PROCUREMENT OF CONSULTING SERVICES Ajay Kumar Mull 16

PROCUREMENT OF CONSULTING SERVICES Ajay Kumar Mull 16 Jestha 2074 1

Session Coverage 1. Introduction 2. Selection Procedure Method, Basis of selection (Open Competition) 3. Types of Consulting Contract 4. Short listing Preparation of TOR, Cost Estimation, Preparation of Request for EOI, Evaluation of EOI, Report preparation 5. Request for Proposal Preparation, Evaluation of Proposal, Preparation of Evaluation Report 6. Contract Award 2

Public Procurement Act Public Procurement Regulation Donor Guidelines, if applicable 3

1. INTRODUCTION 4

INTRODUCTION Consultant Services means any activity of an intellectual nature that does not lead to a measurable physical output 5

INTRODUCTION Public Procurement 9

INTRODUCTION Consultant Selection Basic Principles Solve Specific Problem(s), i. e. , Study, Design, Analysis, Supervision etc. High Quality Services Reasonable Cost Economy and Efficiency Equal Opportunity Transparency 7

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INTRODUCTION Differences Goods and Works Consulting Services Product Based Knowledge Based Open Competition Shortlist Cost Major Factor Quality Major Factor Detailed Specification Terms of Reference Single Stage Procedure Two Stage Procedure 9

INTRODUCTION Differences Goods and Works Consulting Service No Negotiations Limited Negotiations Invitation for Bids Request for Proposals Public Bid Opening Technical Proposal: Proposal Public Opening Not Public ? ? Financial Proposal: Public Proposal Opening Public No Securities ? ? ? ? ? Financial (in 2 envelope) Bid and Performance Securities 10

INTRODUCTION Steps in Procurement § § § § Preparation of Terms of Reference (TOR) Preparation of Cost Estimate Invitation of Expression of Interest (EOI) § Required for value of service >NRs. 2 mill. as per PPA § International EOI for value of service >NRs. 100 mill Short listing of Consultants -3 to 6 firms (cl. 30. 1 PPA) Evaluation for short listing (criteria) Preparation of Request for Proposal Issuance of Request for Proposal to short listed consultants – Min 30 days (cl. 31. 1 PPA) for >NRs. 2 million – Min 15 days (cl. 71. 1 PPR) for <NRs. 2 million 11

INTRODUCTION Steps in Procurement § § § § …. contd Preparation of Proposal by short listed Consultant Submission of proposals Opening of Proposals Evaluation of Technical & Financial Proposals Negotiation with Selected Consultants Award of Contract Debriefing 12

2. SELECTION PROCEDURE 13

Selection Procedure Methods of Procurement Provision of Two Methods Request for Proposal (RFP) – Open Competition Direct Procurement - Negotiation 14

Selection Procedure Basis of Selection under Open Competition Quality And Cost Based Selection (QCBS) Technical (Quality) /Financial (Cost) Proposal Quality Based Selection (QBS) Highest Quality of Technical Proposal Fixed Budget Selection (FBS) Quality Of Technical Proposal and Budget of Financial Proposal[SIMPLE ASSIGNMENT, WELL DEFINED TOR] 15

Selection Procedure Basis of Selection under Open Competition Least Cost Based Selection (LCBS) Acceptable Quality Of Technical Proposal and Least Cost of Fin. Proposal [Standard or Routine Assignments (Auditing and design of non complex works), Contract Amount not Large, Threshold for Quality] Expertise and Qualification Based Selection 16

Selection Procedure Factors Affecting Choice of Selection Method Technical complexity of the assignment Size and value of the assignment Whether the impact of poor performance by the consultant is high or low Whether proposals are comparable (i. e. , assignment can be carried out in different ways) Budget constraints 17

Selection Procedure QCBS v QBS and Flexible QCBS 18

Selection Procedure Quality Based Selection Generally used when TOR and Services of Consultants is Difficult to define and Innovation expected from the Consultants, such as – Study of Economic and Sectoral Policy of the country, Multi Regional Feasibility Study, Financial Reform, Town Master Plan etc. Aimed at receiving Services from DISTINGUISHED EXPERTS, works that have GRAVE FUTURE IMPACT, such as – Feasibility and Structural Engineering designs of High Dams, Policy Study of National Importance, Management Study of big Governmental Institutions, Shipyard/Airport Construction etc. 19

