CEO TI Pakistan1 Transparent Procurement Procedures & Evaluation and comparison of Bids for Works By Syed Adil Gilani Vice Chairman & CEO Transparency.

CEO TI Pakistan 1

Transparent Procurement Procedures & Evaluation and

comparison of Bids for Works

By

Syed Adil GilaniSyed Adil GilaniVice Chairman & CEOVice Chairman & CEO

Transparency International PakistanTransparency International Pakistan

CEO TI Pakistan 2

Evaluation and Comparison of Bids for Evaluation and Comparison of Bids for

Goods and WorksGoods and Works Invitation of TendersInvitation of Tenders..

For competitive bidding, whether open or limited, the bidding documents shall include the following, namely:-

(a) invitation to bid;(b) instructions to bidders;(c) form of bid;(d) form of contract;(e) general or special conditions of contract;(f) specifications and drawings or performance criteria

(where applicable);(g) list of goods or bill of quantities (where applicable);(h) delivery time or completion schedule;(i) qualification criteria (where applicable);(j) bid evaluation criteria;(k) format of all securities required (where applicable);(l) details of standards (if any) that are to be used in

assessing the quality of goods, works or services specified; and(m) any other detail not inconsistent with these rules that

the procuring agency may deem necessary.

CEO TI Pakistan 3

Evaluation and Evaluation and Comparison of Bids for Comparison of Bids for

Goods and WorksGoods and WorksInvitation of Tenders.Invitation of Tenders.

Use Standard Form of Bidding Documents issued by Use Standard Form of Bidding Documents issued by Pakistan Engineering Council in August 2002, with Pakistan Engineering Council in August 2002, with amendments prescribed by NACS 2002 & Public amendments prescribed by NACS 2002 & Public Procurement Rules, 2004.Procurement Rules, 2004.

1.1.Standard Guidelines for Evaluation of Bids for Procurement Standard Guidelines for Evaluation of Bids for Procurement of Works. Annexure VIIof Works. Annexure VII

2.2.Standard forms of Biding Documents (Civil Works) Standard forms of Biding Documents (Civil Works) Annexure VIIAnnexure VII

-- Part I.Part I.General Conditions of Contracts.General Conditions of Contracts.-- Part IIPart II Condition of Particular Condition of Particular

Applications.Applications. -- FIDIC conditions for works of civil FIDIC conditions for works of civil

engineering engineering constructionsconstructions

( continued)( continued)

CEO TI Pakistan 4

Use Standard Form of Bidding Documents issued Use Standard Form of Bidding Documents issued by Pakistan Engineering Council in August 2002, by Pakistan Engineering Council in August 2002, & World Bank SBD’s with amendments & World Bank SBD’s with amendments prescribed by NACS 2002 & Public Procurement prescribed by NACS 2002 & Public Procurement Rules, 2004Rules, 20043. Standard forms of tender documents for procurement of works (Electrical and Mechanical)- Annexure IX4. Escalation and Construction Contracts.- Annexure X

5. Standard Bidding Documents Supply and Installation of Information Systems (Single-Stage Bidding)- Annexure XI6 Standard Bidding Documents Supply and Installation of Information Systems (Two-Stage Bidding)- Annexure XII5. Standard Bidding Documents – Procurement of Plant & Equipment. (Goods)- Annexure XIII

CEO TI Pakistan 5

Amendments to be made in these PEC & World Bank Documents incorporating

NACS 2002 & Public Procurement Rules, 2004 as given below

1. Integrity Pact. IP to be included as prescribed in by PPRA in 2002 for all Procurements of over Rs 10 million value

2. Allocation of Sub Criteria and Financial Evaluation.

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. It must be part of Bidding DocumentsFailure to provide for an unambiguous evaluation criteria in the bidding documents shall amount to mis-procurement


CEO TI Pakistan 6



3. Check for balanced bid prices, to evaluate determination of enhancement of performance security.

Bill of Quantity (BOQ) Format requires change, to include breakdown against each BOQ item cost of material, equipment, labour & overhead costs.

4. Amendments in the Tender Documents for Civil Works

a In Standard Form of Bidding Documents Civil Works also the Arithmetic Check and Correction of error should be included at the preliminary checking stage.

b The IT.26 and IT. 27 Examination of Tenders and Determination of Responsiveness may therefore be substituted with IT 24.1 a & b, 24.2 and 24.3 of the Tender Documents for Electrical and Mechanical Works.


