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Supplemental Agreement/Contract - not found

Post by migz on Wed Aug 10, 2011 12:03 am

Hi! gud evening...

Prior to RA9184, PD1594 is the law being followed for infra. If I remember it right, if variation orders reaches a cumulative total of 25% of the original contract price, it specifically stated that a Supplemental Agreement shall be issued. Thus, I think Supplemental Agreement is distinct from a variation order.

In RA9184, Variation Orders may be issued to a positive/additive cumulative amount not to exceed 10% of the original contract price. If beyond 10%, it shall be subject to another contract to be bid out if the works are separable from the original contract. A possibility of having another contractor. So, it is not an issuance of a supplemental agreement to the original contract.

If it is not separable and urgently necessary to complete the original scope of work, the HOPE may authorize VOs beyond 10%, to be done by the same contractor, but not more than 20% of the original contract price. But, an appropriate sanctions shall be imposed to the official responsible for the original detailed engineering design which failed to consider the VO beyond 10%.

Thus, IRR of RA9184 is strict on variation order. It really allows up to 10% only of the original contract price.

And, I had not found the word supplemental agreement or supplemental contract in the provisions of the IRR. Therefore, am I correct to say that this is not anymore allowed? or I may say no supplemental agreement shall be issued.
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Re: Supplemental Agreement/Contract - not found

Post by RDV @ GP3i on Thu Aug 11, 2011 3:20 pm

migz wrote:Hi! gud evening...

Prior to RA9184, PD1594 is the law being followed for infra. If I remember it right, if variation orders reaches a cumulative total of 25% of the original contract price, it specifically stated that a Supplemental Agreement shall be issued. Thus, I think Supplemental Agreement is distinct from a variation order.

In RA9184, Variation Orders may be issued to a positive/additive cumulative amount not to exceed 10% of the original contract price. If beyond 10%, it shall be subject to another contract to be bid out if the works are separable from the original contract. A possibility of having another contractor. So, it is not an issuance of a supplemental agreement to the original contract.

If it is not separable and urgently necessary to complete the original scope of work, the HOPE may authorize VOs beyond 10%, to be done by the same contractor, but not more than 20% of the original contract price. But, an appropriate sanctions shall be imposed to the official responsible for the original detailed engineering design which failed to consider the VO beyond 10%.

Thus, IRR of RA9184 is strict on variation order. It really allows up to 10% only of the original contract price.

And, I had not found the word supplemental agreement or supplemental contract in the provisions of the IRR. Therefore, am I correct to say that this is not anymore allowed? or I may say no supplemental agreement shall be issued.

I believe that, although the terms "supplemental agreement" or "supplemental contract" are not found in the IRR, it doesn't mean that is no longer allowed or could no longer be issued.

For Variation Order beyond 10% of the original contract cost, Annex E of the IRR provides that it shall be covered by a separate contract. That separate contract could be a supplemental contract. Also, it does not have to be a separate or different contractor, but the same contractor as the original contract. Among the alternative methods of procurement is Negotiated Procurement-Adjacent or Contiguous contract under Sec. 53.4 thereof, subject to compliance to the conditions provided therein.
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Re: Supplemental Agreement/Contract - not found

Post by migz on Sat Aug 13, 2011 1:07 am

Hi! gud evening... thank you for the reply sir...but forgive me I have a different understanding... with due respect to you sir, let me express this thought...

In the other way around, if Supplemental Agreement is still allowed then it should had been expressly stated in the IRR because it is a law.

There are 2 scenario in section 1.4 of Annex E:

1st - if the works are separable from the original contract. Section 1.4 provides that it shall be subject to another contract to be bid out. It is clearly stated that it is another contract which I think is distinct from the original contract, so, it cannot be a supplemental contract because in my understanding, supplemental contract is an add-on or addendum to the original contract. It is also clearly stated that it shall be bid out. It did not state to be negotiated. That's why I say, a possibility of having another contractor, since, it is to be bid out. I think per definition of variation order, it will not fall under Negotiated Procurement-Adjacent or Contiguous.

