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Transparent Procurement Procedures & Prequalification of Consultants. By Syed Adil Gilani Vice Chairman & CEO Transparency International Pakistan.

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Transparent Procurement Procedures & Prequalification of Consultants

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Transparent Procurement Procedures & Prequalification of Consultants

By

Syed Adil Gilani

Vice Chairman & CEO

Transparency International Pakistan


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Address of Quaid-i-Azam Mohammad Ali Jinnah to the Constituent Assembly of Pakistan on his election as President of the Constituent Assembly of Pakistan (11th August 1947)

“One of the biggest curses from which India is suffering…is bribery and corruption. That really is a poison. We must put that down with an iron hand and I hope that you will take adequate measures as soon as it is possible for this Assembly to do so.”

In 2004, Pakistan with Transparency International CPI scores of 1.9, India with 2.9 and Bangladesh with 1.2 out of 10 are ranked in the lowest 50 countries amongst 141 countries.


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  • What Procurement Means

  • Procurement is the engineering term for all

    purchases, supplies, tendering of construction

    works, turnkey projects and consultancy

    services.

  • PPRA definition of Contractor as contained in

    Public Procurement Rules 2004 clarifies this in

    more appropriate manner;

  • “contractor” means a person, consultant, firm,

    company or an organization who undertakes to

    supply goods, services or works;


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Public Procurement Rules, 2004 (PPR)

PPR have eliminated all discretions in procurement process,

The Vital Rules which have incorporated checks and balances in discretion free Procurement System are;

  • Standardization of Procurement Process and tender documents, aadvertise all prequalification or tenders over Rs 40 thousand on Procuring Agency website as well as on PPRA website and in at least one English & one Urdu National Daily Newspaper, Min 15 days,

  • Provide Prequalification & Tender Documents to bidders which shall include all relevant information, including the detailed evaluation criteria, Bid award method, Signing of Integrity Pact, Rights of bidders for complain on evaluation report prior to award, Standard Conditions of Contract, Specifications which shall allow the widest possible competition and shall not favour any single contractor or supplier nor put others at a disadvantage, elimination of culture of Gallop/Short Tender etc

  • Announcement of the results of bid evaluation in the form of a report giving justification for acceptance or rejection of bids at least ten days prior to the award of procurement contract, and no negotiations with the bidder having submitted the lowest evaluated bid or with any other bidder

  • Finalizing of the Evaluation Report after examining all complaints,

  • Award of all Contracts to Consultants, Contractors & Suppliers only to the responsive lowest evaluated bidder.


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LOWEST BIDDER MAY NOT BE

“THE RESPONSIVE LOWEST EVALUATED BIDDER”

  • The general perception that when the tender is opened the Bid which is the lowest at the time of Tender Opening is the Lowest Bid and shall be awarded the Tender.

  • This perception is not correct.

  • After Tender Opening preliminary checks are required to determine the responsiveness of all Bids.

  • A bid is non-responsive and not to be considered on any of the following grounds ;


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  • It is received after the time and date fixed for its receipt,

  • Bidder refuses to Sign the Integrity Pact.

  • It is submitted through fax, telex, telegram or e-mail.

  • It is not accompanied with valid Bid Security.

  • It is unsigned.

  • Its validity of tender is less than specified.

  • It is submitted for incomplete Scope of Work.

  • It indicates completion date later than specified.

  • It indicates that prices quoted are not firm during currency of the contract

  • except those prices where escalation/adjustments are permitted in the

  • Conditions of Contracts.

  • It indicates that material to be supplied does not meet the eligibility

  • requirements.

  • It indicates that Bid Prices do not include the amount of taxes & duties.

  • If Bidder refuses to accept the arithmetic corrections.

  • It is materially and substantially different from the

  • Conditions/ Specifications of Bidding Documents.

  • It provides Sub-contracting, contrary to conditions specified in the Bidding

  • Documents. It fails to comply Mile-Stones/critical dates specified in Bidding Documents.

  • The bidder is not valid license holder of the PEC.


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“Procurement was of huge concern to stakeholders, who highlighted the following weaknesses as being particularly vital in allowing procurement to be the breeding ground for corruption. “

Pakistan has no coherent single law setting standards and no effective legal protection against collusion and corruption in the award of government contracts. Instead, there is an accretion of complex laws, rules, regulations, codes and manuals which create a web of lengthy and cumbersome practices and customs. (Unlike other developing countries, donors’ procurement rules do not prevail over local rules, although the Ministry of Finance has tried to enforce this.)

