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Non-Payment of 10% Retention Fee

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Non-Payment of 10% Retention Fee

Post by demiboy on Wed Mar 10, 2010 7:00 am

I would like to seek legal advice from your good Office regarding my problem. I was a member - adhoc of BAC in principal-led project of DepEd. We signed the acceptance for the early release of retention but upon my verification I found out and informed everyone thru writings that the project was not in accordance with the plans and specifications with less than 10% deficiency. With this finding, may I know if we are still in possession not to release the 10% retention money to the constructor. In a worst scenario that might lead to court trial, what will be my liabilities. May I know also what will be the best thing I can do related to this matter. Thank you and god speed.
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Re: Non-Payment of 10% Retention Fee

Post by RDV @ GP3i on Wed Mar 10, 2010 8:28 am

marvilsim wrote:I would like to seek legal advice from your good Office regarding my problem. I was a member - adhoc of BAC in principal-led project of DepEd. We signed the acceptance for the early release of retention but upon my verification I found out and informed everyone thru writings that the project was not in accordance with the plans and specifications with less than 10% deficiency. With this finding, may I know if we are still in possession not to release the 10% retention money to the constructor. In a worst scenario that might lead to court trial, what will be my liabilities. May I know also what will be the best thing I can do related to this matter. Thank you and god speed.

From the information you gave, there was already the issuance of Certificate of Acceptance, and necessarily the retention money should already be released. Your info, however, raised some questions that need to be clarified first.

1. Why did you accept if the project was not in accordance with the plans and specifications?
2. What do you mean by "less than 10% deficiency"?
3. Is the retention money still in possession of the school and not yet returned to the supplier?

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Non-Payment of 10% Retention Fee

Post by demiboy on Wed Mar 10, 2010 9:42 am

The deficiency which is less than 10% pertains to undersized constructed structure that deviate with the original plans. The 10% retention money in terms of performance bond (Bank guarantee) was still in the possession of the BAC. Likewise, no retention fee was also released to the constructor.

I admit that there was a neglect on my part by signing the acceptance due to my believe and trust to the implementor and not examined thoroughly the structure and specifications of the whole project. At this point, may I seek your advice and your help of what to do in this matter.

Thank you again.
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Re: Non-Payment of 10% Retention Fee

Post by charlie brown on Wed Mar 10, 2010 1:30 pm

marvilsim wrote:The deficiency which is less than 10% pertains to undersized constructed structure that deviate with the original plans. The 10% retention money in terms of performance bond (Bank guarantee) was still in the possession of the BAC. Likewise, no retention fee was also released to the constructor.

I admit that there was a neglect on my part by signing the acceptance due to my believe and trust to the implementor and not examined thoroughly the structure and specifications of the whole project. At this point, may I seek your advice and your help of what to do in this matter.

Thank you again.

Hi marvilism. If i may butt in. Just so we put things in perspective, the retention money which is retained for every progress billing is different from the performance security that the LCRB will post as a requirement in the signing of the contract. Although both are released after the final acceptance which could happen not later than the one-year defects liability period. You mentioned a performance bond as retention money so im a bit confused. it would be good to note the distinction. section 39.5 of the revised IRR identified instances when the performance security maybe released after the issuance of the certificate of acceptance. your case will fall under item a) as you obviously has a claim against the the contract awardee. Kindly check the validity period of the bank guarantee stated in the document. if still valid you may claim reimbursement for repair works charged to the bank guarantee. It could a bit different with the retention money since section 6.2 of annex E of the revised IRR does not mention the same conditions stated in 39.5 of the IRR. thus it might well be that you can no longer calim from the retention money once you have already sighed the certificate of acceptance.

If all these fails it would seem to me that you can still invoke the warranty security under section 62 as the circumstances can be that described under 62.2.3.1.a) of the IRR. Hoping i have been of help
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Re: Non-Payment of 10% Retention Fee

Post by Niwram on Wed Mar 10, 2010 2:41 pm

marvilsim wrote:I would like to seek legal advice from your good Office regarding my problem. I was a member - adhoc of BAC in principal-led project of DepEd. We signed the acceptance for the early release of retention but upon my verification I found out and informed everyone thru writings that the project was not in accordance with the plans and specifications with less than 10% deficiency. With this finding, may I know if we are still in possession not to release the 10% retention money to the constructor. In a worst scenario that might lead to court trial, what will be my liabilities. May I know also what will be the best thing I can do related to this matter. Thank you and god speed.

