The Government Goods/Services Procurement Policy Agency (Lembaga Kebijakan Pengadaan Barang/Jasa Pemerintah – “LKPP”) has amended Regulation No. 12 of 2021 on Guidelines for Procurements of Government Goods/Services Through Providers (“Regulation 12/2021”) through the issuance of Regulation No. 4 of 2024 (“Amendment”). The Amendment itself has been in force since 18 October 2024.[1]

At its core, the Amendment reworks various provisions originally set out under the Appendices to Regulation 12/2021, specifically provisions that address guidelines for the implementation of integrated design-and-build construction procurements through Providers and procurement documents for integrated design-and-build construction.[2] Furthermore, the Amendment has also clarified various matters and introduced a number of notable new provisions, particularly in relation to performance bonds, payment methods and responsibility for designs, as well as the inclusion of innovative technologies.

The Amendment is particularly relevant to business actors who provide goods/services under contract for design-and-build construction procurements (collectively referred to as “Providers”).

Due to the wide scope of the Amendment, this edition of Indonesian Legal Brief (ILB) will limit its analysis to a summary of the following specific topics:

1. General Provisions;
2. Preparations for Procurements: Guideline Documents for Commitment Making Officers (Pejabat Pembuat Komitmen – “PPK”) and Integrated Design-and-Build Construction Contracts;
3. Contract Implementation; and
4. Work Handovers and Asset Recording.

General Provisions

Similar to the stipulations set out under Regulation 12/2021, procurements of integrated design-and-build construction projects must meet the following requirements:[3]

In terms of the procurement flow, Appendix III to the Amendment outlines the following process:[4]

It should be noted that the performance evaluation stage did not previously feature under the framework of Regulation 12/2021 but has now been introduced as a key addition. This evaluation process aligns with the framework outlined under Regulation No. 4 of 2021 issued by the LKPP on the Development of Business Actors for Goods and Services Procurements.

Preparations for Procurements: PPK Guideline Documents and Integrated Design-and-Build Construction Contracts

As part of the procurement preparation process, PPK should develop terms of reference in the form of PPK guideline documents. These guideline documents should detail the relevant objectives, scope, design and other technical criteria. While retaining the applicable document content previously set out under the framework of Regulation 12/2021, the Amendment has now introduced a new component: the integration of innovative practices. These innovations include Building Information Modeling (“BIM”), green buildings, smart buildings and other advances.[5]

Furthermore, the Amendment has also introduced a number of new provisions that specifically address written agreements between contract signing officers and Providers based on lump-sum offers (“Integrated Design-and-Build Construction Contracts”). Provisions that specifically address the available forms of payments and the types of contracts that can be utilized are further detailed in the following table:[6]

Contract Implementation

Compared with the previous framework of Regulation 12/2021, the Amendment has now simplified the overall contract execution stages, as summarized in the following table:[7]

Similar to the provisions featured under the previous framework, contract signing is conducted after the relevant budget execution document has been approved. The deadline for contract signing is 14 working days after the relevant Provider has submitted the required performance bond. The Amendment has newly clarified the possible values of this performance bond, with the relevant percentages detailed in the following table:[9]

Furthermore, the Amendment has also now introduced a new method, specifically advance payment via installments (termin). In cases where the installment method is used, advance payments can be completed in stages in line with the following conditions:[10]

One of the new provisions that has been introduced for the contract execution stage and that is of particular interest requires Providers to create and assume responsibility for project designs. In this regard, project designs must meet the following criteria:[11]

1. Must be prepared by a qualified technical expert or professional with relevant experience and competence within a design-related discipline, as specified in the relevant PPK guidelines document;
2. Must comply with the criteria, requirements and provisions stated in the PPK guidelines document, as well as with any amendments and other technical requirements that are defined under applicable Laws and technical standards;
3. Must expand upon the design proposal originally submitted in the technical offer document;
4. Must incorporate innovative elements, such as Building Information Modeling (BIM), green buildings, smart buildings or other advances;
5. Must be in line with the relevant contract value.

Work Handovers and Asset Recording

In terms of provisional handovers, the Amendment clarifies the conditions under which a project can be handed over to the relevant contract-signing officer. Said conditions break down as follows:[12]

1. The work must have been completed in accordance with the contract provisions;
2. The consultant must have provided (or is deemed to have provided) a notice of no objection to the as-built records;
3. The consultant must have provided (or is deemed to have provided) a notice of no objection to the operation and maintenance manuals for the handed-over work;
4. The Provider must have conducted the necessary training (if required); and
5. The first handover report (berita acara serah terima pertama) must have been issued or is deemed to have been issued.

Moreover, newly stipulated under the Amendment, a Provider can request a first handover report by notifying the relevant construction management consultant within 14 calendar days of the work being completed and becoming ready for handover.[13]

Finally, the Amendment has introduced a new provision on asset recording, whereby the Provider and construction management consultant are required to prepare documents that meet the asset recording requirements based on the handover of the relevant work. These documents must include the following information the least:[14]

1. As-built document;
2. Minutes of meetings issued during the execution of the relevant work;
3. Handover report;
4. List of installed work scope based on updated working papers from the price offer breakdown;
5. Test result reports/certificates;
6. Operation and maintenance manuals, including warranty certificates for machinery/equipment and systems/networks; and
7. Other Provider documents, as required.

Key Takeaways

Through the issuance of the Amendment, Indonesia’s procurement system for integrated design-and-build construction has now been enhanced, offering clearer guidelines and regulatory frameworks for business actors and government officials alike. Furthermore, the Amendment formalizes Provider responsibilities for project design and asset recording, ensuring that both the government and Providers adhere to higher standards of accountability. By bringing the procurement process into line with modern practices, the Amendment provides greater legal clarity and adaptability, hopefully ensuring that Indonesia’s procurement landscape is equipped to meet the evolving demands associated with modern projects.

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