Capacity Building Manual for Procurement
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Capacity Building Manual for Procurement A Training Manual for Capacity Building for Procurement Anjum Asim Shahid Rahman PROCUREMENT, CONTRACT MANAGEMENT AND CAPACITY BUILDING PROJECT 2-Ali Plaza, 1-E, Jinnah Avenue, Blue area, Islamabad 1 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Tel: 2271906, Fax: 2273874 Table of contents Part I-Pre-Procurement 1. 2. 3. 4. 5. Procurement Process Procurement Cycle Procurement Planning Differences in Procurement Types and Methods of Procurement 4 7 9 14 16 Part II-Procurement 6. Procurement of Goods 7. Major Steps in Procurement of Goods 8. Methods of Procurement 9. ICB 10. Other Methods of Procurement a. Limited International Bidding (LIB) b. National Competitive Bidding (NCB) c. Shopping/Small Procurement d. Direct Purchase/Single Source e. Force Account 21 23 34 Part III-Hiring of Consultants 1. Hiring of Consultants 56 2. Methods used for Selection of Consultants (Firms and Individuals) 58 a. b. c. d. e. f. g. QCBS Quality Based Selection Fixed Budget Selection Single Source Selection Least Cost Selection Selection on Consultants’ Qualifications Selection of particular type of Consultants 3. Contract problem areas 59 79 81 83 85 87 89 2 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Part IV General 1. 2. 3. 4. 5. 6. 7. 8. 8. 9. Incoterms Fraud & Corruption Review by IBRD/IDA (Donor) Mis-Procurement Conflict of Interest Record Keeping Guarantees Contract Administration Contract Close out Test 93 95 97 104 106 109 123 125 127 Part V Exhibits/Annexure 3 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement ACRONYMS AND ABBREVIATIONS NACP PACP GOP MoF PPRA MoH DoH IDA IBRD WB ADB TOR SOW SBD ICB NCB LIB IFB RFQ LEB BEC TEC EOI RFP QCBS QBS SBCQ P.O. S.O. National AIDS Control Programme Provincial AIDS Control Programme Government of Pakistan Ministry of Finance Public Procurement Regulatory Authority Ministry of Health Department of Health International Development Agency International Bank for Reconstruction and Development World Bank Asian Development Bank Terms of Reference Scope of Work Standard Bidding Document International Competitive Bidding National Competitive Bidding Limited International Bidding Invitation for Bids Request for Quotations Lowest Evaluated Bid Bid Evaluation Committee Technical Evaluation Committee Expression of Interest Request for Proposals Quality and Cost Based Selection Quality Based Selection Selection Based on Consultants’ Qualification Purchase Order Supply Order 4 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Pre-Procurement 5 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Procurement Process 6 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement FLOW CHART OF THE PROCUREMENT PROCESS Financing Agency Project Authority Normally Agrees During d Appraisal Define goods, works, D and services package contracts, methods of procurement Bidder/ Contractor Other Methods Of Procurement Competitive Bidding Prequalify Bidders NO Reviews YES Prepare Bid Docs Prepare Prequal Docs Reviews Advertise Bidding Docs. Advertise Issue Prequal. Docs. Takes Out Documents Prepare Bidding Docs Reviews Evaluate, Select Qualified Bidders Reviews Submits Inform. Takes Out Bid. Docs Issue Bid Documents 7 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement FLOW CHART OF THE PROCUREMENT PROCESS (CONTINUED) Financing Bidder/ Agency Reviews Project Authority Contractor Receives Clarification Requests Prebid Meeting Attends Meeting Or Requests Reviews Issues Clarification ssues Receives Clarification Reviews Receives Bids & Evaluates Submits BID Reviews Makes Award Receives Copy of Contract Formalizes, Signs Contr. Signs Contract CONTRACT Issues Notice To Proceed Start Work WORK Acknowledges Award 8 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Procurement Cycle 9 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement The Procurement Cycle Planning Gen. Proc. Notice (ICB) Bid Doc. Prep. (Prequalification) Publicize Receive Bids For ICB: Language, currency Provisions, Bank Review, award to LEB Open Bids Evaluate Bids Award contract Perform Contract Performance Eval. Report Bank review: Planning Prequal Doc. & Eval. Bid Doc. Bid Eval. Contract 10 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Procurement Planning 11 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Procurement Planning Separate for: Services Goods Decide Contract Packages: What – like items, large, small, values slice and package How – ICB, NCB, other, co-financing (Ref. to credit Agreement) When each step, each package Who - to do, to review Determine lead time: Administrative Manufacture Delivery Plan: Critical dates for each package Tabulate/prepare bar chart Periodically update Use of monitoring 12 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Format of Procurement Plan 13 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement PROCUREMENT PLAN FOR CONSULTANTS’ SERVICES UNDR (Project Name) Procurement Activity: Procurement Activity: Procurement Activity: Est. cost: Est. cost: Est. cost: Method of procurement: Method of procurement: Method of procurement: Procurement Steps for Consultants Planned Dates Actual Dates Planned Dates Actual Dates Planned Dates Actual Dates Preparation of TORs/Cost Estimates/EOI Bank’s No-objection to TORs and EOIs (for prior review cases only) Advertising for Expression of Interests in National Newspapers. Additionally advertising in UNDB required for contracts above $200,000 Receipt of Interests from Firms Preparation of Short List Bank’s No-objection to Short List (For prior review cases only) Preparation of RFP Bank’s no-objection to RFP (for prior review cases) Issuance of RFP to Short-listed Firms Receipt of Technical and Financial Proposals Completion of Technical Evaluation Bank’s No-objection to Technical Evaluation (for prior review cases) Opening of Financial Proposals Completion of Combined/Final Evaluation Bank’s Clearance of Combined/Final Evaluation (for prior review cases) Negotiations/ Preparation of Draft Contract Bank’s No-objection to draft Contract (for prior review cases) Contract Signing 14 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement PROCUREMENT PLAN FOR GOODS UNDER (Project Name) Procurement Steps for Goods Procurement Activity: Procurement Activity: Procurement Activity: Est. Cost: Est. Cost: Estimated Cost: Method of Procurement: Method of Procurement: Method of Procurement: Planned Dates Planned Dates Planned Dates Actual Dates Actual Dates Actual Dates Preparation of Bidding Documents / (Request for Quotations in case of Shopping) Bank’s No-Objection to Bidding Documents (for prior review cases) Advertisement of Invitation for Bids Bid Submission/Opening Date Completion of Evaluation and Recommendations Bank’s No-objection to Evaluation and contract award (for prior review cases only) Award of Contract Copy of signed contract sent to Bank (for prior review cases) Completion of Contract 15 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Differences in Procurement 16 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Differences in Procurements GOODS “Red” Guidelines Product based Open competition Cost major factor Specifications Single stage procedure Negotiations rare Invitation of bids Public bid opening Bid and Performance Securities CONSULTING SERVICES “Green” Guidelines Knowledge based Shortlist Quality major factor Terms of Reference Two stage procedure Negotiations usual Request for proposals Technical proposal opening not public Financial proposal opening public No Securities Note: For further details please refer to the copies of the World Bank Guidelines and Government of Pakistan Procurement Rules 2004 enclosed in the training package. 17 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Types and Methods of Procurement 18 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Types Generally the following types of procurement are to be processed / carried out under the project: Procurement of Goods Hiring/Contracting for Consultants’ Services (Firms and Individuals). 19 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Methods of Procurement For Goods: Full and Open Competition internationally, which is also called International Competitive Bidding (ICB) Limited International Bidding (LIB) Full and Open Competition within country, which is also called National Competitive Bidding (NCB) Small Procurement or National Shopping/International Shopping Direct Purchase / Single Source Force Account For Services: QCBS SBCQ QBS Others like, Fixed Budget Single Source Least Cost Selection 20 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement PROCUREMENT METHODS There are various methods of procurement which are used in accordance with the situation and requirements of the legal document, like: For Goods Procurement through Full and Open Competition under World Bank financed procurement called International Competitive Bidding (ICB) Competition within the country which is also Full and Open Competition but within the country, and is usually called NCB Shopping or Small Purchase Under the legal documents of the Project, however, the following procurement methods are to be used. 1. Procurement of Goods 2. Contracts amounting US$ 200,000 and above shall be procured using ICB procedures. Contracts amounting from US$ 30,000 to 200,000 shall be procured using NCB procedures. Contracts up to US$ 30,000 shall be procured using National Shopping Procedures.(+) Hiring/Contracting for Consultants’ Services Firms and Individuals. A. Firms B Contracts amounting to US$ 100,000 and above will be achieved by using QCBS Method. Contracts up to US$ 100,000 will be achieved by using SBCQ Method Individuals All Contracts will be achieved by using QBS Method. Under this project, shopping procedures are not to be followed and procurements of more than Rs. 40,000 must be achieved through open competition inviting bids through advertisement. 21 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Part II Procurement of Goods 22 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Procurement of Goods Goods contracts of US $ 2, 00,000 and above are competed internationally (ICB). Contracts upto US $ 2, 00,000 or less are competed through full and open competition within the country (NCB). Procurement of smaller value i.e. upto US. $ 30,000 are made through shopping which does not require bidding through wide publicity but the competition must be held, and at least three quotations should be obtained and compared. Under this project, shopping procedures are not to be followed and procurements of more than Rs. 40,000 must be achieved through open competition inviting bids through advertisement. 23 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Procurement of Goods (Continued) Major Steps Preparation of specifications and cost estimates Preparation of IFB/RFQ Advertisement Issuance of IFB/RFQ Pre bid meeting Bid opening Bid Evaluation Preparation of Evaluation report Approval/NOL of Bid evaluation Award of contract 24 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Procurement of Goods (continued) ICB Adequate notification Equal opportunity Time for bid submission Fair conditions of contract Broad specifications Equal treatment of bidders Disclose evaluation criteria Apply without discrimination Award to lowest evaluated bid Technically & commercialy responsive (with adjustments) Meets qualification criteria 25 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Procurement of Goods (continued) ICB steps - Notification advertising - (prequalification) - Issue of bidding documents - Submission of bids - Public opening of bids - Evaluation - Selection of lowest evaluated bid - Post qualification - Contract award - Contract performance 26 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Reference Material (ICB) 27 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement PROCUREMENT OF GOODS I International Competitive Bidding (ICB) A. General The legal agreement specifies the type of goods and monetary limits for such contracts, which should be procured following the ICB procedures. The general considerations which guide ICB procedures are: B. Wide publicity on International and National level The need for economy and efficiency in procurement All eligible bidders from all member countries are given opportunity to compete Domestic preference Importance of transparency in the procurement process Eligibility The invitation for bid must be open to all bidders, as defined under the Bank’s guidelines. Inviting bids only from pre-registered firms is unacceptable. Foreign firms should also not be precluded from competing. As exceptions to the foregoing: a) A firm which has been engaged by the government to provide consulting services for the preparation or implementation of a project, and any of its affiliates, shall be disqualified from subsequently providing goods or works for the same project. b) Government – owned enterprises in Pakistan may participate only if they can establish that they are (i) legally and financially autonomous, and (ii) operate under commercial law. No dependent agency of the government shall be permitted to bid for the procurement of goods, works or consultants’ services. c) A firm declared ineligible because of fraudulent or corrupt practices in competing for or executing a Bank financed contract. All goods, contractor’s equipment, and other related services to be supplied under these contracts shall have their origin in the eligible source countries, defined under the Bank’s guidelines. For the purpose of this clause, origin means where the goods and related services are manufactured and produced. The origin of goods and services is distinct from the nationality of the bidder. C. Steps To Follow In ICB Process Packaging of goods and works (Qualification) Preparation of bidding documents 28 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Advertisement of invitation for bids (IFB) Internationally (in UN Business Development) Sale of bidding documents, and receipt of bids, and opening of bids Evaluation of bids Selection of lowest evaluated bid Post qualification Award of Contract Contract Performance These steps are further elaborated as follows: Packaging of Goods and Works: 1. 