Implementing Rules and Regulations of r

8/3/2019 Implementing Rules and Regulations of r

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Imp le m enting Ru les and R eg u lations and p ertinent p rovisions of R e pu blic Act 7160 ( L ocal Govern m ent Code of 1991) and itsimp le m enting r u les and reg u lations.

S ec. 1.3. D efinition of Terms. - F or pu r p oses of theseImp le m enting Ru les and R eg u lations, the ter m s and p hraseshere u nder shall be u nderstood as follows:

a. A ct. - shall m ean R e pu blic Act No. 6957, as a m endedby R e pu blic Act No. 7718 .

b. A gency/ A gencies. R efers to any de p art m ent,b u rea u , office, co mm ission, a u thority or agency of thenational govern m ent, incl u ding govern m ent-owned or -controlled cor p orations, a u thorized by law or theirres p ective charters to contract for or u ndertakeinfrastr u ct u re or develo pm ent p rojects.

c. C ontractual A rrangements. R efer to any of thefollowing contract u al arrange m ents or sche m es, as wellas other variations thereof as m ay bea pp roved/a u thorized by the P resident, by whichinfrastr u ct u re and/or develo pm ent p rojects m ay beu ndertaken pu rs u ant to the p rovisions of these IRR :

i. B uild-and-transfer ( B T). - A contract u alarrange m ent whereby the p roject p ro p onentu ndertakes the financing and constr u ction of a given infrastr u ct u re or develo pm ent facilityand after its co mp letion t u rns it over to thegovern m ent agency or local govern m ent u nitconcerned, which shall p ay the p ro p onent onan agreed sched u le its total invest m ent

ex p ended on the p roject, p lu s a reasonablerate of ret u rn thereon. T his arrange m ent m aybe e mp loyed in the constr u ction of anyinfrastr u ct u re or develo pm ent p rojects,incl u ding critical facilities which, for sec u rityor strategic reasons, mu st be o p erateddirectly by the Govern m ent.


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ii. B uild-lease-and-transfer ( BL T) - Acontract u al arrange m ent whereby a p rojectp ro p onent is a u thorized to finance andconstr u ct an infrastr u ct u re or develo pm entfacility and up on its co mp letion t u rns it overto the govern m ent agency or localgovern m ent u nit concerned on a leasearrange m ent for a fixed p eriod, after whichownershi p of the facility is a u to m aticallytransferred to the govern m ent agency orlocal govern m ent u nit concerned.

iii. B uild-operate-and-transfer ( BO T) - Acontract u al arrange m ent whereby the p roject

p ro p onent u ndertakes the constr u ction,incl u ding financing, of a given infrastr u ct u refacility, and the o p eration and m aintenancethereof. T he p roject p ro p onent o p erates thefacility over a fixed ter m d u ring which it isallowed to charge facility u sers a pp ro p riatetolls, fees, rentals, and charges not exceedingthose p ro p osed in its bid or as negotiated andincor p orated in the contract to enable thep roject p ro p onent to recover its invest m ent,and o p erating and m aintenance ex p enses inthe p roject. T he p roject p ro p onent transfersthe facility to the govern m ent agency or localgovern m ent u nit concerned at the end of thefixed ter m that shall not exceed fifty (50)years. T his shall incl u de a s upp ly-and-o p eratesit u ation which is a contract u al arrange m entwhereby the s upp lier of eq u ipm ent andm achinery for a given infrastr u ct u re facility,if the interest of the Govern m ent so req u ires,o p erates the facility p roviding in the p rocesstechnology transfer and training to F ili p inonationals.

iv. B uild-own-and-operate ( BOO ) - Acontract u al arrange m ent whereby a p rojectp ro p onent is a u thorized to finance,


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constr u ct, own, o p erate and m aintain aninfrastr u ct u re or develo pm ent facility fro m which the p ro p onent is allowed to recover itstotal invest m ent, o p erating and m aintenancecosts p lu s a reasonable ret u rn thereon bycollecting tolls, fees, rentals or other chargesfro m facility u sers. Under this p roject, thep ro p onent who owns the assets of the facilitym ay assign its o p eration and m aintenance toa facility o p erator.

v. B uild-transfer-and-operate ( B T O ) - Acontract u al arrange m ent whereby the pu blicsector contracts o u t the b u ilding of an

infrastr u ct u re facility to a p rivate entity s u chthat the contractor b u ilds the facility on at u rn-key basis, ass um ing cost overr u ns,delays, and s p ecified p erfor m ance risks. O ncethe facility is co mm issioned satisfactorily,title is transferred to the i mp le m entingagency. T he p rivate entity however o p eratesthe facility on behalf of the i mp le m entingagency u nder an agree m ent.

vi. C ontract-add-and-operate ( CAO ) - Acontract u al arrange m ent whereby the p rojectp ro p onent adds to an existing infrastr u ct u refacility which it is renting fro m theGovern m ent and o p erates the ex p andedp roject over an agreed franchise p eriod.T here m ay or m ay not be a transferarrange m ent with regard to the added facilityp rovided by the p roject p ro p onent.

vii. D evelop-operate-and-transfer ( DO T) - Acontract u al arrange m ent whereby favorableconditions external to a new infrastr u ct u rep roject which is to be b u ilt by a p rivatep roject p ro p onent are integrated into thearrange m ent by giving that entity the rightto develo p adjoining p ro p erty, and th u s,


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enjoy so m e of the benefits the invest m entcreates s u ch as higher p ro p erty or rentval u es.

viii. Rehabilitate-operate-and-transfer (R O T) -A contract u al arrange m ent whereby anexisting facility is t u rned over to the p rivatesector to ref u rbish, o p erate and m aintain fora franchise p eriod, at the ex p iry of which thelegal title to the facility is t u rned over to theGovern m ent. T he ter m is also u sed todescribe the pu rchase of an existing facilityfro m abroad, i mp orting, ref u rbishing,erecting and cons um ing it within the host

co u ntry.

ix. Rehabilitate-own-and-operate (R OO ) - Acontract u al arrange m ent whereby an existingfacility is t u rned over to the p rivate sector toref u rbish and o p erate with no ti m e li m itationimp osed on ownershi p . As long as theo p erator is not in violation of its franchise, itcan contin u e to o p erate the facility inp er p et u ity.

d. C onstruction - R efers to new constr u ction,rehabilitation, i mp rove m ent, ex p ansion, alteration, andrelated works and activities incl u ding the necessarys upp ly of eq u ipm ent, m aterials, labor and services andrelated ite m s needed to b u ild or rehabilitate aninfrastr u ct u re or develo pm ent facility.

e. C ontractor - R efers to any entity accredited u nderP hili pp ine laws, or that sho u ld be accredited u nderP hili pp ine laws in accordance with S ection 5.4 a letterv. hereof, which m ay or m ay not be the p rojectp ro p onent and which shall u ndertake the act u alconstr u ction and/or s upp ly of eq u ipm ent for thep roject.


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f. D evelopment Program - R efers to national, regional orlocal govern m ent p lans or p rogra m s incl u ded in, b u tnot li m ited to, the Medi um -T er m P hili pp ineDevelo pm ent P lan ( MT P D P ), the R egional D evelo pm entP lans and L ocal Develo pm ent P lans.

g. D irect government guarantee - R efers to anagree m ent whereby the Govern m ent or any of itsagencies or local govern m ent u nits ass um eres p onsibility for the re p ay m ent of debt directlyinc u rred by the p roject p ro p onent in i mp le m enting thep roject in case of a loan defa u lt.

h. F acility operator - R efers to a co mp any registered

with the S ec u rities and E xchange Co mm ission ( SEC ),which m ay or m ay not be the p roject p ro p onent, andwhich is res p onsible for all as p ects of o p eration andm aintenance of the infrastr u ct u re or develo pm entfacility, incl u ding b u t not li m ited to the collection of tolls, fees, rentals or charges fro m facility u sers.

i. G overnment Undertakings R efer to any for m of contrib u tion and/or s upp ort p rovided u nder Ru le 13 of these IRR which the Govern m ent m ay extend to the

p roject p ro p onents u nder any of the contract u alarrange m ents a u thorized u nder these IRR .

j. H ead of A gency - S hall refer to the a u thorizeda pp roving a u thority of the Agency or, in the case of Govern m ent- O wned or- Controlled Cor p orations(GOCC s), the G OCC Governing Board.

k. I CC - R efers to the Invest m ent CoordinationCo mm ittee of the National E cono m ic and Develo pm entAu thority ( NED A) Board.

l. I RR - S hall m ean these Imp le m enting Ru les andR eg u lations.


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m . L ist of Priority Projects - R efers to the list of p rivatesector infrastr u ct u re or develo pm ent p rojects a pp rovedin accordance with S ections 2.3, 2.7, 2.8 and 2.11

n. L ocal G overnment Units ( L G U) R efer to p rovincial,city, mu nici p al and/or barangay govern m ent entities.

o. N egotiated C ontracts R efer to contracts enteredinto by the Govern m ent for convenience even if broadertendering wo u ld have been p ossible. T his ty p e of contract m ay be resorted to only in cases p rescribedu nder Ru le 9.

p . Private sector infrastructure or development projects - T he general descri p tion of infrastr u ct u re ordevelo pm ent p rojects nor m ally financed, and o p eratedby the pu blic sector b u t which will now be wholly orp artly financed, constr u cted and o p erated by thep rivate sector, incl u ding b u t not li m ited to, p owerp lants, highways, p orts, air p orts, canals, da m s,hydro p ower p rojects, water s upp ly, irrigation,teleco mmu nications, railroad and railways, trans p ortsyste m s, land recla m ation p rojects, ind u strial estatesor townshi p s, ho u sing, govern m ent b u ildings, to u ris m

p rojects, pu blic m arkets, sla u ghterho u ses, wareho u ses,solid waste m anage m ent, infor m ation technologynetworks and database infrastr u ct u re, ed u cation andhealth facilities, sewerage, drainage, dredging, andother infrastr u ct u re and develo pm ent p rojects as m ayotherwise be a u thorized by the a pp ro p riate agency.Su ch p rojects shall be u ndertaken thro u gh contract u alarrange m ents as defined herein, incl u ding s u ch othervariations as m ay be a pp roved by the P resident of theP hili pp ines.

q. Project C ost R efers to the total cost to be ex p endedby the p ro p onent to p lan, develo p and constr u ct thep roject to co mp letion stage incl u ding b u t not li m ited tos u ch costs as feasibility st u dies engineering and design,constr u ction, eq u ipm ent, land and right of way.


