Draft Procurement Rules 2012 continued. RFQ stage to find qualified applicants who are most capable of meeting the project objectives for the next stage,

Draft Procurement Rules 2012 continued

RFQ stage to find qualified applicants

• who are most capable of meeting the project objectives for the next stage, RFP

•before going to RFP (Request for Proposal) some projects need intermediary stage

•Request for Technical Proposal (RTP)

•Chapter VIII - Rules 70 to 76 deal with RTP

•specifies the minimum technical requirements

•Physical facilities, capacity that need to be constructed

Request for Technical Proposal (RFT)

Output specifications -target users, levels of service, quality standards, performance parameters

Construction requirements-design standards to be complied, management of social/environmental

Operation requirements -standards to be followed for operations of the facility safety, security, labour relations, quality, monitoring, reporting

Maintenance requirements-standards, schedule

Tests for performance monitoring and the key performance indicators that would be monitored.

Parameters for bidder (RTP) would include (a) qualification of the applicant (b) experience relevant to project (c)approach & methodology for implementation (d) business plan for implementation (e) financial plan for implementationEach one of them will have criteria

For example financial plan would include

(i) sources of finances and their expected boundary conditions, (ii) plan for financial sustainability of the PPP Project; and (iii) projected financials and key assumptions

• RTP- criteria and parameters are assigned scores• cut-off score to qualify on minimum technical

requirement -predetermined & specified in RTP• after taking prior written approval of PPACs• CA should issue RTP to all the applications who

qualified RFQ stage• RTP should specify scheduled dates: • for pre-qualification meeting a minimum of 3 weeks

before due date • for clarifications on queries, amendments issued to

RTP, at least 2 weeks should be left before due date• due date for submission not less than 6 weeks from

the date of advertisement/notification of the RTP

• RTP bids evaluated by the Tender Evaluation Committee using the qualifying criteria as specified in the RTP on the basis of their respective aggregate experience scores

• marks allocated for each of the parameters aggregated to calculate a single score

• applications beyond the pre-specified minimum threshold shall be qualified for next stage RFP

• CA should notify all the applicants whether they are qualified or not

Request for Proposal (RFP)RFP formally solicits final offer from bidders qualified in the earlier stage RFT or RFQ. RFP should contain(a) Feasibility Report (Project Information Memorandum) which includes project objectives and rationale, site details, role of the Government, key agency and stakeholders, project scope and output specifications etc(b) Instructions to Bidders explaining all procedures, terms, conditions to be followed by bidder, those ‘will be’ followed by CA

Request for Proposal (RFP) continued

• description and scope of the project should be objective, functional and generic, and shall set out the relevant technical, quality and performance characteristics expected.

• There should be no reference to a particular trademark or trade name, patent, design or type, specific origin or producer unless there is no option otherwise, but in all such cases, the words “or equivalent” must be included

RFP also contains Draft Concession Agreement Draft Concession Agreement shall contain

- rights and obligations of both the parties

- definition of the subject matter of agreement

- payment terms and performance obligations

- defaults and their consequences

- events of termination and other ancillary clauses

Project Officer is responsible for preparing RFP and Draft Concession Agreement

RFP should

• Clearly define the form & content of Final Offer

• Clearly define criteria for selection and state that selection would be on the basis of arriving at the most advantageous Final Offer.

• Criteria are grants sought, expected revenue/ annuity, tariff/shadow toll, present value of lifecycle cost, period of the concession, upfront premium, equity stake, revenue share etc.

• Rule 81 PPP Rules: approval of PPPAC before CA issues RFP & the Concession Agreement to the Bidders

RFP should specify the due dates

•pre-bid meeting being held minimum of a three weeks from the due date,

•clarifications and amendments being issued at least two weeks before due date

•due date of submission being a minimum of six weeks from date of notification/ advertisement

CA to maintain a data room where specific project information is kept. All bidders should be allowed to access to it during specified timings

• Where the bidder is a consortium, change in the composition can be permitted by the CA, if the application reaches at least 15 days before the due date of submission

• It is subject to the condition that the lead member remains unchanged and the substitute member has equal technical capacity

• The modified/ reconstituted consortium should submit a revised joint bidding agreement before the due date

