In the Matter of Adopting a Joint Venture (JV) and Lease Framework for the Implementation of COMELEC Infrastructure Projects

September 9, 2014 MINUTE RESOLUTION NO. 14-0640 IN THE MATTER OF ADOPTING A JOINT VENTURE (JV) AND LEASE FRAMEWORK FOR THE IMPLEMENTATION OF COMELEC INFRASTRUCTURE PROJECTS WHEREAS, the Commission on Elections (COMELEC), a constitutional commission created under Article IX of the 1987 Philippine Constitution, is independent (Art. IX-A, Sec. 1) and enjoys fiscal autonomy (Art. IX-A, Sec. 5); WHEREAS, in the case of Cesar Bengzon, et al. vs. Hon. Franklin S. Drilon, et al. (G.R. No. 103524, April 15, 1992) , the Supreme Court defined the scope and extent of fiscal autonomy enjoyed by COMELEC and the other constitutional commissions, as "a guarantee of full flexibility to allocate and utilize their resources with the wisdom and dispatch that their needs require"; WHEREAS, COMELEC is empowered by the 1987 Philippine Constitution to perform such other functions as may be provided by law (Art. IX-A, Sec. 8); WHEREAS, under the General Appropriations Act for FY 2014, COMELEC, through its Chairperson, is authorized to use savings from its appropriations, "for repair, maintenance and improvement of central and regional offices, facilities, and equipment" (Chapter XXXII, Special Provisions, Sec. 2 (ii)); WHEREAS, the Administrative Code of 1987 states in Book I, Chapter 12, Sec. 47 thereof that, "contracts or conveyances may be executed for and in behalf of the Government or of any of its branches, subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations, whenever demanded by the exigency or exigencies of the service and as long as the same are not prohibited by law"; WHEREAS, under Section 20, Article II of the 1987 Constitution, the "State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments"; WHEREAS, the private sector participates in infrastructure and development of the State through what is popularly known as Public-Private Partnerships (PPPs); WHEREAS, in furtherance of and consistent with its independence and fiscal autonomy as a Constitutional Commission, the COMELEC is free, provided no statute is violated, to adopt its definition of a PPP undertaking and prescribe the requirements, procedures and conditions for its PPPs, particularly for JVs and leases, and incorporate these in an operative framework; and WHEREAS, having a Resolution defining the COMELEC's JV and lease framework will ensure and facilitate consistency, integrity, reliability, sustainability, accountability and transparency, and enforceability; WHEREAS, Resolution No. 9254 (2011) adopting the COMELEC Strategic Plan 2011 to 2016 enumerates 10 Strategic Goals where the 10th Goal is "to construct COMELEC's own main office building and field offices for improved morale efficiency and independence"; ITSacC WHEREAS, the COMELEC has express, implied and broad powers which must be liberally construed in order to strengthen its functional and fiscal independence and to achieve its Strategic Goals; NOW THEREFORE, the Commission on Elections, by virtue of the powers vested in it by the 1987 Constitution, the Omnibus Election Code, and other pertinent laws, RESOLVED, as it hereby RESOLVES to adopt a Joint Venture (JV) and lease framework for the implementation of its infrastructure projects with the participation of the private sector; and hereby further RESOLVES to promulgate the following rules and regulations for its JV and lease Projects: SECTION 1. Title. This Resolution shall be known as COMELEC JV AND LEASE FRAMEWORK. SECTION 2. Declaration of Policy. (a) It is hereby declared, as a policy, that the COMELEC as a constitutionally-created administrative agency shall enjoy and implement policies and programs that will ensure functional and fiscal independence in order to effectively and efficiently perform its constitutional and statutory mandates. (b) The construction of its own building and similar facilities shall be undertaken pursuant to Strategic Goal No. 10 of COMELEC under Resolution No. 9254 (2011). This will result in "improved morale, efficiency and independence" and when undertaken with the private sector, shall be in furtherance of the State policy on private sector participation. SECTION 3. Rationale. In pursuing JVs and leases, the COMELEC shall be guided by the following value drivers: (a) JVs and leases shall be undertaken in furtherance of and in support of COMELEC's mandate and strategic plan. (b) JVs and leases shall promote the pooling and community of resources, sharing of responsibilities and functions, joint governance and decision-making, mutual innovation, and profit, income, dividends, risk and loss allocation. (c) JVs and leases shall only be undertaken to serve the public good, address scarcity of resources, and create fiscal space for core activities and functions of the COMELEC. (d) JVs and leases shall encourage the accelerated implementation of infrastructure projects, allow for technology transfer and innovation, improve efficiency and quality of