The law require only the posting of a performance bond and not withhold a retention fee
anymore. If it will lead to regular court, you may be Administratively liable for not following the law. And if the contract has not yet awarded you can declare failure of bidding under Section 41 (b).
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Re: Non-Payment of 10% Retention Fee

Post by charlie brown on Wed Mar 10, 2010 3:33 pm

Niwram wrote:
marvilsim wrote:I would like to seek legal advice from your good Office regarding my problem. I was a member - adhoc of BAC in principal-led project of DepEd. We signed the acceptance for the early release of retention but upon my verification I found out and informed everyone thru writings that the project was not in accordance with the plans and specifications with less than 10% deficiency. With this finding, may I know if we are still in possession not to release the 10% retention money to the constructor. In a worst scenario that might lead to court trial, what will be my liabilities. May I know also what will be the best thing I can do related to this matter. Thank you and god speed.

The law require only the posting of a performance bond and not withhold a retention fee
anymore. If it will lead to regular court, you may be Administratively liable for not following the law. And if the contract has not yet awarded you can declare failure of bidding under Section 41 (b).

From what i know there is no such thing as a performance bond - only a performance security which comes in different forms to include a bank guarantee. As to retention, this is covered under 6.2 of the contract implementation guidelines for infra (annex E of the revised IRR). under 6.2 the contractor may request for a substitution of the retention money with a bank guarantee among other forms.

As to the signing of the certificate of acceptance in good faith, it may not necessarily mean administrative liability. I assume it was in good faith as there was probably no way for the inspectors to know that the materials used were of inferior quality - unless these same inspectors also did the construction supervision (im not sure if its allowed) or has received a report of such findings. besides section 39.5 is clear that the PE may withhold the rease of the Performance Security - even after the issuance of the Certificate of Acceptance if it has pening claims files against the contract awardee. this is perhaps the reason why there is a defects liability period of one year from project completion since not all defects can be detected right away.
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Re: Non-Payment of 10% Retention Fee

Post by Niwram on Wed Mar 10, 2010 3:51 pm

ok, you are correct that there no such term in the IRR. However in practice what was required is performance security and to comply with the requirement the bidder will issue a performance bond. performance security is the requirements wherein performance bond is the form.
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Re: Non-Payment of 10% Retention Fee

Post by charlie brown on Thu Mar 11, 2010 1:31 pm

Niwram wrote:ok, you are correct that there no such term in the IRR. However in practice what was required is performance security and to comply with the requirement the bidder will issue a performance bond. performance security is the requirements wherein performance bond is the form.

wala rin kasing performance bond eh. Sa section 39 there is a table of the forms of performance security. meron doon surity bond - di kaya iyon?
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Re: Non-Payment of 10% Retention Fee

Post by Niwram on Thu Mar 11, 2010 1:49 pm

Opo tama po un those are the forms of performance bond. sa handbook po kasi Appendix 6 nabanggit ang performance bond.. With that I rest my case.
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Re: Non-Payment of 10% Retention Fee

Post by charlie brown on Thu Mar 11, 2010 7:48 pm

Niwram wrote:Opo tama po un those are the forms of performance bond. sa handbook po kasi Appendix 6 nabanggit ang performance bond.. With that I rest my case.

Actually marami gumagamit nyan by habit yata like ang bid security tinatawag na bid bond dahil iyon na daw nakasanayan.
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Re: Non-Payment of 10% Retention Fee

Post by jcolas on Thu Mar 11, 2010 9:05 pm

]Marvilism wrote
I would like to seek legal advice from your good Office regarding my problem. I was a member - adhoc of BAC in principal-led project of DepEd. We signed the acceptance for the early release of retention but upon my verification I found out and informed everyone thru writings that the project was not in accordance with the plans and specifications with less than 10% deficiency. With this finding, may I know if we are still in possession not to release the 10% retention money to the constructor. In a worst scenario that might lead to court trial, what will be my liabilities. May I know also what will be the best thing I can do related to this matter. Thank you and god speed.

