FATA INSTITUTIONAL STRENGTHENING PROJECT

FATA INSTITUTIONAL STRENGTHENING PROJECT

TRAINING MODULE ON

PUBLIC PROCUREMENT SYSTEM FOR FATA SECRETARIAT

Prepared by Abacus Consulting under Contract # AID-391-C-11-00003

The FATA Institutional Strengthening Project (FISP) is made possible by the support of the American people through the United States Agency for International Development (USAID). The FISP is being implemented through Abacus Consulting.

DISCLAIMER: The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government

http://www.usaid.gov/pk/

TRAINING MODULE: CAPACITY BUILDING ON PUBLIC PROCUREMENT SYSTEMS - FATA SECRETARIAT

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Contents ABBREVIATIONS AND ACRONYMS .......................................................................................... 4

STRUCTURE OF TRAINING MANUAL ........................................................................................ 5

MODULE 1: INTRODUCTION TO PPS & ITS ETHICAL PRINCIPLES ........................................ 6

WHAT IS PUBLIC PROCUREMENT? ...................................................................................... 7

ETHICAL PRINCIPLES OF PUBLIC PROCUREMENT SYSTEM ............................................... 8

MODULE 2: PPRA ORDINANCE, RULES & REGULATIONS ..................................................... 10

DEFINITIONS ....................................................................................................................... 11

LEGAL FRAMEWORK ............................................................................................................ 14

PPRA ORDINANCE 2002: ................................................................................................. 14

PUBLIC PROCUREMENT RULES 2004: ............................................................................ 16

PUBLIC PROCURMENT REGULATIONS 2008: ................................................................ 20

PROCUREMENT OF CONSULTANCY SERVICES REGULATIONS, 2010: .......................... 21

PPRA GUIDELINES ........................................................................................................... 24

MODULE 3: PROCUREMENT METHODS .................................................................................. 27

PREFERRED METHOD OF PROCURMENT OF GOODS, SERVICES AND WORKS ................ 29

ALTERNATE METHODS OF PROCURMENT OF GOODS, SERVICES AND WORKS .............. 34

MODULE 4: ANNUAL PROCUREMENT PLAN ........................................................................... 41

MODULE 5: PROCUREMENT PROCESS ................................................................................... 44

PREPARING DESCRIPTION OF REQUIREMENTS/ SPECIFICATION ................................. 48

TERMS OF REFERENCE ........................................................................................................ 50

SELECTION OF PROCUREMENT METHODS ........................................................................ 51

IDENTIFYING SUPPLIERS AND PREPARATION OF BIDDING DOCUMENTS ........................ 52

PREQUALIFICATION OF SUPPLIERS AND CONTRACTORS ............................................... 53

PREQUALIFICATION PROCESS ........................................................................................... 53

OBTAINING AND ASSESSING EXPRESSIONS OF INTEREST (EOI) .................................. 55

PREPARATION OF TENDER NOTICE ................................................................................... 56

DEVELOPING A SHORTLIST ................................................................................................ 57

PREPARATION OF BIDDING DOCUMENTS ......................................................................... 58

PREPARATION OF REQUEST FOR QUOTATION ................................................................. 60

MANAGING THE BIDDING PROCESS ..................................................................................... 61

PUBLISHING TENDER NOTICE ........................................................................................... 62

ISSUING BIDDING DOCUMENTS ........................................................................................ 63

MANAGING A PRE BID CONFERENCE AND SITE VISIT ..................................................... 64

HANDLING BIDDER CLARIFICATION, MODIFICATION AND COMPLAINTS .................... 65

RECEIPT OF TENDERS ......................................................................................................... 66

OPENING TENDERS (ONE STAGE – SINGLE ENVELOPE) .................................................. 67

OPENING TENDERS (ONE STAGE – TWO ENVELOPES) ..................................................... 68

MODULE 6: EVALUATING OFFERS .......................................................................................... 70

GENERAL EVALUATION PROCEDURE FOR GOODS WORKS AND SERVICES .................... 71

EVALUATING OFFERS FOR GOODS & SERVICES ............................................................ 73

EVALUATING OFFERS FOR WORKS ................................................................................. 74

GENERAL EVALUATING PROCEDURES FOR CONSULTANCY SERVICES ........................... 80

PROCEDURE FOR EVALUATION OF OFFER OF CONSULTANCY SERVICES .................... 80

QUALITY BASED SELECTION - EVALUATION ................................................................. 81

QUALITY AND COST BASED SELECTION - EVALUATION ............................................... 82

LEAST COST SELECTION - EVALUATION ........................................................................ 84

CONDUCTING NEGOTIATIONS ........................................................................................... 93

CANCELLING PROCUREMENT PROCEEDINGS ................................................................... 93

AWARDING & ADMINISTERING CONTRACTS ....................................................................... 95

NOTICE OF ACCEPTANCE .................................................................................................... 96

PREPARING AND ISSUING A CONTRACT DOCUMENT ...................................................... 98

ANNOUNCING A CONTRACT AWARD AND DEBRIEFING UNSUCCESSFUL BIDDERS ...... 99

ADMINISTERING A CONTRACT ........................................................................................ 100

ENHANCEMENT OF CONTRACT ......................................................................................... 101

CLOSING OF CONTRACT.................................................................................................... 102

TERMINATING A CONTRACT ............................................................................................. 103

POST-CONTRACT SUPPLIER PERFORMANCE EVALUATION AND REPORT .................... 104

MODULE 7: REDRESSAL OF GRIEVANCES AND SETTLEMENT OF DISPUTES ..................... 106

MODULE 8: PROCUREMENT FRAUDS ................................................................................... 109

MODULE 9: STANDARD BIDDING DOCUMENTS .................................................................. 115


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ABBREVIATIONS AND ACRONYMS

APP Annual Procurement Plan PA Procuring Agency PU Procurement Unit PC Procurement Committee FY Financial Year PR Purchase Requisition PO Purchase Order RFQ Request for Quotation RFP Request for Proposal EOI Expression of Interest QCBS Quality Cost Based Selection QBS Quality Based Selection LCS Least Cost Selection BOQ Bill of Quantity TOR Terms of Reference PPRA Public Procurement Regulatory Authority BOC Bid Opening Committee FG Federal Government IC Inspection Committee IFB Invitation for Bid CIF Cost Insurance Freight NIT Notice Inviting Tenders FCC Foreign Currency Component LCC Local Currency Component PKR Pakistani Rupee FOB Free on Board ITC Information to Consultants LOI Letter of Invitation OCB Open Competitive Bidding SBD Standard Bidding Documents PEC Pakistan Engineering Council EIA Environmental Impact Assessment ECC Economic Coordination Committee MD Managing Director O&M Operation & Maintenance OPE Out of Pocket Expenses PPP Public Private Partnership

STRUCTURE OF TRAINING MODULE The training manual is divided into different modules and each module comprises of chapters. The organization of modules and chapters is as follow:

Module 1 • Introduction to Public Procurement System & its Ethical Principles

Module 2 •PPRA Rules & Regulation

Module 3 •Procurement Methods

Module 4 •Annual Procurement Plan

Module 5 •Procurement Process

Module 6 •Evaluation

Module 7 •Redressal of Grievances and Settlement of Disputes

Module 8 •Procurement Fraud

Module 9 • Standard Bidding Documents


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MODULE 1: INTRODUCTION TO PPS & ITS ETHICAL PRINCIPLES

• After completing this module, you will be able to: • Explain the concept of procurement and public

procurement. • Understand the ethical principles of public

procurement.

Learning Objectives

WHAT IS PUBLIC PROCUREMENT?

Public Procurement means acquisition of goods, services or construction of any works financed wholly or partly out of the public funds, unless excluded otherwise by the Federal Government.

Sound public procurement policies and practices are among the essential elements of good governance. Good practices reduce costs and produce timely results, where as poor practices lead to waste and delays. Procurement is the process by which a government constructs infrastructure, supplies schools and clinics, and contracts professional services. It is fundamental to delivering good public services. It also involves the management of large amounts of money and is the largest single cause for allegations of corruption and government inefficiency. Weaknesses in the procurement system adversely affect welfare and prospect for growth. A weak public procurement system is a breeding ground for inefficiency in service delivery. Public procurement is directly related to economic growth, development, poverty reductions/strategies and overall service delivery. There is no sector of government that is not affected, directly or indirectly, positively or negatively, expectedly or unexpectedly by public procurement. This is because each sector needs goods, services and works of varying magnitudes to effectively perform its function. This implies that a problem in the functioning of the public procurement system will have wider implications for the entire public sector. Public procurement is, undeniably, a significant part of a country’s economy.


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ETHICAL PRINCIPLES OF PUBLIC PROCUREMENT SYSTEM Every procuring agency should ensure that procurements are conducted in a fair, efficient, economical, and transparent manner and procurements bring value for money. Public servants and other employees of procuring agencies are required to comply with the following principles:

• Ethical Principles o An employee shall not use his/her authority/office for any personal gains.

An employee shall seek to maintain and enhance the reputation of the government by: • Maintaining honesty & integrity • Developing professional competence • Using funds/ resources to provide maximum benefits to the

government.

• Conflict of Interest o Declare personal interest that they may have in the procurement.

• Confidentiality o Respect confidentiality of information gained in the course of duties, and

shall not use information for personal gain/unfair benefit of any bidder or supplier.

• Competition

o Treat all bidders and suppliers with fairness and impartiality o Avoid any arrangement that might prevent the effective operation of fair

competition.

• Business Gifts o Should not accept business gifts from current/potential suppliers.

• Hospitality o Shall refrain from accepting any business hospitality that may be

considered as an influence on business decisions.

• Reporting o All employees have a duty to report any unethical conduct by a colleague,

bidder or supplier to their superiors/auditors. Some examples of unethical practices are given as follows:

Example 1

Where the Procuring Agency (PA) seeks external assistance to draft and finalize the Terms of Reference (TOR), and other parts of the Invitation Document, the agency employed for such assistance will not be eligible to bid due to conflict of interest. Example 2

Kalma Chowk Flyover:

The Punjab Government decides to review the flyover design in order to better manage traffic flow, a component of the project being executed at the Kalma Chowk intersection.. A Chinese company has been entrusted with this task. It started without fulfilling the mandatory requirement for an Environment Impact Assessment (EIA) aimed at considering alternatives and impacts to decide on the viability of the project.A conflict of interest in the project has been identified. NESPAK is appointed as the design engineering firm and entrusted with undertaking the EIA (environment impact assessment). NESPAK’s fee for the project is 1.83 percent of total project cost. Can NESPAK prepare an impartial report when it is in fact the chief engineer of the project?

Example 3 Rental Power Plant: An accountability court in Islamabad indicted the former Prime Minister (EX PM) and six others in the rental power case. The Ex PM is accused of misusing his authority during his tenure as the Minister for Water and Power to obtain approval from the Economic Coordination Committee (ECC) and the Cabinet for an increase in the down payment to rental power companies from 7 percent to 14 percent, amounting to about Rs. 22 billion. He authorized the submission of a summary to the ECC on April 13, 2009, which allegedly contained misleading facts, stating that the terms and conditions of the bidding envisaging that the 7 percent advance could not be met and should be raised to 14 percent. The Ex-PM was specifically charged in connection with alleged corruption in the Neudero Power Project. The Ex PM is accused of receiving kickbacks and commissions from nine rental power project firms for awarding contracts for setting up their projects in 2008 to overcome electricity crisis in the country, when he was the Minister for Water and Power.


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MODULE 2: PPRA ORDINANCE, RULES & REGULATIONS

• After completing this module, you will be able to: • Define and understand the terminology of Public

Procurement System (PPS): • Understand and explain the legal framework prevailing

in Pakistan of PPS including: • Public Procurement Ordinance • Public Procurement Rules • Public Procurement Regulations

Learning Objectives

DEFINITIONS The following terms are used in this module:

• Ordinance

o Ordinance means Public Procurement Regulatory Authorities Ordinance 2002

• Goods

o “Goods” mean articles and objects of every kind and description including raw materials, products, equipment, machinery, spares and commodities in any form including services incidental to installation, transport, maintenance and similar activities relating to the supply of goods if the value of these services does not exceed the value of such goods.

• Works

o “Works” mean any construction work consisting of erection, assembly, repair, renovation, or demolition of a building or structure or part thereof, such as site preparation, excavation, installation of equipment, or materials, decoration and finishing and includes incidental services such as drilling, mapping, satellite photography, seismic investigations and similar activities, if the value of those services does not exceed that of the works themselves.

• Service

o “Service” means any object of procurement other than goods or works.

• Emergency

o “Emergency” means natural calamities, disasters, accidents, war and operational emergencies, which may give rise to abnormal situations requiring prompt and immediate action to limit or avoid damage to persons, property or the environment.

• Repeat Orders

o “Repeat orders” mean procurement of the same commodity from the same source without competition and includes enhancement of contracts.

• Public Procurement

o “Public Procurement” means acquisition of goods, services or the construction of any works financed wholly or partly out of the public fund, unless otherwise excluded by the Federal Government.

• Misprocurement


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o means public procurement in contravention with any provision of the Ordinance, any rules, regulations, orders or instructions made thereunder or any other law in respect of, or relating to, public procurement.

• Procuring Agency

o can include any ministry, division, department or any office of the Federal Government and/OR;

o any authority, corporation, body or organization established by or under a Federal law or which is owned or controlled by the Federal Government.

• Bid

o means a tender or an offer in response to an invitation by a person, consultancy firm, company or any organization expressing his/her or its willingness to undertake a specified task, at a given price.

• Competitive bidding

o means a procedure leading to the reward of a contract whereby all interested persons, firms, companies or organizations may bid for the contract and includes both national competitive bidding and international competitive bidding.

• Lowest Evaluated Bid means

o a bid most closely conforming to the evaluation criteria and other conditions specified in the bidding document and

o having the lowest evaluated cost.

• Value for Money

o means best returns for each rupee spent in terms of quality, timeliness, reliability, after-sale services, up-grade ability, price, source and the combination of the whole life cost and quality in order to meet the procuring agency’s requirements.

• Corrupt and Fraudulent Practices

o include the offering, giving, receiving, or soliciting of anything of value to influence the action of a public official or the supplier or contractor in the procurement proceeding or in the contract execution to the detriment of the procuring agency, OR

o a misrepresentation of the facts in order to influence a procurement process or the execution of a contract, collusive practices amongst bidders (prior to or after bids submission) designed to establish bid prices at

artificial, non-competitive levels and to deprive procuring agencies of the benefits of free and open competition and any request for, or solicitation of anything of value by any public official in the course of the exercise of his/her duty.


