Course Title: Procurement & Contract Administration

Course Code: CTMG 426 Credit Hours: 3 (Lect. 3) Course Instructor: Tamrat Mulu (B.Sc, M.Tech.)

April, 2012

 

Course Outline: 1. Tendering:

Definition Purpose Types Preparation of tender Pre-qualification Invitations for bid (IFB) Instructions to bidders (ITB) Opening & Evaluations Post Qualification Statistical Approach in tendering to bidders

 

Contd. 2. Contracting

Definition Types Awarding of contract Contract Agreement Conditions of Contract Technical Specifications Bill of Quantities & Drawings

 

Contd. 3.Forms, Formats & Schedules

Tender form Bonds & Guaranties Bid Bond /Security Performance Bond /Construction Security Advance payment Guarantee Retention money Guarantee BDS form 

4. Insurance & Indemnification

5. Claim Administration

Types, causes, Contractual provisions, Time related claims Cost Related claims Quality related claims Stakeholder satisfaction related claims Arbitration, Litigation 

References 1. Building procurement systems by Franks

2. Building Procurement by Turner, Alan 3. Construction Contracting by Clough, Rickard H. 4. Contract Planning & Contractual Procedures by Cooke, B. 5. Construction Project Administration by Firk 6. Standard Bidding Document for the procurement of works

issued by PPA (Version 1), January 2006 7. Standard Conditions of Contract for Construction of Civil

work projects, issued by MoWUD, December 1994 8. Ethiopian Procurement Proclamation No. 624/2009 9. The Federal Procurement Directive, MOFED, 2010 10. Other relevant books

 

Procurement

What is Procurement? Means Obtaining:

Goods, Works, Consultancy or Other services

Through: Purchasing, Hiring or Obtaining by any other contractual means;

Goods

Mean raw materials, products, equipment etc

Works

Mean all work associated with the construction,

reconstruction, up grading, demolition, repair or renovation of

a building, road, or structure

Consultancy Service:

Mean a service of: an intellectual & advisory nature

provided by consultants

using their professional skills to study, design & organize specific projects, advice clients, conduct

training & transfer knowledge;  

Services

Any object of procurement other than works, goods & consultancy services:

Such as: Maintenance, Security, Janitorial, Electricity, Telecommunication & Water supply services;

 

The Project Life Cycle

The cycle of procurement includes: The process from

Planning up to commissioning/testing &

Taking over of the product/service or

Even further Depending on the procurement agreement.

Activities During Procurement & Contract Formulation

 

Procurement planning involves:

Collecting information required for planning the procurement;

Choosing the most appropriate method of procurement;

Identifying the activities involved & estimating the duration;

Identifying the resources required; etc…

Information Required to prepare the Procurement plan:

Current, project plan from which information like brief

description of the work, location, anticipated dates of

commencement & completion & estimated cost will be extracted;

Contd…

Current, Government proclamation & directives;

Current, financer’s procurement guidelines, [if the financer is

other than the government];

Data of previously conducted procurement activities. etc

 

Standards to be Observed in Public

Procurement Activities :

1. Honesty & fairness:

Avoid any practice which gives one party an improper

advantage over another

2. Accountability & Transparency:

Process for awarding contracts should be open, clear &

defensible.   

Contd…  3. No conflict of interest:

Notify beforehand, if exists

4.Rule of law: Parties should comply with all legal obligations

5.No Anti-competitive practices: Shall not engage in collusion, hidden commissions & other anti-

competitive behaviors

Contd….  6.Intention to proceed:

Should not submit tenders without a firm intention & capacity to proceed with

a contract 7.Cooperation:

Maintain relationships based on open & effective communication, respect & trust, &

adopt a non-adversarial approach to dispute resolution.

Contract Administration

 

Contract: Agreements

Which are enforceable by law & As such having been made By free consent of parties,

By persons competent to contract, For lawful consideration, &

Lawful object, & Which are not expressly declared to be void by any statute.

 

What is Contract Administration? Contract Management?

Understanding & implementing the various clauses of

the contract in timely manner from a contractual & legal

angle is called Contract Management.

Contd…

It is the Process that Ensures successful completion of project

under consideration with substantial compliance of the terms of

the contract.

Contd……

Contract Administration:

Involves those activities performed after a contract has been

awarded to determine how well the employer & the contractor

performed to meet the requirements of the contract.

 

Contd……

Contract Administration encompasses all dealings between the

two parties:

from the time the contract is awarded

until the work has been completed & accepted or the contract

terminated, payment has been made, & disputes resolved.

The following factors are essential for Good contract management:

Good project preparation (Good preparation of bid document);

The right contract form;

Communication;

If Contracts are Not well managed from

the employer side, any or all of the

following may happen:

The contractor is likely to neglect the quality, resulting in

substandard product [not durable & structurally unsafe]

Decisions are not taken at the right time [not taken at all];

Leads to delays in payment, approvals - leading to claims;

Time and cost overrun; etc

One of the chief reasons for project delays is poor Contract management, & any or all of the following may happen:

Parties fail to understand their obligations & responsibilities;

Misinterpretation & unease at the implementing level;

Progress is slow /inability to proceed forward;

Contd…..

The expected product specifications are not realized;

Ultimately, the contract becomes unworkable;

Some possible reasons for organizations’ failure to

Manage contracts properly include:

Poorly drafted contracts

Inadequate resources assigned to contract management

Project team lacking skills or experience (or both)

Contd…

Inexperienced people being put in place, also leading to ego

clashes;

Contents, Responsibilities & obligations of the contract are

not well appreciated;

Contd…

Inadequate Delegation of Authority, resulting in financial

decisions not being taken timely;

Failure to monitor & manage retained responsibilities due to

external interference & pressures from stakeholders.

Why Contract Administration?

To See that the Contract is properly administered in terms

of: Quality maintaining! Budget controlling! Time Scale keeping!

Ensure that the Contractor receives fair & proper payment

for the work executed etc

 

DIFFERENCE BETWEEN A TENDER

& A CONTRACT?

A Tender/Bid: Means a stage in the procurement process extending from advertisement (invitation to bid) up to signing of contract.

A Contract Is the term used for when the parties Have reached an agreement, which is enforceable by law.

The process of Finalization of Contracts is achieved Through the Tender process.

 What is Tendering?

Tendering is:

The Management & Commercial Function of

determining the Tender based upon the Estimate & other details prepared.

General Principles of Tendering:

Value for Money:

Optimal cost, without sacrificing performance standards, Open & fair competition:

Maximizing opportunity for firms to compete Accountability:

Allocating responsibility

Contd….. Risk Management:

Should be managed by the party best able to manage it Integrity & Transparency:

Ensuring fairness, impartiality, consistency & transparency Local Industry Participation:

Using local suppliers whenever & wherever they offer best value for money.

In General: A tenderer must not engage:

in any uncompetitive behaviour or

practice that denies legitimate business opportunities to other tenderers/ participants

in the tender process.

It is highly desirable when inviting competitive offers from a

number of bidders that the tender received should be based as

far as possible on equal terms & conditions & presented in a

standardized manner.

The requisites in the context of inviting, processing & acceptance of tenders in public Contracts are:

Non Arbitrariness;

Fair-play &

Safeguarding public interest;

Selection of Bidders:

Is a contract award procedure which involves the selection of contractors to be invited to tender or negotiate. The selection should be made on the basis of objective criteria;

The following Methods are used in Competitive Bidding:

Single Stage - Single Envelope

Single Stage - Two Envelope

Two Stage - Two Envelope

BID Qualification Procedure

Negotative Bid Competitive Bid

Open bid Short listed Bid

One Stage Procedure Two Stage Procedure

Pre-Qualification Post-Qualification

1. Negotiated Bid: It is sometimes referred to as:

“Direct selection” or

“Single source procurement”.

Here, the client: Invites, Negotiates & enters

A contract Agreement With only A single contractor

A contractor is selected without competition.

This method, obviously, does not provide the owner with comparative prices; The cost of a work will be higher in this method; The higher cost may however be offset by:

Better Quality,

Early completion, &

Smooth administration.

Procedure for Negotiated bid a) The Engineer/owner, invites a contractor to submit a bid. The invitation includes information regarding:

The proposed contract procedure, A brief description of the work,

The approximate dates of commencement &

Completion of the works As well as other essential information.

 

b) The Engineer/the contractor prepares the priced bill of quantities. In many cases it would be more practical that:

The contractor do the original pricing;

As he is in a better position to judge the correct price; Which may depend on construction equipments & methods of execution to be adopted by him.

 

c) The priced bills are then handed over to the other party for consideration.

d) The rates are examined by the other party. e) Rates in dispute are compared with current rates for similar works, obtained in competitive tendering after allowing for the special features of the situation; f) When the parties reach agreement, contract would be signed;

Since The use of Competitive Methods is:

A principal rule in public procurement,

Single source procurement, Should be used only Exceptionally, in

public procurements.

Single Source Procurement opted under:

Need of specialized service of the contractor; Working near the project site on other work & If this contractor is selected, mobilization costs would be saved, & congestion & coordination problems would be avoided; The goods/construction/services are available from a particular supplier/a particular supplier has exclusive rights & no reasonable alternative or substitute exists

Contd…. There is an urgent need & engaging in tendering proceedings or any other method of procurement would therefore be impractical, Provided that the circumstances giving rise to the urgency were neither foreseeable by the public body nor the result of negligent conduct on its part; Owing to a catastrophic event, there is an urgent need; The Work must be performed immediately to protect the health, safety, and welfare of the general public etc.

2. Competitive Bid:

Equi-potential & competent contractors are invited to provide their best offer to the bid. Contract is awarded to the best/most responsive bidder based on a bid evaluation process to be carried out consequently.

2.1 Short-Listed Bid: Also called:

“Restricted Tendering” or “Limited Tendering” or “Selective Tendering”

The Owner calls for bids: from a few contractors

who are known to have specialized in the special type of work

& from whom the employer has, in the past,

experienced excellent results. This procedure is usually adopted for private works,

This procedure is recommended for the public sector when the work requires specialized knowledge such as industrial construction.  Here; the client directly selects two or more contractors who are technically fit to the project based on their past performance record. The bid evaluation under such cases is made only on the submitted financial offer & the one with least price will be awarded the contract.

Generally Limited Tendering is opted when:

Tenderers, who are prequalified:

in particular work & required contract value range; With the prequalification being based on a proven record of relevant satisfactory:

Past performance, Capacity,

Project location & Other applicable circumstances.

 

Contd….

Emergency situations or for specialist work when only a limited number of contractors are known to be capable of carrying out the work;

{ Works of Highly complex or specialized nature} The time & the cost required to examine & evaluate a large number of tenders would be disproportionate to the value of the goods or services to be procured.

 

2.2 Open Bid

A Procedure under which, all interested eligible suppliers, may submit their tender documents; In This method bids are called by public advertisement; It is the most competitive tender procedure & all the rest procedures exhibit a decreasing level of competition;  This method is usually adopted for public works;

Summary of The Advantages & Disadvantages

1. Negotiated Tender

Advantages: Contractor may give advice to client during tender negotiation; Work can commence at an early stages before overall contract arrangements have been agreed; May be The only way to encourage a realistic bid from a specialist contractor

Disadvantages: Cost of the work may be higher than if completed on a competitive tender basis; Only really applicable to specialist contractors with good reputation; May conflict with requirements of legislation or of funding authorities.

Selective Tendering

Advantages: Only competent contractors invited to bid; Cost of tender adjudication reduced; Competing contractors may have freedom to allow adequate profit level & therefore flexibility & stability;

Disadvantages: Must avoid favoritism when drawing up list of bidders; Must continually review tender lists to allow new contractors to compete; Possible higher bid prices when compared with open tender; Possible price fixing among small band of contractors; May conflict with requirements of legislation or of funding authorities

Advantages of Open Bidding

It provides Equal & just opportunities to all contractors;

It protects from possible implications of favoritism;

It open the way to having the work done at a minimum cost;

Allows many & perhaps new contractors to bid;

Allows tender list to be without bias;

Ensures Good competition;

Prevents contractors from fixing prices between themselves;

Disadvantages: Long tender lists- Wasteful of client & contractor’s time & money; May discourage good contractors because of the remote chance of obtaining it; Tender adjudication open to scrutiny & questions; if the lowest bidder is not granted the contract; The possibility of having a lowest bid submitted by contractor who is unsuitable for carrying out the work & thereby resulting in waste of time and effort;

Single Stage

In the single staged bid, contractors will be required to submit only a single document upon which bid evaluation may be conducted. The least & most responsive bidder will be selected for the contract award.

 

Two Stage Bidding

A two-stage procedure requires submittal of two separate documents that comprise :

Technical & Financial proposals.

The evaluation process to take place in the two staged process will be either the pre-qualification or post-qualification.

 

Qualification: At the preparatory stage of procurement:

The Employer need to define

Not only their needs in terms of Technical specifications,

but also the minimum qualifications That suppliers must have

in order to be eligible for government contracts.

The Qualifications required includes:

Professional & Technical qualification Competence,

financial resources, equipment & other physical facilities,

managerial capability, experience in the procurement object,

reputation, & the personnel, to perform the contract;

Contd….

Having the legal capacity to enter into the contract; Not insolvent, in receivership, bankrupt or being wound up,

their business activities, have not been suspended, Being registered in the suppliers list;

 

Contd…..