Quote from National Anti Corruption Report


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The rules and regulations are manipulated to deter competition, thwart objectivity and transparency and give officials wide and unsupervised latitude in applying or ignoring the tangle of rules. The ground for corruption is laid at every stage of the procurement process, as seen in the box below

Overall: head of Procuring Agency certifies that procurement process is urgent, thereby avoiding requirement for competitive bidding; projects/contracts split to avoid competitive bidding requirements above a certain cost ceiling; officials take advantage of the year-end (May-June) period, when departments are trying to spend their budget allocations, to rush through procurements which then escape proper procedures and monitoring;

Quote from National Anti Corruption Report -Manipulation of the procurement process


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Technical Feasibility: improper feasibility studies may be undertaken to overvalue projects, to the benefit of officials; studies may also be undertaken by consultants with links to contractors;

Tender Documents: project specifications are prepared to favour particular contractors;

Registration/pre-qualification and Invitations for bids: process is kept bureaucratic (e.g. numerous unnecessary conditions to fulfill) and lengthy to deter competition; advertisements in low circulation publications; published tender notices are followed by a number of short addenda, which if missed by bidders in their tenders would lead to their disqualification; short notice for submission of bids whilst favoured bidder had prior notice and time to prepare; officials will create their own fictitious companies to bid and approve them through this stage of the process;

Quote from National Anti Corruption Report -Manipulation of the procurement process


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Preparation of bids: collusion between competitors will lead to inflated pricing; ‘pooling’, whereby one bidder "buys" his competitors’ bids, changing their values, submitting the lowest bid far in excess of the market price; multiple bids by contractor operating under different names;

Bid Evaluation: financial envelopes are often opened before technical; unrealistic and outdated Schedules of Rates are used to defeat good bids by "outsiders"; delays are created to generate kickbacks

Quote from National Anti Corruption Report -Manipulation of the procurement process


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Negotiations: no rules exist for the negotiation period, but is often the period when collusion and coercion occur. Prices may be renegotiated and adjusted after contracts have been let.

This manipulation of often quite acceptable rules only allows corruption because of the inherent lack of transparency and public participation in the procurement process. Without this, any set of procurement laws and rules can be manipulated for self-enrichment.

The public are usually denied the opportunity to be informed of, monitor or participate in, aspects of the procurement or development affecting their community and country. There is no other mechanism by which the public may be satisfied about the integrity of the process.

The blame does not lie entirely with the government side of course. There are builder’s mafias, collusion between bidders and widespread bribery by national companies. However, in terms of grand corruption, multinationals, and therefore their governments must share the blame, as many tend to view corruption as a Pakistani trait, which they are content to accept, by the use of "agents."

Quote from National Anti Corruption Report -Manipulation of the procurement process


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This Manual is intended to provide necessary clarifications and assistance in the procurement process in Pakistan Steel with essential in-built Checks and Balances to ensure the desired transparency in all its procurement.

The Manual does not contain any new rules of procurement, but is compiled from existing World Bank / PEC procedures combined with the recommendations of the NACS 2002 policy and Public Procurement Rules, 2004 . However it explains in more detail how specific aspects of procurement should be handled to be consistent with the Guidelines. It is a source of “how-to” information about the tasks and elements that comprise the procurement process.

Use of Procurement Manual


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The Procurement Manual describes the review of policy and institutional aspects of transparent public procurement that have a broad applicability, about which questions are most frequently asked. Subsequent chapters deal with specific procurement topics, taking them generally in the chronological order in which they occur, from the initial analysis of a procurement systems and capacity, through the procurement planning stages and into project implementation and contract administration.

Use of Procurement Manual Chapter I


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The Four considerations that guide the rules for Procurement are:

  • Ensuring economy and efficiency in project procurement.

  • b) Giving eligible, responsive and technically Qualified

  • bidders a fair opportunity to compete on a level

  • playing field,

  • c) Encouraging the development of Domestic Producers

  • Constructors and Engineering Services Providers

  • d) Providing for Transparency in the Procurement

  • Process.