CEO TI Pakistan 7



4. c The IT.18 Format and Signing of Tender. Wording of 18.6 is substituted with new wording. 18.6.

“The tender shall contain no alterations, omissions or additions, except to comply with instructions issued by the Employer, or as are necessary to correct errors made by the bidder, in which case such corrections shall be initialed by the person or persons signing the tender”.

“The Correction shall be made by striking a line over the wrong amount, and writing the correct amount separately. The use of White Fluid for correction of error is not allowed. The Correction

shall be made by striking a line over the wrong amount, and writing the correct amount separately”


CEO TI Pakistan 8

Amendments to be made in these PEC & World Bank Documents incorporating NACS 2002 &

Public Procurement Rules, 2004 as given below

5. Amendments in the Tender Documents for Electrical and Mechanical Works. The PEC Standard Form of Tender Documents for Procurement of Works ( Electrical & Mechanical) includes following clause.26.2 Evaluation and Comparison of Tenders substituted with new wording. 18.6.

Commercial Evaluation It will be examined in detail whether the tenders comply with

the commercial/ contractual conditions of the Tender Documents. It is expected that no major deviation/stipulation shall be taken by the bidders. However there is no information on the procedure of commercial evaluation. The procedure for commercial evaluation has to be defined in the Tender Documents for transparent evaluation. For this purpose following Clause is to be included in the Tender Documents for Electrical & Mechanical Works. This clause has been borrowed from the “Standard Bidding Documents for the Supply and Installation of Plant and Equipment” prepared by the World Bank, issued in November 1997, Revised January 1999 and March 2002.

CEO TI Pakistan 9

Evaluation Evaluation

GeneralGeneral

Regardless of how well the other Regardless of how well the other steps in the procurement process steps in the procurement process are conducted, if bids are not are conducted, if bids are not evaluated correctly and fairly, the evaluated correctly and fairly, the process has failed. Unfortunately, process has failed. Unfortunately, bid evaluation is the step that is bid evaluation is the step that is most easily manipulated if one most easily manipulated if one wants to favor a particular bidder.wants to favor a particular bidder.

CEO TI Pakistan 10

Evaluation Evaluation (h)(h) “lowest evaluated bid” means,-“lowest evaluated bid” means,-

(i) a bid most closely conforming to evaluation criteria and (i) a bid most closely conforming to evaluation criteria and other conditions specified in the bidding document; andother conditions specified in the bidding document; and

(ii) having lowest evaluated cost(ii) having lowest evaluated cost;;

The basic sequence for bid evaluation is the same for all The basic sequence for bid evaluation is the same for all goods and works, and consists of the following steps goods and works, and consists of the following steps

Preliminary examination;Preliminary examination; Determination of bid responsiveness;Determination of bid responsiveness; Correction of arithmetic errors;Correction of arithmetic errors; Conversion to common currency;Conversion to common currency; Quantification of omissions and deviations;Quantification of omissions and deviations; Application of evaluation criteria;Application of evaluation criteria; Comparison of bids; andComparison of bids; and Preparation of evaluation report.Preparation of evaluation report.

CEO TI Pakistan 11

Bid Evaluation Committee and its duties In order to examine and evaluate bids, the Procuring

Agency must appoint a Bid Evaluation Committee comprising of minimum three odd number members.

• The Bid Evaluation Committee is responsible for the evaluation and comparison of the bids received and for the preparation of the Bid Evaluation Report.

• No evaluation criteria shall be used for evaluation of bids that had not been specified in the bidding documents.

• Preliminary Examination

• Correction of Arithmetic Errors

• Application of Evaluation Criteria

• Responsiveness Check

• Conversion to Common Currency

• Evaluation of Bids on the Basis of Price Only (continued)

CEO TI Pakistan 12

Bid Evaluation Committee and its duties

• Price Adjustment

• Delivery Schedules

• Cost of Spare Parts

• Evaluation on the Basis of Life Cycle Cost

• Deviations from the Requirements of Bidding Documents

• Commercial Aspects

• Technical Aspects

• Quantification of Omissions and Deviations

• SAMPLE BID EVALUATION REPORT FOR SIMPLE EQUIPMENT

(continued)

CEO TI Pakistan 13

Bid Evaluation Committee and its dutiesList of Attachments to the Bid Evaluation Report

