Best Practices of IT Procurement

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Best Practices of IT Procurement

Version: 1.0Date: 8 Aug 2007


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e-Government Program (yesser) 3

Table of Contents

1. Executive Summary .......................................................................................................... 52.

Introduction ....................................................................................................................... 6

2.1. Purpose ............................................................................................................................ 62.2. Document Structure .......................................................................................................... 62.3. How to Read this Document ............................................................................................. 73. Background and Context .................................................................................................. 84. The Stages in Procurement .............................................................................................. 95. Planning the Procurement .............................................................................................. 105.1. Defining the Outcome ..................................................................................................... 115.2. Defining Specifications ................................................................................................... 115.3. Researching the Market .................................................................................................. 135.4. Identifying Risks ............................................................................................................. 145.5. Deciding on Timelines .................................................................................................... 155.6. Internal Assessment ....................................................................................................... 155.7. Acquisition Scenarios ..................................................................................................... 155.8. Identifying Alternative Opportunities ............................................................................... 176. Selecting a Procurement Method ................................................................................... 186.1. Public Tendering ( ) ............................................................................................ 186.2. Special (Select) Tendering ( ) .......................................................................... 186.3. Direct Contracting ( ) ............................................................................... 196.4. Comparison and Considerations ..................................................................................... 207. Preparing the Procurement Artifacts ............................................................................. 217.1. Developing the Procurement Plan .................................................................................. 217.2. Preparing the Request Document ................................................................................... 227.3. Establishing the Responses Evaluation (Tendering) Committee ..................................... 268. Publishing the Procurement Request Document.......................................................... 278.1. Announcing the Procurement ......................................................................................... 278.2. Responding to the Bidders Questions ............................................................................ 288.3. Receiving the Bids .......................................................................................................... 299. Evaluating the Bids ......................................................................................................... 309.1. Bids Evaluation ............................................................................................................... 309.2. Bids Evaluation Report ................................................................................................... 3310. Closing the Procurement ................................................................................................ 3510.1. Negotiating the Contract ................................................................................................. 3510.2. Announcing the Awarding of the Contract ....................................................................... 3610.3. Canceling the Procurement ............................................................................................ 3610.4. Handling Complaints....................................................................................................... 3710.5. Reporting ........................................................................................................................ 3711. Special Considerations ................................................................................................... 3812. Appendix I References ................................................................................................. 4013. Appendix II Glossary of Terms .................................................................................... 41


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List of Tables

Table 1 - Sample functional and non-function specifications listing .......................................... 12Table 2 - Sample Good and Bad practices in specifications development ................................ 12Table 3 - Pros and Cons of the different procurement methods ................................................ 20

Table 4 -Request document verification checklist ..................................................................... 25Table 5 - Suggested technical evaluation criteria ..................................................................... 31Table 6 - Glossary of Terms ..................................................................................................... 41

List of Figures

Figure 1 - The stages in procurement ......................................................................................... 9Figure 2 - Procurement planning steps ..................................................................................... 10Figure 3 - Sample evaluation and negotiations approach ......................................................... 33


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1. Executive Summary

Procurement refers to the overall process of acquiring a product or

service. Depending on the organization, it may include some or all of thefollowing actions: identifying a need, specifying the requirements to fulfillthe need, identifying potential suppliers, soliciting bids and proposals,evaluating bids and proposals, awarding contracts or purchase orders,tracking progress and ensuring compliance, taking delivery, and payingthe supplier.

The Government of the Kingdom of Saudi Arabia issued a system calledGovernment Procurement and Competition System based on the royaldecree number (58M) on 4/9/1427 H. Shortly after that, in 20/2/1428 Hthe Ministry of Finance issued rules number (362) to further detail thesystem and they called it Rules of Government Procurement andCompetition System. The regulation aims to set the policy andprocedures of government procurement and sets the basic rules of allinteractions between the government and organizations who wish toprovide products and services to the government of Saudi Arabia duringthe procurement lifecycle. This regulation will be a base for this documentand will be referred to as the Saudi Government Procurement andCompetition System.

Typically, a number of stages are followed in procurement. Within each ofthese stages there are a number of activities that take place:

- Planning the procurement by defining the procurement outcomes,specifications, identifying the procurement options and scenarios,and identifying the risks and constraints on the procurement

- Selecting a procurement method; whether to execute theprocurement by an open tendering, select tendering, or directcontracting methods

- Preparing the procurement artifacts including the procurement planand the request document

- Publishing the procurement request by announcing the procurementto interested and potential bidders, responding to any questions ofinquiries from the bidders, and eventually receiving the bids from thedifferent bidders

- Evaluating the bids and selecting the winning bid by evaluating boththe technical and financial aspects of all the bids

- Closing the procurement by negotiating and signing the contract,announcing the awarded contact, and handling any complaints thatmy come from unsuccessful bidders

This document analyzes the general Saudi Government Procurement and CompetitionSystem and defines more specific IT-related procurement process, taking intoconsideration international best practices and experiences of other countries in this field.


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2. Introduction

2.1. PurposeThe purpose of this document is to provide guidance in IT procurement.This operational guide promotes the achievement of value for money byproviding practical information on managing procurement processes thatlead to organizations entering into a purchasing agreement with asupplier or suppliers. This information meets the requirements of theGovernments procurement rules and regulations while also facilitatingthe delivery of good business outcomes.

The document targets the IT managers / Directors as well as all staff inthe IT department who are involved in making decisions regarding theprocurement of IT resources.

This document is based on best practices of other countries andinternational organizations (WTO, World Bank.. etc) while being alignedto the Saudi Government rules and regulations.

2.2. Document Structure

The document can be navigated from one related subject to another,simply by clicking on the hyperlinks on the table of contents. The mainsections of this document are:

- Background and context (section 3): provides a general definition forProcurement and a discussion of why it is considered an important

process for governments and enterprises around the world

- The stages in procurement (section 4): provides an overview of thedifferent stages in the procurement lifecycle which is described inmore details in the following sections

- Planning the procurement (section 5): defines the planning activitiesthat should be conducted prior to initiating the procurement process

- Selecting a procurement method (section 6) defines the differentpossible procurement methods in the Saudi GovernmentProcurement and Competition System and discusses the pros andcons of each method

- Preparing the procurement artifacts (section 7): discusses thecontent of the main two artifacts in the procurement: the requestdocument and the procurement plan

- Publishing the procurement request document (section 8): definesthe mechanisms of announcing the procurement to interestedbidders as well as the mechanism of responding to biddersquestions and inquiries

- Evaluating the bids (section 9) discusses the criteria of selecting thewinning bid by evaluating both the technical and financial aspects ofall the bids


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- Closing the procurement (section 10) discusses negotiating andsigning the contract, announcing the awarded contact, and handlingany complaints that my come from unsuccessful bidders

2.3. How to Read this Document

For easier reading, this document uses the following notations:

This document contains a number of guidelines and recommendationsthat will help IT managers and other concerned staff in the IT departmentto conduct successful IT procurements.

