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Table of Contents
1. Executive Summary .......................................................................................................... 5 2. Introduction ....................................................................................................................... 6 2.1. Purpose ............................................................................................................................ 6 2.2. Document Structure .......................................................................................................... 6 2.3. How to Read this Document ............................................................................................. 7 3. Background and Context.................................................................................................. 8 4. The Stages in Procurement .............................................................................................. 9 5. Planning the Procurement .............................................................................................. 10 5.1. Defining the Outcome ..................................................................................................... 11 5.2. Defining Specifications ................................................................................................... 11 5.3. Researching the Market.................................................................................................. 13 5.4. Identifying Risks ............................................................................................................. 14 5.5. Deciding on Timelines .................................................................................................... 15 5.6. Internal Assessment ....................................................................................................... 15 5.7. Acquisition Scenarios ..................................................................................................... 15 5.8. Identifying Alternative Opportunities ............................................................................... 17 6. Selecting a Procurement Method ................................................................................... 18 6.1. Public Tendering (81 ............................................................................................ ) 6.2. Special (Select) Tendering (81 .......................................................................... ) 6.3. Direct Contracting (91 ............................................................................... ) 6.4. Comparison and Considerations..................................................................................... 20 7. Preparing the Procurement Artifacts ............................................................................. 21 7.1. Developing the Procurement Plan .................................................................................. 21 7.2. Preparing the Request Document ................................................................................... 22 7.3. Establishing the Responses Evaluation (Tendering) Committee ..................................... 26 8. Publishing the Procurement Request Document.......................................................... 27 8.1. Announcing the Procurement ......................................................................................... 27 8.2. Responding to the Bidders Questions ............................................................................ 28 8.3. Receiving the Bids .......................................................................................................... 29 9. Evaluating the Bids ......................................................................................................... 30 9.1. Bids Evaluation ............................................................................................................... 30 9.2. Bids Evaluation Report ................................................................................................... 33 10. Closing the Procurement ................................................................................................ 35 10.1. Negotiating the Contract ................................................................................................. 35 10.2. Announcing the Awarding of the Contract ....................................................................... 36 10.3. Canceling the Procurement ............................................................................................ 36 10.4. Handling Complaints....................................................................................................... 37 10.5. Reporting ........................................................................................................................ 37 11. Special Considerations ................................................................................................... 38 12. Appendix I References................................................................................................. 40 13. Appendix II Glossary of Terms .................................................................................... 41
List of Tables
Table 1 - Sample functional and non-function specifications listing .......................................... 12 Table 2 - Sample Good and Bad practices in specifications development ................................ 12 Table 3 - Pros and Cons of the different procurement methods................................................ 20 Table 4 -Request document verification checklist ..................................................................... 25 Table 5 - Suggested technical evaluation criteria ..................................................................... 31 Table 6 - Glossary of Terms ..................................................................................................... 41
List of Figures
Figure 1 - The stages in procurement......................................................................................... 9 Figure 2 - Procurement planning steps ..................................................................................... 10 Figure 3 - Sample evaluation and negotiations approach ......................................................... 33
1.
Executive Summary
Procurement refers to the overall process of acquiring a product or service. Depending on the organization, it may include some or all of the following actions: identifying a need, specifying the requirements to fulfill the need, identifying potential suppliers, soliciting bids and proposals, evaluating bids and proposals, awarding contracts or purchase orders, tracking progress and ensuring compliance, taking delivery, and paying the supplier. The Government of the Kingdom of Saudi Arabia issued a system called Government Procurement and Competition System based on the royal decree number (58M) on 4/9/1427 H. Shortly after that, in 20/2/1428 H the Ministry of Finance issued rules number (362) to further detail the system and they called it Rules of Government Procurement and Competition System. The regulation aims to set the policy and procedures of government procurement and sets the basic rules of all interactions between the government and organizations who wish to provide products and services to the government of Saudi Arabia during the procurement lifecycle. This regulation will be a base for this document and will be referred to as the Saudi Government Procurement and Competition System. Typically, a number of stages are followed in procurement. Within each of these stages there are a number of activities that take place: - Planning the procurement by defining the procurement outcomes, specifications, identifying the procurement options and scenarios, and identifying the risks and constraints on the procurement - Selecting a procurement method; whether to execute the procurement by an open tendering, select tendering, or direct contracting methods - Preparing the procurement artifacts including the procurement plan and the request document - Publishing the procurement request by announcing the procurement to interested and potential bidders, responding to any questions of inquiries from the bidders, and eventually receiving the bids from the different bidders - Evaluating the bids and selecting the winning bid by evaluating both the technical and financial aspects of all the bids - Closing the procurement by negotiating and signing the contract, announcing the awarded contact, and handling any complaints that my come from unsuccessful bidders
This document analyzes the general Saudi Government Procurement and Competition System and defines more specific IT-related procurement process, taking into consideration international best practices and experiences of other countries in this field.
