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DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT (DILG) DEPOARTMENT OF BUDGET AND MANAGEMENT (DBM)

DILG-DBM Joint Memorandum Circular No. 2

Date: ________________

TO : All concerned Municipal Mayors, DILG and DBM Regional Directors,

DILG Provincial Directors, DILG Municipal Local Government Operations Officers and All Others Concerned

SUBJECT : POLICY GUIDELINES AND PROCEDURES IN THE IMPLEMENTATION OF FY 2017 ASSISTANCE TO DISADVANTAGED MUNICIPALITIES (ADM) PROJECT

1.0 RATIONALE The Assistance to Disadvantaged Municipalities (ADM) program seeks to strengthen Local Government Units (LGUs) to become more able partners in national development. This shall be done through the implementation of higher good governance standards, improvement of capacities to generate resources, and strengthening of abilities to deliver basic services. The ADM program provides a revitalized thrust to government's efforts to increasing and improving rural development in line with its national development goals.

2.0 PURPOSE This Joint Memorandum Circular is being issued to prescribe the general policies and mechanics in the implementation of the Assistance to Disadvantaged Municipalities (ADM) project particularly to ensure that all concerned are able to abide with the processes and responsibilities in the overall implementation of the program.

3.0 GENERAL GUIDELINES

3.1 Coverage of the Program. The program covers 4,440 projects in all municipalities of the country except municipalities in the Autonomous Region in Muslim Mindanao. Such projects include Water System, Local Access Roads, Evacuation Facility and Small Water Impounding Projects. A total of 19.4 billion pesos has been included in the General Appropriations Act FY 2017 under the Local Government Support Fund (LGSF) to support the implementation projects under this program.

3.2 Governance Conditions. Local Government Unit’s eligibility to implement projects is subject to compliance with the governance conditions in accordance with the pertinent Special Provisions set in page 601, Volume 112, No.1 of GAA FY2017. The governance conditions shall include: (i) compliance with Good Financial Housekeeping component of the DILG Seal of Good Local Governance (SGLG) and; (ii) compliance to the requirements of DBM Public Financial Management.

3.2.1 Good Financial Housekeeping (GFH). The latest list of LGU passers in GFH issued by the DILG Bureau of Local Government Supervision (BLGS) shall be used in determining the list of compliant LGUs to governance conditions.

3.2.2 Public Financial Management (PFM). The DBM through the Local Government and Regional Coordination Bureau shall provide the DILG list of LGUs compliant to the requirements of Public Financial Management.

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This shall be used in determining list of compliant LGUs to governance conditions.

3.2.3 Compliance of Municipal Governments to the governance conditions after

30 June 2017 shall no longer be used as basis in determining LGUs eligibility to implement ADM projects. Subsequently, projects in Municipalities that fail to comply with governance conditions shall be implemented by the Provincial Governments provided that the Provincial Government has met conditions mentioned in Section 3.2.1 and 3.2.2 above.

3.2.4 The DILG, through the ADM-Oversight Project Management Office (ADM-

OPMO), shall consolidate compliance status of LGUs and shall endorse the list of eligible LGUs to the DBM to facilitate fund release.

3.3 Funds Management. The DBM shall release funds intended for the implementation of ADM projects directly to LGUs duly endorsed by the DILG-OPMO. The LGUs shall exclusively utilize the fund for its intended purpose in accordance with the existing government procurement, budgeting, accounting and auditing rules and regulations.

3.3.1 Funds shall be comprehensively released by the DBM Central Office to the

Bureau of Treasury through the issuance of a Special Allotment Release Order (SARO).

3.3.2 DILG-OPMO shall endorse to DBM the list of LGUs eligible to implement ADM projects and provide the DILG-OPDS-PMOs copy of the same list.

3.3.3 DILG-OPDS-Project Management Offices (PMOs), through the DILG-RO, within 15 days upon receipt of the list, shall advise the eligible LGUs to start the preparation of the DED and the filing of necessary permits.

3.3.4 The DBM shall release Notice of Cash Allocation (NCA) to the Bureau of Treasury (BTr) intended for the implementation of projects of eligible LGUs. DBM shall provide copy of NCA to DILG Central Office.

