Implementing Rules and Regulations of P.D. No. 1594, as Amended

April 1992

IMPLEMENTING RULES AND REGULATIONS OF PRESIDENTIAL DECREE NO. 1594, AS AMENDED

I. Detailed Engineering

1. No bidding and/or award of contract for a construction project shall be made unless the detailed engineering investigations, surveys and designs for the project have been sufficiently carried out in accordance with the standards and specifications prescribed by the Head of office/agency/corporation concerned or his duly authorized representatives.

2. Detailed engineering shall proceed only on the basis of the feasibility or preliminary engineering study made which establishes the technical viability of the project and conformance to land use and zoning guidelines prescribed by existing laws. The findings contained in the feasibility study, if undertaken for the project, shall be examined. If, in the course of this exercise, it is found that changes would be desirable in the design standards or principal features, as proposed, specific recommendations for such changes shall be supported by detailed justifications, including their effects on the cost, and (if necessary) the economic justification.

3. A schedule of detailed engineering activities shall include the following:

a. Survey

b. Site Investigation

c. Foundation Investigation

d. Soils and Materials Investigation

e. Preparation of Design

f. Preparation of Specifications

g. Preparation of Quantity and Cost Estimates

h. Preparation of Program of Work

i. Preparation of Proposed Construction Schedule (and estimated Cash Flow for projects with Schedule over Six (6) Months)

j. Preparation of Site or Right-of-Way Plans including Schedule of Acquisition

k. Preparation of Utility Relocation Plan

l. Preparation and Submission of Design Report

m. Environmental Impact Statement for Major Project

n. Preparation of Bid/Tender Documents

4. Work under detailed engineering shall include but not necessarily be limited to the following:

a. Design Standards — Design standards shall be in accordance with appropriate standards adopted by the office/agency/corporation concerned. Design standards for structure shall take into account, among other things, the seismicity of the area to determine the optimum safety of structures and to minimize possible earthquake damage.

b. Field Surveys — Necessary field surveys which may include aerial, hydrographic, topographic, sub-surface, monumenting and other surveys shall be carried out. All survey works shall be prepared in a manner satisfactory to carry out accurate design and production of plans.

c. Contract Plans — The following plans shall be prepared for each construction contract in accordance with guidelines and standards adopted by the office/agency/corporation concerned, incorporating at least the following:

(1) Site development plan

(2) Plans and profile sheet

(3) Typical sections and details

(4) Drainage details where applicable

(5) Structural plans at appropriate scales indicating all details necessary in order that the complete structure can be set out and constructed

(6) Other details which may be required by the Head of office/agency/corporation

d. Quantities — All construction quantities shall be computed to a reasonable accuracy of plus or minus fifteen percent (15%) to avoid variation orders.

e. Special Provisions — Specifications shall be prepared for specific items of work or methods of construction, measurement and payment under each contract, which are not covered by Standard Construction and Material Specifications adopted by the office/agency/corporation concerned.

f. Unit Prices — These shall be prepared for each contract using costs based on reasonable approved current prices, divided into local and foreign exchange costs, as the case may be.

g. Agency Estimate — The Agency Estimate of construction cost shall be prepared by official(s) duly designated by the Head of office/agency/corporation concerned or by his duly authorized representative. It shall be approved by the Head of the office/agency/corporation or his duly designated representative.

THE HEAD OF OFFICE/AGENCY/CORPORATION MAY KEEP THE APPROVED AGENCY ESTIMATE (AAE) CONFIDENTIAL UNTIL THE OPENING OF BIDS OR PUBLICLY ANNOUNCE THE AAE THROUGH ADVERTISEMENT OR IN THE INSTRUCTIONS TO BIDDERS. IN CASES WHERE the approved agency estimate (AAE) IS HELD CONFIDENTIAL, IT shall be finalized on the day of the bidding after all bids have been received and shall be held confidential and signed, sealed and ready for presentation on the day of the opening of bids/tenders.

The estimate should show the local and foreign currency requirements, as the case may be.

The estimate should show for each major work item, such as earthwork, roadwork, and massive concreting, the components for equipment rentals, fuel, labor, materials and overhead.

h. Bid/Tender Documents — The Bid/Tender Documents shall include: Instructions to Bidders, General Conditions, Addenda, Itemized Bill of Quantities, Day Work Schedule, Form of Bid Security, Performance Security, Contract Plans and Specifications, a Draft Contract which will include a price escalation clause, and all other information required for local and international bidding procedures.

For purposes of these implementing rules and regulations, securities shall be defined to mean any of the following cash, manager's checks, cashier's checks, letters of credit, bank drafts/guarantees and surety bonds.

i. Program of Work — Before prosecuting any project, the necessary program of work shall be prepared and submitted for approval. In no case shall construction funds be remitted to field offices or construction work on a project be started before the program of work is approved, in accordance with existing laws.

No program of work for any project shall be approved without detailed engineering.

The program of work shall include, among other things, estimates of the work items, quantities and costs and a PERT/CPM network of the project activities. The program of work shall cover at least a usable portion of the project and no construction shall be started for portions of the project that are less than usable, except projects requiring stage construction, in which case continuity of construction up to the completion of a usable portion must be assured.

j. In the preparation of the bidding documents, the government shall make an estimate of the actual number of working days required to complete the project through PERT/CPM analysis of the project activities and corrected for holidays and weekends. Likewise, the government shall make an estimate of the number of rainy/unworkable days considered unfavorable for the prosecution of the works at the site, WHICH SHALL BE INDICATED IN THE TENDER DOCUMENTS, and incorporate the same in the corrected actual number of working days determined above, and shall be made the basis of the total contract time. The estimated number of rainy/unworkable days considered unfavorable for the prosecution of the works at the site shall be made known before the date of bidding through the instructions to bidders, invitation to bid and other bidding documents for the purpose of guiding both the government and winning contractors in the request for an approval of time extensions. WITHOUT THE ESTIMATED NUMBER OF RAINY/UNWORKABLE DAYS ESTABLISHED BEFORE THE BIDDING DATE AND KNOWN TO ALL PARTICIPATING BIDDERS, THE CONTRACT TIME IS PRESUMED TO HAVE EXCLUDED THE UNFAVORABLE CONDITIONS.

II.IB Instructions to Bidders: These Provisions Refer to Pre-Construction Activities from Advertisement to Contract Award

IB 1 WHO MAY BE ALLOWED TO BID

1. The following may become contractors for government projects:

a. Filipino

(1) Citizens (single proprietorship)

(2) Partnership or corporation duly organized under the laws of the Philippines, and at least seventy five percent (75%) of the capital stock of which belongs to Filipino citizens.

b. Contractors forming themselves into a joint venture i.e., a group of two or more contractors that intend to be jointly and severally responsible for a particular contract, shall for purposes of bidding/tendering comply with LOI 630, and, aside from being currently and properly licensed by the Philippine Contractors Accreditation Board (PCAB), shall comply with the provisions of R.A. 4566 and its Implementing Rules and Regulations, provided that joint ventures in which Filipino ownership is less than seventy five percent (75%) may be prequalified where the structures to be built require the application of techniques and/or technologies which are not adequately possessed by a Filipino entity as defined above.

c. Foreign contractors for internationally bid foreign-assisted projects as may be required by foreign financial institutions.

IB 2 ORGANIZATION OF THE PBAC

1. Each office/agency/corporation shall have in its head office or in its implementing offices a Prequalification, Bid and Award Committee (PBAC) which shall be responsible for the conduct of prequalification, bidding, evaluation of bids and recommending award of contracts. Each committee shall be composed of the following:

a.	Chairman (regular)	-	At least third ranking official of the
	office/agency/corporation
b.	Executive Officer and	-	Legal Officer of the
	Secretary [regular]		office/agency/corporation
c.	Member [regular]	-	Technical member designated by the
	head of office/agency/corporation
d.	Member [provisional]	-	At least two, with experience in the
	type of project to be bid and in project
	management, duly designated by the
	head of office/agency/corporation on a
	project to project basis.
e.	Members from the	-	To ensure the transparency of bidding
	private sector		process, ONE QUALIFIED
			REPRESENTATIVE FROM A DULY
			RECOGNIZED CONSTRUCTORS'
			ASSOCIATION AND one qualified
			representative from any of the
			following organizations:
			(1) End-user group or non-
			governmental organization to be
			designated by the head of the
			office/agency/corporation
			concerned
			(2) Philippine Institute of Certified
			Public Accountants
			(3) Philippine Institute of Civil
			Engineers
			BOTH REPRESENTATIVES SHALL
			BE NON-VOTING MEMBERS.

2. Government owned or controlled corporations shall organize their own PBACs, the members of which shall be appointed by their respective boards preferably along the same line as other government offices.

3. Non-infrastructure agencies — that is, agencies other than the Department of Public Works and Highways, the Department of Transportation and Communication, their attached agencies and other Infrastructure Corporations — that do not possess an in-house technical capability to constitute their own PBACs shall cause the designation of either of the two infrastructure departments mentioned above whichever is concerned, to undertake the Prequalification, bid and award services, as well as the preparation of project plans and designs and supervision of construction.

IB 3 INVITATION TO BID

1. For locally funded projects, contractors shall be invited to bid through:

a. Advertisement for at least three (3) times within a reasonable period depending upon the size and complexity but in no case less than two (2) weeks in at least two (2) newspapers of general circulation which have been regularly published for at least two (2) years before the date of issuance of the notices or announcements and at the same time posting copies thereof at any conspicuous place in the office/agency/corporation concerned if the project cost is more than P1,000,000. However, for projects costing P1,000,000 and below OR FOR PROJECTS AUTHORIZED TO BE BID BY THE REGIONAL/DISTRICT OFFICES INVOLVING COSTS AS MAY BE DELEGATED BY THE HEAD OF OFFICE/AGENCY/CORPORATION, the invitation to bid shall be advertised at least once within a week in a newspaper of local circulation which has been regularly published for at least six (6) months before the date of issuance of the notices or announcements within the REGION where the project is situated, or through posting of notices in the premises of municipal/provincial offices, or through other forms of media such as radio and television, PROVIDED THAT BASED ON THE AGENCY'S SHORT LIST OF CONTRACTORS OR REFERRAL WITH THE INTER-AGENCY COMMITTEE ON REGISTRATION AND CLASSIFICATION OF CONTRACTORS, THERE ARE AT LEAST FOUR CONTRACTORS INDIGENOUS TO THE REGION DULY CLASSIFIED AND REGISTERED TO UNDERTAKE SUCH PROJECTS.

b. Additionally, in the case of projects requiring special technology, direct invitation of contractors known for their capacity to undertake such type of projects.

2. For foreign-financed/assisted projects, contractors are invited under the same procedures above and/or in accordance with procedures established by, and agreed upon with, the lending/financing institution.

IB 4 ISSUANCE OF QUALIFICATION STATEMENTS/FORMS

1. The Prequalification, Bid and Award Committee (PBAC) or the Prequalification Committee, as the case may be shall provide prospective bidders with the Notice to Prequalification and other relevant information regarding the proposed work, including a brief technical description of the work as to size, type, major items and other important features of the work to guide them in evaluating their capabilities and decide whether or not to participate in the bidding of a specific project.

2. The following qualification statements shall be required of interested contractors:

a. Certificate of Registration and Classification

b. Pre-C — Contractor's Confidential Prequalification Statement for the Project

3. Pre-C shall be required by the contracting government office agency/corporation for every project in which the contractor intends to bid. It shall be submitted not later than the deadline set in the published Invitation to Bid, after which date no Pre-C shall be submitted and received.

