ZHRC/HTI Financial
Management Training
Session 7: Procurement and
Tendering Methods
Learning Objectives
• By the end of this session participants will be able
to:
• Describe different procurement methods
• Know factors affecting the choice of procurement
method
• List monetary procurement value thresholds for the
different methods
• Define tendering
• Describe tendering processes
• Describe the preparation of tendering documents
• Explain awarding and evaluation of tenders
Procurement Methods
• Tanzania Procurement Regulations of 2005
require that procurement of goods, works and
services be made through competitive
tendering
• There are several methods of competitive
procurement including:
• International competitive tendering
• National competitive tendering, restricted
tendering
• Competitive quotations
International Competitive Tendering:
(Reg. 65)
• International Competitive Tendering (ICT) is
used when there will be participation from foreign
suppliers
• Procuring entity is required to invite suppliers or
contractors, regardless of nationality, to submit
priced tenders
• International competitive tendering is used:
• Where it is desired to attract tenders from a wide
range of suppliers or contractors
• Where payment is to be made in foreign currency
National Competitive Tendering:
(Reg. 66) (1)
• National Competitive Tendering (NCT) is
used when the procuring entity does not
intend to invite foreign suppliers or
contractors to participate in tendering
• The procuring entity is required to invite
suppliers or contractors, regardless of
nationality, by means of tender notice
advertised only in the national press
• Foreign firms wishing to participate are
allowed to do so. Tender documents may be
in Kiswahili language
National Competitive Tendering:
(Reg. 66) (2)
• NCT is appropriate in the following cases:
• Payment is to be made in Tanzanian shillings
• Goods or works are available within Tanzania at
prices below the international market
• Estimated cost of goods or works is small and
does not exceed threshold for international
competitive tender
• Costs involved in using international competitive
tendering method outweigh its advantages
• Foreign suppliers are not expected to be
interested in the tender
Restricted Tendering: (Reg. 67) (1)
• Restricted tendering is inviting tenders
from a few selected potential suppliers
• Restricted tendering may be used in the
following cases:
• Goods required are of specialized nature or
can be obtained from a limited number of
reputable suppliers
Restricted Tendering: (Reg. 67) (2)
• Restricted tendering may be used when
(list continued from previous slide):
• There is an urgent need for goods or works
such that there would be insufficient time for
procuring entity to engage in national or
international tendering
• There are other exceptional reasons to justify
departure from full competitive tendering
procedures
Competitive Quotations: (Reg. 68) (1)
• Quotations are invited from a minimum of
three suppliers
• They are compared to ensure competitive
prices
• The contract is awarded to the supplier
with lowest-priced quotation meeting the
needs of procuring entity
Competitive Quotations: (Reg. 68) (2)
• This method is used in the following situations:
• Goods to be procured are so diversified that it
would be of no commercial interest for any single
supplier to tender for them
• Goods are readily available off the shelf or the
goods are standard specification commodities
• List of suppliers to be contacted has to be
submitted to Ministerial Tender Board (MTB) for
approval
• Once approved, the request for quotations should
be sent simultaneously to suppliers
Single Source Procurement:
(Reg. 69) (1)
• Single source procurement is when goods
or services are procured from a single
supplier
• Should be approved by appropriate Tender
Board
• This method is used when goods are
available only from a particular supplier and
no reasonable alternative exists, or when…
Single Source Procurement:
(Reg. 69) (2)
• There is an urgent need for goods, and use of
other procurement methods would be
impractical
• Provided that circumstances giving rise to
urgency were neither foreseeable by procuring
entity nor result of dilatory conduct
• Where additional supplies of same type as
those purchased under an existing contract
are required
Minor Value Procurement: (Reg. 71)
• Goods or minor works may be procured
directly from a supplier where no advantage
is likely to be obtained by seeking further
quotations
• Appropriate where price quoted is reasonable
and value of goods and services does not
exceed Tsh 10,000,000/=, or value of minor
works does not exceed Tsh 20,000,000/=
• And for non consultancy services does not
exceed Tsh 10,000,000/= as specified in Second
Schedule of these regulations
Force-Accounts (Reg. 73) (1)
• Force account procurement is used for
construction conducted by a public agency
using its own personnel and equipment
• Force account may be justified where:
• The works are small and scattered or in
remote locations for which qualified
construction firms are unlikely to tender at
reasonable prices
Force-Accounts (Reg. 73) (2)
• Work is required to be carried out without
disrupting ongoing operations
• Risks of work interruption are better borne by
a procuring entity or public authority than by a
contractor; or
• There are emergencies needing prompt
attention
Procurement Method Choice
• Various procurement methods can be employed.
