Introduction
In last week’s article, I discussed the constitutional and legislative arrangements relating to the Government’s procurement systems. These are to be found in Article 212 W of the Constitution and the Procurement Act 2003. Today’s article continues the discussion on the Act and deals with the following: restricted tendering and sole source procurement; two stage tendering; procurement for consulting services; tender security; inducements from suppliers or contractors; tender award; administrative review; and confidentiality of information and penalties for violation.
Restricted tendering and sole
source procurement
Restricted tendering is used where the goods, works or services are of a highly complex or specialized nature and are available only from a limited number of suppliers or contractors. In such a case, all such suppliers or contractors are invited to submit tenders.
Where goods, services or works are only available from a particular supplier or contractor by virtue of their highly complex or specialized nature, or where the supplier or contractor has exclusive rights to these goods, services or works, procurement is undertaken using the sole source method, if no reasonable alternative or substitute exists. Additional supplies may be procured from this source because of the need to maintain standardization and taking into account the effectiveness of the original procurement.
In event of a catastrophic occurrence where there is an urgent need for the goods, services or works and where it is impractical to use other methods of procurement because of the time involved, the sole source method would be appropriate. In addition, remote areas would need special consideration, given the limited scope for competitive bidding and the possible lack of cost effectiveness in procuring the goods, services or works from outside these areas.
Two stage tendering
This is used where it is not feasible to formulate detailed specifications for the goods, services or works because of their complex nature. In the first stage, suppliers and contractors are invited to submit detailed technical proposals but without prices, based on a conceptual design or performance-based specifications. These are reviewed by the procuring entity. In the second stage, suppliers and contractors are invited to submit final technical proposals along with prices in response to the tender as revised following the review carried out in the first stage.
Procurement for consulting services
The procurement entity is required to maintain a short list of consulting firms based on expressions of interest in response to public advertisement. It is from the short list that requests for proposal (RFPs) are solicited. RFPs are to include: (a) the manner in which the proposals are to be prepared and submitted; (b) the evaluation criteria and the manner in which they will be applied; and (e) the draft contract.
The Evaluation Committee reviews the proposals for technical quality such as relevant experience and expertise of staff, proposed work methodology, and the price of the proposal.
Tender security
This is a refundable amount paid by a supplier or contractor at the time he/she submits a tender in response to an invitation to bid. It is usually between one and two per cent of the estimated value of the goods, services or works, and can be in the form of bank guarantees, surety bonds, stand-by letters of credit, certified bank cheques, cash deposits, promissory notes, and bills of exchange.
The tender security is to guard against: withdrawal or modification of the tender after the deadline for submission; failure to sign the contract once awarded; or failure to provide the required performance bond once the contract is awarded. It is returned upon: the award of the contract; the termination of the tender proceedings without the award of the contract; or the withdrawal of the tender prior to the deadline for submission.
A performance bond is issued by the selected tenderer as a guarantee for satisfactory completion of the provision of the goods, works or services. In addition, large contracts, mainly relating to infrastructure works whose duration is for an extended period, may require an advance payment to the contractor to assist him/her to acquire and mobilize the needed equipment and other resources to commence the works. The advance is deducted in equal portions from the valuation of works completed to date so that upon the final payment to the contractor, the advance is fully recovered.
There is, however, no mention of remedies for defects after contracts are completed and the period within which contractors are required to compensate the procuring entity or remedy the defects. It is standard practice for a portion of the contract sum to be retained to cover the cost of remedying any possible defects. Should there be no defects, the amount involved is released after the defects liability period expires.
Inducements from suppliers or contractors
The appropriate tender board is obliged to reject any tender if the supplier or contractor “offers, gives or agrees to give, to any current or former officer or employee of the procuring entity or other governmental authority directly or indirectly including through a family member, a gratuity in any form, an offer of employment or any other thing or service or value”, as an inducement for the award of the contract. Such rejection and the grounds therefor shall be communicated to the supplier or contractor. Also to be noted, is that negotiation between the procuring entity and any of the bidders is strictly prohibited.
Tender award
After the bid opening, the procuring entity transmits to the Evaluation Committee all tenders received. Using the evaluation criteria outlined in the tender documents as a basis for assessing the bids, the Committee decides which tenderer has submitted the lowest evaluated tender. All qualitative criteria are also quantified in monetary terms to arrive at the lowest evaluated tender.
The Evaluation Committee’s recommendation must be made within 14 days. Once the recommendation is accepted, the name of the successful tenderer is publicly disclosed. If the recommendation is rejected, the procuring entity informs the Committee as to which it considers to be the lowest evaluated bid. This becomes binding on the part of the Committee. Within seven days of the award of the contract, the procuring entity publishes a notice of the said award.
Administrative review
A bidder, whose tender proposal was rejected, may submit a written protest to the procuring entity within five business days of the contract award decision. If within the five business days, the procurement entity fails to review the protest, the bidder may submit a request for review by the National Procurement and Tender Administration Board (NPTAB). The procuring entity shall make the relevant records available to facilitate the review by the Bid Protest Committee. A written decision is made within 15 business days of the conclusion of the review during which period the final contract award is suspended.
Cabinet reviews all procurement whose value exceed $15 million based on a streamlined tender evaluation report prepared by the NPTAB.
It may only reject the proposed award if the procurement entity failed to comply with the applicable procurement procedures but it has 21 days to do so. When this happens, the matter is referred to the procurement entity for further review.
Confidentiality of information
and penalties for violation
It is an offence for any of the tender boards or persons concerned with the administration of the Act not to regard as secret and confidential all documents and information disclosed to them.
They are not to divulge such information or the contents of any document to any person except to the extent necessary to discharge their functions or for the prosecution for any offence or other legal proceedings.
Penalties for violation include: (a) in the case of a body, a fine of $500,000 and imprisonment for six months plus removal from office; (b) in the case of a person, a fine of $200,000 and imprisonment for three months. There are also penalties for persons who knowingly receive such confidential information. If convicted, the fine is $300,000 and imprisonment is for six months. Similarly, a person who offers inducements for the award of a contract shall, in addition to being disqualified from the award of the contract, be liable to a fine of $500,000 and imprisonment for six months.
Conclusion
The promulgation of the Procurement Act 2003 is a step in the right direction since it codifies in the form of legislation detailed rules governing public procurement. The previous tender board regulations had become outdated and did not have the force of law.
For the legislation to be effective, there needs to be a mechanism for ensuring strict compliance with it. It is for this reason that the Public Accounts Committee needs to get its act together in nominating the five members to the Public Procurement Commission so that the work of the Commission to monitor public procurement as well as adherence to the Act can begin without further delay.
