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Participant Handbook: Local Government Procurement

DRAFT

District Participatory Planning and


Budgeting Process

Procurement Module B
Training Material
(Step 4: Implement Work Plan and Budget)

Participants Book
November 2009

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Participant Handbook: Local Government Procurement

DRAFT

Participant Handbook: Local


Government Procurement
DRAFT
9/2/November 2009

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Participant Handbook: Local Government Procurement

DRAFT

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Participant Handbook: Local Government Procurement

DRAFT

Contents
Insert after all final changes and additions have been made

Agreement.............................................................................................................. 119
Payment Schedule:................................................................................................. 121
Appendix To Agreement.......................................................................................... 122

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ACRONYMS AND ABBREVIATIONS


BOQ
EOI
ICB
INCOTERMS
ITB
ITC
LCS
LOI
MOILG
NCB
PPP
QBS
QCBS
RFP
RFQ
RT
SBD
SCC
TOR

Bill of Quantities
Expression of Interest
International Competitive Bidding
Internationally accepted definitions of trade terms e.g. CIF, FOB etc issued by the
International Chamber of Commerce
Instructions to Bidders
Instructions to Consultants
Least Cost Selection
Letter of Invitation
Ministry of Interior and Local Government
National Competitive Bidding
Public Private Partnerships
Quality Based Selection
Quality and Cost Based Selection
Request for Proposals
Request for Quotations
Restricted Tendering
Standard Bidding Document
Special Conditions of Contract
Terms of Reference

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Participant Handbook: Local Government Procurement

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1. INTRODUCTION
1.1.
Background
Procurement is one of the key support functions in the public service. Effective
and efficient delivery of public goods and services by the core
functions/departments of the local government depend to a large extent on the
effectiveness and efficiency of the procurement function. Therefore
strengthening public procurement systems in the local government in Puntland is
expected to contribute to improved governance and service delivery.
The preparation of these procurement guidelines for local government in
Puntland has come in response to an assessment of the existing procurement
practices and systems in the districts. Among the issues identified by the
assessments include: weak legal and institutional framework; absence of clear
guidelines; overlap of duties and responsibilities in relation to procurement;
weak transparency and accountability and a general lack of awareness of the
procurement procedures.
The lack of a strong procurement profession and inadequate training of staff has
led to failure to employ good practices in procurement, creating inefficiencies
and high costs to the districts. A general lack of understanding of the procedures
or non compliance further creates opportunities for corruption and inefficient use
of public funds. The inefficient use of funds can be generated from problems
across the entire procurement process-from the poor procurement planning,
definition of the needs and creation of the bidding documents, to a lack of
transparency and competition in the process followed for announcements,
bidding, evaluation and award of contracts, to poor contract supervision.
Effective procurement guidelines and step-by-step procedures are required to
assist district staff involved in the procurement process to perform their duties
effectively and efficiently. The guidelines have been prepared based on best
practices in public procurement to assist the districts to improve their
procurement systems.
Following the preparation of procurement guidelines a set of training manuals
have been developed for use in training local government staff in the districts
who are dealing with procurement on a day to day basis. The training manuals
consist of two parts: the participants manual and trainers manual. The trainers
manual is designed to guide those who will facilitate training to conduct the
training sessions.
1.2.
Purpose of Training
The purpose of this training is to provide participants with a clear understanding of
effective public procurement and the generic procurement process and to provide
participants with the capacity to plan, implement and evaluate a procurement
process appropriate to the goods or services being procured.
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1.3.
Learning Outcomes
By the end of the training the participants will be able to:

Describe the principles of effective public procurement;


Prepare and implement procurement plans;
Prepare specifications and terms of reference;
Choose appropriate procurement method;
Prepare bidding documents;
Invite bids and undertake evaluation of bids; and
Understand and apply/practice ethics and integrity in procurement.

1.4.
Symbols used in this handbook
To assist participants in using this handbook effectively, the following symbols have
been used:

Questions for discussion or reflection

Shaded box
remember

Important information that participants should understand or

1.5.
Training Modules
This training module is organized in three modules units as follows:

Module Unit One:


Module Unit Two:
Module Unit Three:

Understanding the procurement environment


Procurement of goods, works and services
Contract Management

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Implementation and Procurement Module B - Training Overview

Unit

1.
Understanding
the
Procurement
Environment

Session
Introduction Session
(30 mins)

Components
Introductions, welcome, aims
and objectives of the training.

Session objectives
Introduction
Procurement in districts
Objectives of procurement
Categories of procurement
Principles of public procurement
Good Practices
Roles and responsibilities

3. The procurement

cycle and planning

(90 mins)

4.
Procurement
Methods

(75 mins)

Session objectives
Definition and purpose
Transparency and integrity
Procurement ethics
Examples of unethical conduct
Corruption
Session objectives
Procurement Cycle
Procurement planning
Forecasting and budgeting
Annual procurement plan
Session objectives
Procurement Methods
Methods
of
selection
and
employment of consultants
Procurement under PPP
Community participation in
procurement

1. Principles of Public
Procurement (95
mins)

2. Ethical and
Integrity Issues in
Procurement (75
mins)

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Unit
2.
Procurement of
Goods,
Services
and Works

Session
1. Supply Market
Analysis (80 mins)

2. Specifications (80
mins)

3. The Tendering
(Bidding) Process
(120 mins)

Components
Session objectives
Introduction
Definitions of a market
Reasons for market analysis
Sources of Market Information
The process of supplier
appraisal
List of approved suppliers and
contractors
Categories of registration
Supplier performance
monitoring
Session objectives
Introduction
Types of specifications
Standards
Checklist for specifications
Quality
Approval of specifications
Session objectives
Introduction: What is Tendering
Need for tendering and its
application
Tendering procedures
Preparation stage
Invitation to tender and
advertising stage
Cancellation of bidding process
Response management stage

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Participant Handbook: Local Government Procurement

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Unit

Session
4. Supplier Evaluation
and Selection (120
mins)

5. Negotiation (80
mins)

6. Orders and
Contracts (80 mins)

Components
Session objectives
Introduction
Tender Evaluation Committee
Evaluation of Bids
Selection of Suppliers
Comparison and ranking of bids
Post qualification of bids
Evaluation report and
recommendation
Approval of recommendation of
tender award
Rejection of all bids
Session objectives
Introduction and Definition
When to negotiate
The negotiators (negotiation
team)
The negotiation process
Session objectives
Introduction
Definition of a contract
Supplier/provider obligations
Local Government obligations
Preparation of contracts
Tender committee approval of
contracts
Types of contracts
Types of contract agreements
for employment of consultants
Awarding contracts and
notification to bidders
Local Purchase Orders

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Unit
3.Contract
Management

Session
1. Contract
Management (90
mins)

Components
Session objectives
Introduction
Contract effectiveness
Contract supervision and
administration goods
Contract supervision and
administration - works
Contract supervision and
administration services
Contract performance
Procurement reporting
Procurement Monitoring and
Evaluation

Evaluation Session
(30 mins)

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MODULE Unit ONE: UNDERSTANDING THE PROCUREMENT


ENVIRONMENT
2. SESSION 1: PRINCIPLES OF PUBLIC SECTOR PROCUREMENT
2.1.
Session Objectives
By the end of the session the participants should be able to:

Define procurement;

Explain the objectives of procurement for LGAs;

Identify the various forms and categories of procurement;

Identify the recommended principles of procurement in the public sector;

Understand the roles and responsibilities of the various parties in procurement in


local government.

2.2.

Introduction

Questions for Discussion 1


Discuss these questions as a group:
1. What do you understand by the term procurement?
2. Is procurement in the public sector different from procurement in the
private sector? If yes, why?

WHAT IS PROCUREMENT?

It is the process of acquisition of goods, works and services


to satisfy the identified needs.

2.3.
Procurement in Districts
The overall responsibility for the execution of the procurement process in the district
rests with the District Executive Secretary. Each district is required to establish a
District Tender Committee that will handle all matters concerning the procurement
of goods, services and works. The District Tender Committees have powers to award
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contracts for procurement of goods, services and works. The district tender
committee shall consist of:
Chairperson, who shall be one of the heads of department or a person of similar
standing and who shall be appointed by the Executive Secretary;
The Secretary shall be the Procurement Officer (head of the unit responsible for
procurement), appointed by the Executive Secretary;
Three other members who are heads of department or persons of similar
standing within the district, appointed by the Executive Secretary.

2.4.
Objectives of Procurement
The objectives of procurement in the local government are:

To provide the local government with a constant flow of goods, services and
works to meet its needs.

To reduce costs through more efficient and effective purchasing by buying


appropriately to obtain the value for money.

2.5.
Categories of Procurement
Procurement can be categorized into the following:

Works Construction, design, rehabilitation, maintenance and repair of


buildings, bridges, roads, plant, etc.

Supplies This should include goods such as materials, drugs, foodstuffs.

Non-Consultancy Services Such as cleaning services, revenue collection,


security services and repair services.

Consultancy Services - Studies for designs and provision of technical


assistance, training, engineering design and supervision.

2.6.
Principles of Public Procurement
The overall objective of the public procurement system is to provide value for money
to the districts by ensuring that public funds are spent in a transparent, efficient and
fair manner. These guidelines incorporate policy provisions and procedures to
promote competition, fairness/equity, transparency, accountability and ethics, and
value for money.
The basic principles for the procurement of goods, services and works, within the
public sector are:

Transparency:

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Procurement process should be conducted in such a way that there is openness
and clarity on procurement policy and all interested parties know and understand
the actual procedures and processes by which contracts are awarded and
managed.

A transparent procurement system is the one that has clear

regulations and procedures, standardized tender documents, standardized tender


contracts and a fair process.

Accountability:
The

public

officials

who

are

dealing

with

procurement

activities

have

responsibilities and obligations for performance and stewardship. A good


procurement system should have clear lines of responsibility in decision making
and public officials responsible for procurement should be made accountable for
their decisions.

Equal Treatment/Fairness:
An efficient public procurement system should give all participants an equal
chance to compete and by avoiding discrimination among potential bidders.
Potential suppliers should be treated equally and with utmost fairness throughout
the contract award process.

Value for money:


Procurement process should aim at acquiring the right items at the right time,
and at the right price to support government actions.

Appeal rights:
Potential suppliers should be provided with a mechanism for review of grievances
and correct failures of the system.

Integrity:
The public officials responsible for procurement activities should not involve
themselves in corruption or collusion with suppliers or others.

Competition

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Procurement should be carried out by competition unless there are convincing
reasons to the contrary. Public procurement system should be able to attract high
quality national and international suppliers and contractors capable of meeting
government needs through competitions.

2.7.

Good Practices

Emphasise transparency and accountability.

Avoid favouritism and corruption.

All procurement decisions to be ultimately made by the authorized


tender committee.

^ Activity 1.1 Procurement Principles Scenarios


Your trainer will guide you in an activity where you will study and discuss some
scenarios, to encourage you to think further about the principles of procurement and
what they might mean in practice.

You will need to refer to Activity Sheet 1 Principles of Procurement

Scenarios at the end of your Participant Book.

2.8.

Roles and responsibilities

? Who are the key players in procurement in local government and what are
the roles and responsibilities of each key player?
The roles and responsibilities of various parties are summarized in the table
below:
PLAYER
Ministry of Interior and Local
Government (MOILG)

PROCUREMENT RESPONSIBILITIES

Overall
coordination,
direction
and
development of procurement practices and
procedures in Local Government;
Professional development and training of staff
and officials engaged in procurement;
Independent
review
of
procurement
complaints by aggrieved bidders, suppliers and

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PLAYER
The District Tender Committee

PROCUREMENT RESPONSIBILITIES

Executive Secretary

the general public.


Ensuring that best practices in relation to
procurement are strictly adhered by the
district
Coordinate the development and approval of
the Annual Procurement Plan
Approve entries and removals from the
Register of Suppliers and Consultants;
Recommending the appointment of ad hoc
Sub-Committees as required for preparation of
specifications, bid opening, bid evaluation,
receipt of goods and certification of works;
Review
and
approve
prior
to
any
announcement of a procurement process:
the method of procurement;
the bidding documents;
the specifications, classifications, bills of
quantities, plans, drawings and terms of
reference as appropriate; and
advertisements, letters of invitation and
shortlists;
Approving tendering and contract documents.
Approve the issue of tender invitation
documents and use of the appropriate
methods of selecting suppliers.
Consideration
and
approval
of
recommendations for award of tenders issued
under competitive tendering proceedings.
Review of all applications for variations,
addenda
or
amendments
to
on-going
contracts.
Maintain detailed minutes of meetings and
records of all decisions and recommendations.
Overall responsible for the execution of the
procurement process in the district
Establishing a district tender board and
appointing its members
Establishing Procurement Unit and staffing it to
an appropriate level.
Appointing the evaluation committee.
Certifying the availability of funds to support
the procurement activities.
Communicating tender award decisions;
Signing
contracts
and
LPOs
for
the
procurement activities on behalf of the district.
Investigating
complaints
by
suppliers,

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PLAYER

PROCUREMENT RESPONSIBILITIES

Procurement Unit

Tender Evaluation Committee

contractors or consultants.
Ensuring that the implementation of the
awarded contract is in accordance with the
terms and conditions of the award.
Managing all procurement activities of the
district except adjudication and the award of
contract.
Provide secretariat services and advice to the
District Tender Committee.
Implementing the decisions of the District
Tender Committee.
Planning the procurement activities of the
district.
Recommending procurement procedures.
Preparing Tender Documents.
Preparing
advertisements
of
tender
opportunities.
Respond to requests for clarifications from
bidders;
Preparing contract documents.
Ensure that all contractual obligations of the
District are performed promptly and efficiently;
Register
and
maintain
warranties
and
retentions;
Notify the supplier immediately of any failings
in performance of his obligations;
Process claims against retentions
Monitor delivery schedules and the inspection
and certification of delivery or performance
Coordinate the process for payment to
suppliers
Maintaining and archiving records of the
procurement process.
Maintain a Register of pre-qualified suppliers.
Carry out any other associated procurement
tasks as assigned by the Tender Committee.
Technical assessment of all bids, ranking them
in order of quality and responsiveness;
Report on the technical and commercial
compliance of each bid in a technical
evaluation;
Analyse the financial bids and report the
results in a financial evaluation; and
Prepare an Evaluation Report, including
justified recommendations for rejection of bids
and for the award of contract, for approval by

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PLAYER
User Departments

PROCUREMENT RESPONSIBILITIES

District Internal Auditor

the tender committee.


Proposes technical specifications.
Initiate
departmental
procurements
as
approved in the district budget.
Prepare any reports required for submission to
procurement
unit,
the
District
Tender
Committee or the Executive Secretary.
Ensures goods are received, checked and
certified as to quantity and quality before
payment.
Report any departure from the terms and
conditions of an awarded contract to the
procurement unit.
Forward details of any required contract
amendments to the procurement unit for
action.
Maintains and archives records for contracts
management.
Contract supervision.
Conduct audits to ensure the district receives
value for money.

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yes agree.SESSION 2:
PROCUREMENT

ETHICAL AND INTEGRITY ISSUES IN

3.1 Session Objectives


By the end of the session, the participants should be able to:

Define ethics and integrity;

Explain the importance of ethics in public procurement;

Perform procurement activities transparently;

Understand the ethical code of conduct;

Identify the major forms, reasons and measures for preventing corruption in
the procurement system.

3.2 Definitions and Purpose

Questions for Discussion 2


Discuss the following questions in pairs and then as a wider group:

What do you understand by the terms ethics and integrity?


Why do you think those engaged in procurement should act ethically?

WHAT IS ETHICS?
Most people tend to define ethics as being primarily concerned with
issues such as bribes and confidentiality. However, ethics is concerned
with values which is a general term relating to those things which people
regard as good, bad, right, desirable or justifiable.
In summary, ethics is concerned with the moral principles and values
which govern our beliefs, actions and decisions.

Ethical principles require all those involved in procurement to perform their duties
with integrity.

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WHAT

IS

INTEGRITY?
The quality of being honest and having strong moral principles.

Not

corrupt or biased.

The purpose of ethics in LGA procurements is to ensure that decisions are neither
tainted nor appear to be tainted by any question of conflict of interest. Procurement
should be based on objective criteria.

Activity 1.2 Taking your ethical temperature.

To start this session, we will do an activity where you are given an opportunity to
reflect on some of your own views on ethics and integrity and how they apply to
your role as a Local Government Officer
It is often difficult to think about our views and actions in our everyday lives and how
these might relate to concepts like ethics and integrity.
This activity asks you to read some statements related to ethics and indicate how
much you agree or disagree with them.
Note that this activity is not a test and you do not have to share your answers with
anyone. In this way, the more honest you are in your answers, the more you will
benefit from the exercise.
Your trainer will guide you in this activity with further instructions and explanation.

You will need to refer to Activity Sheet 2 at the end of this Participant Book

in order to do this activity.

3.3 Transparency and Integrity


Employees dealing with procurement and members of the tender committee of the
district are required to be honest in all their dealing with suppliers, contractors and
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members of public and must conduct procurement proceedings in such a manner
that district is respected and trusted as a client or customer.

In order to ensure

transparency and therefore accountability, a district should maintain adequate


written records of all procurement proceedings. Such records should be open to
inspection by members of the public at such time and under such arrangements as
may be sanctioned by the Executive Secretary.

3.4 Procurement Ethics


Public Officers are required to sign a Code of Ethical Conduct. In addition, all
suppliers, contractors or consultants are required to sign a declaration of compliance
with those Codes of Conduct. The main ethical principles are:

An employee or member of the tender committee should not use his/her


authority or office for personal gain;

Honesty

among

district

staff,

tender

committee

members

and

suppliers/contractors should be paramount and a pre-requisite;

Employees of a district and tender committee members shall reveal any


personal interest that may impinge on their dealings in the procurement
process;

Information gained in regard of procurement work has to be treated as


confidential and not used for personal gain;

Employees of a district and tender committee members shall avoid any


business arrangement that might prevent the effective operation of fair
competition;

Business gifts should not be accepted from current or potential suppliers and
contractors of the district;

Employees of a district and tender committee members should refrain from


any business hospitality (e.g. dinners) that may be viewed by others as
having an influence in decision-making.

To enhance the ethical conduct and transparency of staff and tender committee
members and employees of the district should not be suppliers/contractors of the
district either directly or indirectly.
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3.5 Examples of Unethical Conduct

? What do you consider unethical behavior by councilors or staff in relation


to procurement?
The following are examples of the types of conduct that are unethical:

Revealing

confidential

or inside information

either directly

or

indirectly to any bidder or prospective bidder;

Discussing a procurement with any bidder or prospective bidder outside


the official rules and procedures for conducting procurements;

Favouring or discriminating against any bidder or prospective bidder in


the drafting of technical specifications or standards or the evaluation of
bids;

Destroying, damaging, hiding, removing, or improperly changing any


official procurement document;

Accepting or requesting money, travel, meals, entertainment, gifts,


favours, discounts or anything of material value from bidders or
prospective bidders;

Discussing

or

accepting

future

employment

with

bidder

or

prospective bidder;

Requesting

any

other

public

servant

or

government

official

representing the district in a procurement to violate the public


procurement rules or procedures;

Ignoring evidence that the Code of Ethics has been violated by a


member of the Tender committee, public servant or other employee or
representative of the district;

Ignoring illegal or unethical activity by bidders or prospective bidders,


including any offer of personal inducements or rewards.

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3.6 Corruption
This is the use of public power for private gain.

It can be in the form of

embezzlement, nepotism, over-invoicing, claiming payments for no goods/services


supplied and taking bribes, bid rigging, split purchasing and the like. It is mainly
caused by weak controls, bureaucracy and personal greed.
The effects of corruption are that it:

Impairs economic development;

Leads to economic waste, inefficiency and reduction in productivity;

Generates administrative inefficiency and ineffectiveness;

Promotes nepotism;

Frustrates competent and honest suppliers/contractors.

To deter corruption in procurement it is necessary to:

Perform internal audit to monitor the process;

Institute checks in the various stages of the procurement cycle;

Require strict observance of procurement regulations;

Disqualify bidders who engage in any form of canvassing;

Penalise all those found guilty, blacklisting errant suppliers, and to


sanction staff and tender committee members by disciplinary action.

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4. SESSION 32: PROCUREMENT CYCLE AND PLANNING
4.1 Session Objectives
By the end of the session, the participants should be able to:

Explain the key components of the procurement cycle;

Identify procurement needs;

Understand procurement planning;

Prepare procurement plans.

4.2 The Procurement Cycle


The procurement cycle starts with identification of procurement needs. Each
department within the district identifies the required goods, services and works. The
procurement cycle is shown in Figure 1 below.
Figure 1: PROCUREMENT CYCLE

Stage 1

Identificatio
n of
procuremen
t needs

Stage 2

Stage 3

Stage 4

Stage
5

Define the
Specificatio
n and the
Procuremen
t approach

Supplier
Selection

Tender
evaluation
and
Contract
award

Manage
the
contract

Stage 6

Contrac
t review

4.3 Procurement Planning

Questions for Discussion 3:


Discuss the following questions as a group:

rephrase instruction reads as

though for trainers manual


1. Do you have procurement plans in your district?

If yes, what do they

contain?
2. Why is it necessary to plan for your procurement requirements?
3. What information do we need in order to accurately forecast our
procurement requirements?

