Mani Ram Gelal

Superintendent Engineer
Principles of Procurement
The four basic principles of procurement are:
Bringing efficiency and economy in project implementation.
Providing equal opportunities to all eligible bidders to
compete in the bidding process
Encouraging development of domestic contractors and
industries
Promoting transparency in the procurement process.
As per PPA 2063 and PPR 2064

Public Entity must prepare and approve Annual procurement Plan

for procurement of less than NRs. 100 Million and Master
Procurement Plan for more than that and for Multi year contracts.

As per World Bank Guidelines

As part of the preparation of the project, the Borrower shall prepare

and, before loan negotiations, furnish to the Bank for its approval, a
Procurement Plan acceptable to the Bank.

The Borrower shall update the Procurement Plan annually or as

needed throughout the duration of the project. The Borrower shall
implement the Procurement Plan in the manner in which it has been
approved by the Bank.
Meaning and Implications

The Procurement Plan is THE DOCUMENT

What, how, when procurement is to happen.
What is to be prior reviewed by Donors
Updated periodically.
Type and Size of Contracts
The bidding documents shall clearly state the type of contract to be
entered into and contain the proposed contract provisions
appropriate therefore.

The most common types of contracts provide for payments on the

basis of a lump sum, unit prices, reimbursable cost plus fees, or
combinations thereof. Reimbursable cost contracts are adopted only
in exceptional circumstances such as conditions of high risk or
where costs cannot be determined in advance with sufficient
accuracy. Such contracts shall include appropriate incentives to limit
costs.

The size and scope of individual contracts will depend on the

magnitude, nature, and location of the project. For projects requiring
a variety of goods and works, separate contracts generally are
awarded for the supply and/or installation of different items of
equipment and plant and for the works.
Two-Stage Bidding
In the case of turnkey contracts or contracts for large complex facilities or
works of a special nature or complex information and communication
technology, it may be undesirable or impractical to prepare complete
technical specifications in advance.

In such a case, a two-stage bidding procedure may be used, under which

first unpriced technical proposals on the basis of a conceptual design or
performance specifications are invited, subject to technical as well as
commercial clarifications and adjustments, to be followed by amended
bidding documents and the submission of final technical proposals and
priced bids in the second stage.
 Once the procurement method is determined, the next step is
to begin the bidding process with the preparation of the
bidding documents.

The procurement practitioner prepares the bidding documents

and then (after obtaining the necessary clearances to advertise
the requirement) invites contractors to submit bids.
 Pre-bid meetings for works procurement are held alone or
in conjunction with a site visit. Pre-proposal meetings are
held primarily for complex requirements. The purpose of
the prebid meeting is to clarify the bid documents.

The pre-bid meeting is a formal event, where minutes are

taken and responses to the attendees are only binding on
the Client if/when received by the prospective
bidders/consultants in writing. Site visits, as mentioned
above, can be held in conjunction with a pre-bid meeting.

Sometimes, as a result of the site visit/prebid meeting

there might be a need to extend the bid submission date
by way of an Addendum to the bid document to give
bidders sufficient time to address issues arising as a result
of the site visit and pre-bid meeting.
 At any time prior to the deadline for submission of bids, the
Employer may amend the Bidding Document by issuing
addenda.

Any addendum issued shall be part of the Bidding Document

and shall be communicated in writing to all who have obtained
the Bidding Document from the Employer .

To give prospective Bidders reasonable time in which to take

an addendum into account in preparing their bids, the
Employer may, at its discretion, extend the deadline for the
submission of bids.
 A Bidder may withdraw, or modify its bid after it has been submitted by
sending a written notice in a sealed envelope, duly signed by an authorized
representative, and shall include a copy of the authorization The corresponding
modification of the bid must accompany the respective written notice. All
notices must be:

prepared and submitted with the respective envelopes clearly marked

WITHDRAWAL, MODIFICATION; and

received by the Employer prior to the deadline prescribed for submission of

bids.

Bids requested to be withdrawn shall be returned unopened to the Bidders after

completion of the bid opening.

