Welcome to the Session on Financial Management and Procurement

1
Procurement Procedure in SSA
Technical Support Group, SSA
2
Main Considerations
PROCUREMENT
Accountability and Ethical Standards
Economy
Efficiency
Transparency
Fairness
3
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.

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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.

5
Effective Procurement
Objectives
Timely Delivery as per schedule
Right Quality product
Lowest possible price
Meeting recognized standards
Reliable suppliers
Right quantities
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PROCUREMENT IN SSA

• Strictly follow procurement procedure prescribed
  in Chapter IX of the Manual on Financial
  Management and Procurement (FMP).
• Mandatory to follow the Manual provisions for all
  procurements under SSA.
• Follow States financial ceilings except when
  not prescribed by MHRD.
• Strictly follow MHRDs financial ceilings
  prescribed for various method of procurement on
  17-09-2008 as extended on 2-7-2010 which shall
  prevail on States ceilings.
• Convert the Ceilings in US to Indian Rupee by
  adopting RBIs buying rate of exchange prevailing
  on the date of issue of purchase order/work
  order.

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MHRDs Financial ceilings per contract
(In US equivalent)
Category Open Tender Limited Tender Single Tender Community
Goods gt50,000 lt3000,000 lt 50,000 lt30,000
Works gt40,000 lt300,000 lt50,000 lt40,000 lt40,000
Text books Upto 1 million lt500.000
SIEMAT Upto 800,000
Information Technology equipment gt50,000 lt4 million lt50,000
Books, Teaching materials school facility improvement, hiring of vehicles of equipment lt30,000
Service Contract lt200,000 lt200,000 lt200,000 lt200,000

• Any contract in excess of the maximum limit
  indicated above shall not be procured using SSA
  funds.

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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

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PROCUREMENT

• Strictly follow the levels of procurement
  provided in Para 112 of the Manual on FMP

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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.

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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

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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).

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PROCUREMENT

• Prepare the Procurement Plan every year and
  upload on SSAs website as envisaged in Para 113
  of the Manual.
• A Model Procurement Plan tentatively prepared at
  the National level is given separately.
• Strictly follow financial ceiling prescribed for
  each method.
• Urged the States on 16th June 2011 to prepare the
  annual procurement plan for 2011-12 and upload
  the same on the web site.
• Information received from 9 States of Chandigarh,
  Haryana, HP, Madhya Pradesh, Maharashtra,
  Meghalaya, Rajasthan, Uttarakhand, West Bengal.
• Information yet to receive from the remaining 26
  States.
• Defaulting States to ensure preparation of
  procurement plan on priority.
• Linkage of all procurements with plan will be
  looked in audits, post review and concurrent
  review.

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

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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

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• Tender documents
• Should be user friendly, self contained,
  comprehensive, unambiguous and relevant to the
  objective of purchase.
• Use Standard State Governments 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

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• 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

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• 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)

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Procurement Steps

• Repeat Orders
• Quantity increase/decrease as per State procedure
  
• Place order within one month from the date of
  last supply
• Prices have since not reduced
• Purchases not made on urgent basis
• Right to Accept any Bid or Reject all Bids
• The purchaser has the right to accept or reject
  any bid and to annul the bidding process and
  reject all bids at any time prior to award of
  contract.
• Rejection of all bids
• Lack of competition
• Tenders not substantially responsive
• Review the causes justifying the rejection
• Obtain the approval of competent authority

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Procurement Steps

• Award of Contract
• Award Criteria
• Award the contract within the bid validity
  period.
• Award the contract to the successful lowest
  evaluated responsive bidder
• The selected bidder need not undertake work not
  specified in bidding documents or to modify his
  bid.
• Single offers received
• Consider if
• publicity was adequate,
• bid specifications / conditions were not
  restrictive or unclear and bid prices are
  considered reasonable.

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LIMITED TENDER

• Items covered
• Goods including books, uniforms
• Teaching learning materials,
• School equipment,
• Hiring of vehicles, and
• Operation and maintenance of equipment
• Invitation for quotations
• Based on comparing price quotations obtained from
  several suppliers, usually at least 3 to ensure
  competitive prices.
• Issue a letter to the supplier to furnish the
  quotations for the required goods/equipment.

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LIMITED TENDER

• Invitation for quotations
• No need of publication of notification in the
  newspaper/website.
• Issue the request letters to suppliers on the
  approved list.
• The request letter should indicate description,
  specifications and quantity of the goods as well
  as desired delivery time and place.
• Only one quotation by each supplier.
• Bid Price
• Quote for the full quantity as described in the
  invitation letter.
• Corrections, if any, made by crossing out, dated
  initialing and re-writing.
• Include all duties, taxes and other levies
  payable by the Vendor/Supplier in the total
  price.
• The rates quoted by the Vendor/Supplier be fixed
  for the duration of the contract and not subject
  to adjustment on any account.
• The prices are quoted in Indian Rupee.