All guidelines, recommendations and tips in this document areframed in a blue box similar to this one

It is also based on the Saudi Government Procurement and CompetitionSystem and provides analysis and mapping between the system and bestpractices. When applicable, the document identifies and suggests areasfor improvement in the current system.

All the Saudi Government Procurement and Competition Systemstandards and rules that are used as base for this document are

framed in yellow box similar to this one

All suggested areas for procurement process improvement areframed in an orange similar to this one

2.4. Referenced Documents

The documents listed below represent relevant material to the subject of

IT procurement and they provide details on their designated subjects:- Best Practices of IT Budgeting

- Guidelines for Project Management

- Guidance for IT Strategic Planning


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3. Background and Context

Procurement refers to the overall process of acquiring a product or

service. Depending on the organization, it may include some or all of thefollowing actions: identifying a need, specifying the requirements to fulfillthe need, identifying potential suppliers, soliciting bids and proposals,evaluating bids and proposals, awarding contracts or purchase orders,tracking progress and ensuring compliance, taking delivery, and payingthe supplier.

Procurement in the Public Sector is considered a major administrativeresponsibility in any organization; governments around the world issueddetailed regulations, policies and procedures to streamline andstandardize the procurement process.

Regulations and policies of government procurement differ according to

each government political direction. Some governments favor domesticprocurement over international options in order to promote and developthe local industries, other governments focus on giving better opportunityto small business to support them in growing rather than procuring fromlarge enterprises who are more established in the market, in othercountries more focus is given to environment safety and recycling.. etc.

International organizations such as the World Trade Organization (WTO)1and the World Bank2 have also issued guidelines and recommendationsfor government procurement in its endeavor to create homogeneous andeffective government procurement in the current global markets.

The Government of the Kingdom of Saudi Arabia in its turn issued the

Government Procurement and Competition System in 1427 H. Theregulation aims to set the policy and procedures of governmentprocurement and sets the basic rules of all interactions between thegovernment and organizations who wish to provide products and servicesto the government of Saudi Arabia during the procurement lifecycle. Thisregulation will be a base for this document and will be referred to as theSaudi Government Procurement and Competition System.

Although IT procurement in the government should adhere to thegovernments rules and regulations, this document sets a practicalapproach and interpretation of these regulations for the special case of ITprocurement; it describes the regulatory mandates that need to be takeninto consideration and discusses the areas of improvement in the current

regulations to suit sophisticated IT procurement.

1http://www.wto.org/english/tratop_e/gproc_e/gproc_e.htm

2World Bank Country Procurement Assessment reports:

http://www-

wds.worldbank.org/external/default/main?pagePK=64187835&piPK=64187936&theSitePK=523679&menuPK=64187511&siteName=WDS&pageSize=20&docTY=540617
http://www.wto.org/english/tratop_e/gproc_e/gproc_e.htmhttp://www.wto.org/english/tratop_e/gproc_e/gproc_e.htm


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4. The Stages in Procurement

Typically, a number of stages are generally followed in procurement.

Within each of these stages there are also a number of activities that takeplace. The following diagram outlines these major stages and activities:

Figure 1 - The stages in procurement


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5. Planning the Procurement

All procurement activities require planning; however, the degree of

planning is dependent on the complexity and size of the procurement.Simple procurement such as purchasing personal computers or printersdo not usually require detailed planning. In the case of large andcomplicated procurements such as systems development or infrastructurebuilding the planning process can be very long and complicated,organizations often assemble teams or committees or hire consultants tobe in charge of such procurements planning.

Successful and effective procurement planning have different objectivesincluding:

- Decide on the feasibility of the procurement

- Clearly and comprehensively define the procurement outcome,scope, and specifications

- Evaluate the different procurement options (public tendering, selecttendering, or direct contracting) scenarios and select the mostappropriate one

- Identify the different risks that can affect the procurement outcome orthe procurement process

This section describes the different steps that may be taken during theprocurement planning. It outlines various issues an organization should

consider when planning an IT procurement that will achieve value formoney.

Figure 2 - Procurement planning steps


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5.1. Defining the Outcome

Having a clear description of the outcome is an important first step inprocurement. By defining the outcome, the organization will define whatneed is to be fulfilled by the procurement and how it is to be fulfilled.

The outcome of the procurement should be described in relation to thegoal that needs to be satisfied; for example, if the target is to deploy anew system in the organization then this should be satisfied by procuringseveral items such as hardware, software, operating system, andprofessional services. These items can be the outcomes of severalprocurements or a single procurement with multiple outcomes.

Once the outcome is defined clearly, the detailed description of thisoutcome will constitute the detailed specifications and requirements of theprocurement as will be described in the following subsection.

The clear and comprehensive description of the outcome of theprocurement and sufficient details about its specifications is mandated by

Element 4 of the Saudi Government Procurement and CompetitionSystem. Element 66 emphasized on this.

5.2. Defining Specifications

Each outcome of the procurement should be further detailed intospecifications that provide sufficient details about the required outcome inorder to enable the providers to successfully bid with adequate productsand services.

Organizations should involve the end users as well as appropriate projectand technical officials in developing the specifications. Developingspecifications is sometimes a complex activity requiring certain expertisethat may not be always available in the IT department or in theorganization as a whole. Organizations should seek external help in suchcases in order to develop sufficient specifications that suffice for therequired outcome and be clear enough for the bidders. In some cases,hiring an external consultant to develop the specifications might berequired; in other cases the organization can seek for support from othergovernment agencies who did similar procurement in the past or who mayoffer consultative services.

Specifications are described in terms of functional and non-functionalspecifications; functional specifications constitute what the outcomeshould be (description of the different functionalities of the system), non-

functional specifications should provide a description of how the outcomeshould work to achieve its goals successfully; including characteristicssuch as performance, security, availability, scalabilityetc. The examplebelow shows the specifications developed for procuring a printer:


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Table 1 - Sample functional and non-function specifications listingSubject: Procurement of Printer for Department X

Functional Specifications Non-Functional Specifications

Property Value Property Value

Colored Yes AvailabilityAvailable throughout the week(Saturday to Wednesday 8:00AM to 5:00 PM)

Type Laser SecurityAbility to have access code andprivileges for printing

Network Yes

Paper Size A4 AND A3

Throughput 20 Pages per minute

It is important to keep in mind that technology changes in very fast paceand in often changes faster than the procurement process itself. Thisshould be an important factor while developing the specifications in a waythat ensures eventually a fair price is paid for the most appropriateproduct.

For example, if an organization is procuring a number of personalcomputers that will be delivered over a period of 6 months, it should keepin mind that the cost of a personal computer might drop drastically oversuch a period. Eventually, the organizations specifications should bedeveloped in a more generic manner and should not provide specific

details as described in the sample table below:

Table 2 - Sample Good and Bad practices in specifications development

Subject: Procurement of Personal Computers

Functional Specifications (DO NOT) Functional Specifications (DO)

Property Value Property Value

Processor 1 GHz Processor1 GHz or higher according tomarket price at the time ofdelivery

Memory 1 GB RAM Memory1 GB RAM or higher accordingto market price at the time ofdelivery

Disk Space 40 GB Disk Space40 GB or higher according tomarket price at the time ofdelivery

Another important best practice is to develop specifications impartiallyand in nondiscriminatory manner in order to give the different bidders afair chance and ensure that the organization is getting the best value of

money for the most appropriate product or service.