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LEGAL FRAMEWORK In order to ensure transparency, economic development, efficiency and accountability of public sector procuring agencies, the Government of Pakistan has established a Public Procurement Regulatory Authority (PPRA). The principal objective of the government was to regulate the procurement of goods, services and works in the public sector. In order to strengthen the public procurement system, the GOP/PPRA enacted/issued the following laws, regulations and guidelines:

1. PPRA Ordinance 2002 2. Public Procurement Rules 2004 3. Public Procurement Regulations 2008 4. Consultancy Services Regulation 2010 5. PPRA Guidelines

An overview of these laws is provided below:

1. PPRA ORDINANCE 2002 F.No.2 (I)/2002-Pub

PPRA Ordinance Comprising of 27 sections grouped into 6 chapters as follows:

Chapter No. Chapter Name Sections Brief Description

I Preliminary 1 – 2 It contains the applicability of the ordinance and definitions.

II Establishment of Authority

3 - 5 It includes the provisions for the establishment of the authority, defines the power of the Federal Government and the functions and powers of the Authority.

III Management & Administration of Authority

6 -8 It includes the provisions relating to the composition of a board, the procedure for meetings of the board and the qualification of the managing director.

IV Financial Provisions

9 - 15 These sections contain the provisions for financial management, books of accounts and audit.

V Regulatory & Other Provisions

16- 17 It explains the power of the authority to call for information and obligation to furnish information to the Federal Government; including the annual report.

VI Miscellaneous 18 - 27 It contains the provision with respect to

Chapter No. Chapter Name Sections Brief Description

the powers to appoint officers, delegate powers, explains the power to grant exemption, indemnity, common seal and winding up and defines the authority with the power to make rules and regulations.


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2. PUBLIC PROCUREMENT RULES 2004 S.R.O. 432(I)/2004

PPRA Rules comprise of 51 Rules grouped into 9 headings, as provided in the table below:

Sr. No. Headings Rules Brief Description

I Short Title & Commencement 1 Specifies the effective date of enforceability II General Provision 2 – 7 Contains definitions of words used in these rules. Further includes scope,

principles, applicability in case of conflict, language that can be used for procurement i.e. Urdu, English or local language and rule for obtaining an Integrity Pact.

III Procurement Planning 8 – 11 PA is required to devise the mechanism for procurement planning within its available resources, delivery time or completion date and benefits that are likely to accrue. PA is required to announce procurement planning and advertise on the PPRA website and proceeds without regrouping / splitting. Specifications should allow the widest possible competition and should be generic. PA is required to have clear authorization and delegation of power for different categories of procurement.

IV Procurement Advertisements 12 - 14

Procurement over PKR 100,000 and up to PKR 2 million to be advertised on the PPRA website Procurement over PKR 2 million to be advertised on the PPRA website and at least two national dailies, one in English and other in Urdu. Response time for receipt of bids shall not be less than 15 days for national competitive bidding and 30 days for international competitive bidding, no time limit is applicable in case of emergency. Exception allowed in case of national security & procurement which is proprietary in nature or falls within the definition of intellectual property.

IV Pre-qualification, Qualification 15 – Prequalification of bidders in case of services, civil works, turnkey projects,


and Dis-qualification of Suppliers and Contractors

19 expensive and technically complex equipment. Explains the contents of prequalification documents. PA having credible reasons / prima facie evidence may require suppliers/ contractors (prequalified /not) to provide professional, technical, financial, legal or management competence after recording reasons in writing. PA shall disqualify a supplier submitting false and materially inaccurate / incomplete information. PA is required to devise a mechanism and manner to permanently / temporarily bar suppliers / contractors who fail to provide satisfactory performance or indulge in corrupt or fraudulent practices.

V Methods of Procurement 20 – 27

PA is required to use Open Competitive Bidding (OCB), if the cost of an object is PKR 100,000 or more. Bids are required in seal package. Bidding documents include the manner and method of submission and the receipt of bids. Rules specify the compulsory contents of bidding documents. Bidders can participate without regard to nationality, except the PA can decide to limit participation to national bidders / prohibit participation of some nationalities in accordance with the policy of the FG. Bid security not to exceed 5% of the bid price. Bid shall be subject to a bid validity period. PA can extend the time for the submission of bids after recording reasons in writing.

VI Opening, Evaluation & Rejection of Bids

28 – 37

Date for opening of bids and the last date for the submission of bids should be the same. Bid must be opened at the time specified in bidding documents. Bids to be opened at least 30 minutes after the deadline. PA can reject all bids at any time prior to the acceptance of a bid/proposal. PA, on request of a bidder, can communicate the grounds for rejection but is not required to justify the grounds. PA can call for rebidding.


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Ten days prior to the award of a contract, PA is required to announce the Bid Evaluation Report. Rule 36 specifies the procedure for OCB, provided below:

• Single stage – one envelope procedure – main OCB procedure. • Single stage – two envelope procedure – evaluated on technical and

financial grounds and price is taken into account after technical evaluation. • Two stage bidding documents – adopted in large and complex contracts

where technically unequal proposals are likely to be encountered or where two or more equally acceptable technical solutions are available.

• Two stage – two envelope bidding documents – alternative technical proposals are possible e.g. type of machinery, equipment or manufacturing plant.

VII Acceptance of Bids and Award of Procurement Contracts

38 – 45

Lowest evaluated bid is awarded the contract. The successful bidder, wherever specified in bidding documents, shall submit the performance guarantee not exceeding 10% of the contract amount. There will be no negotiation with the bidder except as allowed in regulations. PA should keep all information confidential regarding the bid evaluation, until the announcement of the Bid Evaluation Report. Rule 42 specifies the alternative method of procurement::

• Petty purchases – below PKR 25,000/- (exempt from OCB) • Request for Quotation (RFQ) – below PKR 100,000/-, object has a standard

specification, minimum three quotations are required, purchased from supplier offering the lowest price.

• Direct contracting – acquisition of spare parts and supplementary services only one manufacturer/ supplier existing, change of supplier results in acquisition of material having different technical specification, repeat orders to not exceed 15% of the original procurement. In case of an emergency,


the price is fixed by the government, purchase of motor vehicle. • Negotiated tendering: - supplies support specific piece of research

/experiment, technical or artistic reasons, and extreme urgency. Payment to be made by PA within 30 days.

VIII Maintenance of Records & Freedom of Information

46-47 Procurement records should be kept for a minimum period of 5 years. After award of contract all documents related to evaluation shall be made public.

IX Redressal of Grievances & Settlement of Disputes

48 – 51

Redressal committee comprising of odd number of persons should be constituted with proper powers and authorizations. Aggrieved bidder can submit the compliant within 15 days of announcement of bid evaluation report. Committee should investigate and decide upon the complaint within 15 days. Mere lodging of complaint shall not warrant the suspension of procurement process. Arbitration method to be provided in the bidding documents consistent with the laws of Pakistan. Unauthorized breach of these rules amounts to misprocurement.


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3. PUBLIC PROCURMENT REGULATIONS 2008

S.R.O. 805(I)/2008

PPR 2008 comprise of 07 regulations, which are provided below:

Regulation No. Heading Brief Description

01 Short Title and Commencement

Specifies the effective date of enforceability.

02 Definitions Specifies the definitions of words used in the regulations.

03 Bidding Documents Specifies the compulsory usage of SBD prescribed by PEC.

04 Record To Be Kept PA is required to keep the records of procurement proceedings for a period of at least 5 years.

05 Obtaining the Record Any person may obtain the records of procurement proceedings after the acceptance or termination of bids.

06 No Liability to Suppliers etc.

PA is not liable to suppliers/contractors for damages owing solely to a failure of keeping procurement records.

07 Posting of Contract Awards on PPRA’s Website

PA is required to post-contract awards over PKR 50 million on the PPRA website.

4. PROCUREMENT OF CONSULTANCY SERVICES REGULATIONS, 2010

S.R.O. 1077(I)/2010

CSR 2010 comprises of 12 Regulations, which are provided below:


01 Short Title and Commencement Specifies the effective date of enforceability. 02 Definitions Specifies the definitions of words used in regulations. 03 Methods for Selection of

Consultants PA decides the method of selection prior to issuance of Request for Proposal (RFP).

03(A)(i) Quality Based Selection Used in highly specialized and complex assignments, where quality is the only factor.

03(A)(ii) Procedures for Selection Under Quality Based Selection

1) Request for EOI (2) RFP, evaluation of proposal (i) technical proposal (ii) financial proposal – highest ranked technical proposal.

03(B)(i) Quality and Cost based Selection High quality is the prime consideration, while cost is the secondary consideration

03(B)(ii) Procedures for Selection Under Quality and Cost Based Selection

1) Request for EOI (2) RFP, evaluation of proposal (i) technical proposal (ii) financial proposal. A combined evaluation of technical and financial proposal, applicant with the winning proposal should be accepted.

03(C)(i) Least Cost Selection Used for an assignment of a standard or routine nature, where well established practices and standards exist.

03(C)(ii) Procedures for Selection Under Least Cost Selection

1) Evaluation of proposals (i) technical proposal (ii) financial proposal. Passing the technical score threshold is treated equally and evaluated on the basis of cost only.

03(D)(i) Single Source Selection or Direct Selection

Used in exceptional cases: i) Tasks are a natural continuation of the previous assignment. ii) Repeat order


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iii) Emergency iv) Only one consultant is qualified

03(D)(ii) Procedures for Selection Under Single Source Selection

Justification of single source is examined. RFP/TORs is issued, technical & financial proposal is received & discussed.

03(E)(i) Fixed Budget Used in simple assignments where the budget is fixed. RFP indicates the available budget. Proposals exceeding the Fixed Budget are rejected. Ranking is based on the evaluation of the technical proposal.

03(E)(ii) Procedures for Selection Under Fixed Budget

Separate envelope for technical & financial proposal. TORs should be complete; RFP should require a breakdown of costs for different activities. The highest ranked technical proposal is selected and invited for discussion.

4 Criteria for Eligibility of Consultants

PA should avoid conflict of interest. If the consultant provides goods/works for a project, he/she should be disqualified from providing consultancy services.

5 Expression of Interest Request for EOI gives 15 days’ response time for national and 30 days response time for international competition.

6 Criteria for Short-listing of Consultants

Minimum three consultants should be shortlisted, there is no upper limit.

7 Criteria for pre-qualification of Consultants

Prequalification in case of complex assignments.

8 Request for Proposal RFP should be used to seek proposals from consultants. 8(a) Letter of Invitation Specifies the name and address of PA and its intention to enter into a contract

for consultancy services. 8(b) Instruction to Consultants Helps to prepare a responsive proposal. 8(c) Terms of Reference Defines objectives, goals, the scope and condition of the contract. 8(d) Evaluation Criteria Except as otherwise provided, evaluation is to be carried out after due


consideration to quality and cost. 8(e) Type of Contract • Lump sum contract – content, duration & required output are defined.

• Time based contract – where it is difficult to define the scope & length of service.

• Hourly/daily rates – small projects, where assignments are for less than a month.

• Combination of above (including OPE) – where required. 8(f) Proposed Contract Format Draft specimen contract 8(g) Special Provisions Where required 9 Selection Committee Comprising of at least 3 competent relevant persons/outsiders, appropriate

consultants can be engaged. 10 Extent of Negotiations or

Discussions Negotiate with the highest ranked bidder for the followings:

• Methodology • Work plan • Staffing • Special condition of contract

Substitutions of key staff is not permitted (except unavoidable). No negotiation on rate quoted by the bidder.

11 Professional Liability of Consultants

Consultant is liable for consequences of errors or omissions on its part. Extent of liability should not be less than remunerations, excluding OPE and should not exceed twice the remuneration. PA can demand insurance, and the cost of insurance shall be borne by the consultant who shall be reimbursed as OPE.

12 Inconsistency PP Rules 2004 take precedence over these regulations in case of inconsistency.


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5. PPRA GUIDELINES The finance division and PPRA issued a number of guidelines to ministries, departments and autonomous bodies for the implementation of the PPRA Rules, which have been listed below:

Sr. No. Guideline Subject Explanation 01 Declaration of fees, commissions and brokerage etc.

payable by the suppliers of goods, services and works All public sector agencies will always demand a certificate (Integrity Pact) while procuring goods & services worth PKR 10 million or more.

02 Integrity Pact Format of Integrity Pact. 03 Applicability of the Public Procurement Rules 2004 on

public/private partnership Procurement made by PPP projects in which the Federal Government and the private party have joint equity or ownership through a cooperate body and the procurement made by such a body is subject to the PPRA Ordinance and Rules.

04 Monitoring implementation of the Public Procurement Rules 2004

All Procuring Agencies are obliged to provide information on prescribed forms in respect of all contracts for goods, works and services exceeding a financial value of PKR 1 billion, through the “Contract Evaluation Questionnaire”.

05 Implementation of the Public Procurement Rules 2004 Procuring Agencies are directed to ensure strict compliance with rules 8 & 9 of PPRA Rules 2004 and furnish their proposed annual requirements for placing on the authority’s website at the earliest.

06 Frequent violation of the Public Procurement Rules 2004

A letter to Pakistan Railways (PR) for non-compliance of rules 10, 12, 13(1), 23(1), 33(1) of the PPRA Rules, while issuing 205 tender notices were made.

07 Exemption from the operation of the Public Procurement Rules 2004 and condonation of violations

In order to avail the exemption under section 21, all procuring agencies must clearly mention that national

Sr. No. Guideline Subject Explanation of these rules interests are being safeguarded through this proposed

exemption. 08 Implementation of the Public Procurement Rules 2004 To ensure the compliance with rule 16 of PPRA rules

regarding prequalification notices. 09 Publication of Tenders on the PPRA website To ensure compliance with rule 12 to advertise tender

notices for procurement of goods, services & works above PKR 100,000 on the PPRA website.

10 Procurement Report for FY 2008-09 Authority in exercise of its power under section 16(1) requires a procurement report highlighting: (1) description of contract, (2) tender value, (3) conformity with PPRA Rules 2004 and (4) execution status.

11 Meeting of the senate standing committee on Cabinet Secretariat held on 28th September 2009 in the committee room No. 4, Parliament house, Islamabad

Committee asked for details of procurement beyond PKR 10 million during the financial year 2008-09.

12 Procurement advertisement fee on the PPRA website PPRA Board, in order to lend sustainability and ensure neutrality of the Public Procurement Regulatory Authority decided to charge a fee of PKR 1000/- on each tender notice uploaded on the PPRA website (www.ppra.org.pk) in terms of section 9(2) of PPRA Ordinance 2002.