The period for which they were suspended from participating in public procurement is over; if any

Have renewed trade license & fulfilled their

obligations to pay taxes according to tax laws;  

In Short to Qualify for Public Procurement bidders must demonstrate:  1. Formal qualification registration; Legal capacity to enter into a contract, normally through a trade

license; They have fulfilled their obligations to pay taxes normally through

a tax clearance certificate

 

2. Substantive qualifications

  Professional & Technical competence & experience,

Financial resources,

Equipment & other physical facilities,

Managerial capability & personnel.

 

The substantive qualifications of bidders shall be evaluated in accordance with the criteria & procedures set forth in the bidding documents; Tenders from bidders who fail to demonstrate the required formal & substantive qualifications must be rejected;

 

A candidate

who submits a document containing false information for purposes of qualification

shall be disqualified, if found, at any time that; the information submitted;

was materially inaccurate or materially incomplete;  

Prequalification

In prequalification proceedings:

The Employer, will invite interested bidders

To demonstrate their qualifications.

The invitation to prequalify shall contain, as a

minimum:

A summary of the contract for which prequalification is deemed necessary;

Instructions for preparing & submitting

prequalification applications;

Contd….. Any documentary evidence/information which must

be submitted by applicants;

The qualification criteria;  

In Pre-Qualification Process:

Assessment & evaluation of the Technical proposal of contractors is made prior to opening the financial offer;

Financial proposal would be opened if only the contractor attains the minimum cut-off mark fixed by the evaluators;

The subsequent financial evaluation will take place among those qualified technically.

 

A decision shall be made:

with respect to the qualifications of each applicant, using the conditions & criteria

stated in the invitation to prequalify; Pre-qualifying encourages competent bidders to come forward as they will not be competing with unqualified bidders.

 

Pre-qualification of bidders for major works is normally adopted to eliminate the possibility of:

having to reject lowest tenders &

also to bar bidders who do not satisfy the stipulated criteria;

 

Post-qualification

Technical Evaluation of contractors’ will be performed after opening of the financial offer; The technical proposal of the least bidder is first evaluated & if it is found satisfactory, the contract will be awarded without assessing the technical proposal of others;

 

If however, the least bidder is not found responsive then the second least bidder will be evaluated for its technical fitness to work & so on;

 Factors not included in the qualification criteria shall not be later used in the evaluation of the Bidder’s qualifications;

 

The Employer, while processing the tenders & awarding the contract, must act in:

A rational,

Relevant;

& Non-discriminatory manner.

Tender Document  

Tender Document for works Comprises of Two major components: i.e.

Bidding Information &

Contractual Information

Bidding Information Comprises:

Invitation to bid (IFB) Instruction to bidders (ITB) Bid Data Sheet (BDS) Bid form including BOQ Addenda (Bid Amendment)

Forms

Bidding Information

It’s part of a tender document, where bidders are required to respond:

{provide their offer, data, information,} in accordance with, the requirement of the documents within the bidding period. 

 

Contractual Information 

Documents included in the tender document to furnish bidders with full & detailed information of the project for application after winning the contract;

The bidder should utilize such information to provide a fair & reasonable offer to the bidding document.

Contractual Information Comprises:

Agreement form Standard (General) Conditions of contract (GCC) Particular or special conditions of contract (SCC) Technical specifications & Methods of measurement;

Drawings Appendix to construction Agreement

 

INVITATION FOR BID

Also Called: Call for Tender Tender Notice or

Notice Inviting Tender Is designed to provide information that enables potential bidder to decide whether to participate in a bidding process or not; May be published in Newspapers & other media like, TV, Radio, Internet etc.

…… Forms

Format of an ideal Tender Notice

Name of the Project; Name & Address of the

Company floating the tender.;

Name of work, materials or

services;  

 

Period of completion; Earnest Money; Opening & closing date. The cost of tender documents. Eligibility Criterion Place of work location;

Instruction to Bidders (ITB):

Provide instructions to bidders on the preparation & submission of their bids; Informs procedures that regulate the bidding process; ITB Contain information relating to the procedure for bidding & evaluation up to the point of contract award; .....Forms

 

Covers mainly: Instructions with respect to

filling up the bid form; Bid due date; Location to deliver the bid; Examination & Evaluation

of bids;   

Method of Awarding the Contract;

Bid bond/security

information; Conditions for

disqualification/non responsiveness;

  

Bid Data Sheet (BDS)

BDS supplements the ITB by specifying details relevant to an individual bidding document such as its closing date or the value of bid security required etc; The BDS should be prepared by the Employer prior to the issue of the Bidding Document.

  

Bid Form:

Is the document up on which the bidder submits its offer such as financial, technical & other requirements of the bid. The Bid Forms Include:

Bid Submission Form. Bid Security.

Priced Schedules; { BoQ or Schedule of Activities}

Qualification Form.

Addenda: After the documents are issued but before the bids are due, changes may be made; The reasons may be to correct mistakes (on designs, or specifications or both) in the bidding documents; After the occurrences of such gaps, the employer may issue an addendum in writing to all bidders.

Agreement Form:

It serves the purpose of presenting:

a condensation of the contract elements, stating the work to be done &

the price to be paid & providing suitable places for signature

& seal of the parties.

Agreement Form Includes:

Identification & full address of the signing parties; Short description of the project & the work; Date of commencement & signature; Completion time of the project; The contract price; Enumeration of the contract documents constituting the entire

agreement;

 

Standard/General Conditions of Contract:

The objective of the GCC is to establish:

The legal responsibilities, Authority

& rights of all parties involved in the project.

Particular or Special Conditions of Contract:

Having similar performance with that of the GCC, however more specific & relevant to a particular project;

It is a supplementary & modified section of the GCC

Special conditions include additional owner requirements.

Technical Specification

Means document describing: The quality, Type

& Standard

with which the required object of procurement should comply; It includes the materials, equipments, & workmanship to be deployed in the project;

It shall clearly describe the requirements with respect to: quality,

performance, safety &

where necessary: dimensions,

symbols, terminology,

packaging, marking & labeling or the processes & methods of production

& requirements relating to conformity assessment procedures.

Such specifications should include features relating to:

technical capabilities, operating characteristics

& performance standards.

Service aspects include delivery times & after sales service.  

A technical specification shall be prepared in accordance with the need of end users; It has to allows wider competition on the basis of:

performance, function,

technical or design characteristics

depending on the type of the procurement;

Care must be taken in drafting specifications to ensure that they are not restrictive, In stead should state equal or higher quality than the standards mentioned, will also be accepted.  

There shall be no requirement or reference in the technical specifications to a particular trademark or name, patent, design or type, specific original producer or service provider; Unless there is no sufficiently precise or understandable way of describing the procurement requirements & provided that words such as “or equivalent” are included in the specifications

The limited exceptions to this includes: Where the procurement is for spare parts for a particular item of plant or equipment,

or Where there is known to be only one manufacturer/provider of the goods/services, in question, the name of the manufacturer or service provider & the term “or Similar” may be incorporated in the specification.

 

Specifications should be universal & should comply with relevant standards. When preparing technical specification, standards set by Ethiopian Quality & Standard Authority or by other similar institutes may be used depending on the type of procurement & as appropriate.

Drawings Construction drawings are prepared so that designers can communicate their requirements to the contractor in a clear, concise & unambiguous manner. It is important to ensure that drawings are not unnecessarily congested or complicated; The clarity of drawings is very important; Written descriptions on drawings should be as brief as possible, consistent with completeness & the lettering should be clear;

The construction drawings, even if not fully developed, must show:

sufficient details to enable bidders to understand

the type & complexity of the work involved &

to price the Bill of Quantities;

Describe the size & dimensional requirements of the project; 

Appendix to construction Agreement: Comprises information of the project such as:

Amount, liquidated damage,

interest rate, completion time,

amounts of performance bond/insurances, defects liability period, retention percentage,

rate of minimum interim payments, advance payments etc.

 Guidelines for consideration in preparing

Construction bids, From Contractors’ point of view 

  Careful study of the bid documents: Sub-contractor's work; Site visit; Time for completion; Temporary works;

  

Careful study of the bid documents

The bid documents issued to the contractor include GCC/SCC, drawings, specifications, BoQ etc. These documents are to be studied carefully to check:

if any unusual conditions, specifications, or

any feature of the work would demand special attention during pricing.

 

Sub-contractor's work:

Make relative inquiries about prices with

sub-contractors & material suppliers for

their respective portions of the job.

Site visit: This is important to find out the conditions under which the

work has to be carried out & their impact on pricing;

Difficulty to access the site

Limited space on the site for vehicle movements

Type of soil & depth of water table

Availability of space for storing materials on site

 

Contd…. Availability of materials, their sources & prevailing market

prices Local availability of skilled & unskilled labor, prevailing

wages for workmen Source & cost of water needed for construction Power & lighting source, & the cost of erecting, &

dismantling power connection to the site etc….

 

Temporary works: The value of any temporary works needed to commence the

construction & to clear away on completion, Such as:

Temporary office required for construction management purpose,

Store sheds for building materials, Access road,

Water supply, Depreciation of construction equipments, insurances, taxes,

etc.

 

Time for completion:

The bidder then estimates: the length of time the work will take

& the number & category of

permanent staff suggested by the nature of the work for construction management.

This helps to calculate the establishment charges.

Statistical Approach in Tendering to bidders

In an open competition A contractor needs to devise its own

strategy of winning a tender among its competitors.

Some contractors after establishing their tender sum, determine

& fix a reasonable discount (rebate) as a percentage of their

tender sum as a strategy for winning purposes.

Contd….

This strategy often depends up on many factors which the

management body of the contractor has to make a thorough

analysis of the situations at hand & take up appropriate winning

position.

 

Among the factors that need consideration include:

Type & location of the project Projected risks & uncertainties of the project The goal of the financial manager (Profit maximization) Work at hand in reference to contractor’s assets deployed

Form of the bid: {open, shortlisted, Direct etc)

The steps to be followed in gambling a tender include:

Preparation of a database of price quotations offered by competing bidders. This could be collected from successive tender opening sessions. At least the winning price & the tender sum of the contractor under consideration need to be recorded & put in a database file for further undertakings.

 

Contd….. After having sufficient records of the respective bid prices, one could plot the information on a scattered diagram by making X-axis contractor’s own tender price & Y-axis The least bidder & most responsive bidder’s price.

Draw the most likely curve referred as a regression line.  

The simplest to draw is a linear regression line that can be represented by:

Y = mX + b Where: “Y” refers to the most likely winning price; “X” refers to contractor’s tender prices “m” refers to the slope of the line “b” refers to the intercept of the line

m & b can be determined using the following formulae:

 

Standard deviation for X & Y values, Sx & Sy can be calculated using the following statistical formulae :

The Standard deviation, “S” is the square root of

variance, “V” &

The Variance, “V” can be calculated using the following formula

                       

The Values “m” , “b” {Sx and Sy } can also be determined using MS-Excel as

m= INDEX(LINEST(Y values, X Values),1)

b= INDEX(LINEST(Y values, X values),2)

Sy= STDEVA(Y values) Sx= STDEVA(X values)

   

The final step is to decide the probability of Winning using the normal distribution (Z-Curve). The chance of winning by offering the most likely price (μ) is 50%; A contractor can increase/decrease the probability of winning using the Z-Normal Distribution Theory of Statistics.   Where, Yi is the price of interest, μ= Mean (most likely) price & S= Standard deviation

Normal distribution

The normal distribution is pattern for the distribution of a set of data which follows a bell shaped curve known as a normal curve, or normal distribution. The curve is concentrated in the center (mean) of the data & decreases on either side. Indicating that the data has less of a tendency to produce unusually extreme values.

The bell shaped curve is symmetric. This indicates that the probability of deviations from the mean is comparable in either direction. Fifty percent of the distribution lies to the left of the mean & fifty percent lies to the right of the mean The spread of a normal distribution is controlled by the standard deviation, S. The smaller the “S” the more concentrated the data is.

 

Example of a bell shaped curve. 1) With a mean of 50 and a standard deviation of 10.

 

2) With a mean of 50 and a standard deviation of 2.  

The normal distribution with a mean of 0 and a standard deviation of 1 is very important. It is named as “the standard normal distribution”.

