Public Procurement Process (an overview)

8/3/2019 Public Procurement Process (an overview)

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Important component ofGovernance

Public procurement is one important activityof governance with high potential forcorrup on

People look for integrity and honesty

The image of any government, particularlyin the developing world, is largely

influenced by the quality and integrity ofpublic procurement

Procurement Procedure Formation procuring Unit -PPA -7(3)

Formation Evaluation Committee-PPA -71

Preparation of procurement Plan/strategy PPA -6

Preparation of Estimate (> Rs. 25000.00)-PPA (5)

Preparation of Bid document

Opening of Bids

Evaluation of bids

Award of the contract

Completion/Termination of the contract

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Procurement Cyclerocurement CycleProcurement is conceived as aProcurement is conceived as aseries of stages and thoseseries of stages and thosestages in logical sequence isstages in logical sequence isknown as the procurementknown as the procurement

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cyc ecyc e

The sequences of activitiesThe sequences of activities(cycle) can be presented in a(cycle) can be presented in anumber of waysnumber of ways

GeneralProcurementProcess

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Procurement Methods and Practices Procurement Methods {PPA; Procurement

Method to be Selected: 8- (a)}

Force account

Through Consumers Society/Stake

holders participationDirect Purchase/Negotiation

Sealed Quotation

National Competitive Bidding (NCB)

International Competitive Bidding (ICB)

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DirectPurchaseProvisionConcerningDirectProcurement: PPR,85. IT IS JUSTIFIED WHEN:

WORK INVOLVED CANNOTBE DEFINED IN ADVANCE

W OR KS A RE SMA LL A ND SCA TTERED OR IN R EM OTE P LA CESFOR WHICH QUALIFIED CONTRACTORS ARE NOT INTERESTEDOR LIKELY TOASK UNREASONABLEPRICE

CRISISSITUATION NEEDING PROMPT ATTENTION

rec urc ase rom oca s ops

Upto3Lakh(Goods/Services)

Upto5Lakh(works)

Upto15LakhsfromDomesticManufacturer.

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SealedQuotationProvisionsConcerningSealedQuotation: PPR 84

SmallcontractsAmountupto10Lakh (forgoodsor

services)and

up

to

20

Lakh (for

works

ProcedureofNCB tofollowNoticeperiodissmall(15days)Usedforurgentlyrequiredgoods/smalljobsMinimum3Quotationsrequiredonthe

firstnotification,minimumnumbernotrequiredforrenotice.

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National Competitive Bidding

(NCB)

Mediumsizecontract

Localproduction,

reasonable

cost,

promptdelivery

Availabilityoflocalresourcestechnical,financial,etc.

Widecompetitionispossible

Noticeperiod(30daysminimum) PPA14(4)(1)

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InternationalCompetitiveBidding(ICB)

InternationalLevelBidding:PPA 15

Sizeandscopeofcontractusuallycostinglargeamountforwhichdomesticcontractors,manufacturersandsuppliersdont ossessesade uateca abilit andresources

Thegoodsarenotproducedlocally

Thegoodsareofcomplicatednature

The

job

is

highly

technicalNoticeperiod(45daysminimum) PPA14(4)(1)

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ContracttypesPPR Schedule3,(RelatingtoSubrule(1)ofRule21)

(ForGoodsandOtherServicesProcurement)

Contractforsupplyofspecificgoods.

FrameworkContract(unitratecontract).

Multiyearcontract.

Contractfordesign,supplyanderect.

Turnkeycontracts. (design,procurementofallinputs,erectionatsite,commissioning,testingandevenoperationforaninitialperiod)


ContracttypesPPR Schedule4,(RelatingtoRule22)

(FortheProcurementofWorks)

Unitratecontract

Lumpsumcontract

Costreimbursementcontract

Designandbuildcontract

Managementcontract

Performancebasedmaintenanceormanagementcontract

Pieceworkcontract17

ContracttypesPPR Schedule5,(RelatingtoRule23)

(FortheProcurementofConsultancyServices)

Lumpsumcontract.

Timebasedcontract

er ormance

ase

ee

pay ng

contract

Percentagebasedcontract.

Indefiniteserviceperiodcontract



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OtherMethodsofProcurement TwoStageBidding:Wherethepreparationofcomplete

technicalspecificationsinadvanceisundesirableorimpractical.