2nd-if the works are not separable. I say this because the works to be done here is urgently necessary to complete the original scope of work of the original contract, so, they are not separable, thus, it shall be done by the contractor of the original contract.

Either of the 2 scenario, there are people to be penalized. The section provides that an appropriate sanctions shall be imposed to the designer, consultant or official responsible for the original detailed engineering design which failed to consider the conditions that led to the adjustments costing more than 10% of the original contract price.

Do the HOPE really want to impose these sanctions to their personnel?

I think the intention of the law is to strengthen the planning stage, consider all factors in the detailed engineering so that variation orders beyond 10% will be avoided or I may say, there shall be no VOs beyond 10% so that no one will be charge with the appropriate sanctions.

The provision also state that this is subject to the guidelines to be determined by the GPPB, which I think there is none yet.
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Re: Supplemental Agreement/Contract - not found

Post by RDV @ GP3i on Sat Aug 13, 2011 9:07 am

migz wrote:Hi! gud evening... thank you for the reply sir...but forgive me I have a different understanding... with due respect to you sir, let me express this thought...

In the other way around, if Supplemental Agreement is still allowed then it should had been expressly stated in the IRR because it is a law.

There are 2 scenario in section 1.4 of Annex E:

1st - if the works are separable from the original contract. Section 1.4 provides that it shall be subject to another contract to be bid out. It is clearly stated that it is another contract which I think is distinct from the original contract, so, it cannot be a supplemental contract because in my understanding, supplemental contract is an add-on or addendum to the original contract. It is also clearly stated that it shall be bid out. It did not state to be negotiated. That's why I say, a possibility of having another contractor, since, it is to be bid out. I think per definition of variation order, it will not fall under Negotiated Procurement-Adjacent or Contiguous.

2nd-if the works are not separable. I say this because the works to be done here is urgently necessary to complete the original scope of work of the original contract, so, they are not separable, thus, it shall be done by the contractor of the original contract.

Either of the 2 scenario, there are people to be penalized. The section provides that an appropriate sanctions shall be imposed to the designer, consultant or official responsible for the original detailed engineering design which failed to consider the conditions that led to the adjustments costing more than 10% of the original contract price.

Do the HOPE really want to impose these sanctions to their personnel?

I think the intention of the law is to strengthen the planning stage, consider all factors in the detailed engineering so that variation orders beyond 10% will be avoided or I may say, there shall be no VOs beyond 10% so that no one will be charge with the appropriate sanctions.

The provision also state that this is subject to the guidelines to be determined by the GPPB, which I think there is none yet.

You don't have to ask forgiveness for disagreeing with my opinion. We are all free to express our thoughts here. Mine is just an opinion, anyway, but I based mine also on the same provisions that you have mentioned in your post.

Besides, I just responded to your statement: "And, I had not found the word supplemental agreement or supplemental contract in the provisions of the IRR. Therefore, am I correct to say that this is not anymore allowed? or I may say no supplemental agreement shall be issued."

Of course, my answer is based on the 2nd scenario that you correctly identified, where the works are not separable. And even if the works are separable, but is adjacent or contiguous to an ongoing contract, RA 9184 and its IRR allows hat it could be done (other than public bidding) by negotiated procurement even up to 100% of the original contract amount, provided the contract is adjacent or contiguous to the ongoing contract and the other conditions under Sec. 53.4 are complied with and provided further that the alternative method is recommended by the BAC and approved by the HOPE.

On the imposition of sanctions, I believe, it has been provided to discourage the previous practice of 'diving' in bid offers just to be awarded contracts, but during contract implementation the contractors are allowed to recover by way of variation orders. The IRR, however, has not identified the 'appropriate sanctions' which could be imposed. I believe, if the variation order is really well justified, it is up to the HOPE to impose or not any sanction, pending issuance by the GPPB of any guidelines it has determined fit to be issued.
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Re: Supplemental Agreement/Contract - not found

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