GUIDELINES ON THE ACQUISITION OF MOTOR VEHICLES FOR USE IN INFRASTRUCTURE PROJECT SUPERVISION

As part of the continuing efforts of the Department to pursue economy
and efficiency without sacrificing effectiveness in operations, these
guidelines are prescribed to address and align the concerns to provide
service vehicles for effective infrastructure project supervision,
augment and continuously upgrade the existing DPWH fleet and ensure
equitable allocation, transparency and accountability in all stages of
their management.

1.0 ENGAGEMENT OF VEHICLES FOR USE IN INFRASTRUCTURE PROJECT
SUPERVISION

1.1 The number of vehicles to be acquired for project supervision
shall be commensurate not with the project cost but with the actual
demand in the field. The types of vehicle shall be in accordance with
Administrative Order (AO) No. 233, Series of 2008 and with National
Budget Circular (NBC) No. 446-A dated 30 January 1998, which prescribe
the type of vehicles taking into consideration the intended purpose;

1.2 In accordance with NBC No. 446, Series of 1995 and AO 233, Series
2008, the purchase of service vehicles is subject to the approval of
the Agency Head, Department of Budget and Management (DBM) and the
Office of the President. The request must contain a
justification/computation that the purchase of motor vehicles for
supervision of projects of long duration is more advantageous to the
government than pure rental. All other required documents listed in the
NBC shall be complied with;

1.3 In accordance with Sec. 76, Chapter 7, Book VI of Executive Order
No. 292 (Administrative Code of 1987), and D.O. No. 36, Series of 2004,
rental of motor transport equipment for a continuous period of more
than 15 days needs the authorization by DBM;

1.4 For projects with contract duration of twenty four (24) months or
more, the mode of acquisition of service vehicle/s thru procurement
must be included in the project contract itself;

1.5 The number of service vehicle/s and the mode of acquisition shall
be specified in explicit terms in the tender/bid documents. The BAC
Chairman and the signatory to the contract representing the Department
shall be held responsible for ensuring this;

1.6 Pursuant to Department Order No. 22, Series of 2006, for projects
where Purchase or Lease-Purchase/Rent-to-Own are the mode of
acquisition, the contract shall have a provision that in the event the
contractor/consultant does not comply with the requirements for turnover
the original cost of the motor vehicle shall be deducted from the final
billing. In case the final billing is not sufficient to cover the cost,
the contractor/ consultant concerned shall be required to pay the
difference;

1.7 Whatever mode of acquisition is used, the vehicles to be purchased
or rented shall be brand new possibly latest model and locally
manufactured/assembled to save on import taxes, support local industries
and for sustainability of original parts;

1.8 The Bureau of Equipment (BOE) shall inspect the vehicles to
determine compliance with the specifications in the civil works contract
or rental agreement, this order, and all other relevant issuances. The
inspection which shall keep and maintain a track record of the service
vehicles is mandatory at the start and at the end of the project
implementation and may also be done any time in between to make
sure/verify, among others, the physical presence and utilization of the
same vehicles previously inspected. Substitution with other units
during project implementation until turn-over at the end of project
duration is strictly prohibited.

2.0 PRICING, BILLING AND PAYMENT

2.1 The procurement of service vehicles for use in project
supervision shall be billed at cost and not subject to contractor’s
profit, Overhead, Contingency, Miscellaneous (OCM) and other indirect
costs. The billing may be the outright cost in lump sum or on a progress
billing method;

2.2 Official Receipts and Delivery Receipts issued by the car
companies or their authorized dealers shall form part of the documents
to support the request for Certificate of Clearance for Equipment
Rental and Other Obligations and final billings of the contractor as
stated in item 1.6 above pursuant to section 14 of D.O. 36, Series of
2004. For this purposes, an official receipt issued by the
contractor/consultant for the vehicles shall not be accepted;

2.3 Rental of service vehicles for less than 24 months, shall be
covered by a rental agreement that gives complete specifications of
units being rented, including vehicle model, chassis number, engine
number, and plate number. A copy of this agreement shall form part of
the documents to be attached to the progress billings;

2.4 Rental rates shall be based on the DPWH current schedule of
rental rates but shall not exceed the DPWH authorized ACEL rates. A
provision in the contract should be provided that when project duration
exceeds 24 months due to delays, change orders,

extensions, etc. the service vehicles being rented should become the
automatic property of the DPWH. For pure rental, in no instance shall
the cumulative rental payment exceed the total cost of the vehicle;

2.5 Under the “Facilities for Engineer” in the Bill of Quantities,
“Vehicle Rental” shall be itemized into (a) Bare Rental and (b)
Operation and Maintenance Cost of Motor Vehicle, e.g., fuel, oil,
operator’s wage. In this regard, a sample computation of Rental Rates
and maintenance costs of brand new vehicles is shown in Annex B^* to serve as reference of DPWH
implementing offices;

2.6 Except for projects of short duration that use pure rental, no final
payment to a contractor/consultant shall be processed until and
unless there are proofs to show that (a) turnover of service/utility
vehicles are duly executed, and (b) a certification from the BOE, RES,
or AES, that the service/utility vehicles returned are in good running
condition. The contract provision required under Section 1.5 of this
Order should be applied.

3.0 TURNOVER FOR AUGMENTATION AND UPGRADING OF FLEET OF SERVICE
VEHICLES.

3.1 The turnover to the Department of service/utility vehicles that
were procured under rent-to-own/lease purchase agreement for project
supervision, shall be governed by the guidelines under Department Order
No. 22, series of 2006, and other pertinent rules and regulations;

3.2 Pursuant to Department Order No. 117, series of 2004, transfers
of service vehicles from office to office must be coursed thru the
Bureau of Equipment and approved by the Bureau of Director. The BOE
shall assign the turned over vehicles to augment the existing fleet.
Based on an initial determination of the ideal number of vehicles per
type per implementing office and the latest inventory of service
vehicles, it has been established that the Department has a shortage of
approximately 1,500 units, nationwide.

3.3 Once the ideal number of service vehicles has been attained, the
vehicles turned over from project supervision shall be used to
continuously upgrade the fleet in order to avoid the uneconomical
maintenance to ageing units.

Any violation of these Rules shall be a ground for disciplinary
action without prejudice to the filing of appropriate administrative
charges, if warranted.

This Order shall take effect immediately and supersedes other
issuances inconsistent herewith.

Adopted: 04 January 2010

(SGD.) VICTOR A. DOMINGO
Secretary