2. A procurement plan in the Bank’s suggested format indicating details for each package must be compiled and sent to Bank for review and clearance before initiating action. Keeping in view that goods and works are to be procured economically and efficiently, consistent with quality, appropriate individual packages should be made. In case of works the size and scope of individual packages will depend on the magnitude, nature, and location; in the case of goods, it depends on quantity and nature of items to be procured. Preparation of Bidding Documents 3. 4. 5. Bidding documents must be prepared on the basis of the models cleared with the bank for the project (Bank’s sample ICB bidding documents are attached). Deviations should not be made without prior clearance with the bank. For ICB contracts, Bank’s clearance is necessary for each bidding documents, even if these are based on approved models. Bidding documents should include the following: Part 1: Instruction to Bidders General conditions of the contract Part 2: Invitation to Bid Bidding data which specifies qualification criteria, and criteria for bid evaluation and contract award Special Conditions of Contract Technical specifications and drawings Schedule of requirements/schedule of completion Bill of Quantities (BOQ) Forms for Bid, Bid security, Contract Agreement, performance security advance payment security, and manufacturer’s authorization Some important provisions in the bidding conditions (Bid Data Sheet) are as below. i) Currency of Bid: Should be mentioned. 29 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement ii) Bid Security: Should normally be 2% of the bid price, or a fixed amount computed on the basis of estimated cost. No exemption of bid security should be permitted to any class of bidders. iii) Bid Prices: In the case of goods, bid prices are “delivered duty paid (DDP)”, at the destination specified. In case of civil works, bid prices must be invited based on each item specified in the BOQ, and not on Composite Schedule of Rates (CSR). Contractors should be made responsible for all materials and equipment without having to rely on departmental supplies. 6. iv) Evaluation Criteria: Relevant factors in addition to price to be considered in bid evaluation and the manner in which they will be applied for the purpose of determining the lowest evaluated bid. v) Qualification Criteria: In all cases where bidders are not prequalified, explicit post qualification criteria should be specified in the bidding documents. In case of civil works, minimum qualifying criteria for physical out-turn and financial turnover should be clearly set out. Some important provisions in the bidding documents under Special Conditions of Contract/Contract Data are: i) Inspection and Tests: specify what tests are required, where they will be conducted and who will conduct the tests. ii) Liquidated Damages: should not exceed 0.1% per day (for goods), and 0.05% per day (for civil works), of the contract price, subject to a maximum of 10% of the contract value. iii) Price Adjustment: should invariably be provided when the stipulated period of completion is more than 18 months. The adjustment formula is provided in the bidding documents. iv) Advance Payment: If any, must be paid against a bank guarantee. Advertisement of Invitation for Bids (IFB) 7. IFB must be advertised in UN Business Development, Public Procurement Regulatory Authority (PPRA) Website and at least one national newspaper, and must appear in all provincial capitals. Publication in other newspapers having wide circulation in the country. And in case of civil works sending a copy of the IFB to contractor’s Association of Pakistan (CAP) and Pakistan Engineering Council (PEC), is highly recommended. 30 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Sale of Bidding Documents and Receipt of Bids 8. Bidding documents must be made available for sale to all those who intend to participate in the bidding, for a minimum period of 45 days. 9. The price of bidding documents should be nominal, to cover reproduction and mailing expenses only. Bidders should not be asked to deposit bid security before submission of their bids. 10. Bidders must be permitted to deposit their bids on any day during the bidding period. Receipt of bids should not be restricted to a few days or last ten days only. Bidders should be allowed to send their bids either by post or in person on any day during the bidding period. 11. A record of all bidders who purchase the biding documents should be maintained in an orderly manner. 12. Pre-bid conference (optional): a) b) c) Should be provided where necessary, and should be convened early in the bidding process, but allow sufficient time for bidders to study the bidding documents and prepare questions. The date and time of pre-bid meeting must be specified in the bidding documents, in the bid data sheet. The purpose of the meeting will be to clarify issues and answer questions on any matter that may be raised at this stage. Minutes of the meeting indicating responses given in the meeting (including explanation of the query but without identifying the source of the inquiry) should be furnished to all those attending the meeting and subsequently to all purchasers of the bidding documents, after getting the same cleared with the Bank (for prior review contracts). Any modification of the bidding documents, if necessary as a result of pre-bid meeting, shall be made exclusively through issuance of amendment, and not through the minutes of the prebid meeting Opening of Bids 13. The date and time for opening of bids should preferably be the same as the deadline for submission of bids, however not more than one hour gap is acceptable. 14. All bids received must be opened in the presence of all bidders representatives who choose to attend. Participants shall sign a register/sheet prepared for the purpose evidencing their attendance. 15. The bidder’s name, bid prices, bid modifications or withdrawals, discounts, and presence or absence of the requisite bid security shall be announced during the opening of bids. The minutes of the bid opening, documenting the above, must be prepared. No bid shall be rejected at bid 31 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement opening, except for late bids, which shall be returned unopened to the bidder(s). 16. Bids and modifications that are not opened and read out at bid opening shall not be considered further for evaluation, irrespective of circumstances. Withdrawn bids will be returned to the bidder unopened. Evaluation of Bids 17. Before proceeding for evaluation, preliminary examination check should ascertain that the bids: meet the eligibility requirements; have been properly signed; are accompanied by the required bid security; are substantially responsive to the requirements of the bidding documents; and are otherwise generally in order. 18. If any bid is not substantially responsive, that is, it contains material deviations from or reservations to the terms, conditions and specifications in the bidding documents, it should not be considered further. The bidder must not be permitted to correct or withdraw material deviations or reservations once bids have been opened. 19 The department/agency/purchaser may waive any minor informality or nonconformity or irregularity in a bid which does not constitute a material deviation, provided such waiver does not prejudice or affect the relative ranking of any bidder. 20 No preferential treatment should be given to any bidder or class of bidders either for price or for conditions 21 Any procedure, under which bids above or below a predetermined assessment of bid values are automatically disqualified, is not acceptable. 22 For goods and works, all substantially responsive bids should be evaluated in detail as per procedure specified in the bidding documents. The following points should be noted: - - in case of goods, comparison of bids shall be on Delivered Duty Paid (DDP) prices for both goods and works, evaluation will exclude any allowance for price adjustment during the period of execution of the contract, if provided in the bid. bids should be loaded appropriately as per bidding documents for any acceptable deviation with reference to the requirements. 32 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement 23 Bonus or additional credits for bid evaluation should not be given for offered features that exceed the required standards or specifications, or earlier delivery schedule than specified in the bidding documents. 24 Bank’s suggested format for preparation of the bid evaluation report should be used for all contracts 25 A bidder should not be required as a condition of award to undertake responsibilities for work not stipulated in the specifications or otherwise to modify his bid. 26 Rejection of All bids: Regardless of value, if all bids are proposed to be rejected and bids are to be re-invited, the Bank’s prior concurrence should be obtained. In the case of civil works, the system of rejecting bids outside a predetermined margin or “bracket” of process should not be used without prior clearance with the Bank. 27 Post-Qualification: a) The Purchaser/Employer will determine to its satisfaction whether the bidder that is selected as having submitted the lowest evaluated responsive bid is qualified to perform the contract satisfactorily, in accordance with the criteria specified in the bidding document. b) The determination will take into account the Bidder’s financial, technical, and production capabilities, in accordance with the qualification criteria specified in the bidding documents. It will be based upon an examination of the documentary evidence of the Bidder’s qualifications submitted by the Bidder, as well as such other information as the Purchaser/Employer deems necessary and appropriate. c) An affirmative determination will be a prerequisite for award of the contract to the Bidder. A negative determination will result in rejection of the bid, in which event the Purchaser/Employer will proceed to the next lowest evaluated bid to make a similar determination of that Bidder’s capabilities to perform satisfactorily. Award of Contract 28 Contract should be awarded to a bidder whose bid has been determined to be substantially responsive and who has offered the lowest evaluated price provided further that the bidder is determined to be qualified to perform the contract satisfactorily and meets the qualification criteria specified in the bidding document. 29 In the case of works, if the bid of the successful bidder is seriously unbalanced in relation to the engineer’s estimate of the real cost of works, Performance Security should be increased to a level sufficient to 33 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement protect the department against loss in the event of subsequent default of the successful bidder under the contract. 30 If the contract is being let on a ‘Slice and Package” basis the lowest evaluated bid price (the combined cost of all the lots) will be determined in conjunction with other contracts to be awarded concurrently taking into account any discounts offered by the bidders for the award of more than one contract. 31 If extension of bid validity is required it should be sought from all bidders before stipulated expiry date, and not from the lowest alone. In the case of fixed price contracts, if the award is delayed by a period exceeding 60 days beyond the expiry of the initial bid validity, the contract price will be adjusted by a factor specified in the request for extension. The Bank’s prior concurrence is required for the first request for extension (if it is longer than eight weeks) and for all subsequent requests for extension irrespective of the period. 