PRESENTATION ON THE PUBLIC PROCUREMENT TO SPENDING OFFICERS AT KNUST. BY EDWARD NKETIA-ASANTE...

PRESENTATION ON THE PUBLIC PROCUREMENT TO SPENDING OFFICERS AT KNUST.

BY EDWARD NKETIA-ASANTE

DIRECTOR OF PROCUREMENT - KNUST

MEANING OF PUBLIC PROCUREMENT

Public Procurement is made up of defined Rules, Methods, Processes and Procedures by which Government Institutions are mandated by law to use to acquire goods, services and works using public funds.

The Law governing procurement in Ghana is called the Public Procurement Law, 2003, ACT 663.

OBJECTIVES OF ACT 663

To harmonize the processes of Public Procurement in the public service.

To secure a judicious, economic and efficient use of state resources. i.e. Procuring; The Right Quantity; At the Right Price; From Right Supplier; and to be Delivered to the Right Place and at the Right

Time. To ensure that Public Procurement is Fair,

Transparent and Non-Discriminatory.

Strategic Importance of Public Procurment

Ensures timely delivery of goods and services and completion of projects. – By Planning.

Ensures sound financial management by achieving value for money in the organizations’ expenditure – By Competitive Participation.

Reduces corruption - By Ensuring Transparency and Fairness in the Procurement Processes.

Encourages private sector growth and investment – By Opening Tender Publicly.

THE SCOPE OF APPLICATION OF ACT 663

The Act applies to: the procurement of Goods, Works and

Services financed in whole or in part from public funds.

Disposal of public stores and equipment. Procurement financed by funds or loans

taken by Government of Ghana, including foreign aids and grants.

EXCEPTIONS

Where the Minister of Finance decides that it is in the national interest to use a different procedure.

Where a loan or funding agreement specifies alternative procedures.

The Act does not apply to stores management or distribution.

WHO DOES THE ACT APPLY TO?

Central Management Agencies (CMAs); Ministries, Departments and Agencies

(MDAs); Subvented Agencies; Governance Institutions; State Owned Enterprises; Public Universities, Schools, Colleges and

Hospitals;

WHO DOES THE ACT APPLY TO?

Bank of Ghana and Financial Institutions owned by Government;

Institutions established by Government for the general welfare of the public; e.g. PURC, NIC etc.

PROCUREMENT STRUCTURES

End-User Department:- Existing Department which initiates requirement and provides Technical Inputs or Specification.

Procurement Unit:- Permanent Unit staffed by Procurement

Professionals; Manages and Facilitates all Procurement

Activities; The Head of the Unit – Procurement Officer or

Director, acts as Secretary to the Committees. (ETC, TEP etc)

PROCUREMENT STRUCTURES Contd.

Procurement Entity:- Institutions responsible for procurement subject to Act 663 and any conditions and laid down procurement regulations.

Head of Entity (e.g. Vice Chancellor) is responsible and accountable for all procurement actions and inactions taken.

The Vice Chancellor in a way of strengthening the Collegiate System in the University has delegated part of his authority to the following structures; Provosts; Deans and Directors; Heads of Department; and Managers.

PROCUREMENT STRUCTURES cont.

Procurement decisions shall be taken in a corporate manner.

It is the responsibility of the Head of Entity to ensure that provisions of the Public Procurement Act, 2003 (Act 633) are complied with in the Entity.


THE HEAD OF ENTITY: The Head of the Entity is more or less

the Principal Account Holder (PAH) as stated under Section 74 in the Financial Administration Act, 2003 (Act 654).


KEY FUNCTIONS OF PAH Ensures that the provisions of the Act are

complied with. Is held accountable should a contract be

awarded in a manner that is inconsistent with the Act.

Makes decisions in a corporate manner. Implementation of all procurement

activities.


Tender Evaluation Panel (TEP) The Procuring Entity shall establish a TEP with

the required expertise to evaluate tenders and assist the Review Committees in their work.

TEP shall work with the predetermined and published evaluation criteria.

