Training of Trainers for the DILG

Regional Project Concept Note

Workshop Rollout
September 13 & 18, 2019
Processes under Joint Venture
Arrangements for LGUs
Solicited and Unsolicited
Institutional Preparations
Getting Organized and Prepared

Key steps:

• Set up a governance structure and project teams

• PPP/JV Unit
• PPP/JV Selection Committee
• PPP/JV Regulatory Authority

• Secure support from decision-makers

• Ensure sufficient/available resources (financial

and organizational)
Governance Structure
RA 7160 Local Government Code:
Joint Venture Agreements
- Section 35 “Local government units may enter into joint ventures and such
other cooperative arrangements with people’s and nongovernmental
organizations to engage in the delivery of certain basic services, capability-
building and livelihood projects, and to develop local enterprises…”

NEDA Joint Venture Guidelines (2008 or 2013)

Executive Order No. 423 s. 2005
- LGUs not covered by the guidelines with respect to its local autonomy. However,
LGUs are not precluded from adopting the process stipulated in the
guidelines.

Own Local Government PPP Code/JV Ordinance:

- Department of Interior and Local Government issued MC No. 2016-120 or the
Guidelines for the Implementation of Public-Private Partnership for the People
Initiative for Local Governments (LGU P4). The MC encourages LGUs to
adopt an LGU P4 Code where one of the suggested modalities is JV.

Other rules adopted by LGU (e.g. Provincial PPP Ordinance)

JV Project Teams
PPP/JV Selection Committee
Functions of PPP/JV Selection Committee
1) Responsible for all aspects of the pre-selection and selection
process, including, among others, the preparation of the
Feasibility or Project Study and selection/tender documents
2) Determination of the minimum designs, performance
standards/specifications, economic parameters and reasonable
rate of return or tariff-setting mechanism
3) Preparation of bid evaluation criteria
4) Publication of the invitation to apply for eligibility and
submission of proposals or comparative proposals
5) Defining the eligibility requirements, appropriate form and
amount of proposal securities, and schedules of the selection
and challenge processes
6) Pre-qualification of prospective PSPs
PPP/JV Selection Committee

Functions of PPP/JV Selection Committee

7) Conduct of pre-selection conferences and issuance of
supplemental notices
8) Interpretation of the rules regarding the selection process

9) Conduct of the selection or challenge process

10) Evaluation of the legal, financial and technical aspects of the

proposals
11) Negotiates with PSP
12) Resolution of disputes between PSPs and challengers

13) Defining the appeals mechanism

14) Recommends acceptance/rejection of the proposal and/or for

the award of the contract
PPP/JV Selection Committee

Designation Focal Person/s

Chairperson At least a third ranking regular official of the Agency (e.g. City/Municipal Admin etc.)
Secretary Legal Officer
MEMBERS
• Voting • City/Municipal Treasurer
• City/Municipal Planning and Development Officer
• Representative from and selected by the Sanggunian designated by an
appropriate resolution
• Two (2) representatives from and chosen by the accredited CSOs, POs, NGOs
who are members of the City/Municipal Development Council/Regional
Economic and Development Planning Board
• Provisional One (1) technical officer knowledgeable with aspects of requirements of the project
(Non-voting) from a concerned regulatory body, who is to be invited by the LGU on a project-to-
project basis
• Observer • One (1) representative from the Commission on Audit
(Non-Voting) • One (1) representative from regulatory agency
• One (1) representative from the DILG regional office
• One (1) representative from the NEDA regional office
• Two (2) representatives from the private sector
PPP/JV Regulatory Authority

Functions of PPP/JV Regulatory Authority

1) Perform contract management functions such as partnership
management (i.e. corporate governance, communication and
information sharing, and dispute resolution), performance or
service delivery and management (i.e. risk management and
performance management), and contract administration (i.e.
variation management, contract maintenance and financial
administration)
2) Responsible for setting and monitoring the tariff, and
administering the subsidy pursuant to the JV contract
PPP/JV Regulatory Authority

