1. 37 th Review Meeting of State Finance Controllers 29-30 April, 2013 Procurement Procedure-SSA Technical Support Group, SSA

2. 2 PROCUREMENTPROCUREMENT

3. 3 Main Considerations of Proficient Procurement (i)Economy: Give the purchaser best value for money. (ii)Efficiency: Best procurement is simple and swift, producing positive results without protracted delays. (iii) Fairness: Impartial, consistent, and therefore reliable. (iv)Transparency: Maintains rules and procedures that are accessible and unambiguous. It is not only fair, but should be seen to be fair. (v)Accountability and Ethical Standards: A key deterrent to collusion and corruption, and a key prerequisite for procurement credibility.

4. 4 Why is Procurement Important? In procurement terms inputs are generally grouped into three categories: (i)Civil Works – School Infrastructure and facilities like New PS, UPS, Residential Schools, Hostel, ACR, HM Room, BRC/URC, CRC, Drinking water, Toilets, Girls Toilet, Ramps, Handrail, Electrification, Retro-fitting, Boundary wall/ fencing, Major Repairs, etc. (ii)Goods -Typically equipment, computers, furniture, textbooks, library books, uniforms, TLE, TLM, other materials, supplies, commodities, etc. (iii) Services – Hiring of services including academic, technical and resource support provided by institutions/organizations in all areas, research studies, third party quality evaluation of civil works, auditors etc. The quality, timeliness, local appropriateness and affordability of those procured inputs can largely determine whether the public investments will succeed or fail.

5. 5 Effective Procurement ObjectivesObjectives Right Quality product Right quantities Lowest possible price Meeting recognized standards Timely Delivery as per schedule Reliable suppliers

6. 6 PROCUREMENT IN SSA Strictly follow procurement procedure prescribed in Chapter IX of the Manual on Financial Management and Procurement (FM&P). Mandatory to follow the Manual provisions for all procurements under SSA. Follow States’ financial ceilings except when not prescribed by MHRD.

7. 7 Identification of Needs. Ensure availability of specific budget provision. Assessment of bulk requirement at the beginning of the financial year. Computer, equipment, furniture, books etc in economic lots as per annual need. Procure miscellaneous items of stores not covered by bulk requirement as per actual need. Make all purchases to the best advantage after comparison of competitive prices. Strictly follow the level of procurement prescribed in the Manual Encourage decentralized procurement Avoid centralized procurement of items prescribed at lower level Points to be kept in view

8. 8 PROCUREMENT  Strictly follow the levels of procurement provided in Para 112 of the Manual on FM&P Levels of procurement School/Community/ KGBVCRC / BRCDistrictState

9. 9 School/KGBV level  All civil works, except buildings for Residential Schools/Hostels and KGBV.  Furniture to Govt. UPS  Library Books for schools  Teaching Learning Material  School grant.  Maintenance grant.  Teaching Learning Equipment  REMS  Learning Enhancement Programme (LEP).  Items required for KGBV.  Uniform Special Training related Items  TLM, Contingency etc.

10. 10 CRC/BRC level  Furniture/ equipment/computer etc.  Office contingencies  Teaching Learning Material  Teacher Training  Community Training  Civil works for construction of BRC, augmentation of BRC and CRC  Maintenance of BRC and CRC  Printing work  REMS

11. 11 District level  Office equipment for DPO  Office furniture for DPO  Textbooks/other books/supplementary materials  Computers and accessories  Aids and appliances for CWSN  Office contingencies  Hiring of vehicles  Maintenance of equipment and vehicles  District level training and workshops  Printing work  REMS  ECCE Kit  Educational Kits for girls  Learning Enhancement Programme (LEP)  Construction of Residential Schools/Hostel and KGBV

12. 12 State level  Textbooks  Computers and its accessories  Office equipment for SPO  Office furniture for SPO  Equipment for distance education  Aids and appliances for CWSN  Office contingencies  Hiring of vehicles  Maintenance of equipment and vehicles  State level training and workshops  Printing work  Engagement of consultancy firms (service contract)  Engagement of Auditors for external and internal audit  Engagement of experts/resource persons  Engagement of NGOs  REMS  Learning Enhancement Programme (LEP).