2.
2.1.
Introduction
Purpose
The purpose of this document is to provide guidance in IT procurement. This operational guide promotes the achievement of value for money by providing practical information on managing procurement processes that lead to organizations entering into a purchasing agreement with a supplier or suppliers. This information meets the requirements of the Governments procurement rules and regulations while also facilitating the delivery of good business outcomes. The document targets the IT managers / Directors as well as all staff in the IT department who are involved in making decisions regarding the procurement of IT resources. This document is based on best practices of other countries and international organizations (WTO, World Bank.. etc) while being aligned to the Saudi Government rules and regulations.
2.2.
Document Structure
The document can be navigated from one related subject to another, simply by clicking on the hyperlinks on the table of contents. The main sections of this document are: - Background and context (section 3): provides a general definition for Procurement and a discussion of why it is considered an important process for governments and enterprises around the world - The stages in procurement (section 4): provides an overview of the different stages in the procurement lifecycle which is described in more details in the following sections - Planning the procurement (section 5): defines the planning activities that should be conducted prior to initiating the procurement process - Selecting a procurement method (section 6) defines the different possible procurement methods in the Saudi Government Procurement and Competition System and discusses the pros and cons of each method - Preparing the procurement artifacts (section 7): discusses the content of the main two artifacts in the procurement: the request document and the procurement plan - Publishing the procurement request document (section 8): defines the mechanisms of announcing the procurement to interested bidders as well as the mechanism of responding to bidders questions and inquiries - Evaluating the bids (section 9) discusses the criteria of selecting the winning bid by evaluating both the technical and financial aspects of all the bids
Best Practices of IT Procurement - Closing the procurement (section 10) discusses negotiating and signing the contract, announcing the awarded contact, and handling any complaints that my come from unsuccessful bidders
2.3.
All guidelines, recommendations and tips in this document are framed in a blue box similar to this one
It is also based on the Saudi Government Procurement and Competition System and provides analysis and mapping between the system and best practices. When applicable, the document identifies and suggests areas for improvement in the current system.
All the Saudi Government Procurement and Competition System standards and rules that are used as base for this document are framed in yellow box similar to this one
All suggested areas for procurement process improvement are framed in an orange similar to this one
2.4.
Referenced Documents
The documents listed below represent relevant material to the subject of IT procurement and they provide details on their designated subjects: - Best Practices of IT Budgeting - Guidelines for Project Management - Guidance for IT Strategic Planning
3.
1 2
4.
5.
This section describes the different steps that may be taken during the procurement planning. It outlines various issues an organization should consider when planning an IT procurement that will achieve value for money.
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5.1.
5.2.
