Question & AnswerQ&A (GPPB Resolution NO. 018-2004)
The guidelines aim to promote fairness in the termination of government procurement contracts and to prescribe contract conditions and measures to protect the national interest in public procurement contracts of goods, infrastructure projects, and consulting services.
Termination in Whole means the termination of all of the work that has not been completed and accepted under a contract.
The Procuring Entity may terminate the contract if: (a) the supplier fails to deliver or perform any or all goods within the period specified or any extension granted amounting to at least 10% of the contract price, outside force majeure; (b) due to force majeure, the supplier is unable to deliver at least 10% of goods for 60 calendar days after notice; or (c) the supplier fails to perform any other contractual obligation.
Corrupt practice involves offering, giving, receiving, or soliciting anything of value to influence a public official's actions in the procurement or contract execution, including entering into contracts disadvantageous to the government as per RA 3019. Collusive practice refers to schemes among bidders to establish artificial non-competitive bid prices to prevent free and open competition.
The head of the agency or their duly authorized official for national government agencies, the governing board or authorized official for government-owned and controlled corporations, and the local chief executive for local government units are considered Heads of Procuring Entities. In decentralized procurement, the head of each decentralized unit acts as the Head within delegated authority.
First, the Implementing Unit verifies the grounds for termination within 7 days and submits a Verified Report. The Head of the Procuring Entity then issues a Notice to Terminate stating the grounds and instructions to the contractor to show cause. The contractor has 7 days to submit a verified position paper. The Procuring Entity may rescind the notice before receipt of the paper. The Head must decide within 10 days whether to terminate or not and notify the contractor.
Yes. Contracts may be terminated for convenience (e.g., impracticality, changes in law or policy), for insolvency declared by a court, or for unlawful acts such as corrupt, fraudulent, collusive, coercive practices, forgery, or using adulterated materials.
A contractor on infrastructure projects may terminate if works are stopped for 60 days due to Procuring Entity's failure to provide supplies or right-of-way or due to adverse peace and order conditions. A consultant may terminate if the Procuring Entity materially breaches obligations and does not remedy within 60 days after notice.
Goods performed or ready for delivery within 30 calendar days after receipt of the termination notice shall be accepted at contract terms and prices. For goods not yet ready, the Procuring Entity can elect to have portions delivered and pay accordingly or cancel the rest and pay an agreed amount for partially completed goods and materials.
A Show Cause notice is issued to the contractor requiring them to explain why the contract should not be terminated. It provides the contractor an opportunity to present their position before a final termination decision is issued by the Procuring Entity.