Conformed Copy - L4110 - Water Resources Development Project - Supplemental Letter

Page 1 REPUBLIC OF THE PHILIPPINES December 20, 1996 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Loan No. 4110 PH (Water Resources Development Project) Representations and Assurances on Procurement Dear Sirs: I am writing on behalf of the Republic of the Philippines (the "Philippines") in respect of the Loan Agreement, of even date herewith, entered into between the Republic of the Philippines (Philippines) and the International Bank for Reconstruction and Development (the "Bank") and am pleased to provide the Bank the following representations and assurances: 1. The Philippines represents that the conflict existing between the Philippines procurement procedures and the Bank's "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in January 1995 and revised in January and August 1996 and the Bank's "Guidelines for the Use of Consultants by World Bank Borrowers and by The World Bank as Executing Agency" published by the Bank in August 1981 (together, the "Bank Guidelines") is eliminated through the amendment (approved by the Philippines' President on January 10, 1990) of the Implementing Rules and Regulations of Presidential Decree No. 1594 (the "IRR") relating to the procurement of goods and works, and the Guidelines for the Procurement of Consultants for Government Projects Promulgated on November 12, 1990 (the "Consultants' Guide- lines"). Section IV (2) of the amended IRR regarding applicability in relevant part provides: "... nothing in these implementing rules and regulations shall negate any existing and future commitments with respect to the bidding and award of contracts financed partly or wholly with funds from international financial institutions...". Similarly, Section 9.3 of the Consultants' Guidelines in relevant part provides:" ... these guidelines shall not negate any existing and future commitments with respect to the selection of consultants financed partly or wholly with funds from international financial institutions ...". In any event, the Philippines understands and agrees that, in Bank-financed projects, the Bank Guidelines are and will continue to be recognized and given full force and effect. 2. The Philippines specifically assures you that, unless otherwise agreed to in writing by the Bank, for all works contracts to be financed by the Bank following the local competitive bidding procedures contained in IRR: a. Foreign contractors from eligible countries will be allowed to participate, if interested; b. Foreign contractors wishing to register will be permitted to submit a certification from the Chamber of Commerce in their primary place of business in lieu of a certification from their Embassy or Consulate in the Philippines; c. All contractors will be allowed to compete for contracts up to the upper limit of their classification; d. If any bidder is denied access to the bidding process for Page 2  reasons unrelated to its financial and technical qualifications to perform the contract, the Bank shall be consulted prior to such denial; e. Bracketing will not apply, unless specifically agreed to in writing by the Bank in advance of bidding; f. Single responsive bids will not be rejected without prior Bank concurrence; and g. In all cases, award will be made to the lowest evaluated responsive and complying bidder. 3. The Philippines further assures the Bank that, unless otherwise agreed to in writing by the Bank, the following rules shall apply for the procurement of all goods contracts to be financed by the Bank and procured according to local competitive bidding procedures: a. The prospective contract will be advertised at least in the local press; b. Any foreign firms interested in participating will not be excluded; c. The period from advertisement to bid submission will normally not be less than thirty (30) days; d. Mandatory joint ventures with local firms will not be required; e. Bid submission deadlines and times will be specified in the bid documents and strictly adhered to; f. The Bank's domestic or regional preference will not be applied in the evaluation of bids, the other preference in effect in the Philippines will not be used except with the prior concurrence of the Bank; g. Rebidding will not be mandatorily required when a single responsive bid is received; h. Explicit bid evaluation criteria will be set forth in the bid documents; i. Negotiations will not take place with any bidder prior to award without the prior concurrence of the Bank; and j. Award will be made to the lowest evaluated responsive and complying bidder. 4. The Philippines also assures the Bank that, unless otherwise agreed to in writing by the Bank, the following procedures will be adhered to in respect of the procurement of consultants' services to be financed by the Bank; a. The registration and authorization requirements set forth in Section 2.2.5.1 a. and b. of the Consultants' Guidelines will not be applicable for Bank-financed contracts. All potentially qualified foreign firms from eligible source countries will be considered for inclusion on a shortlist and allowed to compete with domestic firms based strictly on the firm's ability to perform the services required under the proposed contract irrespective of any prior registration or authorization requirements; b. Mandatory joint ventures with Philippine consulting firms will only be required if: (i) there are a sufficient number of capable domestic firms available to allow reasonable freedom of choice for the invited foreign firms; (ii) the desirable contribution by either firm will not be constrained by any prescribed manner or extent of participation; and (iii) association with specific named firms selected by the borrower will not be required; Page 3 c. Notwithstanding Sections 5.2 and 5.3 of the Consultants' Guide- lines, qualified consulting firms, which come to the attention of the agency requiring services by means other than a specific expression of interest in response to an announcement of a future project for consulting services, will also be eligible for the shortlist; d. Section 6.9.1 of the Consultants' Guidelines notwithstanding, billing rates and reimbursable costs based on fixed rates in con- sultant contracts will be subject to adjustment whether budgetary funds are available or not. In addition the ten percent (10%) ceiling on price adjustment set in Section 6.9.3 of the Consultants' Guidelines and Clause 4.14 of the Proforma Agreement attached thereto will not apply under Bank-financed contracts; e. The retention money defined in Section 8.2 of the Consultants' Guidelines will not be withheld under Bank-financed contracts. Only the final payment may be withheld pending satisfactory completion of the contract services as is already provided for in Clause 4.12 of the Proforma Agreement attached to the Consultants' Guidelines; and f. An amended draft of the Proforma Agreement attached to the Consultants' Guidelines, satisfactory to the Bank, will be used for contracts financed by the Bank Loan. The Philippines understands that the Bank intends to rely on the representations and assurance contained herein for entering into the Loan Agreement and other agreements with the Philippines relating thereto. It agrees that, unless otherwise agreed to between the Philippines and the Bank, these representations and assurances will form an integral part of the Loan Agreement and any other agreements relating thereto between the Philippines and the Bank. Very truly yours, By _____________________ Authorized Representative