32 Price negotiation with the bidders is unacceptable. If the lowest evaluated, responsive and qualified bid exceeds the pre-bid cost estimates by a substantial margin, the causes for the excessive cost should be investigated and the Bank must be consulted to determine next step(s). 33 In case of prior review contracts, evaluation report and recommendations for award along with comparative statement should be sent to the bank for review and clearance before communicating award of contract. 34 Performance Security: a) b) c) Performance security should be obtained for the prescribed amount and in an acceptable form in the currency of the contract in accordance with the conditions of the contract. Additional security should be taken to cover the risks of unbalanced bids in case of civil works. Performance security should remain valid as stipulated in the bidding document. Failure of the successful bidder to sign the contract or furnish performance security within the specified period shall constitute sufficient grounds for the annulment of the award and forfeiture of the bid security in which event the purchaser may make the award to the next lowest evaluated bidder. 34 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Other Methods 35 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Other Methods of Procurement (Goods) Limited International Bidding National Competitive Bidding Shopping Direct purchase Force account Commercial practices Community participation UNICEF/ILO/WHO Commodity markets Procurement agents Inspection agents 36 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Limited International Bidding (LIB) Appropriate when - Amounts are small - There are only a few suppliers - Other exceptional reasons may justify departure from full ICB Procedure - No public advertising - Solicit bids from a limited number of suppliers - Procedures otherwise identical to ICB - No domestic preference 37 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement National Competitive Bidding (NCB) Appropriate when; - Foreign bidders are uninterested - Amounts are small - Nature of goods/work dispersed (Steps of NCB procurement cycle same as ICB) Principles generally the same as ICB; - Provide adequate competition - Adequate bid documents - Bid evaluation in accordance with pre-specified criteria - Assure award to the lowest evaluated bidder whose bid has been determined to be substantially responsive and meets the qualification criteria 38 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement National Competitive Bidding Conditions Does no exclude foreign bidders GPN not required Allows bidding in local language Bid security in Pak Rupees Payment in Pak Rupees All bids are evaluated and compared on the basis of goods delivered duty paid (DDP) No domestic preference 39 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Reference Material (NCB) 40 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement I NCB IS APPROPRIATE WHEN The NCB procedures are appropriate when it is certain that foreign firms will not be interested due to small values and nature of items II CONDITIONS FOR USING NCB GPN not required Foreign Firms are not precluded Allows bidding in local language Bid Security in Local Currency Bid Prices in Local Currency Payment in Local Currency No domestic preference Bids are evaluated and compared on the basis of goods delivered duty paid (DDP) 41 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement III National Competitive Bidding Procedures (NCB) Generally procedures for NCB are similar to those of ICB. In this Section/part procedures relating to NATIONAL COMPETITIVE BIDDING (NCB) are discussed A. General The legal agreement specifies the type of goods and woks and monetary limits for such contracts, which can be procured following the NCB procedures. The general considerations which guide NCB procedures are: B. The need for economy and efficiency in procurement All eligible bidders from within the country and from other member, countries are given opportunity to compete Importance of transparency in the procurement process Eligibility The invitation for bid must be open to all bidders, as defined under the Bank’s guidelines. Inviting bids only from pre-registered firms is unacceptable. Foreign firms should also not be precluded from competing. As exceptions to the foregoing: A firm which has been engaged by the government to provide consulting services for the preparation or implementation of a project, and any of its affiliates, shall be disqualified from subsequently providing goods or works for the same project Government-owned enterprises in Pakistan may participate only if they can establish that they are (i) legally and financially autonomous, and (ii) operate under commercial law. No dependant agency of the government shall be permitted to bid for the procurement of goods, works. A firm declared ineligible because of fraudulent or corrupt practices in competing for or executing a bank financed contract. All goods, contractor’s equipment, and other related services to be supplied under these contracts shall have their origin in the eligible source countries, defined under the Bank’s guidelines. For the purpose of this clause, origin means where the goods, and related services are manufactures and produced. The origin of goods and services in distinct from the nationality of the bidder. C. Steps to Follow In NCB Process Packaging of goods and works Preparation of bidding documents Advertisement if Invitation for Bids (IFB) 42 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Sale of Bidding documents, and receipt of bids Opening of Bids Evaluation of Bids Award of Contract A Procurement plan in the Bank’s suggested format indicating details for each package must be compiled and sent to bank for review and clearance before initiating action. Packaging of goods and works 1. Keeping in view that goods and works are to be procured economically and efficiently, consistent with quality, appropriate individual packages should be made. In case of works the size and scope of individual packages will depend on the magnitude nature, and location; in the case of goods, it depends on quantity and nature of items to be procured. Preparation of bidding documents 2. Bidding documents must be prepared on the basis of the models cleared with the bank for the Project (Bank’s sample NCB Bidding Documents are attached) 3. Deviations should not be made without prior clearance with the Bank. For prior review contracts, Bank’s clearance is necessary for each bidding documents, even if these are based on approved models. 4. Bidding documents should include the following: Part 1: Instruction to Bidders General Conditions of the Contract Part 2: Invitation to Bid - Bidding Data which specifies qualification criteria, and criteriafor bid evaluation and contract award. Special Conditions of Contract Technical Specifications and Drawing Schedule of Requirements/Schedule of completion Bill of Quantities (BOQ) Forms for bid, bid security, contract agreement, performance Security advance payment security, and manufacturer’s authorization. 5. Some important provisions in the bidding conditions (Bid Data Sheet) should be noted. i) Currency of bid: should be Pak Rupees 43 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement ii) iii) iv) v) 6. Bid Security: should normally be 2% of the bid price, or a fixed amount computed on the basis of estimated cost. No exemption of bid security should be permitted to any class of bidders. Bid Prices: In case of civil works, bid prices must be invited based on each item specified in the BOQ, and not on Composite Schedule of Rates (CSR). Contractors should be made responsible for all materials and equipment without having to rely on departmental supplies. In the case of goods, bid prices are delivered duty paid (DDP) at the destination specified. Evaluation: criteria relevant factors in addition to price to be considered and bid evaluation and the manner in which they will be applied for the purpose of determining the lowest evaluated bid. Qualification Criteria: In all cases where bidders are not prequalified, explicit post qualification criteria should be specified in the bidding documents. In case of civil works, minimum qualifying criteria for physical out turn and financial turnover should be clearly set out. Some important provisions in the bidding documents under special conditions of contract/Contract data should be noted: i) ii) iii) iv) Inspection and Tests: Specify what tests are required, where they will be conducted in who will conduct the tests. Liquidated Damages: Should not exceed 0. 1% per day (for goods), and 0.05% per day (for civil works), of the contract price, subject to a maximum of 10% of the contract value. Price Adjustment: Should invariably be provided when the stipulated period of completion is more than 18 months. The adjustment formula is provided in the bidding documents. Advance Payment: if any must be paid against the bank guarantee. Advertisement of IFB 7. IFB must be advertised in at-least one national newspaper, and must appear in all provincial capitals. Publications in other newspapers having wide circulation in the country. And (in case of civil works) sending a copy of the IFB to contractor’s Association of Pakistan (CAP) are highly recommended. Sale of Bidding Documents and Receipt of Bids 8. 9. 10. Bidding Documents must be made available for sale, to all those who intend to participate in the bidding, for a minimum period of 30 days. The Price of Bidding documents should be nominal, to cover reproduction and mailing expenses only. Bidders should not be asked to deposit bid security before submission of their bids. Bidders must be permitted to deposit their bids on any day during the bidding period. Receipt of bids should not be restricted to few days or 44 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement 11. 12. last ten days only. Bidders can send their bids either by post or in person on any day during the bidding period. A record of all bidders who purchase the bidding documents should be maintained in an orderly manner. Pre-Bid Conference (Optional): a. b. c. 13. 14. 15. 16. Should be provided where necessary, and should be convened early in the bidding process, but should allow sufficient time for bidders to study the bidding documents and prepare questions. Date and time of the pre bi meeting must be specified in the bidding documents, in the bid data sheet. The Purpose of the meeting will be to clarify issues and answer questions on any matter that may be raised at this stage. Minutes of the meeting indicating responses given in the meeting (including and explanation of the query but without identifying the source of the inquiry) should be furnished expeditiously to all those attending the meeting and subsequently to all purchasers of the bidding documents ,after getting the same cleared with the Bank (for prior review contracts). Any modification of the bidding documents, if necessary as a result of the pre-bid meeting shall be made exclusively, and not through the minutes of the pre-bid meeting. The date and time for opening of bids should preferably be the same as deadline for submission of bids, however maximum of one hour difference between these times is acceptable. All bids received must be opened in presence of all bidder’s representatives who choose to attend .Participants shall sign a register evidencing their attendance. The bidder’s name, bid prices, bid modifications or withdrawals, discounts and presence or absence of the requisite bid security shall be announced during the opening of the bids. The minutes of the bid opening documenting the above must be prepared. No bid shall be rejected at bid opening, except for late bids, which shall be returned to the bidder. Bids and modifications that are not opened and read out at the bid opening shall not be considered further for evaluation, irrespective of circumstances. Withdrawn bids will be returned to the bidder unopened. Evaluation of Bids 17. Before proceeding for evaluation, preliminary examination check should ascertain that the bids: a. Meet the eligibility requirements; b. Have been properly signed; c. Are accompanied by the required bid security ; d. Are substantially responsive to the requirements of the bidding documents(and); e. Are otherwise generally in order. 