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What do you understand by the term procurement planning?


What are the benefits of procurement planning in the public sector?
Definition
Procurement planning is the process of determining what is needed, how much is
needed, where, how and when. It is a description of the goods and services that will
be acquired by a district, when and how they will be acquired, and from which
source. Districts must plan their procurements each year. The procurement plans
are approved by the Tender Committee and the District Council together with the
budget estimates.

Benefits of procurement planning


Adequate procurement planning and prioritisation of needs by each district is an
essential prerequisite to effective procurement for the following reasons:

Funding for procurement is unlikely to be sufficient to meet all requirements, and


scarce financial resources must be channeled to ensure that the priority public
service aims of a district are adequately met before spending on less essential

procurements.
Procurement planning help to avoid emergency procurements and splitting of
procurements to defeat the use of appropriate procurement methods unless such

splitting is to enable wider participation of local service providers


Effective planning allows requirements to be aggregated

into

larger

procurements at lower unit costs, rather than frequent sourcing of quotations for

identical items and issuing many individual Local Purchase Orders.


Procurement of common user items may also be aggregated for more than one
district into Framework (Call-off) Contracts for six months or a year, to permit
further economies of bulk purchasing, saving of time wasted by separate

procurements, and a reduction of the procurement costs.


Publication of realistic annual procurement plans allows the private sector to
respond more effectively to the requirements and specifications.

Structured development of procurement plans is an essential part of the annual


budget preparation process and provides an essential checklist for the approval of
procurements by tender committees and monitoring of procurement activity by the
MOILG.
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Forecasting and Budgeting Procurement Requirements
A district can use two possible methods to forecast requirements:

Bills of Materials. Bills of materials for the various goods/services required are
used to forecast the procurement requirement.

Past Consumption Analysis. This is used for items that have an independent
demand which are consumed on a continuous basis, for which no bills of
materials is possible. Analyse past consumption data and project the future.

2.2.
An Annual Procurement Plan
This is in form of an annual work plan used by a district to schedule procurements
for the whole year. It may include among others:

Detailed breakdown of activities of goods, services and works to be acquired;

A schedule of procurement requirements in order of priority;

A statement of required resources;

Projected funding;

A plan of the likely method of procurement.

The budget preparation process


An annual procurement plan should be linked to the annual budget of a district.
Procurement plans therefore should be prepared concurrently with the preparation
of an annual budget in accordance with the budgeting procedures for the districts.
Procurement plans are prepared based on the requirements for activities included in
the annual budget and work plan. Preparation of the Annual Procurement Plan
should be commenced at least three months before the start of the financial year to
allow sufficient time for a realistic and accurately costed plan to be compiled.

Tender Committee actions


The Tender Committee has overall responsibility for control of the preparation and
the approval of the detailed Annual Procurement Plan under the authority of the
Executive Secretary. The Tender Committees actions in preparation of an annual
procurement plan include to:

Issue instructions to the Procurement Unit to commence development of the


Annual Procurement Plan; and

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Receive, review and recommend changes where necessary, and approve the
annual procurement plan and forward a copy to the MOILG.

2.3.
Procurement unit actions
The Procurement Unit has the task of compiling the costed annual procurement plan
from the individual departments, units, projects and programmes of the district. The
procurement unit is responsible for issuing detailed instructions to the heads of the
user departments, units, projects and programmes on the format and content of
submissions for the Procurement Plan.
Other responsibilities of the procurement unit in relation to preparation of an annual
procurement plan include to:

Receive submissions, check quantities and costing, obtain clarifications and other
responses to any queries, analyse and compile all submissions into a

comprehensive procurement plan.


Submit the draft annual procurement plan to the tender committee for review

and approval.
Make adjustments to the plan according to service priorities as recommended by

the tender committee in its review of the plan;


Compile the final annual procurement plan and submit to the tender committee

for approval.
Notify individual Heads of departments, units, projects and programmes of their
approved procurement plans and annual procurement budgets.

2.4.
Heads of departments
The heads of departments are required to ensure the analysis and preparation of
Annual Procurement Plans for their own and subordinate areas of control.

All planned procurements of goods, works and services for the next financial year

must be identified and scheduled in the annual procurement plan.


Submit the annual procurement plan to the Procurement Unit, identifying all

proposed procurements for the new financial year by quantity and cost.
Respond to any queries raised by the Procurement Officer on requirements

included in the plan.


Receive notification of the final approved annual procurement plan and budget
and use this as an essential guideline for all procurement processes undertaken
in the new financial year.

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Aggregate the requirements of different user departments within the


district to achieve economies of scale and thus lower costs. This is
subject to considerations like storage facilities, available cash flow
and the like.

Avoid splitting requirements into smaller amounts to be ordered


more times in order to stay within the maximum limits or to avoid
the use of appropriate method of procurement.

The procurement plan may be reviewed every six months to take


into account any new procurement.

A district comprehensive annual procurement plan is part of the


district annual budget.

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^ Activity 1.3 Develop Procurement Plan


Your trainer will guide you in an activity to help you practice how to fill out a
procurement plan for your district.

You will need to refer to Activity Sheet 3 at the end of your Participant

Book in order to complete this activity.


2.5.
Procurement Plan Format
The following is a summary procurement format for works/services and goods:

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I have tried to do a basic example to illustrate what a completed procurement form might look like. Please make
corrections or additions where necessary.
Input needed: It would be good to complete this form with a couple of other example projects (eg 1 works project, 1
services and 1 goods) so that participants can see what a completed procurement plan looks like.
Have also included a blank one of these at the end of the Participant Book as Activity Sheet 3, so that participants
can do the activity where they fill in a procurement plan for their own district.

PROCUREMENT PLAN FOR GOODS, WORKS AND NON-CONSULTANCY SERVICES


. District

. Financial Year
Pre-Qualification

Description /
Code

Tende
r No.

111

Basic Data
Est.
Proc.
Amount
Metho
Sshs.
d1

900,00
0

NCB

Bidding

Document

Invitation

Evaluation

Prep
arati
on

Approv
by
Tender
Comm

Date
of
invit
ation

Closi
ng
Date

Submissi
on of
report

Approv
by
Tender
Comm

7/05

14/05/

15/0

15/0

22/06/

25/06/

/10

10

5/10

6/10

10

10

Bid Doc
Prepared

Tender
Committ
Approval

Adver
t

Bid
Open

Evaluation
report
Submission

Tender
committ
appr/
contract
award

Date of
contract
sign.

7/05/10

14/05/1

15/05

15/06

22/06/10

25/06/

30/06/

/10

/10

10

10

Contract
amount
Sshs

Delivery/
Impleme
ntation

Plan
vs.
Act.

900,000

30/09/1

Plan

0
Actual
Plan
Actual
Plan
Actual
Plan
Actual
Plan
Actual
Plan
Actual
Plan
Actual

Procurement method could be any of the following; national competitive tendering, international competitive tendering,, selective
tendering,, competitive quotation, single source, direct procurement, minor value, and force accounts.

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3. SESSION 43: PROCUREMENT METHODS


3.2.
Session Objectives
By the end of the session, the participants should be able to:

Understand and explain the procurement methods;

Understand and explain the selection methods for consultants;

Identify the main influences on the choice of procurement method

Questions for Discussion 4:


Discuss this question in pairs and then feedback to the group.

What is the main type of procurement usually conducted in your district and
what are the reasons for using this method?

3.3.
Procurement methods
The Local Government Procurement Guidelines requires that procurement of

goods, works, goods and services be made through competitive tendering


(national or international competitive bidding). However, where competitive
tendering would not be the most economic and efficient method of
procurement and where other methods of procurement are considered to be
more appropriate, the guidelines allows the use of other procurement
methods. Where procurement method other than competitive bidding has
been used, the guidelines requires the district to include in the procurement
proceedings a statement of the grounds and circumstances on which it relied to
justify the use of method.
The procurement methods which can be used are as follows:

Open Competitive Bidding (National and International)


Restricted Bidding
Request for Quotations (RFQ), also referred to as shopping
Single Source

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3.3.1.
National Competitive Bidding
National Competitive Bidding (NCB) as a procurement method is to be used when
the district does not intend to invite foreign suppliers or contractors to participate in
tendering proceedings. Under this method the district is required to invite suppliers,
service providers or contractors regardless of their nationality, by means of a tender
advertised only in the national press. Foreign firms wishing to participate are

allowed to do so. The use of NCB is appropriate in the following cases:

Payment may be made wholly in Somalia Shillings;


The goods, services and works are available locally at prices below international

markets;
The estimated cost of the goods, works or services is small and does not exceed

the threshold for open international tendering;


Works or services are scattered geographically or spread over time;
Works are labour intensive;
Where foreign suppliers or contractors are not expected to be interested in the

bid;

The advantages of international competitive bidding are clearly outweighed by


the administrative or financial burden involved.

3.3.2.
International Competitive Bidding (ICB)
ICB is mostly used when the participation of foreign suppliers or contractors in
tendering proceedings is intended. Under this procurement method a district is
required invite suppliers or contractors regardless of their nationality through the
tender notice that is advertised nationally and internationally.
ICB should be used in the following circumstances:

For high value or complex procurements;


Where payment for the contract is to be made in whole or in part in foreign

currency;
Where it is desired to attract tenders from a widest range of suppliers or
contractors, regardless of the estimated value of goods or works be to procured;

and
Where the goods, works or services by their nature or scope, are unlikely to
attract adequate local competition.

There are no procedural differences between ICB and NCB apart from

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to allow a longer time before bid closing to reflect the slower
communications involved.

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3.3.3.
Restricted bidding
Restricted tendering (RT) is a process of direct invitation to a shortlist of prequalified,
pre-registered or known suppliers. This may directly follow a formal pre-qualification
of suppliers for the specific requirement. It is an appropriate method of procurement
where:

The estimated contract values are within the limit for restricted tendering;
The requirement is of a specialised nature or has requirements of public safety,

or public security which make an open competitive bid impossible;


Due to the urgent nature of the requirement, an open competitive bid is not
practical (provided that the circumstances giving rise to the urgency could not

have been caused by negligent conduct on the part of the district);


The number of potential suppliers is limited; or
An open competitive bid has failed to bring an award of contract.

Under restricted bidding, the district will invite bids from a list of prequalified suppliers broad enough to assure competitive prices, and
including all suppliers when there are six or less. Open Competitive
Bidding procedures shall apply in all respects, other than advertisement
being replaced by direct invitation to a shortlist of bidders. Restricted
bidding also includes requests for proposals for services, as the method to
be used for the procurement of consultant services.

3.3.4.
Request for quotations (RFQ)
This is also known as shopping and is based on comparing price quotations
obtained from several suppliers, usually at least three, to ensure competitive prices.
Shopping method is appropriate for procuring readily available off-the-shelf goods or
standard specification commodities that are small in value. A district tender
committee may approve for competition to be invited through request for quotations
where it has been determined that:

The goods to be procured are so diversified that it would be of no commercial

interest for any single supplier to tender for them; or


The goods are readily available off-the-shelf or
commodities of low value.

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Before this method can be used, the list of the suppliers to be contacted has to be
submitted to the tender committee for approval and once approved the request for
quotations should to be sent to all approved suppliers simultaneously.

3.3.5.
Single Source/direct contracting
This is a procurement method where goods are procured directly from a single
supplier or manufacturer. The use of single source procurement method should be
approved by District Tender Committee and the district should secure a specific
waiver by the MOILG. Single source procurement method can be used in the
following circumstances:

When only one supplier has the exclusive right to the manufacture of the goods,
carry out the works, or perform the services to be procured, and no suitable

alternative is available;
For additional deliveries of goods by the original supplier which are intended
either as parts replacement for existing goods, services, or installations, or as the
extension of existing goods, services, or installations where a change of supplier
would compel the district to procure equipment or services not meeting

requirements of inter-changeability with already existing equipment or services;


Additional works, which were not included in the initial contract have, through
unforeseeable circumstances, become necessary since the separation of the
additional works services from the initial contract would be difficult for technical

or economic reasons;
There is extreme urgency, provided the circumstances which gave rise to the
urgency were neither foreseeable by the district nor the result of dilatory conduct

on its part;
The services require that a particular consultant be selected due to his unique
qualifications, or when it is indispensable to continue with the same consultant.

3.3.6.
Force Account
Force account is construction by the use of public or semi-public agencies, or
departments concerned, where the public or semi-public agency has its own
personnel and equipment. The use of force account or direct labour may be justified
where:

Required works are small and scattered or in remote locations for which qualified

construction firms are unlikely to tender at reasonable prices;


Work is required to be carried out without disrupting ongoing operations;

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Risks of unavoidable work interruption are better borne by a district than by a

contractor;
There are emergencies needing prompt attention.

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^ Activity 1.4 Procurement Methods


Study the information above about the different procurement methods in 5.2
Procurement Methods.
In groups of 3, discuss and try to answer the questions that follow:
1. A project is approved for a primary school rehabilitation project in Sandy District.
The estimated cost is 200,000,000Ssh.
Which procurement method would you recommend? Why? ..
....

2. Seaside District wants to conduct a tendering process for a road construction


project, estimated to cost around USD 50,000, with payment made in USD. It wants
to attract a wide range of contractors and believes that the project is unlikely to
attract sufficient local competition due to its large scope.
Which procurement method is best suited to this project? Why?
....
...
.
...
3. Friendly District conducted an open competitive tendering process for the supply
of some school and office furniture. The process failed to bring an award of contract,
so the Procurement Unit has decided that another procurement method is needed.
Which procurement method can now be used? Why?
....
...
.
...

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4. A flash flood in the west of Somaliland resulted in the collapse of a bridge, which
is part of a highway linking outlying towns to the main market centre in the district.
The District Council has an urgent need for procurement of works in order to repair
the bridge as soon as possible.
Which procurement method can be used in such a situation? Why?

..
.....
...

3.4.
Methods of Selection and Employment Consultants
The procurement of consultant services is a specialised form of procurement
requiring bidding procedures and documents which are very different to those for
standard goods and works. The use of merit-point evaluation systems and twoenvelope bidding procedures are routine features in the procurement and selection
of consultants. Selecting consultants for long or complex assignments on the basis
of cost alone is unlikely to achieve the required quality of services.

3.4.1.
Merit-Point Systems
A merit point system uses a point-scoring basis to determine the winning bidder.
Points are awarded for technical capability and usually for the financial cost,
according to criteria specified in the Request for Proposals. The bidder scoring the
highest number of points is usually recommended for the award of contract.
Where cost is a factor in selection, technical quality for consultancy assignments is
normally awarded 80% of the total points and cost 20%. However this is only a
guideline and the appropriateness of the weighting of the technical and financial
scores should be assessed for each assignment.
Merit point systems can also be used to evaluate whether bids pass a minimum
technical score to proceed to a final financial evaluation (Least Cost Selection
Method). The financial envelopes of all bidders whose bids pass the minimum

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technical score are then opened, and the bid with the lowest price recommended for
award of contract.

3.4.2.
Two-envelope bidding
To avoid any chance of the bidders price influencing the technical evaluation under
a merit point system, financial bids are submitted in a separate sealed envelope.
The financial envelope must only be opened after the technical evaluation is
completed and approved by the tender committee. In the interests of transparency,
a second public opening of the financial bids of those bidders who have passed the
technical evaluation stage is held.

3.4.3.
Quality and Cost Based Selection (QCBS) Method
Quality and Cost Based Selection (QCBS) is the standard method of selecting
consultants through competition between pre-qualified short-listed firms. Selection
is based on the technical quality of the consultants, the quality of the proposal, and
on the cost of the services to be provided. The relative weights given to the
technical quality and cost of each proposal are determined for each case depending
on the nature of the assignment.

3.4.4.
Quality-Based Selection (QBS)
Quality Based Selection (QBS) may be appropriate for complex or highly specialised
assignments, or those which invite innovations. The selection is based solely on the
quality of the proposal without consideration of the cost. QBS is suitable for the
following types of assignments:

Complex or highly specialised assignments where it is difficult to define precise


TOR and the required input from the consultants, and for which the client expects
the consultants to demonstrate innovation in their proposals (for example,
country economic or sector studies, multi-sector feasibility studies, design of a
hazardous waste remediation plant or of an urban master plan, financial sector

reforms);
Assignments that have a long term impact and in which the objective is to have
the best experts available (for example, feasibility and structural engineering
design of such major infrastructure as large dams, policy studies of national

significance, management studies of large government agencies); and


Assignments that can be carried out in very different ways, and therefore
proposals may not be directly comparable (for example, management advice, or

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policy studies in which the value of the services depends on the quality of the
analysis).
The Request for Proposals (RFP) should not indicate the estimated budget, but may
provide the estimated number of key staff and time, specifying that this information
is given as an indication only, and that consultants are free to propose their own
estimates. The RFP may require submission of a technical proposal only (without a
financial proposal), or request submission of both technical and financial proposals
at the same time, but in separate envelopes (two-envelope system). Only the
financial envelope of the highest ranked technical proposal is opened. The rest are
returned unopened to the bidders, after the negotiations are successfully concluded.
If technical proposals only are invited, after evaluating the technical proposals the
Consultant with the highest ranked technical proposal will be invited to submit a
detailed financial proposal. The District and the Consultant shall then negotiate the
financial proposal and the contract.

3.4.5.
Selection under a Fixed Budget
Fixed Budget Selection (FBS) is where the District seeks to obtain the best technical
proposal from pre-qualified short-listed consultants within a pre-determined budget
limit. This method is only appropriate when:

The assignment is simple and can be precisely defined; and


The budget is fixed.

The RFP will indicate the available budget and request the consultants to provide
their best technical and financial proposals in separate sealed envelopes, within the
stated budget. The TOR must be carefully prepared to ensure that the budget is
sufficient for the consultants to perform all of the expected tasks.
Technical proposals will be evaluated and bidders who pass the minimum technical
score will be invited to a public opening of their financial envelopes.
Bidders whose technical proposals fail to meet the minimum technical score will
have their financial envelopes returned unopened. Any financial proposals that
exceed the indicated budget shall be rejected. The Consultant who has submitted
the highest ranked technical proposal within the budget will be selected for award of
contract.
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3.4.6.
Least-Cost Selection
This method is more appropriate to selection of consultants for assignments of a
standard or routine nature (audits, engineering design of noncomplex works, and so
forth) where well-established practices and professional standards exist, and when
the contract value is small.
A minimum qualifying score for the required quality is established and is stated in
the RFP. Shortlisted bidders are required to submit technical and financial proposals
in separate envelopes. Technical envelopes are opened first and evaluated. Those
bids scoring less than the minimum qualifying score are rejected. The financial
envelopes of the remaining bidders are opened in public. The firm with the lowest
price is selected for contract award.

3.4.7.
Selection Based on Consultants Qualifications
This method may be appropriate for very small assignments where the need for
submission and evaluation of detailed competitive proposals is not justified.
Expressions of interest and information on the consultants experience and
competence relevant to the assignment are requested. The firm with the most
appropriate qualifications and references is selected. The selected firm is invited to
submit a combined technical and financial proposal, and then invited to negotiate
the proposal and the contract.

3.4.8.
Single-Source Selection
Single-source selection of consultants lacks the benefit of competition in regard to
quality and cost, is not transparent in selection, and may encourage unacceptable
practices. Therefore, single-source selection should only be used in exceptional
circumstances. The justification for single-source selection must be examined
carefully to ensure economy and efficiency. The conditions for the use of direct
procurement should be noted before using this selection method.
Single-source selection is only appropriate if there is a clear advantage over
competitive selection:

for tasks that are a natural continuation of previous work carried out by the firm;
where rapid selection is essential (for example, in an emergency situation);
for very low value assignments;

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when only one firm is qualified or has the necessary experience for the
assignment.

3.5.
Procurement Under Public Private Partnership (PPP)
Public Private Partnerships shall include the following forms or combinations of
them;

service

contract,

management

contract,

leasing,

joint

ventures,

partnerships, Build Operate Transfer, Build Own Operate, Design Build Operate
Finance and concessions. Services for which there are no governmental, legal or
operational limitations that dictate they must be performed by public sector
employees,

may

be

outsourced

under

the

private

sector

participation

arrangement. As soon as the district identifies a project that may be concluded


as a public private partnership, it must:

ensure that it has the expertise within that district to proceed with a public

private partnership;
appoint a project officer from within or outside the procuring entity; and
appoint a transaction advisor.

For public private partnership project, the district shall undertake a feasibility
study in order to:

confirm affordability of the project for the district if it will incur any financial

commitments;
establish factors that will determine value for money;
assess the potential of a public private partnership to deliver value for

money;
identify the form(s) of public private partnership most likely to deliver for

value for money;


establish the optimum scope of the public private partnership;
identify the parameters to be used to assess value for money at the

procurement stage;
provide a sound basis for the district to decide on procurement approach;
set out the proposed allocation of financial and technical risks between the

district and the private party; and


explain the capacity of the procuring entity to procure, implement, manage,
enforce, and monitor the public private partnership project.

