2004-07-02

NPM 092-2004

Requesting Entity: Department of Transportation and Communications

Issues Concern: Variation Orders and Supplemental Agreements in Light of the Republic Act 9184 and its Implementing Rules and Regulations Part A

 

Details

1. Whether or not the provisions of Republic Act 9184 (R.A. 9184) and its Implementing Rules and Regulations Part A (IRR-A) on Variation Orders apply to contracts perfected during the effectivity of Presidential Decree 1594 (P.D. 1594) and its Implementing Rules and Regulations (IRR).

Notwithstanding the passage of R.A. 9184 and its IRR-A prior procurement laws, rules and regulations still govern the procurement and implementation of certain government contracts, if the advertisement or invitation for bids were issued prior to the effectivity of R.A. 9184 or its IRR-A.

In this regard, we are of the opinion that DOTC may apply the provisions of P.D. 1594 and its IRR for contracts perfected during its effectivity since this implies the fact that the advertisements or invitation for bids therefor has been issued prior to the effectivity of R.A. 9184 and its IRR-A.


2. Whether or not Supplemental Agreements are still allowed considering that the basic elements of a Supplemental Agreement is reproduced in Section 53(d) of the IRR-A.

Under the IRR-A of R.A. 9184, Supplemental Agreement is no longer recognized as a form of Variation Order. The only forms of Variation Orders recognized under Annex E of the IRR-A of R.A. 9184 are Change Order and Extra Work Order.

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Even assuming arguendo that the basic elements of a Supplemental Agreement were reproduced in Section 53(d) of the IRR-A of R.A. 9184, such reproduction does not imply recognition by the IRR-A of Supplemental Agreement as a form of Variation Order. Section 53(d) of the IRR-A should be strictly interpreted to apply only in the circumstance provided therein, specifically when the contract is adjacent or contiguous to an on-going infrastructure project; but it cannot be interpreted in the same light as a Supplemental Agreement recognized under P.D. 1594 and its IRR which may be executed for Change Orders or Extra Work Orders.

Based on the foregoing, it is clear that Supplemental Agreement as a form of Variation Order is not recognized under the IRR-A of R.A. 9184 regardless of the aggregate or cumulative amount of any Variation Order.