Term Paper

On

National Procurement Methods for Goods, Works and Related Services in

The Light of PPR 2008

Course code: CE301

Course title: Professional Practices and Communication
Section: 01
Date: 15-05-2020

Submitted By: Umme Habiba Shanchita

Student ID: 2018-1-22-002

Submitted To: Ibrahim AKM

Adjunct Faculty
Civil Engineering Department
East West University
 Table of Contents

Contents
Page No.
Introduction.................................................................................................................................................1
1. Methods of Procurement for Goods, Works and Related Services......................................................2
2. Most Suitable Method of Procurement...............................................................................................2
2.1. Open Tendering Method..............................................................................................................2
3. Other Methods for Procurement of Goods, Works and Related Services...........................................2
3.1. Limited Tendering Method...........................................................................................................3
3.2. Two-stage Tendering Method......................................................................................................3
3.3. Request for Quotation Method....................................................................................................3
3.4. Direct Procurement Method.........................................................................................................4
3.5. International Procurement...........................................................................................................4
3.6. Framework Contract.....................................................................................................................4
4. Pros and Cons of the seven types of Procuring Methods....................................................................5
4.1. Open Tendering Method..............................................................................................................5
4.2. Limited Tendering Method...........................................................................................................5
4.3. Two-stage Tendering Method......................................................................................................5
4.4. Request for Quotation Method....................................................................................................6
4.5. Direct Procurement Method.........................................................................................................6
4.6. International Procurement...........................................................................................................6
4.7. Framework Contract.....................................................................................................................7
Conclusion...................................................................................................................................................8
National Procurement Methods for Goods, Works and Related Services in
The Light of PPR 2008
 Introduction

Procurement is the process of sourcing and acquiring the goods and services a company needs to
fulfill its business model. An effective procurement strategy can save company money by
negotiating favorable terms and pricing, and ensuring supplier quality and efficiency.
Procurement is often carried out by the process of tendering, rather than buying products directly
from a seller. ... Subsequently, it will open the bidding in a process known as tendering.
Interested companies can then submit their proposals to the client (often a local government) to
meet these requirements. The Five Pillars of procurement are:

1. Value for money.

2. Open and effective competition.
3. Ethics and fair dealing.
4. Accountability and reporting.
5. Equity.

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1. Methods of Procurement for Goods, Works and Related Services

According to The Public Procurement Rules 2008 (PPR 2008) of Bangladesh, there are 7 types
of methods we can follow for the procurement of goods, works and related services. Those
methods are-

 Open Tendering Method

 Limited Tendering Method
 Two-stage Tendering Method
 Request for Quotation Method
 Direct Procurement Method
 International Procurement
 Framework Contracts

2. Most Suitable Method of Procurement

2.1. Open Tendering Method

Open tendering is the process aimed at acquiring goods or/and services at the lowest price. The
belief is to stimulate competition and minimize discrimination. It is also known as open
competitive bidding, open competition or open solicitation. The open tendering shall be the
preferred method of procurement for goods and related services, works and physical services,
unless the threshold or special circumstances relating to a specific requirement make it more
appropriate for one of the other procurement methods to be. Tenders shall be invited from all
eligible tenderers through public advertisement under rule 90. Government owned factories or
enterprises may participate in the public tenders if they establish that they are legally and
financially autonomous. The submission of tender security and performance security is required
under this method. The open tendering method can be used without prior approval of the head of
the Procuring Entity or an officer authorized by him or her.

3. Other Methods for Procurement of Goods, Works and Related Services

A Procuring Entity may use a procurement method other than open tendering method for
procurement of goods and related services and works and physical services in accordance with
the requirements set out in the Public Procurement Rules 2008 (PPR 2008) of Bangladesh.

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3.1. Limited Tendering Method
Limited tendering is a procurement method that limits the request for tenders to a select number
of suppliers, contractors or service providers such as aircraft, locomotives, specialized medical
equipments, contraceptives, telecommunication equipments , silos, ports, harbors etc. There is no
need for advertising as suppliers are limited and known The Procuring Entity may invite tenders
from enlisted suppliers or contractors. Procuring Entity must follow this tendering method when
there is an urgent need for procurement or, in the circumstances where the project go delayed
without the fault of procuring entity and delay on its part. The limited tendering method shall not
be used without prior approval of the head of the Procuring Entity or an officer authorized by
him or her. The submission of Tender Security shall not be mandatory under this method but the
submission of Performance Security shall be required.

3.2. Two-stage Tendering Method

Two stage tendering is a method of procurement where the employer seeks to appoint a
contractor at an initial stage of the project based on an outline scope of work. In the first-stage, a
Procuring Entity shall invite unpriced technical proposals through advertisement on the basis of a
conceptual design that provides potential tenderers with basic technical information, such as
conditions relating to expected production capacity of works, outline of the technical
specifications and visual, operational and economic details of the object of the procurement.
There shall be no requirement of submitting a tender security and performance security by the
tenderers in the first-stage. In the second stage tender security and performance security is
required.

3.3. Request for Quotation Method

Request for quotation (RFQ) is a procurement method that consist in asking information about
specific products or services to several suppliers. The company releases RFQ to a group of
selected providers with the purpose of comparing prices and other basic sales terms. The Head of
the Procuring Entity shall strictly control the use of the RFQ Method in order to ensure that there
is no abuse and that its use by Procuring Entities is restricted to the items specified in this rule. A
decision to use RFQ method shall be approved in writing by the Head of the Procuring Entity or
an officer authorized by him or her unless the RFQ method was scheduled for 60 the said object
of Procurement in the Procurement Plan approved under Rule 16(7). Procuring Entities shall not
use the RFQ Method as means to either bypass more competitive methods of Tendering or split
large potential contracts into smaller ones solely to allow the use of this method. Procuring

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Entities shall use the standard document specified for RFQ method. No tender or performance
securities are required when the RFQ method is used.

