procurement overview


Published on

East and Southern Africa, Procurement Overview

  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

procurement overview

  1. 1. Procurement Overview Dec 2010
  2. 2. Introduction Inefficient or ineffective procurement may have serious consequences: expected project results & impact not achieved delays in project implementation higher cost of implementation Procurement is a sensitive activity: can be conducive to corruption & fraud complexity of certain procurement actions combined use of national & IFAD regulations /guidelines Purchasing goods, services and works (procurement) is a critical element of project implementation. . .
  3. 3. Importance of Procurement – IFAD Guidelines Proper use of loan funds : IFAD must ensure financing proceeds are used only for intended purpose: specifically CPM & support staff oversight Economy & efficiency requirements in project implementation in general & procurement in particular: IFAD must ensure contract awards result from a competitive process IFAD must ensure equity , integrity , transparency & good governance in procurement process Concept of “ no objection ” IFAD’s fiduciary responsibilities :
  4. 4. Responsibilities Implementation of project/ programme including award & administration of contracts Borrower / Recipient IFAD supervises the Borrower’s procurement actions in order to ensure that funds are used for the purpose of the Financing agreement with due attention to considerations of economy, efficiency & social equity IFAD
  5. 5. Role of Borrower/ PMU in Procurement Procurement planning (in line with project objectives & AWPB) Preparation & issuance of bidding documents & invitation to bid Opening & evaluation of offers Negotiation , award & signature of contract Monitoring of contract execution (technical & financial/ administrative) Delivery of goods/ works/ services Payment PMU has overall responsibility for Procurement
  6. 6. Role of IFAD in Procurement Ensure coherence of procurement actions with project objectives, AWPB & procurement plan , & timing within implementation period Ensure funds availability : cost of procurement must not exceed funds allocated in Financing agreement & AWPB Ensure transparency & equity : procurement must be conducted in compliance with applicable rules & procedures Ensure best value for money : procurement must be the result of a competitive process Review procurement plan, prequalification of bidders, perform procurement review – prior & ex-post CPM must: IFAD staff must maintain neutrality & impartiality Flexibility is a must – but know rules & regulations
  7. 7. Formation of Bid Evaluation Committee ; N-O by IFAD Prepare Specifications and tender documents (Advertisement/ ITBs/ RFPs/ RFQs as applicable) Bid Evaluation and draft contract IFAD Prior Review & No-Objection (if required) Contract Award to best evaluated bid ITB – Invitation to Bid RFP – Request for Proposal RFQ – Request for Quotation Key Tendering Process
  8. 8. Procurement Methods Different methods (ranging from International Competitive Bidding to Direct Contracting) are used for the different categories of procurement depending on nature, amount & other criteria - guiding principle being economy, efficiency & social equity
  9. 9. Common Procurement Methods International Competitive Bidding (ICB): for high value requirements Advertise in widely circulated newspapers, local representatives, Embassies, UN Development Forum Pre-qualification Public bid opening Bid evaluation based on point scoring system (technical & financial) Advertise in local newspapers (note: foreign suppliers may bid) Pre-qualification Public bid opening Bid evaluation based on point scoring system (technical & financial) National Competitive Bidding (NCB): public procurement in Borrower’s country
  10. 10. Common Procurement Methods International Shopping short-list at least 3 reputable suppliers in at least 2 member countries of IFAD issue ITB to the short-listed suppliers receive bids in original form (not faxed) bid evaluation based on lowest cost for compliant offers sign contract Local Shopping prepare specifications and request for quotations short-list at least 3 reputable suppliers issue request for quotations to the short-listed suppliers receive bids in original form (not faxed) bid evaluation based on lowest cost for compliant offers sign contract Direct Contracting Extension of/ addition to an existing contract Standardisation of goods with existing project assets Note: Competitive process is not required.
  11. 11. Project Specific Principles Procurement is carried out in accordance with Financing Agreement &/or Letter to the Borrower Procurement is now not limited to suppliers/ manufacturers from IFAD Member States (since September 2010) Procurement is to be conducted within the project implementation period Procurement must not exceed availability of funds duly allocated by Financing Agreement Procurement must be consistent with approved AWPB Procurement should provide best value for money
  12. 12. Regulatory Framework Procurement rules and procedures applicable to a particular project come from different sources: national procurement rules & regulations IFAD Procurement Guidelines project design report financing agreement Applicable rules , methods & procedures are specified in Letter to the Borrower , as well as IFAD procurement review requirements Must adhere to regulatory framework . . .
