Data Loading...
Procurement Module: Module 7 Flipbook PDF
Procurement Module: Module 7
127 Views
35 Downloads
FLIP PDF 785.53KB
These guidelines aim to promote fairness in the Termination of procurement contracts and to prescribe contract conditions and measures to enable the government to protect its interests. For this purpose, policies and procedures relating to the whole or partial termination of government procurement contracts of goods, infrastructure projects, and consulting services are covered here.
I.
Definition of Terms A.
Termination in Part means the termination of a part but not all, of the work that has not been completed and accepted under a contract.
B.
Termination in Whole means the termination of all of the work that has not been completed and accepted under a contract.
C.
Show Cause refers to a notice which the Procuring Entity is required to issue prior to terminating a contract. The purpose of a show cause notice is to enable the contractor to present its position why the contract should not be terminated.
D.
Verified Report refers to the report submitted by the Implementing Unit to the Head of the Procuring Entity setting forth its findings as to the existence of grounds or causes for termination and explicitly stating its recommendation for the issuance of a Notice to Terminate.
II.
Grounds for Termination of Contracts A.
Termination for Default 1.
In contracts for Goods The Procuring Entity shall terminate a contract for default when any of the following conditions attend its implementation: a)
Outside of force majeure, the Supplier fails to deliver or perform any or all of the Goods within the period(s) specified in the contract, or within any extension thereof granted by the Procuring Entity pursuant to a request made by the Supplier prior to the delay, and such failure amounts to at least ten percent (10%) of the contract price;
PROCUREMENT SERVICE: Module 1. General Overview of RA 9184…
107
b)
As a result of force majeure, the Supplier is unable to deliver or perform any or all
of the Goods, amounting to at least ten percent (10%) of the contract price, for a period of not less than sixty (60) calendar days after receipt of the notice from the Procuring Entity stating that the circumstance of force majeure is deemed to have ceased; or c)
The Supplier fails to perform any other obligation under the Contract.
In contracts for Infrastructure Projects The Procuring Entity shall terminate a contract for default when any of the following conditions attend its implementation: a)
Due to the Contractor’s fault and while the project is on-going, it has incurred negative slippage of fifteen percent (15%) or more;
b)
Due to the Contractor’s fault and after the contract time has expired, it has incurred a negative slippage of ten percent (10%) or more in the completion of the work; or
c)
The Contractor
Abandons the contract works, refuses or fails to comply with a valid instruction of the Procuring Entity or fails to proceed expeditiously and without delay despite a written notice by the Procuring Entity;
Does not actually have on the project site the minimum essential equipment
Listed on the Bid necessary to prosecute the Works in accordance with the approved work plan and equipment deployment schedule as required for the
project;
Does not execute the Works in accordance with the contract or persistently or flagrantly neglects to carry out its obligations under the contract;
Neglects or refuses to remove materials or to perform a new work that has been rejected as defective or unsuitable; or
Sub-lets any part of the contract works without approval by the Procuring Entity.
In contracts for Consulting Services The Procuring Entity shall terminate a contract for default when any of the following conditions attend its implementation: a)
Outside of force majeure, the Consultant fails to deliver or perform the Outputs and Deliverables within the period(s) specified in the contract, or within any extension thereof
PROCUREMENT SERVICE: Module 1. General Overview of RA 9184…
108
granted by the Procuring Entity pursuant to a request made by the Consultant prior to the
delay; b)
As a result of force majeure, the Consultant is unable to deliver or perform a material portion of the Outputs and Deliverables for a period of not less than sixty (60) calendar days after the Consultant’s receipt of the notice from the Procuring Entity stating that the circumstance of force majeure is deemed to have ceased; or
c)
B.
The Consultant fails to perform any other obligation under the contract.
Termination for Convenience
The Head of the Procuring Entity may terminate a contract for the convenience of the Government if it has determined the existence of conditions that make Project Implementation economically, financially or technically impractical and/or unnecessary, such as, but not limited to, fortuitous event(s) or changes in law and national government policies.
C.
Termination for Insolvency
The Procuring Entity shall terminate the contract if the Supplier/Contractor/Consultant is declared bankrupt or insolvent as determined with finality by a court of competent jurisdiction. In this event, termination will be without compensation to the Supplier/Contractor/Consultant, provided that such termination will not prejudice or affect any right of action or remedy which has accrued or will accrue thereafter to the Procuring Entity and/or the Supplier/Contractor/Consultant.
Termination for Unlawful Acts The Procuring Entity may terminate the contract in case it is determined prima facie that the Supplier/ Contractor/Consultant has engaged, before or during the implementation of the contract, in unlawful deeds and behaviors relative to contract acquisition and implementation. Unlawful acts include, but are not limited to, the following: a)
Corrupt, fraudulent, collusive and coercive practices;
b)
Drawing up or using forged documents;
c)
Using adulterated materials, means or methods, or engaging in production contrary to rules of science or the trade; and
d)
Any other act analogous to the foregoing.
PROCUREMENT SERVICE: Module 1. General Overview of RA 9184…
109
Termination by Contractor/Consultant 1.
