Procurement Plan & Bid document

1. Procurement Plan&Bid document Er. Satya Narayan Shah B.Sc. In Mechanical Engineering (India)MS in Manufacturing Engineering & Management (UK) Email: er.snshah@gmail.com Cell : 9851004366 June, 2018

2. Definition • Procurement planning is the process of identifying and consolidating requirements and determining the timeframes for their procurement with the aim of having them as and when they are required. • A good procurement plan will describe the process in the identification and selection of suppliers/contractors/consultants. Er. Satya Narayan Shah

3. The Typical Procure to Pay Cycle • Steps usually involved: • Identification of Requirement • Authorization of Purchase Request • Final Approval of Purchase Request • Procurement • Identification of Suppliers • Inquiries • Receipt of the Quotation/offer • Negotiation • Selection of the Vendor • Purchase Order Acknowledgement • Advance Shipment Notice • Goods Receipt • Invoice Recording • 3 Way Match • Payment to Supplier

4. Planning Planning Process includes three major components: • Information: A collection of facts from which conclusions may be drawn • Deliberation: Discussion of all sides of a question, Careful consideration • Instruction:A message describing how something is to be done

5. Legal Backing Er. Satya Narayan Shah

6. Procurement Procedure • Formation procuring Unit -PPA -7(3) • Formation Evaluation Committee-PPA -71 • Preparation of procurement Plan/strategy PPA -6; PPR- 7,8 • Preparation of Estimate (Rs. 100,000.00 excluding works)-PPA (5) • Preparation of Bid document • Opening of Bids • Evaluation of bids • Award of the contract • Completion/Termination of the contract

7. Procurement Plan • Master Procurement Plan to be Prepared- PPA (clause 6), PPR (clause 7) • for a period of more than one year or in making a procurement of an amount exceeding one hundred million Rupees annually (Ten Crores). • The master procurement plan to be approved by the secretary of the Public Entity. • To be up dated each fiscal year.

8. Importance of Procurement Planning (1) • It helps to decide what to buy, when and from what sources. • Allows planners to determine if expectations are realistic; particularly the expectations of the requesting entities, which usually expect their requirements met on short notice and over a shorter period than the application of the corresponding procurement method allows. • An opportunity for all stakeholders involved in the processes to discuss about procurement requirements. Stakeholders- the requesting entity, end users, procurement department, technical experts, and even vendors to give relevant inputs on specific requirements. Er. Satya Narayan Shah

9. Importance of Procurement Planning (2) • It permits the creation of a procurement strategy for procuring each requirement that will be included in the procurement plan. Such strategy includes a market survey and determining the applicable procurement method given the requirement and the circumstances. • Planners can estimate the time required to complete the procurement process and award contract for each requirement. This is valuable information as it serves to confirm if the requirement can be fulfilled within the period expected, or required, by the requesting entity. Er. Satya Narayan Shah

10. Importance of Procurement Planning (3) • The need for technical expertise to develop technical specifications and/or scope of work for certain requirements can be assessed, especially where in-house technical capacity is not available or is non-existent. • Planners can assess feasibility of combining or dividing procurement requirements into different contract packages. • The Procurement Plan is the product of the procurement planning process. It can be developed for a particular requirement, a specific project, or for a number of requirements for one or many entities in the public or private sectors.

11. Importance of Procurement Planning (4) • From it the procurement schedule is developed, which establishes the timelinesfor carrying out each step in the procurement process up to contract award and the fulfilment of the requirement. • It allows for the consolidation of similar requirements under one contract or the division of a requirement into several contract packages for economies of scale. • From the number of requirements on the procurement plan, the procuring entity can determine beforehand any need for additional staffing, including external assistance for the purpose of completing all procurement requirements listed on the procurement plan.

