Chapter 5 Present Procurement Rules and Regulations Procurement

Chapter 5 Present Procurement Rules and Regulations (Procurement of Consulting Service)

Consulting Service Legal Provision • A public entity may procure consultancy services from any person, firm, organization or company in the following circumstances: üAny act can’t done by human resource available in the concerned public entity; or üService is required to be obtained from a consultant under the foreign aid source in accordance with an agreement with a donor party. • Procurement of consultancy service shall be made by fulfilling the procedures stated in Public Procurement Act 2063 and Regulation 2064.

Consulting Service cont… Procurement Method • Direct Procurement : Up to 5 Lakh • Issuing RFP to consultants contained in standing list of concerned public entity if available in standing list : 5 to 20 Lakh • Through open EOI : 20 to 10 Carore (Competition between national consultants only , except if it is assigned to apply international bidding) : Above 10 carore (Only International bidding) : Above 5 Lakh if required consultants are not available in standing list.

Consulting Service cont… Procurement Method • Through direct negotiation by chief of public entity (Training, seminar etc. ) : Up to 5 Lakh : Above 5 Lakh (From approval of one level higher authority)

Consulting Service cont… Basic steps of procurement • Preparation of cost estimate • Preparation of TOR • Preparation of short list by making request of proposals publicly (EOI) • Preparation of RFP documents • Request for proposals • Opening of technical proposals and evaluation • Opening of financial proposals and evaluation • Selection of proponent • Negotiation with proponent • Agreement

Cost of Consulting Services • • • Remuneration for professional Administrative and support staff Office running cost Reimbursable expenses Test, investigation cost Equipment and machinery cost

Cost Estimation Consulting Services • Ministry Norms • TOR • Actual cost for similar services in the past in the organization or in similar organization • To be mentioned üKey expert and Remuneration üTravel cost, Subsistence allowance, office expense, equipment, reporting, translation, Printing ü Training, workshop, travel and other cost

Consulting Service cont… Terms of Reference (TOR) Preparation • The public entity shall, for the procurement of consultancy services, prepare TOR indicating following matters: üBackground and objective of assignment to be performed by the consultant üScope of work of consultant and the assignment to be performed by the consultant üDescription of existing relevant studies and basic data, if any üIf the consultants is required to transfer knowledge or skill to public entity, description thereof üPayment

Consulting Service cont… Terms of Reference (TOR) Preparation cont… üIf any training is to be provide, the number of employees to be trained üFunctions and qualifications of key personnel of the consultant and the estimated time required for the assignment to be performed by the consultant üTime for the commencement and completion of assignment by the consultant üDescription of information, physical facilities and equipment to be provided by the public entity to the consultant üDescription of reports, data, designs, survey reports etc. to be submitted by the consultant

Consulting Service cont… TOR cont… Objectives • Set boundaries of the services • Context in which the TOR has been prepared • What are inputs and outputs are required Scope of TOR • Boundaries of services • Desired inputs/outputs • Persons involved • Delivery schedule • Project administration

Consulting Service cont… TOR cont… Factors to be considered • Not to be too detailed to make inflexible • Clear responsibility of client and consultants • Consistent with budget

Consulting Service cont… Preparation of shortlist (By inviting LOI) • For values more than 20 lakhs, the public entity shall publish a notice inviting Expression of Interest (EOI) also called Letter of Intent (LOI) • For consultancy service of greater than 100 million rupees, international letter of intent shall be invited • The notice, which shall be published giving a period of at least 15 days in a national newspaper of national inviting the letter of intent, shall indicate the following matters. ü Name and address of public entity ü General description of the proposed assignment ü Source of funding

Consulting Service cont… Preparation of shortlist (By inviting LOI) cont… ü Qualification of consultant submitting LOI ü If the consultant submitting LOI is firm or company Ø A profile of the firm or company, its organization and staffing Ø If two or more firms or companies are to provide consultancy service as joint venture, the names, addresses, profiles of such firms or companies name of lead firm or company Ø Details of experience of similar assignments undertaken in the previous five years and their locations Ø Bio data of key human resources to be involved in the proposed assignment.

