Prescribing Policies, Guidelines, Rules And Regulations For Government Infrastructure Contracts
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Prescribing Policies, Guidelines, Rules And Regulations For Government Infrastructure Contracts
Presidential Decree No. 1594
June 11, 1978
Case Overview and Summary
POLICY OBJECTIVES- Achieve maximum efficiency in project implementation and minimize costs and variations through sound contract management practices. (Section 1a)
- Promote healthy partnership between government and private sector for national development. (Section 1b)
- Enhance growth of local construction industry and optimize use of indigenous manpower, materials, and resources. (Section 1c)
DETAILED ENGINEERING
- No bidding or award of contract unless detailed engineering investigations, surveys, and designs are sufficiently carried out per standards to minimize overruns, underruns, change orders, and extra work orders. (Section 2)
- Detailed engineering documents must be approved by relevant Minister (Public Works, Transportation and Communications; Public Highways; or Energy). (Section 2)
PREQUALIFICATION OF PROSPECTIVE CONTRACTORS
- Legal Requirements:
- Licensed contractor for current year (Republic Act No. 4566)
- Paid privilege tax for current year
- Comply with Administrative Order No. 66 and other pertinent laws (Section 3a)
- Technical Requirements:
- Competence and experience in managing similar projects
- Competence and experience of key personnel
- Availability and commitment of equipment (Section 3b)
- Financial Requirements:
- Meet net worth and liquid asset requirements
- Allowed to cover net worth deficiency through bank line of credit (Section 3c)
- Promote maximum participation of eligible Filipino contractors (Section 3d)
BIDDING
- Construction projects generally undertaken through competitive public bidding (Section 4)
- Administration/force account or negotiated contract allowed in exceptional cases with approval (Section 4)
- Bidder's bond required to guarantee successful bidder enters into contract and provides performance bond (Section 4)
AWARD AND CONTRACT
- Award to lowest prequalified bidder whose bid complies with terms and is most advantageous to government (Section 5)
- Contractor must post performance bond prior to award (Section 5)
- Awards and contracts subject to approval of relevant Minister (Section 5)
ASSIGNMENT AND SUBCONTRACT
- Contractor cannot assign, transfer, pledge, subcontract, or dispose of contract without Minister's approval (Section 6)
- Subcontract approval does not relieve main contractor's liability or create contractual relation between subcontractor and government (Section 6)
CONTRACTOR RESPONSIBILITY
- Contractor fully responsible for contract work until final acceptance by government (Section 7)
- Contractor responsible for damage or destruction of works except force majeure (Section 7)
- Contractor responsible for safety, protection, security, and convenience of personnel, third parties, public, works, equipment, and installations except force majeure (Section 7)
ADJUSTMENT OF CONTRACT PRICE
- Minister may authorize adjustment if labor, equipment, material, and supply costs increase or decrease due to direct government acts during contract effectivity (Section 8)
- Adjustments made using formulas established in rules and regulations (Section 8)
CHANGE ORDER AND EXTRA WORK ORDER
- Change order or extra work order allowed only for works necessary for project completion and within general scope of contract (Section 9)
- All change orders and extra work orders subject to Minister's approval (Section 9)
INSPECTION AND CONSTRUCTION
- Government inspects contract work in progress to ensure compliance with standards and requirements (Section 10)
- Contractor held responsible for acceptability of finished works and must promptly replace materials and correct works failing to meet requirements (Section 10)
GOVERNMENT'S RIGHT TO TAKE OVER
- Government may take over contract work if contractor abandons, unduly delays, becomes insolvent, assigns assets for creditors' benefit, is adjudged bankrupt, assigns contract without approval, or violates terms (Section 11)
- Government must give due notice to contractor and sureties before taking over (Section 11)
IMPLEMENTING RULES AND REGULATIONS
- Minister of Public Works, Transportation and Communications as lead official, Minister of Public Highways, Minister of Energy, and NEDA Director-General shall jointly promulgate implementing rules and regulations (Section 12)
- Once approved by President, rules and regulations applicable to all government infrastructure and construction contracts (Section 12)
SEPARABILITY CLAUSE
- If any provision is held unconstitutional, other provisions remain valid (Section 13)
REPEALING CLAUSE
- All conflicting Acts, Charters, Decrees, Letters of Instructions, Executive Orders, Proclamations, rules and regulations repealed or modified accordingly (Section 14)
EFFECTIVITY
- Decree takes effect immediately (Section 15)
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Prescribing Policies, Guidelines, Rules And Regulations For Government Infrastructure Contracts
Presidential Decree No. 1594
•June 11, 1978
MALACAÑANGM a n i l a
PRESIDENTIAL DECREE No. 1594
PRESCRIBING POLICIES, GUIDELINES, RULES AND REGULATIONS FOR GOVERNMENT INFRASTRUCTURE CONTRACTS
WHEREAS, the present policies, rules and regulations covering government contracts for infrastructure and other construction projects are generally fragmented and have been found to be inadequate to cope with the intricate and complex process involved;
WHEREAS, there is a need to adopt a comprehensive, uniform, and updated set of policies, guidelines, rules and regulations covering government contracts for infrastructure and other construction projects in order to achieve a more efficient and effective implementation of these projects.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree the following:
Section 1. Policy Objectives. It is the policy of the government to adopt a set rules and regulations covering government contracts for infrastructure and other construction projects which shall:
(a) bring about maximum efficiency in project implementation and minimize project costs and contract variations through sound practices in contract management;
(b)...
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