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LIMITED TENDER

• Steps
• Identifying items
• Laying down specifications
• Estimating total numbers and costs of items
• Need not notify in newspaper/website
• Identifying likely agencies borne on the approved
  list of contractors/ suppliers (minimum 3, 8-10
  for more competitive rates)
• Obtaining approvals of competent authority
• Issuing letters of invitation
• Processing quotations received

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• Obtaining orders of competent authority for
  placing orders for supply
• Issuing letters placing orders for supply and
  delivery period
• Quoted price shall include all duties, taxes and
  other levies
• Rates quoted be fixed and not subject to
  adjustment
• Ensuring inspection
• Ensuring timely supply and
• Making payments after delivery in satisfactory
  condition.
• The financial ceiling prescribed for limited
  tender shall be applicable for Rate contracts of
  DGS D and Rate contracts of State Governments.

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SINGLE TENDER

• Followed in the case of
• Articles specifically certified as of propriety
  nature or
• Manufactured by a particular firm
• Goods including books
• Teaching materials
• School grant
• Hiring of vehicles and
• Operation and maintenance of equipment etc
• Appropriate for
• Extension of existing contracts
• Standard equipment/spare parts for existing
  equipments from original supplier.
• Items obtainable from one source
• Early delivery
• In exceptional cases such as natural disaster.

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• WITHOUT TENDER / QUOTATION
• Procurement of goods or group of goods estimated
  to cost the equivalent of the ceiling of State
  Govt.
• Issue suitable guidelines by the SIS

• THROUGH COMMUNITIES
• Construction of all civil works except, BRC,
  Hostel, KGBV and SIEMAT
• BRC construction if the community is technically
  capable
• Purchase of materials as per ISI certification,
  if available
• SPD may provide simple procurement guidelines

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• Identify the committee locally operating in the
  area.
• Keep the following points in view
• Active involvement of community in planning and
  implementation
• Who will procure the materials or goods used in
  works
• Goods / works have to be executed as per approved
  plans and specifications
• The name and designation of the Engineer for
  technical supervision and certification.

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• Suggested advance payments based on the
  certificate issued by the Supervising Engineer
• Advance (mobilisation advance
• upon start up of the work and
• on reaching lintel level)
  75 of total cost
• Plastering and completion of
• work
  25 of total cost
• School toilet and other repair works
• Advance (mobilisation advance
• upon start up of the work) cost 75
  of total
• Plastering and completion
• of work cost
  25 of total

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Service Contract
Considerations
High Quality
Efficiency
Transparency
Economy
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Service Contract

• Selection process
• Preparation of Terms of Reference
• Preparation of Cost Estimate and Budget
• Advertisement, seeking Expression of Interest
  (EOI)
• short listing of consultants/firms based on EOI
• Issue of Request for Proposal (RFP) to short
  listed Consultants/firms.
• Receipt of RFP in two envelope system, technical
  and financial proposals separately.
• Formation of Evaluation Committee
• Evaluation of Technical proposal and assign
  individual mark by each member on the basis of
  responsiveness to the TOR
• Open the Financial proposals of the qualifying
  Consultants publicly in the presence of the
  Consultants/representatives
• Final discussions including negotiations
• Award of contract

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Service Contract

• Terms of Reference (TOR)
• Prepare a well-defined TOR specifying the
  services to be provided on the following lines
• Background information
• A precise statement of objectives
• An outline of tasks to be carried out
• A time schedule for completion of tasks
• The support/inputs provided by the Client
• Composition of Review Committee to monitor the
  services
• List of key personnel whose CV and experience
  would be evaluated.

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Service Contract

• Preparation of Terms of Reference
• Preparation of Cost Estimate and Budget
• Advertisement, seeking Expression of Interest
  (EOI)
• short listing of consultants/firms based on EOI
• Issue of Request for Proposal (RFP) to short
  listed Consultants/firms.
• Receipt of RFP in two envelope system, technical
  and financial proposals separately.
• Formation of Evaluation Committee
• Evaluation of Technical proposal and assign
  individual mark by each member on the basis of
  responsiveness to the TOR
• Open the Financial proposals of the qualifying
  Consultants publicly in the presence of the
  Consultants/representatives
• Final discussions including negotiations
• Award of contract
• Performance of contract

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Service Contract

• Cost Estimate and Budget
• Based on the assessment of resources needed to
  carry out the assignment, staff time, logistical
  support and physical inputs.
• Costs divided into two broad categories (a) fee
  or remuneration and (b) reimbursable.
• Ensure that the requested services are within the
  current financial budget.
• Advertising
• Not necessary for short term consultancy
  services.
• Advertisement seeking Expression of Interest for
  other services, is published in regional and
  national newspapers having wide circulation and
  uploaded in the web site of the Client.
• Specify requisite qualifications, experience etc.
  in the notification.