1. Copy of Bid Invitation2. Pre-bid meeting minutes3. Copy of bidding document and amendments, if

any4. Minutes of bid opening (process verbal)5. Table of bid prices received- bidder, nationality,

bid price as read out, bid price in common currency

6. List of bids rejected during preliminary examination with brief reasons

7. Evaluation and comparison table of substantially responsive bids with all adjustments and preference margin, if applied

8. Contract information sheet of the selected bid.9. Announcement of evaluation reports.- Procuring

agencies shall announce 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. (continued)

CEO TI Pakistan 14

A Bid is Not Responsive If; 1. It is received after the time and date fixed for its receipt, 2. Fails to Sign the Integrity Pact.3. It is submitted through fax, telex, telegram or e-mail.4. It is not accompanied with the specified Bid Security.5. It is unsigned.6. Its validity is less than specified.7. It is submitted for incomplete Scope of Work.8. It indicates completion date later than specified.9. 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.10. It indicates that material to be supplied does not meet the eligibility requirements.11. It indicates that Bid Prices do not include the amount of taxes & duties.12. If Bidder refuses to accept the arithmetic corrections.13. It is materially and substantially different from the Conditions/ Specifications of Bidding Documents.10. It provides Sub-contracting, contrary to conditions specified in the

Bidding 11. Documents. It fails to comply Mile-Stones/critical dates specified

in Bidding Documents.12.The bidder is not valid license holder of the PEC.

CEO TI Pakistan 15

GENERAL PROVISIONSGENERAL PROVISIONS– 2.2. Definitions.- (1) In these rules, unless there Definitions.- (1) In these rules, unless there

is anything repugnant in the subject or context,- is anything repugnant in the subject or context,- – (a)(a) “bid” means a tender, or an offer, in “bid” means a tender, or an offer, in

response to an invitation, by a person, consultant, response to an invitation, by a person, consultant, firm, company or an organization expressing his firm, company or an organization expressing his or its willingness to undertake a specified task at or its willingness to undertake a specified task at a price;a price;

– (b)(b) “bidder” means a person who submits a bid;“bidder” means a person who submits a bid;– (c)(c) “competitive bidding” means a procedure “competitive bidding” means a procedure

leading to the award of a contract whereby all the leading to the award of a contract whereby all the interested persons, firms, companies or interested persons, firms, companies or organizations may bid for the contract and organizations may bid for the contract and includes both national competitive bidding and includes both national competitive bidding and international competitive bidding; international competitive bidding; d)d) “contractor” means a person, consultant, “contractor” means a person, consultant, firm, company or an organization who undertakes firm, company or an organization who undertakes to supply goods, services or works;to supply goods, services or works;

CEO TI Pakistan 16


WorksWorks Evaluation of bids for works contracts is more

complex than the evaluation of bids for goods. To make the evaluation process easier and transparent, it is essential for the Procuring Agency set out in bidding documents, well defined evaluation criteria and carry out the evaluation process in a transparent manner. If the evaluation criteria is not well defined, Bidders may be reluctant to submit bids. The evaluation of works contracts involves price and nonprice factors, depending on the form of works contract being procured. The selection of bids in for a works contract involves two steps after the preliminary examination to determine responsiveness. The first being the selection to determine whether Bidders demonstrate relevant experience in the undertaking the works being procured and the second step is based on price. (continued)

CEO TI Pakistan 17


WorksWorks Evaluation of bids for works contracts is more

complex than the evaluation of bids for goods. To make the evaluation process easier and

transparent, it is essential for the Procuring Agency set out in bidding documents, well

defined evaluation criteria and carry out the evaluation process in a transparent manner. If

the evaluation criteria is not well defined, Bidders may be reluctant to submit bids. The

evaluation of works contracts involves price and nonprice factors, depending on the form of

works contract being procured. The selection of bids in for a works contract involves two steps

after the preliminary examination to determine responsiveness. The first being the selection to

determine whether Bidders demonstrate relevant experience in the undertaking the

works being procured and the second step is based on price. (continued)

CEO TI Pakistan 18


WorksWorks Evaluation of Deviations in Bids for Works

Contracts.

Bidders for works contracts often qualify or condition their bids in some way, creating

problems for Procuring Agency staff who must decide whether a bid is substantially responsive

to the bidding documents and, if so, how deviations from the bidding conditions should be

handled in the evaluation of bids. Clear unambiguous bidding documents prepared by

experienced staff of the Procuring Agency result in fewer qualifications by bidders. Pre-bid

conferences during the bidding period should also be convened to clarify any serious

ambiguities and discrepancies in the documents. (continued)

CEO TI Pakistan 19


WorksWorks Evaluation of Deviations in Bids for Works

Contracts.