12. Importance of Procurement Planning (5) • It allows for the monitoring of the procuring process to determine how actual performance compares with planned activities, and thus to alert the pertinent departments and adjust the procurement plan accordingly. • It enhances the transparency and predictability of the procurement process. Er. Satya Narayan Shah

13. Factors Affecting Procurement Planning • Market Analysis • strong understanding of the market dynamics, availability etc • Spend Analysis • visibility of spend data-accurately analyse the goods and services that have been historically procured. • analysis will disclose issues concerning spend visibility, contract compliance and control. • Needs Analysis • It is important to identify the ‘need’ and not the ‘want’.

14. NEED ANALYSIS PPR 5 Ka • मालसामान, निमार्ण कार्य र सेवाको विवरण स्वीकृत गर्नु पर्ने: (१) सावर्जिनक निकायको प्रमुखले कुनै मालसामान, निमार्ण कार्य वा सेवा खरिद गर्नुअघि ऐनको दफा ४ बमोजीमको स्पेसीफिकेशन,योजना,नक्शा, डीजाइन, बिशेष आवशयकता वा अन्य विवरण तयार गर्नु वा गराउनु पर्नेछ ।  Er. Satya Narayan Shah

15. Procurement Plan (need analysis) The following questions should be answered • what is the procurement aiming to achieve? • Do we really need to purchase, or can the need be met in another way? • Can the quantity or scale of the goods, works or services be reduced whilst achieving the same service delivery? • Can alternative goods or service be used to meet this need? • Can the works, goods, service be specified to have improved sustainability outcomes, including being able to serve a useful purpose after its initial use? • What information is available regarding sustainably-preferable options for this purchasing requirement? Where can more information be obtained about suitable alternatives? • what happens to the product at the end-of-life? • how does this procurement impact upon our (environmental/ social) objectives and policies?

16. Content of Procurement Plan (1) 1. Key project information • objectives and plan to achieve them • an outline of what's being procured and the costs involved • planned approach to meet the Principles of Public Procurement (eg transparent, fair to all, get the right supplier or provider and the best outcome) and the Government Rules of Sourcing • governance arrangements and approvals processes • key stakeholders and your plan for engaging with them • links to agency's procurement strategy.

17. Content of Procurement Plan (2) 2. Sourcing plan • the type of procurement approach (eg open process or direct sourcing) • how suppliers or providers and their proposals will be evaluated and what due diligence will be conducted • a written document detailing your strategy for approaching the supplier or provider community. Er. Satya Narayan Shah

18. Content of Procurement Plan (3) 3. Exclusions and exceptions • a record of any exclusions or exemptions to the Government Rules of Sourcing, giving specific justification for the approach • evidence of an approved formal exemption from an independent senior manager if your proposed approach proposes a departure from your agency’s own procurement policy. Er. Satya Narayan Shah

19. Content of Procurement Plan (4) 4. Contract information • a description of the contract that will be used • how the contract will be delivered and its completion date • how the contract will be managed during delivery. 5. Risks and Integrity • the risks associated with the project and how they will be managed. • how the probity process will be managed. 6. Timetable • a realistic step-by-step timetable for the procurement process

20. Procurement Plan • Annual Procurement Plan to be Prepared- PPR (clause 8)- • In the cases where a Public Entity requires to make procurement of an amount exceeding one million Rupees annually. • Annual procurement plan to be attached with the annual program and budget of the next fiscal. • The annual procurement plan to be revised and sent to its superior office, Treasury/ Controller Office and PPMO.

21. Procurement Planning and Budget Linkage: Legal Reference {PPR 8 (5)} The chief of the Public Entity shall, after receiving the approved program and budget of the current fiscal year, have to revise accordingly the annual procurement plan prepared pursuant to this Rule and approve it and send one copy each of such plan to • its superior office, • Treasury and Controller Office, and • Public Procurement Monitoring Office.

