EXPLAINER: Can an Agency Extend a Contract which is about to Expire?

Yes. Procuring entities may extend the duration or effectivity of an ongoing contract which is about to expire.

As a general rule, the Procurement Law discourages the extension of government Contracts.

However, the law allows extension of Contracts but only for services which are essential, indispensable, or necessary to support the operations of the government or for the enhancement of the welfare of its personnel to include, but shall not be limited to, non-personal or contractual services such as maintenance of equipment and furniture, janitorial and security services.

The said extension, however, is not applicable to contracts with water, electricity, telecommunications, and internet service providers, which shall be governed by the Guidelines on Procurement of Water, Electricity, Telecommunications and Internet Service Providers issued by the Government Procurement Policy Board under Resolution No. 19-2006, dated 6 December 2006.

Although an Agency can extend the duration of its contract, it must ensure that it has complied with or will comply the following conditions:

• No contract extension shall exceed one (1) year;
• The original contract subject of the extension was awarded in accordance with the provisions of Republic Act 9184 (R.A. 9184) and its Implementing Rules and Regulations (IRR);
• The procuring entity concerned has substantially undertaken the procurement activities required prior to award of the new contract under R.A. 9184 and its IRR;
• The aforesaid contract extension is undertaken due to circumstances beyond its control and the procuring entity concerned cannot award a new contract within a month after the expiration of the term of the original contract;
• The current service provider has not violated any of the provisions of the original contract; and
• The terms and conditions of the original contract shall not be changed or modified, except when changes or modifications will redound to the advantage of the government at no additional cost to the Procuring Entity.

The contract extensions shall be subject to the prior approval of the Head of the Procuring Entity or his/her duly authorized representative upon recommendation of the Bids and Awards Committee.

Additionally, if the proposed contract extension exceeds six (6) months, the Head of the Procuring Entity or his/her duly authorized representative shall immediately report to the Government Procurement Policy Board in writing of its intent to extend beyond six months.

Source: APPENDIX 24 – REVISED GUIDELINES ON THE EXTENSION OF CONTRACTS FOR GENERAL SUPPORT SERVICES, 2016 REVISED IRR, R.A 9184

Download the 2016 Revised IRR of RA 9184 here.