4. The following papers shall, among others, comprise Pre-C. Each office/agency/corporation shall have the discretion to specify whether any of the documentation listed below shall form part of the Pre-C subject to revision in the event the situation of the contractor has materially changed at the time of submission of the Pre-C.

a. Statement of completed construction projects in the last three years, government and private. The statement shall include the nature and value of the project, original and actual project schedule, the location of the project, the name and address of the owner, the financial institutions from whom guarantees, credit lines, loans and other financial accommodations were secured for such projects, and the aggregate outstanding from each institution in each year.

b. Detailed statement showing a list of all on-going construction projects, government and private, as well as awarded and/or approved contracts not yet started. This statement shall include the value of the project, percentage of time elapsed, percentage of physical accomplishment and scheduled date of completion.

c. Actual employment or contract to employ duly qualified project manager and project engineer who have managed or supervised at least a project of similar nature as to type and cost (escalated).

d. An organization chart and a complete qualification and experience data sheet of key personnel.

e. List of owned equipment and those pledged exclusively for the project.

5. All Prequalification documents shall be under oath signifying their correctness and authenticity. These shall be accompanied by a letter authorizing the head of office/agency/corporation or his duly authorized representatives to verify any or all of the documents submitted.

IB 5 CLASSIFICATION AND REGISTRATION OF CONTRACTORS

1. An inter-agency committee composed of representatives from the Department of Public Works and Highways, the Department of Transportation and Communications, the Office of the President of the Philippines in the absence of a Department of Energy and the Construction Industry Authority of the Philippines (CIAP) shall classify and register, or predisqualify, the contractors who have submitted ARC-C statements, certificates of registration and classification of contractors previously approved by the Inter-Agency Committee shall be deemed valid until the same shall have expired, revoked and/or upgraded/downgraded.

2. The inter-agency committee shall be chaired by and based at the offices of the CIAP which shall provide secretariat services through the Philippine Contractors Accreditation Board (PCAB). It shall formulate uniform guidelines, criteria, and procedures for the classification of contractors to be adopted by all offices/agencies/corporations concerned.

3. The classification shall be made by matching the contractors with the types or categories of projects (e.g., highways, irrigation, flood control, water supply, buildings, power, etc.), considering their magnitude, degree of complexity, cost, and construction time, on the one hand, and the experience or track record, financial resources, equipment capability, organization and technical personnel of the contractor, on the other. These shall provide, among other things, that, for similar types of project (e.g., buildings), the offices/agencies/corporations shall adopt a common classification system.

4. A contractor may not be qualified to bid for contracts in a class higher than for which he has been classified. Bidding for projects larger than the small (or lowest) category shall be open to all contractors above that category, provided that a contractor may not bid for a project with a cost exceeding the ceiling of his class. Bidding for projects within the small category shall be limited only to small contractors.

5. The Inter-Agency Committee shall examine and evaluate the contractor's confidential Application for Registration and Classification (ARC-C), together with all attached supporting papers to determine whether all requirements (legal, financial, equipment, technical, experience and organization) have been duly complied with.

6. The following documents shall, among others, comprise ARC-C:

a. Certified xerox copy of Contractor's License for the current year.

b. Certified xerox copy of Privilege Tax Receipt (PTR) for the current year.

c. Description of the organization including its objectives and the names, nationalities and construction experiences of key officials/engineers.

d. Detailed financial statements (balance sheets and profit and loss statements) for at least the current year, or for a longer period depending on the size or complexity of the project at the discretion of the Head of office/agency/corporation, as reflected in his Income Tax Return duly filed with and received by the BIR. In the case of joint ventures, the financial statements of each individual member entity shall be shown.

e. List of equipment owned.

f. Experience record.

g. In the case of foreign contractors allowed to bid and submit proposals under these rules and regulations, a certification from their respective embassies/consulates that they are bonafide contractors.

h. Articles of partnership or incorporation.

7. For large and complicated projects, emphasis shall be on the technical expertise and experience of the prospective bidders. And for small projects, emphasis shall be on the financial capability of the prospective bidder. The track record, including work performance and financial capability of the contractor for the last three years, shall be scrutinized, and actual verification shall be made when there is doubt in authenticity of any item in his prequalification statements.

8. The Inter-Agency Committee shall examine carefully the organization and the equipment capability of the prospective bidder.

9. The Inter-Agency Committee shall check the financial contracting capacity (FCC) of the prospective bidder. The FCC shall be his present net worth as shown in his balance sheet and reflected in his latest Income Tax Return (duly filed with and received by the BIR) times twelve (12).

10. The Inter-Agency Committee shall check whether the applicant, or any one of the members in case of a joint venture, is presently suspended. If the applicant or any member of the joint venture is suspended, the same shall be a ground for predisqualification. When the applicant is a new contracting firm, the names of the incorporators shall be checked against the list of suspended contractors. If the controlling stockholder(s) are found as such, the applicant firm shall be predisqualified.

11. After undertaking the above processes, the inter-agency committee shall, as the case may be, either classify and register the contractor for the current year, the validity of which shall be consistent with that prescribed under the guidelines on classification and registration formulated in accordance with these rules and regulations, or predisqualify the contractor, giving the reasons therefor.

IB 6 PREQUALIFICATION OF CONTRACTORS FOR SPECIFIC CONTRACTS

1. A bidder must be found to be prequalified to undertake the subject contract based on his prequalification statements as evaluated by the PBAC.

2. Notwithstanding the prequalification of a contractor, the Government reserves the right to review his prequalification statements and other relevant information before the approval of the contract. Should such review uncover any misrepresentation made in the prequalification statements, or any change in the situation of the contractor to downgrade the substance of his prequalification statements, the Government shall disqualify him from submitting a bid or from obtaining any award or contract.

3. In the evaluation of the Pre-C statement, the PBAC shall review, among other things, the technical capability of the contractor to carry out the subject contract as gauged by the extent and quality of his relevant experience and performance and track record, the suitability of his available construction equipment, and the adequacy of his proposed project organization and personnel. Up-to-date information on these aspects shall be considered.

4. To determine the financial capacity of the contractor, the PBAC shall require the contractor to submit a statement from a bank or a financing institution authorized/licensed by the Central Bank of the Philippines that the bank/financing institution commits to provide the contractor, if awarded the contract, a credit line in an amount specified by the agency which is equal to the average operating expenses of the project for two (2) months or ten percent (10%) of the approximate total project cost, whichever is less, or a cash deposit certificate in the amount specified in the foregoing. In the case of a cash deposit certificate submitted by the winning bidder, withdrawal of said cash deposit shall be subject to approval by the concerned contracting government agency.

5. The PBAC shall also check the bidder's performance in his on-going government and private projects. If there is a reported negative slippage of more than 15%, unsatisfactory quality of work and/or performance of his obligations under his contracts in any of these projects, the PBAC shall verify the cause(s) of such reported negative slippage, unsatisfactory quality of work and/or performance of said obligations, and if these are found due to his fault or negligence, the bidder shall be predisqualified from the subject contract.

6. After undertaking the above processes, the PBAC (or the Postqualification Committee as the case may be) shall mark the prequalification documents "Prequalified," together with the classification of the contractor, or "Predisqualified," as the case may be, countersigned by the Chairman, for review and approval of the Head of office/agency/corporation concerned or his duly authorized representative. Accordingly, the PBAC (or the Prequalification Committee, as the case may be), shall duly inform the prospective bidders who have been prequalified within SEVEN (7) CALENDAR days after approval. Applicants predisqualified should likewise be informed stating therein the grounds for their predisqualification. Those predisqualified are given SEVEN (7) CALENDAR days upon receipt of notice within which to appeal for reconsideration.

IB 7 ISSUANCE OF PLANS, SPECIFICATIONS, PROPOSAL BOOK FORM(S) AND DRAFT CONTRACT

1. The PBAC (or the Prequalification Committee, as the case may be), shall issue the plans, specifications, proposal book form(s) for the project to be bid to contractor-applicants prequalified under Pre-C prequalification under the relevant classification, upon payment of the corresponding price thereof to the collecting/disbursing officer of the office/agency/corporation concerned in accordance with the following schedule:

	Estimated Project Cost	Issuance of Plans, Specifications,
	(in Pesos)	Proposal Book Form(s)
	and Draft Contracts
a.	Up to one (1) million	15 days before the date of bidding
b.	Above one (1) million	30 days before the date of bidding
	up to five (5) million
c.	Above five (5) million	45 days before the date of bidding
	up to ten (10) million
d.	Above ten (10) million	60 days before the date of bidding
	up to one hundred (100)
	million
e.	Above one hundred	90 days before the date of bidding
	(100) million

2. The aforementioned schedules shall be considered as prescribed minimums and may be extended depending on the complexity of the project to be bid subject to the approval of the office/agency/corporation head concerned.

3. In case of simple or repetitive or standardized jobs where time is of the essence, the head of office/agency/corporation may reduce the above time of issuance to not less than fifty percent (50%).

4. A Draft Contract shall be issued to the prospective bidders to form part of the bid documents.

IB 8 INTERPRETATION OF BID/TENDER DOCUMENTS AND OTHER SUPPLEMENTAL NOTICES

1. If a prospective bidder is in doubt as to the meaning of any part of the bid documents, he may submit a written request for an interpretation to the head of office/agency/corporation concerned allowing sufficient time for a reply to reach him before submission of his bid. Any substantive interpretation given will be issued by the Government in the form of a Supplemental Notice, furnishing copies thereof to all prospective bidders.

2. The government may also issue to all prospective bidders Supplemental Notices at least SEVEN (7) CALENDAR days prior to the date of opening of bids for purposes of clarification or modification of the bid documents. Receipt of all Supplemental Notices shall be duly acknowledged by each prospective bidder prior to submittal of bids and compliance thereto shall be indicated on the bid form. Oral interpretation of the bid documents shall not be binding.

3. Pre-bid conference(s) may be conducted at the discretion of the Government or upon written request by any or all of the prospective bidders subject to the approval of the office/agency/corporation. For projects with an approximate cost of P20 million or more, at least one (1) pre-bid conference is required. Said pre-bid conference(s) shall be held at the place and time to be designated by the head of office/agency/corporation concerned which shall not be later than FOURTEEN (14) CALENDAR days prior to opening of bids. For this purpose, foreign prospective bidders shall be advised through their local representatives. In the absence of local representatives, cables shall be sent to contractors.

IB 9 PROSPECTIVE BIDDER'S RESPONSIBILITY

1. The prospective bidder shall be responsible for having taken steps to carefully examine all of the bid documents and also have acknowledged all conditions, local or otherwise, effecting the carrying out of the contract work, and to have arrived at an estimate of the facilities available and needed for the project. Failure to do so shall be at the prospective bidder's risk.

2. It shall be the sole responsibility of the prospective bidder to determine and to satisfy himself by such means as he considers necessary or desirable as to all matters pertaining to the project, including the location and the nature of the work; climatic conditions; the nature and condition of the terrain; geological conditions at the site; transportation and communication facilities; the requirement and the availability of materials, labor, water, electric power and roads; the locations and extent of aggregate source; and other factors that may affect the cost, duration and execution of the work. The prospective bidder by the act of submitting his bid, acknowledges that he has inspected the site and determined the general characteristics of the project and the condition indicated above. An affidavit of such site inspection from the prospective bidders SHALL THEREFORE BE REQUIRED.