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Feasibility study for private sector participation in delivery of public services


shall recommend service areas within the district which could, or should be
offered to the private sector by:

describing the current procuring entitys organisation, service areas and

associated costs;
presenting an analysis of the suitability of contracting out current service

areas within the procuring entity to the private sector;


identifying important issues that must be addressed before services are

contracted out such as, but not limited to:


service packaging;
contract length and pricing mechanisms;
treatment of government assets;
tender selection procedures;
personnel issues;
highlighting important areas where private sector participation policy issues

remain to be resolved; and


presenting a risk management plan.

The district shall not proceed with the procurement phase of a public private
partnership or private
sector participation project if the feasibility study indicates that the proposed
project will not provide value for money or improve the quality of the public
service.
The district shall advertise the request for qualification in the form of the specific
procurement notice in at least one newspaper of wide and general circulation in
Puntland, in any international newspaper as may be directed by the appropriate
tender committee, and may additionally advertise in well known technical
magazines or trade publications.
The notification of the request for qualification shall be done at the same time as
the advertisement in the local newspapers, and shall be given in sufficient time
to enable prospective tenderers to obtain request for qualification documents,
prepare and submit their responses. The notification of the request for
qualification shall contain the following:
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A brief description of the intention of the government to undertake the

project;
A high level definition of the project;
Identification of the specific location where interested parties may obtain a
copy of the request for qualification, the dates and times during which the
request for qualification will be available, including any costs for obtaining a

copy;
A declaration reciting the date, time and place where the request for

qualification submissions must be filed with the government sponsor.


A statement of where and how the submissions will be evaluated and a
timeframe after which those making submissions will be notified as to the
results of the evaluation.
3.6.

Community Participation in Procurement

Community participation in the procurement and project implementation process


is important in order to:
Ensure the sustainability of a project that is to be implemented in a
community.
Achieve certain social objectives within the project, for example,
increased local employment.
Ways of incorporating community participation into a project include the
following:
Where in the interest of project sustainability or to achieve certain specific social
objectives of the project, it is desirable in selected project components to:
call for the participation of local communities; or
increase the utiliszation of local knowledge - how and local materials; or
employ labour intensive and other appropriate technologies.
In some cases, the community itself will be responsible for the actual project
implementation.
, the procurement procedures, specifications and contract packaging shall be
suitably adapted as to reflect such considerations.
The beneficiary community shall be responsible for the procurement activities
under the project component. The project authorities shall have the
responsibility to provide the necessary training and simple standardized
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documents to the community to enable it carry out the procurement function in


a manner acceptable to the MOILG. Further, the district shall include in the
bidding documents provisions on how to monitor compliance with the
requirements and sanctions for non compliance.
The District Planning and Budgeting Guidelines offer some guidance to District
Councils to determine the types of projects that may be implemented by
communities themselves. This information can be found in the following places in
the District Planning and Budgeting Guidelines:
Step 4: Implement Work Plan and Budget
Task 4.1 Decide how the project will be implemented
Task 4.2 Consult with VCs who are directly involved in or benefit from the
project.

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The shaded boxes below are taken from the guidelines and also give some
information on how to decide whether project implementation is delegated to a
community based organisation:
Box 4A: Determining a community project
The following parameters provide guidance to the District Council in
determining public basic service projects that would be assigned and delivered
by communities themselves:
1. The scope and scale in terms of number of beneficiaries is limited to/or
predominantly
(80%)
benefit
only
those
within
the
community/neighbourhood itself and the community has the expertise
required;
2. Are context specific and/or the delivery, operation and maintenance
arrangements of the asset/service are such that no public agency exists
or is adequately prepared/resourced to undertake them and are such
that the community is the most legitimate venue for local decision
making, resource management and delivery and/or that they lends
themselves to community-based management structures i.e. user
groups;
3. Are fully financed by the communities themselves; are entirely
community-led with high level of community participation and
voluntarism;
4. Are urgent/emergency demands making them time and cost ineffective
Box 4B: Community projects may include but are not limited to:
Education :Rehabilitation of primary school, extension of primary
school, improvement of primary School (e.g. fencing, latrines, feeding
center)
Water: Berket, kiosk
Sanitation; "Community" latrines, garbage collection (villages or
neighbourhoods)
Health: Health post
Agriculture/environment: Embankments (for soil erosion)
Productive projects (livelihood): Revolving funds; irrigations systems
(pumps); community center (vocational training);markets (rural villages
only)
Box 4C: Design and management of community projects
Communities that have been delegated by District Council to carry out a
community project set up a Project Implementation Committee. The project
implementing committee oversees the design of the project. If the project
implementation committee does not have the appropriate skills, it may need to
hire experts from the private sector.
The project implementation committee ensures that:
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Community projects comply with the overall policy, legislative and


regulatory framework at local and central levels.
Community projects are regularized by the local government
structures; harmonized with the principles, methods and standards
spelled out in these guidelines, in particular paragraphs 4.4 to 4.10;
and coordinated as need be with decentralized public sector
institutions.
The project implementation committee will exist temporarily for the duration

Where a community is not directly involved in project implementation, it still has


an important role to play in monitoring the project, through the structures of the
Village Council and user groups.
Where a community has been delegated to undertake the implementation of a
project, the beneficiary community shall be responsible for the procurement
activities under the project component. The project authorities shall have the
responsibility to provide the necessary training and simple standardized
documents to the community to enable it carry out the procurement function in
a manner acceptable to the MOILG. Further, the district shall include in the
bidding documents provisions on how to monitor compliance with the
requirements and sanctions for non compliance.

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MODULE UNIT TWO: PROCUREMENT OF GOODS, WORKS


AND SERVICES
4. INTRODUCTION TO MODULE UNIT TWO
This module unit deals with the activities which should be undertaken in order to
procure goods, services and works for a district. It contains the following sessions:

Supply Market Analysis;

Specifications;

The Tendering Process;

Supplier Evaluation and Selection;

Orders and Contracts negotiations;

4.2.
Aim of Module Unit Two
To equip the participants with the necessary skills and knowledge to be able to
procure goods, works and services.

4.3.
Objectives of Module Unit Two
By the end of this moduleunit, the participants should be able to:

Understand market analysis;

Understand and explain specifications;

Understand and explain tender evaluation process;

Explain procurement standards;

Understand negotiations.

2.9.
Duration
When all the sessions in the module are taken consecutively the course should be
completed within two days.

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5. SESSION 1:

DRAFT

SUPPLY MARKET ANALYSIS

5.2.
Session Objectives
By the end of the session, the participants will be able to:

Define a market;

Describe the benefits of undertaking a supply market analysis;

Identify the sources of market information;

List the main steps involved in supplier appraisal;

Compile and maintain list of approved suppliers and contractors.

5.3.
Introduction
This session presents to participants the process of sourcing suppliers who are
reliable and can provide services efficiently and effectively.

5.4.

Definition of a Market

WHAT

IS

MARKET?
A market is an area for potential exchange. Markets are made up of
buyers demanding products and services and suppliers/providers
offering them for sale.

5.5.

Reasons for Market Analysis

WHY

MARKET

ANALYSIS?
To be able to identify and compile a list of possible sources of
goods, services and works that are reliable.

Supply market analysis involves the review of the structure, characteristics and
trends of a market for a particular product or service. When this is done possible
sources of supply for the requirements are identified as well as the risks and
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opportunities associated with them.

DRAFT

At the end of the market analysis a list of

proposed suppliers and contractors is generated.

Questions for Discussion 5:


Discuss this question in three3s and then feedback to the group.
1. Why do you think it is important to generate a list of suitable
suppliers/contractors for District projects?
2. Which procurement principles are relevant here?

5.6.
Sources of Market Information
LGA can gather information about the possible sources of supply from the following:

The press;

Trade catalogues;

Trade statistics from bodies such as the Chamber of Commerce, etc;

Information from the data bank of the MOILG;

Information from other districts;

Information within the district own records concerning earlier


procurements.

5.7.
The Process of Supplier Appraisal
This involves a number of steps, namely:

Identifying potential suppliers;

Screening the potential suppliers by appraisal;

Researching for further information on suppliers if necessary;

Producing a list of possible suppliers for approval by the tender


committee.
5.8.

List of Approved Suppliers and Contractors

The end result of the market analysis should be the development of a list of possible
suppliers and contractors. A district may undertake pre-qualification proceedings to
identify suppliers and contractors that are qualified. The Secretary of the tender
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committee is responsible for maintaining a list of approved suppliers and contractors


and the list should be kept under constant review by the tender committee and
renewed annually at the beginning of each financial year to remove defunct service
providers.
In practice this list is compiled after the tender committee has advertised a prequalification notice in the newspapers, evaluated and approved the pre-qualification
applications. The register of suppliers and consultants will be maintained based on
the following principles:

Periodic public advertisement or canvassing to invite applications.

Establishment and publication of clear evaluation criteria for acceptance


into categories and grades.

Monitoring and recording of the performance of suppliers on contracts


awarded and removal from the register of suppliers who fail to perform
satisfactorily

Sharing of database information with other Government Procuring Entities.

Registration to be subject to periodic formal renewal or cancellation.

5.9.
Categories of Registration
Suppliers are to be registered into appropriate categories for the specific goods or
services they supply. Some common examples of registration categories may be:

Type or value of works;

Office Stationery and Computer Supplies;

Computer Services;

Office Equipment;

Medical Instruments;

Tyres and Batteries;

Vehicle Repairs;

Office Cleaning Services.

5.10.
Supplier Performance Monitoring
Suppliers or consultants who fail to fulfill their contractual obligations in a
satisfactory manner, in terms of quality, delivery, performance, or customer service,
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and who fail to improve their performance on being notified of the deficiency, may
be disqualified from providing further services.
Suppliers failing to perform satisfactorily shall be notified in writing, specifying the
deficiencies to be addressed,

and given an opportunity to improve

their

performance. Mitigating factors must be taken into consideration when assessing


supplier performance, and especially factors outside the suppliers control, and any
contributory acts or omissions on the part of the district such as failure to make a
payment or to provide required information on time.

^ Activity 2.1 Supplier/Contractor Appraisal


Your trainer will guide you in this activity, which gives you an opportunity to
review your current process of generating and maintaining their list of
approved suppliers and contractors for district projects, as well as to identify
any gaps in your current practice and areas for improvement.

You will need to use Activity Sheet 4 Checklist for List of Approved

Suppliers/Contractors, at the end of your Participant Book, in order to complete


this activity.

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6. SESSION 2:

DRAFT

SPECIFICATIONS

6.2.
Session Objectives
By the end of the session, the participants will be able to:

Define specification;

Describe the different types of product specifications;

Describe the concept of standardisation and its benefits;

Identify what to include in a procurement specification.

6.3.
Introduction
This session introduces to the participants the importance of specifications, the
different types of product specifications, their advantages and disadvantages and
how all the above relate to procurement in districts.

WHAT

IS

SPECIFICATION?
It is a statement of a set of requirements to be satisfied by a product,
material or process, indicating, whenever appropriate, the procedures
by means of which it may be determined whether the requirements
given are satisfied.
In other words, what are the requirements for a particular product,
material or process and how can we tell if these requirements have
been met?

While the user initiates the purchase needs and may in some instance
specify the requirement, it is the responsibility of the Procurement Unit to
ensure that specifications are clear and unambiguous.
Specifications should contain the following:

What exactly is required (in terms of quality, type, size, performance.)?

How much is required?

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Delivery schedules

Transportation

Inspection and testing

Any other information that may be required e.g. packaging/labeling.

Consequences of making wrong specifications:

The service delivery of a district may be interrupted because the required


item was not available when needed.

Additional costs arising from the item being re-modified.

Questions for Discussion 6


Share your experience with the rest of the group:
Can you recall any instances of a district project where proper
specifications (goods/works/services) were not properly set out as part of
the project design? What was the reason for this and what was the
outcome?

6.4.
Types of Specifications
The major types of specifications are Brand Names, Samples, Technical, and

Functional/Performance.
Brand Name: This is a name or trade mark by which one producer
distinguishes his or her product from similar products by other producers in
the same industry for example, Omo washing powder.
Technical Specifications: Technical specifications may take the form of
design, physical dimensions, processes, etc. It is that part of purchase
specifications on design and quality. For example, technical drawings for
classrooms to be constructed in the district and the dimensions of school
desks.

Please see below for an example of a technical drawing and a Bill of

Quantities for a community centre works project.

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Functional/Performance

Specifications:

Functional

and

Performance

specifications are at times used interchangeably but there is some difference.


Whereas functional specifications refer to what the product is to be used for, i.e.
what it is supposed to do or achieve, a performance specification goes further to
mention how well the function is to be achieved. For example, if a district plans to
purchase a printing machine, some of the attributes mentioned above must be
indicated.

Samples: Samples may be used if any other form of specification is difficult to use,
i.e. if the item is hard to describe therefore making it more worthwhile to show it
physically to the suppliers.

Specifications must be generic and should not include brand names,


model numbers, catalogue numbers or trademarks except where these
are essential for compatibility with existing machinery, equipment or
instruments. If detailed specifications cannot be prepared by the user
department, the advice of the procurement unit may be sought for
assistance or the appointment of a specialist technical advisor.

6.5.

Standards

WHAT ARE STANDARDS?


Specified levels of quality.
Procurements must be of acceptable defined quality.

Districts should use standards, where available, in formulating any


specifications, plans, drawings and designs to be included in the tender
documents or other documents for solicitation of proposal, offers or
quotations.
The following are sources of standards which could guide the districts.
(a) Industrial standards:
These are usually developed by trade and industry associations.
(b) National standards:
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These are established and agreed within a country. Some national
standards may be required by legislation (particularly those regarding
health, safety and the environment), while others are voluntary.
(c) Regional standards:
For example, certain products sold into member states of the European
Union must comply with established standards (EU Directives).
(d) International standards:
These are established by institutions such as the International Standards
Organisation for (ISO), the International Electro Technical Commission
(IEC) and the International Telecommunication Union (ITU).
Standards enable buyers and sellers to speak the same language through
the use of common parameters, terminology and /or symbols.
Some

standards

can also be very

complex,

so you should

not

automatically assume that the supplier will be conversant with all aspects
of a particular standard. It is therefore always wise to establish the depth
of the suppliers experience with a standard, if this is not clear.
6.6.

Check-list for Specifications

WHAT
SPECIFIED?

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Product/Service

Quantity

Delivery

Service responsiveness

Inspection/Tests

Documentation

Insurance

Warranty

Payment Terms

Legislation Issues

Special requirements, e.g. labeling, packaging,


packing

The product or service that is required must be stated clearly. This must be
accompanied with information regarding the required quality. You may
provide

designs,

drawings,

performance

requirements.

The

required

quantities must be stated, in addition the date, place and possibly time when
the deliveries are to be made should be indicated. If there any conditions
pertaining to delivery, e.g. restrictions, must be clearly stated. Under
delivery, you may include information on the required packaging, delivery
schedules, and method of transport.
The freight and delivery requirements for each procurement requirement
must be specified in the solicitation documents by stating the delivery terms
using the appropriate INCOTERMS. State the required mode of transportation
and freight. Specify the required level of insurance against loss, damage and
theft.
In addition to what has been highlighted, there may be need for additional
information.
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relevant to the subject of purchase, then there is need for them to be
specified. Contact names, addresses, office to which bids are to be
submitted, etc. should be specified.
6.7.
Specification of Requirements
The requirements need to be fully identified with detailed technical

specifications, drawings, plans, objectives and/or terms of reference as


appropriate. Specification of requirements for:

Goods: define the requirement in terms of description, quantity, quality,


urgency, packing and marking requirements and a detailed specification.

Works: prepare plans, drawings, specifications and a bill of quantities.

Please see below for an example of a technical drawing and a Bill of

Quantities for a community centre works project.

Non-Consultant Services (e.g. routine cleaning of premises or computer


support services) - prepare a description of services required, and a
detailed specification of the requirement including the period of the
contract, quality standards and service levels.

Consultant Services - define the objectives of the consultancy services


and prepare detailed terms of reference.

6.7.1.
The Terms of Reference (TOR) for Consultancy Services
The TOR must define clearly the objectives and scope of the assignment and

provide background information (including a list of existing relevant studies


and basic data) to enable the consultant to prepare a proposal. The TOR
should:

Describe the background to the assignment;

State the objectives of the assignment including:


the scope of the services;
the duration of the assignment;
a detailed list of the consultants duties and responsibilities;

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where applicable, the required inputs in terms of man days, months
or years;

Detail the required outputs, e.g.: reports, recommendations, draft laws


etc. which the consultants will be required to produce (also referred to as
deliverables);

Set the time periods for the deliverables;

Not be over-detailed or inflexible, so that competing consultants may


propose their own methodology and staffing.

List any services and surveys necessary to carry out the assignment;

Include details of the services, facilities and counterpart staff to be


provided by the district.

Specify detailed requirements when transfer of knowledge or training is


an objective, to allow bidders to estimate the required resources.

6.8.
Quality
This is simply defined as what is fit for the purpose. Procurement must aim

at achieving value for money. Whatever method of procurement is applied,


the quality of service, goods or works should not be questionable.
6.9.
Approval of Specifications
The procurement unit will submit the specifications to the tender committee

for review and approval. The Secretary to the tender committee will maintain
a record of the minutes of the tender committee meeting approving the
specifications.

^ Activity 2.2 Technical Specifications


As we have seen above, the specifications for a works project will need to
include such things as technical drawings and a Bill of Quantities.
In this activity you are given an example set of specifications for a works
project in Activity Sheet 5, which includes a drawing and a bill of quantities
for a garbage collection point project.
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Work in pairs and answer the 3 questions found in Activity Sheet 5. You can
record your answers below:
1. Can you fill in these dimensions?

2. What should be the total cost of this item?

3. What unit should be used here?

You will need to refer to Activity Sheet 5 Technical Specifications

at the end of your Participant Book.

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Example Bill of Quantities Construction of a Community Centre


Construction of Community Centre _ BoQ
Item
N0.

1.1
1.11
1,12
1.13

1.14

1.15
1.16
1.17

Description of works

Spec.

QTY

sqm

22x12

264

M3

74*0.4*0.5

14.8

M3

74*0.4*0.05

1.48

M3

74*0.4*0.8

23.68

M3

74*0.4*0.15

4.44

M3

20*10*0.2

40

M3

20*10*0.075

15

Substructure work
Allow for clearing the site from any debris, trees, roots
etc, filling hollows and levelling.

Excavation of found trench 0.4m x 0.5m depth.


Mass concrete in 50 mm thick blinding layer (1:4:8
mix) under the foundation wall.
Rubble stone foundation wall in cement & sand
mortar 1:4 ( 0.8 m x 0.4m wide) min. 15cm above
ground level.
R.C C(1:2:4 mix) in ground beam
(0.4m
x0.15m ), with 4N0. Y12 re-bars & R6 links @ 300
mm c/c.
200 mm thick stone hardcore filling well compacted
and levelled.
75mm thick murram or other approved backfill
material, well compacted and levelled.

SUB-TOTAL A

2.1

Uni
Cos

Unit

Superstructure works including conc. floor slab

2.11

Mass concrete (1:3:6 mix ) in conc. floor slab 75 mm


thick.

M3

5*9*0.075

2.12

40cm thick rubble stone walling in cement & sand mortar


1;4 mix

M3

240*0.4

96

2.13

20cm thick cement block walling laid in cement & sand


mortar 1:4 mix ( rate to include making of blocks)

M2

5*3

15

2.14

R.C (1:2:4 mix) in two level conc. ring beams 15 cm


depth, each with 4N0. Y12 re-bars & R6 links @
250 mm c/c.

M3

(2.1*2+35*0.4*0.15)*2

4.2

2.15

R.C (1:2:4 mix) in 20 cm x 20 cm column shaft,


each with 4N0. Y12 re-bars & R6 links @ 200 mm
c/c.

M3

0.16*4*0.2*0.2*4

0.64

2.16

R.C (1:2:4 mix) in windowsills (25 cm x3).

M3

0.45*0.03*1.2*6

0.1

74

SUB-TOTAL B

3.1

3.37

Roof work

3.11

Roof with timber trusses covered with N0. 28 GCI sheets


with two coats anti- rust paint

M2

6.5*11

3.12

Supply and fix 200mm x 20mm fascia board, including


two coats enamel paint

LM

5.8+5.8+20+14

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3.13

4.11
4.12
4.13
4.14

Plastering and other finishing


External & internal plastering, 12 mm thick, cement /
sand mix 1:5, with wood float finish.
Apply two coats white wash and distemper paint to
the ceiling and plastered wall surface.
Supply and fix ceramic floor tiles to include 100mm
tile skirting, laid on cement /sand mortar 1:3 mix
40 mm thick 1;3 cement/sand floor screed including
100mmx12 mm thick cement skirting.

5.1

7*9

63

SUB-TOTAL C

4.1

M2

4 mm thick plywood ceiling on 2x2 timber brandering

M2

255*2

510

M2

510+63

573

M2

47*0.1+44

50

M2

47*0.1+45

50

SUB-TOTAL D

Gates, Doors & Windows

5.11

Supply and fix doors (2.0m x 1.0 m) complete with frame,


hinges & locks and to include two coats of gloss paint.