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In fact, partiality in the procurement process is considered illegal in thegovernment procurement in Saudi Arabia as specified by Element 1/A ofthe Saudi Government Procurement and Competition System.Consequently, no brand name or number should be used in thespecifications to avoid any bias and put the whole procurement operationin questionable position. This is also indicated in Element 65 of the Saudi

Government Procurement and Competition System.

5.3. Researching the Market

Researching the market is very important to understand how the marketworks in terms of:

- Competition within the market

- Latest developments and innovations

- Price range and nature of the change in the price- Key players and potential vendors

- Types of services provided normally by the suppliers

- Updates on specifications

Market research can happen through several methods and in differenttimes:

- Consulting with other government organizations who did similarprocurements in the past or who provide consultative services

- Conducting market and technology watch activities in a permanentmanner; this method is applied by some large organizations to stayup-to-date with the market

- Conducting limited market research through the internet, books,products datasheetsetc

- Soliciting information from possible vendors through a formalRequest for Information (RFI); RFI can be a very useful tool giventhat the organization can guarantee that the final specifications willnot be biased or inclined to a specific provider or product. RFI isdescribed in more details in the following subsection:

Request for Information (RFI)

Request for Information (RFI) is a method that is used specifically in largeprocurements. As indicated in its name, RFI is used to inquire forinformation from vendors and potential bidders.

The objective of the RFI is typically one or both of the following:

- Obtaining more knowledge about unknown technology or solution inorder to properly identify requirements and specifications of theprocurement outcome

- Identifying and/or short-listing potential bidders who demonstrate

experience and knowledge in their responses to the RFI

RFI typically consist of the following main parts:


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- Introduction about the subject of the RFI and justification of its need inthe organization

- Questions and inquiries: since the main target of the RFI is to inquirefor information then it is normal that the RFI mainly consist ofquestions and inquiries. Having more clear questions and inquiries will

result in better understanding by the vendors and eventually betterand more useful responses

- Terms and conditions of participating in the RFI (such as the deadlinefor receiving responses, the qualifications of participating vendorsetc)

RFI is a powerful tool that is used at the planning stage for better andmore effective procurement.

5.4. Identifying Risks

Identifying and managing possible risks is imperative during the

procurement cycle. At this stage of planning it is important that anypossible risks on the procurement are identified and evaluated, possiblemitigation actions should be planned, and any required modifications onthe specifications or terms and conditions must take place.

In the case of IT procurement, some of the risks that can be identified are:

- Lack of availability of expertise or technologies to fulfill the desiredoutcome of the procurement

- High price of technology (over the estimated budget) or pricechanges during the procurement

- Delays in delivery

- Expiry or change of technology

- Security of information and configuration of the organizations ITassets that are exposed in the procurement process

While some risks are hard to avoid in IT procurement, most risks can bemanaged by ensuring the right measures are in place all over theprocurement process; for each unacceptable risk that is identified theorganization should assess its ability to:

- Reduce the likelihood of occurrence of the risk

- Reduce the severity of the risk or its consequences once it occurs

- Transfer the risk to another party in part or in full

- Avoid the risk

This assessment should finally result in making possible requiredadjustments to the specifications or terms and conditions.

A practical example for risk assessment is the organization requesting thebidders to sign non-disclosure agreement (NDA) prior to conducting sitevisits or providing detailed specifications for an existing system etc.


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5.5. Deciding on Timelines

In developing the procurement timelines, it is important to allow adequatetime to undertake the various tasks of the procurement cycle.

For example, the time given to the bidders to propose should be

proportional to the complexity of the requirements to allow the bidders topropose the best products and services. Consequently, the time plannedfor evaluating the different bids should be proportional to the complexityof the requirements and to the foreseen number of bidders in order toensure that each bid is adequately studied and evaluated.

The Saudi Government Procurement and Competition System mandatesthat all information about the procurement should be available for all thebidders at the same time and that all of them should have the same timeto analyze the procurement requirements and submit their proposals(Elements 3 and 4 of the Saudi Government Procurement andCompetition System). This rule should be kept in mind while deciding onthe timelines of any procurement.

5.6. Internal Assessment

The IT department is responsible to ensure that the procurement isaligned with the current internal legal, policy, and operationalarrangements. Therefore, internal assessment is an integral factor in therisk management of the procurement. This assessment should cover:

- Ensuring that the procurement is not contradicting with any policy orregulation (e.g. internal or governmental black lists, operational

policiesetc).- Ensuring that the procurement is not contradicting with any license,

intellectual properties or other obligations on the organization.

- Ensuring that the procurement is not contradicting with any currentoperational system or process in the IT department or any otherdepartment.

- Ensuring that the procurement is inline with the current and plannedservice levels and service requirements.

- Ensuring that the procurement is aligned with the entity InformationTechnology strategic direction.

5.7. Acquisition Scenarios

The IT department need to consider the most suitable means of acquiringthe required products or services in the procurement, the usualacquisition scenarios are buy, hire, or lease.

When buying, the organization has the advantages of ownership, butbears the risks and costs of maintenance, obsolescence and eventuallydisposal.

Hiring involves renting the products without any fixed term of ownershipand hence releases the organization from the typical worries of ownership(maintenance, obsolescence, disposal ...etc). I.e. the organization will be


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paying for the time of using the asset with the flexibility to abandon itwithout bearing the cost of this abandon. Hiring cost might be higher thanthe cost of ownership over long period of time, however it might carryseveral advantages on the effectiveness and efficiency of the IT servicesand may eventually be more cost effective.

Leasing is a middle solution; it entails renting the assets for a fixed termand over an agreed-upon period with regular monthly, quarterly, or yearlypayments. At the end of the renting period the organization can decide toabandon the asset or purchase it at a fair market value and price.

The IT department will decide on its preferred acquisition scenarios basedon several factors including:

- Total cost of ownership: TCO is a very useful tool for estimating thecost of acquiring IT assets; using TCO enabled several organizationsto realize that the options of leasing or hiring were more effectivethan buying in specific scenarios3

- Budget allowance at the current year; in some scenarios the IT assetis necessary while there is not enough budget to cover for its cost, inthese scenarios leasing or hiring options are used

- IT strategic direction and sourcing strategy; outsourcing of servicesand assets can be a strategic direction taken by a certainorganization for many reasons

For example, if the organization is planning to procure servers then thescenario of buying the servers may be considered the best scenario fromgeneral point of view, but when considering other factors like:

- The cost of running these servers in secure and availableenvironment such as high availability datacenter

- The cost and skills of the resources that will be operating andmaintaining these servers

- The cost of upgrading these servers in the future, or disposing themand procuring new ones

Having such factors in mind may prove that the buying scenario is not thesuitable one for this organization or for the budget allocated for thisprocurement; and hence the organization may decide to consider leasingor hiring scenarios instead.