13. 13 Method of Procurement Method of Procurement Procurement Open Tender Open Tender Limited Tender Single Tender Procurement without tender / quotation Procurement through communities

14. 14 OPEN TENDER Meaning Competitive bidding procedure and is the most efficient and economic way of procuring goods or works. Provides for adequate competition in order to ensure reasonable prices. Ensures transparency and equal opportunity to all. The methods used in the evaluation and the award of contracts are made known to all bidders. Items covered  Civil works construction of BRC, Residential schools / Hostel, KGBV, SIEMAT and any other civil works specifically approved by Project Approval Board through contractors.  Goods

15. 15 Steps  Preparation of tender documents  Notification / Advertisement;  Issue of tender documents;  Pre-bid Conference  Submission of tender documents;  Public opening of tender;  Evaluation;  Selection of lowest evaluated responsive bidder based on post qualification;  Negotiation with L-1 (if necessary)  Contract award; and  Contract performance

16. 16 Tender documents:  Should be user friendly, self contained, comprehensive, unambiguous and relevant to the objective of purchase.  Use Standard State Government’s tender documents duly modified, if necessary, to cover the following sections:  Section - I – Invitation for Bids (IFB)  Section - II – Instructions to Bidders (ITB)  Section - III – General Conditions of Contract  Section - IV – Special Conditions of Contract  Section - V – Schedule of Requirements  Section - VI – Technical Specifications  Section - VI-A – Post Qualification Criteria  Section - VII – Bid form and Price Schedule  Section - VIII – Bid Security Form  Section - IX – Contract Form

17. 17  Section - X – Performance Security Form  Section - XI – Performance Statement  Section - XII – Manufacturers Authorization Form  Section - XIII – Form for Bank Guarantee for Advance Payment  Section - XIV – Performa for Equipment and Quality Control employed by the Manufacturer Important Clauses:  Notification of Tender Notice  Sale of tender documents  Schedule of requirement  Bid Form  Bid Prices  Technical Specifications  Post-Qualification Criteria  Bid Validity Period

18. 18  Earnest Money  Pre-bid Conference  Signing of Bids  Submission of bids  Opening of bids  Evaluation criteria  Negotiation with L1  Award of contract  Security deposit  Retention money  Signing of agreement/contract  Payment terms  Adjudicator  Force Majeure  Liquidated damages  Corrupt or Fraudulent Practices  General Conditions of Contract (GCC)  Special Conditions of Contract (SCC)

19. Repeat Orders  Quantity increase/decrease as per State procedure  Place order within one month from the date of last supply  Prices have since not reduced  Purchases not made on urgent basis Right to Accept any Bid or Reject all Bids  The purchaser has the right to accept or reject any bid and to annul the bidding process and reject all bids at any time prior to award of contract. Rejection of all bids  Lack of competition  Tenders not substantially responsive  Review the causes justifying the rejection  Obtain the approval of competent authority Procurement Steps

20. Award of Contract Award Criteria  Award the contract within the bid validity period.  Award the contract to the successful lowest evaluated responsive bidder  The selected bidder need not undertake work not specified in bidding documents or to modify his bid. Single offers received: Consider if;  publicity was adequate,  bid specifications / conditions were not restrictive or unclear and bid prices are considered reasonable. Procurement Steps

21. 21 LIMITED TENDER Items covered:  Goods including books, uniforms  Teaching learning materials,  School equipment,  Hiring of vehicles, and  Operation and maintenance of equipment Invitation for quotations – Based on comparing price quotations obtained from several suppliers, usually at least 3 to ensure competitive prices. Issue a letter to the supplier to furnish the quotations for the required goods/equipment.

