Republic Act No. 7718

Section 1 Declaration of Policy 3

Section 2 Definition of Terms 3

Section 3 Private Initiative in Infrastructure 6

Section 4 Priority Projects 7

Section 4 - A Unsolicited Proposals 7

Section 5 Public Bidding of Projects 8

Section 5 - A Direct Negotiation of Contract 9

Section 6 Repayment Scheme 9

Section 7 Contract Termination 10

Section 8 Regulatory Boards 10

Section 9 Project Supervision 11

Section 10 Investment Incentives 11

Section 11 Implementing Rules and Regulations 11

Section 12 Coordination and Monitoring 11

Section 13 Renumbered Section 11 of R.A. No. 6957 12

Section 14 Renumbered Section 12 of R.A. No. 6957 12

Section 15 Renumbered Section 13 of R.A. No. 6957 12

Section 16 Repealing Clause 12

Section 17 Separability Clause 12

Section 18 Effectivity Clause 12 II. IMPLEMENTING RULES AND REGULATIONS 15 Introduction 17

Rule 1 Preliminary Provisions 17

Section 1.1 Policy 17

Section 1.2 Coverage 17

Section 1.3 Definition of Terms 18

Rule 2 General Provisions 23

Section 2.1 Authorized Contracting Government Agencies/Units 23

Section 2.2 Eligible Types of Projects 23 i

Section 2.3 List of Priority Projects 24 Rule 7 SUBMISSION, RECEIPT AND OPENING OF BIDS 39

Section 2.4 Publication and Notice 25 Section 7.1 Requirements for Bid Submission 39

Section 2.5 Allowable Modes of Implementation 25 Section 7.2 Submission of Late Bids 41

Section 2.6 Approval of Projects 25 Section 7.3 Opening of the Envelope for Qualification of Bidder 41

Section 2.7 Detailed Guidelines for the Approval of Projects 26 Section 7.4 Evaluation of Qualification Requirements 41

Section 2.8 Approval of Contracts 26 Section 7.5 Rejection of Bids 42

Section 2.9 Presidential Approval, When Required 27 Section 7.6 Opening of the Envelope for the Technical Proposal 42

Section 2.10 Deadline for Approval of Solicited Projects 27 Section 7.7 Opening of the Envelope for the Financial Proposal 42

Section 7.8 Withdrawal and/or Modification of Bids 42

Rule 3 THE BOT PRE-QUALIFICATION, BIDS, AND AWARDS COMMITTEE 28

Section 3.1 Composition 28 Rule 8 EVALUATION OF BIDS 42

Section 3.2 Responsibility of the PBAC 29 Section 8.1 The First Envelope Evaluation 42

Section 3.3 Quorum 29 Section 8.2 The Second Envelope Evaluation 43

Section 8.3 Right to Reject All Bids 44

Rule 4 BID/TENDER DOCUMENTS 29

Section 4.1 Bid/Tender Documents 29 Rule 9 NEGOTIATED CONTRACT 44

Section 4.2 Instructions to Bidders 30 Section 9.1 Direct Negotiation 44

Section 4.3 Minimum Designs, Performance Standards/Specifications and 31 Section 9.2 Unsolicited Proposals 44 Economic Parameters Section 9.3 Conditions for Negotiated Projects 45

Section 4.4 Draft Contract 32 Section 9.4 Financial and Technical Evaluation of Negotiated Contracts 45

Rule 5 QUALIFICATION OF BIDDERS 33 Rule 10 UNSOLICITED PROPOSALS 45

Section 5.1 Who May Participate 33 Section 10.1 Requisites for Unsolicited Proposals 45

Section 5.2 Publication of Invitation to Pre-Qualify and Bid 33 Section 10.2 New Technology 46

Section 5.3 Period to Prepare Pre-Qualification Documents 34 Section 10.3 Projects Ineligible for Unsolicited Proposals 46

Section 5.4 Pre-Qualification Requirements 34 Section 10.4 Investment Incentives and Government Undertakings for 46

Section 5.5 Pre-Qualified and Disqualified Proponents 36 Unsolicited Proposals

Section 5.6 Issuance of Tender Documents 37 Section 10.5 Submission of a Complete Unsolicited Proposal 47

Section 5.7 Simultaneous or Single-Stage Qualification and Bidding 37 Section 10.6 Treatment of More Than One Proposal for the Same or Similar 47

Section 5.8 Changes to Pre-Qualification and Tender Documents 37 Project

Section 5.9 Acceptance of Criteria and Waiver of Rights to Enjoin Project 38 Section 10.7 Evaluation and Acceptance of Unsolicited Proposals 47

Section 10.8 ICC Determination of Reasonable Rate of Return (ROR) and 48 Parameters and Approval of the Unsolicited Project Prior to

Rule 6 SUPPLEMENTAL NOTICES AND PRE-BID CONFERENCES 38 Negotiation With the Original Proponent

Section 6.1 Responsibility of Bidder 38

Section 10.9 Approval of Unsolicited Contracts by the Head of Agency/LGU 49

Section 6.2 Supplemental Notices 38

Section 10.10 Tender Documents 49

Section 6.3 Pre-Bid Conference 39

Section 10.11 Invitation for Comparative Proposals 49 ii iii

Section 10.12 Posting of Bid Bond by Original Proponent 50 Section 12.17 Revenue Sharing 60

Section 10.13 Qualification of Comparative Proponents 50 Section 12.18 Adjustments of Tolls/Fees/Rentals/Charges 60

Section 10.14 Submission of Proposal 50 Section 12.19 Audit of Collections 61

Section 10.15 Evaluation of Comparative Proposals 50 Section 12.20 Accession/Divestiture 61

Section 10.16 Disclosure of the Price Proposal 50 Section 12.21 Contract Termination/Rescission 61

Section 10.17 Failure of a Winning Comparative Proponent to Enter Into 50 Section 12.22 Venue for Litigation 62 Contract Section 12.23 Expiring BOT/PPP Contracts and Transfer of and Warranty 63 Over the Facility

Rule 11 AWARD AND SIGNING of CONTRACT 51

Section 11.1 Recommendation to Award 51 Rule 13 INVESTMENT INCENTIVES AND GOVERNMENT UNDERTAKINGS 63

Section 11.2 Decision to Award 51 Section 13.1 Sources of Financing 63

Section 11.3 Notice of Award 51 Section 13.2 Investment Incentives 63

Section 11.4 Public Dissemination of Bidding Results 52 Section 13.3 Government Undertakings 64

Section 11.5 Formation of Special Purpose Company (SPC) 52

Section 11.6 Withdrawal/Substitution of a Member 53 Rule 14 COORDINATION AND MONITORING OF PROJECTS 65

Section 11.7 Validity of Bids/Return of Bid Security 53 Section 14.1 The PPP Center 65

Section 11.8 Extension of Validity of Bids 53 Section 14.2 Timelines 66

Section 11.9 Failure of Bidding 53 Section 14.3 PPP Units 66

Section 14.4 Informing Congress 66

Rule 12 CONTRACT APPROVAL AND IMPLEMENTATION 54

Section 12.1 Execution/Approval of the Contract 54 Rule 15 FINAL PROVISIONS 66

Section 12.2 Other Approvals for Contract 54 Section 15.1 IRR Committee 66

Section 12.3 Grant of Franchise 54 Section 15.2 Effectivity of These Revised IRR or Amendments Thereto 67

Section 12.4 Contract Effectivity 55 Section 15.3 Transitory Provision 67

Section 12.5 Notice to Commence 55 Section 15.4 Repealing Clause 67

Section 12.6 Preparation and Approval of Detailed Engineering Design 55 Section 15.5 Separability Clause 67

Section 12.7 Project Construction 55

Section 12.8 Performance Security for Construction Works 56

Section 12.9 Performance Security for Operations 56

Section 12.10 Review of Project Construction, Operation and Maintenance 56

Section 12.11 Contract Variation 57

Section 12.12 Milestones 57

Section 12.13 Release of Performance Security 58

Section 12.14 Liquidated Damages 58

Section 12.15 Repair and Maintenance Costs 59

Section 12.16 Repayment Schemes 59 iv v Republic Act No. 7718 The Philippine BOT Law 5th May 1994 The Philippine BOT Law REPUBLIC OF THE PHILIPPINES Congress of the Philippines Metro Manila Second Regular Session Begun and held in Metro Manila, on Monday, the twenty-sixth day of July, nineteen hundred and ninety-three [ REPUBLIC ACT NO. 7718 ] AN ACT AMENDING CERTAIN SECTIONS OF REPUBLIC ACT NO. 6957, ENTITLED “AN ACT AUTHORIZING THE FINANCING, CONSTRUCTION, OPERATION AND MAINTENANCE OF INFRASTRUCTURE PROJECTS BY THE PRIVATE SECTOR, AND FOR OTHER PURPOSES” Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: SEC. 1. Section 1 of Republic Act no. 6957 is hereby amended to read as follows: “SEC. 1. Declaration of Policy. - It is the declared policy of the State to recognize the indispensable role of the private sector as the main engine for national growth and development and provide the most appropriate incentives to mobilize private resources for the purpose of financing the construction, operation and maintenance of infrastructure and development projects normally financed and undertaken by the Government. Such incentives, aside from financial incentives as provided by law, shall include providing a climate of minimum government regulations and procedures and specific government undertakings in support of the private sector.” SEC. 2. Section 2 of the same Act is hereby amended to read as follows: “SEC. 2. Definition of Terms. - The following terms used in this Act shall have the meanings stated below: “(a) Private sector infrastructure or development projects - The general description of infrastructure or development projects normally financed and operated by the public sector but which will now be wholly or partly implemented by the private sector, including but not limited to, power plants, highways, ports, airports, canals, dams, hydropower projects, water supply, irrigation, telecommunications, railroads and railways, transport systems, land reclamation projects, industrial estates or townships, housing, government buildings, tourism projects, markets, slaughterhouses, warehouses, solid waste management, information technology networks and database infrastructure, education and health facilities, sewerage, drainage, dredging, and other infrastructure and development projects as may be authorized by the appropriate 3 The Philippine BOT Law The Philippine BOT Law agency/LGU pursuant to this Act. Such projects shall be undertaken through contractual “(d) Build-own-and-operate - A contractual arrangement whereby a project proponent is arrangements as defined hereunder and such other variations as may be approved by the authorized to finance, construct, own, operate and maintain an infrastructure or development President of the Philippines. facility from which the proponent is allowed to recover its total investment, operating and maintenance costs plus a reasonable return thereon by collecting tolls, fees, rentals or “For the construction stage of these infrastructure projects, the project proponent may obtain other charges from facility users: Provided, That all such projects, upon recommendation of financing from foreign and/or domestic sources and/or engage the services of a foreign and/ the Investment Coordination Committee (ICC) of the National Economic and Development or Filipino contractor: Provided, That, in case an infrastructure or a development facility’s Authority (NEDA), shall be approved by the President of the Philippines. Under this project, operation requires a public utility franchise, the facility operator must be a Filipino or if a the proponent which owns the assets of the facility may assign its operation and maintenance corporation, it must be duly registered with the Securities and Exchange Commission and to a facility operator. owned up to at least sixty percent (60%) by Filipinos: Provided, further, That in the case of foreign contractors, Filipino labor shall be employed or hired in the different phases of “(e) Build-lease-and-transfer - A contractual arrangement whereby a project proponent is construction where Filipino skills are available: Provided, finally, That projects which would authorized to finance and construct an infrastructure or development facility and upon its have difficulty in sourcing funds may be financed partly from direct government appropriations completion turns it over to the government agency or local government unit concerned on and/or from official Development Assistance (ODA) of foreign governments or institutions a lease arrangement for a fixed period after which ownership of the facility is automatically not exceeding fifty percent (50%) of the project cost, and the balance to be provided by the transferred to the government agency or local government unit concerned. project proponent. “(f) Build-transfer-and-operate - A contractual arrangement whereby the public sector contracts “(b) Build-operate-and-transfer - A contractual arrangement whereby the project proponent out the building of an infrastructure facility to a private entity such that the contractor builds undertakes the construction, including financing, of a given infrastructure facility, and the the facility on a turn-key basis, assuming cost overrun, delay and specified performance operation maintenance thereof. The project proponent operates the facility over a fixed term risks. during which it is allowed to charge facility users appropriate tolls, fees, rentals, and charges not exceeding those proposed in its bid or as negotiated and incorporated in the contract “Once the facility is commissioned satisfactorily, title is transferred to the implementing to enable the project proponent to recover its investment, and operating and maintenance agency/LGU. The private entity, however, operates the facility on behalf of the implementing expenses in the project. The project proponent transfers the facility to the government agency/LGU under an agreement. agency or local government unit concerned at the end of the fixed term which shall not exceed fifty (50) years: Provided, That in case of an infrastructure or development facility “(g) Contract-add-and-operate - A contractual arrangement whereby the project proponent adds whose operation requires a public utility franchise, the proponent must be Filipino or, if a to an existing infrastructure facility which it is renting from the government. It operates the corporation, must be duly registered with the Securities and Exchange Commission and expanded project over an agreed franchise period. There may, or may not be, a transfer owned up to at least sixty percent (60%) by Filipinos. arrangement in regard to the facility. “The build-operate-and-transfer shall include a supply-and-operate situation which is a “(h) Develop-operate-and-transfer - A contractual arrangement whereby favorable conditions contractual arrangement whereby the supplier of equipment and machinery for a given external to a new infrastructure project which is to be built by a private project proponent are infrastructure facility, if the interest of the Government so requires, operates the facility integrated into the arrangement by giving that entity the right to develop adjoining property, providing in the process technology transfer and training to Filipino nationals. and thus, enjoy some of the benefits the investment creates such as higher property or rent values. “(c) Build-and-transfer - A contractual arrangement whereby the project proponent undertakes the financing and construction of a given infrastructure or development facility and after “(i) Rehabilitate-operate-and-transfer - A contractual arrangement whereby an existing facility its completion turns it over to the government agency or local government unit concerned, is turned over to the private sector to refurbish, operate and maintain for a franchise period, which shall pay the proponent on an agreed schedule its total investments expended on the at the expiry of which the legal title to the facility is turned over to the government. The project, plus a reasonable rate of return thereon. This arrangement may be employed in the term is also used to describe the purchase of an existing facility from abroad, importing, construction of any infrastructure or development project, including critical facilities which, refurbishing, erecting and consuming it within the host country. for security or strategic reasons, must be operated directly by the Government. 4 5 The Philippine BOT Law The Philippine BOT Law “(j) Rehabilitate-own-and-operate - A contractual arrangement whereby an existing facility is viable infrastructure or development facility through any of the projects authorized turned over to the private sector to refurbish and operate with no time limitation imposed in this Act. Said agencies, when entering into such contracts, are enjoined to solicit on ownership. As long as the operator is not in violation of its franchise, it can continue to the expertise of individuals, groups, or corporations in the private sector who have operate the facility in perpetuity. extensive experience in undertaking infrastructure or development projects.” “(k) Project proponent - The private sector entity which shall have contractual responsibility SEC. 4. Section 4 of the same act is hereby amended to read as follows: for the project and which shall have an adequate financial base to implement said project consisting of equity and firm commitments from reputable financial institutions to provide, “SEC. 4. Priority Projects. - All concerned government agencies, including government- upon award, sufficient credit lines to cover the total estimated cost of the project. owned and-controlled corporations and local government units, shall include in their development programs those priority projects that may be financed, constructed, “(l) Contractor - Any entity accredited under the Philippine laws which may or may not be operated and maintained by the private sector under the provisions of this Act. It shall the project proponent and which shall undertake the actual construction and/or supply of be the duty of all concerned government agencies to give wide publicity to all projects equipment for the project. eligible for financing under this Act, including publication in national and, where applicable, international newspapers of general circulation once every six (6) months “(m) Facility operator - A company registered with the Securities and Exchange Commission, and official notification of project proponents registered with them. which may or may not be the project proponent, and which is responsible for all aspects of operation and maintenance of the infrastructure or development facility, including but not “The list of all such national projects must be part of the development programs of the limited to the collection of tolls, fees, rentals or charges from facility users: Provided, That in agencies concerned. The list of projects costing up to Three hundred million pesos case the facility requires a public utility franchise, the facility operator shall be Filipino or at (P300,000,000) shall be submitted to ICC of NEDA for its approval and to the NEDA least sixty per centum (60%) owned by Filipino. Board for projects costing more than Three hundred million pesos (P300,000,000). The list of projects submitted to ICC of the NEDA Board shall be acted upon within “(n) Direct government guarantee - An agreement whereby the government or any of its agencies thirty (30) working days. or local government units assume responsibility for the repayment of debt directly incurred by the project proponent in implementing the project in case of a loan default. “The list of local projects to be implemented by the local government units concerned shall be submitted, for confirmation, to the municipal development council for projects “(o) Reasonable rate of return on investments and operating and maintenance cost - The rate of costing up to Twenty million pesos; those costing above Twenty up to Fifty million return that reflects the prevailing cost of capital in the domestic and international markets: pesos, to the provincial development council; those costing up to Fifty million, to the Provided, That in case of negotiated contracts, such rate of return shall be determined by city development council; above Fifty million up to Two hundred million pesos, to the ICC of NEDA prior to the negotiation and/or call for proposals: Provided, further, That for regional development councils; and those above Two hundred million pesos, to ICC of negotiated contracts for public utility projects which are monopolies, the rate of return on rate NEDA. base shall be determined by existing laws, which in no case shall exceed twelve per centum (12%). SEC. 5. A new section is hereby added after Section 4 of the same Act and numbered as