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r. Project L oan R efers to all loans and/or creditfacilities extended by financial instit u tions; mu lti-lateral lenders; ex p ort credit agencies, and all otherthird p arty lenders, to the p roject co mp any and/orp ro p onent for the develo pm ent and/or o p eration of thep roject.

s. Project Proponent R efers to the p rivate sectorentity which shall have contract u al res p onsibility forthe p roject and which shall have an adeq u ate financialbase to i mp le m ent the said p roject consisting of eq u ityand fir m co mm it m ents fro m re pu table financialinstit u tions to p rovide, up on award, s u fficient creditlines to cover the total esti m ated cost of the p roject.

t. Public Utility Projects R efer to p rojects incl u dingpu blic roads and thoro u ghfares, railways and u rban railm ass transit, electricity and gas distrib u tion syste m s,city and mu nici p al water distrib u tion and seweragesyste m s, and teleco mmu nication syste m s serving thegeneral pu blic, and s u ch other pu blic services asdefined u nder the P u blic S ervices Act, as a m ended.

u . Reasonable rate of return on investment - S hall have

the m eaning ascribed to it in ICC Gu idelines attachedhereto as Annex B .

v. Unsolicited Proposals R efer to p roject p ro p osalss u b m itted by the p rivate sector to u ndertakeinfrastr u ct u re or develo pm ent p rojects which m ay beentered into by Agency/ L GU s u bject to thereq u ire m ents/conditions p rescribed u nder Ru le 10.

RULE 2

GENER AL P ROVISIONS

S ec. 2.1. A uthorized C ontracting G overnment A gencies/Units. -T he following are a u thorized to enter into contract u alarrange m ents u nder this Act and these IRR :

a. All concerned govern m ent agencies, incl u dinggovern m ent-owned or controlled cor p orations, a u thorized by


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law or by their res p ective charters to u ndertakeinfrastr u ct u re and/or develo pm ent p rojects.

b. L GUs a u thorized by law or by their charters to u ndertakeinfrastr u ct u re and/or develo pm ent p rojects within theirres p ective j u risdiction.

S ec. 2.2. E ligible Types of Projects. T he constr u ction,rehabilitation, i mp rove m ent, better m ent, ex p ansion,m odernization, o p eration, financing and m aintenance, of thefollowing ty p es of p rojects which are nor m ally financed ando p erated by the pu blic sector which will now be wholly or p artlyfinanced, constr u cted and o p erated by the p rivate sector,incl u ding other infrastr u ct u re and develo pm ent p rojects as m ay

be a u thorized by the a pp ro p riate agencies, m ay be p rosec u tedu nder the p rovisions of the Act and these IRR , p rovided howeverthat s u ch p rojects have a cost recovery co mp onent which coversat least 50% of the p roject cost:

a. Highways, incl u ding ex p ressway, roads, bridges,interchanges, t u nnels, and related facilities;

b. R ailways or rail-based p rojects p ackaged with co mm ercialdevelo pm ent o pp ort u nities;

c. Non-rail based m ass transit facilities, navigable inlandwaterways and related facilities;

d. P ort infrastr u ct u res like p iers, wharves, q u ays, storage,handling, ferry services and related facilities; e. Air p orts, airnavigations, and related facilities;

f. P ower generation, trans m ission, s u b-trans m ission ,distrib u tion, and related facilities;

g. T eleco mmu nications, backbone network, terrestrial andsatellite facilities and related service facilities;

h. Infor m ation technology and data base infrastr u ct u re;

i. Irrigation and related facilities;

j. Water s upp ly, sewerage, drainage, and related facilities;


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k. E d u cation and health infrastr u ct u re;

l. L and recla m ation, dredging and other related develo pm entfacilities;

m . Ind u strial and to u ris m estates or townshi p s, incl u dingrelated infrastr u ct u re facilities and u tilities;

n. Govern m ent b u ildings, ho u sing p rojects;

o. M arkets, sla u ghterho u ses, and related facilities;

p . Wareho u ses and p ost-harvest facilities;

q. P u blic fish p orts and fish p onds, incl u ding storage andp rocessing facilities; and

r. E nviron m ental and solid waste m anage m ent relatedfacilities s u ch as collection eq u ipm ent, co mp osting p lants,incinerators, landfill and tidal barriers, a m ong others.

S ec. 2.3. L ist of Priority Projects. - Concerned Agencies/ L GUs aretasked to p re p are their infrastr u ct u re/develo pm ent p rogra m s andto identify s p ecific p riority p rojects that m ay be financed,constr u cted, o p erated and m aintained by the p rivate sectorthro u gh the contract u al arrange m ents or sche m es a u thorizedu nder these IRR .

T he p rojects req u ire the a pp roval of either the NED A Board, ICC or L ocal Develo pm ent Co u ncils ( LDC s) and res p ectiveS angg u nians as s p ecified in S ection 2.7. Su ch req u isite a pp rovalshall be a pp lied for and sho u ld be sec u red by the Head of Agency/ L GU p rior to the call for bids for the p roject. F or thispu r p ose, the Head of Agency/ L GU m ay s u b m it p rojects forincl u sion in the list, for a pp roval by the a pp ro p riate a pp rovinga u thority, as often as is necessary. A pp roved p rojects shallconstit u te the L ist of P riority P rojects.

S ec. 2.4. Publication and N otice. - All Agencies/ L GUs shallp rovide wide pu blicity of the list of p riority p rojects p ro p osed forimp le m entation u nder the contract u al arrange m ents or sche m esas a u thorized u nder the Act and these IRR to kee p


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interested/concerned p arties infor m ed thereof. F or this pu r p ose,all Agencies/ L GUs, up on a pp roval by either the NED A Board, ICC ,or L ocal Develo pm ent Co u ncil ( LDC ) and S angg u nians of said listof p riority p rojects, shall ca u se the sa m e to be pu blished at leastonce every six (6) m onths in a national news p a p er of generalcirc u lation.

S ec. 2.5. Registration of Project Proponents. - P roject p ro p onentsm ay register with the Agency/ L GU, indicating which p rojects areof interest to the m , and for this pu r p ose s u b m it its co mp anyp rofile in the for m p rescribed u nder Annex A . Du ly registeredp roject p ro p onents shall be officially notified and f u rnished bythe Agency/ L GU a co p y of the list of their res p ective p riorityp rojects and corres p onding p roject up dates at least once every six

(6) m onths. S ec. 2.6. A llowable Modes of I mplementation. - P rojects m ay beimp le m ented thro u gh pu blic bidding or direct negotiation. T hedirect negotiation m ode is s u bject to conditions s p ecified inRu les 9 and 10 hereof.

S ec. 2.7. A pproval of Priority Projects. - T he a pp roval of p rojectsp rosec u ted u nder this Act shall be in accordance with thefollowing:

N ational Priority Projects. - T he p rojects mu st be p art of theAgency's develo pm ent p rogra m s, and shall be a pp roved asfollows:

p rojects costing up to P 300 m illion, shall be s u b m ittedto the ICC for a pp roval;

p rojects costing m ore than P 300 m illion, shall bes u b m itted to the NED A Board for a pp roval up on the

reco mm endation of the ICC ; and

negotiated p rojects shall be s u b m itted to the ICC for itto p rescribe the reasonable rate of ret u rn p rior tonegotiation and/or call for co mp arative p ro p osals.


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L ocal Priority Projects. - F or local p rojects to beimp le m ented by the L GUs, these shall be s u b m itted by theconcerned L GU for confir m ation, as follows:

to the mu nici p al develo pm ent co u ncil for p rojectscosting up to P 20 m illion;

to the p rovincial develo pm ent co u ncil for those costingabove P 20 m illion up to P 50 m illion;

to the city develo pm ent co u ncil for those costing up toP 50 m illion;

to the regional develo pm ent co u ncil or, in the case of Metro M anila p rojects, the M etro Manila D evelo pm entCo u ncil ( MMDC ), for those costing above P 50 m illion up to P 200 m illion; and

to the ICC of the NED A Board for those costing aboveP 200 m illion.

F inal a pp roval of p rojects classified u nder b) i. to b) iv. of this section is vested on the L ocal S angg u nians p erp rovision of the L ocal Govern m ent Code.

S ec. 2.8. I CC A pproval of Projects. - T he review and a pp roval of p rojects by ICC , as indicated above, incl u ding those p ro p osed forBOO imp le m entation, shall be in accordance with the g u idelinesof the ICC , attached hereto as Annex B .

F or pu blicly-bid p rojects, the ICC a pp roval of the p roject sho u ldbe sec u red p rior to bidding and for u nsolicited p ro p osals p rior to

negotiation with the originalp

rop

onent.

S ec. 2.9. I CC / L ocal Sanggunian C learance of the C ontract Prior to A ward. - ICC / L ocal S angg u nian clearance of contracts shalllikewise be req u ired only for p rojects req u iring nationalgovern m ent u ndertakings. ICC clearance of the contract shall be


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sec u red p rior to award in the case of pu blicly bid p rojects or p riorto solicitation of co mp arative p ro p osals for u nsolicited p ro p osals.

T he concerned Agency/ L GU shall, p rior to the sched u le of s u b m ission of bids, s u b m it the draft contract to the ICC forclearance on a no-objection basis. T he agency shall s u b m it thecontract to ICC anyti m e fro m finalization of the bid ter m s of reference to bid p re p aration. T he agency m ay o p t to s u b m it thecontract after the p re-bid conference to consider any co mm entsor s u ggestions that the bidders m ay have on the contract. AnnexB of these IRR p rovides the g u idelines of ICC for contract review.ICC shall act on the final draft contract within fifteen (15)working days up on s u b m ission of co mp lete doc um entation.Unless otherwise p revio u sly notified in writing by the ICC , fail u re

to act within this p rescribed p eriod shall m ean that theconcerned Agency/ L GU m ay p roceed with contract award. I f thedraft contract incl u des govern m ent u ndertakings within thesco p e of an earlier ICC a pp roval, then the s u b m ission will only befor the infor m ation of the ICC . However, sho u ld it incl u deadditional govern m ent u ndertakings over and above the originalsco p e then the draft contract will have to be reviewed by the ICC .

