Scope and Coverage of PPP Projects
- Covers all contractual arrangements between Implementing Agencies and Private Partners for financing, design, construction, operation, and maintenance of infrastructure or development projects.
- Includes joint ventures, toll operation agreements, lease agreements associated with PPP projects, and other related contractual arrangements.
- Excludes projects under the Government Procurement Reform Act, management contracts, service contracts, divestments, corporatization, onerous or gratuitous donations, and purely commercial joint ventures.
Definitions of Key Terms
- Provides detailed definitions for terms used in PPP projects such as Approving Body, Availability Payments, Construction, Contingent Liability, Contractor, Facility Operator, Financial Close, Government Undertakings, Green Financing, Guarantee on Demand, Implementing Agency, Joint Venture, Material Adverse Government Action (MAGA), Most Responsive Bid, National and Local PPP Projects, Private Proponent, Project Cost, Reasonable Rate of Return, Subsidy, Termination Payment, Unsolicited Proposal, Value for Money (VFM), and others.
Authority to Undertake PPP Projects
- All Implementing Agencies as defined are authorized to undertake all phases of PPP projects including identification, development, assessment, evaluation, approval, negotiation, award, and implementation.
Identification and Development of PPP Projects
- Implementing Agencies must prepare PPP project lists guided by effectiveness, transparency, VFM, affordability, safety, and alignment with development plans.
- Criteria for project development include feasibility, risk allocation, tariff affordability, climate resilience, social and environmental safeguards.
- Stakeholder consultation is required before project development.
Approval Process for PPP Projects
- National PPP projects costing P15 billion and above require approval from the NEDA Board after recommendation from NEDA Board-ICC.
- Projects below this threshold are approved by the Head of the Implementing Agency or appropriate governing body.
- Local PPP projects are approved by local Sanggunian or LUC boards, with prior endorsement from local development councils.
- Government undertakings involving national funds for local projects require NEDA Board-ICC approval.
- The approving body evaluates projects for feasibility, VFM, risk management, and sets project terms and conditions (PTCs).
- Project approval decisions must be rendered within 120 days or deemed approved if no action is taken.
- Splitting projects to avoid approval thresholds is prohibited.
Pre-qualification, Bidding, and Award Procedures
- Establishes a Pre-qualification, Bids and Awards Committee (PBAC) for managing the bidding process.
- Final PPP contract drafts must be reviewed and cleared by statutory counsel, PPP Center, and Department of Finance where applicable.
- Bidding can be single-stage or two-stage, conducted manually or electronically.
- The contract is awarded to the most responsive compliant bidder; substitution prior to bidding allowed with equivalent qualifications.
- Failure of bidding circumstances and handling of single complying bids are provided for.
Solicited Proposals
- Defined as submissions responding to an agency’s public bidding.
- Government undertakings are allowed subject to approval.
- Procedures for bidding, failure declaration, and contract award follow transparent and competitive standards, with processes for penalties and substitution of bidders.
Unsolicited Proposals
- Must be submitted to PPP Center for completeness verification, then endorsed to the appropriate Implementing Agency.
- The agency may continue processing or reject proposals with written justification.
- Unsolicited proposals can include ROW acquisition plans but advance government payment is not required.
- Restrictions on government undertakings in unsolicited proposals, except for compensation provisions where applicable.
- A comparative challenge mechanism requiring publication for competitive proposals, with right-to-match provisions for original proponents.
- Requires achievement of financial close within the contractually specified period.
Joint Ventures (JVs)
- May be contractual or via JV companies formed under applicable corporate laws.
- Government equity contribution is capped at 50% of project cost or JV capital stock.
- Profit and loss shares are proportionate to contributions with possible preferential government returns.
- Provisions ensure government’s mandate and regulatory responsibilities remain unaffected.
- End assets revert to government at contract end unless privatization is deemed beneficial.
Protest Mechanism
- All procurement stage protests must be resolved within 45 days.
- Appeals or motions for reconsideration do not delay the bidding process, but contract awards are withheld pending final decisions on appeals.
Regulation of Tolls and Charges
- Regulatory bodies must issue guidelines for tolls, fares, fees, and other charges within 180 days from IRR effectiveness.
