06 CONTRACT IMPLEMENTATION AND SANCTION MECHANISM.pdf

CONTRACT
IMPLEMENTATION AND
SANCTION MECHANISM
This module will aid in understanding contract
implementation and the accountability mechanisms in public
procurement. This session also explores the legal liabilities of
stakeholders and remedies available to address issues of
non-compliance or disputes.
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At the end of this module, learners are expected to:
UNDERSTAND key provisions of RA No. 12009 and its
Implementing Rules and Regulations (IRR) concerning contract
implementation, administrative liabilities, and legal remedies.
IDENTIFY common violations, administrative liabilities
associated with procurement activities, and the roles of
procurement actors and stakeholders in addressing legal
actions, violations, and liabilities.
OBJECTIVES
Note: Any unauthorized sharing, reproduction, or commercialization is strictly prohibited and may be subject to legal action. Please note that the GPPB-TSO is not liable for any inaccuracies arising from the use of outdated versions. Users are
encouraged to regularly check for updates to ensure they are referencing the most current information.
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Contract Implementation
Protest Mechanism
Settlement of Disputes
Administrative Liability of Private Entities
Administrative Liability of Public Officers
OUTLINE
encouraged to regularly check for updates to ensure they are referencing the most current information. 3
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Emergency or Unforeseen Events:
Amendments may be made due to emergencies, fortuitous events, or contingencies that affect .Emergency or Unforeseen
Events:
Amendments may be made due to emergencies, fortuitous events, or contingencies that affect implementation.
AMENDMENT TO ORDER - GOODS
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May be issued under ANY of the following:
(Reference: RA No. 12009, Sec. 71.1.1-a-e)
EMERGENCY, FORTUITOUS OR UNFORESEEN EVENTS
When emergencies, fortuitous events, or contingencies affect implementation.
AMENDMENT DUE TO MISTAKE OR ACCIDENT
When contract do not reflect the real intent of the parties due to mistake or
accident.
DELIVERY SCHEDULE EXTENSION
When HoPE approves changes in schedule, upon valid request and without
supplier fault. Extension must not exceed original period.
SUBSTITUTION OF GOODS
When original goods are unavailable, equivalents with no added cost and
government advantage may be accepted.
OTHER ANALOGOUS SITUATIONS
Other valid reasons similar in nature to those listed above that materially
impact the procurement.

Use original contract unit prices, if applicable
If no rate exists, mutually agree on suitable prices
AMENDMENT TO ORDER - GOODS
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(Reference: RA No. 12009, Sec. 71.1.1-a-e)
SCOPE OF AMENDMENT
Amendments may cover changes in quantity, specifications, or delivery of
goods, supplies, or materials during contract implementation.
ADJUSTMENT IN PRICE AND/OR SCHEDULE
If the change affects cost or delivery time, an equitable adjustment in the
contract price and/or delivery schedule must be mutually agreed upon and
reflected in a written contract modification.
LIMIT ON PRICE INCREASE
Up to 10% of the original contract price
Up to 20%, if approved by the HoPE
PAYMENT FOR ADDITIONAL ITEMS
Use original contract unit prices, if applicable
If no rate exists, mutually agree on suitable prices
📌All amendments must be justified, documented, and advantageous
to the government.

WHEN SUSPENSION IS ALLOWED:
Originally permitted only for force majeure or fortuitous events, now
expanded to include meritorious reasons, as determined by the
HoPE, based on End-User or IU recommendation subject to proper
justification and approval.
DURATION OF SUSPENSION:
May not exceed the original contract duration, unless justified and
approved by the HoPE.
SUPPLIER OBLIGATIONS DURING SUSPENSION:
Must take reasonable steps to minimize storage or handling costs
for goods or services affected by the suspension (including
installation, commissioning, etc.).
SUSPENSION OF DELIVERY OF GOODS
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(Reference: RA No. 12009, Sec. 71.1.2)

EXTENSION OF CONTRACT TIME
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Requests for extensions, whether initial or supplemental,
shall be submitted before the prescribed delivery date.
The same may be approved by the HoPE upon the
recommendation of the End-User or Implementing Unit,
based on meritorious reasons.

If delays are likely to be incurred beyond its control, the
supplier, manufacturer, or distributor shall promptly
notify the Procuring Entity in writing, providing details of
the causes and duration of the expected delay.
The Procuring Entity may, at its discretion, grant a time
extension based on meritorious grounds, with or without the
imposition of liquidated damages.
LIQUIDATED DAMAGES
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Amount equivalent to 1/10 of 1% of the cost of the delayed
goods scheduled for delivery for every day of delay until such
goods are finally delivered and accepted by PE.
In case total sum of LD reaches 10% of total contract price,
the PE may rescind the contract and impose appropriate
sanctions over and above the LD.