13 Redressal of grievances by the Procuring Agency All procuring agencies / units are advised to constitute independent Grievance Redressal Committees

14 Grievances Redressal and Principal Accounting Officer To strengthen the mechanism, as provided under rule 48, the Principal Accounting Officer should conduct an administrative review on the findings of complaints and take appropriate action.

15 Access and Transparency Direction to all concerned that tenders appearing in the press should carry out a compulsory note to the

http://www.ppra.org.pk/


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Sr. No. Guideline Subject Explanation effect that: “tender is also available at the PPRA website www.ppra.org.pk”, to strengthen access and transparency.

16 Award of Contracts and Public Procurement Regulatory Authority

PPRA role is clarified as: “Creating a small, professionally staffed, independent regulatory agency to develop the procurement framework, with functions which are mainly confined to policy, documentation, development of rules, etc. and not to include line clearance functions for awarding of contracts”.

17 Tender notice on PPRA website and its proof for audit and record

Procuring agencies are directed to download/ print the advertisement for the purpose of record and audit.

18 Annual Procurement Planning Report To ensure compliance of rules 8 & 9, procuring agencies are required to furnish their proposed annual procurement plan for uploading on the authority’s website.

19 Registration of firms and charging of registration/ processing fee etc.

All procuring agencies are advised to refrain from charging exorbitant registration fee/ processing fee/ other charges for registration of a firm.

http://www.ppra.org.pk/

MODULE 3: PROCUREMENT METHODS

• After completing this module you will be able to: • Explain the different types of procurement

methods. • Understand and explain the single stage and two

stage bidding process.

Learning Objectives


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PROCUREMENT METHODS

An overview of the public procurement methods under PPRA Rules and Regulations is provided below:

Invite quotations from minimum three (3) vendors

Purchase Order

Selection of Supplier with lowest evaluated Bid

Petty Purchases below Rs. 25k

Open Competitive Bidding (OCB)

Direct (Single Source) Contracting

Procurement between Rs. 25 k -

100k

Procurement

Rs. 100k & above

Types of Procurement (Service, Goods, Works)

Negotiated Tendering

Pre-Qualification Advertisement

Selection of Supplier

Bidding documents

to shortlisted suppliers

Award of Contract

Award of Contract

TYPE of OCB Single/ Two stage, Single/

Two envelopes

Prequalification

Advertisement for Req. EOI

Evaluate EOI

RFP to shortlisted

vendors only

Procurement Planning & Budget

PREFERRED METHOD OF PROCURMENT OF GOODS, SERVICES AND WORKS Rule 20: Principal method of procurement Save as otherwise provided hereinafter, the procuring agencies shall use open competitive bidding as the method of procurement for procurement of goods, services and works. Rule 21: Open Competitive Bidding Subject to the provision of rule 22 to 37, procuring agencies shall engage in open competitive bidding if the cost of the object to be procured is more than the prescribed financial limit, which is applicable under rule 42(i)(b). Financial Limit - Open Competitive Bidding Open competitive bidding is the principal method for the procurement of goods, services and works. The Procuring Agency shall engage in open competitive bidding if the cost of the object is PKR 100,000 or more. The procurement process under OCB is provided below. Regulation 3: Methods for Selection of Consultants The method for selection of consultants shall be determined by the Procuring Agency prior to the issuance of the RFP from prospective consultants. A Procuring Agency may utilize one of the following methods for the selection of consultants, namely:

Regulation 3A (i) Quality Based Selection

This method will be used for highly specialized and complex assignments, where quality is the only factor taken into consideration, provided that any procuring agency desirous of using quality based selection as a method of procurement, records its reasons and justifications in writing for resorting to this method and places the same on record.

Regulation 3B (i) Quality and Cost Based Selection

This method will be used where high quality is the prime consideration, while cost is a secondary consideration.

Regulation 3C (i) Least cost

This method will only be used for assignments of a standard or routine nature, where well established practices and standards exist.


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RULE36 (a): OCB: ACTIVITY FLOW DIAGRAM OF PROCUREMENT PROCEDURE OF PKR. 100,000 & ABOVE (SINGLE STAGE - ONE ENVELOPE)

End User & Approving Authority

Procurement Officer/

Committee Vendor Evaluation

Committee Comments

(if any)

Award of contract

Open & Sign of Bids

Presence at Bid Opening

Prepare Contract

Approved Bid / Tender

Documents Request for Bid

Documents

Activate Tender Advertisement -

Email

Issue Bid Documents

Offer Bid

Receive Bids

Receive the opened Bids

Evaluation

Receive Contract

Approval No

Yes

Prepare Bid Evaluation Report

Approved Purchase Requisition & Specifications

RULE36 (b): OCB: ACTIVITY FLOW DIAGRAM OF PROCUREMENT OF PKR. 100,000 & ABOVE (SINGLE STAGE - TWO ENVELOPES)

Approving Authority Procurement/

Officer Committee

Vendor Evaluation Committee

Comments (if any)

Award of contract

Open & Sign of Technical Proposals

Prepare Contract

Approved Bid / Tender

Documents

Request for Bid Documents

Activate Tender Advertisement -

Email

Issue Bid Documents

Offer Bid

Receive Bids

Receive opened bids

Technical Evaluation

Receive Contract

Approval No

Yes

Bid Evaluation Report

Presence in Bid Opening

Open & Sign of Financial Proposals (Technically

qualified bidder)

Approved Purchase Requisition & Specification


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RULE36 (c): OCB: ACTIVITY FLOW DIAGRAM OF PROCUREMENT OF PKR. 100,000 & ABOVE (TWO STAGE BIDDING PROCEDURE)

Approving Authority Procurement/ Tender Committee Vendor

Procurement/ Tender

Committee

Comments (if any)

Prepare Contract

Approved Bid / Tender Document

Activate Tender Advertisement Request for Bid

Documents

Submit Technical Proposals

Issue Bid Documents

Receive Proposals

Discuss and Revise Technical

Specifications

Clarification of specifications.

Submit Revised

Technical and Financial proposals

Receive Proposal for Evaluation

Receive Contract Award of contract

Approval

Prepare Evaluation Report

Yes

No


RULE36 (d): OCB: ACTIVITY FLOW DIAGRAM OF PROCUREMENT OF PKR. 100,000 & ABOVE (TWO STAGE TWO ENVELOPE BIDDING PROCEDURE)

Approving Authority Procurement/ Tender Committee Vendor

Procurement/ Tender

Committee

Comments (if any)

Prepare Contract

Approved Bid / Tender Document

Activate Tender Advertisement

Email

Request for Bid Documents

Submit (Technical & Financial) Proposals

Issue Bid Documents

Receive Proposals

Discuss and Revise Technical Specifications

Clarification of specifications

May Submit Revised

Technical & Supplementary

Financial proposal

Input & Evaluate Proposals

Receive Contract Award of contract

Approval

Prepare Evaluation Report

Yes

No



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ALTERNATE METHODS OF PROCURMENT OF GOODS, SERVICES AND WORKS Rule 42: Alternative Methods of Procurement A Procuring Agency may utilize the following alternative methods of procurement of goods, services and works, namely:

Rule 42 (a) Petty Purchases: Procuring Agencies may provide for petty purchases, where the object of the procurement is below the financial limit of twenty-five thousand PKR. Such procurement shall be exempted from the requirements of bidding or quotation of prices:

Procedure for Petty Purchases End user prepares the purchase requisition and specification list. Purchase requisition is approved by the person with financial power and the procurement is made by the Procuring Officer.

The PA shall ensure that procurements are conducted in a fair and transparent manner and the procurement brings value for money and that the procurement process is efficient and economical (Rule 4).

Approval by the Federal Government PA, if convinced of the inadequacy of the financial limit prescribed for petty purchases, may approach the Federal Government to increase the financial limit, along with a full and proper justification.

Purchase Requisition

Specifications List

Procurement from vendor

Rule 42 (b) Request for Quotations: A PA shall engage in the method of procurement, only if the following conditions are met, namely:

i. the cost of the object of procurement is below the prescribed limit of one hundred thousand PKR; • Provided that the respective boards of autonomous bodies are authorized

to fix an appropriate limit for RFQs method of procurement, subject to a maximum of PKR five hundred thousand, which will become the financial limit under this sub-rule:

ii. the object of the procurement has standard specifications; iii. a minimum of three quotations have been obtained; and iv. the object of the procurement is purchased from the supplier offering the

lowest price. Where procuring agenciesare convinced that the prescribed financial limit is inadequate to undertake their respective operations, they may approach the Federal Government for enhancement with full and proper justification. Procedure for RFQ The end user prepares the purchase requisition and specification list. Under the RFQ method, the object (goods works or services) of the procurement has the standard specifications. A purchase requisition is approved by the competent authority, and the procurement is made from the vendor offering the lowest price, by the Procuring Officer.

Enhancement of Financial Limit The Boards of Autonomous Bodies are authorized to fix an appropriate limit for the RFQ method of the procurement subject upto a maximum of PKR 500,000.

Approval of Federal Government PA, if convinced of an inadequate financial limit prescribed for RFQ, may approach the Federal Government for enhancement of the financial limit, along with a full and proper justification.

Purchase Requisition

Specification List

Quotations from short listed vendors

(minimum three quotations)

Comparative Statement

Purchase Order • Procurement from vendor offering lowest

price


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Rule 42 (c) Direct Contracting: PA shall only engage in direct contracting, if the following conditions are met, namely: The procurement concerns the acquisition of spare parts or supplementary services from the original manufacturer or supplier, provided that the same is not available from alternative sources.

Only one manufacturer or supplier exists for the required procurement,

provided that the procuring agencies shall specify the appropriate fora, which may authorize procurement of proprietary object after due diligence;

Where a change of supplier would oblige the procuring agency to acquire material

having different technical specifications or characteristics, and would result in incompatibility or disproportionate technical difficulties in operation and maintenance, provided that the contract or contracts do not exceed three years in duration;

a) Repeat orders not exceeding fifteen percent of the original procurement:

In cases of an emergency, rovided that PAs shall specify appropriate fora vested with necessary authority to declare an emergency;

b) When the price of goods, services or works is fixed by the government or any

other authority, agency or body duly authorized by the government, on its behalf; and

(i) For purchase of motor vehicles from local original manufacturers or their

authorized agents at the manufacturer's price.

Case Study 1

(Investment in Power Sector)

GOP is contemplating to bypass the bidding process and adopt the “direct contracting” mode to secure investments in the power sector from international firms and sovereign investors to address chronic energy shortages. This direct contracting would be adopted in cases where the foreign private investor or sovereign lender would provide 85 percent of total project cost, while the remaining 15pc would be arranged by GOP.

The framework mainly draws its strength from the provisions of rule 42C (vi) of PPRA Rules 2004, which enables the public sector to enter into direct contracting.

The government may also stretch the clause in the national interest or use clause (v) of the same section that deals with emergencies.

An order by the FG would be required to declare national emergencies in the power sector in order to sidestep bidding processes. This is keeping in view that the PPRA Act and the PPRA rules of 2004 do not allow any procurement or contract award without a transparent bidding process.

Case Study 2

(Iran Pakistan Gas Pipeline)

The Cabinet, in its meeting, has approved a waiver of the PPRA rules, in order to award the contract directly to an Iranian firm. Pakistani public sector firm Interstate Gas Systems and private Iranian firm Tadbir Energy will sign the contract.

Approval by government authorities and other bodies through rule 42C of PPRA, will enable the contract to placed under the direct contracting category.


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Rule 42 (d) Negotiated Tendering A PA may engage in negotiated tendering with one or more suppliers or contractors with or without prior publication of a procurement notification. This procedure shall only be used where:

(i) The supplies involved are manufactured purely for the purpose of supporting a specific piece of research or an experiment, a study or a particular development;

(ii) For technical or artistic reasons, or for reasons connected with protection of exclusive rights or intellectual property, the supplies may be manufactured or delivered only by a particular supplier;

(iii) For reasons of extreme urgency due to unforeseeable events the defined time limit for open and limited bidding methods cannot be met. The circumstances invoked to justify extreme urgency must not be attributable to the PA;

Provided that any PA desirous of using negotiated tendering as a method of procurement shall record its reasons and justifications in writing for resorting to negotiated tendering and shall place the same on record.

CASE STUDY 1 The US$ 6 billion Gadani Project begins as a violation of PPRA Rules. The GOP has decided to appoint NESPAK as the consultant in the US$6 billion Gadani Power Project, which may ultimately produce 6,000MW electricity from imported coal. To provide legal cover, six Federal Secretaries in their role as PPRA board members recently endeavoured for exemption of the project from the PPRA rules. Subsequently, they waived the open tendering process and allowed the Ministry of Water and Power to engage NESPAK. . Though the MD PPRA had opposed this move but the board proceeded to follow through with the exemption. Excerpts from the minutes of the PPRA board meeting, are as follows:

“The board resolved to recommend to the FG to grant exemption under Section 21 of the PPRA Ordinance, 2002 for hiring services of M/s NESPAK by PPPMLC, the subsidiary of the Ministry of Water and Power.” This exemption has been approved by Federal Secretaries dominating the PPRA board, despite the opposition of the PPRA chief. The PPRA Managing Director (MD), in the agenda of the meeting, had made it clear that if the matter was urgent, then rule 42(d) (iii) of Public Procurement Rules, 2004, may be invoked, which read: “For reasons of extreme urgency due to unforeseeable events the defined time limit for open and limited bidding methods cannot be met. The circumstances invoked to justify extreme urgency must not be attributable to the procuring agency: Provided that any procuring agency desirous of using negotiated tendering as a method of procurement shall record its reasons and justifications in writing for resorting to negotiated tendering and shall place the same on record.” The MD had contended that if NESPAK was ideally suited for the subject consultancy with the requisite expertise and resources, then rule 42(c) (ii) may be invoked, which reads:

“Only one manufacturer or supplier exists for the required procurement; Provided that the PA shall specify the appropriate fora, which may authorize the procurement of a proprietary object after due diligence.”

What does this case study show?

CASE STUDY 2 (Purchase of 4010 Symantec End Point Protection - Renewal and Essential Support) SBP procured above item under Negotiated Tendering Procedure in accordance with Rule 42 (d) (ii) of Public Procurement Rules 2004.


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1Tender for Two stage bidding procedure

RULE 37: CONDITIONS FOR USE OF SINGLE STAGE TWO ENVELOPES, TWO STAGES, AND TWO STAGE TWO ENVELOPES

Single stage one envelope bidding procedure ordinarily is the main OCB procedure used for most procurement activties. Other appropriate procedures of OCB shall be selected in the following circumstances:

• It shall be adotpted where the bids are to be evaluated on technical and financial grounds and price is taken into account after the technical evaluation

SINGLE STAGE TWO ENVELOPES

•This shall be adopted in large and complex contracts where technically unequal proposals are likely to be encountered or where the procuring agency: •is aware of the options in the market

•two or more equally acceptable technical solutions are available

TWO STAGES

•This shall be adopted where alternative technical proposals are acceptable, such as certain type of machinery or equipment or manufacturing plant.

