Build-Lease-Transfer Agreement

PPP for School Infrastructure Project

14 May 2012
Milestones
Section Activity Responsibilit Deadline
y

6.2.c Appointment of the IC DepED Within 60 days from the

Execution Date
7.2.a Financial Closure Proponent Not later than 30 days from
Execution Date
8.0.a Providing access to the Project DepED Within 15 days from the
Sites Execution Date
12.4.a Issuance of Notice to Proceed DepED 1 day after receipt by the
DepED of the Certified DED
issued by the IC
12.10.a Construction Works, with IC Proponent All Sub-Projects must be
certification that requirements completed within 12 months
for issuance of all Certificates from Execution Date
of Completion have been met
Milestones
Section Activity Responsibilit Deadline
y

12.10.c Issuance of Certificate of DepED No later than the last day of the
12.10.d Completion per Sub-Project month following the month
12.10.f when the Sub-Project passed
the Punch List Inspection or
Rectification Inspection, as the
case may be
14.1 Lease of Completed Sub- DepED (as Starts upon issuance of the
Project from the Proponent Lessee) and relevant Certificate of
Proponent (as Completion and shall terminate
Lessor) 10 years from such date.
15.0 Payments to Proponent DepED In accordance with Section 15.0

17.0 Automatic Transfer of Proponent At the end of the relevant Lease

Ownership of Completed Period
Assets to DepED
Section 6.0 Independent Consultant
 The Independent Consultant must be appointed (i.e.,
the IC Contract must be executed) within 60 days from
Execution Date.

 DepEd may initiate the process for soliciting possible IC

candidates even prior to the Execution Date. The
DepEd is required, however, to give the Proponent the
short-list of candidates, and the Proponent may object
to any of the candidates in the short list.
Section 8.0 Project Sites
 The DepEd is required to provide access to the Project
Sites within 15 days from Execution Date. “Providing
Access” means the Proponent is allowed to possess and
occupy for purposes of commencing construction.

 If DepEd fails to provide access for a Project Site, it has

the option to propose a substitute site, with
substantially the same conditions. The Proponent has
the option to accept or reject the substitute site. If the
Proponent rejects the Project Site, the Sub-Project shall
be excluded from the coverage of the BLT.
Section 9.0 Performance Security
 Proponent is required to maintain Performance Security
equivalent to 2% of the Contract Price.

 Performance Security shall be in full force and effect

from Execution Date until 60 days from the end of the
latest Final Rectification Deadline.

 Final Rectification Deadline: for each Sub-Project, 60

days from the Construction Completion Deadline
Section 10.0 Insurance
 Insurance Policies required to be obtained by the
Proponent shall only be in full force and effect from the
Execution Date, until the end of all Final Rectification
Deadlines (60 days from the Construction Completion
Deadline)
Section 11.0 Design
 The Independent Consultant shall review all DEDs and
will issue a Certified DED if it complies with the MPSS.

 Within 1 day after receipt by the DepEd of the Certified

DED, DepEd shall issue the Notice to Proceed.
Section 12.0 Construction
 All Sub-Projects must be completed within the Construction
Completion Deadline (12 months from Execution Date, as may
be extended due to an Incident)

 When Proponent has completed a Sub-Project, it shall send a

Construction Completion Notice to the DepEd. The IC and a
representative from DepED should conduct the Punch List
inspection within 15 days from receipt of the Construction
Completion Notice

 If no items to be rectified after Punch List Inspection, DepEd

shall issue Certificate of Completion (COC) no later than the
last day of the month following the month when the Sub-
Project passed the Punch List Inspection.
Section 12.0 Construction
 If there are still items to be rectified, the IC shall issue
a punch list to the Proponent on the day following the
end of the Punch List Inspection.
 When the punch list items have been rectified,
Proponent shall send a Rectification Completion Notice.
Within 15 days from receipt of such notice, IC and
DepEd shall conduct the Rectification Inspection.
 If no items to be rectified after Rectification Inspection,
DepEd shall issue COC no later than the last day of the
month following the month when the Sub-Project passed
the Rectification Inspection.
Section 13.0 Liability for Defects

 Proponent shall be liable for all defects,

deficiencies and failures on an Accepted Sub-
Project that constitutes a violation of the
specifications in the MPSS from the date of
issuance of the Certificate of Completion until
the end of the relevant Lease Period, except for
those defects, deficiencies and failures
occasioned by a Force Majeure Event and those
caused by third parties.
Section 15.0 Contract Price
 DepEd will only start payment when the Accepted Sub-
Projects is equal to 30% (based on total sub-project co-
efficients)

 Lease Payment Dates shall be either March 31, June 30,

September 30 and December 31.

 The first lease payment shall cover all monthly lease

payments accrued as of the first lease payment date.
Section 16.0 Maintenance
 Periodic Maintenance Works – responsibility of
Proponent, once every 4.5 years from the date of
issuance of the Certificate of Completion

 Routine maintenance – including day-to-day cleaning

and upkeep, responsibility of DepED
Section 17.0 Transfer
 At the end of the Lease Period for a Sub-Project, the
ownership shall be deemed and considered to be
automatically transferred to the DepED.