3. The Government shall not assume any responsibility regarding erroneous interpretations or conclusions by the prospective bidder out of the data furnished by the Government.

4. Prior to submittal of bids, the prospective bidders are considered to have become familiar with all existing laws, decrees, ordinances, acts and regulations of the Philippines which may affect or apply to the operations and activities of contractors. However, in cases where the cost of the awarded contract is affected by any applicable new laws, decrees, ordinances, regulations and other acts of government promulgated after the date of bidding for publicly-bid and sealed-bid contracts of date of contract for negotiated contracts, a contract price adjustment shall be made or appropriate relief shall be applied on a no loss-no gain basis provided such is not covered by the provisions on price escalation hereof.

IB 10 BID/TENDER AND AWARD

IB 10.1 PREPARATION OF BIDS, BID BONDS, AND PREQUALIFICATION STATEMENT

1. Bids shall be prepared on the proposal book form in accordance with the Instructions to Bidders.

2. The original copy of the bid shall be accompanied by a bid security in an amount not less than two-and-one-half percent (2-1/2%) of the total bid price in the form of cash, certified check, manager's check, or bank draft/guarantee confirmed by a local bank (in the case of foreign contractor bonded by a foreign bank) against any reputable bank or letter of credit issued by a commercial bank or surety bond, callable on demand, issued by a surety or insurance company duly accredited by the Office of the Insurance Commission or any combination thereof as may be required by the Head of office/agency/corporation concerned payable to the office/agency/corporation as guarantee that the successful bidder shall within thirty (30) calendar days or less at the discretion of the Head of office/agency/corporation concerned, from receipt of Notice of Award, enter into contract with the Government and furnish the performance security for the faithful and complete prosecution of the work specified in the contract documents. Bids and bid securities shall be valid for a reasonable period to be determined by the Head of office/agency/corporation concerned as indicated in the Instruction to Bidders but in no case later than one hundred twenty (120) calendar days following the opening of the bids.

3. No bid securities submitted in the form of sureties of all complying bidders shall be returned after the opening of bids. Bid securities submitted in form other than sureties, such as cash, manager's check, cashier's check, irrevocable standby letter of credit and bank draft/guarantee, may be returned upon request of the bidder provided that he is not among the three lowest complying bidders and such withdrawal shall be construed as a waiver by the bidder for award of contract. Bid securities in the form of sureties shall be returned only after the successful bidder has signed the contract and furnished the performance security but in any case not later than the expiration of the bid security validity period indicated in the Instructions to Bidders.

IB10.2 SUBMISSION, OPENING AND ABSTRACTING OF BIDS/TENDERS

1. Bids in the prescribed bid form including its annexes as specified under Section 10.7-1.h shall be submitted in two (2) sealed envelopes with the name of the project to be bid and the name of the bidder in capital letters addressed to the PBAC (or to the Bid and Award Committee as the case may be) of the office/agency/corporation concerned. They shall be marked "Do not open before (date and time of opening of bids)".

2. The first envelope shall contain the following information/documents:

a. Authority of the Signing Official

b. Construction Schedule and S-curve

c. Construction Methods

d. Project Organizational Chart

e. Manpower Schedule

f. Equipment Utilization Schedule and duly executed Contract of Lease of all equipment and machineries which shall be intended for use exclusively for the project, if any

g. Affidavit of Site Inspection

h. Bid Security

i. Certification that the detailed estimates, Cash flow by quarter, and Payments Schedule are in the second envelope

It shall be opened first to determine the contractor's compliance with the above requirements.

3. The second envelope shall contain the following information/documents:

a. Bid prices in the bill of quantities

b. Detailed estimates

c. Cash flow by quarter and payments schedule

It shall be opened immediately after the opening of the first envelope and only if the contractor has complied with the requirements of Section IB 10.2-2 above.

4. Bids shall be received on or before the designated time and date to be eligible for consideration. Bids may be withdrawn only in writing before the time set for the opening of bids.

5. IN CASES WHERE the Approved Agency Estimate (AAE) IS HELD CONFIDENTIAL, IT shall be announced publicly by the Chairman of the PBAC before all bids are opened, read and recorded. Should there be only one (1) bidder, the AAE may be read as provided in Section IB 10.3-2.

6. A bid which is not accompanied by the required bid security shall be rejected outright.

7. Bids shall be opened at the place, date and time specified in the advertisement by the PBAC. The bidder or their duly authorized representative may attend the opening of bids. Every page of the original copies of all bids received and read must be initialed by all members of the PBAC and the auditor's representative.

8. After all bids have been received and opened, the corresponding Abstract of Bids shall be prepared. The Abstract of Bids shall be signed by all members of the PBAC attaching thereto all the bids with their corresponding bid securities and the minutes or proceedings of the bidding. The Abstract of Bids shall contain the following:

a. Name of the project and its location.

b. Time, date and place of bidding.

c. Names of bidders and their corresponding bids arranged from the lowest to highest showing their respective variances in percent from the Approved Agency Estimate, the amount of security and name of the issuing entity.

IB 10.3 EVALUATION OF BIDS

1. A bid which does not comply with the conditions or requirements of the bid documents shall be rejected by the PBAC (or the Bid and Award Committee as the case may be) giving the reason or reasons for its rejection. The Government, however, in the evaluation of bids received, reserves the right to waive the consideration of minor deviations in the bids received which do not affect the substance and validity of the bids.

2. At the time of opening of bids, there shall be at least two (2) competing bidders. In case there is only one bidder, the PBAC has the option to either:

a. IN CASES WHERE IT IS HELD CONFIDENTIAL, announce the AAE and open the bid (second envelope) and subsequently consider the lone bid for award provided that it complies with the requirements of Section IB 10.2-2 hereof, and provided further that it does not exceed the AAE; or

b. Return the second envelope of the lone bidder unopened and conduct a rebidding thru sealed canvass of at least five (5) qualified contractors within fifteen (15) days from the date of the failed opening of bids. However, for projects costing P3.0 million and below, the number of qualified contractors to be invited may be reduced to at least three (3). The prospective bidders shall not be limited to those previously prequalified for the project, and may include those whose classification is higher than that corresponding to the subject project, with the lone complying bidder automatically participating.

The bidders to be invited shall have shown satisfactory performance in previous projects undertaken for the government as may be determined by the head of office/agency/corporation concerned and shall have not incurred any delays in all its on-going government and private projects.

3. Should after undertaking the above processes, there is failure to award the contract within the limits prescribed under Section IB 10.4.1-1 hereof, the project shall be advertised anew for bidding after undertaking the procedure prescribed under Section IB 10.4.1-2 for failed bidding.

4. The respective PBACs of concerned government offices/agencies/corporations should normally complete the evaluation of bids not later than thirty (30) calendar days from the date of the opening of bids.

IB 10.4 AWARDING OF CONTRACT

IB 10.4.1 By Bid Contract

1. No award of contracts shall be made to a bidder whose bid price is higher than the allowable government estimate (AGE) or the Approved Agency Estimate (AAE), whichever is higher, or lower than seventy percent (70%) of the AGE. For purposes of these implementing rules and regulations, the AGE shall be equal to one half of the sum of the AAE and the average of all responsive bids. For purposes of determining the average of all responsive bids, bids higher than one hundred twenty percent (120%) of the AAE or lower than sixty percent (60%) of the AAE shall not be considered.

2. In the event that any of the following conditions should occur, the bidding shall be declared a failure and the office/agency/corporation concerned shall undertake a review of the AAE and the tender/bid and other related documents such as Instructions to Bidders, plans and technical specifications, standards and completion schedule, etc.:

a. When no bids are received

b. When all bids received are higher than one hundred twenty percent (120%) of the AAE or lower than sixty percent (60%) of the AAE

c. Failure to award the contract within the limits prescribed under Section IB 10.4.1-1

If found necessary, the AAE, including other related tender documents, shall be revised and the project shall be advertised anew for bidding subject to the approval of the office/agency/corporation head concerned. Such review and/or revisions however, including the approval by the office/agency/corporation head concerned of the necessary modifications, if any, shall be made not later than twenty (20) calendar days from the date of opening of bids.

3. All bidders who have been previously prequalified for the project shall automatically prequalify for the rebidding of the project.

4. The Government, however, reserves the right to reject any or all bids; to declare a failure of bidding if there is, among others, reason to suspect an evident collusion among contractors resulting in no competition; to waive any required formality in the bids received; and to disregard any bid which is obviously unbalanced, particularly in the major items. For purposes of these implementing rules and regulation, an unbalanced bid shall be defined as a bid containing one or more pay items that are thirty percent (30%) higher than the unit AGE in respect to major items whereas other pay items are priced lower than the unit AGE, major items being defined as pay items representing at least twenty percent (20%) of the AAE or the first two items having the highest percentage of the AAE or those indicated/specified in the Instructions to Bidders.

5. Unbalanced bids as defined above may be considered for award provided that the excess of the item bid price for the subject major item over one hundred thirty percent (130%) of the unit AGE is paid upon eighty percent (80%) completion of the entire project and full completion of the subject major item.

6. The right is also reserved to reject the bid of any bidder who (a) has previously failed to satisfactorily perform or complete any construction contract undertaken by him or (b) was prequalified on the basis of suppressed or false information.

7. In the event of refusal or failure of any complying bidder eligible for award to enter into contract within the stipulated time, the Government shall impose the appropriate sanctions provided in IB 10.5.

8. In the event of refusal, inability or failure of the lowest complying bidder eligible for award to make good his bid by entering into contract and to post his performance security within the time provided therefor, the second lowest complying bidder eligible for award shall be considered for award at his bid price provided that his bid shall not exceed the limits prescribed under Section IB 10.4.1-1 hereof. This rule shall likewise apply to the third lowest complying bidder eligible for award in case the second lowest complying bidder eligible for award shall refuse. Otherwise, the project shall be advertised anew for bidding after undertaking the procedure prescribed under Section IB 10.4.1-2.

9. If after rebidding, no bid still comes within the limits of award of contracts prescribed under Section IB 10.4.1-1 hereof, the project may be recommended to the head of office/agency/corporation concerned for prosecution by administration or by negotiated contract in accordance with existing laws, rules and regulations. The head of office/agency/corporation shall endorse the same to the Secretary concerned, as the case may be, for approval.

10. Normally within thirty (30) calendar days from the date the evaluation of bids shall have been completed, a decision on the results of the bid evaluation should be made. If the decision is to award the contract, the Notice of Award should be issued normally within seven (7) calendar days from the date the decision to award is made. For foreign-assisted projects, the decision to award the contract should be transmitted to the concerned foreign financial institution for concurrence as may be required normally within seven (7) calendar days from the date decision to award is made. Likewise, the Notice of Award should be issued by the concerned implementing agency normally within seven (7) calendar days from the date the concurrence of the concerned foreign financial institution shall have been secured. The successful bidder or his duly authorized representative should execute the contract with the office/agency/corporation concerned normally within fifteen (15) calendar days from receipt of the Notice of Award.

11. To guarantee the faithful performance of the contractor under the contract, he shall post upon the signing of the contract a performance security in the form of cash, manager's check, cashier's check, bank draft/guarantee confirmed by a local bank (in the case of foreign contractor bonded by a foreign bank), letter of credit issued by a reputable bank, surety bond, callable on demand, issued by the Government Service Insurance System or by surety or insurance companies duly accredited by the Office of the Insurance Commissioner, or a combination thereof, in accordance with the following schedule:

a. Cash, manager's check, cashier's check, irrevocable letter of credit, bank draft — five percent (5%) of the total contract price.

b. Bank Guarantee — ten percent (10%) of the total contract price.

c. Surety Bond — thirty percent (30%) of the total contract price.

