Procurement Procedure in SSA

1. Procurement Procedure in SSA

2. PART - I • Introduction • (a) Main Considerations • (b) Objectives of Effective Procurement • (c) Procurement in SSA • Financial Ceiling • Levels of Procurement • Procurement Plan

3. Main Considerations PROCUREMENT Accountability and Ethical Standards Economy Efficiency Transparency Fairness

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

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

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

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

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

9. PROCUREMENT • Strictly follow the levels of procurement provided in Para 112 of the Manual on FM&P 9

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

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

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

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

14. PART - II • Method of Procurement • (a) Open Tender • (b) Limited Tender • (c) Single Tender • (d) Without Quotation • (e) Through Community • Steps involved in various method of Procurement • Major Procurement in SSA

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

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

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

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

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

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

21. Procurement Steps • Notification of Tender Notice • Timely notification of bidding opportunities is essential in competitive bidding. • Invitation to bid to be published in newspapers, and at least in one national English daily, if value is more than ` 20 lakh. • While a gist of the notification is published in the news paper detailed notification be uploaded on State SSA’s website. • Notification should cover: • Cost of bidding documents and mode of payment • Details of goods / equipment /works, quantity, delivery/ completion date • Date of commencement and last date for sale of bidding documents

22. Procurement Steps • Notification of Tender Notice • Last date and time for receipt of bids • Time and date of opening of bids • Place of opening of bids • Address for communication • Earnest Money and its mode of payment • Last date for receipt of tender documents – • The day following the date for close of the sale of tender documents. • Tendering period – • Not less than 30 days from the date of sale of tender documents.

23. Procurement Steps • Sale of Tender Documents • Begin only after publication of notification of tender. • Close one day prior to the last date for receipt of tender. • Prescribe a reasonable cost. Levy additional charges in case of sending by post or courier. • Allow to down load from web site, subject to payment of the prescribed cost of the tender documents while submitting it. • Non-refundable cost in the form of a Demand Draft / Bankers’ Cheque on any Nationalized/Scheduled bank in favor of the purchaser/employer • Not transferrable from one bidder to another • All associated cost borne by the bidder

24. Procurement Steps • Schedule of Requirement • Use the prescribed format given in the bidding documents • Clearly specify the work to be carried out, location, goods to be supplied, place of delivery / installation, schedule of delivery / completion, earnest money deposit, minimum performance requirement, warranty and maintenance requirement and other terms & conditions • Prepare based on the items to be procured • Include similar items in one schedule or package, include dissimilar items in separate schedule or package

25. Procurement Steps • Bid Form • Use the prescribed form given in bid documents • Indicate brief description of the goods / equipment / work, quantity and bid price • This is an undertaking given by the bidder to the purchaser on the acceptance of the conditions and the bid validity period • Signed by the bidder or his authorized representative holding power of attorney • Unsigned bids not to be accepted

26. Procurement Steps • Bid Prices • Indicate the unit price, total bid price including taxes and duties, transportation and other incidental charges for the total quantity required in the price schedule • Allow to submit bids for any one or more schedule/package in the case of multiple schedule/package and offer discounts for combined schedules/packages • Should quote the complete requirement specified under each schedule/package failing which such bids need not be considered • Remain fixed during the currency of the contract unless in the case of civil works where prices may vary as per the variation orders issued • Reject all adjustable price quotations • Need not consider offer of any conditional discounts • In the case of discrepancy between unit price and total price, unit price shall prevail. • In the case of discrepancy between amount in figures and words, amount in words shall prevail.

27. Procurement Steps Technical Specifications • Prescribe technical specifications in Annex – IV of the Bid Documents, required for each item after carrying out the market survey to ascertain updated version of that item. • Ensure clarity while drawing specifications • Typical technical specifications of Text Books are given in Annex-I. • Use the internationally or nationally accepted standards • Based on relevant characteristics and / or performance requirements • Avoid references to brand names, catalogue numbers or similar classifications • In case brand name or catalogue number is necessary to quote, add the words “or equivalent” • Permit the acceptance of offers which have similar characteristics and provide performance at least substantially equivalent to those specified • Define the test, standards, and methods that will be employed to judge the conformity of equipment as delivered, or works as performed, with the specifications • Deviations not allowed after opening of bids

28. Procurement Steps • Documents Establishing Technical Qualifications • Documentary evidence of conformity in the form of literature, drawings and data which consist of : • a detailed description of the essential technical and performance characteristics of the goods ; • a list giving full particulars, including available sources and current prices, of spare parts, special tools, etc., necessary for the proper and continuing functioning of the goods for a period of three years, following commencement of the use of the goods by the purchaser; and • an item-by-item commentary on the purchaser’s Technical Specifications demonstrating substantial responsiveness of the goods and services to those specifications or a statement of deviations and exceptions to the provisions of the Technical Specifications.