However, fail u re on the p art of the agency to s u b m it the contractor if s u b m itted, to co mp ly with the req u ire m ents of the ICC shall

render the Notice of Award and/or contract invalid.

S ec. 2.10. Presidential A pproval, When Required. - P rojectsu ndertaken thro u gh the B OO sche m e shall req u ire P residentiala pp roval. F or this pu r p ose, the Head of Agency/ L GU shall s u b m itthe p ro p osed p roject to ICC , which shall eval u ate the p ro p osaland forward the sa m e to the O ffice of the P resident with itsreco mm endations. P rojects which will be u ndertaken thro u ghcontract u al arrange m ents or sche m es other than those definedu nder S ection 1.3.c of these IRR shall also req u ire a pp roval bythe P resident. F ollowing ICC contract a pp roval, all B OO contractsare p resented to the P resident, thro u gh the NED A Board, fora pp roval. S ince the P resident chairs the NED A Board, NED A Boarda pp roval already carries with it the P resident's a pp roval.

S ec. 2.11. D eadline for A pproval of Projects. - T he ICC or theconcerned L ocal D evelo pm ent Co u ncil ( LDC ) and concerned


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facility u sers, or d u ly recognized acco u ntingassociations.

viii. O bserver - A re p resentative fro m the Co mm issionon A u dit. (non-voting)

ix. O bserver - O ne (1) re p resentative fro m the CC P S P tobe invited on a case to case basis. (non-voting)

b. F or L GUs, the P BAC shall be co mp osed and organized inthe m anner p rovided u nder R e pu blic Act No. 7160 ( L ocalGovern m ent Code of 1991). In addition to the m e m bershi p therein, a DIL G re p resentative fro m the regional orp rovincial office shall be invited as observer/non-votingm e m ber. T his is to enable DIL G to m ore effectively carry o u tits role as a pp eal body for disq u alified bidders.

S ec. 3.2. Responsibility of the P BAC . - T he P BAC herein createdshall be res p onsible for all as p ects of the p re-bidding and biddingp rocess, incl u ding, a m ong others, the p re p aration of thebidding/tender doc um ents, pu blication of the invitation to p re-q u alify and bid, p re-q u alification of p ros p ective bidders, cond u ctof p re-bid conferences and iss u ance of s upp le m ental notices,inter p retation of the r u les regarding the bidding, the cond u ct of

bidding, eval u ation of bids, resol u tion of dis pu tes betweenbidders, and reco mm endation for the acce p tance of the bidand/or for the award of the p roject.

S ec. 3.3. Q uorum. - A q u or um of the P BA C shall be co mp osed of asi mp le m ajority of all voting m e m bers of the Co mm ittee. T heChair m an shall vote only in case of a tie.

S ec. 3.4. Technical A ssistance to the P BAC . - T o aid the P BA C herein created in the p erfor m ance of their res p onsibilities,

Agencies/ L GUs concerned m ay solicit the services of cons u ltantswith extensive and a pp ro p riate ex p erience in u ndertakingsi m ilar/related p rojects a u thorized u nder these IRR . T hecons u ltants shall be selected in accordance with existing laws,r u les and reg u lations, incl u ding the NED A Board-a pp rovedGu idelines on the P roc u re m ent of Cons u lting S ervices for


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c. Bid s u b m ission p roced u res and req u ire m ents, which shallincl u de infor m ation on the m anner of bid s u b m ission, then um ber of co p ies of bid p ro p osal to be s u b m itted, where thebids are to be s u b m itted, the deadline for the s u b m ission of bids, p er m issible m ode of trans m ission of bid p ro p osals, etc.;

d. Govern m ent u ndertakings s u ch as p rovision of right of way, access to OD A and/or direct govern m enta pp ro p riations, a m ong others, and invest m ent incentives assti pu lated u nder Ru le 13 of these IRR to be p rovided by theconcerned Agency/ L GU;

e. Bid sec u rity and bid sec u rity validity p eriod;

f. M ilestone bonding;

g. Method and criteria (incl u ding the m ini mum a m o u nt of eq u ity) for the eval u ation of the technical and financialco mp onents of the bids;

As a general r u le, the m ethod and criteria for the eval u ationof financial p ro p osals shall be in accordance with S ection8.2.a, 8.2.b or 8.2c hereof. However, for p rojects which arenot pu blic u tilities and where the Agency/ L GU req u ires

p ay m ents to be m ade by the p roject p ro p onent to thegovern m ent, the Agency/ L GU concerned m ay o p t to ado p tthe m ethod and criteria for the eval u ation of financialp ro p osals p rescribed u nder S ection 8.2.d hereof.

h. F or mu la and a pp ro p riate indices to be u sed in theadj u st m ents of tolls/fees/rentals/charges, when a pp licable.S aid for mu la shall take into acco u nt the reasonableness of the sa m e to u sers of the p roject/facility u nder bidding;

i. R eq u ire m ents of concerned reg u latory bodies, s u ch as, b u tnot li m ited to, the De p art m ent of E nviron m ent and Nat u ralR eso u rces ( DENR ) for the iss u ance of an E nviron m entalCo mp liance C ertificate, National Water R eso u rces Board(NWR B) for the iss u ance of the Water P er m it, the P hili pp ineContractors Accreditation Board ( P CAB) for the registrationreq u ire m ents of contractors, the T oll R eg u latory Board ( TR B)


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for the review of toll rates and adj u st m ent for mu la fornegotiated contracts.

j. Cu rrent r u les and reg u lations of the m onetary a u thority;

k. R even u e sharing arrange m ents, if any;

l. E x p ected co mm issioning date; and

m . R eq u ired ownershi p str u ct u re and nationalityreq u ire m ents as req u ired by law.

S ec. 4.3 . Minimum D esigns, Performance Standards and E conomic Parameters. - M ini mum design and p erfor m ancestandards/s p ecifications, incl u ding a pp ro p riate environ m entalstandards as p rescribed by the DENR , shall be clearly defined andshall refer m ore to the desired q u antity and q u ality of the o u t pu tsof the facility and sho u ld state that non-confor m ity with any of these m ini mum req u ire m ents shall render the bids as non-res p onsive. L ikewise, the following econo m ic p ara m eters, a m ongothers, shall be p rescribed:

a. D isco u nt rate, foreign exchange rate and inflation factoras p rescribed by the ICC .

b. Maxi mum p eriod of p roject constr u ction.

c. F ixed ter m for p roject o p eration and collection of tolls/fees/rentals/charges in the case of B OT , B OO , C AO ,DOT , ROT , ROO and other variations thereof a u thorized/a pp roved by the P resident.

d. F or mu la and p rice indices to be u sed in adj u st m ents totolls/fees/rentals/charges, in the case of B OT , B OO , C AO ,DOT , ROT , ROO and other variations thereof

a u thorized/a pp roved by theP

resident.

e. M ini mum p eriod of re p ay m ent, in the case of B T , B LT ,BTO and other variations thereof a u thorized/ a pp roved bythe P resident.


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f. R even u e S hare of the Imp le m enting Agency/ L ocalGovern m ent Unit.

S ec. 4.4. D raft C ontract. - T he draft contract sho u ld clearlydefine the basic and legal relationshi p between the p arties andtheir rights and res p onsibilities. Where a pp licable, sti pu lationp roviding for the following m atters, a m ong others, shall beincl u ded: bonds; g u arantees; ins u rance; liq u idated da m ages; taxesand d u ties; p roject co mp letion date; sched u le and a m o u nts of m ilestone bonding; p rice indices to be u sed; governing laws; forcem aje u re; the effect of changes in circ um stances which m ay bebro u ght abo u t by, a m ong others, the enact m ent of new laws orreg u lations or the change in existing govern m ent p olicies whichwill m aterially affect the financial viability of the p roject;

contract ter m ination; and the m anner and p roced u res for theresol u tion of dis pu tes incl u ding arbitration p roced u res.

RULE 5 QU ALI F IC ATION O F BIDDERS

S ec. 5.1. Who May Participate. - Any individ u al, p artnershi p ,cor p oration or fir m , whether local or foreign, incl u ding jointvent u re or consortia of local, foreign or local and foreign fir m s,s u bject to the li m its herein set, m ay p artici p ate or a pp ly for p re

or si mu ltaneo u s q u alification for p rojects covered u nder thep rovisions of the Act and these IRR .

S ec. 5.2. Publication of I nvitation to Pre-qualify and B id. - T heHead of the Agency/ L GU concerned shall, up on the a pp roval of the p riority p rojects ready for i mp le m entation u nder thep rovisions of these IRR , forthwith ca u se to be pu blished, onceevery week for three (3) consec u tive weeks, in at least two (2)news p a p er of general circ u lation and in at least one (1) localnews p a p er of general circ u lation in the region, p rovince, city ormu nici p ality in which the p rojects are to be i mp le m ented, anotice inviting all p ros p ective infrastr u ct u re or develo pm entp roject p ro p onents to p re-q u alify and bid for the p rojects soa pp roved. L ikewise, the Agency/ L GU concerned shall iss u e officialnotification of the sa m e to p roject p ro p onents registered withthe m .


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T he pu blished Invitation to P re-q u alify and Bid shall containinfor m ation, a m ong others, whether the contractor to bee mp loyed to u ndertake the constr u ction works needs to be p re-identified for p re-q u alification pu r p oses or not.

S ec. 5.3 . Period to Prepare Pre-qualification D ocuments. - T heAgency/ L GU concerned shall allow p ros p ective bidders at leastthirty (30) calendar days fro m the last date of pu blication of theInvitation to P re-q u alify and Bid to p re p are their res p ective p re-q u alification doc um ents. F or p rojects costing at least P 300m illion, the p eriod of p re p aration shall at least be forty-five (45)calendar days fro m the last date of pu blication of the Invitationto P re-q u alify and Bid. In any event, the deadline for s u b m issionof p re-q u alification state m ents shall be indicated in the pu blished

Invitation toP

re-q u alify and Bid.