service, provide value-for-money and good economic value, and enhance economic and social benefits. (e) Procurement of JV Projects and the selection of the Private Sector Proponent (PSP) or lessees must be competitive and must be undertaken through open competitive bidding or competitive challenge, or in certain cases, limited negotiations. Competition must be legitimate, fair and honest. The selection of the PSP, co-venturer or lessee must be done in compliance with the requirements of competition, transparency and accountability. SECTION 4. Rules of Interpretation. This Resolution and the provisions hereof shall be liberally interpreted to accomplish the policy and objectives herein set forth. SECTION 5. Definition of Terms. As used in this Resolution, the following terms shall mean: (a) Competitive Challenge or Swiss Challenge An alternative selection process wherein third parties or challengers shall be invited to submit comparative proposals to an unsolicited proposal to the COMELEC. Accordingly, the PSP or lessee who submitted the unsolicited proposal to the COMELEC, or the original proponent, is accorded the right to match any superior offers given by a comparative PSP/lessee/challenger. (b) Competitive Selection or Bidding or Open Competition A method of selection or procurement initiated and solicited by the COMELEC, based on a transparent criteria, which is open to participation by any interested party. (c) Contractual JV A legal and binding agreement under which the JV Partners shall perform the primary functions and obligations under the JV Agreement (JVA). (d) Cost Sharing The capital expenses made by the COMELEC associated with the establishment of an infrastructure development facility such as the provision of access infrastructure, lease of property, right-of-way, and any partial financing of the project. (e) Negotiated Projects The instances where the desired project is the result of an unsolicited proposal from a PSP or lessee, where the COMELEC has failed to identify an eligible PSP for a desired JV or lease activity when there is only one qualified bidder after subjecting the same to a competitive selection or bidding. (f) Private Sector Proponent (PSP) The private sector entity which shall be the JV partner or lessee of the COMELEC for the JV or lease project or activity and which shall have an adequate track record in the concerned industry, as well as technical capability and financial base consisting of equity and firm commitments from reputable financial institutions, to provide, upon award, sufficient credit lines to cover the total estimated cost of the project to implement the said project. The PSP or lessee may be a consortium or private JV. Political parties, incumbent public officials, candidates in previous elections, and contributors of a political party or candidate are disqualified from being the PSP or lessee. (g) Project Study A study prepared by the COMELEC in a competitive selection or a PSP or lessee when submitting an unsolicited proposal which discusses the technical and financial aspects of the JV or lease project, the proposed project, the benefits to the COMELEC, among other considerations. (h) Public-Private Partnerships (PPP) PPP is a form of legally enforceable contract between the COMELEC and a PSP or lessee, where each party assumes specified functions, bears certain risks, provides contribution or renders some obligation, and earns benefits and revenues from the JV or lease arrangement. (i) Unsolicited Proposal Refers to project proposals submitted by a PSP or lessee to the COMELEC to undertake a JV Project or lease arrangement without a formal solicitation issued by the COMELEC. SECTION 6. JV Arrangement. (a) A JV, a PPP modality, is a contractual arrangement between the COMELEC and a PPP or a group of private sector entities as co-venturers involving a community or pooling of interests in the performance of the service, function, business, activity or components of the JV project, with each party having a right to direct and govern the policy in connection therewith, and with a view of sharing income, dividends, revenues, profits, risks and losses, subject to the JVA. (b) The term of the JV activity should be a fixed period not to exceed a maximum of fifty (50) years. (c) The JV activity shall not carry with it divestment, disposition or transfer of ownership of the JV activity or project, or COMELEC asset but can include leases, sub-leases or usufruct of properties. HEScID SECTION 7. Contributions and Shareholdings. (a) The co-venturers or parties to a JV may contribute money, capital, services, extend goodwill, assets including equipment, land, intellectual property or anything of value, or a combination of any or all of the foregoing to the JV arrangement. The COMELEC may provide for cost-sharing mechanisms. (b) The COMELEC may contract a loan the proceeds of which can be earmarked for the JV activity. (c) The COMELEC shall be a minority shareholder while the PSP shall be majority equity or shareholder, except in the case