No bid may be withdrawn, or modified in the interval between the deadline for
submission of bids and the expiration of the period of bid validity specified by
the Bidder on the Letter of Bid or any extension thereof.
 After the pre-bid meeting, one of the following is a
natural consequence:

the selection process continues to the bid submission

and opening date, as planned,
the submission date is extended by addendum to give
bidders a reasonable amount of time address issues
raised during the site visit and pre-bid meeting, or
The requirement is altogether cancelled by the Client.

Assuming the process continues as expected, the

bid submission and opening will follow.
 For the bid opening, a checklist is prepared. During the
opening event, the following needs to be determined:

i. Is the bid received in a sealed envelope?

ii. Is the bid form completed and signed?

iii. Is the bid received on or before the submission date

and time?

iv. Is there a power of attorney mandating the authorized

representative to sign the bid?

v. Is the bid security (if any) in the form and amount

stipulated in the bidding document?
 The The Public Entity shall award the contract, within the
period of the validity of bids, to the bidder who meets the
appropriate standards of capability and resources and whose
bid has been determined
(i) to be substantially responsive to the bidding documents
(ii) to offer the lowest evaluated cost.

(Referred to as lowest evaluated bidder and lowest

evaluated bid, respectively.)
Publication of the Award of Contract
Within One week of decision to the recommendation of contract
award, the Borrower shall publish the results identifying the bid and
lot numbers and the following information:

(a) Name of each bidder who submitted a bid;

(b) Bid prices as read out at bid opening;
(c) Name and evaluated prices of each bid that was evaluated;
(d) Name of bidders whose bids were rejected and the reasons for
their rejection; and
(e) Name of the winning bidder, and the price it offered, as well as
the duration and summary scope of the contract awarded.
Rejection of All Bids

Bidding documents usually provide that PE may reject all bids.

Rejection of all bids is justified when there is lack of effective
competition, or bids are not substantially responsive or when bid
prices are substantially higher than existing budget.

Lack of competition shall not be determined solely on the basis of

the number of bidders. Even when only one bid is submitted, the
bidding process may be considered valid, if the bid was
satisfactorily advertised and prices are reasonable in comparison to
market values.

PE may, reject all bids. If all bids are rejected, the PE shall review
the causes justifying the rejection and consider making revisions to
the conditions of contract, design and specifications, scope of the
contract, or a combination of these, before inviting new bids.
 If the rejection of all bids is due to lack of competition, wider
advertising shall be considered. If the rejection is due to most or all of
the bids being nonresponsive, new bids may be invited from the
initially prequalified firms, or from only those that submitted bids in
the first instance.

If the lowest evaluated responsive bid exceeds the PEs pre-bid cost
estimates by a substantial margin, the PE shall investigate causes for
the excessive cost and consider requesting new bids as described in the
previous paragraphs.

Alternatively, the PE may negotiate with the lowest evaluated bidder to

try to obtain a satisfactory contract through a reduction in the scope
and/or a reallocation of risk and responsibility which can be reflected
in a reduction of the contract price. However, substantial reduction in
the scope or modification to the contract documents may require
rebidding.

The Donors prior approval (For DA Projects) shall be obtained before

rejecting all bids, soliciting new bids, or entering into negotiations with
the lowest evaluated bidder.
Debriefing

In the publication of Contract Award, the Borrower shall

specify that any bidder who wishes to ascertain the grounds on
which its bid was not selected, should request an explanation
from the PE.

The PE shall promptly provide an explanation of why such bid

was not selected, either in writing and/or in a debriefing
meeting, at the option of the Borrower.

The requesting bidder shall bear all the costs of attending such
a debriefing.
Effective date
Under the GCC/SCC route, once a bid is accepted and letter of
acceptance is issued, the contract comes into effect legally.

Similarly, once a contract document is signed by both parties,

under the self- contained contract route, a contract comes into
effect legally.

The date of the letter of acceptance or the date of signing the

contract normally becomes the effective date for all purposes,
and various actions and activities on the part of both the
parties start flowing thereafter.
There are instances when suppliers insist that though the
contract is signed, it should be made effective only from the
date of advance payment (if provided in the contract) or the
date of opening a letter of credit(if the contract provides for
such opening within a specified period of signing the
contract), as they fear that delays on the part of the buyer may
occur in making the advance payment or opening the letter of
credit and would not like to proceed with the implementation
till they get the advance payment or the letter of credit is
established. It would imply that the effective date of the
contract is a date later than the date of signing.
It would be rather anomalous to have a situation where a
contract has come into being legally and yet it is effective
from a date other than the date of signing.

