Selling to the Government 

One of the biggest customers in the Philippines is the government, which procures through official tenders. U.S. firms interested in selling to the government must first understand the process to qualify and participate in such opportunities, and then properly strategize on how to win them.

Philippine government-funded procurement of goods, infrastructure projects and consulting services is governed by Republic Act (RA) No. 9184 or the Government Procurement Reform Act (GPRA) and its Implementing Rules and Regulations. RA 9184 and its IRR also apply to foreign-funded procurement activities unless another procedure is stipulated in the treaties or agreements under which the procurement is made. The most common example would be procurements financed by development aid where the procurement is conducted according to the rules of the donor entity such as the Japan International Cooperation Agency.

The Government Procurement Policy Board (GPPB) was established under RA 9184 to be the central procurement policy-making body of the government. The GPPB website contains up-to-date government procurement-related resolutions and guidelines, as well as standard bidding documents and procurement manuals.

Tender opportunities are advertised at the Philippine Government Electronic Procurement System (PHILGEPS) website and the websites of the procuring entities. Firms must pay membership fees to be a PHILGEPS Platinum Member and bid on tenders under competitive bidding. To bid on specific projects, one must also pay for bidding documents, ranging in price from $10 to $1,500. Appendix 8 of the IRR contains the standardized cost of bid documents based on the approved budget for the contract (ABC).

Projects funded by the Philippine Government have a national ownership requirement. A minimum of 60 percent Filipino ownership is usually required for goods, infrastructure projects and consulting services. U.S. firms interested in participating in tenders should work with a Filipino distributor, or in some cases with a Filipino joint venture partner as very few opportunities allow for foreign firms to bid without a Philippine partner. Foreign firms can bid directly when there are no local suppliers able to provide the product and other special circumstances. More information on these special circumstances is available in the IRR, specifically Sections 23.4.1.2 (Goods), 23.4.2.2 (Infrastructure Projects) and 24.3.3 (Consulting Services) and Appendix 9: Guidelines in the Determination of Eligibility of Foreign Suppliers, Contractors, and Consultants to Participate in Government Procurement Projects.

The local partner leads in the many cumbersome bureaucratic procedures. Such procedures include excessive paperwork requirements such as: business registration certificates, mayor’s permit, tax clearances, audited financial statements, statements of ongoing contracts for a given period, and statements of single largest completed contract. Section 23 of the IRR lists the required documents for submission. Many defense and ICT firms have expressed concern about submitting some information that cannot be disclosed for national security or business confidentiality reasons.

The standard practice is for tenders to be conducted through competitive bidding. The ABC should be mentioned in the Invitation to Bid and would be the ceiling for the bid price. Bids are evaluated by the Bids and Awards Committees (BACs) that are created for the specific purpose of evaluating bids. For goods and infrastructure projects, the contract is awarded to the bidder with the lowest calculated and responsive bid. For consultancy service, the bidder with the highest rated responsive bid will win the contract.

Retention money or a special bank guarantee of 1 to 5 percent of the total goods contract price is required to cover for warranty. For infrastructure projects, the contractor is required to post a warranty security of 5, 10 or 30 percent of the total contract price depending on the form of the warranty security.

The “lowest calculated and responsive bid” clause has proven to be a challenge for U.S. firms as the bid specifications do not often take life cycle cost into account. Unless technical experts have a say in the bid specifications, they often are crafted in a manner that allows for the most economical option to be selected without consideration on value, or proper credit given to innovative technologies. BAC officials fear choosing the more expensive option in what may seem to be a violation of the procurement law, even when the option is likely to have better long-term value.

Procurement methods other than competitive bidding, such as negotiated procurement, direct contracting, and limited source bidding, can be used in highly exceptional cases. A foreign supplier that wins a government tender should submit a Certificate of Registration issued by the Philippines’ Securities and Exchange Commission, and/or the authority or license from the appropriate government agency to the procuring entity before the contract award.

While there are significant hurdles in pursuing government tenders, their value may make such pursuit worthwhile.  Firms with a local partner, unique product(s) not locally available, and a proper risk hedging strategy can position themselves to secure government business. In fact, many firms have engaged with government stakeholders early on, in anticipation of future tenders. They have helped shape tender specifications to allow for a proper evaluation that takes value into consideration so that the final decision is less likely to be made by cost.

In 2019, the World Trade Organization Committee on Government Procurement approved the Philippines’ application for observer status. The Philippines is not a party to a free trade agreement (FTA) with the United States that contains commitments on government procurement.

It is important to note that there have been many reported scams from entities impersonating the Philippine Government.  Such entities have reached out directly to U.S. firms and requested deposits to fulfill tenders with the Philippine Government.  It is important for firms to properly conduct due diligence when contacted by such agencies, and the U.S. Commercial Service can help. 

U.S. companies bidding on foreign government tenders may also qualify for U.S. Government advocacy.  Within the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters in competition with foreign firms in foreign government projects or procurement opportunities. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts.  Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agency officials expressing support for the U.S. exporters directly to the foreign government. Consult the Advocacy Center’s program web page on trade.gov for additional information.