where fifty percent (50%) of the contribution is owned or made by COMELEC. (d) The share of each JV party shall be set as fixed or determinable percentages or values either based on an overall or across the board assignment of contributions, revenues, profits, losses, risks and functions; or on specific assignment of contributions and functions to each JV party, provided that, the agreed percentage share is maintained and that joint governance is ensured where the COMELEC shall have representation in the governing structure based on in proportionate share at the minimum. (e) Subject to the terms of the competitive selection process and agreement of parties, the COMELEC may be entitled to share greater than its contribution; (f) Each party shall be entitled to dividends, profits, income and revenues and will bear the corresponding risks, losses and obligations in proportion to its share, either based on gross or net revenues or income, unless the parties agree that the COMELEC will have greater share in the dividends, profits, income and revenues and/or bear lower risk and percentage loss than what it contributes to the JV arrangement. (g) For as long as the COMELEC is involved in the JV undertaking, the PSP shall not sell or transfer its interest in the JV arrangement without the express written consent of the COMELEC. (h) The share of the COMELEC in the JV arrangement may be advanced, in full or in part, by the PSP where the PSP shall be paid from the future revenues due the COMELEC either by set-off or actual payment. SECTION 8. JV Agreement. (a) The JVA shall govern the relationship between the co-venturers, the COMELEC and PSP. The JVA shall be a public document which can be freely accessed by the public, shall be posted in two conspicuous places of the COMELEC and uploaded in the website of the COMELEC. (b) The JVA shall set forth the protect, contributions of the Parties, term, performance indicators, targets, governance structure, revenues or share of each party, among other provisions. (c) All JVAs shall be signed by the COMELEC Chairman with prior consent of the COMELEC en banc. (d) The COMELEC Chairman shall no proceed with the award signing of the contract if there are material deviations from the parameters and terms and conditions set forth in the proposal/tender documents that tend to increase the financial exposure, liabilities and risks of the COMELEC or any other factors that would cause disadvantage to government and any deviation that will cause prejudice to losing PSPs. (e) The regulation of the JV shall be pursuant to the JVA. A duty executed JVA shall be respected and not impaired, and shall be binding on the successor administration. SECTION 9. JV Projects. (a) The COMELEC, regardless of the cost, may undertake infrastructure and development projects. (b) In particular, the COMELEC may enter into JV arrangements for government buildings, warehouses, offices, transport systems, communications, information technology networks and database infrastructure not in connection with the casting and counting of votes, transmission and canvassing of results, and similar projects. (c) Parties to a JV jointly undertake an activity in order to accomplish either an integrated or multi-use arrangement, or a specific goal or purpose. (d) Procurement made by the COMELEC using public funds shall be subject to the Government Procurement Reform Act (GPRA) and its revised Implementing Rules and Regulations. Procurement made by the PSP using private funds shall not be covered by said statute. (e) The revenues, funds, expenditures and contributions of the COMELEC shall be subject to the audit examination by the Commission on Audit (COA). Revenues, funds, expenditures and contributions of the PSP shall be subject to audit by a private auditing firm. SECTION 10. Lease Arrangements. (a) A lease shall a contractual arrangement between the COMELEC and a PSP or lessee whereby the latter shall construct a building or facility on COMELEC property, operate, maintain, and manage services by the PSP or lessee including working capital and/or improvements to an existing infrastructure or development facility leased by the PSP from the COMELEC for a fixed term and for a valuable consideration. (b) Under a lease arrangement, the PSP or lessee retains revenues collected from customers or users of commercial or sub-leased premises and makes a specified lease payment to COMELEC pursuant to a lease agreement. The COMELEC may be entitled to a share of the revenues and/or building(s) or facility(ies) that will be constructed by the PSP or lessee at no or partial cost to COMELEC as considerations for the lease. aCSTDc (c) The maximum term of the lease is fifty (50) years. (d) The lease shall not include the transfer of ownership of any COMELEC property or facility to PSP, lessee or any private individual or entity. (e) The lease agreement shall identify the COMELEC property, lease term, milestones, lease payments or revenues due the COMELEC, limitations, creation of an oversight committee where