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Procurement Procedure

and Preparation of
Procurement Plan
30th Review Meeting of State FCs- Delhi
(4th - 5th August 2011)

PROCUREMENT
Strictly follow procurement procedure prescribed in
Chapter IX of the revised Manual on FM&P.
Manual provisions mandatory for all procurements.
Follow State's financial ceilings except
prescribed by MHRD.

when not

MHRD prescribed ceiling on 17-09-2008


MHRDs ceilings extended up to 30-9-2012 vide letter
dated 2-7-2010.
Shall prevail on State ceilings.
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PROCUREMENT
Main
Considerations

Econom
y

Efficienc
y

Equal
Opportuni
ty

Transparency

PointsPROCUREMENT
to be kept in view

Identification of Needs.
Requisition from users.
Exists specific budget provision.
Assessment of bulk requirement at the
beginning of the financial year.
Computer, Equipment, furniture, books
etc in economic lots as per annual need.
All purchases be made to the best
advantage after comparison of
competitive prices.
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PROCUREMENT
Strictly follow the levels
provided in Para 112 of FM&P

of

procurement

School/Community/ KGBV
CRC / BRC
District
State

School/KGBV level
All civil works, except buildings for BRCs, SIEMAT,
Residential Schools/Hostels and KGBV.
Furniture to Govt. UPS
School library
Teaching Learning Material
School grant.
Maintenance grant.
Teaching Learning Equipment
REMS
Learning Enhancement Programme (LEP).
Items required for KGBV.
Uniform

EGS/AIE/Special Training related items

TLM, Contingency etc.

CRC/BRC level
Furniture/equipment/computer etc.
Office contingencies
Teaching Learning Material
Teacher Training
Community Training
Civil works for construction of BRC,
augmentation of BRC and CRC
Maintenance of BRC and CRC
Printing work
REMS

District level

Office equipment for DPO


Office furniture for DPO
Textbooks/other books/supplementary materials
Computers and accessories
Aids and appliances for CWSN
Office contingencies
Hiring of vehicles
Maintenance of equipment and vehicles
District level training and workshops
Printing work
REMS
ECCE Kit
Educational Kits for girls
Learning Enhancement Programme (LEP)
Construction of Residential Schools/Hostel and KGBV

State level

Textbooks
Computers and its accessories
Office equipment for SPO
Office furniture for SPO
Equipment for distance education
Aids and appliances for CWSN
Office contingencies
Hiring of vehicles
Maintenance of equipment and vehicles
State level training and workshops
Printing work
Engagement of consultancy firms (service contract)
Engagement of Auditors for external and internal audit
Engagement of experts/resource persons
Engagement of NGOs
REMS
Learning Enhancement Programme (LEP).

PROCUREMENT
Prepare the Procurement Plan every year and upload on
SSAs website as envisaged in Para 113 of the Manual.
Strictly follow financial ceiling prescribed for each method.
Urged the States on 16th June 2011 to prepare the annual
procurement plan for 2011-12 and upload the same on the
web site.
Information received from 6 States of Chandigarh, HP,
Maharashtra, Meghalaya, Rajasthan and Uttarakhand.
Remaining States yet to prepare the plan. Accord priority.
Linkage of all procurements with plan will be looked in audits,
post review and concurrent review.
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Method of Procurement
1.
2.
3.
4.

Open Tender (Para 115-117 of the Manual)


Limited Tender (Para 118 of the Manual)
Single Tender (Para 119 of the Manual)
Procurement without tender / quotation (Para 120 of
the Manual)
5. Procurement through communities (Para 121 of the
Manual)

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Financial ceiling for each contract


(In US $ equivalent)
Category

Open Tender

Limited
Tender

Single
Tender

Goods

>50,000
<3000,000

< 50,000

<30,000

Works

>40,000
<300,000

<50,000

<40,000

Text books

Upto 1 million

SIEMAT

Upto 800,000

Information Technology
equipment

>50,000
million

<4

<40,000

<500.000

<50,000

Books, Teaching materials


school facility improvement,
hiring of vehicles of equipment
Service Contract

Community

<30,000

<200,000

Any contract in excess of the maximum limit indicated above shall not 12be
procured using SSA funds.

