Presentation on theme: "ZHRC/HTI Financial Management Training"— Presentation transcript:
1 ZHRC/HTI Financial Management Training Session 7: Procurement and Tendering MethodsINTRODUCE the session to participants.
2 Learning ObjectivesBy the end of this session participants will be able to:Describe different procurement methodsKnow factors affecting the choice of procurement methodList monetary procurement value thresholds for the different methodsDefine tenderingDescribe tendering processesDescribe the preparation of tendering documentsExplain awarding and evaluation of tendersREAD or ASK participants to volunteer and read the learning objectives and clarify.ENCOURAGE participants to ask questions about any of the concepts that will be presented during this session
3 Procurement MethodsTanzania Procurement Regulations of require that procurement of goods, works and services be made through competitive tenderingThere are several methods of competitive procurement including:International competitive tenderingNational competitive tendering, restricted tenderingCompetitive quotationsEXPLAIN to participants that, where competitive tendering would not be the most economic and efficient method of procurement and where other methods of procurement are considered to be more appropriate, the regulations allow the use of other procurement methods as specified in the Second Schedule.In this Session, the different methods of competitive procurement will be discussed.
4 International Competitive Tendering: (Reg. 65) International Competitive Tendering (ICT) is used when there will be participation from foreign suppliersProcuring entity is required to invite suppliers or contractors, regardless of nationality, to submit priced tendersInternational competitive tendering is used:Where it is desired to attract tenders from a wide range of suppliers or contractorsWhere payment is to be made in foreign currencyEXPLAIN to participants that, Tender Notice shall be advertised nationally and internationally.The procuring entity should use International Competitive Tendering in the following situations:where it is desired to attract tenders from the widest range of suppliers or contractors, regardless of the estimated value of goods or works to be procured.where payment for the contract is to be made in whole or in part in foreign currency.
5 National Competitive Tendering: (Reg. 66) (1) National Competitive Tendering (NCT) is used when the procuring entity does not intend to invite foreign suppliers or contractors to participate in tenderingThe procuring entity is required to invite suppliers or contractors, regardless of nationality, by means of tender notice advertised only in the national pressForeign firms wishing to participate are allowed to do so. Tender documents may be in Kiswahili language5
6 National Competitive Tendering: (Reg. 66) (2) NCT is appropriate in the following cases:Payment is to be made in Tanzanian shillingsGoods or works are available within Tanzania at prices below the international marketEstimated cost of goods or works is small and does not exceed threshold for international competitive tenderCosts involved in using international competitive tendering method outweigh its advantagesForeign suppliers are not expected to be interested in the tender
7 Restricted Tendering: (Reg. 67) (1) Restricted tendering is inviting tenders from a few selected potential suppliersRestricted tendering may be used in the following cases:Goods required are of specialized nature or can be obtained from a limited number of reputable suppliersEXPLAIN to participants that this method involves inviting tenders from few selected potential suppliers or contractors and the invitation may be preceded by either the pre-qualification or shortlisting of suppliers or contractors.
8 Restricted Tendering: (Reg. 67) (2) Restricted tendering may be used when (list continued from previous slide):There is an urgent need for goods or works such that there would be insufficient time for procuring entity to engage in national or international tenderingThere are other exceptional reasons to justify departure from full competitive tendering proceduresCLARIFY to participants that the first bullet sub bullet that, however, the circumstances giving rise to the urgency should be such that could not have been foreseen and have not been caused by dilatory conduct on the part of Procuring Entity.
9 Competitive Quotations: (Reg. 68) (1) Quotations are invited from a minimum of three suppliersThey are compared to ensure competitive pricesThe contract is awarded to the supplier with lowest-priced quotation meeting the needs of procuring entityEXPLAIN to participants that, competitive quotation method can be used by a procuring entity for minor maintenance works and repair contracts and contracts for services. It is an appropriate method for procuring readily available off-the shelf goods or standard specification commodities that are small in value.
