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?