22. 22 Invitation for quotations –  No need of publication of notification in the newspaper/website.  Issue the request letters to suppliers on the approved list.  The request letter should indicate description, specifications and quantity of the goods as well as desired delivery time and place.  Only one quotation by each supplier. Bid Price  Quote for the full quantity as described in the invitation letter.  Corrections, if any, made by crossing out, dated initialing and re-writing.  Include all duties, taxes and other levies payable by the Vendor/Supplier in the total price.  The rates quoted by the Vendor/Supplier be fixed for the duration of the contract and not subject to adjustment on any account.  The prices are quoted in Indian Rupee. LIMITED TENDER

23. 23 LIMITED TENDER Steps  Identifying items;  Laying down specifications;  Estimating total numbers and costs of items;  Need not notify in newspaper/website  Identifying likely agencies borne on the approved list of contractors/ suppliers; (minimum 3, 8-10 for more competitive rates)  Obtaining approvals of competent authority;  Issuing letters of invitation;  Processing quotations received;

24. 24  Obtaining orders of competent authority for placing orders for supply;  Issuing letters placing orders for supply and delivery period;  Quoted price shall include all duties, taxes and other levies;  Rates quoted be fixed and not subject to adjustment;  Ensuring inspection;  Ensuring timely supply: and  Making payments after delivery in satisfactory condition.  The financial ceiling prescribed for limited tender shall be applicable for Rate contracts of DGS & D and Rate contracts of State Governments.

25. 25 SINGLE TENDER Followed in the case of  Articles specifically certified as of propriety nature; or  Manufactured by a particular firm;  Goods including books;  Teaching materials;  School grant;  Hiring of vehicles; and  Operation and maintenance of equipment etc Appropriate for  Extension of existing contracts  Standard equipment/spare parts for existing equipments from original supplier.  Items obtainable from one source  Early delivery  In exceptional cases such as natural disaster.

26. 26 WITHOUT TENDER / QUOTATION  Procurement of goods or group of goods estimated to cost the equivalent of the ceiling of State Govt.  Issue suitable guidelines by the SIS THROUGH COMMUNITIES Construction of all civil works except, BRC, Hostel, KGBV and SIEMAT BRC construction if the community is technically capable Purchase of materials as per ISI certification, if available; SPD may provide simple procurement guidelines

27. 27  Identify the committee locally operating in the area.  Keep the following points in view:  Active involvement of community in planning and implementation;  Who will procure the materials or goods used in works;  Goods / works have to be executed as per approved plans and specifications  The name and designation of the Engineer for technical supervision and certification.

28. 28 Suggested advance payments based on the certificate issued by the Supervising Engineer Advance (mobilisation advance upon start up of the work and on reaching lintel level) : 75% of total cost Plastering and completion of work : 25% of total cost School toilet and other repair works Advance (mobilisation advance upon start up of the work) cost : 75% of total Plastering and completion of work cost : 25% of total

29. 29 Considerations

30. 30 Selection process  Preparation of Terms of Reference  Preparation of Cost Estimate and Budget  Advertisement, seeking Expression of Interest (EOI)  short listing of consultants/firms based on EOI  Issue of Request for Proposal (RFP) to short listed Consultants/firms.  Receipt of RFP in two envelope system, technical and financial proposals separately.  Formation of Evaluation Committee  Evaluation of Technical proposal and assign individual mark by each member on the basis of responsiveness to the TOR  Open the Financial proposals of the qualifying Consultants publicly in the presence of the Consultants/representatives  Final discussions including negotiations  Award of contract

31. 31 Terms of Reference (TOR)  Prepare a well-defined TOR specifying the services to be provided on the following lines:  Background information;  A precise statement of objectives;  An outline of tasks to be carried out;  A time schedule for completion of tasks;  The support/inputs provided by the Client;  Composition of Review Committee to monitor the services;  List of key personnel whose CV and experience would be evaluated.

32. 32  Preparation of Terms of Reference  Preparation of Cost Estimate and Budget  Advertisement, seeking Expression of Interest (EOI)  short listing of consultants/firms based on EOI  Issue of Request for Proposal (RFP) to short listed Consultants/firms.  Receipt of RFP in two envelope system, technical and financial proposals separately.  Formation of Evaluation Committee  Evaluation of Technical proposal and assign individual mark by each member on the basis of responsiveness to the TOR  Open the Financial proposals of the qualifying Consultants publicly in the presence of the Consultants/representatives  Final discussions including negotiations  Award of contract  Performance of contra ct

33. 33 Cost Estimate and Budget  Based on the assessment of resources needed to carry out the assignment, staff time, logistical support and physical inputs.  Costs divided into two broad categories (a) fee or remuneration and (b) reimbursable.  Ensure that the requested services are within the current financial budget. Advertising  Not necessary for short term consultancy services.  Advertisement seeking Expression of Interest for other services, is published in regional and national newspapers having wide circulation and uploaded in the web site of the Client.  Specify requisite qualifications, experience etc. in the notification.

