EXECUTIVE ORDER NO. 807
EXECUTIVE ORDER NO. 807 -
ESTABLISHING THE SMALL CONTRACTORS MODULE UNDER THE KILUSANG KABUHAYAN
AT KAUNLARAN AND FOR OTHER PURPOSES
WHEREAS,
the Government has launched the kilusang Kabuhayan at Kaunlaran (KKK)
as a nationwide movement to mobilize local resources for the
establishment of viable productive enterprises that will provide
sources of livelihood in the community;
WHEREAS, locally-based contractors can be utilized to undertake the
construction and maintenance of support facilities required by KKK
projects particularly farm-to-market roads, markets, water supply
systems and the social facilities such as school and health centers;
WHEREAS, there are thousands of small contractors groups employing a
large number of laborers all over the country, many of which have been
and tend to remain perennial sub-contractors and informal labor groups
offering their services to the larger and more established contractors
and owner/clients not only for private construction jobs but also for
community projects such as roads, markets, schools, public buildings,
drainage, water supply facilities and other social facilities;
WHEREAS, while these small contractors have manifested the technical
capability, determination, and potential to organize themselves into
more viable contractor entrepreneurs, a major constraint facing them is
the lack of suitable support programs responsive to their financial
requirements at affordable levels; and
WHEREAS, the establishment of the KKK opens the opportunity to provide
assistance to these small contractors in order to stimulate and sustain
entrepreneurship in the countryside, generate local jobs, further
develop construction technology, spread income opportunities especially
in the rural communities, and enable the extensive construction and
maintenance of community public works at reduced costs.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution and the
authority vested in me by Presidential Decree No. 1416, as amended, do
hereby order and ordain:
Section 1. Establishment of Small Contractors Module.
— A “small contractors module” is hereby established as an integral
part of the KKK to be implemented in accordance with the guidelines and
procedures provided herein.
Sec. 2. Types of Projects. — KKK assistance under
the small contractors module may be extended for public works and
highways projects with an estimated contract cost of not more than
Seven Hundred Thousand Pesos (P700,000.00) each, such as school
buildings, barangay roads, small flood control and drainage works,
communal irrigation, wells, health centers, and similar
projects.
Sec. 3. Prospective Beneficiaries. — To be
considered as a prospective beneficiary of the KKK, an applicant must
be duly accredited by the District or City Engineer’s Office or other
equivalent instrumentality under the Ministry of Public Works and
Highways as having met the following prequalification requirements:
a.
Legal requirements
i.
The applicant must be a Filipino citizen, of legal age, and good
standing in the community, or partnership/cooperation of good standing
whose capital stock is fully owned by Filipino citizens.
ii. The key
officer of the applicant must be bona fide residents for the past three
(3) years of the region where the subject project applied for is
located. The applicant may, therefore, apply for KKK assistance only
for proposed public works and highways contracts in his region of
residence.
iii. The
applicant must submit a sworn statement that he shall, if awarded the
contract for the subject, project, procure unskilled workers from the
municipality or city where the subject project is located, and
semi-skilled workers from the province where the subject contract is
situated.
b.
Technical requirements
i.
Experience. — The applicant or his key construction staff must have
satisfactorily completed projects with aggregate costs of at least ten
per cent (10%) of the estimated contract cost of the subject project
and which involve essentially the same or similar technology as that of
the subject project. Applicants whose completed projects for the past
year have an aggregate value of more than One Million Pesos
(P1,000,000.00) are disqualified.
ii. Equipment.
— The applicant must own at least basic construction tools, e.g.
masonry, carpentry, and ditching tools.
iii.
Organization. — The applicant must have in his employ at least a
construct foreman with a minimum experience of the (1) year in the same
or similar work as that of the subject project.
c.
Financial requirements. — The applicant must have a positive net worth
i.e., his total assets must exceed his total liabilities, based on his
latest income tax return.
Sec. 4. Types of KKK Assistance. — KKK assistance
to pre-qualified and accredited contractors who are awarded a contract
will come in the form of a loan bearing an interest of twelve per cent
(12%) per annum, repayable in accordance with Sec. 6. hereof. The loan
may cover:
a.
The estimated working capital requirement by the contractor for the
subject project, but not to exceed the estimated operating expenses for
one and one-half (1-½) months or fifteen per cent (15%) of the
estimated contract cost of the project, whichever is lesser
and/or
b. The
estimated cost of purchasing light construction equipment needed for
the project, such as concrete mixers, not exceeding fifteen percent
(15%) of the estimated contract cost.
The contractor may also request the KKK designated banks to post, on
behalf of the contractor, either or both of the following bonds, with
the premiums, banking charges and other expenses incidental thereto
considered as additional loans under the same terms and conditions as
mentioned above:
a.
The required bid bond in favor of the government agency concerned in
the form of cash, cashier’s check, manager’s check, letter of credit,
or a combination thereof, amounting to at least two and a half (2.5%)
of the bid price to guarantee that, if awarded the contract, the
contractor will enter into corresponding agreement with the government
agency concerned with fifteen (15) calendar days from the date of
receipt of the notice of award of the contract; and/or
b. If awarded
the contract, the required performance bond in favor of the government
agency concerned in the form of cash, manager’s check, cashier’s check,
letter of credit, or a combination thereof, amounting to at least five
per cent (5.0%) of the contract price, to guarantee the contractor’s
faithful performance of the contract.