Pcs

5.12

Supply and fix metal gate (3m x 2.5m) complete with


hinges and locks and to include 2 coats of gloss paint.

Pcs

5.13

Supply and fix windows (1.2m x 1.0m) complete with


burglar bars, hinges, locks and to include two coats of
paint.

Pcs

SUB-TOTAL E

6.1

Provisional Items (includes materials & labour )

6.11

Water tank / Plumbing works

LS

6.12

Standard latrine units as per BoQ(only excavation of the


pit and cover slab)

LS

6.13

Electrical installation works

LS

SUB-TOTAL F

GRAND TOTAL = (A+B+C+D+E+F)

Prepared by: District Eng.___________________________________________________________________

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Signature;_________________________________________________________________Date;___/____/2009
Checked by: MOI Eng. ______________________________________________________________________
Signature:_________________________________________________________________Date;___/____/2009

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Example Technical Drawing Construction of a Community Centre

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7. SESSION 3:

THE TENDERING (BIDDING) PROCESS

7.2.
Session Objectives
By the end of the session participants will be able to:

Understand the meaning and need for tendering;

Know which type/method of invitation to use when tendering;

Prepare a tender invitation package;

Know the procedure to follow when receiving bids.

7.3.
Introduction
This session presents to participants the process of tendering in local government.
7.4.

Tendering

WHAT

IS

TENDERING?
Tendering is one of the methods for procurement whereby potential
suppliers are invited to make a formal offer to supply goods, to
provide services, or carry out works, which on acceptance shall be
the basis of the subsequent contract. Tendering may be used in
procuring works such as the construction of health centres in
districts or provision of services, for example collection of taxes on
behalf of district.

7.5.
Need for tendering and its application
Procurement officers are required to prepare a tendering package and advertise it in
order to ensure transparency in the procurement process and to guarantee
receiving the best value for money spent. The Heads of department compile lists of
their (user departments) requirements every year, with clear specifications of the
nature of goods, services or works needed and then submit them to procurement

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unit for incorporation in the procurement plan and within the annual budgetary
provisions.

7.6.
Tendering Procedures
Tendering process may be divided into five main stages:

Preparation Stage: The activities involved during this phase includes the
identification of type and nature of procurement, assessment of market
conditions

and

choice

of

procurement

procedure,

specifying

the

requirement, preparation of tender documents and tender notice, and


choice of contract type;

Invitation to Tender and Advertising Stage: The activities taking place


under this phase are tender advertisement and issuance of tender
documents;

Response Management Stage: This phase deals with the management of


the received tenders and the activities falling under this includes
receiving of tenders, custody of tenders, tender opening, evaluation of
tenders and recommendation to the tender committee.

Contract Award Stage:

The award stage includes activities such as

approval by the tender board, actual contract award and debriefing.

Contract Management Stage: The activities falling under this phase


includes contract performance, contract completion and possibly dispute
settlement.

7.7.
Preparation Stage
A district intending to procure goods, works or services using tendering method
should commence the process by preparing:

Tender documents giving instructions to bidders; and

Tender notice inviting suppliers, contractors and service providers to submit


priced offers for the supply of the goods, for undertaking the works or for
provision of services required.

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Tender documents and tender notice should be issued only after they have been
approved by the Council Tender Committee. Procurement Unit should submit the
draft of the tender documents and tender notice to the Tender Committee for
approval before issuing and publication respectively. Tender documents or tender
notice issued or published by the district without the approval of the tender
committee shall not be considered as sufficient and adequate to satisfy the
governing local government procurement guidelines.

7.7.1.
Bid Documents
Tender documents are media

through

which

local

government

communicates with the potential suppliers and contractors on how to


prepare tender bids. Tender documents are important because they describe
the goods, works and service to be procured, they establish the legal,
technical and financial conditions under which the bidding will take place,
and they also establishes the evaluation criteria. Tender document usually
consists of:

Instructions to tenderers;

Description of the method for evaluation;

Relevant set of general conditions;

Special conditions;

Technical specifications, drawings or terms of reference;

General information

Price breakdown and bills of quantities;

Bid form;

Contract form;

Manufacturers letter of authorisation in case goods to be procured will


require maintenance regularly.

The instruction to bidders


The contract terms and conditions, and
The specifications.

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Tender Documents should be worded in such a way that it they permit and
encourage competition and theyit should clearly and precisely provide all
information necessary for potential bidders to prepare a tender/bid.

Please refer to your set of Somaliland District Bidding Documents and

familiarise yourself with the following documents:

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Table: Summary of Bidding Documents
Form
What is it for?
Form A.1
For advertising tenders through an open competitive
Invitation to Bid
process.
Form B.1
Instructions to
Bidders

This gives the bidders some information on how to


complete the tender forms and other important
information about the tender process.

Form B.2 Form of


Tender

This is completed by the bidder and states his/her bid


price for the tender.

Form B.3
Appendix to Form
of Tender

This has additional information about the tender. Some


information is filled in by the bidder and some
information is filled in by the Tender Committee. This
form is submitted by the bidder, along with Form B.2
Form of Tender.

Form B.4
Qualification
Information

This document is submitted as part of the bid, along


with Form B.2 and Form B.3. The form is designed to
demonstrate how the bidder is qualified to undertake
the required work. The bidder must complete it with
information about his/her company, staff, labour and
equipment.

Form B.5
Proposed
programme of
works

This document is completed by the bidder and


submitted as part of the bid. It contains a works
programme for all the different activities that are part of
the project.

Form B.6 Letter


of Acceptance

This letter is filled in on behalf of the District Council


(the employer) and signed by the Executive Secretary?
It is addressed to the winning bidder to indicate that
his/her bid has been accepted.

Form C.1 Form of


Agreement

This document is essentially the contract signed


between the District Council and the winning bidder. It
should include the following attachments:
Form B2 Form of Tender
Form B3 Appendix to Form of Tender

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Form C.2
Conditions of
Particular
Application
Form C.3
Statement of
Works

This document outlines the general conditions of the


contract, for example, those relating to labour,
environment, health and safety and reporting.
This

document contains the following information:


Summary description of works
Bill of Quantities
Drawings
Specifications

Note that a similar summary of these forms is located at the end of your

set of Somaliland District Bidding Documents.


7.7.2.
Preparation of the Request for Proposal (RFP)
Consultancy Services
The standard bidding document provides detailed guidance on preparation of

the Request for Proposals. Specification of the evaluation criteria and number
of points to be awarded to each criterion is critical to achieving a satisfactory
result in the selection of consultants. Both technical and financial point
scores are assessed initially out of 100 points for the purpose of clarity.
During final evaluation, the scores are combined by applying the weighting
percentage stated in the RFP for technical and financial scores.
7.7.2.1. Technical Evaluation Criteria
The criteria specified in the RFP should include:

the firms relevant experience for the assignment;


the quality of the methodology proposed;
the qualifications and experience of the key staff proposed;
provisions for training/capacity building of local staff;
the extent of participation by nationals among key staff in the
performance of the assignment.

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The marks for each criterion are aggregated to give the total technical score.
The following table shows the normal range of points to be specified for each
criterion, which may be adjusted for specific circumstances. The proposed
points must be declared in the RFP.
Figure 1 - Indicative Weighting of Evaluation Criteria (Consultant
Services)
Criteria
Specific relevant experience
Response to the TOR and
Proposed
Key personnel
Training
Participation by nationals
Total

Methodology

Weight
0 to 10 points
20 to 50 points
30 to 60 points
0 to 10 points
0 to 10 points
100 points

The criteria may be divided into sub-criteria to assist the objectivity of the
evaluation. For example, sub-criteria under methodology might be innovation
and level of detail. It is usual to use sub-criteria for key staff to evaluate their
qualifications, technical experience and language capabilities. The number of
sub-criteria should be kept to the essential minimum and must be fully
detailed within the RFP.
Firms Specific Experience
The points given to experience can be relatively low if this criterion has

already been taken into account when short-listing the bidders.


Methodology
A large number of points should be given to the response and proposed

methodology for more complex assignments (for example, multidisciplinary


feasibility or management studies).
Key Personnel
Only the key personnel should normally be evaluated since they will

determine the quality of performance. More points should be assigned if the


proposed assignment is complex.
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When the assignment depends critically on the performance of a


Project Manager or key specialist in a team of individuals, more points

should be allocated for this person.


Individuals should be evaluated on the following sub-criteria as
relevant to the task:
General Qualifications: General education and training, professional
qualifications, length of experience, positions held, time with the
consulting firm, experience in similar countries, etc;
Adequacy for the Assignment: Specific experience relevant to the

assignment in the sector, field, subject, process or activity; and


Experience in the Region: Knowledge of local culture, administrative
systems, government organisations, etc.

7.7.2.2. Minimum Technical Score


The minimum qualifying technical score to be achieved for a technical

proposal to proceed to the Financial Evaluation must be specified in the RFP.


Usually the minimum score required for qualification of the technical
proposal is at least 70%.
7.7.2.3. Financial Evaluation
In addition to specifying the weighting for technical and financial scores, the

RFP must specify the formula for award of points to each bid price. Normally
the lowest priced bid receives 100 points and the other bids receive points
based on dividing their prices by the lowest priced bid and multiplying by
100. The standard procedures for correcting arithmetic and other errors in
bid prices will apply to adjust the bid price before the points are awarded to
each bid.
7.7.2.4. Weighting of Technical and Financial Scores
The relative weightings for technical and financial scores must be stated in

the RFP. This is usually set at 80% for the technical score and 20% for the
financial score. In this case the technical score will be multiplied by 80% and
the financial score by 20% to give the total score for each bid.

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7.7.3.
Tender Notice
Invitations to tender should be made only through written invitations. The

purpose of the tender notice is to inform potential suppliers, contractors and


service provider of the existence of business opportunities for supplying of
goods, carrying out construction works or providing services in the district.
The tender notice should among other information contain the following:

The
The
The
The
The
The
The
The
The
The

name and address of the district


source of financing
nature and quantity of the items required
place of delivery/location of the works to be affected
means or conditions of obtaining the tender documents
place from which tender documents may be obtained
price, if any, charged by the district for the Tender Documents
place for the submission of tenders
deadline for submission of tenders
place, hour and date for tender opening

All invitations to tender must obtain prior approval of the tender


committee except for emergency procurements.

7.8.

Invitation to Tender and Advertising Stage

7.8.1.
Tender Notice
Advertisement of tender is important because it gives prospective bidders

notice of pre-qualification process and of the invitation of bids. The


objectives of tender advertisement are to obtain the widest possible
competition and to ensure fair treatment of all prospective bidders.
Once the tender notice has been approved by the tender committee it should
be advertised at least twice in one or more newspapers of national
circulation and in the case of international tendering method, a notice may
be published in international publications or trade journals.
7.8.2.
Issue of Tender Documents
Tender documents should be made available immediately after first

publication of the tender notice. All potential suppliers and contractors who
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respond to the tender notice in accordance to the procedures and
requirements specified in the invitation to tender should be provided with the
tender documents. In the case where the district has pre-qualified the
suppliers or contractors, it should provide all those who have been prequalified with a set of tender documents at a price, if any, charged for the
documents.
7.8.3.
Clarifications
In tendering method, it is common for suppliers, contractors and service

providers to request for a clarification of the tender documents from the


district. A district should respond promptly to any such request for
clarification so as to give suppliers, contractors and service providers enough
time to take into account the clarification given in the preparation of their
tender bids. A district should communicate the clarification to all suppliers,
contractors and service providers who were provided with the tender
documents without revealing the source of the request. Clarification should be
made in writing and becomes part and parcel of the tender document.

7.8.4.
Tender Period
Tender period is the period between the dates of first publication of the

tender notice or the date of posting the invitation to tender and the closing
date for the submission of tenders. A local government must allow at least
30 days for preparation and submission of tenders from the date of first
publication of the tender notice. In case of international competitive
tendering, at least 45 days from the date of first publication of tender notice
should be given. Tender period should be mentioned in the tender notice and
once it has been set and advertised, it cannot be changed except in
exceptional circumstances. Any extension of the tender period should be
done reasonably in advance of closing date and promptly communicated to
all who requested for the tender documents.

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7.8.5.
Extension of bid closing date
The closing date for submission of bids may be extended at the discretion of

the tender committee for any practical or justifiable reason. Such reasons
would include: modification to the bidding documents after issue, requiring
additional research or effort by bidders to submit a responsive bid; request
for a time extension by two or more bidders; and unforeseen administrative
issues which force a postponement of the proposed bid opening.
Following approval by the tender committee of an extension of time, the
Procurement Officer should notify all bidders in writing of the revised date for
submission of bids and place copies of all correspondence in the relevant
procurement file.
7.9.
Cancellation of Bidding Process
A bidding process may be cancelled at any time before the deadline for

receipt of bids with the approval of the tender committee. Justifications for
cancellation:

the procurement need has ceased to exist or changed significantly;


insufficient funding is available for the procurement;
there is a significant change in the required technical details, bidding
conditions, conditions of contract or other details, such that the

recommencement of proceedings is necessary;


insufficient, or bids received are not responsive;
there is evidence of collusion among bidders; or
cancellation is deemed to be in the interest of national security.

When the bidding process in cancelled prior to bid opening, the district
should:

Notify all bidders who have purchased or received the bidding

documents, of the cancellation.


If the bidder has already submitted his bid, this must be returned
unopened.

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Notify all departments, units and sub-committees involved in the


procurement, of the cancellation.

7.10.
Response Management Stage
The response management stage deals with the management of the

received bids. Other activities falling under this stage include custody of the
bids received, opening of the tenders, evaluation of the tenders and
recommendation to tender committee.
7.10.1.
Submission and Receipt of Bids
The place and time for submission of bids should be stated in the invitation

to tender. Bidders are required to submit their bids within the time, place and
the in the form and manner specified in the invitation to tender. Only those
bids received within specified time should be considered. Bids received after
submission deadline should not be accepted and should be returned
unopened. Tenders should be submitted in a plain and sealed envelope
clearly marked Tender for. The place of receipt of tenders
should be clearly mentioned such as District Building, Room 4 and placed in
tender box marked Tender for
7.10.2.
Custody of Tenders
All received tenders must be placed in a locked tender box or in a secure

office space until the tender opening time. The tenders received should each
be given a registration number, time and date of delivery should be recorded
on each envelope.
The Secretary to Tender Committee is responsible for keeping the keys to the
tender box or boxes and for holding securely those envelopes which cannot
be placed in a locked tender box. The tender box should be locked at the
time of invitation of bids, and to remain locked until the closing date of
invitation to tender. The tender box should have only one opening, wide
enough to take in the envelopes containing bids and it should be closed at
the time stated in the advertisement.
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7.10.3.
Opening of Tenders
Tender opening has to be done at a specified time and place. The date for

opening of tenders and the last date for submission of tenders should be the
same. Tender opening should take place as soon as possible after the
deadline for receipt of tenders has passed. All tender bids received before
the deadline should be opened publicly in the presence of bidders or their
representatives. The names of all present at the opening should be recorded.
At the opening of tender, the following information should be read aloud:

The number allocated to the bid by the Bid Opening Committee;

Bidders name

Any bid modifications or withdrawals;

The name and country of the bidder;

A brief description of the goods, works and/or services offered if the bid
is for more than one lot;

The currency of the bid;

The total bid price;

Any discounts offered;

Confirmation that the bidder has completed the declaration of ethical


conduct, and

Any other appropriate information at the discretion of the chairperson.


In the case of two-envelope bidding where separate technical and
financial bids are submitted for consultancy services, only the
technical bid will be opened for evaluation at the initial bid opening.
The Financial bids are retained unopened pending a second public
opening of those bids achieving more than the minimum technical
score. In this case the financial details above will not be read out.

After reading out the above details, the bid should be passed on to a
nominated representative of the bidders who shall also read out the same
details. Any obvious failure to provide a responsive bid shall be reported to
the meeting and recorded in the minutes. These bids shall be rejected.
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The chairperson and two members of the bid opening committee will initial
the original of each bid and all attachments thereto including any samples
provided by the bidder. Any corrections to prices or obvious errors and
omissions should be circled in red ink and also initialed.
The Secretary of the Bid Opening Committee will record the details read out
of each bid in the record of bid/proposal opening ensuring that amounts are
recorded in words as well as figures, and record all corrections and errors or
omissions which are noted during the bid opening in the minutes of the
meeting. When all the bids have been opened and read out, the Secretary of
the bid opening committee must show the meeting that the bid box is empty.
Minutes of the bid opening shall be prepared by the Procurement Unit, signed
by the chairperson of the committee and made available to any bidder
involved in the bid who requests a copy in writing.
In summary:
1. Tender opening takes place as soon as possible after the deadline for receipt of
tenders has passed. It is the responsibility of the Procurement Officer to organise
the room for the tender opening.
2. A Bid Opening Committee is established for the specific purpose of the bid
opening procedure.
3. All tender bids received before the deadline should be opened publicly in the
presence of bidders or their representatives.
4. The Procurement Officer is responsible for the following preparations:
Arrange placement of the tender box in a prominent place and ensure that all
reception office staff and staff responsible for the receipt of post are fully aware
of the bid and their responsibilities for bids received.
Ensure that the tender box is kept locked until the bid opening and that neither
the bidders nor staff have an opportunity to tamper with the box.
Close and seal the tender box immediately following the deadline for submission
of bids and transport the tender box to the room where the bid opening will take
place.

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5. The bidders and representatives must sit separately from the Bid Opening
Committee and the names of all bidders and representatives present must be
recorded.
6. The Procurement Unit is responsible for the smooth running of the bid opening,
including the following:
Bring in the unopened tender box and/or all bids and samples received which
have been removed from the tender box or could not be accommodated in the
tender box.
Open the tender box, check that the writing on each envelope or sample inside
confirms that it is for the correct bid and complies with the wording and sealing
required in the bidding documents.
Stack all envelopes in clear view of the bidders ready for opening. Samples
supplied by bidders shall be stacked separately after checking that the bidders
name is clearly identified on each sample provided.
Any bids not received by the deadline for the opening of bids must be rejected
and returned unopened to the bidder. Bidders are not permitted to amend their
bid in any way during the bid opening or to submit any additional documents
during the process.
Check for any withdrawals or modifications and match with the original bid
before proceeding. Withdrawn bids shall not be opened once the authenticity of
the withdrawal notice has been confirmed.
7. The Chairman will open the meeting and outline the procedures to be used for
the bid opening.
8. The Chairman of the Bid Opening Committee is also responsible for opening the
bids. Bids are opened one by one. When a bid is opened, some important
information is read out, see the bullet point list above.
9. The important bid information is also read out by a bidders representative. This
is to ensure that all required bid information has been included in the bid. Each bid
is initialed by the Bid Opening Committee members.
10. When all bids have been opened and read out, the Secretary of the Bid Opening
Committee must show the meeting that the box is empty.
11. The Procurement Unit will prepare the minutes of the Bid Opening meeting,
which are signed and made available to any bidder involved in the bid.

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7.10.4.
Cancellation of Bids after Bid Opening
Bids and RFQs may be cancelled by recommendation of the head of

department responsible, and following approval of the tender committee, if:

Only one bid was presented or after rejection of all other bids only one
bid remains for consideration;

Most of the bids were presented with unacceptable reservations and


conditions; or

The tender committee confirms that the lowest priced bid is higher
than the budgetary provision.

Prior to cancellation of bids and RFQs the Procurement Officer shall obtain
approval of the head of department responsible and the tender committee
for cancellation of the bid/RFQ and then notify all bidders that the bid/RFQ
process has been cancelled. The Procurement Officer should then decide
whether the procurement is to be cancelled completely, or to proceed later,
and by what method. If the procurement is to proceed, the Procurement
Officer shall re-submit all documents to the Originating Officer for
preparation

of

revised

specifications,

or

prepare

bidding

documents

appropriate to a procurement method proposed.


7.10.5.
Extension of Bid Validity Period
The duration of bid validity is specified in the bidding documents and should

be confirmed in the signed bid form submitted by each bidder. Any bid which
is valid for a shorter period shall be rejected by the procuring entity as being
substantially non-responsive. If circumstances occur in which award cannot
be made within the original bid validity period, extensions in writing should
be requested from bidders, in accordance with the bidding documents. The
evaluation and award of contract should be completed within the period set
for the validity of bids. The date for expiry of bid validity must be monitored
and attention drawn to this deadline not less than two weeks before the
expiry date.

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If, due to unforeseen circumstances, the work cannot be completed within
the set period, the Procurement Unit may contact bidders to seek their
agreement to an extension of the bid validity. Bidders who refuse this
request may withdraw from the bid without incurring any penalty.
When an extension of bid validity period is requested, bidders shall not
normally be requested or be permitted to change the quoted price or other
conditions of their bid. However, the bidding documents may provide for an
appropriate price adjustment mechanism when requests for second or
subsequent extensions are made, to reflect changes in the cost of inputs for
the contract over the period of extension.
The Procurement Unit shall:

Maintain a diary reminder of all bid validity dates and advise the
responsible officer not less than two weeks before the expiry date so
that appropriate action can be taken in time.