• RFP bid Applications to be opened by CA on the due

date, and at the time and place as specified in the RFP

in the presence of Applicants who choose to attend

• CA should permit all of them to participate; until such

time PO shall ensure that the Applications remain

unopened and are stored in a secure location

• Evaluated by the Tender Evaluation Committee

assisted by transaction advisor wherever necessary

• Evaluation should be on pre-determined criteria

communicated in RFP

• Independent Monitor shall be present for all Bid

evaluation meetings. Negotiations are prohibited

• all RFP qualified bids should be ranked

• the first ranked one is the preferred bidder

• if the first ranked bidder withdraws or is not selected for any reason, it is treated as first round of bidding

• Contracting Authority may invite all the remaining Bidders to revalidate and match the bid of first ranked to enter into the 2nd round

• the one who matches would be the preferred bidder

• in the second round if more than 2 or 3 match the bid, the one which got higher ranking/ score from RFQ stage is the preferred bidder

• in the event that two or more Bidders have quoted the same Final Offer and have same ranking, the Contracting Authority shall identify the Preferred Bidder by asking the two Bidders to provide their Best and Final Offer

• most advantageous Final Offer shall be adjudged the winner

• If not successful, CA shall take into account the aggregate experience score of each such bidder from the RFQ Stage- Bidder with higher score shall be adjudged the Preferred Bidder

• If the tie persists, CA shall initiate fresh Tender Proceedings. If no bidder matches CA shall initiate new tender proceedings

• If sole bid CA can accept if the Tender Evaluation Committee is of the same opinion or reject it

• If a sole bid is accepted, negotiations are permitted provided they result in better terms

Rule 89-93 of draft PPP Rules 2012• CA notifies Preferred Bidder after obtaining

approval of the Approving Authority • CA should communicate to other Bidders

about the selection of the Preferred Bidder• A Letter of Award (LOA) in duplicate will be

issued asking to sign it and return a duplicate copy within 7 days of receipt of LOA

• After the receipt of acceptance, CA should execute the Concession Agreement

• No negotiations

Chapter - V : Rule 32 to 53 - general provisions

Tenders should be given wide publicity

advertisement/notification in at least one English and one Hindi daily of national reputation

website of the Contracting Authority and on the centralized PPP e-procurement website

may advertise in trade journals or business publications or other periodicals – if needed

procedures notified by MoF if it intends to utilize system of e-tendering

• Communication between contracting authority and the respondents; any decision, notification, information generated during tender process should be in a form that would be a record to be accessible subsequently

• Record of Tender Proceedings should contain basic information of respondents, statement of reasons and circumstances relied upon by contracting authority for decision, ....state of reasons for rejection, .... deviations from model tender documents

Rule 53• All officers and employees are bound by a Code of

Conduct, documented and implemented by Contracting Authority; (Format is prescribed)

• CA can disqualify –if respondent has offered, given or agreed to give, directly or indirectly, to any current or former officer or employee of the CA or other governmental authority a gratuity in any form or any other thing of service or value, so as to influence a decision or an act relating to procurement proceedings.

• Similarly for false information, conflict of interest

• Chapter-II of Draft Procurement Bill 2012 has Code of Integrity both for procuring entities and for bidders

• No official of a procuring entity or a person participating in a procurement process shall act in contravention of the code of integrity prescribed by the Central Government. Code of integrity includes provisions for prohibiting any offer, solicitation or acceptance of any bribe, reward or gift or any material benefit, omission, including a misrepresentation, collusion…….

• Whoever, being a public servant acting in

connection with any procurement process, accepts

or obtains or agrees to accept ... any gratification

other than legal remuneration or any valuable

thing ……………… in connection with such public

procurement, as a motive ..... favour or disfavour

to any person or for rendering or attempting to

render any service or disservice to any person, shall

be punishable with imprisonment not less than six

months which may extend to five years and shall

also be liable to fine.