Defining Specifications
Each outcome of the procurement should be further detailed into specifications that provide sufficient details about the required outcome in order to enable the providers to successfully bid with adequate products and services. Organizations should involve the end users as well as appropriate project and technical officials in developing the specifications. Developing specifications is sometimes a complex activity requiring certain expertise that may not be always available in the IT department or in the organization as a whole. Organizations should seek external help in such cases in order to develop sufficient specifications that suffice for the required outcome and be clear enough for the bidders. In some cases, hiring an external consultant to develop the specifications might be required; in other cases the organization can seek for support from other government agencies who did similar procurement in the past or who may offer consultative services. Specifications are described in terms of functional and non-functional specifications; functional specifications constitute what the outcome should be (description of the different functionalities of the system), nonfunctional specifications should provide a description of how the outcome should work to achieve its goals successfully; including characteristics such as performance, security, availability, scalabilityetc. The example below shows the specifications developed for procuring a printer:
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Security
It is important to keep in mind that technology changes in very fast pace and in often changes faster than the procurement process itself. This should be an important factor while developing the specifications in a way that ensures eventually a fair price is paid for the most appropriate product. For example, if an organization is procuring a number of personal computers that will be delivered over a period of 6 months, it should keep in mind that the cost of a personal computer might drop drastically over such a period. Eventually, the organizations specifications should be developed in a more generic manner and should not provide specific details as described in the sample table below:
Memory
1 GB RAM
Memory
Disk Space
40 GB
Disk Space
Another important best practice is to develop specifications impartially and in nondiscriminatory manner in order to give the different bidders a fair chance and ensure that the organization is getting the best value of money for the most appropriate product or service.
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Best Practices of IT Procurement In fact, partiality in the procurement process is considered illegal in the government procurement in Saudi Arabia as specified by Element 1/A of the Saudi Government Procurement and Competition System. Consequently, no brand name or number should be used in the specifications to avoid any bias and put the whole procurement operation in questionable position. This is also indicated in Element 65 of the Saudi Government Procurement and Competition System.
5.3.
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Best Practices of IT Procurement Introduction about the subject of the RFI and justification of its need in the organization Questions and inquiries: since the main target of the RFI is to inquire for information then it is normal that the RFI mainly consist of questions and inquiries. Having more clear questions and inquiries will result in better understanding by the vendors and eventually better and more useful responses Terms and conditions of participating in the RFI (such as the deadline for receiving responses, the qualifications of participating vendors etc)
RFI is a powerful tool that is used at the planning stage for better and more effective procurement.
5.4.
Identifying Risks
Identifying and managing possible risks is imperative during the procurement cycle. At this stage of planning it is important that any possible risks on the procurement are identified and evaluated, possible mitigation actions should be planned, and any required modifications on the specifications or terms and conditions must take place. In the case of IT procurement, some of the risks that can be identified are: - Lack of availability of expertise or technologies to fulfill the desired outcome of the procurement - High price of technology (over the estimated budget) or price changes during the procurement - Delays in delivery - Expiry or change of technology - Security of information and configuration of the organizations IT assets that are exposed in the procurement process While some risks are hard to avoid in IT procurement, most risks can be managed by ensuring the right measures are in place all over the procurement process; for each unacceptable risk that is identified the organization should assess its ability to: - Reduce the likelihood of occurrence of the risk - Reduce the severity of the risk or its consequences once it occurs - Transfer the risk to another party in part or in full - Avoid the risk This assessment should finally result in making possible required adjustments to the specifications or terms and conditions. A practical example for risk assessment is the organization requesting the bidders to sign non-disclosure agreement (NDA) prior to conducting site visits or providing detailed specifications for an existing system etc.
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5.5.
Deciding on Timelines
In developing the procurement timelines, it is important to allow adequate time to undertake the various tasks of the procurement cycle. For example, the time given to the bidders to propose should be proportional to the complexity of the requirements to allow the bidders to propose the best products and services. Consequently, the time planned for evaluating the different bids should be proportional to the complexity of the requirements and to the foreseen number of bidders in order to ensure that each bid is adequately studied and evaluated. The Saudi Government Procurement and Competition System mandates that all information about the procurement should be available for all the bidders at the same time and that all of them should have the same time to analyze the procurement requirements and submit their proposals (Elements 3 and 4 of the Saudi Government Procurement and Competition System). This rule should be kept in mind while deciding on the timelines of any procurement.
5.6.