the COMELEC is represented, among other provisions. SECTION 11. Procedural Requirements. (a) If the COMELEC opts to select a PSP or lessee using either Competitive Selection or Competitive Challenge, the COMELEC in the Competitive Selection must prepare, and the PSP or lessee in the Competitive Challenge approach must submit a Project Study. The costs of preparing the Project Study may be reimbursed by the winning PSP or lessee to the COMELEC or Original Proponent, as the case may be, subject to the terms of the bidding/challenge. (b) The Bids and Awards Committee of the COMELEC shall act as the JV/Lease Selection Committee (JVL-SC) for purposes of selecting a PSP or lessee for a specific JV or Lease Project. The JVL-SC with the approval of the COMELEC Chairman may invite non-voting members from the National Economic and Development Authority (NEDA) and COA to observe the proceedings and make suggestions. (c) The JVL-SC shall be responsible for all aspects of the pre-selection and selection process, including, among others, the preparation or evaluation of the Project Study and Selection/tender documents; determination of the minimum designs, performance standards/specifications, economic parameters; drafting or evaluation of the JVA or lease agreement; publication of the invitation to apply for eligibility and submission of proposals or comparative proposals; defining the eligibility requirements, appropriate form and amount of proposal securities, and schedules of the selection and challenge processes; pre-qualification of prospective PSPs, lessees, bidders or challengers; conduct of pre-selection conferences and issuance of supplemental notices; interpretation of the rules regarding the selection process; conduct of the election or challenge process; evaluation of the legal, financial and technical aspects of the proposals; resolution of disputes between PSPs or lessees and challengers; defining the appeals mechanisms; and recommendation for the acceptance of the proposal and/or for the award of the JVA or lease agreement. (d) All recommendations of the JVL-SC shall be submitted to the COMELEC Chairman for consideration and approval. The COMELEC Chairman shall approve the tender documents and the draft JVA or lease agreement before they are issued to the prospective PSPs/lessees/bidders. (e) All JVAs and lease agreements must be signed by the COMELEC Chairman with prior consent and authorization from the COMELEC en banc. (f) During the consideration of the JVA or lease agreement by the COMELEC en banc, a public consultation shall be conducted. (g) After the signing of the JVA or lease agreement by the COMELEC Chairman, the JVL-SC shall issue the Notice of Award to the PSP or lessee. SECTION 12. Competitive Procedures. (a) In the Selection of the PSP or lessee, the COMELEC may undertake a Competitive Selection, Limited Negotiations, or Competitive Challenge selection process. (b) The Competitive Selection procedure shall consist of the following steps: advertisement, issuance of instructions and tender documents, conduct of pre-bid conferences, eligibility screening of prospective bidders, receipt and opening of bids, posting or proposal securities, evaluation of bids, post-qualification, and award of JVA or lease agreement. (c) Where the COMELEC has failed to identify an eligible PSP or lessee for a desired JV or lease activity when there is only one qualified bidder after subjecting the same to a competitive selection or bidding or where the desired JV or lease project is the subject of an unsolicited proposal from a PSP or lessee, Limited Negotiations may take place. The negotiations will cover all the technical and financial aspects of the JV or Lease project or activity; provided, that the minimum designs, performance standards/specifications and economic parameters stated in the Project Study and Terms of Reference for the Competitive Selection are complied with. The COMELEC Chairman shall approve the terms of the Limited Negotiations, prior to the award of the contract to the PSP or lessee. (d) The Competitive Challenge process shall be divided into three (3) Stages, described as: Stage One/Unsolicited Proposal The steps are: 1. A PSP or lessee submits an unsolicited proposal accompanied by a Project Study and draft JVA or lease agreement to the COMELEC for a proposed JV or Lease Project. 2. The JVL-SC shall make an initial evaluation of the proposal and determination of the eligibility of the PSP or lessee. 3. Upon completion of the initial evaluation, the COMELEC Chairman, upon recommendation of the JVL-SC, shall either issue a certificate of acceptance or non-acceptance of the proposal for purposes of detailed negotiations. Upon the issuance of the certificate of acceptance, no other proposal for the same project may be subjected to the competitive challenge process. IaHAcT 4. If there is more than one unsolicited proposal submitted for the same Project, the COMELEC Chairman, upon recommendation of the JVL-SC, may reject all proposals and pursue competitive selection, or accept the unsolicited proposal that is complete and provides the greater advantage and benefits to COMELEC. Stage Two/Detailed Negotiations The steps are: 1. The parties shall negotiate and agree on the terms and conditions of the JV or Lease Projects concerning its technical and financial aspects. 