Public Procurement Management

What is the procurement?

It is the process of acquisition of goods, works and services to satisfy the identified needs
Procurement in Ministry
The overall responsibility for the execution of the procurement process in the ministry rests with
the procurement team or tender committee. Each ministry is required to establish a Tender
Committee that will handle all matters concerning the procurement of goods, services and works.
The ministry Tender Committees have powers to award contracts for procurement of goods,
services and works. The ministry tender committee shall consist of:
 Chairperson, who shall be one of the heads of department or a person of similar standing
 the Procurement Officer responsible for procurement
 Tender committee should be appointed to handle procurement activities
Objectives of Procurement in the ministry are:
 To provide the ministry 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”.
Categories of Procurement
Procurement can be categorized into the following:
 Works – Construction, design, drilling water wells, rehabilitation, maintenance and repair of
buildings, bridges, roads, plant, etc.
 Supplies – This should include goods such as materials, drugs, foodstuffs.
 Services – which can be Consultancy and Non-Consultancy Services
 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 design and supervision.
Principles of Public Procurement
To provide value for money to the ministry by ensuring that public funds are spent in a
transparent, efficient and fair manner.
The basic principles for the procurement are:
Transparency:
A transparent procurement system is the one that has clear regulations and procedures,
standardized tender documents, standardized tender contracts and a fair process.
Accountability:
The public officials who are dealing with procurement activities have responsibilities and
obligations for performance and stewardship
Equal Treatment/Fairness:
An efficient public procurement system should give all participants an equal chance to compete
and by avoiding discrimination among potential bidders.
Value for money:
Procurement process should aim at acquiring the right items at the right time, and at the right
price to support government actions.
Appeal rights:
Potential suppliers should be provided with a mechanism for review of grievances and correct
failures of the system.

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 Integrity:
The public officials responsible for procurement activities should not involve themselves in
corruption or collusion with suppliers or others.
Competition:
Public procurement system should be able to attract high quality national and international
suppliers and contractors capable of meeting government needs through competitions.
Good Practices
Finally
Emphasize transparency and accountability. Avoid favoritism and corruption.
All procurement decisions to be ultimately made by the authorized tender committee.
Responsibilities
Key Players Procurement responsibilities

The Tender Ensuring that best practices in relation to procurement are smoothly
Committee functioning
Coordinate the development and approval of the Annual Procurement Plan
Approve entries and removals from the Register of Suppliers and Consultants;
Recommending the appointment of ad hoc Sub-Committees as required for
preparation of specifications, bid opening, bid evaluation, receipt of goods and
certification of works;

Review and approve prior to any announcement of a procurement process:

the method of procurement;
the bidding documents;
the specifications, classifications, bills of quantities, plans, drawings and terms
of reference as appropriate; and
advertisements, letters of invitation and shortlists

Procurement Unit Managing all procurement activities of the ministry except adjudication and
the award of contract.
Provide secretariat services and advice to the Ministry Tender Committee.
Implementing the decisions of the Ministry Tender Committee.
Planning the procurement activities of the MOWR.
Recommending procurement procedures.
Preparing Tender Documents.
Preparing advertisements of tender opportunities.

Respond to requests for clarifications from bidders;

Preparing contract documents.
Ensure that all contractual obligations of the ministry are performed promptly
and efficiently;
Register and maintain warranties and retentions;
Notify the supplier immediately of any failings in performance of his
obligations;
Process claims against retentions

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 Monitor delivery schedules and the inspection and certification of delivery or
performance
Coordinate the process for payment to suppliers
Maintaining and archiving records of the procurement process.
Maintain a Register of pre-qualified Suppliers

Procurement Process

 INTEGRITY
The quality of being honest and having strong moral principles. Not corrupt or biased
 Purpose
The purpose of ethics in LGA procurements is to ensure that decisions are neither tainted nor
appear to be tainted by any question of conflict of interest. Procurement should be based on
objective criteria.
 Transparency and Integrity
Employees dealing with procurement and members of the tender committee of the ministry are
required to be honest in all their dealing with suppliers, contractors and members of public and
must conduct procurement proceedings.
 Procurement Ethics

