Letter Gatuslao

12 November 2018
HON. JUSTIN SILOS GATUSLAO

Sangguniang Panlungsod Member
Chairman of the Committee on Ways & Means
Himamaylan City, Negros Occidental
Dear Hon. Gatuslao:
This refers to your 4 November 2018 letter requesting for an answer on the
following questions in relation to the unsolicited proposal for Joint Venture
Agreement submitted by a Private Entity, to wit:
1. Were the consultations made with neighboring/other Local

Government Units were also offered unsolicited proposals? If so, what
were the findings?
2. Does the HWD Board have any plans to reach out other water
companies to ensure the best possible deal is reached?
3. Will the HWD Board entertain a Swiss Challenge? What are the
requirements to avail of such option?
On the first issue, HWD have made a thorough evaluation and assessment
on whether the unsolicited proposal submitted by a Private Proponent is
beneficial and advantageous not only to the HWD and its employees but also to
our concessionaires, as well.
Based on our evaluation of the proposals, we find it to meet the general

criteria in determining the technical feasibility, financial viability, and the
proponents’ capability and qualification in undertaking the project, thus, the
Proposal is found to be generally acceptable to the HWD and is advantageous to
the water consumers and concessionaires in the City of Himamaylan.
On the second issue, we reply it in the negative. Under the 2013 Revised
NEDA Guidelines and procedures for Entering into a Joint venture Agreements
between the Government and Private entities (2013 Revised NEDA Guidelines),
the first time in approach will apply. Meaning, the first who will submit an
unsolicited proposal will undergo the procedure under the above-mentioned
guidelines. If after detailed negotiations (Stage 2), the parties did not agree on the
Page 2
terms and conditions of the Joint Venture Agreement (JVA), that’s the time that
HWD will again accept any unsolicited proposals from other water utility
companies.
Relative to third issue, we reply it in the affirmative.
Negotiated Joint Venture are allowed under Annex B of the 2013 Revised
NEDA Guidelines. Any Government Entity may directly negotiate a JV activity
with a private sector entity under any of the following circumstances:
a. When a Government Entity receives a proposal from the private

sector for a project; or
b. When after a failed competitive selection as provided under Section

VIII.9 of Annex A hereof, the concerned Government Entity conducts
another competitive selection which again fails. In this case, the
concerned Government Entity may seek out a JV Partner and request
the latter to submit a proposal for the JV activity manifestly
advantageous to government, provided that negotiations must be
concluded within one (1) year from date of submission of bids for
which there was a second failure of competitive selection, and that
negotiation shall only be on the financial terms or aspect.
Negotiated JV shall be subjected to a three-stage process summarized as

follows:1
Stage One – Initial Evaluation of Proposals by Concerned

Government Entity which shall be completed within sixty (60) days upon
submission of complete documents by the private sector entity.
Stage Two – Conduct of Negotiation between Concerned

Government Entity and Private Sector Entity/ies, Conferment of
Original Proponent Status, and Evaluation by the Approving Authority
which shall be completed within thirty (30) calendar days upon
acceptance by the Government Entity concerned of the proposal as
provided in Stage One.
Stage Three – is the Competitive Challenge and Reimbursement

to the Original Proponent the Cost incurred from providing the JV
Proposal. The Head of Government entity, thru the Joint Venture
Selection Committee (JVSC) shall prepare and approve all tender
documents including the draft contract before the publication of the
1
Section III, Annex B of the 2013 Revised NEDA Guidelines.
Page 3
invitation to apply for eligibility and to submit a comparative proposal

(IAESP). The competitive challenge is completed within Two hundred
eight (208) calendar days.
Stage 3 is similar to a Swiss Challenge wherein other prospective private

proponents are given a chance to bid or challenge the proposal of the Original
Proponent.
Prior to publication of IAESP in the Newspaper of National Circulation,

HWD Bulletin Board and Website, the Government Entity concerned shall
submit a copy of the draft JV agreement, instructions to private sector
participants, and minimum designs, performance standards, specifications and
economic parameters to National Economic and Development Authority
(NEDA), Department of Finance (DOF) and GOCC Corporate Governance (GCG)
for their information.2
Before the execution of the JV Agreement, the Office of the Government

Corporate Counsel (OGCC), Department of Justice (DOJ), or other entity
prescribed by law/issuances as the statutory counsel of GOCCs, GCEs and
GICPs, shall issue the corresponding Counsel’s Opinion and Contract Review. 3
Lastly, the period within which to process the JV is provided under the
2013 Revised NEDA Guidelines. The Joint Venture Selection Committee (JVSC)
who are under obligation to conduct the JV process are compose of the
following:
1. Chairman, HWD employee who is at least a 3rd highest rank;

2. Member, HWD employee knowledgeable in finance;
3. Member, HWD employee knowledgeable in technical and operation;
4. Member, HWD employee knowledgeable in administration or
commercial;
5. Secretary/Legal, lawyer from HWD’s statutory legal counsel, the Office
of the Government Corporate Counsel (OGCC);
6. Provisional Member, from Local Water Utilities Administration
(LWUA);
7. Observers, from Commission on Audit (COA), Philippine Institute of
Certified Public Accountants (PICPA) and Philippine Institute of Civil
Engineers.
2
Section III, (1), Annex A of the 2013 Revised NEDA Guidelines.
3
Section VIII (11), 2013 Revised NEDA Guidelines.
Page 4
Considering the members of the JVSC who conducts the JV process are
coming from different government and private institutions, it is very clear that
the process is transparent and open to the public.
Hope we have sufficiently addressed your concerns.
Thank you and more power!
Engr. JOEL G. GELLECANAO

General Manager

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12 November 2018

HON. JUSTIN SILOS GATUSLAO

Dear Hon. Gatuslao:

1. Were the consultations made with neighboring/other Local

Based on our evaluation of the proposals, we find it to meet the general

Relative to third issue, we reply it in the affirmative.

a. When a Government Entity receives a proposal from the private

b. When after a failed competitive selection as provided under Section

Negotiated JV shall be subjected to a three-stage process summarized as

Stage One – Initial Evaluation of Proposals by Concerned

Stage Two – Conduct of Negotiation between Concerned

Stage Three – is the Competitive Challenge and Reimbursement

invitation to apply for eligibility and to submit a comparative proposal

Stage 3 is similar to a Swiss Challenge wherein other prospective private

Prior to publication of IAESP in the Newspaper of National Circulation,

Before the execution of the JV Agreement, the Office of the Government

1. Chairman, HWD employee who is at least a 3rd highest rank;

Hope we have sufficiently addressed your concerns.

Thank you and more power!

Engr. JOEL G. GELLECANAO

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