PUBLIC PROCUREMENT PRINCIPLES

(PST 06101)

Topic Three: Public Procurement

Methods

By
Dr. Meshack Siwandeti
Ph.D (MoCU), MIB (UDSM), Msc.PSCM (MU), ADPLM (IAA),
CPSP(T). 1
In Tanzania the public procurement undertakings
are guided by the Public Procurement Act and its
regulations.

In this case, all possible Methods of Procurement

are indicated in the PPA 2011 (goods, works,
consultancy and non consultancy service)
Regulation (PPR, 2013) –Section 148 to 172 of
which all public procuring entities should adhere
to.
 Factors for Methods Choice
 The amount of expenditure per contract (Value)
 Circumstances (urgency, limited number of
supply sources, nature of requirement, currency
of payment)
 The need for economy
 Efficiency and transparency requirement
 Competition and sources of supply
 Contract Extensions.
 Standardisation or product registration
 Procurement Methods
 Tendering
– National and International
 Restricted Tendering
– National and International
 Shopping
– National and International
 Single Sourcing
 Direct Contracting for Works
 Minor Value Procurement
 Micro Value Procurement
 Turnkey Contract
 Force Account
 Public Private Partnership
 Use of Procurement Agents
 Tendering
Tendering is a method of buying involving a
process whereby requests are sent to prospective
suppliers to quote prices and terms of sales and
delivery at which they are prepared to offer their
goods for sale. Thereafter, the buyer selects the
supplier with satisfactory terms and price.
International Competitive Tendering
This is where prospective suppliers are invited to
compete for a contract advertised globally through
the press or on the internet.
In international competitive tendering, a procuring
entity shall, through a notice advertised nationally
and internationally, invite tenderers regardless of
their nationality, to submit priced tenders for goods,
works or services or purchase of public assets. PPR
2013 S. 150 (1)
PPR S. 150(2) “The international competitive tendering
shall be used if-
(a) payment, in whole or in part, is made in a foreign
currency; or
(b) it is desired to attract tenders from the widest
range of tenderers regardless of the estimated
value of the goods or works to be procured.
PPR S. 150(3) “A procuring entity shall advertise
tenders under international competitive tendering in
accordance with the 1st and 8th Schedule to the
Regulations”.
 National Competitive Tendering
This is where prospective suppliers are invited to
compete for a contract advertised within the
country through the press or on the internet.
In national competitive tendering, a procuring
entity shall, through a notice advertised only in
the United Republic, invite tenderers regardless of
their nationality, to submit priced tenders for
goods, services, works or purchase of public
assets. PPR S. 151. (1)
PPR. S.151.(2) The national competitive
tendering may be used if-
 payment is made wholly in Tanzanian shillings;
 the goods, works or services are available
locally at prices below the international market;
 works or services are scattered geographically
or spread over time;
 works are labour intensive;
 the estimated cost of the goods, works or
services does not exceed the threshold for
open international tendering prescribed in the
Seventh Schedule to these Regulations;
 The advantages of international competitive
tendering are clearly outweighed by
the administrative or financial burden are
involved
 Restricted Tendering
In this tender prospective suppliers are invited to compete for a
contract, the advertising of which is restricted to an appropriate
technical journal or newspaper.
• Limited number of firms invited to participate in the tender
exercise;
• no tender notice issued
• Reduced tendering period

PPR S. 152. (1) A procuring entity may restrict the issue of

tender documents to a limited number of specified tenderers if:-
 the suppliers, contractors or service
providers have already been pre-
qualified further to regulations 119 of the
Regulations;
 the goods, works, or services required are
of a specialised nature or can be obtained
from a limited number of specialised
contractors, service providers or reputable
sources;
• there is an urgent need for the goods, works or
services such that there would be insufficient
time for a procuring entity to engage in open
national or international tendering,
• there is a need to achieve certain social
objectives by calling for participation of local
communities or local firms.
• Value of procurement is below Tshs 400 million
for Goods and Tshs1.5bn for Works
 SHOPPING OR QUOTATION (NATIONAL &
INTERNATIONAL)
Shopping is a legal method of procurement
indicated in the PPR Section 163

It is the method of procurement based on

comparing prices quoted by various
suppliers (at least three) for the purpose of
obtaining competitive price and efficiency in
procurement.
Applicability
 Appropriate for on shelf goods which are
available off- the-shelf or standard items
 Appropriate also for items which are so
diversified that it will be of no commercial
interest for any single supplier to tender for
them.
 Must be within the limits stated in the
Seventh Schedule of PPR, 2013
Legally it must be approved by the tender
board for it to be applied (either national or
international shopping can be approved).