TEP is made up of Ad-Hoc specialists who evaluate, review and make appropriate recommendations for contract awards, using specified and previously announced criteria for evaluation.


TEP Evaluates the Quotations / Offers received from Suppliers, Contractors and Consultants; Compare the Published Requirements with

the Offers; No new requirements shall be introduced at

this stage; Recommendation for Contract Award;

The specialists need not be in-house or in the institution.


Entity Tender Committee:- Each PE shall establish ETC. ETC ensures that procurement activities carried out

conforms with the procedure prescribed in the Act. Exercise sound judgment in making procurement

decisions. Refer to appropriate TRB for approval. ETC Approves Procurement Plans and Invitation

Documents. Awards Contracts within its Authority.


Ensures referral to the appropriate Tender Review Board.

ETC is a Standing Committee of Senior Officials.

ETC Reviews yearly & quarterly procurement plan.

ETC Ensures correlation between policies and procurement plans of the entity

ETC Applies proper procedures ETC Seeks one stop only concurrent

approval


SECTION 20: Tender Review Boards (TRBs) Tender Review Boards are established at 4 levels

and their levels of operations are governed by thresholds.

TRBs review and approve evaluation reports. They consist of the following:

Central Tender Review Board (CTRB) Ministerial Tender Review Board (MTRB) District Tender Review Board (DTRB) Entity Tender Committee (ETC) Head of Entity (HOE)

PROCUREMENT STRUCTURES cont.Non Decentralized Entities- Thresholds for Review and Approval Authority. (GH¢)

Authority Goods Works Technical Services

Consulting Services

HOE Up to 5,000 Up to 10,000

Up to 5,000 Up to 5,000

ETC >5,000- 100,000

>10,000- 200,000

>5,000- 100,000

>5,000- 50,000

MRTRB >100,000- 800,000

>200,000- 1.5m

>100,000- 800,000

>50,000- 350,000

CTRB >800,,000 >1.5m >800,000 >350,000


Functions of TRBs: Review the activities at each step of the

Procurement Cycle leading to the selection of the lowest evaluated bid or best offer by PE in order to ensure compliance with the provisions of the Act and its operating instructions and guidelines;

Give concurrent approval; Furnish the PPA with reports in prescribed

format; and


TRBs may engage the services of consultants and advisers, or co-opt persons with specialized expertise.

Public Procurement Authority: Makes proposals on the formulation of policies on

procurement. Ensures policy implementation and human

resource development for Public Procurement. Develops draft rules, instructions and other

regulatory documentation on Public Procurement and formats for Public Procurement documentation.


Monitors and Audits PP and ensures compliance with statutory requirements;

Prosecutes breaches of the Act; Have the right to obtain information

concerning PP from contracting authorities; Establishes and Implementing an

information System relating to PP. Publishes monthly PP Bulletin which

contains Procurement Notices, Notices of Invitation to Tender and Contract Awards Information.


Assesses the operations of the PP processes and submit proposals for improvement of the processes.

Presents Annual Report to the Minister on PP processes.

Facilitates the training of public officials involved in PP at various levels.

Advises Government on issues relating PP. Maintains a register of all Procurement Entities and

Members and Secretaries to tender committees of PP Entities.

Maintains a database of suppliers, contractors and consultants and a record of prices to assist in the work of PE.


Investigates and debars from procurement practice under the Act, suppliers, contractors and consultants who neglect their obligations under PP contract, have provided false information about their qualifications or offered inducement of a kind referred in Section 32 of the Act.

Maintains list of firms that have been debarred from participating in PP and send the list to all PEs.


Minister of Finance: Issues Regulations; Receives Public Procurement Authority’s

Annual Report for on-ward submission to Parliament. Feedback; Recommend for amendments of any section of

the ACTS; Procurement expenditure in the year; Proposals on the formulation of policies on

procurement; etc

PUBLIC PROCUREMENT PROCESSES

Public Procurement entails the following Processes: Identifying Sources Funding; Needs Assessment and Planning; Annual Estimates and Budgeting; Tendering;

Identify Sources and Inviting Offers; Evaluating Offers;

Seeking for Concurrent Approvals; Awarding and Managing Contracts.