22. Procurement Plan • Master Procurement Plan • shall contain, the following matters:- • Type, quantity and tentative estimated cost, • Procurement method, • Slice or package for maximizing competition, • Tentative numbers of contracts, • Pre-qualification proceedings (if required), • Tentative time-table of proceedings, • Any other matter as directed by PPMO

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25. Procurement Plan • Annual Procurement Plan to be Prepared- PPR (clause 8)- • the following matters shall have to be stated • The types of procurement, • Possible package of procurement, • Time table of procurement proceedings, • such as Preparation of specification, cost estimate, bidding documents, notice for invitation, evaluation, Acceptance, contract, commencement, and completion. • Procurement method, • Types of contracts, and • Any other matter as directed by PPMO

26. Procurement Planning Contents • Time table of procurement proceedings should include the following: • Specifications preparation (for the procurement of goods), • Cost estimation of procurement, • Preparation of sealed quotation form, bidding documents or documents relating to proposal for pre-qualification or request for proposal (RFP) for consultancy service, • Publication of a notice for invitation to sealed quotation, pre-qualification proposal, bid or request for the proposal of consultancy services,

27. Procurement Planning Contents • Time table of procurement proceedings should include the following: • Evaluation of sealed quotation, pre-qualification proposal, bid or proposal for consultancy service, • Approval of sealed quotation, pre-qualification proposal, bid or request for proposal for consultancy service, • Endorsement of Contract, • Commencement of the job, and • Accomplishment of the job

28. Procurement Plan Contents

29. Procurement Plan Contents

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31. Consequences of Lack of Procurement Planning • Delays in project implementation • Inappropriate procurements • Use of inappropriate procurement methods and procedures • Increased packaging costs

32. Bidding Documents

33. What is Bidding? Bidding is an offer (often competitive) of setting a price one is willing to pay for something. A price offer is called a bid. The term may be used in context of supplies, works, auctions, stock exchange, or real estate.

34. Contents of Bid Document: Invitation for Bids (IFB)- depends upon SBD Section I. Instructions to Bidders (ITB) Section II. Bid Data Sheet (BDS) Section III. Evaluation and Qualification Criteria Section IV. Bidding Forms Section V. Schedule of Requirements Section VI. General Conditions of Contract (GCC) Section VII. Special Conditions of Contract (SCC) Section VIII. Contract Forms

35. Invitation for Bids (IFB) contains • Name of borrower, project & contract ID; eligible bidders; funding source & loan no. • Name of employer, brief description of works under the contract, procurement method (ICB/NCB), applicable procurement procedure, • Information regarding availability of bidding document, address of employer for further information etc.,

36. Invitation for Bids (IFB) contains • Amount & currency for the purchase of Bid Document and its procedure, • Bid validity period, amount & currency of bid security, validity of bid security, address (exact location), date, and time of bid submission, • Minimum qualification criteria • Pre-bid meeting, date & time

37. Notice of Invitation for Bids (IFB) Invitation for Bid (IFB) & Prequalification (IFQ)to be published in; • National Newspaper, • UN Development Business Online and Development Gateway’s Market for ICB contracts in WB financed projects, • Displayed in selected offices of GoN(up to District level) • Displayed in Internet Web pages, where feasible For ICB contracts notice may be sent to DIPLOMATIC MISSIONS (potential sources) Usually 30 Days for Preparation & Submission

38. NOTICE PERIOD • International Competitive Bidding(ICB): PPA 15 • Notice period (45 days minimum)- PPA 14 (4)(1) • National Competitive Bidding(NCB) • Notice period (30 days minimum)- PPA 14 (4)(1) • Sealed Quotation: PPA 40 (3) • Notice period is small (15 days)

39. Instructions to Bidders (ITB) provides information • For bidders to prepare Responsivebid, • On composition of bidding documents and preparation of bids, • On bid submission, opening, evaluation, and award of contract, • Contents in ITB are not changed; if required as per project requirement it should be mentioned at proper clause in BDS. • ITB will not be a part of contract,

40. Instructions to Bidders (ITB) provides information on; • Language of the PQ or Bid Document (inENGLISH or NEPALI), • Documents submitted in Foreign Languages(not in English) to be accompanied with certified/ authorized translation, • Proposed Procurement method to be stated in the Bid/PQ Documents ,

