2008-01-30

NPM 001-2008

Requesting Entity: Bataan Economic Zone - Philippine Economic Zone Authority

Issues Concern: Variation Order

 

Details

1. Whether or not the ten percent (10%) limit on variation orders applies to repair or rehabilitation projects, or for new construction projects only.

The ten percent (10%) cap on variation orders applies to both repair/rehabilitation as well as new construction projects. The definition of infrastructure project under Sec. 5 of the IRR-A of RA 9184 is comprehensive and includes the construction, improvement, rehabilitation, demolition, repair, restoration, or maintenance of roads and bridges, railways, airports, seaports, communications facilities, civil works components of information technology, irrigation, flood control and drainage, and other related construction projects of the government. The rule on variation orders forms part of the Contract Implementation Guidelines for the Procurement of Infrastructure Projects under RA 9184 and its IRR-A.

2. What are the sanctions that may be imposed on the official responsible for the preparation of the original detailed engineering that resulted to the increase of variation orders beyond 10%?

[T]he Contract Implementation Guidelines for the Procurement of Infrastructure Projects also state that the head of the procuring entity may authorize the variation order beyond ten percent (10%) but not more than twenty percent (20%) subject to the guidelines to be determined by the GPPB, provided that appropriate sanctions shall be imposed on the designer, consultant, or official responsible for the original detailed engineering design which failed to consider the variation order beyond ten percent (10%).

Although the GPPB has yet to issue the guidelines on the matter, it can be inferred that existing provisions under RA 9184 which impose civil, criminal, and administrative sanctions on certain offenses, in addition to the sanctions for dishonesty, abuse of discretion, neglect of duty, inefficiency and incompetence in the performance of official duties, among others, under the Civil Service law and rules, as well as violations of the Anti-Graft and Corrupt Practices Act, may be considered in the prosecution of any official held responsible for the preparation of the original detailed engineering design that resulted to the increase of variation orders beyond ten percent (10%). Among the more noted administrative penalties are dismissal, suspension, transfer, demotion, imprisonment, and disqualification.