Transcript Welcome to the Session on Financial Management and Procurement

37th Review Meeting of State Finance Controllers
29-30 April, 2013
Procurement Procedure-SSA
Technical Support Group, SSA
PROCUREMENT
MAIN
CONSIDERATIONS
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Main Considerations of Proficient
Procurement
(i)
Economy: Give the purchaser best value for money.
(ii)
Efficiency: Best procurement is simple and swift, producing positive
results without protracted delays.
(iii)
Fairness: Impartial, consistent, and therefore reliable.
(iv)
Transparency: Maintains rules and procedures that are accessible and
unambiguous. It is not only fair, but should be seen to be fair.
(v)
Accountability and Ethical Standards: A key deterrent to collusion and
corruption, and a key prerequisite for procurement credibility.
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Why is Procurement Important?
•
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In procurement terms inputs are generally grouped into three
categories:
(i)
Civil Works – School Infrastructure and facilities like New
PS, UPS, Residential Schools, Hostel, ACR, HM Room,
BRC/URC, CRC, Drinking water, Toilets, Girls Toilet, Ramps,
Handrail, Electrification, Retro-fitting, Boundary wall/ fencing,
Major Repairs, etc.
(ii) Goods - Typically
equipment,
computers,
furniture,
textbooks, library books, uniforms, TLE, TLM, other materials,
supplies, commodities, etc.
(iii) Services – Hiring of services including academic, technical
and resource support provided by institutions/organizations in
all areas, research studies, third party quality evaluation of
civil works, auditors etc.
The quality, timeliness, local appropriateness and affordability of
those procured inputs can largely determine whether the public
investments will succeed or fail.
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Effective Procurement
Objectives
Right
Quality
product
Right
quantities
Lowest
possible
price
Meeting
recognized
standards
Timely
Delivery as
per
schedule
Reliable
suppliers
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PROCUREMENT IN SSA
• Strictly follow procurement procedure prescribed in Chapter IX
of the Manual on Financial Management and Procurement
(FM&P).
• Mandatory to follow the Manual provisions for all procurements
under SSA.
• Follow States’ financial ceilings except when not prescribed by
MHRD.
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Points to be kept in view
• Identification of Needs.
• Ensure availability of specific budget provision.
• Assessment of bulk requirement at the beginning of the financial year.
• Computer, equipment, furniture, books etc in economic lots as per annual
need.
• Procure miscellaneous items of stores not covered by bulk requirement as
per actual need.
• Make all purchases to the best advantage after comparison of competitive
prices.
• Strictly follow the level of procurement prescribed in the Manual
• Encourage decentralized procurement
•
Avoid centralized procurement of items prescribed at lower level
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PROCUREMENT

Strictly follow the levels of procurement provided in
Para 112 of the Manual on FM&P
Levels of procurement
School/Community/ KGBV
CRC / BRC
District
State
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School/KGBV level
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All civil works, except buildings for Residential
Schools/Hostels and KGBV.
Furniture to Govt. UPS
Library Books for schools
Teaching Learning Material
School grant.
Maintenance grant.
Teaching Learning Equipment
REMS
Learning Enhancement Programme (LEP).
Items required for KGBV.
Uniform
Special Training related Items
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TLM, Contingency etc.
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CRC/BRC level
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Furniture/ equipment/computer etc.
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Office contingencies
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Teaching Learning Material
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Teacher Training
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Community Training
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Civil works for construction of BRC, augmentation of
BRC and CRC
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Maintenance of BRC and CRC
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Printing work
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REMS
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District level
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Office equipment for DPO
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Office furniture for DPO
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Textbooks/other books/supplementary materials
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Computers and accessories
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Aids and appliances for CWSN
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Office contingencies
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Hiring of vehicles
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Maintenance of equipment and vehicles
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District level training and workshops
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Printing work
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REMS
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ECCE Kit
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Educational Kits for girls
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Learning Enhancement Programme (LEP)
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Construction of Residential Schools/Hostel and KGBV
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State level
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Textbooks
Computers and its accessories
Office equipment for SPO
Office furniture for SPO
Equipment for distance education
Aids and appliances for CWSN
Office contingencies
Hiring of vehicles
Maintenance of equipment and vehicles
State level training and workshops
Printing work
Engagement of consultancy firms (service contract)
Engagement of Auditors for external and internal audit
Engagement of experts/resource persons
Engagement of NGOs
REMS
Learning Enhancement Programme (LEP).
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Method of Procurement
Method of
Procurement
Open
Tender
Limited
Tender
Single
Tender
Procurement
without tender /
quotation
Procurement
through
communities
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OPEN TENDER
Meaning
•
Competitive bidding procedure and is the most efficient and
economic way of procuring goods or works.
•
Provides for adequate competition in order to ensure reasonable
prices.
•
•
Ensures transparency and equal opportunity to all.
The methods used in the evaluation and the award of contracts are
made known to all bidders.
Items covered

Civil works construction of BRC, Residential schools / Hostel, KGBV,
SIEMAT and any other civil works specifically approved by Project
Approval Board through contractors.

