ANNEX “D”

CONTRACT IMPLEMENTATION GUIDELINES FOR THE PROCUREMENT OF GOODS,

1. Amendment to Order

1.1. Subject to the conditions set forth below, amendments to order may be issued at any time by
the procuring entity concerned. If any such order increases or decreases the cost of, or the time
required for executing any part of the work under the original contract, an equitable adjustment in
contract price and/or delivery schedule shall be mutually agreed upon between the parties
concerned, and the contract modified in writing.

1.2. An amendment to order may be issued only in emergency cases or during fortuitous events
requiring necessary adjustments within the general scope of the contract in any one or more of the
following is required in order to fully meet the requirements of the project:

a) drawings, design or specifications, if the goods to be furnished are to be specifically

b) method of shipment or packing; or

c) place of delivery.

1.3. An amendment to order may also be issued by the concerned procuring entity where there are
additional items needed and necessary for the protection of the goods, which were not included in
the original contract. Payments for these additional items shall be based on the unit prices in the
original contract for items of goods similar to those in the original contract. If the contract does not
contain any rate applicable to the additional items, then suitable prices shall mutually be agreed
upon between the parties. Request for payment by the supplier for any additional items shall be
accompanied by a statement with the approved supporting forms, giving a detailed accounting and
record of amount for which it claims payment. The contract time shall likewise be extended if the
acquisition of such additional items so warrants.

1.4. Under no circumstances shall a supplier proceed to commence work under any amendment to
order unless the same has been approved by the Head of the Procuring Entity concerned or his
duly authorized representative. As an exception to the rule, the Regional Director/Head concerned
may authorize the immediate start of work under any amendment to order in the event of
emergencies to avoid detriment to public service, or damage to life and/or property or when time is
of the essence: Provided, however, That the same is valid only on items up to the point where the
cumulative increase in the contract cost which has not yet been duly fully approved by the Head of
the Procuring Entity concerned or his duly authorized representative does not exceed five percent
(5%) of the original contract cost: Provided, further, That the corresponding amendment to order
shall immediately be prepared and submitted for approval to the Head of the Procuring Entity
concerned or his duly authorized representative. For an amendment to order involving a cumulative
amount exceeding five percent (5%) of the original contract price, no work thereon shall be
commenced unless the same has been approved by the Head of Procuring Entity concerned or his
duly authorized representative: Provided, That, the said cumulative amount does not exceed ten
percent (10%) of the original contract price.

2. Suspension of Work

2.1 The procuring entity may suspend the work wholly or partly by written order for a certain
period of time, as it deems necessary due to force majeure or any fortuitous events as defined in
the contract. The supplier shall take all reasonable steps to minimize the costs allocable to the work
covered by such order during work stoppage.
2.2 Before the suspension order expires, the procuring entity concerned shall either lift such order
or terminate the work covered by the same. If the suspension order is lifted, or if the period of the
order expires, the supplier shall have the right to resume work. Appropriate adjustments shall be
made in the delivery or contract schedule, or contract price, or both, and the contract shall be
modified accordingly.

3. Liquidated Damages

3.1 When the supplier fails to satisfactorily deliver goods under the contract within the specified
delivery schedule, inclusive of duly granted time extensions, if any, the supplier shall be liable for
damages for the delay and shall pay the procuring entity liquidated damages, not by way of
penalty, an amount equal to one-tenth (1/10) of one percent (1%) of the cost of the delayed goods
scheduled for delivery for every day of delay until such goods are finally delivered and accepted by
the procuring entity concerned. The procuring entity need not prove that it has incurred actual
damages to be entitled to liquidated damages. Such amount shall be deducted from any money
due or which may become due to the supplier, or collected from any securities or warranties posted
by the supplier, whichever is convenient to the procuring entity concerned. In case the total sum of
liquidated damages reaches ten percent (10%) of the total contract price, the procuring entity
concerned may rescind the contract and impose appropriate sanctions over and above the
liquidated damages to be paid.

4. Advance Payment

4.1 In accordance with Presidential Decree 1445, advance payment shall be made only after prior
approval of the President, and shall not exceed fifteen percent (15%) of the contract amount,
unless otherwise directed by the President; Provided, however, that for cases mentioned under 4.3,
4.4, and 4.5 of these guidelines, no prior approval by the President shall be necessary.

4.2 All progress payments shall first be charged against the advance payment until the latter has
been fully exhausted, unless otherwise approved by the President.

4.3 A single advance payment not to exceed fifty percent (50%) of the contract amount shall be
allowed for contracts entered into by a procuring entity for the following services where
requirement of down payment is a standard industry practice:

a) Hotel and restaurant services;

b) Use of conference/seminar and exhibit areas; and

c) Lease of office space.

4.4 Advance payment not to exceed fifteen percent (15%) of the contract amount, unless
otherwise directed by the President, shall also be allowed for procurement of goods required to
address contingencies arising from natural or man-made calamities in areas where a “State of
Calamity” has been declared by appropriate authorities.

4.5 Upon submission of an irrevocable letter of credit or bank guarantee issued by a Universal or
Commercial Bank, advance payment not to exceed fifteen percent (15%) of the contract amount
shall be allowed and paid within sixty (60) calendar days from signing of the contract. The
irrevocable letter of credit or bank guarantee must be for an equivalent amount, shall remain valid
until the goods are delivered, and accompanied by a claim for advance payment.
5. Other Rules and Guidelines

The rules and regulations for the other aspects of contract implementation shall be included in the
manuals to be issued by the GPPB, such as, but not limited to, the following:
a) Incidental Services;
b) Spare Parts;
c) Delays in the Supplier’s Performance;
d) Purchaser’s Responsibilities;
e) Prices;
f) Payment;
g) Taxes and Duties;
h) Subcontracts;
i) Standards;
j) Packing;
k) Insurance;
l) Transportation;
m) Inspections and Tests;
n) Patent Rights;
o) Limitations of Liability;
p) Termination for Default;
q) Termination for Insolvency;
r) Termination for Convenience; and
s) Assignment.