ace By 2028, a world class Army that is a source of national pride HEADQUARTERS PHILIPPINE ARMY Fort Andres Bonifacio, Metro Manila OCT 22 2019 AJAIOG4 SUBJECT: Guidelines of Terminated Infrastructure Projects Implemented by Contract To: All Units Concerned 1. References: @. _ Revised Implementing Rules and Regulations of Republic Act 9184, s-2016, Annex ‘I’, entitled, “Guidelines on Termination of Contracts’ . _ Memorandum Circular no. 57 dated 07 February 2019 from the Office of the President, entitled, “Reminding all Government Offices, Agencies and Instrumentalities, including Govemment-Owned or Controlled Corporations, Government Financial, Institutions, State Universities and Colleges, and Local Government Units, to Ensure the Timely Completion of Government Infrastructure Projects”. c. AFP Logistics Letter Directive 2019-01 dated 18 Mach 2019, Subject: Administrative Action on AFP Infrastructure Contracts with Negative Slippage. Status of Infrastructure Projects implemented by Contract CY 2019. 2. Background: For the past years, the Philippine Amy (PA) has been hounded with issues regarding delayed, suspended and abandoned projects. Currently, there are 16 projects that were already terminated. Some of these projects were terminated as early as 2015, The said projects remain unfinished due to uncertainties on how to take feasible steps to pursue its completion. The legal and financial aspect add to the complication that resulted in lost opportunities in facilities readiness and wastage to financial and material resources. Based on Republic Act (RA) 9184 and Armed Forces of the Philippines Logistics Letter Directive on Projects with Negative Slippages, there are prescribed actions that an entity must take when projects are not delivered on time. in addition, the directive defined the calibrated action that empowers the Implementing Unit to recommend appropriate actions. On the other hand, the Department of Public Works and Highways (DPWH) issued guidelines to address the non-compliance to project completion timeliness and strictly implements said guidelines and impose ‘sanctions to poorly performing contractors. Hence, there is the need for a policy to ae ® gE Honor. Patriotism. Duty vue ter.By 2028, a world class Army that is a source of national pride immediately address terminated Infrastructure Projects implemented by contract to protect the interest of the PA and finally bring these projects to fruition. 3. Purpose: This policy prescribes the administrative actions on the Disposition of Terminated Projects implemented by contract. In line with the desire of the Philippine Army for timely completion of Infrastructure Projects, this policy specifies guidelines concerning the completion of terminated infrastructure projects in relation to the Implementing Rules and Regulations (IRR) of RA 9184 and AFP Logistics Letter Directive (LLD). 4. Scope: The policy applies to all infrastructure projects implemented by contract with issuances of Notice of Decision from Head of Procuring Entity (HOPE). 5. Definition of Terms a. __ Contract Termination Review Committee (CTRC) — The head of the Procuring Entity may create a committee to assist him in the discharge of his function under these guidelines. All decisions recommended by the CTRC shall be subjected to the approval of the Head of the Procuring Entity. b. _ Notice of Decision — A written notice served by the HOPE to the Contractor within a non-extendible period of 10 calendar days from receipt of Contractor's Verified Position Paper containing HOPE’s decision of whether or not to terminate the contract based on ground/s stated in the Notice to Terminate. Unless otherwise provided, the Contract is deemed terminated from receipt of the Contractor of the Notice of Decision. c. HOPE - refers to: (i) the head of the agency or his/her duly authorized official, for national government agencies; (ji) the governing board or its duly authorized official, for government-owned and/or controlled corporations; ‘or (ii) ‘the local chief executive, for local government units. Provided, that in a department, office or agency where the procurement is decentralized, the Head of each decentralized unit shall be considered as the Head of the Procuring Entity subject to the limitations and authority delegated by the head of the department, office or agency. d. Infrastructure Projects - Include the construction, improvement, rehabilitation, demolition, repair, restoration or maintenance of roads and bridges, railways, airports, seaports, communication facilities, civil works components of information technology projects, irrigation, flood contro! drainage, water supply, sanitation, sewerage, and solid waste management systems, shore protection, energy/power and electrical facilities, national buildings, school buildings, hospital buildings and other related construction projects of the goverment. An infrastructure project has the same meaning as and is used interchangeably with the term “civil works”. . _ Implementing UnitProject Managers (IU/PM) - The unitientity of the AFP in charge of managing and supervising “by contract” projects and for the implementation of this policy refers to TCE, AFP/MS Chief Engineers in the execution of its function of managing “by contract” projects. Honor. Patriotism. Duty. Page 2 of 7, By 2028, a world class Army that is a source of national pride f Implementing Program of