Section 4-A, to read as follows: “(p) Construction - Refers to new construction, rehabilitation, improvement, expansion, alteration and related works and activities including the necessary supply of equipment, materials, “SEC. 4-A. Unsolicited Proposals. - Unsolicited proposals for projects may be accepted by any labor and services and related items.” government agency or local government unit on a negotiated basis: Provided, That, all the following conditions are met: (1) such projects involve a new concept or technology SEC. 3. Section 3 of the same Act is hereby amended to read as follows: and/or are not part of the list of priority projects, (2) no direct government guarantee, subsidy or equity is required, and (3) the government agency or local government unit “SEC. 3. Private Initiative in Infrastructure. - All government infrastructure agencies, including has invited by publication, for three (3) consecutive weeks, in a newspaper of general government-owned and-controlled corporations (GOCC) and local government units circulation, comparative or competitive proposals and no other proposal is received (LGUs) are hereby authorized to enter into contract with any duly pre-qualified project for a period of sixty (60) working days: Provided, further, That in the event another proponent for the financing, construction, operation and maintenance of any financially proponent submits a lower price proposal, the original proponent shall have the right to match that price within thirty (30) working days.” 6 7 The Philippine BOT Law The Philippine BOT Law SEC. 6. Section 5 of the same Act is hereby amended to read as follows: SEC. 7. A new section is hereby added after Section 5 of the same Act and numbered as section 5-A, to read as follows: “SEC. 5. Public Bidding of Projects. - Upon approval of the projects mentioned in Section 4 of this Act, the head of the infrastructure agency or local government unit concerned shall “SEC. 5-A. Direct Negotiation of Contracts. - Direct negotiation shall be resorted to when there is forthwith cause to be published, once every week for three (3) consecutive weeks, in at only one complying bidder left as defined here under: least two (2) newspapers of general circulation and in at least one (1) local newspaper which is circulated in the region, province, city or municipality in which the project is to “(a) If, after advertisement, only one contractor applies for pre-qualification and it meets the be constructed, a notice inviting all prospective infrastructure or development project pre-qualification requirements, after which it is required to submit a bid/proposal which is proponents to participate in a competitive public bidding for the projects so approved. subsequently found by the agency/local government unit (LGU) to be complying. “In the case of a build-operate-and-transfer arrangement, the contract shall be awarded “(b) If, after advertisement, more than one contractor applied for pre-qualification but only one to the bidder who, having satisfied the minimum financial, technical, organizational and meets the pre-qualification requirements, after which it submits bid/proposal which is found legal standards required by this Act, has submitted the lowest bid and most favorable by the agency/LGU to be complying. terms for the project, based on the present value of its proposed tolls, fees, rentals and charges over a fixed term for the facility to be constructed, rehabilitated, operated and “(c) If, after pre-qualification of more than one contractor, only one submits a bid which is found maintained according to the prescribed minimum design and performance standards, by the agency/LGU to be complying. plans and specifications. For this purpose, the winning project proponent shall be automatically granted by the appropriate agency the franchise to operate and maintain “(d) If, after pre-qualification, more than one contractor submit bids but only one is found by the facility, including the collection of tolls, fees, rentals, and charges in accordance the agency/LGU to be complying: Provided, That any of the disqualified prospective bidder with Section 5 hereof. may appeal the decision of the implementing agency’s/LGU’s Pre-qualification Bids and Awards Committee within fifteen (15) working days to the head of the agency, in case of “In the case of build-and-transfer or build-lease-and-transfer arrangement, the national projects; to the Department of the Interior and Local Government (DILG), in case of contract shall be awarded to the lowest complying bidder based on the present value local projects from the date the disqualification was made known to the disqualified bidder: of its proposed schedule of amortization payments for the facility to be constructed Provided, furthermore, That the implementing agency concerned or DILG should act on the according to the prescribed minimum design and performance standards, plans, and appeal within forty-five (45) working days from receipt thereof.” specifications: Provided, however, That a Filipino contractor who submits an equally advantageous bid with exactly the same price and technical specifications as those of SEC. 8. Section 6 of the same Act is hereby amended to read as follows: a foreign contractor shall be given preference. “SEC. 6. Repayment Scheme. - For the financing, construction, operation and maintenance “In all cases, a consortium that participates in a bid must present proof that the of any infrastructure project undertaken through the Build-Operate-and-Transfer members of the consortium have bound themselves jointly and severally to assume arrangement or any of its variations pursuant to the provisions of this Act, the project responsibility for any project. The withdrawal of any member of the consortium prior proponent shall be repaid by authorizing it to charge and collect reasonable tolls, fees, to the implementation of the project could be a ground for the cancellation of the and rentals for the use of the project facility not exceeding those incorporated in the contract. contract and, where applicable, the proponent may likewise be repaid in the form of a share in the revenue of the project or other non-monetary payments, such as, but “The public bidding must be conducted under a two-envelope/two-stage system: the not limited to, the grant of a portion or percentage of the reclaimed land, subject to the first envelope to contain the technical proposal and the second envelope to contain the constitutional requirements with respect to the ownership of land: Provided, That for financial proposal. The procedures for this system shall be outlined in the implementing negotiated contracts, and for projects which have been granted a natural monopoly rules and regulations of this Act. or where the public has no access to alternative facilities, the appropriate government regulatory bodies, shall approve the tolls, fees, rentals, and charges based on a “A copy of each contract involving a project entered into under this Act shall forthwith reasonable rate of return: Provided, further, That the imposition and collection of be submitted to Congress for its information.” tolls, fees, rentals, and charges shall be for a fixed term as proposed in the bid and incorporated in the contract but in no case shall this term exceed fifty (50) years: 8 9 The Philippine BOT Law The Philippine BOT Law Provided, furthermore, That the tolls, fees, rentals, and charges may be subject to SEC. 11. Section 9 of the same Act is hereby amended to read as follows: adjustment during the life of the contract, based on a predetermined formula using official price indices and included in the instructions to bidders and in the contract: “SEC. 9. Project Supervision. - Every infrastructure project undertaken under the provisions Provided, also, That all tolls, fees, rentals, and charges and adjustments thereof shall of this Act shall be in accordance with the plans, specifications, standards, and costs take into account the reasonableness of said rates to the end-users of private sector- approved by the concerned government agency and shall be under the supervision of built infrastructure: Provided, finally, That during the lifetime of the franchise, the project the said agency or local government unit in the case of local projects.” proponent shall undertake the necessary maintenance and repair of the facility in accordance with standards prescribed in the bidding documents and in the contract. In SEC. 12. A new section to be numbered as Section 10 is hereby added to read as follows: the case of a Build-and-Transfer arrangement, the repayment scheme is to be effected through amortization payments by the government agency or local government unit “SEC. 10. Investment Incentives. - Among other incentives, projects in excess of One billion concerned to the project proponent according to the scheme proposed in the bid and pesos (P1,000,000,000) shall be entitled to incentives as provided by the Omnibus incorporated in the contract.” Investment Code, upon registration with the Board of Investments.” SEC. 9. Section 7 of the same Act is hereby amended to read as follows: SEC. 13. Section 10 of the same Act is hereby renumbered as Section 11 to read as follows: “SEC. 7. Contract Termination. - In the event that a project is revoked, cancelled or terminated “SEC. 11. Implementing Rules and Regulations. - A committee composed of one (1) representative by the Government through no fault of the project proponent or by mutual agreement, from the Department of Public Works and Highways (DPWH), the Department of the Government shall compensate the said project proponent for its actual expenses Transportation and Communications (DOTC), the Department of Energy (DOE), incurred in the project plus a reasonable rate of return thereon not exceeding that the Department of Environment and National Resources (DENR), the Department stated in the contract as of the date of such revocation, cancellation or termination: of Agriculture (DA), the Department of Trade and Industry (DTI), the Department of Provided, That the interest of the Government in these instances shall be duly insured Finance (DOF), the Department of Interior and Local Government (DILG), the National with the Government Service Insurance System (GSIS) or any other insurance entity Economic and Development Authority (NEDA), the Coordinating Council of the duly accredited by the office of the Insurance Commissioner: Provided, finally, That Philippine Assistance Program (CCPAP), and other concerned government agencies the cost of the insurance coverage shall be included in the terms and conditions of the shall, within sixty (60) days from the effectivity of this Act, formulate and prescribe, bidding referred to above. after public hearing and publication as required by law, the implementing rules and regulations including, among others, the criteria and guidelines for evaluation of bid “In the event that the government defaults on certain major obligations in the contract proposals, list of financial incentives and arrangements that the Government may and such failure is not remediable or if remediable shall remain unremedied for an provide for the project, in order to carry out the provisions of this Act in the most unreasonable length of time, the project proponent/contractor may, by prior notice expeditious manner. to the concerned national government agency or local government unit specifying the turn-over date, terminate the contract. The project proponent/contractor shall be “The Chairman of this committee shall be appointed by the President of the Philippines reasonably compensated by the Government of equivalent or proportionate contract from its members. cost as defined in the contract.” “From time to time the Committee may conduct, formulate and prescribe after due SEC. 10. Section 8 of the same Act is hereby amended to read as follows: public hearing and publication, amendments to the implementing rules and regulations, consistent with the provisions of this Act.” “SEC. 8. Regulatory Boards. - The Toll Regulatory Board which was created by Presidential Decree No. 1112 is hereby attached to the Department of Public Works and Highways SEC. 14. A new section to be numbered as Section 12 is hereby added to read as follows: with the Secretary of Public Works and Highways as Chairman.” “SEC. 12. Coordination and Monitoring of Projects. - The Coordinating Council of the Philippine Assistance Program (CCPAP) shall be responsible for the coordination and monitoring of projects implemented under this Act. 10 11 The Philippine BOT Law The Philippine BOT Law “Regional development councils and local government units shall periodically submit to CCPAP information on the status of said projects. Approved, “At the end of every calendar year, the CCPAP shall report to the President and to Congress on the progress of all projects implemented under this Act.” SEC. 15. Sections 11, 12 and 13 of the same Act are hereby renumbered as Sections 13, 14 and 15 respectively. SEC. 16. Repealing Clause. - All laws or parts of any law inconsistent with the provisions of this Act are hereby repealed or modified accordingly. EDGARDO J. ANGARA JOSE DE VENECIA JR. President of the Senate Speaker of the House of Representative SEC. 17. Separability Clause. - If any provision of this Act is held invalid, the other provisions not affected thereby shall continue in operation. This Act which is a consolidation of House Bill No. 10943 and Senate Bill No. 1586 was finally passed SEC. 18. Effectivity Clause. - This Act shall take effect fifteen (15) days after its publication in at by the House of Representatives and the Senate on April 12, 1994 and April 27, 1994, respectively. least two (2) newspapers of general circulation. EDGARDO E. TUMANGAN ROBERTO P. NAZARENO Secretary of the Senate Acting Secretary General House of Representative FIDEL V. RAMOS President of the Philippines Approved: 5 MAY 1994 12 13 Implementing Rules & Regulations (IRR) 2012 Revision Revised BOT Law Implementing Rules and Regulations REVISED IMPLEMENTING RULES AND REGULATIONS OF R.A. NO. 6957, “AN ACT AUTHORIZING THE FINANCING, CONSTRUCTION, OPERATION AND MAINTENANCE OF INFRASTRUCTURE PROJECTS BY THE PRIVATE SECTOR AND FOR OTHER PURPOSES”, AS AMENDED BY R.A. NO. 7718 INTRODUCTION Pursuant to Section 11 of R.A. No. 6957, as amended by R.A. No. 7718, the following Revised Implementing Rules and Regulations are hereby prescribed to carry out the provisions of said Act.

RULE 1 - PRELIMINARY PROVISIONS

Section 1.1 - Policy It is the declared policy of the State to recognize the indispensable role of the private sector as the main engine for national growth and development and provide the most appropriate incentives to mobilize private resources for the purpose of financing the Construction, operation and maintenance of infrastructure and development projects normally financed and undertaken by the Government. In line with the foregoing, these Revised IRR seek to identify specific incentives, support and undertakings, financial or otherwise, that may be granted to Project Proponents, provide a climate of minimum Government regulations, allow reasonable returns on investments made by Project Proponents, provide procedures that will assure transparency and competitiveness in the bidding and award of projects, ensure that Contractual Arrangements reflect appropriate sharing of risks between the Government and the Project Proponent, assure close coordination between national government and Local Government Units (LGUs), and ensure strict compliance by the Government and the Project Proponent of their respective obligations and undertakings and the monitoring thereof, in connection with or relative to Private Sector Infrastructure or Development Projects to be undertaken under this Act and these Revised IRR.

Section 1.2 - Coverage These Implementing Rules and Regulations (IRR) shall cover all Private Sector Infrastructure or Development Projects, as hereunder defined, undertaken by Agencies/LGUs in accordance with such contractual arrangement or scheme authorized under and pursuant to R.A. No. 6957, as amended by R.A. No. 7718. For LGU projects, concerned LGUs may formulate additional guidelines/procedures not in conflict with this Act and these Implementing Rules and Regulations and pertinent provisions of R.A. No. 7160 (Local Government Code of 1991) and its implementing rules and regulations. 17 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations

