1. 11 Module I. Basics of the Public Procurement Law of Mongolia (PPLM) - Framework and Governing Principles I.Theoretical basics and legislation of public procurement II.Introduction on Public procurement law of Mongolia III.Management of public procurement IV.Supervision & coordination

2. 22 Theoretical basics and legislation of public procurement /Module I.1/ а. What public procurement is? b. Why it matters? c. What tender is?

3. 33 (Theory of Money, Freidman.A) Buying by  One’s own money for Someone else  One’s own money for Oneself  Someone else’s money for Oneself  Someone’s money for someone M.I.1.a. What public procurement is? Mentality of people on Quality and Price

4. 44 Buying by Quality Economy 1.One’s own money for Someone else 21  One’s own money for Oneself 11  Someone else’s money for Oneself 12  Someone’s money for someone ? ? M.I.1.a. What public procurement is? Common altitude of people on Quality and Price

5. 5

6. 6 Public Procurement needs to have specific rules and regulations in order to be beneficial for everyone in the country! M.I.1.b. Why it matters? Thus! How to be beneficial? There are 5 principles should be pursued to provide transparency, fairness, efficiency, effectiveness and responsibility in the implementation of Public Procurement.

7. 7 1.Value for Money -High quality and technology in industry -Citizen 2.Win-Win: Who will win in case of Good procurement? -Procuring entity -Bidders -Citizen Motto of Procurement M.I.1.b. Why it matters?

8. 8 1.In your judgment, how to provide Responsibility and/or Accountability in Public procurement? 2.Can the independent control and monitoring be ‘beneficial’ rather than encouraging the internal control and/or auditing? ??? Questions for audiences !!! M.I.1.b. Why it matters?

9. Why does Procurement Regulation Matter? Why are we interested? -wealth of the nation -economy and efficiency - increased social welfare How does it work? - Providing value for money for Government - Through competitive processes - On a level playing field M.I.1.b. Why it matters?

10. What can go wrong? Poor vision/planning Problem of Government leadership Bureaucratic excess Misunderstanding of “value for money” Administrative mistakes Procedural deficiency and capacity State capture Political interference Corruption Probity and integrity M.I.1.b. Why it matters?

11. Why procurement regulation? Understanding the administration - How the Government works - Bureaucracy End user Vs Procuring entity Informational asymmetry Controlling the administration -accountability provisions -transparency - procedural compliance - verifiability M.I.1.b. Why it matters?

12. How does procurement regulation work? Public Procurement Law: –accountability provisions –transparency and verifiability –procedural integrity –personal integrity Implementation and Enforcement: –PPD –Independent monitoring (amendment 2011) M.I.1.b. Why it matters?

13. Why the Public Interest? Increasing social welfare –society’s wealth –benefits accrue to public –public services Public awareness –of functions –of rules Reducing tolerance of corruption M.I.1.b. Why it matters?

14. 14

15. Civil society can do… Social accountability –monitoring results –community action Investigative journalism –watchdog of the people –government probity –bureaucratic accountability M.I.1.b. Why it matters?

16. 16 UNCITRAL model law FIDIC contract standards Government procurement agreement (GPA) EU procurement directives Etc., International regulations M.I.1.b. Why it matters?

17. 17 Key risks and conflicts have to be regulated Purchaser’s willingness to procure best quality exceeds their budgets approvedPurchaser’s willingness to procure best quality exceeds their budgets approved Procuring entities as government’s organizations have an interests not to save resources, but to spend more in order increase their power and budgetProcuring entities as government’s organizations have an interests not to save resources, but to spend more in order increase their power and budget Conflicts of interests: Conflict may arise due to purchaser’s individual interestConflicts of interests: Conflict may arise due to purchaser’s individual interest M.I.1.b. Why it matters?

18. 18 How to prevent conflicts of interests ? There should be a well-structured legislative regulation and procedures on public procurement! And, there are: -Common international standards have been developed -International organizations comply with ‘harmonized’ set of rules -Most countries/governments develop their procurement practices M.I.1.b. Why it matters?

19. 19 UN’s model Procurement reform: Countries which are revising laws on public procurement Fostering international competition in procurement markets Progressive/Good practices of public procurement M.I.1.b. Why it matters? UNCITRAL model law

20. 20 UN’s model Procurement reform: Countries which are revising laws on public procurement Fostering international competition in procurement markets Progressive/Good practices of public procurement M.I.1.b. Why it matters? UNCITRAL model law

21. 21 Public procurement and Economics Interrelated with development key issues - Economic development - Reducing poverty -Decentralization -Developing private sectors -International trade -Direct investment Implementation of mid-term expenditure management M.I.1.b. Why it matters?