Determine the additional time required to complete the evaluation and


award of the specific contract. Any extension of bid validity should be
for the minimum period required to complete the evaluation, to obtain
the necessary approvals and to award the contract.

Prepare an individual letter to each bidder requesting their formal


approval to an extension of the validity of bids and an extension of
their bid securities (where necessary) for the required period. Set a
date for written responses to be received by the District stressing that
bidders who do not respond in time will be considered to have
withdrawn their bids.

Send the letter by registered post or deliver by hand to each bidder


and obtain a receipt.

Bidders have the right to refuse to grant an extension of bid validity. If a


bidder refuses to extend the validity of his bid then, upon expiry of the
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original bid validity period, the bid shall not be considered further. Only
bidders who respond confirming their unconditional acceptance may be
considered for further evaluation and award of contract.
7.10.6.
Tender Evaluation
Tenders that have been opened will be evaluated against the same criteria

that have been established before the tenders are opened and which have
been indicated in the tender documents. Tender evaluation process is
discussed in more details in Session Four.
There are 2 activities for this session.

^ Activity 2.3: Invitation to Bid


This activity relates to 9.7 Invitation to Tender and Advertising Stage in your
Participant Book.
This activity is designed to give you practice in completing an Invitation to Bid form
for one of your district projects.
You will need to work in your district groups and choose 1 project from your districts
annual work plan. If possible, you will choose a project that you used in Activity
1.3: Procurement Planning, that we conducted earlier.
In your groups, try to complete the Invitation to Bid form for the project you have
chosen from your districts work plan or the procurement planning activity.

Please do this activity in Activity Sheet 6 Invitation to Bid at the end of

your Participant Book.

^ Activity 2.4 Bid Opening


This activity is designed to familiarise you with a simplified bid opening process.
1. Your trainer will divide you into 7 groups.
2. Before the activity begins, familiarise yourself with the summary of steps 1-11 in
the tender opening process outlined above.

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3. Groups 1-6 will act as bidders for a tender for a contract on the Sandy District
Primary School Classroom Rehabilitation project. Group 7 will act as the
Procurement Unit and Bid Opening Committee.
4. Your group needs to carry out the instructions given below, depending on
whether you are a bidder or a Procurement Unit. Your trainer will guide you
through this process.
5. Once the process below has been followed, everyone should be able to determine
which company has the lowest bid. For the purposes of the activity, the lowest
bidding company will be awarded the tender.
6. The information about bids received should be recorded by all participants in
Activity Sheet 6 Bid Opening, at the end of this Participant Book.

Note that Activity Sheet 7 Bid Opening can also be found in your set of

Somaliland District Bid Opening and Evaluation Documents, which we will look at
more closely in the next session.
Bidder Groups
1. Your trainer will give you an
envelope, which contains your
bid price. Read your bid and note
the details.

Procurement Unit
1. Ensure that all bidders are sitting away
from the Bid Opening Committee

2. Put your bid back in the


envelope, seal it and write your
companys name on the front of
the envelope.

2. Identify someone in your group who will


act as the Chairman of the Bid Opening
Committee for this activity.

3. One member of your group


should submit your bid into the
Tender Box.

3. Allow bidders 5 minutes to read their bid


information and submit their bids into the
Tender Box.

4. As each bid is being read out


and recorded on the whiteboard,
write down the details in Activity
Sheet 6 at the end of your
Participant Book.

4. Open the Tender Box and stack all the bid


envelopes. Ensure that none have been
tampered with.

5. The Chairman of the Bid Opening


Committee will open the first bid.
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6. The Chairman will read out the company
name and bid price and this is recorded on
the whiteboard by the Procurement Unit.
7. Members of the Bid Opening Committee
must initial each bid.
8. When all bids have been opened, the
Chairman should show everyone that the
tender box is empty.

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8. SESSION 4:

SUPPLIER TENDER EVALUATION AND SELECTION

8.2.
Session Objectives
By the end of the session, the participants will be able to:

Know how the evaluation committee is selected and composed;

Understand the functions of the Tender Evaluation Committee/Team;

Understand the main stages of evaluation of bids;

Identify the key elements to consider when selecting a bid winner;

Know the contents of the report of the Evaluation Committee

8.3.
Introduction
This session presents to the participants the process of evaluation of bids
recommendation of the preferred bidder/supplier by the evaluation committee.

Questions for Discussion 7:


Based on your districts experience, discuss the following questions:

How does tender evaluation usually take place in your district?


What problems do Local Governments face when evaluating tenders?

As with the Bidding Documents we saw in the previous session, there are a
number of documents that you need to use for Bid Evaluation. These are
outlined in the table below.

Please refer to your set of Somaliland District Bid Opening and Evaluation
Documents and familiarise yourself with the following documents:
Table: Summary of Bid Opening and Evaluation Documents
Form
What is it for?
Form D.1 Bid
This is used during the bid opening process and
Opening
includes:
1. Received Bids lists all bids received along with the
bid amounts.
2. Attendance Register for Tender Committee, MOI, JLPG
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representatives present.
3. Attendance Register for Bidder representatives
present.
Form E.1 Bid
Evaluation

This form is used during the bid evaluation process and


includes:
1. Eligibility This assesses each bid and bidder against
a number of criteria to determine whether the bid is
eligible for technical evaluation.
2. Technical Qualification This assesses each eligible
bid against a number of criteria and gives each bid a
score, to determine whether a bid can go on to the next
stage which is Financial Evaluation.
3. Financial Evaluation This assesses each bid
according to financial criteria.
4. Example This is a completed example of how to
conduct a Financial Evaluation of a number of bids.

Form E.2 Bid


Evaluation
Summary

This set of forms is related to the evaluation of bids and


includes:
1. Evaluation Report
2. Technical Evaluation Team Justification for Preferred
Bidder
3. Bid Evaluation - Engineers
4. Tender Committee decision and justification
5. Bid Evaluation Tender Committee

8.4.
Tender Evaluation Committee/Team
The responsibility of evaluating bids and quotations and ranking them in

order of pricing and quality rests with the Tender Evaluation Committee/Team
in the district. The committee comprises of not less than three and not more
than five members one of whom must be an expert on the subject matter for
which evaluation is to be done. The evaluation team members are appointed
by the Executive Secretary based on their technical skills and competences.

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The evaluation team must assess all tenders received on the basis of the
evaluation criteria set out in the tender document. Upon completion of the
evaluation process, the Evaluation Committee submits its evaluation report
and assessment scores to Tender Committee.
8.5.
Evaluation of Tenders
Evaluation of tenders is done by an Evaluation Team. It is done in three sequential
stages:

A preliminary examination;

A technical evaluation;

A financial evaluation to compare costs of the eligible, responsive and


technically compliant bids.

The evaluation process is conducted in accordance with the established


methodology and criteria, as defined in the tender document and a written
evaluation report should then be produced. Tabulation of offers will make it
easier to compare them.
8.5.1.
Preliminary examination
The purpose of preliminary examination is to identify and reject bids that are

incomplete, invalid or substantially non-responsive to the bidding documents


and are therefore not to be considered further. To pass preliminary
examination, bids must be:

Correctly submitted and completed in all general respects;

Using bid documents obtained from the source

Properly signed; (this criterion included in Form E.1)

Fully priced

In line with the eligibility requirements specified in the bidding


document; and

Substantially responsive to the bidding documents.

Eligibility requirements for bidders:


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Are registered in the district;

Have the legal capacity to enter into a contract; (this criterion included
in Form E.1)

Are not-insolvent, in receivership, bankrupt, or being wound up;

Have not had their business activities suspended; (this criterion


included in Form E.1)

Are not subject to legal proceedings;

Have fulfilled tax, social security obligations;

Do not have a conflict of interest.


Some of these eligibility requirements above are not included in
Form E.1 should they be added to Form E.1? Or can we say that
bidders should have already passed these eligibility requirements in
order to be included on the districts list of approved bidders and
that only bidders who appear on the districts list should submit
bids?

Please refer to Form E.1 Bid Evaluation, 1. Eligibility, in your set of


Somaliland District Bid Opening and Evaluation Documents.
Responsiveness is determined by measuring whether a bidder has responded
satisfactorily to the criteria detailed in the bidding documents e.g. the bid in
the required format, the correct number of copies of the bid, samples
required, required delivery schedule, etc.

If a bid contains major deviations from, or reservations to, the terms,


conditions and specifications in the bidding documents, it is not
substantially responsive. The bidder is not permitted to correct or
withdraw any material deviations or reservations once the bids have
been opened.

Activity 2.5: Complete Bid Eligibility Form

In this activity you will practise filling in the details on Form E.1 Bid
Evaluation, 1. Eligibility for a fictional project, Construction of Primary School
Staff Quarters in Friendly Village.
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You will work in pairs and your trainer will guide you in this activity.
The aim of the activity is to use the information provided in Activity Sheet 8
Eligibility to Bid Form to fill in the table and determine whether the bid
submitted by Akber Constructions is eligible and therefore able to have a
Technical Evaluation.

You will need to refer to Activity Sheet 8 at the end of your Participant
Book.

8.5.2.
Technical evaluation
Technical evaluation should be conducted to assess the technical compliance

of bids to the statement of requirements. Only bids that have passed the
preliminary examination and are considered to be substantially responsive to
the bidding documents will be considered for further evaluation. Any bids
which do not reach the minimum standard or score required points should be
rejected and not evaluated further.
In undertaking technical evaluation of bids, the evaluation committee should:

Check for compliance with the technical specifications. Unacceptable


deviations are those that, if accepted, would not fulfill the purposes for
which the bid is requested, or would prevent a fair comparison with
bids that are fully compliant with the specifications. Examples may
include:
failure to respond to the specifications by offering a different
design or product that is inferior in performance or in other
requirements;
submission

of

specifications;

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phasing of contract start-up, delivery, installation or construction
does not conform to the required critical dates or progress
markers;
sub-contracting in a substantially different amount or manner
than that specified.

Record the results of any inspection of samples.

For least-cost selection procurements only confirm compliance or


record reasons for non-compliance, with the specifications. All bids
passing the technical evaluation will proceed directly to the financial
evaluation stage.

For merit point procurements: If a merit point system is specified in the


bidding documents, evaluation and scoring of each bid for the
technical criteria stated in the bidding documents is undertaken:
Each member of the Evaluation Committee will award technical
point scores individually to each bid.
The scores given by each member for each bid will be discussed
and consolidated into a summary which will be used to
determine the averaged technical score totals for each bidder
and to indicate which bidders have passed the minimum
technical score required.
Prepare the technical evaluation report and submit to the tender
committee for approval.

Recommend rejection of any bid which is not technically responsive to


the bidding document, where the sample provided does not conform to
the required specifications, or where the required technical score is not
reached under a merit point system.

Please refer to Form E.1 Bid Evaluation, 2. Technical Qualification,


in your set of Somaliland District Bid Opening and Evaluation Documents.

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8.5.3.
Financial evaluation
Financial evaluation should only be conducted on bids that are eligible and

responsive, and are technically compliant or meet the required minimum


technical standard. If a two-envelope system and merit point evaluation were
specified in the bidding documents, financial evaluation cannot commence
until the technical evaluation has been approved by the tender committee,
and financial envelopes have been opened at a second public opening. The
financial evaluation should be conducted to:

Correct any arithmetic errors in the bid. Where there is a discrepancy


between the amounts in figures and in words, the amount in words will
govern; and where there is a discrepancy between the unit rate and
the line item total resulting from multiplying the unit rate by the
quantity, the unit rate as quoted will govern, unless in the opinion of
the committee there is an obviously gross misplacement of the decimal
point in the unit rate, in which case the line item total as quoted will
govern and the unit rate will be corrected. All corrections made in
accordance with the procedure specified in the bidding document, are
considered binding on the bidder;

Determine whether the financial bids are complete and cost any
missing items, adding them to the original bid price. Where items
missing in some bids are present in others, the highest price quoted by
the other bidders is added to the incomplete bids for evaluation
purposes. Under works contracts, missing prices for occasional work
items are normally assumed to be included in prices for closely related
items elsewhere.

Convert all bids to a single evaluation currency for purposes of


comparison if required. If bids in different currencies are permitted in
the bidding documents, convert the bid prices to the single currency
(Somalia Shillings) as stated in the bidding documents:

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The selected source and date for currency exchange rates must
be as specified in the bidding documents. The selected date
should not be later than the original date for closing of bids.
The source of exchange rates will normally be the selling rate
quoted by the Central Bank on the selected date.
Obtain written evidence of the conversion rates to be used
confirming the required date and source.
Apply the appropriate conversion rate to each corrected bid price
to arrive at the evaluation price in the common currency.

Award a financial score or rank bids, in accordance with the evaluation


methodology selected;

Determine the best-evaluated bid in accordance with the methodology


selected.

Provisional Sums: If the bids contain provisional sums set for contingencies
or for nominated subcontractors, since these sums are the same for all bids,
they should be deducted from the prices read out at the bid opening to allow
a proper comparison of the competitive elements of bid prices.
Modifications and Discounts: Discounts offered in accordance with the
bidding document that are conditional on the simultaneous award of other
contracts or lots in the bidding documents (cross-discounts) shall not be
evaluated until the completion of all other evaluation steps. Non-conditional
discounts should be included at this stage.

Please refer to Form E.1 Bid Evaluation, 3. Financial Evaluation, in


your set of Somaliland District Bid Opening and Evaluation Documents.

8.6.
Selection of suppliers
Bid evaluations should be consistent with the objectives set for each

purchase. However, for most purchases, the purchase price is only one of the
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several considerations when selecting a supplier. Meeting user requirements,
quality and service are a critical and usually more important aspect.
Among the elements to be considered when selecting a supplier are the
following:

Ability to meet essential and desirable requirements;

Customer service;

Quality assurance capacity and adoption to local conditions;

Past performance;

Offered best price, operating and maintenance costs;

Supplier innovation;

Supplier financial strength;

Risk management;

Compliance to conditions of contract;

Lack of conflict of interest;

Qualification and guarantee offered etc.

Selection/evaluation

criteria

should

be

clearly

stated

in

the

tender

documents.
8.7.

Comparison and Ranking of Bids

For least-cost selection, the corrected bid prices, adjusted for omissions,
deviations and specified evaluation factors, and converted to a common
currency are ranked to determine the lowest evaluated responsive bid. For
merit point systems [including the Quality and Cost Based Selection (QCBS)
method for consultant services], the combined technical and financial scores
are calculated to determine the lowest evaluated responsive bid. In either
case the ranking of bidders is still subject to:

the application of any margin of preference to domestic bids as allowed


for in the bidding documents;

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the application of any cross-discounts, dependent on the simultaneous


award of multiple contracts or lots; and

post-qualification evaluation, or, if pre-qualification has occurred,


reconfirmation of pre-qualification information.

8.8.

Post Qualification of Bids

Post-Qualification of the lowest evaluated responsive bidder should be


conducted to determine his capability and resources to perform the contract.
Using the criteria specified in the bidding documents, this review should
include an assessment of the bidders financial and physical resources
available to undertake the contract, including his current workload.
The criteria for post-qualification shall be set out in the solicitation
documents and may include:

Experience and past performance on similar contracts;

Knowledge of local working conditions;

Capabilities with respect to personnel, equipment and construction or


manufacturing facilities;

Financial capability;

Litigation record; or

Any other relevant criteria.

If pre-qualification was conducted, the lowest evaluated responsive bid


should be recommended for the award of contract, unless the bidders
qualifications have since materially deteriorated, or if the bidder has since
received additional work that reduces the available capacity. Where prequalification has not taken place, the lowest evaluated responsive bid should
be subjected to post-qualification, according to the procedures described in
the bidding documents.

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If the lowest evaluated responsive bidder fails post-qualification, his bid
should be rejected, and the next ranked bidder should then be subject to
post-qualification examination. If successful, this bidder should receive the
award. If not, the process continues for the other bidders. The rejection of a
bid for reasons of qualification requires substantial justification, which should
be clearly documented in the text of, or in attachments to, the evaluation
report. A history of poor performance may be considered a justification for
failing post-qualification if the bidder is unable to demonstrate that steps
have been taken to resolve previous problems.
8.9.
Evaluation report and recommendation
The evaluation committee will, at the end of the evaluation process, prepare

a report to the tender committee. The report should include:

Evaluation and assessment scores for each bidder;

Minutes of the committee concerning the contract;

Criteria against which the scoring was made;

Ranking of bidders in order of quality and responsiveness;

Recommendation of a winner to the tender committee.

Evaluation report should be signed by all members of the evaluation


committee. Technical evaluation reports should contain recommendations on
which bidders should proceed to the financial evaluation. Combined technical
and financial evaluation reports shall contain recommendations on the bestevaluated bidder. The evaluation report shall be submitted to tender
committee for approval.

Please refer to Form E.2 Bid Evaluation Summary, 1. Evaluation


Report, in your set of Somaliland District Bid Opening and Evaluation
Documents for a template of the Tender Evaluation Report.

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8.10.
Tender Committee Approval of Recommendation for
Contract Award
After evaluation by evaluation committee, the report is submitted to the

tender committee which discusses the report and makes a decision.

The

tender committee may decide to either:

Approve the evaluation committee recommendations and award the


contract to the recommended supplier; or

Refuse to authorize acceptance of any tenders and refer the evaluation


back to the evaluation committee with an instruction to re-evaluate the
tenders or to the procurement unit for re-tendering

The

8.10.1.
tender

Action by the Tender Committee


committee will review the evaluation

report

and

recommendations presented by the evaluation committee. Before giving


approval, the tender committee will ensure that any written complaints
made by bidders concerning the bid opening procedures have been reviewed
and responded to. A copy of the complaint and the response shall be sent to
the Executive Secretary and to the MOILG for information. If the complaint
reveals a serious breach of procedures or ethics, or if directed by the MOILG,
the tender committee shall reject the evaluation report and call for reevaluation or re-bidding, as the case may be.
The tender committee will award the contract to the bidder who has
submitted the lowest-evaluated responsive bid and has been determined to
be qualified to perform the contract.
A bidder shall not be required, as a condition of contract award, to undertake
responsibilities for work not stipulated in the bidding documents or otherwise
to modify his bid as originally submitted.
The tender committee should:

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Check the accuracy of the evaluation and recommendations as


submitted.

If the lowest evaluated responsive bid is higher than the original


estimated cost, decide whether the price increase is justified. If the
price is not acceptable, the tender committee may consider that the
bid should be re-advertised, cancelled, or the quantities or scope
reduced.

If the evaluation report recommends negotiation with a bidder to


remove any reservations in the best-evaluated bid, the tender
committee shall arrange for such formal negotiations to be held.
Negotiations may not be held with the object of reducing prices on any
competitive bidding process. If negotiations with the lowest evaluated
responsive bidder fail to get a withdrawal of the reservations in his bid,
the second-ranked bidder may be invited to sign the contract or invited
for negotiations. Following any negotiation process the result of
negotiations and any recommendations must be reported back to the
tender committee for approval before further action is taken.

Reject any evaluation report which contains serious inaccuracies or


flaws and return to the Evaluation Committee for correction and resubmission.

Issue a full or a qualified approval to the award of contract or the


recommended action. A qualified approval may be issued subject to
clearly explained corrections that must be made to the evaluation
report, or to the contract documents before issue.

Ensure that all discussions and decisions of the committee are reported
in the minutes of the meeting.

8.11.
Rejection of All Bids
If the Evaluation Committee recommends the rejection of all bids, the tender

committee may consider:

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wider advertising or sourcing of bidders if the rejection of all bids is due


to lack of competition;

invitation of new bids from the initially pre-qualified firms if the


rejection is due to most or all of the bids being non-responsive;

if the lowest evaluated responsive bid exceeds the pre-bid cost


estimates by a substantial margin, investigate the causes of the
excessive cost and request new bids with amendments to the
specifications or bidding document.

negotiations with the lowest evaluated responsive bidder with the


objective of agreeing a satisfactory contract through a reduction in the
scope or quantities and/or a reallocation of risk and responsibility, to
reduce the contract price. However, any substantial reduction in the
scope, or modification to the contract documents may require rebidding to ensure transparency.

instructing the Evaluation Committee to review the causes of the


rejection and to recommend revisions, before inviting new bids, to the:
conditions of contract;
design and specifications;
scope of the contract;
or any other relevant provision.

Activity 2.6: Bosaso District Role Play

This role play activity is designed to illustrate the roles of the Tender Committee and
the Evaluation Committee and the decision making process on recommendation of
tenders.
Your trainer will guide you in the conduct of this activity.
It will be helpful for you to refer to the following information in your Participant Book
in order to conduct the activity:
3.8 Roles and Responsibilities
10.3 Tender Evaluation Committee
10.9.1 Action by the Tender Committee
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You will also need to refer to Activity Sheet 9 Bosaso District Role
Play at the end of your Participant Book.