Approximately: 68% of the distribution lies within one standard deviation of the mean. 95% of the distribution lies within two standard deviations 99.7% of the distribution lies within three standard deviations

You can Refer the following web page for further exercise on how to plot a specific Normal distribution curve for a given set of data

http://www.tushar-mehta.com/excel/charts/normal_distribution/

New folder\Procurement2012\Table of Standard Normal Distribution Curve.doc 

 Worked Example 1 Assume the following table shows records of bid prices at ten different tenders of a certain contractor(X) along with the winning prices (Y) of each bidding sessions. If the contractor’s current bid is Birr 100 by how much percentage should he make a discount so as to have a 95% winning probability? New folder\Procurement2012\Statistical approach exmp.xls

   

Tender Session X Y X*Y X2 (X‐Xavg)2 (Y‐Yavg)2

1 10.00 7.00 70.00 100.00 118.81 73.96

2 15.00 10.00 150.00 225.00 34.81 31.36

3 20.00 15.00 300.00 400.00 0.81 0.36

4 25.00 20.00 500.00 625.00 16.81 19.36

5 20.00 16.00 320.00 400.00 0.81 0.16

6 25.00 21.00 525.00 625.00 16.81 29.16

7 30.00 22.00 660.00 900.00 82.81 40.96

8 22.00 15.00 330.00 484.00 1.21 0.36

9 25.00 20.00 500.00 625.00 16.81 19.36

10 17.00 10.00 170.00 289.00 15.21 31.36

Sum 209.00 156.00 3,525.00 4,673.00 304.90 246.40

Average 20.90 15.60        

X Average 20.90 Y Average 15.60

   

Step 1. To Calculate ''m'' Value

1 n Equals to 10

2 Sum (X*Y) Equals to 3,525.00

3 Sum X * Sum Y Equals to 32,604.00

4 Sum (X)2 Equals to 4,673.00

5 (Sum X)2 Equals to 43,681.00

6 Formula for ''m'' Equals to n* Sum(X*Y)-(Sum X * Sum Y)

n* Sum(X2)-(Sum X)2

7 Meaning ''m'' Equals to 35,250.00 _ 32,604.00

46,730.00 _ 43,681.00

8 Therefore ''m'' Equals to 2,646.00

3,049.00

9 'm'' Equals to 0.87

   

Step 2. To Calculate ''b'' Value

1 n Equals to 10

2 Sum (X) Equals to 209.00

3 Sum (Y) Equals to 156.00

4 Sum (X)2 Equals to 4,673.00

5 (Sum X)2 Equals to 43,681.00

6 Sum (X*Y) Equals to 3,525.00

7 Formula for ''b'' Equals to [Sum(Y)*(Sum X2 )] __[(Sum x)* (Sum (X*Y)]

n* Sum(X2)-(Sum X)2

8 Meaning ''b'' Equals to 728,988.00 _ 736,725.00

46,730.00 _ 43,681.00

9 Therefore ''b'' Equals to -7,737.00

3,049.00

10 'b'' Equals to -2.54

    Step 3. To Calculate ''Sx & Sy'' Values

1 n Equals to 10

2 n-1 Equals to 9.00

3 1/(n-1) Equals to 0.11

4 Sum (X-Xavg)2 Equals to 304.90

5 Sum (Y-Yavg)2 Equals to 246.40

6 Formula for ''Sx'' Equals to SQRT of {(1/n-1)* [(Sum (X-Xavg)2]}

Sx Equals 5.82

7 Formula for Sy Equals to SQRT of {(1/n-1)* [(Sum (Y-Yavg)2]}

Sy Equals 5.23

   

Step 4. To Calculate, Variance ''V'' & Standard deviation ''S' Values  

1 n-1 Equals to 9

2 n-2 Equals to 8.00

3 (n-1)/(n-2) Equals to 1.13

4 (Sy)2 Equals to 27.38

5 (Sx)2 Equals to 33.88

6 (m)2 Equals to 0.75

7 Formula for

''V'' Equals to n-1 *

{(Sy)2-[m2* (Sx)2]}

n-2

8 Variance ''V'' Equals to 2.10

9 Standard Deviation S Equals to SQRT of V

10 'S'' Equals to 1.45

   

Step 5. To Calculate Y The Most likely (mean) Value with 50% Winning Probability

1 m Equals to 0.87

2 X Equals to 100.00

3 b Equals to -2.54

4 Y=mx + b Equals to 84.24

5 Y=μ This is only a 50% probability of

Winning

   

Step 6. To Calculate Yi The interested % age probability of Winning

 

1 Interested % age

of Probability Equals to 95.00  

2 Z Equals to -1.65  

3 μ Equals to 84.24  

4 S Equals to 1.45  

5 Formula of Z Equals to Yi Minus μ  

S  

6 Yi Equals to μ+(Z*S)

7 Yi Equals to 81.86

   

Step 7. To Calculate the discount % age required to

achieve the required Yi value

1 Yi Equals to 81.86

2 X Equals to 100.00

3 Yi/X Equals to 0.8186

4

Discount (Rebate) Equals to 1-(Yi/X)

5

Discount (Rebate) Equals to 0.1814

6

Discount (Rebate) Equals to 18.14%

 This Means:

The cited contractor has to make a discount

of 18% from its original offer of Br.100

and submit its offer at Br. 81.86 so as to

achieve a 95% probability of winning in its

current bid.

  Table of Standard Normal Distribution Curve.doc 

 Worked Example 2 Assume the following table shows records of bid prices at ten different tenders of a certain contractor(X) along with the winning prices (Y) of each bidding sessions. If the contractor’s current bid is Birr 1,600,000 by how much percentage should he make a discount so as to have a 95% winning probability?

Statistical approach exmp.xls

Session  X  Y 1  150,000.00  125,000.00 2  131,500.00  129,781.00 3  145,600.00  145,600.00 4  138,000.00  136,900.00 5  144,500.00  142,200.00 6  129,967.00  129,050.00 7  140,000.00  135,000.00 8  125,500.00  123,712.00 9  143,000.00  141,500.00 10  150,000.00  148,896.00 

Sum  1,398,067.00  1,357,639.00 Average  139,806.70  135,763.90 

X*Y  X2  (X-Xavg)2  (Y-Yavg)2 

18,750,000,000.00  22,500,000,000.00  103,903,364.89  115,861,543.21 

17,066,201,500.00  17,292,250,000.00  69,001,264.89  35,795,092.41 

21,199,360,000.00  21,199,360,000.00  33,562,324.89  96,748,863.21 

18,892,200,000.00  19,044,000,000.00  3,264,164.89  1,290,723.21 

20,547,900,000.00  20,880,250,000.00  22,027,064.89  41,423,383.21 

16,772,241,350.00  16,891,421,089.00  96,819,696.09  45,076,453.21 

18,900,000,000.00  19,600,000,000.00  37,364.89  583,543.21 

15,525,856,000.00  15,750,250,000.00  204,681,664.89  145,248,293.61 

20,234,500,000.00  20,449,000,000.00  10,197,164.89  32,902,843.21 

22,334,400,000.00  22,500,000,000.00  103,903,364.89  172,452,050.41 

190,222,658,850.00  196,106,531,089.00  647,397,440.10  687,382,788.90 

To calculate "m" Value 

   

n*Sum(X*Y)  1,902,226,588,500.00 

SumX * SumY  1,898,070,283,813.00 

n*Sum(X)2  1,961,065,310,890.00 

(SumX)2  1,954,591,336,489.00 

m  0.64 

To Calculate "b" Values 

SumY*Sum(x2)  266,241,874,761,139,000.00 

SumX*Sum(x*Y)  265,944,021,990,443,000.00 

n*Sum(x2)  1,961,065,310,890.00 

(SumX)2  1,954,591,336,489.00 

b  46,007.72 

 

To calculate Sx , Sy & S Values Using The Formula   

Sx Square root of

((1/9)*647,397,440.10))  8,481.34 

Sy Square root of

((1/9)*687,382,788.9))  8,739.33 

n    10.00 

(Sy)2  8739.33*8739.33  76,375,865.43 

(Sx)2  8481.34*8481.34  71,933,048.90 

m2  .64*.64  0.41 

Variance  (9/8)*[(Sy)2 -m2*(Sx)2]  52,568,398.20 Standard Dev,

S  SQUARE ROOT of Variance  7,250.41 

 Also Using MS-Excel The result reveals the same 

     

m INDEX(LINEST(Y values, X Values),1)  0.64 

b INDEX(LINEST(Y values, X values),2)  46,007.72 

Sy  STDEVA(Y values)  8,739.33 

Sx  STDEVA(X values)  8,481.34 

Let the current tender price for the Bidder is 1,600,000

Therefore: Y=mX + b

Hence, in this case X is = 1,600,000

m= 0.64 b= 46,007.72 S=7,250.41

 

Y=0.64*1,600,000+46,007.72= 1,073,210.96 i.e Y= 1,073,210.96 (This is the Mean/Most likely value, μ) with 50% chance of winning)

Assume 95% of winning probability is targeted: From the Normal distribution curve the value of Z for 95% probability is equal to -1.65 The relationship between Z and probability in this case is negative, as a probability for winning the tender increases with the reduction in bid offer

Therefore from the formula                           

{-1.65}={(Yi- 1,073,210.96)}/{(7,250.41)} {(7,250.41)*(-1.65)}= {Yi-1,073,210.96} Yi =1,061,247.79

 

Therefore, in order to have a 95% probability of winning the tender, the contractor has to reduce his bid price from ETB 1,600,000 to ETB 1,061,247.79 that means he has to provide approximately 34% rebate from his initial offer Ex3: New folder\Procurement2012\Statistical approach exmp.xls

Procurement: Ethiopian Context

The Ethiopian Federal Government has enacted Proclamation No. 624/2009:

“The Ethiopian Federal Government Procurement &

Property Administration Proclamation”

Had been into force as of the 9th of September, 2009. Subdivided in to 80 Articles,

MoFED:

Has also issued its Federal Procurement Directive on

May 20, 2010 which is made effective as of the 8th day

of June 2010.

Aims of proclamation No. 624/2009:

The Aims of The Proclamation are:

Achieving better transparency, efficiency, fairness &

impartiality in public procurement;

To enable the utilization of the large sum of public money

spent on procurement in a manner that ensures greater

economy & efficiency by addressing problems encountered in

the course of implementation.

Principles to be complied with public procurement:

Achieve maximum value for money in procurement Ensure economy, efficiency & effectiveness.

Non-discrimination among candidates

On grounds not having to do with qualification, Except preference specifically provided for;

Transparency & fairness of the criteria

On the basis of which decisions are given;  

Contd…..  Accountability

For decisions made & measures taken

Encourage local producers, companies & MSE

Through the application of preferential treatment.

 

Where in the evaluation of bids for a procurement object:

Equal percentage points are resulted;

for bidders offering similar price & quality;

preference shall be given

To local goods, services or companies.

Rules of Ethics in Ethiopian Public Procurement

1. Personnel engaged in public procurement:

Obligations to notify actual/ possible conflict of interest & isolate oneself from such acts of involvement; Give candidates equal opportunity of competition & performance; Keep in secret any confidential information concerning the public body,

 

Contd…. Reject any offer of an employment opportunity /monetary value; Report to the law enforcement agencies any intended/ completed action of corruption; Demonstrate concern to public resource;

 

II. Any supplier shall refrain from: Giving/promising/ directly/indirectly gifts of any kind, or anything of monetary value; Presenting a falsified document/withholding information that should have been disclosed; Conspiring with another candidate in an act of false competition; And Should report to the law enforcement any intended/completed action of corruption;

Article 77 of the proclamation: Offences & Punishment 1. A person employed by a public body who:

Receives any payment for the performance of his official duty, except as provided by law; Defrauds a public body, conspires with any person to defraud/provides an opportunity for any person to defraud; Contravenes/ intentionally permits any contravention; Willfully signs any false entry/ makes false certificates

Will be liable on conviction to:

A fine ≥ Birr 25,000 & ≤ 35,000

& Imprisonment for a term of:

≥ 10 years & ≤ 15 years.

II-A procurement officer, who:  

Discloses to any person, any matter in respect of another person; Permits any other person to have access to records in the possession/custody of the public body, Is liable on conviction to:

a fine of ≥ Birr 10,000 &

to imprisonment for a term of ≥ 2 years & ≤ 5 years.

III-Every person employed by a public body who: Directly/indirectly asks for/receives, a payment or gift; Enters into an agreement to do/abstain from doing, permit, conceal, or connive at any act /thing whereby the procurement is/ may be defrauded; Liable on conviction to:

a fine of ≥ 50,000 Birr & to imprisonment for a term of ≥ (10) years & ≤ (20) years.

IV-Every person who, promises, offers or gives any bribe to any person employed in any public procurement with intent

To influence: The decision of that person on any matter that is pending/may be brought before him in his official capacity;

Or To commit/aid in committing any fraud /to connive at, collide in;

Liable on conviction to: a fine of ≥ Birr 50,000 & imprisonment for a term

≥ ten(10) years & ≤ (20) years,

V. Any candidate who: With the intention of deriving unlawful advantage, presents falsified documentary evidence/conceals any evidence which he should have disclosed/ connives at an act of fake competition Upon conviction be punishable with:

fine ≥ 20,000 Birr &

with rigorous imprisonment of ≥ 5 years & ≤ 10 years.

 

Preparation of procurement plan  

Once procurement needs have been identified & specified, it has to be procured in time; To achieve this:

A procurement plan should be prepared; Supported by action plan,

The Annual procurement plan may be submitted as underneath

No 

Item

to

be p

rocu

red 

Source of Budget 

Procurement category 

Estimated Budget 

Sel

ecte

d pr

ocur

emen

t met

hod 

Procurement Type 

Estimated time to procure 

Remark 

Tre

asur

y 

Inte

rnal

rev

enue 

Loa

n 

Aid 

Rec

urre

nt 

capi

tal 

Tender Announcement 

receiving 

 1 

G/S/Works 

currency 

Ope

n se

lect

ed

bid

etc 

NCB/ICB 

The procurement plan shall enable the attainment of the following objectives:-

Ensure compliance with principles of public procurement Achieve the work program of the Public Body. Ensure economy & efficiency by discouraging piecemeal purchase. Exercise carefulness & make the necessary preparation to prevent problems that might be encountered in the execution of procurement.

Determining the annual procurement needs, has to adhere to the following procedures:-

Require end users to submit their annual procurement needs, Indentify the need submitted by type of procurement, quantity, quality & source. Identify object of procurement to which priority & special attention is to be given. find out that there are adequate suppliers for the needs

 

Contd… Determine the cost estimate for each type of procurement; Ensure that technical specification is prepared or will be prepared by end users. Public bodies have to organize their procurement needs in packages based on procurement needs data collected from end users.   