22. 22

23. 23 M.I.1. c. What tender is? Subject matter of Tender Eligibility and Capacity of Bidder WHO Goods, Works, Services to supply WHAT Methodology and/or work plan to perform the contract HOW/ WHEN Cost estimation PRICE TECHNICAL PROPOSAL FINANCIAL PROPOSAL

24. 24 /Module I.2/ Introduction on public procurement law of Mongolia /Module I.2/ а. Scope of Public procurement law of Mongolia (PPLM) b. Overview c. Common provisions d. Procurement procedures

25. -Constitution (revised 1992, amended 2000) -Budget law (revised 2011) -Public procurement law (adopted 2000, revised 2005, amended 2007, 2009, 2010, 2011) -Government decrees & threshold value etc., (2006- 2011) -Standard bidding documents (2001-present) -Implementing rules and regulations approved by State administrative body for budgetary issue- Ministry of Finance (2001-present) -Etc., 25 M.I.2. a. Scope of Public procurement law of Mongolia (PPLM) Legislative acts on Public Procurement of Mongolia

26. 26 Planning, Implementing and Reporting of Public procurement Supervision & coordination of Public procurement Complaint mechanism Sanctions M.I.2. a. Scope of Public procurement law of Mongolia (PPLM) Scope of the law

27. 27 Chapter 1. General provisions (Articles 1-16) Chapter 2. Open procurement procedures (Articles 17-30) Chapter 3. Exceptional procurement procedures (Articles 30-34) Chapter 4. Procurement of Consulting services (Articles 35-39) Chapter 5. Procurement contract for Goods, Works and Services (Articles 40-44) Chapter 6. Managing procurement (Articles 45-53) Chapter 7. Settlement of disputes, Responsibilities (Articles 53-57) & Article 58. Entering into force Structure of the law M.I.2.b. Overview

28. 28 Stages of Public procurement Pre October 1, 2012 M.I.2.b. Overview Planning Tendering Most challenging phase of procurement Contracting Reporting

29. 29 Stages of Public procurement Post October 1, 2012 M.I.2.b. Overview Tendering Most challenging phase of procurement Contracting Reporting

30. 30 Tendering Establishing the ‘Evaluating Committee’; Defining of procurement method; Stating the justification except open bidding; Preparing bidding documents; Publishing of bid Invitation; Clarification of Bidding document and Pre-bid meeting to ensure the ‘quality’ of Bidding document Response to the clarifications and/or amendment to the Bidding document Bid opening; Evaluating of bids; Contract award. M.I.2.b. Overview For opening tendering the deadline timeframe for tender submission shall be at least 30 days.

31. 31 Contracting M.I.2.b. Overview Starting of contracting /negotiating and submission of ‘Performance Security’; Signing contract; Implementation of contract /Payment Schedule/; Testing and Acceptance of contract implementation. The purchaser shall pay within 30 days, upon received contractor’s claim.

32. 32 Reporting M.I.2.b. Overview Procuring entity: Preparing Procurement report Submit Procurement report to the portfolio Minister; (before 1 December of given year); The portfolio Minister shall submit Procurement report to the State administrative body for budgetary issues (before 15th Jan of next year); The State administrative body for budgetary issues shall submit to the Government of Mongolia. (within the 1 st season of next year) Government of Mongolia shall report to Parliament.

33. 33 According to national security, the special purpose Goods, Works and Services; Maintenance of national roads, to be executed by the state-owned legal entity; Procurement of goods, works and services if the relevant treaty specifies particularly the different procedures and/or conditions for the procurement; Etc., (Article 3, PPLM) M.I.2.c. Common provisions

34. 34 Article 6. Principles of public procurement Transparency Providing equal opportunity to compete Efficiency Economy Responsibility M.I.2.c. Common provisions

35. 35 Article 4. Procuring entity Legal entity with state and local ownership Legal entity with partial state and local ownership of 50% or more The project implementing entity defined in the law on Coordination and of foreign loans and aid M.I.2.c. Common provisions

36. 36 Clause 5.1.6. Definition - Bidder Entities independent from the procuring entity: Entity which submits a bid Several entities which submitted a bid on the basis of cooperation contract M.I.2.c. Common provisions

37. 37 Goods 10% discount for goods of Mongolian origin Works 7.5% discount for works executed by domestic entity In case of granting preferential rights to the bodies specified in 10.1 of the law, the matter shall be clearly indicated in the bidding documents, and body which is interested in to obtain discount shall deliver information on origin and cost of goods or documents to prove the provisions set forth in provisions 10.1.2-10.1.5 of the law. Article 10. Domestic preference M.I.2.c. Common provisions