Sec. 5. Financing Institutions. — KKK financing
will be extended to accredited contractors by KKK designated banks or
other financing institutions duly authorized by the KKK National
Secretariat.
Sec. 6. Procedure. — The following procedures
shall be followed by all concerned in the implementation of this
module:
a.
Prequalification
i.
For every specific project that is deemed eligible for KKK assistance
under the small contractors module in accordance with the provisions of
Sec. 2 hereof, the government agency concerned, i.e., the District
or City Engineer’s Office or other equivalent instrumentality under the
Ministry of Public Works and Highways shall invite interested
contractors to submit to its application for prequalification and KKK
assistance for the project and, if so prequalified, to submit bids for
the project contract under regular public bidding or sealed canvass
bidding, at the discretion of the Head of the office or agency
concerned.
ii. The
contractor-applicant shall accomplish both application forms for
prequalification and KKK assistance and submit them to the agency
concerned before the prescribed deadline.
iii. The
agency concerned shall evaluate the prequalification statement of the
contractor to determine its conformity with requirements mentioned in
Sec. 3 hereof. In the event of approval of the contractor’s
application for prequalification, the agency shall endorse the
application for KKK assistance to the KKK Regional Action Officer (RAO)
concerned.
b.
Processing of application for KKK assistance. — The RAO shall evaluate
the application of the contractor for KKK financing. Upon being
ascertained of the project’s viability, the RAO issues a statement to
the effect that it shall endorse to the KKK-designated bank the loan
applied for in accordance with the provisions of Sec. 4 hereof if
and when the contractor-applicant is awarded the contract.
c. Submission
of Bid. — The contractor-applicant shall then submit to the agency
concerned his bid, together with the aforesaid statement from the RAO,
on or before the prescribed deadline.
d. Award and
Perfection of Contract. — If the contractor-applicant is awarded the
contract, the RAO shall confirm the loan under the prescribed terms and
conditions. The contract is then perfected and approved by the head of
the implementing government agency or his authorized representative.
e. Deposit of
Project Funds. — The implementing government agency concerned shall
deposit with the KKK-designated bank the project funds in an account
which shall earn interest equal to the rediscounting rate of the
Central Bank of the Philippines. The interest earnings of such deposit
shall accrue to the National Government Treasury.
f. Loan for
Working Capital
i.
Should the proposed loan be intended to cover the financing of the
working capital in accordance with Sec. 4, item a hereof, the RAO
shall communicate with the KKK-designated bank to extend the loan to
the contractor under the terms stipulated in Sec. 4 hereof, based on
the budget of the contractor as certified by the agency concerned. The
contractor, in turn, shall assign his rights under the contract to the
KKK designated bank for the latter to directly receive from the
government agency concerned the loan amortization payments to be
proportionally deducted from the construction progress payments due to
the contractor.
ii. During the
implementation of the project, the agency concerned shall promptly
process each request for progress payment submitted by the contractor.
Within one week from the receipt of a certified request, the agency
shall issue a check in favor of the KKK-designated bank to cover the
loan amount multiplied by the ratio of the corresponding progress
payment to the total contract price, plus interest and other applicable
banking charges. At the same time, the agency shall issue a check in
favor of the contractor for the balance of the certified progress
payment i.e., net of the amortization payment to the KKK-designated
bank, appropriate retention money and contractor’s tax. The above
process is repeated until the loan is fully amortized and
liquidated.
g.
Loan for Purchase of Equipment
i.
Should the proposed loan be intended to cover the purchase of
construction equipment in accordance with Sec. 4, item b hereof, the
RAO shall endorse the contractor’s loan application to the
KKK-designated bank under the terms stipulated in Sec. 4 hereof. The
contractor shall, in turn, execute a chattel mortgage in favor of the
KKK-designated bank.
ii. The loan
is the amortized out of the progress payments through the same process
stated in Sec. 6, Item f-ii hereof.
h.
Default. — In case the contractor, through his own fault or negligence,
fails to fulfill his contractual obligations with the government agency
concerned resulting in the termination or rescission of the contract,
the standard KKK guidelines governing the livelihood projects approved
by the Regional Action Officers shall apply. In addition he shall be
blacklisted by both the government agency and the financing institution
concerned and shall be banned from entering into future transactions
with them, without prejudice to civil and/or other legal actions deemed
proper by the KKK.
Sec. 7. Implementing Details. — The Minister of
Public Works and Highways, in coordination with the KKK National
Secretariat shall promulgate the appropriate implementing details,
including forms and circulars to carry out the above
guidelines.
Sec. 8. Repealing and Modifying Clause. — All
laws, decrees, charters, executive orders, administrative orders, rules
and regulations, including the provisions of the implementing rules and
regulations of Presidential Decree No. 1594 (Contract Policies and
Procedures), or parts thereof, in conflict with this Executive Order
are hereby repealed or modified accordingly.
Sec. 9. Separability Clause. — Any portion of a
provision of this Executive Order that may be declared unconstitutional
shall not have the effect of nullifying the other portions thereof,
provided that such remaining portions can still stand be given effect
in their entirety to accomplish the objectives of this Executive Order.
Sec. 10. Effectivity. — This Executive Order shall
take effect immediately.
Done in the City of Manila,
this 10th day of June, in the year of Our Lord, nineteen hundred and
eighty-two.
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Since 19.07.98.