3.

3 Procurement Management
Processes
Procurement Management process can be idealized into
three major processes. These include Preparation, Tendering,
and Evaluation Processes

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 3.3.1 Procurement Preparation
Procurement Team:
Ethiopian Procurement Regulation states that a
Procurement team consisting of a minimum of five
members shall be established.
As Tender Evaluation is a joint technical and
commercial exercise, the project owner shall consider
that the necessary experts shall be composed in the
procurement team.

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 Tender document
Tender Documents: are prepared to
Instruct bidders on the procedures for the
preparation and submissions of bids,
Inform prospective bidders about the nature of
things to be procured,
Inform bidders about the criteria for evaluation
and selection of the successful bidder, and
lay down the contract conditions, delivery system,
procurement methods and contract types of the
project.
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 Tender document cont…
Tender documents include:
Form of Invitation to Tender or Request for Proposals;
Instruction to Tenderers (Standard and / or Particular
information) or Terms of References;
Prequalification Documents if necessary;
Forms of Tender;
Forms of Contract Agreement;
General and Particular Conditions of Contract;
Bill of Quantities and Drawings ;
Technical Specifications & Methods of Measurement;
Other Forms, Formats and Schedules.
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5
 Tender document cont…
Invitation for Tender (IFT): is a requisition for
interested bidders to participate for the procurement of
services / works / goods. It shall be:
in accordance with the approved provisions of the
contract planning phase and applicable laws
made public through the wide covering media,
newsletter, notice boards, etc

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 Tender document cont…
Usually Invitations for Tender include:
Name and address of Institutions issuing the
invitation and Clarification if requested,
Objective and Requirements of the Invitations,
Stages and accordingly qualification terms
Brief descriptions of the project
Sources of Fund and Eligibility requirements
Completion time, if necessary
Date, Place, Time and Conditions to get, submit
and open tender documents
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 Tender document cont…
 Instruction to Bidder (ITB)
shall provide all the necessary information to
enable bidders to prepare their offer in
accordance with the requirements of the
Project Owners.
Whenever necessary, it will be supplemented
by particular information which cannot be
standardized or generalized in the General ITB
document

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 Tender document cont…
The ITB document includes:
Introductory Parts covering sources of fund,
description of the project, eligibility and qualification
requirements, and necessary obligations concerning
the cost of tendering, site visits, etc.
Tender Document Parts eliciting the contents,
clarification and amendment processes.
Tender Preparation Parts which states the
language, documents comprising and their
precedence, form of tender and appendix thereto
requirements, and alternative offer and formats and
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signing of bids.
 Tender document cont…
The ITB document includes:
Tender Submission part stressing sealing and
marking of bids, deadline for submission of tenders,
and modification and withdrawals.
Tender Opening and Evaluation Parts covering
procedures and criteria for opening and evaluation
of tenders, and preference for domestic or regional
preferences.
Tender Award Parts stating Award criteria and
procedures, and Rejection Rights and Obligations

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 Approval of Tender Documents
Regulatory requirements enforced for:
Budgeting, Credit, Assistance and Grant Policies;
Health, Safety and Environmental Requirements;
Professional, Ethical and Legal Requirements
demand checking, renewal and approvals of
Tender Documents. Check list for review is the
best practice used for Tender Documents
approval.

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 3.3.2 Tendering Phase
Invitation:
Normally open tenders are floated for a period between
30 to 45 days. Limited and Negotiated tenders can be
invited between 7 to 15 days. The invitation to tender
shall clearly state:
the owner and his desirous service or works
eligibility requirements,
place to get further information,
where to purchase & submit tender documents,
how long the tender will be floated,
how should the tender offer be packed, and
when and where submission and opening of tender will
12 take place.
 Clarifications
Can either be
requested by interested bidder or
carried out using a pre - tender clarification
meeting
In both cases issues clarified shall be sent (written) to all
bidders
The bidders shall submit their offer on or before the
submission date and time.
Late bids are automatically rejected.

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 Tender Opening
Bids shall be opened in public on the date, at the time
and place
Ethiopian practice in tender opening for public
construction projects is that
 representatives from MWUD
 Project Owner,
 Consultant ( if available) and
 Contractors (Who wish to attend)

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 Tender Opening
The following will be carried out during tender opening:-
Tender Attendee members shall take their place, be
registered and shall sign to attest their presence
during opening
Tender box opened and checked for faulty things,
Check the tender is the right one,
Bids will be opened one after the other,
All necessary data which deem useful will be read
aloud and recorded at the opening of bids.
Tender committee members shall sign on the Tender
documents.
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 3.3.3 Tender Evaluation Phase
It is made to determine and make award
recommendation for the least evaluated bidder using
preliminary and detail evaluations.
The recommended winner may or may not necessarily
be the lowest bidder.
Factors to be considered in determining the least
evaluated bidder are.
technical qualification,
completion time,
commercial terms of the offer
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 Preliminary Evaluations
Preliminary Evaluations are made for Eligibility and
Arithmetic Review requirements
Eligibility Requirements:
Most often sited issues considered in eligibility
requirements are:
Valid & Up to date Trade and Professional License,
Valid & Up to date Membership to Financier
Organizations
Valid provision of Bid Security or Bond,