Internal Assessment
The IT department is responsible to ensure that the procurement is aligned with the current internal legal, policy, and operational arrangements. Therefore, internal assessment is an integral factor in the risk management of the procurement. This assessment should cover: - Ensuring that the procurement is not contradicting with any policy or regulation (e.g. internal or governmental black lists, operational policiesetc). - Ensuring that the procurement is not contradicting with any license, intellectual properties or other obligations on the organization. - Ensuring that the procurement is not contradicting with any current operational system or process in the IT department or any other department. - Ensuring that the procurement is inline with the current and planned service levels and service requirements. - Ensuring that the procurement is aligned with the entity Information Technology strategic direction.
5.7.
Acquisition Scenarios
The IT department need to consider the most suitable means of acquiring the required products or services in the procurement, the usual acquisition scenarios are buy, hire, or lease. When buying, the organization has the advantages of ownership, but bears the risks and costs of maintenance, obsolescence and eventually disposal. Hiring involves renting the products without any fixed term of ownership and hence releases the organization from the typical worries of ownership (maintenance, obsolescence, disposal ...etc). I.e. the organization will be
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Best Practices of IT Procurement paying for the time of using the asset with the flexibility to abandon it without bearing the cost of this abandon. Hiring cost might be higher than the cost of ownership over long period of time, however it might carry several advantages on the effectiveness and efficiency of the IT services and may eventually be more cost effective. Leasing is a middle solution; it entails renting the assets for a fixed term and over an agreed-upon period with regular monthly, quarterly, or yearly payments. At the end of the renting period the organization can decide to abandon the asset or purchase it at a fair market value and price. The IT department will decide on its preferred acquisition scenarios based on several factors including: - Total cost of ownership: TCO is a very useful tool for estimating the cost of acquiring IT assets; using TCO enabled several organizations to realize that the options of leasing or hiring were more effective than buying in specific scenarios3 - Budget allowance at the current year; in some scenarios the IT asset is necessary while there is not enough budget to cover for its cost, in these scenarios leasing or hiring options are used - IT strategic direction and sourcing strategy; outsourcing of services and assets can be a strategic direction taken by a certain organization for many reasons For example, if the organization is planning to procure servers then the scenario of buying the servers may be considered the best scenario from general point of view, but when considering other factors like: - The cost of running these servers in secure and available environment such as high availability datacenter - The cost and skills of the resources that will be operating and maintaining these servers - The cost of upgrading these servers in the future, or disposing them and procuring new ones Having such factors in mind may prove that the buying scenario is not the suitable one for this organization or for the budget allocated for this procurement; and hence the organization may decide to consider leasing or hiring scenarios instead. Element 67 of the Saudi Government Procurement and Competition System gave the government entities the flexibility to select the appropriate acquisition scenario in a way that ensures best use of the available resources.
For further information about TCO please refer to IT Budgeting Best Practices report (section 8.1)
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5.8.
17
6.
6.1.
Public Tendering ()
As specified in Element 6 on the Saudi Government Procurement and Competition System, Public tendering is the default method for procurement. Public Tendering Entails announcing the procurement through channels of official public media (e.g. newspapers or procurement portals) and guaranteeing an open competition between all bidders who meet the required qualifications.
6.2.
The selected bidders are recommended by other government organizations who were involved in similar procurements in the past The selected bidders are recommended by specialized government organizations The selected bidders are well known in the market for providing products and services similar to the outcomes of the procurement
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6.3.
Direct Contracting ()
Direct contracting happens through direct request for quotation from three vendors at the least while eliminating the option of evaluating multiple offers. Although direct contracting is permitted in the Saudi Government Procurement and Competition System, it is considered an exception and cannot occur without fulfilling a number of conditions or the existence of certain circumstances. The main the cases that allow direct contracting are: Emergency procurements for amounts that do not exceed 1 million Riyals Element 44 of the Saudi Government Procurement and Competition System Spare parts for existing assets that were procured from the same vendor previously (even if such procurement cost exceeds 1 million Saudi Riyals) Element 47/C of the Saudi Government Procurement and Competition System The procurement outcome is available by one Saudi manufacturer (if there is more than one Saudi manufacturer then direct contracting is not allowed) Element 47/D of the Saudi Government Procurement and Competition System Consultancy and supervisory procurement for values less than 1 million Saudi Riyals Element 47/B of the Saudi Government Procurement and Competition System
Element 45 of the Saudi Government Procurement and Competition System provided the requirements and regulations for the Direct Contracting method; where direct contracting requires the approval of the minister (he can delegate the authority for procurements of value less than 500,000 Saudi Riyals)5. Element 46 mandated that procurements for values above 1 million Saudi Riyals must not be partitioned so they can fit the purpose of direct contracting.