Sources of Procurement: International Sources; (Internet) National Sources; Within the Locality; From Existing Records and Databases; From Sister Institutions; and Advertise for Registration of Firms.


Inviting Offers:- Use appropriate Methods and Documentation.

Documentation: Tender Documents (RFTs): for High Value

Procurement, High Risk Procurement and High Competitive Tender. Used for Goods and Works Procurement.

Letters of Invitation (LOIs): for Low Value Procurement, Low Risk and Low Competitive Tender. Used for Goods and Works Procurement.

Request For Proposals (RFPs): Used for Selection of Consultants only.


Procurement Methods available for Goods, Technical Services and Works:

National Competitive Tendering (section 44) International Competitive Tendering (section 45) Restricted Tendering (sections 38-39) Single Source Procurement (sections 40-41) Prequalification/ Two-Stage Tendering (Sections

36-37) Price Quotation/Request for Quotation (RFQ)

(sections 42-43)


Procurement Methods available for ConsultingServices: Advertisement for Expression of Interest; Least Cost Selection (LCS); Quality Cost Based Selection (QCBS) – Default; Quality Based Selection (QBS); Fixed Budget Selection (FBS); Selection based on Consultants’ Qualification; and Selection based on Individual Consultant’s

Qualification;


Choice of Procurement Method shall be based on: threshold or circumstances driven.

Thresholds shall be issued periodically in a Schedule of the Act

Circumstances are defined in the Act and Regulations


Circumstances: Specialized Product and no substitute; Urgency; Emergency Situations; Limited Number of suppliers; Compatibility; Standardization; Research, experiment, study or

development purposes; and For National or Institutional Security


Products available in the foreign countries only;

Products available in the domestic country; and

Cost of tender proceedings is disproportionate to the cost of the product to be procured;

Intellectual Property or Patent Right;


Prequalification:- We identify the qualified firms before we invite them to bid.

Usually necessary for large or complex works or in other circumstances in which the high cost of preparing detailed bids could discourage competition, such as custom-designed equipment, industrial plant, specialized services, contracts under turnkey etc.


International Competitive Tender:- Where products to be procured can only

be obtained in foreign countries;


National Competitive Tender:- Where the objects to be procured can be

obtained in the local country:


Price Quotation:- Where the objects to be procured could

be obtained within the locality; When Lead Time is of essences to the

production line.


Single Source:- The Procurement Entity may engage in Single Source procurement subject to approval from the Public Procurement Authority (PPA).

Justifications:- Where Goods, works and services are obtained from a

particular supplier, contractor or consultant.Supplier, Contractor or Consultant has exclusive right of the Goods, Works or Services- Patent Rights, Intellectual Property; No reasonable alternative or substitute exist;


There is an urgent need for Goods, Works or Services: Due to unforeseeable circumstances and not

dilatory conduct on the part of the entity. Owing to catastrophic event;

Additional purchases due to standardization;

Additional purchases due to compatibility with the existing equipment;


Engaging a contractor or supplier in a Research, Experiment, Study or Development except where the contract includes the production of goods in commercial quantity; and

The Procurement concerns National Security or Entity Security.


Restricted Tendering:- The Entity may for reasons of economy

and efficiency and subject to approval from PPA engage in procurement by means of Restricted Tendering; If goods, works and services are available

only from a limited number of suppliers or contractors; or


If time and cost required to examine and evaluate a large number of tenders is disproportionate to the value of the goods, works and services to be procured.


