Guiding Principles for Joint Ventures
- JV must not block market entry for other players.
- Production costs should be efficient to generate profits.
- Government can withdraw investment without barriers.
- Government's regulatory role separated from business implementation to avoid conflict.
- Private sector can assume full ownership after government divestment.
- Accountability rests with head of government entity and private partners.
Purpose of Guidelines
- Establish rules and procedures for government-private JV agreements.
- Promote pooling of resources and expertise for development goals.
- Ensure transparent award of government contracts.
Scope and Coverage
- Applies to GOCCs, GCEs, GICPs, GFIs, and SUCs authorized by law.
- Excludes LGUs and ordinary transactions of GFIs.
Definitions
- Government Entity: GOCCs, GCEs, GICPs, SUCs, GFIs.
- Joint Venture (JV): Contractual arrangement pooling capital, services, or assets for a particular goal aiming eventual private ownership.
- JV Company: SEC-registered entity formed by JV partners.
- Contractual JV: JV without forming a company.
- Competitive Selection: Transparent and fair partner selection process.
- Competitive Challenge: Process allowing third parties to submit comparative proposals.
- Unsolicited Proposal: Private initiative without government call.
General Guidelines
- JV must align with government entity's mandate.
- JV should support national development and not crowd out private efforts.
- Prefer formation of JV Company with government equity less than 50%.
- Government contribution can be asset-based with independent valuation.
- JV Company governance proportionate to investments.
- Government encouraged to limit participation period and divest via competitive means.
- Draft agreements must clearly define objectives, roles, capital, profit/loss sharing, dispute resolution, termination, confidentiality, and indemnification.
- Contractual JVs allowed if JV Company not viable.
Process for Entering into JV Agreements
- Requires approval in principle by head of government entity based on justification, description, and feasibility.
- DOF/DBM clearance needed if national government involvement exists.
- Modes of JV partner selection:
- Competitive Selection: Transparent, competitive process overseen by JV Selection Committee (JV-SC).
- Negotiated Agreements: Allowed on unsolicited proposals or failed competition.
- Material deviations in contracts require reapproval; otherwise, contract is invalid.
Reporting
- Annual implementation report to DOF including audited financials and 3-year work program.
- JV agreements above 300 million pesos reported to NEDA with full documents.
Amendments and Separability
- Guidelines amendable by NEDA in consultation with GPPB and OGCC.
- Invalid provisions do not affect the rest of the guidelines.
Implementation and Effectivity
- Guidelines effective 15 days after publication.
JV Selection Committee (JV-SC)
- Composed of government officials and representatives from NEDA.
- Responsibilities include managing the entire JV selection process.
- Quorum is simple majority; chairman votes only in ties.
Selection/Tender Documents
- Includes instructions, minimum standards, feasibility studies, draft contracts, proposal forms, and applicable regulations.
- Instructions must include project objectives, submission guidelines, evaluation criteria, financial parameters, and regulatory requirements.
Competitive Selection Procedures
- Invitation to apply published for at least 7 days with 30-day submission period.
- Qualification based on legal, technical, financial criteria.
- Proposal submitted in two envelopes: technical and financial.
- Late or incomplete proposals rejected.
- Evaluation in stages: first technical, then financial.
- Right to reject all proposals reserved.
- Extensions allowed but without modification of proposals.
Award and Contract Signing
- JV-SC recommends award; head of entity approves within 7 days.
- Notice of Award issued requiring compliance within 15 days.
- Failure to contract results in forfeiture of proposal security and opportunity to next ranked bidder.
- Contract effective upon signing.
- Other required government approvals must be secured.
Appeals
- Decisions of JV-SC can be appealed to head of entity after motion for reconsideration.
- Appeals must be filed within 7 days with a fee.
Procedures for Failed Competitive Selection (Limited Negotiations)
- Eligibility of sole remaining private party assessed.
- Proposal submitted and evaluated.
- If rejected, negotiations terminated; entity may re-initiate competition or pursue other options.
- Financial-only negotiations permitted if technical proposal passed but financial proposal failed.
Competitive Challenge Procedure for Negotiated JVs
- Unsolicited proposals or JVs after failed competition subject to competitive challenge.
- Three-stage process: proposal submission and evaluation; negotiation of terms; competitive challenge for superior offers.
- Original proponent has right to match superior comparative offers.
- Award to best or matched offer.
These comprehensive guidelines ensure transparent, fair, and accountable processes for joint ventures between government entities and private sector counterparts, safeguarding public interest and promoting efficient public-private partnerships.