S ec. 5.4. Pre-qualification Requirements. - T o p re-q u alify, ap roject p ro p onent mu st co mp ly with the following req u ire m ents:

a. L egal Requirements: i. F or p rojects to be i mp le m ented u nder the B OT sche m e whose o p erations req u ire a pu blic u tilityfranchise, the p roject p ro p onent and the facilityo p erator mu st be a F ili p ino or, if a cor p oration, mu st be

d u ly registered with the S ec u rities and E xchangeCo mm ission ( SEC ) and owned up to at least sixtyp ercent (60%) by F ili p inos.

ii. F or p rojects to be i mp le m ented thro u gh a sche m eother than the B OT and req u iring a pu blic u tilityfranchise, the facility o p erator mu st be a F ili p ino or, if a cor p oration, mu st be d u ly registered with theS ec u rities and E xchange Co mm ission ( SEC ) and ownedup to at least sixty p ercent (60%) by F ili p inos.

Consistent with existing laws, the p ro p onent m ay bethe o p erator b u t it m ay be allowed to enter into am anage m ent contract with another entity, who m ay be100% foreign owned, for the day to day o p eration of thefacility, p rovided that the p ro p onent will ass um e allattendant liabilities of an o p erator.


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iii. In case the p roject p ro p onent is a joint vent u re orconsorti um , the m e m bers or p artici p ants shall s u b m it asworn state m ent u ndertaking that if awarded thecontract, they shall bind the m selves to be jointlyseverally and solidarily liable for the obligations of thep roject p ro p onent u nder the contract. However, if m e m bers of the joint vent u re or consorti um organizethe m selves as a cor p oration registered u nder P hili pp inelaws, the liabilities of s u ch m e m bers u nder the contractshall be in accordance with said laws.

iv. F or p rojects to be o p erated by the p roject p ro p onentitself or owned by the p ro p onent b u t o p erated thro u gha facility o p erator where o p eration of the facility does

not req u ire a pu blic u tility franchise, the p rojectp ro p onent or the facility o p erator m ay be F ili p ino orforeign-owned.

v. If the contractor to be engaged by the p rojectp ro p onent to u ndertake the constr u ction works of thep roject u nder bidding needs to be p re-identified asp rescribed in the pu blished Invitation to P re-q u alifyand Bid and is a F ili p ino, it mu st be d u ly licensed andaccredited by the P hili pp ine Contractors Accreditation

Board ( P C AB). However, if the contractor is a foreigner,P CAB registration will not be req u ired at p re-q u alification stage, rather it will be one of the contractm ilestones.

b. Ex perience or Track Record: T he p ro p onent-a pp licantmu st p ossess adeq u ate ex p erience in ter m s of the following: c. F irm Ex perience: By itself or thro u gh the m e m ber-fir m s incase of a joint vent u re/consorti um or thro u gh acontractor(s) which the p roject p ro p onent m ay have engagedfor the p roject, the p roject p ro p onent and/or itscontractor(s) mu st have s u ccessf u lly u ndertaken a p roject(s)si m ilar or related to the s u bject infrastr u ct u re/develo pm entp roject to be bid. T he individ u al fir m s and/or theircontractor(s) m ay individ u ally s p ecialize on any or severalp hases of the p roject(s). A joint vent u re/consorti um p ro p onent shall be eval u ated based on the individ u al or


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collective ex p erience of the m e m ber-fir m s of the jointvent u re/consorti um and of the contractor(s) that it hasengaged for the p roject.

F or pu r p oses of the above, joint vent u res/consortia shalls u b m it as p art of its p re-q u alification state m ent a b u sinessp lan which shall, a m ong others, identify its m e m bers and itscontractor(s), if the ex p erience of its contractor(s) arenecessary for the deter m ination of the ca p acity of the jointvent u re/consorti um to u ndertake the p roject and thedescri p tion of the res p ective roles said m e m bers andcontractors, if necessary, shall p lay or u ndertake in thep roject. If u ndecided on a s p ecific contractor, the p ro p onentm ay s u b m it a short list of contractors fro m a m ong which it

will select the final contractor. S hort listed contractors arereq u ired to s u b m it a state m ent indicating willingness top artici p ate in the p roject and ca p acity to u ndertake thereq u ire m ents of the p roject. T he b u siness p lan shall disclosewhich of the m e m bers of the joint vent u re/consorti um shallbe the lead m e m ber the financing ar m , and/or facilityo p erator(s), and the contractor(s) if req u ired to be p re-identified as p rescribed in the pu blished Invitation to P re-q u alify and Bid or if the q u alifications/ex p erience of theircontractor(s) are necessary for the deter m ination of theca p acity of the joint vent u re/consorti um to u ndertake thep roject.

d. K ey Personnel Ex perience: T he key p ersonnel of thep ro p onent and/or its contractor(s) mu st have s u fficientex p erience in the relevant as p ect of sche m es si m ilar orrelated to the s u bject p roject, as s p ecified by theAgency/ L GU.

e. F inancial C apability: T he p roject p ro p onent mu st haveadeq u ate ca p ability to s u stain the financing req u ire m entsfor the detailed engineering design, constr u ction and/oro p eration and m aintenance p hases of the p roject, as thecase m ay be. F or pu r p oses of p re-q u alification, thisca p ability shall be m eas u red in ter m s of:


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(i) p roof of the ability of the p roject p ro p onent and/orthe consorti um to p rovide a m ini mum a m o u nt of eq u ityto the p roject m eas u red in ter m s of the net worth of the co mp any or in the case of joint vent u res orconsortia the co m bined net worth of m e m bers or a set-aside de p osit eq u ivalent to the m ini mum eq u ityreq u ired, and

(ii) a letter testi m onial fro m re pu table banks attestingthat the p roject p ro p onent and/or m e m bers of theconsorti um are banking with the m , and that they are ingood financial standing. T he govern m ent Agency/ L GU concerned shall deter m ine on a p roject-to- p roject basis,and before p re-q u alification, the m ini mum a m o u nt of

eq u ity needed. In addition, the Agency/ L GU will infor m the p ro p onents of the m ini mum debt-eq u ity ratioreq u ired by the m onetary a u thority for p rojects to befinanced by foreign loans.

T he Imp le m enting Agency thro u gh its P BA C shallco mp lete the eval u ation of the p re-q u alificationdoc um ents of the p ro p onents within thirty (30)calendar days.

S ec. 5.5. Pre-qualified and D isqualified Proponents. - After

u ndertaking the above p rocess, the P BAC shall m ark the p re-q u alification doc um ents of each p ros p ective p ro p onent as either"P re-q u alified" or " D isq u alified", as the case m ay be,co u ntersigned by the Chair m an, for review and a pp roval by theHead of the Agency/ L GU concerned. Accordingly, the P BA C shalld u ly infor m the p ros p ective p ro p onents who have been p re-q u alified within seven (7) calendar days after a pp roval thereof.D isq u alified p ro p onents shall likewise be infor m ed stating thereinthe gro u nds for their disq u alification. T hey m ay a pp eal thedisq u alification to the Head of Agency in the case of nationalp rojects, or the DIL G in the case of local p rojects within fifteen(15) working days fro m recei p t of the notice of disq u alification.

T he bidding p rocess will be s u s p ended while the a pp eal is beingeval u ated. T he Head of Agency or the L GU, as the case m ay be,shall act on the a pp eal within forty-five (45) calendar days fro m


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recei p t of the a pp eal. T he decision of the Head of Agency or L GU on the a pp eal shall be final and i mm ediately exec u tory.

S ec. 5.6 . I ssuance of Tender D ocuments. - T he Agency/ L GU concerned shall m ake available the related bid doc um ents to allp re-q u alified bidders as soon as p racticable to p rovide res p ectivebidders a mp le ti m e to exa m ine the sa m e and to p re p are theirres p ective bids p rior to the date of o p ening of bids.

S ec. 5.7. Simultaneous Q ualification. - In the exigency of service,the Agency/ L GU Head m ay o p t to do a si mu ltaneo u s q u alificationinstead of a p re-q u alification of p ro p onents. In case of si mu ltaneo u s q u alification, the pu blication of the invitationfollowing the req u ire m ents in S ection 5.2, shall be for the

s u b m ission of q u alification req u ire m ents and bid p ro p osals. T hebidders shall be asked to s u b m it their p ro p osal in threeenvelo p es, the first being the q u alification doc um entscorres p onding to the req u ire m ents so stated in S ection 5.4herein, the second the technical p ro p osal and the third thefinancial p ro p osal. T he req u ire m ents for bid s u b m ission arecovered u nder Ru le 7 of these IRR . T he p eriod for the p re p arationof the q u alification doc um ents shall be s u bs um ed u nder the ti m eallotted for bid p re p aration.

S ec. 5.8. A cceptance of C riteria and Waiver of Rights to E njoin Project. - All p ros p ective bidders shall be req u ired to s u b m it, asp art of their q u alification doc um ents, a state m ent sti pu latingthat the bidder (i) has acce p ted the q u alification criteriaestablished by the P BA C of the Agency/ L GU concerned, and (ii)waives any right it m ay have to seek and obtain a writ of inj u nction or p rohibition or restraining order against theconcerned Agency/ L GU or its P BAC to p revent or restrain theq u alification p rocess or any p roceedings related thereto, theholding of a bidding or any p roceedings related thereto, thenegotiation of and award of the contract to a s u ccessf u l bidder,and the carrying o u t of the awarded contract. Su ch waiver shall,however, be witho u t p rej u dice to the right of a disq u alified orlosing bidder to q u estion the lawf u lness of its disq u alification orthe rejection of its bid by a pp ro p riate ad m inistrative or j u dicialp rocesses not involving the iss u ance of a writ of inj u nction or


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p rohibition or restraining order.

RULE 6 SU PP LEMENT AL NOTICES AND P RE -B ID CON F ERENCES

S ec. 6.1 . Responsibility of B idder. - T he p ros p ective bidder shallbe solely res p onsible for having taken all the necessary ste p s tocaref u lly exa m ine and acq u aint hi m self with the req u ire m ents,ter m s, and conditions of the bidding doc um ents with res p ect tothe cost, d u ration, and exec u tion/o p eration of the p roject as itaffects the p re p aration and s u b m ission of his bid. T heAgency/ L GU concerned shall not ass um e any res p onsibilityregarding erroneo u s inter p retations or concl u sions by the

p ros p ective bidder o u t of data f u rnished or indicated in thebidding doc um ents.