No advance payment except under any of the following conditions:
ADVANCE PAYMENT
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(Reference: RA No. 12009, Sec. 71.1.5a-c)
Standard industry
practice where the
requirement of
down payment, a
single advance
payment not to
exceed 50% of the
contract amount
To address
contingencies arising in
areas declared a
State of Calamity,
advance payment
not to exceed 15% of
the contract
amount
Upon submission of an
irrevocable L/C or bank
guarantee
issued by local bank,
advance payment not to
exceed 15% of the
contract

1.Incidental Services
2.Spare Parts
3.Delays in the Supplier’s Performance
4.Purchaser’s Responsibilities
5.Prices
6.Payment
7.Taxes and Duties
8.Subcontracts
9.Standards
10.Packing
OTHER ASPECTS OF CONTRACT IMPLEMENTATION
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Rules and regulations of the other aspects of contract implementation
shall be included in the manuals to be issued by the GPPB, such as,
but not limited to, the following:
11. Insurance
12. Transporation
13. Inspections and Tests
14. Patent Rights
15. Limitations of Liability
16. Termination for Default
17. Termination for Insolvency
18. Termination for Convenience
19. Assignment
(Reference: RA No. 12009, Sec. 71.1.6 )

VARIATION ORDER
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DUE TO CHANGE OF PLANS, DESIGN OR
ALIGNMENT TO SUIT ACTUAL FIELD CONDITIONS
AFTER AWARD OF THE CONTRACT
Resulting in disparity between the preconstruction
plans vs. “as staked plans” or construction
drawings prepared after joint survey by contractor
and Government
ANY INCREASE OR DECREASE IN QUANTITIES
Including the introduction of new work items that are not
included in the original contract or
Reclassification of work items
May be issued by the Procuring Entity for:

VARIATION ORDER
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General Rule: The cumulative amount of the VO shall not exceed
10% of the original contract price. Any cumulative positive VO
beyond 10% of the original contract price shall be the subject of
another procurement project to be bid out if the works are
separable from the original contract.
Exception: Cases where it is urgently necessary to
complete the original scope of work, the HoPE, upon
the recommendation of the End-User or
Implementing Unit, may authorize positive VOs
resulting to a cumulative value of the positive VO
beyond (10%) but not more than (20%) of the
original contract price.

VARIATION ORDER
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(Reference: RA No. 12009, Sec. 71.2.1 (a ) )
EXTRA WORK ORDER
New work necessary for
the completion,
improvement or
protection of the project
which was not included
as items of work in the
original contract.
CHANGE ORDER
increase or
decrease in
quantities of original
work items in the
contract.

For Variation Orders, the contractor shall be paid for additional
work items with unit prices derived based on the following:
Change Orders (same/similar items):
Use original contract unit prices.
Extra Work Orders (new items):
Based on original contract’s direct costs
(e.g., materials, labor, equipment).
Fixed prices, agreed upon by both parties.
Must be validated by PE via documented canvass.
Apply contractor’s original markup for final unit price.
VARIATION ORDER
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(Reference: RA No. 12009, Sec. 71.2.1 (b) )
Additional or ExtraWork Costing

GENERAL RULE: Under no circumstances shall a contractor proceed to commence
work under any Change Order or Extra Work Order unless it has been approved by
the HoPE or duly authorized representative.
EXCEPTION: Under any of the following conditions, the PE’s representative or Project
Engineer may, subject to the availability of funds and within the limits of its delegated
authority, allow the immediate start of work under any Change Order or Extra Work
Order:
Emergency or urgent need (to avoid harm to life, property, or public service)
Time is of the essence
Funds are available
Within delegated authority
Work value does not exceed 5% of the adjusted contract price
Formal approval must follow immediately.
Payment only after approval by HoPE.
Conditions under which the Contractor is to start work
underVariation Orders and Receive Payments
VARIATION ORDER
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(Reference: RA No. 12009, Sec. 71.2 .1 (d ))

The appropriate sanctions imposed on the
designer, consultant, or official responsible
for the original detailed engineering
design, which failed to consider the
Variation Order beyond 10% as provided
under RA No. 9184 has been removed
under the IRR of RA No. 12009.
VARIATION ORDER
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Sanctions on Designers, Consultants, or Officials for Failing
to ConsiderVariation Orders Beyond 10%

The Procuring Entity may
suspend the work (wholly or
partly, by written order) for
such period as may be
deemed necessary due to:
Force majeure or any fortuitous
event
Contractor's failure to correct unsafe
conditions
Contractor’s failure to carry out valid
orders by the PE or perform contract
provisions
Due to adjustment of plans to suit
field conditions
The contractor shall immediately comply
with the suspension order.
Procuring
Entity
SUSPENSION OF WORK
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The Contractor may suspend work
after 15 calendar days from
written notice to the PE, for any
of the following:
Right-of-way problems preventing work
Owner-furnished plans not issued
Peace and order conditions, certified by
PNP and confirmed by DILG
PE's failure to deliver
materials/equipment as stipulated
Delay in progress billing payment beyond
45 calendar days (unless justified in
writing)
Consultant