Guiding factors include:
• Value of procurement
• Urgency
• Nature of requirement
• Limited number of supply sources
• Currency of payment
• Standardization
• Contract Extensions
Monetary Procurement Thresholds
(Second Schedule)
Methods of Selection and Limit of Application
Method of
Procurement
Goods
Works
Disposal of
Assets
No limit
Non
Consultancy
Services
No limit
International
competitive
tendering
No limit
National
competitive
tendering
Restricted
tendering
Up to Tshs
800,000,000
Up to Tshs
3,000,000,000
Up to Tshs
500,000,000
Up to Tshs
3,000,000,000
Up to Tshs
Up to Tshs
Up to Tshs
Up to Tshs
Competitive
quotations
400,000,000
Up to Tshs
80,000,000
1,500,000,000
Up to Tshs
100,000,000
200,000,000
Up to Tshs
50,000,000
100,000,000
Not
applicable
Single source
procurement
Up to Tshs.
500,000,000/-
Up to Tshs
800,000,000
Up to Tshs.
100,000,000
Not
applicable
Up to
20,000,000
Up to
10,000,000
Not
applicable
Source: PPR, 2005, G. N 97
Minor value
procurement
Up to
10,000,000
No limit
Group Work:
Choice of Procurement Method
Tendering Processes
What is Tendering?
Definition of Tendering
• Tendering is one of the methods of
procurement whereby potential suppliers
are invited to make a formal offer to supply
goods, provide services, or carry out
works; which on acceptance, shall be the
basis of subsequent contract
Need for Tendering and Its Application
• Procuring entities create an annual
procurement plan which is submitted to
the PMU for action
• Procurement officers are required to
prepare tendering packages and to
advertise them to ensure transparency
and guarantee receiving the best value for
Government money
Tendering Procedures
• Tendering process in procuring entity may be
divided into several stages:
• Preparation of tender documents
• Review and approval of tender documents by the
Tender Board
• Advertising of tender and issuing of tender
documents
• Submission and custody of tender bids
• Opening of tenders
• Evaluation of tender
• Approval and award of the tender by the tender
board
Preparation of Tender Documents (1)
• Tender documents generally include the following
components, each is discussed in slides that follow:
• Section 1: Invitation for Tenders
• Section 2: Instruction to Tenderers
• Section 3: Tender Data Sheet
• Session 4: General Conditions of Contract
• Section 5: Special Conditions of Contract
• Section 6: Schedule of Requirements
• Section 7: Sample Forms
• Section 8: Technical Specifications
• Section 9: Security Forms
• Section 10: Anti-Bribery Policy/Code of Conduct
Preparation of Tender Documents (2)
• Tender documents generally include the
following components:
• Section 1: Invitation for Tender
• This is a letter that invites bidders to apply for
tenders. It provides basic information that will
attract and inform potential bidders on how to
obtain the tender document.
Preparation of Tender Documents (3)
• Section 2: Instructions to Tenderers
• This Section explains how to prepare the bid,
requirements or documents that should be
attached to the bid, whether bid security is
required, criteria used for evaluation and the
time and place of bid opening.
• Section 3: Tender Data Sheet
• Provides information that supplements or
amends instructions to bidders.
Preparation of Tender Documents (4)
• Section 4: General Conditions of Contract
• Contains general conditions for supply of goods
under tendering methods. The conditions are
standard for all tenders pursued under the Public
Procurement Act .
• Section 5: Special Conditions of Contract
• Some tenders have special conditions that
supplement or amend the General Conditions.
Preparation of Tender Documents (5)
• Section 6: Schedule of Requirements
• This form should be completed by the
Procuring Entity indicating description,
quantity and delivery schedule. The bidder
will use this information during performance of
the contract. The bidder must indicate
compliance with the schedule.
Preparation of Tender Documents (6)
• Section 7: Sample Forms
• Forms that should be filled in by the bidder
include:
•
•
•
•
•
Bid Forms
Price schedules for local and imported goods
Forms for qualification information
Sample Letter of Acceptance
Sample contract
Preparation of Tender Documents (7)
• Section 8: Technical Specifications
• These are prepared by the buyer. Technical
specifications describe the physical
characteristics of required goods or works.
• Section 9: Security Forms
• Used by bidders to prepare the bid security or
bonds or bid security declaration.
Preparation of Tender Documents (8)
• Section 10: Anti-Bribery Policy and
Code of Conduct
• These are also called integrity forms.
The bidder is required to fill in the forms and
or attach the Company’s Code of Conduct or
Anti-Bribery Policy. The absence of these
forms in a bid is sufficient to disqualify a
bidder.
