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IS IT TRUE THAT INTERNATIONAL/NATIONAL COMPETITIVE BIDDING LENGTHY AND COSTFULL METHOD OF PROCUREMENT?

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Re: IS IT TRUE THAT INTERNATIONAL/NATIONAL COMPETITIVE BIDDING LENGTHY AND COSTFULL METHOD OF PROCUREMENT?

Post  Michael Chilongani on Thu May 27, 2010 5:15 pm

Mr Gaitan you started the motion by only quoting the views of Mzungu. can we hear your views?

Today i would like to give my opinion while wearing the shoes of user department.

Yes, when viewed in the perspective of user departments, it is true that Competitive Biding is lengthy and is not without some opportunity costs. Even if planned, no user would happily accept the reasons as to why after motivating a procurement request due to such a lengthy procurement cycle; delivery is to be effected at the earliest after seven (7) solid months!

Just consider the scenario depicted in the table below that represents standard processing time deemed reasonable when one is engaged in competitive tendering as prescribed in the third schedule/GN 97. The assumption in the scenario is that no prequalification is made but rather an open international competitive tendering is opted.

No Item Days
1 Preparation of tender Document...............................................14
2 Review and approval of tender document by the Tender Board.......30
3 Advertise and Issue Tender Document .......................................14
4 Tendering time for Bidders to prepare their Bids ...........................45
5 Evaluation of tender and obtaining necessary approvals.................30
6 Award of tender and notification of award.....................................7
7 Total number of days..............................................................140

With the above 140 days a contract has just been awarded after which some processes follows including the following: -

No item Estimated days
1 Negotiation (if applicable and at the earliest)...........................14
2 Signing of contract and submission of performance guarantee
(Ref R97(2)/GN 97).............................................................28
2 Opening a letter of credit and/or Effecting Advance payments.....14
3 Delivery period – dummy figurative average estimate..................21
Total number of extra days .................................................77

When the 77 days are added to 140 days you get a total of 217 days! This is about 7 months.

The implication from above scenario means that in June 2010 one should start processing tenders for delivery in January, 2011. If the financial year ends in December then it means the requirements should be included in 2011 budget as an on going project. With a multitude of such requirements surely confusion is likely to be the order of the day.

RSM, I don’t think that restricted tendering is always preceded by prequalification. Pursuant to regulation 67 (1)/GN97 after each circumstance numbered (a) to (d) there is a word ‘or’ implying that the conditions are mutually exclusive.

RJM, I (as user) concur with the use of a default method (Competitive method) with expectations that the service shall be delivered within reasonable time. If it takes up seven months for delivery to be effected then I think more is demanded for the purpose of streamlining the process so that the period is shortened.

With an additional scenario explained by RSM, then the impact is that there shall be even further delays in the delivery of the service. Tender processing up to delivery may a take as longer as 12 months.

In view of the above, it is surely true that Competitive Biding is a lengthy process that is not without some opportunity costs.


Last edited by M.Chilongani on Thu May 27, 2010 7:39 pm; edited 1 time in total (Reason for editing : minor correction of some words)

Michael Chilongani

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Re: IS IT TRUE THAT INTERNATIONAL/NATIONAL COMPETITIVE BIDDING LENGTHY AND COSTFULL METHOD OF PROCUREMENT?

Post  RSM on Wed May 26, 2010 5:36 pm

This topic has enticed me to share with forum members one interesting incidence involving pre-qualification.


It was a tender which was a complex and expensive, and it was thought appropriate to use pre-qualifcation to obtain a shortlist of contractord who would eventually be invited to submit a tender.

The day that the pre-qualifatication advert was posted-which gave 45 days for potential bidders to submit their applications- instructions were issued that the 45 days was too long and it should be reduced to 21 days!!!. As procurement practioners we responded that once a tender period has been given out to bidders, it can only be extended and not reduced .

Those issuing instructions became adamant that the tender period should be reduced. We then offered a way out - that rather than reduce the tender period, we could cancel the prequalification process and proceed with open tendering in which everybody including those that had collected pre-qualifcation documents could participate.

The idea was accepted and there was an immediate instruction that the cancellation notice of prequalification should be issued the next day. We again suggested that before cancellation notice is put out, tender documents for that particular project should be ready so that the same cancellation notice could be used to invite potential bidders to participate in open tendering by collecting tender documents from the PE.

