What is PD 1594?
• PRESIDENTIAL DECREE NO. 1594
• Issued on July 11, 1978
• Prescribing policies, guidelines, rules and regulations for
government infrastructure contracts.
PD 1594 contains 15 sections, namely:
SECTION 1. Policy Objectives
SHALL:
(a) Bring about the maximum efficiency in project
implementation and minimize project cost and contract
variations through sound practices in contract management;
PD 1594 contains 15 sections, namely:
SECTION 1. Policy Objectives
(b) Promote a healthy partnership between the government
and the private sector in furthering national development; and
(c) Enhance the growth of the local construction industry and
optimize the use of indigenous manpower, materials and other
sources.
PD 1594 contains 15 sections, namely:
SECTION 2. Detailed Engineering
No bidding and/or award of contract for a construction
project shall be made unless the detailed engineering
investigations, surveys and designs for the project have been
sufficiently carried out and approved.
PD 1594 contains 15 sections, namely:
SECTION 3. Prequalification of Prospective Contractors
A prospective contractor may be prequalified to offer his bid
or tender for a construction project only if he meets the
following requirements:
(a) Legal Requirements
(b) Technical Requirements
(c) Financial Requirements
PD 1594 contains 15 sections, namely:
SECTION 4. Bidding
Construction projects shall generally be undertaken by
contract after competitive public bidding. Projects may be
undertaken by administration or force account or by
negotiated contract only in exceptional cases.
PD 1594 contains 15 sections, namely:
SECTION 5. Award and Contract
The contract may be awarded to the lowest prequalified
bidder whose bid as evaluated complies with all the terms and
conditions in the call for bid and is the most advantageous to
the Government.
PD 1594 contains 15 sections, namely:
SECTION 6. Assignment and Subcontract
The contractor shall not assign, transfer, pledge, subcontract
or make any other disposition of the contract or any part of
interest therein.
PD 1594 contains 15 sections, namely:
SECTION 7. Responsibility of the Contractor
The contractor shall assume full responsibility for the contract
work until its final acceptance by the Government.
PD 1594 contains 15 sections, namely:
SECTION 8. Adjustment Contract Price
Adjustment of contract price for construction projects may be
authorized if during the effectivity of the contract, the cost of
labor, equipment, materials and supplies required for the
construction should increase or decrease due to direct acts of
the Government.
PD 1594 contains 15 sections, namely:
SECTION 9. Change Order and Extra Work Order
A change order or extra work order may be issued only for
works necessary for the completion of the projects and,
therefore, shall be within the general scope of the contract as
bidded and awarded.
PD 1594 contains 15 sections, namely:
SECTION 10. Inspection and Construction of Contract
Inspection of the contract work shall be made by the
Government while such contract work is in progress to
ascertain that the completed works comply in all respects with
the standards and requirements set forth in the contract
documents.
PD 1594 contains 15 sections, namely:
SECTION 11. Government's Right to Take Over Contract
The Government may take over the contract work should the
contractor abandon the contract work, or unduly delay the
prosecution of the contract work, or be adjudged bankrupt, or
assign the contract work without written approval by the
Government, or violate any condition or term of the contract.
PD 1594 contains 15 sections, namely:
SECTION 12. Implementing Rules and Regulations
The Minister of Public Works, Transportation and
Communications, as the lead official, the Minister of Public
Highways, the Minister of Energy, and the Director-General of
the National Economic and Development Authority, shall
jointly promulgate the rules and regulations to implement the
provisions of this Decree.
PD 1594 contains 15 sections, namely:
SECTION 13. Separability Clause
If any provision of this Decree is held unconstitutional, the
other provisions shall remain valid.
PD 1594 contains 15 sections, namely:
SECTION 14. Repealing Clause
All Acts, Charters, Decrees, Letters of Instructions, Executive
Orders, Proclamations, rules and regulations or parts thereof
in conflict with the provisions of this Decree are hereby
repealed or modified accordingly.
PD 1594 contains 15 sections, namely:
SECTION 15. Effectivity
This Decree shall take effect immediately.
Done in the City of Manila, this 11th
day of June, Nineteen Hundred and Seventy-Eight.