- Approvals are based on service quality, fairness, transparency, protection of public interest, and reasonable return on investment.
- In the absence of regulators, such provisions are included in PPP contracts.
- Local PPP projects may establish local rate-setting bodies through ordinances.
Dispute Resolution
- All PPP contracts must include provisions for dispute avoidance and Alternative Dispute Resolution (ADR) under the Alternative Dispute Resolution Act of 2004.
- Parties have freedom to choose ADR mechanisms within legal bounds.
Contract Management and Risk Mitigation
- Contract management and risk mitigation plans are mandatory, detailing risks assumed by government and implementers, mitigating measures, costs, timelines, and action plans.
- Plans must be updated and submitted to the PPP Center for monitoring.
Project Supervision and Monitoring
- Implementing Agencies supervise and monitor PPP projects and submit periodic, sworn monitoring reports to oversight agencies.
- The PPP Governing Board sets monitoring frameworks and penalties for non-compliance.
- The PPP Center coordinates monitoring, collects project documentation, and submits progress reports annually to Congress.
Investment Incentives
- PPP projects are entitled to applicable government incentives, with mandatory reporting of tax exemptions or special rates to the PPP Center.
Investment Recovery Schemes
- Private partners recover investments through revenue-based (user fees) or availability-based (government payments) schemes.
- Other schemes such as commercial development rights and land grants can be allowed, subject to valuation and constitutional restrictions.
Variations and Extensions
- Project variations or extensions require due diligence and, in some cases, approval by the appropriate body, especially for changes in costs, schedules, terms, or government liabilities.
- Unauthorized variations are void, and splitting changes to circumvent approval limits is prohibited.
- Provisions apply to existing franchises and concessions, preserving substantive rights.
Divestment
- Divestment of private or government interests requires approval and compliance with qualification standards.
- Full or partial transfers of government assets follow applicable laws and require approval.
Contract Termination and Wind-up Measures
- PPP contracts define termination events, remedies, notice requirements, and termination payments.
- Termination requires exhaustion of cure periods.
- Wind-up provisions cover asset transfer, technology transfer, training, warranties, and compensation for JV buy-outs.
Prohibition on Temporary Restraining Orders
- Courts other than the Supreme Court are prohibited from issuing temporary restraining orders or similar remedies against PPP-related activities, ensuring uninterrupted project implementation.
- Exceptions only for urgent constitutional issues with bond requirements.
- Violating judges face suspension and orders issued in violation are void.
PPP Center and Governing Board
- The PPP Center is authorized to implement the PPP program, provide assistance, monitor projects, manage funds, and serve as the central PPP information repository.
- Headed by an Executive Director appointed by the President.
- The PPP Governing Board, composed of key government officials and a private sector representative, is the policy-making body overseeing the PPP program.
Project Development and Monitoring Facility (PDMF) and Risk Management Fund
- The PDMF provides funding for advisory and support services related to PPP project development and monitoring.
- The PPP Risk Management Fund manages contingent liabilities and ensures fiscal sustainability.
- Both funds are administered by the PPP Center with oversight committees.
- LGUs may establish similar risk funds and access the national fund subject to guidelines.
Establishment of PPP Units
- Implementing Agencies may create PPP Units staffed with specialized personnel to oversee PPP projects.
- PPP Center provides technical assistance and capacity development.
Transparency and Confidentiality
- Tender documents and PPP contracts are public records and must be published except where proprietary, security, or safety concerns dictate otherwise.
- Confidential information is protected except when consented to or mandated by law.
Miscellaneous Provisions
- Independent consultants may be procured to provide unbiased project advice and monitoring, with costs shared between the government and private partner.
- Conflict of interest rules apply to all parties; members with conflicts must resign.
- Alternative financing instruments like green financing and capital market instruments are permitted.
- Interconnection risks among projects require joint planning documented in MOAs.
- PBAC members are entitled to legal and medical assistance when acting in official capacity.
- Preference is given to Filipino labor and domestic materials in project implementation.
- Land Value Capture strategies should be considered to optimize finan