Section 1.3 - Definition of Terms facility and upon its completion turns it over to the Agency/LGU concerned on a lease arrangement for a fixed period, after which ownership of the facility is automatically For purposes of these Implementing Rules and Regulations, the terms and phrases hereunder shall transferred to the Agency/LGU concerned. be understood as follows: iii. Build-operate-and-transfer (BOT) - A contractual arrangement whereby the Project a. Act - shall mean Republic Act No. 6957, as amended by Republic Act No. 7718. Proponent undertakes the Construction, including financing, of a given infrastructure facility, and the operation and maintenance thereof. The Project Proponent operates the b. Agency - Refers to any department, bureau, office, commission, authority or agency of facility over a fixed term during which it is allowed to charge facility users appropriate the national government, including Government-Owned and/or -Controlled Corporations tolls, fees, rentals, and charges not exceeding those proposed in its bid or as (GOCCs), Government Financial Institutions (GFIs), and State Universities and Colleges negotiated and incorporated in the contract to enable the Project Proponent to recover (SUCs) authorized by law or their respective charters to contract for or undertake Infrastructure its investment, and operating and maintenance expenses in the project. The Project or Development Projects. Proponent transfers the facility to the Agency/LGU concerned at the end of the fixed term that shall not exceed fifty (50) years: Provided, that in the case of an Infrastructure or c. Amortization - The regular, periodic repayment of principal and payment of interest of a Development Facility whose operation requires a public utility franchise, the proponent debt for a definite period of time, at the maturity of which the entire indebtedness is paid in must be Filipino or, if a corporation, must be duly registered with the Securities and full. Exchange Commission (SEC) and owned up to at least sixty percent (60%) by Filipinos. This build-operate-and-transfer contractual arrangement shall include a supply-and- d. Approving Body - The entity authorized to approve projects proposed under this Act and in operate scheme which is a contractual arrangement whereby the supplier of equipment accordance with Sections 2.6 and 2.7 of these Revised IRR. and machinery for a given infrastructure facility, if the interest of the Government so requires, operates the facility providing in the process technology transfer and training e. PPP Center - The successor of the BOT Center and Coordinating Council of the Philippine to Filipino nationals. Assistance Program (CCPAP), the agency mandated under Section 12 of the Act, to coordinate and monitor projects implemented under the Act, pursuant to Administrative Order iv. Build-own-and-operate (BOO) - A contractual arrangement whereby a Project No. 105 (s. 1989), as amended by Administrative Order No. 67 (s. 1999), as amended by Proponent is authorized to finance, construct, own, operate and maintain an Administrative Order No. 103 (s. 2000), and Executive Order No. 144 (s. 2002), as amended infrastructure or development facility from which the Project Proponent is allowed to by Executive Order No. 8 (s. 2010). recover its total investment, operating and maintenance costs plus a reasonable return thereon by collecting tolls, fees, rentals or other charges from facility users; provided, f. Contractual Arrangements - Refers to any of the following contractual arrangements or That all such projects upon recommendation of the Investment Coordination Committee schemes, as well as other variations thereof, as may be approved by the President, by which (ICC) of the National Economic and Development Authority (NEDA), shall be approved infrastructure and/or development projects may be undertaken pursuant to the provisions of by the President of the Philippines. Under this project, the proponent who owns the these Revised IRR: assets of the facility may assign its operation and maintenance to a Facility operator. i. Build-and-transfer (BT) - A contractual arrangement whereby the Project Proponent v. Build-transfer-and-operate (BTO) - A contractual arrangement whereby the Agency/ undertakes the financing and Construction of a given infrastructure or development LGU contracts out the Construction of an infrastructure facility to a private entity such facility and after its completion turns it over to the Agency or LGU concerned, which that the Contractor builds the facility on a turnkey basis, assuming cost overruns, delays, shall pay the Project Proponent on an agreed schedule its total investment expended and specified performance risks. Once the facility is commissioned satisfactorily, title is on the project, plus a Reasonable Rate of Return (ROR) thereon. This arrangement transferred to the implementing Agency/LGU. The private entity however operates the may be employed in the Construction of any Infrastructure or Development Projects, facility on behalf of the implementing Agency/LGU under an agreement. including critical facilities which, for security or strategic reasons, must be operated vi. Contract-add-and-operate (CAO) - A contractual arrangement whereby the Project directly by the Government. Proponent adds to an existing infrastructure facility which it is renting from the Government and operates the expanded project over an agreed Franchise period. ii. Build-lease-and-transfer (BLT) - A contractual arrangement whereby a Project There may or may not be a transfer arrangement with regard to the added facility Proponent is authorized to finance and construct an infrastructure or development provided by the Project Proponent. 18 19 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations vii. Develop-operate-and-transfer (DOT) - A contractual arrangement whereby favorable l. Franchise - Refers to a certificate, permit or other form of authorization required to be conditions external to a new infrastructure project which is to be built by a Project obtained by a Facility Operator from a Regulator prior to operating a Public Utility Project. Proponent are integrated into the arrangement by giving that entity the right to develop adjoining property, and thus, enjoy some of the benefits the investment creates such as m. Government Undertakings - Refers to any form of contribution and/or support provided higher property or rent values. under Section 13.3 of these Revised IRR, which the Government or any of its Agencies/ LGUs may extend to a Project Proponent. viii. Rehabilitate-operate-and-transfer (ROT) - A contractual arrangement whereby an existing facility is turned over to the Project Proponent to refurbish, operate and maintain n. Head of Agency/LGU - Shall be defined as: (i) the head of the agency or body, for national for a Franchise period, at the expiry of which the legal title to the facility is turned over to government agencies (NGAs) and the constitutional commissions or offices, and branches the Government. The term is also used to describe the purchase of an existing facility of government; (ii) the Governing Board or its authorized official/managing head/Chief from abroad, importing, refurbishing, erecting and consuming it within the host country. Executive officer of GOCCs, GFIs, or SUCs; or (iii) the Sanggunian or its authorized official or the local chief executive, for LGUs. ix.  Rehabilitate-own-and-operate (ROO) - A contractual arrangement whereby an existing facility is turned over to the Project Proponent to refurbish and operate with no o. ICC - Refers to the Investment Coordination Committee of the National Economic and time limitation imposed on ownership. As long as the operator is not in violation of its Development Authority (NEDA) Board. Franchise, it can continue to operate the facility in perpetuity. p. Investment Incentives - Refers to any form of contribution and/or support, which the g. Construction - Refers to new construction, rehabilitation, improvement, expansion, alteration, Government or any of its Agencies/LGUs including GOCCs may extend to the Project and related works and activities including the necessary design, supply, installation, testing Proponent in accordance with Section 13.2 of these Revised IRR. and commissioning of equipment, systems, plants, materials, labor and services and related items needed to build or rehabilitate an infrastructure or development facility. q. IRR - Shall mean these Revised Implementing Rules and Regulations. h. Contractor - Refers to any entity accredited under Philippine laws, or that should be r. List of Priority Projects - Refers to the list of Private Sector Infrastructure or Development accredited under Philippine laws in accordance with Section 5.4 (a.v) hereof, which may or Projects in accordance with Section 2.3. may not be the Project Proponent and which shall undertake the actual Construction and/or supply of equipment for the project. s. Local Government Units (LGUs) - Refer to provincial, city, municipal and/or barangay government entities. i. Development Program - Refers to national, regional or local government plans or programs included in, but not limited to, the Philippine Development Plan (PDP), and the Provincial t. Negotiated Contracts - Refer to contracts entered into by the Government in cases Development and Physical Framework Plan (PDPFP). prescribed under Rule 9. j. Direct Government Guarantee - Refers to an agreement whereby the Government or any u. PBAC - Refers to the Pre-qualifications, Bids, and Awards Committee established in of its Agencies/LGUs guarantees to assume responsibility for the repayment of debt directly accordance with Rule 3 of these Revised IRR. incurred by the Project Proponent in implementing the project in case of a loan default. v. Private Sector Infrastructure or Development Projects - The general description of k. Facility Operator - Refers to the entity which may or may not be the Project Proponent, and Infrastructure or Development Projects normally financed, and operated by the public sector which is responsible for all aspects of operation and maintenance of the infrastructure or but which will now be wholly or partly financed, constructed and operated by the private development facility, including but not limited to the collection of tolls, fees, rentals or charges sector, including but not limited to, power plants, highways, ports, airports, canals, dams, from facility users; provided, that the facility operator must be registered with the Securities hydropower projects, water supply, irrigation, telecommunications, railroad and railways, and Exchange Commission (SEC) before commencement of operation and maintenance of transport systems, land reclamation projects, industrial estates or townships, housing, the infrastructure or development facility; provided further, that in case the facility requires government buildings, tourism projects, public markets, slaughterhouses, warehouses, a public utility franchise, the Facility Operator shall, no later than the commencement of solid waste management, information technology networks and database infrastructure, operation of the facility, comply with the nationality and ownership requirements under the education and health facilities, sewerage, drainage, dredging, and other infrastructure Constitution and other applicable laws and jurisprudence. 20 21 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations and development projects as may otherwise be authorized by the appropriate Agency/ assumed by the Project Proponent and the level of Government Undertakings extended for LGU pursuant to the Act or these Revised IRR. Such projects shall be undertaken through the project; provided, further, that in the case of Negotiated Contracts, such rate of return shall Contractual Arrangements as defined herein, including such other variations as may be be determined by the ICC prior to negotiation and/or call for proposals; provided further, that approved by the President of the Philippines. for Negotiated Contracts for public utilities projects which are monopolies, the rate of return on rate base shall be determined by existing laws, which in no case shall exceed twelve per For the construction stage of these infrastructure projects, the project proponent may obtain centum (12%), as provided by the Act. financing from foreign and/or domestic sources and/or engage the services of a foreign and/ or Filipino contractor: provided, that, in case an infrastructure or a development facility’s b.b. Regulator - Refers to the agency, body or commission empowered by law to fix the rates of operation requires a public utility franchise, the facility operator must be a Filipino or if a provider of a particular public service as defined by the Commonwealth Act No. 146 (Public a corporation, it must be duly registered with the Securities and Exchange Commission Service Law), as amended, and for which a Franchise is required to operate the same. (SEC) and owned up to at least sixty percent (60%) by Filipinos: provided, further, that in the case of foreign contractors, Filipino labor shall be employed or hired in the different c.c. Solicited Projects – Refer to projects identified by an Agency/LGU as part of the list of priority phases of construction where Filipino skills are available: provided, finally, that projects projects in accordance with Section 2.3. which would have difficulty in sourcing funds may be financed partly from direct government appropriations and/or from official Development Assistance (ODA) of foreign governments d.d. Unsolicited Proposals - Refer to project proposals submitted by the private sector, not in or institutions not exceeding fifty percent (50%) of the project cost, and the balance to be response to a formal solicitation or request issued by an Agency/LGU and not part of the list provided by the project proponent. of priority projects as identified by Agency/LGU, to undertake Infrastructure or Development Projects which may be entered into by Agency/LGU subject to the requirements/conditions w. Project Cost - Refers to the total cost to be expended to plan, develop and construct the prescribed under Rule 10. project to completion stage including but not limited to cost of feasibility studies engineering and design, Construction, equipment, land and right-of-way, taxes imposed on said cost, RULE 2 - GENERAL PROVISIONS and development cost.

Section 2.1 - Authorized Contracting Government Agencies/Units x. Project Loan - Refers to all loans and/or credit facilities extended by financial institutions, multi-lateral lenders, export credit agencies, and all other third party lenders to the project All concerned departments, bureaus, offices, commissions, authorities, or agencies of the national company and/or Project Proponent for the development and/or operation of the project. government, including GOCCs, GFIs, SUCs, and LGUs authorized by law or by their respective charters to undertake Infrastructure or Development project are authorized to enter into contractual Foreign loans/foreign currency loans to be incurred by the project company shall be in arrangements under this Act and these Revised IRR. accordance with prevailing Bangko Sentral ng Pilipinas (BSP) regulations.

Section 2.2 - Eligible Types of Projects y. Project Proponent - Refers to the private sector entity which shall have contractual responsibility for the project and which shall have an adequate track record in the concerned The Construction, rehabilitation, improvement, betterment, expansion, modernization, operation, industry as well as technical capability and financial base consisting of equity and firm financing and maintenance of the following types of projects which are normally financed and operated commitments from reputable financial institutions to provide, upon award, sufficient credit by the public sector which will now be wholly or partly financed, constructed and operated by the lines to cover the total estimated cost of the project to implement the said project. private sector, including other infrastructure and development projects as may be authorized by the appropriate agencies, may be proposed under the provisions of the Act and these Revised IRR: z. Public Utility Projects - Refers to projects or facilities that provide public services as defined under the Commonwealth Act No. 146 (Public Service Law), as amended, and for which a a. Highways, including expressway, roads, bridges, interchanges, tunnels, and related facilities; Franchise is required. b. Railways or rail-based projects that may or may not be packaged with commercial a.a. Reasonable Rate of Return - Refers to the rate of return that a Project Proponent shall development opportunities; be entitled to, as determined by the ICC taking into account, among others, the prevailing cost of capital (equity and borrowings) in the domestic and international markets, risks being c. Non-rail based mass transit facilities, navigable inland waterways and related facilities; 22 23 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations d. Port infrastructures like piers, wharves, quays, storage, handling, ferry services and related private sector through the Contractual Arrangements or schemes authorized under these Revised IRR facilities; and to submit for the approval by the Approving Body, as specified in Section 2 .6. The List of Priority Projects shall be consistent with the Philippine Development Plan (PDP), and Provincial Development e. Airports, air navigation, and related facilities; and Physical Framework Plan (PDPFP). f. Power generation, transmission, sub-transmission, distribution, and related facilities; The Public Investment Program (PIP) and the Comprehensive and Integrated Infrastructure Program (CIIP) shall be deemed as the list of National Priority Projects. The Provincial Development Investment g. Telecommunications, backbone network, terrestrial and satellite facilities and related service Programs (PDIPs)/Local Development Investment Programs (LDIPs) shall be deemed as the List of facilities; Local Priority Projects. The PIP, CIIP and PDIP/LDIP shall be updated periodically. h. Information technology (IT) and data base infrastructure, including modernization of IT, geo- Any updates to the lists of Priority Projects, local and national, shall be submitted to the PPP Center spatial resource mapping and cadastral survey for resource accounting and planning; within five (5) days from approval of the Approving Body for information and for posting in the PPP Center website. i. Irrigation and related facilities;

Section 2.4 - Publication and Notice j. Water supply, sewerage, drainage, and related facilities; All Agencies/LGUs shall provide wide publicity of the List of Priority Projects proposed for implementation k. Education and health infrastructure; under the Contractual Arrangements or schemes as authorized under the Act and these Revised IRR to keep interested/concerned parties informed thereof. For this purpose, all Agencies/LGUs shall l. Land reclamation, dredging and other related development facilities; cause their respective List of Priority Projects to be published at least once every six (6) months in a national newspaper of general circulation, and where applicable, international newspapers of general m. Industrial and tourism estates or townships, including ecotourism projects such as terrestrial circulation. Said List should also be posted continuously in the websites of the PPP Center and the and coastal/marine nature parks, among others and related infrastructure facilities and concerned Agency/LGU, if available. utilities;

Section 2.5 - Allowable Modes of Implementation n. Government buildings, housing projects; Projects may be implemented through public bidding or direct negotiation. The direct negotiation mode o. Markets, slaughterhouses, and related facilities; is subject to conditions specified in Rules 9 and 10 hereof. p. Warehouses and post-harvest facilities; Section 2.6 - Approval of Projects q. Public fish ports and fishponds, including storage and processing facilities; The approval of projects proposed under this Act shall be in accordance with the following: r. Environmental and solid waste management related facilities such as but not limited t o a.  National Projects - The projects must be part of the Agency’s development programs, and collection equipment, composting plants, landfill and tidal barriers, among others; and shall be approved as follows: s. Climate change mitigation and adaptation infrastructure projects and related facilities. i. projects costing up to PhP 300 million, shall be submitted to ICC for approval;

Section 2.3 - List of Priority Projects ii. projects costing more than PhP 300 million, shall be submitted to the NEDA Board for approval upon the recommendation of ICC.; and Concerned Agencies/LGUs are tasked to prepare their infrastructure or development programs and to identify specific priority projects that may be financed, constructed, operated and maintained by the iii. regardless of amount, negotiated projects shall be submitted to the NEDA Board for approval upon recommendation by the ICC. 24 25 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations b.  Local Projects - Local projects to be implemented by the LGUs shall be submitted by the For solicited projects, changes in the terms and conditions of the draft contract after its approval by the concerned LGU for confirmation, as follows: Head of Agency/LGU may be allowed prior to submission of bids provided that the Head of Agency/ LGU shall secure approval of the appropriate Approving Body for any of the following changes: i. to the municipal development council for projects costing up to PhP 20 million; a. Changes which reduce the service levels to the public; ii. to the provincial development council for those costing above PhP 20 million up to PhP 50 million; b. Changes which reduce the economic internal rate of return below the hurdle rate used in the original analysis of the project; iii. to the city development council for those costing up to PhP 50 million; c. Changes which increase the total government subsidy to a project by at least five percent iv. to the regional development council or, in the case of Metro Manila projects, the Regional (5%) of the total project cost; and Development Council for Metropolitan Manila, for those costing above PhP 50 million up to PhP 200 million; and d. Changes in the risk profile which are detrimental to the best interest of the government. v. to the ICC for those costing above PhP 200 million.  The concerned Agency/LGU shall inform in writing the concerned statutory counsel as provided in this section of such changes. Final approval of projects classified under b.i to b.iv of this section is vested on the Local Sanggunians per provisions of the Local Government Code. Changes to the terms and conditions of the draft contract after bid submission and prior to contract execution shall not be allowed except for changes to contract terms affected or

Section 2.7 - Detailed Guidelines for the Approval of Projects decided by the winning bidder’s bid. The Approving Body shall, from time to time, prescribe or revise detailed guidelines on the process and For unsolicited projects, in accordance with Section 10.9 of these Revised IRR, changes procedures for the approval of projects as well as the requirements to be submitted in support thereof, to the draft contract as agreed upon by Agency/LGU and the original proponent and as provided that the same are consistent with the Act and these Revised IRR. approved by the Head of Agency/LGU shall not be allowed, except for changes to contract terms affected or decided by the winning bidder’s bid during the solicitation of comparative

Section 2.8 - Approval of Contracts proposals and matching by the original proponent. The Head of the Agency/LGU shall review and approve the Draft Contract which shall be based on the The Head of the Agency/LGU shall be responsible for compliance with this policy. parameters, terms and conditions set forth by the Approving Body.