An important addition that should be noted in the new Saudi Government Procurement System is that direct purchasing can be done using electronic means. Which gives the government entities more ability to do such purchasing more effectively, it also has good effect on facilitating the growth of e-commerce in the Kingdom.
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6.4.
- Eliminate chances of unselected possible vendors to participate, and may cause complaints of discrimination - Not guaranteed procurement for the best value of money
Direct Contracting
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7.
Where appropriate, a Responses evaluation committee should also be formed prior to an approach being made to the market as the committee should be in agreement on the details of the request document and the content of the bids evaluation plan. This chapter is structured to describe in turn the purpose of each of the three documents identified above and the role of the bids evaluation committee.
7.1.
For more details about the evaluation criteria please refer to section 9.1
21
Best Practices of IT Procurement Special considerations and conditions that uniquely belong to this procurement; such as mandating signing NDA agreements by the bidders or the need for conducting site visit etc Financial arrangements for the procurement process, including the price of the request document and the value of the bid guarantee when applicable based on the Rules of Procurement and Competition System. Acquiring the best value for the money spent.
The level of detailing the procurement plan depends on the size and the complexity of the procurement. However, the procurement plan need to cover all the appropriate details from the ones listed above whenever appropriate. The procurement plan should go through acceptance process; all members of the organization who are responsible of the procurement must review the plan and approve it. This includes the IT manager, the members of the tendering committee (when appropriate) and any other officials such as the Director of Administrative and Financial affairs or the Minister (when appropriate).
7.2.
22
It is important to note that the conditions of participation should include mandatory conditions and not preferred characteristics; the later can be specified as criteria in the evaluation criteria as described below.
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Evaluation Criteria
To enable bidders to provide the most relevant proposals, the request document should provide adequate description for the evaluation criteria against which their bids are going to be evaluated. The evaluation criteria should describe how will the organization select the successful bids from the ones who already passed the mandatory conditions for participation. The request document must clearly identify any criteria that are to be treated as essential in the evaluation of bids. Including the evaluation criteria in the request document will result in a number of benefits: Allows bidders to evaluate their solutions prior to submitting them Creates transparency in the procurement process, and assures the bidders that their bids will be evaluated in a tangible and predetermined manner
For more details about the evaluation criteria, please refer to section 9.1.
Element 11 of the Saudi Government Procurement and Competition System specifies that a bid bond of 1% to 2% of the of the total procurement value is mandatory except in the case of direct purchasing (with open proposals).
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Draft Contract
If the organization has a predetermined contract draft that will be used for this procurement, it is recommended to include this draft as a sample contract in the request document. This will help the bidders understand what will be their obligations beyond the procurement process should they be selected as winners, and may affect their response accordingly.
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
25
Yes
No
Yes
No
Yes
No
7.3.
For more details about the evaluation criteria please refer to section 9.1
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8.
8.1.
In the case of procurements that will potentially attract bidders from outside the Kingdom, announcing the procurement can take place outside the Kingdom under the condition of announcing it internally as well (Saudi Government Procurement and Competition System Element 7/B).
In all cases, the Saudi Government Procurement and Competition System mandates that the announcement of the procurement should happen in such a way that ensure that all bidders are notified about the procurement in the same time and with the same information in order to ensure fair and unbiased competition (Elements 3 and 4 of the Saudi Government Procurement and Competition System).
Some of the basic information that should be included the procurement announcements are: The name of the organization, and other information needed to contact the organization to obtain the request document A description of the procurement outcomes, and listing of all the participation conditions The address of submission of the responses
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In the case of open tendering, the Saudi Government Procurement and Competition System allows the organization to charge a specific amount of money for giving away copies of the request document; this amount of money is typically proportional to the value of the procurement.