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9. SESSION 5:

NEGOTIATION

9.2.
Session Objectives
By the end of the session the participants will be able to:

Define negotiation;

Determine when it is necessary;

Identify the influences of negotiation;

Identify the different stages of negotiation;

Perform good bargaining and negotiations;

To enable participants know the importance/benefits of negotiations.

9.3.
Introduction
This session explains to the participants the importance of negotiation, when

it should be applied, and how it fits into the procurement of service providers
especially the consultants.

Questions for Discussion 8:


Based on your districts experience, discuss the following question:

Under which circumstances is it appropriate to negotiate with a


supplier, contractor or consultant?

9.4.

Definition

WHAT IS NEGOTIATION?
Negotiation is a process whereby two or more parties, initially with
differing views attempt to reach an agreement on a common
objective by selective use of different methods of persuasion.

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9.5.
When to negotiate
Negotiations with the lowest

evaluated

responsive

bidder

may

be

undertaken:

Where reservations or restrictions on the specifications or conditions


are contained in the bid. These negotiations are for the sole purpose of
persuading the bidder to waive these restrictions so that the bid is in
accordance with the specifications, terms and conditions of the original
bid.

To agree a satisfactory contract through a reduction in the scope or


quantities and/or a reallocation of risk and responsibility, to reduce the
contract price when prices quoted are substantially higher than the
estimated cost. However, any substantial reduction in the scope or
modification to the contract documents may require re-bidding to
ensure transparency.

Negotiations (including price) may be undertaken in selection of consultant


services where price is not an evaluation criteria. This will apply only to the
Quality-Based Selection (QBS), Selection Based on Qualifications, or SingleSource Selection methods.
Other issues for negotiations may include:

Finalizing payment arrangements;

Mobilization arrangements;

The methodology or staffing;

Clarifying details that were not apparent or could not be finalized at


the time of bidding;

Agreeing final delivery or work schedule to accommodate any changes


required by the district.

Negotiation is only permitted after the tender board has


approved the evaluation committees recommendation.
Price negotiations with the lowest evaluated responsive
evaluated bidder on a competitive bidding process where price
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9.5.1.
Issues for negotiations consultancy services
In the procurement of the consultancy services, negotiations for award of

contract will cover the following issues:

Terms of reference

Methodology;

Proposed work programme;

Staffing

Scope of consultancy services

9.5.2.
Issues for negotiations goods and works
In the procurement of goods and works, negotiation will be on areas relating

to the following:

Reduction of quantities for budgetary reasons;

Minor

alteration

to

the

technical

details

of

the

statement

of

requirements;

Payment arrangements

Minor amendments to the special conditions of contract;

Methodology or staffing

Final delivery or work schedule

9.6.
The two

The Negotiators
parties to the

negotiation

are

the

district

and

the

consultants/supplier/contractor or service providers.


9.7.

The Negotiation Process

9.7.1.

Selection of negotiation team

The negotiation team is proposed by the tender committee based on


appropriate seniority and experience depending on the value and complexity
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of the procurement. The proposed negotiation team should possess relevant
mix of skills and experience, including:

Knowledge of end user requirements;


Financial management skills;
Negotiation skills;
Procurement and contract management skills; and
Technical skills relevant to the subject of procurement.
9.7.2.

Characteristics of a good Negotiator

The following are characteristics of a good negotiator among others:

Principled focusing on district interests and not positions


Have objective reach understanding based on standards
Be open to reason yield to principle not pressure
Able to control emotions
Good communicator without communication there is no negotiation
Able to listen actively
Able to take a decision.

9.7.3.
Pre-negotiation
This is a strategy formulation stage. It involves looking at your own

negotiation objectives, interests, principals and targets, the positions and


possible interests of the other side, and the strengths and weaknesses of
both sides, reflected in the balance of power. At this stage the negotiation
team prepares a negotiations plan specifying the issues to be negotiated and
the objectives to be achieved and whenever possible, quantify the objectives
and set maximum and minimum negotiating parameters for the negotiation
team. The negotiation plan should be approved by the tender committee
prior to any negotiations taking place.
9.7.4.

The Actual Negotiation

9.7.4.1. Opening stage


Dos: Be welcoming, show interest and respect, ensure refreshments are at

hand, make purposeful talk and find out about them as people, check their

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authority to negotiate, be warm but firm, agree on the agenda, expected
outcomes and time scales.
Do not: Be demanding, put down any conditions, refer to contracts with
other suppliers, make them feel uneasy, start substantive discussions before
agreeing on the agenda.
9.7.4.2. Proposal stage
Normally the entity asks the supplier to make their proposals first because

this way they expose their best target. You should remember to link different
variables, build on the ideas and proposals being offered, ask questions to
clarify any points that are not clear, take abundant notes, and propose a
recess to discuss options when necessary.
Try not to reject a proposal instantly, make a counter proposal immediately,
or use-irritating phrases like: We need a fair and reasonable offer.
9.7.4.3. Bargaining stage
The basic rules of bargaining are: Always try to attach conditions to

concessions; try to give way on variables which may be of little value to you;
focus on all the variables involved; try to make numerous small concessions
rather than a major one.
9.7.4.4. Agreement stage
At this stage, clearly summarise and state clearly what has been agreed

upon. This is not the end but the beginning of a working relationship.
9.7.5.
Post-negotiation:
This involves preparing and formalizing the agreement, monitoring and

managing the implementation, and evaluating your negotiation performance.


The negotiation team shall produce minutes of the meeting and shall obtain the
bidders written agreement that it is a true and accurate record of the
negotiations held and submit the minutes to the procurement unit for
submission of recommendations of the negotiation team to the tender
committee to:
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proceed

with

contract

award

to

the

recommended

bidder,

incorporating the agreements reached during negotiations;

revise the negotiation objectives and hold further negotiations, or

terminate the negotiation and reject the bidder.

Where the negotiation team recommends rejection of the bidder, it may also,
where appropriate, recommend inviting the next ranked bidder for negotiations
in the case of competitive methods of procurement or a new bidder to submit a
tender in the case of direct procurement. The tender committee may:

approve the recommendations;

request further negotiations on specific points;

reject the recommendations with reasons; or

cancel the negotiations in their entirety.

The results of any approved negotiations shall be specified in a letter of tender


acceptance and incorporated into the contract document. Where negotiations
are commenced with the next ranked bidder or a new bidder is invited, the
district shall not reopen earlier negotiations; and the original bidder shall be
informed in writing of the reasons for termination of the negotiations.

Activity 2.7: Baran District Role Play

This role play activity is designed to illustrate the negotiation process between a
District Tender Committee and a potential supplier.
Your trainer will guide you in the conduct of this activity.
It will be helpful for you to refer to the following information in your Participant Book
in order to conduct the activity:
11.6.2 Characteristics of a good negotiator
11.6.3 Pre-negotiation
11.6.4 The actual negotiation

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You will also need to refer to Activity Sheet 10 Baran District Role
Play at the end of your Participant Book.

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Suggest moving this session to become the first session in Unit 3: Contract
Management
10.

SESSION 6:

ORDERS AND CONTRACTS

10.2.
Session Objectives
By the end of the session, the participants will be able to:

Explain the importance of a contract;

List the key obligations of the purchaser and provider of service or


goods;

Describe the major issues relating to preparing a procurement


contract;

Outline the problems frequently encountered in procurement contracts;

Know which type of contract to use for a given procurement.

10.3.
Introduction
This session presents to the participants the importance of signing a contract

after awarding a tender, the buyers and sellers obligations in the contract.
10.4.
Definition of a contract
A contract is a formal legal agreement, usually written, between different

parties. The procurement contract enters into force when the contract is
signed by the supplier, contractor or service provider and by the Local
Government.
10.5.
Suppliers/Providers Obligations
Suppliers /providers obligations may include but not limited to:

Deliver the goods, service or works in the way, at the time, and in the
location that has been specified by the parties.

Deliver the documents that are related to the goods or service.

Transfer of title of ownership for a product.

Ensure the conformity of the goods to the specifications.

Act in good faith and deal fairly.

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Accept liability of the manufacturer of the goods in the case of injury to


the persons or objects.

10.6.
Local Governments Obligations
Local government may include but not limited to:

Accept the goods or services provided they meet the contract terms

Pay the agreed price.

Act in good faith and deal fairly.

Accept liability in the case of injury to persons or objects.

10.7.
Preparation of Contracts
A contract document for submission to the successful bidder for signature is

prepared by the Procurement Management Unit. Contents of a contract


document are determined by contents of the tender documents and the
nature of the tender. The Procurement Unit will complete the draft contract
document and submit it to the tender committee together with all relevant
attachments, for approval.
10.7.1.
Major issues
The major issues related to preparing the contract are:

What the local government/district wants to obtain;

What the local government/district wants to avoid;

The options that are available, (if all goes wrong), to protect the local
government/district so that the negative impact on the business is as
low as possible;

10.7.2.
Problems that may be encountered in purchasing and
supplying contracts
Numerous difficulties may arise in purchasing and supply contracts. Some of

these are:

Change of ownership/management;

Change of circumstances;

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Currency fluctuations ;

Delays in performance;

Different business cultures;

Dominance;

Lack of specificity.

10.8.
Tender Committee Approval of Contract
The Tender Committee will review the contract document with particular regard
to compliance with any modifications requested by the Committee in issuing its
approval to the evaluation report. The committee will:

Examine the form of contract to ensure that all required information,


conditions and attachments are completed, and all modifications or
negotiations are incorporated.

Approve the contract and give authority to proceed to the award of


contract stage, or reject the contract pending further amendments or
clarifications.

Ensure that all discussions and decisions of the committee are reported
in the minutes of the meeting.

10.9.
Types of Contracts
There are various types of contracts and these are normally specified by a

district when preparing the tender document. Specification of the contract


type specifies the kind of contract that a district wants to enter into. The
types of contracts are:

Lump sum contracts: These are contracts of fixed amount whereby the
price covers the whole of the works, supplies and services, being the
subject of the contract;

Schedule of rates contracts: These are contracts in which works,


supplies and services are broken down on the basis of bill of quantities
but the proposed unit price is indicated;

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Contracts with special features: These includes cost reimbursement


type contracts in which the contractor is paid the actual cost of the
work plus a fee

10.10. Types of Contract Agreements for the Employment of


Consultants
The type of contract must be selected when preparing the Request for

Proposals and included as a draft with all contract terms and conditions in
the RFP.
10.10.1.
Lump Sum (Fixed Price) Contracts
Lump sum contracts are used mainly for assignments in which the following

are both clearly defined:

the content and the duration of the services; and

the required output of the consultants.

Lump sum contracts are widely used for simple planning and feasibility
studies, environmental studies, detailed design of standard or common
structures, preparation of data processing systems, etc. Payments are linked
to defined outputs (deliverables), such as reports, drawings, bills of
quantities, bidding documents, and software programs. Lump sum contracts
are simple to administer because payments are due on attainment of clearly
specified outputs.
10.10.2.
Time-Based Contract
This type of contract is widely used for complex studies, supervision of

construction, technical advisory services, and training assignments. It may


also be appropriate when:

it is difficult to define the full scope of services, or the input of the


consultants required to attain the objectives of the assignment;

the length of services can be precisely defined and deliverables are


only incidental to the main purpose of the assignment;

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the services are related to activities by others for which the completion
period may vary.

Payments are based on:

Remuneration: Agreed hourly, daily, weekly, or monthly rates for staff;

Reimbursables: Reimbursable items using actual expenses and/or


agreed unit prices.

The rates for staff remuneration include salary, social costs, overhead, fee
(or profit), and, where appropriate, special allowances. This type of contract
must include a maximum amount of total payments (the contract ceiling) to
be made to the consultants. The contract ceiling usually includes a
contingency allowance for unforeseen work and duration, and provision for
price adjustments, where appropriate.
Time-based contracts need to be closely monitored and administered by the
District to ensure that the assignment is progressing satisfactorily, and
payments claimed by the consultants are appropriate.
10.10.3.
Retainer and/or Contingency (Success) Fee Contract
Retainer and contingency fee contracts are frequently used when consultants

(banks or financial firms) are undertaking specialist financial activities such


as preparing companies for sale, in mergers of firms, or in privatization
operations. The remuneration of the Consultant includes a retainer and a
success fee, the latter being normally expressed as a percentage of the sale
price of the assets.
10.10.4.
Percentage Contract
These contracts are commonly used for architectural services but may be

also used in similar circumstances such as for procurement and inspection


agents. Percentage contracts directly relate the fees paid to the Consultant
to the estimated or actual project construction cost, or the cost of the goods
procured or inspected.
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Contracts are negotiated on the basis of market standards for the services
and/or estimated staff-month costs for the services, or competitively bid. In
the case of architectural or engineering services, percentage contracts lack
any incentive for economic design or performance. The use of a percentage
contract format for architectural services is only recommended if based on a
fixed target cost and covers precisely defined services.
10.10.5.
Indefinite Delivery Contract (Price Agreement).
These contracts are used when there is a need for on call specialised

services to provide advice or services, the extent and timing of which cannot
be defined in advance. These are commonly used to retain advisers for
implementation

of

complex

projects

expert

adjudicators

for

dispute

resolution panels, institutional reforms, procurement advice, technical


troubleshooting, etc. normally for a period of a year or more. The district and
the firm agree on the unit rates to be paid, and payments are made on the
basis of the time and resources actually used.
10.11. Awarding Contracts and Notification to Bidders
Following the approval of the contract by the tender committee, the

Procurement Unit will:

Finalise the contract and produce copies for signature.

Prepare and send a formal notice of award to the winning bidder by


hand or by registered letter, requesting the bidders attendance to sign
the contract. At the same time inform all unsuccessful bidders that
their bids were not successful and encourage them to participate in
future bids. The notification letters (to successful and unsuccessful
bidders) are signed by the Executive Secretary.

If the bidder refuses to attend for signature of the contract as


requested, the procurement unit should refer to the tender committee
for a decision on award to the next ranked bidder.

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Check that the contract is correctly signed by both the supplier or


contractor and the authorised signatory for the district and that each
page of the contract is initialed by representatives of both parties to
the contract.

Ensure that the contract is duly recorded in the contracts register


maintained by the Procurement Unit.

For purposes of transparency and accountability the results of a Tender Committee


award should be published in at least two newspapers of wide circulation as

well as placed on notice boards at the district headquarters and other public
places. Also, the procurement officer should notify the MOILG and the Auditor
General of contract awards and copies of signed contracts should be availed
to these institutions.

Please refer to Forms C.1, C.2 and C.3, in your set of Somaliland District
Bidding Documents.
11.
11.2.
Local Purchase Orders
In case of very low value and low risk items, once the supplier has been

selected, the Procurement Officer raises the Local Purchase Order (LPO). A
Local Purchase Order which is sent to the supplier is suitable for accepting
offers where the requirement is straightforward. Any special conditions
agreed upon should be referred to on the purchase order. In cases where the
purchase is complex, a specially drafted contract should be put in place and
should be signed by the officers authorized to sign contracts on behalf of the
district.

A local purchase order must be prepared in five copies and

distributed as follows:

Original and duplicate copies are sent to the supplier

Triplicate copy is forwarded to accounts section;

Quadruplicate copy is sent to the stores/receiving section;

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Quintriplicate copy remains at the procurement unit as file copy.

Local Purchase Orders are raised in the names of the supplier based on the
tender award by the Tender Committee and they should indicate the date,
time and place of delivery of the goods. In all cases, the Tender Committee
minutes is quoted as reference to source of authority.

^ Activity 2.8: Sandy Desert District Council Contract


A contract is an important legal document and therefore attention to detail is
essential when preparing and signing contracts on behalf of the district.
This activity is designed to familiarise you with the content of a typical
contract for a district project. Your task will be to examine an example
contract document and check to make sure that it has been filled in correctly.

You will need to refer to the example contract provided in Activity


Sheet 11 at the end of your Participant Book for this activity.

Note that these forms are also provided in your Somaliland District

Bidding Documents for future reference:


Form C1 Form of Agreement
Form C2 Conditions of Particular Application
Form C3 Statement of Works
In groups of 4, study the example contract and payment schedule in
Activity Sheet 11 and answer the following questions:
1. Has the contract number been completed correctly? Y/N (If no, explain the
error)
..

..

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2. Has the correct person from the District signed the contract? Y/N (If no,
explain the error)
(Note: you may need to refer to the table of roles and responsibilities given
in 3.8 Roles and Responsibilities, in order to answer this question)
..

..

3. Are the progress payments correctly calculated? Y/N (If no, explain the
error)

..
..

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MODULE Unit THREE: CONTRACT MANAGEMENT


12.

INTRODUCTION TO MODULE Unit THREE

This is the last module Unit in this course. It deals with the day-to-day
management issues required to make contract performance a success.
Contracts have to be supervised and monitored to ensure that the
supplier/contractor performs according to the contract and that the
contractual obligations are met. Ineffective supervision and monitoring of
contracts may lead to serious losses to the local government.
12.2.

Aim of Module Unit Three

The aim of this module unit is to enhance contract management and


administration in local governments.
12.3.

Objectives of Module Unit Three

By the end of this moduleunit, the participants will be able to:

Monitor and supervise projects;

Produce supervision and monitoring reports;

Understand and explain Ethical and Integrity issues in procurement.

2.10.

Duration

The module is divided into two sessions and it is expected to be completed in


one day.

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13. SESSION 1:
CONTRACT MANAGEMENT
Suggestion: there is a lot of content to be covered in this session. Perhaps for future
versions of this training we could divide it up into 2 or 3 separate sessions, for
example, 1. Contract Administration and Supervision, 2. Reporting and Payments.
13.2.

Session Objectives

By the end of the session the participants will be able to:

Understand and explain contract supervision;

Understand and explain contract monitoring;

Explain the key requirements in making payments to contractors.

13.3.

Introduction

Effective management of contracts is essential to ensure that the objectives


of the procurement process are achieved and that all contractual obligations
and activities are completed efficiently by both parties to the contract. The
Procurement Unit must ensure that routine monitoring of all current contracts
is maintained so that swift remedial measures can be taken when problems
arise, or preventative action taken when problems are foreseen.
There are many post-contract issues that need to be dealt with, monitored
and resolved before the contract reaches its conclusion including:

Contract effectiveness;

Delivery and inspections of goods;

Payments to the consultant, supplier or contractor;

Performance monitoring for services and works;

Contractual disputes;

Delays in performance;

Claims for damages;

Initial and final takeover of construction works;

Installation and commissioning of equipment;

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Acceptance of deliverables;

Contract closure.

13.4.

Contract Effectiveness

The procurement contract enters into force when the contract is signed by the
supplier, service provider or contractor and by the district. Where the bidding
documents stipulate that the procurement or disposal contract is subject to
approval by a higher authority or a financing agency, the procurement contract
shall not enter into force before the approval is given.
13.5.

Contract supervision and administration - goods

Contract supervision and administration for goods will be the primary


responsibility of the Procurement Unit. Supervision and administration is
straightforward in most procurement of goods however monitoring delivery
schedules, processing of documents and the inspection of goods are essential to
ensure that the correct goods are delivered on time. The Procurement Officer
will:

Monitor the delivery schedules of all purchases to ensure that they are
dispatched, delivered or collected on time.

Receive reports on pre-shipment inspection of goods and contact the


supplier in writing requesting rectification of any discrepancies or
deficiencies.

Contact the supplier to identify the causes of any delay in delivery;

Initiate and supervise any process for claims against the supplier.

Report to the tender committee any failure by the supplier in his


contractual obligations.

The inspection and receiving committee will co-ordinate the receipt and
inspection of goods and prepare acceptance report.

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13.5.1.

Delivery and Inspection of Goods

On delivery by a supplier, the Inspection and Receiving committee will receive


the goods and examine the good to ensure that the goods delivered are as
specified in the order/contract i.e. the Inspection and Receiving Committee will:

Examine the documentation and packaging for compliance with the


contract.

Examine and analyse the goods for conformity with the contract
specifications and/or the samples provided.

Reject all goods that are damaged or do not conform with the required
specifications or samples.

Prepare an inspection report recording the delivery, and descriptions,


specifications and quantities of the goods examined, and the reasons
for accepting or rejecting the goods.
13.5.2.

Payment for Goods

For simple payments against invoices, the Procurement Officer will certify the
invoice submitted by the supplier for payment. The Procurement Officer has to
ensure that any advance payments already made and any contractual penalties
incurred by the supplier have been taken into consideration in arriving at the
amount payable to the supplier. The Procurement Officer should check the
invoice to ensure that it is fully supported i.e. the following have been attached:

The shipping documents or airway bill, or a delivery note;

Original of the Inspection Report;

Original Goods Receipt Note;

Calculation of any penalties for rejected goods not removed by the


Supplier and liquidated damages if allowable under the contract;

Copies of relevant information from the contract document, records of


approval and financial authorisations.

The procurement unit will then forward the documents to accounts for
preparation of payment voucher. When the payment voucher is ready, the
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Procurement Officer will use the details to update the contracts register with
details of payments. On expiry of any guarantee period the Procurement Officer
shall release the retention balance to the supplier.
13.6.

