Procurement Bidding and Tendering Principles Procurement Definition n

Procurement Bidding and Tendering Principles

Procurement Definition n Procurementis the acquisition of goods and/or services at the best possible total cost of ownership, in the right quantity and quality, at the right time, in the right place for the direct benefit or use of governments, corporations, or individuals, generally via a contract. Almost all purchasing decisions include factors like delivery and handling, marginal benefit, and price fluctuations. Procurement generally involves making buying decisions under conditions of scarcity. If good data is available it is good practice to make use of economic analysis methods such as cost-benefit analysis or cost-utility analysis. An important distinction is between analyses made without risk and those with risk. Where risk is involved, either in the costs or the benefits, the concept of expected value should be employed. (Source: Wikipedia)

Forms of Procurement n International Competitive Bidding n Limited International Bidding n National Competitive Bidding n Shopping n Direct Contracting n Force Account n Procurement from Specialized Agencies n Procurement Agents n Inspection Agents n Procurement in Loans to Financial Intermediaries n Procurement under BOO / BOT / BOOT, Concessions and Similar Private Sector Arrangements n Performance Based Procurement n Procurement under Loans Guaranteed by Financing Institution n Community Participation in Procurement under Disaster and Emergency Assistance

Procurement Principles n Source of Procurement n Economy and Efficiency n Fairness n Transparency n Promotion of Domestic Industries

Documents Governing Procurement n n n Procurement Law (RA 9184, EO 109 [2002]) Financing Agreement (ADB/WB/IMF etc. ) Procurement Guidelines (NEDA, Financing Institution Standard Bidding Documents Handbooks and Guides

Procurement Principles Eligibility Limitation for Participation n Ideally only by bidders' capability to fulfill the contract Exceptions (especially for projects funded by development banks/agencies) n n Compliance with UN Security Council decision Conflict of interest Government owned enterprises Declaration of ineligibility by Financing Institution (e. g. WB, ADB)

Procurement Plan (RA 9184 IRR) n n n All procurement should be within approved budget and should be meticulously and judiciously planned; An Annual Procurement Plan shall be prepared by a government procuring entity. No government procurement shall be undertaken unless it is in accordance with an approved APP; Each project component shall have a Project Procurement Management Plan, which is incorporated in the APP. PPMPs and APPs shall be regularly updated

Procurement Plan Competitive Aspects Content of Bid Package Timing of Delivery Bid Package Location Institutional Capability Market Practices

Sample Procurement Flow Chart Bid Packaging Prequalification Bidding Documents Bid Opening Bid Evaluation Award of Contract

Procurement Examples: International Competitive Bidding Essentials of ICB n n n Threshold Contracts valued in excess of US$ 1, 000 (in case of ADB and World Bank financed projects) Value for Money For Borrower, wide range of choices in bid selection from among competing suppliers / contractors Fairness, Transparency For prospective bidders from eligible source countries, adequate, fair and equal opportunities

International Competitive Bidding Type and Size of Contracts Type: Supply, Design-Supply-Install (Turnkey), Works Size: Dependent on magnitude, nature and location of project Payment: Unit Price, Lump Sum, Combination Slicing: A bid may consist of multiple contracts (slices) Procedure: Single/Two-Stage, One/Two-Envelope

International Competitive Bidding Typical Time Requirements Bid Packaging Preparation of PQ Document Prequalification Preparation of Bidding Document Bidding Award -4 -3 -2 -1 1 2 3 4 5 6 7 8 9 10 11

International Competitive Bidding Advertisement and Notification Invitation for Bids or Prequalification to be published. . . by Financing Agency in its web site, and. . . by Government in English language newspapers of national circulation, or. . . internationally known and freely accessible website In case of Prequalification Invitation for Bids will be send to prequalified bidders only

International Competitive Bidding Prequalification Purpose to ensure that bids are submitted only by firms that have the necessary qualifications in terms of • Eligibility • Experience • Financial Capacity • Pending Litigation to undertake the work for which bids are to be invited. Prequalification process usually used for • Large complex works contracts • Turnkey contracts • Contracts for fabrication of custom designed plant and equipment • Specialized service contracts • Complex IT contracts

International Competitive Bidding Prequalification Benefits For User n Protection from unqualified bids n Simplifies and expedites bid evaluation n Permits more objective assessment of bidder qualifications n Provides indication on number of firms interested to bid For Bidder n n Protects unqualified firms from cost of bidding Assures bids will not be rejected on qualification grounds

International Competitive Bidding Documents shall : n Comply with requirements of the prevailing laws and/or Procurement Guidelines of the Financing Agency n Comply with agreed modifications or departures from the Guidelines n Comply with the format of the appropriate Standard Bidding Documents (SBDs)