3.3.5 Bureau of Treasury shall release funds to the LGUs by issuing Authority to Debit Account (ADA) to Authorized Government Servicing Bank, and a Notice of ADA Issued (NADAI) to the recipient LGU. BTr-RO to provide copy of NADAI to DILG-RO.

3.3.6 DILG-OPDS-PMOs shall provide the List of LGUs with NCA to all DILG–

ROs for verification with the concerned LGUs if they have received the

funds and submit report to DILG-OPDS-PMOs.

3.3.7 Provincial Government shall implement projects of municipalities that are

ineligible to facilitate project implementation, provided that the Provincial Government has complied with the eligibility requirements set in Section 3.2 above and such compliance shall be duly endorsed by the DILG to DBM. The DILG ADM-OPMO, through the DILG-RO, shall provide all concerned provinces the list of municipalities and their respective projects with corresponding allocation.

3.3.8 Funds for ADM projects shall no longer be released to LGUs where both

Municipal and Provincial Governments failed to comply with the Governance Conditions specified in Section 3.2 above.

3.3.9 LGU shall record the funds as Trust Fund and maintain a separate subsidiary ledger for each project.

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3.3.10 Within six (6) months after project completion, any unutilized fund shall be returned to the BTr. LGU shall provide copy to DILG of the said transaction.

3.4 Project Implementation. LGUs shall be accountable in the overall implementation of the projects. They shall ensure that the design, costing and construction of projects are in accordance with the National Government standards and within the range of costs and project duration of similar projects being implemented by National Government Agency (NGA) in the same locality. 3.4.1 Preparation and Submission of Documentary Requirements

Within two (2) months after receipt of the funds, the LGU shall submit to

DILG the following:

3.4.1.1 Local Chief Executive (LCE) Certification that:

(i) DED/POW have been prepared and are in accordance

with the national government standards and shall be made

available to DILG during field monitoring visits;

(ii) All the applications for necessary permits and clearances

have been submitted to the concerned agency.

(iii) All the required permits and clearances shall be secured

prior to implementation such as ECC/CNC, NCIP, Water

Permit, etc.;

(iv) The site of the project has no problem on Land Ownership

and/or Road Right-of-Way (RROW);

(v) For Water Supply Projects, the water source has been

validated by the Municipal Engineer and has been found to

be:

a.) Feasible to supply the intended beneficiaries; and

b.) Potable for drinking or engineering mitigation

measures have been included in the design to make

the water potable;

(vi) For Vertical Structures, the project site is located in safe

zone based on the MGB hazard map or engineering

mitigation measures have been included in the design to

address the potential problems;

(vii) Maintenance and insurance funds for the project shall be

provided;

(viii) Procurement is included in the LGU Annual Procurement

Plan and shall commence on the date indicated in the

procurement timelines submitted by the LGU but shall not

go beyond 15 days of the date indicated in this

Certification.

3.4.1.2 Project implementation schedule including procurement timelines.

LGUs may request technical assistance in the preparation of DED/POW from the DILG.

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3.4.2 Procurement by the LGUs

3.4.2.1 All projects shall be procured through competitive bidding with strict adherence to the provisions of R.A. No. 9184 (Government Procurement Reform Act) and its 2016 Revised IRR and GPPB Guidelines. The LGUs shall use the latest standard bidding documents for procurement of works issued by GPPB.

3.4.2.2 All procurement activities must be included in the Annual Procurement Plan of the LGU.

3.4.2.3 Upon submission of the required Certifications and documents stated in Section 3.4.1 above, the LGU shall proceed with the procurement, as indicated in the Certification.

3.4.2.4 The DILG and other entities may be invited to observe particularly during bid opening.

3.4.2.5 In the event of a failed bidding, the LGU shall immediately start the re-bidding process within five (5) working days after the Head of the Procuring Entity (HOPE) has approved the BAC Resolution declaring a failure of bidding, in accordance with the timelines set forth in 2016 Revised IRR of R.A. No. 9184. Within the same period, the LGU shall submit to DILG a revised procurement schedule indicating the revised target dates for the bidding.

3.4.2.6 In the event that the LGU will have to resort to negotiated procurement after two (2) failed biddings, the negotiation shall commence within five (5) days after the HOPE has approved the resolution declaring a failure of bidding and shall be completed within thirty (30) days.

