Chapter 1
Concept of Procurement
What is Procurement ?
• Simply buying some thing expending money
• Means the acquisition of goods, consultancy services or
other services, procurement or causing procurement of an
construction work
Types
• Private Procurement
• Public Procurement
Public Procurement
A procurement made with Public Money is called Public
Procurement.
Public Entity
• Constitutional organs or bodies
• Ministries
• Secretariats
• Commissions
• Department of the government of Nepal
• Any other governmental entities
• Corporations, companies, bank or board fully or in majority
owned or controlled by the government
Public Procurement…
Public Entity…
• Commissions, corporations, authorities, academies, boards,
centers, councils or other corporate bodies of a similar nature
which are formed by government.
• Universities, colleges, research centers and other academic
and educational institutes of similar nature which are operated
by government or receive grant fully or in majority from
government.
• Local bodies
• Development boards formed under development board act.
• Bodies operated with loan or grant of government
• Such other bodies as declared by government as public entity
Public Procurement cont…
• Procurement of Goods, Procurement of Works &
Procurement of Consultancy and other Services
• More than 60 % of public money is expended in public
procurement
• The world bank estimates that about 90- 95% expenditure
on a project is incurred through procurement
• Public procurement is important part of Public Financial
Management System
Public Procurement cont…
Public procurement does not permit subjective or unrestrained
buying.
This may be with regard to,
• Item
• Quality
• Quantity
• Methodology
All procurements have to undergo scrutiny, and there are well
laid norms.
Public Procurement cont…
Mistakes and lapses in Public Buying can cause grief to the
organization or individuals
• Audit /Vigilance reviews
• Penalty and punishments
Why Public Procurement important ?
• It influences economic growth
• Efficiency in public procurement releases funds for
development
• It is a tool to meet social and economic objectives
• It affects quality of life of the citizens
• The public servant is accountable
Principles in Public Procurement
• Accountability
• Ethics
• Reliability
• Impartiality
• Transparency
• Open competition
• Efficient and effectiveness
• Professionalism
• Service
• Justice
• Environmental friendly
Sound Principles of Public Procurement
Economy
Development of
Efficiency
national industries
Fairness Transparency
Objectives of Public Procurement
3 R’s.
• Right item,
• Right price
• Right time
• Efficiency
• Value for money
Special Objectives of Public Procurement
• Equal access and non-discrimination
• Transparency of process and decisions
• Accountability of process and officials
• Social Objectives
Requirements in Public Procurement
Legal Arrangement
• In context of Nepal
Public Procurement Act 2063 (PPA 2063)
Public Procurement Regulation 2064 (PPR 2064)
Institutional Arrangement
• In context of Nepal
Public Procurement Monitoring Office (PPMO) has been established
to monitor and facilitate public Procurement
Sound Bidding documents
In Nepal Standard Bidding Documents are Issued by PPMO
Guidelines
In procurement guidelines are issued by PPMO
Efficient Manpower 11
Private Organizational Procurement versus
Public Procurement
Private Organizational Procurement
• Profit is sole motive
• Procedures are not of primary importance
Public Procurement
• Economy is a consideration but profit is not a motive
• Procedures are of primary importance
• Public money must be spent for public good 12
Procurement of works, goods, other services and
consulting services
• Goods means any kind of goods, whether movable or
immovable, and this term also includes services incidental to
the supply of such goods.
• Construction work means all work associated with the
construction, reconstruction, demolition, repair or renovation
of any structure or works such as site preparation, excavation
erection, building, installation of equipment or materials and
decoration and also includes services incidental to construction
work such as mapping, laboratory testing, satellite
photography and seismic investigation.
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Procurement of works, goods, other services and
consulting services
• Consultancy services means any study, research, survey,
design, drawing, supervision, training, testing, software
development services or other intellectual or professional
services.
• Other services means hiring motor vehicles, equipments or
goods, transportation or repair and maintenance of goods
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Procurement Process
Depends on situation and procurement price
• Open Bidding
• Limited bidding
(A)Goods, works and other services
• Open Bidding
International Competitive Bidding (ICB)
National Competitive Bidding (NCB)
One stage
With prequalification
Without prequalification
Two stage
Procurement Process
One envelop and two envelop
• Sealed Quotation
• Direct purchase
• Community participation
• Force account
• Emergency procurement
• Lump sum rate method
• Catalog Shopping
• Limited Bidding
• Buy Back Method
Procurement Process
(B) Consultancy Service
• Competitive Proposal
International level
National level
• Direct Procurement
• Proposal from standing list
• Direct negotiation
Important Provisions of Public Procurement
Act 2063
• Establishment of Public Procurement Monitoring Office
(PPMO)
• Responsibility of Public Procurement to Procurement
Unit/branch
• Master procurement plan and Annual Procurement plan
• Procurement proceedings or review of decisions
• Open call for tender and equal access to bidders
• Neutral Specification
Important Provisions of PPA cont..
• Code of conduct for the persons involved in procurement
• Contract award to lowest substantially responsive bids
• Shall not be rejected even if one bid is substantially
responsive or only one bid is registered
• Public notice shall be published incase of emergency
procurement
• Public notice of contract agreement shall be published
Role and responsibilities of PPMO
Monitoring
Advice
Sensitization
Capacity building
Coordinating
Punishment
Documentation and improvement
Pressure generating (By reporting)
Risk, Challenges and Opportunity of Public
Procurement
Risk
• Misuse of Public Money
Challenges
• Transparency
• Fairness
• Competitive and Credibility
Opportunity
Good Governance Good Procurement
Procurement Preparation of
Planning bidding documents
Post Contract
Review Notice for
PQ or EOI
Contract Procurement
Implementation Cycle Bid invitation
Issuing of RFP
Contract Pre-Bid or Pre –
Award Proposal meeting
Bid or Proposal Bid or Proposal
Evaluation opening
Any Question?