TWO STAGES TWO ENVELOPES

MODULE 4: ANNUAL PROCUREMENT PLAN

• After completing this module you will be able to: • Explain the Annual Procurement Plan

Learning Objectives


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ANNUAL PROCUREMENT PLAN (APP)

•All government ministries and departments should devise a mechanism for develpoing annual procurement plans (APP).

•APP should be devised at the same time as the annual budget forecast.

•Planning for the next FY should begin halfway through the current FY.

•Changes to an annual financial plan may be required due to shortage of funds / availability of supplementary funds.

•Procurement plans should be reviewed on a quarterly basis.

•List all the procurement methods for each procurement.

•Communicate the APP on PPRA for publishing on website.

•Provide the name, telephone number and email address (if available) of a contact person within a PA to whom enquiries should be addressed.

Activity

Prepare the APP of your department for the year 2014-15, in the format provided below:


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MODULE 5: PROCUREMENT PROCESS

• After completing this module you will be able to: • Explain the Procurement Process.

Learning Objectives

PROCUREMENT PROCESS

PROCUREMENT PROCESS:

Annual Procurement Planning

Requisitions, Describing

Requirements and Selecting

Procurement Methods

Identifying Suppliers and

Preparing Invitation

Documents

Managing the Bidding Process

Evaluating Offers

Awarding Contracts

Administering Contracts


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PURCHASE REQUISITION (PR)

Purpose

• Requisition must be raised to initiate any procurement process.

• Purchase Requisition (PR) documents the need for goods, works or services.

• Confirms the availability of funding.

Procedure

• Procurement process starts with the identification of the need for goods, works or services.

• Prepare the initial description of goods, services or works and attach it to the PR.

• Estimate the value.

• Obtain confirmation of availability of funds.

• Obtain approval of budget holder.

• Provide each PR with a unique identification number.

Activity

Prepare the PR for the following objects in the format provided below:

• Procurement of toner • Procurement of furniture & fixtures • Procurement of training services

Name of Procuring Agency

PROCUREMENT REQUISITION Page __of ___

Procurement Number Entity Department/Project Financial Year Sequence Number Bid Number Contract Number

Subject of Procurement: Location/Site:

Item No.

Description (A detailed Statement of Requirements or Stock Management Information

may be attached)

Quantity Unit of Measure

Estimated Unit Cost

Estimated Total Cost

Funds Availability: Chapter Section Item Type Estimated Total Cost:

Signatures required to certify that (1) the works, services or supplies described are required, (2) approval is granted to proceed with the procurement, and that (3) funds are available or budgeted for the requirement.

1. Originating Officer 2. Head of Department/Unit 3. Finance Section Officer Signature:

_____________________________________ _____________________________________ _____________________________________

Name: _____________________________________ _____________________________________ _____________________________________

Position: _____________________________________ _____________________________________ _____________________________________

Date: _____________________________________ _____________________________________ _____________________________________


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PREPARING DESCRIPTION OF REQUIREMENTS/ SPECIFICATIONS

RULE 10

Specifications shall allow the widest possible competition and shall not favor any single contractor or supplier nor put others at a disadvantage. Specifications shall be generic and shall not include references to brand names, model numbers, catalogue numbers or similar classifications. However, where the PA is convinced that use of, or a reference to a brand name or a catalogue number, is essential to complete an otherwise incomplete specification, such use or reference shall be qualified with the words “or equivalent”.

“Provided that this rule shall not apply to procurement made by public sector commercial concerns on the demand of private sector client specifying, in writing, a particular brand, model or classification of equipment, machinery or other objects.”

Purpose

• The purpose of the Rule is as follows:

o communicate the requirements to be purchased by the end- user;

o inform the bidders of the requirement through inclusion in the bidding document;

o provide the technical standards against which tenders are evaluated;

o form the specifications as part of the contract with the supplier; and

o set the technical standards against which goods supplied can be inspected.

Procedure

o Prepare a general description of the requirement and do not over specify;

o Prepare a complete list of the items required;

o Describe list of goods including any incidental works or services required e.g. installation, commissioning, training etc;

o Define the purpose for procurements of the requried goods;

o Prepare specifications for each item required;

o Prepare required realistic delivery schedule (period and place);

o Prepare BOQ and include in the bidding document;

o It is important not to over-specify in the bid document;

o Supplies must be “suit the the purpose for which they are needed”, and not over specified.

• Example:

• If the requirement is low-grade cotton wool used for lotion application, it is not needed to specify high-grade sterile hospital operating-room grade cotton wool.

• Such detailed specifications results, unnecessarily in higher expenses.

ADDITIONAL CONSIDERATION IN PREPAREING WORKS SPECIFICATION

•Must be prepared by an engineer with appropriate technical qualifications and experience

•Start with a general summary description of the requirement •Prepare the drawings and specifications for the works •Prepare the Bill of Quantity (BOQ)/ activity schedule •Prepare the completion schedule •Prepare an overall scope of works, which will form part of the bidding documents

Description of Requirements for Works


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ADDITIONAL CONSIDERATION IN PREPAREING SERVICES SPECIFICATION

TERMS OF REFERENCE Regulation 8(c) TORs shall clearly define the objectives, goals and scope of the assignment besides conditions of contract. TORs shall list the services and surveys necessary to carry out the assignment and expected outputs.

•Start with a general summary description of the requirement. •Prepare detailed TORs for the services

Description of requirements for Services

•Should provide sufficient information to enable bidders to understand the required services

•Should be complete, precise and clear •Should not be over-prescriptive

TORs for Consultancy Services

•Background to the assignment •Objectives of the assignment •Scope of services •Specific deliverables required •Role, qualifications and experience of key staff •Duration of assignment and expected completion details •Facilities and resources to be provided by PA •Arrangements for reporting, including lines of communication and contact points •Schedule of any reports required including inception, progress and final report

Minimum Required Contents

SELECTION OF PROCUREMENT METHODS

• Ensure fair competition for suppliers • Obtain value for money • Ensure timely delivery • Receive goods, works and services of appropriate quality • Minimize cost of conducting the procurement process and administering contracts

Public Procurement typically has the following objectives:

•Open Competitive Bidding for goods, works and routine services;

•Request for Proposals for consultancy services.

Preferred Methods of Procurement

•Petty Purchases •Request for Quotation •Direct Contracting •Negoiated Tendering •Single source / direct selection in case of consultancy assignment •Fixed Budget in case of consultancy assignment

Alternate Methods of Procurment


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Prequalification of Suppliers

Expressions of Interest

Tender Notice

Bidding Documents / RFP

Request for Quotation

IDENTIFYING SUPPLIERS AND PREPARATION OF BIDDING DOCUMENTS

PREQUALIFICATION OF SUPPLIERS AND CONTRACTORS

Rule 15

1) A PA, prior to floating of tenders, invitation to proposals or offers in procurement proceedings, may engage in pre-qualification of bidders in case of services, civil works, turnkey projects. This is also admissabel for procurement of expensive and technically complex equipment in order to ensure that technically and financially capable firms possessing adequate managerial capability are invited to submit bids only. Such prequalification shall solely be based upon the ability of interested parties to perform that particular work satisfactorily.

2) A PA, while engaging in prequalification may take into consideration the following factors, namely:

a. Relevant experience and past performance; b. Capabilities with respect to personnel, equipment and plant; c. Financial position; d. Appropriate managerial capability; and e. Any other factor that a PA may deem relevant, not inconsistent with

these rules.

PREQUALIFICATION PROCESS

Rule 16

• Prequalification may be used under the Open Competitive Bidding procurement method

• Prequalification for consultancy services (under RFP method) is achieved through obtaining and assessing Expression of Interest (EOI).

PREQUALIFICAITON OF SUPPLIERS:

•Identify bidders who have adequate capabilities, resources and experience.

Purpose of Prequalification

•Used in high value & complex procurement

Usage


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1 The PA engaging in pre-qualification shall announce, in the prequalification documents, all information required for prequalification including instructions for preparation and submission of pre-qualification documents, evaluation criteria, list of documentary evidence required by suppliers or contractors to demonstrate their respective qualification and any other information that the procuring deems necessary for prequalification.

2 The PA shall provide a set of prequalification documents to any supplier or contractor, on request and subject to payment of price, if any

Explanation: For the purpose of this sub-rule, price means the cost of printing and providing the documents only.

3 The PA shall promptly notify each supplier or contractor submitting an application to prequalify whether or not it has been prequalified and shall make available to any person directly involved in the prequalification process, upon request, the names of all suppliers or contractors who have been pre-qualified. Only suppliers or contractors who have been prequalified shall be entitled to participate further in the procurement proceedings.

4 The PA shall communicate the reasons to all those suppliers or contractors who have not been prequalified.

• Use the standard appropriate prequalification document • Complete the pre-qualification document with respect to: •Data sheet •Qualification criteria •Description and type of goods, services or works

• Draft an invitation to prequalify notice • Publish the notice after approval • Issue the pre-qualification documents to all bidders • Receive application until the deadline •Open the application (no public tender opening is required) • Evaluate the application and record the results • Prepare a list of prequalified bidders and obtain approval from Relevant Authority • Communicate the decision to all bidders (suppliers or contractors) inlcuding the req-qulaification results

Procedure of Prequalification

Procedure for obtaining EOIs

Draft notice to obtain EOIs

Publish the EOI notice after approval

Receive EOIs as per deadline

Open the EOIs and record names of all applicants

(Public tender opening not required)

Assess EOIs for key skills, experience or capabilities

Prepare shortlist of qualified bidders and obtain approval

OBTAINING AND ASSESSING EXPRESSIONS OF INTEREST (EOI)

Regulation 5: Expression of interest 1) A request for an EOI shall be advertised by

providing applicants at least fifteen calendar days for national competition and thirty calendar days for international competition to submit their interest to provide consultancy services.

2) The expression of interest shall contain at least the following information, namely: a) The name and address of PA; b) An appropriate description of the

assignment providing the scope of the intellectual and professional services required;

c) Deadline and place of submission of the expression of interest; and

d) Evaluation criteria required to be followed.

•EOI procedure may be used under the RFP method. Though not mandatory, it is recommended for all but small and simple assignments.

•It is used for consultancy services only.

Purpose

•It assists in identifying the relevant and potential service provider, as consultancy assignments vary significantly, owing to their highly complex or specialized in nature. Thus, the identification of a competent service provider is challenging.

•Only a limited number of suppliers are required to prepare detailed proposals and thus ensuring availaibility of key staff for the validity period.

•PAs do not require excessive time and resources for evaluation of numerous detailed proposals including complex methodologies and CVs.

•Bidding is limited to suppliers likely to possess capabilities, personnel and experience required for successful performance of the contract

Benefits of EOI


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Information to be included in Invitation to Tender notices

Tender/ Reference number

The name and address of PA

Brief description of goods, works, or services including location &

time of delivery /service (completion)

Amount of bid security

Addressing for viewing / obtaining bidding documents

The price for purchase of bidding documents, currency and means

of making payment

Language of bidding documents

Time and place for opening tenders

Location, date and time of any pre-bid conference/ site visit

Instruction on location and deadline for submission of

tenders

PREPARATION OF TENDER NOTICE

An invitation to tender notice is required under an OCB.

•Invitation to tender (pre-qualify) notices are published in order to: •Attract the widest possible competition, which would assist in obtaining value for money

•Offer all potential bidders a fair opportunity to tender for government funded projects.

Purpose

•The PA is responsible for the preparation of the Invitation to Tender or a pre-qualifying notice and for fixing the price of the bidding documents.

Responsiblity

•Sample tender notice is provided on a CD.

Sample

•Divide the participants into groups of 5 members and ask them to prepare the invitation to tender notice (pre-qualify) •Goods •Routine services •Works

Activity

DEVELOPING A SHORTLIST A shortlist is prepared in the following procurement methods as well:

1. RFQ 2. Direct Contracting 3. Negotiated Tendering.

The shortlist is intended to ensure effective and real competition, where open competition through the publication of a notice is not appropriate or feasible.

In shortlisting, first identify all or at least a reasonable number of potential sources of the goods, works or services to develop the “long list”. Then prepare a shortlist based on the initial “long list”. Where competition is restricted due to goods, work or services available only from a limited number of suppliers, all potential sources must be included in the shortlist.

Where competition is restricted due to relatively low value of the procurement, a minimum of three bidders must be included in the shortlist.

Letter of Invitation

The PA will publicly notify for the project scope of work, and complete the pre-qualification (short-listing) process that includes eligible consulting firms (registered with PEC). Following this, the PA shall invite proposals from the short-listed firms through formally issuing a Letter of Invitation (LOI), including the data sheet also called a “Request for Proposal (RFP).


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PREPARATION OF BIDDING DOCUMENTS

Rule 23: Bidding Documents

1) PAs shall formulate precise and unambiguous bidding documents that shall be made available to the bidders immediately after publication of the Invitation to Bid.

2) For competitive bidding, whether open or limited, the bidding documents shall include the following, namely:

a. Invitation to Bid; b. Instruction to bidders; c. Form of bid; d. Form of contract; e. General or special conditions of contract; f. Specifications and drawings or performance criteria (where applicable); g. List of goods or bill of quantities (where applicable); h. Delivery time or completion schedule; i. Qualification criteria (where applicable); j. Bid evaluation criteria; k. Format of all securities required (where applicable); l. Details of standards (if any) that are to be used in assessing the quality

of goods, works or services specified; and m. Any other detail not inconsistent with these rules that the procuring

agency may deem necessary. 3) Any information, that becomes necessary for bidding or for bid evaluation,

after the Invitation to Bid or issue of the bidding documents to the prospective bidders, shall be provided in a timely manner and on an equal opportunity basis. Where notification of such change, addition, modification or deletion becomes essential, such notification shall be made in a manner similar to the original advertisement.

4) PA shall use standard bidding documents as and when notified by the regulation and the competent authority.

Provided that bidding documents already in use of the PA may be retained to the extent of being consistent with these rules, and till such time that the standard bidding documents are specified by regulations.

5) The PA shall provide a set of bidding documents to any supplier or contractor, on request and subject to payment of price, if any.

Explanation- for the purpose of this sub-rule price means the cost of printing and providing the documents only.

Bidding documents should be precise and unambiguous and should be made available to the bidder immediately after the publication of the Invitation to Bid. The bidding document is critical to the success of the bidding process. It informs the bidders about:

• The precise description of goods, works or services required; • The rules for the bidding process; • The applicable evaluation criteria and methodology; • Any applicable eligibility and qualification criteria; and • The type and conditions of the proposed contract.