3.4.2.7 The LGU shall submit to the Local Auditor a copy of the contract and other required supporting documents within five (5) days from the execution of the contract, in accordance with Section 3.1 of COA Circular No. 2009-001 dated 12 February 2009.

3.4.2.8 LGUs shall be allowed to implement projects “By Administration” only after two (2) failed biddings and negotiated bidding. LGU shall refer to the provisions of Republic Act 9184 for the Implementation of Infrastructure Project by Administration.

3.4.3 Project Execution

3.4.3.1 The LGUs shall implement the project in accordance with the national standards and policies. The LGUs shall have the primary responsibility of ensuring the quality of works and compliance with the plans and specifications.

3.4.3.2 The project construction shall commence within four (4) months upon receipt of funds.

3.4.3.3 A community and project billboard shall be installed and updated regularly in accordance with COA Circular No. 2013-004 dated 30 January 2013, and other relevant guidelines.

3.4.3.4 All variation orders and contract time extensions shall be approved by the LCE. If the cost of the variation order exceeds the approved allocation for the project, the LGU shall provide the required additional funds. The LGU shall inform DILG of any approved variation orders and contract time extensions.

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3.4.3.5 In case of delay in the implementation of the project, the LGU shall perform the following calibrated actions:

(i) Negative slippage of 5% - issuance of Warning Letter with a requirement for the Contractor to submit a Catch-up Plan;

(ii) Negative slippage of 10% - issuance of Final Warning Letter with a requirement for the Contractor to submit a detailed schedule of activities to catch-up with the delays, supported by adequate resources such as materials, workforce and equipment; and

(iii) Negative slippage of 15% - initiation of termination process

in accordance with Annex E of the 2016 Revised IRR of R.A. No. 9184.

3.4.3.6 In case the Contractor fails to complete the work within the specified contract time, plus any approved time extension, the LGU shall impose liquidated damages in accordance with Annex E of the 2016 Revised IRR of R.A 9184.

3.4.3.7 The LGU may invite DILG and/or third party monitors during punchlistings and final inspections. Immediately after the inspection, the LGU shall instruct the contractor to rectify the noted deficiencies, if any.

3.4.3.8 The LGU shall ensure the following:

(i) Posting of performance security by Contractors in accordance with Section 39 of the 2016 Revised IRR of R.A. No. 9184.

(ii) Posting of warranty security by Contractors in accordance with Section 62.2 of the 2016 Revised IRR of R.A. No. 9184.

3.4.3.9 Utilization of Balance

During project implementation, LGUs may use the balance in the Project Allocation after the Contract Award to finance additional work due to Variation Orders for the same project. Balances shall not be used for other projects. The variation order shall strictly comply with Annex E (Contract Implementation Guidelines for the Procurement of Infrastructure Projects) of the 2016 Revised IRR of R.A. No. 9184, and the provisions of the Contract.

3.4.4 Project Modification and Replacement 3.4.4.1 Modification in the project can only be made on the following

conditions:

(i) Change of location within the same municipality;

(ii) Correction of project within the same project type.

Any additional fund requirement that will result in the changes of the project shall be borne by the LGU

The DILG shall be informed accordingly of the changes or modifications made on the project.

3.4.4.2 Replacement of projects shall not be allowed.

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3.4.5. Implementation Arrangement

3.4.5.1 Department of Budget and Management (DBM) shall: (i) Comprehensively release the funds to the BTr through the

issuance of a SARO.

(ii) Issue the NCA and coordinate with the BTr for the issuance of ADA to authorize Government Servicing Bank of the LGUs and NADAI to concerned LGUs.

3.4.5.2 Bureau of Treasury (BTr) shall release funds to LGUs by issuing

ADA to Authorized Government Servicing Bank, and NADAI to the recipient LGUs. Provide copy to DILG-RO.

3.4.5.3 Department of the Interior and Local Government Unit (DILG) shall:

3.4.5.3.1 Establish the Project Management Office with the following sub-PMOs:

(i) Oversight Project Management Office (OPMO)

shall oversee the overall implementation of the Project and ensure the functionality of the Local Development Council (LDC) in LGUs at all levels

(ii) Under the Office of Project Development Services (OPDS):

a.) Water Supply Project Management Office (WSPMO) shall monitor and provide technical assistance in the implementation of water supply projects

b.) Local Roads Project Management Office

(LRPMO) shall monitor and provide technical assistance in the implementation of local road projects

c.) DRR and Other Infra Project Management Office (DRROIPMO) shall monitor and provide technical assistance in the implementation of evacuation center and small water impounding projects

3.4.5.3.2 Mobilize the DILG Regional PDMUs, Provincial and

Municipal Offices to monitor and provide technical assistance in the implementation of Project.