Contract Supervision and Administration - Works

Contract supervision and administration of works contracts is often complex due


to factors which could not be foreseen at the start of the work. The use of
Technical Supervisor or Project Managers also means that daily control and
supervision of the contract is not practical for the district. Districts must
therefore ensure that they are kept informed of progress and problems which
arise through routine implementation progress reports.
13.6.1.

Contract Supervision

Day to day supervision of a works contract is carried out by the Technical


Supervisor (usually the District Engineer) or Project Manager who acts for the
district to supervise and administer the contract. For large contracts this may
involve a team of engineers, inspectors, quantity surveyors etc. The technical
supervisor is appointed by the Executive Secretary. The process of contract

supervision starts immediately after the signing of the contract agreement


and ends with the issue of a certificate of performance and making of final
payments to the contractor. Contract supervision may require crosschecking
to actual progress/performance against contracted outputs in the bills of
quantities.
13.6.2.

Responsibilities of the Technical Supervisor

The responsibilities of the Technical Supervisor include to:

Discuss technical matters with the contractor and ensure that the
contractor understands the technical design and specification;

Inspect the works and advise the contractor and district management
if there is any deviation from the technical design and specification;

Help to solve problems that arise during implementation of the


contract;

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Prepare progress reports. These reports are needed when the contract
submits a claim for payment, for monitoring implementation progress
and when problems arise during implementation;

Issue certificate of payment detailing the quantity of work performed


by the contractor against each item in the priced BOQs and the
valuation of work completed.

If any part of work is not done to the satisfaction of the Technical Supervisor,
he may instruct the contractor to rectify the shortcomings.
13.6.3.

Payment for Works

Payment for works contracts will normally be made against payment


certificates approved by the technical supervisor and completion reports of
the inspection and acceptance committee. For all works contracts, materials
delivered to the site but not yet used will be excluded from the measurement
approved and the value of payment certificates.
The Technical Supervisor will ensure that:

any required retention specified under the contract is deducted from


the value of the certificate before payment;

agreed deductions in respect of the repayment schedule for any


advance payment are deducted from the value of the certificate before
payment;

on issue of an interim takeover certificate by the Inspection and


Acceptance Committee, part of any retention monies held may be paid
to the contractor if specified in the contract;

on issue of a final takeover certificate by the Inspection and


Acceptance Committee, the balance of any retention monies is paid to
the contractor.

Retention monies are due on expiration of the defects liability


period, after it has been confirmed that there were no defects arising
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13.6.4.

Claims by contractor

Claims by Contractors for additional work or costs which are not covered
under the terms of the existing contract and total contract value, must be
referred to the tender committee for approval. Claims for extension of time,
with or without additional costs, or for additional payment to the contractor
must be resolved quickly, subject to the approval of the tender committee.
13.7.

Contract Supervision and Administration - Services

Contract supervision and administration for simple routine services such as


office cleaning, provision of transport or contract maintenance, will be
undertaken by the

User Department and the Procurement

Unit as

appropriate.
For consultancy services, the contract will usually nominate a Project
Manager to coordinate supervision and administration. The contract may
specify payments on the basis of inputs (time), deliverables, retainers, unit
rates or commission fees, and administrative and supervision activities must
therefore be based on the specific terms of each contract.
The Procurement Unit (or Project Manager) will:

Monitor the activity and performance in accordance with the contract


to ensure that levels of service are maintained and that deliverables
are submitted or completed on time. For consultancy services, the
contract may specify key reports to be submitted, or timesheets and
routine reports to be submitted on a monthly or quarterly basis.

Ensure that all contractual obligations of the District are performed


promptly and efficiently.

Ensure that all deliverables (and especially reports) are reviewed


immediately and responded to in writing where necessary.

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Contact the service provider to identify the causes of any failings in


performance or failure to meet targets.

Issue a formal letter to the service provider detailing the complaint if


the explanation given is unsatisfactory or if performance is not
improved within a reasonable period of time.

Report to the tender committee any continued breach by the service


provider of his contractual obligations.
13.7.1.

Payment for Services

Payment for service contracts will be made according to the specific terms of
each contract against invoiced claims by the service provider. The
Procurement Unit (or Project Manager) will ensure that:

the invoice claim is justified by the evidence of timesheets, submission


and acceptance of deliverables, or other criteria as specified in the
contract;

agreed deductions in respect of the repayment schedule for any


advance payment are deducted from the value of the invoice before
payment;

any retention sum specified in the contract is deducted from the value
of the invoice before payment.
13.7.2.

Timing of Payments

The district has a responsibility to make payments promptly in accordance


with the contract. Payment delays not only create a bad impression of the
district, but are also ultimately passed on to district in higher prices as
suppliers build in the cost of payment delays in their prices. The periods in
which payments have to be made, and the penalties for delayed payment
will be those specified in the signed contract. The Procurement Officer or
Project Manager must ensure that:

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the payment terms and penalties specified in the contract are known
to all managers and staff involved in the processing of payments;

all invoices and certificates which are not in dispute are paid within the
agreed payment period.

13.8.

Contract Performance

? How should the district engineer/project manager, councilors and local


communities ensure that the contractor delivers the agreed outputs?
13.8.1.
Monitoring Consultant, Supplier or Contractors
Obligations

The consultant, supplier or contractors performance against the contract


must be monitored on a routine basis. The Procurement Unit or Project
Manager will:

Notify the supplier or contractor immediately in writing of any failings


in performance and seek an agreed solution. In the case of a
consultant this takes the form of comments on consultancy reports

Update the contract file regularly to reflect the monitoring of


performance;

Ensure that the Executive Secretary is informed of any serious failings


in performance.
13.8.2.

Monitoring and Performing the Districts Obligations

The contract may impose certain conditions on the district which, if not
complied with, may affect the supplier or contractors performance including:

Payment of stage payments within the contracted time limits;

Approval of drawings or reports within the set time periods;

Provision of storage or working facilities and access permits;

Conditions relating to the suppliers provision of staff services (e.g.


letters of invitation for visas, provision of office space, etc.).

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The Procurement Officer/Project Manager must ensure that all such
obligations of the district are planned and performed without undue delay.
13.8.3.

Delays in Performance

Delivery of goods, construction of works and the performance of services


should be completed by the supplier or contractor in accordance with the
time schedule prescribed in the schedule of requirements. Where this is not
the case:

In accordance with the contract conditions, the supplier, contractor, or


its subcontractor, must notify the district in writing of the conditions
delaying performance, including full details of the delay, the likely
duration and the cause(s).

The district will immediately assess the situation, and may at its
discretion extend the supplier or contractor's time for performance,
with or without liquidated damages as specified in the contract.

If the time for performance is extended, both parties shall ratify such
extension by a formal addendum to the contract subject to approval by
the tender committee.

A delay by the supplier or contractor in the performance of his obligations


may render him liable to liquidated damages if specified in the contract
document, except where:

the delay is as a result of Force Majeure;

there is no provision for liquidated damages in the contract;

an extension of time is agreed between the two parties without the


application of liquidated damages.

The Procurement Unit or Project Manager will:

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Refer to the relevant clauses in the General or Special Conditions of


Contract for the procedure to be followed to apply, calculate and claim
liquidated damages.

Update the procurement file and contract register to reflect any delays
in the suppliers performance.

Notify the end-user department immediately of all such delays.


13.8.4.

Resolution of Disputes

What are the possible sources of conflicts during the procurement


contract management process?
What should be considered in developing a conflict resolution
mechanism that is expeditiousquick, fair, transparent and simple?
Most minor disputes may be resolved by sensible discussion and agreement
between the responsible officer and the supplier or contractor to rectify the
cause of complaint. Any formal written complaints received from a supplier
or contractor should be fully investigated and referred to the Executive
Secretary to authorise correspondence or formal negotiations with the
supplier or contractor.
When handling disputes the project manager/procurement officer should:

Examine the contract carefully to be aware of all contract conditions


relating to the resolution of disputes.

Determine if the district is at fault or partly at fault, and if so, take


appropriate action to rectify the problem.

Invite the supplier or contractor to a formal meeting to discuss the


issues and try to agree a compromise acceptable to both parties.
Ensure that accurate written minutes are kept of any such meeting. If
an agreement is reached which changes any of the conditions of the
contract, approval of the tender committee or the Executive Secretary
is required before the agreement can be implemented.

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If no initial agreement is reached and negotiations conducted by the


Executive Secretary also fail, consider the use of arbitration services as
specified in the contract.

Prepare any necessary addendum to the contract for signature.


13.8.5.

Termination of the Contract

The parties to the contract normally have the right to terminate the contract,
but to protect the district, advice of the Legal Officer and the MOILG should
always be sought if the district is considering such action. For donor funded
procurements, donor no objection must be sought before any action to
terminate a contract is initiated. Contracts should not normally be
terminated

without

examining

all

possible

alternatives,

unless

the

termination is agreed by all parties to the contract.


13.8.6.

Contract Amendment

Contract amendment may become necessary as a result of the application of


price variations specified in the contract, the resolution of disputes,
additional or reduced requirements by the district, agreements to extend the
time schedule, or from accepted increases or decreases in prices. The
contract may allow the district to modify contract values by a pre-determined
percentage when this is in the public interest and essential for the work of
the district.
All other amendments to costs, quantities, time-periods and other terms and
conditions of the contract must be approved by the Tender Committee and
confirmed in a formal contract amendment or addendum.
The Procurement Unit/Project Manager will:

identify and agree with the supplier or contractor the specific clauses
in the contract which need to be changed, and the new values or terms
and conditions which are to apply;

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prepare a draft contract amendment document for approval by the


Tender Committee together with a report justifying the reasons for the
amendment;

following approval by the Tender Committee:


record any other contractual changes in the Contract Register;
arrange for signature of the contract amendment; and

distribute copies in the same way as the original contract.

13.9.

Procurement Reporting

The routine reporting of procurement activity by all districts is essential for


procurement planning and budgeting, and for the monitoring, tracking and
evaluation of procurement. Districts are required to report quarterly to the
MOILG on all procurement activities undertaken. The quarterly report of
procurement shall be submitted to the district council prior to submission to
the MOILG.
13.10. Procurement Monitoring and Evaluation

Procurement monitoring and evaluation is a process that must be routinely


conducted both by districts and by the MOILG to:

ensure that procurements are within the annual procurement plan;

identify weaknesses and delays in the procurement process;

compare prices against market standards;

assess performance of Procurement Units and Committees;

assess performance of suppliers, contractors and consultants;

assess compliance by the districts to these guidelines; and

identify any necessary remedial action.


13.10.1.

Sources of Information

Procurement monitoring and evaluation information is obtained from:

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Requests for deviation from procurement procedures submitted by


districts;

Monthly Reports of Procurement;

Regular meetings with stakeholders (including representatives of the


private sector);

Reports of the Auditor General and the Internal Auditor of the district;

Reports of specialist external procurement audits;

Bidder and supplier complaints;

Complaints by bidders referred to the MOILG;

Examination of the procurement file for any procurement which


appears to deviate from compliance with the guidelines.
13.10.2.

Action by the MOILG

The basis of the monitoring system is the Quarterly Report. On receipt of the
report from a district, the MOILG will:

Check that procurement activity recorded is within the authority levels


of the tender committee and in accord with the annual procurement
plan;

Check that any new procurement processes commenced are within the
procurement plan for the district;

Identify any procurement decision which appears to deviate from


compliance with the guidelines, and query this with the tender
committee/Unit;

Inspect or call for the procurement file where serious breaches of the
guidelines or Code of Ethics are suspected.

The MOILG will use this information to:

provide districts with summary reports on procurement activity;

compile the statistical analysis of procurement activity for the Annual


Report of the MOILG;

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identify the scale and values of common user items that may benefit
from the introduction of framework contracts;

identify regular procurements of identical items by a district which may


indicate that requirements have been split to avoid an approval
threshold or a procurement procedure; and

determine the individual and average timescales for procurement


processes.
13.10.3.
Other Monitoring and Evaluation Activities by the
MOILG

The MOILG will carry out the following activities:

Conduct regular meetings with stakeholders (including representatives


of the Private Sector) to report on procurement issues and initiatives,
and to initiate investigation of complaints and proposals from
stakeholders.

Undertake periodic reviews of the procurement performance of districts


and re-certify their authority for decentralised procurement, and/or
advise on specific issues which need to be addressed.

Review and initiate remedial action as appropriate in response to audit


reports of the Auditor General, the Internal Audit Department of the
district, and any specialist external procurement auditors.

Review and initial remedial action as appropriate in respect of bidder


and supplier complaints.

Undertake a programme of routine sampling of procurement files for


individual procurements and report findings and recommendations to
the district.

Review procurement procedures, systems, guidelines and standard


documentation

on

routine

basis,

and

make

or

introduce

recommendations for improvement.

Compile all findings and action into the annual report of the MOILG.

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13.10.4.

Action by the District

The tender committee has the general responsibility to monitor procurement


activity and remedy any defects before giving approval for procurement actions.
The advice of the MOILG should always be sought if the tender committee is unsure
of compliance with the guidelines. The Executive Secretary will ensure that all
issues raised by the MOILG are actioned expeditiously by the district through the
tender committee and Procurement Unit, and that complete records of procurement
are made available for audit purposes and for inspection by the MOILG.

^ Activity 3.1: Dispute Resolution Role Play


This activity is designed to give you practice in resolving the kinds of
disputes that can arise during the contract management phase of district
projects.
Share your ideas and experience in a brainstorm discussion:
What are the possible sources of conflicts during the contract
management process?
What should be considered in developing a conflict resolution
mechanism that is quick, fair, transparent and simple?
1. Your trainer will lead you in this activity, which involves working in groups
to develop a brief scenario of a dispute that could arise during the contract
management phase of a project.
2. You may be able to draw on past experience to help you develop a
scenario. Try to include as much relevant information about the
circumstances as possible.
3. Your trainer will ask each group to briefly present their scenario. Then 1
scenario will be chosen as the basis for a dispute resolution role play
between a contractor, a project manager and an Executive Secretary.
4. We will assume that initial discussions between the contractor and Project
Manager have failed. The Executive Secretary has been brought in to try and
bring about a resolution.

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5. The contractor presents his side of the story, followed by the Project
Manager.
6. The Executive Secretary makes a decision on who is correct in the
scenario.
! Note: it may be helpful to refer to Form C.2 Conditions of Particular
Application in your set of Somaliland District Bidding Documents to assist
with resolving the dispute.
7. The decision should then be presented to the whole group along with
reasons why.

Questions for Discussion:


Discuss these questions as a whole group:

What did you think of the decision of the Executive Secretary? Why?
Do you think both parties were happy with the outcome of the dispute
resolution? Why/Why not?
What alternative responses could the Executive Secretary have chosen
for this situation?

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Activity Sheets
Activity Sheet 1 Procurement Principles Scenarios
Activity Sheet 2 Taking your ethical temperature
Activity Sheet 3 Procurement Plan
Activity

Sheet

Checklist

for

List

of

Approved

Suppliers/Contractors
Activity Sheet 5 Invitation to Bid
Activity Sheet 6 Technical Specifications
Activity Sheet 7 Bid Opening
Activity Sheet 8 Eligibility to Bid Form
Activity Sheet 9 Bosaso District Role Play
Activity Sheet 10 Baran District Role Play
Activity Sheet 11 Sandy Desert District Contract

3. SESSION 2:
3.1.

ETHICAL AND INTEGRITY ISSUES IN PROCUREMENT

Session Objectives

By the end of the session, the participants should be able to:

Define ethics and integrity;

Explain the importance of ethics in public procurement;

Perform procurement activities transparently;

Understand the ethical code of conduct;

Identify the major forms, reasons and measures for preventing


corruption in the procurement system.

3.2.

Definitions and Purpose

WHAT IS ETHICS?

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Most people tend to define ethics as being primarily concerned
with issues such as bribes and confidentiality. However, ethics is
concerned with values which is a general term relating to those
things which people regard as good, bad, right, desirable or
justifiable.
In summary, ethics is concerned with the moral principles and
values which govern our beliefs, actions and decisions.

Ethical principles require all those involved in procurement to perform their duties
with integrity.

WHAT

IS

INTEGRITY?
The quality of being honest and having strong moral principles.
Not corrupt or biased.

The purpose of ethics in LGA procurements is to ensure that decisions are neither
tainted nor appear to be tainted by any question of conflict of interest. Procurement
should be based on objective criteria.

3.3.

Transparency and Integrity

Employees dealing with procurement and members of the tender committee of the
district are required to be honest in all their dealing with suppliers, contractors and
members of public and must conduct procurement proceedings in such a manner
that district is respected and trusted as a client or customer. In order to ensure
transparency and therefore accountability, a district should maintain adequate
written records of all procurement proceedings. Such records should be open to
inspection by members of the public at such time and under such arrangements as
may be sanctioned by the Executive Secretary.
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3.4.

Procurement Ethics

Public Officers are required to sign a Code of Ethical Conduct. In addition, all
suppliers, contractors or consultants are required to sign a declaration of
compliance with those Codes of Conduct. The main ethical principles are:

An employee or member of the tender committee should not use


his/her authority or office for personal gain;

Honesty

among

district

staff,

tender

committee

members

and

suppliers/contractors should be paramount and a pre-requisite;

Employees of a district and tender committee members shall reveal


any personal interest that may impinge on their dealings in the
procurement process;

Information gained in regard of procurement work has to be treated as


confidential and not used for personal gain;

Employees of a district and tender committee members shall avoid any


business arrangement that might prevent the effective operation of fair
competition;

Business gifts should not be accepted from current or potential


suppliers and contractors of the district;

Employees of a district and tender committee members should refrain


from any business hospitality (e.g. dinners) that may be viewed by
others as having an influence in decision-making.

To enhance the ethical conduct and transparency of staff and tender committee
members and employees of the district should not be suppliers/contractors of

the district either directly or indirectly.


3.5.

Examples of Unethical Conduct

? What do you consider unethical behavior by councilors or staff in relation


to procurement?
The following are examples of the types of conduct that are unethical:
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Revealing confidential or inside information either directly or


indirectly to any bidder or prospective bidder;

Discussing a procurement with any bidder or prospective bidder


outside the official rules and procedures for conducting procurements;

Favouring or discriminating against any bidder or prospective bidder in


the drafting of technical specifications or standards or the evaluation of
bids;

Destroying, damaging, hiding, removing, or improperly changing any


official procurement document;

Accepting or requesting money, travel, meals, entertainment, gifts,


favours, discounts or anything of material value from bidders or
prospective bidders;

Discussing

or

accepting

future

employment

with

bidder

or

prospective bidder;

Requesting

any

other

public

servant

or

government

official

representing the district in a procurement to violate the public


procurement rules or procedures;

Ignoring evidence that the Code of Ethics has been violated by a


member of the Tender committee, public servant or other employee or
representative of the district;

Ignoring illegal or unethical activity by bidders or prospective bidders,


including any offer of personal inducements or rewards.

3.6.

Corruption

This is the use of public power for private gain.

It can be in the form of

embezzlement, nepotism, over-invoicing, claiming payments for no goods/services


supplied and taking bribes, bid rigging, split purchasing and the like. It is mainly
caused by weak controls, bureaucracy and personal greed.
The effects of corruption are that it:

Impairs economic development;

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Leads to economic waste, inefficiency and reduction in productivity;

Generates administrative inefficiency and ineffectiveness;

Promotes nepotism;

Frustrates competent and honest suppliers/contractors.

To deter corruption in procurement it is necessary to:

Perform internal audit to monitor the process;

Institute checks in the various stages of the procurement cycle;

Require strict observance of procurement regulations;

Disqualify bidders who engage in any form of canvassing;

Penalise all those found guilty, blacklisting errant suppliers, and to sanction
staff and tender committee members by disciplinary action.

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Activity Sheet 1 Procurement Principles Scenarios
Scenario 1
Success District advertised a tender nationally to build a water harvesting system.
There was a lot of interest from contractors, because it was a big project worth a lot
of money. The Mayor asked the Senior Works Officer to provide one particular
contractor with information about the estimated price for the contract, to help him
prepare his bid. The Mayor said that this contractor was based in the district, so he
deserved to get more help than contractors from other districts. The Senior Works
Officer said that this was unfair and that all contractors should receive the same
information about a contract.
Questions:
1. Who is correct the Mayor or the Senior Works Officer? Why?
2. Which procurement principle do you think this scenario relates to? Why?

Scenario 2
A tendering process was being initiated for a construction project. The Executive
Secretary suggested using the National Competitive Bidding process, to get as
much competition as possible and therefore a better price for the contract.
However, the Senior Works Officer said that the National Competitive Bidding
process created too much work for him, so it was easier to initiate a direct
contracting process.
Questions:
1. Who is correct The Executive Secretary or the Senior Works Officer? Why?
2. Which procurement principle do you think this scenario relates to? Why?

Scenario 3
A district put out a tender for the supply of some school furniture. One supplier
(Lucky Sky Enterprises) submitted a bid which was lower than the estimated price
and the materials were very good quality. Another supplier (Blue Sea Contractors)
submitted a bid which was higher and the materials were not as good quality. The
Tender Evaluation Committee was divided about who should be awarded the tender.
Some members said that Lucky Sky was the best value for money for the district.
But other members said that Blue Sea were influential people in the district, so it
would be better to award the contract to them.
Questions:
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1. Who should get the contract Lucky Sky or Blue Sea? Why?
2. Which procurement principle do you think this scenario relates to? Why?