Selection Procedure Direct Procurement- Negotiation In the Circumstances - When Only that Consultant has the Specialized Technical Ability or Capacity to fulfill the Procurement requirement Service Extension – Replacement is not possible As Proprietary Nature Not included in Original Contract due to difficulty in forecasting, difficult due to Technical/Financial reason - As additional Services Immediate need for Procurement within the Threshold Limit 20

Selection Procedure Single Source Selection If the service of a particular consultant with his unique qualifications is immediately needed for the concerned work or where the service of same consultant is indispensable. PPA Clause 41 (f) 21

3. TYPES OF CONSULTING CONTRACT 22

Type of Contract Types of Contract Lump Sum Contract Time Based Contract Retainer and / or Contingency (Success) Fee Contract Percentage Contract Indefinite Delivery Contract Schedule 5, (related to Clause 23 of PPR) 23

Type of Contract Lump Sum Contracts are used for assignments in which the content and the duration of the work is clearly defined. Fixed sum payment is made upon delivery of outputs and within specified deadline. The main advantage of this type of contract is that it is easy to administer. Examples Feasibility Studies Environment Studies Detailed design of a standard structure Project designs or detailed designs 24

Type of Contract Time Based Contract Used for assignments in which it is difficult to define the scope and the duration of the work as well as staff month required. Payment based on monthly rate plus reimbursable expenses using actual expenses or agreed upon unit prices. Contract provides for a maximum total payable amount that includes a contingency for unforeseen work and duration, price adjustments, etc. Examples Preparation of data Design of complex structures such as dam, etc. Management of complex institutions Supervision of construction Advisory services 25

Retainer and/or Contingency (Success) Fee Contract Type of Contract Used to remunerate Consultants or Banks on performance. The remuneration shall include the retainer fee and a success fee normally expressed as a percentage of the sale price of the assets. Examples Privatization (sale of publicly owned asset) Merger of companies 26

Type of Contract Percentage Contract Related to the fee paid to the Consultant based upon the estimated or actual project construction cost or the cost of goods to be procured or inspected. Percent is based upon market norm or standard practice in the industry or estimated staff month cost for the services or through competitive bidding procedures. Examples Architectural Services Engineering Services Procurement Agencies Inspection Agents 27

Type of Contract Indefinite Delivery Contract Used for on-call specialized services to provide advice on a particular activity. The client and the firm agree upon the unit rates to be paid to the experts as and when the need arises, and payments are made on the basis of the time actually used. Examples Advisors for complex projects, e. g. , dam panel Expert, Adjudicators Technical Troubleshooting 28

4. SHORTLISTING Preparation of TOR, Cost Estimation, Preparation of Request for EOI, Evaluation of EOI, Report preparation 29

SHORTLISTING Terms of Reference (TOR) A comprehensive and clear TOR is important for the understanding of the assignment and its correct execution. It reduces the risk of unnecessary extra work, delays, and additional expenses for the Client. In addition, it helps reduce the risk of ambiguities during the preparation of consultant proposals, contract negotiation, and execution of the services. This Section should not be used to over-write provisions in ITC. 30

SHORTLISTING Typical Terms of Reference • • Project introduction and background information Objective of the Consultancy Services Scope of the work , expected output (compatible with the budget) Duration of the Services Reporting Requirement Team Composition and qualification requirement (and any other requirement used for evaluation) Provision of Consultant’s Facilities Studies, reports , data and facilities to be provided by the Client 31

SHORTLISTING Cost Estimate ● ● ● TOR is the basis for preparation of the cost estimate. Accuracy of the estimate increases with the extent of service requirement details in the TOR Cost estimate is the sum of the Remuneration of the consultant staffs, assignment related activities (surveys, investigations, equipments etc. ) and other expenses (travel , allowances, communication, office rent, report , taxes etc) for the performance of the services in the TOR Cost Division • Remuneration • Reimbursable /Out of pocket Expenses • Provisional Sum • Contingency 32

SHORTLISTING Cost Estimate …. Contd. Cost Estimate basis: • • • Norms prepared by concerned Ministry, if any Terms & conditions of the services Previous estimates of similar assignments Historical data on cost of similar assignments Market rates for office supplies, equipments, communication, transportation etc. 33

SHORTLISTING EOI Notice Provide enough information allowing Consultants to decide whether or not to prepare an expression of interest. Requested information should be the minimum required to judge a Consultant’s suitability and not so complex as to discourage Consultants from expressing interest. 34