OPEN TENDER

Items covered: Civil works construction of BRC,


Residential schools/Hostel, KGBV, SIEMAT and goods.
Steps
Preparation of tender documents
Notification / Advertisement;
Issue of tender documents;
Pre-bid Conference
Submission of tender documents;
Public opening of tender;
Evaluation;
Selection of lowest evaluated responsive tender
based on post qualification;
Negotiation with L-1 (if necessary)
Contract award; and
Contract performance

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Prescribe bidding documents covering :

Documents user friendly, self contained, comprehensive,


unambiguous and relevant to the objective of purchase.
Schedule of requirements
Bid form and price schedule
Technical specifications
Post qualification criteria
Validity period
Earnest money
Signing of bids
Pre-bid conference
Submission of bids
Opening of bids
Evaluation criteria
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Negotiation with L1
Award of contract
Signing of agreement/contract
Security deposit
Retention money
Payment terms
Liquidated damages
Repeat Orders
Quantity as per State procedure

Place order within one month from the date of last supply

Prices have since not reduced

Purchases not made on urgent basis

Rejection of all bids


Lack of competition

Tenders not substantially responsive


Obtain the approval of competent authority

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LIMITED TENDER
Items covered:

goods including books, uniforms


teaching learning materials,
school equipment,
hiring of vehicles, and
operation and maintenance of equipment

Invitation for quotations


Based on comparing price quotations obtained from
several suppliers, usually at least 3 to ensure competitive
prices.
Issue a letter to the supplier to furnish the quotations for
the required goods/equipment.

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LIMITED TENDER
Invitation for quotations

No need of publication of notification in the


newspaper/website.
Issue the request letters to suppliers on the approved
list.
The request letter should indicate description,
specifications and quantity of the goods as well as
desired delivery time and place.
Only one quotation by each supplier.

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LIMITED TENDER
Bid Price

Quote for the full quantity as described in the


invitation letter.
Corrections, if any, made by crossing out, dated
initialing and re-writing.
Include all duties, taxes and other levies payable by
the Vendor/Supplier in the total price.
The rates quoted by the Vendor/Supplier be fixed for
the duration of the contract and not subject to
adjustment on any account.
The prices are quoted in Indian Rupee.

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LIMITED TENDER
Steps

Identifying items;

Laying down specifications;

Estimating total numbers and costs of items;

Need not notify in newspaper/website

Identifying likely agencies borne on the approved


list of contractors/ suppliers; (minimum 3, 8-10 for
more competitive rates)

Obtaining approvals of competent authority;

Issuing letters of invitation;

Processing quotations received;


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Obtaining orders of competent authority for


placing orders for supply;

Issuing letters placing orders for supply and


delivery period;

Quoted price shall include all duties, taxes and other


levies;

Rates quoted be fixed and not subject to adjustment;

Ensuring inspection;

Ensuring timely supply: and

Making payments after delivery in satisfactory


condition.

The financial ceiling prescribed for limited tender


shall be applicable for Rate contracts of DGS & D
and Rate contracts of State Governments.
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SINGLE TENDER
Followed in the case of
articles specifically certified as of propriety nature; or
manufactured by a particular firm;
goods including books;
teaching materials;
school grant;
hiring of vehicles; and
operation and maintenance of equipment etc
Appropriate for
Extension of existing contracts
Standard equipment/spare parts for existing equipments
from original supplier.
Items obtainable from one source
Early delivery
In exceptional cases such as natural disaster.
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WITHOUT TENDER / QUOTATION

Procurement of goods or group of goods estimated


to cost the equivalent of the ceiling of State Govt.
Issue suitable guidelines by the SIS

THROUGH COMMUNITIES

Construction of all civil works except, BRC, Hostel,


KGBV and SIEMAT
BRC construction if the community is technically
capable
Purchase of materials as per ISI certification, if
available;
SPD may provide simple procurement guidelines
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Identify the committee locally operating in the area.

Keep the following points in view:

Active involvement of community in planning and


implementation;

Who will procure the materials or goods used in


works;

Goods / works have to be executed as per


approved plans and specifications

The name and designation of the Engineer for


technical supervision and certification.