Goods
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OPEN TENDER
Steps

Preparation of tender documents
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Notification / Advertisement;
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Issue of tender documents;
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Pre-bid Conference
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Submission of tender documents;
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Public opening of tender;
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Evaluation;
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Selection of lowest evaluated responsive bidder based on post
qualification;
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Negotiation with L-1 (if necessary)
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Contract award; and
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Contract performance
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Tender documents:

Should be user friendly, self contained, comprehensive, unambiguous and
relevant to the objective of purchase.

Use Standard State Government’s tender documents duly modified, if
necessary, to cover the following sections:
 Section - I – Invitation for Bids (IFB)
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Section - II – Instructions to Bidders (ITB)
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Section - III – General Conditions of Contract
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Section - IV – Special Conditions of Contract
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Section - V – Schedule of Requirements
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Section - VI – Technical Specifications
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Section - VI-A – Post Qualification Criteria
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Section - VII – Bid form and Price Schedule
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Section - VIII – Bid Security Form
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Section - IX – Contract Form
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Section - X – Performance Security Form
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Section - XI – Performance Statement
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Section - XII – Manufacturers Authorization Form
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Section - XIII – Form for Bank Guarantee for Advance Payment
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Section - XIV – Performa for Equipment and Quality Control employed
by the Manufacturer
Important Clauses:
 Notification of Tender Notice
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Sale of tender documents
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Schedule of requirement
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Bid Form
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Bid Prices
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Technical Specifications
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Post-Qualification Criteria
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Bid Validity Period
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Earnest Money
Pre-bid Conference
Signing of Bids
Submission of bids
Opening of bids
Evaluation criteria
Negotiation with L1
Award of contract
Security deposit
Retention money
Signing of agreement/contract
Payment terms
Adjudicator
Force Majeure
Liquidated damages
Corrupt or Fraudulent Practices
General Conditions of Contract (GCC)
Special Conditions of Contract (SCC)
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Procurement Steps
Repeat Orders
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Quantity increase/decrease as per State procedure
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Place order within one month from the date of last supply
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Prices have since not reduced
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Purchases not made on urgent basis
Right to Accept any Bid or Reject all Bids