To cut the long story short- The tender documents were not ready when the pressure to reduce the time of prequalification was being exerted. Actually the tender documents became ready almost three months after the deadline for submission of the pre-qualification documents and two months after the shortlisted bidders had been announced.

Any comments on this?

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Re: IS IT TRUE THAT INTERNATIONAL/NATIONAL COMPETITIVE BIDDING LENGTHY AND COSTFULL METHOD OF PROCUREMENT?

Post  RJM on Mon Dec 21, 2009 2:44 pm

“Most purchases under open competitive bidding are high technical goods and services, so preparations of the bids are often expensive”. To me, when the project is large and complex, it is obvious that the preparation of bid documents will be expensive since the project itself is expensive. I think it goes without say that a thorough preparation of bid documents [understand client’s business case, stakeholders’ requirements, design, bidding documents etc) to great extent assure the Client will get Value for Money. Mzungu should understand that the procurements undertaking through International and National Bidding are lengthy and cost because of its nature and complexity. These systems are also common in American and the rest of the world.

Totally I do not agree with Mzungu that “many suppliers, contractors and services providers simply refuse to engage on contracts offered through open competitive bidding”. What kind of suppliers, contractors and services providers are these? Where do they get fairness, equal opportunity, transparency etc [What we so called five pillars of procurement system] if not in the open bidding?

All these systems have been devised not only to reduce risk of corruption and encourage transparency but to great extent to have systematic approach of carrying out procurement activities. This has been wrong perception to most of people that Procurement Legislations are there only to curb cor
ruption.

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Re: IS IT TRUE THAT INTERNATIONAL/NATIONAL COMPETITIVE BIDDING LENGTHY AND COSTFULL METHOD OF PROCUREMENT?

Post  RSM on Thu Dec 17, 2009 11:30 am

Gaitan,

I think that Mzungu might have been mixing things. Restricted Tendering preceded by pre-qualification to me is equal to open tendering - national or international.

Actually even PPA 2004 and its Regulations recommends the use of pre-qualification for complex projects.

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IS IT TRUE THAT INTERNATIONAL/NATIONAL COMPETITIVE BIDDING LENGTHY AND COSTFULL METHOD OF PROCUREMENT?

Post  GadielCM on Wed Dec 16, 2009 10:39 pm

Gaitan,
Nothing in procurement law procedures impossible if and only if the Section 45 of PPA is adhered effectivelly and efficiently. In other hand nothing is impossible if the nationla procurement laws adhered effectively and efficiently
Most of PE's they want to procure without using the plan suuposed to prepare before. The main features of Procurement plan is the following;
-Requirements need to be procurede by PE
-Estimated value for particular item to be procured in which will lead to the appropriate method of procurement
-Method of procurement to be used, considering the tendering processing time
-Dates when that goods/services required to be procured
-Dates for approving and awarding of contract.

Th problem of people, even if in other countries I think, is that, they dont plan appropriately as required, they always need, ad hoc procurement. I reamin, and I will be back for more, but I dont agree with the article cited.

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IS IT TRUE THAT INTERNATIONAL/NATIONAL COMPETITIVE BIDDING LENGTHY AND COSTFULL METHOD OF PROCUREMENT?

Post  Gaitan on Wed Dec 16, 2009 8:21 pm

I read one article written by one American procurement professional discarding open tendering either national or international as is not a good method to add value for money. Some arguements raised by him are as follows:-

a) It is a lengthy process that incur various costs on every stage that it should pass through contrary to selective tendering that only few bidder that have been prequalified are invited to bid.
b) The main criterion for tender evaluation is price although there are factors which should be specified in instruction to tender in addition to price to be considered to determine the lowest evaluated tender. This may result to find some very plausible bids have come in from firms you have no wish to do business with but you must not reject them however unsuitable they may be.You can only accept what has been written and are barred from letting anything else influence your decision.

c) Most purchases under open competitive bidding are high technical goods and services, so preparations of the bids are often expensive. It is no wonder that many suppliers, contractors and services providers simply refuse to engage on contracts offered through open competitive bidding.

He came at the end concluding that all these systems have been created to reduce the risk of corruption and encourage transparency. Yet one of the biggest causes of corruption is slowness. Not only do slow procedures give corrupt time to move, they also give them an excuse for their actions.

Hence to him the proper solution for procurement method is Restricted Tendering in which prequalification should be conducted

I SUBMIT FOR YOUR COMMENTS

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