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PRESIDENTIAL DECREE NO. 1594
PRESIDENTIAL DECREE NO. 1594 -
PRESCRIBING POLICIES, GUIDELINES, RULES AND REGULATIONS FOR GOVERNMENT
INFRASTRUCTURE CONTRACTS
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WHEREAS,
the present policies, rules and regulations covering government
contracts for infrastructure and other construction projects are
generally fragmented and have been found to be inadequate to cope with
the intricate and complex process involved; chanroblesvirtualawlibrary
WHEREAS, there is a need to adopt a comprehensive, uniform, and updated
set of policies, guidelines, rules and regulations covering government
contracts for infrastructure and other construction projects in order
to achieve a more efficient and effective implementation of these
projects.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby
order and decree the following:cralaw:red
Section 1. Policy Objectives. — It is the policy of
the government to adopt a set rules and regulations covering government
contracts for infrastructure and other construction projects which
shall:cralaw:red
a. bring about maximum efficiency in project
implementation and minimize project costs and contract variations
through sound practices in contract management; chanroblesvirtualawlibrary
b. promote a healthy partnership between the
government and the private sector in furthering national development;
and
c. enhance the growth of the local construction
industry and optimize the use of indigenous manpower, materials and
other sources.
Section 2. Detailed Engineering. — 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 to be established under the rules and
regulations to be promulgated pursuant to Section 12 of this Decree so
as to minimize quantity and cost overruns and underruns, change orders
and extra work orders, and unless the detailed engineering documents
have been approved by the Minister of Public Works, Transportation and
Communications, the Minister of Public Highways, of the Minister of
Energy, as the case may be. chanroblesvirtualawlibrary
Section 3. Prequalification of Prospective
Contractors. — A prospective contractor may prequalified to offer his
bid or tender for a construction project only if he meets the following
requirements.
a. Legal Requirements. — The prospective contractor
must have been licensed as a contractor for the current year pursuant
to Republic Act No. 4566, must have paid his privilege tax to practice
or engage in the contracting business for the current year, must comply
with the Administrative Order No. 66 of the Office of the President of
the Philippines, and must comply with other existing pertinent laws,
rules and regulations.
b. Technical Requirements. — The prospective
contractor must meet the following technical requirements to be
established in accordance with the rules and regulations to be
promulgated pursuant to Section 12 of this Decree, to enable him to
satisfactorily prosecute the subject project: chanroblesvirtualawlibrary
1. Competence and experience of the contractor in
managing projects similar to the subject project.
2. Competence and experience of the contractor's key
personnel to be assigned to the subject project.
3. Availability and commitment of the contractor's
equipment to be used for the subject project.
c. Financial Requirements. — The net worth and liquid
assets of the prospective contractor must meet the requirements, to be
established in accordance with the rules and regulations to be
promulgated pursuant to Section 12 of this Decree, to enable him to
satisfactorily execute the subject project. The prospective contractor
may be allowed to cover the deficiency in the required net worth
through a line of credit fully committed to the subject project by a
bank or financial institution acceptable to the Ministry
concerned. chanroblesvirtualawlibrary
d. Filipino participation. — The Government shall
promote maximum participation of eligible Filipino contractors in all
construction projects.
Section 4. Bidding. — Construction projects shall
generally be undertaken by contract after competitive public bidding.
Projects may be undertaken by administration or force account or by
negotiated contract only in exceptional cases where time is of the
essence, or where there is lack of qualified bidders or contractors, or
where there is a conclusive evidence that greater economy and
efficiency would be achieved through this arrangement, and in
accordance with provision of laws and acts on the matter, subject to
the approval of the Ministry of Public Works, Transportation and
Communications, the Minister of Public Highways, or the Minister of
Energy, as the case may be, if the project cost is less than P1
Million, and of the President of the Philippines, upon the
recommendation of the Minister, if the project cost is P1 Million or
more.
A bidder's bond, in an amount to be established in accordance with the
rules and regulations to be promulgated pursuant to Section 12 of this
Decree, shall accompany the bid to guarantee that the successful bidder
shall, within a prescribed period from receipt of the notice of award,
enter into account and furnish the required performance bond for the
faithful and complete prosecution of the work specified in the contract
documents.
