Presidential Decree 1594: Government Infrastructure Contracts

Study Notes

To adopt a set of rules and regulations for government contracts for infrastructure and other construction projects
To bring about maximum efficiency in project implementation and minimize project costs and contract variations
To promote a healthy partnership between the government and the private sector in furthering national development
To enhance the growth of the local construction industry and optimize the use of indigenous manpower, materials, and other resources

A prospective contractor must meet legal, technical, and financial requirements to prequalify for a construction project
Legal requirements include licensing as a contractor, paying privilege tax, and complying with existing laws and regulations
Technical requirements include competence and experience in managing projects similar to the subject project, key personnel, and equipment availability
Financial requirements include meeting the required net worth and liquid assets to satisfactorily execute the project

Construction projects shall generally be undertaken by contract after competitive public bidding
Exceptions include projects where time is of the essence, lack of qualified bidders, or conclusive evidence of greater economy and efficiency through administration or force account
A bidder's bond is required to guarantee the successful bidder's entry into a contract and furnishing of a performance bond
The contract may be awarded to the lowest prequalified bidder whose bid complies with all the terms and conditions

The contractor shall post a performance bond to guarantee faithful performance of the contract
All awards and contracts shall be subject to the approval of the Minister of Public Works, Transportation and Communications, the Minister of Public Highways, or the Minister of Energy
The contractor assumes full responsibility for the contract work until its final acceptance by the Government

The contractor shall not assign, transfer, pledge, subcontract, or make any other disposition of the contract or any part of interest therein without approval
Approval of the subcontract shall not relieve the main contractor from any liability or obligation under his contract with the Government

The contractor shall be held responsible for any damage or destruction of works except those occasioned by force majeure
The contractor shall be fully responsible for the safety, protection, security, and convenience of his personnel, third parties, and the public at large

Adjustment of contract price may be authorized by the Minister of Public Works, Transportation and Communications, the Minister of Public Highways, or the Minister of Energy upon recommendation of the National Economic and Development Authority
Adjustments shall be made using appropriate formulas established in accordance with the rules and regulations

A change order or extra work order may be issued only for works necessary for the completion of the project
All change orders and extra work orders shall be subject to the approval of the Minister of Public Works, Transportation and Communications, the Minister of Public Highways, or the Minister of Energy

Inspection of the contract work shall be made by the Government to ascertain that the completed works comply with the standards and requirements set forth in the contract documents
The contractor shall be held responsible for the acceptability of the finished works
The contractor shall promptly replace all materials and correct all works determined by the Government as failing to meet contract requirements