Element 67 of the Saudi Government Procurement and CompetitionSystem gave the government entities the flexibility to select theappropriate acquisition scenario in a way that ensures best use of theavailable resources.

3For further information about TCO please refer to IT Budgeting Best Practices report (section 8.1)


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5.8. Identifying Alternative Opportunities

Once the outcome has been defined, specifications has been developedand risks has been realized, alternative opportunities can be identified tominimize the investment are speed up the acquisition process. Alternative

options can be sharing resources with other government organizations orexpanding available assets. Alternative options scenarios apply stronglyin the cases of procuring infrastructure assets such as connectivity orhardware.


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6. Selecting a Procurement Method

Any procurement entails investment in time and money not just in the

procurement outcomes but also in the process itself. Deciding the mostappropriate procurement process will save the effort and time of the ITdepartment and will ensure gaining the best value of money.

In the Saudi Government Procurement and Competition System, severalprocurement processes are provided; each process is valid in certainscenarios and has certain conditions and requirements4. Theseprocurement processes are described in the following subsections:

6.1. Public Tendering ( )

As specified in Element 6 on the Saudi Government Procurement and

Competition System, Public tendering is the default method forprocurement.

Public Tendering Entails announcing the procurement through channelsof official public media (e.g. newspapers or procurement portals) andguaranteeing an open competition between all bidders who meet therequired qualifications.

6.2. Special (Select) Tendering ( )

Special or Select tendering involves inviting a limited number of bidderswho are known by the organization as qualified bidders and able to fulfill

the procurement outcomes and specifications.As mandated in the Saudi Government Procurement and CompetitionSystem; government organizations are obliged to invite at least 3 qualifiedbidders for any special tendering.

The selection of the invited bidders is typically based on one of thefollowing reasons:

- The selected bidders have successfully delivered similarprocurements for the organization in the past

- The selected bidders are recommended by other governmentorganizations who were involved in similar procurements in the past

- The selected bidders are recommended by specialized governmentorganizations

- The selected bidders are well known in the market for providingproducts and services similar to the outcomes of the procurement

4Please refer to Section 2 of the Saudi Government Procurement System


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6.3. Direct Contracting ( )

Direct contracting happens through direct request for quotation from threevendors at the least while eliminating the option of evaluating multipleoffers. Although direct contracting is permitted in the Saudi Government

Procurement and Competition System, it is considered an exception andcannot occur without fulfilling a number of conditions or the existence ofcertain circumstances. The main the cases that allow direct contractingare:

- Emergency procurements for amounts that do not exceed 1 millionRiyals Element 44 of the Saudi Government Procurement andCompetition System

- Spare parts for existing assets that were procured from the samevendor previously (even if such procurement cost exceeds 1 millionSaudi Riyals) Element 47/C of the Saudi Government Procurementand Competition System

- The procurement outcome is available by one Saudi manufacturer (ifthere is more than one Saudi manufacturer then direct contracting isnot allowed) Element 47/D of the Saudi Government Procurementand Competition System

- Consultancy and supervisory procurement for values less than 1million Saudi Riyals Element 47/B of the Saudi GovernmentProcurement and Competition System

Element 45 of the Saudi Government Procurement and CompetitionSystem provided the requirements and regulations for the DirectContracting method; where direct contracting requires the approval of theminister (he can delegate the authority for procurements of value lessthan 500,000 Saudi Riyals)5.

Element 46 mandated that procurements for values above 1 million SaudiRiyals must not be partitioned so they can fit the purpose of directcontracting.

5An important addition that should be noted in the new Saudi Government Procurement System is that

direct purchasing can be done using electronic means. Which gives the government entities more abilityto do such purchasing more effectively, it also has good effect on facilitating the growth of e-commerce inthe Kingdom.


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6.4. Comparison and Considerations

Each procurement method entails a number of advantages or strengthsas well as a number of disadvantages or constraints; the IT department isrequired to study the procurements case carefully and to evaluate all the

possible options before making a decision on which method it is going touse.

The table below describes the different pros and cons of eachprocurement method:

Table 3 - Pros and Cons of the different procurement methodsMethod Pros Cons

Open Tendering

- Open competition with nopreferences

- Eliminates discrimination or

biased procurement- Guaranteed procurement for

the best value of money

- Time-consuming process thatdo not suit urgent needs

- May entail overhead on the

organization for evaluatinglarge number of bids

Special (Select)Tendering

- Open but controlledcompetition

- More optimized processwhich minimizes theoverhead on the organizationfor evaluating large number ofbids

- Faster process than opentendering

- Eliminate chances ofunselected possible vendorsto participate, and may causecomplaints of discrimination

- Not guaranteed procurementfor the best value of money

DirectContracting

- Fastest and most optimizedprocurement process

- Positive impact on vendorrelation

- Positive impact on theconsistency in theorganizations assets andservices

- Low transparency, and maycause complaints ofdiscrimination

- Not guaranteed procurementfor the best value of money

- Constrained by specialconditions in the SaudiGovernment Procurement

and Competition System


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7. Preparing the Procurement Artifacts

Once the decision has been made as to the type of tender process that is

appropriate, it is necessary to begin preparing the documents that arerequired for the procurement initiation.

Two main documents should be prepared during this phase:

- Procurement plan

- Request document (RFP or RFQ)

Where appropriate, a Responses evaluation committee should also beformed prior to an approach being made to the market as the committeeshould be in agreement on the details of the request document and thecontent of the bids evaluation plan.

This chapter is structured to describe in turn the purpose of each of thethree documents identified above and the role of the bids evaluationcommittee.

7.1. Developing the Procurement Plan

The procurement plan details the process that will be undertaken. Itshould not describe why a procurement is being undertaken. Instead, itexplains how the procurement is to be undertaken.

The procurement plan should cover the following topics (or the applicabletopics for the procurement):

- A description of the procurement, including a full description of theoutcomes and brief description of specifications

- The conditions for participation (qualifications of participants), andlisting of participants (in the cases of select tendering and directcontracting)

- The evaluation criteria that will be used in the procurement6

- The type of procurement method to be used, with an explanation ofwhy an open tender is not being used (in the cases of select tenderingor direct contracting)

- Governance arrangements, such as the need for a steeringcommittee. The Saudi Government Procurement and CompetitionSystem provides complete description on the different governancerequirements for the different procurement scenarios and methods; forexample, procurements of value above 1 million Saudi Riyals must beapproved and signed by the Minister

- The risk assessment

- Indicative time-lines

- Responses evaluation plan, including the detailed timeline andprocess of evaluating the responses

6For more details about the evaluation criteria please refer to section 9.1


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- Special considerations and conditions that uniquely belong to thisprocurement; such as mandating signing NDA agreements by thebidders or the need for conducting site visit etc

- Financial arrangements for the procurement process, including theprice of the request document and the value of the bid guarantee

when applicable based on the Rules of Procurement and CompetitionSystem.

- Acquiring the best value for the money spent.

The level of detailing the procurement plan depends on the size and thecomplexity of the procurement. However, the procurement plan need tocover all the appropriate details from the ones listed above wheneverappropriate.

