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Topic : The Public Procurement Act (2004)

and Its Related Regulations- Key Features

For BSc Eco

Prepared By:

Maziku, A.P
School of Business
Mzumbe University

September 2011

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1.0 Overall Topic Objective

 To acquaint students with broad


understanding of the Public
Procurement Act (2004) and its related
Regulations (2005).

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1.1 Specific Objectives-1

 By the end of the course, students


should be able to understand:
– the public procurement legal
framework;
– the principles of public procurement;
– the procurement methods.

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1.2- Understanding the Procurement
Environment

 Procurement is the process of buying goods,


works and services to satisfy the identified
needs.

 For a public institution to be able to improve


service delivery, they have to acquire goods,
services and works of the right quality, at the
right time, in the right quantity, from the right
source and at the right price.

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1.3 Major Laws and Regulations

 The Public Procurement Act (PPA), 2004


 The Public Procurement Regulations, 2005

In addition for Local Government Authorities


 Local Government Finance Act, 1982
 The Local Government (Procurement of
Goods and Works) Regulations, 2007

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1.4 Procurement in Public Institutions
Who is Responsible?

According to Section 33 of the Public Procurement


Act 2004:

 the overall responsibility for the execution of the


procurement process rests with the Accounting
Officer/Chief Executive Officer

 Tender Boards to handle all matters concerning


the procurement of goods, services and works-
with powers to award contracts for
procurement of goods, services and works.
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1.5 Objectives of Procurement

 To provide the organisation with a constant


flow of goods, services and works to meet its
needs.

 To reduce costs through more efficient and


effective purchasing by buying appropriately
to obtain the “value for money”.

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1.6 Categories of Procurement in
Public Institutions

 Works – Construction, design, rehabilitation,


maintenance and repair of buildings, bridges, roads,
plant, etc.

 Supplies – This should include goods such as materials,


drugs, foodstuffs.

 Non-Consultancy Services – Such as cleaning


services, revenue collection, security services and repair
services.

 Consultancy Services - Studies for designs and


provision of technical assistance, training, engineering
8 design and supervision.
1.7 Principles of Public Procurement-1

(a) Transparency:
 openness and clarity on procurement policy
 all interested parties know and understand the actual procedures and
processes by which contracts are awarded and managed.
 clear regulations and procedures,
 standardized tender documents,
 standardized tender contracts
 fair process.

(b) Accountability:
 The public officials who are dealing with procurement activities have
responsibilities and obligations for performance and stewardship.
 A good procurement system should have clear lines of responsibility in
decision making and public officials responsible for procurement
should be made accountable for their decisions.
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1.7 Principles of Public Procurement-2

(c) Equal Treatment/Fairness:


 Give all participants an equal chance to compete and by
avoiding discrimination among potential bidders.

(d)Value for money:


 Acquiring the right items at the right time, and at the right price
to support government actions.

(e) Appeal rights:


 Potential suppliers should be provided with a mechanism for
review of grievances and correct failures of the system.

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1.7 Principles of Public Procurement-3

(f) Integrity:
 The public officials abstain from corruption or
collusion with suppliers or others.

(g) Competition
 Procurement should be carried out by
competition unless there are convincing
reasons to the contrary.
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1.7 Principles of Public Procurement-4

(h) In addition, the PPA Regulations of


Goods and Works 2005, require Public
Institutions’ Tender Boards to
demonstrate a high degree of
transparency and integrity and apply the
following principles:
 Preference for goods manufactured in Tanzania or for
Tanzanian contractor for works.
 Exclusive preference to Local persons or firms.

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1.8 The Public Procurement
Institutional Framework

The public procurement institutional


framework as provided in the PPA (2004)
consists of two key bodies:

 The Public Procurement Regulatory


Authority (The Authority)- PPRA;

 The Procuring Entities.

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Procuring Entities Structure

Accounting Officer

Tender Board

Procurement Management Unit

User Departments Projects User Departments

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1.8.1 The Public Procurement
Regulatory Authority-1

This Authority replaced the Central Tender Board and its


objectives are:
 Ensuring the application of fair, competitive, transparent, non-
discriminatory and value for money procurement standards and
practices;
 Harmonization of the procurement policies, systems and
practices of the Central Government, Local Governments and
statutory bodies;
 Setting of standards for the public procurement systems in
Tanzania;
 Monitoring of compliance of procuring entities; and

 Building procurement capacity in Tanzania

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1.8.1 The Public Procurement
Regulatory Authority-2

The Act requires each Public Institution to:


 Establish a tender board to handle matters
concerning the procurement of goods, services and
works.
 Facilitate the execution of the procurement activities
in orderly manner,
 Establish a Procurement Management Unit (PMU)
which should consist of procurement and other
technical specialist together with the necessary
supporting and administrative staff.

