COLLEGE OF BUSINESS EDUCATION (CBE)
DAR ES SALAAM CAMPUS
BCPS, BCTLM, BCAF & BCAT 2023/2024
BASIC PROCUREMENT PRINCIPLES (PST04101)
TOPIC 6: PROCUREMENT METHODS
Topic Contents
• Definition of procurement methods
• Types of procurement methods and their conditions for use
• Factors to consider in the selection of procurement method
Introduction
Procurement methods are the procedures used by the procuring entity to acquire goods, services
and works. These methods can be competitive and non-competitive. There’s a preference for using
competitive methods of procurement given that they tend to promote transparency, efficiency, and
limit favoritism, resulting to obtaining reliable suppliers who offer reasonable prices and deliver
the required qualities at the agreed time.
During the requirement(s) identification stage, the entity with the need determines when they want
the goods delivered, services rendered or construction works completed. It is important to consult
with the procuring entity at this early stage in order to determine the most appropriate procurement
method for their specific need.
The procurement method should be determined at this early stage because of the impact it has on
the procurement lead-time, and also to ensure that the responsible entity is able to set realistic
timeframes and expectations for contract award in the initial stages of development and definition
of their procurement requirement.
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Types of procurement methods
Procurement methods are many, and they go by different names depending on the procurement
category. Most, with few exceptions, generally fall into the following types;
❖ International Competitive Tendering
❖ National Competitive Tendering
❖ Restricted Tendering
❖ Competitive quotation/Shopping
❖ Single source for goods or services
❖ Minor value procurement
❖ Micro Value Procurement
❖ Force account
Of the above-mentioned procurement methods, international competitive tendering, national
competitive tendering and restricted tendering are considered to be competitive procurement
methods because the solicitation documents are advertised and open to any qualified firm
interested in competing for the assignment.
In contrast, other procurement methods are considered non-competitive procurement methods
because the invitation to submit offers is not advertised, and it is sent only to firms or individuals
specifically invited by the procuring entity.
With respect to restricted tendering, there’s debate as to whether it is a competitive or non-
competitive procurement method. It is considered to be competitive procurement method because
it involves pre-qualification stage where bidding documents are advertised openly for all potential
bidders to compete for qualification.
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Procurement methods and their conditions for use
International Competitive Tendering
Is the procurement method where by a procuring entity invites suppliers, contractors and service
providers regardless of their nationality by means of tender notice that shall be advertised
nationally and internationally to submit priced tenders for goods, non-consultancy services and
works or purchase of public assets.
Condition for application:
This form of tender shall be used in all cases where;
a) Payment, in whole or in part, is made in a foreign currency; or
b) It is desired to attract tenders from the widest range of tenderers regardless of the estimated
value of the goods or works to be procured.
National Competitive Tendering
Is the procurement method where by a procuring entity invites suppliers, contractors and service
providers through a notice advertised only in the United Republic, invite tenderers regardless of
their nationality, to submit priced tenders for goods, non-consultancy services, works or purchase
of public assets.
Condition for application:
This form of tender shall be used in all cases where;
a) Payment is made wholly in Tanzanian shillings;
b) The goods, works or non consultancy services are available locally at prices below the
international market;
c) The total cost is within the threshold set for this method of procurement;
d) Works or non-consultancy services are scattered geographically or spread over time;
e) Works are labor intensive
Restricted Tendering
This is the procurement method where by the procuring entity restrict the issue of the tender
document to a number of specified (prequalified) suppliers, contractors and service providers.
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Condition for application:
This form of tender shall be used in all cases where;
a) The suppliers, contractors or service providers have already been pre-qualified
b) The goods, works, or services required are of a specialised nature or can be obtained from
a limited number of specialised contractors, service providers or reputable sources
c) Urgent needs and lack of sufficient time for international or national competitive time for
tendering
d) There is a need to achieve certain social objectives by calling for participation of local
communities or local firms.
Competitive quotation/shopping
The competitive quotation is a procurement method that is used for small value procurements of
readily available off-the-shelf goods, small value construction works, or small value services
procurements. This procurement method is also known as invitation to quote or shopping, and it
does not require the preparation of tender documents to the same extent as for competitive and
restricted tendering methods. The invitations are not complex, and this method is considered non-
competitive because the procuring entity determines which contractors, suppliers or service
providers to request quotations from as long as a minimum of three are invited.
Condition for application:
This form of tender shall be used in all cases where;
a) The goods to be procured are so diversified that it would be of no commercial interest for
any single supplier to tender for them; or
b) The goods are readily available off-the-shelf or standard specification commodities.
c) The total cost is within the threshold set for this method of procurement.
Single source for goods or services
Acquiring goods, services and construction works from only one source is referred to as: sole-
source procurement, single-source procurement, sole-source selection, direct procurement, among
others. This is clearly a non-competitive procurement method, and it should be used only under
exceptional circumstances.
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Condition for application:
a) for emergency situations;
b) when only one firm or individual is qualified to fulfill the requirement;
c) for the continuation of previous work, or additional work, that cannot be acquired from
another firm or individual due to patent, compatibility issues, or exclusive rights;
d) the use of this method represents a clear advantage over the use of a competitive method;
e) for the procurement of related items that are available only from one source.
Minor value procurement
A procuring entity may procure goods, services or minor works directly from a supplier, service
provider or contractor by competing at least three bidders, where:
Condition for application:
a) The value does not exceed the set limit for minor value prescribed;
b) The price quoted is reasonable;
c) No advantage to a procuring entity is likely to be obtained by seeking further quotations or
by using other methods of procurement; and
d) The contract for the provision of such goods, services or works may be a local purchase
order.
Micro Value Procurement
A micro procurement may be conducted by a procuring entity by that purchasing directly from
established supermarkets, shops or drug stores, or similar establishments if the value of such
procurement does not exceed the limit set out. A PE may use petty cash, imprests or purchase cards
to effect payments under micro procurement.
A micro procurement process shall not require:
• written solicitation document;
• written bid;
• public bid opening;
• notice of best evaluated bidder; or
• signed contract document.
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Force account
Force Account means a construction by the Procuring entity itself or use of public or semi-public
agencies or departments concerned, where PE or the public or semi-public agency uses its own
personnel and equipment or hired labor.
Condition for application:
a) the required works are scattered or are in remote locations for which qualified construction
firms are unlikely to tender at reasonable prices;
b) work is required to be carried out without disrupting ongoing operations;
c) risks of unavoidable work interruption are better borne by a PE or public authority than by
a contractor;
d) there are emergencies which require a prompt attention;
e) the PE has qualified personnel to carry out and supervise the required works; or
f) the maintenance or construction is part of the routine activity of the PE.
Deciding which procurement method to use
A decision to use a particular procurement method must be based primarily on the stipulations of
the procurement guidelines, manuals and procedures; which necessarily stem from the
procurement legal framework. Which among others, include the following factors:
a) The value of the requirement
b) Nature and complexity of the requirement
c) The urgency of need
d) Market availability
e) Currency of payment
f) Standardization or product registration
g) Contract extension
h) Pre-qualification
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