Section 2.9 - Presidential Approval, When Required Prior to approval of the Head of Agency/LGU, the draft contract shall undergo review by the office of the Government Corporate Counsel (OGCC), the office of the Solicitor-General (OSG) or any other entity Projects undertaken through the Build-Own-and-Operate (BOO) scheme or through Contractual prescribed by law/issuances as the statutory counsel of GOCCs and LGUs as provided in Section 4.4 Arrangements or schemes other than those defined under Section 2 of the Act shall require Presidential of these Revised IRR. For projects of national government agencies, local projects which will involve approval. For this purpose, the Head of Agency/LGU shall submit the proposed project to the NEDA funds of the national government, and local projects requiring ICC review/approval, the draft contract Board through the ICC which shall evaluate the proposal and forward its recommendations to the must also be reviewed by the Department of Finance (DOF) before the Head of Agency/LGU approves President. However, such projects shall be deemed to have been approved by the President when the same. approved at a NEDA Board meeting presided over by the President. The prescribed statutory counsel, and if necessary, the DOF, shall issue an opinion on the draft contract Section 2.10 - Deadline for Approval of Solicited Projects within ten (10) days upon receipt thereof. The Approving Body shall act on the project within thirty (30) working days upon satisfactory compliance by the concerned Agency/LGU with the requirements of the Approving Body. Failure of the Approving 26 27 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations Body to act on the project within the specified period shall be deemed an approval thereof and the PBAC. The absence of observers will not nullify the PBAC proceedings, provided that they concerned Agency/LGU may proceed with the solicitation of proposals. Upon approval, the Agency/ have been duly invited in writing. LGU must publish the invitation to pre-qualify and to bid within six (6) months unless otherwise provided or extended by the Approving Body. Section 3.2 - Responsibility of the PBAC

RULE 3 - THE BOT PRE-QUALIFICATION, BIDS, AND AWARDS COMMITTEE The PBAC herein created shall be responsible for all aspects of the pre-bidding and bidding process in the case of solicited proposals, and for the comparative bidding process (otherwise known as the

Section 3.1 - Composition “Swiss Challenge“), in the case of Unsolicited Proposals, including, among others, the preparation of the bidding/tender documents, publication of the invitation to pre-qualify and bid, pre-qualification The Head of the Agency/LGU shall create a BOT Pre-qualification, Bids and Awards Committee of prospective bidders, conduct of pre-bid conferences and issuance of supplemental notices, (PBAC). The Head of Agency/LGU shall determine the appropriate composition of the PBAC, provided interpretation of the rules regarding the bidding, the conduct of bidding, evaluation of bids, resolution it includes the following among its members: of disputes between bidders, and recommendation for the acceptance of the bid and/or for the award of the project. a. At least a third ranking regular official of the Agency/LGU - Chairman

Section 3.3 - Quorum b. A legal officer - Member-Secretary A quorum of the PBAC shall be composed of a simple majority of all voting members of the Committee. c. One (1) technical officer knowledgeable with the technical aspects or requirements of the The Chairman shall vote only in case of a tie. project, duly designated by the Head of Agency/LGU concerned on a project-to-project basis - Member (provisional) RULE 4 - BID/TENDER DOCUMENTS d. One (1) technical officer knowledgeable with aspects or requirements of the project from a Section 4.1 - Bid/Tender Documents concerned regulatory body, when applicable, to be invited by the Agency/LGU concerned on a project-to-project basis. - Member (provisional and non-voting) The Agency/LGU concerned shall prepare the bid/tender documents, which shall include the following: e. An officer knowledgeable in finance - Member a. “Instructions to Bidders”; f. An officer knowledgeable in management/operation of the project - Member b. “Minimum Design, Performance Standards/Specifications, and Economic Parameters” such as discount rate, inflation factor and foreign exchange rate, where applicable, among others; g. Two (2) representatives from the private sector: one from duly recognized Contractors associations; and the other from either the facility users, or duly recognized accounting c. “Draft Contract” (as approved in accordance with Section 2.8) reflecting the contractual associations. - Observers (non-voting) arrangement under which the project shall be undertaken, and the respective undertakings of the contracting parties, among others, and using the model contracts provided by NEDA/ h. A representative from the Commission on Audit - Observer (non-voting) PPP Center as reference; i. One (1) representative from the PPP Center for national projects, in accordance with Section d. “Bid Form” reflecting the required information to properly evaluate the bid proposal; 2.6 (a) - Observer (non-voting) e. forms of bid and performance securities; j. One (1) representative from the local DILG office, for LGU projects - Observer (non-voting) f. requirements and timelines/milestones of concerned Agencies in granting of franchise, if Observers will be notified at least two (2) calendar days before the following stages: pre-bid applicable; and conference, opening of bids, evaluation of bids, contract award, and special meetings of the g. other documents as may be deemed necessary by the Agency/LGU concerned. 28 29 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations

Section 4.2 - Instructions to Bidders j. Formula and appropriate indices to be used in the adjustments of tolls/fees/rentals/charges, when applicable. Said formula shall take into account the reasonableness of the same to The instructions to bidders, which establish the rules of the bidding, shall be clear, comprehensive and users of the project/facility under bidding; fair to all bidders and shall, as far as necessary and practicable, include the following information: k. Requirements of concerned regulatory bodies, such as, but not limited to: the Department a. General description and objectives of the project, including a statement that the project shall of Environment and Natural Resources (DENR), for the issuance of an Environmental be proposed under Republic Act No. 6957, as amended by Republic Act No. 7718 and these Compliance Certificate (ECC); National Water Resources Board (NWRB), for the issuance Revised IRR; of the Water Permit; the PCAB, for the registration requirements of Contractors; and, the toll Regulatory Board (TRB), for the review of toll rates and adjustment formula; b. Contractual arrangement under which the project shall be undertaken; l. Requirements and timelines/milestones of concerned Agencies in granting of franchise, if c. Bid submission procedures and requirements, which shall include information on the manner applicable; of bid submission, the number of copies of bid proposal to be submitted, where the bids are to be submitted, the deadline for the submission of bids, permissible mode of transmission m. Current rules and regulations of the BSP; of bid proposals, etc.; n. Revenue sharing arrangements, if any; d. Investment Incentives and Government Undertakings under Rule 13; o. Expected commissioning date; and e. Bid security and bid security validity period; p. Nationality and ownership requirements as, required by law. f. Milestones;

Section 4.3 - Minimum Designs, Performance Standards/Specifications and Economic Parameters g. Method and criteria for the evaluation of the technical component of the bids; Minimum design and performance standards/specifications, including appropriate environmental h. Parameters and criteria for evaluation of financial component of the bids; standards as prescribed by the DENR, shall be clearly defined and shall refer more to the desired quantity and quality of the outputs of the facility and should state that non-conformity with any of Any one or more of the following criteria may be used in the evaluation of the financial these minimum requirements shall render the bids as non-responsive. Likewise, for the purpose of component of the bid for determining the most advantageous bid for the Government: evaluating bids, the following economic parameters, among others, shall be prescribed: i. Lowest proposed toll, fee, rental or charge at the start of project operation, if a pre - a. Discount rate, foreign exchange rate and inflation factor as prescribed by the Approving agreed parametric tariff adjustment formula is prescribed in the bid document; Body, if applicable; ii. Lowest present value of government subsidy to be provided for the period covered by b. Maximum period of project Construction; the contract; c. Fixed term for project operation and collection of the proposed tolls/fees/rentals/charges, if iii. Highest present value of proposed payments to Government, such as: concession applicable; fees, lease/rental payments, fixed/guaranteed payments, and/or variable payments/ percentage shares of revenue for the period covered by the contract; or d. Formula and price indices to be used in the adjustments of tolls/fees/rentals/charges, if applicable; iv. Any other appropriate financial bid parameter as may be approved by the Approving Body. e. Minimum period of repayment under the schemes contemplated in Section 12.16, if applicable; i. Minimum amount of equity as prescribed by the Approving Body; 30 31 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations f. Revenue Share of the Implementing Agency/LGU, if applicable; and In accordance with Section 2.8, prior to approval of the draft contract by the Head of Agency/LGU, the office of the Government Corporate Counsel (OGCC ), the office of the Solicitor-General (OSG) g. Minimum amount of equity as prescribed by the Approving Body. or any other entity prescribed by law/issuances as the statutory counsel of GOCCs and LGUs, and if necessary, the Department of Finance (DOF) shall issue an opinion on the draft contract within ten (10)

Section 4.4 - Draft Contract days upon receipt by the corresponding counsel of the draft contract as submitted by the Agency/LGU. The Head of the Agency/LGU shall be responsible in ensuring the consistency of the draft contract with RULE 5 - QUALIFICATION OF BIDDERS the parameters, terms and conditions as approved by the Approving Body.

Section 5.1 - Who May Participate The draft contract should clearly define the basic and legal relationship between the parties and their rights and responsibilities including the specific Government Undertakings to be provided by the Any individual, partnership, corporation or firm, whether local or foreign, including consortia of local, Agency/LGU relative to the project. The draft contract shall have the following mandatory terms or foreign or local and foreign firms, subject to the limits herein set, may participate or apply for pre- or conditions: simultaneous qualification for projects covered under the provisions of the Act and these Revised IRR. a. specific contractual arrangement, term, and scope of work; Section 5.2 - Publication of Invitation to Pre-qualify and Bid b. project technical specifications and system features; The publication of Invitation to Pre-qualify and Bid for a particular project shall not be made unless the Approving Body has approved the parameters, terms and conditions for the project which shall serve c. implementation milestones including those for securing other approvals, project completion as basis for the draft contract as provided in Section 4.4. date; The Head of the Agency/LGU concerned shall, after obtaining approval for the project, forthwith cause d. cost recovery scheme via proposed tolls, fees, rentals and charges, as the case may be; to be published, once every week for three (3) consecutive weeks, in at least two (2) newspapers of general circulation and in at least one (1) local newspaper of general circulation in the region, province, e. liquidated damages as contemplated under Section 12.14; city or municipality in which the projects are to be implemented, a notice inviting all prospective infrastructure or development Project Proponents to pre -qualify and bid for the projects so approved. f. performance and warranty bonds contemplated under Sections 12.8 and 12.9; Said invitation should also be posted continuously in the website of the Agency/LGU concerned, if available, and the PPP Center during the period stated above. If the total project cost amounts to at g. minimum insurance coverage as may be required for the project, such as Contractors’ all least PhP 500 million, the invitation may also be published in at least one (1) international publication. risk, motor vehicle, workmen’s compensation, third party liability, or comprehensive general Likewise, the Agency/LGU concerned shall issue official notification of the same to Project Proponents liability insurance; registered with them. h. acceptance tests and procedures; The published Invitation to Pre-qualify and Bid shall contain information, among others, whether the Contractor to be employed to undertake the Construction works needs to be pre-identified for pre- i. warranty period and procedures (after transfer); qualification purposes or not. j. grounds for and effects of contract termination including modes for settling disputes; For changes in the information contained in the published invitation to Pre-qualify and to Bid, the Agency/LGU may cause the invitation reflecting said changes to be published anew in accordance k. the manner and procedures for the resolution of warranty against corruption, and with this section. l. compliance with all other applicable laws, rules, and regulations. 32 33 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations

Section 5.3 - Period to Prepare Pre-qualification Documents v. For purposes of pre-qualification, the Contractor proposed to be engaged by the Project Proponent to undertake the Construction of the project must be duly licensed The Agency/LGU concerned shall allow prospective bidders at least fifteen (15) calendar days from and accredited by the PCAB, in the case of a Filipino Contractor, or by an equivalent the last date of publication of the Invitation to Pre-qualify and Bid to prepare their respective pre- accreditation institution in the Contractor’s country of origin, in the case of a foreign qualification documents. In any event, the deadline for submission of pre-qualification statements shall Contractor. Once the Project Proponent is awarded the project, such foreign Contractor be indicated in the published Invitation to Pre-qualify and Bid. must secure a license and accreditation from the PCAB.

Section 5.4 - Pre-qualification Requirements b. Experience or Track Record - The prospective Project Proponent must possess adequate experience in terms of the following: To pre-qualify, a prospective Project Proponent must comply with the following requirements: i. Firm Experience - By itself or through the member-firms in case of a consortium or a. Legal Requirements through a Contractor(s) which the prospective Project Proponent may engage for the project, the prospective Project Proponent and/or its Contractor(s) must have i. For projects to be implemented under a contractual arrangement which requires a public successfully undertaken a project(s) similar or related to the subject infrastructure/ utility Franchise for its operation, and where the project proponent and Facility Operator development project to be bid. The individual firms and/or their Contractor(s) may are one and the same entity, the prospective Project Proponent must be Filipinos or, if individually specialize on any or several phases of the project(s). A consortium proponent corporations, must be duly registered with the Securities and Exchange Commission shall be evaluated based on the individual or collective experience of the member-firms (SEC) and owned up to at least sixty percent (60%) by Filipinos, or, if a consortium of of the consortium and of the Contractor(s) that it has engaged for the project. local, foreign, or local and foreign firms, Filipinos must have at least sixty percent (60%) interest in said consortium. For purposes of the above, consortia shall submit as part of their pre-qualification statement a business plan which shall, among others, identify their members, the equity ii. For projects to be implemented through a contractual arrangement requiring a public interest/contribution of each member to the consortium, their prospective Contractor(s), utility Franchise for its operation but where the Project Proponent and Facility Operator if the experience of their Contractor(s) are necessary for the determination of the may be two separate and independent entities, the Facility Operator must be a Filipino or, capacity of the consortium to undertake the project, and the description of the respective if a corporation, must be duly registered with the Securities and Exchange Commission roles said members and Contractors, if necessary, shall play or undertake in the project, (SEC) and owned up to at least sixty percent (60%) by Filipinos. including as to which member(s) is(are) the prospective facility operator(s), if applicable. If undecided on a specific Contractor, the prospective Project Proponent may submit a iii. For projects that do not require a public utility Franchise for its operation, the prospective short list of Contractors from among which it will select the final Contractor. Short listed Project Proponent or the Facility Operator may be Filipino or foreign-owned. Contractors are required to submit a statement indicating willingness to participate in the project and capacity to undertake the requirements of the project. iv. In case the prospective Project Proponent is a consortium, the members or participants thereof shall be disclosed during the pre-qualification stage and shall undergo pre- ii. Key Personnel Experience - The key personnel of the prospective Project Proponent qualification. Further, the members or participants thereof shall execute an undertaking and/or its Contractor(s) must have sufficient experience in the relevant aspect of in favor of the Agency/LGU that if awarded the contract, they shall bind themselves schemes similar or related to the subject project, as specified by the Agency/LGU. to be jointly and severally liable for the obligations of the Project Proponent under the contract. c. Financial Capability - The prospective Project Proponent must have adequate capability to sustain the financing requirements for the detailed engineering design, Construction and/or However, if members of the consortium organize themselves as a corporation registered operation and maintenance phases of the project, as the case may be. under Philippine laws, such corporation shall execute such an undertaking binding itself to be liable for the obligations of the Project Proponent under the contract, which shall The Agency/LGU concerned shall determine on a project-to-project basis, and before pre- substitute or be in lieu of the undertaking submitted by the members or participants of qualification, the minimum amount of equity needed. the consortium. 34 35 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations For purposes of pre-qualification, this capability shall be measured in terms of proof of the Section 5.6 - Issuance of Tender Documents ability of the prospective Project Proponent and/or the consortium to provide: The Agency/LGU concerned shall make available the related bid documents to all pre-qualified i. Equity bidders upon completion of pre-qualification evaluation and issuance of notice of pre-qualification/ disqualification to provide respective bidders ample time to examine the same and to prepare their (a) a minimum amount of equity to the project measured in terms of the net worth respective bids prior to the date of opening of bids. of the company, or in the case of consortia, the net worth of the lead member or the combined net worth of members, or Section 5.7 - Simultaneous or Single-stage Qualification and Bidding (b) a set-aside deposit equivalent to the minimum equity required In the exigency of service, the Agency/LGU Head may opt to do a simultaneous qualification instead of a pre-qualification of proponents. In case of simultaneous qualification, the publication of the invitation, ii. Debt following the requirements in Section 5.2, shall be for the submission of qualification requirements and bid proposals. The bidders shall be asked to submit their proposal in three envelopes; the first A letter testimonial from a domestic universal/commercial bank or an international bank envelope - the qualification documents corresponding to the requirements so stated in Section 5.4 with a subsidiary/branch in the Philippines or any international bank recognized by the herein; the second envelope - the technical proposal; and the third envelope - the financial proposal. BSP attesting that the prospective Project Proponent and/or members of the consortium The requirements for bid submission are covered under Rule 7 of these Revised IRR. The period are banking with them, and that they are in good financial standing and/or are qualified for the preparation of the qualification documents shall be subsumed under the time allotted for bid to obtain credit accommodations from such banks to finance the project. preparation. The Agency/LGU, through its PBAC, shall complete the evaluation of the pre-qualification Section 5.8 - Changes to Pre-qualification and Tender Documents documents of the prospective Project Proponents within twenty (20) calendar days. If changes to pre-qualification and tender documents are made prior to pre-qualification of prospective