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1.8.2 Procuring Entities

Procuring entities consist of:


 Ministries
 Regions
 Independent Departments
 Parastatals
 Local Government Authorities
 Executive Agencies
 Tanzanian Foreign Embassies & High Commissions

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1.9 The Public Procurement
Regulations (2005)

 These are Regulations issued under Public


Procurement Act (2004)

 They regulate procurement activities for


Goods and Works in the Public Institutions.
 Regulations cover for:
– Procurement of Goods and Works
– Procurement of Consultancy Services

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1.10 Duties and Roles: Tender Boards-1

 Ensuring that best practices in relation to


procurement are strictly adhered by an organisation
 Approving tendering and contract documents.
 Approve the issue of tender invitation documents
and use of the appropriate methods of selecting
suppliers.
 Consideration and approval of recommendations for
award of tenders issued under competitive tendering
proceedings.
 Review of all applications for variations, addenda or
amendments to on going contracts

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1.10 Duties and Roles:
Accounting Officer- 2

 Overall responsible for the execution of the


procurement process

 Establishing a tender board in accordance with the


PPA, 2004.

 Establishing Procurement Management Unit (PMU)


and staffing it to an appropriate level.

 Appointing the evaluation committee.

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1.10Duties and Roles:
Accounting Officer- Cont’d
 Certifying the availability of funds to support the procurement
activities.

 Signing contracts and LPO’s for the procurement activities on


behalf of the organisation.

 Investigating complaints by suppliers, contractors or


consultants.

 Ensuring that the implementation of the awarded contract is in


accordance with the terms and conditions of the award.

 Handles procurements of goods, services and works below the


amount maximum (threshold) set in the Second Schedule of
21 Public Procurement of Goods and Works) Regulations, 2004.
1.10 Duties and Roles:
Procurement Management Unit-3

 Managing all procurement activities of the organisation except


the award of contract.
 Acting as a secretariat to the Organisational Tender Board.
 Supporting the functioning of the Organisational Tender Board.
 Implementing the decisions of the Organisational Tender
Board.
 Planning the procurement activities of the Organisation.
 Recommending procurement procedures.
 Preparing Tender Documents.
 Preparing advertisements of tender opportunities.
 Preparing contract documents.
 Issuing approved contract documents.
 Maintaining and archiving records of the procurement process
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1.10 Duties and Roles: Tender
Evaluation Committee/Team- 4

 Technical assessment of all bids, ranking


them in order of quality and responsiveness.

 Submit its evaluation and assessment


reports to the Tender Board to guide it in
award decisions

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1.10 Duties and Roles:
User Departments- 5

 Proposes technical specifications


 Initiate departmental procurements as approved in
the organisation’s budget.
 Prepare any reports required for submission to PMU,
the Tender Board or the Accounting Officer.
 Ensures goods are received, checked and certified
as to quantity and quality before payment.
 Report any departure from the terms and conditions
of an awarded contract to the PMU.
 Forward details of any required contract
amendments to the PMU for action.
 Maintains and archives records for contracts
24 management.
 Contract supervision
1.10 Duties and Roles:
Internal Auditor of the Organisation-6

 Conduct audits to ensure the organisation


receives value for money
Economy
Efficiency
Effectiveness

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Procurement Planning: Legal Provisions
under PPA 2004- 1

 An Annual Procurement Plan (APP) is a


mandatory feature of the procurement policy
framework as articulated in the PPA 2004
 It derives its legality under:
– Section 45 of the PPA 2004;
– Regulation 40, 46, and 47 of GN 97 of
2005;
– Regulation 25 and 26 of GN 98 of 2005.

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1.11Procurement Planning- 2

What is Procurement Planning?


 It is the process of determining what is needed, how
much is needed, where and when.
 Describes which products will be acquired by the
procurement entity, as well as when and how they
will be acquired.
 The organisation must plan their procurements each
year.
 The procurement plans are approved by the
organisation together with the budget estimates.
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1.11 Important Considerations in APP-3

Economies of scale
 Aggregate the requirements of different user departments within
the organisation to achieve economies of scale and thus lower
costs. This is subject to considerations like storage facilities,
available cash flow and the like.

Maximum Limits
 Avoid splitting requirements into smaller amounts to be ordered
more times in order avoid tendering.

Flexibility
 The procurement plan may be reviewed every six months to take
into account any new procurement.