29. Procurement Steps • Documents Establishing Technical Qualifications • For purposes of the commentary to be furnished, the Bidder shall note that standards for workmanship, material and equipment, and references to brand names or catalogue numbers designated by the purchaser in its Technical Specifications are intended to be descriptive only and not restrictive. • The Bidder may substitute alternative standards, brand names and/or catalogue numbers in its bid, provided that it demonstrates to the purchaser’s satisfaction that the substitutions ensure substantial equivalence to those designated in the Technical Specifications.

30. Procurement Steps • Post-Qualification Criteria • Prescribe in the Annexure given in the bidding documents. • Typical post qualification criteria is given in Annex-II. • Provide documentary evidence to establish post- qualification • Manufacture’s authorization in case the bidder himself is not the manufacturer; • Ensure financial, technical and production capability necessary to perform the contract

31. Procurement Steps • Bid Validity Period • Remain valid for 90 days after the date of bid opening • Reject the bids in case of shorter period of bid validity • In case delay anticipated for completing the formalities of evaluation and award of contract extension of bid validity with the consent of the bidders • Seek extension of validity of earnest money deposit in the case of extension of bid validity period • No price variation • No forfeiture of earnest money in case the bidder refuse for the extension

32. Procurement Steps • Earnest Money (Bid Security) • To protect the purchaser against the risk of bidders conduct which would warrant forfeiture of earnest money • Amount - 2 % of the estimated contract value indicated in fixed amount for all prospective bidders • Method of payment - bank guarantee, irrevocable letter of credit, demand draft or banker’s cheque issued by a Nationalized/scheduled bank • Date of Deposit - after the date of notification of the bid • Validity Period - 45 days beyond bid validity period of the bid • Reject the bids, if, not accompanied by the requisite amount, not covering the validity period and not adhering to the mode of payment • Return to unsuccessful bidders soon after the final acceptance of bid • Adjustment in the case of successful bidders against security deposit (performance security) • Forfeiture - withdrawal of bids during bid validity, non acceptance of correction of arithmetic errors, failure to sign the contract, not furnishing security deposit within the stipulated time by the successful bidders • Not forfeited in case of refusal for the extension of bid validity period

33. Procurement Steps • Pre-bid conference • Arranged by the purchaser/employer as per the notification to provide clarifications on the provisions of the bidding documents to the prospective bidders. • Bidders can seek the clarifications in writing well in advance before the scheduled date • Issue addendum, if needed as a result of the pre-bid conference, well in time to enable the bidders for compliance • In case sufficient time is not available, extend the tendering period • Furnish the minutes of the pre-bid conference along with the addendum to all bidders who had purchased the bids and also along with the bid documents to the bidders purchasing the documents subsequently.

34. Procurement Steps • Signing of Bids • Signed by the bidder or his representative who is authorized to do so by a power of attorney which should be attached with the bid • Bid in original in conformity with the bid documents • All corrections be signed with date • All pages of bid documents be signed

35. Procurement Steps • Submission of Bids • Bids typed or written in indelible ink and sign by the bidder or his representative, authorized by a power of attorney (attach with the bid). • Single Envelope System: Submit both the technical and financial bid along with earnest money deposit in a single envelop. • Double Envelope System: Submit the technical and financial bids in separate envelopes along with earnest money deposit indicating on each envelope “Technical Bid” or “Financial Bid” as the case may be. • Seal the original and copy of bid in separate inner envelopes and then place all the inner envelopes in outer envelope and seal. • Address both the envelopes to the purchaser indicating “Do not open before _______ hours on________. • Sent by post/courier or dropped in person in the bid box placed in the purchaser’s office. • Bids received after deadline need not be considered and returned unopened. • Reject Bids sent by e-mail or fax. • Accept only one bid from one bidder.

