Question & AnswerQ&A (EXECUTIVE ORDER NO. 807)
The purpose is to establish the Small Contractors Module under the Kilusang Kabuhayan at Kaunlaran (KKK), aiming to mobilize local resources to support small contractors in undertaking construction and maintenance of community projects, thereby generating livelihood, stimulating entrepreneurship, and reducing public works costs.
Projects include public works and highways with an estimated contract cost not exceeding Seven Hundred Thousand Pesos (P700,000.00), such as school buildings, barangay roads, small flood control and drainage works, communal irrigation, wells, health centers, and similar community projects.
Beneficiaries must be Filipino citizens or Filipino-owned partnerships/cooperatives, at least of legal age and good standing, domiciled for three years in the region of the project, and accredited by the District or City Engineer's Office or equivalent under the Ministry of Public Works and Highways that they meet the legal, technical, and financial criteria set in the EO.
Applicants must be Filipino citizens or wholly Filipino-owned entities, key officers must have been bona fide residents for the last three years in the project's region, and submit a sworn statement to procure unskilled and semi-skilled workers from the project's locality and province, respectively.
Applicants or their key construction staff must have completed projects worth at least 10% of the subject project's estimated cost using essentially similar technology. Completed projects exceeding One Million Pesos in aggregate value in the last year disqualify applicants. Additionally, applicants must own basic construction tools and employ a construct foreman with at least one year of relevant experience.
Applicants must have a positive net worth, meaning their total assets must exceed total liabilities, based on their latest income tax return.
KKK assistance is provided as a loan bearing twelve percent (12%) interest per annum, repayable according to prescribed terms. The loan may cover working capital up to 15% of the estimated contract cost or operating expenses for 1.5 months, and/or purchase of light construction equipment, also up to 15% of contract cost.
They may post the required bid bond amounting to at least 2.5% of the bid price and/or the performance bond amounting to at least 5.0% of the contract price for government agency contracts, including related premiums and charges as additional loans.
Interested contractors submit prequalification applications to the government agency handling the project. The agency evaluates applications and, if approved, endorses them to the KKK Regional Action Officer (RAO). The RAO assesses project viability and loan application, issues endorsements to designated banks, after which the contractor submits bids. If awarded, loans are confirmed, and contracts perfected.
Loans for working capital are paid through proportional deductions from progress payments made by the government agency to the contractor and then to the KKK-designated bank. Equipment purchase loans require execution of a chattel mortgage and are amortized similarly through deductions from progress payments.
If a contractor defaults due to fault or negligence, resulting in contract termination or rescission, standard KKK livelihood project guidelines apply. The contractor is blacklisted by both the government agency and financing institution and barred from future transactions, subject to civil or other legal actions.
The Minister of Public Works and Highways, in coordination with the KKK National Secretariat, is responsible for issuing implementing rules, forms, and circulars necessary to effectuate the guidelines.
It repeals or modifies all laws, decrees, charters, executive orders, administrative orders, rules, and regulations conflicting with its provisions, including aspects of Presidential Decree No. 1594 related to contract policies and procedures.
Applicants may apply only for projects located within the region where they and their key officers have been bona fide residents for the preceding three years.