A well drafted bidding document should result in a successful procurement process, therefore this document must be approved by the relevant authority, prior to issue. The bidding documents should include the minimum content specified above. Rule 24: Reservation and Preference

1 PA shall allow all prospective bidders to participate in the procurement procedure irrespective of nationality, except in cases where any PA specifies limited participation to national bidders only or prohibits other nationalties to participate, in accordance with Federal Government policy.

2 PA shall allow for a preference to domestic or national suppliers/ contractors in accordance the Federal Government policies. The magnitude of price preference to be accorded shall be clearly mentioned in the bidding documents under the Bid Evaluation Criteria.

Rule 32: Discriminatory and Difficult Conditions No PA shall introduce any condition that discriminates bidders or is considered to be met with difficulty Except as otherwise stated. In ascertaining the discriminatory or difficult nature of any condition, specific reference shall be made to ordinary practices of the relevant trade, manufacturing, construction business or service..


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PREPARATION OF REQUEST FOR QUOTATION

• This procurement method may only be used for procurement estimated to cost less than PKR 100,000/-. RFQ informs the bidder of: • precise description of goods, works or services required; • rules for the procurement process; • evaluation criteria and methodology to be applied; • any qualification criteria to be applied;

• Type and conditions of the proposed contract (Purchase Order); • A well drafted RFQ document should result in a successful procurement process. RFQ is drafted in consultation with end-user and technical specialist(s).

Purpose

• Select the appropriate SBD document for the requirement. • Consult with the end-user, and technical specialists if required, regarding finalisation of description for inclusion in the document.

• Complete details of the procurement process e.g. the bid closing time and date, the time when bids will be opened, the address at which bids should be submitted, the evaluation criteria to be applied, any eligibility and qualification criteria to be applied etc.

• Complete the Conditions of Contract with the conditions which will apply to the contract (purchase order) e.g. payment terms, delivery/completion period, warranty, liquidated damages.

• Submit the draft RFQ document and shortlist to the RA for approval. • Send the RFQ document to the suppliers selected to provide quotations.

Procedure

• Prepare the RFQ

Activity

Publishing Tender

Issuing Bidding Documents

Managing Pre-Bid Conference & Site Visit

Restricting Tendering

Handling Bidder Clarification, Modifications & Extensions

MANAGING THE BIDDING PROCESS


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PUBLISHING TENDER NOTICE

The publication of a tender notice is required in case of open competitive bidding. Notice is also published in case of pre-qualification of suppliers and contractors and expression of interest for consultancy services.

RULE 12: METHOD OF ADVERTISEMENT

•Tender Notices are published in order to: •Attract the widest possible competition, which should assist in obtaining value for money or in preparing a strong shortlist of bidders, and

•Offer all potential bidders a fair opportunity to tender or prequalify for contracts financed from public funds

Purpose

•If the estimated value of procurement is more than PKR 100,000 but upto PKR 2 million, then notice must be published on the PPRA website.

•Procurement of this value may also be advertised in print media, but this is NOT mandatory.

•Procurement more than PKR 2 million should be advertised in print media with coverage in at least two national daily newspapers covering Urdu and English both.

•The publication date signifies the starting date of the bid period and will be the date from which minimum response time (bidding period) is calulated.

•Tender can also be published on the PA's website, if any, •For international tendering, appropriate publications with wide international circulation should be identified, such as internationally recognized newspaper, relevant journals, the internet etc.

•In case of World Bank's financed procurement, notice should be placed in the World Bank's "Development Business" Publication.

•Ensure that sufficient copies of bidding or pre-qualification documents are available at offices for distribution from the first publication date.

Procedure

ISSUING BIDDING DOCUMENTS

•After the publication of a tender notice, the PA physically issues the sale bidding documents to bidders and keeps records of bidding documents issued.

Issuance

•The bidding documents must be issued/sold promptly to provide bidders with sufficient time to prepare and submit their tenders.

Timeline

•The delays in issuing documents may result in reduced competition, and in turn lead to the cancellation of a tendering process/ higher prices for items.

Delay in issuance

•Bidders may request to preview the documents prior to purchase, so arrangements must be made to permit previews, at the location and time stated in the published notice.

Preview - best practice

•Tender documents should be made available on the PPRA website for viewing only.

PPRA - best practice

•A record of the issue of bidding documents must be completed and filed..

Record


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MANAGING A PRE BID CONFERENCE AND SITE VISIT

The need for pre-bid conferences or site visits must be considered at the procurement planning stage and appropriate provision must be included in the bidding document. Conferences or site visits are not mandatory but may be arranged where the procurement is highly technical, where significant number of requests for clarification are likely to be received or where the knowledge of the site is important to the tender’s preparation.

•Provides additional information to bidders. •Assists bidders in preparing tenders. •Facilitates early warning of any unforseen queries/problems, which may result in modification of the bidding document.

•Allows addressing majority of similar requests at the same time.

Purpose and Benefits

•Consider the need for a pre-bid conference or site visit at the procurement planning stage and include details of the location, date and time in the bidding document, and any invitation to tender notice.

•Hold the conference early during the bidding period, to allow bidders time to incorporate the information while preparing their tenders.

•Coincide the pre-bid conference and site visit should they both be requried. •Ensure that arrangements are made in advance, including a meeting room reservation, availaibility of sufficient appropriate staff, access to the site is possible at the appointed time, appropriate safety arrangements on site, if required, etc.

•Prepare an agenda which should typically include an introduction, welcome note, brief presentation by the PA on the procurement requirement, questions by bidders and closing.

•Record complete details of the pre-bid conference and/or site visit. •Issue a record of the meeting to all bidders, including those bidders that didnot attend, following completion of the pre-bid conference and/or site visit.

•Where necessary, issue a formal modification of the bidding document and/or extension to the bidding deadline. If required, such modification or extension must be communicated to all those who have purchased bid documents after approval.

Procedure

HANDLING BIDDER CLARIFICATION, MODIFICATION AND COMPLAINTS

Rule 31: Clarification of Bids

1 No bidder shall be allowed to alter or modify his bid after bids have been opened. However, the PA may seek and accept clarifications to the bid.

2 Any request for clarification in the bid, made by the PA shall always be in writing. The response to such request shall also be in writing.

PA should respond to bidder clarification or issue modification to bidding documents and grant extensions, in the case any modification or extension is considered inevitable. The same should be notified by the agency in the same manner as adopted for the original advertisement.

Mishandling of the bidder’s clarification, modifications and extensions may result in complaints from bidders, unnecessary delays to the bidding process and/or a reduced number of tenders.

Issue uniform clarification, modification or extension to all bidders at the same time.

A record should be kept on the procurement file regarding the issue of clarification, modification or extension to the bid‘s deadline.


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RECEIPT OF TENDERS

Rule 22: Submission of Bids

1) The bids shall be submitted in a sealed package or packages in such a manner that the contents are fully enclosed, and cannot be known until duly opened.

2) A PA shall specify the manner and method of submission and receipt of bids in an unambiguous and clear manner in the bidding documents.

• Ensure the tender is closed at the specified time. • Maintain a record of all tenders submitted on a timely basis. • Ensure all tender submissions are unopened till time of public opening.

Purpose and Benefits

• Procure a locked and sealed tender box. • Label the tender box with the procurement reference number. • Ensure adequate tender box dimensions to receive a substantial number of large documents. The measurements of the box opening should easily allow large documents to be inserted.

• Place separate arrangements for receipt of samples. • Nominate and brief staff to manage the tender closing according to specficied date and time.

• Seal the tender box opening at the precise date and time of the deadline. • Deliver the sealed tender box to the allocated location for tender opening and place in custody of the Bid Opening Committee.

Procedure

OPENING TENDERS (ONE STAGE – SINGLE ENVELOPE)

Rule 28: Opening of Bids

1) The date for bid opening and the last date for the bid submission shall be the same. Bids shall be opened at the time specified in the bidding documents. The bids shall be opened at least thirty minutes after the deadline for submission of bids.

2) All bids shall be opened publically in the presence of the bidders or their representatives who may choose to be present, at the time and place announced prior to the bidding. The PA shall read aloud the unit price, as well as the bid amount and shall record the minutes of the bid opening. All bidders in attendance shall sign an attendance sheet. All bids submitted after the time prescribed shall be rejected and returned without being opened.

Tenders, which have been received on time, must be opened publically in the presence of bidders and summary details shall be read out and recorded. Purpose & Benefits

• Demonstrates a transparent tendering process; • Avoids any disputes regarding price changes at a later date when bids are

publically read out; • Prevents late tenders from being included in the evaluation.

Procedure

• Prepare a room prior to the tender opening time; • Welcome address by the chairperson of the Bid Opening Committee to

bidders, and request all to record attendance; • Show the seal of the tender box to all present at the Bid Opening

Committee meeting before breaking; • Open, remove and count all tenders from thetender box.; • Start with opening envelopes marked “Withdrawal”, one at a time; • Read out the letter, locate the envelope containing the corresponding

tender, and return to the bidder unopened; • Count the remaining tenders; each tender envelope should be marked

with a serial number starting with the number “1”. The tenders must be listed in numerical order;

• Open the tenders one at a time, and read out and record the relevant details;

• The chairperson of the BOC should stamp and and sign or initial key pages, followed by a counter-signs by all members of BOC;


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• No comments to be made by BOC regarding the acceptance or rejection of any tender.

• Bidders allowed by the chairperson to ask questions following opening, reading, and recording of all tenders received on time;

• The chairperson of the BOC should close the bid opening meeting, reminding bidders that they must not seek to influence the evaluation and that the Tender Evaluation Report will be announced in due course.

• Distribute copies of the tender opening record to bidders on request. The original record should be added to the procurement file.

• All tenders should be immediately taken to a place of safe keeping, until the Evaluation Committee is ready to meet. Any tender securities must also be secured.

OPENING TENDERS (ONE STAGE – TWO ENVELOPES) The outer envelopes of tenders, which have been received on time, are opened publically in the presence of bidders, to obtain the separate envelopes containing the technical and financial proposals within. The technical proposals are then opened and summary details read out and recorded. Bid security is part of the evaluation and should be submitted (if the amount is specified in the tender notice) along with the technical proposal. This, if required, should be in percentage of cost of goods/services, and then with the financial proposal. Financial proposals are kept sealed until technical evaluation has been completed and approved. The financial proposals envelopes of bidders, whose technical proposals do not qualify as per specified criteria or donot contain/include deficit bid securities (if required, as %age of cost) are returned unopened. Records of both the technical and financial bid opening meetings must be completed and kept on the procurement file.

BID OPENING CHECKLIST

(To be filled-out for each bid as it is read out)

Contract Reference: ________________________________________

Bid Opening Date: ______________________________ Time: _________________

Name of Bidder: _______________________________________________

(a) Is outer envelope of bid sealed?

(b) Is Form of Bid completed and signed?

(c) Expiration date of bid ________________________

(d) Is documentary authority for signing enclosed?

(e) Amount of bid security (as required): _______________________

(f) Describe any “Substitution,” “Withdrawal,” or “Modification” submitted.

(g) Describe any alternative bid made.

(h) Describe any discounts or modifications offered.

(i) Additional comments

(j) Name of bidder or his representative who attended bid opening.

(k) Total bid price:

_________________________________________________________

(If bid is for a package of contracts, the price for each part should be read out).

Signed by:

____________________ Members of Committee ___________________ Bidder’s Representatives _____________________ Convener of Committee


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General Evaluation Procedures

Evaluation Procedures for Goods & Routine Services

Evaluation Procedures for Works

Evaluation Procedures for Consultancy Services • QCBS •QBS •LCS

Conducting a Negotiation

Cancellation

MODULE 6: EVALUATING OFFERS

GENERAL EVALUATION PROCEDURE FOR GOODS WORKS AND SERVICES

Evaluation will vary for goods, works and services but the evaluation methodology will always consist of three stages:

A step by step procedure for the evaluation of bids is provided below:

• To eliminate tenders which do not comply with the basic requirement of bidding documents and bidders who do not meet mandatory eligiblity requirement.

Preliminary Screening

• Determine whether tenders are substantially responsive to the technical and commercial requirements of the bidding document and;

Detailed Evaluation

• Compare costs of responsive tenders, determine the successful tender to be recommended for award.

Financial Evaluation


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Procedure for Evaluation of Bid

•The head of the PC and the RA should identify appropriate members of staff to conduct the evaluation.

Formation of Evaluation Committee

•Review and list the requirements, instructions and evaluation criteria specified in the bidding document. The evaluation must apply the criteria specified in the bidding document only

•No new or varied criteria may be added.

Listing of Evaluation Criteria

•The member of the PC responsible for managing the evaluation should meet with any selected evaluator(s) to review the evaluation methodology and criteria specified in the bidding document and ensure that it is fully understood by all evaluators.

Discussion of Evaluation Criteria

• Conduct a preliminary screening. • Eliminate tenders which do not pass the preliminary screening. • List the failed tenders, with the tender number, name of the supplier and reasons for rejection, on a separate sheet of paper.

Preliminary

• Conduct a detailed examination of the tenders which passed the preliminary screening.

Detailed Evaluation

• Conduct a financial evaluation of the tenders which passed the detailed evaluation to determine the lowest priced tender.


• Prepare the Evaluation Report for submission to the RA for approval with the Evaluation Committee’s clear recommendation.

Evaluation Report

EVALUATING OFFERS FOR GOODS & SERVICES

The purpose of the evaluation methodology for goods is to determine the lowest priced tender, which is responsive to the requirements of the bidding document. The objective is to ensure that the PA purchases goods which meet its specifications only, but does not pay any more than necessary for those goods.

In evaluating the offer for goods:

Rank the tenders according to their evaluated price and identify the lowest priced tender, which will be the successful tender.


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EVALUATING OFFERS FOR WORKS Stages of Bid Evaluation

Prior to proceeding with defining the procedure/instructions for the evaluation of bids, the three important stages of bid evaluation are listed below:

A. Preliminary Examination to include:

(a) Does the bidder hold a valid license from the PEC and fall within the category allowed to participate for the size of the project?

(b) Has the bid been properly signed by the authorized person(s) and the authorization is available/bonafide?

(c) Is the bid accompanied by the required securities i.e. whether the amount is adequate as required in the ITB/bid data sheet and conforms to the specified format and is issued by an acceptable source?

(d) Does the bid generally and substantially meet the requirements of the bid documents?

(e) Does the bid have adequate provision for clarifications, if required for substantiation of any elements desired by the employer?

