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Does the issuance of Purchase Order (PO) required even if the Procuring Entity and the Supplier had already entered into a contract?

Does the issuance of Purchase Order (PO) required even if the Procuring Entity and the Supplier had already entered into a contract?

by Mikhail Duhaylungsod -
Number of replies: 2

Good day!

I am asking if whether the "meeting of minds" takes place after the PE and the winning bidder have signed the contract agreement form and upon receipt of the NTP by the bidder. And since the Purchase Order is the contract itself, or the set conditions that the bidder must conform thereto, does the PE still requires itself to issue Purchase Orders regardless the Contract Agreement Form has already been complied with together with the Notice to Proceed?

It is in my impression that Contract Agreement is needed in order for the PE and winning bidder to formally enter into contract for procurements that have undergone Public Bidding; however for Alternative Methods of Procurement, Purchase Orders are commonly used as "substitute" to Contract Agreement by taking consideration the set conditions and amount of the infrastructure, goods or services projects to be procured with.

Since Purchase Orders are itself embodiment of a contract, where the meeting of minds has already taken place upon agreeing to its terms and conditions and upon receipt thereof, i still wonder why there is a need to issue such document considering that, in cases for Public Bidding procurement, the contract have already been entered formally by accomplishing the Contract Agreement Form and having it notarized?

Hoping for your informative answer on this matter.

In reply to Mikhail Duhaylungsod

Re: Does the issuance of Purchase Order (PO) required even if the Procuring Entity and the Supplier had already entered into a contract?

by Edita Nota -

In public bidding, contract agreement is mandatory while for alternative methods, it is optional and Purchase Order may be used.  One form of contract is used, either contract or PO.  In bidding, there is no need for PO.   

In reply to Mikhail Duhaylungsod

Re: Does the issuance of Purchase Order (PO) required even if the Procuring Entity and the Supplier had already entered into a contract?

by Jessie Salvador -
The Civil Code of the Philippines is applicable:

Article 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.

Applying this in the government procurement. the meeting of the minds take place once the Notice of Award is received by the winning bidder. From that moment, a contract have been entered into. However, there are forms and requirements needed to comply with RA 9184.

However, in relation to your query on Purchase Order (PO), it is my opinion that PO should no longer be required if there is already a contract agreement. Otherwise, it will create confusion as to which contract (because PO is also a contract) should be enforced in case of discrepancy.
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