S ec. 6.2 . Supplemental N otices. - If a bidder is in do u bt as to them eaning of any data or req u ire m ents or any p art of the biddingdoc um ents, written req u est m ay be s u b m itted to the Agency/ L GU concerned for an inter p retation of the sa m e, allowing s u fficientti m e for the concerned Agency/ L GU to re p ly before thes u b m ission of his/her bid. Any s u bstantive inter p retation givenby the concerned Agency/ L GU shall be iss u ed in the for m of a

Supp le m ental Notice, and f u rnished to all p ros p ective bidders.T he Agency/ L GU concerned m ay also iss u e Supp le m ental Noticesto all p ros p ective bidders at any ti m e for pu r p oses of clarifyingany p rovisions of the bidding doc um ents p rovided that the sa m eis iss u ed within a reasonable p eriod to allow all bidders toconsider the sa m e in the p re p aration of their bids. R ecei p t of allSupp le m ental Notices shall be d u ly acknowledged by each bidderp rior to the s u b m ission of his bid and shall be so indicated in thebid.

S ec. 6.3 . Pre-bid C onference. - F or p rojects costing less than P 300m illion, a p re-bid conference shall also be cond u cted by theconcerned Agency/ L GU at least thirty (30) days before thedeadline for the s u b m ission of bids to clarify any p rovisions,req u ire m ents and/or ter m s and conditions of the biddingdoc um ents and/or any other m atter that the p ros p ective biddersm ay raise. F or p rojects costing P 300 m illion and above, the p re-


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bid conference shall be cond u cted ninety (90) to one h u ndred-twenty (120) days before the s u b m ission of bids.

Nothing stated at the p re-bid conference shall m odify anyp rovisions or ter m s and conditions of the bidding doc um entsu nless s u ch is m ade as a written a m end m ent thereto by theconcerned Agency/ L GU. Any a m end m ents shall be iss u ed by theAgency/ L GU concerned to all bidders within a reasonable ti m e toallow the m to consider the sa m e in the p re p aration of their bidsand shall be d u ly acknowledged by each bidder p rior to thes u b m ission of his bid and shall be so indicated in his bid. As umm ary of the p re-bid conference p roceedings shall also beiss u ed to all p ros p ective bidders by the Agency/ L GU concerned.Attendance to the p re-bid conference by p ros p ective bidders shall

not be m andatory.

RULE 7 SU BMISSION , RECEI P T AND O P ENIN G O F BIDS

S ec. 7.1. Requirements for B id Submission. Bidders shall bereq u ired to s u b m it their bids on or before the deadline sti pu latedin the Instr u ctions to Bidders. F or p re-q u alified bidders, theirbids shall be s u b m itted in two (2) se p arate sealed envelo p es, the

first being the technical p ro p osal and the second the financialp ro p osal. In case of si mu ltaneo u s q u alification, three envelo p esshall be s u b m itted. T he first envelo p e shall be the q u alificationreq u ire m ents, the second the technical p ro p osal and the third thefinancial p ro p osal. All envelo p es shall bear the na m e of the bidderand p roject to be bid o u t in ca p ital letters and addressed to theP BAC of the concerned Agency/ L GU. T hey shall be m arked " DoNot Op en Before (date and ti m e of o p ening of bids)". T heenvelo p es shall be a pp ro p riately labeled as Qu alificationR eq u ire m ents, T echnical P ro p osal and F inancial P ro p osal.

a. T he envelo p e for q u alification of the bidder shall containreq u ire m ents as stated in S ection 5.4

b. T he " T echnical P ro p osal" shall contain the following:


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i. Op erational feasibility of the p roject, which shallindicate the p ro p osed organization, m ethods andp roced u res for the o p eration and m aintenance of thep roject u nder bidding;

ii. T echnical so u ndness/ p reli m inary engineeringdesign, incl u ding p ro p osed p roject ti m eline;

iii. P reli m inary environ m ental assess m ent, which shallindicate the p robable adverse effects of the p roject onthe environ m ent and the corres p onding m itigatingm eas u res to be ado p ted;

iv. P roject cost incl u ding o p erating and m aintenancecost req u ire m ents and p ro p osed financing p lan(p ro p osed eq u ity contrib u tion, debt, etc.);

v. Bid sec u rity in the for m of cash, certified check,m anager's check, letter of credit, or bankdraft/g u arantee iss u ed by a re pu table local/foreignbank, or a s u rety bond callable on de m and iss u ed bythe Govern m ent S ervice Ins u rance S yste m (GSIS ) or anentity d u ly registered and recognized by the O ffice of the Ins u rance Co mm issioner and acce p table to the

Agency/ L GU, or any co m bination thereof p ayable to theAgency/ L GU concerned in accordance with thefollowing sched u les:

Required Bid Security Estimated Cost of Construction

not less than 2.0% of less than P5.0 B

not less than 1.5% of P5.0 B to P10.0 Bbut at least P100million


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Incasethebidsec urityisiss ued by a foreign bank, said sec u rity has to be confir m edand validated by its local branch in the P hili pp ines orby a bank that is d u ly registered and a u thorized by theBangko S entral ng P ili p inas (B S P ).

T he p osting of the bid sec u rity is for the pu r p ose of gu aranteeing that the p ro p osed contract awardee shallenter into contract with the concerned Agency withinthe ti m e p rescribed therefore.

Bids and bid sec u rities shall be valid for a p eriod to bep rescribed by the Agency/ L GU concerned in the biddingdoc um ents b u t in no case beyond one h u ndred andeighty (180) calendar days fro m the date of o p ening of

bids. T he act u al a m o u nt of bid sec u rity to be p osted bythe bidders will be fixed by the concerned Agency/ L GU p rior to bidding. S aid act u al a m o u nt shall not be lessthan the a m o u nt p rescribed in the above sched u le.

vi. O ther doc um ents as m ay be req u ired by theconcerned Agency/ L GU to s upp ort the bidder'stechnical p ro p osal.

c. T he " F inancial Proposal" shall contain the following, asthe case m ay be:

i. F or B OT , B OO , C AO , DOT , ROT , ROO and si m ilarvariants:

P ro p osed u ser tolls/fees/rentals/other charges; and

not less than 1.0% of P10.0 B and above theestimated cost of construction but at leastP150 million


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- P resent worth of the p ro p osed u sertolls/fees/rentals/other charges over the fixed ter m based on the disco u nting rate and foreign exchangerate p rescribed in the bidding doc um ents in accordancewith S ection 4.3.a hereof.

ii. F or B T , B LT , and si m ilar variants:

P ro p osed a m ortization p ay m ents and re p ay m entp eriod; and p resent worth of p ro p osed a m ortizationp ay m ents based on the disco u nting rate and foreignexchange rate p rescribed in the bidding doc um ents inaccordance with S ection 4.3.a hereof.

iii. F or B TO and si m ilar variants, either:

- P ro p osed u ser tolls/fees/rentals/other charges; and

P resent worth of the p ro p osed u ser tolls/fees/rentals/other charges over the fixed ter m based on thedisco u nting rate and foreign exchange rate p rescribedin the bidding doc um ents in accordance with S ection4.3.a hereof; or

- P ro p osed a m ortization p ay m ents and re p ay m entp eriod; and

- P resent worth of p ro p osed a m ortization p ay m entsbased on the disco u nting rate and foreign exchangerate p rescribed in the bidding doc um ents in accordancewith S ection 4.3.a hereof.

T he choice between u ser fees and a m ortizationp ay m ents shall de p end on the m ethod and criteria for

the eval u ation of the financial p ro p osal so stated in theInstr u ctions to Bidders.

iv. F or p rojects which are not pu blic u tilities, where theAgency/ L GU req u ires p ay m ents to be m ade by thep roject p ro p onent to the govern m ent and where the


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days. O nly q u alified bidders shall be allowed to p artici p ate in thebid eval u ation. D isq u alified bidders shall be infor m ed of thegro u nds of disq u alification and their technical and financialp ro p osals ret u rned u no p ened.

S ec. 7.5 . Rejection of B ids. - Inco mp lete infor m ation on any of the envelo p es and/or non-co mp liance with the bid sec u rityreq u ire m ents p rescribed in S ection 7.1b shall be gro u nds fora u to m atic rejection of bids.

S ec. 7.6. O pening of the E nvelope for the Technical Proposal. - Atthe date and ti m e of bid o p ening, as sti pu lated in the Instr u ctionsto Bidders, the P BAC shall o p en only the technical p ro p osal andascertain whether the sa m e is co mp lete in ter m s of the

data/infor m ation req u ired u nder S ection 7.1.b above and whetherthe sa m e is acco mp anied by the req u ired bid sec u rity in thep rescribed for m , a m o u nt and p eriod of validity. Su ch infor m ationshall be recorded at the ti m e, incl u ding the na m es and addressesof req u ired witnesses. All bidders or their re p resentatives p resentat the o p ening of the first envelo p es shall sign a register of thebid o p ening.

S ec. 7.7. O pening of the E nvelope for the F inancial Proposal. -O nly those bidders whose technical p ro p osal p assed the

eval u ation criteria as p rescribed u nder S ection 8.1 hereof shallhave their financial p ro p osal o p ened for f u rther eval u ation. T hosewho failed the eval u ation of the technical p ro p osal shall not beconsidered f u rther and the P BA C shall ret u rn their financialp ro p osals u no p ened together with the reasons for theirdisq u alification fro m the bidding.

O nce the bidders who have q u alified for the eval u ation of thefinancial p ro p osal have been deter m ined, the P BAC shall notifysaid bidders of the date, ti m e and p lace of the o p ening of theenvelo p es for the financial p ro p osal. T he o p ening thereof shallfollow the sa m e p roced u res p rescribed for the o p ening of thep revio u s envelo p es.

S ec. 7.8 . Withdrawal and/or Modification of B ids. - Withdrawaland/or m odification of bids m ay be allowed up on written noticeby the bidder concerned to the Agency/ L GU p rior to the ti m e and


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date set for the o p ening of bids (o p ening of first envelo p es) ass p ecified in the Instr u ctions to Bidders. No bids shall be m odifiedor withdrawn after the ti m e p rescribed to o p en bids. Bidm odifications received after said p eriod shall be considered lateand will be ret u rned u no p ened. Withdrawal of bids after the bido p ening date shall ca u se the forfeit u re of the bidder's bidsec u rity.