34. 34 Short list of Consultants  Short list the Expression of Interest received based on the relevant qualifications and experience specified in the notification. Receipt of proposals  Issue letter of Invitations along with the TOR to the short listed consultants/firms.  Seek proposals from the short listed consultants / firms in two envelope system i.e, technical proposal in one envelope and financial proposal in another envelope. Evaluation Committee  Constitute evaluation committees separately for technical and financial evaluation  This committee will evaluate the proposals received from the consultants / firms

35. 35 Evaluation  Carried out in two stages, first the quality and then the cost  Until the technical evaluation is concluded the evaluators of technical proposals will not have access to the financial proposal Evaluation of Technical Proposal  Carried out on the basis of the responsiveness to the TOR.  The technical evaluation committee will prepare an evaluation report on the technical aspects of the proposal.  The report shall substantiate the results of the evaluation and describe the relative strength and weaknesses of the proposals.  Individual marks will be assigned by each member and a consolidated mark sheet is prepared.  Minimum qualifying marks should be provided in the Letter of Invitation and those who are not obtaining this will be disqualified

36. 36 Evaluation of Financial Proposal  On completion of technical evaluation, notify those consultants whose proposals did not meet the minimum qualifying marks that their financial proposals will be returned after completing the selection process.  Simultaneously notify the consultants who have secured the minimum qualifying marks and intimate the date and time set for opening the financial proposal.  Allow sufficient time for attending the opening of financial proposals  The financial committee shall open the financial proposal publically in the presence of representatives of the consultants / firms who choose to attend.  Read aloud the name of the consultant / firm, the quality scores and the proposed prices when the financial proposals are opened  Prepare the minutes of the public opening.

37. 37 Final discussions (negotiations)  Held with the selected consultant /firm on the following issues The selected consultant /firm shall not be allowed to substitute key staff unless both parties agree that undue delay in the selection process makes such substitution unavoidable or that such changes are critical to meet the objectives of the assignment. Financial discussions shall include in addition to fee / remuneration, clarification of the consultant’s / firm’s tax liability and how this tax liability shall be reflected in the contract. In case these discussions fail to result in an acceptable contract, terminate the process and invite the next ranked consultant / firm for discussion After the process is successfully completed, promptly notify other consultants /firms on the short list that they were unsuccessful

38. 38 Award of Contract  Award the contract to the selected consultant / firm  Use the prescribed contract agreement form for signing the contract  Indicate the fee/remuneration negotiated with the selected consultant/firm to be paid for the services in the contract agreement and also the terms of payment

39. 39  Preparation of Terms of Reference  Publication of advertisement  Formation of Evaluation Committee  Short-listing of NGOs on the basis of specifications and scope of the work specified in the TOR.  Desk appraisal and if found suitable, field appraisal by the Evaluation Committee  Recommendation by the Evaluation Committee for the selection of NGOs to the Grant-in-Aid Committee.  Approval by Grant-in-Aid Committee based on the report of the Evaluation Committee on the desk and field appraisal.

40. 40 Post Review  Government of India or the funding agencies shall undertake post review of the contracts awarded on procurement of goods, works and services on a random basis.  All procurement documents should be retained and made available to the review team. Mis-procurement  Goods, works and services that have not been procured as per the Manual shall be treated as mis-procurement and SSA funds cannot be used for such procurement.

41. 41 Complaint Handling Mechanism  Set up complaint handling mechanism at national as well as State level to deal with complaint received from contractors/suppliers.  Dealt with at a level higher than that of the level at which the procurement process is being undertaken  Undertake a thorough enquiry of the allegations made  If found correct, take appropriate remedial measures  Initiate disciplinary proceedings against the delinquent staff  Receipt of any illegal gratification by staff is considered as misconduct and result in disciplinary proceedings against such staff, in addition to imposing penalties under the law.

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