Consulting Service cont… Preparation of shortlist (By inviting LOI) ü In case of an individual consultant, details of experience of similar assignment in the previous three years and their locations and his or her bio-data. ü Estimated time required for the completion of the proposed assignment. ü Statement that only shortlisted persons, firms, organizations, or company shall be invited to submit proposals on consultancy service procurement. ü Document required to be submitted by the consultants submitting the LOI ü Instruction for preparation of LOI and deadline and place for submission of LOI.

Consulting Service cont… Preparation of shortlist (By inviting LOI) ü Contact address of public entity and contact person. • In inviting international level LOI approval from one level higher authority is required • The public entity shall select the consultant submitting LOI by making evaluation of qualification, experience and capacity of the consultants. • In selecting international consultant submitting LOI, the public entity shall make selection of firms or companies including different nationalities, background and having local agent.

Consulting Service cont… Preparation of shortlist (By inviting LOI) • A renowned consultant who did not submit LOI may be included in shortlist after making contact with such consultant. • If at least three consultants (required 3 to 6) submitting LOI can’t be selected, the public entity shall re-publish a notice inviting LOI. • If even after publishing notice second time, number of consultant selected are less than three, the list including only the selected consultants submitting the LOI may be maintained. • The public entity shall give information to all consultants submitting LOI about the shortlist.

Consulting Service cont… Soliciting (issuing) proposal • After preparing shortlist of consulting firms, a public entity shall send request for proposal (RFP), at free of cost, to the proponents that are included in shortlist and request for proposal from them by giving them a period of at least 30 days. • Statements that have to be stated in RFP document: üName and address of public entity üNature of services to be procured, time and place when and where the services are to be provided, TOR of services, task to be completed and expected result üInstruction for proponents to prepare proposals

Consulting Service cont… Soliciting proposal cont… üRequirement that the technical and financial proposals have to be sealed in separate envelops, each of which has to clearly indicate the proposal inside it and that both envelopes have then to be sealed in a separate envelope and that the required services have to be mentioned thereon; üTechnical and financial evaluation weightage; üThe criteria and weightage for the evaluation and comparison of proposals; üConditions of the procurement contract; üDeadline and place for submission of proposal. üThe place, date and time for the submission of proposal

Consulting Service cont… Soliciting proposal cont… üProcedure for the selection of proposals; üInformation that proposals are not entertained in the event of conflict of interest or information relating to legal action for fraud or corruption; üProvision that any bidder may make an application for review, against any error or decision made by the public entity in carrying out procurement proceedings; ü Letter of invitation to proposals; üRequirement that the key human resources proposed by the proponent certify that their respective updated bio-data are accurate and complete;

Consulting Service cont… Soliciting proposal cont… üMatter that financial proposals shall be opened only after evaluation of technical proposals; üMinimum pass score to be obtained by proponent on the technical proposal; üWhether the proponent is allowed to propose a separate action plan of its own and human resources for the concerned assignment; üWhether the proponent is allowed to comment on the TOR and üSource of finance required for the proposed assignment

Consulting Service cont… Soliciting proposal cont… • While stating criteria of evaluation of technical proposal, following criteria, all or any as per requirement, have to be stated: üThe experience of consultant in the task to be performed by consultants; üThe quality of proposed methodology for the performance of the task by consultants; üThe qualification of the proposed core human resource; üProvision of knowledge and technology transfer; üIn the case of international proposals, the details of the core Nepalese human resource proposed for the performance of the task.

Consulting Service cont… Soliciting proposal cont… • While setting forth, in the RFP, the method for the selection of proposals one of the following methods shall be stated: ü Quality and Cost based Selection (QCBS) ü Quality Based Selection (QBS) ü Selection under a Fixed Budget (FBS) ü Least-Cost Selection (LCS) • For consulting services of exceptionally complex or such services are likely to have considerable impact on national economy or future project, the selection of proposals may be made exclusively on the basis of QBS. • Score weight of proposals to be stated as per follows:

Consulting Service cont… Soliciting proposal cont… ü For QCBS depending upon nature and complexity of work, the weight shall be determined in such a manner that the total weight of technical and financial proposals be one hundred; out of total score, the total weight for technical proposal should be in the range of 70 to 90 and that for financial proposal should be in the range of 30 to 10. ü For QBS, FBS and LCS, the weight for technical proposal should be 100. • Incase of fixed budget system, while inviting proposal for selection of consultant, available budget shall be indicated in the proposal.