When some of the bidders were surveyed, they complained that the price of the request documents is very high and that they have to invest a considerable amount of money in purchasing request document. They have also complained that in some cases they do not get sufficient information about the procurement from the announcement, which discourages them from making the uncertain investment, end eventually impact the competitiveness of the procurement negatively. In order to ensure open competition in open tendering procurements, the following two guidelines should be considered: Consider minimizing the price of the request document; and remember that the objective is not to make profit from this and not to create financial overhead on the bidders Ensure that sufficient information about the procurement outcomes are provided in the announcement, to ensure that interested bidders only will be obtaining the request document
8.2.
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Best Practices of IT Procurement o Will result in unveiling information that the organization did not want to disclose, such as systems configurations or businesssensitive information Will affect the scope of the procurement or the specifications of its outcomes Will dilute the competitive nature of the procurement; for example, if one of the bidders inquire about the preferred brand of the outcome then the organization must respond negatively and keeps the open competition between all bidders
o o
8.3.
Element 73 of the Saudi Government Procurement and Competition System mandated that government employees must maintain and ensure the secrecy of all the information and prices proposed to them in procurements and not share or expose such information to other bidders or parties, except in the cases that were allowed by the system.
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9.
9.1.
Bids Evaluation
Bids evaluation must take place according to the predefined procedure and criteria of evaluation. There are different evaluation procedures that are used by different organizations and different countries: An evaluation committee is required in some procedures while other procedures leave the evaluation of the bids to the IT departments to manage without requesting a committee Some procedures segregate between the financial evaluation and the technical evaluation of the bids where technical evaluation is done by the IT department and the financial evaluation is done by the financial department9 Some procedures mandate the opening of the financial bids after the opening of the technical bids, this is done to ensure that the price difference do not impose any inclination on the technical proposals evaluation
According to the Saudi Government Procurement and Competition Rules, any type of evaluation or procurement committee must adhere to the technical and financial criteria in evaluating proposals following the Government Procurement and Competition System as well as the Rules manuals. No offer should be rejected if all requirements are met aligning with the regulations and rules of the Government Procurement and Competition System (Element 30). According to the Saudi Government Procurement and Competition System, a bids evaluation committee of minimum three members should be formed to pursue the evaluation and selection process (Elements 16 and 17).
As mentioned earlier, the Saudi Government Procurement and Competition System, provides detailed description of the requirements of the evaluation procedure. One of the main improvement areas that need to be considered is that financial bids are opened at the beginning of the evaluation process. This, as described earlier, may result in inclination of the technical evaluation for the favor of the lowest price. It is recommended to segregate between
http://www.usaservices.gov/procurement.htm#s7
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Best Practices of IT Procurement the technical and financial evaluations of the bids; and to delay the opening of the financial bids until the end of the technical evaluation. During the evaluation, the evaluation committee might decide to send inquiries and questions for the different bidders in order to clarify or to confirm certain areas in their responses. It is recommended to include a time window for this activity inside the evaluation procedure. All such interactions should go through official communication channels only to ensure transparency and integrity of the process. In terms of criteria, it can be split into two parts; technical and financial criteria: Naturally, the financial part of any evaluation criteria will imply that that lowest price gets the highest marks. So the financial part is quite straight forward. However, some countries implement more strict measures to eliminate any possibility of fraud, such as: Some countries disqualify the highest and lowest bids automatically no matter what their technical response is Other countries eliminate all the bids with prices above and below 20% of the procurement budget
On the other hand, the technical evaluation part entails many details and may be different between different organizations, countries, or even types of procurements in the same organization. Since it is designed to meet the requirements of all types of governmental procurement, the Saudi Government Procurement and Competition System did not specify technical criteria to be used, the design of appropriate technical criteria was left for each organization by itself or for each type of procurement (e.g. IT Procurement evaluation criteria is different from Electrical Appliances procurement ...etc). Technical evaluation criteria for IT procurement should cover different aspects of the bids including compliance to requirements, quality of response, relevant experience and size of the bidder etc. The table below features suggested criteria that can be used in technical evaluation. It is important to note that the weights given in this evaluation criteria are subjective and can be changed according to the procurement nature and specific needs.