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Service Contract

• Short list of Consultants
• Short list the Expression of Interest received
  based on the relevant qualifications and
  experience specified in the notification.
• Receipt of proposals
• Issue letter of Invitations along with the TOR to
  the short listed consultants/firms.
• Seek proposals from the short listed consultants
  / firms in two envelope system i.e, technical
  proposal in one envelope and financial proposal
  in another envelope.
• Evaluation Committee
• Constitute evaluation committees separately for
  technical and financial evaluation
• This committee will evaluate the proposals
  received from the consultants / firms

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Service Contract

• Evaluation
• Carried out in two stages, first the quality and
  then the cost
• Until the technical evaluation is concluded the
  evaluators of technical proposals will not have
  access to the financial proposal
• Evaluation of Technical Proposal
• Carried out on the basis of the responsiveness to
  the TOR.
• The technical evaluation committee will prepare
  an evaluation report on the technical aspects of
  the proposal.
• The report shall substantiate the results of the
  evaluation and describe the relative strength and
  weaknesses of the proposals.
• Individual marks will be assigned by each member
  and a consolidated mark sheet is prepared.
• Minimum qualifying marks should be provided in
  the Letter of Invitation and those who are not
  obtaining this will be disqualified

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Service Contract

• Evaluation of Financial Proposal
• On completion of technical evaluation, notify
  those consultants whose proposals did not meet
  the minimum qualifying marks that their financial
  proposals will be returned after completing the
  selection process.
• Simultaneously notify the consultants who have
  secured the minimum qualifying marks and intimate
  the date and time set for opening the financial
  proposal.
• Allow sufficient time for attending the opening
  of financial proposals
• The financial committee shall open the financial
  proposal publically in the presence of
  representatives of the consultants / firms who
  choose to attend.
• Read aloud the name of the consultant / firm, the
  quality scores and the proposed prices when the
  financial proposals are opened
• Prepare the minutes of the public opening.

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Service Contract

• Final discussions (negotiations)
• Held with the selected consultant /firm on the
  following issues
• The selected consultant /firm shall not be
  allowed to substitute key staff unless both
  parties agree that undue delay in the selection
  process makes such substitution unavoidable or
  that such changes are critical to meet the
  objectives of the assignment.
• Financial discussions shall include in addition
  to fee / remuneration, clarification of the
  consultants / firms tax liability and how this
  tax liability shall be reflected in the contract.
• In case these discussions fail to result in an
  acceptable contract, terminate the process and
  invite the next ranked consultant / firm for
  discussion
• After the process is successfully completed,
  promptly notify other consultants /firms on the
  short list that they were unsuccessful

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Service Contract

• Award of Contract
• Award the contract to the selected consultant /
  firm
• Use the prescribed contract agreement form for
  signing the contract
• Indicate the fee/remuneration negotiated with the
  selected consultant/firm to be paid for the
  services in the contract agreement and also the
  terms of payment

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Non-Government Organizations

• Preparation of Terms of Reference
• Publication of advertisement
• Formation of Evaluation Committee
• Short-listing of NGOs on the basis of
  specifications and scope of the work specified in
  the TOR.
• Desk appraisal and if found suitable, field
  appraisal by the Evaluation Committee
• Recommendation by the Evaluation Committee for
  the selection of NGOs to the Grant-in-Aid
  Committee.
• Approval by Grant-in-Aid Committee based on the
  report of the Evaluation Committee on the desk
  and field appraisal.

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• Post Review
• Government of India or the funding agencies shall
  undertake post review of the contracts awarded on
  procurement of goods, works and services on a
  random basis.
• All procurement documents should be retained and
  made available to the review team.
• Mis-procurement
• Goods, works and services that have not been
  procured as per the Manual shall be treated as
  mis-procurement and SSA funds cannot be used for
  such procurement.

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• Complaint Handling Mechanism
• Set up complaint handling mechanism at national
  as well as State level to deal with complaint
  received from contractors/suppliers.
• Dealt with at a level higher than that of the
  level at which the procurement process is being
  undertaken
• Undertake a thorough enquiry of the allegations
  made
• If found correct, take appropriate remedial
  measures
• Initiate disciplinary proceedings against the
  delinquent staff
• Receipt of any illegal gratification by staff is
  considered as misconduct and result in
  disciplinary proceedings against such staff, in
  addition to imposing penalties under the law.

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Thank You