1. Building Capacity of SMEs for Participation in Public Procurement Draft Presentation for Training of Trainers June 2014

2. Outline of the Training Module Public Procurement is an opportunity for doing business (Session 1) How to Participate in Public Procurement (Session 2) How to Prepare a Good (Winning) Bid (Session 3) Important aspects of contract performance (insurance, payments, disputes) (Session 4) 2

3. Outline of Session 4 Having won a contract, and what next? Insurance Requirements Receiving Payments The Parties Contract Disputes Being a Sub-contrator 3

4. Having won a Contract What is next? Provide a performance security (if required) within the specified time after contract award notification and return contract agreement signed within the specified time after contract award notification Promptly get organized for contract performance Obtain required insurance Fulfill all contract obligations (delays, documents for approval by procuring entity if any, notices) 4

5. Getting Organized for Contract Performance As soon as the Contract is signed, and an instruction is issued by the Procuring entity or on its behalf, the Supplier or Contractor must promptly proceed to perform it. 5

6. Getting organized for contract performance (cont’d) Contract for supply of goods: deliver the goods as promised in the Bid (straightforward) Contract for Works or Services: follow the steps as prescribed in the Contract (General and Particular Conditions, and Specifications) – Prepare/submit a detailed work program showing mobilization (of equipment and personnel), performance of various components, handing- over (within contract completion time), warranty obligations and demobilization 6

7. Obtaining Insurance The Procuring Entity may require a Contractor or a Service Provider to have insurance for professional liability, third party liability, personnel, vehicles decennial liability (in countries with civil law) – for specified minimum coverage Through this requirement, the Procuring Entity protects itself (for potential liabilities to third parties, or from risk of default by the Contractor) and also protects the Contractor! 7

8. Obtaining Insurance (cont’d) Such insurance is available (at competitive prices) from local insurance companies A bidder must account for the cost of required insurances in its Bid price! The Contractor and the Procuring Entity are co- insured under these policies The Contractor must be able to justify that insurance is in place at all times 8

9. The Parties Involved during Contract Performance Procuring Entity (Purchaser, Owner, Employer) The Contracted party (Supplier, Contractor, Service Provider) The Procuring Entity’s Representative (Project Manager, Engineer) The term Engineer refers to a Consultant Engineer recruited by the Owner or the Employer to supervise Works performed by the Contractor 9

10. Receiving Payments The Contract specifies how and when your firm will be paid (under Payment Terms in the General and/or Particular Conditions of Contract) Make sure the conditions for getting paid are all met by your firm on time Any Advance Payment may be subject to the submission of a security (bank guarantee) 10

11. Receiving Payments (cont’d) Submit invoice, provide bank account and any supporting documents as required Request payment as per the contract conditions. It is your basic right! Procurement Law provides for interest on delayed payments, in many countries If some part of the invoice is disputed by the Procuring Entity, the undisputed part of the invoice must still be paid, while the disputed part will be addressed later 11

12. Contract Disputes and Remedies Disagreements may occur between the parties during performance of the Contract Contractor submits a claim when he determines that additional time for performance or additional payment is justified However, claims must always be based on a specific provision in the contract, such as – Delays caused by the Procuring Entity – Unforeseeable soil conditions (for works) 12

13. Contract Disputes and Remedies (cont’d) Amicable settlement between the parties should be sought if possible; recourse to an independent expert’s advice by mutual agreement is often useful In such case, the expert is usually appointed by mutual agreement If no amicable settlement, recourse to the court system (or arbitration in case the contract has such provision) is necessary 13

14. Being a Sub-contractor PP also offers opportunities for subcontracting to SMEs However, in such case, subcontractor has no direct relationship with the Procuring Entity, and is liable to the main Contractor only A subcontractor’s contract is negotiated directly between the main Contractor and the Subcontractor Subcontracting provides relevant experience to SMEs which they may use later as references to qualify for other contracts Some countries have legal provisions on direct payment (by the Procuring Entity ) to subcontractors; however, payment still requires approval by the main Contractor. 14

15. And finally SMEs must be engaged in Public Procurement! Get involved in dialogue with Government on PP Policies Raise the issues which impede your participation, at every opportunity! Communicate SMEs’ views when the Government opens up discussions / consultation on PP issues 15