Session Overview

• Definition of Procurement
• Green Procurement
• Corporate Social Responsibility
• Procurement Cycle
 Learning Objective
• By the end of this session, participants will be
able to evaluate procurement ,its process
and its basic concepts
 Public Procurement

Acquisition of goods, services or

construction of any works
financed wholly or partly out of
the public funds of enterprises
which are owned or controlled by
the Federal/Provincial
Government.;
 Nature of procurement

–Strategic procurement
–Non-strategic procurement
–Routine procurement
 Objectives
• Economy, efficiency, and quality of services.
• Giving equal opportunity to all eligible bidders to
compete in providing goods, works, and services
financed by the Bank.
• Encouraging domestic contracting and
manufacturing industry, and consultancy
services.
• Transparency in the selection process.

•
 Significance
• Efficient procurement is critical to:
– good project implementation
– attainment of project objectives
– sustainability of the project.
– Strengthening the capacity of Borrowers to
administer procurement in an effective and
transparent manner as a part of sound
governance and good project management.
 Significance (cont.)

• best returns for each rupee spent in terms

of quality, timelines, reliability, after sales
services, up-grade ability, price, source,
and the combination of whole-life cost and
quality to meet the procuring agency’s
requirements
 Misprocurement

• Public procurement in contravention

of any provision of PPRA Ordinance
2002, any rules, regulations, orders
or instructions made hereunder or
any other law in respect of ,or relating
to public procurement.
 Procuring Agency
i. any Ministry, Division, Department/ Office
ii. any authority, corporation, body or
organization established by or under a
Federal law or which is owned or controlled
by the Federal/Provincial Government.
 Works
• Any construction work
• assembly, repair, renovation or demolition of a
building or structure or part thereof, such as site
preparation ,excavation
• installation of equipment or materials and
decoration
• drilling ,mapping. satellite photography, seismic
investigations and similar activities
 Service
• Any object of procurement other than goods
or works.
 Main Differences between
Goods and Services
A Good is… A Service is…
•An object, a device, a thing •A deed, a performance, an effort

•Tangible: purchaser can •Intangible: has no physical

accurately describe its physical properties, therefore purchaser
properties before purchase cannot accurately describe the
service before purchase

•Produced by the manufacturer •Produced by seller and purchaser

jointly: the client participates with
the service provider in the joint
production of the service
 Main Differences between Goods
and Services (contd.)
A Good is…
•Composed entirely of physical objects.
Inputs by people during manufacture of
the good can be strictly controlled and
checked before sale of good to
purchaser
•Quality control is straightforward.
Manufactured goods can be checked
for conformance to predefined quality
standards before sale to purchaser
A Service is…
• People are part of the “product”.
Therefore, the quality of the service
depends largely on the quality of the
person delivering the service. And the
quality of the purchaser’s personnel
participating in the service also
affects the quality of the service
•Quality is difficult to define in
advance and even more difficult to
control during the performance of the
service
 Bid/Bidder
• “Bid” means a tender, or an offer, in
response to an invitation, by a person,
consultant, firm, company or an
organization expressing his or its
willingness to undertake a specified task at
a price;
• “Bidder” means a person who submits a
bid;
 Competitive Bidding

• a procedure leading to the award of a

contract whereby all the interested
persons, firms, companies or
organizations may bid for the contract and
includes both national competitive bidding
and international competitive bidding;
 Contractor
• a person, consultant, firm, company or an
organization who undertakes to supply
goods, services or works;

• “supplier” means a person, consultant,

firm, company or an organization who
undertakes to supply goods, services or
works;
 lowest evaluated bid

• A bid most closely conforming to

evaluation criteria and other
conditions specified in the bidding
document; and having lowest
evaluated cost.
 Corrupt and Fraudulent Practices

• the offering, giving, receiving, or soliciting

of any thing of value to influence the
action of a public officials or the supplier
or contractor in the procurement process
or in contract execution to the detriment
of the procuring agencies; or
 Corrupt and Fraudulent Practices (cont..)

• misrepresentation of facts
• collusive practices among bidders (prior
to or after bid submission)
• to establish bid prices at artificial, non-
competitive levels
 Prequalification
• Method whereby suppliers of particular goods are
assessed against pre-determined criteria and those
suppliers who satisfy the prequalification criteria are
placed on the database of vendors maintained by the
purchasing organisation

• Provides purchasers with more confidence that only

suppliers who have the required experience, technical,
financial resources and capability to supply goods

• Suppliers who satisfy the prequalification criteria are

placed on database and will be invited to offer
 Integrity Pact
Procurements exceeding the prescribed limit subject to an
integrity pact, between the procuring agency and the
suppliers or contractors

