Session Overview

Definition of Procurement
Green Procurement
Corporate Social Responsibility
Procurement Cycle
Learning Objective
By the end of this session, participants will be
able to evaluate procurement ,its process
and its basic concepts
Public Procurement
Acquisition of goods, services or
construction of any works
financed wholly or partly out of
the public funds of enterprises
which are owned or controlled by
the Federal/Provincial
Government.;
Nature of procurement
Strategic procurement
Non-strategic procurement
Routine procurement
Objectives
Economy, efficiency, and quality of services.
Giving equal opportunity to all eligible bidders to
compete in providing goods, works, and services
financed by the Bank.
Encouraging domestic contracting and
manufacturing industry, and consultancy
services.
Transparency in the selection process.

Significance
Efficient procurement is critical to:
good project implementation
attainment of project objectives
sustainability of the project.
Strengthening the capacity of Borrowers to
administer procurement in an effective and
transparent manner as a part of sound
governance and good project management.
Significance (cont.)
best returns for each rupee spent in terms
of quality, timelines, reliability, after sales
services, up-grade ability, price, source,
and the combination of whole-life cost and
quality to meet the procuring agencys
requirements
Misprocurement
Public procurement in contravention
of any provision of PPRA Ordinance
2002, any rules, regulations, orders
or instructions made hereunder or
any other law in respect of ,or relating
to public procurement.
Procuring Agency
i. any Ministry, Division, Department/ Office
ii. any authority, corporation, body or
organization established by or under a
Federal law or which is owned or controlled
by the Federal/Provincial Government.
Works
Any construction work
assembly, repair, renovation or demolition of a
building or structure or part thereof, such as site
preparation ,excavation
installation of equipment or materials and
decoration
drilling ,mapping. satellite photography, seismic
investigations and similar activities
Service
Any object of procurement other than goods
or works.
Main Differences between
Goods and Services
A Good is A Service is
An object, a device, a thing A deed, a performance, an effort
Tangible: purchaser can
accurately describe its physical
properties before purchase
Intangible: has no physical
properties, therefore purchaser
cannot accurately describe the
service before purchase
Produced by the manufacturer Produced by seller and purchaser
jointly: the client participates with
the service provider in the joint
production of the service
Main Differences between Goods
and Services (contd.)
A Good is A Service is
Composed entirely of physical objects.
Inputs by people during manufacture of
the good can be strictly controlled and
checked before sale of good to
purchaser
People are part of the product.
Therefore, the quality of the service
depends largely on the quality of the
person delivering the service. And the
quality of the purchasers personnel
participating in the service also
affects the quality of the service
Quality control is straightforward.
Manufactured goods can be checked
for conformance to predefined quality
standards before sale to purchaser
Quality is difficult to define in
advance and even more difficult to
control during the performance of the
service
Bid/Bidder
Bid means a tender, or an offer, in
response to an invitation, by a person,
consultant, firm, company or an
organization expressing his or its
willingness to undertake a specified task at
a price;
Bidder means a person who submits a
bid;
Competitive Bidding
a procedure leading to the award of a
contract whereby all the interested
persons, firms, companies or
organizations may bid for the contract and
includes both national competitive bidding
and international competitive bidding;
Contractor
a person, consultant, firm, company or an
organization who undertakes to supply
goods, services or works;
supplier means a person, consultant,
firm, company or an organization who
undertakes to supply goods, services or
works;
lowest evaluated bid
A bid most closely conforming to
evaluation criteria and other
conditions specified in the bidding
document; and having lowest
evaluated cost.
Corrupt and Fraudulent Practices
the offering, giving, receiving, or soliciting
of any thing of value to influence the
action of a public officials or the supplier
or contractor in the procurement process
or in contract execution to the detriment
of the procuring agencies; or
Corrupt and Fraudulent Practices (cont..)
misrepresentation of facts
collusive practices among bidders (prior
to or after bid submission)
to establish bid prices at artificial, non-
competitive levels
Prequalification
Method whereby suppliers of particular goods are
assessed against pre-determined criteria and those
suppliers who satisfy the prequalification criteria are
placed on the database of vendors maintained by the
purchasing organisation
Provides purchasers with more confidence that only
suppliers who have the required experience, technical,
financial resources and capability to supply goods
Suppliers who satisfy the prequalification criteria are
placed on database and will be invited to offer
Integrity Pact
Procurements exceeding the prescribed limit subject to an
integrity pact, between the procuring agency and the
suppliers or contractors
Decision of ECC dated 23
rd
Sep, 2002 Declaration of
Fees, Commissions and Brokerage
Finance Divisions DO No. 687/MD(PPRA)/05 dated
14
th
Sep, 2005 Integrity Pact to be made a part of
all contracts worth Rs. 10 Million and above in value.