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 Preliminary Evaluations cont…
issues considered in eligibility requirements are:
Completeness and submittals of all required
documents,
Turnover requirements fulfilled
Power of Attorney, Signature and Sealing
Requirements, and
Appropriate Invitation, Packaging and Submission
Requirements.
These eligibility requirements together with basic
alterations of the conditions of the tender will be
considered for responsiveness or not
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 Preliminary Evaluations cont…
For guideline during tender evaluation; outlined when
a tender is considered major deviation(non-responsive)
or not

Major Deviations Minor Deviations

Affecting the validity of the
bid
Rejection or Disqualifying
conditions stated
Substantial effect on the Bid
Price
Do not affect the triple
constraints of the project
Do not result in change of
Bid Price
Non conditional tenders

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 Preliminary Evaluations cont…
Arithmetic Review:
Tenders are not arithmetic error free. Therefore, it is a
formal evaluation process to review arithmetic before
carrying out detail evaluations.
Arithmetic review can be done if and only when
financial proposals are opened.

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 Detail Evaluations
Detail Evaluations include Technical, Commercial and
Financial Qualification requirements.
Technical requirements:
at this stage eligible bidders evidence of their ability to
perform the services required by the employer is to be
examined.( see per-qualification part )
Commercial Evaluation:
This includes
Benefit Forgone due to Completion Time;
Additional Costs due to differences in Foreign Currency
Exchange and Advance Payment requirements; and
21 Provisions of Domestic or Regional Preference Margins.
 Detail Evaluations Cont…
Benefit Forgone due to Completion Time:
When tenders are offered with different completion times,
comparisons are made to determine the benefit forgone
taking into account the least acceptable completion time as
a basis for competitions.
Additional cost due to
Foreign Currency Exchange requirements
 When tenders have provisions to quote different
currencies, their comparison will be made based on
determining their effects due to the additional cost
incurred for variations in currency exchange
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requirements.(convert all tender into one currency)
 Detail Evaluations Cont…
Advance Payment
 When different amounts of advance payment are
requested as part of the tender offer, this does not give
the same basis for evaluation. so that, there shall be the
same basis for proof of competition
 Therefore, the evaluation should take minimum advance
payment request as a basis and consider others for
additional cost incurred due to different mobilization
advance requirements.

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 Detail Evaluations Cont…
Domestic and / or Regional Preference
Domestic or regional preference margin is a provision
to give preference to local companies even if their bid
offer is not over by a percentage often equals 7-10 %
for construction works
A contractor can be eligible for such preference margin
if and only if;
Its legal constitution is in accordance with the
Employers’ Country / Region
It is registered according to rules and regulations of the
Employers’ Country / Region
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 Detail Evaluations Cont…
A contractor can be eligible for such preference margin if
and only if;
It has proof that its majority of works are undertaken in the
Employers’ Country / Region
Its majority of capital shares are held by the Employers’
Country / Region nationals
Its majority of the board of directors members are the
Employers’ Country / Region nationals
Its 50 % key personnel are nationals of the Employers’
Country / Region
Its arrangement to execute the work should not involve
major part of its work or net profit other than the
25 Employers’ Country / Region Nationals or Co - Companies
 Detail Evaluations Cont…
Financial Offer Comparison:
After all commercial comparisons are considered on the
same bases; the Tender offer will be adjusted based on the
Cost - Benefit principle which involves adding costs and
benefits foregone. Besides, the preference margin will also
be added and Least evaluated Bidder is Determined.That is:
TO evaluated = (TO + BFCT + ACAP + ACFE + ACPM)
Besides, Financial offers per groups of trades of works are
compared in order to evaluate whether tenders are front
loaded or not. Front loading often cause disruption of
projects or over zealous contractual negotiations.
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 Rejection of All Tenders
Rejection of All Tenders is solely the power of the
employer to decide, for the sake of fairness. it is
recommended that such rights shall be exercised in the
following cases:
All Tenders are found non – responsive during the
Preliminary evaluations
Evidences of lack of competitions such as collusion
among bidders, monopoly, etc
Lowest responsive offer is found unreasonably high.
The following procedural Flow Chart is recommended
for Tendering following the Pre-Qualification
27 procedural flow chart shown previously.
 Summary of tendering processes
Procedure
Procurement Document
Tender Document
Preparation
Issuance of Tender
Documents
Tendering Phase
Employer / Consultant Contractors
Letter of Invitation
Check Eligibility
Instruction to Bidders
Check Competitive Adv.
Conditions of Contract Collect Information
Drawings, Bill of Quantities, Forms, Formats and Decide to participate
Schedules, etc
Advertisement or Invitation Request and Obtain Tender docs.
Project Scope, Location, Source of finance
Issue, Submission and Opening dates of Tenders