36. Procurement Steps • Deadline for submission of bids • Bids must receive within the time and date specified in the invitation for bids.   • In the event of the specified date for submission of bids being declared a holiday, the bids will be received up to the specified time on the next working day. • The purchaser may extend this deadline by amending the bid documents which will be strictly adhered to by the purchaser and the bidder. • Late Bids • The bidder should ensure timely submission of bids.  • Any bids received after the prescribed deadline shall be rejected and returned to the bidder unopened.

37. Procurement Steps • Opening of Bid • Follow the procedures described in the Instructions for Bidders (IFB). • Open in public in the presence of bidders or his authorized representatives ( maximum 2) who choose to attend the bid opening process. • The authorized representatives must carry an authorization letter from the bidder. • Strictly follow the date, time and place of bid opening specified in the IFB • Open immediately after the deadline for submission of bids but not exceed more than one hour from the deadline for submission of bids. • In the event of the specified date for opening of bids being declared a holiday, the bids will be opened up to the specified time and location on the next working day. • Obtain the signature of the bidder or his authorized representatives who are present for having attended the bid opening.

38. Procurement Steps • Manner of Opening the bids • The Purchase Committee shall count the number of bids received and allot numbers to each bid based on the total number of bids. • If 10 bids are received, the numbers will be allotted as 1/10, 2/10, 3/10 and so on. • All the members of the Committee shall initial with date on the outer cover of all the bids. •  In case the envelopes containing the bid offer are not properly sealed, such bids need not be opened and rejected outright. • The reasons for not opening such bids shall be recorded on the face of the envelope and all the members of the Committee shall initial with date. • Read out at the bid opening, the bidders’ name, bid modifications or withdrawals, bid prices, discounts, and the amount of earnest money deposit.

39. Procurement Steps • Manner of Opening the bids • No bid shall be rejected at bid opening except those received after the deadline for receipt of bids and unsealed bids which shall be returned to the bidder unopened. • Prepare a summary of the read out bid prices as per the format given in Annex-III. • All members present in the bid opening must sign with date all pages of the bid documents, and the supporting documents submitted by the bidder except printed materials. •  Prepare the Minutes of the bid opening. • To assist in carrying out the opening and preparing of the record, a bid opening check list is provided in Annex-IV.

40. Procurement Steps • Clarification of bids • Request clarifications of bidders on ambiguities or inconsistencies, if any, in bid. • During evaluation, if clarifications considered necessary, seek from the bidder in writing, indicating time limits for submission of the response. • Not to seek or accept any change in the price or scope of the originally offered goods, works, or services except for the correction of arithmetic errors. • The bidder shall submit the clarifications in writing within the specified time limit. • No circumstances shall justify meetings or conversations between the purchaser and bidders during the bid evaluation process.

41. Procurement Steps • Evaluation of Bids • Preliminary Examination of Bids • Begin immediately after bid opening the evaluation process. • The purpose of preliminary examination is to identify and reject bids that are incomplete, invalid, or substantially non-responsive to the bidding documents and therefore are not to be considered further. • Such bids shall not subsequently be made responsive by correction or withdrawal of the non conforming deviation or reservation. • Carry out the following checks:

42. Procurement Steps • Verification • Attention should be given towards deficiencies that, if accepted, would provide unfair advantages to the bidder. • Sound judgment must be used: for example, simple omissions or mistakes arguably occasioned by human error should not be grounds for rejection of the bid. • Rarely is a bid perfect in all respects. However, the validity of the bid itself, for example, its signatures, must not be in question. • If the bidder is an agent, an authorization from the supplier or manufacturer must be provided in addition to any documentation required of the supplier or manufacturer itself.

43. Procurement Steps • Earnest Money Deposit • Must conform to the requirements of the ITB, and it must accompany the bid. • If the earnest money deposit is issued as a bank guarantee, it must be consistent with the wording of the bid security form provided in the bidding document. • Submission of a copy of the security or submission of a counter-guarantee naming the purchaser’s bank instead of the purchaser is unacceptable. • Deposit for an amount smaller or for a period shorter than the one specified in the IFB, not in conformity with the form and bank specified in ITB are not acceptable.