3.4.5.1 Local Government Unit (LGU) shall be responsible in the implementation of the project in accordance with the National Standards and the provisions of this Guidelines.

3.5 Project Monitoring and Reporting.

3.5.1 During project monitoring, the DILG shall observe the following, among

others:

(i) Preparation of the DED/POW as to the project timelines;

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(ii) Procurement timelines (from ITB/AD Posting to the issuance of

NTP);

(iii) Project Implementation (if works are with the national standards):

a.) Availability of construction materials on site, in accordance with

the approved plans and specifications;

b.) Availability of appropriate equipment on site, in accordance with

the Equipment Schedule; and

c.) Works are in accordance with the approved Plans and

Specifications.

3.5.2 DILG may provide technical assistance to LGUs on the following

situations:

(i) Special request from the LGUs;

(ii) Based on the assessment of DILG, the LGU needs assistance.

3.5.3 The DILG Regional Office, through the Provincial Director and MLGOO

shall immediately advise the LGU of any noted deviations and to cause the Contractor to initiate corrective actions.

3.5.4 The DILG-OPMO shall facilitate the conduct of 3rd party monitoring through local Civil Society Organization (CSO) partners, State Universities and Colleges (SUCs), and/or Higher Learning Institutions (HEIs). The LGUs concerned are enjoined to extend their support to the 3rd party monitors, such as the disclosure and sharing of relevant project documents required for monitoring purposes.

3.5.5 Any findings by the DILG and the third party monitors shall be officially submitted to the LGU for resolution. Issues and other concerns not resolved at the LGU level may be submitted to the Grievance Redress Committee (GRC) for resolution.

3.6 Project Reporting

3.6.1 LGUs shall submit twice a month status report to the DILG Regional Office using the prescribed template attached as Annex A, together with copies of the approved SWA and SORD.

3.6.2 LGUs shall submit to DBM, the Speaker of the House of Representatives, the President of the Senate of the Philippines, the House Committee of Appropriation, and the Senate Committee on Finance, either in printed form or by way of electronic document, quarterly reports on the financial and physical accomplishment by the project in accordance with Section D (Government Support Fund), Special Provision No. 2 of the GAA FY 2017.

3.6.3 The DILG shall evaluate the submitted reports by the LGUs to check the consistency between the reported and the actual works accomplished. As necessary, the DILG may join inspections with the LGU to resolve inconsistencies.

3.6.4 The DILG shall post the reports submitted by the LGUs to ADM online portal.

3.6.5 The DILG shall conduct regular site visit and spot check during construction of the project.

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3.6.6 LGUs failure to submit the necessary reports shall be a basis for disqualification from participating in the succeeding round of the program.

3.6.7 Upon completion of the project, LGUs shall submit to the DILG the following:

(i) Copy of the Certificate of Acceptance of the project signed by the LCE;

(ii) Copy of consolidated SORD showing the financial transactions for the project

(iii) Copy of COA certification of Liquidation of 100% of the project fund

and COA Inspection Report;

(iv) Copy of Project Completion Report; and

(v) Others, as deemed necessary.

3.6.8 The LGUs shall install community billboards to provide the people information on the period of implementation, fund allocation, fund utilization, among others.

4.0 SANCTIONS

4.1 Implementation of projects not in accordance with the provisions of this circular

may result to the following:

4.1.1 LGU disqualification from participating in the succeeding round of ADM Program; and

4.1.2 Project termination and reversion of funds back to the Bureau of Treasury.

4.2 The DILG shall immediately advise the LGUs of any noted deviations and to cause the contractor to initiate corrective actions.

5.0 REPEALING CLAUSE. All provisions of existing issuance that are inconsistent with this Circular are hereby repealed/amended accordingly.

