QuestionsQuestions (PRESIDENTIAL DECREE NO. 1594)
PD 1594 aims to: (1) achieve maximum efficiency in project implementation and minimize costs and contract variations through sound contract management; (2) promote a healthy partnership between government and the private sector for national development; and (3) enhance the growth of the local construction industry and optimize use of indigenous manpower, materials, and resources.
No bidding and/or award may be made unless detailed engineering investigations, surveys, and designs have been sufficiently carried out according to required standards/specifications, and unless the detailed engineering documents have been approved by the appropriate minister (DPWH/Minister of Public Works, Transportation and Communications/Minister of Public Highways/Minister of Energy, as the case may be).
It is intended to minimize quantity and cost overruns and underruns, reduce change orders and extra work orders, and ensure that engineering documents are properly approved before procurement.
A prospective contractor may be prequalified only if it meets legal requirements, technical requirements, financial requirements, and Filipino participation requirements as provided in PD 1594 and the implementing rules.
The contractor must: (1) be licensed as a contractor for the current year under RA 4566; (2) have paid the privilege tax to practice/engage in contracting for the current year; (3) comply with Administrative Order No. 66 of the Office of the President; and (4) comply with other pertinent existing laws, rules, and regulations.
They must show competence and experience in managing similar projects; competence and experience of key personnel assigned to the project; and availability and commitment of equipment to be used for the project.
The prospective contractor’s net worth and liquid assets must meet the requirements set under the implementing rules. A deficiency may be covered through a fully committed line of credit to the subject project by an acceptable bank or financial institution.
PD 1594 mandates maximum participation of eligible Filipino contractors in all construction projects.
Construction projects shall generally be undertaken by contract after competitive public bidding.
In exceptional cases such as when time is of the essence, when there is lack of qualified bidders/contractors, or when conclusive evidence shows greater economy and efficiency would be achieved through that arrangement—consistent with applicable laws, and subject to approval rules stated in PD 1594.
If the project cost is less than P1 Million, approval is by the relevant minister (MPWT/Minister of Public Highways/Minister of Energy, as the case may be). If P1 Million or more, approval is by the President upon the recommendation of the Minister.
A bidder’s bond is required, with amount to be set in the implementing rules. It accompanies the bid to guarantee that the successful bidder will, within a prescribed period from notice of award, enter into the contract and furnish the required performance bond.
The contract is awarded to the lowest prequalified bidder whose bid, as evaluated, complies with all terms and conditions in the call for bid and is most advantageous to the government.
Prior to award, the contractor must post a performance bond (amount to be set in the implementing rules) to guarantee faithful performance of the contract.
The government may take over the work and terminate the contractor’s employment after due notice if the contractor abandons or unduly delays the work, becomes insolvent, assigns assets for creditors, is adjudged bankrupt, assigns the contract without written approval, or violates any contract condition or term.