RULE 8 EV ALU ATION O F B IDS

S ec. 8.1. The F irst Stage E valuation. - T he eval u ation of bidsshall be u ndertaken in two (2) stages in accordance with the

p roced u res described below.

T he first stage eval u ation shall involve the assess m ent of thetechnical, o p erational, environ m ental, and financing viability of the p ro p osal as contained in the bidders' first envelo p es vis-a-visthe p rescribed req u ire m ents and criteria/ m ini mum standards andbasic p ara m eters p rescribed in the bidding doc um ents. O nly thosebids that have been deter m ined to have p ositively p assed the firststage of eval u ation shall be q u alified and considered for thesecond stage of eval u ation.

T he Agency/ L GU concerned shall eval u ate the technical p ro p osalsof the bidder in accordance with the following criteria:

a. Technical soundness (preliminary engineering design): T he basic engineering design of the p roject sho u ld confor m to the m ini mum design and p erfor m ance standards ands p ecifications set by the Agency/ L GU concerned asp rescribed in the bidding doc um ents. T he engineerings u rveys, p lans and esti m ates sho u ld be u ndertaken within+/- 20% of the final q u antities. T he constr u ction m ethodsand sched u les sho u ld also be p resented and shown to befeasible or "doable".

b. O perational feasibility: T he p ro p osed organization,m ethods, and p roced u res for o p erating and m aintaining theco mp leted facility mu st be well defined, sho u ld confor m to


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the p rescribed p erfor m ance standards, and sho u ld be shownto be workable. Where feasible, it sho u ld p rovide for thetransfer of technology u sed in every p hase of the p roject.

c. E nvironmental Standards: T he p ro p osed design and thetechnology of the p roject to be u sed mu st be in accordancewith the environ m ental standards set forth by theDe p art m ent of E nviron m ent and Nat u ral R eso u rces ( DENR )as indicated in the bid doc um ents. Any adverse effects onthe environ m ent as a conseq u ence of the p roject asp ro p osed by the p roject p ro p onent mu st be p ro p erlyidentified, incl u ding the corres p ondingcorrective/ m itigating m eas u res to be ado p ted.

d. Project F

inancing: T he p ro p osed financing p lan sho u ldp ositively show that the sa m e co u ld adeq u ately m eet theconstr u ction cost and o p erating and m aintenance costsreq u ire m ents of the p roject. T he Agency/ L GU concernedshall assess the financing p ro p osals of the bidders if thesa m e m atches and adeq u ately m eets the cost req u ire m entsof the p roject u nder bidding.

e. E nhancements: O ther ter m s which the p roject p ro p onentm ay offer to the govern m ent to m ake the p ro p osals m ore

attractive, s u ch as, b u t not li m ited to, p rovisions allowingthe govern m ent to share in reven u es; less govern m entgu arantees or red u ction in the level of govern m entu ndertakings or s upp ort.

T he P BAC of the Agency/ L GU concerned shall co mp lete theeval u ation of the technical p ro p osal within thirty (30) calendardays fro m the date the bids are o p ened.

S ec. 8.2. The Second Stage E valuation. - T he second stage

eval u ation shall involve the assess m ent and co mp arison of thefinancial p ro p osals of the bidders:

a. F or B OT , B OO , C AO , DOT , ROT , ROO and other si m ilarsche m es that m ay be a pp roved/a u thorized by the P resident,assess m ent and co mp arison of the financial p ro p osals of bidders shall be based on the lowest p resent val u e of the


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p ro p osed tolls, fees, rentals and other charges over a fixedter m for the facility to be constr u cted, rehabilitated,o p erated and m aintained according to the p rescribedm ini mum design and p erfor m ance standards, p lans ands p ecifications.

b. F or B T , B LT , and other si m ilar sche m es that m ay bea pp roved/a u thorized by the P resident, assess m ent andco mp arison of the financial p ro p osals of the bidders shall bebased on the p resent val u e of the p ro p osed sched u le of a m ortization p ay m ents for the facility to be constr u ctedaccording to the p rescribed m ini mum design andp erfor m ance standards, p lans and s p ecifications.

c.F

or B TO and other si m ilar sche m es that m ay bea pp roved/a u thorized by the P resident, assess m ent andco mp arison of the financial p ro p osals of bidders shall bebased on either the lowest p resent val u e of the p ro p osedtolls, fees, rentals and other charges over a fixed ter m forthe facility to be constr u cted, o p erated and m aintained, orthe p resent val u e of the p ro p osed sched u le of a m ortizationp ay m ents for the facility to be constr u cted according to thep rescribed m ini mum design and p erfor m ance standards,p lans and s p ecifications.

T he eval u ation criteria for a B TO shall be stated in theInstr u ctions to Bidders.

T he Agency/ L GU concerned shall award the contract to thebidder whose p ro p osed tolls/fees/rentals/charges in case of BOT , B OO , CAO , DOT , ROT , ROO , B TO , and other si m ilarsche m es, or p ro p osed sched u le of a m ortization p ay m ents incase of B T , B LT , B TO , and other si m ilar sche m es, aredeter m ined to have the lowest p resent val u e. However, inthe case of B T , B LT and B TO sche m es, a F ili p ino p rojectp ro p onent who s u b m its an eq u ally advantageo u s bid withexactly the sa m e p rice and technical s p ecifications as thatof a foreign p roject p ro p onent shall be given p reference.

d. F or other contract u al arrange m ents which are aco m bination of any of the above and/or which have been


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a pp roved by the P resident of the P hili pp ines, assess m entand co mp arison of the financial p ro p osal of the bidders shallbe based up on the p resent val u e of the a m ortizationp ay m ents and/or p resent val u e of the p ro p osed toll fees, andother charges and/or other ty p es of p ay m ents for the facilityto be constr u cted according to the p rescribed m ini mum design and p erfor m ance standards, p lans and s p ecifications,as reco mm ended by the ICC and a pp roved/a u thorized by theP resident of the P hili pp ines.

e. F or p rojects that are not pu blic u tilities where theAgency/ L GU concerned req u ires p ay m ents to be m ade by thep roject p ro p onent to the govern m ent, the assess m ent andco mp arison of the financial p ro p osals of bidders m ay be

based on the p resent val u e of p ro p osed p ay m ents. T heAgency/ L GU concerned shall award the contract to thebidder whose p ro p osed p ay m ents are deter m ined to have thehighest p resent val u e.

T he second stage eval u ation shall be co mp leted by the P BAC of the concerned Agency/ L GU within fifteen (15) calendar days fro m the date the first stage eval u ation shall have been co mp leted.

S ec. 8.3 . Right to Reject A ll B ids. - T he Agency/ L GU concerned

reserves the right to reject any or all bids, waive any m inordefects therein and acce p t the offer m ost advantageo u s to thegovern m ent.

RULE 9 NE GOTI ATED CONTR ACT

S ec. 9.1. D irect N egotiation. - D irect negotiation shall be resortedto when there is only one co mp lying bidder left as definedhere u nder:

a. If, after advertise m ent, only one p roject p ro p onenta pp lies for p re-q u alification and it m eets the p re-q u alification req u ire m ents, after which it is req u ired tos u b m it a bid/ p ro p osal which is s u bseq u ently fo u nd by theAgency/ L GU to be co mp lying;


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b. If, after advertise m ent, m ore than one p roject p ro p onenta pp lied for p re-q u alification b u t only one m eets the p re-q u alification req u ire m ents, after which it s u b m its a bidp ro p osal that is fo u nd by the Agency/ L GU to be co mp lying;

c. If, after p re-q u alification of m ore than one p rojectp ro p onent, only one s u b m its a bid which is fo u nd by theAgency/ L GU to be co mp lying;

d. If, after p re-q u alification, m ore than one p rojectp ro p onent s u b m it bids b u t only one is fo u nd by theAgency/ L GU to be co mp lying;

In s u ch events however, any disq u alified bidder m ay a pp ealthe decision of the concerned Agency/ L GU to the Head of Agency in case of national p rojects, or to the De p art m ent of Interior and L ocal Govern m ent ( DIL G) in case of localp rojects within fifteen (15) working days fro m recei p t of thenotice of disq u alification. T he Agency/ L GU concerned shallact on the a pp eal within forty-five (45) working days fro m recei p t thereof. T he decision of the Agency concerned or theDIL G, as the case m ay be, shall be final and i mm ediatelyexec u tory.

S ec. 9.2. Unsolicited Proposals . - Unsolicited p ro p osals m aylikewise, s u bject to the conditions p rovided u nder Ru le 10, beacce p ted by an Agency/ L GU on a negotiated basis.

S ec. 9.3. C onditions for N egotiated Projects. - In addition to theabove req u isites for negotiated p rojects, ICC mu st p rescribe thereasonable rate of ret u rn p rior to negotiation and/or call forco mp arative p ro p osals. T he a pp ro p riate govern m ent reg u latorybody mu st a pp rove the rates and the adj u st m ent for mu la thereforincor p orated in the contract, p rior to award. In the absence of a

reg u latory body, ICC a pp roval shall s u ffice.

S ec. 9.4. F inancial and Technical E valuation of N egotiated C ontracts. - In so far as a pp licable, the sa m e r u les p rovided forthe eval u ation of the technical and financial as p ects of bidp ro p osals shall be a pp lied in the eval u ation of negotiated


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red u ce i mp le m entation of constr u ction costs, acceleratep roject exec u tion, i mp rove safety, enhance p rojectp erfor m ance, extend econo m ic life, red u ce costs of facilitym aintenance and o p erations, or red u ce negativeenviron m ental i mp act or social/econo m ic dist u rbances ordisr up tions d u ring either the p rojectimp le m entation/constr u ction p hase or the o p eration p hase;or

b. A p rocess for which the p roject p ro p onent or any m e m berof the p ro p onent joint vent u re/consorti um p ossessesexcl u sive rights, either world-wide or regionally; or

c. A design, m ethodology or engineering conce p t for which

the p ro p onent or a m e m ber of the p ro p onent consorti um orassociation p ossesses intellect u al p ro p erty rights.