Designation Focal Person/s

Chairperson City/Municipal Mayor or the City/Municipal Administrator if so designated by the
City/Municipal Mayor
Vice-Chairperson Vice-Mayor or a member of the Sanggunian to be chosen by the Sanggunian as
evidenced by an appropriate resolution
• Members • Two (2) representatives of the Sanggunian belonging to two (2) distinct
registered political parties to which the City/Municipal Mayor does not belong,
and to be chosen on the basis of proportional representation of all parties
represented in the Sanggunian
• City/Municipal Legal Officer
• City/Municipal Treasurer
• City/Municipal Planning and Development Officer
• Two (2) representatives from and chosen by the accredited CSOs, POs,
NGOs who are members of the City/Municipal Development Council/Regional
Economic and Development Planning Board (not the same representatives in
the PPP/JV Selection Committee)
• Provisional • One (1) representative from a partner government entity (for projects covered
by government-to-government joint JV undertakings
• Contract manager for a JV project (depending on the JV contract value,
complexity and associated risks)
• Observers • COA, NEDA, DILG, private sector, CSOs, POs, NGOs
 JV Processes:
Competitive Selection and
Competitive Negotiation
Modes of Selecting a JV Partner

Competitive Selection (“Solicited”)

• LGU identifies projects from its list of priority projects
• LGU develops Feasibility Study/Business Case for the
identified JV project
• LGU selects JV Partner based on transparent criteria which
should not constrain or limit competition and is open to
participation by any interested and qualified private entity

Competitive Negotiation (“Unsolicited”)

• Private sector proponent submits JV proposal to LGU
• LGU directly negotiates a JV activity with a Private Sector
Entity
JV Competitive Selection
(Solicited)
Competitive Selection
Commencement of
Implementation

Contract Award &

Signing

• Post-
Bid Proper qualification
• Award of
Pre- • Receipt and Contract
qualification opening of
bids
• Conduct of • Posting of
Advertisement pre-bid proposal
conferences securities
Project • Issuance of • Eligibility • Evaluation of
Approval instructions screening of bids
and tender prospective
Project documents bidders
Preparation

Schedules and Timelines: The Local Chief Executive, through an Executive Order, upon
recommendation of the PPP/JV SC, shall have the authority to adopt and prescribe the
appropriate and reasonable schedules and timeliness for each PSP selection process.
Project Identification

LGU should identify

project and its scope.
Project Preparation
2. 4.
1. Project Project
3.
Pre-
Preparation Approval Advertisement
qualification

• JV activity is responsive in meeting national or

development goals
• JV proposal clearly describes proposed investment
(e.g. total cost, activities, objectives, sources of funding,
extent and nature of LGU’s participation, etc.)
• JV proposal establishes all components in determining
the over-all feasibility
Contents of Project Study
2. 4.
1. Project Project
3.
Pre-
Preparation Approval Advertisement
qualification

Background of History/Current Rationale for Contributions of

the Study Use of Asset Project the Parties

Project
Obligations of Implementation Management of Financial
the Parties Plan and the Project Proposal
Timelines

Appropriateness
Financial Legal
Market Risks of JV as PPP
Projection Framework
Modality
Project Approval
2. 4.
1. Project 3.
Project Pre-
Preparation Advertisement
Approval qualification

Required Approvals
• The Sanggunian approves the project, terms of
reference/ draft contract, and the authority of Local
Chief Executive to sign on behalf of the LGU.
• The Local Chief Executive approves tender
documents and draft Joint Venture Agreement before
issuance to prospective bidders
Project Approval
2. 4.
1. Project 3.
Project Pre-
Preparation Advertisement
Approval qualification

Preparation of Selection/Tender Documents

1) JV Project Study
2) Instruction to Private Sector Participants
3) Minimum Design, Performance Standards/Specifications and other
Financial and Economic Parameters
4) Draft Contract reflecting the terms and conditions in undertaking the
JV activity
5) Selection Form reflecting the required information to evaluate
technical and financial proposals
6) Forms of technical and financial proposals and performance securities
7) Other documents as may be required by the LGU
Advertisement
2. 4.
1. Project Project 3. Pre-
Preparation Approval Advertisement qualification