2. Once negotiations are successful, the Parties shall issue a joint certification stating that an agreement has been reached and specifying the eligibility of the PSP or lessee and the technical and financial aspects of the JV or Lease Project as agreed upon. 3. The issuance of the certification commences the activities for the solicitation for comparative proposals. 4. However, should negotiations not result to an agreement acceptable to both parties, the COMELEC shall have the option to reject the proposal by informing the PSP or lessee in writing stating the grounds for rejection and thereafter may accept a new proposal from other PSPs or lessees or subject the JV or Lease Project to a Competitive Selection. Stage Three/Competitive or Swiss Challenge The steps are: 1. The JVL-SC shall prepare the tender documents. The eligibility criteria used in determining the eligibility of the PSP shall be the same as those stated in the tender documents. Proprietary information shall, however, be respected and protected, and treated with confidentiality. As such, it shall not form part of the tender and related documents. 2. The COMELEC Chairman shall approve all tender documents including the draft JVA or lease agreement before the publication of the invitation for comparative proposals. 3. The JVL-SC shall publish the invitation for comparative proposals. 4. The PSP or lessee or Original Proponent shall post the Proposal security at the date of the first day of the publication of the invitation for comparative proposals in the amount form stated in the tender documents. 5. In the evaluation of proposals, the best offer shall be determined to include the original proposal of the PSP or lessee. If the COMELEC determines that an offer made by a comparative PSP, lessee or challenger other than the negotiated terms with original proponent is superior or more advantageous to the COMELEC than the original proposal, the PSP or lessee who submitted the original proposal shall be given the right to match such superior or more advantageous offer. Should no matching offer be received within the stated period, the JV or Lease Project shall be awarded to the comparative PSP or lessee submitting the most advantageous proposal. If a matching offer is received within the prescribed period, the JV or Lease Project shall be awarded to the original proponent. If no comparative proposal received by the COMELEC, the JV or Lease Project shall be immediately awarded to the original proponent. 6. In the event that the Original Proponent is not able to match the superior offer of the challenger, the winning challenger shall reimburse, within 30 days from issuance of the notice of award, the original proponent the cost of preparing the project study, provided, that this reimbursement arrangement and the cost of preparation of the reference for the competitive challenge, and that the JVL-SC has determined that the cost is reasonable. (e) The COMELEC Chairman, upon recommendation of the JVL-SC, shall have the authority to adopt and prescribe the appropriate schedules and timelines for each selection process: provided that the periods are reasonable and will not undermine free competition, transparency and accountability. SECTION 13. Application for Other PPP Laws and Regulations. Whenever relevant and appropriate as determined by the COMELEC en banc, in the absence of a specific provision to the contrary, and upon recommendation of the JVL-SC, the provisions of the GPRA, the Build-Operate-Transfer Law, and the 2008 or 2013 JV Guidelines adopted by the NEDA shall apply in a suppletory manner. SECTION 14. Separability Clause. If, for any reason, any section or provision of this Resolution or any part thereof, or the application of such section, provision or portion is declared invalid or unconstitutional, the remainder thereof shall not be affected by such declaration. SECTION 15. Repealing Clause. All resolutions or parts thereof inconsistent with the provisions of this Resolution are hereby repealed or modified accordingly. SECTION 16. Effectivity. This Resolution shall take effect on the seventh (7th) day after its publication in two (2) daily newspapers of general circulation in the Philippines. Let the Education and Information Department cause the publication of this Resolution in two (2) newspapers of general circulation in the Philippines. SO ORDERED. DCcAIS (SGD.) SIXTO S. BRILLANTES, JR. Chairman (SGD.) LUCENITO N. TAGLE Commissioner (SGD.) ELIAS R. YUSOPH Commissioner (On Leave) CHRISTIAN ROBERT S. LIM Commissioner (On Official Business) AL A. PARREO Commissioner (SGD.) LUIE TITO F. GUIA Commissioner (SGD.) ARTHUR D. LIM Commissioner Published in The Philippine Daily Inquirer on September 17, 2014.