Hello Marvilism:
It is good to hear one from DepEd, but may I be clarified of the following:

1. Did you sign the Certificate of Acceptance as a member of the BAC/ BAC Vice Chair? Remember that under the Principal-Led School Building Program it is only the Principal/School Head who is authorize to sign the Cert. of Acceptance. In no way is the BAC allowed to dip its finger in the implementation of the project; inspection, acceptance, as this is the responsibility of the HOPE; in your case, the Principal.

2. If you really signed the Cert. of Acceptance, did you not require forthe following documents?
a) Punchlist of Corrective Works/Inspection Report which should have
been signed by the Division Office Representative and the DepEd
Project engineer, and jointly inspected and signed by the Contrac-
tors representaive and the Principal?
b) Certificate of Completion that is jointly signed by the Project Engineer
PTCA President, the Principal, the Division Office Representative and
the PFSED Representative.
c) Certificate of Post-Technical Inspection which is signed by the Principal
and the Schools Division Superintendent.

These are the Documents that should have been required by you before the Certificate of Acceptance is signed. You please refer to the Operations Manual which was issued by the Central Office.
You mentioned also in your secondposting that the retention money was not released, so final payment has not been made. If that is the case, you talk with the HOPE and inform him/her that the Cert. that you have signed is void and that it should not be honored by the Accounting Office. Inform also the contractor through the Principal in writing of the punch listed items and require him to immediately effect corrective measures. As to your fear of any liability, sleep peacefully, as I hope, payment has not been made yet.
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Re: Non-Payment of 10% Retention Fee

Post by sunriser431 on Thu Mar 11, 2010 9:16 pm

marvilsim wrote:I would like to seek legal advice from your good Office regarding my problem. I was a member - adhoc of BAC in principal-led project of DepEd. We signed the acceptance for the early release of retention but upon my verification I found out and informed everyone thru writings that the project was not in accordance with the plans and specifications with less than 10% deficiency. With this finding, may I know if we are still in possession not to release the 10% retention money to the constructor. In a worst scenario that might lead to court trial, what will be my liabilities. May I know also what will be the best thing I can do related to this matter. Thank you and god speed.

From the very limited information you have provided, the following observation I have noted
1. The function of the BAC was clearly defined in section 12.1 of the revised IRR, furthermore the BAC in my opinion is not in the position to issue/signed the Certificate of final acceptance for the project.
2. The work of the BAC will end, if the HOPE will approved of their (BAC) recommendation.
3. The release of the retention can only be made if there is a Certificate of Final acceptance issued by the PE. Excerpts from the GCC section 44 of the PBDs for infra. This can be your agency guidance.
Once the project reaches an accomplishment of ninety five (95%) of the total contract amount, the Procuring Entity may create an inspectorate team to make preliminary inspection and submit a punch-list to the Contractor in preparation for the final turnover of the project. Said punch-list will contain, among others, the remaining Works, Work deficiencies for necessary corrections, and the specific duration/time to fully complete the project considering the approved remaining contract time. This, however, shall not preclude the claim of the Procuring Entity for liquidated damages
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Re: Non-Payment of 10% Retention Fee

Post by Niwram on Fri Mar 12, 2010 11:36 am

charlie brown wrote:
Niwram wrote:Opo tama po un those are the forms of performance bond. sa handbook po kasi Appendix 6 nabanggit ang performance bond.. With that I rest my case.

Actually marami gumagamit nyan by habit yata like ang bid security tinatawag na bid bond dahil iyon na daw nakasanayan.

malamang ganun na nga po ang nangyayari.. Very Happy
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Re: Non-Payment of 10% Retention Fee

Post by charlie brown on Fri Mar 12, 2010 2:40 pm

sunriser431 wrote:
marvilsim wrote:I would like to seek legal advice from your good Office regarding my problem. I was a member - adhoc of BAC in principal-led project of DepEd. We signed the acceptance for the early release of retention but upon my verification I found out and informed everyone thru writings that the project was not in accordance with the plans and specifications with less than 10% deficiency. With this finding, may I know if we are still in possession not to release the 10% retention money to the constructor. In a worst scenario that might lead to court trial, what will be my liabilities. May I know also what will be the best thing I can do related to this matter. Thank you and god speed.