Work (IMPOW) - It is the program of work of the remaining unimplemented items of work to complete the project. g. Procurement Center/Contracting Office (PC/ICO) — A subordinate office of the Armed Forced of the Philippines Procurement Service (AFPPS) directly responsible in the management of Contracts. h. — Procuring Entity — refers to Philippine Army. i. _ Project Inspector- An Engineer Unit of the Philippine Army directed by the Project Manager to monitor contactor in the implementation of project. i. __ Negative Slippage — refers to the delay in works execution occurring when actual accomplishment falls below the target measured by the difference between scheduled and actual accomplishment of the work of the contractor as established in the work schedule. This is described as a percentage of the whole work. . k. Notice to Terminate - Upon recommendation by the Implementing Unit (IU), the HOPE shall terminate contracts only by written notice to the Supplier/Contractor conveying the termination of the contract. The Notice to terminate shall be accompanied by a copy of the Verified Report. The notice shall state: 1) _ That the contract is being terminated for any of the ground/s aforementioned, a statement of the acts that constitute the ground/s constituting the same; 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 terminate ind 4) Special instructions of the Procuring Entity, if any. |. Statement of Work Accomplished (SWA) - An evaluated report from the Project Inspector reflecting the actual weighted accomplishment as per approved Program of Works attached in the contract. m. Technical Assessment Team (TAT) - the team shall be organized by OACE and shall conduct inspection of the terminated infrastructure project/s and provide appropriate actions/recommendations for the approval of HOPE. 6. General Policies: a. __ This policy is anchored on the 2016 Revised IRR of RA 9184 in- particular Annex “I” — Guidelines on Termination of Contacts. These guidelines aim to promote faimess in the termination of procurement contracts and to prescribe contract conditions and measures to enable government to protect its interest; b. All PA infrastructure projects under contracts shall be implemented and completed on time based on the contract time or when extended if approved by the proper authority. Thus, PRAD/U must abide by the calibrated actions specified by AFPLLD 2019-01 whereby negative slippage percentages have corresponding actions; and c. All concemed staff and implementing units involved in the disposition of terminated infrastructure projects shall abide with this policy to ensure a common understanding in dealing with this condition. Honor. Patriotism. Duty. Page 3 of 7By 2028, a world class Army that is a source of national pride 7. Guidelines: a. The Commanding General, PA (CGPA), being the Head of Procuring Entity (HOPE), may initiate the immediate take-overidisposition process for terminated projects in order to facilitate its completion; b. Impose liquidated damages for terminated projects and effect suspension and/or blacklisting of Contractor/s; c. _ If the contract was terminated for the current year, the balance of the Approved Budget for the Contract (ABC) may still be used provided that the concemed Field Accounting Unit was nofified so they can make necessary adjustment for the original obligated amount. Request for change of creditor may be initiated; and 4. ei If the balance has lapsed or has been realigned, then the balance of the ABC for the project may no longer be available for utilization. In this case, request for another funding to finish the project may be initiated through the Office of Assistant Chief of Staff for Logistics, OG4, PA. 8. Procedures: a. __The HOPE shall issue a Notice of Decision and Blacklisting Order through PC/CO to the Contractor. . The PCICO shall forward a copy of Notice of Decision and Blacklisting Order to OG4, PA. ¢. G4, PA shall send copies of Blacklisting Order to Government Procurement Policy Board (GPPB), and subsequently furnish Notice of Decision to Accounting Service, PA (ASPA), Office of Army Financial Management (OAFM), Office of the Army Chief of Engineers (OACE), Engineer Brigade where the fund was released, Field Accounting Unit (FAU) and end-user for information and appropriate actions. d. The Project Manager (OACE) shall initiate the conduct of Project Evaluation on terminated project along with the members of Technical Assessment, Team (TAT) from the end-user, concemed Engineer Unit, Project Management Branch, OACF, Commission On Audit (COA) Representative and Contractor to determine the actual essential plans, estimates, and program of works to complete the remaining works, as well as to reconcile the physical accomplishment of the terminated project with the Contractor. @. The Project Manager (OACE) shall furnish OG4, PA, ASPA, PC/CO and Engineer Unit with a copy of Project Evaluation Report on terminated project with attached SWA, along with the crafted IMPOWs to be undertaken “by Administration’, one to complete the remaining works of the project based on remaining funds but not functional, and the other is to fully and completely finish the project with appropriate adjustment of prices based on current market research, with attached Detailed Architectural and Engineering Plans (DAEP), and Management Tools for approval of HOPE. The procedure prescribed under para 