Section 5.5 - Pre-qualified and Disqualified Proponents bidders, the Agency/LGU shall issue a bid bulletin to all bidders who had purchased the tender/bid documents informing them of such changes, and afford them reasonable time within which to consider The Agency/LGU, through its PBAC, shall, within a period of twenty (20) calendar days after the the same in the preparation of their submission/bids. Such issuance shall be duly acknowledged by deadline set for the submission of the pre-qualification documents, determine which among prospective each bidder prior to the submission of his pre-qualification documents/bid and shall be so indicated proponents are “pre-qualified” or “disqualified”. Accordingly, the PBAC shall duly inform the prospective in his submission/bid. This shall be observed under the single-stage bidding process (simultaneous Project Proponents who have been pre-qualified within five (5) calendar days after approval thereof. qualification) as well as in the two-stage bidding process. Disqualified proponents shall likewise be informed stating therein the grounds for their disqualification within the same period. Those disqualified may appeal the disqualification within fifteen (15) working Further, if changes to pre-qualification and tender documents are made after the pre-qualification days from receipt of the notice of disqualification to the Head of Agency in the case of national projects, stage, the bid bulletin shall be issued only to all pre-qualified bidders. or the Head of the DILG unit concerned or his authorized representative, in the case of local projects. Provided that, consistent with Section 2.8 of these Revised IRR, the Head of Agency/LGU shall secure The bidding process will be suspended while the appeal is being evaluated. The Head of Agency or approval by the appropriate Approving Body prior to the issuance of the bid bulletin for any of the Head of the DILG unit concerned or his authorized representative, as the case may be, shall act on the following material changes in the information contained in the documents obtained by prospective appeal within forty-five (45) working days from receipt of the appeal and upon filing of a non-refundable bidders for single-stage and two-stage bidding process: appeal fee in an amount equivalent to no less than one-half of one percent (0.5 %) of the Project Cost as approved by the Approving Body. The decision of the Head of Agency of Head of the DILG unit a. Changes which reduce the service levels to the public; concerned or his authorized representative on the appeal shall be final and immediately executory. b. Changes which reduce the economic internal rate of return below the hurdle rate used in the original analysis of the project; 36 37 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations c. Changes which increase the total government subsidy to a project by at least five percent Notices shall be duly acknowledged by each bidder prior to the submission of his bid and shall be so (5%) of the total project cost; and indicated in the bid. d. Changes in the risk profile which are detrimental to the best interest of the government. Section 6.3 - Pre-bid Conference The concerned Agency/LGU shall inform in writing the concerned statutory counsel as provided in For projects costing less than PhP 300 million, a pre-bid conference shall also be conducted by the

Section 2.8 of these Revised IRR of such changes. concerned Agency/LGU at least thirty (30) calendar days before the deadline for the submission of bids to clarify any provisions, requirements and/or terms and conditions of the bidding documents and/

Section 5.9 - Acceptance of Criteria and Waiver of Rights to Enjoin Project or any other matter that the prospective bidders may raise. For projects costing PhP 300 million and above, the pre-bid conference shall be conducted no later than sixty (60) calendar days before the All prospective bidders shall be required to submit, as part of their qualification documents, a statement submission of bids. stipulating that the bidder (i) has accepted the qualification criteria established by the PBAC of the Agency/LGU concerned, and (ii) waives any right it may have to seek and obtain a writ of injunction or Nothing stated at the pre-bid conference shall modify any provisions or terms and conditions of the prohibition or restraining order against the concerned Agency/LGU or its PBAC to prevent or restrain bidding documents unless such is made as a written amendment thereto by the concerned Agency/ the qualification process or any proceedings related thereto, the holding of a bidding or any proceedings LGU. Any amendments shall be issued by the Agency/LGU concerned to all bidders within a reasonable related thereto, the negotiation of and award of the contract to a successful bidder, and the carrying out time to allow them to consider the same in the preparation of their bids and shall be duly acknowledged of the awarded contract. Such waiver shall, however, be without prejudice to the right of a disqualified by each bidder prior to the submission of his bid and shall be so indicated in his bid. A summary of or losing bidder to question the lawfulness of its disqualification or the rejection of its bid by appropriate the pre-bid conference proceedings shall also be issued to all prospective bidders by the Agency/LGU administrative or judicial processes not involving the issuance of a writ of injunction or prohibition or concerned. Attendance to the pre-bid conference by prospective bidders shall not be mandatory. restraining order.

RULE 7 - SUBMISSION, RECEIPT AND OPENING OF BIDS

RULE 6 - SUPPLEMENTAL NOTICES AND PRE-BID CONFERENCES

Section 7.1 - Requirements for Bid Submission

Section 6.1 - Responsibility of Bidder Bidders shall be required to submit their bids on or before the deadline stipulated in the “Instructions The prospective bidder shall be solely responsible for having taken all the necessary steps to carefully to Bidders”. For pre-qualified bidders, their bids shall be submitted in at least two (2) separate sealed examine and acquaint himself with the requirements and terms and conditions of the bidding documents envelopes, the first being the technical proposal and the second the financial proposal. In case of with respect to the cost, duration, and execution/operation of the project as it affects the preparation simultaneous qualification, at least three (3) envelopes shall be submitted. The first envelope shall be and submission of his bid. The Agency/LGU concerned shall not assume any responsibility regarding the qualification requirements, the second the technical proposal and the third the financial proposal. erroneous interpretations or conclusions by the prospective bidder out of data furnished or indicated All envelopes shall bear the name of the bidder and project to be bid out in capital letters and addressed in the bidding documents. to the PBAC of the concerned Agency/LGU. They shall be marked “Do Not Open Before (date and time of opening of bids)”. The envelopes shall be appropriately labeled as Qualification Requirements,

Section 6.2 - Supplemental Notices Technical Proposal and Financial Proposal. If a bidder is in doubt as to the meaning of any data or requirements or any part of the bidding a. The “Qualification Requirements” shall contain requirements as stated in Section 5.4 documents, written request may be submitted to the Agency/LGU concerned for an interpretation of the same, allowing sufficient time for the concerned Agency/LGU to reply before the submission of b. The “Technical Proposal” shall contain the following requirements, as may be deemed his/her bid. Any substantive interpretation given by the concerned Agency/LGU shall be issued in the necessary by the concerned Agency/LGU: form of a Supplemental Notice, and furnished to all prospective bidders. The Agency/LGU concerned may also issue Supplemental Notices to all prospective bidders at any time for purposes of clarifying i. Acceptance/Compliance statements with regard to all terms and conditions in the tender any provisions of the bidding documents provided that the same is issued within a reasonable period documents including those with regard to financial parameters and any changes which to allow all bidders to consider the same in the preparation of their bids. Receipt of all Supplemental were made thereto by the Agency/LGU prior to bid submission. 38 39 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations ii. Operational feasibility of the project, which shall indicate the proposed organization, Bids and bid securities shall be valid for a period to be prescribed by the Agency/LGU methods and procedures for the operation and maintenance of the project under concerned in the bidding documents but in no case beyond one hundred and eighty bidding; (180) calendar days from the date of opening of bids, subject to Section 11.7. The actual amount of bid security to be posted by the bidders will be fixed by the concerned iii. Technical soundness/preliminary engineering design, including proposed project Agency/LGU prior to bidding. Said actual amount shall not be less than the amount timeline; prescribed in the above schedule. iv. Preliminary environmental assessment, which shall indicate the probable adverse vii. Other documents as may be required by the concerned Agency/LGU to support the effects of the project on the environment and the corresponding mitigating measures to bidder’s technical proposal. be adopted; c. The “Financial Proposal” shall contain the following, as the case may be: v. Project Cost; i. Proposed Project Cost, operation and maintenance cost, and all other related costs; vi. Bid Security. The Agency/LGU shall determine which form of Bid Security it will require which may be in cash, certified check, manager’s check, letter of credit, or bank draft/ ii. Project financing scheme, which may include the amount of equity to be infused, debt guarantee issued by a reputable local/foreign bank, or a surety bond callable on to be obtained for the project, and sources of financing; and demand issued by the Government Service Insurance System (GSIS) or an entity duly registered and recognized by the office of the Insurance Commissioner and acceptable iii. Financial bid corresponding to the parameters set by the Agency/LGU in accordance to the Agency/LGU, or any combination thereof payable to the Agency/LGU concerned with Section 4.2 (h). based on the total Project Cost (as indicated by the prospective Project Proponent) in accordance with the following schedules: Section 7.2 - Submission of Late Bids PROJECT COST Bids submitted after the deadline for submission prescribed in the “Instructions to Bidders” shall be (as estimated by the Agency/LGU or REQUIRED BID SECURITY considered late and shall be returned unopened. proposed by the Project Proponent)

Section 7.3 - Opening of the Envelope for Qualification of Bidder less than PhP 5.0 billion 2.0% of the Project Cost At the date and time stipulated in the “Instructions to Bidders”, the PBAC shall open the envelope and less than PhP 5.0 billion to less than PhP 1.5% of the Project Cost or PhP 100 ascertain whether the same is complete in terms of the information required under Section 5.4. Such 10.0 billion million, whichever is higher information shall be recorded at the time, including the names and addresses of required witnesses. All bidders or their representatives present at the opening of the first envelopes shall sign a register of 1.0% of the Project Cost or PhP 150 PhP 10.0 billion and more the opening of the qualification envelope. million, whichever is higher

Section 7.4 - Evaluation of Qualification Requirements The Agency/LGU shall determine whether the Bid Security shall be issued by a local bank, an international bank, or both. In case the bid security is issued by an The qualification documents will first be evaluated prior to the opening of the technical proposal. The international bank, said security has to be confirmed and validated by its local branch in Agency/LGU shall inform bidders whether they are qualified or disqualified, and for the latter, the the Philippines or by a bank that is duly registered and authorized by the BSP. reasons for disqualification, within ten (10) calendar days. Only qualified bidders shall be allowed to participate in the bid evaluation. Disqualified bidders shall be informed of the grounds of disqualification The posting of the bid security is for the purpose of guaranteeing that the proposed and their technical and financial proposals returned unopened. contract awardee shall enter into contract with the concerned Agency within the time prescribed therefore. 40 41 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations

Section 7.5 - Rejection of Bids The first envelope evaluation shall involve the assessment of the technical, operational, environmental and financing viability of the proposal as contained in the bidders’ first envelopes vis-à-vis the Incomplete information on any of the envelopes and/or non-compliance with the bid security prescribed requirements and criteria/minimum standards and basic parameters prescribed in the requirements prescribed in Section 7.1 (b) shall be grounds for automatic rejection of bids. bidding documents. Only those bids that have been determined to have positively passed the first stage of evaluation shall be qualified and considered for the second stage of evaluation.

Section 7.6 - Opening of the Envelope for the Technical Proposal The Agency/LGU concerned shall evaluate the technical proposals of the bidder in accordance with At the date and time of bid opening, as stipulated in the “Instructions to Bidders”, the PBAC shall open the following criteria: only the technical proposal and ascertain whether the same is complete in terms of the data/information required under Section 7.1 (b) above and whether the same is accompanied by the required bid a. Technical soundness (preliminary engineering design) - The basic engineering design of the security in the prescribed form, amount and period of validity. Such information shall be recorded at project should conform to the minimum design and performance standards and specifications the time, including the names and addresses of required witnesses. All bidders or their representatives set by the Agency/LGU concerned as prescribed in the bidding documents. The engineering present at the opening of the first envelopes shall sign a register of the bid opening. surveys, plans and estimates should be undertaken within +/- 20% of the final quantities. The Construction methods and schedules should also be presented and shown to be feasible or

Section 7.7 - Opening of the Envelope for the Financial Proposal “doable”. Only those bidders whose technical proposal passed the evaluation criteria as prescribed under b. Operational feasibility - The proposed organization, methods, and procedures for operating

Section 8.1 hereof shall have their financial proposal opened for further evaluation. Those who failed and maintaining the completed facility must be well defined, should conform to the prescribed the evaluation of the technical proposal shall not be considered further, and the PBAC shall return their performance standards, and should be shown to be workable. Where feasible, it should financial proposals unopened together with the reasons for their disqualification from the bidding. provide for the transfer of technology used in every phase of the project. Once the bidders who have qualified for the evaluation of the financial proposal have been determined, c. Environmental Standards - The proposed design and the technology of the project to be the PBAC shall notify said bidders of the date, time and place of the opening of the envelopes for the used must be in accordance with the environmental standards set forth by the Department financial proposal. The opening thereof shall follow the same procedures prescribed for the opening of Environment and Natural Resources (DENR), as indicated in the bid documents. Any of the previous envelopes. adverse effects on the environment as a consequence of the project as proposed by the prospective Project Proponent must be properly identified, including the corresponding

Section 7.8 - Withdrawal and/or Modification of Bids corrective/mitigating measures to be adopted. Withdrawal and/or modification of bids may be allowed upon written notice by the bidder concerned d. Project Financing - The proposed financing plan should positively show that the same could to the Agency/LGU prior to the time and date set for the opening of bids (opening of first envelopes) adequately meet the Construction cost as well as the operating and maintenance costs as specified in the “Instructions to Bidders”. No bids shall be modified or withdrawn after the time requirements of the project. The Agency/LGU concerned shall assess the financing prescribed to open bids. Bid modifications received after said period shall be considered late and will proposals of the bidders if the same matches and adequately meets the cost requirements be returned unopened. Withdrawal of bids after the bid opening date shall cause the forfeiture of the of the project under bidding. bidder’s bid security. The PBAC of the Agency/LGU concerned shall complete the evaluation of the technical proposal within twenty (20) calendar days from the date the bids are opened.

RULE 8 - EVALUATION OF BIDS

Section 8.2 - The Second Envelope Evaluation

Section 8.1 - The First Envelope Evaluation The second envelope evaluation shall involve the assessment and comparison of the financial proposals The evaluation of bids shall be undertaken in two (2) stages, in accordance with the procedures of the bidders, based on the parameters stated in Section 4.2 (h). The second stage evaluation shall be described below. completed by the PBAC of the concerned Agency/LGU within fifteen (15) calendar days from the date the first stage evaluation shall have been completed. 42 43 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations In the case of BT and BLT schemes, a Filipino Project Proponent who submits an equally advantageous Section 9.3 - Conditions for Negotiated Projects bid with exactly the same price and technical specifications as that of a foreign Project Proponent shall be given preference. In the instances where negotiated projects are allowed, the ICC shall determine the Reasonable Rate of Return prior to the negotiation in the case of solicited proposals as referred to under Section 9.1

Section 8.3 - Right to Reject All Bids of these Revised IRR. The scope of negotiation, in the case of solicited proposals referred to under

Section 9.1 of these Revised IRR, shall be limited to the financial proposal of the proponent and The Agency/LGU concerned reserves the right to reject any or all bids, waive any minor defects therein compliance with the ICC-determined Reasonable Rate of Return. Direct negotiation should not result and accept the offer it deems most advantageous to the Government. in a higher subsidy, or higher user fee, or lower amount of government revenue, or longer concession period.