Procurement Methods for Consulting Services and Thresholds:

Advertisement for EOI - Above GH¢ 70,000 Least Cost Selection - Above GH¢ 70,000 Selection based on consultant qualifications:-

Up to GH¢ 35,000 Quality Based Selection (QBS) – No threshold Fixed Budget Selection (FBS) – No threshold Quality and Cost Based Selection (CQBS)- No

Threshold


Thresholds For Procurement Methods (Goods, Works and Technical Services)

Prequalification: Goods - Above GH¢3,500,000.00 (¢35b) Works - Above GH¢7,000,000.00 (¢70b) Tech. Services - Not more than 10% of cost of

Works International Competitive Tender:

Goods - Above GH¢1,500,000.00 (¢15b) Works - Above GH¢2,000,000.00 (¢20b) Tech. Services - Above GH¢200,000.00 (¢2b)


National Competitive Tender: Goods - Above GH¢20,000 - GH

¢1,500,000 Works - Above GH¢50,000 - GH

¢2,000,000 Tech. Services - Above GH¢20,000 - GH

¢200,000 Price Quotation:

Goods - Up to GH¢20,000.00 (¢200m)

Works - Up to GH¢50,000.00 (¢500m)

Tech. Services - Up to GH¢20,000.00(¢200m)


Restricted Tendering - Subject to approval by PPA

Single Source Procurement - Subject to approval by PPA

Delegation of Authority – By Vice Chancellors

The threshold for Provosts, Deans and Heads of Departments (up to GH¢500.00) was introduced by Prof. K. A. Andam’s during his tenure as Vice Chancellor;

The object was to reduce his workload, empower his subordinates and also to facilitate the Procurement of Minor and Low Value Items to enhance the efficiency and effectiveness of academic work.


The immediate past Finance Officer, Mr. K. Adu and the Director of Procurement went to Public Procurement Authority (PPA) to have discussions with the then Chief Executive Officer of PPA on this innovative idea from the VC.

PPA embraced the idea but cautioned the University to observe the provisions of the ACT in carrying procurements within this threshold (GHC1.0-GHC500.00).


The Vice Chancellor, Prof. W. O. Ellis also in a way to further strengthen the decentralization policy in the University reviewed the threshold.

The object was to facilitate the procurement of minor and low value items, especially the teaching and learning materials to enhance teaching and learning.

The new levels are as follows:


1. Heads of Department - GH¢500.002. Deans/Directors - GH¢1,000.003. Provosts/Heads of Administrative/

Professional Offices - GH¢1,500.004. Director, University Hospital/

Dean, Institute of Distance Learning- GH¢1,000.00

Note:-The due process should be observed when administering the above thresholds.

TENDERING PROCESS for the New Levels of Thresholds

The Price Quotation (PQ) or Invitation For Quotation (IFQ) Method shall be used.

Use appropriate Invitation documents to source for quotations.

Quotations are sourced using Letters of Invitation (LOI) from a minimum of three registered firms. (see Form A1)

The quotations are to be submitted in sealed envelopes.


In the LOIs the Procurement Entity shall specify the ff:

a) Fix the place for, and a specific date and time as the deadline for the submission of quotations;

b) Allow tenderers at least Two (2) weeks to submit sealed quotations.

c) Sealed Quotations shall be opened Public.

d) Suppliers or their representatives shall be allowed to observed the opening proceedings.


The Letter of Invitation (LOI) shall capture the following:

The Contract Package No./Name; Brief Description of the items and their respective

quantities; Price Schedule Chart indicating the Minimum Technical

Specifications required for each item, (See Form A2); Warranty Period; Delivery Period; Time and Date of Tender Submission/Opening; and Place of Tender Submission/Opening.

TTENDERING PROCESS for the New Levels of Thresholds

It is expected that experts in the relevant areas would be invited to assist in defining the technical requirements and evaluation of bids.


Opening of Tenders :-Tenders shall be opened1) At the time specified in the tender

documents (LOIs) as the deadline for the submission of tenders or at the deadline specified in any extension of the deadline.

2) The time for opening of the tenders shall be the same as the deadline for receipt of tenders or promptly after that deadline.


A supplier or contractor who has submitted a tender or a representative of the supplier or contractor, shall be permitted by the procurement entity to be present at the opening of tenders.


The name and address of each supplier or contractor whose tender is opened and the tender price shall be announced to those present at the opening of tenders and communicated on request to a supplier or contractor who has submitted a tender but is not present at the opening of the tenders.