The procurement plan should go through acceptance process; allmembers of the organization who are responsible of the procurementmust review the plan and approve it. This includes the IT manager, themembers of the tendering committee (when appropriate) and any otherofficials such as the Director of Administrative and Financial affairs or theMinister (when appropriate).

7.2. Preparing the Request Document

In brief, the request document represents the official communiqubetween the organization and the bidders, it should clearly express all therequirements and expectations of the organization from the procurementin terms of outcomes, specifications, and requirements. In addition, itshould clearly explain the ground rules for the relation between the

organization and all the bidders throughout the procurement lifecycle.

The level of detailing the request document depends on the size and thecomplexity of the procurement. In all cases, the request document mustdeliver all the requirements of the procurement without any ambiguity toall the bidders.

The request document should go through acceptance process; allmembers of the organization who are responsible of the procurementmust review the plan and approve it. This includes the IT manager, themembers of the tendering committee (when appropriate) and any otherofficials such as the Deputy Minister of Administrative and Financialaffairs or the Minister (when appropriate).

The request document is called with different names such as Request forProposals (RFP), Request for Quotations (RFQ), or Request for Bids(RFB) etc. No matter what name is used, the Request Documentcontains similar parts with different levels of details. The followingsubsections provide a description of the main parts of the requestdocument, which should ideally be available (explicitly or implicitly) in anysuccessful request document.


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A Description of the Procurement

The request document must describe clearly the outcome of theprocurement. This may include:

- The nature, scope and quantity of the procurement

- The detailed specifications of the outcome(s) as described in section5.2 above, supported with all required datasheets, drawings,chartsetc

- All additional requirements and expectations of the procurement, suchas training, installation, migration, integration, support ...etc

- Delivery time requirements

- Any qualitative standards and requirements for the outcome(s), suchas compliance to international standards or to certain local ororganizational standards and codes

Conditions for Participation

Conditions for participation are mandatory requirements which describeminimum standards or essential characteristics that suppliers must meetfor their bids to be considered.

The specification of conditions for participation in the request documentshould flow directly from the procurement planning process describedabove and be limited to assuring the legal, financial, technical and/orcommercial capabilities of the supplier to meet the procurementrequirements of the case at hand.

This part of the request document is particularly important in open

tendering procurement to filter and eliminate any unqualified bidder priorto the evaluation process.

Examples of conditions for participation include suppliers having:

- Special classification, according the Saudi classification system7

- Access to certain technical or operational skills, facilities orcapabilities

- Relevant licenses or professional accreditations/registrations

- Minimum level of financial ability or business size in the Kingdom (oroutside the Kingdom as well)

- Number of years of experience

It is important to note that the conditions of participation should includemandatory conditions and not preferred characteristics; the later can bespecified as criteria in the evaluation criteria as described below.

7For more information please refer to http://www.momra.gov.sa/classification-agency/index.htm
http://www.momra.gov.sa/classification-agency/index.htmhttp://www.momra.gov.sa/classification-agency/index.htm


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Evaluation Criteria

To enable bidders to provide the most relevant proposals, the requestdocument should provide adequate description for the evaluation criteriaagainst which their bids are going to be evaluated. The evaluation criteriashould describe how will the organization select the successful bids fromthe ones who already passed the mandatory conditions for participation.The request document must clearly identify any criteria that are to betreated as essential in the evaluation of bids.

Including the evaluation criteria in the request document will result in anumber of benefits:

- Allows bidders to evaluate their solutions prior to submitting them

- Creates transparency in the procurement process, and assures thebidders that their bids will be evaluated in a tangible andpredetermined manner

For more details about the evaluation criteria, please refer to section 9.1.

Content and Format Requirements

To avoid ambiguous, incomplete or inaccurate responses, it is customaryto include in the request document a description of the minimum contentand format requirements of the responses. The organization may includea disclaimer that it will disqualify any response that do not meet theserequirements. The content and format requirements differ according tothe complexity of the procurement as well as to the requirements of eachorganization. Some examples of content and format requirements arelisted below:

- A description of the structure of the response and how should theresponse be organized

- A description of the number of pages required in the response or ineach section or component of the response

- Templates and forms to be filled and included in the response, suchas compliance forms, NDA (Non-Disclosure Agreement), referencesand profiles templates etc

Element 11 of the Saudi Government Procurement and CompetitionSystem specifies that a bid bond of 1% to 2% of the of the totalprocurement value is mandatory except in the case of direct purchasing

(with open proposals).

Procurement Process Rules

This section should describe to the bidders all the rules of theprocurement process, including all the rules for disqualification of the bidand all the disclaimers of the organization. It should also describe all therights of the organization and the bidders, for example, if the organizationwants to declare its right to cancel the procurement at any point of timeduring the process, this is the right section for declaring it.


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Draft Contract

If the organization has a predetermined contract draft that will be used forthis procurement, it is recommended to include this draft as a samplecontract in the request document.

This will help the bidders understand what will be their obligations beyondthe procurement process should they be selected as winners, and mayaffect their response accordingly.

Request Document Verification Checklist

In summary, the request document should include all the abovecomponents in different extents of detailing. The following checklist canbe used to verify the completeness of the request document. Thischecklist is useful for quality-assuring or approving the request document:

Table 4 -Request document verification checklistQuestion Answer Notes

Contains sufficient description of the nature ofthe outcomes. Yes No

Contains sufficient description of the scope ofthe outcomes. Yes No

Contains sufficient description of the quantitiesof the outcomes. Yes No

All the outcomes are described with adequatelevel of details in terms of specifications. Yes No

The expected time of delivery is stated clearly.Yes No

All additional requirements such as training,installation, support... etc are stated clearly. Yes No

Qualitative requirements are stated clearly.Yes No

The conditions for participation are stated

clearly. Yes No

The evaluation criteria are stated clearly.Yes No

A description of the structure of the response isstated clearly. Yes No

A description of the number of pages required inthe response or in each section or component ofthe response is stated clearly. Yes No

All required templates and forms to be filled and

included in the response are included. Yes No


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Procurement Process rules are stated clearly.Yes No

Draft Contract included. Yes No

Table of contents requested from Vendor. Yes No

7.3. Establishing the Responses Evaluation (Tendering) Committee

In the cases of open or select tendering, an evaluation committee isnormally required. The evaluation committee will be responsible ofevaluating all the bids and making the decisions of qualifying ordisqualifying the competitors. The Saudi Government Procurement andCompetition System mandates that a response evaluation committeemust be established in the cases of open and select tendering, thesystem also mandates that one of the members of the committee shouldbe a financial auditor (Element 16 of the Saudi Government Procurementand Competition System).

The evaluation committee must consist of no less than three membersand their number can increase according to the size and complexity of theprocurement.

The committee members profiles should reflect their adequate andrelevant technical background, and their understanding of the technicalspecifications of the procurement and their ability to evaluate theresponses against them.