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Organize Project Management / Implementation Teams

Prepare Prequalification Documents (In case the Pre-qualification is being undertaken)

Revise and Clear Prequalification Document (if necessary)

Obtain Approval

Advertise Prequalification Documents

Tendering Process


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Prepare Applications (Suppliers)

Manage Application Process

Draft Bidding Documents

Obtain Approval of Bid Documents

Evaluate and Select Pre-qualified Firms

Obtain approval

Tendering Process


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Prepare Applications (Suppliers)

Distribute List of Pre-qualified Firms to All Applicants and Issue Bidding Documents

Opening of Bids

Evaluate and Select Lowest Responsive Evaluated Bid

Evaluation Report Declaration to bidders for inviting Objections within 15 days.

Tendering Process


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Re Examine Evaluation Report and Objections.

Revise and Finalize Evaluation Report and Submit the Recommendation to Award the Bid to the Lowest Responsive Bidder to Authority for Approval, and Award the Bid to the Lowest Responsive Bidder

Public access and transparency.- As soon as a contract has been awarded the procuring agency shall make all documents related to the evaluation of the bid and award of contract public:

Provided that where the disclosure of any information related to the award of a contract is of proprietary nature or where the procuring agency is convinced that such disclosure shall be against the public interest, it can withhold only such information from public disclosure subject to the prior approval of the Authority.

Tendering Process


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Because it is too time consuming to invite and evaluate proposals from all consultants who want to compete, Selection is based on limited competition among qualified firms who have the required experience and are capable of delivering the required services and desired level of quality.

From the consultants’ point of view, the use of a shortlist reduces the number of proposals to be prepared, raises proposal quality, and increases the chances of the consultant winning the competition. For the PIA, it is an effective way of attracting the best candidates for the assignment.

PREQUALIFICATION of Consultants


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Procedures for hiring consultants provide that, first, consultant opportunities are advertised. Then, on the basis of those consultants who submitted expressions of interest in response to the advertisement the Procuring Agency prepares a shortlist of consultants who will be invited to present their proposals.

Integrity Pact.

High value and high profile procurements in particular, above Rupees Ten Million for procurement of Services, Goods and Works are to be based on Integrity Pacts. The Standard prescribed “Integrity Pact” is given in the Manual.

PREQUALIFICATION of Consultants


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Consultants may associate with each other. Such an association may be for the long term (independent of any particular assignment) or for a specific assignment. The “association” may take the form of a joint venture or of a sub-consultancy. In case if the an association is in the form of a joint venture, the association should appoint one of the firms to represent the association. All members of the joint venture shall sign the contract and shall be jointly and severally liable for the entire assignment. Any association in the form of joint venture or sub-consultancy among short-listed firms shall be permissible only with the approval of Procuring Agency

PREQUALIFICATION of Consultants


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Allocation of Sub Criteria.

Sub-criteria and their weighting determine the outcome of the evaluation, they should be chosen considering the aspects that are critical to the success of the assignment. Evaluation criteria and sub-criteria, associated points, and the rating

system form an arithmetic model to assess the technical merit of the proposals. The more reliable the model, the more accurate the evaluation and the greater the possibility that Procuring Agency will select the proposal of the consultants who are best suited for the assignment. All sub-criteria points shall be included in the prequalification documents for information of the applicants.

PREQUALIFICATION of Consultants


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Fair Competition.

Sub Clause 6.3 of the PEC Standard Guideline restricting the number of qualified firms, is deleted, to enable all qualified firms to have fair opportunity to participate in the competition.

This has therefore to be ensured that the Prequalification should not be used to limit competition to a predetermined number of potential bidders. All applicants who have the qualifications to perform the proposed contract should be pre-qualified and bidding documents made available to all those who stands pre-qualified. No upper limit therefore should be imposed on the number of pre-qualified potential bidders.

PREQUALIFICATION of Consultants


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Copy of the PEC Standard Guidelines for Evaluation of Proposals for Procurement of Engineering Services issued on May, 2002 by Pakistan Engineering Council Islamabad and amended by TI-Pakistan in June 2005 is attached as Annexure IV.

The Use of the Standard Guidelines For Evaluation of Proposals for Procurement of Engineering Services issued on May, 2002 by Pakistan Engineering Council Islamabad along with the with modifications as prescribed by the Public Procurement Rules, 2004.