Clarification and Site Visit

Tendering Arrange date and Time for Pre Bid Submission Meeting Request & Obtain Clarifications
Send all clarifications to all bidders Request and Visit Site
Phase Arrange date and time for site visit Acknowledge receipt of all clarifications
Prepare and Issue Addenda for all Clarifications

Submission of Offer
Tendering Receive Offers Complete and Submit Offers
Record date and Time of Receipt together with Relevant Info.
Phase Reject Late Offers

Opening of
Open Tender in the presence of relevant attendee
Tender Announce and Record Tenderers and all offer Attend Tender Opening
Tender Evaluation Phase information Ceremony

Evaluation of Tenders Review conformity and completeness of Tender

Tender Evaluation Evaluate Alternative tenders and deviations Provide Clarification if
Reject Substantially non Responsive and non Requested
Phase conforming Tender
Approval by Regulator & Financier

Selection and Award Select Least Qualified and Evaluated Bidder

Recommendation Propose Award Recommendations
Tender
28 Evaluation Phase Decide if further Negotiation is required or
not
 Sample Form of Tender
Date: [insert date]
Procurement Ref. No.: [insert tender reference no]
Page [insert page no] of [insert total n0 of pages] pages
To: [insert complete name of Employer]
We, the undersigned, declare that:
We have examined and have no reservations to the Bidding
Documents, including Addenda No.: [insert the number and
issuing date of each Addenda];
We offer to execute the [insert the name & procurement ref. no
of the Contract] in conformity with the Bidding Documents for
the Contract Price of [insert amount in no & words] Ethiopian
Birr, excluding any discounts offered below;
The advance payment required is …..…. Ethiopian Birr:
The discounts offered & the methodology for their application are:
…………………
Our bid shall be valid for a period of [specify the no of days that
the bid is valid for] calendar days from the date fixed for the bid
submission deadline in accordance with the ITB, & it shall remain
binding upon us & may be accepted at any time before the
expiration of that period;
We, including any subcontractors / suppliers for any part of the
contract, have nationality from the following eligible countries:
[insert the nationality of the Bidder, including that of all
parties that comprise the Bidder, if the Bidder is a JV, and
the nationality of each subcontractor and supplier]
We have no conflict of interest in accordance with the ITB;
Our firm, its affiliates or subsidiaries - including any subcontractors /
suppliers for any part of the contract - has not been debarred from
participation in public procurement by the Government of the
FDRE, in accordance with the ITB ;
We have read & understood the provisions on fraud and corruption
in the ITB and we undertake to abide by the Code of Ethical
Conduct for Bidders during the procurement process and the
execution of any resulting contract;
We understand that this bid, together with your written acceptance
thereof included in your notification of award, shall constitute a
binding contract between us, until a formal contract is prepared and
executed.
We understand that you are not bound to accept the lowest
evaluated bid or any other bid that you may receive.
We accept / do not accept the appointment of [insert name of
……. proposed in the BDS] as the ………... and propose instead
that [insert name] be appointed as ……. Whose fees and
biographical data are attached.
Signed: [insert signature]
In the capacity of [insert legal capacity of person signing the
Bid]
Name: [insert complete name of person signing the Bid]
Duly authorized to sign the bid for and on behalf of: [insert
complete name of Bidder]
Dated on ____ day of _________ , _____ [insert date of signing]
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 Sample Form for Contract Agreement
Form of Agreement
This Agreement hereinafter called “the Contract” is made
on the ___ day of __ 20 __ between on the one part
__________ of ________ hereinafter called “the Employer”
and on the other part _______ hereinafter called ‘the
Contractor” / “the Consultant”.
Whereas the Employer is desirous that certain works /
services should be executed by the Contractor /
Consultant, viz. _________________ and has accepted
the tender for the execution / implementation and
completion of such works / services and the remedying of
any defects therein.
Now this Agreement witnesses as follows:
1. In this Agreement words and expressions shall have
the same meanings as are respectively assigned to
them in the conditions of contract herein after referred
to.
2. The following documents shall be deemed to form and
be read and construed as part of this Agreement, viz:
a. The Letter of Acceptance
b. The said Tender
c. The Conditions of Contract (I+II)
d. The Specifications
e. The Drawings, and
f. The Priced Bill of Quantities.
3. In Consideration of the payments to be made by
the Employer to the Contractor as hereinafter mentioned, the
Contractor hereby covenants with the Employer to execute
and complete the Works and Remedy any defects therein in
conformity in all respects with the provisions of the Contract.
4. The Employer hereby covenants to pay the Contractor
in consideration of the Contract Price of such other sum as
may become payable under the provisions of the Contract at
the times and in the manner prescribed by the Contract.
In Witness Whereof the parties hereto have caused
this Contract / Agreement to be signed in their respective
places as of the day, the month and the year first above
written.
For and on behalf of the Employer
_________________ _______________
Signature Date
For and on behalf of the Contractor
__________________ _______________
Signature Date
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