NEEDS TO KNOW ONPUBLIC PROCUREMENT

Priyantha weerasooriya. SSP/Director-Supplies.

PHQ

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Meaning of procurement

Oxford Dic; The process of obtaining

supplies, especially for Government or

an organization

Previous Tender Guidelines in Sri Lanka

Guidelines on Government Tender Procedure

Separate Chapter for Foreign Funded Projects (2000)

Guidelines on Government Tender Procedures (Revised in 1997)

Issued a Separate book, with 60 Circulars to the tender procedure 1997 (2004)

2006 -Pro Guideline and Manuals in Operation as at Today

Procurement Guideline and Manual Works and Goods 2006.

Selection and Employment of Consultants 2007

Procurement of Pharmaceuticals & Medicals & Medical Devices 2006

1.4 ETHICS IN PROCUREMENT

1.4.1. Confidentiality

1.4.2. Corruption

1.4.3. Conflict of Interest

1.4.4. No gifts or inducement to be accepted

Objectives of Procurement Value for Money Elements of VFM * Economy – Minimizing Cost of Resources * Efficiency - Maximum output against minimum input * Effectiveness - Relationship between intended results and actual results Public Procurement Involves * SUPPLIES * CONSTRUCTIONS * SERVICES (Over 80% Public Expenditure Goes Through Public Procurement)

Procurement in Supplies should ensure * RIGHT QUALITY * RIGHT QUANTITY * RIIGHT TIME * RIGHT PRICE * RIGHT PLACE

Transparency Accountability

Fairness

Efficiency

Equal Opportunity

Development of Local Business

Achievement of National Development Objectives

Important elements of the Procurement Process

Procurement Planning Preparation of Bidding Document Invitation to bid Closing Bid Opening Bid Evaluation Award of Contract

LAWS APPLICABLE TO PROCUREMENT ACTIONS

1) Laws of Arbitration Act No. 11 of 1995

2) Laws of Contract

3)Bribery Act – Section 70. Any public servant who, with intent, to cause wrongful or unlawful loss to the

Government, or to confer a wrongful or unlawful benefit, favour or advantage onhimself or any person, or with knowledge, that any wrongful or unlawful loss will be

caused to any person or to the Government, or that any wrongful or unlawful benefit,hall upon summary trial and

conviction by a Magistrate be liable to imprisonment for a term not exceeding tenyears or to a fine not exceeding one hundred thousand rupees or to both such

imprisonment and fine.

PROCUREMENT METHOD 3.1 International Competitive Bidding (ICB)

3.2 National Competitive Bidding (NCB) - Over 2M* Publish in a News Papers – 21 days* Bid Security required - for 119 days* Bid validity - for 91 days

3.3 Limited / Restricted International Competitive Bidding (LIB) and Limited / Restricted National Competitive

Bidding (LNB)

3.4 Shopping - Below 2M • Five (5) quotations • Thru Registered Suppliers • Yellow Pages and Rainbow Pages

3.5 Direct Contracting

a) Direct contracting is a means of Procurement of Goods or Services or Works from a single supplier source.

b) It entails no competition and shall be used only under exceptional circumstances

c) This method is appropriate under the following circumstances i) When the prices or rates are fixed pursuant to legislation by regulatory bodies ii) Standardization of equipment, for compatibility with existing equipment, may justify additional purchases of the same type of Goods

d) When direct contracting is used under any of the reasons above, the value of the Procurement shall be subjected to the upper limits given under Guideline 2.14. No government

agency will qualify for automatic direct contract award unless the above requirements are satisfied

3.6 Repeat Orders

3.7 Force Account

3.8 Emergency Account

PROCUREMENT PLANNING

“Good Start is half done:

WHAT IS STRATEGIC PROCUREMENT PLANNING?