SHORTLISTING EOI Notice should include • • Name & address of client Project details & Fund source Applicant firm’s details e. g. , organization, personnel, lead partner in case of JV Estimated time period for the services List of documents to be submitted by the applicant EOI preparation procedure, place & date of submission, contact address Information that only short listed consultant will be eligible for submission of proposal 35

SHORTLISTING Shortlisting from Standing List (as per PPR: EOI not required up to NRs 2 million) Advertising for Expression of Interest (EOI) ● Advertise in national newspaper, websites Advertising for EOI Minimum 15 days notice provided for responses. 36

SHORTLISTING Shortlisting …. . Contd. Eligibility & Completeness • Company Registration • VAT/PAN Registration • Tax Clearance/Tax Return Submission • EOI Submission Form Nos. 1 to 5. 37

SHORTLISTING Shortlisting …. . Contd. Shortlist shall compromise 3 - 6 firms (International: geographic spread and a local firm), in donor project no more than two firms from one country, and at least one firm from developing countries, Shortlist in donor funded projects may be entirely of national consultants , if the value of assignment is below the ceiling established in the Procurement Plan. However, if foreign firms express interest, they shall be considered. Should be based on qualification, experience and capability The Shortlist shall not include individual consultant 38

SHORTLISTING Shortlisting …. . Contd. Criteria for Evaluation of EOI (PWD) Ranking Criteria (Out of 100%) Weight General Experience of Consultant 20 -30% Experience in Similar Projects 30 -50% Experience in Similar Geographical Area 10 -15% Availability of Staff with Suitable Qualifications 10 -15% Works in Hand 5 -10% (Negative) Financial Capability 5 -10% Equipment and Facilities 5 -10% Commitment for Code of Ethics 2 -3% Commitment for Adherence to Anti-corruption Policy 2 -3% TOTAL 100 % 39

SHORTLISTING Shortlisting …. . Contd. EOI Evaluation Criteria Score [Out of 100%] A. Qualification of Key Experts Experience of Key Experts B. Experience General of consulting firm Specific experience of consulting firm within last 7 years. [Client should insert in between: [30 % to 50 %] [Client should insert in between: [40 % to 60 %] In case of person, specific experience of the person within last 4 years. Similar Geographical experience of consulting firm C. Capacity Financial Capacity 1 Infrastructure/equipment related to the proposed assignment 2 1 Average 2 This [Client should insert in between: [10 % to 20 %] turnover required shall not exceed 150% of cost estimate Evaluation criteria should be deleted if infrastructure/equipment are not the part of the proposed assignment. 40

5. REQUEST FOR PROPOSAL 41

REQUEST FOR PROPOSAL Request for Proposal Section 1: Section 2: Section 3: 4: 5: 6: Letter of Invitation (LOI) Information to Consultants (ITC) (including the Data Sheet) Technical Proposal - Standard Forms Financial Proposal - Standard Forms Terms of Reference (TOR); and Standard Form of Contract (including General Conditions of Contract (GCC), Special Conditions of Contract (SCC), and Appendices) 42

REQUEST FOR PROPOSAL Letter of Invitation (LOI) Intention of the Client to enter into a contract for an assignment and informs the shortlisted consultants that they are invited to submit a proposal for the assignment. It provides basic information regarding: Name of the Client and the sources of funds to finance the consulting services Names of the short-listed consultants Name of the consulting services assignment Method of selection The LOI also instructs consultant to indicate whether they intend to submit the proposal alone or in association 43

REQUEST FOR PROPOSAL Information to Consultants (ITC) This Section provides information to help shortlisted consultants prepare their proposals. This Section consists of two parts: “Information to Consultants” and “Data Sheet”. ITC contains provisions that are to be used without modifications. 44

REQUEST FOR PROPOSAL Information to Consultants (ITC) “Data Sheet” contains information specific to each selection and corresponds to the clauses in ITC that call for selection-specific information to be added. Information is also provided on the submission, opening and evaluation of proposals, contract negotiation and award of contract. 45

REQUEST FOR PROPOSAL Technical Proposal – Standard Forms This Section includes the forms that are to be completed by the shortlisted consultants and submitted in accordance with the requirements of ITC. Following forms are included in Section 3: 3 A 3 B 3 C 3 D 3 E 3 F 3 G 3 H Technical Proposal submission form. Consultant’s references. Comments and suggestions of consultants on the Terms of Reference and on data, services, and facilities to be provided by the Client. Description of the methodology and work plan for performing the assignment. Team composition and task assignments. Format of curriculum vitae (CV) for proposed professional staff. Time schedule for professional personnel. Activity (work) schedule. 46