6.0 EFFECTIVITY. This Circular shall take effect immediately.

ISMAEL D. SUENO BENJAMIN E. DIOKNO Secretary, DILG Secretary, DBM

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Annex A

Local Government Support Fund

Report on Fund Utilization (Monthly) and Status of Program/Project Implementation (Bi-Monthly)

As of _________________________

ID No.

Budget

Year

LGU PROFILE Project Profile Financial Physical Implementation Issues

(Please use the

dropdown menu)

Action taken/recommenda

tion

Region Provinc

e LGU

Title of Project

Specific Location

Project Type (Potable

Water/Local Road/

Evacuation Center/SWIP)

Mechanism/Mode of

Implementation

Estimated Number of

Beneficiaries

Amount

Balance Date

Activity Started

Status

% Physical Accomplish

ment per SWA (if on-

going)

Approved Budget per GAA

Qty. Unit Received Disbursed

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (12)-(13)

=(14) (15) (16) (17) (18) (19)

Prepared by: Approved by:

City/Municipal Accountant Local Chief Executive

(Financial Status)

Submitted by:

City/Municipal Engineer C/MLGOO C/MLGOO

(Physical Status)

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Definition of entries

As of: End of reporting period

(1) ID No.: Identification/Reference number of project implemented (14) Balance: Difference of the Amount Received & Amount Disbursed

(2) Budget Year: As Stated in the GAA (15) Date Activity Started: Actual Date of Implementation Started

(3) Region: Location of Region (16) Status: Physical Status of project as of report date (proposed, pipelined, on-going, completed, dropped, no status information)

(4) Province: Province where project is Implemented

Proposed: LGU has no yet received funds from the DBM Regional Office. If so, state under column 'Implementation Issues' why

(5) LGU: Municipality where project is Implemented

Pipelined: LGU has not received 100% or at least first tranche of the funds

(6) Title of Project: Name of Project to be Implemented On-going: Implementation of the project has started and there is already visually verifiable physical accomplishment

(7) Specific Location: Exact location of the project to be Implemented Completed: The project has been physically completed

(8) Project Type: Potable Water/Local Road/ Evacuation Center/Small Water Impounding project (SWIP) Dropped: MLGU and PLGU have not complied with the BUB requirements

(9) Mechanism/Mode of Implementation: If Implementation is by ADMIN/CONTRACT No Status: No status report of the project

(10) Quantity: Total number of Beneficiaries (17) %Physical Accomplishment per SWA(if on-going): Actual % of physical status submitted by contractor/admin during on-going Implementation

(11) Unit: Unit on the total number of beneficiaries (18) Implementation Issues: Operation constraints/concerns encountered during project implementation

(12) Received (Approved Budget per GAA): Actual funds received as found in GAA (19) Action taken/Recommendation: Remedial measures taken/recommended to improve project progress/implementation

(13) Disbursed (Approved Budget per GAA): Actual funds released

Document Code

FM-QP-AB-41-03

Rev. No.

00

Eff. Date

10.01.15

Page

1 of 1

DILG-CENTRAL OFFICE

POLICY FORMULATION COMMENT SHEET

Please accomplish the comment sheet by indicating the (a) policy provisions you wish to comment on, (b) your corresponding feedback (e.g. queries, recommendations, comments, etc.), and (c) the rationale behind the feedback you provided (e.g. legal basis, studies, relevant experiences, etc.). An example is provided below for your guidance. Thank you.

EXAMPLE:

PROVISIONS FEEDBACK BASIS FOR FEEDBACK

Par. (b) of Sec. 13 Why is it phrased as…? If possible, we suggest that… such that this provision becomes consistent with…

Sec. 10 of R.A… provides that… hence, the… stated in Par. (b) of Sec. 13 of your proposed policy may be in conflict with the…

NAME OF POLICY REVIEWED: ___________________________

PROVISIONS FEEDBACK BASIS FOR FEEDBACK

PREPARED BY: __________________________________________________________ [Name and Position] [Name of Office]

Prepared By Reviewed By Approved By

ROLYN Q. ZAMBALES / MANUEL Q. GOTIS / ANNA LIZA F. BONAGUA / LEOCADIO T. TROVELA

ASEC ESTER A. ALDANA, CESO II

ATTY. EDWIN R. ENRILE

Process Owners/Bureau Deputy QMRs DILG-CO Deputy QMR DILG-CO QMR