The responsibilities of the responses evaluation committee include:

- Ensure that the conditions for participation are met in all responses,and eliminate the responses that do not meet the conditions

- Ensure that the responses format and content are meeting therequirements of the request document

- Evaluate the responses according to the predefined evaluationcriteria8

- Prepare responses evaluation reports

- Conduct meetings to compare evaluations and decide on final results

8For more details about the evaluation criteria please refer to section 9.1


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8. Publishing the ProcurementRequest Document

Now that all the preparations for initiating the procurement process arecompleted, it is time to publish the procurement request through the rightchannels. This step consists of three main periods:

- Announcing the procurement through the appropriate channels

- Responding to bidders questions

- Receiving the bids

8.1. Announcing the Procurement

The method of announcing the procurement differ according to theprocurement method selected:

- In the case of public and open tendering, the organization needs toannounce the procurement in the official newspapers or openelectronic media such as the organizations website (SaudiGovernment Procurement and Competition System Element 7/A)

- In the case of select tendering, the organization needs to officially anddirectly communicate with the selected bidders to notify them of theprocurement

- In the case of direct contracting, the organization will be

communicating directly with the vendor.

- In the case of procurements that will potentially attract bidders fromoutside the Kingdom, announcing the procurement can take placeoutside the Kingdom under the condition of announcing it internally aswell (Saudi Government Procurement and Competition System Element 7/B).

In all cases, the Saudi Government Procurement and CompetitionSystem mandates that the announcement of the procurement shouldhappen in such a way that ensure that all bidders are notified about the

procurement in the same time and with the same information in order toensure fair and unbiased competition (Elements 3 and 4 of the SaudiGovernment Procurement and Competition System).

Some of the basic information that should be included the procurementannouncements are:

- The name of the organization, and other information needed tocontact the organization to obtain the request document

- A description of the procurement outcomes, and listing of all theparticipation conditions

- The address of submission of the responses


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- The closure date of submission of the responses

In the case of open tendering, the Saudi Government Procurement andCompetition System allows the organization to charge a specific amount

of money for giving away copies of the request document; this amount ofmoney is typically proportional to the value of the procurement.

When some of the bidders were surveyed, they complained that the priceof the request documents is very high and that they have to invest aconsiderable amount of money in purchasing request document.

They have also complained that in some cases they do not get sufficientinformation about the procurement from the announcement, whichdiscourages them from making the uncertain investment, end eventuallyimpact the competitiveness of the procurement negatively.

In order to ensure open competition in open tendering procurements, thefollowing two guidelines should be considered:

- Consider minimizing the price of the request document; andremember that the objective is not to make profit from this and not tocreate financial overhead on the bidders

- Ensure that sufficient information about the procurement outcomesare provided in the announcement, to ensure that interested biddersonly will be obtaining the request document

8.2. Responding to the Bidders Questions

As described above, the main objective of this stage is to provide thebidders with sufficient and clear information about the procurement inorder for them to respond successfully. Hence, no matter how clear orsimple will the request document appear to its publishers, bidders willhave questions and inquiries to further understand the procurementoutcomes or conditions.

The organization is obliged to respond to all inquiries and questions of thebidders, however, this response is constrained by a number of factors:

- The organization should define a specific period of time for receiving

the questions and inquiries; this period of time must be defined in theprocurement plan and must also be communicated to all the biddersin the request document

- The organization must also commit itself for a deadline for respondingto the inquiries, this deadline should be set in a way that allowsenough time for the bidders to update their proposals accordingly

- The organization must send all answers to vendors at the same time.

- The organization should evaluate the bidders questions and decide ifresponding to these questions will really add value to the bidders. Theorganization should not respond to any inquiry that:


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o Will result in unveiling information that the organization did notwant to disclose, such as systems configurations or business-sensitive information

o Will affect the scope of the procurement or the specificationsof its outcomes

o Will dilute the competitive nature of the procurement; forexample, if one of the bidders inquire about the preferredbrand of the outcome then the organization must respondnegatively and keeps the open competition between allbidders

8.3. Receiving the Bids

The period from the date of announcing the procurement until thedeadline of receiving the bidders responses should be proportional to the

complexity and size of the procurement and should give enough time forall the bidders to respond successfully to all the requirements.

In the cases of open ad select tendering, all bids must be received inclosed and sealed envelops, all the envelops must be opened at thesame time at the end of the given period to guarantee transparency andeliminate any cases of price manipulation and fraud.

Some bidders often request extensions to the deadline of sending theirbids, the organization is free to accept or reject these requests.

Element 10 to 17 of the Saudi Government Procurement and CompetitionSystem provides details of the procedure that should be followed for

receiving and opening bids as well as details of the acceptable bidscontent.

Element 73 of the Saudi Government Procurement and CompetitionSystem mandated that government employees must maintain and ensurethe secrecy of all the information and prices proposed to them inprocurements and not share or expose such information to other biddersor parties, except in the cases that were allowed by the system.


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9. Evaluating the Bids

The evaluation of the bids is the decisive and the most important stage in

the procurement lifecycle. In this stage, the organization implements theprocedures and criteria that were set in the bids evaluation plan earlier.The main output of this stage is the decision of the winner bid or bids.

9.1. Bids Evaluation

Bids evaluation must take place according to the predefined procedureand criteria of evaluation.

There are different evaluation procedures that are used by differentorganizations and different countries:

- An evaluation committee is required in some procedures while otherprocedures leave the evaluation of the bids to the IT departments tomanage without requesting a committee

- Some procedures segregate between the financial evaluation and thetechnical evaluation of the bids where technical evaluation is done bythe IT department and the financial evaluation is done by the financialdepartment9

- Some procedures mandate the opening of the financial bids after theopening of the technical bids, this is done to ensure that the pricedifference do not impose any inclination on the technical proposalsevaluation

According to the Saudi Government Procurement and Competition Rules,any type of evaluation or procurement committee must adhere to thetechnical and financial criteria in evaluating proposals following theGovernment Procurement and Competition System as well as the Rulesmanuals. No offer should be rejected if all requirements are met aligningwith the regulations and rules of the Government Procurement andCompetition System (Element 30).

According to the Saudi Government Procurement and CompetitionSystem, a bids evaluation committee of minimum three members shouldbe formed to pursue the evaluation and selection process (Elements 16

and 17).

As mentioned earlier, the Saudi Government Procurement andCompetition System, provides detailed description of the requirements ofthe evaluation procedure.

One of the main improvement areas that need to be considered is thatfinancial bids are opened at the beginning of the evaluation process. This,as described earlier, may result in inclination of the technical evaluationfor the favor of the lowest price. It is recommended to segregate between

9http://www.usaservices.gov/procurement.htm#s7
http://www.usaservices.gov/procurement.htm#s7http://www.usaservices.gov/procurement.htm#s7


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the technical and financial evaluations of the bids; and to delay theopening of the financial bids until the end of the technical evaluation.

During the evaluation, the evaluation committee might decide to sendinquiries and questions for the different bidders in order to clarify or toconfirm certain areas in their responses. It is recommended to include a

time window for this activity inside the evaluation procedure. All suchinteractions should go through official communication channels only toensure transparency and integrity of the process.

In terms of criteria, it can be split into two parts; technical and financialcriteria:

Naturally, the financial part of any evaluation criteria will imply thatthat lowest price gets the highest marks. So the financial part isquite straight forward.