4.1. Advance Procurement Action

4.2. Master Procurement Plan (MPP)

4.3. Total Cost Estimate

* Preparation of procurement plan 1st stage ofthe procurement process

* Define what actions to be taken to focus

* List out various procurement under works, goods, services and consultancy

* Identify by which each one of these works goods and services are required to use

* Decide contents of individual procurement packages

* Identify the relationship between each such items

* Determine the method of procurement

* Determine the procurement lead-time for each package and schedule, target date for each event

* Prepare a bar chart and / or table or list identifying the above dates for each bid package to assist in procurement monitoring

PREPARATION OF BIDDING DOCUMENTS

STANDARD BIDDING DOCUMENT FOR PROCUREMENT OF GOODS

FORMAT

* Invitation for Bids (IFB)* Instructions to Bidders (ITB)* Bid Data Sheet * Evaluation and Qualification Criteria * Bidding Forms * Schedule of Requirements (SOR)* General Condition of Contract (GCC)* Special Conditions of Contract (SCC)* Contract Forms * Specifications * Price Schedule

INSTRUCTIONS TO BIDDERS General - Scope of Bid

- Source of Funds- Ethic, Fraud and Corruption - Eligible Bidders - Eligible Goods & related services

Contents of Bidding Documents - Sections of Bidding Documents- Clarification of Bidding Documents - Amendment of Bidding Documents

Preparation of Bids - Cost of Bidding - Language of Bidding Document - Comprising the Bid - Bid Submission Forms and Price Schedule- Alternative Bids - Bid Prices and Discounts

- Currencies of Bids - Documents Establishing the Eligibility of the bidder- Documents Establishing the conformity of the goods

and related services - Documents Establishing the qualifications of the

Bidder- Period of Validity of Bids - Bid Security - Format and Signing of Bids

Submission & Opening of Bids - Submission, Sealing and Marking of Bids - Deadline for submission of Bids - Late Bids - Withdrawals and modification of Bids - Bid Opening

Evaluation and Comparison of Bids - Examination of Terms & conditions: Technical Evaluation - Conversion to Single Currency - Domestic Preference - Evaluation of Bids - Comparison of Bids - Post Qualification of the Bidder - Purchaser’s Right Accept any Bid, and to reject any or all Bids

Award of Contract - Award Criteria - Purchaser's right to vary Quantities at time of award- Notification of Award- Signing of Contract- Performance Security

ROLE IN BIDDING DOCUMENTS Lay down rules of the Competition

* How to price * How to prepare and submit bids * What will be the selection criteria * What will be the qualification criteria

Scope of the obligation * Technical Specifications * Bill of Quantities * Delivery / Completion Time * Warranty / Service obligations

Conditions of Contract * Payment Terms * Price Adjustments * Liability * Insurance * Dispute Resolution

BIDDING DATA SHEET

General

Contents of Bidding Documents

Preparation of Bids

Submission and Opening of Bids

Evaluation and Comparison of Bids

EVALUATION AND QUALIFICATION CRITERIA

Evaluation Criteria

Evaluation Criteria (Methodology)

Multiple Contracts

Domestic Preference

Post Qualification Requirement

BIDDING FORMS

Bid Submission Form Price Schedule Price and completion Schedule – Related

Services Bid Security (Guarantee) Bid – Security Declaration Manufacturer’s Authorization

SCHEDULE OF REQUIREMENTS

List of Goods and Delivery Schedule

List of Related Services and completion Schedule

Technical Specification

Drawings

Inspection and Tests

GENERAL CONDITIONS OF CONTRACT

* Definitions * Contract Documents * Fraud and Corruption * Interpretation * Language * Joint Venture, Consortium or Association * Eligibility * Notices* Governing Law* Settlement of Disputes * Scope of Supply

* Delivery and Documents* Supplier’s Responsibilities * Contract Price * Terms of Payments

* Taxes and Duties

* Performance Security * Copyright * Confidential Information* Subcontracting * Specification and Standards* Packing and Documents* Insurance * Transportation * Inspection and Tests * Liquidated Damages* Warranty* Patent Indemnity * Limitation of Liability * Changes in Laws and Regulations * Force Majeure * Change Orders and Contract Amendments * Extensions of Time * Termination * Assignment

CONTRACT DATA

Contract Data shall supplement and / or amend the condition of contract (CC). Whenever there is a conflict, the provisions contract data shall prevail over those in the contract condition

CONTRACT FORMS

* Contract Agreement

* Performance Security

* Bank Guarantee for Advance Payment

NPA APPROVED STANDARD BIDDING DOCUMENTS

PUBLICATION NUMBER TITLE

ICTAD /SBD/01 Shopping Procedure

ICTAD/SBD/02 NCB

ICTAD/SBD/03 MINER CONTRACTS

ICTAD/SBD/04 DESIGN AND BUILD

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ISSUANCE OF BIDDING DOCUMENTS

* Should be made available during office hours

* At least up to one day prier to deadline of submission of bids

* Availability for inspection, free of charge

* Cost of BDs should be reasonable

* Maintain good record keeping system

* BDs shall be issued as specified in the IFB

SUBMISSION OF BIDS

* Bids shall be received only at one location * Bids must be submitted only under sealed cover.

