1. Procurement of Goods: Procurement methods and Procedure
CA. Bhava Nath Dahal
Public Procurement National Instructor

2. We discussed on procurement of goods
Procurement methods
Procurement cycle
Concept of pre-qualification
Concept of post qualification
Single & two stage method
Concept of Single envelope and two envelope system
preparation of Specification for Goods
preparation of Cost estimate for goods
Procurement Procedure
Direct purchase
Emergency procurement
User's Committee
Nongovernmental organization
Force account
Sealed Quotation
National Bid
International Bid
Catalogue shopping
By Back Method
Limited Tendering
Lump Sum Method

3. Procurement Cycle Procurement Cycle is same in all cases of
goods,
works,
consulting and
other services
Procurement Cycle
1. Procurement Plan
Master Plan
Annual Plan
Collection of Requisition
Cost estimation
Set procurement method
Set procurement agreement

4. Procurement Cycle 2. Identification of sellers
Standing list
Pre-qualification
Post-qualification
3. Preparation of solicitation documents
4. Bidding or similar process
5. Evaluation of offer
6. Award process
7. Contract phase
Procurement Cycle 8. Contract Management 9. Payment and final payment 10. Documentation and retaining documents 11. Feedback for future

5. Concept of Prequalification
Concept of PQ
Highly technical and complex assignment
Core concentration with capable, strong and high-ranked supplier
Time consuming but limited activities of procurement process
Legality of PQ
On the procurement as prescribed by PPMO as highly technical or complex or as fixed by Entity itself
Process of PQ
PQ notice
Collection of PQ offer
Evaluation of offered
Shortlisting of successful bidder
Biding notice (~ as post qualification)
Receiving Price-bids
Evaluation of bids
Awards
Contract
Contract managment

6. Concept of qualification
What is qualification
As prescribed by buyer, Inter alia includes detail evaluation of
Qualification of or number of employees or workers
Level of equipment (capacity, number)
Experiences on similar/other success
Financial capacity (historical or future)
Bid capacity (current)
……..
What is eligible bidder
Above in general level (except bid capacity)
Pre-qualification
Post-qualification
Minimum-qualification (standing list)
No-qualification (standing list)

7. Prequalification Benefits of PQ Risk of PQ Critical points on PQ:
Obtains highly qualified supplier
Less complexity on Price-bid evaluation (technical as well as financial bid)
Risk of PQ
A good ground for collusion
Same as limited tendering
Almost cases, it creates disputes.
Less competitive procurement method
Discourage domestic bidders
Critical points on PQ:
Change of substance of corporate structure (restructuring)
Joint venture of short-listed parties (in this project or elsewhere)
Subcontracting each other (in this project or elsewhere)

8. Concept of Post-qualification
Bidding process with all eligible bidders
Fixation of eligibility at the beginning
Evaluation of bids of eligible bidders
At the end of evaluation, evaluation of qualification of the successful bidders with Lowest Evaluated priced bid (L1).
If L1 bidder seems the required qualification has not with it, evaluation and award to L2.
Benefits of Post- qualification
Risk on Post-qualification

9. Single State or Two Stage method
Single Stage Bid
Concept
PQ based Single-stage
Post qualification based Single –stage
Single-envelop single-stage
Double-envelop single-stage
Two Stage Bid
For highly technical and unpredictable procurement on which buyer has less than minimum knowledge
First stage- offer for specification, bid document and terms of contract
Second stage- cost estimation and other regular offer of bidding process
International practice Vs Sec. 28 of PPA

10. Single State or Two Stage method
Single Stage Bid
Concept
PQ based Single-stage
Post qualification based Single –stage
Single-envelop single-stage
Double-envelop single-stage
Two Stage Bid
For highly technical and unpredictable procurement on which buyer has less than minimum knowledge
First stage- offer for specification, bid document and terms of contract
Second stage- cost estimation and other regular offer of bidding process
International practice Vs Sec. 28 of PPA
PPA is silence on many point on it

11. Single envelop or double envelop
Single envelop bid
Both technical and financial offer in same envelop
On the opening, price disclosed on ‘Read aloud’ basis
Price taken in the fifth process of evaluation
Benefits
Risks
Double envelop bid
Technical and financial offer in different envelop
Opening of technical offer first.
Safe keep of priced envelop until public opening.
Benefits
Risks

12. Preparation of Specification for goods
Goods based on objective specification
Example:
in regular case- ६४ पेजको रजिष्टर राम्रो खालको
Specification as prescribed by PPA
Register having 64 pages, paper size- 8.5”/11.5”, paper thickness 80 gsm, card-board hard-cover having thickness at least 250 gsm, recyclable
All the technical features to be incorporated into specification.
Size, dimension, weight, ….
Measurement must be in form of industry specific (e.g. paint industry uses % of mixes like 20%R, 60%W, 20%G instead of pink color)
All the measurement must be with range, if possible (e.g. at least 80 kg, from gsm).
If the requirement is fixed with size, dimension…, then only real size has to be mentioned.