Consulting Service cont… Soliciting proposal cont… • While indicating weights in documents relating to proposal for the selection of consultant, the public entity shall indicate appropriate weights according to nature and complexity of the assignment that such weight do not exceed the ceiling of the weights as follows: ü Consultant’s specific experience : 25 % of total score ü Methodology of performance and responsiveness to the TOR : 20 to 35 % of total score ü Qualification and experience of key human resources : 30 to 60 % of total score

Consulting Service cont… Soliciting proposal cont… ü Technology transfer or training : up to 10 % of total mark ü Participation of native human resources (For international proposal only) : up to 10 % of total mark Total score = 100 • All evaluation criteria stated above shall be divided into three sub criteria and weights shall also be determined for the same.

Consulting Service cont… Opening of proposals • After expiry of deadline for the submission of proposals, the outer envelopes of the proposals received from the proponents shall be opened and the sealed envelopes of technical and financial proposals shall be set aside. • Out of the proposals set aside, the technical proposals shall be opened first, and the envelopes of financial proposals shall be kept apart unopened. • The envelopes of financial proposals set aside shall be opened only after making evaluation of technical proposals.

Consulting Service cont… Opening of proposals cont… • The public entity shall open the proposal in presence of proponents or their agents as far as possible but there is no bar for opening the proposal even if there is absence of proponents or their agents. • While opening technical proposal, following matters are read out and recognizance deed is prepared thereof: ü Name and address of the proponent, ü Whether the proposal bears the signature of proponent or its agent or not. ü If the documents relating to proposal contain any correction or overwriting, whether it is initialed by the proponent or its agent or not.

Consulting Service cont… Evaluation of technical proposals: • The technical proposal shall be evaluated in accordance with the evaluation criteria set forth in the RFP. • Each member of the evaluation committee shall individually evaluate it based on the criteria set and determine the score gained by the proponent. • The committee shall draw the average score secured by such proponent by calculating score given by each member of the committee. • The evaluation committee shall prepare a list of proponents who have gained pass score. • The list shall be prepared in order of the proponents who have secured highest scores.

Consulting Service cont… Evaluation of technical proposals cont… • The evaluation committee shall not open financial proposals until the evaluation of technical proposal is completed. • The financial proposals of only the proponents included in the pass list shall be opened. • The proposals of the proponents who can not be included in the pass list shall be returned unopened to the concerned proponents. Evaluation Report on quality of proposal: The report shall indicate the following matters: • Name and address of proponents,

Consulting Service cont… Evaluation report on quality of proposal cont… • Whether proposals have signed by proponents or their agents or not, • Whether documents supporting that proponents are qualified to submit proposals as per laws have been submitted or not, • In event of requirement of a joint venture agreement, whether such agreement has been submitted or not, • Whether proposals are complete in conformity with the directions set forth in the documents relating to proposal for proponents or not, • Relative strengths, weakness of and results of evaluation of each proposal.

Consulting Service cont… Notice to be given to proponents selected • The public entity shall give a notice indicating the place, date and time for opening the financial proposals and asking them to present at that date and time to the proponents who have been included in the pass list. • In giving notice to the proponents, period of at least seven days and that of at least fifteen days shall be given in the case of a domestic proposal and an international proposal, respectively. • The financial proposals of those proponents who fail to secure the pass mark shall be returned them, accompanied by a notice setting out the reason why their technical proposal have not been selected.