45 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. If a bid is not substantially responsive, that is, it contains material deviations from or reservations to the terms, conditions and specifications in the bidding documents, it should not be considered further. The bidder must not be permitted to correct or withdraw material deviations or reservations once bids have been opened. The purchaser may waive any minor informality or irregularity in a bid which does not constitute a material deviation, provided such waiver does not prejudice or affect the relative ranking of any bidder. No preferential treatment under which bids above or below a predetermined assessment of bid values are automatically disqualified, is not acceptable. Any procedure under which bids above or below a predetermined assessment of bid values are automatically disqualified, is not acceptable. For goods and works, all substantially responsive bids should be evaluated in detail as per procedure specified in the bidding documents. The following points should be noted a. In case of goods and works , evaluation will exclude any allowance for price adjustment during the period of execution of the contract, if provided in the bid, b. Bids should be loaded appropriately as per bidding documents for any requirements. Bonus or additional credits for bid evaluation should not be given for offered features that exceed the required standards or specifications, or earlier delivery schedule than specified in the bidding documents. Bank’s suggested format preparation of the bid evaluation report should be used for all contracts. A bidder should not be required as a condition of award to undertake responsibilities for work not stipulated in the specifications or otherwise to modify his bid. Rejection of All Bids: Regardless of the value, if all bids are proposed to be rejected and bids are to be re-invited, the Bank’s prior concurrence should be obtained. In case of civil works, the system of rejecting bids outside a predetermined margin or “bracket” of prices should not be used without prior clearance with the bank. Post Qualification: a. b. c. The purchaser/Employer will determine to its satisfaction whether the bidder that is selected as having submitted the lowest evaluated responsive bid is qualified to perform the contract satisfactorily, in accordance with the criteria specified in the bidding document. The determination will take into account the bidder’s financial, technical, and production capabilities, in accordance with the criteria specified in the bidding documents. It will be based upon an examination of the documentary evidence of the Bidder’s qualifications submitted by the Bidder, as well as such other information as the Purchaser/ Employer deems necessary and appropriate. An affirmative determination will be a prerequisite for award of the contract to the Bidder. A negative determination will result in rejection of the bid, in which event the purchaser will proceed to 46 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement 28. 29. 30. 31. 32. 33. 34. the next lowest evaluated bid to make a similar determination of that Bidder’s capabilities to perform satisfactorily. Award of Contract Contract should be awarded to a bidder whose bid has been determined to be substantially responsive and who has offered the lowest evaluated price provided further that the bidder is determined to be qualified to perform the contract satisfactorily and meets the qualification criteria specified in the bidding document. In the case of works, if the bid of the successful bidder is seriously unbalanced in relation to the engineer’s estimate of the real cost of works, performance Security should be increased to a level sufficient to protect the Department against financial loss in the event of subsequent default of the successful bidder under the contract. If the contract is being let on a “Slice and Package” basis, the lowest evaluated bid price (the combined cost of all the lots) will be determined in conjunction with other contracts to be awarded concurrently taking into account any discounts offered by the bidders for the award of more than one contract. If extension of bid validity is required it should be sought from all bidders before stipulated expiry date, and not from the lowest alone. In the case of fixed price contracts, if the award is delayed by a period exceeding 60 days beyond the expiry of the initial bid validity , the contract price will be adjusted by a factor specified in the request for extension( if it sis longer than eight weeks) and for all subsequent requests for extension irrespective of the period. Price negotiation with the bidders is unacceptable. If the lowest evaluated, responsive and qualified bid exceeds the pre-bid cost estimates by a substantial margin, the causes for the excessive cost should be investigated and the Bank must be consulted to determine next steps. In case of prior review contracts, evaluation report and recommendations for award along with comparative statements to the Bank for review and clearance before communicating award of the contract should be sent. Performance Security: a. Performance security should be obtained for the prescribed amount and in an acceptable form in the currency of the contract in accordance with the conditions of the contract. Additional security should be taken to cover the risks of unbalanced bids in case of civil works. b. Performance security should remain valid as stipulated in the bidding document. c. Failure of the successful bidder to sign the contract or furnish performance security within the specified period shall constitute sufficient grounds for the annulment of the award and forfeiture of the bid security in which event the purchaser may make the award to the next lowest evaluated bidder. 47 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Shopping 48 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Shopping International National - Appropriate Values are small Off the shelf goods Standard specification commodities - No Formal Bidding Document Requests for quotations to provide Description & quantity of goods Delivery time & place - Written Quotations Quotations by telex or facsimile acceptable - Usually at least three quotations (to ensure competitive prices) - International shopping Solicit quotations from at least 3 suppliers in 2 countries - National shopping Goods available from more than 1 source - No public opening of quotations 49 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement NATIONAL SHOPPING PROCEDURE There is an “agreement” between the World Bank and NATIONAL AIDS CONTROL PROGRAMME, Ministry of Health that Government of Pakistan Procurement Rules (PPRA RULES) will be used instead of NATIONAL SHOPPING PROCEDURES of the World Bank by AIDS Control Programmes. The PPRA rules require that all purchases over and above Rs. 40,000/- must be processed by open bidding which means that NCB procedures given in the previous pages should be followed. National Shopping Procedures as per the World Bank Guidelines are explained in the next section for information of the reader/user. IMPORTANT NOTE Please Consult the Legal Documents for Thresholds Fixed For Shopping 50 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Reference Material (Shopping) 51 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement I NATIONAL SHOPPING PROCEDURE A. General 1. B. The following pages use of shopping as a procurement method is explained. It elaborates on Para. 3.5 & 3.6 of the Guidelines. Shopping is intended to be a simple and rapid procurement method. Shopping is one of the least competitive procurement methods and may be abused unless it is carried out in compliance with the legal agreements, and observing a minimum of formality in the process, and with appropriate record keeping for verification and audit. In fact, the Bank has recently discovered cases of abuse that have culminated in declaration of mis-procurement. When is Shopping Appropriate? 2. Shopping may be used: a. b. To procure small amounts of off-the-shelf goods or standard specification commodities for which more competitive methods are not justified on the basis of cost or efficiency. In emergency projects or for urgent relief-type operations including re- establishment of vital services like utilities, communications, shelter, and vital supplies which stem from disasters or conflict. These emergency contracts may involve one or several activities in supply of goods, installation and commissioning, and very urgent minor civil works. In the case of civil works or supply involving substantial installation, the term shopping is not used but referred commonly as "price comparison". Because of the risk of abuse in procurement under shopping, the use of this method is restricted to cases when the justification for it is beyond contention. Borrowers may not use shopping only as an expedient to bypass more competitive methods or fraction large procurements into smaller ones solely to allow the use of shopping. When the nature of the specifications is complex or the type of procurement requires an elaborate, detailed evaluation system (i.e., efficiencies, delivery times, etc.,) that needs substantial documentation, a formal bidding process instead of shopping is used. Shopping is not appropriate in these cases, because it is a method that should not require complex documentation or all the formalities of a bidding process. C. Setting Thresholds 52 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement 3. Generally, the threshold for shopping does not exceed $100,000 equivalent for low risk implementing agencies1 but project teams set lower thresholds when the implementing agency is considered as a medium or high risk one in administering procurement. The loan/credit agreement establishes the threshold below which shopping may be used for individual contracts and the maximum aggregate amount that cannot be exceeded for each project, unless the aggregate amount cannot be estimated in advance. When the need for shopping arises during project execution and the loan agreement does not set the thresholds below which shopping is permitted or when changes in the existing arrangements are required, the project team clears their proposal with the RPA and the country lawyer before the client is notified of the acceptance by the Bank of the loan agreement amendments or waivers, as necessary. The threshold for shopping in emergency projects or relief operations may, with the clearance of the RPA be set above $100,000 to allow for quick restoration of vital services or for protection of life or critical assets. D. Number and Origin of Quotations to be compared 4. Interpretation of Para. 3.5 And 3.6 of the Guidelines require the purchaser to obtain and compare at least three quotations to establish reasonableness of price. Comparison of two quotations is justified only when there is evidence satisfactory to the Bank that there are only two reliable sources of supply (national or foreign as the case may be). It is possible that not all the suppliers invited will respond to the request for quotations. To minimize the risk of getting only one or two quotations, clients are advised to initially request more than three quotations. Clients may also at the time of the request, verify whether those being invited will make an offer or not. When there is more than one source for the goods, at competitive prices, in the country of the borrower, the purchaser may use national shopping, but must obtain at least three quotations. If this is not the case, then international shopping is used. Under international shopping, borrowers request quotations from suppliers from at least two different countries, including the Borrowers'. Quotation for foreign goods located in the Borrower country and offered by a firm located in the Borrower country, are considered as quoted from abroad for purposes of satisfying the " two different countries" rule. This is applicable, for example, to items such as computers, vehicles, etc., that are normally imported by dealers of the foreign manufacturers who are also able to provide after sales services. E. Firms to be Invited 5. The borrower exercises due diligence to satisfy itself that the firms invited to quote are reputable, well established, and are suppliers of the goods or services being purchased as part of their normal business. In case the borrower receives unsolicited quotations, these may be accepted after carrying out a similar due diligence exercise to verify the nature and reputation of the firms. 