To resolve this conflict, the clause in the contract dealing with

effective date can have remedies built in the clause against
delays by the buyer in making the advance payment or
opening a letter of credit, so that the basic concept is not
disturbed.
The wording can be on the following lines:

Provided the advance payment has been made by the buyer to

the supplier in terms of Article..of this contract,
within.. days of receipt by him of a bank guarantee (in the
form at Annexure-----) furnished by the supplier, the date of
signing the contract by both the parties shall be the effective
date. If, however, there is a delay on the part of the buyer in
making the advance payment in terms of Article------of this
contract, within. days of the receipt of the bank guarantee
from the supplier, the scheduled delivery date in Article. of
this contract, shall be extended by the number of days by
which there has been a delay in the advance payment by the
buyer beyond the ..days specified in Article of this
contract.
Sample clause regarding commencement of contract
Except otherwise specified in the Particular Conditions, the
Commencement Date shall be the date at which the following
precedent conditions have all been fulfilled and the Engineers
instruction recording the agreement of both Parties on such
fulfillment and instructing to commence the Works is received
by the Contractor:

signature of the Contract Agreement by both Parties, and if

required, approval of the Contract by relevant authorities in
the Country;

delivery to the Contractor of reasonable evidence of the

Employers Financial arrangements

except if otherwise specified in the Contract Data,

possession of the Site given to the Contractor
 receipt by the Contractor of the Advance Payment
provided that the corresponding bank guarantee has
been delivered by the Contractor.

If the said Engineers instruction is not received by the

Contractor within 180 days from his receipt of the
Letter of Acceptance, the Contractor shall be entitled to
terminate the Contract

The Contractor shall commence the execution of the

Works as soon as is reasonably practicable after the
Commencement Date, and shall then proceed with the
Works with due expedition and without delay.
 To become prima facie acceptable in bidding process, a bidder
has to fulfill two broad criteria. These are :

ELIGIBILITY CRITERIA
QUALIFICATION CRITERIA
 TO GENERATE COMPETITION, THE EMPLOYER(BORROWER)
AND/OR DONOR (WORLD BANK) PERMIT BIDDERS FROM
ALL COUNTRIES TO BID SUBJECT TO CERTAIN CONDITIONS

SUPPLIER FROM A COUNTRY OR GOODS & SERVICES OF A

COUNTRY MAY BE EXCLUDED IF THE BORROWER
COUNTRY OFFICIALLY PROHIBITS COMMERCIAL
TRANSACTION WITH THAT COUNTRY, PROVIDED THE
WORLD BANK AGREES TO THE SAME.

A BIDDER IS NOT PERMITTED TO SUBMIT MORE THAN ONE

BID IN A PARTICULAR CASE (EXCEPT FOR ALTERNATIVE
OFFERS, IF SPECIALLY PERMITTED).
 A FIRM OR ANY OF ITS AFFILIATES, WHICH HAS ALREADY
BEEN ENGAGED BY THE BORROWER AS A CONSULTANT
FOR PREPARATION OR IMPLEMENTATION OF THE PROJECT
IS NOT ELIGIBLE TO BID.

ANY DEPENDENT AGENCY OF THE BORROWER OR SUB-

BORROWER SHALL BE INELIGIBLE TO BID.

A FIRM DECLARED INELIGIBLE BY THE WORLD BANK DUE

TO ANY MALPRACTICE AS PER CL. 1.14 SHALL BE
INELIGIBLE.