10 Competitive Quotations: (Reg. 68) (2) This method is used in the following situations:Goods to be procured are so diversified that it would be of no commercial interest for any single supplier to tender for themGoods are readily available off the shelf or the goods are standard specification commoditiesList of suppliers to be contacted has to be submitted to Ministerial Tender Board (MTB) for approvalOnce approved, the request for quotations should be sent simultaneously to suppliersEXPLAIN to participants that, competitive quotation method can be used by a procuring entity for minor maintenance works and repair contracts and contracts for services. It is an appropriate method for procuring readily available off-the shelf goods or standard specification commodities that are small in value.NOTE that this method can also be used where the goods can be purchased either locally or internationally.
11 Single Source Procurement: (Reg. 69) (1) Single source procurement is when goods or services are procured from a single supplierShould be approved by appropriate Tender BoardThis method is used when goods are available only from a particular supplier and no reasonable alternative exists, or when…GO to the next slide to see more cases when Single Source Procurement is used.
12 Single Source Procurement: (Reg. 69) (2) There is an urgent need for goods, and use of other procurement methods would be impracticalProvided that circumstances giving rise to urgency were neither foreseeable by procuring entity nor result of dilatory conductWhere additional supplies of same type as those purchased under an existing contract are required
13 Minor Value Procurement: (Reg. 71) Goods or minor works may be procured directly from a supplier where no advantage is likely to be obtained by seeking further quotationsAppropriate where price quoted is reasonable and value of goods and services does not exceed Tsh 10,000,000/=, or value of minor works does not exceed Tsh 20,000,000/=And for non consultancy services does not exceed Tsh 10,000,000/= as specified in Second Schedule of these regulationsEXPLAIN to participants that under this procurement method, the procuring entity may procure goods or minor works directly from a supplier or contractor where no advantage is likely to be obtained by seeking further quotations.TELL participants that this method is appropriate where the price quoted is reasonable and the value of the goods does not exceed 10,000,000/=, or the value of the minor works does not exceed Tsh. 20,000,000/= or the value of the non-consultancy services does not exceed Tsh. 10,000,000/= as specified in the Second Schedule of these Regulations.
14 Force-Accounts (Reg. 73) (1) Force account procurement is used for construction conducted by a public agency using its own personnel and equipmentForce account may be justified where:The works are small and scattered or in remote locations for which qualified construction firms are unlikely to tender at reasonable prices
15 Force-Accounts (Reg. 73) (2) Work is required to be carried out without disrupting ongoing operationsRisks of work interruption are better borne by a procuring entity or public authority than by a contractor; orThere are emergencies needing prompt attention
16 Procurement Method Choice Various procurement methods can be employed. Guiding factors include:Value of procurementUrgencyNature of requirementLimited number of supply sourcesCurrency of paymentStandardizationContract Extensions
17 Monetary Procurement Thresholds (Second Schedule) Methods of Selection and Limit of ApplicationSource: PPR, 2005, G. N 97REFER participants to Handout 7.1: Monetary Procurement Thresholds- Second Schedule on page XX of participant handbook for a larger table to view.
18 Group Work: Choice of Procurement Method Total activity time: 40 minutesASK participants to work in groups of 3.REFER participants to Worksheet 7.1: Choice of Procurement Method for the group work.ALLOW 20 minutes for them to complete the worksheet, identifying which procurement methods should be used.REQUEST small groups share portions of their worksheet answers and discuss as a large group for 20 minutes.
20 What is Tendering? ASK participants “what is tendering”? ALLOW few participants to respond and record them on the board or flip chart before you proceed to next slide.
21 Definition of Tendering Tendering is one of the methods of procurement whereby potential suppliers are invited to make a formal offer to supply goods, provide services, or carry out works; which on acceptance, shall be the basis of subsequent contractCLARIFY to participants that, tendering may be used in procuring works such as the construction of health centers in districts or provision of services, such as the provision of security services.
22 Need for Tendering and Its Application Procuring entities create an annual procurement plan which is submitted to the PMU for actionProcurement officers are required to prepare tendering packages and to advertise them to ensure transparency and guarantee receiving the best value for Government moneyEXPLAIN to participants that Heads of Department in each department in a procuring entity (user departments) compile lists of their requirements every year, with clear specifications of the nature of goods, services or works needed and then submit them to PMU for action in accordance with the procurement plan and within the annual budgetary provisions.