However, some countries implement more strict measures to eliminateany possibility of fraud, such as:

- Some countries disqualify the highest and lowest bids automaticallyno matter what their technical response is

- Other countries eliminate all the bids with prices above and below20% of the procurement budget

On the other hand, the technical evaluation part entails many details andmay be different between different organizations, countries, or even typesof procurements in the same organization. Since it is designed to meetthe requirements of all types of governmental procurement, the SaudiGovernment Procurement and Competition System did not specifytechnical criteria to be used, the design of appropriate technical criteriawas left for each organization by itself or for each type of procurement

(e.g. IT Procurement evaluation criteria is different from ElectricalAppliances procurement ...etc).

Technical evaluation criteria for IT procurement should cover differentaspects of the bids including compliance to requirements, quality ofresponse, relevant experience and size of the bidder etc.

The table below features suggested criteria that can be used in technicalevaluation. It is important to note that the weights given in this evaluationcriteria are subjective and can be changed according to the procurementnature and specific needs.

Table 5 - Suggested technical evaluation criteriaResponse Comprehensiveness

Criterion Conforming Notes

Addresses the mandatory outcomesand specifications in the requestdocument

Yes No

Provides extra useful features andoutcomes

Yes No

Format Yes No


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Response Quality

Technical solution Yes No

The excellence of the proposed technicalsolution the quality of the proposed technicalcomponents (e.g. the proposed servers,operation systemsetc)

Approach and methodology Yes No

The excellence of the proposed approach andmethodology to undertake the project; project

management approach, the quality managementapproach etc

Bidder-related measures

Bidder size Yes No

Number of employee, capitaletc

General experience Yes No

Number of years experience in the field and themarket

Relevant experience Yes No

The capability to demonstrate ability by showingrelevant successful delivery of similar project;references, opinion of the bidder experience andprofiles of proposed project staffetc

When performing a technical evaluation, the committee is required toconsider the conformity of technical requirements for each procurementproposal.

Elements 16 to 26 of the Saudi Government Procurement andCompetition System discuss the process and regulations for bidsevaluation in details. Element 21 specifies that the evaluation committeecan negotiate with the bidder that proposed the lowest price or otherbidders if the proposed prices are significantly higher than the estimatedcost (as estimated during the procurement planning phase) or the marketvalue. Element 22 gives the ability for the evaluation committee todisqualify bids with prices that are lower than 35% of the estimated costonly if the evaluation committee is not convinced with the technicalevaluation of the bid or if the bidder is found unable to fulfill theprocurement commitments (Element 23). Element 24 specifies that if onlyone bid was proposed or if one bid only passed the technical evaluation

then the procurement must be re-tendered except in special cases thatmust be approved by the minister or the equivalent head of theindependent entity.

The Saudi Government Procurement and Competition System mandatesthat the winner should be the lowest price among all the bids that passedthe technical evaluation successfully, without any consideration of theweight differential.

This approach might be acceptable for some types of procurement but itis definitely not acceptable for IT procurement; IT procurement

emphasizes strongly on the quality and the excellence rather than theprice, thats why the cost factor comes second after technical excellence.I.e. the winning technical solution is not necessarily the cheapest one.


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Element 21/B could be used in this case as an exception and a specialcase.

The sample approach in the figure below can be ideal in such case:

Figure 3 - Sample evaluation and negotiations approach

9.2. Bids Evaluation Report

At the end of the evaluation, a Bids Evaluation Report should beprepared to summarize the results of the procurement and evaluation.

The bids evaluation report may contain:

- Summary of the evaluation process

- Summary of each received bid

- Summary of the assessment of each bid

- Reasons for any bid elimination (when applicable)

- Recommendations concerning the preferred bid

Technical and Financial

Evaluation Results

Select bid that matchtechnical requirements

Apply Criteria

Eliminate the bid fromthe list

Conforming withTechnical requirements

Yes

No

Lowest PriceNo

Negotiate to bring price

to accepted levelAnnounce as Winner

Yes

EndNegotiation

Succeeded?Yes

No


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- Details of any issues that need to be clarified with the bidder duringsubsequent contract negotiations

The report is to be signed by the members of the evaluation committeeand addressed to the approver of the procurement (Minister, DeputyMinister, IT Manager etc). The approver is to sign the report if they arein agreement with its recommendations.

According to Element 26 of the Saudi Government Procurement andCompetition System, the final authority of selecting the winning proposalis for the minister or equivalent manager of the independent entity. Theycan delegate this authority for bids that are less than or equal threemillion Saudi Riyals.


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10. Closing the Procurement

The final stage of the procurement is awarding and signing the contract,

however, some attention should be given to the final details including thenegotiations of the contract, the announcement of the winner, handlingthe complaints of bidders who did not win ...etc. Such issues arediscussed in the following subsections.

10.1. Negotiating the Contract

As described in section 9.1 above, negotiations can take place during theevaluation process to ensure that the best value of money is obtained forthe best possible outcomes. Further negotiations might include scenariossuch as:

- Expanding or shrinking the scope of the outcomes or certainspecifications

- Negotiating certain terms imposed by any of the two parties (such aspayment terms, warrantees, support, performance bonds and bankguarantees etc)

- Interviewing, accepting, or replacing the bidder resources who will beworking on the project

The agreements that will result for these negotiations should bedocumented and communicated officially and reflected in the contractbefore signing it.

It is important to note that terms of contracts in IT related contracts aregenerally different from other procurements contracts. Certain specialterms and conditions normally apply on IT related contracts such as:

- Licensing

- Intellectual Property and ownership

- Warranty and support

Elements 27 to 32 of the Saudi Government Procurement andCompetition System provide full details for the contractual format and

requirements. Element 31 specifies that a contract is not necessary forprocurements that are less than 300,000 Saudi Riyals were the exchangeof written commitment suffices instead of the contract. Element 32mandates that if the value of the procurement is over 5 million SaudiRiyals or if the procurement requires more than a year for completionthen the contract must be sent to the Ministry of Finance for reviewingand providing feedback prior to the signing.


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10.2. Announcing the Awarding of the Contract

Once the final agreement has been reached and contract signed, differentparties should be informed of the results of the procurement and theawarding of the contract:

- The financial authorities of the organization

- The other bidders who did not succeed

- Other government agencies that might be concerned with theprocurement

Announcing the awarding of the contract can be done using officialcommunication through memos or letters. In the cases of largeprocurements that may concern larger audience, an announcement canbe made in the official newspapers.

Element 74 of the Saudi Government Procurement and Competition

System mandated that government entities must announce the awardingof contracts.

10.3. Canceling the Procurement

According to the Saudi Government Procurement and CompetitionSystem (Elements 21, 24 and 25), the organization can decide to cancelthe procurement at any time if:

- The need for the procurement outcomes have disappeared.

- The procurement process did not meet the regulations.

- Core or significant mistakes were found in the definition of theoutcomes or the specifications of the procurement.