The purchaser has the right to accept or reject any bid and to annul the
bidding process and reject all bids at any time prior to award of contract.
Rejection of all bids
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Lack of competition
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Tenders not substantially responsive
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Review the causes justifying the rejection
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Obtain the approval of competent authority
Procurement Steps
Award of Contract
Award Criteria
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Award the contract within the bid validity period.
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Award the contract to the successful lowest evaluated
bidder
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The selected bidder need not undertake work not specified in bidding
documents or to modify his bid.
responsive
Single offers received:
Consider if;
 publicity was adequate,
 bid specifications / conditions were not restrictive or unclear
and bid prices are considered reasonable.
LIMITED TENDER
Items covered:
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Goods including books, uniforms
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Teaching learning materials,
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School equipment,
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Hiring of vehicles, and
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Operation and maintenance of equipment
Invitation for quotations –
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Based on comparing price quotations obtained from several suppliers,
usually at least 3 to ensure competitive prices.
Issue a letter to the supplier to furnish the quotations for the required
goods/equipment.
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LIMITED TENDER
Invitation for quotations –
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No need of publication of notification in the newspaper/website.
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Issue the request letters to suppliers on the approved list.
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The request letter should indicate description, specifications and quantity
of the goods as well as desired delivery time and place.
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Only one quotation by each supplier.
Bid Price
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Quote for the full quantity as described in the invitation letter.
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Corrections, if any, made by crossing out, dated initialing and re-writing.
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Include all duties, taxes and other levies payable by the Vendor/Supplier in
the total price.
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The rates quoted by the Vendor/Supplier be fixed for the duration of the
contract and not subject to adjustment on any account.
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The prices are quoted in Indian Rupee.
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LIMITED TENDER
Steps
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Identifying items;
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Laying down specifications;
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Estimating total numbers and costs of items;
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Need not notify in newspaper/website
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Identifying likely agencies borne on the approved list of contractors/
suppliers; (minimum 3, 8-10 for more competitive rates)
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Obtaining approvals of competent authority;
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Issuing letters of invitation;
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Processing quotations received;
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Obtaining orders of competent authority for placing orders for
supply;
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Issuing letters placing orders for supply and delivery period;
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Quoted price shall include all duties, taxes and other levies;
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Rates quoted be fixed and not subject to adjustment;
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Ensuring inspection;
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Ensuring timely supply: and
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Making payments after delivery in satisfactory condition.
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The financial ceiling prescribed for limited tender shall be applicable
for Rate contracts of DGS & D and Rate contracts of State
Governments.
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SINGLE TENDER
Followed in the case of
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Articles specifically certified as of propriety nature; or
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Manufactured by a particular firm;
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Goods including books;
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Teaching materials;
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School grant;
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Hiring of vehicles; and
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Operation and maintenance of equipment etc
Appropriate for
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Extension of existing contracts
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Standard equipment/spare parts for existing equipments from original
supplier.
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Items obtainable from one source
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Early delivery
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In exceptional cases such as natural disaster.
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WITHOUT TENDER / QUOTATION
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Procurement of goods or group of goods estimated to cost the
equivalent of the ceiling of State Govt.
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Issue suitable guidelines by the SIS
THROUGH COMMUNITIES
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Construction of all civil works except, BRC, Hostel, KGBV and SIEMAT
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BRC construction if the community is technically capable
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Purchase of materials as per ISI certification, if available;
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SPD may provide simple procurement guidelines
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Identify the committee locally operating in the area.
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Keep the following points in view:
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Active involvement of community in planning and
implementation;
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Who will procure the materials or goods used in works;
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Goods / works have to be executed as per approved
plans and specifications
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The name and designation of the Engineer for technical
supervision and certification.
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
Suggested advance payments based on the certificate
issued by the Supervising Engineer
Advance (mobilisation advance
upon start up of the work and
on reaching lintel level)
: 75% of total cost
Plastering and completion of
work
: 25% of total cost
School toilet and other repair works
Advance (mobilisation advance
upon start up of the work) cost
: 75% of total
Plastering and completion
of work cost
: 25% of total
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SERVICE CONTRACT
Considerations
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SERVICE CONTRACT
Selection process
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Preparation of Terms of Reference
Preparation of Cost Estimate and Budget
Advertisement, seeking Expression of Interest (EOI)
short listing of consultants/firms based on EOI
Issue of Request for Proposal (RFP) to short listed Consultants/firms.
Receipt of RFP in two envelope system, technical and financial proposals
separately.
Formation of Evaluation Committee
Evaluation of Technical proposal and assign individual mark by each