The PE may grant an extension of contract time if:
Additional work or special circumstances justify it,
The contractor notifies the PE of its claim:
Before contract expiration, and
Within 30 calendar days after work starts or
circumstance arises,
With full and detailed particulars of the delay.
Failure to notify = Waiver of Claim
No extension shall be granted due to:
Ordinary unfavorable weather, or
Inexcusable contractor negligence (e.g., lack of
equipment/materials).
EXTENSION OF CONTRACT
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If the Contractor fails to complete the works within the contract duration
(including extensions), they are liable for liquidated damages:
At least 0.001 (1/10 of 1%) of the unperformed portion per day of delay.
PE does not need to prove actual damages to claim liquidated damages.
Damages may be deducted from:
Any money due to the Contractor,
Retention money or other securities,
Or a combination — whichever is convenient to the PE.
If LD reaches 10% of the contract price, PE may terminate the contract.
Usability of project will be assessed by the End-User/Implementing Unit to guide
LD computation.
LIQUIDATED DAMAGES
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The Advance Payment shall be made only upon:
Written request of the contractor which shall form part of the contract
document; and
Submission of an irrevocable standby Letter of Credit of equivalent
value from a bank as confirmed by the PE; a bank guarantee; or a
surety bond callable upon demand issued by a duly licensed surety or
insurance company, at the option of the PE.
ADVANCE PAYMENT
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The PE shall make an advance payment to the contractor in an amount
not exceeding 15% of the total contract price to be made in lump sum
or, at the most, two installments according to a schedule specified in the
Instructions to Bidders and other relevant bidding documents.

The PE shall ensure the timely
implementation of Infrastructure Projects by
monitoring the performance of the
contractors.
When the contractor incurs negative
slippage during the contract duration, the
PE shall implement the calibrated
measures to be provided in the guidelines
issued by the GPPB.
NEGATIVE SLIPPAGE
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Once a month, the contractor may submit a statement of work accomplished (SWA) or
progress billing and corresponding request for progress payment for work accomplished.
The SWA should show the amounts which the contractor considers itself to be entitled to
up to the end of the month, to cover (i) the cumulative value of the works it executed to
date, based on the items in the Bill of Quantities, and (ii) adjustments made for
approved VOs executed.
Alternatively, the PE may require in the Bidding Documents that the SWA or progress
billing and the corresponding request for progress payment may only be submitted
upon actual completion of the Infrastructure Project or a specific portion, segment,
milestone or phase thereof.
The PE’s representative or Project Engineer shall check the contractor’s SWA and certify
the amount to be paid to the contractor as progress payment.
Except as otherwise stipulated in the ITB, materials and equipment delivered on the
site but not completely put in place shall not be included for payment.
PROGRESS PAYMENT
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RETENTION MONEY
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PERCENTAGE DEDUCTED FROM EVERY PROGRESS PAYMENT:
10% Retention from every progress payment until 50% of the project value is
completed, based on the Procuring Entity’s (PE) assessment.
POST-50% COMPLETION:
If the project is on schedule and satisfactorily completed, no further retention will be
made.
If the work is delayed or unsatisfactory, 10% retention will apply, but may be
reduced to 5% upon justifiable cause by the PE.
SUBSTITUTION OPTION:
The Contractor may request to substitute the retention money with an irrevocable
standby Letter of Credit, bank guarantee, or surety bond from a bank, equal to the
retention amount, if:
Project is on schedule.
Work is satisfactorily undertaken
RELEASE OF RETENTION:
The retention money will be released upon final acceptance of the works by the PE.

The rules and regulations for the other aspects of contract
implementation shall be included in the manuals to be issued
by the GPPB, such as, but not limited to, the following:
Sub-contracting
Interference with Traffic and Adjoining Properties
Clearance of Project Site of Obstruction
Inspection and Testing
Daywork
Measurement of Works
Other Implementation Aspects
OTHER ASPECTS OF CONTRACT IMPLEMENTATION
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Scope Changes & Adjustments: Changes to the contract may be necessary to ensure the project's objectives are met,
which could affect the scope of work, key personnel, schedule of deliverables, payments, timelines, or contract duration.
CONTRACT AMENDMENT
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Scope Changes & Adjustments: Changes to the contract may be necessary
to ensure the project's objectives are met, which could affect the scope of
work, key personnel, schedule of deliverables, payments, timelines, or
contract duration.
Equitable Adjustment: If adjustments are required, the Procuring Entity
(PE) and the consultant must mutually agree upon an equitable
adjustment in the contract price. This adjustment will be based on:
Existing rates or unit prices in the contract.
If no such rates exist, applicable or current market rates should be
used for amended or additional items.
Cost Limitation: The total increase in the contract price due to these
changes must not exceed 20% of the original contract price.