Preparation of Tender Documents (9)
• Tender documents should be worded to
encourage competition
• The documents should clearly and
precisely provide all information necessary
for potential tenderers to prepare bids
Preparation of Tender Documents (10)
• Tender documents should be worded to
encourage competition
• The documents should clearly and
precisely provide all information necessary
for potential tenderers to prepare bids
Opening of Tenders (1)
• Tenders should be opened at the deadline for
receipt of tenders or promptly thereafter
• All tenders submitted before the deadline shall
be opened in public and the following read out
loudly:
• Tenderers’ names
• Tender prices and total amount of each
tender
• Discount if any
• Tender security
Opening of Tenders (2)
• Tenders should be numbered
consecutively
• Secretary of the Tender Board should
prepare minutes of opening
Evaluation of Tenders (Reg. 90-94) (1)
• Accounting Officer or Chief Executive Officer
shall establish a tender evaluation committee
which should be comprised of not less than three
and not more than five members
• All tenders that have been accepted and opened
should be passed promptly to the evaluation
committee
• Record of tenders received and attendees of the
opening meeting should also be provided to the
evaluation committee
Evaluation of Tenders (Reg. 90-94) (2)
• Tender evaluation should be consistent
with the terms and conditions of the tender
documents
• The evaluation shall be carried out using
the criteria explicitly stated in the tender
documents
Tender Evaluation Sequence
• Tender evaluation should be carried out in
the following sequence:
1. Preliminary evaluation to determine
commercial responsiveness
2. Detailed Technical Evaluation
3. Post-qualification to the lowest
evaluated bidder
Preliminary Examination
• During preliminary examination, the committee
will establish whether each tender is substantially
responsive to requirements of tender documents
• A substantially responsive tender conforms to
terms and conditions of tender documents
without material deviations
• A material deviation affects the scope, quality or
performance of contract, or is inconsistent with
tender document
• Procuring entity may ask suppliers/contractors for
clarification of their tenders
Negotiation (Reg. 95) (1)
• Negotiation may be undertaken with lowest
evaluated tenderer
• Negotiation with tenderers are not permitted until
after tender board has approved evaluation
committee's recommendations
• PMU shall recommend membership of a
negotiation team based on appropriate seniority
and experience depending on value and
complexity of procurement
• Tender board shall approve the negotiation plan
prior to negotiations taking place
Negotiation (Reg. 95) (2)
• Prior to confirming an agreement, the
Procurement Management Unit shall seek
approval of the Tender Board
• Appropriate tender board shall approve the
negation plan prior to any negotiations
taking place
• Prior to confirming any agreement reached,
the Procurement Management Unit shall
seek approval of the Tender Board
Negotiation (Reg. 95) (3)
• Negotiations may be undertaken with the
lowest evaluated bidder in the following
areas:
• A minor alteration of the technical details
• Reduction of quantities for budgetary reasons
• A minor amendment to the special conditions
of contract
• Finalising payment arrangements
Negotiation (Reg. 95) (4)
• Mobilisation arrangements
• Agreeing to final delivery or work
schedule to accommodate changes
required by procuring entity
• Methodology or staffing
• Clarifying details that were not apparent
or could not be finalised at time of
bidding
Negotiation (Reg. 95) (5)
• Negotiations shall not be conducted to:
• Substantially change specification or details of
requirement, including tasks or responsibilities
of tenderer
• Materially alter terms and conditions of
contract
• Reduce prices
• Increase prices in case of disposal of assets
Approval of Award of Contract (1)
• Evaluation committee will prepare a
detailed report on evaluation of tenders
• Committee will give specific reasons upon
which the determination of the lowest
evaluated tender is based
• Report will be submitted to PMU
Approval of Award of Contract (2)
• Tender Board shall review the evaluation and
may either:
• Approve recommendation and, authorize the
procuring entity to accept the tender and award
a contract
• Refuse to authorize any of the of tenders and
refer the evaluation back to procuring entity
with instructions to re-evaluate tenders the
tenders or re-tender
Award of contract must be made within period of
validity of the bid or extension thereof
Group Work:
Tendering Process
Key Points (1)
• Procurement methods include:
•
•
•
•
•
•
•
International competitive tendering,
National competitive tendering
Restricted tendering
Competitive quotations
Single source
Minor value procurement
Force accounts
• A number of factors can guide in selecting
procurement methods
Key Points (2)
• Tendering is inviting suppliers to make a formal
offer to supply goods, services or works, shall be
the basis of the contract.
• Tendering procedures include:
•
•
•
•
•
•
•
Preparation of tender documents
Approval of documents by Tender Board
Advertising of tender
Submission and custody of bids
Opening of tenders
Evaluation of tenders
Approval and award of tender by the Tender Board