REQUEST FOR PROPOSAL Financial Proposal – Standard Forms This Section includes the financial forms that are to be completed by the shortlisted consultants, including the consultant’s costing of its technical proposal, which are to be submitted in accordance with the requirements of ITC. Following forms are included in Section 4: 4 A. 4 B. 4 C. 4 D. 4 E. 4 F. Financial Proposal submission form. Summary of costs. Breakdown of price per activity. Breakdown of remuneration per activity. Reimbursable per activity. Miscellaneous expenses. 47

REQUEST FOR PROPOSAL Standard form of Contract This Section includes standard contract forms for a Time-Based Contract/ Lump-Sum Contract. It includes General Conditions of Contract (GCC) and Special Conditions of Contract (SCC). The SCC include clauses specific to each contract to supplement the General Conditions. 48

REQUEST FOR PROPOSAL Standard form of Contract The rights and obligations of the Client and the Consultant are governed by the Request for Proposals (RFP) issued by the Client and by the contract signed by the Client with the Consultant, and not by any other documents. The standard GCC in the Form of Contract should not be modified. Any changes required to be made in GCC are to be made through SCC. 49

REQUEST FOR PROPOSAL Technical Proposal Evaluation Criteria In RFP, Evaluation CRITERIA is to be specified Specific experience of the consultants related to the assignment [0 -25] Adequacy of the proposed work plan and methodology in responding to the Terms of Reference [20 - 35] Qualifications and competence of the key staff for the Assignment [30 - 60] Suitability of the transfer of knowledge program (training) [0 - 10] Local participation [0 - 10] 50

REQUEST FOR PROPOSAL Technical Proposal Evaluation Criteria § § § All criteria are to be sub divided into 3 sub-criteria Score needed to qualify in the Technical Proposal has to be specified in the RFP The number of points to be given under each evaluation sub criteria for qualifications of Key staff are: (i) General qualifications [20 - 30] (ii) Adequacy for the project [50 - 60] (iii) Experience in region & language (International Staff] Or Experience in similar terrain [National Staff] [10 - 20] Total Points: 100 51

REQUEST FOR PROPOSAL Request for Proposal (RFP) Response Period – Minimum 15 days for estimate below NRs. 2 million; Minimum 30 days for estimate above NRs. 2 million 52

EVALUATION OF PROPOSAL Opening & Evaluation Opening of Technical Proposal Evaluation of Technical Proposal Opening of Financial Proposal (of firms qualified in Technical Proposal) Evaluation of Financial Proposal 53

EVALUATION OF PROPOSAL Opening Technical Proposal and Evaluation § Public Opening of Technical Proposals • All firms submitting the proposal are invited • Only names of firms submitting the proposal announced, • All attendees including the bid opening committee members sign on the Price Envelopes, • Price Envelopes to be stored in safe custody § Technical Proposal Evaluation [based on criteria as stated in RFP]

EVALUATION OF PROPOSAL Technical Proposal Evaluation Report Evaluation report, inter alia, to include relative strength and weaknesses of the proposals (PPR 77) A Short Report Summarizing the Findings of the Technical Evaluation; Technical Evaluation Report - Forms; Technical Evaluation - Basic Data Evaluation Summary Individual Evaluations - Comparison Minutes of the Public Opening of the Technical Proposals 55

EVALUATION OF PROPOSAL EVALUATION OF FINANCIAL PROPOSALS v Public Opening of Financial Proposal of Qualified Firms v v For QBS opening only for highest or request to submit Financial proposal and evaluation FP opening: Name of the Consultant, Score of TP, and Proposed Prices is read aloud and recorded. Minutes shall be prepared by the Procuring Entity and shall be part of the procurement proceedings.