 Proponent shall bear all costs incurred in connection

with the transfer.
Section 18.0 Force Majeure
 If FM lasts for less than 30 days, and happens before
Acceptance or Exclusion of a Sub-Project, and
Construction can continue, the Construction Completion
Deadline may be extended the duration of the FM
effect. DepEd has no obligation to pay Proponent for
additional costs that may be incurred.
 If FM lasts for less than 30 days, and happens before
Acceptance or Exclusion of a Sub-Project, and
construction cannot continue, DepEd has no obligation
to pay lease payments for affected Sub-Project and
Proponent not obligated to rebuild. Parties may agree
on a substitute site if FM is site-specific.
Section 18.0 Force Majeure
 If FM lasts for less than 30 days, and Sub-Project is
already accepted, and effect of FM is that Sub-Project
cannot be used temporarily, parties shall agree on
period to repair. DepEd shall pay for cost of repair.

 If Proponent does not repair within agreed period,

DepEd may repair at its own cost.

 Lease payments during the period when the Sub-Project

cannot be used shall be suspended. At the end of the
lease period, the DepEd shall pay Proponent a Delayed
Use Penalty equal to the suspended lease payments.
Section 18.0 Force Majeure
 If FM lasts for less than 30 days, and the Sub-Project is
already accepted and can no longer be used as a result
of the FM, lease will be terminated. DepEd shall pay
the Proponent a compensation for loss of investment
equal to:

 Present value of scheduled but unpaid lease payments for

the Sub-Project as of the date the DepEd determines that
the Sub-Project cannot be used permanently, using a
discount rate of PDST-F + 2.5% less the cost of Periodic
Maintenance Works that have not been undertaken when
the FM occurred, equivalent to 5% of the Sub-Project
Contract Price.
Section 20.0 Liquidated Damages
Relevant Section Event Liquidated Damages

Section 12.10.e If by the Construction Completion 25% of the Sub-Project Contract

Deadline, the Proponent has not Price.
started the Construction of a Sub-
Project.
Section 12.10.f If by the Construction Completion 40% of Monthly Lease Payment
Deadline, the Proponent had multiplied by the number of
started construction on a Sub- months and fraction of a month
Project, but not yet issued a from the Construction Completion
Construction Completion Notice, Deadline until the issuance of the
but by the Final Rectification Certificate of Completion.
Deadline, the Sub-Project passes
either the Punch List Inspection or
Rectification Inspection.

Section 12.10.g If by the Final Rectification 25% of the Sub-Project Contract

Deadline, any project not Price.
previously Excluded has not yet
passed either the Punch List
Inspection or the Rectification
Inspection.
Section 20.0 Liquidated Damages
Relevant Event
Section
Section 13.0b If DepED notifies the Proponent that
there are structural defects or failures
due to faulty design and construction
in violation of the prescribed MPSS.
Section 13.0.c If DepED notifies Proponent of
defects in the Sub-Project, and the
Proponent does not complete the
required repair, rehabilitation, or
reconstruction works within 30 days
of notice from the DepED that there
are structural defects or failures.
Liquidated Damages
40% of the Monthly Lease Payment
multiplied by the number of months
and fraction of a month from the
DepED’s notification to the
Proponent that there are structural
defects or failures until the actual
completion of the required repair,
rehabilitation, or reconstruction
works.
40% of the Monthly Lease Payment
multiplied by the number of months
and fraction of a month from the
deadline for the completion of the
repair, rehabilitation, or
reconstruction works, until the earlier
of the actual completion of such
repair, rehabilitation, or
reconstruction works and when
DepED exercises the option to
require the removal or demolition of
the Sub-Project from the Project Site.
Section 20.0 Liquidated Damages
Relevant Event
Section
Section 16.1.c The Proponent fails to perform the
Periodic Maintenance Works within
the required period.
Section After the occurrence of a Force
18.3.c(2) Majeure event, the Parties agree on
the cost of and period for repairs,
and the Proponent fails to complete
the repairs within the same period.
Liquidated Damages
20% of the Monthly Lease
Payment multiplied by the number
of months and fraction of a month
that the Periodic Maintenance
Works are not performed, from the
time they are due to be performed
until the time the Periodic
Maintenance Works are actually
completed.
40% of the Monthly Lease
Payment multiplied by the
number of months and fraction of
a month from the time that the
repairs are scheduled to be
completed and the time when they
are actually completed by either
the Proponent or the DepED.
Section 21.0 Default and Termination
Proponent’s obligations for which breach shall constitute a Proponent Default (and if not
cured or is not curable, may lead to termination):

1. Maintaining leverage ratio

2. Financial Closure

3. Maintenance of required Performance Security

4. Failure to maintain required insurance policies

5. Submission of as-built drawings

6. Compliance with provisions on corrupt, fraudulent, coercive, undesirable and

restrictive practices

7. No material breach of any other obligations, representations and warranties

8. Observance of Philippine laws and regulations, the violation of which has a material
adverse effect on its ability to perform its obligations
Section 21.0 Default and Termination

The following shall likewise constitute a Proponent

Default:
 If the Proponent is being liquidated and dissolved for
reasons other than insolvency, or is declared insolvent
and/or if the Lenders have determined that the Proponent
is in default or unable to fulfill its obligations to them.
 If any amount due from the Proponent to DepED for
Liquidated Damages, after drawing on the Performance
Security (if the Performance Security is still in force)
exceeds fifty percent (50%) of the Lease Payments
scheduled to be paid on all Accepted Sub-Projects at the
time of the issuance of the Notice of Default.