International Competitive Bidding Documents Part I: Bidding Procedures Section 1 Section 2 Section 3 Section 4 Section 5 Instruction to Bidders Bid Data Sheet Evaluation and Qualification Criteria Bidding Forms Eligible Countries Part II: Requirements Section 6 Supply or Works Requirements Part III: Conditions of Contract & Contract Forms Section 7 Section 8 Section 9 General Conditions of Contract Particular Conditions of Contract Forms

International Competitive Bidding Procedures (used for ADB-financed projects) n n Single-Stage: One-Envelope Single-Stage: Two-Envelope Two Stage

Bidding Procedures Single-Stage: One-Envelope ADB Approv al Deadline STOP Technical Proposal Technical Financial Proposal Financial Preparation Financial Proposal Evaluation

Bidding Procedures Single-Stage: Two-Envelope Deadline STOP ADB Approv Technical al Proposal ADB Approv al Financial Proposal Technical Financial Proposal Financial Preparation Financial Evaluation 1 Evaluation 2

Bidding Procedures: Two-Stage: Two-Envelope ADB Approval Deadline Technical Proposal STOP Technical Proposal Deadline Revised Techn. Proposal STOP Suppl. Financial Proposal ADB Approva l Revised Techn. Proposal Suppl. Financial Proposal Technical Revised Technical Financial Proposal Suppl. Financial Proposal Financial Preparation Evaluation 1 Preparation 2 Evaluation 2

Bidding Procedures: Two Stage Deadline ADB Approv al Deadline STOP Technical Proposal Revised Technical Proposal Financial Proposal Revised Technical Preparation ADB Approv al Financial Evaluation 1 Preparation 2 Evaluation 2

Steps in Selection of Consultants Competitive Selection n Project preparation (TOR, budget, etc) n Advertisement n Submission of Expressions of Interest n Shortlisting and Invitation (RFP) n Submission of Proposals n Evaluation and Ranking of Technical Proposals n Opening of Financial Proposals n Evaluation of Financial Proposals and Final Ranking n Contract Negotiations and Awarding

Procurement Issues Misprocurement If Procurement is not carried out as agreed. . . declare misprocurement. . . cancel corresponding portion of financing (for projects funded by multilateral development banks). . . exercise other remedies If appropriate, may permit rebidding

Procurement Issues Fraud and Corruption Corrupt Practice the offering, giving receiving, or soliciting, directly or indirectly, of any thing of value to influence the action of any party in the procurement process or the execution of a contract Fraudulent Practice a misrepresentation or omission of facts in order to influence a procurement process or the execution of a contract Collusive Practice a scheme or arrangement between two or more bidders, with or without the knowledge of the Borrower, designed to influence the action of any party in a procurement process or the execution of a contract Coercive Practice the harming or threatening to harm, directly or indirectly, persons, or their property to influence their participation in a procurement process, or affect the execution of a contract

How to prepare responsive bids ? (General Tips for Proposal Tendering)

How to Prepare Responsive Bids ? n Be compliant! Submit a basic offer that complies with all terms and conditions of the bidding document, even if some of these conditions appear irrelevant n Don’t qualify! Do not add any conditions. Conditionalities or qualifications will lead to rejection n Get official clarification! Submit an official inquiry to the procuring entity if any provisions of the bidding document are unclear or unacceptable before the bid closing date or such date as may be specified.

How to Prepare Responsive Bids ? n Be aware of bid evaluation criteria! n Be clear with alternatives! Check if other factors besides price, such as delivery periods, efficiency, operating & maintenance costs, will be considered in the bid evaluation. These factors must be specified in the bidding document to be applied. Submit alternatives only if explicitly allowed in the bidding document. Alternative proposal, if allowed, should be submitted in addition to the compliant proposal. The proposed alternatives and corresponding changes in bid price should be clearly indicated. Only the alternative proposal submitted by the bidder with the lowest evaluated and substantially responsive compliant bid can be considered, unless otherwise provided in the bidding documents.

How to Prepare Responsive Bids ? n Ensure bid is complete ! n Make final check of bid ! Check if the bid complies with all the requirements of the bidding document such as bid security, power of attorney, additional documents such as test certificates and technical brochures. Incomplete Bids may be rejected. Amount, validity and text of Bid Security Signatures and power of attorney n Joint venture agreement enclosed n References enclosed n Discounts in covering letter or appropraiate place as specified in the bidding document n Marking of envelopes n n

How to Prepare Responsive Bids ? n Be on time ! n During opening ensure ! Submit bid within the stipulated deadline. Late bids will not be accepted. n n n n All relevant prices are read out All discounts are read out Presence and amount of bid security is read out No envelope remains unopened All the above is recorded correctly The record is signed by all bidders present and by the buyer Be Aware of Possible Extension ! There may be a request to extend the bid validity period by several months, as in certain cases the evaluation of bids requires more time than originally expected.

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