23 Tendering ProceduresTendering process in procuring entity may be divided into several stages:Preparation of tender documentsReview and approval of tender documents by the Tender BoardAdvertising of tender and issuing of tender documentsSubmission and custody of tender bidsOpening of tendersEvaluation of tenderApproval and award of the tender by the tender board
24 Preparation of Tender Documents (1) Tender documents generally include the following components, each is discussed in slides that follow:Section 1: Invitation for TendersSection 2: Instruction to TenderersSection 3: Tender Data SheetSession 4: General Conditions of ContractSection 5: Special Conditions of ContractSection 6: Schedule of RequirementsSection 7: Sample FormsSection 8: Technical SpecificationsSection 9: Security FormsSection 10: Anti-Bribery Policy/Code of ConductEXPLAIN to participants the following:Tender documents are media through which a Procuring Entity communicates with the potential suppliers and contractors on how to prepare tender bids.Tender documents are important because they describe the goods, works and service to be procured, they establish the legal, technical and financial conditions under which the bidding will take place, and they also establishes the evaluation criteria.
25 Preparation of Tender Documents (2) Tender documents generally include the following components:Section 1: Invitation for TenderThis is a letter that invites bidders to apply for tenders. It provides basic information that will attract and inform potential bidders on how to obtain the tender document.EXPLAIN to participants the following:Invitation for Tender is either advertised in the newspaper or website or sent directly to bidders. The way it is sent to bidders depends on the type of tender. If it is an open tender, such as an International or National Tender, the letter is issued as an advertisement in the media. For Restricted Tenders, it is issued directly to the respective bidder.The Invitation for Tender contains information regarding goods, works or services, the address of the procuring entity, the method of procurement to be used, whether there is any requirement for a tender fee, where to obtain bids, the date and time of the deadline and the opening of bids, and where to submit the tenders.
26 Preparation of Tender Documents (3) Section 2: Instructions to TenderersThis Section explains how to prepare the bid, requirements or documents that should be attached to the bid, whether bid security is required, criteria used for evaluation and the time and place of bid opening.Section 3: Tender Data SheetProvides information that supplements or amends instructions to bidders.EXPLAIN to participants that the Instructions to tenderers shall also provide additional clarifying information where necessary.
27 Preparation of Tender Documents (4) Section 4: General Conditions of ContractContains general conditions for supply of goods under tendering methods. The conditions are standard for all tenders pursued under the Public Procurement Act .Section 5: Special Conditions of ContractSome tenders have special conditions that supplement or amend the General Conditions.EXPLAIN to participants the following:Each type of procurement (Goods, Works, Services and Non-Consultancy Services) has its own conditions.Generally, this part of the tender document describes the conditions under which the contract will be implemented.It is therefore important it is included in the Tender Document so the potential bidders know the conditions and requirements.
28 Preparation of Tender Documents (5) Section 6: Schedule of RequirementsThis form should be completed by the Procuring Entity indicating description, quantity and delivery schedule. The bidder will use this information during performance of the contract. The bidder must indicate compliance with the schedule.EXPLAIN to participants that those who do not confirm compliancy are rejected.
29 Preparation of Tender Documents (6) Section 7: Sample FormsForms that should be filled in by the bidder include:Bid FormsPrice schedules for local and imported goodsForms for qualification informationSample Letter of AcceptanceSample contractEXPLAIN to participants that these forms serve as guidelines to bidders. All forms, especially the bid form, become part of the contract for that bidder who eventually wins the tender. The sample letter of acceptance and contract forms are also used by the PE to accept the tender and prepare the contracts.