B. Check for arithmetic errors and acceptance of corrections by the bidders. C. Evaluation/Comparison of bids

(a)Determination of the evaluated bid price for each bid by making any adjustments, as required, which may include:

(i) Application of unconditional discounts/conditional discounts; (ii) Making correction of errors; (iii) Excluding provisional sums and contingencies (iv) Determination/making adjustments for minor (acceptable)

deviations on technical/commercial grounds; (v) Making adjustments for a varying time for completion

offered by the bidders, if acceptable.

(b) Consideration of the effect of any loading of bid.

(c) A bid is likely not to be considered, if:

(i) It is unsigned; (ii) Its validity is less than specified; (iii) It is submitted for an incomplete scope of work; (iv) It indicates completion period later than specified;

(v) It indicates that works and materials that are to be supplied, do not meet eligibility requirements;

(vi) It indicates that bid prices do not include the amount of income tax.

(c) A bid will not be considered, if:

(i) It is not accompanied with bid security;

(ii) It is submitted by a bidder, who has participated in more than one bid; (iii) It is received after the deadline for submission of bids;

(iv) It is submitted through fax, telex, telegram or email; (v) It indicates that prices quoted are not firm during currency of the

contract, as bidders are required to quote fixed price(s); (vi) The bidder refuses to accept arithmetic correction;

(vii) It is materially and substantially different from the conditions/specifications of the bidding documents.

Arithmetical errors will be rectified on the following basis:

If there is a discrepancy between the unit price and total price that is obtained by multiplying the unit price and quantity, the unit price shall prevail and the total price shall be corrected. If there is a discrepancy between the words and figures, the amount in words shall prevail. If there is a discrepancy between the total bid price entered in the form of Bid and the total shown in the schedule of prices summary, the amount stated in the form of bid will be corrected by the employer/engineer in accordance with the corrected schedule of prices.

If the bidder does not accept the corrected amount of bid, their bid will be rejected and their bid security forfeited.

Prior to the detailed evaluation, the PA/engineer will determine the substantial responsiveness of each bid to the bidding documents. A substantially responsive bid is one which conforms to all terms and conditions of the bidding documents without material deviations.

A material deviation or reservation is one:

i) Which affects in any substantial way the scope, quality or performance of the works;

ii) Which limits in any substantial way, inconsistent with the bidding documents, the PA’s rights or the bidder’s obligations under the Contract; or

iii) Whose rectification/adoption would affect unfairly the competitive position of other bidders presenting substantially responsive bids?


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The PA’s/engineer’s determination of a bid’s responsiveness will be based on the contents of the bid itself.

A bid determined as substantially non-responsive will be rejected and will not subsequently be made responsive by the bidder by correction of the non-conformity.

Any minor informality or non-conformity or irregularity in a bid, which does not constitute a material deviation may be waived by employer, provided such waiver does not prejudice or affect the relative ranking of any bidder. Conversion to Single Currency To facilitate evaluation and comparison, the PA/engineer will convert, all bid prices expressed in the amount in various currencies in which bid price is payable, to Pakistani Rupees at the telegraphic transfer and over draft (TT&OD) composite (selling) exchange rates published/authorized by the State Bank of Pakistan and applicable to similar transactions, on the date of the opening of bids.

Results of Preliminary Examination

The results of preliminary examination should be presented in a table. If the bid fails in its preliminary acceptance, the reasons must be clearly explained in footnotes or in an attachment, as necessary. Executing agencies may find it useful to include additional tables for itemization of responsiveness to a list of technical or commercial specifications.

RESULTS OF PRELIMINARY EXAMINATION

Bidder

(a)

Verification

(b)

Eligibility

(c)

Bid Securit

y

(d)

Completeness of Bid

(e)

Substantial Responsivenes

s

(f)

Acceptance for Detailed Examinatio

n

(g)

Detailed Evaluation of Bids

Only responsive bids as a result of preliminary examinations shall be examined in detail.

Evaluation and Comparison of Bids

(a) Bids will be evaluated for each item and/or complete scope of work. (b) Basis of Price Comparison: The prices will be compared on the basis of the evaluated bid price

provided below. (c) Technical Evaluation: It will be examined in detail whether the goods offered by the bidder

comply with the technical provisions of the bidding documents. For this purpose, the bidder’s data submitted with the bid will be compared with the specific work data prescribed by the PA and technical features/criteria of the goods detailed in the technical provisions. Other technical information submitted with the bid regarding the scope of work will also be reviewed.

(d) Commercial Evaluation: It will be examined in detail whether the bids comply with the

commercial/contractual conditions of the bidding documents. It is expected that no major deviation/stipulation shall be taken by the bidders.

(e) Evaluated Bid Price:

In evaluating the bids, the PA will determine for each bid in addition to the bid price, the following factors (adjustments) in the manner and to the extent indicated below to determine the evaluated bid price:

(i) Making any correction for errors as discussed above;

(ii) Excluding Provisional Sums, if any, but including priced Day work;

(iii) Making an appropriate adjustment for any other acceptable variation or deviation.


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Evaluation Methods Following evaluation methods for price adjustment will be followed:

(a) Price adjustment for completeness in scope of work; (b) Price adjustment for technical compliance; (c) Price adjustment for commercial compliance; (d) Price adjustment for deviations in terms of payment; (e) Price adjustment for completion schedule.

(i) Price Adjustment for Completeness in Scope of Work In case of omission in the scope of work of a quoted item no price

adjustment for the omitted item(s) shall be applied provided that the bidder has mentioned in his bid that the same is covered in any other item.

The price adjustment shall not justify any additional payment by the

PA. The price(s) of omitted item(s) shall be deemed covered by other prices of the schedule of prices.

(ii) Price Adjustment for Technical Compliance The cost of making good any deficiency resulting from technical

noncompliance will be added to the corrected total bid price for comparison purposes only. The adjustments will be applied taking the highest price quoted by other bidders being evaluated in detail in their original bids for corresponding item. In case of non-availability of price from other bidders, the price will be estimated by the Engineer.

(iii) Price Adjustment for Commercial Compliance The cost of making good any deficiency resulting from any quantifiable

variations and deviations from the bid schedules and conditions of contract, as determined by the Engineer will be added to the corrected total bid price for comparison purpose only. Adjustment for commercial compliance will be based on corrected total bid prices.

(iv) Price Adjustment for Deviation in Terms of Payment If a bid deviates from the terms of payment/payment conditions as

specified in the conditions of contract and if such deviation is considered acceptable to the PA, mark-up earned for any earlier payments involved in the terms outlined in the bid as compared to those stipulated in the conditions of contract shall be calculated, and shall be added to the corrected total bid price for comparison purposes only.

(v) Price Adjustment for Completion Schedule

Bids indicating completion in advance of the dates stated in preamble to conditions of contract; no credit will be given in this evaluation.

Bids indicating completion period later than the period set out in

Preamble to Conditions of Contract shall be adjusted in the evaluation by adding a factor of 0.05% of the corrected total bid price for each calendar day of completion later than specified period of the completion.

If the bid of the successful bidder is unbalanced in relation to the PA’s estimate of the cost of work to be performed under the contract, the employer may require the bidder to produce detailed price analyses for any or all items of the schedule of prices to demonstrate the internal consistency of those prices with the construction methods and schedule proposed. After evaluation of the price analyses, the PA may require that the amount of the performance security be increased at the expense of the successful bidder to a level sufficient to protect the PA against financial loss in the event of default of the successful bidder under the contract.


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GENERAL EVALUATING PROCEDURES FOR CONSULTANCY SERVICES

PROCEDURE FOR EVALUATION OF OFFER OF CONSULTANCY SERVICES

• A well conducted evaluation should ensure that: • Competition is fair and that all bidders have an equal opportunity of winning contracts;

• The supplier selected has appropriate staff and experience to successfully perform the services; and

• The consultancy services purchased under the contract offer an appropriate balance of quality and cost, depending on the objectives and circustances of the procurement requirement.

Purpose

Preliminary Screening Responsive

Non Responsive -

Rejected

Detailed Evaluation

Award points against criteria

in the RFP

Compare scores to minimum technical threshold

Recomended for financial

opening


Highest score total

Recommend for Contract

Award

QUALITY BASED SELECTION (QBS) - EVALUATION

The purpose of the QBS evaluation methodology is to determine the proposal which offers the best quality without any reference to price, where obtaining the highest possible technical quality is the main objective of the procurement.

After evaluation/ranking of technical proposals, only the top-ranked qualifying firm shall be invited for the opening in the presence of representatives formally authorized to negotiate its financial proposal/contract. These negotiations will focus firstly on the TORS and proposed facilities etc. to be provided by the PA. After agreement on these issues, the cost elements will be discussed and finalized. In case of failure of these negotiations with the top ranked firm, the second ranked qualifying firm on the basis of technical proposals will be invited to open and negotiate its financial proposal/contract. The process shall continue until negotiations with a qualifying consultancy firm are completed successfully.


Techncial Proposal s Opened • Responsive • Non Responsive -

Rejected

Financial Proposal remain sealed

Detailed Evaluation

Award points against criteria in

the RFP and

Rank/score with highest score as

No. 1

Highest Scores -Recommended for financial opening


Assess value for money

Prepare for negotiation, if

required

Proposal with highest technical

score recommended for

approval


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QUALITY AND COST BASED SELECTION – EVALUATION

The purpose of the QCBS evaluation methodology is to determine the proposal which offers the best overall value by taking into account both the quality and the price of proposals

The financial proposals of the three top-ranking qualifying consultancy firms on the basis of the evaluation of technical proposals, shall be opened in the presence of the representatives of these firms, who shall be invited for the occasion and who care to attend.

The PA shall inform the date, time and address for opening of financial proposals as indicated in the data sheet. The total cost and major components of each proposal shall be publicly announced to the attending representatives of the firms.

Award financial score weight technical and

financial scores

Highest score total- Recommended for

Contract Award


Award points against criteria in the RFP and

compares scores to the minimum technical

threshold

Over threshold-Recommended for financial opening in Technical Evaluation

Report

Under threshold rejected

Detailed Evaluation

Tender Opening

Evaluation includes proposals received on

time, opened and readout.

Late proposals not included. Financial proposals remain

sealed

Responsive

Non Responsive - Rejected


The Evaluation Committee shall determine whether the financial proposals are complete and without computational errors.

The lowest financial proposal (Fm) among the three shall be given a financial score (Sf) of 100 points. The financial scores of the proposals shall be computed as follows:

Sƒ=100 x Fm F

(F = amount of specific financial proposal)

Proposals, in the quality-cum-cost based selection shall finally be ranked according to their combined technical (St) and financial (Sf) scores, using the weights (T- the weight given to the technical proposal, P = the weight given to the financial proposal; and T+P=1) indicated in the data sheet:

S = St x T %+Sƒ x P%


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LEAST COST SELECTION (LCS) – EVALUATION

The purpose of the LCS evaluation methodology is to determine the lowest priced proposal, which meets the minimum quality standard set in the RFP document. This ensures that the PA procures consultancy services of the required standard, but does not pay any more than necessary for those services.

Compare total cost rank prices with

lowest price as No. 1

lowest priced proposal which

reached the minimum technical

threshold recommended for

Contract Award


Award points against criteria in

the RFP and compares scores to the minimum

technical threshold

Over threshold-Recommended for

financial opening in Technical

Evaluation Report Under threshold

rejected

Detailed Evaluation

Tender Opening evaluation

includes proposal received on time,

opened and readout. Late proposals not

included. Financial proposals remain

sealed Responsive

Non Responsive - Rejected


Example (Evaluation of Consultants) Components of a Project For the sake of example, the components of an Irrigation and Drainage Project can be listed as follows: A. Irrigation Component

a) Diversion structures; b) Main canals (lined/unlined); c) Distribution system (distys and minor canals); d) On farm water management.

B. Drainage Component

a) Surface drains; b) Main drains; c) Secondary/tertiary drains; d) On farm drains; e) Sub-surface drains; f) Interceptor drains; g) Horizontal (tile) drains; h) Vertical drains (tube wells).

Activities on a Project In the same manner, the duties of the consultants i.e. activities on the project could include:

a) Survey and investigations; b) Design of project/project components/tender documents; c) Procurement;

i) Pre-qualification of contractors. ii) Tendering/evaluation/award of contracts. iii) Contract management.

d) Construction supervision; e) Quality control; f) O&M of completed project; g) Project monitoring and benefit evaluation; h) Social surveys/environment and impact assessment.


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a) EVALUATION OF FIRM EXPERIENCE

(TITLE OF THE PROJECT) EVALUATION OF TECHNICAL PROPOSALS

I. QUALIFICATION/EXPERIENCE OF FIRM: MAXIMUM POINTS 1000

Name of the firm: ____________________________________________

Weightage A C T I V I T I E S

Sr. Survey/

No. Project Components Percentage Points Investigation/ Design of Procurement Construction O&M Points

Planning Project Supervision

10% 30% 20% 30% 10%

A. Experience on similar project of matching magnitude/complexity 80 % of 100 80 8 24 16 24 8 80

(a) SPECIFIC 75% of 80 60

i) Diversion structures 30% 18

ii) Canal (lined/unlined) 30% 18

iii) Distribution System 20% 12

iv) OFWM 20% 12

Sub-Total (a):- 60

(b) GENERAL

Experience on projects which are not similar but are important to judge the capacity of the firm (maximum credit for 3-5 projects)

25% of 80% 20

Sub-Total (b):- 100% 20

B. Experience in similar conditions/regions 10% of 100 10

C. OTHER FACTORS 10% of 100 10

a. Home Office Support 50 5

b. Back-up Facilities 50 5

Sub-Total (c):- 100% 10

Total Points Under-I


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b) EVALUATION OF METHODOLOGY

Maximum Points: 250*

WEIGHTAGE OBTAINED ITEM DESCRIPTION

% AGE POINTS POINTS a. Understanding of objectives 10% of 250 25 b. Quality of methodology 30% of 250 75

i) Survey & investigations 10 ii) Design 25 iii) Procurement 15 iv) Construction supervision 30 v) O&M 10 vi) Other items 10

Sub-Total (c):

c. Innovativeness 10% of 250 25

i) Survey & investigations ii) Design iii) Implementation management iv) Training

Sub-Total (c):

d. Work Program 30% of 250 75

Activity schedule 35 Team organization 20 Staff Duty Matrix 10 Staffing schedule 25 Estimate of staff months 10

Sub-Total (d): 100 75 e. Facilities Proposed 10% of 250 25 f. Transfer of Technology 5% of 250 12.5 g. Proposal Presentation 5% of 250 12.5