Budgeting
 An Organisational comprehensive annual procurement plan is
28 part of the Organisation Budget.
Formats for APP-4

 PPRA issued two formats:


– APP Template for Procurement of
Goods, Works and Non-Consultancy
Services in accordance with GN. 97
– APP Template for Procurement of
Consultancy Services in accordance
with GN. 98
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Formats for APP-4

 In both formats, there are three kinds of


information that should be kept by a PE:
– For internal use in the PEs for Planning
Purposes;
– For External Use- notifying potential
bidders of procurement opportunities in
the PEs
– For submission to PPRA- for notification
and monitoring purposes.
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1.12- PROCUREMENT PROCEDURES

Requirement of the Regulations:


 Procurement to be made through competitive
tendering.

 However, 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 allows the use of other procurement
methods (specified in its First Schedule).

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Methods of Procurement and their use- 1

 International Competitive Tendering- Reg.


65
 National Competitive Tendering – Reg. 66.
 Restricted Tendering – Reg. 67.
 Shopping (Competitive Quotations) – Reg.
68.
 Single source for goods or services – Reg.
69.
 Direct contracting for works – Reg. 70.
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Methods of Procurement and their use- 2

 Minor value procurement – Reg. 71.


 Turnkey – Reg. 72.
 Force account – Reg. 73.
 Public Private Partnership – Reg. 74.
 Community participation – Reg. 75.
 Procurement of commodities with
seasonal variation of prices – Reg. 76.
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1.12 Procurement methods:
National Competitive Tendering-1

 A method with maximum competition – tender


advertised as open to all interested bidders.
 Formal procurement process with detailed
invitation to tender document.
 Public tender opening
 Tender notice only published within Tanzania
 To be used when the entity does not intend to
invite foreign suppliers or contractors

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1.12 Procurement Methods:
International Competitive Tendering-2

 Mostly used when the participation of foreign


suppliers or contractors in tendering proceedings
is intended.

 International publication of tender notice.

To be used in the following cases:


 where payment for the contract is to be made in
whole or in part in foreign currency;

 where it is desired to attract tenders from a widest


range of suppliers or contractors, regardless of the
35 estimated value of goods or works to be procured.
1.12 Procurement Methods:
Restricted Tendering- 3

 Involves inviting tenders from few selected


potential suppliers or contractors
 Invitation may be preceded by either the pre-
qualification or short-listing of suppliers or
contractors.

To be used in the following cases:


 Where the goods required are of specialized
nature or can be obtained from a limited number of
reputable suppliers;
 Where the works required can only be
provided/executed by a limited number of
36 specialized contractors;
1.12 Procurement Methods:
Restricted Tendering- 3 cont’d

 Where there is an urgent need for the goods


or works such that there would be insufficient
time for organisation to engage in open
national or international tendering.
(Unforeseen urgency)
 Where there are other exceptional reasons to
justify departure from full competitive
tendering procedures.

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1.12 Procurement Methods:
Competitive Quotations- 4

 Simplified method for low value


procurement.
 Minimum of three companies invited to
participate.
 Simplified letter of invitation and contract
documents.
 Requirement: The quotations so collected
must be approved by the Tender Board.

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1.12 Procurement Methods:
Single Source Procurement for
Goods- 5

Goods are procured directly from a single supplier or


manufacturer. To be approved by the Tender Board.

To be used in the following circumstances:


 where the goods are available only from a
particular supplier or a in a situation where a
particular supplier has exclusive rights in respect
of the goods and no reasonable alternative or
substitute exists.
 Where there is an urgent need for the goods or
works such that there would be insufficient time for
organisation to engage in open national or
39 international tendering. (Unforeseen urgency)
1.12 Procurement Methods:
Single Source Procurement for
Goods- 5 cont’d

 where due to a catastrophic event,


there is an urgent need for goods,
making it impractical to use any
other method of procurement
because of time involved in using
those methods

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1.12 Procurement Methods:
Minor Value Procurement - 6

Under this procurement method, the 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.

This method is appropriate where the price quoted is


reasonable and the value of the goods or minor
works to procured does not exceed Tshs.10m for
good and Tshs 20m for works.