RULE 9 - NEGOTIATED CONTRACT

Section 9.4 - Financial and Technical Evaluation of Negotiated Contracts

Section 9.1 - Direct Negotiation In so far as applicable, the same rules provided for the evaluation of the technical and financial aspects Direct negotiation shall be resorted to when there is only one complying bidder left as defined hereunder: of bid proposals shall be applied in the evaluation of Negotiated Contracts authorized in the Act and these Revised IRR. a. If, after advertisement, only one prospective Project Proponent applies for pre-qualification and it meets the pre-qualification requirements, after which, it is required to submit a bid/ RULE 10 - UNSOLICITED PROPOSALS proposal which is subsequently found by the Agency/LGU to be complying;

Section 10.1 - Requisites for Unsolicited Proposals b. If, after advertisement, more than one prospective Project Proponent applied for pre- qualification but only one meets the pre-qualification requirements, after which it submits a Any Agency/LGU may accept Unsolicited Proposals on a negotiated basis provided that all the following bid proposal that is found by the Agency/LGU to be complying; conditions are met: c. If, after pre-qualification of more than one prospective Project Proponent, only one submits a. the project involves a new concept or technology as determined by the Agency/LGU and/or a bid which is found by the Agency/LGU to be complying; is not part of the List of Priority Projects; d. If, after pre-qualification, more than one prospective Project Proponent submit bids but only b. no Direct Government Guarantee, subsidy or equity is required; and one is found by the Agency/LGU to be complying; c. the Agency/LGU concerned has invited by publication, for three (3) consecutive weeks, In such events, however, any disqualified bidder may appeal the disqualification of the concerned in a newspaper of general circulation, comparative or competitive proposals and no other Agency/LGU to the Head of Agency, in case of national projects, or to the Head of the DILG unit proposal is received for a period of sixty (60) working days. concerned or his authorized representative, in case of local projects, within fifteen (15) working days from receipt of the notice of disqualification. The Head of Agency or the Head of the DILG unit concerned If no comparative or competitive proposal or no complying bid is received by the Agency/ or his authorized representative shall act on the appeal within forty-five (45) working days from receipt LGU, the original proponent shall immediately be awarded the contract. In the event thereof. The decision of the Head of Agency or the Head of the DILG unit concerned or his authorized that a comparative proponent submits a price proposal better than that submitted by the representative shall be final and immediately executory. original proponent, the latter shall have the right to match such price proposal within thirty (30) working days from receipt of a notification from the Agency/LGU of the result of the

Section 9.2 - Unsolicited Proposals comparative or competitive bid. Should the original proponent fail to match the price proposal of the comparative proponent within the specified period, the contract shall be awarded Unsolicited Proposals may be accepted by an Agency/LGU on a negotiated basis, subject to the to the comparative proponent. On the other hand, if the original proponent matches the conditions provided under Rule 10. price proposal of the comparative proponent within the specified period, the project shall immediately be awarded to the original proponent. 44 45 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations

Section 10.2 - New Technology The standards for valuation of government assets, including among others, right-of-way, and of relocation and resettlement shall be pursuant to Republic Act No.8974 and other existing laws, rules The Project Proponent proposing a project involving a new concept or technology shall incorporate and regulations, and guidelines. The appraisal or valuation shall be undertaken by a third-party or an in its proposal information regarding said new concept or technology which it should have directly, or independent institution or individuals duly accredited to conduct the appraisal of the property/asset. through any of its key members, successfully implemented at a scale similar to the proposed project. The information disclosed must be in sufficient detail so as to allow the Agency/LGU to properly Section 10.5 - Submission of a Complete Unsolicited Proposal evaluate the new concept or technology. Additionally, the new technology must possess at least one of the following attributes: For an unsolicited proposal to be considered by the Agency/LGU, the proponent has to submit a complete proposal, which shall include a cover letter, feasibility study which should indicate relevant a. A recognized process, design, methodology or engineering concept which has demonstrated assumptions, company profile, the draft contract adverted to in Section 4.4 above, and other documents its ability to significantly reduce implementation of Construction costs, accelerate project that are needed even if proprietary in nature. The cover letter shall indicate the basic information execution, improve safety, enhance project performance, extend economic life, reduce costs on the Unsolicited Proposal such as its expected output and outcome, implementation period, and of facility maintenance and operations, or reduce negative environmental impact or social/ general description of the new concept or technology, among others, and shall include the company economic disturbances or disruptions either during the project implementation/Construction profile of the unsolicited proponent. The feasibility study, draft contract, and other documents that are phase or the operation phase; needed even if proprietary in nature shall be submitted in a sealed envelope. The Agency/LGU shall acknowledge receipt of the proposal within seven (7) calendar days and advise the proponent whether b. A process for which the Project Proponent or any member of the proponent consortium the proposal is complete or incomplete within thirty (30) calendar days from submission thereof. If possesses exclusive rights, either world-wide or regionally; or incomplete, the Agency/LGU shall return to the proponent its submission indicating what information is lacking or necessary and the Agency/LGU may entertain thereafter other same or similar project c. A design, methodology or engineering concept for which the proponent or a member of the proposal. proponent consortium or association possesses intellectual property rights.

Section 10.6 - Treatment of More Than One Proposal for the Same or Similar Project

Section 10.3 - Projects Ineligible for Unsolicited Proposals In the case where the Agency/LGU receives more than one Unsolicited Proposal involving the same Projects included in the “List of Priority Projects”, as defined under Section 2.3, shall not be eligible to or similar project prior to acceptance of the proposal as the “original proponent”, the Agency/LGU may be accepted as Unsolicited Proposals, unless involving a new concept or technology. In addition, any reject all such proposals or instead, bid out the project as a solicited proposal. Otherwise, the Agency/ component of an approved project shall not be eligible for any Unsolicited Proposal. LGU shall evaluate the proposals using a first in time approach. Under this approach, the first complete proposal is evaluated and decided upon. The second complete proposal will only be entertained if the

Section 10.4 - Investment Incentives and Government Undertakings for Unsolicited Proposals first one is rejected. Otherwise, the second proposal will be considered only if there is a failure in the negotiation of the first proposal or during the “invitation for comparative proposals” as defined under As a general rule, the Government may grant Investment Incentives to Unsolicited Proposals as Section 10.11. enumerated under Rule 13. Under the first in time approach, the Head of Agency/LGU shall acknowledge the submission of other In accordance with Section 4-A of the Act, there shall be no direct government guarantee, subsidy or unsolicited proponent for the same or similar project concept, and advise the unsolicited proponent on equity for unsolicited proposals. existence of similar project concept and its rank/position based on date of submission of unsolicited proposals. If a contract is awarded to a proponent, the unopened envelope/s shall be returned to the The grant of usufruct of government assets, including among others, right-of-way, to Project Proponents respective proponents. shall be considered as direct subsidy or equity unless government receives appropriate compensation pursuant to existing laws, rules and regulations, and guidelines. Section 10.7 - Evaluation and Acceptance of Unsolicited Proposals All costs related to relocation and resettlement in connection with the project shall be shouldered by The Agency/LGU is tasked with the evaluation of the proposal. The Agency/LGU shall: 1) appraise the Project Proponent. the merits of the project; 2) qualify the proponent based on the provisions of Rule 5 hereof; 3) assess the appropriateness of the contractual arrangement and reasonableness of the risk allocation; 4) 46 47 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations recommend a reasonable Rate of Return (ROR); and, 5) inform the ICC and the PPP Center of its The approval by the Approving Body of the unsolicited project under this section shall be valid only for a receipt of an Unsolicited Proposal. The Agency/LGU shall evaluate the proposal, qualify the proponent, period of eighteen (18) months from the issuance of the approval unless the invitation for comparative and advise whether it accepts or rejects the proposal within one hundred and twenty (120) calendar proposals has been issued. days upon receipt of the complete proposal. The Agency/LGU shall indicate in its letter of acceptance the confirmation of the proponent as “original proponent”. In case of acceptance, the Agency/LGU Section 10.9 - Approval of Unsolicited Contracts by the Head of Agency/LGU shall endorse the unsolicited proposal and submit all pertinent documentation to the ICC/Approving Body. At this point, the Agency/LGU will no longer entertain other similar proposals unless the parties The Head of Agency/LGU shall review and approve the draft contract which shall be based on the are unable to agree during the period for negotiations specified in Section 10.8 below, or the original parameters, terms and conditions set forth by the Approving Body. proponent is unable to comply with the parameters set by the Approving Body, or until the solicitation of comparative proposals has been completed. Prior to approval of the Head of Agency/LGU, the draft contract shall undergo review by the office of the Government Corporate Counsel (OGCC), the office of the Solicitor-General (OSG) or any other

Section 10.8 - ICC Determination of Reasonable Rate of Return (ROR) and Parameters and entity prescribed by law/issuances as the statutory counsel of GOCCs and LGUs. The prescribed Approval of the Unsolicited Project Prior to Negotiation With the Original Proponent statutory counsel, and if necessary, the DOF, shall issue an opinion on the draft contract within ten (10) days upon their receipt of the draft contract as submitted by the Agency/LGU. Within five (5) calendar days upon issuance of the letter of acceptance by the Agency/LGU to the proponent, the Head of Agency/LGU shall endorse to the ICC the proposed unsolicited project. Changes to the draft contract as agreed upon by Agency/LGU and the original proponent and as Pursuant to Section 2(o) of the Act, the ICC shall determine the reasonable ROR on investments and approved by the Head of Agency/LGU shall not be allowed, except for changes to contract terms operating and maintenance cost based on the reasonable ROR recommended by the Agency/LGU. affected or decided by the winning bidder’s bid during the solicitation of comparative proposals and matching by the original proponent. Within thirty (30) working days upon receipt of endorsement, results of due diligence evaluation conducted and submission of complete documentation from the Head of Agency/LGU, the Approving Section 10.10 - Tender Documents Body shall act on the unsolicited project upon recommendation by the ICC of the project including the determination of the reasonable ROR and other parameters for negotiation. The Approving Body shall The qualification and tender documents shall be prepared along the lines specified under Rules 4 and formally advise the Agency/LGU, thereafter, that such determination is final and executory. 5 hereof. The draft contract as agreed upon by the Agency/LGU and the original proponent and as approved by the Head of Agency/LGU, which shall be part of the tender documents, will be considered Within seven (7) calendar days upon receipt of the Agency/LGU of the formal advise of the ICC/ final and non-negotiable by the comparative proponents. Proprietary information shall, however, be Approving Body, the Agency/LGU shall inform in writing the original proponent of the mechanics of respected, protected and treated with utmost confidentiality. As such, it shall not form part of the the negotiation including the commencement date and the authorized representative(s) of the Agency/ bidding/tender and related documents. LGU. Negotiations shall focus on the project scope, implementation arrangements, reasonable ROR and other parameters determined by ICC/Approving Body, and the terms and conditions of the draft Section 10.11 - Invitation for Comparative Proposals contract for the Unsolicited Proposal, among others. The Agency/LGU and the original proponent shall conclude negotiations within a period of eighty (80) calendar days from receipt by the proponent Within seven (7) calendar days upon issuance of the certification of a successful negotiation referred of written notice from the Agency/LGU to commence negotiation. The Agency/LGU and the original to in Section 10.8, the Agency/LGU PBAC shall publish the invitation for comparative proposals proponent shall negotiate in good faith and endeavor to complete the negotiation within the eighty after receipt of the notification from the Original Proponent that the latter accepts all the terms and (80)-calendar day period; provided, that should there be irreconcilable differences during the negotiation conditions. The invitation for comparative or competitive proposals should be published at least once period, the Agency/LGU shall have the option to reject the proposal by advising the original proponent every week for three (3) consecutive weeks in at least one (1) newspaper of general circulation. Said in writing stating the grounds for rejection and thereafter may accept a new Unsolicited Proposal, invitation should also be posted continuously in the website of the Agency/LGU concerned, if available, or bid out the project as a solicited proposal, or undertake the project on its own. If negotiation is during the period stated above. For projects costing at least PhP 500 million, the invitation may also be successful, the Head of Agency/LGU and the authorized signatory of the original proponent shall issue published at least once (1) in at least one (1) international publication. It shall indicate the time, which a signed certification that an agreement has been reached by both parties. Said certification shall also should not be earlier than the last date of publication, and place where tender/bidding documents could state that the Agency/LGU shall commence the activities for the solicitation of comparative proposals. be obtained. It shall likewise explicitly specify a time of sixty (60) working days reckoned from the date The Agency/LGU shall, within seven (7) calendar days after the eighty (80)-calendar day negotiation of issuance of the tender/bidding documents upon which proposals shall be received. Beyond said period, submit a report to the ICC and the Approving Body of the result of its negotiation with the deadline, no proposals shall be accepted. A pre-bid conference shall be conducted thirty (30) working original proponent for approval/validation. days after the issuance of the tender/bidding documents. 48 49 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations

Section 10.12 - Posting of Bid Bond by Original Proponent bid. If no other comparative bid is determined to be better than the offer of the original proponent, the project shall immediately be awarded to the original proponent. The original proponent shall be required at the date of the first day of the publication of the “invitation for comparative proposals” to submit a bid bond equal to the amount and in the form required of the RULE 11 - AWARD AND SIGNING OF CONTRACT comparative proponents, following the requirements of Section 7.1(b)(vi).

Section 11.1 - Recommendation to Award

Section 10.13 - Qualification of Comparative Proponents Within three (3) calendar days from the date the financial evaluation shall have been completed, the The evaluation criteria used for qualifying the original proponent should be the same criteria used in Agency/LGU PBAC will submit to the Head of Agency/LGU a recommendation of award. The PBAC will the “Term of Reference” for the comparative proponents. prepare and submit a detailed evaluation/assessment report on its decision regarding the evaluation of the bids and explain in clear terms the basis of its recommendations.

Section 10.14 - Submission of Proposal

Section 11.2 - Decision to Award The bidders are required to submit the proposal in three envelopes at the time and place specified in the Tender Documents. The first envelope shall contain the qualification documents, the second Within three (3) calendar days from the submission by PBAC of the recommendation to award, the envelope the technical proposal as required under Section 7.1 (b), and the third envelope the financial Head of Agency/LGU shall decide on the award. The approval shall be manifested by signing and proposal as required under Section 7.1 (c). issuing the “Notice of Award” to the winning Project Proponent within five (5) calendar days from approval thereof.

