Guidelines in the Development of Public Private Partnership Projects of the Department of Agriculture

January 29, 2013

DA ADMINISTRATIVE ORDER NO. 004-13

 

WHEREAS, the President during his first State of the Nation Address (SONA) announced that Government shall implement national development projects through Public Private Partnership (PPP) schemes; TDCAIS

WHEREAS, Government recognized that the PPP scheme is one solution to finance and implement national development projects given the country's lack of funds and the private sector's interest to invest in such projects and take part in the country's development;

WHEREAS, PPPs shall also enable Government to immediately and efficiently deliver the needed interventions supportive of economic growth and development, and contribute to food security and self sufficiency, sustainable agriculture and fisheries, natural resource management and climate change resilience at no or minimal public spending through private sector involvement;

WHEREAS, heeding the call of the President, various Government agencies including the Department of Agriculture (DA) initiated moves to identify and develop PPP project proposals for possible immediate implementation;

WHEREAS, there is a need to define the mechanisms and procedures in processing the Department's PPP project proposals to rationalize and make efficient the use of meager government resources.

NOW, THEREFORE, this Order which adopts this set of guidelines in the development of PPP projects 1 of the Department of Agriculture is hereby issued.

I. Definition of Terms

1. Brownfield Project — refers to projects for PPP involving the operation, rehabilitation and/or expansion of existing facilities or services.

2. DA or Department of Agriculture — refers to any unit or office in the Department of Agriculture-Office of the Secretary, including its Regional Field Units, bureaus, attached agencies and attached corporations.

3. Greenfield Project — refers to projects for PPP involving the development of new facilities or services.

4. ICC or Investment Coordination Committee — refers to an inter-agency committee established under Executive Order No. 230 on Reorganizing the National Economic and Development Authority, engaged in rationalizing national public investments and expenditures.

5. Implementing Agency (IA) — refers to any bureau, office, commission, authority or agency of the Department of Agriculture including Government-Owned or Controlled Corporations (GOCC), Government Financial Institutions (GFIs) and State Universities and Colleges (SUCs), authorized by law or their respective charters to contract for and undertake agricultural infrastructure or development projects.

6. Infrastructure or Development Project — refers to a range of basic physical and organizational structures needed for the operation of a society, or the services and facilities necessary for an economy to function, including but not limited to, power plants, highways, ports, airports, canals, dams, hydropower projects, water supply, irrigation, telecommunications, railroad and railways, transport systems, land reclamation projects, industrial estates or townships, housing, government buildings, tourism projects, public markets, slaughterhouses, warehouses, solid waste management, information technology networks and database infrastructure, education and health facilities, sewerage, drainage, and dredging.

7. Investment Incentive — refers to any form of contribution and/or support, which the Government or any of its Agencies/LGUs including GOCCs may extend to the private sector partner in accordance with Section 13.2 of the Revised Implementing Rules and Regulations of the BOT Law, 2012. TaISEH

8. IRR or Implementing Rules and Regulations — refers to the Revised Implementing Rules and Regulations of the BOT Law, 2012.

9. PDMF or Project Development and Monitoring Facility — refers to the revolving fund constituted pursuant to Section 2a and Section 6 of Executive Order No. 8 s. 2010, with financing from the Government of the Philippines and the Government of Australia through the Asian Development Bank (ADB) available for PPP-related activities.

10. PDP or Philippine Development Plan — is a national planning document, prepared at the start of a new national leadership, which highlights the aspirations and goals of the country for the next six (6) years, including sector and sub-sector outcomes.

11. PPP or Public-Private Partnership — is a range of possible contractual arrangements between the public and private entities to provide and/or deliver infrastructure and/or development projects or services, with the roles and responsibilities of the parties/partners defined and the allocation or revenues/costs/risks sharing among public and private partners are clearly defined.

12. PPP Center — refers to the successor of the BOT Center and Coordinating Council of the Philippine Assistance Program (CCPAP), the agency mandated under Section 12 of the Act, to coordinate and monitor projects implemented under the Act, pursuant to Administrative Order No. 105 (s. 1989), as amended by Administrative Order No. 67 (s. 1999), as amended by Administrative Order No. 103 (s. 2000), and Executive Order No. 144 (s. 2002), as amended by Executive Order No. 8 (s. 2010).

13. PPP Modality — refers to any of the contractual arrangements or schemes, as well as other variations thereof as may be approved by the President, by which infrastructure and/or development projects may be undertaken pursuant to the provisions of the revised Implementing Rules and Regulations of the BOT Law.

14. PPP SSF or Public-Private Partnership Strategic Support Fund — is a lump-sum appropriation lodged in the budget of Implementing Agencies to fund the government share for PPP project components.