SUSPENSION OF WORK
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Suspension by the PE
The PE may suspend work and payments by written notice if the
consultant fails to perform obligations due to fault, force majeure, or other
circumstances beyond the control of either party.
Notice must specify the failure and require remedy within 30 days.
Before expiration, PE decides whether to resume, terminate, or cancel
affected work.
If continuation is practicable, PE lifts suspension and orders resumption
under amended terms.
Suspension by the Consultant
The consultant may suspend affected work by written notice if:
PE fails to deliver required inputs (equipment, data, reports);
Peace and order issues certified by PNP and DILG;
Payment delays beyond 60 days from certified claim, unless justifiably
explained.
Procuring
Entity
Consultant

EXTENSION OR ADJUSTMENT OF CONTRACT TIME
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30
CRITERIAFOREXTENSION:
Theworkissuspendedduetofactorsbeyondtheconsultant’scontrol.
Suspensionordelayoccursalongthecriticalpathoftheproject
CONSIDERATION - THEELAPSEDTIMEBETWEEN:
Thesuspensionorder(whenworkishalted).
Theresumptionorder(whenworkrestarts)mustbetakenintoaccount.
NOFAULTOFCONSULTANT
Extensionsaregrantedwhenthesuspensionisnotduetothefaultofthe
consultant,ensuringtheyarenotpenalizedfordelaysoutsidetheircontrol.

LIQUIDATED DAMAGES
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Sum of liquidated damages reaches 10% of the contract amount
Contract may be rescinded or terminated by the PE, without prejudice to
other courses of action and remedies available
In case the contract is rescinded or terminated –
PE may take over the contract; or
award the same to a qualified consultant through negotiated procurement
In addition to the liquidated damages, consultant’s performance security shall
also be forfeited
Delay in the completion of the services exceeds 10% of the specified contract
time plus any time extension
PE may rescind the contract
PE forfeits the performance security
PE takes over the contract OR awards the same to a
qualified consultant through Negotiated Procurement

BREACH OF CONTRACT
GROUNDS FOR TERMINATION OF CONTRACTS
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(Reference: RA No. 12009, Sec. 71.4.1-5)
FORCE MAJEURE
PROCURING ENTITY’S
CONVENIENCE
UNLAWFUL ACTS
TERMINATION BY
CONTRACTOR/ CONSULTANT

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TERMINATION FOR BREACH OF CONTRACT
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GOODS: When Supplier fails to deliver or perform any or all
of the Goods within the specified period (or duly extended
period), and the failure amounts to at least 10% of the
contract price.
CONSULTING SERVICES:
When consultant fails to deliver Outputs/Deliverables
within the contract period (or extended), and failure
amounts to at least 10% of the contract price.

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INFRASTRUCTURE PROJECTS:PE shall terminate when ANY
of the following occur:
15% negative slippage during implementation (PD 1870)
10% negative slippage after contract time expires
Abandonment or refusal to proceed despite notice
Non-compliance with Notice of Rejection/remedial work within
30 days
Failure to deploy required minimum equipment
Persistent or flagrant neglect of contractual obligations
Refusal to remove defective work/materials
Unauthorized subcontracting
Bankruptcy, insolvency, dissolution, or equivalent event
TERMINATION FOR BREACH OF CONTRACT
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TERMINATION DUE TO FORCE MAJEURE
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Goods:
PE may terminate the contract and impose liquidated damages when:
Due to force majeure, the supplier is unable to deliver or perform any
or all goods amounting to ≥ 10% of the contract price
For a period of at least 60 calendar days, or earlier as deemed
necessary by PE
After receiving PE’s written notice that force majeure is deemed
to have ceased
Consulting Services:
Consultant unable to deliver or perform a material portion
of outputs/deliverables
For at least 60 calendar days, or earlier as determined by
PE
After PE issues notice that the force majeure condition
has ceased

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TERMINATION FOR PROCURING ENTITY’S CONVENIENCE
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Goods and Consulting
Project is no longer economically,
financially, or technically feasible (as
determined by the HoPE)
Conditions arise that make
implementation impractical (e.g.,
fortuitous events, changes in
laws/policies)
Funding is withheld or reduced through
no fault of the PE
Any similar/analogous circumstance
Infrastructure Projects
Significant changes in conditions make
the project no longer feasible (HoPE
determines)
Implementation becomes impractical or
unnecessary (e.g., fortuitous events,
policy/law changes)

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Unlawful acts include, but not limited to the following:
Corrupt, fraudulent, collusive, or coercive practices;
Use of forged documents;
Use of adulterated materials, means, or methods,
or violating rules of science or trade; or
Any analogous acts.
TERMINATION FOR UNLAWFUL ACTS
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The Procuring Entity may terminate the contract if it is determined prima facie that
the supplier, contractor, or consultant, including any JV partner therein, has engaged
in unlawful acts before or during contract implementation, in unlawful deeds
and behaviors relative to the contract acquisition and implementation.