38. 38 Define given goods, works or services not in terms of their design or descriptive characteristics but in terms of their purpose, application, use, quality and technical merits; Define subject to international standards accepted in Mongolia; if such standards do not exist, subject to national standards, technical requirements, regulations and instructions; Not specify particular requirements and conditions indicating a trademark, name, design, type, origin, manufacturing method, and manufacturer and/or supplier; if it is required to specify the requirements and conditions, the requirements and conditions shall be followed by “or its equivalent”; Procuring entity is prohibited from getting advice on restricting competition from an entity interested in participating in a bid; Article 11. Technical specifications M.I.2.c. Common provisions

39. 39 Article 14-16. Assessing bidders’ capacity To provide equal opportunity and conditions to participate in procurement process to entities interested in a bid; To review and evaluate bidders’ general conditions, financial and technical qualifications; A procuring entity shall include capacity requirements and criteria in the bidding documents; A procuring entity shall reject a bid which does not meet capacity requirements set by it and advise the bidder in written; A procuring entity can review the bidder’s qualification who has submitted “the best” evaluated bid before awarding a contract; A procuring entity shall keep bidders’ secrets; M.I.2.c. Common provisions

40. 40 Article 7. Procurement procedure Open procurement procedure Exceptional procurement procedure - Limited bidding - Comparison method - Direct contracting method Procedure for selecting contractor of consulting services a procuring entity may directly procure goods, works and services when their cost estimates are small. M.I.2.d. Procurement procedures

41. 41 Amendment followed up with revised Budget Law, 23 Dec 2011 Article 7’. Procurement with community participation M.I.2.d. Procurement procedures

42. 42 Article 8. Selection of procurement procedures The government sets the following thresholds distinguishing the methods for procurement of Goods, Works and Services: Comparison ceilingComparison ceiling Direct contracting ceilingDirect contracting ceiling Least-cost consultant selection ceilingLeast-cost consultant selection ceiling Authorization from MOF ceilingAuthorization from MOF ceiling Publishing on website ceilingPublishing on website ceiling NOTE!!! Selection of procurement procedures shall be based on approved budget. (Clause 8.5) M.I.2.d. Procurement procedures

43. 43 a) Procurement planning/packaging; b) Publishing a list of goods, works and services to procured; c) Establishing an evaluation committee; Functions of Evaluation committee: (d-i) d) Determining which procurement procedure to use; e) Explain reasons for selecting certain procedure except open bidding; f) Preparing bidding documents; g) Publishing a bidding invitation; (Clarification and Pre-bid meeting) h) Opening bids; i) Evaluating bids; The end result of tendering k) Awarding a contract; l) Starting and finishing contracting activities, signing a contract; m) Contract implementation n) Reporting & documenting Stages of public procurement M.I.2.d. Procurement procedures

44. 44 Use of Bidding documents Limited bidding Limited bidding Request for quotation /preparing quotation/ Open bidding Open bidding Bidding documents Bidding documents /preparing of bid / Comparison Comparison Direct contracting Direct contracting Bidding documents M.I.2.d. Procurement procedures

45. 45 Split into packaging (Clause 8.6 & 8.7) Packaging For the purposes of promoting competition Packaging goods, works and services In Considerations of Purposes Type and brands Geographic locations M.I.2.d. Procurement procedures

46. 46 Selection of procurement procedures is based on the total costs of the package Selection of procurement procedures is based on the total costs of the package A procuring entity shall indicate the existence of package of bids and in the invitation and bidding documents and the right of bidders to submit their proposals on one or several bids A procuring entity shall indicate the existence of package of bids and in the invitation and bidding documents and the right of bidders to submit their proposals on one or several bids Evaluating every bids Evaluating every bids Selecting a version of proposals with the least contract values Selecting a version of proposals with the least contract values M.I.2.d. Procurement procedures Requirements for procuring entities whilst packaging

47. 47 Awarding contract By every bids By several bids By whole package If any entity is awarded a contract for several bids that should be written in the procurement report. M.I.2.d. Procurement procedures

48. Home work! Correlation matrix for law articles and Procurement Principles 48 Articles of law Article 1. …. ….. Article 58. Transparency, Equal opp., Efficiency, Effectiveness, Responsibility to compete ✔✔ ✔ ✔ ✔ ✔ ✔ where appropriate!Handwriting! and