1. ZHRC/HTI Financial Management Training
Session 7: Procurement and Tendering Methods
INTRODUCE the session to participants.

2. Learning Objectives
By the end of this session participants will be able to:
Describe different procurement methods
Know factors affecting the choice of procurement method
List monetary procurement value thresholds for the different methods
Define tendering
Describe tendering processes
Describe the preparation of tendering documents
Explain awarding and evaluation of tenders
READ or ASK participants to volunteer and read the learning objectives and clarify.
ENCOURAGE participants to ask questions about any of the concepts that will be presented during this session

3. Procurement Methods
Tanzania Procurement Regulations of require that procurement of goods, works and services be made through competitive tendering
There are several methods of competitive procurement including:
International competitive tendering
National competitive tendering, restricted tendering
Competitive quotations
EXPLAIN to participants that, 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 regulations allow the use of other procurement methods as specified in the Second Schedule.
In this Session, the different methods of competitive procurement will be discussed.

4. International Competitive Tendering: (Reg. 65)
International Competitive Tendering (ICT) is used when there will be participation from foreign suppliers
Procuring entity is required to invite suppliers or contractors, regardless of nationality, to submit priced tenders
International competitive tendering is used:
Where it is desired to attract tenders from a wide range of suppliers or contractors
Where payment is to be made in foreign currency
EXPLAIN to participants that, Tender Notice shall be advertised nationally and internationally.
The procuring entity should use International Competitive Tendering in the following situations:
where it is desired to attract tenders from the widest range of suppliers or contractors, regardless of the estimated value of goods or works to be procured.
where payment for the contract is to be made in whole or in part in foreign currency.

5. National Competitive Tendering: (Reg. 66) (1)
National Competitive Tendering (NCT) is used when the procuring entity does not intend to invite foreign suppliers or contractors to participate in tendering
The procuring entity is required to invite suppliers or contractors, regardless of nationality, by means of tender notice advertised only in the national press
Foreign firms wishing to participate are allowed to do so. Tender documents may be in Kiswahili language 5

6. National Competitive Tendering: (Reg. 66) (2)
NCT is appropriate in the following cases:
Payment is to be made in Tanzanian shillings
Goods or works are available within Tanzania at prices below the international market
Estimated cost of goods or works is small and does not exceed threshold for international competitive tender
Costs involved in using international competitive tendering method outweigh its advantages
Foreign suppliers are not expected to be interested in the tender

7. Restricted Tendering: (Reg. 67) (1)
Restricted tendering is inviting tenders from a few selected potential suppliers
Restricted tendering may be used in the following cases:
Goods required are of specialized nature or can be obtained from a limited number of reputable suppliers
EXPLAIN to participants that this method involves inviting tenders from few selected potential suppliers or contractors and the invitation may be preceded by either the pre-qualification or shortlisting of suppliers or contractors.

8. Restricted Tendering: (Reg. 67) (2)
Restricted tendering may be used when (list continued from previous slide):
There is an urgent need for goods or works such that there would be insufficient time for procuring entity to engage in national or international tendering
There are other exceptional reasons to justify departure from full competitive tendering procedures
CLARIFY to participants that the first bullet sub bullet that, however, the circumstances giving rise to the urgency should be such that could not have been foreseen and have not been caused by dilatory conduct on the part of Procuring Entity.

9. Competitive Quotations: (Reg. 68) (1)
Quotations are invited from a minimum of three suppliers
They are compared to ensure competitive prices
The contract is awarded to the supplier with lowest-priced quotation meeting the needs of procuring entity
EXPLAIN to participants that, competitive quotation method can be used by a procuring entity for minor maintenance works and repair contracts and contracts for services. It is an appropriate method for procuring readily available off-the shelf goods or standard specification commodities that are small in value.