15. Private Sector Partner — refers to the private sector entity which shall have contractual responsibility for the project 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.

16. Project Proponent — refers to the source and/or endorser of the proposal which will be subjected to the PPP process.

17. Public Investment — refers to government projects that contribute to the achievement of the societal goals, sector targets and outcomes laid out in the Philippine Development Plan (PDP).

18. Solicited Proposal — refers to project proposals identified by an agency as part of the list of priority projects in accordance to Section 2.3 of the Revised Implementing Rules and Regulations of the BOT Law, 2012. HAIaEc

19. Transaction Advisor — refers to the consultant or consulting firm that will be engaged to help the agency determine and structure a PPP project.

20. Unsolicited Proposal — refers to project proposals submitted by the private sector, not in response to a formal solicitation or request issued by an agency/LGU, to undertake Infrastructure or Development Projects which may be entered into by the agency/LGU subject to the requirements/conditions prescribed under Rule 10 of the Revised Implementing Rules and Regulations of the BOT Law.

II. General Framework

A.Policy Directions

1. Overall Direction

 As provided for in Republic Act 7718, otherwise known as the Philippine BOT Law (Annex 1), the Government recognizes the essential role of the private sector as the main engine for national growth and development. In accordance with this, investment incentives will be provided to stimulate private resources for the purpose of financing the construction, operation and maintenance of infrastructure and development projects normally undertaken by the Government.

 To help achieve the high and sustained economic growth needed to generate productive employment opportunities, Government will provide an enabling environment for private sector investment through a stable macroeconomic environment and sound and consistent public policies.

2. Agriculture and Fishery Sectors Direction

Government envisions that through PPPs, it can readily provide the necessary infrastructure and support facilities/services that will develop the country's agriculture and fishery sectors.

The President, in his first State of the Nation Address in 2010 explicitly stated that "if we can fix our food supply chain with the help of the private sector, instead of importing, we will hopefully be able to supply for the needs of the global market".

It is further envisioned that PPP shall contribute to the agriculture and fishery sectors goal in attaining food security and self sufficiency, sustainable agriculture and fisheries, natural resource management and climate change resilience.

B. Eligible Projects

1. The types of projects eligible for processing under these guidelines are as follows:

a. Projects with Revenue Potential

i. Greenfield projects on public investments and/or infrastructure or development projects normally financed and operated by the public sector; TEaADS

ii. Greenfield projects on investments that are supposed to be led by the private sector and are highly needed by stakeholders but which are not in place;

iii. Brownfield projects on public and private support infrastructures, facilities and services which are either underutilized and non-operational but still has the potential for revenues and/or are highly needed by stakeholders, as well as those which need upgrading and/or expansion.

b. Essential Non-Revenue Generating Projects

Greenfield and brownfield projects on public investments and/or infrastructure or development projects which have strong economic impacts and are urgently needed by stakeholders.

2. The list of eligible projects includes, but not limited to, the following:

a. Irrigation, including incidental benefits;

b. Farm- and coast-to market access;

c. Postharvest, cold chain and processing/value-adding support services;

d. Production centers for agriculture and fishery inputs and machinery/equipment;

e. Farm mechanization services;

f. Food and product transport, terminals and logistics services;

g. Laboratory and testing centers and other related services for agriculture and fishery products;

h. Fish ports, landing, and other support services;

i. Markets, abattoirs and related facilities;

j. Corporate farming, production/farming/contract growing project, food security buffer project; assistance of the government to private sectors on CARP areas, resettlement, etc.

k. Technology commercialization, research & development projects with infra support components such as development of hybrid planting materials and commercialization of farm machinery;

l. Research, training and extension center and services;

m. Marketing system, IT infrastructure, trading and auction, projects related to the establishment of market system infrastructure, such as agricultural commodity exchange system and bonded warehouses;

n. DA-related government buildings and housing projects;

o. Agri-tourism projects such as coastal and mariculture parks and related facilities and services; and CDHSac

p. Climate change mitigation and adaptation infrastructure projects and related facilities.

C. Eligible Proponents

1. Project proponents eligible under these guidelines are the operating units of the Department of Agriculture which includes the Office of the Secretary, the Regional Field Units, Bureaus, and Attached Agencies and Corporations. 2

2. Proponents from the private sector are only eligible for unsolicited proposals, in accordance to conditions set in Rule 10 of the Revised Implementing Rules and Regulations (IRR) of the BOT Law, 2012 (Annex II).

D. Classification of Proposals

1. Proposals for PPP can be classified based on the origin or project proponent:

a. Solicited — proposals from any unit of the Department of Agriculture which forms part of the list of priority projects in accordance to Section 2.3 of the Revised Implementing Rules and Regulations of the BOT Law;

b. Unsolicited — proposals from private entity duly endorsed by relevant units of the Department of Agriculture.