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Suggested advance payments based on the certificate


issued by the Supervising Engineer

Advance (mobilisation advance


upon start up of the work and
on reaching lintel level)
: 75% of total cost
Plastering and completion of
work
: 25% of total cost
School toilet and other repair works
Advance (mobilisation advance
upon start up of the work) cost

: 75% of total

Plastering and completion


of work cost

: 25% of total
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Procurement of major items

Textbooks Single Tender (Textbooks Corporation,


NCERT etc) and Open Tender

IT Equipment Limited Tender (State approved


vendors)
State Electronic Corporation/IT Deptt/other
State
agencies provided they follow State procedure and
Manual provisions
Open Tender and e-procurement

Printing work Rate Contract approved by State


Government, Limited Tender and Open Tender
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Service Contract

Preparation of Terms of Reference


Preparation of Cost Estimate and Budget
Advertising
Preparation of short list of consultants
Receipt of proposals
Formation of Evaluation Committee
Evaluation of Technical and Financial proposals
Final discussions including negotiations and award of
the contract

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Non-Government Organizations

Preparation of Terms of Reference

Advertising

Formation of Evaluation Committee

Selection of NGOs

Approval by Grant-in-Aid Committee

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PROCUREMENT

Post Review by Government of India

Mis-procurement

Complaint Handling Mechanism

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Key Observations of Post review of Procurement


Review revealed :
need for tightening of procurement system
especially on procedural lapses
incomplete documentations
irregularities
diversions of funds
Procedural lapses
Not issued solicitation letters to the vendors for
obtaining quotations.
obtained Quotations by hand by visiting the
premises of the vendors.
In some cases, notice inviting quotations being put
on the notice boards of SSA offices.
In some cases, L1, L2 and L3 share the same
address and telephone number.

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Key Observations of Post review of Procurement


Procedural lapses
Engagement of contractors for construction of civil
works without obtaining the prior approval of PAB.
Non observance of the time limit of 30 days for
submission of bids.
Letter of award issued within 20 days, even though 30
days time limit was allowed for submission of bids.
Entire procurement cycle completed within 2 days.
Invoice date is prior to the purchase order date.
Cheques drawn prior to the issue of purchase order.
Splitting of orders to bring it within the financial
ceiling.
Contract amount exceeded without issue of repeat
orders or revision of contract agreement.
Not indicated Bid validity period in the bid
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documents.

Key Observations of Post review of Procurement


Procedural lapses
Procured goods not taken in the fixed asset register.
Procured goods not found at site during visit,
Followed single tender instead of limited tender.
Followed limited tender instead of open tender.
Not taken Earnest money deposit from prospective
bidder.
Not indicated validity period of the earnest money
deposit in the tender documents.
Not obtained Security deposit/performance guarantee
from selected bidders.
Delay in delivery period stipulated in the PAB.
Made payment based on provisional bill.
The
date issued for work order and the
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delivery/invoice/payment dates on the same day.

Key Observations of Post review of Procurement


Procedural lapses
Not indicated validity period of the earnest money
deposit in the tender documents.
Not obtained Security deposit/performance guarantee
from selected bidders.
Not contain clauses for liquidated damages, security
deposits, retention money, delivery schedule and
payment schedule in Work Orders .
Not charged Liquidated damages though stipulated in
the purchase order.
Not published advertisement in national news paper
for open tender valuing more than Rs. 20 lakh.
Not clearly specified Technical specifications, delivery
period, payment terms etc in the tender documents. 32

Key Observations of Post review of Procurement


Lack of training on Procurement
The Head Masters were not aware of the prescribed procurement
procedures under SSA.
Poor understanding of procurement procedures at State and
district level.
Irregularities in Procurement
Dates of all bids received were overwritten except the winning
bidder.
Vehicle providers had formed a cartel in the award of contracts
for hiring of vehicle.
Not selected Lowest bidder in a limited tender for construction of
additional class room on the ground of his inability to handle the
construction involving negotiation with second lowest bidder.
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Key Observations of Post review of Procurement


Irregularities in Procurement

Selected same contractor on single source basis in two


schools.
Purchased Computers from agencies not on authorized
DGS&D or State Government Rate contract entities.
Assets procured were not available for physical verification.
Absence of concerned staff during the course of review
despite prior notification of the visit.

Diversion of funds

Used ACR fund for the construction of library

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