41. Instructions to Bidders (ITB) provides information on; • Information on whether alternative bids are permitted or not,and if permitted, What details are to be given and how they will be evaluated to be clearly mentioned, • Information on whether the bidders are permitted to submit the bid for part or not, • Information on whether details of bid prices to be submitted or not ,

42. Instructions to Bidders (ITB) provides information on; • Whether the prices are Fixed or Adjustable (as per price adjustment formula), • Currency acceptable in the bid price, • Details of the Bid/ Performance/ Advance security (Acceptable instruments, Formats indicating principal terms and conditions, amount, and validity)

43. Instructions to Bidders (ITB) provides information on; • Provision of Bid Withdrawal or Modification prior to deadline for Bid submission (without forfeiture of bid security), • Procedure for seeking clarification on bid, pre-bid meeting, field visit etc (Title, Address, and Contact Persons of the Employer), • Validity of Bids and Bid Security, • How the bids to be submitted(Sealed, Original, Copy, Place, Dead line, etc.) , • Bid Opening(Place, Date, Time, Procedures),

44. Instructions to Bidders (ITB) provides information on; • Criteria and Methodology for Bid Examination, Comparison, and Evaluation(including the currency and source/ date for exchange rate), • Criteria and methodology for assessing Qualification of Bidders, • Process of resolving Claims/ Disputes by Adjudication, Dispute Resolution Board/ Expert, Arbitration (NEPCA, ICC), Litigation, and • If required, prior proposal for the name of DRB members or Adjudicator,

45. Instructions to Bidders (ITB) provides information on; • Formalities to be fulfilled by the Bidder before entering in to contract, • Right to reject all bids or cancel the proceedings without assigning any reasons, • Bidders to refrain from the Corrupt and Fraudulent practices during procurement as well as during contract execution, • Bidder’s right to lodge complaint against unlawful act/ decision and or procedures of Employer.

46. Instructions to Bidders (ITB) & Eligibility/Qualification information; • Required documentary evidences to prove Eligibility and Qualifications such as; • Manufacturer’s authorization letter • Written Power of Attorney (original) • Copy of company registration certificate (certified), • Copy of income tax registration or PAN certificate, • Copy of VAT registration certificate, • Copy of updated income tax clearance certificate, • Copy of audit reports for the last 5 years or up to … FY, • Information on works in hand (details of financial sources, employer’s address, start/completion dates, value of contract & work completed)

47. Instructions to Bidders (ITB) & Qualification information; • Required documentary evidences to prove Eligibility and Qualifications such as; • Financial sources, • General and specific experiences (certificates), • List of manpower available (CV), • Availability of after sales services, • Litigation history of firm, • Any other data required by the Entity.

48. Instructions to Bidders (ITB) & Qualification information; • Failure of the bidder to submit above mentioned documents may result the Bid to be Non-responsive. • So, be careful in case ICB Documents where for Foreign bidder’s income tax registration or PAN or VAT certificate, and updated income tax clearance certificate, which may need to be excluded.

49. Instructions to Bidders (ITB) & Evaluation process information; • Only substantially responsive bids will be evaluated, • For comparison purpose the Bid price is determined by: • Correcting arithmetical errors, • Excluding fixed amounts (PS, Contingencies etc.), • Employer right to accept/reject any deviations/ variations and adjust the acceptable deviations/ variations, • Converting the bid amount to a single currency, • Applying any discount offered, • Domestic preference, if any • Exclusion of Price adjustment provisions, • Employer’s right to ask for Rate Analyses & Additional Performance Security, if unbalanced/very low bid,

50. Bidding Data • Bidding Data is always with Reference to Standard Instructions to Bidder clauses, • Bidding data is used to specify the ITB clauses by inserting specific data (name, days, amount etc.) and required changes, • Bidding data replaces the ITB clauses, if changed, • Bidding data to be filled out by the Employer before issuance of the Bidding documents, • Bidding data also do not form part of Contract document.