  13. 13. Compatibility with National Rules & IFAD’s Guidelines NATIONAL RULES & REGULATIONS MAY BE ADOPTED IF THEY ARE ASSESSED TO BE COMPATIBLE WITH IFAD’S GUIDELINES Compatible means that they respect the main basic principles of IFAD’s guidelines N.B. In the unlikely case that some provisions in Schedule 4 of the Financing Agreement/ LTB are not in line with IFAD’s Procurement guidelines, the provisions of Schedule 4 shall prevail
  14. 14. IFAD Prior Review Schedule 4 of the Financing Agreement/ LTB lists all major procurement contracts to be awarded on the Project, their estimated value, category (goods, works, services), the monetary threshold for IFAD’s prior review The thresholds may always be modified from time to time as notified by the Fund to the Borrower/ Recipient (needs agreement by both parties if the threshold is decreased)
  15. 15. Mis-Procurement When procurement has not been conducted in accordance with the procedures adopted (national and/or IFAD) When a contract has been awarded based on incomplete, inaccurate or misleading information furnished by the borrower, even in the case where a NO OBJECTION has been granted When a contract has been modified without IFAD’s approval
  16. 16. Review of Prequalification of Bidders
  17. 17. Review of Draft Prequalification Documents a brief description of the goods & works to be procured the contract conditions who is financing the project eligibility requirements for potential bidders, suppliers & contractors the time and place where prequalification documents can be obtained The advertisement & invitation for prequalification should contain: Prequalification documents should contain further information: the proposed procurement the estimated value of the contract & major quantities of work location of the work procurement scheduling of goods or works to be procured abbreviated specifications & conditions of contract main quantities to be procured delivery or implementation schedules requirements for bid & performance securities how the project is to be financed payment terms, price adjustment provisions the language & governing law of the contract other information in sufficient detail to enable bidders, suppliers or contractors to assess their interest & respond appropriately
  18. 18. Procurement Process for Goods, Services & Works Best use of competitive bidding Step 1 Step 2 Procurement List And Bulk Purchase Procurement Plan Model of Procurement plan: proposed minimum contents and to be updated periodically (See Procurement Handbook)
  19. 19. Step 3 Preparation of Bidding Documents Procurement Process for Goods, Services & Works GOODS SERVICES WORKS Bidding documents or Request for quotations Request for Proposals from shortlisted firms Bidding documents or Request for quotations Invitation to bid Letter of invitation & general and specific conditions Invitation to bid Instructions to bidders with: * Bid security (Lumpsum) * Bid evaluation method and process etc. Instructions to Consultants with: * Proposal preparation info * Proposal evaluation method and process etc. Instructions to bidders with: * Bid security (Lumpsum) * Bid evaluation method and process etc. Conditions of contract (general and special) Acceptable to IFAD Conditions of contract (general and special)- International Federation of Consulting Engineers (FIDIC) for large contracts above 10 million USD Schedule of requirements and technical specifications Terms of Reference (TORs) Scope of works, Bill of quantities and drawings Prices schedules Breakdown of costs Prices schedules Contract form Contract form Contract form Annexes for bid bonds and performance security, tax clearance, etc..; No proposal or performance securities
  20. 20. Procurement Process for Goods, Services & Works TECHNICAL SPECIFICATIONS (TS) FOR GOODS: Inappropriate, irrelevant, too many details lead to a restriction of competition: reference to an exclusive mark/ model (IT equipment), too many technical details (computers/ laptops), project or country specifications (give explanations), limit to essential criteria (adherence to TS evaluation), warranty & upgraded equipment, check specialists, visit potential suppliers 70 – 80% OF THE PROBLEMS OF A BID EVALUATION COME FROM A BAD DEFINITION OF TECHNICAL SPECIFICATIONS TERMS OF REFERENCE (TORs) FOR CONSULTANCY SERVICES To be done by the final user of the services and not by the procurement officer or the financial controller SCOPE OF WORKS, Bill of Quantities (BoQ), DRAWINGS: use the services of an engineering expert or office Crucial Steps
  21. 21. Review of Draft Bidding Documents Is the procurement: In accordance with the loan agreement & any subsequent changes reflected in mission reports within the availability of funds ? consistent with the approved AWPB (procurement plan)? Bidding documents should provide all the information necessary for a bidder to prepare its bid for the goods or works to be provided. This includes: Instruction to the bidders proposed pricing (e.g. unit prices or lump sum), currency arrangements qualification standards set out for bidder (where no prequalification) Terms of Reference (TOR) or Statement of Work (SOW) describing contract requirements evaluation criteria by which the award will be determined clarity and propriety of the borrower’s use of preferences (e.g. the method by which domestic bidders may be favoured ) insurance or bond requirements unusual provisions (e.g. large advance payments) proposed attachments to be included in the bidding documents borrowers’ list of proposed bidders to receive the invitation of bids draft contract to be awarded General Adequacy and Quality of the Bidding Documents Other Issues