53 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement F. Form of Requests 6. The purchaser requests quotations by letter, fax, telex, electronic messaging, etc., (with proof of receipt and record keeping). The request includes the description and quantity of the goods, as well as the required delivery time and place for the goods or services, including any installation requirements, as appropriate. The request indicates the date by which the quotations are needed. In extremely urgent cases, described in Para. 1 (ii) (restoration of vital services), quotations for civil works may be requested in the form of unit rate prices (if work quantities are available with a reasonable degree of reliability), "cost plus fee" arrangements (when quantities cannot be reasonably determined in advance) or in the form of a lump sum based on cost estimates carried out by the borrower, or if not possible, by the contractors. G. Prices and Currencies 7. Prices for goods supplied from within the country (including previously imported items) are requested to be quoted EXW (ex works, ex factory, ex warehouse ex show room or off-the-shelf, as applicable), including all custom duties and sale and other taxes already paid or payable on the raw materials and components. For goods offered from abroad (i.e., not previously imported), prices are requested CIF or CIP. However, if the purchaser wishes to invite quotations on DDP basis, the Bank will not object. Staff should note that the use of DDP may pose an undue burden on foreign suppliers for estimation of custom duties and internal transport for relatively small purchases. Prices for civil works are requested, inclusive of all taxes and duties payable by the contractor. Prices can be quoted in any currency of the Bankmember countries. H. Submission of Quotations 8. I. Suppliers submit their quotations in writing, i.e., by fax, telex, letter, or electronic messaging (copies to be kept for the records). No bid or performance securities are required. There is no requirement for strict time and date for submission of quotations and for public opening, but normally requests for quotes indicate the expected date of submission of quotes, within one or two weeks of the initial request. In other cases, if the purchaser has not received at least three quotations within the time set, it verifies with the missing suppliers whether they intend to do so and how soon. Unless there is extreme urgency or there are already three or more quotations available, the client may give a reasonable amount of additional time; say three more days, to get additional quotations. At this point the client may proceed with the comparison of the proposals received. Comparison of Quotations 9. Quotations are compared after adding to the quoted price for goods, the estimated cost of inland transportation and insurance, if any, to the final 54 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement destination. For purposes of comparison, prices are converted into local currency at the exchange rate on the day of invitation of the quotes or the day of comparison. The lowest priced offer is selected. Purchasers may exercise discretion in selecting a quotation that is not the lowest priced, as far as there is a good justification. For example, a slightly higher price may be justified for faster delivery or immediate availability in cases of extreme urgency, when late delivery may result in heavy consequences for the purchaser. In such cases, the intention should be indicated in the request for quotation. J. Record of Award 10. The client documents the award decision and its rationale and keeps it for review and audit by the Bank, as needed. The record contains also the list of firms invited and the list and value of the quotations received and documents clearly that the award is based on sound economic criteria. K. Currency of Payment 11. L. 12. Purchase orders specify the currency of payment which is the currency of the quote. The Bank accepts payments in any currency of the member countries. Purchasing from UN Agencies Instead of Shopping The Department/Agency may purchase goods that otherwise would qualify for shopping under Para 3.5 and 3.6 of the Guidelines directly from UN agencies. 55 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Direct Purchase Includes: Extension of existing contract Standardization Proprietary items Process design requires critical items from specific supplier as condition of contractor providing performance guarantee In exceptional cases such as response to natural disaster Rationale: 56 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Part III Hiring of Consultants (Firms & Individual) 57 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Part III Hiring of Consultants 1. Methods used for selection of consultants (firms and individuals) a) QCBS i. ii. iii. iv. v. vi. vii. viii. b) c) d) e) f) g) Cost Estimates/TORs Advertising for EOI Short List preparation Short List of consultants Request for proposals (RFP) QBCBS – RFP Receipt of proposals Evaluation criteria Quality Based Selection Fixed Budget Selection Single Source Selection Least Cost Selection Selection on Consultants Qualifications Selection of particular type of Consultants 2. Contract problem areas 58 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement METHODS USED FOR SELECTION OF CONSULTANTS (FIRMS & INDIVIDUALS) QCBS SBCQ QBS FIXED BUDGET LEAST COST SINGLE SOURCE OTHERS MAJOR STEPS Preparation of TORs Expression of Interest Pre-proposal conference Receipt of technical and financial proposals Evaluation of technical proposals Public opening of financial proposals Combined evaluation of technical & financial proposals Approval /NOC to award recommendations/evaluation Award of contract 59 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement QUALITY AND COST BASED SELECTION (QCBS) 60 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement QCBS – STEPS Preparation of Terms of Reference (TOR) Preparation of Cost Estimate (Budget) Advertisement (EOI) Preparation of Short List Preparation and issuance of Request for Proposals (RFP): Letter of Invitation (LOI) Information to Consultants Receipt of proposals, opening and evaluation of technical proposals Public opening of financial proposals and evaluation of financial proposals Combined evaluation of quality and cost Negotiations Award of Contract 61 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement TERMS OF REFERENCE Implementing Agency/Deptt responsible for its preparation Bank or consultant may provide assistance, as the TORs must be prepared by a specialist Budget/TORs/Cost Estimate Define Objectives: short and general Define Scope: some detail and specific Background information: existing data, studies site conditions Reporting requirements (inception, progress, final reports) Deliverables/time schedule Facilities/services provided by Client/ Employer 62 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement COST ESTIMATES LOCAL CURRENCY Staff Cost Living Expenses Education Costs Travel Office Costs Other Reimbursables Price Escalation/Contingencies COST ESTIMATES FOREIGN CURRENCY Staff Cost International Travel Education Costs Travel Office Costs Other Reimbursable/ Misc. Price Escalation/Contingencies ADVERTISING FOR EOI GPN annually updated UNDB and “National” newspaper >$200,000 Optionally (depending on assignment) in an International publication Copy of advert to respondents to GPN Contact embassies 63 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Request DACON lists ADVERTISING FOR EOI ADVERTISING CONTENT: - Request information on firm’s experience and capability Keep it very simple Do not ask for “tailored” responses Give 30 days for response SHORT LIST PREPARATION SOURCES Purchaser’s knowledge Advertisement Expressions of Interest Associations DACON Banks’ Role COMPOSITION: Three to six firms Max. two of one country One from a developing country. If justified, assignment is small (less than $200,000) and consultants available 64 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement REQUEST FOR PROPOSALS (RFP) INCLUDES: STANDARD FORMS Letter of Invitation (LOI) Information to Consultants (ITC) Terms of Reference (TOR) Form of Contract Letter of Invitation (LOI) Standard – no need to prepare each time ITC SPECIFIC DETAILS – name, description, phasing, inputs, short list, address, limitations, evaluation criteria, validity period, etc. QCBS-RFP RECEIPT OF PROPOSALS Sufficient time (4 to 12 Weeks) Clarifications Extension Technical and Financial Proposals Opening of Proposals – Tech. Proposals opened by the committee and Financial proposals kept sealed - unopened. EVALUATION CRITERIA Not too detailed Cannot totally avoid judgment ITC Do not give points for unnecessary details No. Of similar projects Education Annual turnover 65 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement EVALUATION CRITERIA Basic Breakdown (EACH MARKED 0 – 100) FIRMS EXPERIENCE (Was considered in shortlist) 5-10 METHODOLOGY (Depends on complexity) 20-50 KEY PERSONNEL (only key) 30-60 TRANSFER OF KNOWLEDGE 0-10 PARTICIPATION BY NATIONALS 0-10 100 Each to be subdivided further EVALUATION CRITERIA - TRANSFER OF KNOWLEDGE Based upon specific measures of compliance, not generalities. - PARTICIPATION OF NATIONALS Refers to nationals in the team; a foreign firm could score higher than a local team. QCBS – Evaluation Criteria (Example) METHODOLOGY - Innovation Level of detail Understanding of assignment 30 30 40 100 66 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement QCBS – Evaluation Criteria (Example) KEY PERSONNEL - General Education Length of experience Positions held Time with the firm Experience in Developing Countries 5 5 10 10 10 QCBS – Evaluation Criteria (Example) ADEQUACY FOR ASSIGNMENT - Specific Education Specific Training Experiences in specific field 10 10 20 EXPERIENCE IN THE REGION - Knowledge of language - Culture, admin system 10 10 100 67 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Reference Material (QCBS) 68 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement PROCEDURES FOR HIRING OF CONSULTANTS (FIRMS) A HIRING OF CONSULTANTS The acquisition of consulting services is based on project requirements supported by the administrative action and availability of funds for the implementation. Selection Based on QUALITY AND COST (QCBS) When required services are of specific nature, a short list of 3-6, most qualified firms shall be drawn after inviting the expression of interest or prequalification questionnaire by advertising in major nation wide daily newspapers (two English and two Urdu) and then competing the requirement amongst these short listed firms/consultants. B SELECTION PROCESS -MAJOR STEPS If short listing is to be done before the selection of a firm, the process shall involve the following main steps:1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Preparation of Scope of Work (SOW)/Terms of Reference (TOR) including evaluation/selection criteria Preparation of budget/cost estimates for the assignment Advertisement for short listing/expression of interest Short listing of firms Request for proposals including its preparation and issuance (only to short listed firms) Receipt proposals (technical and financial) Evaluation of technical proposals Opening of financial proposals Combined technical cum financial evaluation (in case cost is a factor for evaluation) Negotiations Pre-Award Survey Award of Contract These steps are further elaborated in the following:1. Scope Of Work (SOW) / Terms Of Reference (TOR) SOW/TOR shall be prepared by the person in charge of the project or any other individual/ firm fully familiar with requirements of the project activity. SOW shall be compatible with the indicated available time frame and budget. It must clearly define: Purpose of the contract Background information of the project including relevant previous studies/publications. 69 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Objectives. Project description Scope of the assignment. Work Plans. Estimated input in the shape of person months/days of technical/professional staff, with a statement that these are mere estimates and consultants should propose their own estimates if they want, Expected deliverables including benchmarks. Obligations of Client. Obligations of the firm(s). Reporting requirements Evaluation Criteria on the basis of which proposals shall be evaluated. Some of these criteria with ranges of score for each may be:Specific experience of the firm Adequacy of the proposed work plan and methodology Qualification and competence of the proposed key staff Proposed Cost (If cost is to be included in the selection criteria) 10 - 15 Points 25 - 35 Points 40 - 50 Points 10 - 30 Points (In certain cases where work involved is of routine nature cost can be given up to 50 points.) In case of Foreign Firms, the following may also be added to the criteria: Similar experience in developing countries Knowledge of local culture and languages Knowledge of local laws and govt. administration Compulsory local participation The above criteria can be further enhanced, to suit specific jobs. SOW shall be concise, specific and contractible. It shall contain information to facilitate the offerors/firms in preparing a responsive proposal. 