Consulting Service cont… Opening of financial proposals • The evaluation committee shall open the envelop of financial proposals in presence of the proponents or their agents but there is no bar for opening the proposal even if there is absence of proponents or their agents. • After opening the envelop of financial proposal, the evaluation committee shall announce the name of such proponent, the score secured by the proponent in technical proposal and the service fee proposed in the financial proposal and prepare a recognizance deed setting out following matters: ü Name and address of proponent, ü Proposed service fee,

Consulting Service cont… Opening of financial proposals cont… ü If the proposal offers any discount in the proposed service fee, contents thereof, ü If there is discrepancy between figures and words, details thereof, ü Whether the financial proposal bears the signature of the proponent or its agent or not, ü Where an matter or content of the financial proposal is corrected or overwritten, whether such correction or overwriting has be initialed by the proponent or its agent or not, and amount and contents so corrected or overwritten ü Such other such necessary matters as per required

Consulting Service cont… Evaluation of financial proposals • Expect as otherwise mentioned in the documents relating to proposal, for the purpose of evaluation of a financial proposal, the service fee quoted in the proposal shall be deemed to include the taxes leviable on the proponent under the prevailing laws other than value added tax and reimbursable expenses such as travel of consultant, translation of the documents concerned, report printing or overhead costs. • If, in evaluating the financial proposal of each proponent, the evaluation committee finds any arithmetical error in the proposal, the public entity may rectify such error;

Consulting Service cont… Evaluation of financial proposals cont… • If, in so rectifying the error, the unit rate and total amount differ, the unit rate shall prevail and the total amount shall be corrected according to that rate. In the event of such rectification of error, information thereof shall be given to the concerned proponent. • If there is a divergence between the figure and words of the amount quoted by a proponent in the financial proposal, the amount set in the words shall prevail. • If any proponent offers any concession on the proposed quoted price, the evaluation committee shall adjust the amount so proposed for concession. • After evaluation a list of the set quoted prices of all proponents shall be prepared.

Consulting Service cont… Selection of proponent • Where the quality and cost based selection (QCBS) is adopted for selection of proposal, the evaluation committee shall select a successful proponent by making technical and financial proposal as follows: ü The figure of quotient to be derived by dividing the figure, which is drawn by multiplying the secured marks of the technical proposal of the proponent to be evaluated with the weight-age of marks allocated for the technical proposal, with one hundred shall be the net secured marks of the technical proposal.

Consulting Service cont… Selection of proponent cont… ü The figure quotient to be derived by dividing the figure, which is drawn by multiplying the lowest quoted price, out of the proposals which have been successful upon the evaluation of technical proposal with the weight-age of score allocated for the financial proposal, with the quoted price of the proponent to be evaluated shall be the net secured marks of the financial proposal. ü As a proponent who secures the highest marks on the basis of a combined evaluation by adding the net secured marks of the financial proposal and that of the technical proposal shall be successful, that proponent shall be selected.

Consulting Service cont… Selection of proponent cont… • Example ü Total weight-age of marks allocated for the technical proposal = 75 ü Total weight-age of marks allocated for the financial proposal = 25 ü Pass mark on technical proposal = 70 ü Marks secured in technical proposal by A, B, C A = 90 B = 92 C = 88 ü Price quoted in financial proposal by A, B, C

Consulting Service cont… Selection of proponent cont… ü Price quoted in financial proposal by A, B, C A = 500, 000 B = 550, 000 C = 480, 000 (Lowest quoted price) ü Marks secured on technical proposal A = 90 * 75/100 = 67. 5 B = 92 * 75/100 = 69. 0 C = 88 * 75/100 = 66. 0 ü Marks secured on financial proposal A = 480, 000 * 25/500, 000 = 24. 0 B = 480, 000 * 25/550, 000 = 21. 8 C = 480, 000 * 25/480, 000 = 25. 0

Consulting Service cont… Selection of proponent cont… ü Combined marks obtained A = 67. 5 + 24. 0 = 91. 5 ( 1 st ) B = 69. 0 + 21. 8 = 90. 8 ( 3 rd ) C = 66. 0 + 25. 0 = 91. 0 ( 2 nd ) ‘A’ is selected if QCBS method is adopted • Where QBS method is adopted, the proponent having highest score in technical proposal would be selected i. e. ‘B’ would be selected • Where FBS method is adopted, the proponent having highest score in technical proposal and quoted amount is within available budget would be selected. E. g. if budget limitation is 500, 000, then A would be selected.