In this case the list of suppliers to be

contracted shall be submitted to the
appropriate tender board for approval before
addressing quotations to these suppliers.
 Single Sourcing
This is the method of procurement where by
a procuring entity may engage in a single
source procurement i.e. only one supplier is
involved in procurement of goods or service.
PPR, 159 (1);

Legally the circumstances which fever the

applicability of this method include;
 When there is an urgent need for the
goods or services.
 When goods or services are available only
from one particular supplier or service
provider or when such supplier has
exclusive rights or has capability in respect
to such goods or services at reasonable
price.
 When procurement involve national
defenses or security purpose if required.
 When there is an on-going project, additional
items need to be purchased for the completion
of implementation.
 When standardization of equipment is essential
for economic or technical reasons and it has
been proved by the tender board that, there is
no an alternative supplier
 When critical items are needed to be purchased
strategically from a specified supplier.
 Direct Contracting for Works
It is appropriate for the procurement of
works where the procuring entity obtains a
single priced quotation from a single
contractor, negotiates and enters into a
direct contract. (Single sourcing for works).
PPR S. 161 (1)
This method is applicable when;
It is applied when:
 There is an urgent need for the work to be
done.
 There is only one contractor by which the
procuring entity can reasonably expect to
undertake the required work.
 There are advantages to the procuring
entity in using a particular contractor who
has undertaken or who is undertaking
similar work.
 When there is the need for extension of
the work.
 Minor Value Procurement
PPR S.165 state it as the procurement of
articles of small value. Minor value means
an amount of money up to a maximum limit
for the procurement of goods, services or
minor works of a minor nature as specified
in the seventh schedule of PPR.
 Minor Value Procurement cont…
It is applicable when;
 The value does not exceed the limit for minor
value prescribed in the 7th schedule of PPR
 No advantage to a procuring entity is likely
to be obtained by seeking further quotation
or by using other methods of procurement
 The price quoted is reasonable
 The contract for the provision of such goods,
service or work may be a Local Purchase
Order
 Minor Value Procurement cont…
• What is minor value procurement?
– Simple form of procurement for very low values
– Only one supplier is required
– Contract to be issued by Local Purchase Order
• When should it be used?
– For the supply of goods up to Tshs 10 million
for Goods and Tshs 20 million for Works
– When no advantage is likely by seeking further
offers
 Micro Value Procurement
A micro procurement may be conducted by
a procuring entity that purchases directly
from established supermarkets, shops or
drug stores, or similar establishments if the
value of such procurement does not exceed
the limit set out in the Seventh Schedule to
these Regulations. PPR. S. 166
A micro procurement process shall not require a;
• written solicitation document;
• written bid;
• public bid opening;
• notice of best evaluated bidder; or
• signed contract document.
A procuring entity may use petty cash, imprest or
purchase cards to effect payments under micro
procurement. PPR S. 166 (4)
 Force Account
Force Account is construction by the use of
public or semi public agencies or
department concerned, where the public or
semi public agency has its own personnel
and equipment. PPR S.167
 Force Account cont…
This method is justified when;
 Required work are small and scattered or
in remote location for which qualified
construction firms are unlike to tender at
reasonable price.
 Works required to be carried out without
disrupting ongoing operations
 Force Account cont…
 Risks of unavoidable work interruptions are
better borne by the procuring entity or public
authority than by a contractor or
 There are emergencies needing prompt
attention
 the procuring entity has qualified personnel to
carry out and supervise the required works; or
 the maintenance or construction is part of the
routine activity of the procuring entity.
 Turnkey Projects
A turnkey project is one involving a major specialized
works e.g. the construction of an industrial plant or a
military base, where the supply of goods and the
performance of various works need to be closely
integrated.