3.4. Direct Procurement Method

Direct procurement method is a method of procurement where a procuring entity procures its
requirement from one bidder or supplier without having received bids from other bidders. The
head of a Procuring Entity shall strictly control the use of the direct procurement method as it
does not provide the benefits of competition, lacks transparency and could encourage
unacceptable and fraudulent practices. The decision to use this method shall be approved by the
head of the Procuring Entity or an officer authorized by HOPE. There shall be no requirement
for direct procurement to be advertised. There shall be no requirement for a tender security in
case of direct procurement, but a performance security shall be obtained from the supplier or
contractor, except for procurements under Rule 27(9), Rules 81 and 82.

3.5. International Procurement

International procurement is the process of allowing firms around the world to bid on contracts
for goods and services. This creates the capacity for increased spending, allowing customers and
businesses to purchase goods and services. Methods mentioned for national procurement may be
used for international procurement. Rule 83 to 88 governs use of different methods for
international procurement.

3.6. Framework Contract

Framework contract means a contract, effective for a given period of time, between one or more
Procuring Entities and one or more suppliers, establishing the terms governing the Procurement
of goods and related services, with regard to price, and, where appropriate, the quantity or
quantities envisaged. Procuring Entities may enter into a framework Contract, under Section 36 of the
Act, for the supply of a quantity of similar items at specified prices during a defined period, in order to
avoid repeated tendering for the same requirement as well as obtain better prices through economics of
scale. Framework contracts may be concluded following open or limited tendering with one or more
suppliers to provide a range of goods and physical services over a defined period of time not exceeding
three (3) years. Framework Contracts shall not be used to procure items or Goods for prices higher than
the market prices.

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4. Pros and Cons of the seven types of Procuring Methods

4.1. Open Tendering Method

Pros: It offers the greatest competition and has the advantage of allowing new or emerging
suppliers to try and secure contracts. This facilitates greater innovation. Open tender method
provides the best possible value for money. It ensures a healthy and competitive marketplace with
companies providing the best products and services. Suppliers will be encouraged to deliver on
time, adhere to the quality required and offer competitive prices. A government or organization
that subscribes to the open tender system shows the mark of good governance.

Cons: The open tender method is not without disadvantages, as it requires strict adherence to
procedures and, depending on the kind of procurement, may be lengthy. The process has been
criticized for being slow and costly, attracting a large number of expressions of interest from
bidders who may be unsuitable for the contract. The filtering process takes time and costs
money.

4.2. Limited Tendering Method

Pros: Time consumption is lower than open tendering method as there is a selective list of
suppliers. It can save the design time and cost. Moreover, less risk to the client as the suppliers
are well known for the specific product.

Cons: This method have some disadvantages too. As, the suppliers are well known for a specific
product, the price may be high and there might be no scope for negotiation. Final quality can be
affected because well-known suppliers do not customize their product according to clients.

4.3. Two-stage Tendering Method

Pros: In this method, time consumption for the tendering process is low. Procuring Entity can
select a reliable, experienced contractor for a reasonable price.

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Cons: It can be risky at the negotiation case to find a suitable professional contractor. The
contractor’s advice may hamper the project. The establishment of price level is done by
collecting information. These details should be strong enough to make the right decision.

4.4. Request for Quotation Method

Pros: Using an RFQ makes the solicitation process more efficient because the document is
circulated only to a select few. With even fewer qualified responses being provided. This reduces
the time and effort required to evaluate proposals from qualified bidders. This can be modified to
the particular terms and conditions. The contract is awarded when a vendor accepts the offer.

Cons: It can be limiting, as companies only receive quotes from vendors they have established
relationships with – meaning new vendors who may be able to provide the same service, project,
or task for a smaller fee won’t have the opportunity to do so. As a result of this, the company
may miss out on good deals.

4.5. Direct Procurement Method

Pros:  There is no need to spend extra money and time to find a contractor. The needs shall be
met upon a market price research by a person or persons to be assigned by contracting officer,
without necessity of establishing a tender commission and of requiring the qualification
provisions stated in article.

Cons: Direct procurement results in various additional costs to the firm. There’s no competitive
bidding, which entails sellers competing to offer the items at the lowest possible cost to the
advantage of the buyer. The firm may spend more money when making its small-scale purchases
because of its low bargaining power and lack of quantity discounts. Relying on a single supplier
is a risk to any firm’s operations. The supplier may fail to deliver the right quantity at the
stipulated time, leading to stock-outs.

4.6. International Procurement

Pros:  It can be done by following national procurement method. It can develop the tendering
skill of a country by keeping in touch with other countries.

Cons: There is no specific method to follow. So, there can be problem in making a decision.

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4.7. Framework Contract

Pros:  Frameworks eliminate the need to write a lot of repetitive code that you will find being
used in many different applications. The advantage of efficiency will never be underestimated.
You can expect to build a project in much less time than would be achieved writing code without
a framework.

Cons: Frameworks are unresponsive to change. There may be new suppliers and/or new
solutions within the market that were not included when the agreement was initially set up. They
apply a 'one size fits all' approach, which may make it difficult for buyers to satisfy their own
procurement objectives.

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 Conclusion

Procurement is essential to project success and typically an early decision. Suppliers are selected
to provide the required work, services during project evolution and manage the risk appointed to
them. Suppliers are pain in an efficient, objective and timely manner. Administration ensures that
variation is identified, captured and controlled with the right quality in a timely and controlled
manner. Ensures claims are handled in an objective manner and impacts on interfaces with other
contracts is identified and managed. Closures finalizes the buying or selling and ensures lessons
are learnt and there is legal closure. So, we must follow procurement method wisely.

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