 Decision of ECC dated 23rd Sep, 2002 – Declaration of

Fees, Commissions and Brokerage

 Finance Division’s DO No. 687/MD(PPRA)/05 dated

14th Sep, 2005 – Integrity Pact to be made a part of
all contracts worth Rs. 10 Million and above in value.
 Corporate Social Responsibility
• Self-regulation integrated into a business
model
built-in, self-regulating mechanism
• business monitor and ensure their
adherence to law, ethical standards, and
international norms
 CSR
• proactively promote the public interest
• encouraging community growth and
development
• eliminating practices that harm the public
• corporations benefit in multiple ways by
operating with a perspective broader and
longer
 ENVIRONMENTAL CONSIDERATIONS
• Green procurement/ ISO 14000
• Consideration should be given to the
environmental impact in the procurement
process
e.g. product re-usability, re- cycleability,
durability, energy efficiency and packaging.
 Procurement Cycle

Procurement
Planning/Designing
Cycle Contract
specifications
Administration

Payments Pre-
qualification

Grievance
Redressal Solicitation of
Bids

Contract Bids opening and

Award Evaluation
 Identify the need

• Identifying the need is the process of determining

what is actually required to achieve the intended
result or contracting outcome.
• Once a need has been identified, it must be accurately
defined before it can be satisfied.
• Optimal results cannot be achieved unless objectives
are understood clearly and can be conveyed to
suppliers.
 OBTAIN APPROVAL TO PROCEED
• It may be necessary to obtain the appropriate
internal written approval to undertake the
purchase.

• When seeking approval to proceed with the

purchase, ensure that there is an approved
budget.
 DEVELOP REQUEST DOCUMENT

CONSIDERATIONS

• Consider most appropriate method

• The Request carries legal implications

• Must facilitate equitable comparison

 DEVELOP REQUEST DOCUMENT
STANDARD KEY ELEMENTS:

• Conditions of quoting

• Specifications

• Standard terms and conditions

• Special terms and conditions

 CONTRACT PLANNING
• development of tender documentation
• writing specifications
• development of selection criteria
• selection criteria weightings
• terms and conditions

• dispute resolution
 Contracting Process

Planning
Identify Need
Plan Purchase
Develop Request
Invite & Receive Offers

Formation
Evaluate Offers
Negotiate/Due Diligence

Finalise & Award

Manage Transition

Management
Contract Operation
Complete, Extend, Renew

Review & Evaluate

Link to Supplier Performance Management

 Contract Formation
Pre-Release of Tender
• Draft Tender may be issued to industry for
comment prior to release
• Draft Tender to legal for opinion/comment
prior to release
• Obtain end user approval prior to release
 Contract Formation
Pre-Release of Tender
• Obtain details of potential suppliers from end
user
• Agree on timeframe for tender
• Agree on media to be used
• Determine acceptable means of submission
• Determine location of tender box
 Common Elements of Contract Management
Process

• Relationships • Financial
• Communication & • Amendments
documentation • Disputes
• Start up • Discharge or
• Transition termination
• Performance & • Extension or renewal
remedies • Close out
• Risk • Review
 Contract Formation
Issue Tender
• Advertise in Local Press
• Advertise in other press as appropriate
• Forward Tender to any identified potential
suppliers
 Contract Formation
Pre-Release of Tender
• Obtain details of potential suppliers from end
user
• Agree on timeframe for tender
• Agree on media to be used
• Determine acceptable means of submission
• Determine location of tender box
 MINIMISE TENDER COSTS

The cost of the tender process is

reduced if specifications:

• are standardised for similar requirements;

• are concise and accurate; and
• can be readily incorporated into a formal
contract.
 SPECIFICATION

• Clearly and clearly

accurately describe accurately

the essential requirements

requirements for the

product to be
purchased
 PREPARING A SPECIFICATION

• Identify user needs

• Research the market
• Conduct a risk assessment
• Identify what is to be procured
• Determine the scope
• Determine the evaluation
 TYPES OF SPECIFICATION
• Functional – outcomes to be achieved

• Performance – performance required

• Technical – physical characteristics

 SELECTION CRITERIA WEIGHTINGS
• Assists evaluation panel in evaluation of
submissions
• Each qualitative criteria is given a weighting
• Weighting should indicate importance of
criteria
 DISPUTE RESOLUTION

• Better to avoid than to resolve

• Avoid by:
- clearly defining requirements
- Contract management plan
- Meetings
 Why Organisations Fail to Manage Contracts
Successfully
• Poorly drafted contracts
• Contract not understood
• Failure to check Contractor’s assumptions
• Lack of performance measurement
• Inadequate resources
• Difference in skills/experience
• Unclear authorities or responsibilities
• Focus on contract and not improvement potential
• Failure to monitor and manage retained risks
• Personality clashes
 Red Boxes
• The Contractor may take control
• Decisions may not be taken at the right time
• New processes not integrated with existing processes
• Failure to understand obligations & responsibilities
• Progress may be slow
• Intended benefits not realised
• Opportunities may be missed
 Red Boxes
• Short period of bid process
• Incomplete bid documents
• Unauthorized amendment
• Inconsistencies in rating
• Not genuine documentation – e.g. advertisement,
forged signatures, bid proposals, CV of personnel
• Deliverables – low quality, not match with TOR
Conclusion

 Public Procurement is the most

 Important,
 Risky

 New area

 Must be given its due importance.

Q&A

THANKS