Section 10.15 - Evaluation of Comparative Proposals All unsuccessful bidders shall be informed in writing of the decision of the Agency/LGU to award the Proposals shall be evaluated in three stages: Stage 1, qualification documents; Stage 2, the technical project to the winning Project Proponent. Such decision shall be made available to the public when proposal; and Stage 3, the financial proposal. Only those bids which pass the first stage will be considered requested. for the second stage and similarly, only those which pass the second stage will be considered for the third stage evaluation. The Agency/LGU will return to the disqualified bidders the remaining envelopes Section 11.3 - Notice of Award unopened, together with a letter explaining why they were disqualified. The criteria for evaluation will follow Rule 5 for the qualification of bidders and Rule 8 for the technical and financial proposals. The The “Notice of Award”, which is issued by the Head of Agency/LGU, shall indicate, among others, that time frames under Rules 5 and 8 shall likewise be followed. the winning Project Proponent must submit within twenty (20) calendar days from official receipt of the “Notice of Award” the following:

Section 10.16 - Disclosure of the Price Proposal a. prescribed performance security; The decision to disclose the price or financial proposal of the original proponent in the Tender Documents shall be mutually agreed upon between the Agency/LGU and the original proponent. If the b. proof of commitment of the required equity contribution, as specified by the Agency/LGU: original proponent’s price proposal was not disclosed in the Tender Documents, it should be revealed upon the opening of the financial proposals of the comparative proponents. i. in the case where the Project Proponent is a corporation - e.g., treasurer’s affidavit attesting to actual paid-up capital, subscription agreement(s) between a shareholder(s)

Section 10.17 - Failure of a Winning Comparative Proponent to Enter Into Contract of the Project Proponent and the Project Proponent itself covering said equity contribution, or shareholders agreement between and amongst 2 or more shareholders In the event of refusal, inability or failure of the winning comparative proponent to enter into contract with of the Project Proponent undertaking to contribute/subscribe the required equity the Agency/LGU within the specified time in the Tender Documents, its bid security shall be forfeited contribution; or in favor of the Agency/LGU. In such an event, the Agency/LGU concerned shall consider for award the bidder with the next-ranked complying comparative bid which is better than the offer of the original ii. in the case of a consortium - an undertaking of the members thereof to infuse the proponent. The original proponent shall again be given the right to match the comparative proponent’s required equity contribution to the consortium. 50 51 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations c. proof of firm commitments from reputable financial institution to provide sufficient credit lines c. an accession undertaking is executed by the corporation and the winning proponent in to cover the total estimated cost of the project; favor of the Agency/LGU making the corporation principally liable for the performance of the winning Project Proponent’s obligations under the Notice of Award and/or the contract. d. in the case of a consortium, the agreement indicating that the members are jointly and severally liable for the obligations of the Project Proponent under the contract; or Section 11.6 - Withdrawal/Substitution of a Member e. in case a special purpose company (SPC) is formed for purposes of undertaking the project, Subject to the approval of the Agency/LGU, any member of the consortium, or a shareholder of the proof of registration in accordance with Philippine laws. SPC created (who was a member of such consortium), or its pre-qualified Contractors may withdraw as such prior to award of the project or any time during the contract term, provided that, the remaining f. such other conditions imposed by the Agency/LGU. members or shareholders are still legally, technically, and financially capable of successfully carrying out the implementation/operation of the project. The Agency/LGU shall have the discretion to allow Failure to submit the requirements within the prescribed twenty (20)-calendar day period will result in substitution of members or shareholders after pre-qualification; provided that, the substitute has equal confiscation of the bid security. Within five (5) calendar days upon receipt of the foregoing requirements or better qualifications than the withdrawing member or shareholder; provided further, that the Agency/ for award, the Head of Agency/LGU shall determine and notify the winning bidder of its compliance of LGU shall undertake necessary procedure to determine the qualification of the substitute. all the conditions stated in the said notice. A withdrawal made in violation of this section shall be a ground for disqualification or cancellation of the

Section 11.4 - Public Dissemination of Bidding Results contract, as the case may be, and forfeiture of the proponent’s bid or performance security. The PBAC shall post the notice of award and/or bidding results in the PHILGEPS, websites of PPP The Agency/LGU shall inform in writing the PPP Center of such changes for monitoring purposes. Center and of the Agency/LGU, if any, within seven (7) calendar days from the issuance of Notice of Award. Section 11.7 - Validity of Bids/Return of Bid Security

Section 11.5 - Formation of Special Purpose Company (SPC) The execution of the contract shall be made within the period of the validity of the bid security. The required bid security shall be valid for a reasonable period but in no case beyond one hundred The concerned Agency/LGU may require the winning Project Proponent to incorporate with the eighty (180) calendar days following the opening of the bids. Bid securities shall be returned to the Securities and Exchange Commission (SEC) in accordance with applicable Philippine laws. The unsuccessful bidders as soon as the contract is signed by the winning bidder. corporation that will be created shall assume and accede to all the rights and obligations of the winning Project Proponent, Provided, that: Section 11.8 - Extension of Validity of Bids a. the winning Project Proponent subscribes to and pays for a significant/principal shareholding When an extension of validity of bids is considered necessary, those who submitted bids shall be or controlling interest in the corporation, subject to the nationality and ownership requirements requested in writing to extend the validity of their bids before the expiration date. However, bidders under the Constitution and other applicable laws. The required level of share ownership may shall not be allowed to modify or revise the price or other substance of their bids. be indicated in the tender documents or determined as a condition prior to contract award; Bidders shall have the right to refuse to grant such an extension without forfeiting their bid security, b. in the case of a consortium, all members thereof shall present proof of contractual or but those who are willing to extend the validity of their bids should be required to provide a suitable other legally binding ties to or relationships with the corporation for the development and extension of bid security. implementation of the project in accordance with their submitted business plan, e.g., for facility owners/developers/equity investors - subscription to and payment for a significant Section 11.9 - Failure of Bidding number of shares in the corporation; for Contractors or operators - binding appointment and undertaking to be the Contractor/operator or duly signed engineering, procurement and In the case of solicited bids, when no complying bids are received or in case of failure to execute the Construction (EPC) contract/operation and maintenance agreement; for financial institutions contract with a qualified and contracting bidder due to the refusal of the latter, the bidding shall be - letter of firm commitment to raise or provide financing to the project; declared a failure. In such cases, the project shall be subjected to a re-bidding. 52 53 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations

RULE 12 - CONTRACT APPROVAL AND IMPLEMENTATION Provided that, if the final approval of the franchise by the regulator shall result in a decrease in the amount of tolls, fees, rentals, and other charges stipulated under the contract, the government shall

Section 12.1 - Execution/Approval of the Contract ensure that the Project Proponent recovers the difference between the amount stipulated under the contract/parametric formulae and the amount approved by the regulator or appropriate regulatory body The authorized signatory(ies) of the winning bidder and the Head of Agency/LGU shall execute and through measures consistent with the Constitution and other applicable laws. sign the contract for the project as approved in accordance with Section 2.8, within five (5) calendar days from receipt by the winning bidder of the notice from the Agency/LGU that all conditions stated in Section 12.4 - Contract Effectivity the Notice of Award have been complied with. The contract shall be effective upon signing thereof by the Head of Agency/LGU, unless another date Consistent with Article 1159 of the New Civil Code, the contract is the law between the parties and is stipulated therein. the parties shall perform their respective prestations, obligations, and undertakings thereunder with utmost good faith with the end in view of attaining the objective hereof. An original signed copy of the Section 12.5 - Notice to Commence contract shall be submitted to the Approving Body and the PPP Center within five (5) calendar days after signing thereof by the Agency/LGU. The concerned Agency/LGU, when deemed necessary, shall issue the “Notice to Commence Implementation” of the project to the proponent within a reasonable period to be determined by the In the event of refusal, inability or failure of the winning bidder to enter into contract with the Government Agency/LGUs and stated in the contract. within the time provided therefor, the Agency/LGU concerned shall forfeit its bid security. In such an event, the Agency/LGU concerned shall consider the bidder with the next ranked complying bid. If Section 12.6 - Preparation and Approval of Detailed Engineering Design the same shall likewise refuse or fail to enter into contract with the Government, its bid security shall likewise be forfeited and the Agency/LGU concerned shall consider the next ranked complying bid, Where the project involves design, the Project Proponent shall be responsible for the preparation of and so on until a contract shall have been entered into. In the event that the concerned Agency/LGU is the detailed engineering designs and plans based on the prescribed minimum design and performance unable to execute the contract with any of the complying bidders, a failure of bidding will be declared standards and specifications and shall submit the same to the Agency/LGU concerned. and the project may be subjected to a re-bidding. The Agency/LGU concerned shall review the detailed engineering designs and plans prepared by the

Section 12.2 - Other Approvals for Contract Project Proponent in terms of its compliance with the prescribed standards and specifications, and if found acceptable, shall approve the same for incorporation in the contract to be signed by the Project The Project Proponent shall, as may be required under the existing laws, rules and regulations secure Proponent and the Agency/LGU. This approval by the Agency/LGU concerned notwithstanding, the any and all other approvals for the contract or the implementation thereof from government agencies or Project Proponent shall be solely responsible for the integrity of its detailed engineering designs and bodies including the Regulator in the case of Public Utility Projects. This includes securing the necessary plans. The approval thereof by the Agency/LGU concerned does not diminish this responsibility, nor and appropriate environmental clearances from the DENR prior to actual project Construction. The does it transfer any part of such responsibility to the Agency/LGU concerned. DENR shall act on the environmental clearance of the project within the time frame prescribed in and following the guidelines of DENR Administrative Order No. 96 -37 and subsequent guidelines as may In the case of local projects, the LGU concerned shall ensure that the technical designs, plans, be issued from time to time. The Agency/LGU may provide the necessary assistance to the Project specifications, and related aspects necessary for the project’s Construction, operation and maintenance Proponent in securing all the required clearances. The contract shall provide milestones in securing shall be based on relevant local and national policies, standards and guidelines. Moreover, the LGU such other approvals required for the implementation of the contract. shall consult with appropriate national regulatory bodies regarding national policies, standards, and guidelines in granting the necessary Franchise.

Section 12.3 - Grant of Franchise

Section 12.7 - Project Construction Subject to the provisions of the Constitution and other existing laws, rules and regulations, once a contract is executed by the Project Proponent and the Agency/LGU, a presumption arises that the The Project Proponent shall build the facility in accordance with the design and performance standards public interest will be served by the implementation of the project covered thereby, and immediately and specifications prescribed in the approved detailed engineering design. For this Construction stage, upon application by the Project Proponent, the Regulator shall automatically grant in favor of the the Project Proponent may engage the services of foreign and/or Filipino Contractors that comply Project Proponent a Franchise to operate the facility and collect the tolls, fees, rentals, and other with the requirements as prescribed under Section 5.4 (a) and (b). In the case of foreign Contractors, charges stipulated under the contract. 54 55 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations Filipino labor shall be employed in the different phases of the Construction works where Filipino skills within the time prescribed by the Agency/LGU may be a ground for the rescission/ termination of the are available. Hiring of labor shall be subject to existing labor laws, rules and regulations. contract, in accordance with Section 12.21 (b) of these Revised IRR. Such technical supervision by the Agency/LGU concerned shall not diminish the singular responsibility of the Project Proponent for

Section 12.8 - Performance Security for Construction Works the proper Construction, operation, and maintenance of the facility, nor does it transfer any part of that responsibility to the Agency/LGU. To guarantee the faithful performance by the Project Proponent of its obligations under the contract, including the prosecution of the Construction works related to the project, the Project Proponent shall Section 12.11 - Contract Variation post a performance guarantee in favor of the Agency/LGU concerned, within the period and in the form and amount stipulated in the Notice of Award. The Agency/LGU shall determine which form of A contract variation may be allowed by the Head of the Agency/LGU, Provided, that: performance security it will require which may be in cash, bank draft or guarantee confirmed by a local bank (in the case of foreign bidders bonded by a foreign bank), letter of credit issued by a reputable a. There is no impact on the basic parameters, terms and conditions as approved by the bank, surety bond callable on demand issued by the GSIS or by surety or insurance companies duly Approving Body; or accredited by the office of the Insurance Commissioner, or a combination thereof, in accordance with the following schedules: b. There is no increase in the agreed fees, tolls and charges or a decrease in the Agency/ LGU’s revenue or profit share derived from the project, except as may be allowed under a a. Cash, irrevocable letter of credit, bank draft - a minimum of two percent (2%) of the total parametric formula in the contract itself; or Project Cost. c. There is no reduction in the scope of works or performance standards, or fundamental b. Bank Guarantee - a minimum of five percent (5%) of the total Project Cost. change in the contractual arrangement nor extension in the contract term, except in cases of breach on the part of the Agency/LGU of its obligations under the contract; or c. Surety Bond - a minimum of ten percent (10%) of the total Project Cost. The performance guarantee shall be valid up to acceptance by the Agency/LGU of the facility. d. There is no additional Government Undertaking, or increase in the financial exposure of the Government under the project.

Section 12.9 - Performance Security for Operations Upon due diligence and recommendation of the Head or Agency/LGU, contract variations not covered For projects where the proponent or other third parties shall operate the project, the Agency/LGU by above shall undergo approval by the Approving Body in terms of the impacts on government shall determine whether the Project Proponent will post a performance security for operations, undertakings/exposure, performance standards and service charges. Failure to secure clearance/ simultaneously with the acceptance of the facility. The performance security for operations will be approval of the Head of Agency/LGU or Approving Body as provided in this section shall render the issued to guarantee the proper operation of the project in accordance with the operating parameters contract variation void. and specifications under the contract. The Agency/LGU shall determine the amount but the form shall be in accordance with the preceding section. This performance security for operations shall be valid The Agency/LGU shall report to the Approving Body and the PPP Center on any contract variations ninety (90) calendar days after the turn-over of the facility, as contemplated in Section 12.23, or as may including those approved by the Head of Agency/LGU. be provided in the contract whichever is longer.

Section 12.12 - Milestones

Section 12.10 - Review of Project Construction, Operation and Maintenance The Project Proponent shall execute the project in accordance with pre-determined milestones. The Agency/LGU may inspect and check, from time to time, the project to determine whether the Failure by the Project Proponent to comply with these milestones may result to contract rescission and project is constructed, operated and maintained in accordance with the approved plans, specifications, forfeiture of the performance security of the proponent, in accordance with Section 12.21 (b) hereof. standards and costs under the contract. In the event that the Agency/LGU concerned shall find any deviation from or non-compliance with the approved plans, specifications and standards, it shall bring the same to the attention of the Project Proponent for the necessary corrective actions. Failure of the Project Proponent to correct the deviation 56 57 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations

Section 12.13 - Release of Performance Security Section 12.15 - Repair and Maintenance Costs a. Performance Security for Construction Works The Project Proponent shall, within the contract term and the warranty period prescribed under Section 12.23, undertake the necessary and appropriate repair and maintenance of the project, in accordance Upon completion of construction works, the Agency/LGU shall issue a “Certificate of with the design and performance standards, and other terms prescribed in the approved contract, Completion.” Within a period of no more than one (1) year after its issuance, the Agency/ in order to ensure that the facility operates at the desired level of service. For this purpose, and LGU shall issue a “Certificate of Acceptance” upon final acceptance that the project had where applicable, a portion of the project’s revenues equivalent to the cost of the project’s repair and been completed in accordance with the agreed standards and specifications. maintenance, as indicated in the Project Proponent’s bid proposal shall be set aside and reserved exclusively for repair and maintenance costs of the project. For facility, an escrow account may be The Performance Security for Construction Works shall be released by the Agency/LGU established for the purpose. concerned after the issuance of the “Certificate of Acceptance” of the Construction works provided that there are no claims filed against the Project Proponent or its Contractor. Section 12.16 - Repayment Schemes As may be agreed upon in the contract, a portion of the Performance Security shall be 12.16.1 General Classification released upon compliance with corresponding milestones. The repayment schemes for the projects shall depend on the contractual arrangement as follows b. Performance Security for Operations or as may be approved by the Approving Body: The Performance Security for Operations shall be released by the Agency/LGU concerned a. For projects undertaken through BOT, CAO, DOT, ROT, BOO and ROO arrangements, the on the transfer date of the facility, provided that there are no claims filed against the Project Project Proponents may be repaid by authorizing it to collect reasonable tolls, fees, and Proponent and its Contractor. charges for a fixed term. In the case of BOT, CAO, DOT, ROT arrangements, such term shall in no case exceed fifty (50) years. However, for BOO and ROO arrangements, the

Section 12.14 - Liquidated Damages Project Proponent, upon renewal of its Franchise or contract with the Agency or LGU, may be allowed to continue collecting toll, fees, charges and rentals for the operation of the Where the Project Proponent fails to satisfactorily complete the work on or before completion date, facility or the provision of the service. including any extension or grace period duly granted, or meet the operating performance standard as prescribed in the contract, the Project Proponent shall pay the Agency/LGU concerned liquidated b. For projects undertaken through BTO arrangement - the Project Proponent may be repaid damages, as specified in the contract as an indemnity and not by way of penalty. The performance by either of the following two options: First Option - the Agency/LGU provides Amortization security for construction works or for operations, as the case may be, may be applied to answer for any as may be appropriate and reasonable. Tolls, fees, rentals and charges that the Project liquidated damages due to the Agency/LGU. Proponent may collect while operating the facility on behalf of the Agency/LGU may be applied directly to the Amortization. Moreover, the Facility operator may be repaid by the During the Construction period, the amount of liquidated damages due for every calendar day of Agency/LGU through a management fee as may be incorporated in the management delay beyond the completion date will be determined by the Agency/LGU based on the formula in the contract entered between the Agency/LGU and the Project Proponent; Second Option - the contract. During the operation period, the amount of liquidated damages, which will be determined by Project Proponent may be allowed to directly collect tolls, fees, rentals and charges for a the Agency/LGU, shall be based on the principle of fair compensation for damages which the Agency/ fixed term. LGU will sustain as a result of the Project Proponent’s failure to meet its obligations. c. For projects undertaken through BT and BLT arrangements - the Project Proponent may be The imposition and collection of liquidated damages shall be without prejudice to the right of the repaid by the Agency/LGU through Amortization as may be appropriate and reasonable. Agency/LGU concerned to rescind the contract and proceed with the procedures prescribed under