Corporate Social Responsibility
Self-regulation integrated into a business
model
built-in, self-regulating mechanism
business monitor and ensure their
adherence to law, ethical standards, and
international norms
CSR
proactively promote the public interest
encouraging community growth and
development
eliminating practices that harm the public
corporations benefit in multiple ways by
operating with a perspective broader and
longer
ENVIRONMENTAL CONSIDERATIONS
Green procurement/ ISO 14000
Consideration should be given to the
environmental impact in the procurement
process
e.g. product re-usability, re- cycleability,
durability, energy efficiency and packaging.
Procurement Cycle
Contract
Award
Pre-
qualification
Planning/Designing
specifications
Payments
Procurement
Cycle Contract
Administration
Bids opening and
Evaluation
Grievance
Redressal
Solicitation of
Bids
Identify the need
Identifying the need is the process of determining
what is actually required to achieve the intended
result or contracting outcome.
Once a need has been identified, it must be accurately
defined before it can be satisfied.
Optimal results cannot be achieved unless objectives
are understood clearly and can be conveyed to
suppliers.
OBTAIN APPROVAL TO PROCEED
It may be necessary to obtain the appropriate
internal written approval to undertake the
purchase.
When seeking approval to proceed with the
purchase, ensure that there is an approved
budget.
DEVELOP REQUEST DOCUMENT
CONSIDERATIONS
Consider most appropriate method
The Request carries legal implications
Must facilitate equitable comparison
DEVELOP REQUEST DOCUMENT
STANDARD KEY ELEMENTS:
Conditions of quoting
Specifications
Standard terms and conditions
Special terms and conditions
CONTRACT PLANNING
development of tender documentation
writing specifications
development of selection criteria
selection criteria weightings
terms and conditions
dispute resolution
Contracting Process
Identify Need
Plan Purchase
Manage Transition
Develop Request
Invite & Receive Offers
Evaluate Offers
Negotiate/Due Diligence
Finalise & Award
Contract Operation
Complete, Extend, Renew
Review & Evaluate
Link to Supplier Performance Management
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Contract Formation
Pre-Release of Tender
Draft Tender may be issued to industry for
comment prior to release
Draft Tender to legal for opinion/comment
prior to release
Obtain end user approval prior to release
Contract Formation
Pre-Release of Tender
Obtain details of potential suppliers from end
user
Agree on timeframe for tender
Agree on media to be used
Determine acceptable means of submission
Determine location of tender box
Common Elements of Contract Management
Process
Relationships
Communication &
documentation
Start up
Transition
Performance &
remedies
Risk
Financial
Amendments
Disputes
Discharge or
termination
Extension or renewal
Close out
Review
Contract Formation
Issue Tender
Advertise in Local Press
Advertise in other press as appropriate
Forward Tender to any identified potential
suppliers
Contract Formation
Pre-Release of Tender
Obtain details of potential suppliers from end
user
Agree on timeframe for tender
Agree on media to be used
Determine acceptable means of submission
Determine location of tender box
MINIMISE TENDER COSTS
The cost of the tender process is
reduced if specifications:
are standardised for similar requirements;
are concise and accurate; and
can be readily incorporated into a formal
contract.
SPECIFICATION
Clearly and
accurately describe
the essential
requirements for the
product to be
purchased
requirements
accurately
clearly
PREPARING A SPECIFICATION
Identify user needs
Research the market
Conduct a risk assessment
Identify what is to be procured
Determine the scope
Determine the evaluation
TYPES OF SPECIFICATION
Functional outcomes to be achieved
Performance performance required
Technical physical characteristics
SELECTION CRITERIA WEIGHTINGS
Assists evaluation panel in evaluation of
submissions
Each qualitative criteria is given a weighting
Weighting should indicate importance of
criteria
DISPUTE RESOLUTION
Better to avoid than to resolve
Avoid by:
- clearly defining requirements
- Contract management plan
- Meetings
Why Organisations Fail to Manage Contracts
Successfully
Poorly drafted contracts
Contract not understood
Failure to check Contractors assumptions
Lack of performance measurement
Inadequate resources
Difference in skills/experience
Unclear authorities or responsibilities
Focus on contract and not improvement potential
Failure to monitor and manage retained risks
Personality clashes
Red Boxes
The Contractor may take control
Decisions may not be taken at the right time
New processes not integrated with existing processes
Failure to understand obligations & responsibilities
Progress may be slow
Intended benefits not realised
Opportunities may be missed
Red Boxes
Short period of bid process
Incomplete bid documents
Unauthorized amendment
Inconsistencies in rating
Not genuine documentation e.g. advertisement,
forged signatures, bid proposals, CV of personnel
Deliverables low quality, not match with TOR
Conclusion
Public Procurement is the most
Important,
Risky
New area
Must be given its due importance.
Q&A
THANKS