12. This performance security shall be posted in favor of the office/agency/corporation concerned, and shall guarantee the payment of the amount of the security as penalty in the event it is established that the contractor is in default in his obligation thereunder.

13. In the execution of the performance security, the following conditions shall be complied with:

a. It shall be executed in accordance with the form prescribed therefor.

b. It shall be at least co-terminus with the final completion of the project.

c. The following provisions shall form part of the performance security: "The right to institute action on the penal bond pursuant to Act No. 3688 of any individual firm, partnership, corporation and association supplying the contractor with labor and material for the prosecution of the work is hereby acknowledged and confirmed."

14. Subject to the conditions of the contract, the performance security may be released by the office/agency/corporation concerned after the issuance of the certificate of completion of the project, provided that there are no claims for labor and materials filed against the contractor or the surety company.

15. Should any surety upon the bond for the performance of this contract become unacceptable to the Government, the contractor shall promptly furnish such replacement security as may be required from time to time up to the sum equal to the amount of the original surety.

16. The contractor shall post an additional performance security to cover any cumulative increase of more than ten percent (10%) over the original value of the contract as a result of adjustments in unit prices, and/or change orders, extra work orders and supplemental agreements. The contractor shall cause the extension of the validity of the performance security to cover approved contract time extensions.

17. In case of a reduction in the contract value and for partial utile work completed by the contractor and accepted by the Government and which in the judgment of the implementing department/agency/office/corporation concerned shall not affect the structural integrity of the entire project, the agency/office/corporation concerned shall allow a proportional reduction in the original performance security, provided that any such reduction is more than ten percent (10%) and that the aggregate of such reduction is not more than fifty percent (50%) of the original performance security.

IB 10.4.2 By Negotiated Contract

1. Negotiated contract may be entered into only where any of the following conditions exists and the implementing office/agency/corporation is not capable of undertaking the project by administration:

a. In times of emergencies arising from natural calamities where immediate action is necessary to prevent imminent loss of life and/or property.

b. Failure to award the contract after competitive public bidding for valid cause or causes.

c. Where the subject project is adjacent or contiguous to an ongoing project and it could be economically prosecuted by the same contractor, in which case, direct negotiation may be undertaken with the said contractor at the same unit prices ADJUSTED TO PRICE LEVELS PREVAILING AT THE TIME OF NEGOTIATION USING THE PARAMETRIC FORMULAE HEREIN PRESCRIBED WITHOUT THE 5% DEDUCTION and contract conditions, less mobilization cost, provided that he has no negative slippage and has demonstrated a satisfactory performance.

d. For contracts terminated in accordance with the provisions of Presidential Decree No. 1870 (Authorizing the government's take over by administration of delayed infrastructure projects or awarding of the contract to other qualified contractors) or similar laws or Section CI 8-3 and 4 (Liquidated Damages) hereof.

In cases a and b above, bidding may be undertaken through sealed canvass of at least three (3) qualified contractors. For case d, contract may be negotiated with the second lowest bidder for the project under consideration at the bidder's original bid price escalated to the date of contract negotiation using the parametric formulae contained herein reckoned from the date of the bidding, or bidding may be undertaken through sealed canvass of at least three (3) qualified bidders. Authority to negotiate contracts for projects under these exceptional cases shall be subject to prior approval by heads of agencies within their limits of approving authority.

2. Bonafide contractors whose ARC-C, Pre C and other prequalification papers are on file with the CIAP and/or the office/agency/corporation concerned and who have been classified under the type of project where the subject contract falls are eligible to be invited for negotiation. Other contractors not previously prequalified may also be accepted for prequalification for the subject project.

3. Contractor(s) duly prequalified for the project under consideration shall be furnished copies of the Instructions to Offerors, Plans, Specifications, Proposal Book Form, and other Tender Documents for their use in submitting their quotation and other information called for in the format. The contractors shall submit, simultaneously with their quotation, the bid security as stipulated above.

4. Negotiation may be made with the complying offerors in ascending order starting from the lowest complying offeror.

IB 10.4.3 Disclaimer

1. The Government assumes no obligation whatsoever to compensate or indemnify the bidders for any expenses or loss that they may incur in the preparation of their bid nor does the Government guarantee that an award will be made.

IB 10.5 ADMINISTRATIVE SANCTIONS

1. The following administrative sanctions shall be imposed for offenses/violations of contractors in the prequalification and bidding:

a. Suspension for one (1) year for first offense, disqualification for two (2) years for the second offense and perpetual disqualification for succeeding offenses:

(1) Misrepresentation of any information or concealment of a material fact in the sworn prequalification statements and/or bids.

(2) Submission of bids and/or detailed estimates that are identical to each other or to the Approved Agency Estimates.

(3) Other acts of the contractors which directly or indirectly tend to defeat the purpose of public bidding.

b. Forfeiture of bid security for first offense, and suspension of one (1) year for second offense, and perpetual disqualification for succeeding offense for refusal or failure of the proposed awardee to enter into contract, or failure to pose the required performance security, within the prescribed time.

IB 10.6 APPROVAL OF AWARDS AND CONTRACTS

1. The head of the Infrastructure Department concerned or his duly authorized representatives shall approve awards and contracts that are funded and/or implemented by that Department including agencies under or attached to it, within the limits of their approving authority.

2. Awards and contracts implemented by both infrastructure and non-infrastructure agencies shall be approved by their respective Secretaries or, in the case of agencies not attached to any department by the heads of office concerned within the limits of the approving authority granted them by the President of the Philippines.

3. Beyond the limits of the approving authority of the abovementioned officials, awards and contracts shall be submitted to the President of the Philippines or his authorized representative for approval.

4. In no case shall award of contracts be made beyond the bid security validity period as specified in the Instructions to Bidders. In no case shall the contractor be compelled to accept the award beyond the said validity period.

IB 10.7 DOCUMENTS COMPRISING THE CONTRACT

1. The following documents shall form part of the contract:

a. Contract Agreement

b. Conditions of Contract

c. Drawings/Plans

d. Specifications

e. Invitation to Bid

f. Instructions to Bidders

g. Addenda

h. Bid Form including the following Annexes:

(1) Authority of the Signing Official

(2) Bid Prices in the Bill of Quantities

(3) Detailed Estimates

(4) Construction Schedule and S-Curve

(5) Construction Methods

(6) Project Organizational Chart

(7) Manpower Schedule

(8) Equipment Utilization Schedule and duly executed Contract of Lease of all equipment and machineries which shall be intended for use exclusively for the project, if any

(9) Cash flow by quarter and Payments Schedule

(10) Affidavit of Site Inspection

i. Performance Security

j. Prequalification Statements

k. Credit Line issued by an authorized bank in an amount equal to the average operating expenses of the project for two (2) months or ten percent (10%) of the total project cost, whichever is less

l. Notice of Award of Contract and Contractor's "Conforme" thereto

m. Other Contract Documents that may be required by the office/agency/corporation concerned.

IB 10.8 SUPPORTING DOCUMENTS

1. To facilitate the approval of the contract, the following supporting documents shall be submitted:

a. Duly Approved Program of Work and Cost Estimates

b. Certificate of Availability of Funds

c. Approved Agency Estimate (AAE) and Allowable Government Estimate (AGE)

d. Abstract of Bids

e. Resolution of the PBAC or the PBAC recommending Award

f. Approval of Award by Approving Authority

g. Concurrence of Lending Institution in case of Foreign-assisted Projects

h. Other pertinent documents as may be reasonably required by existing laws.

IB 10.9 APPROVAL OF CONTRACT

1. Contracts should normally be approved/disapproved by the head of office/agency/corporation concerned in accordance with existing laws, rules and regulations within fifteen (15) calendar days from the date the successful bidder or his duly authorized representative shall have executed the contract with the office/agency/corporation concerned and submitted all documentary requirements to perfect the contract foremost of which is the performance security. For contracts requiring the approval by the Office of the President, the same should normally be approved/disapproved within thirty (30) calendar days from the date that request for approval of such contracts shall have been received by the Office of the President.

IB 10.10 ISSUANCE OF NOTICE TO PROCEED

1. The concerned government office/agency/corporation should issue the Notice to Proceed (NTP) to the successful bidder normally not later than fifteen (15) calendar days from the date of approval of the contract by the concerned/authorized government official.

2. FOR PROJECTS WHEREBY THE NOTICE TO PROCEED (NTP) IS ISSUED AFTER 120 CALENDAR DAYS FROM THE BIDDING DATE, THE AWARDED BIDDER MAY REQUEST FOR A CONTRACT UNIT PRICE ADJUSTMENT USING THE PARAMETRIC FORMULAE UPDATED TO THE MONTH OF THE NTP. COMPUTATION OF THE UNIT PRICE ADJUSTMENT SHALL BE THE ORIGINAL CONTRACT UNIT PRICE MULTIPLIED BY THE FLUCTUATION FACTOR K WITHOUT DEDUCTING THE 5%. SUCH UPDATED UNIT PRICES SHALL BE USED AS BASIS FOR COMPUTING THE REGULAR PROGRESS BILLINGS, AND PRICE ESCALATION FOR WORK ACCOMPLISHMENT SHALL BE CALCULATED USING THE PARAMETRIC FORMULAE HEREIN PRESCRIBED AS APPLIED TO THE UPDATED UNIT PRICES RECKONED FROM THE MONTH OF THE NTP. ADJUSTMENT OF UNIT PRICES SHALL BE MADE WITHIN FOURTEEN (14) CALENDAR DAYS FROM THE DATE THE REQUIRED INDICES ARE AVAILABLE/ISSUED BY THE APPROPRIATE GOVERNMENT AGENCY.

IB 10.11 MONITORING OF CONTRACT AWARDS PROCESS

1. All government tendering agencies shall submit to the NEDA Committee on Infrastructure (INFRACOM), for monitoring purposes, the list of all contracts involving contract cost of P10.0 million and above approved by the appropriate authorities indicating such milestones as dates of advertisement, opening of bids, evaluation of bids, SUBMISSION TO AND CONCURRENCE OF FOREIGN FINANCIAL INSTITUTIONS, award of contracts, approval of contracts and Notice to Proceed normally within fifteen (15) calendar days from the date of Notice to Proceed.

III.CI Contract Implementation: These Provisions Refer to Activities During Project Construction, i.e., After Contract Award Until Completion, Except as May Otherwise Be Specifically Referred to Provisions Under Section II.IB — Instructions to Bidders

CI 1 VARIATION ORDERS — CHANGE ORDER/EXTRA WORK ORDER/SUPPLEMENTAL AGREEMENT

1. The increase/decrease in quantities or reclassification of items is usually due to change of plans, design or alignment to suit actual field conditions, or as a result of great disparity between the preconstruction plans used for purposes of bidding and the "as staked plans" or construction drawings prepared after a joint survey by the contractor and the government after award of the contract.