Section 12.21 (b). d. Where applicable, the proponent may likewise be repaid in the form of a share in the revenue of the project or other non-monetary payments, such as, but not limited to the grant of commercial development rights or the grant of a portion or percentage of the reclaimed land, subject to constitutional requirements. 58 59 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations e. For projects undertaken through arrangements not enumerated under this Act and IRR but Section 12.19 - Audit of Collections approved/authorized by the NEDA Board, the Project Proponent may be repaid through any schemes as recommended by the ICC and approved/authorized by the NEDA Board. All revenues, share and/or receipts pertaining to or accruing to the Agency/LGU derived from any project proposed under the Act and these Revised IRR, including expenditures or use of funds and 12.16.2 tolls, fees, rentals and charges property, owned or held in trust by, or pertaining to the Government, shall be subject to examination audit by the Commission on Audit (COA), including i) ensuring that such revenues, share and/or The proposed tolls, fees, and charges shall be considered by the Agency/LGU in the evaluation receipts are fully and properly accounted for and remitted to the Agency/LGU, and ii) determining if the of the bid, taking into account the reasonableness thereof to the end-users of the facility. The mandated return on rate base is complied with, in the case of negotiated contracts and Public Utility tolls, fees, charges and rentals that a Project Proponent may charge for the use of the facility Projects which are natural monopolies. shall be those as approved by the Approving Body, resulting from the bidding, and incorporated in the contract, which, shall be upheld, adopted, accorded utmost weight, or recognized by the All revenues and receipts pertaining to or accruing to the Project Proponent shall be treated as private Regulator. funds including interest or yield thereon, which may be remitted directly to the Project Proponent, as may be stipulated in the contract. 12.16.3 Remittance of Earnings or Other Amounts Due to a Foreign Project Proponent

Section 12.20 - Accession/Divestiture The remittance of earnings and other amounts due to a foreign proponent under the contract shall be in accordance with pertinent laws, rules and regulations especially those issued by the BSP. Subject to the approval of the Approving Body upon due diligence and recommendation by the Head of Agency/LGU, a project proponent may divest or accede its ownership and/or rights to a project provided

Section 12.17 - Revenue Sharing that, the divestiture or accession shall be after the holding or lock-in period which shall be determined by the Agency/LGU and indicated in the contract, and provided that, the new project proponent has The Agency/LGU concerned may share in the revenue from the operation of the Project Proponent in equal or better qualifications as with the previous project proponent. the form of either a fixed fee or a certain percentage of the gross revenue or a combination of both, provided that the same is indicated in the bidding documents and included in the contract. A divestment/accession made in violation of this section shall be a ground for disqualification of the proponent or cancellation of the contract, as the case may be, and forfeiture of the proponent’s bid or

Section 12.18 - Adjustments of Tolls/Fees/Rentals/Charges performance security. The tolls, fees, rentals and charges may be subject to adjustment during the life of the contract, based The Agency/LGU shall inform in writing the PPP Center the change in ownership for monitoring on the pre-determined formula prescribed in the “Instructions to Bidders” and the approved contract. purposes. For this purpose, prior to bidding, the concerned Agency/LGU shall secure either the advice of the Regulator or the approval of the Approving body or both, as the case maybe, for such formula. The Section 12.21 - Contract Termination/Rescission monitoring of the consistency of the proposed adjustments of tolls, fees, rentals and charges with the prescribed rate of return, if any, shall be undertaken by the appropriate regulatory body or Implementing The contract may be terminated/rescinded in the following events: Agency/LGU. a. If the Agency/LGU concerned fails to comply with any major obligation prescribed in Price indices shall be based on the official issuances by the National Statistics office (NSO), BSP, the approved contract, and such failure is not remediable or if remediable shall remain Department of Labor and Employment (DOLE) and other sources authorized by the Agency/LGU unremedied for an unreasonable length of time, the Project Proponent may, with prior notice concerned prior to bidding. to the concerned Agency/LGU, specifying the turn-over date, terminate the contract. In such an event, the Project Proponent shall be reasonably compensated by the Government for The government shall ensure that the project proponent recovers the difference between the amount of equivalent or proportionate contract cost, as defined in the contract subject to (c) below. tolls, fees, rentals and other charges as stipulated or computed based on the contract and/or approved parametric formulae and the amount approved by the Regulator or appropriate regulatory body through b. If the Project Proponent refuses or fails to perform any of the provisions of the approved measures consistent with applicable laws and the constitution. contract with such diligence as will ensure the project’s completion, operation and maintenance in accordance with the prescribed technical and performance standards 60 61 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations or otherwise fails to satisfy any of the contract provisions including compliance with the Section 12.23 - Expiring BOT/PPP Contracts and Transfer of and Warranty Over the Facility prescribed/agreed milestone activities, or commits any substantial breach of the approved contract, the Agency/LGU shall notify the Project Proponent in writing of the same and if not Under Contractual Arrangements involving transfer of the facility to the Agency/LGU, the transfer or corrected within the time specified, the Agency/LGU concerned may rescind the contract. In turnover will necessarily include the transfer of full legal ownership over the project, all documents, such an event, the Agency/LGU concerned may either: property rights, source codes, equipment, among others, which are related to the project in favor of the Agency/LGU, subject to any existing liens as may be agreed upon in the contract. The facility, i. Take over the facility; or upon transfer to Agency/LGU, shall be operable and in good condition. The performance indicators for the project/facility and frequency of monitoring the indicators shall be stipulated in the contract. A ii. Allow the Project Proponent’s lenders/creditors/banks to exercise their rights and third-party shall be commissioned to assess the residual value of the facility upon transfer or turnover interests under the loan and collateral documents with respect to the project. of the facility to the Agency/LGU. The Project Proponent shall provide warranty that the facility meets the project technical specifications/agreed system features, performance standards and services In any case, the Agency/LGU concerned shall likewise forfeit the performance security of the in connection therewith for a period not less than one (1) year from the turnover of the facility. For defaulting Project Proponent. this purpose, the Project Proponent shall put up a warranty security in a form to be specified by the concerned Agency/LGU which may be in cash, letter of credit, or bank draft/guarantee issued by a c. In the event that the project/contract is: (a) revoked, cancelled, or terminated by (i) the reputable local/foreign bank, or a surety bond issued by the GSIS or an entity duly registered and Agency/LGU in accordance with the contract through no fault of the Project Proponent or recognized by the office of the Insurance Commissioner, callable on demand and acceptable to the (ii) by mutual agreement, or (b) revoked or canceled by a court by final judgment through no Agency/LGU, or any combination thereof payable to the Agency/LGU concerned, the amount of which fault of the Project Proponent, the Agency/LGU shall compensate the said Project Proponent shall be determined by the Agency/LGU and shall be stipulated in the contract. The warranty security for its actual expenses incurred in the project plus a Reasonable Rate of Return thereon not shall be made effective immediately upon transfer of full legal ownership over the project in favor of the exceeding that stated in the contract, as of the date of contract termination, provided that Agency/LGU, as described above. the interest of the Government in these instances shall be duly insured with the GSIS or any other insurance entity duly accredited by the office of the Insurance Commissioner, provided RULE 13 - INVESTMENT INCENTIVES AND GOVERNMENT UNDERTAKINGS further that the cost of the insurance coverage shall be included in the terms and conditions of the approved contract. Section 13.1 - Sources of Financing In the cases referred to in (a) and (c) above, an independent appraiser, mutually acceptable to In the Construction of projects authorized under the Act and these Revised IRR, the Project Proponent the Agency/LGU and the Project Proponent, shall determine the amount to be paid to the Project may obtain the required financing for the Construction of the project from foreign and/or domestic Proponent, which determination shall be made within a period not more than one hundred eighty (180) sources. calendar days from contract rescission or termination. The amount determined by the independent appraiser shall be binding to both the Project Proponent and the Agency/LGU. Section 13.2 - Investment Incentives In cases of emergency or when the public interest so requires, the Agency/LGU may immediately take- The following Investment Incentives will be made available to Project Proponents: over the facility prior to the determination of said amount and payment thereof to the Project Proponent. Unless otherwise agreed upon by the Agency/LGU and the Project Proponent, the amount fixed by a. Projects undertaken through Contractual Arrangements authorized under these Revised said independent appraiser shall be paid by the Agency/LGU not later than ninety (90) calendar days IRR costing more than PhP 1.0 billion shall, upon registration with the Board of Investments from said independent appraiser’s advice of such determination, subject to the enactment of a law or (BOI), be entitled to incentives as provided for under Executive Order (EO) No. 226, otherwise ordinance, as the case may be, appropriating such amount, if required. known as the Omnibus Investment Code of 1987, subject to the compliance of the project with the criteria, as may be set by the BOI in its review thereof under EO 226 such as, but

Section 12.22 - Venue for Litigation not limited to economic and consumer benefit, technical and financial soundness. The venue for the resolution of disputes, arbitration or litigation shall be as mutually agreed upon by the parties to the contract. In default thereof, the venue shall be in the Philippines. 62 63 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations b. Projects undertaken through Contractual Arrangements authorized under these Revised IRR c. Direct Government Subsidy - This shall refer to an agreement whereby the Government, costing PhP 1.0 billion or less may, upon registration with BOI, avail of incentives provided or any of its Agencies/LGUs will: (a) defray, pay for or shoulder a portion of the Project for under the Omnibus Investment Code subject to inclusion of the project activity or sector Cost or the expenses and costs in operating or maintaining the project; (b) contribute any in the current Investment Priorities Plan (IPP) of BOI and compliance of the project with the property or assets to the project; (c) in the case of LGUs, waive or grant special rates on criteria, as may be set by the BOI in its review thereof under EO 226, such as, but not limited real property taxes on the project during the term of the contractual arrangement; and/or to economic and consumer benefit, technical and financial soundness. (d) waive charges or fees relative to business permits or licenses that are to be obtained for the Construction of the project, all without receiving payment or value from the Project c. Projects undertaken through Contractual Arrangements authorized under these Revised Proponent and/or Facility operator for such payment, contribution or support. IRR shall also be entitled to other incentives, as provided under existing laws, such as, but not limited to incentives under R.A. 9513, otherwise known as the “Renewable Energy Act of d. Direct Government Equity - This shall refer to the subscription by the Government or any of 2008”, R.A. 9593, otherwise known as “The Tourism Act of 2009”, and R.A. 7156, otherwise its agencies or Local Government Units of shares of stock or other securities convertible to known as the “Mini-Hydroelectric Power Incentives Act”. shares of stock of the project company, whether such subscription will be paid by the money or assets. d. LGUs may provide additional tax incentives, exemptions, or reliefs, subject to the provisions of the Local Government Code (LGC) of 1991 and other pertinent laws. e. Performance Undertaking - This shall refer to an undertaking of a department, bureau, office, commission, authority, agency, GOCC, or LGU in assuming responsibility for the

Section 13.3 - Government Undertakings performance of the Agency’s/LGU’s obligations under the contractual arrangement including the payment of monetary obligations, in case of default. These undertakings may be subject Subject to existing laws, policies, rules and regulations, the Government may provide any form of to payment of risk premium to the Government or LGU, or any other authorized agency. support or contribution to solicited projects, such as, but not limited, to the following: f. Legal Assistance - This shall refer to the extension of representation by government lawyers a. Cost Sharing - This shall refer to the Agency/LGU concerned bearing a portion of capital to a Project Proponent but only in cases, hearings, or inquiries where the Agency/LGU and expenses associated with the establishment of an infrastructure development facility, such Project Proponent are party-defendants/respondents therein including the adoption by such as, the provision of access infrastructure, right-of-way, transfer of ownership over, or usufruct, government lawyers of positions and strategies consistent with upholding the validity of the or possession of land, building or any other real or personal property for direct use in the approved contractual arrangement. project and/or any partial financing of the project, or components thereof, Provided, that such shall not exceed fifty percent (50%) of the Project Cost, and the balance to be provided g. Security Assistance - This shall refer to the deployment of government security forces, either by the Project Proponent. Such government share may be financed from direct government from the Philippine National Police (PNP) or the Armed Forces of the Philippines (AFP) in appropriations and/or from official Development Assistance (ODA) of foreign government or the vicinity of the project site to provide security during the implementation of the project up institutions. to completion. b. Credit Enhancements - This shall refer to support to a development facility by the Project The Agency/LGU may offer any one or more Government Undertakings relative to a project, which Proponent and/or Agency/LGU concerned, the provision of which is contingent upon the shall be pre-cleared in principle, in writing, by the department, bureau, office, commission, authority, occurrence of certain events and/or risks, as stipulated in the contract. Credit enhancements agency, GOCC, or LGU or any other government entity that will grant the same as mandated by law; are allocated to the party that is best able to manage and assume the consequences of provided that the total government undertakings shall not exceed fifty percent (50%) of the total project the risk involved. Credit enhancements may include, but are not limited to, government cost. guarantees on the performance, or the obligation of the Agency/LGU under its contract with the Project Proponent. The government undertakings shall be based on the approved risk allocation matrix which shall be issued by the Approving Body/ICC. 64 65 Revised BOT Law Implementing Rules and Regulations Revised BOT Law Implementing Rules and Regulations

RULE 14 - COORDINATION AND MONITORING OF PROJECTS RULE 15 - FINAL PROVISIONS

Section 14.1 - The PPP Center Section 15.1 - IRR Committee The PPP Center shall be responsible for the coordination and monitoring of projects implemented under The Committee constituted pursuant to Section 11 of R.A. 6957, as amended by R.A. 7718, may be Contractual Arrangements or schemes authorized under these Revised IRR. Project monitoring will reconvened by its Chairman at his instance, or upon the recommendation of any members of the be undertaken to ensure that the project complies with these Revised IRR, including the proponent’s Committee, formulate and prescribe amendments to these Revised IRR, consistent with the letter required environmental clearances from the DENR. For this purpose, concerned Agencies/LGUs shall and spirit of the Act. No amendments to these Revised IRR may be adopted and prescribed by the periodically submit to the PPP Center information on the status of projects implemented by them. Committee without due public consultation/hearing and publication. In addition, all concerned Agencies/LGUs shall submit to the PPP Center a copy of all Unsolicited Proposals that they receive and all other related documents. The PPP Center is also hereby mandated Section 15.2 - Effectivity of These Revised IRR or Amendments Thereto to guide the Agency/LGU in the preparation and development of the project. Amendments to these Revised IRR or amendments thereto shall, after due public hearing, become At the end of every calendar year, PPP Center shall report to the ICC, President, and the Congress on effective fifteen (15) days after its complete publication in at least one (1) newspaper of general the progress of all projects implemented under these Revised IRR. circulation.

Section 14.2 - Timelines Section 15.3 - Transitory Provision All timelines shall be contained in a flow chart herein attached as Annex A. The PPP Center shall Upon effectivity of these revised IRR, all PPP projects, including those presently being processed and/ monitor the compliance of the Agencies/LGUs with the timelines prescribed in these Revised IRR. or reviewed but not yet approved by the Approving Body shall hereafter be processed and/or reviewed in accordance with these revised IRR.

Section 14.3 - PPP Units Projects under implementation shall be governed by the contract provisions entered into by the Each concerned Agency/LGU may create a PPP Unit headed by a senior official of the Agency/ concerned parties. LGU and shall designate a senior official as PPP Project Development officer (PDO), who shall be responsible for planning, overseeing, and monitoring projects of Agencies/LGUs authorized under the Section 15.4 - Repealing Clause Act and these Revised IRR. The PPP Unit may also include as members, among others, technical and legal personnel who are knowledgeable on the technical and legal aspects, respectively, of the PPP Any issuance, executive order, administrative order, proclamation, charter, rule or regulation and/or projects that may be implemented pursuant to the Act and this IRR. parts thereof contrary to or inconsistent with the provisions of this IRR is hereby repealed, modified or amended accordingly.

Section 14.4 - Informing Congress

Section 15.5 - Separability Clause A report regarding the salient features or a copy of each contract, involving a project entered into under the provisions of these Revised IRR, shall be submitted to Congress by the PPP Center, copy the ICC, In the event any of the provisions of these Revised IRR is declared void or unenforceable by final for its information. judgment of a court of competent jurisdiction, the other provisions unaffected thereby shall remain in full force and effect. 66 67 Revised BOT Law Implementing Rules and Regulations CAYETANO W. PADERANGA, JR. Secretary of Socio-Economic Planning Chairman, BOT-IRR Committee Published: 07 October 2012 / Effectivity: 22 October 2012 68 Republic of the Philippines Public-Private Partnership Center 8th Floor One Cyberpod Centris, EDSA Corner Quezon Avenue, Quezon City 1100, Philippines Trunk Line: (+632) 709-4146 www.ppp.gov.ph Printed 2017