• LGU releases Invitation to Apply for Eligibility and

to Submit Comparative Proposals (IAESP)
• Prospective bidders prepare and submit eligibility
documents
Pre-qualification
1. Project 2. 4.
Project 3. Pre-
Preparation Approval Advertisement
qualification

Eligibility Documents
1) Legal
• Incorporation Documents, Board Resolutions
2) Financial
• Bank Comfort Letter, Proof of Funds, Bank Guarantee,
etc.
3) Technical
• Track Record, Past Projects, EPC Contracts
Bid Proper
6.
5. Contract 7.
Bid Proper Award & Implementation
Signing

Requirements for Submission of Proposals

Technical Proposal (First Envelope)
• Compliance statements with technical parameters
• Operational feasibility
• Technical soundness
• Preliminary environmental assessment
• Cost and financial plan
• Proposal security

Financial Proposal (Second Envelope)

• Compliance statements with financial parameters
• Proposed cost of JV activity, O&M cost, amount of equity and debt,
sources of financing, other related costs
• Financial proposal corresponding to parameters set
Contract Award and Signing
5. 6. 8.
Contract Award Implementation
Bid Proper
& Signing

Required Approvals
• The Local Chief Executive signs on behalf of the LGU
upon recommendation by the Selection Committee
Implementation
6.
5. Contract 7.
Bid Proper Award & Implementation
Signing

 Final and signed JV Agreement will be officially handed

over to PPP/JV Regulatory Authority
 Fulfillment of Conditions Precedent
 Incorporation of JV Company (for Incorporated JV)
 Issuance of Notice to Proceed
 PPP/JV Regulatory Authority may be assisted by
transaction advisors or Independent Consultants, if
necessary
Implementation
6.
5. Contract 7.
Bid Proper Award & Implementation
Signing

PPP Contract Management Principles

Communion of two To ensure that both parties are
parties, specifically  compliant with
between the contractual
Concessionaire and responsibilities found in
Contracting Authority and the joint venture
in close coordination agreement
with the PPP Center  so as to be able to
provide continuous
public service delivery
 to avoid any
consequences.
The PPP Center
ensures that all
contracting parties are
also consistent with
their reporting duties.
Monitoring of PPP
projects is guided by the
PPP Governing Board
approved Policy Circular
establishing a
Monitoring Framework
and Protocols for PPP
projects
 Unsolicited
(Competitive Challenge/
Swiss Challenge)
Competitive Challenge

Commencement of
Implementation

Invitation for Comparative

Proposals
Contract Award &
Signing
Granting of Original • Recommendation to
Proponent Status Challenge Proper
Award
• Decision to Award
• Release of and Issuance of
Submission of Swiss Challenge tender Notice of Award
Unsolicited documents (NOA)
Proposal Negotiation Period • Prepare tender • Posting of • Submission of NOA
documents proposal security Requirements
Initial Evaluation and • Issuance of joint • Approval of by OP • Advertise NOA
Completeness Check certification tender • Evaluation of • Execution and
stating that an documents by comparative
• Recommendation to Accept Approval of JV
agreement has the LCE proposals
• Issuance of Certificate of
been reached • Right to Match
Acceptance by LCE
by OP

Schedules and Timelines: The Local Chief Executive, through an Executive Order, upon
recommendation of the PPP/JV-SC, shall have the authority to adopt and prescribe the
appropriate and reasonable schedules and timeliness for each PSP selection process.
Submission of Unsolicited Proposal
2.
1. Submission Initial 3. 4.
of Unsolicited Evaluation and Negotiation Granting of
Proposal Completeness
Period OP Status
Check

Contents of Unsolicited Proposal

 Cover Letter
 Project Study
 Draft Joint Venture Agreement
 Eligibility Documents
Initial Evaluation and Completeness Check
2.
1. Submission Initial 3. 4.
of Unsolicited Evaluation and Negotiation Granting of
Proposal Completeness Period OP Status
Check

Local Chief
PPP/JV SC PPP/JV SC gives
Executive
evaluates the its
convenes PPP/JV
Unsolicited recommendation
Selection
Proposal to the LCE
Committee