2. A Change Order may be issued by the implementing official after the same has been approved by the appropriate official if the amount of the change order is within the limits of the former's authority to approve original contracts and under the following conditions:

a. Where the aggregate cost of Change Order(s) is limited to 25% of the original contract cost excluding the effects of price escalation and provided that no major pay item (i.e., pay item which represents at least 20% of total estimated cost of the contract) shall be increased by more than 100% of its original cost. Change Orders exceeding 25% of the original contract price may be covered by a Supplemental Agreement. In the case of a repeat order, the Change Order should not exceed 100% of the escalated original contract price and the same shall be covered by a Supplemental Agreement. All Change Orders beyond 100% of escalated original contract price shall be subject to public bidding except where inseparable from the original scope of the project in which case negotiation with the incumbent contractor may be allowed, subject to approval by the appropriate authorities. All Change Orders shall be subject to price adjustment in accordance with duly approved guidelines.

b. Where there is a decrease in work due to deletion of work items or sections of the project.

c. Where there is a reclassification of an existing item, like earth excavation to solid rock excavation, due to latent conditions which where not known at the time of the bidding.

d. Where there is damage to structure and/or destruction of finished work in any section of the project due to force majeure or causes beyond the control of man.

3. For a unit-price contract, quantity overruns or underruns of not more than fifteen percent (15%) of the estimates per major pay item and twenty five percent (25%) per minor pay item in the Bill of Quantities need not be covered by Change Order provided that the same is authorized by the Approving Authority for the contract.

4. An Extra Work Order may be issued by the implementing official after the same has been approved by the appropriate official if the amount of the Extra Work Order is within the limits of the former's authority to approve original contracts and under the following conditions:

a. Where there are additional works needed and necessary for the completion, improvement or protection of the project which were not included as items of work in the original contract.

b. Where there are subsurface or latent physical conditions at the site differing materially from those indicated in the contract beyond the limit of the Change Order.

c. Where there are unknown physical conditions at the site of an unusual nature differing materially beyond the limits of Change Order from those ordinarily encountered and generally recognized as inherent in the work or character provided for in the contract.

d. Where there are duly approved construction drawings or any instruction issued by the implementing office/agency during the term of contract which involve extra cost.

5. As an absolute rule, Change Orders or Extra Work Orders should be issued only for additional/deletion of works necessary for the completion of the project and, therefore, should be within the limits stated above and the general scope of the project as bid and awarded.

6. Change Orders or Extra Work Orders may be issued on a contract upon the approval of competent authorities provided that the cumulative amount of such Change Orders or Extra Work Orders does not exceed the limits of the former's authority to approve original contracts.

7. A separate Supplemental Agreement may be entered into for all Change Orders and Extra Work Orders if the aggregate amount exceeds 25% of the escalated original contract price. A Supplemental Agreement may likewise be entered into for works immediately beyond the project limits but are immediately abutting the project under the same terms and conditions as the original contract provided that it does not exceed 100% of the escalated original contract price less the cost of mobilization and provided further that funds are certified as available and subject to approval by appropriate authority.

8. Any Variation Order (Change Order or Extra Work Order) shall be subject to the escalation formula used to adjust the original contract price less the cost of mobilization. In claiming for any Variation Order, the contractor shall, within seven (7) calendar days after such work has been commenced or after the circumstances leading to such condition(s) leading to the extra cost, and within 28 calendar days deliver a written communication giving full and detailed particulars of any extra cost in order that it may be investigated at that time. Failure to provide either of such notices in the time stipulated shall constitute a waiver by the contractor for any claim. The preparation and submission of Change Orders, Extra Work Orders or Supplemental Agreements are as follows:

a. If the Project Engineer believes that a Change Order, Extra Work Order or Supplemental Agreement should be issued, he shall prepare the proposed Order or Supplemental Agreement accompanied with the notices submitted by the contractor, the plans therefor, his computations as to the quantities of the additional works involved per item indicating the specific stations where such works are needed, the date of his inspections and investigations thereon, and the log book thereof, and a detailed estimate of the unit cost of such items of work, together with his justifications for the need of such Change Order, Extra Work Order or Supplemental Agreement, and shall submit the same to the Regional Director of office/agency/corporation concerned.

b. The Regional Director concerned, upon receipt of the proposed Change Order, Extra Work Order or Supplemental Agreement shall immediately instruct the technical staff of the Region to conduct an on-the-spot investigation to verify the need for the work to be prosecuted. A report of such verification shall be submitted directly to the Regional Director concerned.

c. The Regional Director concerned after being satisfied that such Change Order, Extra Work Order or Supplemental Agreement is justified and necessary, shall review the estimated quantities and prices and forward the proposal with the supporting documentation to the head of office/agency/corporation for consideration.

d. If, after review of the plans, quantities and estimated unit cost of the items of work involved, the proper office/agency/corporation committee empowered to review and evaluate Change Orders, Extra Work Orders or Supplemental Agreements recommends approval thereof, the head of office/agency/corporation, believing the Change Order, Extra Work Order or Supplemental Agreement to be in order, shall approve the same. The limits of approving authority for any individual, and the aggregate of, Change Orders, Extra Work Orders or Supplemental Agreements for any project of the head of office/agency/corporation shall not be greater than those granted for an original project.

CI 2 EXTRA WORK COSTING

1. The Government may, at any time by written order and without notice to the Sureties, direct the contractor to perform extra work necessary to and within the General Scope of the Contract. The contractor shall promptly proceed with the extra work involving an increase of less than twenty five percent (25%) of the original contract price or adjusted original contract price, the contractor shall be paid on the basis of the unit prices indicated in the original contract price or adjusted original contract price for work items similar to those in the original contract. If the contract does not contain any rate applicable to the additional or extra work, then suitable prices shall be agreed upon by the Government and the contractor. In the case of extra work involving an increase of twenty five percent (25%) or more of the original contract price or adjusted original contract price to be covered by a supplemental agreement, the price shall be agreed upon by the parties covering the entire extra work, under any of the following methods:

a. By applicable unit prices contained in the original price or adjusted original contract price for like work.

b. By cost-plus percentage basis where the cost represents the expenses incurred, exclusive of profit and contractor's tax, while the plus represents a certain percentage of the cost which shall not exceed fifteen percent (15%). The contractor shall be reimbursed for all actual necessary costs, as determined by:

(1) his direct labor costs;

(2) all materials used in the extra work;

(3) all supplies, fuel lubrications, power and other incidentals;

(4) reasonable base equipment rental for use of his construction equipment; and

(5) current rental rates for use of construction equipment not owned by the contractor.

2. If the parties are unable to agree on any of the modes of payment specified in Section CI 2-1.a, the extra work shall be done on a cost-plus percentage basis described in Section CI 2-1.b above.

3. The cost of the extra work done shall be submitted at the intervals to be determined by the Project Engineer in a satisfactory form which shall be approved or adjusted at once by the Government. Request for payment by the contractor for any extra work shall be accompanied by a statement, with the approved supporting forms, giving a detailed accounting and record of amount for which he claims payment. Said request for payment shall be included with the contractor's statement for progress payment.

CI 3 CONDITIONS UNDER WHICH CONTRACTOR IS TO START WORK UNDER VARIATION ORDERS AND RECEIVE PAYMENTS

1. Under no circumstances shall a contractor proceed to commence work under any Change Order, Extra Work Order or Supplemental Agreement unless it has been approved by the Secretary or his duly authorized representative. Exceptions to the preceding rule are the following:

a. The Regional Director may, subject to the availability of funds, authorize the immediate start of work under any Change or Extra Work Order under any or all of the following conditions:

(1) In the event of an emergency where the prosecution of the work is urgent to avoid detriment to public service, or damage to life and/or property; and/or

(2) when time is of the essence;

provided, however, that such approval is valid on work done up to the point where the cumulative increase in value of work on the project which has not yet been duly fully approved does not exceed five percent (5%) of the total original contract price, or P500,000 whichever is less;

provided, further, that immediately after the start of work, the corresponding Change/Extra Work Order shall be prepared and submitted for approval in accordance with the above rules herein set. Payments for works satisfactorily accomplished on any Change/Extra Work Order may be made only after approval of the same by the Secretary or his duly authorized representative.

b. For a Change/Extra Work Order involving a cumulative amount exceeding fifteen percent (15%) of the original contract price or original adjusted contract price, no work thereon may be commenced unless said Change/Extra Work Order has been approved by the Secretary or his duly authorized representative.

CI 4 ADVANCE PAYMENT

1. The Government shall, upon a written request of the contractor which shall be submitted as a contract document, make an advance payment to the contractor in an amount equal to fifteen percent (15%) of the total contract price, to be made in lump sum or at the most two installments according to a schedule specified in the Instructions to Bidders and other relevant Tender Documents.

2. The advance payment shall be made only upon the submission to and acceptance by the Government of an irrevocable standby letter of credit of equivalent value from a commercial bank or a guarantee payment bond, callable on demand, issued by a surety or insurance company duly licensed by the Office of the Insurance Commissioner and confirmed by the implementing agency.

3. The advance payment shall be repaid by the contractor by deducting 20% from his periodic progress payments, with the first repayment to be made when the contract value of the work executed and materials delivered shall equal or have exceeded twenty percent (20%) of the contract price and further refunds shall be done thereafter at monthly intervals. THE FIRST WORK ACCOMPLISHMENT EQUIVALENT TO 20% OF THE CONTRACT PRICE SHALL NOT BE SUBJECT TO THE 20% DEDUCTION.

4. The contractor may reduce his standby letter of credit or guarantee instrument by the amounts refunded by the Monthly Certificates in the advance payment.

CI 5 PROGRESS PAYMENT

1. Once a month or for an accomplishment of at least P1.0 million, the contractor may submit a request for payment for work accomplished. Such request for payment shall be verified and certified by the Government project engineer. Except as otherwise stipulated in the Instructions to Bidders, materials and equipment delivered on the site but not completely put in place shall not be included for payment.

2. THE GOVERNMENT SHALL HAVE THE RIGHT TO DEDUCT FROM THE CONTRACTOR'S PROGRESS BILLING SUCH AMOUNT AS MAY BE NECESSARY TO COVER THIRD PARTY LIABILITIES, AS WELL AS UNCORRECTED DISCOVERED DEFECTS IN THE PROJECT.

CI 6 RETENTION MONEY

1. Progress payments are subject to retention of ten percent (10%) referred to as the "retention money." Such retention shall be based on the total amount due to the contractor prior to any deduction and shall be retained from every progress payment until fifty percent (50%) of the value of works, as determined by the Government, are completed. If, after fifty percent (50%) completion, the work is satisfactorily done and on schedule, no additional retention shall be made; otherwise, the ten percent (10%) retention shall be imposed.

2. The total "retention money" shall be due for release upon final acceptance of the works. THE CONTRACTOR MAY HOWEVER REQUEST FOR THE SUBSTITUTION OF THE RETENTION MONEY FOR EACH PROGRESS BILLING WITH SURETY BONDS CALLABLE ON DEMAND OF AMOUNTS EQUIVALENT TO THE RETENTION MONEY SUBSTITUTED FOR AND ACCEPTABLE TO GOVERNMENT, PROVIDED THAT THE PROJECT IS ON SCHEDULE AND IS SATISFACTORILY UNDERTAKEN. OTHERWISE, THE TEN PERCENT (10%) RETENTION SHALL BE MADE. SAID SURETY BONDS, TO BE POSTED IN FAVOR OF GOVERNMENT SHALL BE VALID FOR A DURATION TO BE DETERMINED BY THE CONCERNED GOVERNMENT IMPLEMENTING AGENCY AND WILL ANSWER FOR THE PURPOSE FOR WHICH THE TEN PERCENT (10%) RETENTION IS INTENDED, I.E., TO COVER UNCORRECTED DISCOVERED DEFECTS AND THIRD PARTY LIABILITIES.