PREQUALIFICATION of Consultants


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All consultancy contracts except single source selection of engineering experts if falls under the preview of direct contracting, or negotiated tendering under the Public Procurement Rules 2004, should be processed on the two envelope system, evaluated on the basis of technical competence with minimum passing marks of 75% .

The Use of the Standard Guidelines For Evaluation of Proposals for Procurement of Engineering Services issued on May, 2002 by Pakistan Engineering Council Islamabad along with the with modifications as prescribed by the Public Procurement Rules, 2004.

PREQUALIFICATION of Consultants


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Evaluation of the Experience

EVALUATION OF APPLICATIONS

Similarly the general experience should also be considered after certain limitation in numbers because after certain number, more projects may not add much to differentiate between the competitors. Weightage of general experience shall be 30%. A maximum of 10 to 20 projects should be enough number to fetch full hundred percent points. A sample is proposed as follows:-


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Evaluation of the Specific Experience

EVALUATION OF APPLICATIONS

No. of Projects For Max. 5 Projects For Max. 3 Projects

1st Project 50 Percent 70 Percent

2nd Project 75 Percent 90 Percent

3rd Project 85 Percent 100 Percent

4th Project 95 Percent -

5th Project 100 Percent


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EVALUATION OF APPLICATIONSEvaluation of the General Experience

Where Maximum Number of Where Maximum Number of

Projects is fixed as 20 Project is fixed as 10

Numbers of Proposed Number of Projects Proposed Criteria

Projects Criteria

Min: 3 20% Min: 2 25%

4-5 40% 3-5 60%

6-7 60% 6-7 85%

8-10 70% 8-9 95%

11-13 80% 10 100%

14-16 90%

17-20 100%


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Other Factors

There are some other factors which do have a bearing on the overall proficiency of a firm in meeting its obligations later during the currency of the contract. For example, when training of Client’s staff is a requirement on the project, the firms having previous experience and resources could be better placed to perform that part of the assignment. Similarly experienced home office professional staff as well as availability of equipment/software and facilities are useful for timely handling of critical issues and in time availability of equipment/facilities respectively. These and such other factors which differentiate between otherwise excellent firms should be considered as weighted qualifications

PREQUALIFICATION of Consultants


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Evaluation of Quality of Staff

For the sake of assigning weightage to judge capability of the firm on the basis of expertise of its staff, the following steps may be adopted:-

i) List the type of essential expertise required for the project.

ii) The number of discipline- types included in the list should be the most important ones and be limited to a maximum of 5.

iii) Assess the relative importance of each expertise viz-a-viz the requirements of the project.

iv) Assign number of credit points to each expertise/the staff member nominated for that expertise.

PREQUALIFICATION of Consultants


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2 Nominated experts should be evaluated on the basis of the following three items of qualification as demonstrated in their C.Vs:-

i) Academic Qualification 20-30 Percent

ii) Professional Experience 60-70 Percent

Specific 80%

General 20%

iii) Experience of working environment 10 Percent

Nationally 60%

Internationally 20%

Specific Area within the Country 20%

Which is based on:

D Specific Province 60%

D Regional Language 40%

PREQUALIFICATION of Consultants


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Evaluation of applications should preferably be carried out individually by the committee members on forms jointly developed by the committee and using the pre-determined weightage award sub-criteria. Sample Forms for evaluation of experience and staff are placed at Annex-C, Forms C-1 and C-2 for the committee’s reference and guidance. After finalization of the evaluation, each member should compile the grading list containing a Summary of points and the Annex-C, Forms C-1 and C-2 a copy of which be submitted to the Convener of the Committee before a formal meeting is convened by him.

Note: Evaluation criteria and sub-criteria on which the evaluation will be conducted shall be included in the prequalification documents.

PREQUALIFICATION of Consultants


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FINALIZATION OF SHORT-LIST

1 The selection committee should hold a meeting to review the evaluation/grading carried out by the individual committee members. The basic aim is to review the capabilities of consultants securing above qualifying marks in the individual grading on each list. Since the members have evaluated the firms on the basis of an agreed criteria hence it has considerable advantage of organized discussion and consideration of those firms only which are not unanimous choice. The discussion will yield a more balanced grading of firms and finalization of the short-list. Additionally, discussions in this meeting shall reduce the likelihood of unsupported personal bias.

All the applicants scoring qualifying marks shall be shortlist.