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1.13 Influences on Procurement
Method: Summary

A number of procurement methods can be employed within the


entity.
The guiding factor for the choice of a given procurement method is
mainly determined by the estimated value of the procurement
requirement and the circumstances connected to the requirement
such as:

 Urgency
 Nature of the requirement
 Limited number of supply sources
 Currency of payment
 Standardization
 Contract Extensions
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Choice of Procurement
Method- Other Factors

Methods of Goods Works Non Consultancy Disposal of Assets


tendering M Services

International No limit No limit No limit No limit


competitive tendering

National competitive Up to Tshs, Up to Tshs, Up to Up to


tendering 800,000,000 3,000,000,000 Tshs,500,000,000 Tshs,,3,000,000,000

Restricted tendering Up to Tshs. Up to Tshs, Up to Up to


400,000,000 1,500,000,000 Tshs,200,000,000 Tshs,100,000,000

Competitive Up to Tshs. Up to Tshs, Up to Not applicable


quotations 80,000,000 100,000,000 Tshs,50,000,000

Single source Up to Tshs. Up to Tshs, Up to Not applicable


procurement 500,000,000 800,000,000 Tshs,100,000,000

Minor value Up to Tshs. Up to Tshs, Up to Not applicable


procurement 10,000,000 20,000,000 Tshs,10,000,000

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Tendering Process: Detailed Key steps

(i) Preparation of Tender Documents;


(ii) Review and Approval of Tender Documents by the
Tender Board.
(iii)Advertising of Tender and the issuing of Tender
Documents.
(iv)Submission and Custody of Tender Bids;
(v)Opening of Tenders.
(vi)Evaluation of Tender.
(vii)Approval and Award of the Tender by the TB. 44
Description of works/
goods/services to
PREPARE meet the needs of PE
TENDERING
DOCUMENTS AND
ESTABLISH Approximate value
APPROXIMATE will assist in
VALUE determination of
method of tendering

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 Tender documents generally include the
following components:

– Section1: Invitation for Tender


– Section 2: Instruction to Tenderers
– Section 3: Tender Data Sheet
– Session 4: General Condition of Contract
– Section 5: Special Condition of Contract
– Section 6: Schedule of Requirements
– Section 7: Technical Specifications
– Section 8: Sample Forms
– Section 9: Anti-Bribery Policy/Code of Conduct
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Restricted Tendering
(Reg. 67) – Justification and Approval
of Tender Board (TB)

Single source or Direct Contracting


(Reg. 69/70) – Justification and
Approval of TB
DECIDE ON National Competitive Tendering
METHOD OF (Reg. 66) – Observe limits of
TENDERING1 Exclusive Preference to local firms
otherwise apply margin of preference

International Competitive
Tendering
(Reg. 65) – Observe requirement to
apply Margin of Preference in favour
of local firms

1Other methods also exist: Competitive Quotations up to Tshs. 100 million and Minor
Value Procurement up to 20 mil.
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Prequalification
Identify qualified contractors/suppliers/service providers
prior to calling tenders

Use prepared prequalification documents to pre-qualify


contractors based on their experience, financial
standing, equipment and manpower availability.

Invite by advertising or writing to eligible contractors

Open tendering
TB must approve tender Notice and adequate time be
provided for eligible bidders to collect tender
INVITE documents. Later post-qualification must be carried
ELIGIBLE out
Provide eligible contractors/suppliers/service
BIDDERS providers with timely and adequate notice and time
to tender
Clarifications on enquiries be made within
reasonable time using method described in the
Bidding Document – should be strictly in writing

Standard Tender Documents to be used – prepared


by PPRA

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PE to fix place, date and time of
submission of tenders

Tenders to be submitted in the form


and manner specified in Tender
Documents

PE may issue deadline to


submission in case there was
SUBMISSION OF clarification or modifications
TENDERS
Notice of extension of submission
to be given promptly to all bidders

Tenders to be submitted in the form


and manner specified in Tender
Documents

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Deposit tenders in specified place
and under the care of Secretary of TB

Use register to record submitted


tender and issue receipt showing date
and time of receipt.
RECEIPT AND Tender opening to be preceded by
OPENING OF Secretary of TB or his appointee
TENDERS
Details of each tender including
discounts shall be announced in the
meeting
Secretary of TB will take minutes of
the Tender Opening meeting

Alteration or modification not allowed


after opening

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Accounting Officer (AO) to appoint
evaluation Team with members above
three – external experts may be
included

Evaluation based on evaluation criteria


included in Tender Document

EVALUATION
OF TENDERS Evaluation Team (ET) shall first
establish the responsiveness of the
bids – non responsive bids shall be
rejected.

Responsive bids shall be subjected to


detailed technical evaluation. Bids
failing this stage shall be rejected

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Commercial and technical responsive
bids shall be subjected to financial
evaluation. The lowest evaluated
tender shall be subjected to Post-
qualification

Evaluation team shall prepare a tender


report with recommendation to be
EVALUATION
submitted to the PMU
OF TENDERS

Cont’d

PMU if satisfied with the report shall


submit it to TB meeting for approval
and award of contract.