From the very limited information you have provided, the following observation I have noted
1. The function of the BAC was clearly defined in section 12.1 of the revised IRR, furthermore the BAC in my opinion is not in the position to issue/signed the Certificate of final acceptance for the project.
2. The work of the BAC will end, if the HOPE will approved of their (BAC) recommendation.
3. The release of the retention can only be made if there is a Certificate of Final acceptance issued by the PE. Excerpts from the GCC section 44 of the PBDs for infra. This can be your agency guidance.
Once the project reaches an accomplishment of ninety five (95%) of the total contract amount, the Procuring Entity may create an inspectorate team to make preliminary inspection and submit a punch-list to the Contractor in preparation for the final turnover of the project. Said punch-list will contain, among others, the remaining Works, Work deficiencies for necessary corrections, and the specific duration/time to fully complete the project considering the approved remaining contract time. This, however, shall not preclude the claim of the Procuring Entity for liquidated damages

My understanding of GCC 44 is that liquidated damages may only be claimed when after the project has reached 95%, the total remaining time duration to finally complete the project goes beyond the contract period. thus the 1/10 of 1% for every day of delay in completing the unperformed portion. In the case as presented kasi natapos yong project, accepted pa nga kaya wala ng LD. the options available as i understand it are:

1. The performance security - which covers the defects liability period (up to 1 year from completion to acceptance (62.2.2/62.2.2.2) and maybe released after signing the Acceptance but subject to claims made if there are any (39.5 of the IRR). defects liability pertains to the damage to the infrastructure on account of use of inferior materials.
2. tHE wARRANTY - which remains effective for one year from the defects liability period/final acceptance (62.2.3.4). The warranty covers for structural defects defined as major faults/flaws/deficiencies in one or more key structural elements which may lead to structural failure...or structural failures.
3. the retention money- is for uncorrected discoverd defects and third party liabilities under section 6.2 of Annex E Contract Implementation Guidelines for Infra which is due for release upon final acceptance.

There is not enough information to be certain which one is being referred to since all of these can be subtituted by a bank guarantee, surety bond, CLC etc. Hence i mentioned previously that it is important to note what is in the possession of the PE as these monies serves different purposes and it would be wise and prudent - knowing that it has already made some tactical errors - to know how to approach and resolve the issue of correcting the defects/problems that just came to thier knowledge.
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Re: Non-Payment of 10% Retention Fee

Post by sunriser431 on Fri Mar 12, 2010 11:17 pm

additional information, excerpt from the revised IRR which is self explanatory bounce
8.5. 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
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Re: Non-Payment of 10% Retention Fee

Post by RDV @ GP3i on Fri Mar 12, 2010 11:50 pm

marvilsim wrote:The deficiency which is less than 10% pertains to undersized constructed structure that deviate with the original plans. The 10% retention money in terms of performance bond (Bank guarantee) was still in the possession of the BAC. Likewise, no retention fee was also released to the constructor.

I admit that there was a neglect on my part by signing the acceptance due to my believe and trust to the implementor and not examined thoroughly the structure and specifications of the whole project. At this point, may I seek your advice and your help of what to do in this matter.

Thank you again.

As jcolas pointed out, you have your internal guidelines for principal-led project, which you are supposed to follow. If it was not followed, be prepared to explain the reason/s why. Administratively, you could be held responsible. Being noteworthy is you accepting the project when you are the BAC Chair/Vice-Chair/member. There is evidently conflict of interest there.

You mentioned that 10% retention money in the form of bank guarantee. Although you mentioned that no retention money was released to the constructor, I would, however, assume that the release of the retention money was requested by the constructor prior to the issuance of Certificate of Acceptance and it was actually released but replaced by the bank guarantee. And now that the CA was already issued, the release of the bank guarantee is now being requested, is that correct?

But why is the BAC in possession of the bank guarantee, when it is past the BAC's responsibility? BAC, it seems, is threading on dangerous grounds that exposes itself to too much responsibility and accountability.

Instead of giving advice as you requested, I could not help but ask questions first because I need to fill in some gaps in the info given.