13. Preparation of Specification for goods
Who prepare specification
Technical person of buyer
Entity chief is responsible for it.
When to prepare specification
After collection of requisition and before cost estimation
Update of specification
Not required as cost estimation; however, entity may review on need
Source of specification
Based on industry of specific goods under procurement
Domestic industry or foreign industry
National standard will be one source, if coincide with requirement
ISO, in most cases are not specification for procurement (or required to mix many ISOs for single goods under procurement)

14. Preparation of cost estimation for goods
Cost estimation is based on specification
For the date of cost estimation:
Quantity: as required
Rate
Cost estimation = Quantity * rate
In each year, this cost has to be updated on rate.
Basic Rate for cost estimation (PPR 11)
Procurement of goods having similar specification by same entity or other entity within district during this year or earlier years
Current market price (local)
Current market price (national or international) plus transportation
Price fixed by Commerce and Industry, if any

15. Preparation of cost estimation for goods
Problems on estimation
Price adjustment in earlier procurement rate.
Non-availability of current price
Source of price is vague (so creates disputes)
PPR is silent on differences in prices for 4 different sources
Good Practices
For earlier prices- adjustment of inflations
Averaging the prices from different sources
Published price is more reliable than enveloped price

16. We discussed on procurement of goods
Procurement methods
Procurement cycle
Concept of pre-qualification
Concept of post qualification
Single & two stage method
Concept of Single envelope and two envelope system
preparation of Specification for Goods
preparation of Cost estimate for goods
Procurement Procedure
Direct purchase
Emergency procurement
User's Committee
Nongovernmental organization
Force account
Sealed Quotation
National Bid
International Bid
Catalogue shopping
By Back Method
Limited Tendering
Lump Sum Method

17. Procurement Procedures: Direct Purchase
PPR 85
Unique goods and services
Single sourced item
Single producer-domestic
Proprietary goods
From Public entity
G-to-G
Small and non-recurring procurement (Rs.5 Lakh)
Standing list (Rs.1 Lakh)
PPR 82
Training or similar (Rs.5 Lakh)
PPR 83
Cost and Qualification based selection (CQS)

18. Emergency Procurement
PPA 66
Conditions
Process- permission from one higher level
PPR 145
Competitive or negotiation
Process may shorten as required
Why dispute on the earth- quake relief procurement

19. Users-committee procurement
PPR 97
Cost estimation upto Rs 1 Crore including overhead, VAT, contingency and public contribution.
Public notice by entity or request letter from UC.
Agreement and advance (1/3rd of contract amount)
All bills must be passed by UC and submits to entity.
Public notice of expense and public audit
No heavy equipment (exception exists)
Black-listing of UC

20. NGO procurement PPA 46 PPR 99 Mainly training activities
Public notice by entity or request letter from NGO.
Minimum cost basis
Other processes as similar to sealed quotation.

21. Force Account PPA 8 PPR 98 Where
Goods procurement – under usual procedure
Only labor part is force account
No standard documents- practiced by usual procedure
Regular repair, cleaning, regular small works

22. Sealed quotation PPA 40/52 PPR 84 Goods/works/service – Rs.20 lakh
Medical supplier- Rs. 50 lakh
A competitive procedure
Single bid process
Validity -45 days
BG validity- 75 days
At least 3 quotation requires- otherwise renotice
Benefits

23. National bid PPA 8 Most common method of competitive procurement
All the provision of bidding is applicable
Standard bidding document by PPMO
Payment in Nepali Rupee
Dispute resolution in Nepal
Foreign person may lodge the bid

24. International bid
PPA 8
Common method of competitive procurement for large contracts
All the provision of bidding is applicable
Standard bidding document by PPMO/FIDIC
Payment in agreed currency
Dispute resolution agreed place
Domestic person may lodge the bid

25. Catalogue shopping
PPA 8 PPR 31B Competition of price amongst supplier on the published price on webpage or in catalogue. Publisher may be- either producer or authorized agent.
Only the eligibility of bidder is producer or authorized agent, remaining procedure is same as other bidding.
May be multi-year
Two-stage bidding
Lodging catalogue
Price offer
PPMO yet to prepare standard bid document

26. Buyback method PPA 8 PPR 31D
Procurement of goods having hazardous impact with the condition that will return after expiry and new procurement
First bid is purely competitive method, from downward stage- it goes to single source
PPMO yet to prepare standard bid document

27. Limited tendering PPA 8 PPR 31C 31E
Competition amongst limited producer or suppliers (almost 3 producers/suppliers)
Upto Rs. 1 billion- domestic competition
A competitive procedure with producers/suppliers
No-multi-year benefit
PPMO yet to prepare standard bid document

28. Lump sum Discount method
PPA 8 PPR 31A
Competition on rate of discount on rate on cost estimation
A competitive procedure under national bid (may be multi-year)
PPMO yet to prepare standard bid document