2. Both solicited and unsolicited PPP project proposals are covered under this set of guidelines. Priority, however, is accorded to solicited project proposals particularly in terms of assistance that will be provided to the project.

3. Unsolicited Proposals may only be accepted for processing provided that all conditions set in Rule 10 of the IRR of the BOT Law are met.

E. Evaluation Parameters

1. Generally, proposals should:

a. Be consistent with Government policies and thrusts for the agriculture and fishery sectors provided for under the following:

i. Agriculture and Fisheries Modernization Act (AFMA);

ii. Fisheries Code;

iii. Philippine Development Plan (PDP);

iv. Agriculture and Fisheries Modernization Plan (AFMP);

v. DA Commodity Programs;

vi. DA Climate Change Adaptation Program;

vii. National Organic Agriculture Program; and

viii. Presidential and other Government pronouncements and directives for the agriculture and fishery sectors, e.g., Investments Priority Plan (IPP). aEHTSc

b. Consist of investment requirements or be included under:

i. DA's Public Investment Program (PIP);

ii. Comprehensive Integrated Infrastructure Program (CIIP) and development program of the proponent agency or the sector it represents as submitted to NEDA; and/or

iii. Commodity/Agency Roadmaps or Master Plans.

c. Complement and support current Government initiatives such as asset reform, job generation, farmers' profitability, etc.

2. For proposals to be applied for pre-Feasibility and Feasibility Studies, a PPP project proposal must, at minimum:

a. Provide indicative figures for revenue potential of projects provided for in Section III.B.1.a.

b. Provide justifications that are consistent with the provisions of Section III.B.1.b for non-revenue generating projects.

3. For proposals with ready Feasibility Studies (FS) for Investment Coordination Committee (ICC) approval, the FS must:

a. Be prepared in the last 3 years;

b. Be technically feasible and sustainable;

c. Show market viability in terms of product sales or service availment;

d. Be financially and economically viable based on indicators set by the ICC;

e. Present a cost sharing scheme wherein proposed government counterpart is consistent with the IRR of the BOT Law;

f. Have a project management structure that will oversee and ensure the smooth implementation of the project;

g. Present the best PPP scheme to be adopted during project implementation; and

h. Present a risk profile (identified risks, allocation among stakeholders and mitigating measures) for the project.

III.  Financing for Project Development

1. The Project Development and Monitoring Facility (PDMF) is intended to fund and facilitate the pre-investment activities of potential PPP projects such as the preparation of pre-feasibility studies, feasibility studies, tender documents and project contracts.

2. The PDMF is administered by the NEDA-PPP Center. This can be tapped by the agency in accordance to Project Development and Monitoring Facility (PDMF) Guidelines (Annex III) and the National Budget Circular No. 538 on the Guidelines in the Submission of Agency Budgetary Proposal to be funded from Public-Private Partnership Strategic Support Fund (PPP SSF) and Project Development and Monitoring Facility (PDMF) issued by the Department of Budget and Management on 22 March 2012 (Annex IV). 3 IDTHcA

3. For funding sources other than the PDMF, relevant provisions of this set of guidelines should apply.

IV. Organizational Structure

A. Internal Approval

1. PPP Steering Committee (PSC)

a. Composition

Chair	:	The Undersecretary in charge for DA PPP initiatives
Co-Chair	:	Undersecretary for Policy and Planning
Members	:	Assistant Secretary for Policy and Planning
		Assistant Secretary for Finance
		Assistant Secretary for Operations
		Chair, PPP Prequalification, Bids and Awards Committee (PBAC)
		Chair, Technical Committee

b. Duties and Responsibilities

i. For proposals requiring the preparation of pre-Feasibility Study, review and render decision on the proposals for endorsement to NEDA PPP Center for PDMF assistance;

ii. For proposals with ready Feasibility Study, review and render decision on the proposals for endorsement to the NEDA to undergo the ICC approval process;

iii. Review and recommend approval of the Secretary on policies and provisions that will amend all or part of these guidelines; and

iv. Meet as necessary to render decisions and recommendations pertaining to its duties and responsibilities.

B. Project Development

1. Technical Committee (TechCom)

a. Composition

Chair	:	Head, DA PPP Coordinating Staff
Co-Chair	:	Director, Project Development Service (PDS)
Members	:	Director, Planning Service (PS)
		Director, Field Operations Service (FOS)
		Chief, Legal Division

b. Duties and Responsibilities

i. For proposals requiring the preparation of pre-Feasibility Study, review and recommend approval to the PPP Steering Committee of the proposals for endorsement to NEDA PPP Center for PDMF assistance; CSIcTa

ii. For proposals with ready Feasibility Study, review and recommend approval to the PPP Steering Committee of the proposals for endorsement to the NEDA to undergo the ICC approval process;

iii. Review and recommend approval of the PPP Steering Committee on policies and provisions that will amend all or part of these guidelines;

iv. Engage resource persons as may be needed in the performance of its duties and responsibilities;

v. The Chair or his alternate will act as the representative of the PPP TechCom in the DA Project Clearing House as provided for in the Transitory Clauses of Administrative Order No. 29, series of 2012 (Annex V); and

vi. Meet as necessary to render decisions and recommendations pertaining to its duties and responsibilities.