 

  Records of Procurement

Records & documents regarding public procurement, shall be maintained from the date of concluding any procurement proceedings;

Such information shall include

A brief description of the Object of Procurement

The invitation to bid;

The names & addresses of participating suppliers;

The evaluation criteria stipulated & applied

Information on the proceeding of any decision rendered where a

complaint against a procurement process is lodged;

Grounds for using a procurement procedure other than open

bidding.

 

Bidding Documents

The bidding documents shall contain sufficient information:

to enable competition among the bidders

to take place on the basis of

complete, neutral & objective terms.

Preparation of Bids:

The bidder shall fill in rates & prices for all items of the works

described in the BoQ.

Items for which no rate or price is entered by the bidder will not

be paid for by the employer when executed.

 

If so specified in the BDS, the bidder shall provide a breakdown

of rates & prices, showing equipment, materials & labors, for all

items whose cost is greater than the percentage of the bid prices

specified in BDS.

Approved Methods of Procurement

Open tendering;

Restricted tendering;

Request for quotations;

Single source/Direct procurement.

Request for proposals;

Two-stage tendering;

 

It is Government’s policy that public bodies shall undertake

procurement of all items by open tendering unless there is a

specific & good reason to use another method of procurement.

A Public Body using a method of procurement other than open

bidding, shall record a statement of the grounds & circumstances

on which it relied to justify the use of that method.

Procurement By Restricted Bidding;

Conditions for use:

a) The object is available only with limited suppliers; (proved)

b) The cost does not exceed the threshold (below);

c) Repeated advertisement fails to attract bidders

Threshold for procurement by Restricted bidding;

Works Birr……………….......................... 2,000,000.00

Goods Birr ... …………………….. 500,000.00

Consultancy Service Birr……….… 300,000.00

Services Birr……….……………... 400,000.00

Invitation to open bid must have been published at least twice,

& must have attracted no bidder,

or

The bidders responding to the second invitation must have failed

to meet the technical requirements set forth;

Ensure that, no factor associated with the:

Invitation to bid,

Mode or Amount of bid security,

bidding document or

Any other element of the procurement process,

Restrains candidates

from participating in the bid.

Must have been believed that:

inviting suppliers engaged in the field

by restricted bidding

attracts such suppliers

to participate in the procurement.

The Public Body, must have established through inquiry, that

The suppliers engaged in the field

have no hidden reason

for not wanting to participate in open bid,

which is illegitimate or harmful

to the interest of the Public Body.

If the required object is available only with limited suppliers,

the IFB shall be sent directly to their respective addresses

At least five candidates shall be selected in a fairly manner

from the suppliers list

The identity of candidates shall not be disclosed;

If all the invited candidates have submitted their bid documents

before the date set for expiration of the floating period:

A new date for bid opening shall be fixed

& communicated to all candidates

to be present on that date

Without having to wait until the initial closing date.

The employer in its discretion May ignore

collecting charges for bidding documents

&

Send to such candidates

The bidding document together with The IFB.

if requesting the candidates to furnish bid security is believed to

be discouraging ( because of their limited Nos. ):

They may be required to sign bid declaration form & submit

with their bid documents, in lieu of bid security.

Forms\3.3 Bid deceleration form.doc

Single source procurement/Direct Procurement Applied under:

Absence of competitions for technical reasons;

Can be provided only by one candidate;

Additional deliveries of goods by the original supplier;

The need is one of pressing emergency;

Contd….

For purchase made under exceptionally advantageous

conditions which only arise in the very short term.

For continuation of consultant services, where the original

contract has been satisfactorily performed & the continuation

is likely to lead to gains in economy & efficiency;

(Within threshold)

Public bodies may procure from the same supplier:

Additional requirements of the same kind

As those they have procured from that supplier

Under a previous contract

in accordance with the following stipulations:

Volume (additional requirements) may not exceed 25% of

the volume under the initial contract;

Job order must be issued before the expiration of the initial

contract or within 6 months after the expiration;

No adjustment shall be allowed to the unit price of items

included in the additional procurement. 

Contd….

If the additional requirements include inputs for which the

initial contract allows price adjustment:

Adjustment may be made in respect of such inputs

Public bodies, subject to the following conditions,

may enter into a new contract or vary the initial

contract, for the execution of works which have

not been foreseen or not included in the initial

contract.

The separation of the additional works from the initial

contract would be difficult for technical or economic reasons.

(Should have been included in the initial contract)

Value of the additional work shall not exceed 30% of the total

value of the initial contract

Contd… 

If the unit price of the additional works can be

determined by reference to the initial contract,

that unit price shall apply to the additional

works.

 

Contd… 

If the unit price cannot be determined by reference

to the initial contract, the price to be agreed

through negotiation, shall conform to the

prevailing market price.

 

Direct procurement should not be used with the intention of:

a) Avoiding possible competition

or

a) In a manner which would constitute a means of

discrimination among candidates.

When the public body engages in direct procurement:

Shall prepare a description of its needs & any requirements

{quality, quantity, terms & time of delivery}

Shall be free to negotiate on price & conditions of offer

Any agreement reached shall be confirmed by a contract.

 

Your Mid Exam Would be

Conducted on 1st July, 2011

(Friday)

Public bodies may carry out directly from any supplier,

procurement, ≤ 1500 Birr

The total value of such small procurements, within a fiscal

year, shall not exceed birr 30,000.00

Diplomatic missions USD ≤ $300 /per direct purchase &

≤ USD $6000.00 within a fiscal year

Procurement by Request for Quotation

Public bodies have to be

Inclusive in planning

Their procurement requirements &

Apply open bidding to meet

Anticipated needs to the extent possible.

They may, however, engage in procurement by

means of request for quotations for the purchase

of:

Readily available goods/ works or services

for which there is an established market,

& within the financial threshold below.

Financial Threshold  

For works, …………………………….. birr 250,000.00

For goods, ……………………………. birr 100,000.00

For consultancy, ……………………..…..birr 60,000.00

For services, …………………………..… birr 75,000.00

Public bodies may not split procurements

merely to take advantage of provisions

governing procurements by request for

quotation.

In procurement made by request for quotation:

The Proforma, a supplier presents &

The letter of purchase order sent by the Public Body,

Constitute a contract between them.

Hence, it is not necessary for them to sign a contract.

 

Diplomatic missions of the Ethiopian Government may,

procure requirements the value of which does not exceed

USD $ 10,000 per purchase order, by collecting

Proforma invoices in the country to which they are

assigned.

Procedure for Request of Quotations  

Quotations shall be requested from at least three suppliers,

It has to be ensured that equal opportunity of participation is

given to all candidates engaged in the business.

The same suppliers shall not be repeatedly invited, while there

are other options;

 

Contd…

Request shall contain a clear statement of the requirements;

Adequate time shall be given to candidates;

No negotiation shall be allowed on the price

Each candidate shall be allowed to quote a firm price

A purchase order shall be placed with the candidate who

meets the requirements.

The Employer has to establish:

A system to prevent possible acts of collusion

&

Carry out price verification regularly.

Procurement by means of two stage Bidding May be engaged when:

It is not feasible to formulate detailed specifications for the

object of procurement;

Sought to enter into a contract for the purpose of research,

experiment, study or development;

Contd..

Where all bids are rejected/not submitted at all/ due to

failure to draw up a clear & complete specification;

Because of its technical character, when it is required to

negotiate with suppliers

Procedure for Two-Stage Bidding

It shall be stated in the IFB that the procurement

shall be carried out by means of two stage bidding,

Candidates shall not be required to furnish bid security

during the first of the two stages bidding,

The purpose of the first stage is to draw up detailed schedule

of requirements based on proposals from candidates,

Hence, the bidding document, prepared by the Public Body

for the first stage, shall state the requirements in general terms

& incorporate the necessary description & questionnaires.

The 1st stage evaluation shall focus on examining the

proposals submitted by candidates to identify the schedule of

requirements necessary & the bidders qualifying for the 2nd

stage bidding.

The bidding document to be proposed for the 2nd stage,

shall, comply with the procedure of competitive bidding.

 

The employer shall draw up a specification which is more

appropriate to its requirements on the basis of the evaluation

against the requirements of the proposals submitted to it at the

first stage of the bid proceeding.

The revised specification shall be communicated to the

responsible candidates at the first stage;

Invitation shall be sent to such candidates;

Such bidders shall be required to furnish bid security;

A supplier not wishing to participate in the 2nd stage with the

reformulated specification may withdraw from the proceeding.

Negotiation may be held with the 1st ranking bidder

concerning any aspect of its bid, except price.

 Pre-qualification of bids Applicable, where the procurement concerns to:-

A work of design, manufacturing or installation of a very high

value or complex nature, or

A turnkey contract of works, or the acquisition of machinery

or Information technology, or

Contd.. 

Supply of goods or equipments of considerable importance &

includes installation, or

Where the cost of drawing up bidding documents is so high

that only pre-qualified bidders should participate in the bid.

 

Under prequalification bidders shall produce evidence WRT:

Experience in the object of procurement

Capability {having adequate human power, machinery,

equipment etc}

Having good reputation (past performance) &

Financial standing that enables it to perform its obligations

No restriction shall be imposed

in the number of bidders passing to

the second stage bidding

as long as such bidders have pre-qualified.

The result of the pre-qualification evaluation

shall be disclosed at the same time

to all bidders participating in the bid

regardless of whether such bidders have prequalified

A contract may not be signed with a bidder declared to

be successful,

If the information given by such bidder

in regard to its qualification,

in its prequalification bid

is found to be wrong, or

if it is established;

with reasonable degree of certainty,

that it no longer possesses the capability

on the basis of which it pre-qualified,

&

hence, cannot perform the contract on the expected level. 

Procurement made by means of request for proposal.

RFP

May be engaged when it is sought:

to obtain consultancy services or

contracts for which the component of consultancy services

represents more than 50% of the amount of the contract.

Invitation for Expression of Interest

An expression of interest shall be invited for procurement of

consultancy service the estimated value of which exceeds

300,000 birr.

The invitation for Expression of Interest shall be:

Carried out in accordance with the provisions for open

tendering, & shall state that the invitation is only for EoI.

Shall state:

The type of the required consultancy service,

The expected output,

The time for completion of the assignment,

The qualification required,

Work experience & any other relevant information

As well as the list of documents to be submitted

&

The manner, time & place of submitting such documents.

From among those responding to the invitation for EoI, not

less than 3 but not more than 7 consultants, demonstrating better

suitability, shall be chosen on the basis of evaluation of their

profiles, & such consultants shall be invited to submit their

proposals.

 

The selection of consultants for submitting proposals shall be made in the following manner:

Selecting those with better qualification to an invitation for EoI;

IF, the no. of consultants having the competence, being limited,

by inviting all of such consultants;

If the estimated value of the procurement is below 300,000 birr, by

random selection from among consultants in the suppliers’ list.

The Public Body shall send:

Simultaneously to the addresses of

The selected consultants,

A letter of Notification to submit their proposal.

It may send, the bidding document prepared for this purpose

free of charge together with the letter.

Candidates shall be given adequate time to

prepare their proposals;

The competitive bidding procedure laid down shall apply to the procurement of consultancy service.

 The floating period.doc

The public body may negotiate with the first ranked

candidate with respect to the nature, volume &

organization of the services included in their proposals.

The essential requirements of the bidding document

& the quality of the work to be delivered by the

consultant are non-negotiable.

The negotiation to be held shall focus on:

The content of the consultancy work,

The method applied to accomplish the work,

The quality of the human resource to be engaged,

The material to be used in the performance of the service,

The content of the report to be submitted

As well as the manner of Submitting such report &

Such other issues arising from the performance of the service

In evaluating & comparing technical proposals, the following criteria shall be used: 

The experience relevant to the service required;

The methodology proposed to apply in conducting the study;

The ability for knowledge transfer;

The level of participation of Ethiopian consultants in the

important components;

 

The following percentage points shall be given:

For experience of the consultant 5-10%;

For methodology 20-50%;

For ability to transfer knowledge…….………… 5-10%;

For competence of key professionals engaged 30-60%;

For participation of Ethiopians ….. 5-10%;

The number of points to be given under each evaluation sub-criteria can be further subdivided.

For instance: (d) qualifications of staff:

Criteria Maximum Points

General qualifications [20-30]

Adequacy for the assignment [50-60]

Experience in region and language [10-20]

Total 100

Bidders getting < 70% in the Technical evaluation shall be

rejected & their financial document shall be returned to

them unopened.

The envelopes containing the financial proposals of those

consultants scoring 70% & above shall be opened.

 

Selection methods for Consultancy Services:

Selection based on Quality & Cost (QCBS)

Quality Based Selection (QBS)

Selection Based on Fixed Budget(FBS)

Selection Based on Least Cost(LCS)

Selection Based on the Consultants’ Qualification

Single Source Selection

Selection based on Quality and Cost

In the financial evaluation, the highest point shall be given to

the lowest priced bid, & conversely, the lowest point shall be

given to the highest priced bid; among technically qualified bids.

The points given to other bidders shall be determined depending

on their price offers.