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TERMINATION BY CONTRACTOR OR CONSULTANT
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Contractor may terminate if work is
completely stopped for 60 days due to:
PE’s failure to deliver materials, RoW,
etc.
Material breach by PE
Prolonged suspension by PE
Adverse peace and order situation
(AFP-certified)
Consultant may terminate with 30 days'
notice if:
PE materially breaches the contract
and fails to remedy in 60 days
Prolonged suspension or failure to
perform
INFRASTRUCTURE PROJECTS CONSULTING SERVICES

PROCEDURES FOR TERMINATION OF CONTRACTS
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(Reference: RA No. 12009, Sec. 71.4.6a-i)
Verification
Notice to
Terminate Show Cause
Recession of Notice
of Termination
Decision
Contract Termination
Review Committee (CTRC)
Take-Over of
Contracts
Notice by Contractor
or Consultant
Procuring Entity’s Options
in Termination for
Convenience in Contracts
for Goods
7cds
10cds
30cds
7cds
30cds

PROTESTS ON DECISIONS OF THE BAC
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Subject of Protest:
Decisions of the Bids and Awards Committee (BAC)
in all stages of procurement
To whom should the protest be addressed:
The Head of Procuring Entity (HoPE)
Provided:
prior request for reconsideration should have been
filed by the party concerned to the BAC and the
same has been resolved.
(Reference: RA No. 12009, Sec. 83.1-2)

BAC decides on the Request
for Reconsideration
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PROCESS OF FILING A PROTEST
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(Reference: RA No. 12009, Sec. 83.1)
Within 3 cds upon receipt of Written
Notice or Verbal Notification of the
BAC decision
Within 7 cds upon receipt.
The BIDDER SHALL NOT BE ALLOWED to submit
additional documents to correct any defects
in the bid submitted
Bidder files Request for
Reconsideration of the
BAC Decision
In case of denial, Bidders files
Protest on the Denial of BAC
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5
HoPE decides
on the Protest
Within 7 cds upon receipt of the
protest of the bidder
Within 7 cds upon receipt by
the party concerned of the
resolution
2 3
1

PROTEST FEE
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NOTE: the GPPB shall establish an electronic filing system which
allows payment of non-refundable protest fee via electronic
payment channel. The procedures for the use shall be provided
for in the Guidelines issued by the GPPB.

VERIFIED POSITION PAPER
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a. Name of Bidder;
b. Office Address of the Bidder;
c. Name of project or contract;
d. Implementing Office, Agency, or Procuring
Entity;
e. Brief Statement of Facts;
f. Issue to be resolved;
g. Factual basis and legal arguments in
support of the protest; and
h. Such other matters and information pertinent
and relevant to the proper resolution of the
protest.
Shall contain the following information:

The HoPE shall resolve the protest within seven (7) calendar days from
receipt.
The HoPE’s decision shall be final, but only up to the limits of their
contracting or approving authority, in accordance with existing laws
and regulations governing department secretaries, agency heads,
constitutional bodies, and instrumentalities of the government.
For Local Government Units (LGUs), the decision of the Local Chief
Executive shall be final.
The HoPE’s decision must:
Clearly state the factual and legal bases used to resolve the protest;
Expressly cite relevant provisions of bidding documents, procurement
laws and IRRs;
Refer to relevant BAC resolutions, minutes, or other supporting
documents used as a basis.
RESOLUTION OF PROTESTS
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RESOLUTION OF PROTESTS
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The decision of the HoPE shall be final and executory up to the limit of
its contract approving authority for the following procurement projects:

The RTC shall have jurisdiction over final decisions of the HoPE.
Court actions shall be governed by Rule 65 of the 1997 Rules of Civil
Procedure, as amended.
For amounts exceeding thresholds set in the IRR, the HoPE's decision
becomes final and executory after 10 calendar days, unless an appeal
to the RTC is perfected within that period.
Under Sections 84 and 85:
The BAC’s decision is final and executory.
However, if the amount exceeds the threshold under Section 85,
the HoPE’s decision becomes final and executory after 10 days
unless appealed.
Conditions for Court Action:
The protest process under Article XVI (Protest Mechanism) must be
completed.
Filing a case without exhausting remedies may result in dismissal for
lack of jurisdiction.
RESORT TO REGULAR COURTS
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(Reference: RA No. 12009, Sec. 85)