44. Procurement Steps • Completeness of Bid • Unless the bidding documents have specifically allowed partial bids—permitting bidders to quote for only select items or for only partial quantities of a particular item—bids not offering all of the required items should ordinarily be considered non-responsive. • However, under works contracts, missing prices for occasional work items are considered to be included in prices for closely related items elsewhere. • If any erasures, interlineations, additions, or other changes have been made, they should be initialed by the bidder. • Missing pages in the bids shall be a cause for rejection of the bid.

45. Procurement Steps • Substantial Responsiveness • A substantially responsive Bid is one which conforms to all the terms and conditions, and technical specifications prescribed in the bidding documents, without material deviation or reservation. • Major deviations to the commercial requirements and technical specifications are a basis for the rejection of bids. • As a general rule, major deviations are those that, if accepted, would not fulfill the purposes for which the bid is requested, or would prevent a fair comparison with bids that are properly compliant with the bidding documents.

46. Procurement Steps • Examples of major deviations include: • Stipulating price adjustment when fixed price bids were called for • Failing to respond to specifications by offering instead a different design or product that does not offer substantial equivalence in critical performance parameters or in other requirements • Phasing of contract start-up, delivery, installation, or construction not conforming to required critical dates or progress markers • Sub-contracting in a substantially different amount or manner than that permitted • Refusing to bear important responsibilities and liabilities allocated in the bidding documents, such as performance guarantees and insurance coverage • Taking exception to critical provisions such as applicable law, taxes and duties, and dispute resolution procedures • Those deviations that are specified in the ITB as requiring rejection of the bid (such as, in the case of works, participating in the submission of another’s bid other than as a subcontractor).

47. Procurement Steps • The results of preliminary examination should be presented in Annex-V. If the bid fails preliminary acceptance, the reasons must be clearly explained in footnotes or in an attachment, as necessary • Detailed Preliminary Examination • A typical Checklist for the detailed preliminary examination of the bid is given at Annex-VI. • Reject the bids determined as non-responsive in the check list. • Technical Evaluation • In combined bids invited in one envelope system, the technical evaluation will be carried out simultaneously by a Technical Committee constituted for this purpose. • The ranking system by allotting marks will not be followed in the case of technical evaluation of goods/equipment and works.

48. Procurement Steps • The Technical Committee will examine the bids with reference to the technical specification specified in Annexure of the bidding documents and comment on the responsiveness of the technical specifications. • Reject the bids which do not conform to the technical specifications specified in the bidding documents. • The format to ascertain responsiveness to technical aspects is provided in Annex-VII. • In double envelope system, the evaluation of technical qualification is carried out first and financial evaluation is done only the bids that qualifies technical qualification. • Evaluation and comparison of substantially responsive bids • Only those bids surviving preliminary examination need to be examined in this phase. • The purchaser reserves the right to accept or reject any variation, deviation, or alternative offer.

49. Procurement Steps • Variations, deviations, and alternative offers and other factors which are in excess of the requirements of the Bidding documents shall not be taken into account in bid evaluation. • If the Bid of the successful Bidder is seriously unbalanced in relation to the purchaser’s estimate of the cost of goods/equipment to be supplied under the contract, purchaser may require the Bidder to produce detailed price analysis of ex-factory/ex-warehouse/off-the-shelf price of the goods offered, such price to include all costs as well as duties and taxes paid or payable, cost of incidental services, transportation, insurance etc. • Determination of post qualification criteria • The purchaser will determine to its satisfaction whether the Bidder that is selected as having submitted the lowest evaluated responsive bidder meets the post qualification criteria specified in the Annexure of ITB and is qualified to perform the contract satisfactorily. • The determination will take into account the Bidder's financial and production capabilities.

50. Procurement Steps • It will be based upon an examination of the documentary evidence of the Bidder's qualifications submitted by the Bidder as well as such other information as the purchaser deems necessary and appropriate. • A typical check list for the determination of post qualification criteria is given in Annex-VIII.This may be modified suitably in conformity with the post qualification criteria prescribed in Annexure of ITB used for the procurement. • If the lowest evaluated bidder fails post qualification, its bid should be rejected, and the next ranked bidder should then be selected subject to fulfillment of post qualification. • If successful, this bidder should receive the award. If not, the process will continue. • The rejection of a bid for reasons of post qualification requires substantial justification, which should be documented in attachments to the bid evaluation report.