To determine financial scores for each proposal, the lowest

priced proposal shall be given a financial score of 100, & other

proposals shall be given a score proportionate to this, by

application of the following formula:

Where:

Sf : The financial score of the proposal under consideration;

Fm is the price of the lowest price that passed the technical

evaluation;

F -denotes the price of the proposal under consideration

From the total merit points to be given for proposals submitted

by consultants in a bid for Procurement of consultancy service,

the share of technical proposal shall be 80% & the remaining

20% shall be the share of financial proposal.

In case of QCBS

A total score (S) will be determined for each proposal, by

combining its technical (St) & financial (Sf) scores using the

following formula & weightings:

S = (St x T%) + (Sf x P%)

Where: T=80 & P=20

For example, if the financial proposals for 3 bidders (B1,B2, &

B3) were ETB 500,000; 550,000 and 600,000, the financial

score of Each Bidder would be calculated as follows:

Sf = 100 x Fm/F ,

Here Fm=500,000

For B1= Sf1 = 100 x 500,000/500,000 =100

For B2= Sf2=100x500,000/550,000=90.91

For B3= Sf3=100x500,000/600,000=83.33

Assume the Technical score(St) for each bidder to be 75, 86 & 92 respectively:

S=(St*T%) + (Sf*P%)

The result is tabulated as underneath:

Assignment.xls

No Bidder Name

Financial offer in Br

Sf = 100 x Fm/F

St=Technical Offer (%)

S=(0.8*St + 0.2* Sf)

1 B1 500,000.00 100.00 75 80.00

2 B2 550,000.00 90.91 86 86.98

3 B3 600,000.00 83.33 92 90.27

In QCBS:

The consultant scoring the highest point in the total sum of the

technical and financial Evaluation shall be selected as the

successful bidder.

Assignment.xls

Hence: Bidder 3 Shall be the winner, in our case

Quality Based Selection Shall be used under the following conditions:

Where the complexity calls for special qualification & for

this reason it is difficult to define precise ToR

or

The required input from the consultants, is expected to

demonstrate innovation.

Contd…

Assignments that have a high downstream impact & in

which the objective is to have the best experts.

Assignments that can be carried out in substantially different

ways, when comparison of such proposal is expected to be

difficult.

 

The Envelopes containing the technical proposals

shall be opened in the presence of the bidders.

The bidder scoring the highest point in the

evaluation of the technical proposals shall be

selected as the successful bidder.

 

If the price offered by the selected bidder is beyond the

public body’s ability to pay, the Public Body may enter

into a contract with the bidder scoring the second

highest point in the technical proposal to procure the

required service, provided that the price offered by such

bidder is affordable to it.

Upon signature of the contract with the

selected bidder, the envelopes containing the

financial proposals of the unsuccessful

bidders shall be returned to such bidders

unopened.

Selection Based on Fixed Budget

This method is appropriate only when the assignment is

simple & can be precisely defined & when the budget is

fixed.

The technical evaluation shall be carried out in

accordance with the provisions above

 

The financial envelopes of the bidders, who have

technically qualified, shall be opened & those

offering price in excess of the budget available for

the procurement shall be disqualified.

The one offering:

Price within the budget limit & Scoring the highest point

in the total sum of the technical & financial evaluations

shall be selected as the successful bidder.

Negotiation may be held with him on issues excluding price.

 

Selection Based on Least Cost   

This method is appropriate for procurement of a

consultancy service which is:

Standard,

Simple &

Doesn’t call for special qualification.

The bidder offering the lowest evaluated price shall be

selected as the successful bidder from among the bidders

who have technically qualified by satisfying the

minimum point. 

Selection Based on the Consultants’ Qualification This method may be used: For small assignments of which the cost & time required for preparing & evaluating competitive proposals is not justified.

Where the value of the consultancy services ≤ Birr 50,000.

The ToR to be prepared shall require candidates to state their experience & level of qualification

Contd..

The consultancy assignment shall be based on the agreement

reached through negotiation on:

The technical & financial proposal of the consultant

selected through evaluation of

information submitted by candidates

Chosen from the suppliers’ list or contained in the data base;

 

Single Source Selection   

Public bodies may procure consultancy service by

means of single source selection, provided that the

conditions stated for such procedures are satisfied

National Competitive Bidding NCB Should be applied when:

The object of procurement can be procured from local suppliers

& its value is below the threshold;

The object of procurement is available only locally though its

cost exceeds the threshold;

Financial Threshold for NCB

For works Below birr……………..………. 50,000,000.00

For goods below birr …………………….... 10,000,000.00

For consultancy services below birr...……... 2,500,000.00

For services below birr………………… 7,000,000.00

 

Invitation to bid (IFB)   

IFB -Has to be published:

At least once in a news paper

That has nationwide circulation

To ensure participation of

As many bidders as possible.

Bids may be advertised:

At any time,

As many times

&

By any other means:

Like on National Radio, Television etc.

The Instructions to bidders

The ITB contains:

Standard provisions

That have been designed to remain unchanged

&

To be used without modifying their text.

Conventionally the ITB contains:

Information/data

Relating to the procedure for

Bidding & Evaluation

Up to the point of contract award.

  

A Public Body, has to ensure that:

Bidders get the ITB & the BDS, which is an extension

of the ITB, as parts of the SBD.

The ITB has to contain the following:-

A general description of the object of procurement,

The full name & address of the Employer

The source of finance;

The criteria that bidders are expected to fulfill

Contd….

Domestic bidders submitting bids for a contract value of Birr

≥ 100,000.00 must present VAT registration certificate;

Foreign bidders must submit business organization

registration certificate or trade license issued by the country of

establishment.

Contd… 

The address & time for submitting requests of clarification &

a statement that such request has to be made in writing,

The content of bid documents to be submitted by candidates,

The language in which bid documents have to be submitted,

Contd…

The type & number of necessary documents & complementary

forms described in the bidding documents.

The bidder has to sign on Anti bribery pledge form; to observe

Ethiopian Law against Fraud & Corruption & other forms that

ought to be completed & signed by him,

Contd..

A statement that bidders attempting to influence the bid shall be:

Disqualified from the bid,

Prohibited from participating in any future public procurement

&

Their bid security shall be forfeited,

Contd…

If bidders are required to submit samples:

The place where the samples are to be delivered

The time & the place where the samples will be openly shown,

Whether sample are to be returned to the unsuccessful bidders

or not,

Contd…

The place where the bid box is available

A statement indicating that bids submitted after the bid is

closed shall not be accepted,

 

Contd…

The methodology of evaluating bids, the criteria for the

evaluation & the weight each criterion shall have.

Whether it is possible to make price adjustment & the

condition in which such adjustment is made, if it is allowed,

 

The deadline for submission of bids

&

The place, date & hour of the bid opening.

The mode & amount of

Bid & performance securities required

&

The validity period of same.

Contd..

The validity period of the bid, the place & time of delivery.

The manner of application of preference to local products &

companies. 

The amount of Advance payment & the mode of the

corresponding guarantee required as a prerequisite;

 

Contd..

If the bids are to be submitted in a single or double envelopes,

The manner in which the envelopes are sealed,

Requirements that the original & copies of the bid documents

shall be uniform,

The number of copies required,

 

Contd..

All documents have to be signed by authorized persons & the seal of the organization shall be affixed there to;

Supporting documents: Current tax clearance certificate,

Renewed business license & Other required documents

Should be submitted.

 

Contd..

If bidders are aggrieved, by the decision rendered, the place

where such complaint may be filed

An indication that the PE has the right to decrease or increase

the quantity of the goods or services by up to 20% when

awarding the contract without changing the unit price.

Setting of bid floating periods

The deadline for bid submission should be set based on the following conditions:

 

The time it takes for bidders:

To obtain the bidding document,

To prepare responsive bids,

To gather information,

To analyze the information,

To establish joint venture as necessary,

To obtain certificate of manufacturer’s authorization

Including the power of attorney to sign 

 

Contd..

In case of ICB, the time necessary for the submission of bid

document to the designated place.

In case of procurement of works in particular, the time

necessary to visit the construction site & for pre-bid meeting.

 

The Minimum Possible

floating Period

No Procurement Type

Complexity

Mode of Procurement  ICB

NCB

Restricted Bidding

LIB LNB 1 Works C 45 30 45 30

NC 35 21 35 21

2 Goods C 45 30 45 30

NC 35 15 35 15

3 Other services C 45 30 45 30

NC 35 15 35 15

4 Consultancy Service (EOI)

C 14 10 ------- ------ NC 10 7 ------- ------

Request for proposal (RFP)

C 45 30 35 30

NC 35 15 21 15

In single source procurements &/or RFQ:

The deadline for submission shall be set taking in to account:

The type, urgency & complexity of the procurement

As well as the scope of participation of bidders

In that procurement & other relevant considerations.

 

In procurements made by means of Two stage bidding:

For the first stage bidding, the floating period prescribed

above, for NCB/ICB of the respective procurement shall apply.

For the second stage bidding in which selected local or foreign

bidders participate, the period prescribed for Restricted Bidding

above shall apply.

 

Depending on:

The type of procurement

&

The conditions of the market,

Additional time may be allowed to bidders

To prepare & submit bids, if necessary.

Sale of bidding documents

When fixing the selling price of bidding documents:

The price shall not impede wide competition.

shall not aim at seeking profit but aim only at recovery of

costs incurred for bid document preparation.

   

Bidding documents may be given free of charge, or at a lesser price under the following circumstances:-

Inadequate Number of bidders forthcoming,

The cost incurred for the bidding document is so minimal

The cost estimate of the bidding document is so high;

Considered unfair to request again (re-advertized bids).

The bidding document shall be available to candidates desiring

to participate in the bid on working days during the floating

period of the bid in the manner stated in the advertisement.

Clarification /Modification of bidding documents

At any time prior to the deadline for submission of bids, the

public body may, on its own initiative or in response to an

inquiry by a candidate, modify the bidding documents by issuing

an addendum, which becomes an integral part of the bidding

documents.

If the public body considers it necessary to amend the bidding

documents & if it determines that there is no enough time to

incorporate the modification, it may postpone the closing date by

a number of days, depending on the procurement object, which is

sufficient to enable the bidders to take the addendum into

account in preparing their bids.

The Public Body shall not be obliged to respond to a request for clarification / modification submitted:

Later than 10 days prior to the deadline for submission, in

NCB for complex procurements;

Later than 21 days prior to the deadline in respect of ICB.

Later than 5 days prior to the deadline for Non-complex

procurements;

A reply given by the Public Body to a request for

clarification by a candidate shall be in writing and sent

to all candidates at the same time without reference to

the identity of the candidate initiating the request.

Bid price & price Adjustment

The employer has to ensure that prices quoted by a bidder:

Are not based on prices of the other bidders

&

Such prices remain firm & do not vary

During the validity period of the bid &

Throughout the performance of the contract.

   

The Public Body may, under the following circumstances, indicate

that price adjustments are allowed In respect of:

Works contracts,

After 12 months from the effective date of such contracts

A framework contract,

After 3 months from its effective; 

Where it is verified that:

In respect of works contracts:

The performance of the contract requires more than 18 months, &

In respect of a framework contract:

The performance of the contract requires more than 6 months.

For framework contracts where the Agency or the Central

Statistics Agency issues periodic price index to use as reference

for fixing the initial price & make price adjustment.

Where it is ascertained that the Agency or the CSA can issue

price index or price indicators for selected categories of items.

Notwithstanding the provisions above, in respect of selected

categories of items which the Public Body considers appropriate

to allow price adjustment & for which the Agency or CSA is not

in a position to issue current price index, where price

information is available from a well-known local producer or

competent foreign institution.

 

Price adjustment for works contract

Any price adjustment made in connection with works contract

shall be calculated using the formula provided in the SBD in

accordance with the following procedure.

Identifying the major inputs necessary & the set of items to be

classified under each major input.

Calculating the share of each major input from the total input

& select the ones for which price adjustment may be allowed.

The price index operating before the bid closing date should be

used as basis for price adjustment.

The price adjustment is calculated, on the basis of the formula below:

 

.etcEoEnd

MoMnc

LoLnbApn ++++=

Where:

Pn is a price adjustment factor (adjustment multiplier) to be applied to the amount for each payment certificate;

A is a constant, specified in the Contractor’s Bid, representing the nonadjustable portion in contractual payments; b, c, d, etc., are weightings or coefficients representing the estimated proportion of each cost element

(labor, materials, equipment usage, etc.) The sum of A, b, c, d, etc., shall be one;

Lo,Mo,Eo are the Base Date Indices for the specified

(adjustable) elements;

Ln. Mn, En are the current date Indices of the specified

(adjustable) elements for the period “n”

If “P” is the amount payable (prior to adjustment) at the rates

entered in the contract document, then the adjusted amount

payable to the contractor for the work carried out in the period

“n” shall be equal to Pn*P.

Price Adjustment for consultancy service

Where the time for completion of a consultancy service under

a contract is extended for a reason not attributable to the fault

of the consultant, the Public Body may make price adjustment,

if it considers that such adjustment is appropriate.

The price adjustment allowed for consultants, however, shall

not exceed 15% of the total contract price.

Validity period of bid documents The following shall be considered in fixing the validity period:

The complexity of the procurement in question & the estimated

time required for the bid proceeding;

The estimated number of candidates participating in the bid;

The experience of the PE in evaluating bids of similar nature;

The price volatility of the procurement;

The validity period of bid price, shall take into account:

The time necessary to evaluate the bid,

To obtain the approval of

The Procurement Endorsing Committee,

To consider complaints &

To sign contract with the successful bidder.