  22. 22. Review of Draft RFP Is the procurement: in accordance with financing agreement & any subsequent changes reflected in mission reports within availability of funds (cost estimate by submitted by borrower) consistent with approved AWPB (& procurement plan) The RFP should provide all the information necessary for a consulting firm to prepare its proposal: instruction to consultant (including applicable forms and data sheets) requirements to specification of pricing (e.g. time-based, lump sum, reimbursable) currency arrangements terms of reference (TOR) describing contract requirements, overall as well as for individual personnel selection method evaluation criteria (technical & financial) by which the award will be determined clarity and propriety of the Borrower’s use of preferences (e.g. the method by which domestic consultants may be favoured ) insurance or bond requirements Unusual provisions Proposed attachments to be included in RFP Borrowers’ shortlist of consultants to receive RFP Draft contract to be awarded General Adequacy and Quality of the RFP Other Issues
  23. 23. Procurement Process for Goods, Services & Works FOR GOODS: Standard forms OK but attention should be given to the conditions of payment (avoid Letter of Credit & special commitment, direct payment if possible, advance payment against bank or insurance guarantee*) FOR SERVICES: depends on scope of services & duration of these services FOR WORKS: Standard form but specific model for community intervention * Specific criteria are being developed for use of insurance guarantees, which are acceptable only in specific circumstances including wording, whether World Bank permits, regulatory framework, and depend on country context Contract Forms
  24. 24. Procurement Process for Goods, Services & Works Each request of No Objection (NO) should be numbered in a continuous manner with the name of project, country code and date, for example: NO 08/RWA/PAPSTA/28022011 = 8th request of NO from PAPSTA project in Rwanda dated 28th February 2011 Step 4 Prior Review and Approval Procurement process approved in AWPB & in line with Procurement plan Open or limited tender or prequalification documentation Advert of publication & list of newspapers, magazines, etc. Letter of invitation List of pre selected bidders with justifications Instructions to bidders, rules of evaluation, conditions of payment TS or TORs or BoQ adequacy Contract form General & special conditions of contract Bid security & other bonds
  25. 25. Procurement Process for Goods, Services & Works Step 5 Step 6 Open Tender Publication Opening Session of Bids Recommended: a box for the deposit of bids Step 7 Evaluation of Bids/ Request for Proposal Crucial Steps Composition of the evaluation committee (procurement, financial, technical) The report should be structured as follows: Background, reference to NO, publication, list of bidding documents purchased or sent, bids or proposals received, minutes of opening session, technical & evaluation steps with recommendation The evaluation process for goods should be conducted as follows:
  26. 26. Procurement Process for Goods, Services & Works Before proceeding to the detailed evaluation, the evaluators appointed by Project have to declare the bids received as acceptable & responsive . Acceptability : The bids are acceptable if: submitted before the deadline from a duly solicited supplier (in case of Selective bidding) written in English (or in the requested language) sealed in an envelope in conformity with Instructions to Bidders Responsiveness : The bids are responsive if: they include a bid security (if requested) the quoted prices are fixed not subject to variation if so stipulated in the Bidding Docs; (v) the quoted prices are valid for the period requested they are duly signed and initialed the prices quoted are for one or several complete lot(s) First Step
  27. 27. Procurement Process for Goods, Services & Works The Evaluators will proceed to: conversion to a single currency of all bids quoted in foreign currency by using official selling rate of exchange of recipient country on closing date of bids multiplication of unit price by quantity to verify total price quoted by item & grand total for all items. In case of discrepancy between unit price & total, unit price shall prevail verification of actual quantities of goods proposed & possible modification as above in case of obvious arithmetical errors Second Step – Preliminary operations:
  28. 28. Procurement Process for Goods, Services & Works The Annex attached to tendering & contracting procedures should include some specific, detailed evaluation (technical & financial) of goods Third Step – Specific & detailed technical & financial evaluation :
