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Up what amount/percent is the Performance bond should be liable?

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Up what amount/percent is the Performance bond should be liable?

Post by PedroParkero on Fri Jul 20, 2012 8:07 am

Ask ko lang po, sa IRR ng RA 9184 may ganitong nakalagay

In no case however, shall the total sum of liquidated damages exceed ten percent (10%) of the total contract price, in which event the contract shall automatically be taken over by the procuring entity concerned or award the same to a qualified contractor through negotiation and the erring contractor's performance security shall be forfeited. The amount of the forfeited performance security shall be aside from the amount of the liquidated damages that the contractor shall pay the government under the provisions of this clause and impose other appropriate sanctions.

Kapag po halimbawa, 50% lang sa 1 million contract ang nagawa ng 1st contractor (subsequently nakompleto ng second contractor ang 1 mil contract ) at may PERFORMANCE BOND na 0.5M ang 1st contractor. Up to what amount po ba ipo-forfeit yung 0.5M na PERFORMANCE bond ng 1st contractor? Buong ) 1. buong 0.5M ba 2. O yung 1/2 lang ng 0.5M kasi may na "perform" naman daw yung first contractor?

thanks in advance,

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Re: Up what amount/percent is the Performance bond should be liable?

Post by engrjhez® on Fri Jul 20, 2012 12:01 pm

PedroParkero wrote:Ask ko lang po, sa IRR ng RA 9184 may ganitong nakalagay

In no case however, shall the total sum of liquidated damages exceed ten percent (10%) of the total contract price, in which event the contract shall automatically be taken over by the procuring entity concerned or award the same to a qualified contractor through negotiation and the erring contractor's performance security shall be forfeited. The amount of the forfeited performance security shall be aside from the amount of the liquidated damages that the contractor shall pay the government under the provisions of this clause and impose other appropriate sanctions.

Kapag po halimbawa, 50% lang sa 1 million contract ang nagawa ng 1st contractor (subsequently nakompleto ng second contractor ang 1 mil contract ) at may PERFORMANCE BOND na 0.5M ang 1st contractor. Up to what amount po ba ipo-forfeit yung 0.5M na PERFORMANCE bond ng 1st contractor? Buong ) 1. buong 0.5M ba 2. O yung 1/2 lang ng 0.5M kasi may na "perform" naman daw yung first contractor?

thanks in advance,



Performance security is posted in fixed amount (5% or 10% if cash, 30% if surety, based on contract amount). In any case of forfeiture, the whole amount of that security or bond is forfeited. The liquidated damages on the other hand, will be based on undelivered portion of the contract, but in no case shall reach 10% of the contract amount (otherwise, the contract should have been rescinded). Smile
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engrjhez®
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Re: Up what amount/percent is the Performance bond should be liable?

Post by PedroParkero on Fri Jul 20, 2012 12:44 pm

thanks engrjhez.

pardon my ignorance. Ano po ba kaya ang wisdom/ reason at whole amount ng security or bond is forfeited? thanks again

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Re: Up what amount/percent is the Performance bond should be liable?

Post by engrjhez® on Fri Jul 20, 2012 1:13 pm

PedroParkero wrote:thanks engrjhez.

pardon my ignorance. Ano po ba kaya ang wisdom/ reason at whole amount ng security or bond is forfeited? thanks again

The reason can be sought from Sec.39 of the IRR:

39.1. To guarantee the faithful performance by the winning bidder of its obligations under
the contract in accordance with the Bidding Documents, it shall post a performance
security prior to the signing of the contract.

However, there is an exception in (general rule of) forfeiture, as stipulated in Sec.39.7:

39.7. In case of a reduction in the contract value, or, in the case of procurement of
infrastructure projects, for partially completed works under the contract which are
usable and accepted by the GOP, and the use of which, in the judgment of the
implementing agency or the procuring entity, will not affect the structural integrity of
the entire project, the said agency or procuring entity shall allow a proportional
reduction in the original performance security, provided that any such reduction is
more than ten percent (10%) and that the aggregate of such reductions is not more
than fifty percent (50%) of the original Performance Security.

Which may be applied in your case if it is an infra project with the aforesaid conditions are satisfied. Smile
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