RDV @ GPPPI


Last edited by RDV @ GPPPI on Sat Mar 13, 2010 8:37 am; edited 1 time in total
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Re: Non-Payment of 10% Retention Fee

Post by sunriser431 on Sat Mar 13, 2010 12:04 am

RDV @ GPPPI wrote:
marvilsim wrote:The deficiency which is less than 10% pertains to undersized constructed structure that deviate with the original plans. The 10% retention money in terms of performance bond (Bank guarantee) was still in the possession of the BAC. Likewise, no retention fee was also released to the constructor.

I admit that there was a neglect on my part by signing the acceptance due to my believe and trust to the implementor and not examined thoroughly the structure and specifications of the whole project. At this point, may I seek your advice and your help of what to do in this matter.

Thank you again.

As jcolas pointed out, who have your internal guidelines for principal-led project, which you are supposed to follow. If it was not followed, be prepared to explain the reason/s why. Administratively, you could be held responsible. Being noteworthy is you accepting the project when you are the BAC Chair/Vice-Chair/member. There is evidently conflict of interest there.

You mentioned that 10% retention money in the form of bank guarantee. Although you mentioned that no retention money was released to the constructor, I would, however, assume that the release of the retention money was requested by the constructor prior to the issuance of Certificate of Acceptance and it was actually released but replaced by the bank guarantee. And now that the CA was already issued, the release of the bank guarantee is now being requested, is that correct?

But why is the BAC in possession of the bank guarantee, when it is past the BAC's responsibility? BAC, it seems, is threading on dangerous grounds that exposes itself to too much responsibility and accountability.

Instead of giving advice as you requested, I could not help but ask questions first because I need to fill in some gaps in the info given.

RDV @ GPPPI
In reference to the undeline bold text, it really pays to know the procurement law, thats why in case of doubt write letter to the GPPB, and seek clarification or opinion and they would be of help as always. bounce Peace
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Re: Non-Payment of 10% Retention Fee

Post by RDV @ GP3i on Sat Mar 13, 2010 8:37 am

sunriser431 wrote:
RDV @ GPPPI wrote:
marvilsim wrote:The deficiency which is less than 10% pertains to undersized constructed structure that deviate with the original plans. The 10% retention money in terms of performance bond (Bank guarantee) was still in the possession of the BAC. Likewise, no retention fee was also released to the constructor.

I admit that there was a neglect on my part by signing the acceptance due to my believe and trust to the implementor and not examined thoroughly the structure and specifications of the whole project. At this point, may I seek your advice and your help of what to do in this matter.

Thank you again.

As jcolas pointed out, you have your internal guidelines for principal-led project, which you are supposed to follow. If it was not followed, be prepared to explain the reason/s why. Administratively, you could be held responsible. Being noteworthy is you accepting the project when you are the BAC Chair/Vice-Chair/member. There is evidently conflict of interest there.

You mentioned that 10% retention money in the form of bank guarantee. Although you mentioned that no retention money was released to the constructor, I would, however, assume that the release of the retention money was requested by the constructor prior to the issuance of Certificate of Acceptance and it was actually released but replaced by the bank guarantee. And now that the CA was already issued, the release of the bank guarantee is now being requested, is that correct?

But why is the BAC in possession of the bank guarantee, when it is past the BAC's responsibility? BAC, it seems, is threading on dangerous grounds that exposes itself to too much responsibility and accountability.

Instead of giving advice as you requested, I could not help but ask questions first because I need to fill in some gaps in the info given.

RDV @ GPPPI
In reference to the undeline bold text, it really pays to know the procurement law, thats why in case of doubt write letter to the GPPB, and seek clarification or opinion and they would be of help as always. bounce Peace
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Re: Non-Payment of 10% Retention Fee

Post by jcolas on Sat Mar 13, 2010 7:41 pm

Sir RDV and Sunriser
I agree with you that their BAC is treading on dangerous grounds for the following observations:
1. They are holding on to the Bank guarantee, and;
2. a BAC member signed the Certificate of Acceptance; responsibilities that are the mandate of the Head of the Procuring Entity. To marvilism, what you should do as you can not feign ignorance of the law, is to try to undo what you have done, and to read and read the provisions of the GPRA or to ask guidance from the PFSED headed by Engineer Oliver or from the Procurement service of our central office or lay down the facts to the GPPB forum and let the members try to help you. Learning starts the minute when you accept ignorance, Please remember that.
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Re: Non-Payment of 10% Retention Fee

Post by demiboy on Sun Mar 14, 2010 10:52 am

I was the co-chair of BAC and at the same time as a Physical Facilities Coordinator (PFC). I was the representative of the Division Office and as PFC I am automatically member of the Principal-led project. You are right that after Certificate of Acceptance the constructor requested the early release of 10% retention money and replaced it by a performance bond in the form of bank guarantee. The BAC was not actually involved here but rather the construction committee of the said school wherein not only the PFC but also the DepEd Engineer were involved.