3(b) of Annex “H’ of the 2016 a IRR of RA 9184 shall be adopted. Upon approval of CGPA on the desired Implementing Program of Works meow) to be utilized on the said project, with attached documents, OG4, PA shall initiate the approval of Supplemental Procurement Plan (SPP) with concemed Bids and Awards Committee (BAC) of the PA. e Ee Honor. Patriotism. Duty. Page 4 of7. By 2028, a world class Army that is a source of national pride g. While awaiting the approval of SPP, End-User in coordination with Technical Working Group shall prepare the Bidding Documents and necessary documents required for the request for competitive bidding. h. Upon receipt of Project Evaluation Report, PC/CO shall prepare Necessary documents to facilitate the payment of the contractor less the mandatory deductions and imposition of Liquidated Damages (LD). i. Upon receipt of Directive from OAFM to initiate change of Creditor based on the remaining funds, MFO of Engineer Unit/implementing Unit in coordination with servicing Accounting Unit shall reconcile the remaining funds of the projects less the computed payables to ‘the terminated supplier or contractor and submit necessary report to OAFM for the recoupment and subsequently issuance of new Advise of Allotment (ASA) with the End-user. j. Upon approval of the SPP, and receipt of ASA, end-user shall ‘submit a Unit Procurement Request (UPR) with complete attachments including Bid Documents requesting for competitive Bidding to PC/CO designated to handle the projects. k. __ PCICO shall evaluate request for bidding documents. If passed, said documents shall be transmitted to PABAC for bidding, and return the mentioned request to end-user in case of failure to satisfy the mandatory requirements of bidding for correction. | Philippine Army Bids and Awards Committee (PABAC) shall facilitate the conduct of Bidding and subsequently, after the completion. of bidding proceeding forward the complete and original set of procurement documents to concerned PC/CO. ™m. — PC/CO shall facilitate the preparation and signing of Notice of. ‘Award (NOA) and fumish the OACE for the issuance of Construction Directive and Waring Order to concemed Project Administrator (PRAD). n. _ PCICO shall conduct Pre-Delivery Conference with the End- user, Project Administrator (PRAD), Office of The Chief Engineer (OTCE), OACE, Accounting Unit, Field Property Officer, and Supplier to iron-out issues and concems in relation to the delivery of items. 0. _ The End-user shalll facilitate the issuance of Certificate of Site Possession to the PRAD prior to the issuance of NTP. p. The PRAD shall furnish the supplier with Material Delivery Schedule aligned with the S-Curve, and PERT/CPM stipulated in the contract prior the issuance of NTP. 4. Within 10 Calendar Days after the receipt of Notice of Award (NOA), the supplier shall submit its Performance Security and Warranty Security to PCICO. ie Respective Field Accounting Unit shall issue Certificate of Funding Chargeability (CAF). s. PC/CO along with other signatories of contract to include the supplier shall conduct contract evaluation proceeding and subsequently followed by the signing of Contract Agreement, Special Conditions of Contract, and receipt of NTP. : t. _ PC/CO shall furnish the end-user, and OACE with the NTP and Contact Agreement as reference in the issuance of Construction Directive to PRAD on a non-extendable period of three (3) Calendar Days upon receipt. 2&8 Vr Patten Page 5 of 7 1By 2028, a world class Army that is a source of national pride u. Upon receipt of Construction Directive, the PRAD shall implement the project as stipulated in the management tools of the contract. 3. Responsibilities a. __OG4, PA, through Engineer Branch, to ensure the holding of a Post-Termination Conference. b. ACE to facilitate the conduct of Technical inspection of the Terminated projects with Commission On Audit (COA) Representative. ¢. Contracting Office/CTRC Secretariat to duly inform all staffs and offices concemed regarding the issuance of a Notice of Decision. d. Engineer Unit concamed to prepare pertinent documents in relation to the terminated project such as the Statement of Works Accomplished (SWA), ASPP/APPMP, IMPOWs and duly coordinates with concemed staffs and the end user. . _ MFO/Engineer Unit to prepare the status of funds (Terminated Project) and informs OAFM. f. _ OAFM to initiate change of creditor for funds and issues directive as basis for FAU and issues new ASA based on available funds. g. End User to cancel the issued Certificate of Site Possession to the terminated Contractor, concurs on the IMPOWs prepared by IU, and issues a- new Certificate of Site Possession upon the resumption of the project. h. IU to ensure that the Performance Security and Warranty Bond are updated. 10. _Rescission: All policy directives in conflict with this directive are hereby rescinded. 41. Effectivity: This Policy Letter Directive shall take effect upon publication. BY COMMAND OF LIEUTENANT GENERAL ALBERTO: DISTRIBUTION: TCE, AFP, GHQ Engineer Brigades, PA PAMUs ASPA PAPC yed Pa ¥ eee | ae OCT 22 OAFM oe Page 6 of 7-By 2028, a world class Army that is a source of national pride Contracting Office Annexes: Operative Flowchart Department of Public Works and Highways’ Requirements for the Request of Change of Creditor Resolution After Activity Report/Attendance ListPhotos Honor. Patriotism. Duty. Page 7 of 7