First

stage unpriced technicalproposalonthebasisofaconceptual

designorperformancespecificationsareinvited

subjecttotechnicalaswellascommercialclarificationsandadjustmentstobefollowedbyamendedbiddingdocuments

SecondStage

submissionoffinaltechnicalproposalandpricedbids

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DOCUMENTS

Procurement Planning

Procurement Plan Establishment of the need for Sustainable

Procurement.

Fix the procurement policy/strategy basedon the best purchasing option consideringre uirements, risk, cost and othermanagement issues.

The Australian Procurement and Construction Councils (APCC)

defines sustainable procurement as a process whereby

organizations meet their needs for goods, services, works and utilitiesin a way that achieves value for money on a whole of life basis in termsof generating benefits not only for the organisation, but also to society

and the economy, whilst minimizing damage to the environment.

Procurement Planning: Need and

Importance Timely completion of the project

Cost saving

Identification of critical and non-criticalactivities

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,

Resource management: organize people andresource Resource scheduling

Theft, damage, loss, out dated, etc

Assignments and responsibilities

Other issues

Procurement Plan(need analysis)

The following questions should be answered Do we really need to purchase, or can the need be met in

another way?

Can the quantity or scale of the goods, works or services be

reduced whilst achieving the same service delivery? Can alternative goods or service be used to meet this need?

Can the works, goods, service be specified to have improvedsustainability outcomes, including being able to serve auseful purpose after its initial use?

What information is available regarding sustainably-preferableoptions for this purchasing requirement? Where can moreinformation be obtained about suitable alternatives?

Procurement PlanMaster Procurement Plan to bePrepared- PPR (clause 7)-for a period of more than one year or in

making a procurement of an amountexceeding one hundred million Rupeesannually.

The master procurement plan to beapproved by the secretary of the PublicEntity.

To be up dated each fiscal year.


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Procurement PlanMaster Procurement Plan shall contain, the following matters:-

Type, quantity and tentative estimated cost,

Procurement method,

Slice or package for maximizing competition,

Tentative numbers of contracts,

Pre-qualification proceedings (if required),

Tentative time-table of proceedings,

Any other matter as directed by PPMO

Procurement Plan Annual Procurement Plan to be Prepared-

PPR (clause 8)-

In the cases where a Public Entity requires to makeprocurement of an amount exceeding one millionRupees annually.

Annual procurement plan to be attached withthe annual program and budget of the nextfiscal.

The annual procurement plan to be revisedand sent to its superior office, Treasury andController Office and PPMO. 26

Procurement Plan Annual Procurement Plan to be Prepared- PPR

(clause 8)-

the following matters shall have to be stated

The types of procurement,

Possible package of procurement,

me ta e o procurement procee ngs,such as Preparation of specification, cost estimate,

bidding documents, notice for invitation, evaluation,

Acceptance, contract, commencement, and completion.

Procurement method,

Types of contracts, and Any other matter as directed by PPMO 27

Specification

The act of specifying, a detailed,

,

especially a statement prescribing

materials, dimensions, and quality

of work for something to be built,

installed, or manufactured.

SpecificationSpecifications are a part of contract documents

It is the document where the level of intendedquality is specified.

It is clear and concise description of materialsan wor mans p.

If required the specifications are attached withproper drawings and other related documents

They should be non-discriminatory.


SpecificationPurposes

Specifications help to avoid lengthy description inthe Bill of Quantities.

They guide Bidders about the clients intendedquality requirements and to arrive them at fair price.

the risks and responsibilities.

Formation of contractual obligations as to whatexactly the client wants.

Help the supervisors and commissioning and testingteam.



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It guides to achieve the required total qualityand performance of the end product,

It helps the Contractor/ Supplier to workout the

rates and prices for bidding the contract,

It helps the Engineer/ Employer to monitor and

control the quality of end product,

It provides basis for dialogue between the

Contractor and the Engineer to agree ordisagree for quality of materials and works.

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It is basis for the Engineer to approve or rejectmaterials or works

Clear specifications will result in less Claims,Disputes and Litigation problems

Thats why, the specificationsare to be written by anexperienced professional.


SpecificationsUse of standard specifications reduces thechances of ambiguity and also makes easier forpreparation of contract documents.

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published by the organization. They aregenerally prepared on the basis of reference,

e.g. ISI, BSI, NS etc.

Standard Specification needs to be approved bythe Cabinet level.