IMPLEMENTING RULES AND REGULATIONS
Detailed Engineering
A schedule of detailed engineering activities shall include the ff:
(a) Survey;
(b) Site investigation;
(c) Soils and foundation investigation;
(d) Construction materials investigation;
(e) Preparation of design plans;
(f) Preparation of technical specifications;
IMPLEMENTING RULES AND REGULATIONS
Detailed Engineering
A schedule of detailed engineering activities shall include the ff:
(g) Preparation of construction cost and estimates;
(h) Preparation of program of work;
(i) Preparation of proposed construction schedule;
(j) Preparation of site or right-of-way plans including schedule
of acquisition; and
(k) Preparation of utility relocation plan.
IMPLEMENTING RULES AND REGULATIONS
Detailed Engineering
Work under detailed engineering shall include the following:
(a) Design standards
(b) Field surveys and investigation
(c) Contract plans
(d) Quantities
(e) Special provisions
(f) Unit prices
IMPLEMENTING RULES AND REGULATIONS
Detailed Engineering
Work under detailed engineering shall include the following:
(g) Budget for the contract
(h) Bid/tender documents
(i) Program of work
(j) Pert/cpm analysis and estimates
(k) Days = calendar days as per the Decree
Who May Be Allowed to Bid?
• Filipino
• Citizens (Single Proprietorship)
• Partnership or corporation duly organized under the laws of
the Philippines, and at least 75% of the capital stock of which
belongs to Filipino citizens
• Contractors forming themselves into a joint venture
• Foreign contractors for internationally bid foreign-assisted
projects
Organization of the Bid and Award Committee (BAC) or
Designated Procurement Unit
The BAC are responsible for the conduct of prequalification or
eligibility screening, bidding, evaluation of bids, postqualification,
and recommending wards of contracts.
• Chairman (regular)
• Executive officer and secretary (regular)
• Member (regular)
• Member (provisional)
• Members from the private sector
• Observer
Invitation to Prequalify/Apply for Eligibility and to Bid
(a) Contracts to be bid costing more than 5,000,000 php:
- advertisement shall be made at least three (3) times in not less than
two (2) weeks in at least two (2) newspapers of general nationwide
circulation which have been regularly published for at least two (2)
years before the date of issue of the advertisement
Invitation to Prequalify/Apply for Eligibility and to Bid
(b) Contracts to be bid costing 5,000,000 php and below
(or contracts authorized to be bid by the regional/district
offices,involving costs):
- advertised at least two (2) times within two (2) weeks in a
newspaper of general local circulation in the region where the
contract to be bid is located
Issuance of Qualification Statements/Forms
(a) BAC or Designated Procurement Unit shall provide prospective
bidders with the notice for prequalification/eligibility screening
containing the following as guides in evaluating their capabilities:
• Name and location of project;
• Project background and other relevant information regarding the
proposed work including brief technical description of the work as
to size, type, major items, and other important features of the
work;
Issuance of Qualification Statements/Forms
• The Prequalification of eligibility screening of contractors;
• The evaluation of bids; and
• The Postqualification of the lowest calculated bid
• Cost and Place of Issuance
• Date, Time and Place of: POSS
P: Pre-bid Conference
O: Opening of Bids
S: Submission of Accomplished Eligibility Forms
S: Submission of Bids
Issuance of Qualification Statements/Forms
(b) Prequalification or Eligibility Statements shall be required by the
contracting government for every contract in which the contractor
intends to bid.
(c) The following documents which embody the non–discretionary
“Pass/Fail” Criteria for prequalification or eligibility for the contract
to bid:
(a) Legal Documents
(b) Technical Documents
(c) Financial Documents
Classification and Registration of Contracts
The Philippine Contractors Accreditation Board (PCAB)
shall register and classify contractors based
on the PCAB guidelines for registration and
classification of contractors.
Prequalification for Eligibility Screening of Contractors
for Specific Contracts
1. A bidder must be found to be prequalified or eligible to submit a bid
for the contract to be bid.
2. The Government reserves the right to review the prequalification
statements of a contractor before the approval of contract.
Prequalification for Eligibility Screening of Contractors
for Specific Contracts
3. The BAC or designated procurement unit shall determine if each
contractor is prequalified to submit bids for the contract to be bid.
4. The BAC or designated procurement unit shall mark set of
prequalification documents or each contractor “ELIGIBLE” or
“INELIGIBLE”. They inform in writing the eligible and ineligible
bidders within 7 calendar days after the approval.