RESORT TO REGULAR COURTS
Nothing in this IRR shall be interpreted to prejudice or
prohibit the Office of the Ombudsman from exercising
its duties, functions, and powers, as provided under the
1987 Constitution, RA No. 6770 (Ombudsman Act of
1989), and/or any relevant rules and regulations
pursuant thereto.
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In no case shall any protest stay
or delay the bidding process.
However, protests must first be
resolved before any award is
made.
NON-INTERRUPTION OF THE BIDDING PROCESS
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Only the Supreme Court may issue TROs or injunctions in
procurement cases. Lower courts cannot stop or delay: bidding,
awarding and implementation of contracts, termination or related lawful
actions.
Applies to all parties (e.g., bidders, private entities, agencies)
Exception:
Cases of extreme urgency involving constitutional issues
Must show risk of grave injustice or irreparable injury
Bond required if TRO is granted; payable to government if unjustified
PROHIBITION ON THE ISSUANCE OF TEMPORARY RESTRAINING ORDER
OR INJUNCTIONS
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(Reference: RA No. 12009, Sec. 83-87)
Bidder files a Request for
Reconsideration to the BAC
Bidder files Protest to
the HoPE of the PE
BAC decides on the Request
for Reconsideration
HoPE decides
on the Protest
The appropriate court shall
decide in accordance with
the hierarchy of courts and
the appeal filed by the
party/bidder.
Appeal filed to the RTC
within ten (10) cds upon
receipt of the party/bidder
Denies
Approves
Decision
Amount
within the threshold
Amount
exceeds the threshold
Final and
Executory
SUMMARY OF PROTEST MECHANISM
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Within 3 cds upon receipt Within 7 cds upon receipt.
Within seven (7) calendar days
upon receipt of the party/bidder
Within seven (7) calendar days upon receipt
No appeal was made within
ten (10) cds upon receipt of the
party/bidder
Rule 65 Rules of Civil
Procedure, as amended (RTC)

DISPUTE RESOLUTION
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Any dispute arising from the implementation of a contract covered by
the Act and the IRR shall first be resolved and settled amicably by
mutual consultation or agreement.
The parties are encouraged to select the
most expeditious mode of dispute
resolution.
a.Process of arbitration may be
incorporated as a provision in the
contract; and
b.By mutual agreement, the parties may
agree in writing to resort to other
alternative modes of dispute resolution.

Simulating procurement
eligibility requirements
or strategic procurement
planning activities; or
All other acts or
omissions with the
intention of not
complying with the
mandatory provisions
of the Act.
ADMINISTRATIVE LIABILITY OF PUBLIC OFFICERS
2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No. 12009, Sec. 92
Applies even without
criminal prosecution
Without prejudice to liability
under R.A. No. 3019 and
other penal laws

2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No. 12009, Sec. 92 a-e)
Premature opening or disclosure of
sealed bids or bid documents
Unjustified delays in eligibility screening,
bid opening, evaluation, or awarding
Undue influence on BAC members or procurement
staff—or allowing oneself to be influenced
Splitting of contracts to avoid
competitive bidding limits
Abuse of HoPE's authority
to reject bids with clear bias

2025-0005
V.2 | 27 JUNE 2025
Criminal cases filed before the effectivity of R.A. No.
12009 and its IRR: Will be governed by the laws in force at
the time the offense was committed.
committed
Judicial decisions and court orders issued prior to the
effectivity of the law: Remain valid and enforceable.
Reflects the legal principle of non-retroactivity of penal laws.

JURISDICTION
2025-0005
V.2 | 27 JUNE 2025
Jurisdiction over offenses under administrative sanction
→Lies with the appropriate courts, based on laws in force at the
time of the offense
committed
Liability remains for unlawful acts committed before the
effectivity of R.A. No. 12009
→Applies to individuals, corporations, and other entities
Criminal liability not diminished, modified or affected
→Despite Article 22 of the Revised Penal Code or any other
contrary law

PREVENTIVE SUSPENSION
2025-0005
V.2 | 27 JUNE 2025
The head of the agency may preventively
suspend any member of the TWG,
Secretariat, BAC, or other involved officials
if there are strong reasons or prima facie
evidence showing that the officials or
employees concerned may be found liable
for:
Charges filed against under Rule XX
RA No. 12009 and its IRR; or
Dishonesty as defined by
civil service laws

LIFTING OF SUSPENSION AND REMOVAL OF ADMINISTRATIVE DISABILITIES
2025-0005
V.2 | 27 JUNE 2025
Lifting of preventive suspension pending administrative investigation, as well
as removal of administrative penalties and disabilities shall be in accordance
with Section 52 and 53, Chapter 7 of Book V of EO No. 292 (Administrative
Code of 1987) and other civil service laws, rules and regulations.
Automatic Reinstatement
→If no final decision is rendered within 90 days
→Applies to non-presidential appointees only
→Delays caused by the respondent do not count
Removal or Commutation of Penalties
→May be done by the President in meritorious cases
→Upon recommendation of the CSC

A conviction under RA No. 3019 and other penal laws
shall carry with it civil liability, which may either consist of:
Restitution for the damage done; or
Forfeiture in favor of the government of any
unwarranted benefit derived from the act
or acts in question; or
Both, at the discretion of the courts.
Civil liability is in addition to criminal penalties.
CIVIL LIABILITY IN CASE OF CONVICTION
2025-0005
V.2 | 27 JUNE 2025