Conciseness 30

Clarity 30 Completeness 40

Sub-Total (g): 100 12.5

Total Approach & Methodology 100% 250

c) EVALUATION OF KEY PERSONNELS

WEIGHTAGE OBTAINED

ITEM DESCRIPTION FIRM A

% AGE POINTS POINTS a. Team Leader 25 150 b. Quality Assurance 5 30 c. Survey/Investigations 5 30 d. Design 20 120 e. Procurement 10 60

f. Construction Supervision 20 120

g. Quality Control 10 60 h. O&M Group 5 30 Total 100 600


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(TITLE OF THE PROJECT) EVALUATION OF TECHNICAL PROPOSALS

EVALUATION OF KEY PERSONNEL Maximum Points: 150 Name of the Firm Position Name of Nominated Staff :

Sr. Maximum Weightage Points No. Description Percentage Points Status Awarded

A. ACADEMIC AND GENERAL QUALIFICATION 30 45.00 a) B.Sc. Eng. (Specified Discipline) 60 b) M.Sc.Eng. (Specified Specialization) 10 c) Ph.D. Eng. 10 iv) Management (Degree/Diploma/Training) 10

v) Professional Papers, Recognition by the Government./Professional Institutions 10

Sub-Total (A):- 100

B. PROFESSIONAL EXPERIENCE RELATED TO ASSIGNMENT 60 90

a) Experience in Lead Position (specified Requirement) 40% 36

b) Experience as Senior Professional 30% 27 (i) Irrigation Component - Diversion Structure - Main Canal - OFWM - Structures

(ii) Drainage Component - Surface Drains - Sub-Surface Drains - Tube wells - Tile Drains - Inceptor Drains c) Experience as Junior Professional 30 27 (i) Irrigation Component - Diversion Structure - Main Canal - OFWM - Structures (ii) Drainage Component - Surface Drains - Sub-Surface Drains - Tube wells - Tile Drains - Inceptor Drains

Sub-Total (B):- 100 C. KNOWLEDGE OF LANGUAGES 5 7.5 i) English 60% ii) Urdu 20%

iii) Regional Language (Sindhi, Balochi, Pashto, Punjabi) 20%

Sub-Total (C):- 100 D. STATUS WITH THE FIRM 5 7.5 Permanent Employee 100% Sub-Total (D):- 100 Total (A+B+C+D):- 100 150


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EVALUATION OF PROPOSALS WITH VARYING TECHNICAL PRICE RATIOS

Technical X X X Price LPx100 X X X Weightage

Consultants Score 80% 85% 90% Pak Rs. In P 20% 15% 10% 80/20 85/15 90/10

Million Score

A 87 6.2 B 83 4.5 C 80 4.2

* = Winning Proposal

X= Weightage

CONDUCTING NEGOTIATIONS Rule 40: Limitation on Negotiations: Save as otherwise provided, there shall be no negotiations with the bidder having submitted the lowest evaluated bid or with any other bidder: Provided that the extent of negotiation permissible shall be subject to the regulations issued by the Authority.

The purpose of negotiations/discussions is to discuss and finalise certain details of a contract with the successful bidder, prior to contract placement. Negotiation/ discussions should lead to a contract, which is acceptable to both parties and should therefore reduce the likelihood of disputes or the need for contract amendments.

Negotiation/discussions are not held with the intention of making substantial changes to a contract or of obtaining price reductions from the lowest evaluated responsive bidder, with the exception of negotiations following an evaluation using the Quality Based Selection methodology, where there has been no competition on price.

CANCELLING PROCUREMENT PROCEEDINGS The cancellation of procurement proceedings should be avoided, wherever possible, as it means a waste of time and resources for both the PA and the bidders. However, where it is in the public interest to do so, procurement proceedings may be cancelled at any stage prior to the award of a contract.

PROCEDURE FOR CANCELLATION OF PROCUREMENT PROCEEDINGS:

1. Identify the need to cancel procurement proceedings;

2. Where no invitation document or notice has yet been issued, ensure that all relevant staff are notified. No further action is required;

3. Where an invitation document or notice has been issued, seek the approval of the RA to cancel. The request for RA approval to cancel must state in full the reasons for cancellation;

4. Prepare a notice cancelling the procurement proceedings, which must be identical for all bidders or potential bidders. This notice should normally state the grounds for cancellation, to avoid enquiries from numerous bidders;

5. Send the notice cancelling the procurement proceedings to the PPRA for uploading on its website;

6. Where the cancellation is prior to the bidding deadline, send the notice to all bidders who have been issued with the bidding document. Check the tender box and any other records of receipt and return all unopened tenders, which have already been received;

7. Where the cancellation is after the bidding deadline, send the notice to all bidders who submitted tenders. Promptly return any unopened tenders


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(including separately sealed financial proposals in the case of the RFP method) and any bid securities received;

8. Consider whether to refund to suppliers the fees paid for the purchase of bidding documents.

Awarding & Administering

Contracts

Notice of Acceptance

Preparing & Issuing Contract

Documents

Preparing & Issuing

Purchase Order

Contract Awards & Debriefing

Administering Contracts

Amending Contracts

Completing Contracting

Terminating Contract

AWARDING & ADMINISTERING CONTRACTS


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NOTICE OF ACCEPTANCE Procurement Contract (Rule 44):

A procurement contract shall come into force:

In case of No formal Signing of Contract

Where no formal signing of a contract is required, from the date the notice of the acceptance of the bid or purchase order has been given to the bidder whose bid has been accepted. Such notice of acceptance or purchase order shall be issued within a reasonable time

In case of Signing of Contract

Where signing of a written contract is required, from the date on which the signatures of both the PA and the successful bidder are affixed to the written contract;

In case of contingency

Where a contract is contingent upon fulfillment of a certain condition or conditions, the contract shall take effect from the date whereon such fulfillment takes place;

Notice of Acceptance

Sending a Notice of Acceptance to the successful bidder provides a means of forming a contract,

This offers a number of potential benefits:

The contract comes into force at once, meaning that delivery or mobilisation periods start sooner and overall contract completion should be achieved sooner;

Where the validity of a tender is due to expire shortly, it can be accepted quickly, before there is a need to request an extension to the validity, with the risk that the bidder is not prepared to extend the validity.

Notices of acceptance will be sent by the PU, once all required approvals from the RA have been obtained.

Procedure

1. Ensure that approval of the decision to award the contract has been received in writing from the competent authority;

2. Ensure that the Evaluation Report has been published/announced in accordance with Rule 35 of PPR-2004;

3. Obtain any other necessary approvals, including financial approval for the commitment of the required funds;

4. Ensure that the successful bidder’s tender is still valid and that any modifications to the tender have been confirmed in writing by the bidder;

5. Prepare the notice of acceptance and ensure that the notice is signed by the authorised signatory;

6. Dispatch the notice to the successful bidder, keeping evidence of dispatch, such as proof of posting, fax confirmation slip etc. The contract has now entered into force

7. Ensure that confirmation of receipt of the ‘Notice of Acceptance’ is received from the bidder.

Documents/Records Required:

A copy of the Notice of Acceptance, along with the approval of the notice, must be kept on the procurement file. Evidence of dispatch of the notice must also be kept on the procurement file; this is of critical importance as the contract enters into force when the notice is dispatched.

At a minimum, the Notice of Acceptance must include:

The name and address of the PA, which is a party to the contract;

The name and address of the supplier;

The date of the notice;

The reference number of the procurement transaction;

A brief description of the goods, works or services procured;

The date and any reference number of the bidder’s tender;

Reference to any clarifications or other correspondence which modifies the bidder’s tender;

The currency and amount of the contract award;

A statement of any items which are specifically excluded from the contract award e.g. certain lots included in the tender or any change in quantities;

A statement that the supplier should begin performance of the contract;

A statement that a full contract is being prepared and will be sent to the supplier for signature in due course;

A request that the supplier confirm receipt of the Notice of Acceptance and confirm that it is proceeding with contract performance;

Instructions on any immediate actions required from the supplier e.g. provision of a performance security.


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PREPARING AND ISSUING A CONTRACT DOCUMENT The contract document confirms in writing the contract which has been agreed and formed between the PA and the supplier. It defines the goods, works or services to be provided, the price to be paid for the goods, works or services and establishes the rights and obligations of each party. The contract is the governing document for the administration of the contract.

Procedure:

1. Collect copies of all documents, which will form part of the contract document;

2. Ensure that the Evaluation Report has been published/ announced in accordance with Rule 35 of PPR-2004;

3. Assemble the complete contract document, by including all necessary documents in the correct order. Ensure that the contract does not include any terms or conditions which vary from the successful bidder’s tender, accepted by the Notice of Acceptance;

4. Obtain approval for the contract document;

5. Make the required number of copies of the approved contract and bind or secure the pages in such a way that pages cannot be replaced or lost. The number of copies required must be at least two – one for the supplier and one for the PA;

6. The authorised signatory for the PA should sign all copies of the contract;

7. Send all copies of the contract to the supplier, with a covering letter instructing the supplier to counter-sign all copies, retain one for his records and return all other signed copies to the PA.

Financial commitment should have been made prior to the issue of the notice of acceptance and must be recorded in the Register of Commitments.

A copy of the approved contract document sent to the supplier, along with written approval of the document, must be kept on the procurement file.

The original signed contract document returned by the supplier must be kept in a secure location, with a copy kept in the procurement file for reference. Ideally, contracts should be kept in a safe.

ANNOUNCING A CONTRACT AWARD AND DEBRIEFING UNSUCCESSFUL BIDDERS

Public access and Transparency (Rule 47)

“As soon as a contract has been awarded, the Procuring Agency shall make all documents related to the evaluation of the bid and award of contract public.

Provided that where the disclosure of any information related to the award of a contract is of proprietary nature or where the procuring agency is convinced that such disclosure shall be against the public interest, it can withhold only such information from public disclosure subject to the prior approval of the Authority.”

S.R.O. 805(I)/2008, Regulation 7; Proceeding of contract awards on PPRA’s website:

All Procuring Agencies whether within or outside of Pakistan shall post contract awards over PKR 50 million on the PPRA’s website on the proformas as set out in Annexure I and Annexure II to those regulations.

Purpose:

It is important that unsuccessful bidders are notified and ensure that the Evaluation Report has been published/announced in accordance with Rule 35 of PPR-2004 which says “Procuring Agencies shall announce the results of bid evaluation in the form of a report giving justification for acceptance or rejection of bids at least ten days prior to the award of procurement contract.”

This practice of notifying and debriefing unsuccessful bidders has a number of benefits:

It will encourage unsuccessful bidders to submit tenders again for future opportunities and assist them in submitting more responsive or competitive tenders. This contributes to greater competition, which results in increased value for money;

It provides unsuccessful bidders with a fair opportunity to appeal, if they feel that the procurement has not been properly conducted;

The publication of contract award information for higher value contracts increases the transparency of public procurement.

Procedure:

1. Prepare a standard letter to notify unsuccessful bidders of the contract award;

2. Send a copy of the letter to each unsuccessful bidder;

3. Arrange for publication of the notice on the PPRA website;

4. Where a “request for debrief” is received from an unsuccessful bidder, prepare and send a debrief letter.


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ADMINISTERING A CONTRACT

Contract administration procedures are largely determined by the terms and conditions of each individual contract and the description of requirements for the goods, works or services.

Purpose:

Effective contract administration is critical to successful contract implementation and meeting the objectives of the procurement requirement. Contract administration procedures are designed to ensure that:

The supplier performs the contract in accordance with the terms and conditions specified in the contract;

The PA fulfils its obligations and duties under the contract; and

Swift remedial or preventive action is taken when problems arise or are foreseen.

Procedure:

1. The Head of the Procurement Unit should select the most appropriate person or team to administer the contract;

2. Ensure that a signed copy of the contract or confirmation of the purchase order is received from the supplier;

3. Ensure that any required performance security or advance payment security is received from the supplier;

4. Ensure that the PA meets any immediate obligations, such as payment of an advance payment, opening of a letter of credit or assistance with obtaining visas for the supplier’s foreign staff;

5. Prepare a contract implementation plan, showing key milestones, such as dates for mobilisation, deliveries or completion of certain deliverables or sections of work, and the PA’s obligations, such as providing access to a works site, payment or approval of reports;

6. Monitor the performance of both parties against the contract implementation plan. Take action as required to address any problems or delays, whether actual or anticipated;

7. Ensure that all deliveries, targets or deliverables are completed by the supplier;

8. Check all payment documentation and authorise payments, using the PA’s normal accounting and disbursement procedures.

ENHANCEMENT OF CONTRACT

Rule 2 (j)

Repeat Order:

“Means procurement of same commodity from the same source without competition and includes enhancement of contracts”

Rule 42(c) (IV) states

“Repeat order not exceeding 15% of the original procurement”.

Purpose:

Ideally, a contract which has been placed should not need any amendment, but sometimes it is necessary to make changes to the terms and conditions of a contract or the description of requirements. Contract amendments provide a formal and legal way of amending contracts and ensure that both parties have agreed to the changes.

Step-by-Step Instructions:

1. Identify the need for a contract amendment – this will normally be done by the contract administrator. A contract amendment is required where the PA wants to change any terms or conditions of the contract e.g. the delivery or the completion period, the technical description of the goods, works or services, the quantity of an item purchased, the price etc.;

2. Provide full details of the amendment;

3. The procurement department/unit will discuss the amendment with the supplier, if required;

4. Prepare the contract amendment;

5. Obtain approval from the competent authority;

6. Obtain any other necessary approvals, including financial approval for commitment of any additional funds;

7. Make the required number of copies of the approved contract amendment. The number of copies required must be at least two – one for the supplier and one for the PA. A copy should also be provided to the Accounts Department;

8. The authorised signatory for the PA should sign all copies of the contract amendment;

9. Send all copies of the contract amendment to the supplier, with a covering letter instructing the supplier to counter-sign all copies, retain one for his records and return all other signed copies to the PA.


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CLOSING OF CONTRACT

Rule 45:

Closing of Contract

1. Except for defect liability or maintenance by the supplier or contractor, as specified in the conditions of contract, performance of the contract shall be deemed closed on the issue of the overall delivery certificate or taking over certificate, which shall be issued within thirty days of the final takeover of goods or receiving the deliverables or completion of works enabling the supplier or contractor to submit the final bill and the auditors to do a substantial audit;

2. In case of defect liability or maintenance period, a Defect Liability Certificate shall be issued within 30 days of the expiry of the said period, enabling the supplier or contractor to submit the final bill. Except for unsettled claims, which shall be resolved through arbitration, the bill shall be paid within the time given in the conditions of contract, and shall not exceed sixty days to close the contract for final audit.

Purpose

The contracts should not be kept open beyond the prescribed completion schedule, enabling timely audit besides curbing time and cost over runs. It is important that contracts are formally reviewed and the procurement file closed, once all contract activities and obligations have been completed.

