Procurement introduction

Procurement involves the acquisition of goods, services, or efficient and cost-effective. works from
an external source through a process that is

Fundamental Principles of Procurement

Value for money, Economy,

Efficiency, Effectiveness, Transparency, Nondiscrimination (fairness)

Accountability, Preferential treatment of local companies, Risk Management

2. Types of Procurement
Works Procurement

It is a procurement of all work associated with Construction, Re construction, Upgrading,

Demolition, Repair or Renovation of a building, road or other structure

Service Procurement

It is a procurement of a service of an intellectual and advisory nature provided by consultants

Goods Procurement

It is a procurement of all goods of a type raw material, products and equipment and commodities
in solid, liquid or gacious form, marketable software and live animals.

It also includes installation, maintenance or similar obligations as long as the value of these
services do not exceed the value of that of the goods.

 Non-consulting Services:- Non-consulting Services are contracted on the basis of

performance of measurable outputs and for which performance standards can be clearly
identified and consistently applied. Examples: drilling, aerial photography, satellite
imagery, mapping, and similar operations
 Difference in Procurement
 Consulting Services ,Goods and Works

Product based

Mostly open competition

Cost is major factor (mainly for goods)

Specifications

Single or two stage procedures

Pre-Qualification/ Initial Selection

  Consulting Services

Knowledge based

Shortlist

Quality major factor

Terms of reference

Single stage procedure

Single or two stage procedures

Pre-Qualification/ Initial Selection

Principles of Public Procurement

PPA -Value for money ,Nondiscrimination (fairness) ,Transparency ,Accountability, Preferential

treatment of local companies

 Value for money Purpose of procurement is to get maximum value for money in
procurement, i.e. ensure economy, efficiency and effectiveness

Pillars of Procurement

I. Procurement Laws and Regulations

II. Procurement Staffs
III. Procurement Organization and Structure
 There are three broad types of organization models for procurement:  Centralized  De-
centralized; and  Mixed

The Procurement Cycle

 I. Preparation of Work Plan
II. Preparation of Annual Procurement Plan from Approved Work Plan
III. Preparation of Bidding Documents as per APP
IV. IV. Issuing Bid Documents
V. Receiving of Bids and Bid Opening
VI. Bid Evaluation
VII. Negotiation and Award of Contract
VIII. .Contract signing and Commencement of Works

PROCUREMENT STRATEGY (PS)

Is a policy requirement, describes how the project procurement activities support the objectives
scope , relevant market, scale, risk, value, and country circumstances procurement plan,sets out
selection methods?

Procurement assessment procurement approach

Beneficiary capability contract type and management

Operating environment market approach

Market assessment

Selection of Procurement Methods are dependent on:  Urgency of delivery,  Availability of the
services/works,  Downstream services,  Experience of the PE,  National Security issue, etc

Selection of Procurement Methods is dependent on:

 Urgency of delivery,
 Availability of the services/works,
 Downstream services,
 Experience of the PE,
 National Security issue, etc

Procurement Methods:
 The choice of procurement method depends on:
 the nature of the goods and services to be procured;
 the value of the procurement;
 the likelihood of interest by international bidders, which is a function of the local
availability and cost of goods and services;
 critical dates for delivery; and
 Transparency of procedures proposed.
 As per the Ethiopian Public Procurement Proclamation the following methods will be
adopted depending on the circumstances
 Open Tendering
  Restricted Tendering
 Direct Procurement
 Request for Proposals
 Request for Quotation
 Two Stage Tendering

Open Tendering

The preferred procedure of Procurement both in FPPPA and Donor Financed projects. No
conditions will be applied to use this method.

Restricted Tendering
Condition ;The goods/works/services available only with limited suppliers  Cost of the goods do
not exceed the threshold in the Directive invitation to attract bidders will be applicable then
advertisement

Procedure; Invitation to be bid will be sent to selected bidders and bid security may be required

Direct Procurement
When Works/services could only be made by one supplier due to several reasons

Request for Quotation financial request

Request for Proposals
Two stage procurement ; Applied when the employer is not clear on the detail of its
requirement
Prequalification
In Prequalification, minimum requirements are normally assessed on a pass/fail basis against such
criteria as: Experience, Technical capability, Financial capability, Satisfactory past
performance, Successful completion of similar contracts over a given period,

 All Applicants that substantially meet the minimum qualification requirements are invited
to submit a Bid.

Request for Bid

Post qualification
Pre-qualification

Initial selection

Two step qualifications

Works Procurement
I. Preparation of Tender Document
A Bidding document is a document that provide sufficient information to potential bidders to
enable them prepare a responsive bid.
  A bidding document consists of ;-
 Part one; bidding procedures

Section 1 instruction to bidders

Section 2 bid data sheet

Section 3 evaluation methodology criteria

Section 4 bidding form 6

Section 5 eligible countries

 Part two schedule requirement

Scope of the work

Technical spec

Drawing

BOQ

 Part three contract

GCC

SCC

CONTRACT FORMS

FORMS OF BID AND APPENDIX TIO BID

2. Conducting Procurement of Works

This is a step after the end of tender preparation

a) Advertisement; is an invitation step for bidders

b) Provision of bidding document; with fair enough price
c) Tender flot period; this is a period from advertisement date to last submission date,
which adjustment may be taken