* Clearly marked as “Original” or “Copy”putting together in one envelop

* Late bids shall not be accepted

* Bids shall be received as specified in the IFB

BID OPENING

* BOC shall comprise of minimum two members * Open soon after the closing of bids * Bids shall not be rejected at the bid opening * Only “Original” shall be opened* Late bids shall not be opened* Withdrawals shall not opened (if not any doubt) – withdrawal letter open first * Modification should with original bid * Attendance for bidders or his representatives* Record Keeping is very important* Original bids and records to be handed over to the Chairperson of TEC * Bids shall be opened as specified in the SBDs

NECESSITY

* IG Circular No. 2409/2012Finance Circular No. 05/2012, dated

04.08.2011

* Delegation of financial Authorizationunder FR 135

* For Goods, Works & Services

AUTHORITY FOR AWARD – SHOPPING

Authority GOSL Foreign FundedMPC – Works inviting not less than 5 sealed quotation form ICTAD registered contractors

Less than Rs. 5m

Less than Rs. 5m

MPC – Goods & Services inviting not less than 5 sealed quotations from registered suppliers

Less than Rs. 5m

Less than Rs. 3m

PPC – Works inviting not less than 5 sealed quotation from ICTACD registered contractors

Less than Rs. 5m

Less than Rs. 5m

PPC – Goods & Services inviting not less than 5 sealed quotations from suppliers

Less than Rs. 5m

Less than Rs. 3m

MPC, DPC, PPC, - Goods & Services inviting not less than 3 quotations from registered suppliers

Less than Rs. 5m

Less than Rs. 1m

RPC – Works inviting not less than 5 sealed quotations from ICTAD registered suppliers

Less than Rs. 5m

Less than Rs. 1m

RPC – Goods & Services inviting not less than 5 sealed quotations from ICTAD registered suppliers

Less than Rs. 5m

Less than Rs. 500,000.00

CAO/HD/PD Works inviting not less than 3 sealed quotations

Less than Rs. 500,000.00

CAO/HD/PD goods & Services inviting not less than 3 sealed quotations

Less than Rs. 250,000.00

Purpose of Bid evaluation

To determine the lowest evaluated substantially responsive bid out of the

bid received.

Composition of TEC

1. No member should serve in both the PC & TEC.

2. Subject specialists

3. At least knowledgeable member on Procurement procedure

4. In case of specific subject matters ,can oblation expert advice from external members or institutions

5. Can oblation assistance and expert advice from consultants

Responsibilities of TEC

1. TEC members are jointly and severally responsible.

2. Within the minimum time period as agreed with PC according to the PTS.

3. Evaluation should be made according to the approved specifications and criteria

4. In case of CAPC & MPC, if any objection from any bidder regarding the 10days prier to closing of bids , PE shall convey its decision to all the other bidders.

5. Revive and approve pre qualifications documents / SBDs prepared by the PE.

Responsibilities of TEC Con…

6. To direct the PE to obtain clarifications from bidders in writing if necessary.

7. T approve and issue addenda to the bidding documents where necessary.

8. To agree upon the bid opening procedure.

9. To participate in negotiation , if directed by the PE.

10. The TEC may get assistance from external assistance .

11. Chairperson of the TEC or his nominee selected form the TEC shall participate at the pre – bid conference.

BID EVALUATION

EVALUATION CRITERIA

• Shall be stated in Bid Documents

• All factors quantified in Monitory terms

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Stages of bid Evaluation

Bid Examination

Detailed Bid Evaluation

Post Qualification

EVALUATION PROCESSPreliminary Examination

• Whether the required securities are furnished.• Whether the bid documents are properly signed.• Whether the power of attorney for the authorized

person is submitted• Whether joint venture agreements are submitted ( If

necessary)• Eligibility of bidders• Whether the bid form was purchased from the

concerned office• Whether the person or firm submitting the bid

purchased bid form• Whether the bid is sealed• Whether the local agent is declared (If necessary) 46

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Preliminary Examination

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Substantial Responsiveness

• Failure to sign the bid form• Eligibility requirements• Bid security as specified• Inability to meet the critical delivery schedule• Conditional bids• Unavailability of major supporting documents • Failure to bid for the required scope of work• Failure to quote for a major items in the package• Failure to meet major technical requirements –

E.g. required material , plant capacity.