  29. 29. Procurement Process for Goods, Services & Works EVALUATION OF RFP FOR SERVICES Technical Proposal A two-stage procedure is adopted in evaluating proposals. The technical evaluation shall be carried out first, followed by financial evaluation The evaluation committee appointed by Project shall carry out evaluation, applying evaluation criteria & point system specified in Data Sheet . Each responsive proposal is attributed a technical score Proposals by other firms (scoring below quality threshold) shall be rejected & financial proposals returned unopened Request for IFAD’s No-Objection for Technical Evaluation Report
  30. 30. Procurement Process for Goods, Services & Works Financial Proposal Public Opening of Financial Proposals , disclosure of respective Technical Scores The evaluation committee, after determining whether the financial proposals are complete and without arithmetic errors, shall convert prices in various currencies to common currency specified in the Data Sheet The official selling rates used shall be provided by indicated source The financial proposals shall be ranked with lowest proposal ranked first The maximum of points is allocated to lowest price proposal All other financial proposals will receive points inversely proportional to those of lowest price: e.g. [total financial component points] x [US$ lowest]/[US$ other] = points for other financial proposal Negotiation: Prior to expiration of the validity of proposal, the Client shall notify the Consultant who submitted the No. 1 ranking proposal in writing & invite them to negotiate scope of contract, duration, reimbursables , etc.
  31. 31. Step 8 Evaluation Review & Contract Approval Procurement Process for Goods, Services & Works IFAD does not require a specific format of the evaluation report, but the report should include as a minimum: a listing of all applicants their ratings keyed to specific criteria & items of information requested the list of rejected applicants with a detailed justification for rejection the resulting proposed list of prequalified applicants
  32. 32. Procurement Process for Goods, Services & Works receipt & opening of bids (including minutes of the public bid opening) examination of bids substantially non-responsive bids correction of arithmetic errors & currency conversion adjustment for non-material deviations bids subject to detailed evaluation evaluation & comparison of bids lowest evaluated responsive bid post qualification award recommendation There is no standard format for the bid evaluation report, but the report should to the extent possible cover & reflect the logical sequence of a standard bid evaluation process in the following manner:
  33. 33. Step 9 Contract Notification Step 10 Contract Execution & Management Procurement Process for Goods, Services & Works
  34. 34. Procurement in Project Completion Process To ensure that all goods are delivered/ works completed/ services rendered by project completion date Closely review & monitor the final procurement plan & progress reports during last year of Project Take measures to facilitate completion of physical execution of contracts Cancel contracts that cannot be executed within completion date Ensure that only contracts executed by project completion date are paid Ensure that procurement files are complete & obtain missing documents from Project Report on lessons learned & make recommendations for future projects
  35. 35. Key Tools for Successful Procurement A complete financial & administrative procedures manual (Implementation/ Operations Manual) A well-prepared start-up workshop with technical session The technical session should include discussions about importance of quality submissions , frequent causes of delays , timing issues A ‘ procurement plan ’ summarising procurement methods, applicable rules & prior review requirements as per Financing agreement Assessment of procurement capacity at national/ project level Training of relevant PMU & national partners Procurement expertise at national/ project level (complemented by on-going capacity building ) Procurement expertise at IFAD level (procurement specialist to assist CPM)
  36. 36. How to avoid delays in procurement Lack of procurement plan or inadequate/incomplete procurement plan Poorly designed and/or unrealistic AWPB Imprecise and ambiguous terms or documents for bid evaluation method & selection criteria Absence of confidentiality at various stages of bid evaluation process &/or selection of winning bid Failure to justify rejection of bids or non-selection of a competitive bid Political interference in the procurement process Corruption, fraud, conflicts of interest & mis-procurement Poor qualification of evaluation committee members Lack of procurement capacity at borrower &/or project level Poor understanding of IFAD procedures at borrower &/or project level Confusion between national procedures & IFAD guidelines / loan agreement procedures Cumbersome procedures & bureaucracy for approval of procurement documents at borrower level Long delays in issuance of no-objections by IFAD Long response time by IFAD to queries from PMU
  37. 37. Thank you