10. Competitive Quotations: (Reg. 68) (2)
This method is used in the following situations:
Goods to be procured are so diversified that it would be of no commercial interest for any single supplier to tender for them
Goods are readily available off the shelf or the goods are standard specification commodities
List of suppliers to be contacted has to be submitted to Ministerial Tender Board (MTB) for approval
Once approved, the request for quotations should be sent simultaneously to suppliers
EXPLAIN to participants that, competitive quotation method can be used by a procuring entity for minor maintenance works and repair contracts and contracts for services. It is an appropriate method for procuring readily available off-the shelf goods or standard specification commodities that are small in value.
NOTE that this method can also be used where the goods can be purchased either locally or internationally.

11. Single Source Procurement: (Reg. 69) (1)
Single source procurement is when goods or services are procured from a single supplier
Should be approved by appropriate Tender Board
This method is used when goods are available only from a particular supplier and no reasonable alternative exists, or when…
GO to the next slide to see more cases when Single Source Procurement is used.

12. Single Source Procurement: (Reg. 69) (2)
There is an urgent need for goods, and use of other procurement methods would be impractical
Provided that circumstances giving rise to urgency were neither foreseeable by procuring entity nor result of dilatory conduct
Where additional supplies of same type as those purchased under an existing contract are required

13. Minor Value Procurement: (Reg. 71)
Goods or minor works may be procured directly from a supplier where no advantage is likely to be obtained by seeking further quotations
Appropriate where price quoted is reasonable and value of goods and services does not exceed Tsh 10,000,000/=, or value of minor works does not exceed Tsh 20,000,000/=
And for non consultancy services does not exceed Tsh 10,000,000/= as specified in Second Schedule of these regulations
EXPLAIN to participants that under this procurement method, the procuring entity may procure goods or minor works directly from a supplier or contractor where no advantage is likely to be obtained by seeking further quotations.
TELL participants that this method is appropriate where the price quoted is reasonable and the value of the goods does not exceed 10,000,000/=, or the value of the minor works does not exceed Tsh. 20,000,000/= or the value of the non-consultancy services does not exceed Tsh. 10,000,000/= as specified in the Second Schedule of these Regulations.

14. Force-Accounts (Reg. 73) (1)
Force account procurement is used for construction conducted by a public agency using its own personnel and equipment
Force account may be justified where:
The works are small and scattered or in remote locations for which qualified construction firms are unlikely to tender at reasonable prices

15. Force-Accounts (Reg. 73) (2)
Work is required to be carried out without disrupting ongoing operations
Risks of work interruption are better borne by a procuring entity or public authority than by a contractor; or
There are emergencies needing prompt attention

16. Procurement Method Choice
Various procurement methods can be employed. Guiding factors include:
Value of procurement
Urgency
Nature of requirement
Limited number of supply sources
Currency of payment
Standardization
Contract Extensions

17. Monetary Procurement Thresholds (Second Schedule)
Methods of Selection and Limit of Application
Source: PPR, 2005, G. N 97
REFER participants to Handout 7.1: Monetary Procurement Thresholds- Second Schedule on page XX of participant handbook for a larger table to view.

18. Group Work: Choice of Procurement Method
Total activity time: 40 minutes
ASK participants to work in groups of 3.
REFER participants to Worksheet 7.1: Choice of Procurement Method for the group work.
ALLOW 20 minutes for them to complete the worksheet, identifying which procurement methods should be used.
REQUEST small groups share portions of their worksheet answers and discuss as a large group for 20 minutes.

19. Tendering Processes

20. What is Tendering? ASK participants “what is tendering”?
ALLOW few participants to respond and record them on the board or flip chart before you proceed to next slide.

21. Definition of Tendering
Tendering is one of the methods of procurement whereby potential suppliers are invited to make a formal offer to supply goods, provide services, or carry out works; which on acceptance, shall be the basis of subsequent contract
CLARIFY to participants that, tendering may be used in procuring works such as the construction of health centers in districts or provision of services, such as the provision of security services.

22. Need for Tendering and Its Application
Procuring entities create an annual procurement plan which is submitted to the PMU for action
Procurement officers are required to prepare tendering packages and to advertise them to ensure transparency and guarantee receiving the best value for Government money
EXPLAIN to participants that Heads of Department in each department in a procuring entity (user departments) compile lists of their requirements every year, with clear specifications of the nature of goods, services or works needed and then submit them to PMU for action in accordance with the procurement plan and within the annual budgetary provisions.