Deviations may include exceptions, exclusions, qualifications, conditions, stated assumptions,

alternative proposals (when not specifically solicited) and other changes to the requirements

of bidding documents. Their degree of acceptability and impact on bid comparison will

vary; some may be clearly unacceptable; some that are acceptable may be quantifiable in

monetary terms; others may not be quantifiable but may still affect the competitive position of

other bidders. (continued)

CEO TI Pakistan 20

The first stage in evaluation is to decide whether the deviations in a bid are so material as to be unacceptable, and therefore

are grounds for rejecting the bid. Fairness to the other bidders is a prime consideration. A bidder’s deviation which, in itself or by its withdrawal or rectification, would seriously

affect the competitive position of other bidders unless they were given the same opportunity, would normally constitute

grounds for rejection of the entire bid. The following deviations (or some combination thereof) may result in

rejection of bids : bid submission by a legal entity or joint venture different from

that which was Prequalified (excepting when all members of the new joint venture were Prequalified initially);

the submission of a base bid subject to price adjustment when fixed price bids were called for;

the submission of a bid based on an entirely different alternative design where such had not been requested nor expressly permitted;

an inflexible time phasing of contract construction or performance not conforming to prescribed critical key dates or “milestones” in a broader construction program; and

sub-contracting in a substantially different amount and manner than specified

(continued)

Evaluation of Deviations in Bids for Works Contracts.

CEO TI Pakistan 21

Deviations from the bidding requirements which do not appear

at first sight so serious as to provide immediate grounds for bid rejection maybe considered further in the evaluation process. The following are examples of such deviations.

an amount of advance payment and other payment terms (including retention money, guarantees, the details of price adjustment provision) differing from the prescribed conditions;

non-compliance with local regulations relating to labor, imports taxes, duties, notarization, etc.;

changes in specified methods of construction or execution (temporary works, shift work by labor, etc.);

subcontractors not meeting pre-specified requirements; omission (deliberate or unintentional) of minor works or items

included in the scope of work; non-acceptance of full liabilities (e.g. risks to third parties,

nearby structures, etc.); modification of, or a limit to the amount specified for

liquidated damages; and proposed changes in standards or codes relating to materials,

workmanship or design.(continued)


CEO TI Pakistan 22

The details and implications of any deviations which are

not explicit should be clarified by the Engineer/Employer in discussion with respective bidders without change in the substance or price of the bids.

Deviations or offers which are better than the requirements of the bid specifications (e.g. higher quality materials and workmanship, modified designs, shorter construction periods, etc.) should only be regarded as benefits to the Employer and included in the evaluation if specifically solicited in the bidding documents.

Deviations which are minor or non-quantifiable (e.g., changes in subcontractors, access to site, land acquisition, sources of materials, etc.) should be assessed in terms of their reasonableness for acceptance or rejection taking into account fairness to other bidders and their impact on the implementation of the contract.

(continued)


CEO TI Pakistan 23

The ranking order of bids should be determined using the most probable monetary costs (or benefits) to the Employer of all quantifiable deviations. The contract should be proposed for award to the bidder submitting the lowest ranked evaluated bid.

After selecting the lowest ranked evaluated bidder in the manner described above, the Employer may accept the qualified bid. Non-quantifiable deviations may be accepted or rejected according to their reasonableness.


CEO TI Pakistan 24

In some situations the Procuring Agency is permitted

to reject all bids submitted in response to an invitation for bids.

The Procuring Agency may reject all bids under the following circumstances:

1. Where the price in the lowest evaluated bid exceeds the Procuring Agency’s bid cost estimates by a substantial margin;

2. When all the bids received are not responsive to the requirements in the bid documents; and

3. Where the Procuring Agency after receiving bids reasonably concludes that there is lack of competition.

Where all the bids are rejected, the Procuring Agency should review the bidding documents and make any appropriate revisions. If substantial changes are made to the bidding documents, the Procuring Agency should then invite new bids on the basis of the new bidding documents.

