Law Summary

Introduction

Executive Order No. 278, issued on February 2, 2004, prescribes guidelines for project loan negotiations and the packaging of government foreign-assisted infrastructure projects in the Philippines, emphasizing the promotion of Filipino constructors and consultants.

General Policy on Consultancy Services

• Legal Principle: The government must prioritize funding consultancy services for infrastructure projects using local resources and expertise.
• Key Definitions:
  • Consultancy Services: Services required for feasibility studies, engineering designs, and project management.
• Requirements:
  • Foreign assistance for consultancy is only permissible when local funding is insufficient.
  • Filipino consultants may collaborate with foreign consultants, with Filipinos as lead consultants.
• Procedures:
  • Government units must allocate funds in their investment programs for consultancy services.

Packaging of Government Infrastructure Projects

• Legal Principle: Infrastructure projects must be packaged into manageable components to facilitate Filipino participation.
• Requirements:
  • Projects should be divided into separable work components without compromising technical integrity.
  • Eligible bidders must have successfully completed projects valued at at least 50% of the contract to be bid.
  • Clustering of small and medium projects is allowed if within the capabilities of Filipino contractors.
• Prohibition:
  • Avoid project packaging that constitutes contract splitting to evade legal requirements under Section 11 of Executive Order No. 109-A.

Pre-Loan Negotiations

• Legal Principle: Transparency and private sector involvement are essential during loan negotiations.
• Requirements:
  • A technical working group must be formed, including a representative from the private sector.
  • The Department of Finance (DOF) will invite representatives based on recommendations from relevant authorities.

Projects Preparation and Loan Negotiation Parameters

• Legal Principle: Loan agreements must adhere to specific guidelines to protect Filipino interests and promote local capabilities.
• Key Definitions:
  • Special Tax Privileges: Tax benefits granted to certain classes/nationalities under international agreements.
• Requirements:
  • Tax privileges must be included in bid evaluations.
  • Agreements should foster joint ventures between Filipino and foreign firms where viable.
  • No discriminatory provisions should limit Filipino participation in projects funded by loans.

Implementing Rules and Regulations (IRR)

• Requirements:
  • The National Economic and Development Authority (NEDA) Infrastructure Committee (INFRACOM) is tasked with issuing the IRR within 60 days from the Order's issuance.

Repealing Clause

• Legal Principle: The Order nullifies any inconsistent executive issuances, orders, rules, or regulations.

Separability Clause

• Legal Principle: If any provision of the Order is declared invalid, the remaining provisions remain effective.

Effectivity

• Timeframe: The Order takes effect 15 days after publication in the Official Gazette or a widely circulated newspaper.

Key Takeaways

• Executive Order No. 278 aims to enhance the participation of Filipino constructors and consultants in government foreign-assisted projects.
• Emphasizes the use of local expertise and resources while ensuring that project packaging and loan negotiations facilitate local capabilities.
• Promotes transparency in loan negotiations with private sector representation.
• Establishes a clear framework for implementing the Order, including necessary timelines for the issuance of IRRs and the effective date of the Order.