 

The validity period of bid shall not extend beyond 60 days from

the day of bid opening, unless the employer believes that a bid

document requires longer preparation period in light of the

point of considerations stated above;

Public bodies have to complete bid proceedings within the

validity period of bid documents & sign contracts with

successful bidders.

For reasons beyond control, if the price validity period expires

before the completion of the bid proceeding, bidders shall be

requested to extend the validity period of their bid price.

Bidders who are not willing to extend their price validity period

for whatever reason shall be disqualified from the bid without

having forfeited their bid security.

Bidders agreeing to the request have to express in writing their

agreement & for how long they are willing to extend the period.

They have to amend the validity period of their bid security on

the basis of the extension of the price validity period they have

agreed to, or

furnish new bid security to cover the extended period.

Bid Security Except for procurement of consultancy services, PE have to fix

& clearly indicate in the bidding document, the amount & mode

of bid security to be required of bidders, when executing

procurement by means of open, restricted or two stage bidding.

May require bidders to furnish bid security for consultancy

services as well if, for any reason, finds it necessary to do so.

 

The amount of bid security shall be:

In the range of 0.5% to 2% of

The total estimated contract price,

Which the PE has to fix & indicate in

The IFB & the bidding document.

However, the bid security to be fixed shall not exceed 500,000.00

Points to be considered during fixing the amount of bid security

The volatility of the price of the required object of procurement.

The availability of adequate No. of participants in the bid,

It doesn’t discourage bidders from participating in the bid.

Contd.

The bid security urges the successful bidder to sign the contract

Sufficient to compensate the damage to the PE if the successful

bidder refuses to sign the contract

Sufficient to discourage irresponsible bidders.

The Bid security of a joint venture must define as “Bidder” all

joint venture partners & list them in the following manner: a

joint venture consisting of: “___________”, __”and

“________”.

The bid security may at the bidder’s option be in the form of:

Cash,

cheque certified by a reputable bank,

Bank guarantee or

Letter of credit.

Notwithstanding the provision above, local contractors engaged

in construction service may provide bid security in the form of

conditional insurance bond;

The bid security furnished by foreign bidders from a bank

outside of Ethiopia has to be unconditional & certified or

counter guaranteed by local banks.

The validity period of bid security provided by bidders should

extend for at least 28 days after the expiration of bid price

validity.

Causes for forfeiture of bid security

The commission or omission of one or all of the following acts

by any bidder would entail the forfeiture of its bid security.

 

Withdrawing from a bid:

After the deadline for submission of bids

or

Before the expiration of the price validity period

 

Contd…..

Refusing to sign the contract,

Refusing to accept arithmetic corrections or

Refusing to furnish the performance security after award.

Format & Signing of Bid

The bidder shall prepare one original of the documents

comprising the bid, bound with the volume containing the bid

submission form, & clearly marked “ORIGINAL”.

The bidder shall also submit copies of the bid, in the

number to be specified in BDS, & clearly marked as

“COPIES”.

In the event of discrepancy the Original shall prevail.

 

The original & all copies of the bid shall be well typed & signed

by a person duly authorized to sign on behalf of the bidder.

All pages of the bid where entries or amendments have been

made shall be initialed by the person signing the bid.

 

The bid shall contain no alterations or additions, except:

Those to comply with instructions issued by the employer,

or

As necessary to correct errors made by the bidder,

in which case such corrections shall be initialed by the person

signing the bid.

The bidder shall seal the original & all copies of

the bid in two inner envelopes & one outer

envelope, duly marking the inner envelopes as

“ORIGINAL” and “COPIES”.

The inner & outer envelopes shall:

Be addressed to the Employer at the address provided

Bear the name & procurement reference no.

Provide a warning not to open before the specified

time & date

The inner envelopes shall indicate the name & address of the

bidder to enable the bid to be returned unopened in case it is

declared late.

If the outer envelope is not sealed & marked as above, the

employer will assume no responsibility for the misplacement or

premature opening of the Bid.

 

Withdrawal, Substitution & Modification of Bids:

Bidders may:

Withdraw,

Substitute or

Modify their bids

by giving notice in writing before the specified deadline.

 

Each of such actions shall be prepared, sealed, marked,

& delivered with the outer & inner envelopes

additionally marked “WITHDRAWAL”,

“SUBSTITUTIONS”, or “MODIFICATION” as

appropriate.

The corresponding substitution or modification of

the bid must accompany the written notice.

However, no bid shall be modified after the

deadline for submission of bids.  

 

Bidders may only offer discounts to / or otherwise

modify the prices of their bids by:

Submitting bid substitutions or

Modifications or

Included in the original bid submission. 

 

Submission & Receipt of bid document

Bids shall be submitted:

In writing, Signed &

In a sealed envelope,

To the place & before the deadline

stated in the invitation to bid (IFB).

PEs have to make available a bid box;

The bid box shall be placed at the location stated

in the bidding document & remain open

throughout the bid floating period.

As far as possible, all bid documents shall be placed inside the

bid box;

Where the bid box cannot accommodate bid documents, the PE

shall assign an employee to collect bid documents from bidders

as of the day of publication of the invitation to bid.

It shall be kept securely & the key of the box shall be in

the possession of the head of the procurement unit until

the day of the bid opening.

 

The PE shall issue receipt for bid documents it receives

from bidders in acknowledgement of receipt, the One in

charge of the procurement in question shall be responsible

for the security of the bid documents received accordingly.

Documents received after the deadline for submission of

bids shall be returned to the bidders concerned without

the envelopes containing the bid documents being

opened.

 

Rejection of Bids, Proposals and Quotations

The employer may for one or more of the following reasons

reject in whole or in part bids, proposals or quotations at

any time prior to the conclusion of procurement contract

where:

There is proof of error in the procurement proceeding which

could affect the outcome of the bid;

Proved that the procurement can not ensure a better technical

or economic advantage to the public body;

Bidders fail to meet the minimum criteria set forth;

The minimum price offered doesn’t match with the market

price

Contd….

The price offered by the successful bidder exceeds the

budgetary allocation & the public body cannot make up for the

deficiency from any other source;

It is proved that the bidding is not sufficiently competitive;

Public bodies shall have to give notice to candidates forth with

disclosing the reasons for rejecting bids, proposals or quotations

wholly or partially.

However, they shall not be required to justify the reasons.

 

ITB 31.1 states this issue even in a more stronger terms as:

The Employer reserves the right to accept or reject any Bid, &

to cancel the bidding process & reject all bids, at any time prior

to the award of Contract, without thereby incurring any

liability to the affected Bidder or any obligation to inform the

affected Bidder of the grounds for the Employer’s action.

Bid Opening:-

The Tender Committee is responsible for the Bid

Opening, which is a critical event in the bidding

process.

 

PE-staff must be aware that inappropriate procedures

at Bid Opening are usually:

Irreversible

&

May require cancellation of the Bidding Process

With the consequent delays & waste of time & resources.

 

At the time stipulated in the bidding document for

opening of bids, which should follow immediately after

the deadline for submission of bids, the public body shall

open all bids received before the deadline.

 

The procurement unit shall record the minutes

of the bid opening.

Such minutes shall contain the following:

 

The name of the bidders

The total amount of each bid,

Discounts offered & Conditions for such discounts

The amount & kind of bid security

Any other salient information deemed required

The minutes & the original bid documents shall be

signed by employees conducting the bid proceeding.

Bidders present during the bid opening shall sign the

attendance sheet.

Any bid document not opened & readout during the bid opening

proceeding shall not be considered for further evaluation.

No bidder shall be disqualified from a bid at the time of bid

opening proceeding, except late bids; 

The Bid Opening shall be conducted strictly following the

procedures specified in the ITB, for all bids received on or prior

to the date & time of the bid submission deadline.

The sequence in which bids are handled & opened is crucial.

The term “Bid Opening” can be misleading because a bid for

which a Bid Withdrawal notice was received on time shall not

be opened, but returned unopened to the Bidder.

Bids Shall be opened in the presence of the bidders or their

authorized representatives.

The opening of the bid, shall not however, be affected by the

absence of the bidders on their own will.

Any representative of mass-media or interested observer may

attend the bid opening ceremony, unless there is a space

constraint;

As far as possible, a representative of internal audit of the

Public Body shall be present during the bid opening.

At least 3 employees from the procurement unit & to the extent

possible, representatives from the benefiting department, may

attend the bid opening process;

 

If a complaint is lodged against the result of the

technical evaluation, the bid security & the financial

envelopes shall not be returned to the unsuccessful

bidders pending final decision on such complaints;

Evaluation & Examination of Bids

The Tender Committee, assisted by a Technical Committee if

required, is responsible for the evaluation of all bids received.

Mistakes committed at bid evaluation may later prompt

complaints from Bidders, requiring re-evaluation of the bids,

with the consequent delays & waste of time & resources.

 

Bidders may be asked for clarification of their bids in order to

assist in the examination & evaluation of bids;

However, no change in the substance of the bid, including

changes in price, shall be sought, offered or permitted.

No criterion shall be used that has not been set forth in the

bidding documents.

In conducting the evaluation, the Tender Committee will be

required to make appropriate adjustments for acceptable

variations, deviations or alternatives offers.

In determining whether such variations, deviations or

alternatives are acceptable, the Tender Committee should take

into account the definition of a material deviation.

 

A material deviation or reservation is one: Which affects in any substantial way the scope, quality or performance of the works; Which limits in any substantial way, inconsistent with the Bidding documents, the Employer’s right or the Bidder’s obligation under the contract; The rectification of which, would affect unfairly the competitive position of other bidders;

 

Any variation, deviation or alternative which Substantially :

Affects the scope, quality or performance of the Works,

Alters the Employer’s rights or the Bidder’s obligations or

Would give an unfair competitive advantage

Should be rejected.

 

A substantially responsive Bid:

Is one which conforms:

To all the terms,

Conditions, &

Specifications of the Bidding documents,

without material deviation or reservation.

A Public Body may accept a bid as complete notwithstanding

that such bid contains elements representing certain variance

with the bidding document, in so far as such elements do not

alter the conditions of contract & other essential requirements

forming the fundamental aspect of the bidding document, or

bears minor errors or deviations which can be corrected

without affecting the essence of the bid.

Preliminary evaluation

A Public Body may find a bid complete & qualify that bid for

detailed evaluation only if:

The bid document is opened during the bid opening proceeding

&

Complies with the prerequisites & essential requirements

stated in the bidding document.

A bid should not be put for detailed evaluation where:

It does not meet the minimum quality & other essential

requirements set forth & therefore is found to be non responsive

at first sight;

 The bidder is not willing to accept corrections of Arithmetical

errors made;

Contd..

The bidder does not furnish the bid security or is not willing to furnish the performance bond required;

The bidder does not produce evidence of facts that

need to be proven in connection with the procurement.  

In case of item rate contract, errors will be corrected as follows:

If there is a discrepancy between the unit price & the total price the unit price shall prevail & the total price shall be corrected,

{unless in the opinion of the employer there is an obvious misplacement of the decimal point in the unit price},

In which case the total price as quoted shall govern & the unit price shall be corrected.

 

If there is an error in a total corresponding to the addition or

subtraction of subtotals, the subtotals shall prevail & the total

shall be corrected.

If there is a discrepancy between words & figures, the amount

in words shall prevail, unless the amount expressed in words is

related to an arithmetic error, in which case the amount in

figures shall prevail.

 

In case of lump sum contracts:

If there is a discrepancy between words & figures, the amount in words shall prevail;

Bid Acceptance, Contract Award

& Placement

 

The procedure specified in the Proclamation/ Directive provides

a sequence of events based on the need to recognise:

Bidders’ rights to appeal against the conduct of the evaluation

&

The need for a contract to be placed as soon as is practical after

a decision to award has been approved.

 

The PE notifies all Bidders of the result of the evaluation.

After a period of seven working days, if no complaint has

been received, the PE awards the contract by issuing a Letter of

Acceptance to the successful bidder.

The head of the PE makes a contract award decision, based on

the recommendation of the Tender Committee.

The contract will be confirmed by issue of a full conformed

Contract Document.

The Letter of Acceptance

&

The Contract Document

Should not contain any provisions or conditions

which vary from those in the Bidding document;

Any such modifications should be agreed by the Bidder in

writing before a contract award decision is made.

The Public Body shall conduct the evaluation by applying either of the following methods:

In respect of bids submitted in one envelope:

By selecting the bidder offering :

the lowest evaluated bid

from among bidders

submitting responsive technical proposals.

In respect of bids submitted in two envelopes:

By selecting:

The bidder scoring the highest point

in the total sum of results of

the technical & financial evaluation;

 

For the purpose of procurement of services, the method

of evaluation stated above shall be applied with the

relative weight to be ascribed to price being not less

than 50% of the total merit point.

Where two bidders get equal merit points in the

evaluation, preference shall be given to local

products/services in accordance with Article 25/3

of the proclamation.

 

Where an invitation to bid attracts only one bidder:

The Public Body may sign contract with that bidder if:

The Proposal submitted by such bidder is Satisfactory

&

The price offered is comparable to or less than

The market price of the required object of procurement;  

It is however necessary to make sure that the failure of

the bid to attract bidders is not due to the fact that the

content of the bidding document is restrictive of open

competition.

 

After the opening of bids, information relating to:

The examination,

Clarification, &

Evaluation of bids &

Recommendations for award

Must not be disclosed to bidders or other persons not officially

concerned with this process until the award of the contract is

announced.