CI 7 CONTRACT COMPLETION

1. ONCE THE PROJECT REACHES AN ACCOMPLISHMENT OF 95% OF THE TOTAL CONTRACT AMOUNT, THE CONTRACT TIME MAY BE SUSPENDED AND THE GOVERNMENT UPON THE REQUEST OF THE CONTRACTOR MAY CREATE AN INSPECTORATE TEAM TO MAKE PRELIMINARY INSPECTION AND SUBMIT A PUNCH-LIST TO THE CONTRACTOR IN PREPARATION FOR THE FINAL TURNOVER OF THE PROJECT. SAID PUNCH-LIST WILL CONTAIN, AMONG OTHERS, THE REMAINING WORKS, WORK DEFICIENCIES FOR NECESSARY CORRECTIONS, AND THE SPECIFIC DURATION/TIME TO FULLY COMPLETE THE PROJECT AS AGREED UPON BY THE GOVERNMENT AND THE CONTRACTOR.

CI 8 LIQUIDATED DAMAGES

1. Where the contractor refuses or fails to satisfactorily complete the work within the specified contract time, plus any time extension duly granted and is hereby in default under the contract, the contractor shall pay the Government for liquidated damages, and not by way of penalty, an amount to be determined in accordance with the following formula for each calendar day of delay, until the work is completed and accepted or taken over by the Government:

LD	=	0.75 x CP/CT
WHERE:
LD	=	Amount of liquidated damages for each calendar day of delay.
CP	=	Total contract price minus the value of completed portions of the contract certified by the government office concerned as usable as of the expiration of the contract time, in pesos.
CT	=	Contract time plus any time extension duly granted to the contractor, in calendar days.

2. To be entitled to such liquidated damages, the Government does not have to prove that it has incurred actual damages. Such amount shall be deducted from any money due or which may become due the contractor under the contract and/or collect such liquidated damages from the retention money or other securities posted by the contractor whichever is convenient to the Government.

3. In case that the delay in the completion of the work exceed a time duration equivalent to twenty percent (20%) of the specified contract time plus any time extension duly granted to the contractor, the office/agency/corporation concerned may forfeit the contractor's performance security and takeover the prosecution of the project or award the same to a qualified contractor through negotiated contract.

4. In no case however, shall the total sum of liquidated damages exceed fifteen percent (15%) of the total contract price, in which event the contract shall automatically be taken over by the office/agency/corporation concerned or award the same to a qualified contractor through negotiation and the erring contractor's performance security shall be forfeited. The amount of the forfeited performance security shall be aside from the amount of the liquidated damages that the contractor shall pay the government under the provisions of this clause.

5. For terminated contracts where negotiation shall be undertaken, the procedures prescribed under section IB 10.4.2-1 shall be adopted.

CI 9 INCENTIVE BONUS

1. For major and urgent projects, except for negotiated contracts and provided that the Instructions to Bidders and other Tender and Contract Documents so prescribed, if the contractor completes the contract works ahead of schedule without any suspension order effected or extension of contract time granted, he may be given a bonus for saving the Government additional expenses for engineering and inspection services and for allowing the Government the early use of the completed facilities, in an amount to be determined in accordance with the following formula, but not to exceed ten percent (10%) of the contract price:

IB = 0.75 x VWA

Where:

IB = Total amount of incentive bonus

VWA = Value of works accomplished ahead of schedule

2. The completion of a project ahead of schedule shall also be considered a "plus-factor" in favor of the contractor in assessing/evaluating the prequalification for future projects.

CI 10 SUSPENSION OF WORK

1. The Government or its duly authorized representative shall have the authority to suspend the work wholly or partly by written order for such period as may be deemed necessary, due to force majeure or any fortuitous events or for failure on the part of the contractor to correct bad conditions which are unsafe for workers or for the general public to carry out valid orders given by the Government or to perform any provisions of the contract, or due to adjustment of plans to suit field conditions as found necessary during construction. The contractor shall immediately comply with such order to suspend the work wholly or partly.

2. THE CONTRACTOR OR ITS DULY AUTHORIZED REPRESENTATIVE SHALL HAVE THE RIGHT TO SUSPEND WORK OPERATION ON ANY OR ALL PROJECTS/ACTIVITIES ALONG THE CRITICAL PATH OF ACTIVITIES AFTER FIFTEEN (15) CALENDAR DAYS FROM DATE OF RECEIPT OF WRITTEN NOTICE FROM THE CONTRACTOR TO THE DISTRICT ENGINEER/REGIONAL DIRECTOR/CONSULTANT, AS THE CASE MAY BE, DUE TO THE FOLLOWING:

A. THERE EXIST RIGHT-OF-WAY PROBLEMS WHICH PROHIBIT THE CONTRACTOR FROM PERFORMING WORK IN ACCORDANCE WITH THE APPROVED CONSTRUCTION SCHEDULE.

B. REQUISITE CONSTRUCTION PLANS WHICH MUST BE OWNER-FURNISHED ARE NOT ISSUED TO THE CONTRACTOR PRECLUDING ANY WORK CALLED FOR BY SUCH PLANS.

C. PEACE AND ORDER CONDITIONS MAKE IT EXTREMELY DANGEROUS, IF NOT IMPOSSIBLE, TO WORK. HOWEVER, THIS CONDITION MUST BE CERTIFIED IN WRITING BY THE PHILIPPINE NATIONAL POLICE (PNP) STATION WHICH HAS RESPONSIBILITY OVER THE AFFECTED AREA AND CONFIRMED BY THE DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT (DILG) REGIONAL DIRECTOR.

D. THERE IS FAILURE ON THE PART OF THE GOVERNMENT TO DELIVER GOVERNMENT-FURNISHED MATERIALS AND EQUIPMENT AS STIPULATED IN THE CONTRACT.

E. DELAY IN THE PAYMENT OF CONTRACTOR'S CLAIM FOR PROGRESS BILLING AND/OR PRICE ESCALATION BEYOND FORTY-FIVE (45) CALENDAR DAYS FROM THE TIME THE CONTRACTOR'S CLAIM HAS BEEN CERTIFIED TO BY THE IMPLEMENTING AGENCY'S AUTHORIZED REPRESENTATIVE THAT THE DOCUMENTS ARE COMPLETE UNLESS THERE ARE JUSTIFIABLE REASONS THEREOF WHICH SHALL BE COMMUNICATED IN WRITING TO THE CONTRACTOR.

3. In case of total suspension, or suspension of activities along the critical path, which is not due to any fault of the contractor, the elapsed time between the effective order of suspending operation and the order to resume work shall be allowed the contractor by adjusting the contract time accordingly.

CI 11 EXTENSION OF CONTRACT TIME

1. Should the amount of additional work of any kind or other special circumstances of any kind whatsoever occur such as to fairly entitle the contractor to an extension of contract time, the Government shall determine the amount of such extension; provided that the Government is not bound to take into account any claim for an extension of time unless the contractor has prior to the expiration of the contract time and within thirty (30) calendar days after such work has been commenced or after the circumstances leading to such claim have arisen, delivered to the Government notices in order that it could have investigated them at that time. Failure to provide such notice shall constitute a waiver by the contractor of any claim. Upon receipt of full and detailed particulars, the Government shall examine the facts and extent of the delay and shall extend the contract time for completing the contract work when, in the Government's opinion, the findings of facts justify an extension.

2. No extension of contract time shall be granted the contractor due to (a) ordinary unfavorable weather conditions (b) inexcusable failure or negligence of contractor to provide the required equipment, supplies or materials, or (c) other causes for which Government is not directly responsible.

3. Extension of contract time may be granted only when the affected activities fall within the critical path of the PERT/CPM network.

4. No extension of contract time shall be granted when the reason given to support the request for extension was already considered in the determination of the original contract time during the conduct of detailed engineering and in the preparation of the contract documents as prescribed under Section I.4.J (Detailed Engineering) as agreed upon by the parties before contract perfection.

5. Extension of contract time shall be granted for rainy/unworkable days considered unfavorable for the prosecution of the works at the site, based on the actual conditions obtained at the site, for such period in excess of the number of rainy/unworkable days pre-determined by the government in accordance with Section I.4.J hereof (Detailed Engineering) and/or for equivalent period of delay due to major calamities such as exceptionally destructive typhoons, floods and earthquakes, and epidemics, and for causes such as non-delivery on time of materials, working drawings, or written information to be furnished by the Government, non-acquisition of permit to enter private properties within the right-of-way resulting in complete paralization of construction activities, and other meritorious causes as determined by the Government's authorized Engineer and approved by the Government. Shortage of construction material, general labor strikes, and peace and order problems that disrupt construction operations through no fault of the contractor may be considered as additional grounds for extension of contract time provided they are publicly felt and certified by appropriate government agencies such as DTI, DOLE, DILG, and DND, among others. Provided, further, that the written consent of bondsmen must be attached to any request of the contractor for extension of contract time and submitted to the Government for consideration and that the validity of the performance security shall be correspondingly extended.

CI 12 CONTRACT PRICE ESCALATION

CI 12.1 GUIDELINES ON CONTRACT PRICE ESCALATION

1. These guidelines for the computation and payment of price escalations shall apply to existing infrastructure contracts (as of August 27, 1980), where a specific price escalation clause is not provided therein or where there is no specified methodology for calculation of price escalation. All infrastructure contracts entered into after the date of effectivity of these guidelines (August 27, 1980) shall employ the escalation method provided for in these guidelines. Equipment supply contracts, whether or not included as an integral part of the infrastructure contract, shall not be covered by this provision.

2. The respective implementing offices shall determine all price escalation in accordance with these guidelines.

3. A committee shall be created by the NEDA Committee on Infrastructure which shall review periodically the parametric formulae for the computation of contract price escalation herein specified and shall revise the same whenever necessary, such revisions to be made effective upon the approval by the NEDA Committee on Infrastructure. The revised/updated parametric formulae, if any, shall apply to works to be accomplished on a project after the effectivity/approval of such revisions.

4. For projects with remaining balances of work as of February 1, 1976, the Contract Price Adjustment Committee (CPAC) shall complete the determination of adjusted unit prices as determined by CPAC multiplied by 1.05 as if they were the original contract unit price (see Section CI 12.2-4 below). For projects without any balances of work, and not started as of February 1, 1976, the original unit prices of the contract as set forth in Section CI 12.2-4 below shall be used.

5. For on-going contracts AND CONTRACTS BID OUT BUT YET UNAWARDED as of 31 December 1990, the unit prices for the remaining balance of work based on the approved/revised construction schedule, including any time extension granted, shall be updated using the current parametric formulae to January 1991 prices WITH THE ORIGINAL UNIT PRICES MULTIPLIED BY THE FLUCTUATION FACTORS WITHOUT THE 5% DEDUCTION. Such updated unit prices as of 01 January 1991 shall be used as basis for computing regular progress billings thereafter. Any price escalation after 01 January 1991 shall be calculated using the new parametric formulae herein prescribed as applied to the updated unit prices as of 01 January 1991.