• whoever interferes procurement process with the intention of ......shall be punished with imprisonment for a term which may extend to Rs. five years and shall also be liable to fine which may extend to 5 lakh or 10% of value of procurement

• Whoever abets an offence punishable under this Act ......, whether or not that offence is committed in consequence of that abetment, shall be punished with the punishment provided for the offence

• there is clause to protect officials who acted ‘good faith’ --shall have the same meaning as is assigned in section 52 of the Indian Penal Code

• Back to PPP Rules: Respondent may be a single entity or consortium

• Respondent cannot be member of another

respondent, if he already applied individually or as a

part of consortium

• Preferred Bidder shall hold not less than 51% of the

issued and paid up equity share capital of the

Concessionaire until the date of commercial

operation of the PPP Project is achieved and 26% of

the issued and paid up equity share capital of the

Concessionaire for the term of the Concession

• CA can terminate the contract if there is breach in this issue

• Chapter - X lays down the Rules governing post-award project and contract management

• CA to appoint Contract Management Team (CMT) headed by a Director (CMD) before LOA issued

• The Project Officer should provide all documents to the CMT and continue as member until the execution of the Concession Agreement

• Ministry/Department should set up an Empowered Review Cell headed by a Joint Secretary or above with sufficient capacity and skills to monitor the project

• CMT responsibilities are formulation and monitoring of the implementation of Contract Management Plan

• Includes field visits, interaction with user representatives, adherence to timelines, performance standards, periodic measurement testing etc. - specified in Concession Agreement

• remedial measures for curing defaults• periodic reporting to Contracting Authority• Achievement and Exception Report to

Empowered Review Cell every quarter

• Contract Management Plan of CMT should define the processes that enable both parties to meet their obligations

• manage unanticipated development, manage their differences and resolve disputes

• act as a repository of management procedures and a resource tool by including agreement, schedules, all financing agreements, financial models, names, roles details of key individuals of both parties

• implementation plan - construction, operations and exit phases, performance management plan, risk management plan, contingency plan; contract termination & handover plan.

• Empowered Review Cell is to review the work, issue

necessary directions to CA to rectify any defaults

• Submit a half-yearly report to the PPPAC; redressal the

grievances of users, issues affecting projects,

• CA should appoint an Independent Engineer for

Inspecting & monitoring of construction, conducting

tests & issuing certificates during the construction;

period, reviewing & inspecting the operations and

maintenance arrangements; and monitoring

compliance with the performance & maintenance

standards during the operations period.

• Engineer to submit monthly report to CMT

• CA should cause the Concessionaire to identify the lead financial institution and ensure submission of report on the financial progress, statement of debt and equity contribution, and any other relevant financial information

• Report once in six months during construction and once a year during operation period

• Lead Financial Institution would inform the Contracting Authority of any payment delays by the Concessionaire to the lenders etc.

• any event(s) which has a material adverse effect on the Concession, and is an event(s) which could not have been anticipated by the Concessionaire or the Preferred Bidder, and is outside the control of either party is “Change in Circumstances”

• CMT should conduct a technical, financial and legal due diligence to determine whether such event constitutes a Change in Circumstances

• prepare and submit its recommendations for treatment of the Change in Circumstances to CA

• CA shall consider and if decides otherwise, shall send detailed report to PPPAC and follow its directions

• CA should ensure that the Concession Agreement provides for a hand back and exit strategy for PPP Projects

• CMT is responsible for implementation of exit strategy at the end of the term of the Concession Agreement

Exit strategy should include

Review of options to ensure service continuity, assessment of operations needs and asset/service quality, testing and valuation of assets,

Implementation plan for handing back PPP Project to CA, resource allocation for implementing the exit strategy

Obligation of the parties in relation to the exit strategy

• Grievance redressal system (tendering process) is provided in the Public Procurement Bill

• any bidder or prospective bidder aggrieved that any decision, action or omission of the procuring entity is in contravention to the provisions of this Act can appeal and have redressal of his grievance

• procurement redressal committee shall consist of not less than three members including its chairperson –a retired Judge of a High Court nominated by the Chief Justice of the concerned High Court.

Chapter XI provides for audit of the PPP ProjectCA is the subject of audit, not the concessionaireThe scope of audit is the ‘process compliance’ during procurement stage procedures in releasing payments provision of guarantees managing Contingent Liabilities adherence to the Concession Agreement in terms of

ensuring fulfilment of conditions precedent, performance assessments, fulfilment of obligations of concessionaire and any modification in the agreement not in accordance with the PPP Rules.

• The Contracting Authority should maintain the documents for the above purpose and make the information available

• However, decision to implement a project on PPP basis and choice of the PPP structure approved by the Approving Authority shall not be subject to audit

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