Financing of Projects 

Official Development Assistance (ODA)

Official Development Assistance continues to be a critical source of financing for major development projects in the Philippines, as authorized by Republic Act No. 8182. These projects are funded by multilateral institutions such as the Asian Development Bank (ADB), World Bank (WB), and Asian Infrastructure Investment Bank (AIIB), as well as bilateral development agencies including the Japan International Cooperation Agency (JICA), the United States Agency for International Development (USAID), and the Australian Department of Foreign Affairs and Trade (DFAT). The United Nations System also plays a significant role through various specialized agencies.

As of end-2023, the Philippines’ active ODA portfolio reached $37.29 billion, an increase from $32.24 billion in 2021. This total includes $35.07 billion in loans and $2.22 billion in grants. The table below presents the percentage distribution of ODA by fund source. According to the Philippine National Economic and Development Authority’s (NEDA) 2023 ODA Portfolio Review, total grant assistance to the Philippines reached USD 2.22 billion, of which approximately USD 1.20 billion was utilized in 2023, representing a 54.2 percent utilization rate.

The United States remains a top bilateral grant provider, alongside multilateral institutions and other donor countries. U.S. grant programs are primarily implemented through the United States Trade and Development Agency (USTDA), and other agencies supporting economic growth, and innovation.
 

Table: Cumulative ODA by Fund Source in USD Million, 2023* 

*Source: Philippine National Economic Development Authority – Official Development Assistance Portfolio Review Report 2023
1 Japan is made up of JICA and the Embassy of Japan (i.e., non-project grant aid).
2 The Republic of Korea is made up of the Korea International Cooperation Agency (KOICA), Korea Rural Economic Institute (KREI), Ministry of Agriculture Food and Rural Affairs – Education, Promotion, and Information Service (MAFRAEPIS).
3 USA is made up of contributions of United States Agency for International Development (USAID) and United States Trade and Development Agency (USTDA) 
4 UN System is made up of FAO, IFAD, IOM, UNDP, UNEP, UNESCO, UNFPA, UNICEF, UNIDO, WFP, and WHO.  
5 Others include Japan-ASEAN Integrated Fund (JAIF) and Alliance for Financial Inclusion (AFI).

U.S. Financing Institutions

U.S. financing institutions such as the Export-Import Bank and the Development Finance Corporation (DFC) continue to explore opportunities in the Philippines. The U.S. International Development Finance Corporation (DFC), formerly Overseas Private Investment Corporation (OPIC), provides debt financing, partial credit guarantees, political risk insurance, equity investment and technical assistance grants to support U.S. and other investors and their investments.  The EXIM Bank, the official export credit agency of the United States, provides export credit insurance, loan guarantees, and project and structured finance for U.S. exporters and foreign buyers of U.S. goods and services.

For more information on DFC’s programs in Asia-Pacific:
Douglas Midland
Managing Director, Philippines & Pacific Islands Office 
Development Finance Corporation 
Email: Douglas.Midland@dfc.gov

U.S. Trade and Development Agency (USTDA)

The U.S. Trade and Development Agency strengthens U.S. national security by initiating the development of overseas infrastructure projects that make America safer, stronger and more prosperous through the deployment of trusted U.S. solutions to advance the shared priorities of the United States and its overseas partners.

USTDA is the U.S. Government’s starting point for critical infrastructure development abroad. The Agency is the “first mover” on these projects. USTDA funds the upfront work that accelerates the development of infrastructure projects. This includes project preparation activities such as feasibility studies, technical assistance, and pilot projects. These tools are critical for defining a project’s design options and attracting the financing that it needs for implementation and procurement of U.S. technology. The Agency also hosts activities that promote exclusive infrastructure partnerships with the United States and catalyze the deployment of American technology to critical infrastructure projects overseas. 

To increase the likelihood that supported projects are financed and implemented, USTDA partners with financial institutions like private banks, multilateral development banks and U.S. government partners to help projects address their lending requirements. This approach facilitates their deal flow and mitigates project risks.

USTDA supports projects that advance U.S. national security, prioritizing those that secure U.S. commercial opportunities in major infrastructure and advance shared interests with emerging market partners. Industries of interest include critical minerals, digital infrastructure, energy, healthcare infrastructure and transportation. USTDA also advances projects that further America’s global leadership in emerging technologies. In 2024, every $1 USTDA invested in its programs generated a record of $231 in U.S. exports. USTDA has facilitated more than $120 billion in U.S. exports since its founding in 1992, supporting more than 4,000 infrastructure activities around the world. In the Philippines, successful projects have included support for the expansion of 5G across the country using secure, trusted American technology. The Agency has also advanced U.S. national security and exports to shared priorities in the Philippines’ critical minerals, energy, transportation and other digital infrastructure industries.

USTDA’s regional office, covering Southeast Asia and the Pacific, is located at the U.S. Embassy in Bangkok, Thailand. USTDA also has other staff in the region, including at the U.S. Embassy in Manila, where the Agency’s Indo-Pacific Financing and Implementation Manager works to identify local barriers and approaches to overcome them, helping move projects toward financial close and implementation. Information on accessing USTDA tools and upcoming program activities is available on the Agency’s website.

Multilateral Development Banks and Financing Government Sales

Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB).  A helpful guide for working with the MDBs is the Guide to Doing Business with Multilateral Development Banks. The U.S. Department of Commerce’s (USDOC) International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank. 

Learn more by contacting the:  

• Commercial Liaison Office to the Asian Development Bank
• Commercial Liaison Office to the World Bank