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Detailed bid evaluationStep – by – step procedure to be followed:

1. Correction of arithmetical errors

2. Un balance Bids

3. Discounts if Any;

4. Evaluation of acceptable omissions

5. Conversion to common currency

6. Completion times

7. Adjustments for various minor deviations

8. Domestic preference

9. Substantially non-responsive bids

10.Performance or service factors will be taken in to account as a adjustment.

CORRECTION OF ARITHMETICAL ERRORS

1. Where there is discrepancy between the amount in figures and in word , the amount in words will govern

2. Unit rate and line items

3. Average unit cost for missing items

4. Estimated unit cost for underestimated items

Exclude VAT ,Contingencies & Provisional sum

Unbalanced Bids

Examine whether the bid is substantially balanced

Verify that prices are not so low Higher unit price for earlier worksHigher unit rates for underestimated work

Items>50% the average cost and where the total

amount involved >5% of the total bid

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Unbalanced Bids

Large contracts – say exceeding 500MnDiscount the Loaded ItemDiscount the engineer estimated valueAdd the deference between two NPVs to the

bidder value for the purpose of compression

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Unbalanced Bids

Other contract – Say not exceeding 500MnAsk to provide rate analysisIf the bidder fail to justify ask additional bid

security to mitigate the riskIf the bidder refuse to provide such security

bid shall be rejected.Add the deference between two NPVs to the

bidder value for the purpose of compression

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Alternative bids

If the bidders are permitted to submit alternative bids , it should be mentioned in the bidding documents

Shall be considered as a separate bidIf the lowest evaluated bidder has submitted the alternative bid ,

then in can be opened.Ask to provide rate analysisIf the bidder fail to justify ask additional bid security to mitigate

the riskIf the bidder refuse to provide such security bid shall be rejected.If the alternate bid price lower than the original bid , then

alternate bid value should be the lowest evaluated price

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APPLICABLE DISCOUNT

1. Prier to closing of bids

2. Ignore Conditional Discount

3. Should be declared before closing of bids.

4. As a % or lump-sum can be declared.

5. Exclude the provisional sum and contingencies when the discount is offered as a %

6. When the discount is offered as a lump –sum ,can distribute uniformly to all the line items excluding Contingencies and provisional sum.

CONVERSION TO COMMON CURRENCY

• OBJECT– To determine lowest evaluated bid on date of specified.

• BID PRICE– Convert in to amount payable in each currency.

• COMMON CURRENCY– Borrower’s or any currency

• EXCHANGE RATES– Official source such as Central Bank

• AS ON– Any specified date – Date to be clearly specified in bid documents.

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DOMESTIC PREFERENCE

• Guideline 7.9.6 shall be included in the bidding documents

• Assembly ,Fabrication & possessing etc are commercially recognized.

• Can not modify the mix of domestic and foreign goods after bid opening.

• No margin of preference shall be applied to any associated services or works included in the package.

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Detailed evaluation of bids

Financial adjustment for Bid Price (Commercial Aspects)

1. Adjustment for Deviation from the terms of payment

2. Adjustment for deviation from the delivery schedule or completion

3. Adjustment for Deviation from provision for payment of duties and taxes

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Detailed evaluation of bids

Financial adjustment for Bid Price (Technical Aspects)

1. Adjustment for completeness in scope of supply – E.g. Missing Items

2. Adjustment for Technical compliance – E.g. Alloy wheel vs Normal wheel

3. Adjustment for Inland Transportation4. Adjustment for spare parts5. Maximum amount of Adjustment for deviation

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BID EVALUATION

Other factors

• Delivery Time /Completion time• Payment terms • Terms of Guarantee• Training

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BID EVALUATION

Other Factors

• Technical Capacity• Operating Cost• Maintenance Cost• Efficiency• Resale value

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Life cycle Cost

Questions?

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