70 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement 2. Budget A realistic budget, keeping in view the proposed activity, estimated time for selection process, available funds and inflation prevailing in the country, shall be prepared. There are two main categories of the cost: "Fixed costs" like salaries, fee and overhead; and "Reimbursable costs". Further break up of these categories is as below. Fixed costs: Local staff salaries Expatriate staff salaries(if applicable) Fringe benefits/social charges Indirect Costs. Overheads Fee Reimbursable Costs: 3. Mobilization Travel and transport Per diem Office including equipment/supplies Communications Reproduction, copying and printing charges Contingencies Advertising Expression of interest /prequalification notice should be invited through wide publicity. A notice (expression of interest or prequalification notice) to invite qualified firms in the required fields shall be advertised , in two major English and two Urdu national Newspapers published from all major cities of the country. The firms will be allowed generally 45 days or at least 30 days to submit their qualification data/information after the publication of the Notice in the news papers. Whenever the services of Foreign firms are required, an advertisement in international magazine /newspaper/UN Business Development, in addition to local national newspapers, shall also be placed. The advertisement for expression of interest/prequalification shall contain the following information: a) b) Brief description of Client including its functions. Purpose and intention of the prequalification. 71 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement c) d) e) f) g) h) i) j) k) l) m) Brief description of services for which prequalification is to be done/being done. Availability of Pre-qualification Questionnaire, including details of prequalification criteria. Cost of pre-qualification questionnaire (if any) and address from where available. Date, time, the address for the submission of application for prequalification and the name/designation of the addressee who could also respond to queries. Time frame for prequalification process and actual services required. In case the necessity of site visit, facilities available for such visit(s). Proposed conference if any for pre-submission with prospective applicants including its date and venue.. Requirement to acknowledge the receipt of the Pre-qualification Questionnaire Confirmation whether the firm would submit the information or not. Any other pertinent information which may help the interested firms to submit a responsive application for pre-qualification Reservation of any rights such as acceptance/rejection of the applications. In some cases where time is short the pre-qualification notice in the news papers may contain all the above information briefly as against preparing a separate prequalification questionnaire along with submission date/time, address etc.. 4. Short Listing Of Firms-Committee To Evaluate The Expression Of Interest/Prequalification Documents A Committee comprising the representatives of the concerned divisions/ sections including representative of Finance and Legal shall be constituted to evaluate the prequalification documents and recommend the short listed / pre-qualified firms (a minimum score of 60% will be generally required). Based on the information received from the consulting firms/candidates in respect of their qualifications, experience, availability of the requisite personnel specialized in the field of required work for the project, financial capability and other pertinent aspects, the Client will pre-qualify 3 to 6 most well qualified and suitable consulting firms/individuals in each field of expertise to receive Request For Proposals (RFP) as and when required. On the basis of recommendations of the committee a general roster of qualified firms/individuals for specific fields be prepared and qualified firms informed of the fact. This roster will be updated periodically. 5. Invitation Of Proposals Once the list of short listed firms/consultants is approved, an invitation will be issued to the "short listed" firms to submit their proposals. Depending upon the complexity of the assignment reasonable time shall be given / allowed to firms to submit their proposals. As a general rule a period of 30- 45 days shall be allowed between obtaining the RFP and submission of proposals. 72 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement For large and complex contracts the time shall be 60 to 90 days, especially when foreign firms are also expected to participate. During the period between issuance of the RFP and 7 days before the receipt of proposals, firms may ask for any clarification in writing and Client shall provide these clarifications in writing and copy these to all firms who had obtained RFP. The proposals once submitted and after the due date/time, firms will not be allowed to make any changes. If both proposal i.e. Technical as well as Financial are requested at the same time these shall be in separate sealed covers. If short listing/prequalification method is not adopted: Keeping in view the specific requirements of the project, the Client may invite proposals from the open market. The pre-qualified firms may also participate in the competition. 6. Preparation And Issuance Of The Request For Proposals (RFP) The RFP, generally shall constitute the following Sections:a) b) c) d) e) f) A Transmittal Letter (Letter of Invitation) Information to Consultants Scope of Work / Terms of Reference Evaluation Criteria with an indication of a minimum score. Special Instructions ( if any) and Format of Proposed Contract. Transmittal letter / Letter of Invitation shall list the documents included in the RFP. 73 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement 7. Transmittal Letter/Letter Of Invitation Transmittal Letter/Letter of Invitation shall normally include a) Brief description of the Project b) Intention of Client to hire the services for (brief description of services required), c) Indication that separate scaled envelopes should be used for Technical/Financial Proposals, with clear marking on the outside of the envelopes with date and time of opening, if Financial Proposals are also requested. d) Date, time, the address for the submission of proposals and the name/designation of the person whom to address. Depending upon the complexity of the assignment reasonable time shall be given / allowed to firms to submit their proposals. As a general rule at least 30 days shall be allowed between obtaining the RFP and submission of proposals. For large and complex contracts time between the issuance of RFP and submission of proposal shall be 60 to 90 days, especially when foreign firms are also expected to participate. e) In case the necessity of site visit, the details to facilitate such visit(s). f) If any conference is planned before submission of the proposals, date, time and place where it will be held. g) Validity of the proposal (normally 60-90 days.) h) Details of public opening of the proposals if applicable/ necessary i) A request to acknowledge the receipt of the RFP and confirmation whether the firm would submit the proposal or not. j) The names of the firms to whom the RFP has been issued (in case of prequalified firms) and whether or not the associations between the short listed firms are allowed acceptable 8. Information To Consultants/Firms This section of the RFP shall include all necessary information which will help the prospective offerors in preparing a responsive proposal/offer and shall bring maximum transparency to the selection process by providing information on the evaluation criteria and factors and their respective weights and the minimum score to qualify for the job. This will include: a) The procedure to handle questions/clarifications concerning the RFP and points raised during the pre- proposal conference. b) The method of technical, financial and combined evaluation of proposals. c) Clients estimated budget for the assignment will not be disclosed. Estimated level of input in the form of person months/days shall be indicated. Prospective offerors would however be free to propose their own estimate of staff time necessary to carry out the assignment. d) Indication of minimum educational qualification, experience etc. of the key staff members. e) Information on negotiations; and financial and other information that shall be required of the selected firm during negotiations of the contract. 74 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement f) g) h) i) j) k) In case of foreign firms the currency in which the costs of services shall be given/indicated in the proposal and compared and (in case of contract awarded the payment mode should also be indicated). An alert notice that the firm or its affiliates shall be disqualified from providing services under the project if such activities constitute a conflict of interest with the services provided under the present assignment. For example if a contract for design and supervision of certain project is likely to be awarded to a certain firm it should be mentioned in the RFP that this firm would not be eligible to bid on construction contract. Format of Technical and Financial proposal An undertaking to maintain, without changes, the proposed key staff members and hold rates and the total proposed cost during the validity period of the proposal. The expected time frame for entire process and date on which successful consultant/firm shall be expected to start work. A statement on Tax liabilities of the firm and its proposed staff members for the assignment. In case of expatriate firm/consultants it should also include: m) n) o) p) q) r) s) 9. brief description of the country, major cities, facilities available at the work location, estimated air/surface travel time/costs, information about the local climate; travel/visa requirements for the staff coming from other countries; and local laws concerning registration with certain bodies or requirement to associate with the local firms. Details of import duties and other levies on the equipment to be brought from outside Staff/facilities/equipment, office space, and accommodation to be provided by the client, if any. Possibility of any extension in the assignment. Possibility of subcontracting of any portion of the assignment Payment procedures and details/requirement of deduction of tax at source Language in which the proposal and reports if any are to be prepared. The client/employer shall provide full and equal opportunity to all the invited firms to inspect the site (if required), make any inquiries and investigations that they consider pertinent for the project / activity and make available any data that would help the consultants to prepare their proposals. Format of Contract For the information and guidance of the consultants/firms, a format of the proposed contract shall be included in the RFP. The proposed contract must cover at a minimum the following aspects.a) Introductory clause/description of the parties b) Definitions c) Services to be performed including:(i) Description of the Project/Scope of Work/terms of reference (ii) Key Personnel/details of personnel to be provided and 75 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement d) c) f) g) h) i) j) h) k) 1) m) n) 0) p) q) r) s) t) u) v) w) x) y) z) 10. (iii) Deliverables/reporting requirements Commencement, term/period of the contract Extension in the consultant's performance (optional) Contract amount and payment including:(i) Total price/ceiling (ii) Advance /mobilization payment (optional) (iii) Payment schedule and payment method/conditions (iv) Retention (optional) (v) Final payment Timing/schedule of deliverables with number of copies Replacement of staff Change orders (optional) Delays Insurance Accounts and records Law governing the contract and resolution of disputes Duties/Taxes Performance standards Confidentiality Ownership of reports/material Relationship between the parties Assignment/subcontracts Performance guarantees ( optional) Undertaking by the client Undertaking by the consultants Force Majure Waiver Termination Conflict of interest Authorized representatives and notices Receipt and opening of technical proposals On the date/time fixed for receipt and opening of proposals in the RFP, envelopes containing the technical proposals shall immediately be opened. There shall be no public opening of technical proposals. If both proposals i.e. technical as well as financial were requested at the same time the financial proposals shall not be opened. Proposals submitted after the time of opening shall not be entertained and returned to the offerors without opening. 