ADMINISTRATIVE LIABILITY OF PRIVATE ENTITIES
2025-0005
V.2 | 27 JUNE 2025
Private entities participating in government procurement may be held
administratively liable, without prejudice to any corresponding criminal or
civil liability under applicable laws, including any accessory penalties that may
be imposed. These administrative penalties shall be enforced in accordance
with the provisions of the Act (R.A. No. 12009), its Implementing Rules and
Regulations (IRR), and other relevant laws, rules, and regulations.
Suppliers, Manufacturers,
Distributors, and Service Providers
Contractors Consultants

ADMINISTRATIVE LIABILITY OF PRIVATE ENTITIES
2025-0005
V.2 | 27 JUNE 2025
1. Any appropriate corrective measure, depending on
the severity of the offense considering its disadvantages
to the GoP shall be imposed in accordance with the
guidelines of the GPPB
2. Suspension - for offenses committed under Sec. 99,
entity is prohibited from participating in any procurement
of the Procuring Entity concerned for a given period
3. Blacklisting - for offenses committed under Secs. 100
and 101 entity shall be disqualified from participating in
all government procurements for a given period or
perpetually, as the case may be.

HoPE may impose the penalty of
suspension consisting of:
First Offense - One (1) Year
prohibition
Second Offense - Two (2)
Years prohibition
IMPOSITION OF SUSPENSION
2025-0005
V.2 | 27 JUNE 2025
Bid Security or the Performance Security posted by
the entity concerned shall also be forfeited.

Causing unjustified delay
Refusal to clarify or validate bid in writing
Withdrawing bid or refusing award/contract
without cause
Failure/refusal to post required performance security
Refusal to accept renewal notice or submit updated
documents
2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No. 12009, Sec. 99.1a-e)
During Procurement

2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No. 12009, Sec. 99.2a-c)
During Contract Implementation
a. Delivering goods with unsatisfactory or inferior quality;
b. Poor performance by the consultant; or
c. Poor performance by the winning bidder or unsatisfactory
quality and/or progress of work;
i. Negative slippage; or
ii. Non-compliance of the materials and workmanship with the
approved specifications.

IMPOSITION OF BLACKLISTING
2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No. 12009, Sec.100.1a-c)
HoPE may impose the penalty of
blacklisting consisting of:
First Offense - One (1) Year
prohibition
Second Offense - Two (2)
Years prohibition
Bid Security or the Performance Security posted by
the entity concerned shall also be forfeited.

2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No. 12009, Sec.100.1a-c)
During Procurement or Contract Implementation
COMMISSION OF 3+
SUSPENSION OFFENSE
USE OF FORCE, FRAUD,
COERCION, OR UNDUE
INFLUENCE ON
BAC/PE STAFF
ENGAGEMENT IN
UNLAWFUL ACTS
BEFORE/DURING
CONTRACT
IMPLEMENTATION

Malicious Multiple Bid
r
(Reference: RA No. 12009, Sec.100.2a-j)
2025-0005
V.2 | 27 JUNE 2025
During Procurement
Collusion in bidding Malicious Multiple Bid Bid Rigging
Non Disclosure of Relationship False Beneficial Ownership

Malicious Multiple Bid
r
(Reference: RA No. 12009, Sec.100.2a-j)
2025-0005
V.2 | 27 JUNE 2025
During Procurement
Submission of False or
Misleading Document
Use of Another’s Name Unauthorized access to bids
before opening
Undue Influence on
Bidding Outcome
Schemes Supressing Procurement

2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No. 12009, Sec.100.3 a-c)
During Contract Implementation
Unauthorized
Subcontracting /
Personnel Substitution
Abandonment or
Non-Performance
Without Just Cause
Termination Due
to Default or
Unlawful Acts

IMPOSITION OF BLACKLISTING WITH PERPETUAL DISQUALIFICATION
2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No. 12009, Sec.101a-b)
Commission of a 3rd offense
imposed with blacklisting under the
Act by the same Procuring Entity, or a
combination of 3 violations imposed
with blacklisting by the Procuring
Entity and other Procuring
Entities, as posted on the GPPB portal
Failure to comply with the
provision on warranty that
requires to repair any noted defect
or damage to the Infrastructure
Project due to the use of materials
of inferior quality within ninety (90)
calendar days from the issuance of
the order by the HoPE to
undertake such repairs
Bid Security or the Performance Security posted
by the entity concerned shall also be forfeited.