In contracts for Infrastructure Projects The Contractor may terminate its contract with the Procuring Entity if the works are completely stopped for a continuous period of at least sixty (60) calendar days through no fault of its own, due to any of the following reasons: a)
Failure of the Procuring Entity to deliver, within a reasonable time, supplies, materials, right-of -way, or other items it is obligated to furnish under the terms of the contract; or
b)
The prosecution of the work is disrupted by the adverse peace and order situation, as certified by the Armed Forces of the Philippines Provincial Commander and approved by the Secretary of National Defense.
2.
In contracts for Consulting Services The Consultant may terminate its agreement with the Procuring Entity if the latter is in material breach of its obligations pursuant to the contract and has not remedied the same within sixty (60) calendar days following its receipt of the Consultant’s notice specifying such breach.
III.
Procedures for Termination of Contracts A.
Verification
The implementing unit shall, within 7cd from receipt of written report of acts or causes which may constitute ground/s for termination, verify the existence of such grounds, and shall execute a Verified Report, with all relevant evidence attached.
B.
Notice to Terminate
The HOPE shall terminate contract only by written notice to the Contractor/Supplier stating therein the following: 1.
The ground(s) and a statement of the acts that constitute the ground(s) for which the contract is being terminated;
2.
The extent of termination, whether in whole or in part;
3.
An instruction to the Supplier/Contractor/Consultant to show cause as to why the contract should not be terminated; and
4.
Special instructions of the Procuring Entity, if any.
5.
The PE may withdraw the Notice to Terminate, at any time before the receipt of the Supplier’s/Contractor’s/ Consultant’s position paper.
6.
Withdrawal of Notice to Terminate shall be based on PE’s determination that items or works,
PROCUREMENT SERVICE: Module 1. General Overview of RA 9184…
110
subject of the notice, had been completed, delivered, or performed.
C.
Show Cause
A Verified position paper shall be submitted by the Supplier/ Contractor/ Consultant to the HOPE within 7cd from receipt of the Notice of Termination. Failure by the Supplier/ Contractor/ Consultant to submit the verified position paper within the reglementary period shall cause the HOPE to issue an Order of termination.
D.
Decision
Within a non-extendible period of ten (10) calendar days from receipt of the verified position paper, the Head of the Procuring Entity shall decide whether or not to terminate the contract.
Termination shall be based only on the ground/s stated in the Notice to Terminate.
HOPE may create Contract Termination Review Committee (CTRC) to assist him in the discharge of his function.
All findings or decisions of the CTRC are subject to the approval of the HOPE.
E.
Take-over of Contracts
If a Procuring Entity terminates the contract due to default, insolvency, or for cause, it may enter into a Negotiated Procurement pursuant to Section 53(c) of R.A. 9184 and 53.3 of its IRR, to wit: 1.
The contract may be negotiated starting with the second lowest calculated/highest rated bidder for the project under consideration at the bidder’s original bid price.
2.
If negotiation fails, then negotiation shall be done with the third lowest calculated/ highest rated bidder at his original price. If the negotiation fails again, a short list of at least three (3) eligible contractors shall be invited to submit their bids, and negotiation shall be made starting with the lowest calculated/highest rated bidder.
3.
Authority to negotiate contracts for projects under these exceptional cases shall be subject to prior approval by the Heads of the Procuring Entities concerned, within their respective limits of approving authority.
PROCUREMENT SERVICE: Module 1. General Overview of RA 9184…
111
F.
Procuring Entity’s Options in Termination for Convenience
Applies only for Goods. Goods have been performed or are ready for delivery within thirty (30) calendar days after the Supplier’s receipt of Notice to Terminate shall be accepted by the Procuring Entity at the contract terms and prices. Goods not yet performed or ready for delivery, the Procuring Entity may elect: 1.
To have any portion delivered or performed and paid at the contract terms and prices; and/or
2.
To cancel the remainder and pay to the Supplier an agreed amount for partially completed or performed goods and for materials and parts previously procured by the Supplier.
Payment based on quantum meruit (NPM 92-2012).
G.
Notice by Contractor/Consultant
Written notice must be served to the PE at least 30 cd before its intended termination. Contract is deemed terminated if it is not resumed in 30 cd after receipt of such notice by the PE.
APPLICABILITY OF PROCEDURE FOR TERMINATION OF CONTRACT Procedures for termination of contracts mentioned in Section IV of the Guidelines and in GCC Clause 19.1 of the PBDs for the Procurement of Infrastructure Projects apply to all types of termination of
contracts regardless of the grounds for termination. The mentioned Section/Clause of the Guidelines and GCC does not distinguish the grounds to which they shall be made applicable. “Exceptio firmat regulam in casibus non exceptis”. A thing not being excepted must be regarded as coming within the purview of the general rule (NPM 44-2014).
PROCUREMENT SERVICE: Module 1. General Overview of RA 9184…
112
SUMMARY We have learned the following from this module:
Grounds for termination of contacts: a.
Termination for Default
b.
Termination for Convenience
c.