Yes
No
Yes
No
Format
Yes
No
31
Yes
No
Yes
No
The excellence of the proposed technical solution the quality of the proposed technical components (e.g. the proposed servers, operation systemsetc) The excellence of the proposed approach and methodology to undertake the project; project management approach, the quality management approach etc
Yes
No
Number of years experience in the field and the market General experience
Yes
No
Relevant experience
Yes
No
The capability to demonstrate ability by showing relevant successful delivery of similar project; references, opinion of the bidder experience and profiles of proposed project staffetc
When performing a technical evaluation, the committee is required to consider the conformity of technical requirements for each procurement proposal.
Elements 16 to 26 of the Saudi Government Procurement and Competition System discuss the process and regulations for bids evaluation in details. Element 21 specifies that the evaluation committee can negotiate with the bidder that proposed the lowest price or other bidders if the proposed prices are significantly higher than the estimated cost (as estimated during the procurement planning phase) or the market value. Element 22 gives the ability for the evaluation committee to disqualify bids with prices that are lower than 35% of the estimated cost only if the evaluation committee is not convinced with the technical evaluation of the bid or if the bidder is found unable to fulfill the procurement commitments (Element 23). Element 24 specifies that if only one bid was proposed or if one bid only passed the technical evaluation then the procurement must be re-tendered except in special cases that must be approved by the minister or the equivalent head of the independent entity.
The Saudi Government Procurement and Competition System mandates that the winner should be the lowest price among all the bids that passed the technical evaluation successfully, without any consideration of the weight differential. This approach might be acceptable for some types of procurement but it is definitely not acceptable for IT procurement; IT procurement emphasizes strongly on the quality and the excellence rather than the price, thats why the cost factor comes second after technical excellence. I.e. the winning technical solution is not necessarily the cheapest one.
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Best Practices of IT Procurement Element 21/B could be used in this case as an exception and a special case.
The sample approach in the figure below can be ideal in such case:
Apply Criteria
No
Lowest Price
Yes
Announce as Winner
Negotiation Succeeded?
Yes
End
9.2.
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Best Practices of IT Procurement Details of any issues that need to be clarified with the bidder during subsequent contract negotiations
The report is to be signed by the members of the evaluation committee and addressed to the approver of the procurement (Minister, Deputy Minister, IT Manager etc). The approver is to sign the report if they are in agreement with its recommendations. According to Element 26 of the Saudi Government Procurement and Competition System, the final authority of selecting the winning proposal is for the minister or equivalent manager of the independent entity. They can delegate this authority for bids that are less than or equal three million Saudi Riyals.
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The agreements that will result for these negotiations should be documented and communicated officially and reflected in the contract before signing it. It is important to note that terms of contracts in IT related contracts are generally different from other procurements contracts. Certain special terms and conditions normally apply on IT related contracts such as: Licensing Intellectual Property and ownership Warranty and support
Elements 27 to 32 of the Saudi Government Procurement and Competition System provide full details for the contractual format and requirements. Element 31 specifies that a contract is not necessary for procurements that are less than 300,000 Saudi Riyals were the exchange of written commitment suffices instead of the contract. Element 32 mandates that if the value of the procurement is over 5 million Saudi Riyals or if the procurement requires more than a year for completion then the contract must be sent to the Ministry of Finance for reviewing and providing feedback prior to the signing.
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Announcing the awarding of the contract can be done using official communication through memos or letters. In the cases of large procurements that may concern larger audience, an announcement can be made in the official newspapers. Element 74 of the Saudi Government Procurement and Competition System mandated that government entities must announce the awarding of contracts.
The authority to cancel the procurement is only given to the minister or the equivalent manager of the independent entity. The prices paid for the request document must be returned to all the bidders (Element 25/B)
When procurement is cancelled, the organization needs to communication the cancellation officially to all the bidders and any other concerned government organization.
