INTRODUCTION TO PUBLIC PROCUREMENT Dr. Fred Mugambi Mwirigi JKUAT

Content Introduction Definition and Basics of Procurement Importance of Procurement Objectives of Effective Procurement Measurement of Effective Procurement Management The Procurement Cycle Evaluation of procurement

Introduction Founded on the Public Procurement and Disposal Act, 2005 and Regulations, 2006 Came into force on 1st January, 2007. New Legal and Regulatory framework for procurement Contains rules on processes, institutions and enforcement.

Basic Tenets of the Act Full autonomy to entities to act within the Law Full oversight by PPOA Rights for bidders Information to public Emphasis on “supply chain”.

Definition of Procurement This is the acquisition by purchase, rentals or hire purchase, tenancy or any other contractual means of any type of works, assets, services or goods

Importance of Procurement Procurement of goods, works and services in any institution contributes greatly to the success of the institution, depending on how well it is conducted. Operations cannot run if inputs are not procured at the right time, cost, quantity and quality.

Objectives of Good Procurement To ensure the acquisition of items or services: in the most cost effective manner in the right quantities at the right quality from the right source in timely and right delivery period at the lowest possible total price

Measurement of Good Procurement Total cost incurred Vs price and profit of output Amount of strain on organizations structures and systems Speed of purchase Loopholes of purchase Compliance to PPDA and organizational policies and regulations

Procurement Cycle Identification of needs/requirement Specification of Requirement Choice of Procurement Method Preparation of Tender Documents Tender Notices Receipts of Bids Opening of Bids

Contd. 8. Examination and Evaluation of Bids 9. Tender Adjudication 10 Communication of Tender Committee’s Decision 11. Appeals (if any) 12. Contract Agreement 13. Execution of Contracts 14. Receipt of Goods/Services/Works

Procurement Cycle Identification of Need Main types of need/requirement - Operational requirement - Capital requirement Responsibility for identification of requirement - Departmental level - Organizations level

Identification of needs Contd. Methods/policy of identification of requirement - Objectives of the organization - Profits - Service level - Other factors

2. Specification of Requirements involves providing information that the supplier requires in order to reliably meet the user’s expectation. consists of definitive description on the object to be procured. The description can be very simple for simple products but can be extremely complicated and voluminous if it refers to major works to be carried out by a contractor.

Contd. Who should provide specifications? the user of the product or service the procurement and supply function other stakeholders

3. Preparation of Tender Documents Bidding/source/tender documents contain essentially the specifications for the goods, works or services to be procured; the conditions and instructions to the bidders. They may include - request for quotation - request for proposals

Contd. The volume of tender documents varies with type and size of the project. The procurement officer’s main task is to make sure that these documents are coherent and as comprehensive as possible and the truly reflect the intentions of the user; technical; legal; financial and stakeholders.

Contd. Particular care must be taken to ensure: Correctness of the terms indicated in the documents That the goods/works/services to be provided are described with sufficient clarity and sufficient detail to form the basis for competitive bids. That the criteria to be followed in evaluation bids are disclosed. That the bidding documents conform to the organization regulations and the PPDA

4. Choice of Procurement Method Any of the following procurement methods may be used: Restricted tendering Direct procurement Open competitive bidding Request for quotation Request for proposals.

Restricted Tendering This method is available for large and complex contracts. The method is justified in view of the cost involved in preparing tenders for complex and specialized goods, works or services and the desirability of avoiding tenders from unqualified bidders.

Restricted Tendering Process Advertisement is initially placed in the local dailies for bidders to declare their interest and ability to supply Prospective bidders are given standard application forms to complete giving out the necessary data Those who qualify are then requested to bid on the appropriate bidding documents.

Information requested for prequalification Contractors identification Business details Legal status and compliance Experience and past performance Personnel Equipment Financial status Present commitments Any other relevant information on the project

Direct Procurement This is a non competitive procurement method . It is only used in cases where no reasonable alternatives exist to dealing with just one bidder.

Open Competitive Bidding Involves: 1. Advertising - wide publicity - enough time for preparation of bids 2. Provision of bidding documents - at reasonable cost - clarification (if required) 3. Submission of bid Documents - provision of tender box - no late tenders

Contd. 4. Opening of Bids - tendering opening committee - bidders to participate 5. Bid Evaluation - technical evaluation - Financial evaluation 6. Adjudication of Tender - submission of documents - tender committee deliberation 7. Award of Tender - negotiation - notification 8. Contract Signing

Request for Proposals Used: if the procurement is of services or a combination of goods and services; and if the services to be procured are advisory/ consultancy/training or otherwise of a predominantly intellectual nature

Evaluation of goods Largely based on: Price Quantity Quality Timing of delivery

Evaluation of Services Methods used include: Quality and Cost Based Selection (QCBS), Fixed Budget Selection (FBS) Least Cost Selection (LCS) Consultants’ Qualifications Selection (CQS) Quality Based Selection (QBS)

5. Contract Management Involves: Execution of contract Inspection and quality assurance Follow up and expediting Handling, claims, disputes and appeals Settlements (payments)

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