Activities such as the followings are done by single

contractor selected competitively;
• the design and engineering
• the supply of goods
• supply and installation of equipment
• the construction of the complete plant or works
 Turnkey Projects Cont…
Under the contract for such works, the
design and engineering, supply and
installation of equipment and the
construction of the complete plant or works
will be provided by a single contractor under
one contract, procured using national and
international competitive methods of
procurement as approved by the appropriate
tender board.
 Public Private Partnership
Involving a joint procurement process
between the public and private entities.
It may include different forms; PPR 369-380

Leasing
 Joint ventures
 Build Operate and Transfer
 Build Own Operate
 More forms of PPP

•Design and Build (DB);

•Design Build and Operate (DBO);
• Build, Lease and Transfer (BLT);
•Design, Build, Finance and Operate/Maintain
(DBFO/M); and
•Buy, Build Operate (BBO).
 Selection of Private Partner
 verifying experience of the private partner to
ensure that he possesses the qualifications and
expertise necessary to meet the objectives;
 contacting a list of references provided by the
private partner indicating other public agencies
and projects similar to that being proposed;
 ensuring that the person listed as the reference
contact actually worked directly with the partner
in question and determining the capacity in
which he worked;
 ensuring that any litigation or controversy
associated with the private party and its
individual team members does not affect the
ability to execute the contract;
 confirming the qualifications and experience
that the private partner possesses through
verification of certificates of technical knowledge,
education, and professional experience,
 Reviewing of a list of the proposed partner’s
projects completed and under construction
 verifying the potential private party’s
financial capability prior to final private
party selection
 confirming the available working capital
proposed for the PPP as well as the
bonding capability of the proposed
partners through the provided bank and
surety references.
 Procurement by use of Agents
This is a procurement method where the
procuring entity engages services of an
agency to undertake all procurement
processes that would otherwise be carried
out by the procuring entity, provided that all
procurement functions are carried out in
conformity with PPA.
 Framework Agreement

Framework agreement means a contractual

arrangement which allows a procuring entity
to procure goods, services or works that are
needed continuously or repeatedly at an
agreed price over an agreed period of time,
through placement of a number of orders.
The Agency shall arrange for procurement of
common use items and services by procuring
entities through framework agreements. PPR
131(1)
(2) A framework agreement under this
regulation shall not be less than one year and not
more than three years.
(3) The Agency shall publish in the Journal and
Tenders Portal the list of suppliers and service
providers awarded framework agreements.
Method of Goods Works Non Disposal of
tendering Consultancy Public Assets
Services
International No limit No limit No limit No limit
competitive
tendering
National Up to Tshs Up to Tshs Up to Tshs Up to Tshs
competitive 1,000,000,000 5,000,000,000 1,000,000,000 5,000,000,000
tendering
Restricted No limit but No limit but No limit but No limit but
tendering must be must be must be must be
justified justified justified justified
Competitive Up to Tshs Up to Tshs Up to Tshs Not applicable
quotations 120,000,000 200,000,000 100,000,000
(Shopping)
Single source No limit, but No limit, but No limit, but Not applicable
procurement must be must be must be
justified. justified. justified.
Minor value Up to Up to Up to Not applicable
procurement 10,000,000 20,000,000 10,000,000
Micro value 5,000,000 Not applicable Not applicable Not applicable
procurement
Procurement Method for Works
 Choice of Method - Other Factors

• Essentially there is no difference between the criteria

for goods and works.
• Most important factor is that the procurement method
to be adopted requires the approval of the Tender
Board, prior to the issuance of tender notices etc.
 Pre-qualification
• May be used in respect of large or complex
contracts to ensure that, in advance of
tendering, invitations to tender are only
issued to capable firms.
• Pre-qualification shall not be used to limit
the number of suppliers, all firms found
capable of performing the contract shall be
pre-qualified
 Pre-qualification

• Qualification of tenderers shall be based upon the

applicants ability to perform the contract taking
into account the following:
– experience and past performance on similar contracts
– capability with regard to personnel, equipment and
manufacturing capacity
– financial standing
Procurement Method for Services
 Procurement Method
• Four procurement methods as follows:-
– Competitive Selection, which includes 5 forms of
selection process
– Competitive Proposals
– Single Source
– Minor value procurement
 Choice of Procurement Method