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Public Officers are required to sign a Code of Ethical Conduct. In addition, all suppliers,
contractors or consultants are required to sign a declaration of compliance with those Codes of
Conduct.
The main ethical principles are:
 An employee or member of the tender committee should not use his/her authority or office
for personal gain;
 Honesty among ministry staff, tender committee members and suppliers/contractors should
be paramount and a pre-requisite;
Examples of unethical
 Revealing confidential or “inside information” either directly or indirectly to any bidder or
prospective bidder;
 Discussing a procurement with any bidder or prospective bidder outside the official rules and
procedures for conducting procurements;
 Ignoring evidence that the Code of Ethics has been violated by a member of the Tender
committee, public servant or other employee or representative of the district;
 Ignoring illegal or unethical activity by bidders or prospective bidders, including any offer of
personal inducements or rewards.
Corruption
This is the use of public power for private gain. It can be in the form of embezzlement,
nepotism, over-invoicing, claiming payments for no goods/services supplied and taking bribes,
bid rigging, split purchasing and the like. It is mainly caused by weak controls, bureaucracy
and personal greed.
Effects of corruption
 Impairs economic development;
 Leads to economic waste, inefficiency and reduction in productivity;
 Generates administrative inefficiency and ineffectiveness;
 Promotes nepotism;
 Frustrates competent and honest suppliers/contractors
To deter corruption in procurement it is necessary to:
 Perform internal audit to monitor the process;
 Institute checks in the various stages of the procurement cycle;
 Require strict observance of procurement regulations;
 Disqualify bidders who engage in any form of canvassing;
 Penalize all those found guilty, blacklisting errant suppliers, and to sanction staff and tender
committee members by disciplinary action.
PROCUREMENT CYCLE AND PLANNING
The procurement cycle management starts with identification of procurement needs. Each
department within the district identifies the required goods, service and works.
Benefits of procurement planning
 To meet all requirements.
 To ensure the scarce of financial resources must be channeled.
 In case of the district must adequately met before spending the essential procurement.
 To avoid emergency procurement.

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 To allow requirement to be aggregated into a larger procurements at lower unit rather than

frequent sourcing of quotation for identical items and issuing many individual local purchase
order.

Planning and Budgeting P- Planning

 Bill of material (BOM): Bill of material for the various of goods/ Services required are used
to forecast the procurement requirement.
 Past Consumption Analysis: this is used for items that have an independent demand which
are consumed on a continuous basis for which no bills or materials is possible, analyze past
consumption data, and project future.
Annual Procurement Plan
The following are the steps to be taken by the planner:
 A detailed breakdown of the activities of goods, services and work to be acquired.
 A schedule of procurement requirements in order of priority.
 A statement of required resources.
 Projected funding.
 A plan of the likely method of procurement.
The budget preparation Process
The budget preparation process should be linked to the annual budget of a district. Procurement
plans are prepared based on the procedures of the district.
Procurement Methods
The Ministry Procurement Guidelines requires that procurement of goods, works, goods and
services be made through competitive tendering (national or international competitive bidding).
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

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guidelines allows the use of other procurement methods. If ministry use other than competitive
bidding it must flow procedures and justify method used.

The procurement methods

Open Competitive Bidding (National and International)
Restricted Bidding
Request for Quotations (RFQ), also referred to as shopping
Single Source

National Competitive Bidding

National Competitive Bidding (NCB) as a procurement method is to be used when the ministry
does not intend to invite foreign suppliers or contractors to participate in tendering proceedings.
The use of NCB is appropriate in the following cases:
 Payment may be made wholly in Somaliland Shillings;
 The goods, services and works are available locally at prices below international markets;
 The estimated cost of the goods, works or services is small and does not exceed the threshold
for open international tendering;
 Works or services are scattered geographically or spread over time;
 Works are labor intensive;
 Where foreign suppliers or contractors are not expected to be interested in the bid;

International Competitive Bidding (ICB)

ICB this procurement method a ministry is required invite suppliers or contractors regardless of
their nationality through the tender notice that is advertised nationally and internationally.
Uses of ICP
 For high value or complex procurements;
 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 estimated value of goods or works be to procured;
 Where the goods, works or services by their nature or scope, are unlikely to attract adequate
local competition.