Issuance of Plans, Specifications, Proposal Book Forms
and Draft Contract
Submission, Opening and Abstracting of Bids/Tender
Bids in the prescribed bid form including its annexes shall be
submitted in two (2) sealed envelopes with the name of the
CONTRACT to be bid and the name of the BIDDER in capital letters
addressed to BAC of the office concerned. They shall be marked by
the bidder “DO NOT OPEN BEFORE (date and time of opening of
bids).
Submission, Opening and Abstracting of Bids/Tender
FIRST ENVELOPE (Technical Documents)
• Authority of the signing official
• Construction schedule and S-curve
• Construction methods
• Project organization chart
• Manpower schedule
• Equipment utilization
• Certification that the detailed estimates and cash flows
Submission, Opening and Abstracting of Bids/Tender
SECOND ENVELOPE (Financial Documents)
• Bid Prices in the bill of quantities
• Detailed Estimates
• Cash Flows by quarter and payment schedule
Determination of the Lowest Calculated Responsive Bid
The Lowest Calculated Responsive Bid (the bid with the lowest
price as calculated and which complies with all the requirements)
shall be determined in two steps:
1.) Detailed Bid Evaluation
2.) Post-qualification
Determination of the Lowest Calculated Responsive Bid
DETAILED BID EVALUATION
Bid Security
Completeness of Bid
Major Deviations
Corrections for errors, discounts and other modifications
Approved budget for the contract under bidding
Determination of the Lowest Calculated Responsive Bid
POST QUALIFICATION OF CONTRACTOR WITH THE LOWEST
CALCULATED BID REQUIREMENTS
Legal Requirements
Technical Requirements
Experienced of the contractor
Performance of the contractor
Financial Requirements
Awarding of Contract
The contract may be awarded to the lowest prequalified bidder
whose bid as evaluated complies with all the terms and conditions in
the call for bid and is the most advantageous to the Government.
If, however, the BAC finds that contractor with the lowest calculated
bid fails the postqualification criteria, the office shall immediately
notify him in writing that he is post-disqualified, and the BAC, within
7 calendar days complete the same postqualification process on the
second contractor with the second lowest calculated bid.
Awarding of Contract
Negotiated contract may be entered into only where any of the
following conditions exists and the implementing office/agency
corporation is not capable, of undertaking the project by
administration:
❖ In times of emergencies arising from natural calamities where
immediate action is necessary
❖ Failure to award the contract after two (2) public biddings for valid
cause or causes
Documents Comprising the Contract
1. Contract Agreement 9. Bid Form
2. Conditions of the contract 10. Performance Statements
3. Drawings/Plans 11. Credit Line issued by an
4. Specifications authorized bank
5. Invitation to Bid 12. Notice of Award of Contract
13. Other contract documents
6. Instruction to Bidders
may be required
7. Addenda
Approval of Contract
❖ Within 15 days - for contracts requiring the approval by
the head of office/agency/corporation concerned
❖ Within 30 days - for contracts requiring the approval by
the office of the President
CONTRACT IMPLEMENTATION
Variation Orders
Variation Orders may be issued by the procuring entity to cover
any increase/decrease in quantities, including the introduction
of new work items that are not included in the original contract
or reclassification of work items
Variation Orders
A Change Order may be issued by the implementing official
to cover any increase/decrease in quantities of original
work items in the contract.
An Extra Work Order may be issued by the implementing official
to cover the introduction of new work necessary for the
completion, improvement or protection of the project which was
not included as items of work in the original contract
Advance Payment
The Government shall make
an advance payment to the
contractor in an amount equal to
fifteen percent (15%) of the total
contract price.
Contract Completion
Once the project reaches an accomplishment of 95% of the total
contract amount, the government may create an inspectorate
team to make preliminary inspection and submit a punch-list to
the contractor in preparation for the final turnover of the
project. However, shall not preclude the government’s claim for
liquidated damages, nor the contractor’s claim for incentive
bonus, as the case may be.
Suspension of Work
The Government shall have the authority
to suspend work wholly or partly due
to any fortuitous events
(force majeure).
Extension of Contract Time
The Government shall determine the amount of
extension that acontractor is fairly entitled to,
provided that the Government is
not bound to take into account any
claim for an extension of time