Er. Satya Narayan Shah

Preparation of Specification Language: Simple and clear, same tense

Brief: as brief as possible. Standard articles codebooks specified by references, no need ofexplanation.

Fairness: fair to all parties, proper sharing of risk.

Clear Requirement: Express requirement clearly

No repetition: Repetition of information should beavoided.

Unnecessary text: Inapplicable text should not beincluded.


Preparation of Specification (contd) Inclusions: Inclusion of proper paragraphs for

specification of materials, Major Components,Installations, Tests and Commissioning, After salesservice, Guarantee/Warranty.

Standard Size: Commercial sizes should be.

Brand/Model: Any particular brand or model shouldnot be specified as far as possible. If it is quoted,options and choice should be given.


Specifications and Drawings Specifications and Drawings are the 2 integral

parts of contract, which shows the requirements(needs and expectations) of the Employer.

Specifications are referred more in cases of

conflict and dis utes whereas the drawin s aredealt in day-to-day work execution.

Notes mentioned in the drawings are also treatedas specifications and are effective.



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Specifications and Drawings

Thats why the Notes written in the drawings arealso to be clear, specific, complete, and carefully

worded as in the Specification. To minimize the discrepancy it is important to take

.

It is advised to include clauses stating in case ofdiscrepancy in Drawings and Specifications, theEngineer will decide .

Such authority to the Engineer may avoid disputesand litigations arising from some small mistakes.


Preparation of Specification

Example VehicleType Sedan, Hatchback,

General - Seating capacity,Engine Power, C.C etc. Spec,

Transmission 4 speed, 5 speed

Steering Manual, power

Options AC, Non AC,

Warranty - Period to be covered

ec


Spec,

Performance

Conclusion

Specification to be requiredto describe the desiredperformance, and not to

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reduce competition.

Er. Satya Narayan Shah

BI D DOCUMENTS

Contract and Bid documents

Contract is an offer & anacceptance

Contract is an agreement

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e ween or more par es odo or not to do something thatis enforceable bylaw .(Contract Act, 1999 )

Contract and Bid documentsBid Documents provide a Bidder to make anresponsive cost effective offer to the Employerconsidering;

Scope and Quality of works,

Conditions (liability and risks of Employer andBidder),

Time for com let io n,


Payment modes etc.

Proper Bid Documents helps anEmployer to assess all the Bidders Bidat equal footing and provides a basisfor acceptance of Responsive, Qualifiedand Cost effective bid.


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Lay down Rules of the Competition

How to prepare and submit bids What w ill be the selection criteria

What w ill be the qualification criteria How to price

Specify Scope of Works & Obligations

Purpose of Bidding Document s

Technical Specifications Bill of Quantities Delivery/Completion Time Warranty/Service Obligations

Specify Clearly the Conditions of Contract

General, Time, Cost, and Quality Control


Content of Bid Document:Invitation for Bids (IFB)

Section I.Instructions to Bidders (ITB)

Section II. Bid Data Sheet (BDS)Section III. Evaluation and Qualification Criteria

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ec on . ng orms

Section V. Schedule of Requirements

Section VI. General Conditions of Contract (GCC)

Section VII. Special Conditions of Contract (SCC)

Section VIII. Contract Forms

PREPARATION OF BID

DOCUMENTS TO BE DONE INCLOSE CONSULTATION WITH THE

IMPORTANT NOTES

.

USE OF APPROPRIATE STANDARDBIDDING DOCUMENTS ISSUED BY

PPMO.


Contract form. Main Agreement document signed by

both parties and witness.

Contractor/Suppliers commitment tocomplete the job and remedy thedefects in conformity with the provisionof contract.

Employers commitment to pay thesupplier as per the conditions ofcontract.

List of documents to form and be readand interpreted as part of the greement.46

Completion of theContract


Inspection & CommissioningInspection & Commissioning

Inspection Committee

Verification & validation of

performances

Inspection Report48Er. Satya Narayan Shah


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Employers most contractual obligation Principal source of funds for supplier to discharge

his dutyDelay or default in release in payment has a

negative impact on discharge of obligation by the

Release of excessive payment or advancing ofpayments may dilute the motivation level ofcontractor/ supplier in discharging his duty

A balance is therefore necessary to be maintainedso that the supplier is suitably compensated forworks completed and adequately motivated forcompletion of work


Public Procurement Process (an overview)

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