SIMILAR CONDITIONS ALSO APPLY TO GOODS AND

RELATED SERVICES TO BE SUPPLIED UNDER THE
CONTRACT.
The provisions relating to ELIGIBILITY Criteria in
Standard Bidding Document published by PPMO and
practiced in public Procurement in Nepal
4.1 A Bidder may be a natural person, private entity, or government-
owned entitysubject to ITB 4.5or any combination of them in
the form of a Joint Venture (JV) under an existing agreement, or
with the intent to constitute a legally-enforceable joint venture. In the
case of a JV:

(a) all partners shall be jointly and severally liable for the execution of
the Contract in accordance with the Contract terms.
Maximum number of JV shall be three. The qualification
requirement of the parties to the JV shall be as specified in the BDS,
and

(b) the JV shall nominate a Representative who shall have the

authority to conduct all business for and on behalf of any and all
the parties of the JV during the bidding process and, in the event
the JV is awarded the Contract, during Contract execution.
4.2 A Bidder, and all parties constituting the Bidder, shall have the
nationality of any country or eligible countries mentioned in the BDS.
A Bidder shall be deemed to have the nationality of a country if the
Bidder is a citizen or is constituted, or incorporated, and operates in
conformity with the provisions of the laws of that country. This
criterion shall also apply to the determination of the nationality of
proposed sub Contractors or suppliers for any part of the Contract
including related services.
4.3 A Bidder shall not have a conflict of interest. A Bidder found to
have a conflict of interest shall be disqualified. A Bidder may
be considered to be in a conflict of interest with one or more
parties in this bidding process, if:

(a) they have controlling partners in common;

(b) or they receive or have received any direct or indirect subsidy from
any of them; or
(c) they have the same legal representative for purposes of this bid; or
(d) they have a relationship with each other, directly or through common
third parties, that puts them in a position to have access to information
about or influence on the Bid of another Bidder, or influence the
decisions of the Employer regarding this bidding process; or
(e) e)a Bidder participates in more than one bid in this bidding process.
Participation by a Bidder in more than one Bid will result in the
disqualification of all Bids in which the party is involved. However,
this does not limit the inclusion of the same sub Contractor in more
than one bid; or
(f) a Bidder or any of its affiliates participated as a consultant in the
preparation of the design or technical specifications of the Contract
that is the subject of the Bid; or
(g) g)a Bidder or any of its affiliates has been hired (or is proposed to be
hired) by the Employer as Engineer for the Contract.
4.4 A firm that is under a declaration of ineligibility by the GoN/DP in
accordance with ITB 3, at the date of the deadline for bid submission
or thereafter, shall be disqualified.

4.5 Enterprises owned by Government shall be eligible only if they can

establish that they are legally and financially autonomous and operate
under commercial law, and that they are not a dependent agency of
the GoN.

4.6 Bidders shall provide such evidence of their continued eligibility

satisfactory to the Employer, as the Employer shall reasonably
request.

4.7 In case a prequalification process has been conducted prior to the

bidding process, this bidding is open only to prequalified Bidders.
4.8 Firms shall be excluded in any of the cases, if

(a) by an act of compliance with a decision of the United Nations Security

Council taken under Chapter VII of the Charter of the United Nations,
the Employers country prohibits any import of goods or Contracting of works
or services from that country or any payments to persons or entities in
that country.

(b) DP Funded: as a matter of law or official regulation, Nepal prohibits

commercial relations with that country, provided that the DP is satisfied
that such exclusion does not preclude effective competition for the supply
of goods or related services required;

(c) DP Funded: a firm has been determined to be ineligible by the DP in relation

to their guidelines or appropriate provisions on preventing and combating
fraud and corruption in projects financed by them.

4.9 The Domestic Bidder who has obtained Permanent Account Number (PAN)
and Value Added Tax (VAT) Registration Certificate(s) and Tax Clearance
Certificate from the Inland Revenue Office or proof of submission of
audited PL report to the Inland Revenue Office shall only be eligible. The
foreign bidder submitting the documents indicated in the BDS at the
time of bid submission and a declaration to submit the document(s)
indicated in the BDS at the time of contract agreement shall only be
eligible.
 QUALIFICATION CRITERIA ARE AIMED AT
OBTAINING RELEVANT DATA & DETAILS
FROM PROSPECTIVE/ INTERESTED BIDDERS TO
ASSESS THEIR CAPABILITIES AND RESOURCES
TO PERFORM THE CONTRACT SATISFACTORILY.

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QUALIFICATION CRITERIA TAKE INTO ACCOUNT BIDDERS-

EXPERIENCE AND PAST PERFORMANCE ON SIMILAR

CONTRACTS.

