FM – L2 – Q131 – Public Procurement Methods

(a) The selection of an appropriate method of procurement is a critical matter in public procurement.
Required:
Explain the following methods of procurement and how they are conducted,
(i) Competitive Tendering
(ii) Two Stage Tendering
(iii) Restricted Tendering
(iv) Request for Quotation.

(b) Single source procurement is a delicate method of procurement which must be used with extra caution because of the risk associated with it.
Required:
(a) Explain the exceptional conditions under which the use of single source procurement will be appropriate under the Public Procurement Act 2003, as amended.

(b) Discuss the likely risks associated with indiscriminate use of single source procurement.

(a)
(ii) Restricted Tendering
Restricted tendering (RT) is a method of procurement in which few firms are invited to tender for supply of goods, work which services. A procurement entity may for reasons of economy and efficiency and subject to the approval of the PPA and any and procurement by means of restricted tendering if:
Goods, works or services are available only from a limited number of suppliers or contractors by reason of the con number of suppliers or contractors by reason of the con and specialised nature of the goods, works and services,
The time and cost required to examine and evaluate a large number of tenders is disproportionate to the value of the goods, works or services to be procured; or
If an offer for competitive tendering fails to receive any response after publication.

(iii) Procedure for restricted tendering
Where the procurement entity engages in restricted tendering, it shat cause a notice of the selective-tendering award to be published in that Public Procurement Bulletin. The procedures involved in the restricted tendering are:
□ invite tenders from the suppliers and contractors who can provide the goods, works or services;
□ select in a non-discriminatory manner, a number of supporters to ensure effective competition.

(iv) Request for Quotation
This is a method in which the entity requests invoices from as many suppliers, but at least three, and pick the supplier with the lowest invoice or quotation for the purchase. Principle conflicts of interest, any, should be considered in the evaluation.
In the use of RQ, there should be no negotiation between the entity and the supplier and successful quotation is the one with lowest evaluated responsive quotation that meet the needs of the procurement entity.
Conditions for use:
Where the goods are readily available (they are not specially made for the entity)
Where established market exists for the goods and services, and the amount falls within the threshold.
Where the low-cost goods and services are required
Procedure for request for quotation
The procurement entity shall request quotations from as many suppliers or contractors as practicable, but from at least three different sources that are not related in terms of ownership, shareholding and directorship. The quotation should also be subjected to conflict of interest test between the procurement entities and their members and the difference quotation price sources.
Each supplier or contractor from whom a quotation is requested shall be informed whether any elements, apart from the charges for the goods or services themselves, such as transportation and insurance charges, customs duties and taxes, are to be included in the price.
Each supplier or contractor shall only give one price quotation and shall not change its quotation;
No negotiations shall take place between the procurement entity and a supplier or contractor with respect to a quotation submitted by the supplier or contractor, prior to evaluation of quotations or bids

(b) Explain the exceptional conditions under which the use of single source procurement will be appropriate under the Public Procurement Act 2003, as amended.
Exceptional circumstances for the use of Single Source Procurement include where:
Goods, works or services are only available from a particular supplier or contractor, or if a particular supplier or contractor has exclusive rights in respect of the goods, works or services, and no reasonable alternative or substitute exists;
There is an urgent need for the goods, works or services and engaging in tender proceedings or any other method of procurement is impractical due to unforeseeable circumstances giving rise to the urgency which is not the result of dilatory conduct on the part of the procurement entity;
Owing to a catastrophic event, there is an urgent need for the goods, works or technical services, making it impractical to use other methods of procurement because of the time involved in using those methods;
Where a procurement entity which has procured goods, equipment, technology or services from a supplier or contractor determines that additional supplies need to be procured from that supplier or contractor because of standardisation or compatibility with existing goods, equipment, technology or services, taking into account the
(i) effectiveness of the original procurement in meeting the needs of the procurement entity;
(ii) the limited size of the proposed procurement in relation to the original procurement provides justification;
(iii) the reasonableness of the prices
(iv) the unsuitability of the alternatives of the goods and services in question
The procurement entity seeks to enter into a contract with the supplier or contractor for research, experiment, study or development, except where the contract includes the production of goods in quantities to establish commercial viability or recover research and development costs; or
The procurement entity applies this Act for procurement that concerns national security, and determines that single-source procurement is the most appropriate method of procurement
procurement from a particular supplier or contractor is nonfracter is nonorder to promote a policy specified in the Act or socio-econony in policy and procurement from another supplier or contractor contractor cannot promote that policy.

(c) Discuss the likely risk of procurement associated with indiscriminate use of single source procurement.
The risks of procurement associated with the use of singe sourcins are the following:
There is a tendency of officers engaged in the procurement works and services to select their close associates and relatiy goods, supply the needed goods, services and works. This promotes to unfairness and discrimination in public procurement process.
here may be a tendency to overlook quality of goods, services or works supplies or delivered because of selecting suppliers who are relatives or close to the officers involved in the process. Lack of competition is the main cause of this situation.
High prices for goods, services and works due to lack of competition in the procurement process. This will undermine the principle of economy in the procurement system.
It provides opportunity for corruption and other unethical practices in the public procurement.