S ec. 10.3. Projects I neligible for Unsolicited Proposals. - P rojectsincl u ded in the L ist of P riority P rojects, as defined u nder S ection2.3 shall not be eligible for u nsolicited p ro p osals, u nless involvinga new conce p t or technology. Additionally, any co mp onent of ana pp roved solicited p roject shall not be eligible for any u nsolicitedp ro p osal. F or p rojects, which are not p art of the L ist, theAgency/ L GU has the discretion to deter m ine which m ay be

o p ened to u nsolicited p ro p osals or pu blicly bid o u t. S ec. 10.4. G overnment Undertakings for Unsolicited Proposals. -As a general r u le, u nsolicited p ro p osals can avail of the differentfor m s of govern m ent s upp ort as en um erated u nder Ru le 13,S ection 13.2 b (ii), exce p t for direct govern m ent g u arantees,direct govern m ent s u bsidy or govern m ent eq u ity. T he ICC shalldeter m ine the sco p e and s p ecific for m s of govern m entu ndertaking as defined in S ection 13.2 b that an u nsolicitedp ro p osal m ay be granted.

T he sale or lease of govern m ent assets, incl u ding a m ong others,right of way, to p roject p ro p onents shall not be considered ass u bsidy or eq u ity.

S ec. 10.5. Submission of a C omplete Proposal. - F or a p ro p osal tobe considered by the Agency/ L GU, the p ro p onent has to s u b m it a


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co mp lete p ro p osal which shall incl u de a feasibility st u dy,co mp any p rofile as o u tlined in Annex A , and the basic contract u alter m s and conditions on the obligations of the p ro p onent and thegovern m ent. T he Agency/ L GU shall acknowledge recei p t of thep ro p osal and advice the p ro p onent whether the p ro p osal isco mp lete or inco mp lete. If inco mp lete, it shall indicate whatinfor m ation is lacking or necessary.

S ec. 10.6. E valuation of Unsolicited Proposals. - T he Agency/ L GU is tasked with the initial eval u ation of the p ro p osal. T heAgency/ L GU shall: 1) a pp raise the m erits of the p roject; 2)eval u ate the q u alification of the p ro p onent; and 3) assess thea pp ro p riateness of the contract u al arrange m ent andreasonableness of the risk allocation. T he Agency/ L GU is given

sixty (60) days to eval u ate the p ro p osal fro m the date of s u b m ission of the co mp lete p ro p osal. Within this 60-day p eriodthe Agency/ L GU, shall advise the p ro p onent in writing whether itacce p ts or rejects the p ro p osal. Acce p tance m eans co mm it m entof the Agency/ L GU to pu rs u e the p roject and recognition of thep ro p onent as the "original p ro p onent". At this p oint, theAgency/ L GU will no longer entertain other si m ilar p ro p osals u ntilthe solicitation of co mp arative p ro p osals. T he i mp le m entation of the p roject, however, is still contingent p ri m arily on the a pp rovalof the a pp ro p riate a pp roving a u thorities consistent with S ection

2.7 of these IRR , the agree m ent between the original p ro p onentand the Agency/ L GU of the contract ter m s, and the a pp roval of the contract by the ICC or L ocal S angg u nian.

S ec. 10.7. Treatment of More than one Proposal for the Same or Similar Project. - T he Imp le m enting Agency reserves its o p tion toreject all p ro p osals and bid o u t the p roject instead. However, if the Agency/ L GU o p ts to i mp le m ent the p roject via theu nsolicited m ode, it sho u ld eval u ate p ro p osals u sing a first inti m e a pp roach. Under this a pp roach, the first co mp lete p ro p osalis eval u ated and decided up on. T he second co mp lete p ro p osal willonly be entertained if the first one is rejected. O therwise, thesecond p ro p osal will be considered only if there is a fail u re in thenegotiation of the first p ro p osal or d u ring the invitation forco mp arative p ro p osals as defined u nder S ection 10.11


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S ec. 10.8. I CC / L ocal Sanggunian C learance of Unsolicited Proposals. T he Head of Agency/ L GU shall sec u reICC / S angg u nian clearance of the u nsolicited p ro p osal p rior tonegotiation with the original p ro p onent. An u nsolicited p ro p osalshall be s u b m itted to the ICC / S angg u nian only up on officialendorse m ent by the Head of the concerned Agency/ L GU statingthat the p roject is p art of or consistent with the Agency/ L GU develo pm ent p rogra m s and m ay be p rosec u ted u nder any of thecontract u al arrange m ents a u thorized u nder these IRR . ICC / L ocalS angg u nian shall a pp rove the p roject in accordance with thegu idelines hereto attached as Annex B , set the negotiatingp ara m eters and p rescribe the reasonable rate of ret u rn for thep roject, incl u ding the reasonable internal rate of ret u rn oneq u ity.

S ec. 10.9. N egotiation With the O riginal Proponent. Imm ediately after ICC / L ocal S angg u nian's clearance of thep roject, the Agency/ L GU shall p roceed with the in- de p thnegotiation of the p roject sco p e, i mp le m entation arrange m entsand concession agree m ent, all of which will be u sed in the T er m sof R eference for the solicitation of co mp arative p ro p osals. T heAgency/ L GU and the p ro p onent are given ninety (90) days up onrecei p t of ICC 's a pp roval of the p roject to concl u de negotiations.T he Agency/ L GU and the original p ro p onent shall negotiate in

good faith. However sho u ld there be u nresolvable differencesd u ring the negotiations, the Agency/ L GU shall have the o p tion toreject the p ro p osal and bid o u t the p roject. O n the other hand, if the negotiation is s u ccessf u lly concl u ded, the original p ro p onentshall then be req u ired to refor m at and res u b m it its p ro p osal inaccordance with the req u ire m ents of the T er m s of R eference tofacilitate co mp arison with the co mp arative p ro p osals. T heAgency/ L GU shall validate the refor m atted p ro p osal if it m eetsthe req u ire m ents of the TOR p rior to the iss u ance of theinvitation for co mp arative p ro p osals.

S ec. 10.10 . Tender D ocuments. - T he q u alification and tenderdoc um ents shall be p re p ared along the lines s p ecified u nder Ru les4 and 5 hereof. T he concession agree m ent that will be p art of thetender doc um ents will be considered final and non-negotiable bythe challengers. P ro p rietary infor m ation shall, however, beres p ected, p rotected and treated with u t m ost confidentiality. As


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q u alification doc um ents; S tage 2, the technical p ro p osal; andS tage 3, the financial p ro p osal. O nly those bids which p assed thefirst stage will be considered for the second stage and si m ilarly,only those which p ass the second stage will be considered for thethird stage eval u ation. T he Agency/ L GU will ret u rn to thedisq u alified bidders the re m aining envelo p es u no p ened, togetherwith a letter ex p laining why they were disq u alified. T he criteriafor eval u ation will follow Ru le 5 for the q u alification of biddersand Ru le 8 for the technical and financial p ro p osals. T he ti m efra m es u nder Ru les 5 and 8 shall likewise be followed.

S ec. 10.16 . D isclosure of the Price Proposal. - T he disclos u re of the p rice p ro p osal of the original p ro p onent in the T enderDoc um ents will be left to the discretion of the Agency/ L GU.

However, if it was not disclosed in the T ender Doc um ents, theoriginal p ro p onent's p rice p ro p osal sho u ld be revealed up on theo p ening of the financial p ro p osals of the challengers. T he right of the original p ro p onent to m atch the best p ro p osal within thirty(30) working days starts up on official notification by theAgency/ L GU of the m ost advantageo u s financial p ro p osal.

RULE 11 AWA RD AND SI GNIN G O F CONTR ACT

S ec. 11.1. Recommendation to A ward. - Within seven (7) calendardays fro m the date the financial eval u ation shall have beenco mp leted, the Agency/ L GU P BAC will s u b m it a reco mm endationof award to the Head of Agency/ L GU. T he P BAC will p re p are ands u b m it a detailed eval u ation/assess m ent re p ort on its decisionregarding the eval u ation of the bids and ex p lain in clear ter m sthe basis of its reco mm endations.

S ec. 11.2. D ecision to A ward. Within seven (7) calendar daysfro m the s u b m ission by P BA C of the reco mm endation to award,the Agency/ L GU Head shall decide on the award. T he a pp rovalshall be m anifested by signing and iss u ing the Notice of Award tothe awardee within seven (7) calendar days fro m a pp roval thereof.

S ec. 11.3. N otice of A ward .- T he Notice of Award shall indicate,a m ong others, that the awardee mu st s u b m it within thirty (30)


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p roject or that they have p rovided a s u itable and acce p tables u bstit u te with eq u al or better q u alifications.

S ec. 11.5. Validity of B ids. - T he award of contract shall be m adewithin the p eriod of the validity of the bids. T he req u ired bidsec u rity shall be valid for a reasonable p eriod b u t in no casebeyond one h u ndred eighty (180) calendar days following theo p ening of the bids. Bid sec u rities shall be ret u rned to theu ns u ccessf u l bidders as soon as the contract with the s u ccessf u lbidder has been a pp roved by the Head of Agency/ L GU concernedin accordance with S ections 11.3., 11.7. and 12.1. hereof.

S ec. 11.6. Ex tension of Validity of B ids. - When an extension of validity of bids is considered necessary, those who s u b m itted bids

shall be req u ested in writing to extend the validity of their bidsbefore the ex p iration date. However, bidders shall not be allowedto m odify or revise the p rice or other s u bstance of their bids.

Bidders shall have the right to ref u se to grant s u ch an extensionwitho u t forfeiting their bid sec u rity, b u t those who are willing toextend the validity of their bids sho u ld be req u ired to p rovide as u itable extension of bid sec u rity.

S ec. 11.7. C onditions for A pproval of C ontract. - T he Head of

Agency/ L GU shall ens u re that all of the following conditions havebeen co mp lied with before a pp roving the contract:

a. Su b m ission of the req u ired p erfor m ance sec u rity asp rescribed u nder S ection 12.7 hereof;

b. P roof of s u fficient eq u ity fro m the investors and fir m co mm it m ents fro m re pu table financial instit u tion to p rovides u fficient credit lines to cover the total esti m ated cost of the p roject;

c. ICC clearance of the contract on a no-objection basis;

F ail u re by the winning p roject p ro p onent to s u b m it thereq u ire m ents p rescribed u nder ite m s a, b and c above within theti m e p eriod s p ecified by the concerned Agency/ L GU in the Noticeof Award or fail u re to exec u te the contract within the s p ecified


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ti m e shall res u lt in the disq u alification of the bidder, as well asthe forfeit u re of the bid sec u rity of the bidder.