Please be informed also that no retention fee in any form was released to the constructor up to this time. I am doing my best at this time to correct everything but I don't know where it will lead to when the constructor will stand/fight with the Certificate of Acceptance he had.

With the suggestion of one respondent that we may void the CA, I still don't know if this really works. What I am doing now is inform the constructor and correct the deficiency.

Thanks for your help and God bless you all.
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Re: Non-Payment of 10% Retention Fee

Post by RDV @ GP3i on Sun Mar 14, 2010 3:10 pm

marvilsim wrote:I was the co-chair of BAC and at the same time as a Physical Facilities Coordinator (PFC). I was the representative of the Division Office and as PFC I am automatically member of the Principal-led project. You are right that after Certificate of Acceptance the constructor requested the early release of 10% retention money and replaced it by a performance bond in the form of bank guarantee. The BAC was not actually involved here but rather the construction committee of the said school wherein not only the PFC but also the DepEd Engineer were involved.

Please be informed also that no retention fee in any form was released to the constructor up to this time. I am doing my best at this time to correct everything but I don't know where it will lead to when the constructor will stand/fight with the Certificate of Acceptance he had.

With the suggestion of one respondent that we may void the CA, I still don't know if this really works. What I am doing now is inform the constructor and correct the deficiency.

Thanks for your help and God bless you all.

I am again confused. You said that "after the CA was issued, the constructor requested for the early release of 10% retention money and replaced it by a performance bond in the form of bank guarantee."

First, the retention money is already due for release upon final acceptance of the works. Final acceptance is one (1) year after completion. The one year represents the defects liability period. Since it was already due for release, there is no reason for the replacement of the released retention money by a bank guarantee. So, why the replacement of the retention money by a bank guarantee.

Second, you seem to be confused with the terminologies. You mentioned that the retention money was replaced by a "performance bond." That term is not used in the IRR, but is it the same as "performance security"? The performance security may be in the form of a surety bond or bank guarantee, among other forms, but it is for a different purpose than the retention money. And the performance security is posted upon contract signing.

Third, if the replacement of the released retention money was a bank guarantee, it should be valid for a certain period only. If it has already lapsed, you can no longer run after the bank guarantee.

Fourth, you did not mention about the posting of a warranty security. After the issuance of the CA, the constructor should have posted a warranty security. Did you require him to post such a security? If not, why not? If yes, you can still run after that warranty security if it is still valid.

I hope in the process of correcting your actions, you take into consideration the above-mentioned observations also.

RDV @ GPPPI
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Non-Payment of 10% Retention Fee

Post by demiboy on Mon Mar 15, 2010 1:52 pm

The contractor issued unconditional bank guarantee to the Division Office in order to process the request for early release of retention and replacement of the same which is also valid for 365 days after issuance of certificate of completion. As we know, the 10% retention fee is being release after one year right after the Certificate of Acceptance. The practice here in our Division and I don’t know if this is valid wherein the constructor may issue unconditional bank guarantee after issuance of certificate of completion with same amount of the retention fee and condition that will cover the Defects Liability Period and used this to collect the 10% retention money in advance. They have the retention money in advance and replaced it with performance security valid for one year. I hope this may not lead you to confusion.

This is the reason why we signed earlier the Certificate of Acceptance and now they are using it against us. Just to follow-up again based on the recommendation of one of the previous poster that we may void the Certificate of Acceptance, is this really works.