Restricted bidding
Restricted tendering (RT) is a process of direct invitation to a shortlist of prequalified, pre-
registered or known suppliers.
Uses of RT bidding
 The estimated contract values are within the limit for restricted tendering.
 The requirement is of a specialized nature or has requirements of public safety, or public
security which make an open competitive bid impossible;
 Due to the urgent nature of the requirement, an open competitive bid is not practical
 The number of potential suppliers is limited;
 An open competitive bid has failed to bring an award of contract.

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Request for quotations (RFQ)
This is also known as “shopping” and is based on comparing price quotations obtained from
several suppliers, usually at least three, to ensure competitive prices. A ministry tender
committee may approve for competition to be invited through request for quotations where it has
been determined that:
 The goods to be procured are so diversified that it would be of no commercial interest for
any single supplier to tender for them; or
 The goods are readily available off-the-shelf or standard specification commodities of
low value.

Single Source/direct contracting

This is a procurement method where goods are procured directly from a single supplier or
manufacturer. The use of single source procurement method should be approved by ministry
Tender Committee and ministry.
Uses of single source
 When there is only one supplier and no suitable alternative is available;
 For additional deliveries of goods by the original supplier which are intended either as parts
replacement for existing goods, services, or installations, or as the extension of existing
goods, services, or installations;
 Additional works services from the initial contract would be difficult for technical or
economic reasons.

Force Account
Force account is construction by the use of public or semi-public agencies, or departments
concerned, where the public or semi-public agency has its own personnel and equipment. The
use of force account or direct labour may be justified where:
 Required works are small and scattered or in remote locations for which qualified
construction firms are unlikely to tender at reasonable prices
 Work is required to be carried out without disrupting ongoing operations;
 Risks of unavoidable work interruption are better borne by a ministry than by a contractor;
 There are emergencies needing prompt attention.

Methods of Selection and Employment Consultants

The procurement of consultant services is a specialized form of procurement requiring bidding
procedures and documents which are very different to those for standard goods and works. The
use of merit-point evaluation systems and two-envelope bidding procedures are routine
features in the procurement and selection of consultants. Selecting consultants for long or
complex assignments on the basis of cost alone is unlikely to achieve the required quality of
services.

Merit-Point Systems
A merit point system uses a point-scoring basis to determine the winning bidder. Points are
awarded for technical capability and usually for the financial cost, according to criteria specified
in the Request for Proposals. The bidder scoring the highest number of points is usually
recommended for the award of contract.

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Where cost is a factor in selection, technical quality for consultancy assignments is normally
awarded 80% of the total points and cost 20%.
Merit point systems can also be used to evaluate whether bids pass a minimum technical score to
proceed to a final financial evaluation (Least Cost Selection Method).

Two-envelope bidding method

To avoid any chance of the bidder’s price influencing the technical evaluation under a merit point
system, financial bids are submitted in a separate sealed envelope. The financial envelope must
only be opened after the technical evaluation is completed and approved by the tender
committee.

Quality and Cost Based Selection (QCBS) Method

Quality and Cost Based Selection (QCBS) is the standard method of selecting consultants
through competition between pre-qualified short-listed firms. Selection is based on the technical
quality of the consultants, the quality of the proposal, and on the cost of the services to be
provided.

Quality-Based Selection (QBS)

Quality Based Selection (QBS) may be appropriate for complex or highly specialized
assignments, or those which invite innovations. The selection is based solely on the quality of the
proposal without consideration of the cost.
QBS is suitable for the following types of assignments:
 Complex or highly specialized assignments where it is difficult to define precise TOR and the
required input from the consultants, and for which the client expects the consultants to
demonstrate innovation in their proposals (for example, country economic or sector studies,
multi-sector feasibility studies, design of a hazardous waste remediation plant or of an urban
master plan, financial sector reforms);
 Assignments that have a long term impact and in which the objective is to have the best
experts available (for example, feasibility and structural engineering design of such major
infrastructure as large dams, policy studies of national significance, management studies of
large government agencies); and
 Assignments that can be carried out in very different ways, and therefore proposals may not
be directly comparable (for example, management advice, or policy studies in which the
value of the services depends on the quality of the analysis).
 The Request for Proposals (RFP) should not indicate the estimated budget, but may provide
the estimated number of key staff and time, specifying that this information is given as an
indication only, and that consultants are free to propose their own estimates.

Thank You Allah

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