member on the basis of responsiveness to the TOR
Open the Financial proposals of the qualifying Consultants publicly in the
presence of the Consultants/representatives
Final discussions including negotiations
Award of contract
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SERVICE CONTRACT
Terms of Reference (TOR)
 Prepare a well-defined TOR specifying the services to be
provided on the following lines:
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Background information;
A precise statement of objectives;
An outline of tasks to be carried out;
A time schedule for completion of tasks;
The support/inputs provided by the Client;
Composition of Review Committee to monitor the services;
List of key personnel whose CV and experience would be evaluated.
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SERVICE CONTRACT
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Preparation of Terms of Reference
Preparation of Cost Estimate and Budget
Advertisement, seeking Expression of Interest (EOI)
short listing of consultants/firms based on EOI
Issue of Request for Proposal (RFP) to short listed Consultants/firms.
Receipt of RFP in two envelope system, technical and financial proposals
separately.
Formation of Evaluation Committee
Evaluation of Technical proposal and assign individual mark by each
member on the basis of responsiveness to the TOR
Open the Financial proposals of the qualifying Consultants publicly in the
presence of the Consultants/representatives
Final discussions including negotiations
Award of contract
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Performance of contract
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SERVICE CONTRACT
Cost Estimate and Budget
Based on the assessment of resources needed to carry out the
assignment, staff time, logistical support and physical inputs.
 Costs divided into two broad categories (a) fee or remuneration and (b)
reimbursable.
 Ensure that the requested services are within the current financial
budget.
Advertising
 Not necessary for short term consultancy services.
 Advertisement seeking Expression of Interest for other services, is
published in regional and national newspapers having wide circulation
and uploaded in the web site of the Client.
 Specify requisite qualifications, experience etc. in the notification.
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SERVICE CONTRACT
Short list of Consultants
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Short list the Expression of Interest received based on the relevant
qualifications and experience specified in the notification.
Receipt of proposals
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Issue letter of Invitations along with the TOR to the short listed
consultants/firms.
Seek proposals from the short listed consultants / firms in two envelope
system i.e, technical proposal in one envelope and financial proposal in
another envelope.
Evaluation Committee
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Constitute evaluation committees separately for technical and financial
evaluation
This committee will evaluate the proposals received from the consultants
/ firms
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SERVICE CONTRACT
Evaluation
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Carried out in two stages, first the quality and then the cost
Until the technical evaluation is concluded the evaluators of technical
proposals will not have access to the financial proposal
Evaluation of Technical Proposal
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Carried out on the basis of the responsiveness to the TOR.
The technical evaluation committee will prepare an evaluation report
on the technical aspects of the proposal.
The report shall substantiate the results of the evaluation and
describe the relative strength and weaknesses of the proposals.
Individual marks will be assigned by each member and a consolidated
mark sheet is prepared.
Minimum qualifying marks should be provided in the Letter of
Invitation and those who are not obtaining this will be disqualified
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SERVICE CONTRACT
Evaluation of Financial Proposal
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On completion of technical evaluation, notify those consultants whose
proposals did not meet the minimum qualifying marks that their
financial proposals will be returned after completing the selection
process.
Simultaneously notify the consultants who have secured the minimum
qualifying marks and intimate the date and time set for opening the
financial proposal.
Allow sufficient time for attending the opening of financial proposals
The financial committee shall open the financial proposal publically in
the presence of representatives of the consultants / firms who choose
to attend.
Read aloud the name of the consultant / firm, the quality scores and
the proposed prices when the financial proposals are opened
Prepare the minutes of the public opening.
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SERVICE CONTRACT
Final discussions (negotiations)
 Held with the selected consultant /firm on the following issues
 The selected consultant /firm shall not be allowed to substitute
key staff unless both parties agree that undue delay in the
selection process makes such substitution unavoidable or that
such changes are critical to meet the objectives of the
assignment.
 Financial discussions shall include in addition to fee /
remuneration, clarification of the consultant’s / firm’s tax liability
and how this tax liability shall be reflected in the contract.
 In case these discussions fail to result in an acceptable contract,
terminate the process and invite the next ranked consultant / firm
for discussion
 After the process is successfully completed, promptly notify other
consultants /firms on the short list that they were unsuccessful
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SERVICE CONTRACT
Award of Contract
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Award the contract to the selected consultant / firm
Use the prescribed contract agreement form for signing the contract
Indicate the fee/remuneration negotiated with the selected
consultant/firm to be paid for the services in the contract agreement
and also the terms of payment
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NON-GOVERNMENT ORGANIZATIONS
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Preparation of Terms of Reference
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Publication of advertisement
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Formation of Evaluation Committee
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Short-listing of NGOs on the basis of specifications and scope of the work
specified in the TOR.
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Desk appraisal and if found suitable, field appraisal by the Evaluation
Committee
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Recommendation by the Evaluation Committee for the selection of NGOs
to the Grant-in-Aid Committee.
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Approval by Grant-in-Aid Committee based on the report of the Evaluation
Committee on the desk and field appraisal.
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Post Review

Government of India or the funding agencies shall undertake post
review of the contracts awarded on procurement of goods, works and
services on a random basis.

All procurement documents should be retained and made available to
the review team.
Mis-procurement

Goods, works and services that have not been procured as per the
Manual shall be treated as mis-procurement and SSA funds cannot
be used for such procurement.
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Complaint Handling Mechanism

Set up complaint handling mechanism at national as well as State level to
deal with complaint received from contractors/suppliers.

Dealt with at a level higher than that of the level at which the procurement
process is being undertaken
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Undertake a thorough enquiry of the allegations made
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If found correct, take appropriate remedial measures
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Initiate disciplinary proceedings against the delinquent staff
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Receipt of any illegal gratification by staff is considered as misconduct
and result in disciplinary proceedings against such staff, in addition to
imposing penalties under the law.
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