Termination for Insolvency
d.
Termination for Unlawful Acts
e.
Termination by Contractor/Consultant
There are situations/conditions where government contracts can be terminated.
For Goods, outside force majeure, the Supplier fails to perform or deliver any or all of the Goods, wherein such failure amounts to at least 10% of the contract price.
For Infrastructure Projects, contracts can be terminated for the following reasons:
a.
Due to Contractor’s fault and while the project is on-going, it has incurred a negative slippage of 15% or more;
b.
After the expiration of the contract time, the Contractor incurred negative slippage of 10% or more, due to its own fault; or
c.
The Contractor commits any or all of the following:
Abandons the contract works, refuses or fails to comply with a valid instruction of the PE or fails to proceed expeditiously and without delay despite a written notice by the PE;
Does not have the listed minimum essential equipment in the project site in accordance with the approved work plan and equipment deployment schedule;
Does not execute the works in accordance with the contract or neglects to carry out its contractual obligations;
Neglects or refuses to remove materials or perform a new work that has been rejected as defective or unsuitable; or
Sub-lets any part of the works without approval of the PE.
For Consulting Services contracts can be terminated for the following conditions: a.
Outside force majeure, the Consultant fails to deliver or perform the Outputs and Deliverables within the period specified in the contract, or within any granted extension;
b.
As a result of force majeure, the Consultant is unable to deliver or perform a material portion of Outputs and Deliverables for a period of not less than 60 cd after receipt of notice from the PE that the force majeure is deemed to have ceased; and
c.
The Consultant fails to perform any other obligation under the Contract.
The PE may terminate the contract at any time for its convenience.
The HOPE shall determine the existence of conditions that would make the project implementation economically, financially or technically impractical and/or unnecessary.
PROCUREMENT SERVICE: Module 1. General Overview of RA 9184…
113
The PE shall terminate the contract if the Supplier/Contractor/Consultant is declared bankrupt or insolvent.
The bankruptcy/insolvency of the Supplier/Contractor/ Consultant must be that as determined by a court of competent jurisdiction.
The PE may terminate the contract in case it is determined prima facie that the Supplier/ Contractor/Consultant has engaged, before or during the implementation of the contract in unlawful deeds and behaviors relative to the contract acquisition and implementation.
The following are unlawful acts by a supplier as a basis by the Procurement Entity to terminate a contract:
a.
Corrupt, fraudulent, collusive and coercive practices;
b.
Drawing up or using forged documents;
c.
Using adulterated materials, means or methods, or engaging in production contrary to rules of science or the trade; and
d.
Any other act/s analogous to the foregoing.
The Contractor may terminate his contract with the PE if the works are completely stopped for a continuous period of at least 60 cd, through no fault of its own for the following reasons: a.
Failure of PE to deliver supplies, materials, right-of-way, or other items under the terms of the contract; or
b.
Works are disrupted by adverse peace and order situation, certified by the AFP Provincial Commander and approved by the Secretary of National Defense.
The Consultant may terminate its agreement with the PE if the latter is in material breach of its contractual obligations and has not remedied the same within 60 cd from receipt of the Consultant’s notice specifying such breach.
A Verified Report is the report submitted by the Implementing Unit to the Head of the Procuring Entity indicating its findings as to the existence of grounds or causes for termination and explicitly stating its recommendation for the issuance of a Notice to Terminate.
A Show Cause is a verified position paper submitted by the Supplier/ Contractor/ Consultant to the HOPE within 7cd from receipt of the Notice of Termination.
If a PE terminates a contract due to default, insolvency, or for a cause, it may enter into a Negotiated Procurement in accordance to Section 53(c) of RA 9184 and 53.3 of its IRR.
PE’s options in Termination for Convenience applies only to contract for Goods
A written notice by Contractor/Consultant must be served to the PE at least 30 cd before its intended termination.
PROCUREMENT SERVICE: Module 1. General Overview of RA 9184…
114
REFERENCES
1.
2016 Revised Implementing Rules and Regulations (IRR) of Republic Act (R.A.) No.9184
2.
Government Procurement Policy Board (GPPB) Resolutions
3.
Government Procurement Policy Board (GPPB) Circulars
4.
Non-Policy Matter Opinions
5.
GPPB-TSO Training Materials
6.
Generic Procurement Manual - Volume 1, 2, 3, and 4
7.
DBM Budget Circular No. 2007-3, dated 29 November 2007.
PROCUREMENT SERVICE: Module 1. General Overview of RA 9184…
115
This course material was produced in 2019 by the “Development of eLearning Modules for the Department of Health” project implemented by the University of the Philippines Open University and funded by the Department of Health Health Human Resource Development Bureau.
PRODUCTION TEAM Course Package Developer: Pura Amoloza, Michael Lagaya, and Primo G. Garcia Online Pedagogy Expert: Primo G. Garcia Resource Person: Ramil Jacinto Online Learning Object Specialist: Ellaisa Ruth B. Veluz Scriptwriter: Ellaisa Ruth B. Veluz Style Editor: Ellaisa Ruth B. Veluz