QuestionsQuestions (GPPB Resolution NO. 018-2004)
It aims to promote fairness in terminating government procurement contracts and to prescribe contract conditions and measures to protect government interests. It covers whole or partial termination of contracts for goods, infrastructure projects, and consulting services.
“Termination in Part” is termination of a portion of the work not yet completed and accepted under the contract; “Termination in Whole” is termination of all work not yet completed and accepted under the contract.
A “Show Cause” notice is a notice required before terminating a contract, intended to enable the contractor/consultant to present its position why the contract should not be terminated.
Outside force majeure, supplier fails to deliver/perform within period(s) or extension and failure amounts to at least 10% of contract price. For force majeure, inability to deliver/perform amounting to at least 10% of contract price for at least 60 calendar days after notice that force majeure has ceased. Also, failure to perform any other obligation under the contract.
If due to contractor’s fault while project is ongoing: negative slippage of 15% or more per Presidential Decree 1870. If due to contractor’s fault after contract time expired: negative slippage of 10% or more in completion of the work.
Examples include: abandoning works, refusing/failing to comply with valid instruction or failing to proceed expeditiously after written notice; not having minimum essential equipment on site; persistently or flagrantly neglecting obligations; refusing to remove rejected defective materials or perform new work; sub-letting any part without approval.
Outside force majeure, consultant fails to deliver outputs/deliverables within specified period(s) or granted extension. For force majeure, inability to deliver a material portion for not less than 60 calendar days after receipt of the notice that the force majeure circumstance is deemed to have ceased. Also, failure to perform any other obligation.
The Procuring Entity may terminate in whole or in part at any time for its convenience. The Head may terminate for convenience if conditions make implementation economically, financially, or technically impractical and/or unnecessary, including fortuitous events or changes in law and national government policies.
It must be terminated if the supplier/contractor/consultant is declared bankrupt or insolvent as determined with finality by a court of competent jurisdiction. Termination is without compensation, but it will not prejudice accrued or accruable rights of action/remedies of the parties.
The Procuring Entity may terminate if there is a prima facie determination that the supplier/contractor/consultant engaged in unlawful deeds/behaviors relative to acquisition and implementation, before or during contract implementation. Unlawful acts include corrupt, fraudulent, collusive and coercive practices; forged documents; using adulterated materials/means/methods or producing contrary to science/trade rules; and other analogous acts.
Generally: (1) verification by Implementing Unit within 7 days and preparation of a Verified Report; (2) Head of Procuring Entity issues a written Notice to Terminate stating grounds, extent (whole/part), instruction to show cause, and any special instructions; (3) contractor submits verified position paper within 7 days from receipt; (4) Head decides within a non-extendible 10-day period from receipt of the position paper, issuing written notice; termination is based only on the grounds stated in the Notice to Terminate.
If the contractor/consultant fails to show cause after lapse of the 7-day period—by inaction or default—the Head of the Procuring Entity issues an order terminating the contract.
Yes. It may withdraw at any time before receipt of the contractor’s/consultant’s verified position paper if it is determined that certain items/works subject of the notice were completed, delivered, or performed before receipt of the notice.
Unless otherwise provided, the contract is deemed terminated from receipt of the supplier/contractor/consultant of the notice of decision.
It may enter into a negotiated procurement pursuant to Section 53(c) of R.A. 9184 and its IRR-A.
Goods that have been performed or are ready for delivery within 30 calendar days after the supplier’s receipt of the Notice to Terminate shall be accepted at contract terms and prices.
It may: (a) have any portion delivered or performed and paid at contract terms and prices; and/or (b) cancel the remainder and pay an agreed amount for partially completed/performed goods and for materials/parts previously procured by the supplier.
If the supplier suffers loss in initial performance (e.g., specially manufactured raw materials not sellable in the open market), it may recover partially on a quantum meruit basis. Loss must be established under oath by the supplier to the satisfaction of the Procuring Entity before recovery is made.
The contractor/consultant must serve a written notice of its intention at least 30 calendar days before intended termination. The contract is deemed terminated if it is not resumed in 30 calendar days after the Procuring Entity’s receipt of such notice.