Scenario 4
A Restricted Bidding process was conducted in Sandy District for rehabilitation
work on a school. The Tender Evaluation Committee had already conducted this
tendering processes many times already, so the members decided to make a
recommendation without recording the process in its Tender Evaluation Report.
When asked about this, the committee members said that because everybody
knows the tendering process so well, there was no need to write down everything
that happened. The Executive Secretary told the Tender Evaluation Committee that
everything relating to the procurement process must be recorded so that the
District Council can clearly show the rest of the community that procurement
decisions are made in an honest and open way.
Questions:
1. Who is correct The Tender Evaluation Committee or the Executive Secretary?
Why?
2. Which procurement principle do you think this scenario relates to? Why?

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Activity Sheet 2 Taking your ethical temperature
For each statement, mark with an X where you feel your views are on the
continuum.
Strongly
Strongly
Disagree
Agree
1. The only way to get things done
is to bend the rules from time to
time.
Strongly
Disagree

Strongly
Agree

Strongly
3. It is very hard to make a decent
Disagree
living without accepting gifts and
favours on the side.

Strongly
Agree

4. Everyone engages in unethical Strongly


conduct from time to time, so why Disagree
shouldnt I?

Strongly
Agree

Strongly
Disagree

Strongly
Agree

2. Giving and taking bribes is just


part of the system. Its how things
work.

5. I will be unpopular with my


colleagues if I try to take a stand
against unethical behavior.

6. It is ok to be ethical when you


live in a wealthy country, but when
you are poor, ethics are a luxury.

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Strongly
Disagree

Strongly
Agree

DRAFT

Participant Handbook: Local Government Procurement

Activity Sheet 3 Procurement Plan


PROCUREMENT PLAN FOR GOODS, WORKS AND NON-CONSULTANCY SERVICES
. District

. Financial Year
Pre-Qualification

Description /
Code

Tende
r No.

Basic Data
Est.
Proc.
Amount
Metho
Sshs.
d2

Document

Invitation

Evaluation

Prep
arati
on

Date
of
invit
ation

Submissi
on of
report

Approv
by
Tender
Comm

Closi
ng
Date

Bidding
Bid Doc
Prepared
Approv
by
Tender
Comm

Tender
Committ
Approval

Adver
t

Bid
Open

Evaluation
report
Submission

Tender
committ
appr/
contract
award

Date of
contract
sign.

Contract
amount
Sshs

Delivery/
Impleme
ntation

Plan
vs.
Act.

Plan
Actual
Plan
Actual
Plan
Actual
Plan
Actual
Plan
Actual

Procurement method could be any of the following; national competitive tendering, international competitive tendering,, selective
tendering,, competitive quotation, single source, direct procurement, minor value, and force accounts.

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DRAFT
Activity

Sheet

Checklist

for

List

of

Approved

Suppliers/Contractors
Checklist

YES

NO

If NO, what are some ways we can


improve our current practice?

a) Has our district ever


generated a list of
approved suppliers/
contractors for use in
district projects?

For example, who would be responsible for generating


such a list and where could we get the information from?

b) Does our district


have a clear set of
criteria that is used
to evaluate
suppliers/contractors
for inclusion on the
list?

For example, what are the expectations that we have of


any suppliers/contractors who work on projects in our
district and how would we monitor them?

c) Does our district


monitor and record
the performance of
suppliers/
contractors on
contracts awarded
and remove any who
do not perform
satisfactorily?

For example, who are the best people to monitor and


record performance on contracts and what help do they
need to undertake this task?

d) Does our district


share information
from its list with other
government
procuring entities?

For example, list some possible mechanisms for


information sharing with other districts.

e) Does our District


Tender Committee
keep a constant
review of our list of
approved suppliers/
contractors?

For example, we could ask the Tender Committee to


publish the updated list at regular intervals.

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DRAFT

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Activity Sheet 5 Technical Specifications

1. Can you fill in


Construction of Garbage Collection Point _ these
BoQ
dimensions?

Item
N0.

1.1
1.11

Description of works
Allow for clearing the site from any debris, trees, roots etc, filling
hollows and leveling, of an area 22m x 18m.

1.14
1.15

R.C C(1:2:4 mix) in ground beam


(0.4m x0.15m ), with
4N0. Y12 re-bars & R6 links @ 300 mm c/c.

1.13

1.16
1.17

Spec.

QTY

sqm

396

M3

77x 0.4 x 0.5.

15.4

M3

77x0.4x0.05

1.54

M3

77x0.4x0.6

18.48

M3

77*0.4*0.15

4.62

M3

7x8.8x0.5+22x0.15x19.2

56.14

M3

88x19.2x0.075

12.67

12.67

Substructure work

Excavation of found trench 0.4m x 0.5m depth.


Mass concrete in 50 mm thick blinding layer (1:4:8 mix)
under the foundation wall.
Rubble stone foundation wall in cement & sand mortar 1:4
( 0.6 m x 0.4m wide) min. 15cm above ground level.

1,12

Unit

150 mm thick stone hardcore filling well compacted and


levelled.
75mm thick murram or other approved backfill material, well
compacted and levelled.

SUB-TOTAL A

2.1

Superstructure works including conc. floor slab

2.11

Mass concrete (1:3:6 mix ) in conc. floor slab 75 mm thick.

M3

8.8x19.2x0.075

2.12

40cm thick rubble stone walling in cement & sand mortar 1;4 mix

M3

65x0.4x2

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SUB-TOTAL B

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DRAFT

3.1
3.11

Roof work
Roof with timber trusses covered with N0. 28 GCI sheets with two
coats anti- rust paint

M2

5x1.5

7.5

SUB-TOTAL C

2. What should be the


total cost of this item?
4.1
4.11
4.12

Plastering and other finishing


External & internal plastering, 12 mm thick, cement / sand
mix 1:5, with wood float finish.
40 mm thick 1;3 cement/sand floor screed including
100mmx12 mm thick cement skirting.

5.1

M2

65x2x2

260

M2

8.8x19.2x0.04

6.75

SUB-TOTAL D

Gates, Doors & Windows

5.11

Supply and fix doors (2.0m x 1.0 m) complete with frame, hinges &
locks and to include two coats of gloss paint.

Pcs

5.12

Supply and fix windows (1.2m x 1.0m) complete with burglar bars,
hinges, locks and to include two coats of paint.

..

SUB-TOTAL E

3. What unit should be


used here?
GRAND TOTAL = (A+B+C+D+E)

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DRAFT
Drawing Garbage Collection Point

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DRAFT

Activity Sheet 6 Invitation to Bid


..[date]

Reference:_........................................................................................................[Contract Name]
The District Council of ..has received funding from the United Nations
Joint Programme for Local Governance and Decentralised Service Delivery, and would like to
apply part of the funds for
.
The District Council of .therefore advertises for bids from eligible and
suitably qualified companies to provide the following services:

Bid Documents are available from .....District Council at


a cost of US $10 per set. An official receipt will be issued. Bidders must attach a copy of the
receipt issued to their bid.
The bid opens on (date), and closes at. (time) on
...........................(date)
All Bids shall be prepared in accordance with the Instructions to Bidders and other
documentation in the said documents.
All Bids must be submitted in three copies, and must be delivered to:
[Address and location]
at or before (time and date).
Bids will be opened immediately thereafter, in the presence of Bidders representatives who
choose to attend.
Bidders who require clarifications shall submit their queries in writing by email addressed to the
District Tender Committees email address and copied
to . latest by 12pm on the 3rd day after the date of invitation
to bid. The District Tender Committee will provide a written response and email it to all bidders
(who provided valid email addressees when purchasing Bid documents) at the same time by
12pm on the 7th day after the date of invitation to bid.

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DRAFT
Activity Sheet 7 Bid Opening

Received Bids
Name of District: .

Date: .././2009

Name of Project:Sandy District Primary School Classroom

Rehabilitation Project
Venue:..
NAME OF THE BIDDER

FINANCIAL OFFER ($)

ALLOCATED
NUMBER

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DRAFT
Activity Sheet 8 Bid Eligibility Form
FOR INTERNAL USE BY TENDER COMMITTEE)
Bidder Allocated Number:..
Contract Number:.
The Evaluation is based on evaluation of
(1) Eligibility to bid
(2) Technical evaluation
(3) Financial evaluation

1. Eligibility
Responsiveness
No

CRITERIA

DOCUMENT

YES/NO

Bid documents from source

Receipt
from
District Council

Legal Capacity to enter into Certificate


contract
registration

Bid signed

Signed Bid

Bid fully priced

(1) Priced BOQ

PASS/FAIL

of

(2) Signed form


of tender
(3) Filled
Appendix
Form
tender
5

in
to
of

Not to be subject to Any


official
suspension
by
any information
Government authority
OVERALL ELIGIBILITY (Pass or Fail)

NOTE. Only bidders who are deemed to be eligible to bid should be considered for the
Technical Evaluation.

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DRAFT
Information about the bid for Construction of Primary School Staff Quarters
in Friendly Village
This project involves the construction of a 2 bedroom staff quarters for the primary
school in Friendly Village. The contract number for this project is S/L / 12 / 01 / 24 /
11 / 006

One of the bidders for this project is Akber Construction, who was allocated a
Bidder number of 8. The owner of the company is Mr Mohamed Reliable,
who obtained the bidding documents from the Sandy Desert District Council
office and paid USD 10 for these documents. He has attached his receipt to
the bid to show that he obtained the documents properly.
Akber Construction is a well-known company with a good reputation. It has a
certificate of registration and the registration number was provided in the
bid, as part of the Qualification Information. The bid was signed by Mr
Reliable and it contained a priced Bill of Quantities, a signed Form of Tender
and a completed Appendix to Form of Tender.
Akber Construction is not subject to suspension by any government
authority, either now or in the past 10 years in which it has been operating.
Question: According to this information given above, is Akber
Constructions eligible to bid and therefore able to have a Technical
Evaluation?

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Activity Sheet 9 Bosaso District Role Play
ROLE PLAY:

BOSASO DISTRICT

The District Tender Committee recently received the evaluation report of a


Tender Evaluation Committee for a tender on the routine maintenance of a
50 km feeder road. The District Tender Committee is not wholly satisfied
with the recommendation of the Tender Evaluation Committee to award the
tender to Tawfiq Construction Company, a locally owned firm belonging to
a prominent businessman in the District. In particular the District Tender
Committee has identified the following key issues:
1. Tawfiq Construction Company was not the lowest bidder. The lowest bid
was from Exactline Construction Ltd, an International Construction Co,
but Tawfiq Construction Company has been carrying out this kind of work
for a long time within the District.
2. One of the unsuccessful bidders has alleged that Tawfiq was favoured
through giving bribes to the members of the evaluation committee.
3. It has also been alleged that Tawfiq produced shoddy work on an earlier
similar contract.
The District Tender Committee has decided to call the Tender Evaluation
Committee to answer the concerns of its members.
Roles for Group 1: District Tender Committee (5 members)
You are the members of the District Tender Committee. Elect a Chairman and
Secretary, and prepare yourself to quiz the Tender Evaluation Committee members
on your areas of concern. Quiz the Evaluation Committee members and then decide
on the award. All members of the Tender Committee must effectively participate.
Here are some example questions you might like to use:
Can you explain to us why you have awarded the contract to Tawfiq
Constructions, even though it is not the lowest bidder?
How do you respond to the allegation that Tawfiq has used bribery in order to
be favoured by your Committee?
Why has Tawfiq been recommended, given that it is known to have produced
shoddy work on an earlier similar contract?
After the Tender Evaluation Committee has responded to your questions, you need
to decide as a group whether to award the contract to Tawfiq Constructions or
Exactline Construction and give your reasons why.
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Roles for Group 2: Tender Evaluation Committee (5 members)


You are the Evaluation Committee members. Prepare yourself (with hypothetical
data and relevant responses) in 10 minutes. After this you will be quizzed by the
Tender Committee. Select a chairman to make the presentation to the Tender
Committee assisted by the participation of all other members of the committee.
Here are some suggested approaches:
You will need to explain why you are recommending Tawfiq Constructions
even though it was not the lowest bidder and has a reputation for shoddy
work.
You will need to respond to the allegations that committee members were
bribed in order to favour Tawfiq Construcstions.
Roles for Group 3: Observers (rest of the participants)
You are the observers and your role is to observe the discussion (role play) and
make comments about the performance of the various members in Groups 1 and 2.
Here are some things you might like to consider:
How convincing was the Tender Evaluation Committee about its reasons for
recommending the Tawfiq Construction Company?
Do you think any members of the Tender Evaluation Committee were not
truthful in their responses? Who and Why?
Do you agree with the final decision made by the District Tender Committee?
Why?/Why not?
You can use this space below to make some notes:

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DRAFT
Activity Sheet 10 Baran District Role Play

ROLE PLAY: BARAN DISTRICT


Baran District is a Local Government with a population of approximately
50,000 people. Currently, the district is in process of acquiring uniform and
protective clothing for staff (who include law enforcement officers, medical
workers, messengers, and other relevant staff).
The tender was advertised nationally on a competitive basis. The Tender
Evaluation Committee has already carried out bid evaluations and
recommended the award of the tender to Messrs Baran Designers and
Outfitters Ltd. as the lowest bidder with a price of Ssh 20,000 per uniform.
On receipt of the report of the Evaluation Committee, the District Tender
Committee members are in agreement with the report and are especially
happy since Baran Designers and Outfitters is owned by a local resident
within the district. However the members have some reservations as follows:

The price quotations per uniform appear to be on the high side


(irrespective of Baran Designers being the lowest bidder). A member
informs the Committee that the uniforms could be got at Sshs. 10,000
lower than the price quoted by Baran Designers for each uniform. She
informs the Committee that Baran Designers had actually supplied similar
uniform the previous month to the District and therefore there is no reason
to overcharge the district.

Baran Designers promises to deliver the consignment in four months time


from now. Although the bid documents did not put a limitation on the time
of delivery, the Committee members have been informed by the
management of the municipality about the sorry state of uniforms for
staff. An earlier delivery would therefore be welcome. The Tender
Committee agree that a quicker delivery is necessary.

After a long discussion, the Tender Committee decided that it will call in
representatives of Baran Designers and Outfitters for negotiation on the
above issues.

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Task for Group 1 District Tender Committee (5 members)


You are the Tender Committee members who are going to negotiate with
Baran Designers and Outfitters. Elect a chairperson and assign roles to the
other members. Decide on the key issues you are going to present to the
officials of Baran Designers (you must have your facts). You will then carry
out actual negotiations with the Baran Designers delegation.
This is what the Tender Committee would like to achieve from the negotiation:
Reduction of price by Ssh 10,000 per uniform
Delivery of uniforms in 45 days.
However, before the negotiations begin, the Tender Committee members
need to agree on what conditions they are prepared to accept in terms of
price and delivery time, in the case that their ideal outcomes cannot be met.

Task for Group 2 Baran Designer Delegation (5 members)


You are members of the Baran Designer delegation led consisting of the
Managing Director, Sales Director, Production Director, Finance Director, Cost
Accountant and other sales staff. These are the viewpoints of some of the
different members:
The cost accountant calculates that to make a reasonable profit you
need to stick to the bid price, but in case the Tender Committee refuses
you could reduce to Sshs. 15,000 per uniform piece, in which case you
would just break-even.
The Managing Director thinks you have to make some profit on the
deal.
The Production Director informs you that for a thorough job, 4 months is
the appropriate delivery time, but you could switch other staff to this
job and be able to deliver in 2 months and no less.
Elect a Managing Director and some other characters within the role play. You
are to present your case to the Tender Committee. Decide what to do in the
negotiation, after which you will carry out the actual negotiation.

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DRAFT

Tasks for Group 3: Observers


You are the observers of the negotiation role-play. Carefully observe the
negotiators, note the weak and strong points and get ready to comment on
the performance of the individuals at the end of the role-play.
Some points to consider include:
Which group achieved the best outcome, the District Tender Committee
or the Baran Designers?
Were both parties happy with the outcome of the negotiations?
Why?/Why not?
How well did each party conduct themselves during the negotiations?
You can make some notes here:

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DRAFT
Activity Sheet 11 Sandy Desert District Contract
Form C1

Agreement

This shows
the contract
is in
Somaliland.

Contract No:

This is the code for the


region, district and the
village where the project
will be.

S/L / 12 / 01 / 24 / 11 / 006
This shows the year and
the project number for
that year.

Sector - Circle The Correct Sector 1. Health 2. Education 3. Water and Sanitation 4.
Infrastructure (Roads, Bridges, Culverts). 5. Livestock 6. Agriculture 7. Environment
THIS AGREEMENT made this

19th

.. Day of . . . . . March. . . . . . . ..

2010...

Sandy Desert District ..herein


after referred to as the Employer on one part and Akber Construction
between the District Council of

Yardstick Rd, Unity Town, Sandy


District ,Success Region, Somaliland (address)
(name of company) of

(hereinafter referred to as the contractor) on the other part.


The District Council desires the execution of certain works known as:
Project NameConstruction of Primary School Staff Quarters in
Friendly Village
Location ..Friendly Village, Sandy District, Success Region,
Somaliland....
Description of WorksBuild a 2 bedroom dwelling to accommodate
teaching staff from the local primary school.

(hereinafter called "the Works") and has prepared Drawings, Specifications and Bill of
Quantities showing and describing the works to be done. These Drawings, Specifications and
Bill of Quantities have been signed by and on behalf of the Employer and the Contractor,

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OFFER:
The Contractor has offered a bid for the services for the amount of US Dollars

$50,000 (in figures), fifty thousand US Dollars.(in words)


as per attached Form of Tender and Appendix to the Form of Tender, to execute the works
shown upon the said Drawings and described in the Specifications and Bill of Quantities subject
to the Conditions of Contract annexed hereto.

NOW THEREFORE, IT IS AGREED as follows:1. The Employer agrees to pay the Contractor the sum of US $......$50,000........... (in
figures) ....................

fifty thousand US Dollars..................................................

(in words) (hereinafter called "the Contract Sum") or such other sum as shall become payable to
the Contractor in consideration of work performed at the given rates and at the time and manner
stated in the Conditions of Contract.
2. The following documents shall form part of this Agreement: This Form of Agreement;
The Letter of Acceptance;
Contractors Bid
Addenda to Bidding Documents;
Statement of Works
The Drawings;
Conditions of Contract:
Conditions of Particular Application, Part II,
General Conditions of Contract, Part I;
The Priced Bill of Quantities;
Qualification Information.

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All the above documents are hereinafter referred to as "the Contract". They shall be taken as
complementary and mutually explanatory of each other, however in the case of conflict or
inconsistency they shall take precedence in the order set out above.

3. In consideration of payment to be made by the Employer, the Contractor hereby agrees to


carry out the above-mentioned works in conformity, in all respects, with the provisions of the
Contract.
Signed :
For review: please confirm who can act as an Employers Witness and who can act as a
Contractors Witness?
..............

...........

Countmoney.................................
Signature of Employer's Witness

Name: ...

Trustworthy..................................
...
Signed on behalf of Employer
Name:.... Mr Ibrahim

Mr

Countmoney.........................
Designation:..Procurement
Officer, Sandy Desert
District .......

Trustworthy....
Designation:... Executive
Secretary, Sandy Desert
District........................

Palm Rd, Unity Town, Address:... Palm Rd, Unity Town,


Sandy District , Success
Sandy District , Success
Region,
Region, Somaliland .................
Somaliland................................
Address: ...

.............Busyman.................................

...........

Signature of Contractor's Witness

Reliable................................

Name: ...

Mr Busyman........................

Designation:..Foreman,

Constructions .......
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Akber

Mohamed

Signed on behalf of Contractor


Name:.... Mr Mohamed

Reliable....
Designation:... Contractor, Akber
Constructions........................

Participant Handbook: Local Government Procurement

DRAFT

Yardstick Rd, Unity


Town, Sandy District ,
Success Region,
Somaliland................................
Address:

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Yardstick Rd, Unity


Town, Sandy District ,
Success Region, Somaliland
Address:...

.................

Participant Handbook: Local Government Procurement

DRAFT

Not sure what information needs to go in this table below pls complete if possible
JPLG

OSR/Fiscal Transfer

Others

Payment Schedule:
The payment schedule is as follows:
First payment of US $.....20,000............... which is equivalent to 40% of the total contract
value due within 2 weeks of;

Signing of this Agreement

Second payment of US $ 20,000............ which is equivalent to 40% of the total


contract value due within 2 weeks of:

Progress Report on 50% Completion of the Project

Certificate of Payment

Third payment of US $.....10,000............ which is equivalent to 10% of the total contract


value due within 2 weeks of:

Practical Completion Report (100% Completion) of the Project

Certificate of Payment

Fourth (Final) payment of US $....10,000............. which is equivalent to 10% of the total


contract value due within 2 weeks of:

Final Completion Report (at expiry of defects period)

Certificate of Final Payment

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