PREQUALIFICATION of Consultants


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The PEC Bye Laws under “General Regulations” require that the status of the Partners, Directors, Owners for the sake of conflict of interest must also be verified before its inclusion in the short-list.

For this purpose, the applicants should be required to provide this information in specific terms and any misrepresentation should be made a ground for rejection. Firms may also be forewarned that in case of their selection, any such links, if detected during the currency of their contract, would be reported to the PEC for cancellation of their registration/licence leading to their blacklisting.

PREQUALIFICATION of Consultants


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STANDARD GUIDELINES FOR

EVALUATION OF PROPOSALS FOR

PROCUREMENT OF ENGINEERING SERVICES

May 2002

PAKISTAN ENGINEERING COUNCIL ISLAMABAD

Transparency International Pakistan has incorporated the procedures prescribed in the Pakistan Steel Procurement Manual and is in conformity with the Public Procurement Rules 2004 and National Anticorruption Strategy NACS 2002. Authority means PPRA and Procuring Agency means Pakistan Steel

Evaluation of Proposals of Consultants


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INTRODUCTION

DOCUMENTS

PREPARATION OF PROPOSAL

Technical Proposal

Financial Proposal

4. SUBMISSION OF PROPOSALS

5. PROPOSAL EVALUATION

6. NEGOTIATION

7. Award

8. Sample Form of Contract

INFORMATION TO CONSULTANT

Section IInformation for Consultants

Section II Data Sheet

Section III Technical Proposal Standard Forms

Section IV Financial Proposal Submission Forms

Section V Terms of Reference

Letter of Invitation(LOI)


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DEFINING SCOPE OF SERVICES AND DRAFTING THE TERMS OF REFERENCE (TOR)

OUTLINE OF THE TOR

A. BACKGROUND

OBJECTIVES

SCOPE OF SERVICES

EXPERTISE REQUIREMENT

TRAINING AND SKILLS TRANSFER

INSTITUTIONAL ARRANGEMENTS

REPORTING/APPROVAL OF REPORTS

CLIENT PROVIDED DATA, SERVICES, PERSONNEL AND FACILITIES

Letter of Invitation(LOI)


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Selection of consulting firms require the (short-listed) firms to prepare and submit technical proposals on a competitive basis as out-lined in the sample Letter of Invitation provided in the Section-4 of this document. The technical proposals received have to be evaluated in accordance with the criteria approved by the approving authority and listed in the LOI

Evaluation Criteria


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There are three factors which should be considered for assigning weightage to the technical proposal and the price quoted by the firms for overall ranking, which are:-

Technical complexity of the assignment.

Impact of the assignment on future implementation process.

Comparability of proposals vis-à-vis the respective output.

Evaluation Criteria


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There are three Methods suitable for Services in PP Rules.

Single Stage – Two Envelope Procedure

Two stage bidding Procedure

Two stage - Two envelope bidding Procedure

Evaluation Criteria


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The number of points to be given under each of the evaluation criteria are: Points

i)Experience of the Consulting firm related to the assignment [20]

ii)Adequacy of the proposed work plan and methodology in responding to

Terms of Reference [40]

iii)Qualifications and competence of the key staff for the Assignment [35]

iv)Suitability of the transfer of knowledge (training) [05]

Total Points:[100]

Evaluation Criteria


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A Master Plan Consultancy Project is taken as Example

The number of points to be given under each of the evaluation criteria are: Points

i)Experience of the Consulting firm related to the assignment [25]

ii)Adequacy of the proposed work plan and methodology in responding to

Terms of Reference [40]

iii)Qualifications and competence of the key staff for the Assignment [35]

Total Points:[100]

The minimum aggregate technical score required to pass is 75 points.

Evaluation Criteria


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1.Project Related Experience 25 Points

Foreign Firms

a) Master Planning and Development (Maximum 08 points) (Minimum 05 points)

Satisfactory completion of two master plans of sizeable projects with industrial and port related activities will score 5 points. Each additional project will score one additional point.

b) Financial analysis and evaluation of Public/Private Sector partnership projects .(Maximum 11 points) (Minimum 6 points)

Satisfactory completion of two major private sector investment projects with financial analyses, evaluation, and award(negotiations and contract documentation) project will score 5 points. Each additional project will score one additional point.