Rejection of All Bids

CEO TI Pakistan 25

After the completion of the evaluation process a bid evaluation report shall be prepared setting out the process by which the Bid Evaluation Committee evaluated the bids received in response to the procurement process. A Standard Bid Evaluation Report format prepared by the PEC is available for use by Procuring Agency. This report covers among other things:

key dates and steps in the bidding process; bid prices, corrections, discounts and currency

conversions; additions, adjustments and price deviations; domestic preference if any; technical evaluations if any; post qualification results; names of bidders rejected and reasons for

rejection of bids; and the proposed contract award.

The Standard Bid Evaluation Report

CEO TI Pakistan 26

ACCEPTANCE OF BIDS AND AWARD OF ACCEPTANCE OF BIDS AND AWARD OF PROCUREMENT CONTRACTSPROCUREMENT CONTRACTS

• 38. Acceptance of bids.- The bidder with the lowest evaluated bid, if not in conflict with any other law, rules, regulations or policy of the Federal Government, shall be awarded the procurement contract, within the original or extended period of bid validity.

• 39. Performance guarantee.- Where needed and clearly expressed in the bidding documents, the procuring agency shall require the successful bidder to furnish a performance guarantee which shall not exceed ten per cent of the contract amount.

• 40. Limitation on negotiations.- Save as otherwise provided there shall be no negotiations with the bidder having submitted the lowest evaluated bid or with any other bidder:

• Provided that the extent of negotiation permissible shall be subject to the regulations issued by the Authority.

CEO TI Pakistan 27

Prequalification and TenderDocuments to be ready in 45 days.They should be ready by the time Administrative approval is received.

Timings for Tendering.Prequalification in press Days.Receipt of Prequalification 15 W Days Prequalification Evaluation 7 DaysInvitation of Tenders 1 DayReceipt of Tenders 15 W DaysOpening, Evaluation 7- 14DaysPublic Declaration of ER 10 DaysFinalization of EV & 6 DaysApproval of ER by Tender CommitteeApproval of Competent Authority 4 DaysAward of Contract 2 DaysSigning of Agreement 14-28 Days

TIME BASED PROCEDURE OF ROUTING THE CASESTransparency International Pakistan

CEO TI Pakistan 28

MAINTENANCE OF RECORD AND MAINTENANCE OF RECORD AND FREEDOM OF INFORMATIONFREEDOM 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.

CEO TI Pakistan 29

REDRESSAL OF GRIEVANCES AND REDRESSAL OF GRIEVANCES AND SETTLEMENT OF DISPUTESSETTLEMENT OF DISPUTES

• 48. Redressal of grievances by the procuring agency.- (1) The procuring agency shall constitute a committee comprising of odd number of persons, with proper powers and authorizations, to address the complaints of bidders that may occur prior to the entry into force of the procurement contract.

• (2) Any bidder feeling aggrieved by any act of the procuring agency after the submission of his bid may lodge a written complaint concerning his grievances not later than fifteen days after the announcement of the bid evaluation report under rule 35.

• (3) The committee shall investigate and decide upon the complaint within fifteen days of the receipt of the complaint.

• (4) Mere fact of lodging of a complaint shall not warrant suspension of the procurement process.

• (5) Any bidder not satisfied with the decision of the committee of the procuring agency may lodge an appeal in the relevant court of jurisdiction.

CEO TI Pakistan 30

REDRESSAL OF GRIEVANCES AND REDRESSAL OF GRIEVANCES AND SETTLEMENT OF DISPUTESSETTLEMENT OF DISPUTES

• 49. Arbitration.- (1) After coming into force of the procurement contracts, disputes between the parties to the contract shall be settled by arbitration.

• (2) The procuring agencies shall provide for a method of arbitration in the procurement contract, not inconsistent with the laws of Pakistan.

• 50. Mis-procurement.- Any unauthorized breach of these rules shall amount to mis-procurement.

• 51. Overriding effect.- The provisions of these rules shall have effect notwithstanding anything to the contrary contained in any other rules concerning public procurements:

• Provided that the prevailing rules and procedures will remain applicable only for the procurement of goods, services and works for which notice for invitation of bids had been issued prior to the commencement of these rules unless the procuring agency deems it appropriate to re-issue the notice for the said procurement after commencement of these rules.

CEO TI Pakistan1 Transparent Procurement Procedures & Evaluation and comparison of Bids for Works By Syed Adil Gilani Vice Chairman & CEO Transparency.

Documents

procurement of works

bidding documents failure

evaluation of bids

goods annexure

competitive bidding

public procurement rules

ceo ti pakistan2 evaluation

ceo ti pakistan3 evaluation