SUSPENSION OF BIDDER PENDING BLACKLISTING PROCEEDINGS
2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No. 12009, Sec.102)
Notice of the Commencement of
the Blacklisting proceedings to
the bidder
Serves as the Suspension Order
Notice of Dismissal of a Case
Against the Bidder
Automatic Lifting of the Suspension
of the Bidder
During the pendency of the
blacklisting proceedings
Automatic suspension from participating
in the current procurement activity by PE
concerned

STATUS OF SUSPENDED OR BLACKLISTED PERSON
2025-0005
V.2 | 27 JUNE 2025
Erring bidder may participate in the procurement of any
government project EXCEPT in the Procuring Entity
where it is suspended.
Blacklisted entity/person shall not be qualified for award. Contract
will be awarded to another bidder.
Suspension Order or Blacklisting Order shall not prejudice any contract awarded
prior thereto; Provided that offenses which brought upon the suspension or
blacklisting are not connected to the awarded contract
Before the Issuance of a Blacklisting Order
Blacklisting Order is Issued Prior to the Date of NOA
Issuance of Suspension Order or Blacklisting Order
after Contract Award

INITIATION OF ACTION
2025-0005
V.2 | 27 JUNE 2025
The BAC or the HoPE may, motu
proprio, commence the administrative
proceedings for corrective measures,
suspension or blacklisting, at any stage of
the procurement or contract
implementation, upon prima facie
determination that a bidder or prospective
bidder has committed any of the grounds
for suspension or blacklisting.
Any bidder/prospective bidder may also
initiate the suspension and blacklisting
proceedings.

INITIATION OF ACTION - PROCEDURE
2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No.Sec.104.1a-d)
BAC
Notify the Bidder in writing for
the opportunity to Show Cause
Decision of the
HoPE
BAC will evaluate the records and
recommend action to the HoPE
15cds from
receipt
If bidder was found at fault,
Notice to Commence
Suspension/Blacklisting
Bidder may Request for
Reconsideration
3cds from
receipt
HoPE to resolve
the Request
Disapproved
Request
PE to Post Suspension/
Blacklisting in GPPB Portal
7cds from
receipt 7cds from
Issuance

The penalties of suspension and
blacklisting shall be applied against:
(i) any entity in which the
suspended or blacklisted
person has a controlling
interest; and
(ii) any beneficial owner of the
suspended or blacklisted
person.
EXTENT OF ADMINISTRATIVE SANCTIONS
2025-0005
V.2 | 27 JUNE 2025

a. Sole Proprietorships - individuals or sole proprietorships, to the
bidders and their spouses;
b. Partnerships - Partnership, to the partnerships itself and its
partners;
c. Cooperatives - cooperative itself and board of directors, general
manager or chief executive officer;
d. Partnership, JV or Consortium -
which has blacklisted member/s and/or partner/s
an entity who is a member of a blacklisted JV or consortium
2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No. 12009, Sec.105 a-e)
The penalties shall also be applied against the following affiliates:

e. Corporations/Stockholders -
Relatives up to 3rd civil degree of consanguinity or affinity,
and their assignees, holding at least 20% of the shares
therein;
Chairperson and President shall be blacklisted as determined
to hold same controlling interest in a previously blacklisted
corporation, or in two corporations which have been
blacklisted; the corporations of which they are part shall also
be blacklisted.
2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No. 12009, Sec.105a-e)
The penalties shall also be applied against the following affiliates:

2025-0005
V.2 | 27 JUNE 2025
(Reference: RA No. 12009, Sec.105.1)
Blacklisting Due to Enforcement of a Bid or
Performance Securing Declaration
In addition to forfeiting the bid security or performance security submitted by
the private entity, the following provisions shall be observed in the
imposition of administrative penalties pursuant to the enforcement of the Bid
Securing Declaration Form (BSDF) or Performance Securing Declaration
Form (PSDF):
a. The HoPE, upon BAC recommendation, shall immediately issue a
blacklisting or suspension order upon determining the grounds for the
enforcement and forfeiture of the BSDF or the PSDF.
b. A request for reconsideration may be filed with the HoPE within 3
calendar days of receipt of the blacklisting or suspension order

BAC, TWG, and Secretariat members may
engage private lawyers or external
counsels immediately upon receiving a
court notice that an administrative, civil or
criminal action, suit or proceeding is filed
against them in connection with the lawful
performance of their official functions and
duties.
2025-0005
V.2 | 27 JUNE 2025
PRIVATE LEGAL ASSISTANCE

2025-0005
V.2 | 27 JUNE 2025
The GPPB shall establish an indemnification package
for BAC, TWG, and Secretariat members, including legal
assistance, liability insurance, and related
protections. Indemnification covers costs from legal
proceedings unless they are found liable for gross
negligence, grave misconduct, or abuse of discretion.
Settlements are covered only if no gross negligence or
misconduct occurred.

QUESTION & ANSWER
2025-0005
V.2 | 27 JUNE 2025
86

87
(02) 5322 6222
learning@gppb.gov.ph
training@gppb.gov.ph
Commonwealth Ave., Diliman, Quezon City
Government Procurement PH

06 CONTRACT IMPLEMENTATION AND SANCTION MECHANISM.pdf

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06 CONTRACT IMPLEMENTATION AND SANCTION MECHANISM.pdf