(A Sizable Project is of minimum 6 months duration and minimum 30 man-months effort)

Evaluation Criteria


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1.Project Related Experience 20 Points

Local Firms

a) Master Planning and Development (Maximum 08 points) (Minimum 05 points)

Satisfactory completion of two master plans of sizeable projects with industrial and port related activities will score 5 points. Each additional project will score one additional point.

b) Financial analysis and evaluation of Public/Private Sector partnership projects .(Maximum 06 points) (Minimum 04 points)

Satisfactory completion of two major private sector investment projects with financial analyses, evaluation, and award(negotiations and contract documentation) project will score 3 points. Each additional project will score one additional point.

(A Sizable Project is of minimum 6 months duration and minimum 30 man-months effort)

Evaluation Criteria


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2.Adequacy of Proposed Work Plan

i.Addressing the TOR Max. 15 marks (Min. 6 marks)

ii.Proposed Methodology, Tasks Details Max. 20 marks (Min. 9 marks)

and Workable Programme of Assignment

iii.Innovation in approach Max. 5 marks (Min. 3 marks)

Evaluation Criteria


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Note on Awarding Points.

In case a proposal appears to be unacceptable under this criterion, i.e., it doesn’t deserve to be rated “poor”, it may be considered non responsive.

Grade.Percentage Marks

Poor 50 %

Satisfactory 70%

Good 90%

Very Good100%

Evaluation Criteria


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3Key Personnel Max 35 Points

Note: The Experts Required for the Project and Man Months indicated in RFP are Mandatory and can not be Reduced. Applicants are allowed to increase as per their Proposed Bid

Foreign Firms (Max. 20, Min. 12)

( master/charter or equivalent and minimum 10 years/two sizeable projects experience in their respective fields), nominated for the project

1 Team Leader 10 Points

Experience of 2 Projects as Team Leader 5 Points

Experience on similar nature Project 1 point /project Max 5 Points

Each Expert will score 2 points ,

2 economist

3 legal expert

4 financial expert

5 maritime

Above personnel additional experience of each project will score one additional point.

Evaluation Criteria


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3Key Personnel

Local Firm (Max. 15, Min. 9)

( master/charter or equivalent and minimum 10 years/two sizeable projects experience in their respective fields), nominated for the project

1 Resident Engineer /Dy Team Leader Max 4 Points

Experience of 2 Projects as Resident Engineer/Dy Team Leader 3 Points

Experience on similar nature Project 1 point /project Max 2 Points

Each Expert will score 2 points each , Max 11 Points

2 Town Planner

3 Geologist

4 Senior Surveyor

5 Civil Engineer Roads

6 Structure Engineer

Above personnel additional experience of each project will score one additional point.

Evaluation Criteria


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Review by Committee and Selection

After the members of the evaluation committee have completed their individual evaluations in accordance with the evaluation sub-criteria announced in the documents, the convener should convene the committee meeting. The committee would then jointly consider the individual evaluations and the scores, discuss the merits of each view point and choose the best proposal after assigning a technical scores to each of the proposals. It is extremely important that all proposals are accorded its realistic scores.

Evaluation Criteria


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Review by Committee and Selection

The committee may proceed with the review in an organized manner by adoption of a formal agenda which could include the following items:-

i) Finalization of technical scores of proposals on the basis of arithmetic averages of the scores awarded by each member.

ii) Finalization of comments on the proposals which crossed the minimum passing score of 75% threshold, as these proposals shall only compete on financial proposal.

iii) Elements from all proposals which are considered to be useful for rendering improvement in the methodology to carry out the assignment.

iv) Finalization of the “Evaluation Report” for submission to appropriate forum for its approval, and public declaration for 10 days, before financial proposals are opened.


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MAINTENANCE OF RECORD AND FREEDOM OF INFORMATION

46. Record of procurement proceedings.-

  • (1) All procuring agencies shall maintain a record of their respective procurement proceedings along with all associated documentation for a minimum period of five years.

  • (2) Such maintenance of record shall be subject to the regulations framed in this regard from time to time.

    47.Public access and transparency.- As soon as a contract has been awarded the procuring agency shall make all documents related to the evaluation of the bid and award of contract public:

  • Provided that where the disclosure of any information related to the award of a contract is of proprietary nature or where the procuring agency is convinced that such disclosure shall be against the public interest, it can withhold only such information from public disclosure subject to the prior approval of the Authority.


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