Section 5. Award and Contract. — The contract may be
awarded to the lowest prequalified bidder whose bid as evaluated
complies with all the terms and conditions in the call for bid and is
the most advantageous to the Government.
To guarantee the faithful performance of the contractor, he shall,
prior to the award, post a performance bond, in an amount to be
established in accordance with the rules and regulations to be
promulgated under Section 12 of this Decree.
All awards and contracts duly executed in accordance with the
provisions of this Decree shall be subject to the approval of the
Minister of Public Works, Transportation and Communications, the
Minister of Public Highways, or the Minister of Energy, as the case may
be.
Section 6. Assignment and Subcontract. — The
contractor shall not assign, transfer, pledge, subcontract or make any
other disposition of the contract or any part of interest therein
except with the approval of the Minister of Public Works,
Transportation and Communications, the Minister of Public Highways, or
the Minister of Energy, as the case may be. Approval of the subcontract
shall not relieve the main contractor from any liability or obligation
under his contract with the Government nor shall it create any
contractual relation between the subcontractor and the Government.
Section 7. Responsibility of the Contractor. — The
contractor shall assume full responsibility for the contract work until
its final acceptance by the Government and shall be held responsible
for any damage or destruction of works except those occasioned by force
majeure.
Except likewise for force majeure, the contractor shall be fully
responsible for the safety, protection, security, and convenience of
his personnel, third parties, and the public at large, as well as the
works, equipment, installation and the like to be affected by his
construction work.
Section 8. Adjustment Contract Price. — Adjustment of
contract price for construction projects may be authorized by the
Minister of Public Works, Transportation and Communications, the
Minister of Public Highways, or the Minister of Energy, as the case may
be, upon recommendation of the National Economic and Development
Authority, if during the effectivity of the contract, the cost of
labor, equipment, materials and supplies required for the construction
should increase or decrease due to direct acts of the Government. The
adjustments of the contract price shall be made using appropriate
formulas established in accordance with the rules and regulations to be
promulgated under Section 12 of this Decree.
Section 9. Change Order and Extra Work Order. — A
change order or extra work order may be issued only for works necessary
for the completion of the project and, therefore, shall be within the
general scope of the contract as bidded and awarded. All change orders
and extra work orders shall be subject to the approval of the Minister
of Public Works, Transportation and Communications, the Minister of
Public Highways, or the Minister of Energy, as the case may be.
Section 10. Inspection and Construction of Contract
Work. — Inspection of the contract work shall be made by the Government
while such contract work is in progress to ascertain that the completed
works comply in all respects with the standards and requirements set
forth in the contract documents. Notwithstanding such inspection, the
contractor shall be held responsible for the acceptability of the
finished works. The contractor shall promptly replace all materials and
correct all works determined by the Government as failing to meet
contract requirements. chanroblesvirtualawlibrary
Section 11. Government's Right to Take Over Contract
Work. — The Government may take over the contract work should the
contractor abandon the contract work, or unduly delay the prosecution
of the contract work, or become insolvent, or assign his assets for the
benefit of his creditors, or be adjudged bankrupt, or assign the
contract work without written approval by the Government, or violate
any condition or term of the contract. In any of these cases, the
Government may terminate the employment of the contractor and take over
the contract work after giving due notice to the contractor and his
sureties.
Section 12. Implementing Rules and Regulations. — The
Minister of Public Works, Transportation and Communications, as the
lead official, the Minister of Public Highways, the Minister of Energy,
and the Director-General of the National Economic and Development
Authority, shall jointly promulgate the rules and regulations to
implement the provisions of this Decree. Once approved by the President
of the Philippines, these implementing rules and regulations shall be
applicable to all contracts for infrastructure and other construction
projects of all government agencies including government-owned or
controlled corporations and other instrumentalities.
Section 13. Separability Clause. — If any provision
of this Decree is held unconstitutional, the other provisions shall
remain valid.
Section 14. Repealing Clause. — All Acts, Charters,
Decrees, Letters of Instructions, Executive Orders, Proclamations,
rules and regulations or parts thereof in conflict with the provisions
of this Decree are hereby repealed or modified accordingly.
Section 15. Effectivity. — This Decree shall take
effect immediately.
Done in the City of Manila,
this 11th day of June, in the year of Our Lord, nineteen hundred and
seventy-eight.
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