11. Constitution of technical evaluation committee (TEC) TEC comprising of the 3-5 officials drawn from the concerned technical division/section shall be established. The TEC shall he responsible for evaluation of all technical proposals received in accordance with the evaluation criteria set out in the RFP. One of the members shall be designated as chair-person of TEC. The TEC shall be briefed about:a) b) The method for evaluation; Evaluating the proposals strictly according to evaluation criteria set out in the RFP; 76 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement c) d) e) 12. Keeping the process confidential; Declaration of any conflict of interest. Strictly prohibiting the members of the committee to contact firms who have submitted proposals; Keeping the proposals under safe custody at the end of the day (usually TEC is given a separate room where they evaluate the proposals and at the end of the day hand over the proposals to the chair-person who keeps them under lock and key). Evaluation of Proposals For the evaluation of proposals one of following two methods may he used. The method to be used shall be determined in the very beginning and RFP shall indicate which method is to be used for selection. a) Quality And Cost Based Evaluation. Under this method in addition to technical score, certain weightage is given to cost also. The proposals are first evaluated for quality without making any reference to cost. The cost score is then calculated, added in technical score and combined score worked out for final ranking. b) Quality Based Evaluation Under this method only technical proposals are evaluated, ranked and contract negotiated with the top ranked firm. And if negotiations are not successful with the top ranked firm next ranked firm is invited for negotiations and so on. Evaluation Process And Selection Memorandum a) Quality And Cost Based Evaluation. i) Evaluation Of Quality Each technical proposal shall be evaluated on the basis of its responsiveness to the SOW/TOR. If a proposal does not get a minimum score mentioned in the RFP it would be rejected at this stage. A detailed evaluation report describing the relative strengths and weaknesses of each proposal shall be prepared by the TEC. All records relating to the evaluation like individual score sheets, rough notes etc. shall be retained upto the completion of the assignment. The entire process of technical evaluation shall be kept confidential. The committee after completing the evaluation of all technical proposals shall prepare a selection memorandum which shall state the: evaluation criteria; list all the firms which submitted proposals; 77 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement ii) rank the proposals according to evaluation criteria; list all proposals declared/considered acceptable in the order of ranking ; detailed discussion on merits and weaknesses of each proposal; and Weaknesses of proposals not considered acceptable. Evaluation of Cost As soon as the technical evaluation is completed, the firms which are qualified shall be informed and notified the date and time for opening of their financial proposals. The financial proposals shall be opened publicly in the presence of representatives of the firms who may choose to attend. The technical score obtained and proposed cost of each firm with its name will be announced. The minutes of such public opening shall also be prepared and retained in the files. The financial proposals then shall be checked for arithmetical errors if any and corrected. To compare the proposals at equal footing in case of foreign firms, costs proposed by all firms will be converted into one currency. The technically qualified proposal with the lowest cost shall get full financial score indicated/given in the RFP and other proposals shall be given financial score that are inversely proportional to their cost. (iii) Combined Quality and Cost Evaluation The total score shall be obtained by adding the resultant technical and cost scores and on this basis ranking decided and contract negotiated with the top ranked firm. b) Quality Based Selection This method should be used for complex or highly specialized assignment for which it is difficult to define precise SOW/TOR and consultants are expected to demonstrate innovation in their proposals or assignments under which highly qualified and eminent specialist are required, like policy studies of national importance, or assignments that can be performed in different ways and proposals can not be compared. Under this option only technical proposals shall be invited, evaluated and ranked. The top ranked firm shall then be requested to submit its detailed cost proposal and the contract shall be negotiated with this firm. If the negotiations with this firm are not successful the next ranked firm shall be contacted for the cost proposal and so on. Client may obtain financial proposal in separate sealed cover also along with Technical proposals and keep under safe custody separately. Under such 78 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement circumstances financial proposal of top ranked firm shall only be opened after the completion of technical evaluation. And if the negotiations with the top ranked firm are successful, the financial proposals of other firms should be returned un- opened without any further delay. The same selection process/procedure for Quality + Cost and only Quality based method shall be followed other than explained above. 13. Negotiations and Award of Contract Without allowing any major changes in the original SOW/TOR and terms of the contract Authority and firm can discuss the staffing plans, methodology and any other concern of both the parties. Agreed work plan/methodology and SOW/TOR shall be made the part of the contract. No changes in the key staff shall be allowed at this stage. Since cost had been a factor in selection process, without any special circumstances there shall be no negotiations on cost. In case negotiations are not successful the firm shall be informed indicating the reasons and next ranked firm invited for negotiations, until the negotiations are successfully completed and contract signed. 14. Information to Unsuccessful Firms/Consultants As soon as the contract is signed with the successful firm, the unsuccessful firms who had submitted proposals shall be informed promptly. The letter to these firms shall contain the name and address of the successful firm, total amount of the contract and appreciation for submitting a proposal with a request to continue interest in Client's future projects. 15. Debriefing to Unsuccessful Firms In case a unsuccessful firm requests a debriefing on "why it could not win the contract" Client shall inform that firm in general terms why it could not be selected. 79 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement QUALITY BASED SELECTION 80 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement QUALTIY BASED SELECTION WHEN: Complex or highly specialized High downstream impact Non comparable Technical proposal only 81 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement SINGLE SOURCE SELECTION 82 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement SINGLE SOURCE SELECTION WHEN: Small routine Assignments Very small contract amount Expressions of interest Most appropriate qualifications Full proposal 83 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement LEAST COST SELECTION 84 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement LEAST COST SELECTION WHEN: Routine Assignments Contract amounts not large Threshold for quality Selection of firm with lowest cost above threshold 85 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement SELECTION ON CONSULTANT’S QUALIFICATIONS 86 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement SELECTION ON CONSULTANT’S QUALIFICATIONS WHEN: Small routine Assignments Very small contract amount Expressions of interest Most appropriate qualifications Full proposal 87 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement SELECTION OF PARTICULAR TYPES OF CONSULTANTS 88 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement SELECTION OF PARTICULAR TYPES OF CONSULTANTS UN agencies o Neutralize privileges o Single Source threshold NGOs o No preference Procurement and Inspection Agents QCBS (50% for cost) Banks o o o QCBS Retainer and success fee Higher weight for cost Auditors o QCBS (40-50%) Service delivery contractors o Defined in the Loan agreement 89 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement CONTRACTS PROBLEM AREAS 90 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement PROBLEM AREAS Omissions Additional services Staff substitution Liability/Insurance Taxation Conflict of interest Output/Input definition Payment terms Skills transfer Disputes Termination 91 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Part IV General 92 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Table of contents 1. Incoterms 2. Fraud & Corruption 3. Review by IBRD/IDA (Donor) 4. Mis-Procurement 5. Conflict of Interest 6. Guarantees 7. Record Keeping 8. Contract Administration 9. Contract Close out 10. Test 93 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement INCOTERMS 94 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement COMMONLY USED INCOTERMS EXW Ex Works (…named place) FCA Free Carrier (…named place) FAS Free alongside Ship (…named port of shipment) FOB Free On Board (…named port of shipment) C&F Cost and Freight (…named port of destination) CIF Cost, Insurance and Freight (…named port of destination) CPT Carriage Paid to (…named place of destination) CIP Carriage and Insurance Paid to (…named place of destination) DAF Delivered at Frontier (…named place) DES Delivered Ex Ship (…named port of destination) DEQ Delivered Ex Quay (…named port of destination) DDU Delivered Duty Unpaid (…named place of destination) DDP Delivered Duty Paid (…named place of destination) 95 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Fraud and Corruption 96 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Fraud and Corruption The highest standards, of ethics during procurement and execution of contracts are required. “Corrupt Practice” means the offering, receiving or solicitation of anything of value to influence a public official in the procurement process or in context of execution “Fraudulent practice” means a mis-representation of facts in order to influence a procurement process or the execution of a contract to the detriment of the Purchaser, and includes the collusive practice among bidders (prior to or after bid submission) designed to establish bid prices at artificial, non competitive levels and to deprive the Purchaser of the benefits of free and open competition The Bank/Department Will reject a proposal for award if the bidder is involved in fraud or corruption Cancel portion of the loan if Purchaser/Deptt representatives are involved in fraud and corruption, and satisfactory remedial action is not taken by the department. Will declare a firm ineligible either indefinitely or for a stated period of time Inspect and audit accounts and records of suppliers and contractors 97 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement REVIEW BY BANK 98 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement WHAT IS BANK REVIEW? Review of procurement plans, documentation and decisions made by the Purchaser/Department. Purpose of reviews When Reviews take place Scope of Prior Reviews Post Reviews at the bank in the field 1) To ensure that the procurement process is carried out in accordance with the agreed procedures (LA and Guidelines) 2) To ensure that funds are used for intended purposes. 99 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement POST REVIEWS Documents required for review. Scope of review Procedure for review Post Review at the Bank/in the field Bank Requirements for reviews Findings DOCUMENTS REQUIRED FOR REVIEW After award but prior to first withdrawal application: A conformed copy of the contract including: - Analysis of respective proposals - Recommendations for award - Any other information requested by the Bank SOE Contracts: All documentation is retained by the Purchaser for subsequent examination by the Bank. 100 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement SCOPE OF REVIEW After the awarding of contracts, review of procurement actions is carried out on sample basis Documents sent to the Bank OR In the field on documents retained by the Purchaser/Department PROCEDURE If the review is carried out on documents sent to the Bank: 1) 2) A sample of contracts are selected for review (15%) The documentation for each contract is reviewed using the check lists. For reviews in the field: Bank Requirements 1) Purchaser is given notice of review in advance. 2) Contract Rosters must be maintained by the Purchaser as per suggested format. 3) All documents must be in original condition 4) A random sample (15%) of awarded contracts is selected for review 5) Detailed review is carried out using the checklists. 101 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement FINDINGS If the Bank determines that the award of the contract(s) or contract itself is not consistent with the Loan Agreement, the Purchaser is informed accordingly. In case of major deviations, the Bank may take one or more of the following actions: 1. Proportion of contracts to be reviewed may be increased. 