TECHNICAL CAPACITY AND CAPABILITY IN RESPECT OF

PERSONNEL, PLANT & MACHINERY AND
MANUFACTURING FACILITIES.

STATUS AND FINANCIAL STANDING

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PRE-QUALIFICATION SYSTEM

POST-QUALIFICATION SYSTEM

37
NECESSARY FOR SOPHISTICATED CUSTOM-DESIGNED
EQUIPMENT, INDUSTRIAL PLANT ETC. WHERE HIGH COS OF
PREPARATION OF BIDS USUALLY DISCOURAGES COMPETITION.

THE INVITATION TO PRE-QUALIFY FOR BIDDING ON SPECIFIC

CONTRACT OR GROUP OF CONTRACTS SHALL BE ADVERTISED
AND NOTIFIED AS PER THE WORLD BANKS APPLICABLE
PROCEDURE.

DOCUMENT FOR PRE-QUALIFICATION SHALL CONTAIN THE

SCOPE OF THE CONTRACT(S) IN VIEW AND THE REQUIREMENTS
FOR MEETING QUALIFICATION CRITERIA.

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 RESPONSE OF THE PARTIES ARE TO BE ANALYSED AND
PRIMA FACIE QUALIFIED PROSPECTIVE BIDDERS
DETERMINED.

RESULT OF ABOVE ANALYSIS ARE TO BE MADE KNOWN TO

ALL APPLICANTS.

THEREAFTER, THE COMPLETE BIDDING DOCUMENT SHALL

BE GIVEN TO THE PRIMA FACIE QUALIFIED PROSPECTIVE
BIDDERS TO ENABLE THEM SEND THEIR BIDS.

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 IF NECESSARY, SPECIALLY IN CASE OF LONGER TIME-GAP,
INFORMATION RELATING TO PRE-QUALIFICATION, AS
PROVIDED BY THE SELECTED BIDDER MAY BE VERIFIED/
RE-VERIFIED BEFORE PLACING THE CONTRACT ON IT.

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THIS SYSTEM IS ADOPTED FOR GOODS, WHICH ARE OF
COMMON USE, WHICH HAVE STANDARD SPECIFICATIONS,
WHICH ARE NOT VERY COMPLICATED ETC.

THECRITERIA FOR JUDGING QUALIFICATIONS OF BIDDERS ARE

INCORPORATED IN THE BIDDING DOCUMENT ITSELF

A BIDDER IS TO FURNISH THE REQUIRED DETAILS IN ITS BID.

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The provisions relating to QUALIFICATION CRITERIA in Standard
Bidding Document published by PPMO and practiced in public
Procurement in Nepal
1. General Work Experience
2. Specific Work Experience
3. Financial Capabilities
4. Cash Flow Capacity
5. Personnel
6. Equipments
7. Pending Litigations
 BIDDERS ARE TO SUBMIT BIDS (ORIGINAL AND COPY, AS SPECIFIED)
IN PRESCRIBED FORMS DULY SEALED IN ACCORDANCE WITH
BIDDING DOCUMENTS STIPULATIONS

BIDDERS SUBMITTING BIDS ELECTRONICALLY (IF SO INSTRUCTED)

ARE TO FOLLOW THE PROCEDCURE PRESCRIBED IN BIDDING
DOCUMENTS

BIDS MUST BE SUBMITTED BY SPECIFIED DATE & TIME; OTHERWISE

BIDS WILL BE LATE, REJECTED AND RETURNED TO BIDDERS
UNOPENED

BIDDERS MAY MODIFY/WITHDRAW BIDS (ALREADY SUBMITTED)

FOLLOWING PRESCRIBED PROCEDURES WITHIN THE PRESCRIBED
TIME AND DATE OF RECEIPT OF BIDS.
 BUYER WILL OPEN BIDS (WHETHER SUBMITTED MANUALLY OR
ELECTRONICALLY) IN PUBLIC AT THE SPECIFIED ADDRESS, DATE AND
TIME FOLLOWING THE PROCEDURE AS INCORPORATED IN THE
BIDDING DOCUMENT

BUYER IS TO PREPARE A RECORD OF BID OPENING CONTAINING

RELEVANT DETAILS OF BIDS SO OPENED INCLUDING NAMES &
SIGNATURES OF THE BIDDERS REPS PRESENT DURING BID OPENING .