S ec. 11.8. Ex ecution of the C ontract. - T he s u ccessf u l biddersho u ld sign the contract within seven (7) calendar days fro m recei p t of the advice of the Agency/ L GU that all req u ire m ents foraward, as p rovided for in S ection 11.3. are f u lly co mp lied with.

In the event of ref u sal, inability or fail u re of the bidder with thelowest co mp lying eval u ated bid to m ake good his bid by enteringinto contract with the Govern m ent within the ti m e p rovidedtherefor, the Agency/ L GU concerned shall forfeit its bid sec u rity.In s u ch an event the Agency/ L GU concerned shall consider thenext co mp lying and q u alified lowest eval u ated bid for award. If

the sa m e shall likewise ref u se or fail to enter into contract withthe govern m ent, his/her bid sec u rity shall likewise be forfeitedand the Agency/ L GU concerned shall consider the next co mp lyingand q u alified lowest eval u ated bid, and so on u ntil a contractshall have been entered into. In the event that the concernedAgency/ L GU is u nable to exec u te the contract with any of theco mp lying and q u alified bidders d u e to the ref u sal of the latter, afail u re of bidding will be declared and s u bject the p roject to arebidding.

E ach u ns u ccessf u l bidder shall also be notified of the awardthro u gh official notices/co mmu nications. Notices of Award shallbe m ade available to the pu blic when req u ested.

S ec. 11.9. F ailure of B idding. - When no co mp lying bids arereceived or in case of fail u re to exec u te the contract with aq u alified and contracting bidder d u e to the ref u sal of the latter,the bidding shall be declared a fail u re. In s u ch cases, the p rojectshall be s u bjected to a rebidding.

RULE 12 CONTR ACT APP ROV AL AND IM P LEMENT ATION

S ec. 12.1 . Period to A pprove C ontract. - T he Head of Agency/ L GU concerned shall a pp rove/disa pp rove the contract within fifteen(15) calendar days fro m the date that the winning p roject


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p ro p onent has signed the contract. A pp roval of the contract shallbe witho u t p rej u dice to the obligation of the Agency/ L GU concerned and the winning p roject p ro p onent fro m sec u ring s u chother govern m ent a pp rovals as m ay be req u ired u nder existinglaws, r u les and reg u lations. A m ong others, the winning p rojectp ro p onent shall be res p onsible for sec u ring the necessary anda pp ro p riate environ m ental clearances fro m the DENR p rior toact u al p roject constr u ction in accordance with existing laws,r u les and reg u lations. T he DENR shall act on the environ m entalclearance of the p roject within the ti m e fra m e p rescribed andfollowing the g u idelines of DENR Ad m inistrative O rder No. 96-37and s u bseq u ent g u idelines as m ay be iss u ed fro m ti m e to ti m e.T he Agency/ L GU m ay p rovide the necessary assistance to thep roject p ro p onent in sec u ring all the req u ired clearances.

S ec. 12.2 . G rant of F ranchise. - In case of a p roject req u iring au tility franchise, the winning p roject p ro p onent shalla u to m atically be granted by the a pp ro p riate Agency/ L GU thefranchise to o p erate and m aintain the facility, incl u ding thecollection of tolls, fees, rentals, and other charges in accordancewith the sched u les sti pu lated in the a pp roved contract. T heoriginal franchise p eriod as sti pu lated in the contract agree m entm ay be extended, as m ay be a u thorized by the concerneda u thority, p rovided that the total franchise p eriod shall not

exceed fifty (50) years. P rovided f u rther that the extension andthe new ter m s and conditions of the contract will be s u bject toICC 's no objection clearance.

S ec. 12.3 . C ontract E ffectivity. - T he contract shall be effectiveup on a pp roval thereof by the Head of Agency/ L GU and up onco mp liance with all conditions p recedent as s p ecified in theagree m ent. T he contract shall s p ecify the for m or p roof of co mp liance therewith.

S ec. 12.4. N otice of C ontract E ffectivity. - T he concernedAgency/ L GU shall iss u e the Notice of Contract E ffectivity toimp le m ent the p roject to the awardee not later than seven (7)calendar days fro m the date of the a pp roval of the contract by theHead of Agency/ L GU and co mp liance of conditions p recedent tocontract effectivity, as a pp licable.


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S ec. 12.5. Preparation and A pproval of D etailed E ngineering D esign. - T he winning p roject p ro p onent shall be res p onsible forthe p re p aration of the detailed engineering designs and p lansbased on the p rescribed m ini mum design and p erfor m ancestandards and s p ecifications and shall s u b m it the sa m e to theAgency/ L GU concerned. T he Agency/ L GU concerned shall reviewthe detailed engineering designs and p lans p re p ared by thep roject p ro p onent in ter m s of its co mp liance with the p rescribedstandards and s p ecifications, and if fo u nd acce p table, shalla pp rove the sa m e p rior to act u al p roject constr u ction. T hisa pp roval by the Agency/ L GU concerned notwithstanding, thep roject p ro p onent shall be solely res p onsible for the integrity of its detailed engineering designs and p lans. T he a pp roval thereof by the Agency/ L GU concerned does not di m inish this

res p onsibility, nor does it transfer any p art of s u ch res p onsibilityto the Agency/ L GU concerned. In the case of local p rojects, theL GU concerned shall ens u re that the technical designs, p lans,s p ecifications, and related as p ects necessary for the p roject'sconstr u ction, o p eration and m aintenance shall be based onrelevant local and national p olicies, standards and g u idelines.Moreover, the L GU shall cons u lt with a pp ro p riate nationalreg u latory bodies regarding national p olicies, standards, andgu idelines in granting the necessary franchise.

S ec. 12.6. Project C onstruction. - T he p roject p ro p onent shallb u ild the facility in accordance with the design and p erfor m ancestandards and s p ecifications p rescribed in the a pp roved detailedengineering design. F or this constr u ction stage, the p rojectp ro p onent m ay engage the services of foreign and/or F ili p inocontractors that co mp ly with the legal req u ire m ents as p rescribedu nder S ection 5.4.a. In the case of foreign contractors, F ili p inolabor shall be e mp loyed in the different p hases of theconstr u ction works where F ili p ino skills are available. Hiring of labor shall be s u bject to existing labor laws, r u les and reg u lations.

S ec. 12.7. Performance G uarantee for C onstruction Works. - T ogu arantee the faithf u l p erfor m ance by the p roject p ro p onent of its obligations u nder the contract incl u ding the p rosec u tion of the constr u ction works related to the p roject, the p rojectp ro p onent shall p ost in favor of the Agency/ L GU concerned,within the ti m e and u nder the ter m s p rescribed u nder the p roject


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contract, a p erfor m ance sec u rity in the for m of cash, m anager'scheck, cashier's check, bank draft or g u arantee confir m ed by alocal bank (in the case of foreign bidders bonded by a foreignbank), letter of credit iss u ed by a re pu table bank, s u rety bondcallable on de m and iss u ed by the Govern m ent S ervice Ins u ranceS yste m (GSIS ) or by s u rety or ins u rance co mp anies d u lyaccredited by the O ffice of the Ins u rance Co mm issioner, or aco m bination thereof, in accordance with the following sched u les:

a. C ash, manager's check, cashier's check, irrevocable letter of credit, bank draft a m ini mum of two p ercent (2%) of thetotal P roject Cost.

b. B ank G uarantee a m ini mum of five p ercent (5%) of the

totalP

roject Cost.

c. Surety B ond a m ini mum of ten p ercent (10%) of thetotal P roject Cost.

S ec. 12.8. Performance G uarantee for O peration . - F or p rojectswhere the p ro p onent or other third p arties shall o p erate thep roject, the Agency/ L GU shall deter m ine whether the p rojectp ro p onent or p roject co mp any will p ost an Op erating S ec u rity,p rior to the release of the P erfor m ance S ec u rity. T he Op erating

S ec u rity will be iss u ed to g u arantee the o p eration of the p rojectin accordance with the o p erating p ara m eters and s p ecificationsu nder the contract. T he Agency/ L GU shall deter m ine the a m o u ntand for m thereof.

S ec. 12.9. Supervision of Project C onstruction, O peration and Maintenance. - T he Agency/ L GU concerned shall exercisetechnical s up ervision over the p roject activities of the p rojectp ro p onent. T he Agency/ L GU concerned shall ins p ect and checkwhether the p roject is constr u cted, o p erated and m aintained in

accordance with the a pp roved p lans, s p ecifications, standardsand costs. In the event that the Agency/ L GU concerned shall findany deviation fro m or non-co mp liance with the a pp roved p lans,s p ecifications and standards, it shall bring the sa m e to theattention of the p roject p ro p onent for the necessary correctiveactions. F ail u re of the p roject p ro p onent to correct the deviationwithin the ti m e p rescribed by the i mp le m enting agency m ay be a


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acce p tance by the Agency/ L GU of the p roject as co mp leted inaccordance with the agreed standards and s p ecifications,p rovided that there are no clai m s filed against the contractor orthe s u rety co mp any. (b) Op erating S ec u rity. T he Op eratingS ec u rity shall be released by the Agency/ L GU concerned on thetransfer date of the facility p rovided that it is free fro m any lien,charge or enc um brance.

S ec. 12.13. L iquidated D amages. - Where the p roject p ro p onentof a p roject fails to satisfactorily co mp lete the work within theconstr u ction p eriod p rescribed in the contract, incl u ding anyextension or grace p eriod d u ly granted, and is thereby in defa u ltu nder the contract, the p roject p ro p onent shall p ay theAgency/ L GU concerned liq u idated da m ages, as m ay be agreed

up on u nder the contract by the p arties. T he p arties shall agree onthe a m o u nt and sched u le of p ay m ent of the liq u idated da m ages.T he p erfor m ance sec u rity m ay be forfeited to answer for anyliq u idated da m ages d u e to the Agency/ L GU. T he a m o u nt of liq u idated da m ages d u e for every calendar day of delay will bedeter m ined by the Agency/ L GU. In no case however shall thedelay exceed twenty p ercent (20%) of the a pp roved constr u ctionti m e sti pu lated in the contract p lu s any ti m e extension d u lygranted. In s u ch an event the Agency/ L GU concerned shallrescind the contract, forfeit the p ro p onent's p erfor m ance sec u rity

and p roceed with the p r

Documents

Implementing Rules and Regulations of r