2. All contracts may be subject to review 3. Mis-procurement may be declared by the Bank. 102 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement WHEN DO REVIEWS TAKE PLACE? Prior Review Involves the review of proposed procurement documentation and decisions at various stages of the procurement process. Post Review Carried out on contracts not subject to prior review after action has been taken by the Purchaser 103 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement SUMMARY OF BANK REVIEWS Bank review ensures that procurement documentation and actions are according to Agreement. Bank reviews, procurement plans, and documentation prior to and after awards Requirements for mandatory reviews are specified in LA. For prior review requirements, no objection must be obtained at each stage of the procurement process. For contracts below the prior review threshold, review is carried out on a sample basis after the award of contracts For reviews in the field, Purchaser must maintain all documents in order. Bank will take action against major deviations observed in post review. Post Review procedure requires evaluation report and copies of contract 104 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Mis-Procurement 105 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Mis-procurement The Bank does not finance expenditures for goods which have not been procured in accordance with the agreed procedures in the Loan Agreement, and it is the policy of the Bank to cancel that portion of the loan allocated to the goods that have been mis-procured. The bank may in addition exercise other remedies under the Loan Agreement. 106 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Conflict of Interest 107 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement THE WORLD BANK CLAUSE RELATING TO CONFLICT OF INTEREST Conflict of Interest Bank policy requires that Consultants provide professional, objective, and impartial advice and at all times hold the Client’s interests paramount, strictly avoid conflicts with other assignments or their own corporate interests and act without any consideration for future work. Without limitation on the generality of the foregoing, Consultants, and any of their affiliates, shall be considered to have a conflict of interest and shall not be recruited, under any of the circumstances set forth below: Conflicting activities A firm that has been engaged by the Client to provide goods, works or services other than consulting services for a project, and any of its affiliates, shall be disqualified from providing consulting services related to those goods, works or services. Conversely, a firm hired to provide consulting services for the preparation or implementation of a project, and any of its affiliates, shall be disqualified from subsequently providing goods or works or services other than consulting services resulting from or directly related to the firm’s consulting services for such preparation or implementation. For the purpose of this paragraph, services other than consulting services are defined as those leading to a measurable physical output, for example surveys, exploratory drilling, aerial photography, and satellite imagery. Conflicting assignments A Consultant (including its Personnel and Sub-Consultants) or any of its affiliates shall not be hired for any assignment that, by its nature, may be in conflict with another assignment of the Consultant to be executed for the same or for another Client. For example, a Consultant hired to prepare engineering design for an infrastructure project shall not be engaged to prepare an independent environmental assessment for the same project, and a Consultant assisting a Client in the privatization of public assets shall not purchase, nor advise purchasers of, such assets. Similarly, a Consultant hired to prepare Terms of Reference for an assignment should not be hired for the assignment in question. Conflicting relationships A Consultant (including its Personnel and Sub-Consultants) that has a business or family relationship with a member of the Client’s staff who is directly or indirectly involved in any part of (i) the preparation of the Terms of Reference of the assignment, (ii) the selection process for such assignment, or (iii) supervision of the Contract, may not be awarded a Contract, unless the conflict stemming from this relationship has been resolved in a manner acceptable to the Bank throughout the selection process and the execution of the Contract. Consultants have an obligation to disclose any situation of actual or potential conflict that impacts their capacity to serve the best interest of their Client, or that may reasonably be perceived as having this effect. Failure to disclose said situations may lead to the disqualification of the Consultant or the termination of its Contract. No agency or current employees of the Client shall work as Consultants under their own ministries, departments or agencies. Recruiting former government employees of the Client to 108 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement work for their former ministries, departments or agencies is acceptable provided no conflict of interest exists. When the Consultant nominates any government employee as Personnel in their technical proposal, such Personnel must have written certification from their government or employer confirming that they are on leave without pay from their official position and allowed to work full-time outside of their previous official position. Such certification shall be provided to the Client by the Consultant as part of his technical proposal. Unfair Advantage If a shortlisted Consultant could derive a competitive advantage from having provided consulting services related to the assignment in question, the Client shall make available to all shortlisted Consultants together with this RFP all information that would in that respect give such Consultant any competitive advantage over competing Consultants. 109 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Record Keeping 110 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement RECORD KEEPING CONTRACT ROSTER CONTRACT/ PROCUREMENT FILE CONTRACT REGISTER FORMAT OF REPORTING OF CONTRACTS 111 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement CONTRACT ROSTER- GOODS Project Name: Sr. No IFB Ref No. Mode of Procurement Type of Bank Review Credit No. Works/Goods Description Estimated costs Complete d (Date) Sent to Bank (Date) Bank Clarification (if any) (Date) Bank’s No Objection Tender Notice Advertised On (Date) (Date) 112 Procurement, Contract Management and Capacity Building Project Bid Docs. Made available On (Date) Capacity Building Manual for Procurement CONTRACT ROSTER- GOODS Project Name: Pre-bid Meeting (if any) Sent to Bank On Sent to Bidders on Original (Date) (Date) (Date) (Date) Credit / Loan No. Extended (list all extensions if any) (Date) No. of Bids Received (Date) Minutes of bid opening send to bank on (Date) Original Extended (list all extension s if any) (Date) Ext. Request Sent for Bank’s prior Concurrence (Date) Bank’s Clarificatio ns (if any) Bank’s NoObjection (Date) (Date) (Date) 113 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement CONTRACT ROSTER- GOODS Project Name: Completed Sent to Bank on Bank Clarifi cation (if any) Bank’s NoObjection Credit / Loan No. Acceptence Letter(s) Issued On (Date) No. Signed on Send to Bank on Stipulated Actual Contract or/ Supplier Name & Country Contract Value 114 Procurement, Contract Management and Capacity Building Project Final paymen t To Contrac tor/ supplier Delay in Payme nts (if any) Capacity Building Manual for Procurement CONTRACT ROSTER- CONSULTANTS -FIRMS & INDIVIDUALS) 115 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement CONTRACT ROSTER- Consultants Project Name: Sr. No Description of services Estimated Cost Credit No. Type of Bank Review Methods of Selection TOR Prepared (Date) Expreission of Interest Advertised (Date) Closing Date (Date) No. of Responses Short-listing and RFP (LOI) Short list Completed 116 Procurement, Contract Management and Capacity Building Project No. of Firms Short listed Capacity Building Manual for Procurement CONTRACT ROSTER- Consultants Project Name: RFP Prepared (Date) RFPshrt-list sent to bank RFP Issued to Firms Proposal Submitted/ Closing (Date) Credit / Loan No. Technical Proposal Proposal opened Evaluation Completed Sent to Bank Financial Proposal Bank’s No Object Opened Publicity Evaluation Completed Final (Combined Cost & Quality Evaluation Completed 117 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement CONTRACT ROSTER- Consultants Project Name: Credit / Loan No. Final (Combined Cost & Quality Evaluation Completed Sent to Bank on Bank’s No Object Negotiations Negotiatio ns Complete Draft contract sent to Bank Bank’s NOC Award Contract Awarded (Date) Contract No. Contract Signed on (Date) 118 Procurement, Contract Management and Capacity Building Project Sent to Bank Capacity Building Manual for Procurement CONTRACT ROSTER- Consultants Project Name: Credit / Loan No. Contract Completion Stipulated Actual Information Name of Consultant Contract Value Final Payment Delay in Payment (if any) 119 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement CONTENTS OF A CONTRACT/ PROCUREMENT FILE Vol. I Project Paper containing all project details from the start of the project up to the final approval, Funding Documents, Project Appraisal Paper, Project Implementation Paper, and Credit Agreement if funded by any Donor Vol. II Approved Specifications/SOW/TORs with Procurement Method and Evaluation Criteria EOI/Advertisement Clipping (Copy of the advertisement) from at least one Newspaper with Date List of Firms requesting Tender Documents/ Qualification Questioner Proceedings of committee appointed to evaluate applications/EOIs List of approved/short listed Firms along with approval letter from the approving authority/donor Copy of Draft RFP/IFB Copies of comments from concerned quarters on IFB/ RFP Copy of Approved RFP/IFB with a copy of NOC/NOL/Approving Letter Copy of Minutes of Pre-Proposal Conference/Pre-Bid Meeting Record of Bid opening meeting with details of Bid security instruments/amounts List of bidders/firms submitting bids/proposals on fixed date/time List of bidders/firms submitting bids/proposals late (if any) Notification and details of Evaluation Committee formation 120 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Evaluation Report with rough notes of evaluation committee proceedings/members Award recommendations with signatures/notes of evaluation committee (if any) Notification of Award if applicable A fully executed (by both parties) copy of contract 121 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement CONTRACT REGISTER ESSENTIAL ENTRIES OF CONTRACT REGISTER (When any contract is executed both parties should also sign this register) S.N. Contract Number Description of Services/Supplies Amount Effective Date Completion Date Date of Signing Signature Received by & Signature 122 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement FORMAT FOR REPORTING OF CONTRACTS Credit No.__________ Project__________ Report Date ___________ S.N. Description of Services/Supplies Est.Cost USD Proc.Method ICB,NCB, Shopping/Small Pur.,QCBS, QBS Bank’s Review required (Prior or Ex-Post) Name of Contractor/ Consultant Contract No. & Date Value of Contract PKR 123 Procurement, Contract Management and Capacity Building Project Remarks Capacity Building Manual for Procurement GUARANTEES 124 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement WHAT IS A BANK GUARANTEE? A bank guarantee may be defined as the obligation of a bank to pay a sum of money in the event of nonperformance of a contract by the Contractor/supplier Guarantees are usually irrevocable, unconditional and payable on first demand Bank guarantees are, as a rule, subject to the laws of the country of the issuing bank In international trade, it is difficult for the buyer of goods or services to accurately assess the professional ability and financial position of a supplier. He demands therefore, and quite rightly, that the seller’s ability be secured. The purpose of performance guarantees To ensure that the beneficiary receives the services, including materials, that he contracted for and that he receives them within the time frame stipulated in the contract. 125 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Contract Administration 126 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Contract Administration After the signing of the contract, day to day its, administration is also part of procurement responsibilities procurement office must oversee and, actions other than technical issues. Any action increasing/decreasing total contract amount, level of effort, contract period must be addressed in accordance with the contract clauses and with the mutual agreement of both parties except if contract is being terminated for default. 127 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Contract Close Out 128 Procurement, Contract Management and Capacity Building Project Capacity Building Manual for Procurement Contract Close Out All Contracts when completed must be closed out 129 Procurement, Contract Management and Capacity Building Project