Thank you
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Re: Non-Payment of 10% Retention Fee

Post by charlie brown on Mon Mar 15, 2010 7:27 pm

marvilsim wrote:The contractor issued unconditional bank guarantee to the Division Office in order to process the request for early release of retention and replacement of the same which is also valid for 365 days after issuance of certificate of completion. As we know, the 10% retention fee is being release after one year right after the Certificate of Acceptance. The practice here in our Division and I don’t know if this is valid wherein the constructor may issue unconditional bank guarantee after issuance of certificate of completion with same amount of the retention fee and condition that will cover the Defects Liability Period and used this to collect the 10% retention money in advance. They have the retention money in advance and replaced it with performance security valid for one year. I hope this may not lead you to confusion.

This is the reason why we signed earlier the Certificate of Acceptance and now they are using it against us. Just to follow-up again based on the recommendation of one of the previous poster that we may void the Certificate of Acceptance, is this really works.

Thank you

Hi marvilism,

Im sorry to say but i think you are really confusing everything... the performance Security, the Warranty Security and the Retention Money are three 3 different things required under different stages of the bidding process with the rentntion actually effected during the project implementation stage. The retention money maybe substituted by irrevocable standby LC, a bank guarantee or a surety bond BUT NOT by a performance bond.

The performance security is required prior to the signing of the contract. The performance secutity covers the defects liability period. the defects liability pertains to damage to the infra projects due to the use of materials of inferior quality.

There is also a warranty security that covers one year after the lapse of the defects liability period, this time to cover for structural defects and failures.

the finally there is the retention during contract implementation to cover uncorrected discovered defects and third party liabilities.

If the CA has already been issued and there is now a claim against the performance security, this performance security may be called to correct the damage due to the use of inferior quality materials. at ito ay during the defects liability period that you also mentioed.

Kaya lang sabi mo retention ang pinag uusapan. Which makes it so confusing Sad

anyway, I said earlier mas madali sigure mag claim sa performance security kasi parang mas angkop doon sa description mo of the problem (use of inferior quality materials) pero kung retention nga ang source mo na pinalitan ng bank guarantee sabi ko baka mas mahirap kasi sabi doon sa 6.2 of Annex E the total "retention money" shall be due for release upon final acceptance of the works. Wala kasing qualifier unlike in the performance security. Kindly check/verify if you really mean the retention money or you are talking about the performance security. halos pareho lang kasi ang forms na pwede gamitin ny bidders doon eh.

If its really retention money, tingnan mo rin ano nakalagay sa bank guarantee. Kung valid pa why dont you try to call it since unconditional naman yon.
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Re: Non-Payment of 10% Retention Fee

Post by demiboy on Tue Mar 16, 2010 11:08 am

It was the retention fee. THis is the content of the bank guarantee " In accordance with the provisions of the conditions of Contract, Article D.5.ii Release of Retention Money of the above-cited contractor shall deposit with the DepED represented by the Divisio Office a Bank Guarantee to guarantee workmanship and compliance to the requirements of plans and specifications under the said Clause of the COntract in an amount of _______________.

WE the BDO, as instructed by the Contractor, agree unconditionally and irrevocably to guarantee as primary obligator and not as surety mererly.......

This guarantee shall remain valid and in full effect from the date of the release of retention under the contract until the DepEd ... issues a Certificate of Acceptance 365 days after issuance of Certificate of COmpletion".

Please take note retention money was not also release til this time.

Thanks
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Re: Non-Payment of 10% Retention Fee

Post by RDV @ GP3i on Sun Mar 21, 2010 10:25 am

marvilsim wrote:It was the retention fee. THis is the content of the bank guarantee " In accordance with the provisions of the conditions of Contract, Article D.5.ii Release of Retention Money of the above-cited contractor shall deposit with the DepED represented by the Divisio Office a Bank Guarantee to guarantee workmanship and compliance to the requirements of plans and specifications under the said Clause of the COntract in an amount of _______________.

WE the BDO, as instructed by the Contractor, agree unconditionally and irrevocably to guarantee as primary obligator and not as surety mererly.......

This guarantee shall remain valid and in full effect from the date of the release of retention under the contract until the DepEd ... issues a Certificate of Acceptance 365 days after issuance of Certificate of COmpletion".

Please take note retention money was not also release til this time.

Thanks

You confused everybody else because all the while you were mentioning the release of the retention money after the issuance of the Certificate of Acceptance (CA), when all the while you were referring to the Certificate of Completion.
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