Procedure:

1. The contracts should be closed well in time in accordance with Rule-45 of PPR-2004;

2. The Procurement Unit will identify that all contractual obligations and warranty periods have been completed;

3. The Procurement Unit should review the contract and the procurement file to check that the contract is in fact completed;

4. Close the file and archive it, if required.

TERMINATING A CONTRACT

Purpose:

Contracts should not be terminated, where termination can be avoided. However, sometimes it is necessary to terminate a contract:

To avoid or minimise further loss to the PA or poor performance by the supplier;

Where contract performance has become impossible; or

Where a supplier is no longer qualified or has engaged in corrupt practices.

Procedure:

1. Identify the need to terminate the contract;

2. Check the contract or purchase order document, to confirm the conditions of contract relating to termination;

3. Identify which of the grounds for termination will be used and ensure that the PA has sufficient justification for using the selected grounds. Seek legal advice prior to proceeding.

4. Estimate the amount of money, if any, which will be due to the supplier following termination;

5. Prepare a formal notice, terminating the contract and stating the grounds for termination;

6. Obtain approval of the notice and of the justification for terminating from the RA. Ensure that the RA is informed of the costs of terminating the contract;

7. Issue the termination notice and ensure that it is received by the supplier;

8. Take any follow-up action required, including making any payments due to the supplier under the contract and referring any default or corrupt practices by the supplier to the RA.

If the supplier terminated the contract because of failure by the PA, what was the cause of the failure and how can the PA ensure that this does not happen again? Is there a need for improved procedures or changed policies? It is particularly harmful to the reputation of the government if suppliers cancel contracts with government for cause. Everything possible must be done to guard against these scenarios.


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POST-CONTRACT SUPPLIER PERFORMANCE EVALUATION AND REPORT Purpose:

1. To improve PA’s knowledge of good and bad suppliers by keeping a suppliers database. Much time can be wasted, and much money lost, in dealing with incompetent or dishonest suppliers.

2. To review the Procurement Unit’s own performance.

Procedure:

1. Adverse Contract Events: Make a list of any events that adversely affected the performance of the contract which was the direct responsibility of the contractor, e.g. failure to deliver on time, quality not up to specification, incorrect labeling, failure to advise that goods were ready for inspection, request for price increase, failure to rectify defects etc.

2. List any external mitigating circumstances that have adversely affected the supplier’s performance e.g. war, riot, insurrection, unusual weather conditions, interruptions of electricity supply, unexpected import restrictions, lack of fuel, etc.

3. List any attempt to offer inducements (bribes) or to intimidate procurement staff. Inducements can be offered in return for “turning a blind eye” to breaches of contract or poor quality of goods or packaging, ignoring late delivery etc. Attempts to intimidate can include threats to report staff to some higher authority (usually an influential politician or the police), if they do not do as the supplier wishes.

4. Make a recommendation as to whether the supplier should be availed, or not availed again for their services. In the case of straightforward supplies of goods, this can be done on a pass-fail basis. However, when suppliers are rated as failing, adequate reasons should be provided in the report to justify the recommendation.

5. Place one copy of the report on the procurement file. Make a second copy of the report available to the proposed supplier database.

MODULE 7

REDRESSAL OF GRIEVANCES AND SETTLEMENT OF

DISPUTES


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MODULE 7: REDRESSAL OF GRIEVANCES AND SETTLEMENT OF DISPUTES

Rule 48 Redressal of Grievances by the procuring agency

1. The Procuring Agency shall constitute a committee comprising of odd number of persons, with proper power and authorizations, to address the complaints of bidders that may occur prior to the entry into force of the procurement contract;

2. Any bidder feel aggrieved by any act of Procuring Agency after the submission of his bid may lodge a written complaint concerning his grievances not later than 15 days after the announcement of bid evaluation report under rule 35;

3. The committee shall investigate and decide upon the complaint within 15 days of the receipt of the complaint;

4. Mere fact of lodging of a complaint shall not warrant suspension of the procurement process;

5. Any bidder not satisfied with the decision of the committee of the Procuring Agency may lodge the application in relevant court of jurisdiction.

Rule 49: Arbitration

1. After coming into force of the procurement contracts, disputes between the parties to the contract shall be settled by arbitration;

2. The Procuring Agencies shall provide for a method of arbitration in the procurement contract consistent with the laws of Pakistan.

Rule 50: Misprocurement

Any unauthorized breach of these rules shall amount to misprocurement.

Purpose:

Complaints from suppliers are inevitable. One of the purposes of a clearly defined public procurement process with standardized procedures for every event from procurement advertising to receipt and opening of tenders to evaluation, and contract award is to minimize the chances of complaints. Unfortunately, there will always be suppliers who raise frivolous or unfounded complaints. Fairness requires, however, that all complaints should be examined. The best way to avoid complaints from suppliers is to follow the laid down procedures rigorously, so that no supplier can claim that other suppliers have been unfairly favored in the public tender process. It is therefore necessary to provide a clearly defined process for dealing with complaints from suppliers, so that the necessary procedures can be initiated as soon as a complaint is raised.

Procedure:

1. A Committee shall be constituted to address the complaints of bidders that may occur prior to entry into force of the procurement contract;

2. In order for the procedure to begin, a complaint must be made in writing. The complaint must clearly identify the complainant. Anonymous complaints about a specific procurement will not be investigated, but must be passed to the RA;

3. When a written complaint is received, the RA, or an officer designated by the RA for this purpose, will acknowledge receipt of the complaint in writing. The complaint will then be examined by the RA and a determination will be made as to whether the complaint has substance;

4. The Complaints Committee will consist of odd / three (3) members. In order to

minimize the risk of conflict of interest, or the perception of such conflict of interest, two of these members preferably be drawn from outside the RA and outside the PA concerned. Likewise, the Secretary of the Complaints Committee must not be drawn from the PA against whose actions the complaint has been made.

5. The Procurement Unit against which the complaint has been made will be

provided with a copy of the complaint, and can have five (5) working days to draw up written submissions in rebuttal.

9. These written submissions will be provided to the Complaints Committee before its meeting, and the Secretary of the Complaints Committee will ensure that the members of the Complaints Committee have received all the papers necessary before the meeting is convened. The Complaints Committee will examine the written complaint and the written rebuttals. If required, the complainant and the staff against whom the complaint has been made, may be called before the Complaints Committee for further explanations.

6. The Complaints Committee will render its decision, and will either reject, or

uphold, the complaint. The decision will be communicated to the complainant in writing.

7. If the complainant refuses to accept the decision of the Complaints Committee,

then he has the right to seek relief through the courts of law.

A: Effect on the Procurement in Question:

If the RA, when first examining a written complaint, is of the opinion that the complaint has substance, he should seek advice as to what action should be taken with regard to the continuation of the procurement in question.


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There are four options:

1. To declare misprocurement, to cancel the procurement and to re-tender;

2. To suspend the procurement pending the decision of the Complaints

Committee;

3. To permit the procurement to continue with no alterations in arrangements;

4. Depending on the nature of the complaint, to permit the procurement to

continue, but to disbar certain bidders targeted by the complaint from

consideration.

In the event of malfeasance or corrupt practice, the preferred option in terms of fairness and transparency, would be to declare a misprocurement and to re-tender.

B: Effect on the Staff Involved:

Where a Complaints Committee upholds a complaint against the staff of a Procurement Unit or members of an RA, the matter should be referred to the parent ministry for disciplinary action in accordance with the normal procedure. It is important that procedural fairness and the principles of natural justice be observed in all investigations of complaints.

MODULE 8: PROCUREMENT FRAUDS

• After completing this module you will be able to: • Explain procurement fraud

Learning Objectives


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Procurement System

• Processes, procedures an entities involved in the purchase of goods and services by public or private entities.

Competitive Bidding

• Can create a cutthroat environment that is conducive to fraud.

• Any advantage one vendor can gain over his competitors is valuable.

Example

• The benefit of “inside influence” can ensure that a vendor will win a contract while many other vendors are willing to pay for this influence.

Procurement Process

For the purpose of fraud detection, the procurement process can be reduced to six basic stages

i. Pre-solicitation phase;

ii. Solicitation phase;

iii. Bid evaluation phase;

iv. Award phase;

v. Post-award phase;

vi. Administration phase;

Fraud can occur on each of these phases.

Types of Procurement Fraud Scheme

vii. Two main types of frauds are

i. Collusion among contractors:

• It seeks to circumvent the competitive bidding.

• Competitors in the same market collude to defeat competition or to inflate the prices of goods/ services artificially.

ii Collusion between contractors and employees.

Collusion among Contractors

Most common types of collusion between competitors involve:

i) Complementary bidding;

ii) Bid rotation;

iii) Bid suppression;

iv) Market division.

I. Complementary bidding:

• Also called protective, shadow or cover bidding;

• Occurs when competitors submit token bids that are not serious attempts to win, such as:

a) Bids that are too high to be accepted.

b) Bids that fail to meet other requirements of the tender.

c) Bids that contain special terms that will not be acceptable to the buyer.

II. Bid rotation:

• Also called bid pooling;

• Occurs when two or bidders conspire to alternate the business between them on a rotating basis;

• Further it may be coupled with a scheme involving an arrangement that the winning bidder will award sub-contracts to losing bidders;

• Similarly losing bidders might receive a percentage of the winning company’s profit;

III. Bid suppression:

• Occurs when two or more contractors enter into an illegal agreement whereby at least one refrains from bidding or withdraws a previously submitted bid;

IV. Market division:

• Agreement in which competitors divide the market amongst themselves and refrain from competing in each other’s designated portion of the market;

• Competitors divide the markets according to:

a) Geographic location


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b) Customers

Example:

Vendors A, B and C are up for three separate jobs, and they agree that A’s bid will be the lowest on the first contract, B’s bid will be the lowest on the second contract and C’s bid will be the lowest on the third contract. Although none of the vendors will get all three jobs, each vendor is guaranteed to get at least one job. Furthermore, because they plan their bids ahead of time, the vendor can conspire to raise their prices. Thus the purchasing company suffers as a result of the scheme.

Collusion between contractors and employees

The manner in which these schemes are perpetrated generally depend upon the corrupt employee’s level of influence. The more power a person has over the bidding process, the more likely it is that the person can influence an entity, who is awarded the contract.

These schemes may include:

• Need recognition scheme;

• Bid tailoring;

• Bid manipulation;

• Leaking bid data;

• Bid splitting;

• Unjustified sole source awards.

I. Need recognition scheme:

• Procurement process include initial determinations i.e. assessments of the types and amounts of goods/ services;

• Fraud occurring during this phase results in decisions to purchase excessive or possibly unnecessary goods or services;

• .For example, an employee is bribed to convince his employer that it needs an unnecessary product or service;

II. Bid tailoring:

• An employee often in collusion with a supplier/ contractor tailors the bid specification to give an unfair advantage to a certain contractor.

III. Bid manipulation:

Employee manipulates the bidding process to benefit a favored contractor/ supplier

A corrupt vendor pays an employee to ensure that one/more of the vendor’s competitors cannot bid on the contract and this improves the vendor’s chances of success e.g.

• Publishing a bid during the holiday period;

• Accepting late bids;

• Extend bid opening date;

• Prematurely opening bid;

• Discarding/losing a bid;

Bid manipulation occurs at evaluation/solicitation stage

Example

A requisitioner distorted the requirements of a contract up for bid, claiming the bid specifications called for a sole source provider. Based on the requisitioner’s information, competitive bidding was disregarded and the contract was awarded to the sole supplier. A review of other bids received at a later date showed that certain materials were available for up to $70,000 less than what the company paid in the sole source arrangement. The employee had helped divert the job to a contractor in return for a promise of future employment

IV. Leaking bid data:

• Bids are confidential, therefore, they must remain confidential until a specified date at which all bids are opened & reviewed by the PA.

Example

Gift and cash payments were given to the majority owner of a company, in exchange for preferential treatment during the bidding process. The supplier who paid the bribes was allowed to submit his bid last, knowing what prices his competitors had quoted, as a result, he was allowed to actually view his competitors’ bids and adjust his own bid accordingly.

V. Bid splitting:

• Employees of PA may break a large project up into several small projects that fall below the mandatory bidding level;

• Employees avoid the scrutiny required for a large value project;

• Employees can award some or all of the component parts to a contractor with whom they are conspiring;

VI. Unjustified sole source awards:

• Sole source contracting is more vulnerable to fraud because it provides greater freedom for manipulation and collusion with a vendor.


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Red Flags

• Multiple awards just under the competitive bidding;

• Reputation, allegations and rumors of wrongdoing by an employee;

• Instances where employee bends or breaks the rules to favor a particular supplier;

• Close socialization by employee and contractors;

• The acceptance of inappropriate gifts, travel, or entertainment by an employee;

• High employee turnover in the contract and procurement area;

• Purchasing agent having a financial interest in the business of the contractors;

• A purchaser discussing possible employment with a contractor;

• An employee referring a contractor to a specific sub-contractor, expert or source of supply.

MODULE 9: STANDARD BIDDING DOCUMENTS

• After completing this module you will have the familiarity with the standard bidding documents.

Learning Objectives


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The following standard bidding documents are prepared by PEC and are notified by the PPRA. These documents are provided on a CD, which is attached to this manual.

Standard Form of Bidding Documents for Procurement of Works (Civil Works) Value of Work more than PKR 25 Million Standard Form of Bidding Documents for procurement of Works (Electrical & Mechanical) - Value of Work more than PKR 25 Million Standard Form of Bidding Documents for procurement of Works For Smaller Contracts Standard Form of Contract for Engineering Consultancy Services For large projects – Time based assignments Standard Form of Contract for Engineering Consultancy Services For large projects – Lump Sum assignments Standard Form of Contract For Engineering Consultancy Services For Smaller projects Standard Procedure for Evaluation of Proposals for Procurement of Engineering Services Standard Procedure for Evaluation of Bids for Procurement of Works Standard Procedure for Evaluation of Bids for Procurement of Contractors Standard Procedure for Evaluation of Bids for Pre-Qualification of Consultants Standard Procedure for Evaluation of Bids for Procurement of Works on B.O.T. Basis (Two Stage Bidding Procedure) Standard Form of Bidding Documents for Procurement of Civil Works (Single Stage – Two Envelopes Bidding Procedure) Standard Form of Bidding Documents for

Procurement of Goods (Single Stage – One Envelope Bidding Procedure) Standard Form of Bidding Documents for Procurement of Goods (Single Stage – One Envelope Bidding Procedure) Standard Form of Bidding Documents for Operation & Maintenance Contracts (Single Stage – One Envelope Bidding Procedure)