TENDERING PROCESS for the New Levels of Thresholds.

Evaluation of Tenders:The procurement entity shall evaluate and

comparethe tenders that have been submitted in

order to ascertain the successful tender in

accordance with the procedures and criteria set out in the

invitation Documents (LOIs).


The Unit shall constitute an Ad-hoc Tender Opening/Evaluation Committee as appropriate to open and evaluate bids under their threshold.

Evaluation of tenders shall be carried out immediately after the tender opening.

No criterion shall be used that has not been set out in the invitation documents.


The successful tender shall be:a) The tender with the lowest evaluated

tender; andb) The lowest evaluated tender

ascertained on the basis of criteria specified in the invitation documents.


Standard forms prepared by Procurement Office should be used to carry out the tender opening/evaluation (See Form B).

The Tender Evaluation Panel shall make recommendation for contract award for an appropriate authority (HOD/ Dean/ Director/ Provost/ VC) to review and approve depending on the level of expenditure.


Review and Approval:- Submit the Evaluation Report to an

appropriate authority for review and concurrent approval ;

Contract Award & Management:- Notification; Signing; Execution; Inspection & Acceptance; and Payment.

AUDITING OF PROCUREMENT ACTIVITIES

A Auditing Team including Internal Audit Staff shall be sent to the various units to carry out procurement audit and file reports to the Director of Procurement for onward submission to the Vice Chancellor. Just to ensure that the activities at the various units comply with the Public Procurement Act, 2003 (Act 663).

A Procurement Entity shall maintain records of procurement proceedings for future audit.

AUDITING OF PROCUREMENT ACTIVITIES

A check list shall be used for the auditing exercise (See Form C).

Departments that contravene the provisions of the Act would be sanctioned and have their thresholds withdrawn.

Any evidence of Bulk Breaking detected would call for sanctioning and subsequent withdrawal of the threshold privilege.

CONTRACT AWARDS

After approval of recommendation, a Local Purchase Order Form (See Form D) should be prepared by the Procurement Officer assigned to the College or Unit and this is to be signed by the Head of Department/ Dean/ Director/ Provost, depending on the contract amount, and the College Accountant and copies shall be sent to the Director of Procurement.

Procurement Rule-On Inducement Sect. 32:-Inducement from

Suppliers, Contractors and Consultants A PE shall reject a tender, quotation and

proposal if the supplier or the contractor that submitted bid, gives or agreed to give directly or indirectly to any current or former officer employee of the PE: A gratuity in any form; Offer of employment; and Any other thing of service or value as

inducement.

Procurement Rule-On Description of Goods, Works and Services.

Sect. 33:- Description of Goods, Works , Services

Using:- Specification, Bills of Quantities, Terms of Reference,

Plans, Drawings and Designs that provide the technical or quality characteristics of Goods, Works and Services to be procured.

There shall be no reference to a particular trade mark, brand name, patent, specific origin or producer in the tendering process.

The Suppliers in their Submission shall indicate the trade mark, brand name, patent, specific origin or producer of their offers.

RIGHT TO REVIEW

Right to review :- Any supplier, contractor or consultant

that claims to have suffered loss or injury due to a breach of a duty imposed on the procurement entity by this Act, may seek for review.

International Obligations

Notwithstanding the extent of the application of this Act to procurement, procurement with international obligations arising from any grant or concessionary loan to the government shall be in accordance with the terms of the grant or loan.-Section 96

Offences Relating to Public Procurement

Any person who contravenes any provision of the Act commits an offence and where no penalty has been provided for the offence, the person is liable on summary conviction to a fine not exceeding 1000 penalty units or a term of imprisonment not exceeding five (5) years or to both.

IN CONCLUSION

Please endeavour to comply with all the rules of the Public Procurement Act, 2003 (Act 663).

THE END

THANK YOU

PRESENTATION ON THE PUBLIC PROCUREMENT TO SPENDING OFFICERS AT KNUST. BY EDWARD NKETIA-ASANTE...

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