6. All price escalation to be granted may be approved by the Secretary or head of office/agency/corporation concerned in accordance with Section 8 of Presidential Decree No. 1594 to become effective except for those recommended by CPAC for escalation in contract unit prices up to price levels as of February 1, 1976 where the old CPAC guidelines were used, and which must be forwarded to the Office of the President for approval before they become effective. Payments for price escalation on works accomplished on a project beginning 01 January 1990 may be made by the Secretary and/or agency head concerned irrespective of the amount involved. For works accomplished prior to 01 January 1990, payments for price escalation may be made by the Secretary/Agency Head concerned within the limits of authority specified under the previously amended Implementing Rules and Regulations as the case may be.

7. Escalation of prices for work accomplishment on infrastructure construction, rehabilitation and/or improvement projects shall be made periodically, using the parametric formula as described below, to compensate for fluctuation of prices of construction supplies and materials, equipment and labor which would bring about during the period under consideration an increase or decrease of more than five percent (5%) of the original contract unit price of items of work.

8. Price escalation shall be reckoned from the month of bidding of the project, and shall be allowed for every progress billing. When the contract has not been the subject of competitive bidding, price escalation shall be reckoned from the month agreed upon in the contract and shall be granted for every progress billing. For construction and related materials under government — controlled prices, the computation of price escalation shall be reckoned from the actual date of bidding of the project, or the actual date agreed upon in the contract when the contract has not been the subject of competitive bidding.

9. In case the project is behind schedule by more than five percent (5%) from the approved PERT/CPM network on the date when computation of price escalation is scheduled, computation on such portion of the work that should have been, but was not actually, accomplished within the period (in accordance with the PERT/CPM network) shall be reckoned on the basis of the escalation rate applicable during the period in which it should have been accomplished. Payment of the computed amount shall not be made until the project activities FOR THE PERIOD UNDER CONSIDERATION AS covered by such amount are completed. This shall not in any way affect the final date of completion.

10. Payments for price escalation of work accomplished within the period shall be based on actual escalation amount computed in accordance with appropriate indices provided for in the formulae under this clause or as expressly stipulated in the contract.

11. In case of some projects where advance payment for mobilization purposes and/or purchases of supplies and materials is made, it is only fair to the Government that price escalation shall not be made on the items of work or components thereof to which such advance payments are applied, since these monies are received by the contractor in advance and may be used for the payment of expenditures in connection with the prosecution of the project.

Hence, in calculating price escalation for contracts entered into after the effectivity of these guidelines, no price escalation shall be made for:

a. That portion of work accomplished during the period corresponding to a value equal to the amount of recoupment of advance payment. For example, if during the 6-month-period under consideration, ten percent (10%) of the amount payable to the contract was recouped to recover advance payment, ten percent (10%) likewise of the price escalation calculated to be otherwise payable shall be deducted from the price escalation.

b. That amount of materials for which advance payment is made. Usually such advance payment when made is equal to seventy-five percent (75%) of the cost of material purchased therefrom. Since the funds were logically used by the contractor to purchase materials which he otherwise would not be able to purchase at the same price, it is not fair to the Government that he should both profit from making such advance purchases and at the same time enjoy interest — free use of such funds. In those cases where the contractor enjoys such advance payments, an interest charge of one and one-fourth percent (1-1/4%) per month on the outstanding balance, shall be imputed from the time he receives the advance payment, and the equivalent amount deducted from the next succeeding price escalation payment in lieu of deducting the portion of price escalation corresponding to such materials. No payment of imputed interest charge under this paragraph shall be collected in excess of price escalation payment for the period.

CI 12.2 FLUCTUATION FACTOR

1. The Fluctuation Factor, K, is the coefficient representing the increase or decrease of the unit price as a result of price fluctuation. The value of the K varies for each item of work and is represented by the following:

K = a + b (Xi/Xo) + c (Yi/Yo) + d (Zi/Zo) + ... n (Ni/No)

Where:

a	-	is a 0.15 fixed coefficient representing contractor's profit, and other non-adjustable items.
b,c,d,...n	-	are the coefficients representing the proportionate value of each pay item to the total. b + c + d... + n = 0.85.
Xi,Yi,Zi,...Ni	-	are the current price indices representing costs of labor, materials and other contract items after bidding or, where the contract has not been the subject of competitive bidding, after the date agreed upon in the contract, and every month thereafter.
Xo,Yo, Zo,...No	-	are the price indices representing costs of labor, materials and other contract items at the date of the bidding or, where the contract has not been the subject of competitive bidding, at the date agreed upon in the contract.

2. The fluctuation factor and its application in the parametric formula shall include among others, any or combination of the following:

1. Common earthwork fluctuation factor for clearing and grubbing, subgrade preparation, common excavation, common borrow, embankment construction, common fill or backfill and select borrow.

K1 = 0.15 + 0.05 (Li/Lo) + 0.60 (Ei/Eo) + 0.20 (Fi/Fo)

2. Rock excavation fluctuation factor

K2 = 0.15 + 0.08 (Li/Lo) + 0.27 (Zi/Zo) + 0.12 (Fi/Fo) +0.38 (Ei/Eo)

3. Structural excavation fluctuation factor

K3 = 0.15 + 0.08 (Li/Lo) + 0.19 (Fi/Fo) + 0.58 (Ei/Eo)

4. Structural backfill fluctuation factor

K4 = 0.15 + 0.15 (Li/Lo) + 0.17 (Fi/Fo) + 0.53 (Ei/Eo)

5. Daywork fluctuation factor for equipment

K5 = 0.15 + 0.05 (Li/Lo) + 0.20 (Fi/Fo) + 0.60 (Ei/Eo)

6. Daywork fluctuation factor for labor

K6 = 0.15 + 0.85 (Li/Lo)

7. Graded subbase or base course fluctuation factor using screened or processed aggregate, granular materials, crushed adobe or the like

K7 = 0.15 + 0.02 (Li/Lo) + 0.62 (Bi/Bo) + 0.05 (Fi/Fo) + 0.16 (Ei/Eo)

8. Asphaltic materials fluctuation factor for prime or tack coat

K8 = 0.15 + 0.01 (Li/Lo) + 0.82 (Ai/Ao) + 0.01 (Fi/Fo) + 0.01 (Ei/Eo)

9. Asphaltic concrete fluctuation factor for bituminous wearing or surface course

K9 = 0.15 + 0.01 (Li/Lo) + 0.62 (Ai/Ao) + 0.12 (Bi/Bo) + 0.03 (Fi/Fo)

+ 0.07 (Ei/Eo)

10. Portland cement concrete pavement (PCCP) fluctuation factor

K10 = 0.15 + 0.02 (Li/Lo) + 0.47 (Ci/Co) + 0.21 (Bi/Bo) + 0.02 (Di/Do)

+ 0.03 (Fi/Fo) + 0.10 (Ei/Eo)

11. Concrete fluctuation factor for curb, gutter and sidewalk

K11 = 0.15 + 0.06 (Li/Lo) + 0.36 (Ci/Co) + 0.16 (Bi/Bo) + 0.03 (Di/Do)

+ 0.06 (Fi/Fo) + 0.18 (Ei/Eo)

12. Reinforced concrete structures fluctuation factor for bridge, culvert, retaining wall, bulkhead, piles, precast, parapet wall, railing, footing, columns, supporting slab and beam

K12 = 0.15 + 0.03 (Li/Lo) + 0.28 (Ci/Co) + 0.13 (Bi/Bo) + 0.03 (Di/Do)

+ 0.25 (Ri/Ro) + 0.03 (Fi/Fo) + 0.10 (Ei/Eo)

13. Reinforced concrete structures fluctuation factor for headwall, catchbasin, manhole, drop inlet concrete post.

K13 = 0.15 + 0.21 (Li/Lo) + 0.25 (Ci/Co) + 0.03 (Di/Do) + 0.19 (Ri/Ro)

+ 0.09 (Bi/Bo) + 0.02 (Fi/Fo) + 0.06 (Ei/Eo)

14. Reinforced concrete pipe (RCP) or culvert pipe (RCCP) fluctuation factor

K14 = 0.15 + 0.05 (Li/Lo) + 0.61 (Qi/Qo) + 0.02 (Ci/Co) + 0.01 (Bi/Bo)

+ 0.04 (Fi/Fo) + 0.12 (Ei/Eo)

15. Non-reinforced concrete pipes fluctuation factor

K15 = 0.15 + 0.13 (Li/Lo) + 0.69 (Qi/Qo) + 0.02 (Ci/Co) + 0.01 (Bi/Bo)

16. Concrete for structure Class A or B fluctuation factor

K16 = 0.15 + 0.03 (Li/Lo) + 0.41 (Ci/Co) + 0.19 (Bi/Bo) + 0.09 (Di/Do)

+ 0.04 (Fi/Fo) + 0.09 (Ei/Eo)

17. Grouted rip-rap or stone masonry fluctuation factor

K17 = 0.15 + 0.18 (Li/Lo) + 0.27 (Ci/Co) + 0.13 (Bi/Bo) + 0.07 (Fi/Fo)

+ 0.20 (Ei/Eo)

18. Concrete masonry (CHB) fluctuation factor

K18 = 0.15 + 0.33 (Li/Lo) + 0.30 (Qi/Qo) + 0.13 (Ci/Co) + 0.04 (Bi/Bo)

+ 0.01 (Fi/Fo) + 0.04 (Ei/Eo)

19. Reinforcing steel bars fluctuation factor

K19 = 0.15 + 0.06 (Li/Lo) + 0.67 (Ri/Ro) + 0.04 (Fi/Fo) + 0.08 (Ei/Eo)

20. Structural steel works fluctuation factor

K20 = 0.15 + 0.03 (Li/Lo) + 0.71 (Si/So) + 0.03 (Fi/Fo) + 0.08 (Ei/Eo)

21. Demolition of concrete structure fluctuation factor

K21 = 0.15 + 0.07 (Li/Lo) + 0.20 (Fi/Fo) + 0.58 (Ei/Eo)

22. Demolition of PCCP strip fluctuation factor

K22 = 0.15 + 0.09 (Li/Lo) + 0.19 (Fi/Fo) + 0.57 (Ei/Eo)

23. Demolition AC pavement strip fluctuation factor

K23 = 0.15 + 0.05 (Li/Lo) + 0.20 (Fi/Fo) + 0.60 (Ei/Eo)

24. Painting fluctuation factor with use of equipment

K24 = 0.15 + 0.28 (Li/Lo) + 0.48 (Ni/No) + 0.02 (Fi/Fo) + 0.07 (Ei/Eo)

25. Painting fluctuation factor using labor only

K25 = 0.15 + 0.19 (Li/Lo) + 0.66 (Ni/No)

26. Wood structure fluctuation factor for falsework, temporary wood bridge, wood guardrail

K26 = 0.15 + 0.06 (Li/Lo) + 0.63 (Di/Do) + 0.04 (Fi/Fo) + 0.12 (Ei/Eo)

27. Carpentry works fluctuation factor

K27 = 0.15 + 0.15 (Li/Lo) + 0.62 (Di/Do) + 0.02 (Fi/Fo) + 0.06 (Ei/Eo)

28. Cast and/or galvanized iron pipes fluctuation factor

K28 = 0.15 + 0.02 (Li/Lo) + 0.78 (Ii/Io) + 0.01 (Fi/Fo) + 0.04 (Ei/Eo)

29. Steel pipes fluctuation factor

K29 = 0.15 + 0.03 (Li/Lo) + 0.69 (Ii/Io) + 0.03 (Fi/Fo) + 0.10 (Ei/Eo)

