Conclusion of Chairman on Laws and Ordinances

The documents are in order and there was substantial compliance with the procedural law governing Republic Act 7718.

D I S C U S S I O N S

These are the common questions asked during the deliberations conducted by the Sangguniang Panlungsod:

1. Whether the capitalization of P1.1 Million by the Metrostate qualifies it to bid for the project?

The answer is in the affirmative. Despite the fact that the prospective bidder has an authorized capital stock of only P1.1 Million, he may legally participate and be qualified as a prospective bidder provided that he can show to the Bids & Awards Committee that at the time of the pre-qualification conference, he has a credit guarantee from a reputable bank equivalent to the value of the project. The law merely provides that, “the private sector entity which shall have contractual responsibility 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, upon award, sufficient credit line to cover the total estimated costs”. (Section 2 – R.A. 7718)

2. Whether track record and experience of the project proponent is essential in the determination of the person who shall undertake the project?

The provisions of Republic Act 7718 gave the following definition of terms for the following individuals who are essential participants in a built-operate-and-transfer scheme.

“ Sec. 2 Definition of Terms. The following terms used in this Act shall have the meanings stated below:

(k) Project proponent – The private sector entity which shall have contractual responsibility 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, upon award, sufficient credit line to cover the total estimated costs.

(l) Contractor – Any entity accredited under Philippine laws which may or may not be the project proponent and which shall undertake the actual construction and/or supply of equipment for the project.

The requirement that the highest bidder is a contractor duly licensed under the Philippine Contractor’s Board does not apply in a Built-Operate-And-Transfer Scheme. The private proponent may not be a contractor and vice versa. The requirement that the highest bidder is a licensed contractor only holds true if the project is financed by the government. What is essential under a B-O-T scheme is that the private proponent shall have an adequate financial base to implement said project consisting of equity and firm commitments from reputable financial institutions to provide, upon award, sufficient credit line to cover the total estimated costs.

It is essential however that the contractor who undertakes the actual construction and/or supply for the project shall have the adequate competence and experience in managing projects similar to the subject project.

3. Is it necessary for the City Engineer to pre-approve the technical plan that will be submitted for bidding?

It depends. In a public bidding where the scheme is that the lowest bidder shall be adjudged the winner, there is a need for a common plan which shall be bided. The plan needs the approval of the City Engineer and/or the City Planning Officer. However in case of a “Design and Build” scheme, the City Engineer need not be consulted. In the latter scheme, the local government unit shall only give the specifications. The private proponents shall submit their design which shall be evaluated by the Bids & Awards Committee. The design that conforms best to the specifications and the terms of reference issued by the committee shall be adjudged the winner. In the latter scheme, the bid price constitutes only fifteen (15%) percent in the evaluation of the project. The design constitutes eighty-five (85%) percent of the entire project determination.

note: This is the report of the Committee Chairman that shall be decided by the Sanggunian Members. It may be accepted by the members, it may be rejected by the members. Other issues concerning the Magsaysay bidding not addressed in this report shall also be discussed in the special session on December 19, 2006 at 2:00 PM at the Session Hall of the Sangguniang Panlungsod.