Law Summary
Computation of Periods and Definitions
- Time periods exclude the first day and include the last; adjustments made for holidays and non-working days.
- Extensive definitions clarify critical terms including: Administrative Franchise, Availability Payments, Blended Finance, Confidential Business Information, Feasibility Studies, Financial Close, Government Equity, PPP Contracts, Performance Undertakings, Reasonable Rate of Return (RROR), and many others.
Scope and Types of PPP Projects
- PPPs cover a wide range of infrastructure and services such as highways, airports, power, telecommunications, water supply, health infrastructure, education, urban development, environment management, and defense facilities, among others.
- Includes various contractual arrangements, such as Joint Ventures (JV), Build-Operate-Transfer (BOT) variants, Operation and Maintenance (O&M), and lease agreements tied to PPP Projects.
Non-Applicability
- PPP Code does not apply to: projects under Government Procurement Reform Act (RA 9184), projects fully funded by foreign loans and grants under certain conditions, management contracts without PPP elements, specific service contracts related to coal, petroleum, mining, renewable energy unless bundled, divestments, corporatization, and purely commercial joint ventures or lease agreements.
Authority and Financing
- All Implementing Agencies authorized to undertake PPPs.
- Regulatory Bodies generally cannot undertake PPPs in sectors they regulate unless no alternatives exist.
- PPP Projects may be financed solely or partly by Private Partners, government funds, GFIs, ODA, or Alternative Financial Instruments like Green Finance, bonds, and sukuk.
PPP Units and Project Identification
- Implementing Agencies may establish dedicated PPP units staffed by technical, legal, financial personnel.
- Projects to be identified based on government objectives, VFM, transparency, affordability, market acceptance, and alignment with national or local development plans.
- Consolidated Lists of Investment Programs (CLIPs) and Lists of PPP Projects must be submitted, published, updated, and monitored.
Project Preparation and Feasibility Studies
- Feasibility Studies to cover project description, context, expected outcomes, technical alternatives, costs, legal/regulatory frameworks, market analysis, financial and economic viability, risks, safeguards, and stakeholder consultations.
- Investment recovery allowed through revenue-based, availability-based schemes, or other mechanisms like commercial development rights.
- Mitigation of interconnectivity and interface risks through plans and MOAs.
- Adoption of land value capture strategies to optimize project value.
Project Review and Approval
- National PPP Projects above Php15 billion approved by the NEDA Board upon ICC recommendation; projects below Php15 billion approved by relevant agency heads or boards.
- Specific conditions trigger ICC approval requirements.
- Local PPP Projects require Local Development Councils' confirmation prior to Sanggunian or Boards’ approval.
- Procedural guidelines ensure timelines; failure to act results in deemed approval.
- No delegation of approval authority allowed; monitoring and reporting required.
Unsolicited Proposals
- Must be complete as determined by PPP Center and submitted with feasibility studies, financial and economic models, and without prohibited Government Undertakings.
- Development costs by government reimbursed by winning proponent.
- Private sector allowed to negotiate terms upon acceptance of unsolicited proposals.
- Right-to-match mechanism applied to comparative challenges.
- OPS valid for one year, subject to revocation on grounds like misrepresentation or change in ownership.
Procurement Process
- Establishment of PPP Pre-Qualification/Bids and Awards Committee (PBAC) with minimum technical, financial, and legal experts.
- PBAC conducts pre-bid conferences, issues bid bulletins, evaluates bids based on technical and financial criteria.
- Participation fees assessed; bids may be manual or electronic.
- Single complying bids may undergo negotiation under RROR constraints.
- Protests resolved expeditiously within prescribed timelines.
- Draft PPP Contracts reviewed by PPP Center, statutory counsel, DOF, and approved by Head of Implementing Agency.
Contract Execution and Administration
- Winning bidders execute contracts within 5 calendar days of Notice to Award.
- Owners may form Special Purpose Companies or Joint Ventures, subject to ownership and equity limits.
- Changes in ownership or membership require approval, and substantial changes may cause contract cancellation.
Construction and Operations
- Notices to commence construction and operations issued;
- Performance securities required for both construction and operations to guarantee obligations.
- Independent Consultants may be procured to oversee design, construction, and operation phases.
- Liquidated damages imposed for delays or nonperformance.
- Implementing Agencies retain supervisory roles but ultimate responsibility lies with the Private Partner.
Regulation of Tariffs
- Regulatory Bodies identified for tariff approvals; procedures for tariff setting, adjustment, and appeals established.
- In absence of a regulatory body, tariffs are as stated in the PPP Contract; LGUs may form local rate-setting bodies.
- Approved tariffs must be publicly posted.
Government Undertakings and Incentives
- Government may offer subsidies, guarantees, equity, assets contributions, and subsidies such as Viability Gap Funding,
- Compensation for government assets contributed must be fair and appraised.
- PPP Projects qualify for national and local investment incentives subject to applicable laws.
Valuation and Auditing
- Valuation of government contributions to PPP projects to be conducted by third-party appraisers.
- COA audits PPP Projects including revenues and expenditures to ensure proper accounting.
Contract Variation and Termination
- Variations, extensions, or expansions to contracts require approval depending on type and impact on project cost.
- Prohibited splitting of projects to circumvent approval thresholds.
- Termination events and payments to be detailed in contracts with independent appraisal of termination payments.
Institutional Arrangements
- PPP Center institutionalized and attached to NEDA; headed by an Executive Director.
- PPP Center assists agencies, acts as procurement agent if requested, coordinates, monitors projects, and manages PPP funds.
- PPP Governing Board established as the policy-making body composed of key national officials and private sector representative.
Risk Management and Development Funds
- Project Development and Monitoring Facility (PDMF) established for advisory and preparatory services.
- PPP Risk Management Fund created to cover contingent liabilities with clear management by PPP Center, DBCC, and related bodies.
Legal Assistance and Remedies
- Government officials managing PPP projects entitled to legal and medical assistance unless found guilty of gross negligence or misconduct.
- Provision prohibits courts, except Supreme Court, from issuing temporary restraining orders or injunctions that delay PPP processes except in extreme constitutional urgency.
Sanctions
- Penalties including imprisonment and fines imposed for violations such as downgrading project costs, falsification, failures in approvals, unfair procurement practices, unauthorized divestments, nondisclosure of confidential information, and corruption.
- Violation consequences include contract termination, disqualification, and prohibition from public office or consulting.
Transitory Provisions
- Existing PPP contracts and projects phased into the new Code and IRR with respect to established rights and obligations.
- Projects under previous laws to continue under rules existing at time of submission but processed in conformity with new Code from the procurement stage onward.
Final Provisions
- Prohibition on conflicting local or agency-issued PPP or JV guidelines.
- Repealed prior laws and orders superseded by this Code and IRR.
- Process established for amendments to the IRR.
- Separability clause and effectivity provisions stated.
All provisions and procedures are aimed at ensuring fair, transparent, accountable, and efficient implementation of PPP projects in line with national development and public welfare objectives.