23. Tendering Procedures
Tendering process in procuring entity may be divided into several stages:
Preparation of tender documents
Review and approval of tender documents by the Tender Board
Advertising of tender and issuing of tender documents
Submission and custody of tender bids
Opening of tenders
Evaluation of tender
Approval and award of the tender by the tender board

24. Preparation of Tender Documents (1)
Tender documents generally include the following components, each is discussed in slides that follow:
Section 1: Invitation for Tenders
Section 2: Instruction to Tenderers
Section 3: Tender Data Sheet
Session 4: General Conditions of Contract
Section 5: Special Conditions of Contract
Section 6: Schedule of Requirements
Section 7: Sample Forms
Section 8: Technical Specifications
Section 9: Security Forms
Section 10: Anti-Bribery Policy/Code of Conduct
EXPLAIN to participants the following:
Tender documents are media through which a Procuring Entity communicates with the potential suppliers and contractors on how to prepare tender bids.
Tender documents are important because they describe the goods, works and service to be procured, they establish the legal, technical and financial conditions under which the bidding will take place, and they also establishes the evaluation criteria.

25. Preparation of Tender Documents (2)
Tender documents generally include the following components:
Section 1: Invitation for Tender
This is a letter that invites bidders to apply for tenders. It provides basic information that will attract and inform potential bidders on how to obtain the tender document.
EXPLAIN to participants the following:
Invitation for Tender is either advertised in the newspaper or website or sent directly to bidders. The way it is sent to bidders depends on the type of tender. If it is an open tender, such as an International or National Tender, the letter is issued as an advertisement in the media. For Restricted Tenders, it is issued directly to the respective bidder.
The Invitation for Tender contains information regarding goods, works or services, the address of the procuring entity, the method of procurement to be used, whether there is any requirement for a tender fee, where to obtain bids, the date and time of the deadline and the opening of bids, and where to submit the tenders.

26. Preparation of Tender Documents (3)
Section 2: Instructions to Tenderers
This Section explains how to prepare the bid, requirements or documents that should be attached to the bid, whether bid security is required, criteria used for evaluation and the time and place of bid opening.
Section 3: Tender Data Sheet
Provides information that supplements or amends instructions to bidders.
EXPLAIN to participants that the Instructions to tenderers shall also provide additional clarifying information where necessary.

27. Preparation of Tender Documents (4)
Section 4: General Conditions of Contract
Contains general conditions for supply of goods under tendering methods. The conditions are standard for all tenders pursued under the Public Procurement Act .
Section 5: Special Conditions of Contract
Some tenders have special conditions that supplement or amend the General Conditions.
EXPLAIN to participants the following:
Each type of procurement (Goods, Works, Services and Non-Consultancy Services) has its own conditions.
Generally, this part of the tender document describes the conditions under which the contract will be implemented.
It is therefore important it is included in the Tender Document so the potential bidders know the conditions and requirements.

28. Preparation of Tender Documents (5)
Section 6: Schedule of Requirements
This form should be completed by the Procuring Entity indicating description, quantity and delivery schedule. The bidder will use this information during performance of the contract. The bidder must indicate compliance with the schedule.
EXPLAIN to participants that those who do not confirm compliancy are rejected.

29. Preparation of Tender Documents (6)
Section 7: Sample Forms
Forms that should be filled in by the bidder include:
Bid Forms
Price schedules for local and imported goods
Forms for qualification information
Sample Letter of Acceptance
Sample contract
EXPLAIN to participants that these forms serve as guidelines to bidders. All forms, especially the bid form, become part of the contract for that bidder who eventually wins the tender. The sample letter of acceptance and contract forms are also used by the PE to accept the tender and prepare the contracts.

30. Preparation of Tender Documents (7)
Section 8: Technical Specifications
These are prepared by the buyer. Technical specifications describe the physical characteristics of required goods or works.
Section 9: Security Forms
Used by bidders to prepare the bid security or bonds or bid security declaration.
EXPLAIN the following to participants:
For Section 8, regarding Technical Specifications: The bidder is required to indicate compliance with the Technical Specifications by indicating the goods or works that will be supplied. In the case of goods, the bidder shall indicate the brand name, where possible, of the goods to be supplied.
For Section 9, regarding Security Forms: The Bid Security protects the buyer from the risk of having the acceptance of the bid rejected within the bin validity period.