EVALUATION OF PROPOSAL Quality and Cost Based Selection (QCBS) Proposal Evaluation in Two Stages Technical- Quality and Technical aspect Financial Proposal is Not Opened until Technical Evaluation is Completed Weightage depends upon the Necessity and Nature of Works. Technical Proposal weightage from 70 – 90 and Financial Proposal weightage from 10 – 30. 59

EVALUATION OF PROPOSAL Quality and Cost Based Selection (QCBS) Technical and financial proposal submitted at same time Technical proposal evaluation - qualifying score as specified Opening of technical proposals Public opening of financial proposals of qualifying firms Combine technical and financial scores to give overall ranking Negotiate with highest ranked firm 60

EVALUATION OF PROPOSAL Overall Ranking Quality and Cost Based Selection (QCBS) – 80: 20 Total score = 80% technical + 20% financial 62

EVALUATION OF PROPOSAL Quality Based Selection Works that can be Performed in Different Ways where Cost of all Competitive Proposals cannot be Compared TP Evaluation Procedure similar to QCBS Specify the Pass Marks of Quality Services (in the RFP) Declare Technical marks secured by all (passed) consultants and open the Financial Proposal of consultants securing the highest marks in TP (If TP and FP requested at the same time) 64

EVALUATION OF PROPOSAL Quality Based Selection Request for Financial Proposal and invitation for negotiation regarding technical matters and Price Proposals (If FP not requested with TP) If negotiation fails notice of termination should be given to the consultant and the next high ranking consultants will be invited for negotiation. Continue negotiation in order until the agreement is reached 65

EVALUATION OF PROPOSAL Fixed Budget Selection Evaluation of Technical Proposals Reject all Financial Proposal that Exceed the Budget Invite the Highest Technically Ranked Consultant Within the Budget for Negotiations on Technical Proposal to conclude a Satisfactory Contract No Negotiations on Unit Rates or Prices Sign the Contract, if NOT succeed then terminate the Negotiation AND Select the NEXT in order 66

EVALUATION OF PROPOSAL Least Cost Selection Evaluation Procedures similar to QCBS Selection of Firm with Lowest Cost, amongst those meeting Minimum Technical Criteria Invite the above firm for Technical and Cost Clarifications and Negotiations with a view to conclude Contract 67

EVALUATION OF PROPOSAL Expertise and Qualification Based Selection Highly specialized expertise is required for the assignment; Recruitment time is critical and the assignment is, typically, short term; Few consultants are qualified; and The preparation and evaluation of competitive proposal is not justified. PPR Clause 83 69

6. CONTRACT AWARD 70

CONTRACT AWARD Negotiation/Award Negotiation with Selected Consultants: Negotiations on TOR, Scope of Proposed Services, Deliverables, Progress Reports, Facilities by the PE and also in Financial Proposal (Reimbursements etc. ) as specified in procedure No Negotiations on Financial Proposal (Remuneration) if Selection Procedure is Based on Cost/Budget and under QCBS. Award of Contract: To successful Consultants in the Negotiation and it should be Notified to All the Shortlisted Consultants. In the absence of challenge by any other Consultants Within 7 Days of that Notice the Contract shall be awarded to the Successful Consultants. Clause 38 of the PPA 71

CONTRACT AWARD NEGOTIATIONS ØFinal To. R and Agreed Methodology shall become part of the contract. ØIf negotiation fails invite the next ranked firm for negotiation. ØOnce negotiation is commenced with the next ranked it can not go back to the previous firm. ØAfter successful negotiations and contract it shall be notified to other Firms which were unsuccessful.

Steps for QCBS Selection Completion or Termination of Contract Implementation Start Planning, Estimating, Preparation of EOI notice, TOR, RFP and Approval Award of Contract EOI Evaluation and Short listing of Firms Issuance of Request For Proposal (RFP) and Pre-bid meeting Negotiation with Highest Ranked Firm and follow till successful negotiation Combined Evaluation for Highest Ranked Firm Invitation for Expression of Interest (EOI) Opening and Evaluation of Financial Proposal Submission & Opening of Proposal Evaluation of Technical Proposal

General Steps for QBS Selection Completion or Termination of Contract Planning, Estimating, Preparation of EOI notice, TOR, RFP and Approval Contract Implementation Start Award of Contract Ask Financial Proposal from the Highest Ranked Firm or Open the Financial Proposal of Highest Ranked Firm. Negotiate the Contractual and Financial Terms If not successful follow with Next Ranked Firms till successful Negotiation Invitation for Expression of Interest (EOI) EOI Evaluation and Short listing of Firms Issuance of Request For Proposal (RFP) and Pre-bid meeting Submission & Opening of Proposal Evaluation of Technical Proposal

ANY Further QUERIES ?