Section 7. Strategic Procurement Planning and Budgeting Linkage. - All procurement shall be undertaken with proper and sufficient planning and preparation to ensure sound procurement decisions. This includes the conduct of relevant market scoping, supply positioning, analysis of available procurement modalities, risk management, and disposal procedures as may be applicable.

Procuring Entities shall likewise adopt a procurement strategy that includes fit-for-purpose and proportional approaches, considers the whole lifecycle of a procurement project, including its environmental impact, and aims to achieve value for money.

During the planning stage, the Procuring Entity shall ensure that the project has minimal economic, social, and environmental risks or negative impact during its lifecycle, and that the goods and services are procured with due consideration for responsible and sustainable consumption and production practices, and the national policy.

Measures such as, but not limited to, rehabilitation of properties, condemnation/destruction of properties, transfer of properties to other government agencies, barter, donation, return to supplier/vendor, trade-in, sale to government officials/employees of the agency, public auction, negotiated sale, sale of junk or scrap and/or recycling, and direct negotiation shall be considered by the Procuring Entity in the development of its requirements for purposes of disposal at the end of the useful life of the property.

For subcontracting arrangements, the following rules shall apply to locally-funded projects and to projects financed through Official Development Assistance, except those covered by treaty provisions:

1. The HoPE must provide prior approval to subcontracting;

2. Subcontractors must meet eligibility criteria;

3. The bidder or general contractor must disclose subcontractors during the bidding process;

4. The general contractor shall remain liable for the subcontractor's actions, defaults, delays, and negligence;

5. The general contractor and the subcontractor shall share liability in cases where safety standards pr other labor standards are violated; and

6. The value of the entire completed and accepted project, including the subcontracted portion, shall be recorded as experience of the general contractor, in particular:

   1. The subcontractor shall get credit for one hundred percent (100%) of the value of the subcontracted portion of the project;

   2. Subcontractors shall be eligible to concessional windows of GFIs that treat receivables from the government as loan security; the receivables of subcontractors due from their general contractor shall similarly be accepted as loan security by GFIs; and

   3. Contract performance monitoring, such as, but not limited to the Constructors Performance Evaluation System (CPES), shall also be mandatorily applied to the work of subcontractors.

To guarantee the usefulness throughout the whole lifecycle of goods to be procured, the Procuring Entity shall ensure that goods to be procured are brand new: Provided, That the procurement of second-hand, refurbished or reconditioned goods, such as military, defense, or law enforcement equipment or material, may be considered to secure a contract that is most advantageous to the government subject to the guidelines to be issued by the DBM and subject to compliance with relevant criteria, such as durability, remaining useful life, sustainability, maintenance cost, and warranty.

All procurement should be within the approved budget of the Procuring Entity. Consistent with government fiscal discipline measures, only those considered crucial to the efficient discharge of governmental functions shall be included in the Annual Procurement Plan (APP), which shall at least include the following:

1. Name of the project/procurement;

2. Project management office (PMO)/end-user unit;

3. General description of the project/procurement;

4. Procurement methods adopted and indicating if the procurement tasks are to be outsourced;

5. Criteria for bid evaluation;

6. Time schedule;

7. Source of funds; and

8. Approved Budget for the Contract.

No government procurement shall be undertaken unless it is in accordance with the approved APP or Indicative APP of the Procuring Entity, as the case may be. The APP shall be approved by the HoPE and must be consistent with its duly approved yearly budget or proposed budget in the case of the Indicative APP. The APP shall be formulated and revised only in accordance with the guidelines set forth in the IRR.