31. Preparation of Tender Documents (8)
Section 10: Anti-Bribery Policy and Code of Conduct
These are also called integrity forms The bidder is required to fill in the forms and or attach the Company’s Code of Conduct or Anti-Bribery Policy. The absence of these forms in a bid is sufficient to disqualify a bidder.

32. Preparation of Tender Documents (9)
Tender documents should be worded to encourage competition
The documents should clearly and precisely provide all information necessary for potential tenderers to prepare bids
EXPLAIN to participants the following:
Procuring entities are required use the appropriate standard tender documents issued by the Public Procurement Regulatory Authority with minimum changes, acceptable to the MTB as necessary to address project specific issues.
Tender documents and tender notice should be approved by the Tender Board before they are issued.
PMU should submit the draft texts of the invitation to tender and of the tender documents to the Tender Board for comment and approval.
If there are any amendments agreed with the appropriate Tender Board, it should be incorporated in the final text.
Tender Notice or Tender Documents that have not been approved by the Tender Board is not going to be considered as sufficient and adequate to satisfy the requirement of the Regulations.
REFER participants to Handout 7.2: Advertising, Modifying and Custody of Tenders for more information.

33. Preparation of Tender Documents (10)
Tender documents should be worded to encourage competition
The documents should clearly and precisely provide all information necessary for potential tenderers to prepare bids
EXPLAIN to participants the following:
Procuring entities are required use the appropriate standard tender documents issued by the Public Procurement Regulatory Authority with minimum changes, acceptable to the MTB as necessary to address project specific issues.
Tender documents and tender notice should be approved by the Tender Board before they are issued.
PMU should submit the draft texts of the invitation to tender and of the tender documents to the Tender Board for comment and approval.
If there are any amendments agreed with the appropriate Tender Board, it should be incorporated in the final text.
Tender Notice or Tender Documents that have not been approved by the Tender Board is not going to be considered as sufficient and adequate to satisfy the requirement of the Regulations.
REFER participants to Handout 7.2: Advertising, Modifying and Custody of Tenders for more information.

34. Opening of Tenders (1)
Tenders should be opened at the deadline for receipt of tenders or promptly thereafter
All tenders submitted before the deadline shall be opened in public and the following read out loudly:
Tenderers’ names
Tender prices and total amount of each tender
Discount if any
Tender security
EXPLAIN to participants the following:
All tenders submitted before the deadline shall be opened in public in the presence of the tenders or their representatives and other parties with legitimates interest in the tender proceedings.
Names of all those present at the tender opening and the organisation they represent should be recorded by the secretary of the tender board.
Last tender opened should be endorsed ‘and the last’ and initialed by the members of the tender opening committee in the presence of tenderers or their representatives.

35. Opening of Tenders (2) Tenders should be numbered consecutively
Secretary of the Tender Board should prepare minutes of opening

36. Evaluation of Tenders (Reg. 90-94) (1)
Accounting Officer or Chief Executive Officer shall establish a tender evaluation committee which should be comprised of not less than three and not more than five members
All tenders that have been accepted and opened should be passed promptly to the evaluation committee
Record of tenders received and attendees of the opening meeting should also be provided to the evaluation committee
EXPLAIN to participants that the establishment of a tender evaluation committee should be based on the recommendations of the PMU.