• PPP/JV SC assesses Unsolicited Proposal based on certain considerations

such as:
 Completeness of proposal
 Legality of Joint Venture
 Appropriateness of the project to the needs of LGU
 Project merits
• PPP/JV SC pre-qualifies the Proponent and assesses the following:
 Financial and technical capability and capacity
 Legal and institutional framework
Negotiation Period
2.
1. Submission Initial Evaluation 3. 4.
of Unsolicited and Negotiation Granting of OP
Proposal Completeness Period Status
Check

Public Consultation is conducted

by PPP/ JV SC and Sanggunian
during the Negotiation Period
Negotiation Period
2.
1. Submission Initial Evaluation 3. 4.
of Unsolicited and Negotiation Granting of OP
Proposal Completeness Period Status
Check

Certification must specify the

Successful Issuance of Joint items successfully negotiated
Certification of Successful on, showing initial offer of
Negotiation/s Negotiations
PSP and counteroffer of
LGU, for transparency.

The letter of rejection

Unsuccessful Issuance of Rejection of must specify the
Proposal reason/s for rejection, for
Negotiation/s
transparency.

PPP-SC may invite experts from LGU offices or external consultants, or

create a Technical Working Group to help in the evaluation and negotiation.
Granting of Original Proponent Status
2.
1. Submission Initial 3. 4.
of Unsolicited Evaluation and Negotiation Granting of
Proposal Completeness Period OP Status
Check

• LGU can reject or accept the Unsolicited Proposal

• If LGU accepts, the Proponent is given Original
Proponent Status (OPS)

 LCE issues Certificate of Acceptance and Award of

Original Proponent Status to PSP

Original Proponent is entitled to rights in the PPP/JV

Ordinance (e.g. Right to Match, Right to Outbid, etc.)
Swiss Challenge
6.
5.
Contract 7.
Swiss
Award & Implementation
Challenge
Signing

Challenge Proper
Sanggunian
PPP/JV SC LCE is informed
prepares approves of progress
Terms of Terms of and contents
Reference Reference of Terms of
Reference

Submission Challenger
Publication of
and wins* OR
Invitation for
evaluation of Right to
comparative
comparative match OR
proposals
proposals Award to OP
 Challenger reimburses
cost of project study
Challenge Proper
6.
5.
Contract 7.
Swiss
Award & Implementation
Challenge
Signing

• Swiss Challenge starts with the publication of invitation

for comparative proposals for competitive bidding:
 Release of bid documents
 Posting of bid bond by Original Proponent (OP)
 Pre-bid conference
• Submission and evaluation of comparative proposals
• OP exercises Right to match or Challenger with
superior/most advantageous offer wins
• If Challenger wins, Challenger reimburses cost of project
study to the OP (only if reimbursement is in TOR and cost
is deemed reasonable by PPP/JV SC)
• If no Challenger, contract is awarded to OP
Contract Award and Signing
5. 6. 8.
Swiss Contract Award Implementation
Challenge & Signing

1 PPP/JV SC recommends approval of award to LCE

2 LCE approves award

Award and final draft of JV agreement is submitted to

3 Sanggunian for approval

4 Sanggunian reviews final draft JV agreement, approves

terms, issues ordinance approving JV agreement,
authorizing LCE to sign on behalf of LGU, and authorize
tax exemptions, if any

5 Signing of final JV agreement between LGU and PSP

Implementation
6.
5. Contract 7.
Bid Proper Award & Implementation
Signing

 Final and signed JV Agreement will be officially handed

over to PPP/JV Regulatory Authority
 Fulfillment of Conditions Precedent
 Incorporation of JV Company (for Incorporated JV)
 Issuance of Notice to Proceed
 PPP/JV Regulatory Authority may be assisted by
transaction advisors or Independent Consultants, if
necessary
 Thank You!
For further information, please visit:
www.ppp.gov.ph
For inquiries, kindly e-mail:
capacitybuilding@ppp.gov.ph

PPPCenter.Philippines

@PPP_Ph

Public-private-partnership-
Center-of-the-Philippines

PPPPinas 38