30. Asbestos cement pipes fluctuation factor

K30 = 0.15 + 0.02 (Li/Lo) + 0.77 (Ki/Ko) + 0.02 (Fi/Fo) + 0.04 (Ei/Eo)

31. PVC pipes fluctuation factor

K31 = 0.15 + 0.07 (Li/Lo) + 0.69 (Ji/Jo) + 0.02 (Fi/Fo) + 0.07 (Ei/Eo)

32. Gate valves and fire hydrants fluctuation factor

K32 = 0.15 + 0.04 (Li/Lo) + 0.77 (Ii/Io) + 0.01 (Fi/Fo) + 0.03 (Ei/Eo)

33. Check valves fluctuation factor

K33 = 0.15 + 0.03 (Li/Lo) + 0.79 (Pi/Po) + 0.01 (Fi/Fo) + 0.02 (Ei/Eo)

34. Water service connection fluctuation factor

K34 = 0.15 + 0.10 (Li/Lo) + 0.40 (Pi/Po) + 0.35 (Ji/Jo)

35. Plumbing fixtures fluctuation factor

K35 = 0.15 + 0.08 (Li/Lo) + 0.77 (Pi/Po)

36. Plain and corrugated G.I. sheets fluctuation factor

K36 = 0.15 + 0.09 (Li/Lo) + 0.76 (Wi/Wo)

37. Cement plaster fluctuation factor

K37 = 0.15 + 0.38 (Li/Lo) + 0.37 (Ci/Co) + 0.10 (Bi/Bo)

38. Marble floor finish fluctuation factor

K38 = 0.15 + 0.07 (Li/Lo) + 0.03 (Ci/Co) + 0.01 (Bi/Bo) + 0.65 (Xi/Xo)

+ 0.03 (Fi/Fo) + 0.06 (Ei/Eo)

39. Glazed and ceramic tiles fluctuation factor

K39 = 0.15 + 0.12 (Li/Lo) + 0.66 (Xi/Xo) + 0.05 (Ci/Co) + 0.02 (Bi/Bo)

40. Window frames and grills fluctuation factor

K40 = 0.15 + 0.09 (Li/Lo) + 0.53 (Si/So) + 0.06 (Fi/Fo) + 0.17 (Ei/Eo)

41. Glazing fluctuation factor

K41 = 0.15 + 0.03 (Li/Lo) + 0.82 (Gi/Go)

42. Electrical rough-in fluctuation factor

K42 = 0.15 + 0.16 (Li/Lo) + 0.69 (Vi/Vo)

43. Lighting fixtures & devices fluctuation factor

K43 = 0.15 + 0.13 (Li/Lo) + 0.72 (Ui/Uo)

44. PVC waterstop (9") fluctuation factor

K44 = 0.15 + 0.03 (Li/Lo) + 0.82 (Ji/Jo)

45. Electrical wood pole fluctuation factor

K45 = 0.15 + 0.01 (Li/Lo) + 0.73 (Di/Do) + 0.03 (Fi/Fo) + 0.08 (Ei/Eo)

46. Wood crossarm fluctuation factor

K46 = 0.15 + 0.11 (Li/Lo) + 0.74 (Di/Do)

47. Lightning arrester (3,000v to 15,000v) fluctuation factor

K47 = 0.15 + 0.09 (Li/Lo) + 0.76 (Ti/To)

48. Transformers (10KVA to 50KVA) fluctuation factor

K48 = 0.15 + 0.01 (Li/Lo) + 0.81 (Ti/To) + 0.01 (Fi/Fo) + 0.02 (Ei/Eo)

49. Bare copper wire fluctuation factor

K49 = 0.15 + 0.04 (Li/Lo) + 0.79 (Ti/To) + 0.01 (Fi/Fo) + 0.01 (Ei/Eo)

50. Bare aluminum wire fluctuation factor

K50 = 0.15 + 0.13 (Li/Lo) + 0.69 (Ti/To) + 0.01 (Fi/Fo) + 0.02 (Ei/Eo)

51. Dredging fluctuation factor

K51 = 0.15 + 0.06 (Li/Lo) + 0.20 (Fi/Fo) + 0.59 (Ei/Eo)

52. General construction fluctuation factor (for others not covered by any or combination of the above 51 fluctuation factors)

K52 = 0.15 + 0.85 (Mi/Mo)

Where:

Mi	current general construction price index figure
Mo	base general construction price index figure
Li	current labor index figure
Lo	base labor index figure
Ei	current equipment index figure
Eo	base equipment index figure
Ai	current asphaltic material price index figure
Ao	base asphaltic material price index figure
Bi	current aggregates material price index figure
Bo	base aggregates material price index figure
Ci	current cement material price index figure
Co	base cement material price index figure
Di	current lumber material price index figure
Do	base lumber material price index figure
Fi	current automotive fuel price index figure
Fo	base automotive fuel price index figure
Gi	current glass and glazing material price index figure
Go	base glass and glazing material price index figure
Hi	current hardware material price index figure
Ho	base hardware material price index figure
Ii	current galvanized and/or cast iron pipe (Plumbing) material price index figure
Io	base galvanized and/or cast iron pipe (Plumbing) material price index figure
Ji	current polyvinyl chloride pipe (Plumbing) material price index figure
Jo	base polyvinyl chloride pipe (Plumbing) material price index figure
Ki	current asbestos cement pipe (Plumbing) material price index figure
Ko	base asbestos cement pipe (Plumbing) material price index figure
Ni	current paint material price index figure
No	base paint material price index figure
Pi	current plumbing fixture material price index figure
Po	base plumbing fixture material price index figure
Qi	current concrete products material price index figure
Qo	base concrete products material price index figure
Ri	current reinforcing steel material price index figure
Ro	base reinforcing steel material price index figure
Si	current structural steel material price index figure
So	base structural steel material price index figure
Ti	current exterior electrical material price index figure
To	base exterior electrical material price index figure
Ui	current electrical fixtures/devices material price index figure
Uo	base electrical fixtures/devices material price index figure
Vi	current electrical (rough-in) material price index figure
Vo	base electrical (rough-in) material price index figures
Wi	current metal products material price index figure
Wo	base metal products material price index figure
Xi	current tile work material price index figure
Xo	base tile work material price index figure
Zi	current blasting material price index figure
Zo	base blasting material price index figure

3. For future contracts, the Office/Agency/Corporation concerned are authorized to update these formulae provided that such updated formulae shall be spelled out clearly in the contract documents, and provided further that the value of the constant "a" in the factors representing the contractor's profit and other items as indicated in the contract shall be fixed at 0.15.

4. The following Price Indices shall be used:

General construction price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Labor cost index as published by the Department of Labor and Employment.

Equipment index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Asphaltic material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Aggregates material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Cement material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Lumber material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Automotive fuel price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Glass and glazing material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Hardware material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Galvanized and/or cast iron pipe (Plumbing) material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Polyvinyl chloride pipe (Plumbing) material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Asbestos cement pipe (Plumbing) material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Paint material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Plumbing fixture material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Concrete products material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Reinforcing steel material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Structural steel material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Exterior electrical material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Electrical (rough-in) material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Electrical fixtures/devices material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Metal product material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Tile work material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

Blasting material price index as published by the National Statistics Office (NSO) or other appropriate/authorized government agency.

In the absence of any price index for a specified adjustable item, the nearest related price index shall be used.

5. Price escalation shall be calculated for every whole month and the average fluctuation factor for the month under consideration shall be used. In case the initial month of the contract duration is less than a full month, the average fluctuation factor for that entire month shall be used; in case the last month of the contract duration is less than one half of a full month, the fluctuation factor for the preceding month shall be used, and in case it is more than one half of a full month, the fluctuation factor for that month shall be used. The applicable fluctuation factor shall then be applied to the original contract unit price of the corresponding work item and the formula would be as follows:

Where K > 1.05,	P = Po (K - 0.05)
Where 0.95 < K < 1.05,	P = Po
Where K < 0.95,	P = Po (K + 0.05)
Where:
	P	-	is the escalated bid/unit price
	Po	-	is the original bid/unit price
	K	-	is the fluctuation factor

6. For the foreign currency component of contract prices, price escalations shall be computed using the parametric formulae in Section CI 12.2-5 where:

P - is the escalated unit price of foreign currency component or escalated amount of foreign currency component

Po - is the original unit price of foreign currency component or original amount of foreign currency component

K - is the fluctuation factor computed using the price indices in the foreign country source of the specified adjustable item or the nearest related price index.

In case of the absence of the specific price index the payable price escalation shall be converted to local currency at the time of the accomplishment of the work.

7. In the computation of price escalation for the first partial progress payment, the applicable fluctuation (K) factor to be adopted shall be the average of the values of the specific fluctuation factors from the date of the issuance of Notice to Proceed to the first partial billing, wherein the base price indices are those at the month of bidding for contracts subjected to competitive bidding or at the month agreed upon in the contract when the contract has not been the subject of competitive bidding. For construction and related materials under government controlled prices, the base price indices shall be those at the actual date of bidding of the project, or the actual date agreed upon in the contract when the contract has not been the subject of competitive bidding.

IV. Applicability

1. These implementing rules and regulations as amended shall apply to all contracts for infrastructure and other construction projects of all government agencies including government-owned or controlled corporations and other instrumentalities that will be bid out after ten (10) days from date of dissemination of these amended implementing rules and regulations by the National Economic and Development Authority (NEDA) Committee on Infrastructure (INFRACOM), UNLESS OTHERWISE SPECIFICALLY PROVIDED HEREIN. For contracts bid out before said effectivity date, the previous implementing rules and regulations shall apply. ANY VIOLATION HEREOF SHALL BE PUNISHABLE UNDER EXISTING LAWS, RULES AND REGULATIONS AS MAY BE APPROPRIATE. These amended implementing rules and regulations shall not apply to lump sum "Pakyaw" contracts.

2. The above notwithstanding, nothing in these implementing rules and regulations shall negate any existing and future commitments with respect to the bidding and award of contracts financed partly or wholly with funds from international financial institutions, as well as from bilateral and other similar sources.

REVIEW OF BIDDING PROCEDURES AND GOVERNING RULES

A. Relevant Laws Governing Bidding Procedures

A.1 IRR of PD 1594 as amended April 1992 — Prescribing Policies, Guidelines, Rules & Regulations for Government Infrastructure Contracts

A.2 Adm. Order No. 129, dated 16 May 1994 — Directing the adoption and observance of Standard Processing Time in the Bidding and Award Process for Infrastructure and other Construction Works and Consulting Services Contracts of the National Government

A.3 for DPWH only

A.3.1 D.O. No. 177, Sept. 23, 1993 — Revised Prequalification and Bidding Procedure

A.3.2 D.O. No. 161, Oct. 23, 1992 — Actual/Physical Verification of Construction Equipment

A.3.3 D.O. No. 112, June 8, 1994 — Improvement of Prequalification Evaluation

B. Existing Procedure

B.1 Flow/Bar/Tabular Chart No. 1 — Under IRR of PD 1594

B.2 Flow/Bar/Tabular Chart No. 2 — Under IRR of PD 1594 applying D.O. No. 177 for locally funded projects only

C. Recommendation:

C.1 Flow/Bar/Tabular Chart No. 3 — Under IRR of PD 1594 applying D.O. No. 177 for both locally funded and foreign assisted projects

C.2 Comparative Summary of the PBAC Procedure for Government Infrastructure Contracts

C.3 No PQ option as previously used by DPWH during the time of former Secretary Jesus Hipolito