- All the bids did not pass the technical evaluation

- All the bids were considerably higher than the planned budget of theprocurement

- Negotiations failed with the qualified bidders

The authority to cancel the procurement is only given to the minister orthe equivalent manager of the independent entity. The prices paid for therequest document must be returned to all the bidders (Element 25/B)

When procurement is cancelled, the organization needs tocommunication the cancellation officially to all the bidders and any otherconcerned government organization.


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10.4. Handling Complaints

A well planned and transparent procurement is less likely to facecomplaints. Complaints may occur for many reasons, including:

- Canceling the procurement

- Technical or financial evaluations

- Awarding the procurement to another competitor

However, should a complaint occur, the organization should officiallyrespond to the complaint with clear reasoning and answers to thecomplaint.

10.5. Reporting

As described in the previous sections, several reports will be requiredalong the life cycle of the procurement. In addition, all the discussions,negotiations, and decisions of the bids opening committee or theevaluation committee must be logged and reported properly.


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11. Special Considerations

Procurement is a cornerstone process in any business. Governments are

typically the largest procuring entities around the world, which makesprocurement an extremely important administrative activity ingovernments around the world. This importance is translated into a largenumber of initiatives, regulations and studies to make the procurementprocess more efficient, effective, and transparent.

This section summarizes a number of points to be considered thatcontribute to the success of the IT procurement process:

- Clear and comprehensive definition of the requirements: asdescribed in 5.1 above, providing clear description of the outcomesand adequate level of detailed specifications creates clearunderstanding between the organization and the bidders about the

procurement and makes the bidders job much easier and the wholeprocurement processes more effective

- Leadership and management ownership: IT procurement shouldbe owned and supported by the IT manager in the organization. In thecases of large IT procurements and key projects, ensuring theleadership and support of higher authorities in the organization iscrucial for success. The Saudi Government Procurement andCompetition System mandates that large procurements should beapproved by higher authorities (procurements for over 3 million SaudiRiyals must be approved by the Minister, procurements for over 200

million Saudi Riyals requires Royal approval)

- Transparency: providing all required information to the bidders andkeeping all the bidders informed of the artifacts of the procurementprocess (such as the evaluation criteria and the evaluation results andinviting the bidders for the opening of the bidsetc) is a greatassurance of the integrity of the procurement process. Transparencyin procurement is mandated in the Saudi Government Procurementand Competition System for open and select tendering

- Ensuring equal opportunities: ensuring equal opportunities for allbidders is a very important factor for the success of procurement,some of these benefits are:

o Ensuring the best value of money for the procurement byopening the opportunity to all suitable solutions

o Ensuring the excellent quality of outcomes for theprocurement, which will result in better services for the ITdepartment and better knowledge and experience for thedepartment resources

o Ensuring fairness and diversity in the procurement process,

which will eventually result in benefits for all the bidders and ITsector in the Kingdom in general


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- Bigger procurements: bigger procurements result in better value ofmoney, it also result in effectiveness of the procurement. Biggerprocurements can happen through different ways:

o Applying frame contracts concept: frame contracts meansgrouping different outcomes that share the same objective in

one procurement; for example, a frame contract may includeall the hardware, software, development and operationrequirements for an enterprise system rather than procuringthose items separately. Frame contracts concept is appliedsuccessfully in many countries and even in some Saudienterprises

o Procuring operations and outsourcing contracts for more thanone year. This method will result in more stability in theservices and better negotiations position for the organization

o Some countries10 apply a concept of Open Standing OfferArrangement (OSOA) to encourage collaboration between

government organizations for better value of money. An OSOAresults from a procurement, which specifies that the contractedprice will be made available to other participatingorganizations. This means that potential bidders have beeninformed that they are tendering not only for one organizationspurchasing but, potentially, for purchases by otherorganizations. This will encourage the bidders to offer morecompetitive prices and eventually achieves more value ofmoney for the organizations

- E-Procurement (electronic procurement): e-Procurement is a part

of e-business and is used to designate the optimized, Internet-basedprocurement process. It refers not just to the purchasing process itselfbut to electronic negotiations and the conclusion of contracts withsuppliers as well. Because the purchasing process is simplified by theelectronic handling of operative tasks, strategic tasks can be given amore important role in the process. E-Procurement initiative for theGovernment of Saudi Arabia is currently being developed

- Government organizations should have the ability to decide whatbidders they do not want to work with, and they should be able toshare this decision with other organizations for better benefits for the

whole government. This should be controlled by mandating thebidders to include references for their work with other governmententities and checking with these references for the quality of theservices and products provided for them from the bidder. It isrecommended to have the references evaluation as part of theproposals technical evaluation criteria as proposed in Table 5 above.

10Such as the UK, Australia and Canada


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12. Appendix I References

The following references were used to construct this document:

- Government Procurement and Competition System Issued by RoyalDecree in number (58M) in 9/4/1427 H.

- Government Procurement and Competition Rules Issued by Ministryof Finance number (362) in 20/2/1428 H.

- Effective Competitive Practices in Government Commerce -http://www.fedpubseminars.com/seminar/govproc.html

- http://www.vgpb.vic.gov.au/CA256C450016850B/WebObj/BestPracticeAdvice-EC4P/$File/Best Practice Advice - EC4P.pdf

- World Trade Organization Government Procurement

http://www.wto.org/english/tratop_e/gproc_e/gproc_e.htm- World Bank Country Procurement Assessment reports:

http://www-wds.worldbank.org/external/default/main?pagePK=64187835&piPK=64187936&theSitePK=523679&menuPK=64187511&siteName=WDS&pageSize=20&docTY=540617

- The Office of Government Commerce The United Kingdomhttp://www.ogc.gov.uk/index.asp?id=35

- Mandatory Procurement Procedures Ministry of Finance theGovernment of Australia - http://www.finance.gov.au/ctc/steps.html

- Contracts Canada Portal e-Government of Canada:http://contractscanada.gc.ca/en/
http://www.fedpubseminars.com/seminar/govproc.htmlhttp://www.vgpb.vic.gov.au/CA256C450016850B/WebObj/BestPracticeAdvicehttp://www.wto.org/english/tratop_e/gproc_e/gproc_e.htmhttp://www.ogc.gov.uk/index.asp?id=35http://www.finance.gov.au/ctc/steps.htmlhttp://contractscanada.gc.ca/en/http://contractscanada.gc.ca/en/http://www.finance.gov.au/ctc/steps.htmlhttp://www.ogc.gov.uk/index.asp?id=35http://www.wto.org/english/tratop_e/gproc_e/gproc_e.htmhttp://www.vgpb.vic.gov.au/CA256C450016850B/WebObj/BestPracticeAdvicehttp://www.fedpubseminars.com/seminar/govproc.html


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13. Appendix II Glossary of Terms

The following terms have been used in this document with the following

contextual meaning:

Table 6 - Glossary of Terms

Term Contextual Meaning

IT Information Technology

TCO Total Cost of Ownership

OSOA Open Standing Offer Arrangement

UK United Kingdom

NDA Non-Disclosure Agreement

CPU Central Processing Unit

GB Giga Byte

MB Mega Byte

RFP Request for Proposals

RFQ Request for Quotations

RFI Request for Information

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