2. Technical Secretariat (TechSec)

a. Composition

Coordinating Staff of the DA PPP Unit.

b. Duties and Responsibilities

i. Ensure that all documentary requirements are complied with;

ii. Conduct evaluation and prepare Project Evaluation Reports on proposals for PDMF application and for ICC approval;

iii. Endorse qualified proposals to the Technical Committee for action;

iv. Provide technical support to the Technical Committee and the PPP Steering Committee during project deliberation;

v. As necessary, create a Technical Working Group to assist in the review and evaluation of proposals;

vi. Recommend measures to improve the mechanism in processing proposals; and

vii. Perform other tasks as may be directed by the TechCom and the PSC.

Figure 1. DA PPP Organizational Structure

V. Process Flow and Procedures

A. Identification and Conceptualization

1. Proposals for possible assistance under these guidelines shall be identified and formulated by an eligible proponent; cEaACD

2. Proposals must be listed as eligible projects, and compliant to the evaluation parameters; and

3. Proposals for the preparation of pre-Feasibility and Feasibility Studies shall be submitted in the form of the PDMF Project Concept Note (Annex VI) prescribed by the NEDA PPP Center in accordance to the Project Development and Monitoring Facility (PDMF) Guidelines. 4

B. Screening and Evaluation

1. The Technical Secretariat shall receive proposals in the form of the PDMF Project Concept Note for pre-FS and FS preparation, or Project Feasibility Studies/Project Business Case when available;

2. The TechSec shall review submissions in compliance of the requirements, and notify the project proponent accordingly;

3. The proposal shall be evaluated based on the evaluation parameters provided for in Section III.E;

4. The Technical Secretariat shall prepare a Project Evaluation Report and notify the project proponent of the findings in the submission;

5. Qualified proposals will be endorsed by the Technical Secretariat to the Technical Committee for action; and

6. Unsolicited proposals will be subjected to Rule 10 of the IRR of the BOT Law. HTCSD

C. Project Deliberation and Internal Approval

1. The Technical Secretariat will present the proposal and its merits to the Technical Committee and the PPP Steering Committee. The project proponent will provide additional inputs as necessary during the deliberation;

2. Proposals which were favorably considered by the Technical Committee will be elevated to the PPP Steering Committee for approval;

3. The Secretary will confirm the approval of the PPP Steering Committee on the proposal through an endorsement letter to the NEDA PPP Center for PDMF application and/or NEDA for ICC processing and approval; and

4. Unsolicited proposals will be subjected to Rule 10 of the IRR of the BOT Law.

D. Facilitation of Pre-ICC Approval Preparations

The Project Development and Monitoring Facility (PDMF) guidelines will be observed and complied with during this stage.

E. Facilitation of ICC Approval

1. Upon completion of all requirements by the ICC, the project proposal will be endorsed to the NEDA by the Secretary;

2. The proposal will undergo review, evaluation and approval in accordance to the ICC and NEDA Board approvals process; and

3. Once approved, the DA PPP Unit/Technical Secretariat should propose for the project's budget allocation in accordance to DBM National Budget Circular 538.

Figure 2.DA PPP Process Flow

 

Figure 3.NEDA PPP Center's PDMF Process Flow

 

VI. Effectivity

This Order shall take effect immediately. CSAaDE

(SGD.) PROCESO J. ALCALASecretary

Attachments available upon request.

 

Footnotes

1. A set of guidelines to cover policies, processes and procedures referring to tendering, contract execution and management, and monitoring of PPP-implemented projects shall be prepared separately from these guidelines.

2. Local Government Units proposing for PPP projects are covered by another set of guidelines, the "Developing Public-Private Partnerships in Local Infrastructure and Development Projects (A PPP Manual for LGUs)" issued by the NEDA-PPP Center. The manual can be downloaded from NEDA-PPP Center's official website, http://ppp.gov.ph/.

3. Additional information on the utilization and availment of the PDMF assistance can be found in the Project Development and Monitoring Facility (PDMF) Guidelines issued by the NEDA-PPP Center on October 2011, and is downloadable at the NEDA-PPP Center's official website, http://ppp.gov.ph/.

4. For financing sources other than PDMF, proposals should comply with the particular source's prescribed format.