37. Evaluation of Tenders (Reg. 90-94) (2)
Tender evaluation should be consistent with the terms and conditions of the tender documents
The evaluation shall be carried out using the criteria explicitly stated in the tender documents
EXPLAIN to participants that tender evaluation should be consistent with terms and conditions set forth in tender documents and such evaluation shall be carried out using criteria explicitly stated in tender documents

38. Tender Evaluation Sequence
Tender evaluation should be carried out in the following sequence:
Preliminary evaluation to determine commercial responsiveness
Detailed Technical Evaluation
Post-qualification to the lowest evaluated bidder

39. Preliminary Examination
During preliminary examination, the committee will establish whether each tender is substantially responsive to requirements of tender documents
A substantially responsive tender conforms to terms and conditions of tender documents without material deviations
A material deviation affects the scope, quality or performance of contract, or is inconsistent with tender document
Procuring entity may ask suppliers/contractors for clarification of their tenders
EXPLAIN to participants the following;
The committee will determine whether the required guarantees have been provided, signed and whether the tenders are otherwise generally in order.
Procuring entity may regard a tender as responsive even if it contains minor deviations that do not materially alter or depart from the characteristics, terms, conditions and other requirements set forth in the tender document.
REFER participants to Handout 7.3: Detailed Evaluation and Post Qualification.

40. Negotiation (Reg. 95) (1)
Negotiation may be undertaken with lowest evaluated tenderer
Negotiation with tenderers are not permitted until after tender board has approved evaluation committee's recommendations
PMU shall recommend membership of a negotiation team based on appropriate seniority and experience depending on value and complexity of procurement
Tender board shall approve the negotiation plan prior to negotiations taking place

41. Negotiation (Reg. 95) (2)
Prior to confirming an agreement, the Procurement Management Unit shall seek approval of the Tender Board
Appropriate tender board shall approve the negation plan prior to any negotiations taking place
Prior to confirming any agreement reached, the Procurement Management Unit shall seek approval of the Tender Board

42. Negotiation (Reg. 95) (3)
Negotiations may be undertaken with the lowest evaluated bidder in the following areas:
A minor alteration of the technical details
Reduction of quantities for budgetary reasons
A minor amendment to the special conditions of contract
Finalising payment arrangements

43. Negotiation (Reg. 95) (4) Mobilisation arrangements
Agreeing to final delivery or work schedule to accommodate changes required by procuring entity
Methodology or staffing
Clarifying details that were not apparent or could not be finalised at time of bidding

44. Negotiation (Reg. 95) (5) Negotiations shall not be conducted to:
Substantially change specification or details of requirement, including tasks or responsibilities of tenderer
Materially alter terms and conditions of contract
Reduce prices
Increase prices in case of disposal of assets

45. Approval of Award of Contract (1)
Evaluation committee will prepare a detailed report on evaluation of tenders
Committee will give specific reasons upon which the determination of the lowest evaluated tender is based
Report will be submitted to PMU
EXPLAIN to participants that before submitting the evaluation report to the tender board, PMU is supposed to go through it and clear any doubt on issue (s) that need further clarification from the committee.

46. Approval of Award of Contract (2)
Tender Board shall review the evaluation and may either:
Approve recommendation and, authorize the procuring entity to accept the tender and award a contract
Refuse to authorize any of the of tenders and refer the evaluation back to procuring entity with instructions to re-evaluate tenders the tenders or re-tender
Award of contract must be made within period of validity of the bid or extension thereof
EXPLAIN to participants that the Secretary of the tender board shall send a copy of the decision of the tender board to the Chief Executive Officer of the Authority, the Controller and Auditor General, the Attorney General and the Technical Audit Unit of the Ministry of Finance.

47. Group Work: Tendering Process
Total activity time: 50 minutes
ASK participants to work in groups of 3.
REFER participants to Worksheet 7.2: Tendering Process for the group work.
ALLOW 30 minutes for smalls groups to complete the worksheet.
REQUEST small groups share some of the shortcomings they have identified, why they are shortcomings and discuss as a large group for 20 minutes.

48. Key Points (1) Procurement methods include:
International competitive tendering,
National competitive tendering
Restricted tendering
Competitive quotations
Single source
Minor value procurement
Force accounts
A number of factors can guide in selecting procurement methods 48

49. Key Points (2)
Tendering is inviting suppliers to make a formal offer to supply goods, services or works, shall be the basis of the contract.
Tendering procedures include:
Preparation of tender documents
Approval of documents by Tender Board
Advertising of tender
Submission and custody of bids
Opening of tenders
Evaluation of tenders
Approval and award of tender by the Tender Board 49