Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 1594)
The primary policy objective is to adopt rules and regulations for government infrastructure contracts to achieve maximum efficiency in project implementation, minimize costs and contract variations, promote healthy government-private partnerships, and enhance the local construction industry using indigenous resources.
Detailed engineering investigations, surveys, and designs for the project must be sufficiently carried out and approved by the appropriate Minister to minimize quantity and cost overruns, change orders, and extra work orders.
The contractor must have a valid contractor's license for the current year pursuant to Republic Act No. 4566, have paid the privilege tax, comply with Administrative Order No. 66, and adhere to other relevant laws, rules, and regulations.
The contractor must demonstrate competence and experience in managing similar projects, competence of key personnel assigned, and availability and commitment of necessary equipment.
Contractors must meet specified net worth and liquid asset requirements, or cover deficiencies through a fully committed line of credit from an acceptable bank or financial institution.
In exceptional cases such as urgency, lack of qualified bidders, or where greater economy and efficiency can be achieved, projects may be undertaken by administration, force account, or negotiated contract with proper approvals.
A contract is awarded to the lowest prequalified bidder whose bid complies with all terms and is most advantageous to the government, subject to posting a performance bond and approval by the relevant Minister.
No, contractors require prior approval from the appropriate Minister to assign, transfer, pledge, subcontract, or dispose of the contract or any part of it.
The contractor is fully responsible for the contract work, safety, protection, security of personnel, public, equipment, and any damages except those caused by force majeure.
Contract price adjustments may be authorized if there are increases or decreases in labor, equipment, materials, and supplies costs due to direct government acts, based on formulas established by implementing rules.
They may only be issued for works necessary for project completion and must be within the general contract scope, subject to approval by the relevant Minister.
The government can terminate the contractor's employment and take over the contract work after notice to the contractor and sureties.
The government is responsible for inspecting the contract work during progress to ensure compliance but the contractor remains liable for the finished work's acceptability.
The Minister of Public Works, Transportation and Communications (lead official), the Minister of Public Highways, the Minister of Energy, and the Director-General of the National Economic and Development Authority jointly promulgate the rules.
The other provisions of the Decree shall remain valid and enforceable despite any provision being held unconstitutional.