• Choice of method determined by:

– Value
– Urgency
– Number of potential tenderers
 Competitive Selection
• There are 5 selection processes as follows:
– Quality & Cost Based Selection (QCBS)
– Quality Based Selection (QBS)
– Fixed Budget Selection (FBS)
– Least Cost Selection (LCS)
– Consultants Qualifications Selection (CQS)
 Competitive Selection - QCBS
• The most commonly used method of selection for services
contracts
• Tenderers required to submit separate technical and
financial proposals
• Technical proposals which meet minimum qualification
requirements are deemed compliant and financial
proposals are opened
• Preferred bidder determined by the weighted combined
technical and financial score
• Contract negotiation may take place relating to staff inputs
but not fee rates or reimbursables.
 Competitive Selection - QBS
• Used for highly specialised assignments and major
infrastructure projects or where it is not possible to determine
a uniform approach and methodology
• After evaluation of the technical proposals the highest
evaluated tenderer will be required to submit a financial
proposal which the procuring entity and the preferred
consultants will negotiate upon.
• In some cases 2 envelope tenders will be required but only the
financial proposal of the best evaluated technical offer shall be
opened.
 Competitive Selection - FBS
• Used for simple assignments, where limited funds are
available and the requirement is precise.
• Tenderers required to submit their best technical and
financial proposal within the budget which should be
stated in the tender documents
• 2 envelope bidding process utilised and financial proposals
will be opened which meet the minimum technical
requirement
• Any financial proposals in excess of the budget should be
immediately rejected.
• The tender with the highest technical evaluation and within
the budget shall be awarded the assignment
 Competitive Selection - LCS
• Used for standard assignments, for example audits, design of
standard works
• 2 envelope process utilised
• Tender documents to detail a technical ‘minimum’ qualifying
score. The financial offers of all tenders in excess of the
qualifying score shall be opened
• The tenderer that has met the minimum score with the lowest
cost financial proposal shall be awarded the assignment.
 Competitive Selection - CQS
• Generally used for small assignments
• Procuring entity shall call for expressions of interest to be
submitted for the assignment.
• Responses to be evaluated based upon the experience and
competence to undertake the assignment
• The selected consultant shall be asked to provide a combined
technical and financial proposal and subsequently called to
negotiate a contract accordingly
 Competitive Selection
• In all forms of competitive selection, procuring
entities must:
– Advertise (nationally or internationally) seeking
expressions of interest from consultants
– Clearly specify the proposed method of selection
(QCBS, QBS, FBS etc) in the tender notice so that
consultants can prepare their expression of interest
accordingly
– Obtain Tender Board approval to short lists, evaluations
and proposed awards of contract
 Competitive Proposals
• May be used for assignments with a potential value
below Tshs 100,000,000
• Procuring entity prepares a proposed list of tenderers
based upon its’ own experience of consultants or any
consultants that have expressed interest
• Procuring entity may use QCBS, QBS, FBS, LCS or
CQS as the selection and evaluation methodology and
state this in the tender document.
 Single Source Selection
• Only to be used in exceptional circumstances,
which may include the following:
– Continuation of an existing assignment
– In an emergency requiring rapid selection
– Where only one firm could undertake the
assignment
 Self Assessment Questions
1. Discuss the conditions which favor the applicability of the different
methods in acquisition of goods, works and services for public.
2. Identify the situations justifying urgent needs and the use of single
sourcing or direct contracting for works as stipulated in PPA 2011 and
PPR 2013.
3. Public Private Partnership (PPP) is a mechanism for exploiting the comparative
advantages of Public and Private sectors in mutually supportive ways, several
issues are salient and deserve careful consideration when implementing PPP.
Discuss those factors which need to be critically considered.
4. The Public Procurement Act and its Regulations provide methods of
procurement to be applicable in any Public or non Public sectors. Discuss at
least five methods of Public Procurement and clearly show conditions for its
applicability.
5. Despite the problems involved in Public sector procurement tendering is still
the best sourcing strategy. Discuss