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TB shall review the evaluation and
recommendation and may:

Approve the recommendation and authorize the


award of contract; and

Refuse to authorize acceptance of any tender


and refer the evaluation back to the PMU

Contents of tender report should not be


exposed until after the award. After
AWARDING award bidders reserves the right to be
CONTRACT informed of the reasons for rejection of
their bids
Successful contractor shall be notified
promptly by the AO or CEO and a
contract signed accordingly.
Unsuccessful bidders should be notified
as soon as the performance bond has
been furnished.
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Procurement of Consultancy Services

Methods for selection of consultants:


 International Competitive Selection –
Reg. 32
 National Competitive Selection – Reg. 33.
 Restricted Competitive Selection – Reg.
34
 Single source Selection– Reg. 35.

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Methods of Selection (Contd..)

Method of Procurement Limits

International Competitive Selection No Limit

National Competitive Selection Up to Tshs 1,000,000,000

Restricted Competitive Selection Up to Tshs 500,000,000

Single-Source Selection Up to Tshs 300,000,000

Individual Selection Up to 150,000,000/-

Minor Value Procurement Up to Tshs 7,500,000


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Standard Procurement Processing Time

S/No Activity Time (Calendar days)

National Competitive International


Selection Competitive Selection
1 Preparation of Terms of 7 to 21 21 to 30
Reference
2 (i) Inviting for expression of At least 14 at least 30
interest up to submission of the
same by consultants OR
(ii) Invitation of Application for at least 30 at least 45
prequalification up to the
submission of the same by
Consultants
3 Evaluation of Expression of 14 21
interest and preparing shortlist
with approvals
4 Preparation and issuance of 14 21
the Request for Proposal 56
Standard Procurement Processing
Time (Contd..)
5 Review and approval of 7 7
Request for Proposal by
the tender board or
approval committee

6 Preparation and At least 30 at least 45


submission of proposals
by the consultants

7 Evaluation of Proposal 30 30
and notification of
award and obtaining
necessary approvals

8 Award of contract 7 7

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Assessment Criteria: General –Regulation 58(4)

S/No Criteria Weights

1 Firm’s general experience, reputation and experience 5% to


in previous similar assignments 15%
2 Understanding of the terms of reference, methodology 20% to
and the overall quality of the proposal 40%
3 Qualification of key personnel 30% to
60%
4 Local firms participation 5% to
15%
5 Participation by national experts 5% to
10%
6 Knowledge of the country 5% to
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10%
Pre-qualification – Regulation 58(6)

S/No Criteria Weights

1 Overall experience in the field of the assignment and 20% to


in comparable assignments 50%

2 Professional reputation of the firm and its experience 20% to


in previous assignments 40%
3 Knowledge of project environment in Tanzania and 10% to
of the regional countries and their implications for 20%
the project
4 Inclusion of local firms and experts in the 10% to
assignment 20%

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Corruption in Procurement

Definition

 “Theabuse of public office for


private gain”

 Quotedfrom the World Bank Publication


“Helping Countries Combat Corruption”

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Corruption in Procurement

Corrupt practice – PPA 2004

 Means offering, giving, receiving, or


soliciting of anything of value to influence
the action of a public official in the
procurement process or contract execution

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Corruption in Procurement

Fraudulent practice – PPA 2004

 Means a misrepresentation of facts in order to


influence a procurement process or the execution
of a contract to the detriment of the Government
and includes collusive practices among the
tenderers (prior to or after submission) designed
to establish tender prices at artificial non-
competitive levels and to deprive the government
of the benefits of free and open competition.

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Corruption in Procurement

Identification of Corruption
 Some “red flags” in the purchasing office:
- Poor record keeping;
- Deviations from procedures without written
justification;
- Poorly defined roles/responsibilities;
- Lack of controls;

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“Red flags” in procurement-cont’d

– Overstating physical requirements;


- Create weak oversight and supervision
mechanism;
- Unjustified alterations of timings of projects to
suit personal interests;
- Inappropriate bidding procedures (eg
inadequate advertisement);
- Unjustified wealth of procurement officials.
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Prevention of Corruption in
Procurement

 Section 72 of PPA 2004 gives sanctions available for


PE, public officer and suppliers involved in corrupt
practices
 In case of intention to award the contract:
 The PE may reject the proposal for award of a
contract involving fraudulent and corrupt practices;
 The PE may declare the person or firm ineligible for
a period of ten years to be awarded a public
financed project
 For public official involved in corrupt or fraudulent
practices he / she be punished pursuant to the Penal
Code, the PCCB Act 1971 or any other written law.
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Thank you for listening!!!

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