The cooperation period commences with post award negotiation and contract execution. Post award negotiation is often a step that is taken for granted, but can in fact be a significant pitfall. If not done with adequate scrutiny it can affect or alter the project risk allocation. The key question is who reviews the documentation (other than the LCE and his staff) before financial close. Since the bulk of the project documentation is developed after the project agreement is initialed, it is possible that only the LCE and his staff are aware of its scope and content.
To address a possible check and balance issue the local sanggunian can designate a monitor, who will review post-tender documents, such as:
● Project Agreement | Pre-tender, part of the tendering package but subject to clarifications |
• Schedules to the Project Agreement | Post-tender |
• Engineering and Construction Contract | Post-tender |
• O&M Contract, if required | Post-tender |
• Joint Venture Agreement, if required | Post-tender |
• Subordination and Funding Agreement, if required | Post-tender |
• Equity Guarantee or Standby funding arrangement | Post-tender |
• Trustee Agreement(s) | Post-tender |
At project operation stage, the LGU and the private proponent are bound to fulfill their respective obligations according to the project agreement. Recourses for non-performance or defaults in obligations are usually covered by performance bonds, curing periods and guidelines, arbitration and ultimately termination provisions.