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However, should a complaint occur, the organization should officially respond to the complaint with clear reasoning and answers to the complaint.
10.5. Reporting
As described in the previous sections, several reports will be required along the life cycle of the procurement. In addition, all the discussions, negotiations, and decisions of the bids opening committee or the evaluation committee must be logged and reported properly.
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Leadership and management ownership: IT procurement should be owned and supported by the IT manager in the organization. In the cases of large IT procurements and key projects, ensuring the leadership and support of higher authorities in the organization is crucial for success. The Saudi Government Procurement and Competition System mandates that large procurements should be approved by higher authorities (procurements for over 3 million Saudi Riyals must be approved by the Minister, procurements for over 200 million Saudi Riyals requires Royal approval)
Transparency: providing all required information to the bidders and keeping all the bidders informed of the artifacts of the procurement process (such as the evaluation criteria and the evaluation results and inviting the bidders for the opening of the bidsetc) is a great assurance of the integrity of the procurement process. Transparency in procurement is mandated in the Saudi Government Procurement and Competition System for open and select tendering
Ensuring equal opportunities: ensuring equal opportunities for all bidders is a very important factor for the success of procurement, some of these benefits are: o o Ensuring the best value of money for the procurement by opening the opportunity to all suitable solutions Ensuring the excellent quality of outcomes for the procurement, which will result in better services for the IT department and better knowledge and experience for the department resources Ensuring fairness and diversity in the procurement process, which will eventually result in benefits for all the bidders and IT sector in the Kingdom in general
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Best Practices of IT Procurement Bigger procurements: bigger procurements result in better value of money, it also result in effectiveness of the procurement. Bigger procurements can happen through different ways: o Applying frame contracts concept: frame contracts means grouping different outcomes that share the same objective in one procurement; for example, a frame contract may include all the hardware, software, development and operation requirements for an enterprise system rather than procuring those items separately. Frame contracts concept is applied successfully in many countries and even in some Saudi enterprises Procuring operations and outsourcing contracts for more than one year. This method will result in more stability in the services and better negotiations position for the organization Some countries10 apply a concept of Open Standing Offer Arrangement (OSOA) to encourage collaboration between government organizations for better value of money. An OSOA results from a procurement, which specifies that the contracted price will be made available to other participating organizations. This means that potential bidders have been informed that they are tendering not only for one organizations purchasing but, potentially, for purchases by other organizations. This will encourage the bidders to offer more competitive prices and eventually achieves more value of money for the organizations
E-Procurement (electronic procurement): e-Procurement is a part of e-business and is used to designate the optimized, Internet-based procurement process. It refers not just to the purchasing process itself but to electronic negotiations and the conclusion of contracts with suppliers as well. Because the purchasing process is simplified by the electronic handling of operative tasks, strategic tasks can be given a more important role in the process. E-Procurement initiative for the Government of Saudi Arabia is currently being developed
Government organizations should have the ability to decide what bidders they do not want to work with, and they should be able to share this decision with other organizations for better benefits for the whole government. This should be controlled by mandating the bidders to include references for their work with other government entities and checking with these references for the quality of the services and products provided for them from the bidder. It is recommended to have the references evaluation as part of the proposals technical evaluation criteria as proposed in Table 5 above.
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http://www.vgpb.vic.gov.au/CA256C450016850B/WebObj/BestPracticeAdviceEC4P/$File/Best Practice Advice - EC4P.pdf World Trade Organization Government Procurement http://www.wto.org/english/tratop_e/gproc_e/gproc_e.htm World Bank Country Procurement Assessment reports: http://wwwwds.worldbank.org/external/default/main?pagePK=64187835&piPK=6 4187936&theSitePK=523679&menuPK=64187511&siteName=WDS& pageSize=20&docTY=540617 The Office of Government Commerce The United Kingdom http://www.ogc.gov.uk/index.asp?id=35 Mandatory Procurement Procedures Ministry of Finance the Government of Australia - http://www.finance.gov.au/ctc/steps.html Contracts Canada Portal e-Government of Canada: http://contractscanada.gc.ca/en/
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