30 Preparation of Tender Documents (7) Section 8: Technical SpecificationsThese are prepared by the buyer. Technical specifications describe the physical characteristics of required goods or works.Section 9: Security FormsUsed by bidders to prepare the bid security or bonds or bid security declaration.EXPLAIN the following to participants:For Section 8, regarding Technical Specifications: The bidder is required to indicate compliance with the Technical Specifications by indicating the goods or works that will be supplied. In the case of goods, the bidder shall indicate the brand name, where possible, of the goods to be supplied.For Section 9, regarding Security Forms: The Bid Security protects the buyer from the risk of having the acceptance of the bid rejected within the bin validity period.
31 Preparation of Tender Documents (8) Section 10: Anti-Bribery Policy and Code of ConductThese are also called integrity forms The bidder is required to fill in the forms and or attach the Company’s Code of Conduct or Anti-Bribery Policy. The absence of these forms in a bid is sufficient to disqualify a bidder.
32 Preparation of Tender Documents (9) Tender documents should be worded to encourage competitionThe documents should clearly and precisely provide all information necessary for potential tenderers to prepare bidsEXPLAIN to participants the following:Procuring entities are required use the appropriate standard tender documents issued by the Public Procurement Regulatory Authority with minimum changes, acceptable to the MTB as necessary to address project specific issues.Tender documents and tender notice should be approved by the Tender Board before they are issued.PMU should submit the draft texts of the invitation to tender and of the tender documents to the Tender Board for comment and approval.If there are any amendments agreed with the appropriate Tender Board, it should be incorporated in the final text.Tender Notice or Tender Documents that have not been approved by the Tender Board is not going to be considered as sufficient and adequate to satisfy the requirement of the Regulations.REFER participants to Handout 7.2: Advertising, Modifying and Custody of Tenders for more information.
33 Preparation of Tender Documents (10) Tender documents should be worded to encourage competitionThe documents should clearly and precisely provide all information necessary for potential tenderers to prepare bidsEXPLAIN to participants the following:Procuring entities are required use the appropriate standard tender documents issued by the Public Procurement Regulatory Authority with minimum changes, acceptable to the MTB as necessary to address project specific issues.Tender documents and tender notice should be approved by the Tender Board before they are issued.PMU should submit the draft texts of the invitation to tender and of the tender documents to the Tender Board for comment and approval.If there are any amendments agreed with the appropriate Tender Board, it should be incorporated in the final text.Tender Notice or Tender Documents that have not been approved by the Tender Board is not going to be considered as sufficient and adequate to satisfy the requirement of the Regulations.REFER participants to Handout 7.2: Advertising, Modifying and Custody of Tenders for more information.
34 Opening of Tenders (1)Tenders should be opened at the deadline for receipt of tenders or promptly thereafterAll tenders submitted before the deadline shall be opened in public and the following read out loudly:Tenderers’ namesTender prices and total amount of each tenderDiscount if anyTender securityEXPLAIN to participants the following:All tenders submitted before the deadline shall be opened in public in the presence of the tenders or their representatives and other parties with legitimates interest in the tender proceedings.Names of all those present at the tender opening and the organisation they represent should be recorded by the secretary of the tender board.Last tender opened should be endorsed ‘and the last’ and initialed by the members of the tender opening committee in the presence of tenderers or their representatives.
35 Opening of Tenders (2) Tenders should be numbered consecutively Secretary of the Tender Board should prepare minutes of opening
36 Evaluation of Tenders (Reg. 90-94) (1) Accounting Officer or Chief Executive Officer shall establish a tender evaluation committee which should be comprised of not less than three and not more than five membersAll tenders that have been accepted and opened should be passed promptly to the evaluation committeeRecord of tenders received and attendees of the opening meeting should also be provided to the evaluation committeeEXPLAIN to participants that the establishment of a tender evaluation committee should be based on the recommendations of the PMU.