Consulting Service cont… Selection of proponent cont… • Where LCS method is adopted, the proponent who quote lowest amount among qualified proponents would be selected i. e. ‘C’ would be selected. Negotiation • Negotiation may be held with proponent on TOR and scope of proposed services, progress reports and facilities to be provided by the public entity. • Except in QBS method of selection, the remuneration of professionals shall not be subject to negotiation in respect of financial proposal but expenditures of reimbursable nature may be subjected to negotiation. • If negotiations are to be held with the proponent selected, the public entity shall give a notice indicating the date, time and place for negotiations.

Consulting Service cont… Negotiation cont… • When the negotiation held fails to result in an agreement acceptable to both public entity and the proponent, the public entity shall negotiate with the next proponent who have secured the second highest mark and so on… Agreement • The proposal of the proponent agreed upon in the negotiation held shall be selected for acceptance. • No later than 7 days after selection of proposal, the public entity shall give a notice on the intent of acceptance of proposal so selected to concerned proponent and other proponents. • If any proponent does not make application with complaint against decision within a period of seven days the proposal shall be accepted.

Consulting Service cont… Agreement cont… • A notice shall be communicated to the proponent to enter into contract within 15 days. • Where the proponent comes to enter into the contract within 15 days, the proponent shall sign the contract. • Where the proponent fails to sign such contract, the public entity shall negotiate and enter into contract with other proponent who have secured the second highest marks and so on. . . But in case of LCS method, public entity shall negotiate and enter into contract with other proponent who have second lowest quoted amount and so on. . . • If selected proponent disagrees to enter into contract, PPMO may blacklist the proponent on request of public entity.

Consulting Service cont… Ø Rejection of proposals and cancellation of procurement proceedings • A public entity may reject all proposals or cancel the procurement proceedings in following circumstances: ü When all proposals received are not substantially responsive in accordance with TOR. ü Where the cost of proponent of the selected proponent is substantially above cost estimate and available budget. ü Where the consultancy service are no longer required ü Where it is proved that the proponent has made proposal by way of mutual collusion. However the proposal of a proponent who is not engaged in such collusion may be entertained.

Consulting Service cont… Ø Matters to be set down in directions for preparation of the proposal • The public entity shall set down following matters in the instruction for proponents to prepare proposals ü Standard form of technical and financial proposal, ü The manner of preparation and submission of proposal, ü Phasing of assignment and likelihood of follow-up assignment, ü Where the proponents are to obtain any information as to the documents relating to proposals, the procedure for obtaining such information, ü Whether the consultant is allowed to sub-contract any portion of the proposed assignment, ü Information about notice, service, equipment to be provided by public entity,

Consulting Service cont… Ø Matters to be set down in directions for preparation of the proposal cont… ü Statement whether a pre-proposal conference will be held or not, ü Validity period of proposal, ü Information as to tax to be paid by the proponent and its human resource and other authentic body which the proponent should contact to get more information, ü Language of proposal, ü Procedures for modification of the document relating to proposal by the public entity, ü Manner of submission of the proposal, ü Manner of opening of proposal, ü Conditions relating to confidentiality etc…

Standard Request for Proposal (RFP) • Letter of Invitation • Information to Consultant ØIntroduction, Clarification and Amendment of RFP Documents, Preparation of proposals (Technical and Financial), Opening of Proposals, Proposal evaluation, Negotiation, Award of Contract, Conduct of consultant etc. • Information to Consultants; Data sheet • Technical Proposal- standard Forms ØTechnical Proposal submission form. ØConsultant’s references. 47

Standard Request for Proposal (RFP) cont… ØComments and suggestions of consultants on the Terms of Reference and on data, services, and facilities to be provided by the Client. ØDescription of the methodology and work plan for performing the assignment. ØTeam composition and task assignments. ØFormat of curriculum vitae (CV) for proposed professional staff. ØTime schedule for professional personnel. ØActivity (work) schedule. • Financial Proposal- Standard Forms ØFinancial Proposal submission form. 48

Standard Request for Proposal (RFP) cont… ØSummary of costs. ØBreakdown of price per activity. ØBreakdown of remuneration per activity. Ø Reimbursable per activity. Ø Miscellaneous expenses. • Terms of Reference (TOR) • Standard Forms of Contract 49

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