37th Review Meeting of State Finance Controllers

29-30 April, 2013

Procurement Procedure-SSA

Technical Support Group, SSA

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PROCUREMENTPROCUREMENT

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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?Why is Procurement Important?

• 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 ProcurementEffective Procurement

ObjectivesObjectivesObjectivesObjectives

Right Qualit

y produc

t

Right Qualit

y produc

t

Right quantiti

es

Right quantiti

es

Lowest possible price

Lowest possible price

Meeting recogniz

ed standard

s

Meeting recogniz

ed standard

s

Timely Delivery as per schedul

e

Timely Delivery as per schedul

e

Reliable supplier

s

Reliable supplier

s

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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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• 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

Points to be kept in view Points to be kept in view

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PROCUREMENTPROCUREMENT

Strictly follow the levels of procurement provided in Para 112 of the Manual on FM&P

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School/KGBV levelSchool/KGBV level

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 EquipmentREMSLearning Enhancement Programme (LEP).Items required for KGBV.Uniform

Special Training related ItemsSpecial Training related Items

TLM, Contingency etc.

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CRC/BRC levelCRC/BRC level

Furniture/ equipment/computer etc.

Office contingencies

Teaching Learning Material

Teacher Training

Community Training

Civil works for construction of BRC, augmentation of

BRC and CRC

Maintenance of BRC and CRC

Printing work

REMS

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District levelDistrict level Office equipment for DPO Office furniture for DPO Textbooks/other books/supplementary materials Computers and accessories Aids and appliances for CWSN Office contingencies Hiring of vehicles Maintenance of equipment and vehicles District level training and workshops Printing work REMS ECCE Kit Educational Kits for girls Learning Enhancement Programme (LEP) Construction of Residential Schools/Hostel and KGBV

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State levelState level 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 ProcurementMethod of Procurement

Method of Method of ProcurementProcurementMethod of Method of

ProcurementProcurement

Open Tende

r

Open Tende

r

Limited TenderLimited Tender

Single TenderSingle Tender

Procurement without tender /

quotation

Procurement without tender /

quotation

Procurement through

communities

Procurement through

communities

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OPEN TENDEROPEN TENDERMeaning

• 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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Steps Preparation of tender documents

Notification / Advertisement;

Issue of tender documents;

Pre-bid Conference

Submission of tender documents;

Public opening of tender;

Evaluation;

Selection of lowest evaluated responsive bidder based on post qualification;

Negotiation with L-1 (if necessary)

Contract award; and

Contract performance

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Tender documents: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) Section - II – Instructions to Bidders (ITB) Section - III – General Conditions of Contract Section - IV – Special Conditions of Contract Section - V – Schedule of Requirements Section - VI – Technical Specifications Section - VI-A – Post Qualification Criteria Section - VII – Bid form and Price Schedule Section - VIII – Bid Security Form Section - IX – Contract Form

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Section - X – Performance Security Form Section - XI – Performance Statement Section - XII – Manufacturers Authorization Form Section - XIII – Form for Bank Guarantee for Advance

Payment Section - XIV – Performa for Equipment and Quality

Control employed by the Manufacturer

Important Clauses: Notification of Tender Notice Sale of tender documents Schedule of requirement Bid Form Bid Prices Technical Specifications Post-Qualification Criteria 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)

Repeat Orders

Quantity increase/decrease as per State procedure

Place order within one month from the date of last supply

Prices have since not reduced

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 Lack of competition

Tenders not substantially responsive

Review the causes justifying the rejection

Obtain the approval of competent authority

Procurement Steps Procurement Steps

Award of Contract

Award Criteria Award the contract within the bid validity period.

Award the contract to the successful lowest evaluated responsive bidder

The selected bidder need not undertake work not specified in bidding documents or to modify his bid.

Single offers received:

Consider if; publicity was adequate,

bid specifications / conditions were not restrictive or unclear and bid prices are considered reasonable.

Procurement Steps Procurement Steps

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LIMITED TENDERLIMITED TENDER

Items covered:

Goods including books, uniforms

Teaching learning materials,

School equipment,

Hiring of vehicles, and

Operation and maintenance of equipment

Invitation for quotations –

• 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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Invitation for quotations – No need of publication of notification in the

newspaper/website.

Issue the request letters to suppliers on the approved list.

The request letter should indicate description, specifications and quantity of the goods as well as desired delivery time and place.

Only one quotation by each supplier.

Bid Price Quote for the full quantity as described in the invitation

letter.

Corrections, if any, made by crossing out, dated initialing and re-writing.

Include all duties, taxes and other levies payable by the Vendor/Supplier in the total price.

The rates quoted by the Vendor/Supplier be fixed for the duration of the contract and not subject to adjustment on any account.

The prices are quoted in Indian Rupee.

LIMITED TENDERLIMITED TENDER

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LIMITED TENDERLIMITED TENDER

Steps Identifying items; Laying down specifications; Estimating total numbers and costs of items; Need not notify in newspaper/website Identifying likely agencies borne on the approved

list of contractors/ suppliers; (minimum 3, 8-10 for more competitive rates)

Obtaining approvals of competent authority; Issuing letters of invitation;

Processing quotations received;

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Obtaining orders of competent authority for placing

orders for supply;

Issuing letters placing orders for supply and delivery

period;

Quoted price shall include all duties, taxes and other

levies;

Rates quoted be fixed and not subject to adjustment;

Ensuring inspection;

Ensuring timely supply: and

Making payments after delivery in satisfactory condition.

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 TENDERSINGLE TENDERFollowed in the case of Articles specifically certified as of propriety nature;

or Manufactured by a particular firm; Goods including books; Teaching materials; School grant; Hiring of vehicles; and Operation and maintenance of equipment etc

Appropriate for Extension of existing contracts Standard equipment/spare parts for existing

equipments from original supplier. Items obtainable from one source Early delivery In exceptional cases such as natural disaster.

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WITHOUT TENDER / QUOTATIONWITHOUT TENDER / QUOTATION Procurement of goods or group of goods estimated to

cost the equivalent of the ceiling of State Govt.

Issue suitable guidelines by the SIS

THROUGH COMMUNITIESTHROUGH COMMUNITIES Construction of all civil works except, BRC, Hostel,

KGBV and SIEMAT

BRC construction if the community is technically capable

Purchase of materials as per ISI certification, if available;

SPD may provide simple procurement guidelines

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Identify the committee locally operating in the area.

Keep the following points in view: Active involvement of community in

planning and implementation; Who will procure the materials or goods

used in works; Goods / works have to be executed as per

approved plans and specifications 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 advanceupon start up of the work andon 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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Considerations

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Selection process 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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Terms of Reference (TOR) Prepare a well-defined TOR specifying the

services to be provided on the following lines: 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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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 Performance of contract

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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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Short list of Consultants Short list the Expression of Interest received based on

the relevant qualifications and experience specified in the notification.

Receipt of proposals 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 Constitute evaluation committees separately for

technical and financial evaluation This committee will evaluate the proposals received

from the consultants / firms

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Evaluation 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 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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Evaluation of Financial Proposal 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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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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Award of Contract

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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Preparation of Terms of Reference Publication of advertisement

Formation of Evaluation Committee

Short-listing of NGOs on the basis of specifications and scope of the work specified in the TOR.

Desk appraisal and if found suitable, field appraisal by the Evaluation Committee

Recommendation by the Evaluation Committee for the selection of NGOs to the Grant-in-Aid Committee.

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

Undertake a thorough enquiry of the allegations made

If found correct, take appropriate remedial measures

Initiate disciplinary proceedings against the

delinquent staff

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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