Matters subject for Negotiation with the Successful

Bidder

The public body may negotiate with the successful

bidder on matters of contract performance not dealt

within the bidding document.

Except in single source procurement, the public body

may not negotiate on the price offered by the successful

bidder & on other issues related to price.

 

 

A Public Body shall issue invitation to bid for a

second time where:

The best price offered by a bidder is

significantly higher than the market price

estimate made;

Contd…

Where it is concluded that Non compliance with the

rules & procedures governing bids {prescribed by the

proclamation/the directive} led to the failure of the

invitation to bid to attract more than one bidder, or

 

Contd…

Where it is believed that modifying the bidding

document could attract adequate number of bidders.

 

Preference

Pursuant to Article 25 of the proclamation, preference shall be

granted in any procurement (Except RFQ & Single source

procurements) to:

Locally produced goods,

Small & micro enterprises (SME) &

Local construction & consultancy companies.

 

The margin of preference to be applied when comparing prices

shall be as follows:

a. For procurement of drugs or pharmaceutical products or

medical equipments 25%,

b. For procurement of other products 15%,

c. For construction & consultancy services 7.5 %

The following conditions must be

satisfied for local companies

engaged in Construction or

Consultancy Services to qualify

for preference:

The company has to be incorporated in Ethiopia;

>50% of the company’s capital stock has to be held by

Ethiopian natural or juridical persons;

>50% of members of the board have to be Ethiopian nationals;

At least 50% of the key staff has to be Ethiopian Nationals.

 

For SME:

A margin of preference of 3% shall be given when competing

with local suppliers in NCB;

In ICB The preference granted to local companies shall apply

Shall be entitled to obtain bidding documents free of charge by

producing their certificate of registration

In lieu of bid/performance/Advance security:

a letter of guarantee

written by a body

Organizing & overseeing SME

shall be accepted.

 

Disqualification of bidders

A Public Body may disqualify a bidder for any of the following reasons

Where a bidder offers to supply the required objects of

procurement Originating in a country of which :

The government of the FDRE has imposed trade ban;

Under a trade embargo of the UN-Security council, &

transacting with that country is prohibited for member

states;

Contd…..

Where the bidder commits an act of

violating the provisions of the proclamation

& the directive;

Contd…..

Where the bidder is debarred by a decision of the

Agency from participating in public procurements for

breach of its obligation under previous contract;

 

Contd….

The bidder has given inducement/ bribe to an official

of the procuring body (proved)

The bidder has committed an act of embezzlement,

fraud or connivance with other bidders. (proved)

The procurement unit/the ad hoc committee shall:

Complete the evaluation & submit

The result together with its recommendation,

To the Procurement Endorsing Committee/other body

having the authority to approve bid evaluation results,

within the bid validity period offered by the bidders. 

  

The Procurement Endorsing Committee shall Examine

the evaluation report in light of:

a) The procurement rules & procedures

b) Against the requirements of the bidding document

&

Give its decisions:

The decision to be given may be:

Approve the evaluation report as a whole

& authorize the procurement to Proceed; or

Reject the report & order re-evaluation.

The persons conducting the evaluation may be requested

to account for the evaluation report.

Where the Committee rejects the report, it shall state

the reason for its decision & refer the case back to the

evaluation team with instruction for the team to follow

in re-evaluating the bids in question.

The Evaluation team shall conduct re-evaluation in

accordance with the instruction of the Procurement

Endorsing Committee & Report the result back to the

committee.

 

The Evaluation team / a member/ objecting to the

decision of the committee has the right to record its

dissenting opinion.

However, the procurement shall be executed in

accordance with the decision of the committee.

 

Announcing the Successful bidder

Prior to the expiry of the period of bid validity, the

public body shall notify the successful bidder that its bid

has been accepted.

The Notification of award shall specify:

The time within which

The contract must be signed.

The unsuccessful bidders shall also be informed as to

who the successful bidder is & why they lost the bid.

The result of a bid evaluation shall be announced to all

bidders alike at the same time.  

A letter of award to be sent to a

successful bidder shall not constitute a

contract between them.

 

A contract shall be deemed to have been concluded

only where a contract containing detailed

provisions governing the execution of the

procurement issue is signed.

 

A letter of contract award shall contain that:

The Public Body has accepted his bid;

The Total Contract Price;

The Amount of the Performance Security

The deadline for providing such security.

 

Where the successful bidder cannot or is

unwilling to sign a contract, the Public

Body, forfeiting the bid security of that

bidder, may either:

Declare the bidder submitting the second most preferred

bid the successful bidder/Invite such bidder to sign a

contract

Or

Advertise the bid afresh by assessing the benefit of the

two options. 

The bid security shall be returned to bidders if:

The successful bidder has signed contract & furnished

the required contract security;

The bid validity period initially offered by a bidder

not willing to extend such period has expired or

A bidder is unsuccessful.

 

Performance

Security

Except for procurements executed by:

Means of request for quotation (RFQ)

or

Procurement of rental services,

A Public Body has to require a supplier to furnish

performance security in any procurement.

A supplier shall provide a contract security to make

good any damage the public body may sustain as a

result of default by the supplier under the contract.

The Successful bidder has to provide performance

security within fifteen days for signing a contract in an

amount of at least 10% of the total contract price.

A conditional insurance bond shall be accepted as

performance security in respect of:

Construction contracts or

Supply of drugs with local contractors or

Manufacturers of pharmaceutical products.

 

A consultant may be required to furnish professional

indemnity insurance in respect of consultancy service,

where the Public Body finds it appropriate to make

provision for any damage it may sustain as a result of

possible default on the part of the consultant.

 

SME shall be required to submit a letter of guarantee

from the body organizing & overseeing them in lieu of

performance security.

Enterprises engaged in insurance business &contracting

with a Public Body may use their reserve with the

National Bank of Ethiopia as performance security,

Unless the parties agree otherwise, the performance

security furnished by a supplier shall be returned to him

upon complete performance of the contract.

 

Advance payment

 

In any public procurement, advance may be paid in an

amount not exceeding 30% of the total contract price.

The amount to be paid in advance shall be stated in

the instruction to bidders (ITB).

Suppliers shall submit advance payment security in an

amount equal to the advance payment they receive,

together with their request for advance payment as per

the contract.

The advance payment security to be submitted may be in the form of:

A certified cheque or

Unconditional bank guarantee

At the bidders option from a reputable bank, 

Domestic contractors & manufacturers of

pharmaceutical products/medical equipments may

submit conditional advance payment security from

reputable insurance company.

Where the Advance Payment Security provided by a

contractor is conditional,

or

Where the advance payment is in respect of SME:

A special agreement shall be entered with them

Such Agreement includes the following:-  

The advance to be paid shall be deposited in a special

bank account to be opened for this purpose in the name

of the contractor/ the SME.

   

Contd….

The advance to be deposited, as per above, can only

be withdrawn by joint signature of the Public Body &

the supplier

Contd….

The payment shall be effected, from the special

account, where it is ascertained that the contractor has

performed part of its obligation under the contract

corresponding to the payment disbursed to it

 

In respect of:

Road construction performed by a local contractor, up

to 50% of the advance payment; &

Building construction performed by a local contractor,

up to 30% of the advance payment

May be used for Acquisition of Equipments.

The provision above shall apply where:

The contractor agrees not to transfer to a third party,

the equipments procured with the advance payment

before the completion of the project.

Contd….

The contractor presents before signing an agreement,

on the use of the advance payment, a list of equipments

to be procured with the advance payment & the

engineer assigned certifies that such equipments are

necessary for the work

 

Contd….

The contractor agrees not to move the equipments

from the project site without the permission of the

Public Body.

 

List of Machinery To be

Procured for Roads & Buildings

With Advance Payment  

Machinery for road construction 

Machinery for Building

construction 

Bull Dozer, Front-end Loader, Motor Grader, Trench Excavator, Backhoe, Grid Roller, Vibratory Roller, Water Bowser, Dump Truck, Truck With Trailer; Low bed Hauling Truck; Bitumen Distributer; Stationary Heater; Paver for Base course; Asphalt Paver; Self-Propelled chip Spreader;  Mechanical Broom; Tandem Roller; Vibrating Roller; Pad foot Roller; Pneumatic Roller; Asphalt Plant; Crushing & Screening Plant; Wagon Drill; Compressor; Crane; Concrete Mixer; Generator; Service Vehicle for Supervisory Consultant 

Excavator, Hydraulic Breaker Crane, Tower Crane, Dozer, Truck Mixer, Loader, Dump Truck, Scaffolding, Formwork, Front-end Dumper, Compactor/Roller, Backhoe, Crusher, Generator, Truck With Trailer 

A subsequent installment due to a contractor shall not

be disbursed to him unless such contractor moves the

equipments acquired with the advance payment to the

project site within the time frame agreed in the

contract.

Any advance payment made to a contractor/SME shall

be deducted from each payment effected for work

executed at various stages of the contract, until the

Public Body recovers the full amount of such advance

payment.

 

The liability of A supplier for delay (Liquidated damage):

Shall pay a penalty of 0.1% or 1/1000 of the value of

undelivered item for each day of delay,

The cumulative penalty to be paid shall not exceed

10% of the contract price.

If the delay in performing the contract affects its

activities, the employer may terminate the contract by

giving advance notice to the supplier, without any

obligation to wait until the penalty reaches 10% of the

value of the contract.

Procedure of International procurement

 

ICB shall be used whenever:

An effective competition cannot be obtained unless

foreign firms are invited to bid or

The financial thresholds of the procurement exceeds the

limits indicated below.

 

ICB, if the value exceeds, The following thresholds :-

For works > Birr………..………. …50,000,000.00

For goods > Birr …………………10,000,000.00

For consultancy services > Birr …….2,500,000.00

For services > Birr………………… 7,000,000.00

Bidders participating in procurement of goods made by

means of ICB have to produce manufacturers

authorization if a Public Body requires them to do so,

unless they themselves are manufacturers of such goods,

Procurements made by ICB, in addition, shall comply with the following procedure:-

The bid advertisement & the bidding documents shall be

prepared in English,

The bid advertisement shall be published in a news paper

that has wide circulation & accessible to foreign bidders.

Contd…

In order to attract a large number of bidders:

The bid advertisement may also be posted

On the website of the procuring Body

&

Embassies of various countries may be notified of the bid. 

Contd…. 

Bidders must be given adequate time to prepare bid

documents in response to the ITB.

The schedule of requirements to be prepared shall

comply with National Standard & be Internationally

Acceptable.

 

Contd…. 

Bid prices offered by foreign bidders shall be quoted

& bid securities required of such bidders shall be

furnished in a freely convertible currency used for

payment in international commercial transactions.

 

Where a foreign bidder uses local inputs to satisfy the

required object of procurement, the portion of the total

contract price representing such local expenditure shall

be expressed in Birr in the price schedule of the bidder.

Contracts concluded for procurements to be made by

ICB may incorporate standard terms & conditions

applicable in international commercial transactions to

the extent that such terms & conditions are not in

conflict with the Proclamation/Directive & other

documents governing public procurement.

Unless the contract provides otherwise, disputes

arising from the performance of the contract shall

be adjudicated in accordance with Ethiopian Law.

Procurement of Non-Ethiopian Goods & Services

Public bodies should undertake the same steps to

procure foreign goods & services as they would

for local services.

However, there are several additional

steps required to facilitate the purchase

& receipt of those goods & services :-

 

The additional steps required are:

Attaining foreign currency;

Obtaining a Letter of Credit;

Transportation & shipping; and

Customs clearance.

 

Attaining foreign currency

The payment of foreign currency for foreign purchases

is effected through any commercial bank in Ethiopia.

The procedure will be as detailed in National Bank

Directive No. FXD/07/1998.

Obtaining a Letter of Credit (LC)   

LC is a document issued from one bank to another

that promises to pay a supplier on receipt of a

written document on behalf of the supplier.

 

The LC will be based on the agreement between PE &

suppliers.

The issuing bank will inform the correspondent bank by

opening of the LC in the name of the supplier to pay the

supplier on receipt of shipping documents.

 

Consequently, the correspondent bank will make the

payment effective immediately after receiving the

shipping documents from the supplier.

 

There are 2 types of Letters of Credit:-

Revocable &

Irrevocable LC

Revocable:

Where the issuing bank has the right to cancel or

amend the payment after the opening of LC;

It’s Possible only where, the issuing bank informs the

correspondent bank before it has paid the price.

 

As this type of LC does not bind the purchaser to fulfill

its contractual obligation, it is not practical for use;

Irrevocable:

Where the LC cannot be altered after it has been

opened;

There are 2 types of irrevocable Letters of Credit:

Unconfirmed,

&

Confirmed

Unconfirmed:

Where the issuing bank is bound by Law to pay the

supplier in question, whereas the advising or correspondent

bank is not bound by Law to pay the supplier.

If the correspondent bank does not pay the contract price to

the supplier, the supplier can only sue the issuing bank for

the unpaid amount;

Confirmed:

Where both parties (Issuing & Advising bank) are obliged

to respect all conditions stated on the LC & make the

disbursement effective.

In such a case, the advising bank is known as the

confirming bank.

 

The issuing bank informs the confirming bank about the

opening of the confirmed & irrevocable LC & hence to

give the supplier a payment guarantee. 

Once the Letter of Credit is opened, if the confirming

bank fails to pay the contract price to the supplier, the

supplier has the right to sue both banks.

