Joint Venture participation of 1st Party and 2nd Party

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Joint Venture participation of 1st Party and 2nd Party

Post by Principal on Mon Aug 04, 2014 5:00 pm

Greetings sirs/mams. Here are the circumstances in one of our bidding:

We had complied with the advertising and posting requirements for our Repair Project with an ABC of P11,505,775.50.

Juan, a bidder, submitted his bid for the project.

He used his previous completed project: “XYZ Project” , which is also a repair project, to comply with the requirement under Sec. 23.5.1.3 of the Revised IRR of R.A. 9184 (requirement for a single contract that is similar in nature to the contract to be bid whose value x x x must be at least 50% of the ABC).

We have noted that the XYZ Project has a value of P9,337,936 and that Juan entered into a Joint Venture Agreement (JVA) with Pedro. In their JVA, Juan’s participation is 49% while Pedro’s participation is 51%.

We are satisfied that the XYZ Project’s value is more than the 50% requirement of the revised IRR. However, we are in quandary because Juan’s participation therein is 49%.

Given the situation, is Juan eligible to bid for the project?

Any enlightenment on the matter will be highly appreciated. Thanks  Smile 

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Re: Joint Venture participation of 1st Party and 2nd Party

Post by regina avelino on Wed Aug 06, 2014 10:49 am

there is no problem with the joint venture of juan and pedro if both are filipino owned. if juan is a bidder which owns 49% and pedro owns an interest in the joint venture with 51% which if foreign, then it is a violation of the rule under section 23.5.1.1e .

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Re: Joint Venture participation of 1st Party and 2nd Party

Post by Principal on Thu Aug 07, 2014 11:20 am

Thanks Ms. Regina.

Follow-up questions:

Both Juan and Pedro are Filipinos.

Please take note that the participation/role of Juan in the JVA is 49%. Will it have an adverse effect on the following:

a. Value of XYZ Project to be considered.
b. Experience of Juan in the XYZ Project.

Do the value and the experience of Juan in the XYZ Project be reduced and considered up to 49% only, since the same is Juan's role/participation in the JVA for the said Project.

To make it more clearer. Dahil ba n 49% ang role ni Juan sa JVA for XYZ project (project of same categories indicated in the new bidding) ang amount ba na iko-consider ng BAC sa evaluation ay 49% din lamang ng P9,337,936?

Ang Quantity of Similar categories of work ba ni Juan (in XYZ Project) n iko-consider ng BAC sa evaluation ay 49% din lamang ng actual work accomplished?

Thanks.

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Re: Joint Venture participation of 1st Party and 2nd Party

Post by regina avelino on Fri Aug 22, 2014 5:45 pm

The provision of the law states that each partner of the joint venture shall submit the legal eligibility documents. The submission of technical and financial eligibility documents by ANY of the joint venture partners constitutes compliance. For as any one of the member can comply with the experience requirement of the procuring entity then the joint venture is eligible to bid. That is the purpose of the joint venture, for other who have not or limited experience to join with someone with the experience sufficient with the requirement.

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Re: Joint Venture participation of 1st Party and 2nd Party

Post by engrjhez® on Fri Aug 22, 2014 10:03 pm

Principal wrote:xxx
Do the value and the experience of Juan in the XYZ Project be reduced and considered up to 49% only, since the same is Juan's role/participation in the JVA for the said Project.

To make it more clearer. Dahil ba n 49% ang role ni Juan sa JVA for XYZ project (project of same categories indicated in the new bidding) ang amount ba na iko-consider ng BAC sa evaluation ay 49% din lamang ng  P9,337,936?

Ang Quantity of Similar categories of work ba ni Juan (in XYZ Project) n iko-consider ng BAC sa evaluation ay 49% din lamang ng actual work accomplished?

Thanks.

I would suggest applying these basic rules:

1. Each of the partner in JV must submit all of the eligibility documents required. For infra projects, the JV must obtain a special PCAB license (see GPPB NPM 017-2013, March 27, 2013);

2. By submitting the documents, compliance of one of the partner is deemed compliance of the JV (See GPPB NPM 024-2012, February 24, 2012);

3. Rules on Filipino ownership (at least 75%) applies, without prejudice to the application Sec.23.5.2.1(e) of the IRR.

As to how partners would like to divide their participation is not anymore the concern of BAC, being immaterial to the eligibility of the JV. The idea of computing the "proportional experience" has no basis in the rules, and therefore must not be applied.
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