QuestionsQuestions (VALENZUELA CITY ORDICE NO. 140 SERIES OF 2014)
The ordinance cites Section 35 of R.A. 7160 (Local Government Code of 1991) and Article 66 of its Implementing Rules and Regulations as empowering LGUs to enter into Joint Ventures.
No. The ordinance states that a joint venture is not a variant under the BOT law and does not involve procurement as defined under R.A. 9184 (Government Procurement Reform Act).
A Contractual Joint Venture is a binding agreement where the City and the Private Sector Partner perform obligations without forming a joint venture company. A Joint Venture Company (incorporated company) is a stock corporation formed under the Corporation Code, with the City holding 50% or less of the outstanding capital stock (unless otherwise provided).
The term of the Joint Venture Agreement should be a fixed period not exceeding fifty (50) years.
Key principles include promotion of general welfare and public good, integration of transparency and accountability mechanisms, respect for local autonomy and proprietary functions, requirement of Sanggunian authorization for contracts entered into by the City Mayor, and consistency with the City’s multi-sectoral development and infrastructure framework.
It is a transparent method of selecting a joint venture partner initiated and solicited by the City, open to participation by any interested party based on transparent criteria.
It is an alternative selection process where a private proponent submits an unsolicited proposal; the City invites third parties to submit comparative proposals. The original proponent is given the right to match any superior or more advantageous offer.
The City may contribute money, capital, land, assets, IP, personnel, services, franchise/concession/permit/undertaking, usufruct, right-of-way, equity, subsidy, or guarantee, and may exercise proprietary functions including police power and zoning-related actions as allowed. The private sector contributes money, capital, services, personnel, assets/equipment, land, IP, or anything of value, as provided in the agreement.
The City shall be a minority equity/shareholder while the private sector proponent shall be majority, except in cases where the City owns or contributes 50% of the outstanding capital stock or contribution.
Yes. It states contributions of the parties shall be subject to third-party independent valuation. This is relevant because it affects fairness, accountability, and enforceability of the equity/cost-sharing arrangements.
Examples include: date/effectivity, parties’ identities, JV name and principal place of business, JV project and term, JV vehicle, total cost/specifications, management roles and co-venturer relationship, committed contributions and valuation/timing, profit/revenue/risk-sharing percentages, governing board/directors and officers, termination/liquidation/buy-out and asset transfer rules, divestment/disposition procedure, ADR/arbitration, anti-corruption warranties, and compliance with applicable laws.
The ordinance requires the City Mayor to sign the JV agreement with prior authorization by the Sanggunian Panlungsod.
The process includes: prequalification of prospective private sector proponents; evaluation of qualification requirements; opening and evaluation of technical proposals; opening and evaluation of financial proposals only for those whose technical proposals pass; and then recommendations for award based on the completed evaluation.
Incomplete information in any of the envelopes and/or non-compliance with bid security requirements are grounds for automatic rejection.
The BAC acts as the selection committee, responsible for identifying JV projects, all aspects of pre-selection and selection (including project study/evaluation, drafting/evaluation of JV agreement, publication of invitations, defining eligibility and securities, prequalification, challenge processes, proposal evaluation, dispute resolution mechanisms, appeals mechanisms, and recommending award). Recommendations are submitted to the Mayor for approval.
The ordinance provides forfeiture of bid security and then considers the next ranked complying bid (for solicited proposals). For unsolicited proposals, it considers comparative challengers if the winning bidder is the original proponent, or the original proponent if the winning bidder is the comparative. If none can be executed, it declares failure and the project may be subjected to another round of selection/re-bidding.
Within five (5) days from signing, the JV agreement must be submitted to the Sanggunian Panlungsod for ratification by simple majority. It becomes effective upon ratification unless another date is stipulated in the agreement.