COPY OF THE RECORD SHALL BE SENT TO WORLD BANK AND

DISTRIBUTED TO ALL THE BIDDERS WHO HAVE SENT BIDS ON TIME
AND ALSO POSTED ONLINE (IN CASE OF ELECTRONIC BIDDING)
Stage1 Collection of Information
Step 1 Basic data
Step 2 Record of Bid Opening
Step 3 Preliminary Examinations for Completeness of Bids
Securities furnished or not
Signed or not
Power of attorney for the authorized persons
Joint venture agreements
Documents establishing the eligibility of bidders
Documents required to assess the post qualification of the bidders
Bid form purchased from the concerned office
Seal
Submission of rate analysis if such was requested
Declaration of local agent if such was requested
Stage 2 Determination of Substantial Responsiveness of Bids
A bid is considered substantially responsive if it does not contain any
Major Deviations from the bidding documents or conditions which
can not be determined reasonably in terms of monetary value for
financial adjustments.
The purpose of the exercise is to reject bids which are not substantially
responsive to major commercial and technical requirements.
Step 1 Preparation of Table of Bidders and Bid Prices

Step 2 Substantial Responsiveness to Commercial Terms /Conditions

Bid security/bid validity period not in accordance with bidding

documents.
Inability to meet critical work schedule.
Failure to comply with minimum experience/ financial capability.
Conditional bids.
Step 3 Substantial Responsiveness to Technical requirements
Failure to bid for the required scope of work.
Failure to satisfy major requirements in the Specifications.
Step 4 Preparation of Table of Substantive Responsiveness of Bids

Stage 3 Detailed Evaluation of Bids

 Step 2 Detailed Evaluations

Step 3 Financial Adjustments of Bid Prices (Commercial Aspects)

The bid prices should be adjusted for the purpose of bid comparison for those deviations
which are permissible and which can be translated fairly into monetary values. The
calculation of financial adjustment should be in the manner specified in the bidding
documents.
Adjustment for Deviation from the Terms of Payment

Terms of payment should be analyzed and amount added to the bid price to compensate for
the earlier or larger payment requested. The amount to be added should be calculated using
the commercial rate of interest relevant to the situation.
 Adjustment for Deviation in Delivery schedule or Completion
Price adjustment for later delivery or completion is calculated using the liquidated
damage provision (Maximum limit: 10%)
For earlier delivery and completion additional costs for storage, double handling,
interest for early payments etc. should be added.

Adjustment for Payment of Duties and Taxes

- If the bidder fails to quote the cost of duties and taxes as specified in the bidding
documents, the cost of such duties and taxes should be estimated and added to its bid
price for bid comparison.
Step 4 Financial Adjustments of Bid Prices (Commercial Aspects)

Minor technical deviations, which will affect the cost, should be expressed in
monetary terms and added to the bid price for purpose of evaluation.

Adjustment for Completeness in Scope of study

Adjustment for Technical Compliance

Adjustment for Specified Technical evaluation Factors

Adjustment for Spare parts

Adjustment for Cost of Inland Transportation to the Project site

Maximum Amount for Adjustment (Generally 15%)

Step 5 Detailed evaluation of Bids for a Civil Works Contract.

Plans and Schedules

Analysis of Prices
Unbalanced Bids
Higher Unit Prices for Earlier Works
Higher Unit Rates for Underestimated Work Items
Clarification s, Correspondence and Meetings

Stage 4 Determination of the Lowest Evaluated Substantially

Responsive Bid

Stage 5 Preparation of Bid Evaluation Report

 DOMESTIC PREFERENCE IS PREFERENCE EXTENDED TO
DOMESTICALLY MANUFACTURED GOODS OR TO DOMESTIC
CONTRACTORS (IN CIVIL WORKS)

IF REQUESTED BY THE BORROWER AND AGREED TO BY THE WORLD

BANK, DOMESTIC PREFERENCE MAY BE APPLIED IN ICB.

DOMESTIC PREFERENCE IS APPLICABLE ONLY IN ICB AND NOT IN

OTHER METHODS
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