The Letter of Credit should be opened by the purchaser

within one working week after the foreign exchange

permit for imports has been received.

How to open a Letter of Credit (LC)

Public bodies that have foreign currency accounts

with the National Bank shall open LC through the

NBE;

Letters of Credit can also be opened through CBE;

 

The following formalities should be

carried out in order to open a Letter

of Credit:-

PE must have the foreign exchange application for imports (import permit);

The equivalent value of foreign currency required shall be held/deposited in Birr;

PE should have an insurance policy or certificate

delivered by the Ethiopian Insurance Corporation (EIC);

 

Application for LC (Form FA1) should be completed by

public bodies stating the main points of the agreement with

the supplier, & shall be signed by authorized personnel of

the PE in question & submitted to the bank;  

In the case of budgetary PEs, a special government

Letter of Credit application (Form MF/BE/11/5) shall

be completed & submitted to the bank.

 

If the PE in question is non-budgetary, signing of the

authorized personnel on the back of Form FA1 is

sufficient;

 

Public bodies should also have a pro-forma invoice

checked by the foreign currency control Department of

the bank;

Public bodies should also have the contract agreement

signed by them & the supplier;

Once the above mentioned formalities are completed, the

irrevocable documentary credit form (Form FA 5)

should be completed & sent to the correspondent bank.

Public bodies should take 2 copies, keeping one &

sending the other to the supplier;

 

The process of opening the LC ends with the sending of

Form FA 5 to the advising bank.

Hence, public bodies have to follow-up until they

receive the shipping document.

 

Transportation and Shipping   

Goods purchased from abroad should be transported through

Ethiopian Shipping Lines (ESL) or Ethiopian Airlines (EAL).

If ESL/EAL does not call to that specific port, the goods

can be transported to the nearest port that ESL or EAL

calls & the transshipment should be effected by ESL or

EAL.

If the goods are shipped by ESL, the Bill of Lading; if

shipped by EAL, the Airway bill should be received by the

purchaser.

The goods can be transported by sea, air, in land or rail

based on the contract agreement that is signed by both

parties.

 

The responsibility for arranging the insurance depends upon the contract:-

If the contract entails the delivery of the goods on a free on

board (FOB) basis, the purchaser is responsible to cover all

costs associated with the transportation & insurance;

 

If the contract entails the delivery of the goods on a cost

and freight (C&F) basis, the supplier is responsible to

cover all costs associated with the transportation up to the

port of the purchaser, whereas the purchaser is responsible

to insure the goods;

If the contract entails the delivery of the goods on cost,

freight and insurance (CIF) basis, all costs associated with

the transportation & insurance of the goods will be covered

by the supplier.

Where the purchaser has the responsibility for

the insurance it should insure using the Ethiopian

Insurance Corporation (EIC).

Public bodies will require following documents when they want to make a claim

for short-shipment or damaged goods:-

 

Take the original forms:

Insurance policy,

Bill of lading/Airway bill

&

The chamberised invoice as evidence;

Also use the exchange of letters with the relevant

Port Authority, Captain of the ship in connection with

the damage or short-shipment of the goods;  

 

The short lading certificate of the Maritime and

Transit Services Enterprise;

The insurance survey report; and

A report on the delivery & receipt of the goods;

 

Once purchased goods have reached the port of

entry, public bodies may have to arrange the

inland transportation to the final destination.

Though there are private individuals that provide

transit services, public bodies should use:

The facilities of the

Maritime & Transit Enterprise

(MTSE).

Documents that have to be provided to MTSE:

The bank import permit;

Six invoices, three of which are to be chamberised by

the shipper's country Chamber of Commerce;

The insurance policy certificate;

Bill of lading or airway bill;

Bank debit advice, indicating settlement of the claim;

The packing list;

Advance funds by cheque or cash to cover duty inland

freight, storage & other transit charges.

Customs Clearance

After the international & internal transportation of

goods, public bodies will have to clear the goods through

Ethiopian Customs.

Public bodies should use the facilities of a clearing

agent to do this.

There are number of documents that have to be given to Customs in order to clear the goods being imported:-

The Original Bill of lading/ Airway bill;

The original invoice;

The bank import permit;

The insurance policy;

The bank debit advice.

   

All of the above documents should be submitted to

Customs with a completed "Declaration".

This declaration form can be bought from Customs.

The information that should be inserted onto the

Declaration are as follows:-

 

The names of the supplier & the buyer; The method of shipping; The Port of lading; The license number; The tax payer number; The year of production of the goods; The Bill of lading/airway bill number The bank permit number; The production price; The currency of purchase; The quantity of goods;

The kind, type & weight of the goods; The tariff number or homogenized systems code; The price of the goods; The taxable amount; The rate of tax; The tax amount due; Other taxes and charges; Gross amount of other taxes and charges; The name of the transit agent;  

The right of complaint of a candidate or a bidder

A candidate/a bidder aggrieved on account of a Public

Body (PB) inviting a bid not complying with the

provisions of the proclamation/ the directive in conducting

a bid proceeding may present complaint to the head of the

PB or to the secretariat to have the bid proceeding

reviewed or investigated.

The Board for Review & Resolution of Complaints in public procurement:

The board Comprises of five members each from:

MoFED- [Chair person]

Chamber of commerce (member)

Public bodies (member)

Public enterprises (member)

Public Proc. Agency (member)

One more person without vote from PPA (Serving as

Secretary & Expert Advisor to the board)

As far as possible, the term of office of members of the

board shall be three years.

However, considering their suitability for the job in terms

of their performance & their integrity, their term of office

may be extended for another three years.

Duties of the Board

Receive complaints from candidates/ bidders,

Make sure that a complaint is submitted to it with in 5

working days from the date on which the head of the PE has

responded to the complaint at first instance;

In the event that the head of the PE has not responded to the

complaint in due time, such complaint is submitted to it within 5

working days following the 10th working day from the date in

which the complaint was submitted to the head of the PE.

 

If the complaint is submitted to the board:

in the appropriate manner &

in due time,

notify the PE in writing that :

A complaint is lodged against it &

Instruct the PE to submit documents pertaining to the

procurement &

Its statement of response to the complaint &

Suspend the procurement proceeding until it decides on the

complaint.

Follow up compliance of the PE to the instruction above.

Consider the issues of the complaint presented to it by the

secretariat in the form of summary & the statement of

response by the PE & give decision in accordance with the

provisions governing public procurement.

Transmit the decision to the parties concerned

The board shall have the following powers except:

Making decisions in regard to

Selection of the successful bidder or

Entering into a contract. 

Order a Public Body/ a bidder to produce any

document/record pertaining to a procurement in respect of

which a complaint is lodged;

To suspend a procurement proceeding in writing until a

decision is given on a complaint;

To require technical investigation report to be submitted

to it by the Agency/ other experts in regard to a complaint. 

 

Order a Public Body to comply with provisions of the

proclamation/directive in regard to a procurement

proceeding.

Summon witnesses, examine witnesses & parties

concerned on oath;

Invalidate wholly/partially an act/decision of a Public

Body which violates the law.

Reject a complaint where in its judgment such complaint

is not valid.

Dismiss a complaint submitted to it:

Later than five working days from the date in which the

Public Body has responded to the complaint

or

A complaint which was not first submitted to the head of

the Public Body.

Matters in respect of which complaint may not be

lodged.

The selection of procurement method carried out in

accordance with the conditions established in the

proclamation.

The selection of bidders for procurement to be made by

means of restricted tendering or request for quotation

or

On the evaluation criteria set forth in the bidding

document beforehand.

 

The preference given to Domestic Providers pursuant to

Article 25 of the proclamation & article 16.20/1 of the

directive

Decisions given to reject bids, bid documents or price

quotation pursuant to article 30 of the proclamation.

No complaint presented to the head of a PB after 5

working days have elapsed from the date on which the PB

disclosed the result of a bid evaluation, or

No complaint presented to the board after 5 working days

have elapsed from the date on which the PB responded to

the complaint shall be accepted.

No complaint shall be accepted after a contract was

signed, provided that such contract was signed after seven

working days from the result of the bid evaluation being

disclosed as provided in sub article 46.3 of the proclamation;

Procedure for review of complaints presented to

the head of a Public Body.

Before a procurement contract is signed:-

The PE shall wait for seven working days after:

Disclosing the result of the bid evaluation

or

After responding to a complaint,

To give bidders time to present complaint, if any?

A candidate/a bidder aggrieved in connection with a

procurement proceeding shall within 5 working days of when he

became aware of the reason giving rise to the grievance, may

submit his complaint to the head of the Public Body (PB).

A complaint submitted to the head of the PB thereafter may

not be entertained.

Unless the complaint is resolved by mutual

agreement of the two parties, the head of the PB shall

give decision on the complaint in writhing within ten

working days from the date of submission of the

complaint.

The PB shall give to the litigant a copy of the decision within

5 working days from the date in which the decision was made.

Procedure for presentation to &

review of complaints by the

board

A bidder may submit a complaint to the board with (5)

working days of notification in writing of the decision of the

head of the PB, if he is not satisfied by that decision

or

Where the head of the PB does not give decision within 10

working days, within five days following that last day on which

decision should have been given by the PB.

A complaint submitted to the board after such date may not

be entertained.

A bidder presenting complaint to the board shall attach to its

application a copy of :

1) The letter of the complaint submitted to the head of PB

2) The decision of the PB

3) Other relevant documents.

On receipt of such complaint, the secretariat of the board

shall send a notice to the PB informing that:

a) A complaint is lodged against it, &

b) Instructing it to submit within 5 working days its statement of

response together with the record of the procurement proceeding

&

c) To suspend the proceeding until the board’s final decision.

The PB has to make sure that the documents it is required to

send to the secretariat of the board are received with in five (5)

working days from the date of notification.

The board shall review the complaint against:

I. The bidding document issued by the PB,

II. The bid document submitted by the complainant to the PB

in response to the IFB,

III. The bid evaluation report & other relevant documents &

decide on the complaint;

 

The board shall give its decision in writing to the complainant

& the Public Body within fifteen (15) working days of receipt of

the Public Body’s statement of response.

The secretariat of the board shall send forthwith copies of the

decision of the board to the complainant & the Public Body.

Procedure of submission and review of reports on

misconduct of bidders and suppliers.

The Agency shall review & pass decisions on reports of

misconduct of bidders in regard to the execution of

public procurement, submitted to it by public bodies in

accordance with the following procedure:

Any PB which can prove

that any bidder participating

in a public procurement:

has violated the provisions of the law governing the

procurement,

has refused to sign a contract with the PB,

has committed fraud / has provided falsified documents,

has committed an act of connivance or corruption or

has sustained damage on account of failure by a supplier to

perform his/its obligation under a contract

May submit report of default to the Agency on that bidder;

In submitting a report of misconduct on a bidder, a PB

i. Has to state clearly the nature of the default in that

report

ii. Attach copies of the documents of the procurement

proceeding to which the report relates, &

iii. Other relevant documents to the case under consideration.

The Agency shall notify in writing the bidder against whom

a report of misconduct is presented:

To submit within 5 working days, a statement of response

together with supporting documents, stating briefly the content

of the report & follow up its compliance with the notification.

The Agency shall review the report presented to it against the

statement of response of the bidder, in light of the evidence

presented to it by both parties &

Give decision on the report in accordance with:

i. The proclamation,

ii. The directive,

iii.The bidding document &

iv. The procurement contract, &

It shall communicate the decision in writing to:

The Public Body

The bidder as the case may be, &

If necessary, to other entities concerned,

within 15 working days of the receipt of the report.

The penalty to be imposed on a bidder by the

decision of the agency shall be one of the

following penalties prescribed below:-

If it is proved that a bidder has committed one of the acts listed

below with an intention to distort the bid evaluation result or

during the contract administration;

May be suspended from the supplier’s list for:

a) A period not less than two years or

b) For an indefinite period,

so that he may not participate in any public procurement

Such acts of a bidder may be:

Has committed an act of corruption

Has committed an act of fraud

Has connived at an act of price fixing

Has committed coercive action against a procurement staff

Has delivered goods, services, etc of a kind/ quality that are

not in conformity with the requirements under a contract;

The following acts committed by a bidder shall

entail suspension from the suppliers list

for a period of 6 months up to two years

a) Where a supplier under a contract fails to complete the

delivery of goods, works etc under that contract, & on

account of such failure, the PB suffers direct or

consequential loss or damage.

b) Whereupon receipt of written notification of award as a

successful bidder, a bidder fails/refuses to sign a contract &

in exercising another option to acquire the required objects

of procurement from another supplier, the PB sustains loss

or such failure or refusal of the bidder retards/disrupts the

operation of the Public Body.

 

Any bidder omitting any of the following

acts shall be warned in writing

a) Where a supplier fails to deliver the object of procurement

under a contract on the agreed time & such delay retards or

disrupts the operation of the Public Body.

b) Where it refuses to provide a Proforma invoice to any

Public Body intending to procure a required object.

Any action taken by the Agency against a bidder, shall be

communicated to:

1. All public bodies of the federal government;

2. To Finance & Economic Development bureaus of regions &

city Administrations.

3. Such actions shall also be posted on the Agency’s website.

Without prejudice to any action that may be taken by the

Agency on a bidder, public bodies shall be entitled to seek

compensation for any damage or loss they have sustained on

account of an act or omission by a supplier or bidder in

connection with any procurement in accordance with the

contract or the law. 

THE END

THANK YOU