Pre bid meeting ; is a meeting before the end of the float period prepared
by the procurement entity to give clarification on raised queries from
bidder which purchase the bidding document.
d) Bid submission ;in every bid submission in return there should be receipt given to the
bidder for evidence
 e) Bid opening
f) Bid evaluation
i) Preliminary evaluation
Is the step where we check the bid is substantially responsive or not to terms and conditions to
be met .in this step we are checking major deviations “ bid should not be rejected due to minor
deviations”

ii) Detail evaluation

Will be conducted by the evaluation criteria based on BDS related to type of procurement type

g) Notification of Award and Signing of Contract

h) Rejection of Bids; the bid may be canceled due to several reasons which may
enhance the public bodies advantage

III) Preparation of Contract Document

Procurement Types
 International competitive bidding For contracts above ETB 150
million (PPA or AA)
 National competitive bidding
Procurement Procedures

Procurement Planning
Content of a procurement plan:

 The Procurement number,

 Description of the procurement
 Quantity of the procurement
 Procedures to be followed in the execution of the procurement
 The schedule of main activities to be carried out to complete the procurement
 The budget and source of finance of the procurement
 The Type of contract appropriate to the procurement,
 The roles of main parties involved in the procurement
 Other matters which are important depending on the nature of the Public Body.

Read works procurement by by ENG. Frew

 EVALUATION PROSESS

Domestic preference

allows a 7½ percent margin of preference for domestic bidders.

Sub clause 32.3 states that a domestic bidder is one that meets the following criteria:

for an individual firm:

(i) is registered in the country of the Employer;

(ii) has more than 50 percent ownership by nationals of the country of the Employer;

Does not subcontract more than 10 percent of the Contract Price, excluding Provisional Sums, to
foreign contractors

 Selection and Employment of Consultants

 Methods for the selection of consultants:

o Quality and Cost Based Selection (QCBS);

 o Quality Based Selection (QBS);

o Selection under a Fixed Budget (SFB);

o Least Cost Selection (LCS);

o Selection Based on Consultant’s Qualifications (SBCQ);

o Single Source Selection (SSS); and

Short listing

 the Employer prepares a shortlist of consultants who will be invited to present

proposals;

 The Employer prepares a shortlist of about six firms.

Request for Proposals

 As for works it is bidding document and for consultants it is request for proposal

• The Request for Proposals (RFP) for a specific assignment provides all the information
necessary for the short-listed consultants to prepare their proposals.

Will include ;-

Letter of invitation (LOI)

PART I) Selection procedures and requirements

1. Instruction to consultants (ITC); is a general information about service

procurement ,like instruction to bidders ,will not be part of the final contract
2. Data sheetlike BDS in works specific detail information about the captioned
consultancy service ,will not be apart of contract document
3. Technical proposal standard forms
4. Financial forms standard forms
5. Eligibility criteria
6. Term of reference

PART II) CONDITION OF CONTRACT AND CONTRACT FORMS

1.FORM OF CONTRACT two types ;-

 time-based
  lump-sum basis

Two main considerations determine what type of contract to adopt in consultant assignments:

• the nature and degree of definition of the assignment

• the distribution of risks between the Employer and the consultants

The level of contract supervision the Employer will be able to provide may also factor in the
decision

2.GCC

3. SCC

4.TOR
Objectives of the assignment,

 scope of work,
 activities,
 tasks to be performed,
 respective responsibilities of the Employer and the consultant,
 and expected results and deliverables of the assignment.

preparation of TOR

 The TOR normally consist of

o background of the project;

o objectives of the assignment;

o scope of work;

o transfer of knowledge;

o list of reports, schedule of deliveries, period of performance;

o data, local services, personnel, and facilities to be provided by the Employer; and

institutional arrangements

NOTE The TOR should describe only the activities, not the approach or methodology by which the
results are to be achieved

 Estimating Cost and Budget;

  Setting the Evaluation Criteria
Tender documents include

Invitation to Tender;

Instruction to Tenderers (Standard and / or Particular information or Terms of References;

Prequalification Documents;

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.

Contract Documents are classified basically in 3 parts

I. The Legal Part

 The Contract Agreement;

 The (latest) Minutes of Meeting, if any;

 The Letter of Acceptance(Award);

  The Tender ( NB: Including the Appendix to Tender, if any);

 The Special Conditions of Contract;

 The General Conditions of Contract;

 Others, if any;

The Technical Part

 The Technical Specifications;

 The Drawing;

 The Bill of Quantities;

 Others, if any;

 The Performance Security Form;

 The Payment Security Form;

 The Advance Payment Guarantee Form;

 The Bid Security Form; The Insurance Forms;

 The Retention Money Security Form;

 Others, if any.

Commonly in Ethiopia

 FIDIC (1987) – Condition of Contract

 PPA, Standard Bid Document

 MoWUD, Standard Condition of Contract (1994)

 BaTCoDA, Condition of Contract

General; (Clause 1-Clause 26)

Time Control; (Clause 27-Clause 32)

Quality Control; (Clause 33-Clause 36)

Cost Control; (Clause 37-Clause 54)

Finishing the Contract; (Clause 55-Clause 62)

FPPPA ; federal public procurement and property authority
PPA; public procurement agency
PE; procuring entity
TYPES OF CONTRACT METDHOLOGY