37 Evaluation of Tenders (Reg. 90-94) (2) Tender evaluation should be consistent with the terms and conditions of the tender documentsThe evaluation shall be carried out using the criteria explicitly stated in the tender documentsEXPLAIN to participants that tender evaluation should be consistent with terms and conditions set forth in tender documents and such evaluation shall be carried out using criteria explicitly stated in tender documents
38 Tender Evaluation Sequence Tender evaluation should be carried out in the following sequence:Preliminary evaluation to determine commercial responsivenessDetailed Technical EvaluationPost-qualification to the lowest evaluated bidder
39 Preliminary Examination During preliminary examination, the committee will establish whether each tender is substantially responsive to requirements of tender documentsA substantially responsive tender conforms to terms and conditions of tender documents without material deviationsA material deviation affects the scope, quality or performance of contract, or is inconsistent with tender documentProcuring entity may ask suppliers/contractors for clarification of their tendersEXPLAIN to participants the following;The committee will determine whether the required guarantees have been provided, signed and whether the tenders are otherwise generally in order.Procuring entity may regard a tender as responsive even if it contains minor deviations that do not materially alter or depart from the characteristics, terms, conditions and other requirements set forth in the tender document.REFER participants to Handout 7.3: Detailed Evaluation and Post Qualification.
40 Negotiation (Reg. 95) (1)Negotiation may be undertaken with lowest evaluated tendererNegotiation with tenderers are not permitted until after tender board has approved evaluation committee's recommendationsPMU shall recommend membership of a negotiation team based on appropriate seniority and experience depending on value and complexity of procurementTender board shall approve the negotiation plan prior to negotiations taking place
41 Negotiation (Reg. 95) (2)Prior to confirming an agreement, the Procurement Management Unit shall seek approval of the Tender BoardAppropriate tender board shall approve the negation plan prior to any negotiations taking placePrior to confirming any agreement reached, the Procurement Management Unit shall seek approval of the Tender Board
42 Negotiation (Reg. 95) (3)Negotiations may be undertaken with the lowest evaluated bidder in the following areas:A minor alteration of the technical detailsReduction of quantities for budgetary reasonsA minor amendment to the special conditions of contractFinalising payment arrangements
43 Negotiation (Reg. 95) (4) Mobilisation arrangements Agreeing to final delivery or work schedule to accommodate changes required by procuring entityMethodology or staffingClarifying details that were not apparent or could not be finalised at time of bidding
44 Negotiation (Reg. 95) (5) Negotiations shall not be conducted to: Substantially change specification or details of requirement, including tasks or responsibilities of tendererMaterially alter terms and conditions of contractReduce pricesIncrease prices in case of disposal of assets
45 Approval of Award of Contract (1) Evaluation committee will prepare a detailed report on evaluation of tendersCommittee will give specific reasons upon which the determination of the lowest evaluated tender is basedReport will be submitted to PMUEXPLAIN to participants that before submitting the evaluation report to the tender board, PMU is supposed to go through it and clear any doubt on issue (s) that need further clarification from the committee.
46 Approval of Award of Contract (2) Tender Board shall review the evaluation and may either:Approve recommendation and, authorize the procuring entity to accept the tender and award a contractRefuse to authorize any of the of tenders and refer the evaluation back to procuring entity with instructions to re-evaluate tenders the tenders or re-tenderAward of contract must be made within period of validity of the bid or extension thereofEXPLAIN to participants that the Secretary of the tender board shall send a copy of the decision of the tender board to the Chief Executive Officer of the Authority, the Controller and Auditor General, the Attorney General and the Technical Audit Unit of the Ministry of Finance.
47 Group Work: Tendering Process Total activity time: 50 minutesASK participants to work in groups of 3.REFER participants to Worksheet 7.2: Tendering Process for the group work.ALLOW 30 minutes for smalls groups to complete the worksheet.REQUEST small groups share some of the shortcomings they have identified, why they are shortcomings and discuss as a large group for 20 minutes.
48 Key Points (1) Procurement methods include: International competitive tendering,National competitive tenderingRestricted tenderingCompetitive quotationsSingle sourceMinor value procurementForce accountsA number of factors can guide in selecting procurement methods48
49 Key Points (2)Tendering is inviting suppliers to make a formal offer to supply goods, services or works, shall be the basis of the contract.Tendering procedures include:Preparation of tender documentsApproval of documents by Tender BoardAdvertising of tenderSubmission and custody of bidsOpening of tendersEvaluation of tendersApproval and award of tender by the Tender Board49