ProcurementPolicyandprocedures

TableofContents 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Awarenesssession NewMeasures ProcurementMethods MarginofPreference 4.1 Exampleofhowthemarginofpreferenceworks FormatofCostStructuredocument ProcurementPlanning Procurementlegislations 1 2 2 4 5 5 6 6

1.Awarenesssession InJune2008theMinisterofFinanceannouncedthat foritsprocurement,Government willgiveapreferenceof15percentonpriceforsmalldomesticenterpriseswithlessthan Rs 50 million turnover and a 10 percent preference for small domestic building contractorswithlessthanRs50millionturnover.Thesamebenefitswillbeextendedon atemporarybasisuntilDecember2010todomesticmanufacturing,regardlessofturnover, toassisttheminthetransitiontoglobalcompetitiveness. Inthiscontext,anawarenesssessionwasheldbytheMauritiusChamberofCommerce th andIndustryonthe14 May2009at10hrs00,atthePlantationHouse,PortLouis.The presentation,whichconsistedofexplanationsonproceduresbytwopublicprocurement officersfollowedbyaquestiontimeperiod,wasfavourablywelcomedbythemembersof theChamber. Themainconditionforeligibilityisa30%valueadded*andsuppliershavetosubmita coststructuredocumentsignedbythecertifiedaccountantandalsoabankguarantee.(A modelofthecoststructuredocumentis providedinSection5ofthepresentdocument) ThePublicProcurementAct(2006)anditsaccompanying2008Regulationsprovidefor thesimplificationofprocurementproceduresandensurethatpublicfundsarespentina transparent,efficientandfairmanner.Inthatrespect,threeindependentbodieshavebeen establishedundertheabovementionedact:(1)thePublicProcurementOfficewhichisthe engineforeffectiveprocurementreforminMauritius,(2)theCentralProcurementBoard (replacing the Central Tender Board) which is now responsible for approving and awardingmajorcontractsenteredintobypublicbodiesand(3)theIndependentReview Panel whose purpose is to consider applicationsfor review from unsatisfied bidders or potentialbidders. Varioussuggestions tofurtherimprovetheprocurementprocesshavebeenmadeto the governmentofficersattendingthesession.Forinstance,itwasproposedthatprocurement proceduresbefurthersimplifiedandthatadministrativecostsrelatingtoaccountantfees andbankchargesbereduced.Itwasalsosuggestedtoextendthefacilitytoservicesand, inviewofthefactthatithastakenseveralmonthsforthesesschemestobecomeeffective, itwasproposedtoextenditbeyondDecember2010. All these suggestions were favourably received by the representatives of the Public ProcurementOffice. The working session gave rise to much interest and interaction from the attending audience,showingthatthereisaneedformorecommunicationandalsotrainingtohelp supplierstoparticipatemoreeffectivelyingovernmenttenders. *LocalValueAdded=TotalCost Costofimportedinputsx100 TotalCost

2.NewMeasures In the May 2009 Budget Speech, the Minister of Finance proposed the following measuresinordertospeeduptheprocedures: 1. The threshold value of contracts that can be handled at the level of Ministries/DepartmentsisincreasedfromRs15MtoRs50M. 2. Forallotherpublicbodies,thethresholdvalueisbeingraisedfromRs15MtoRs 50MandfromRs50MtoRs100M. 3.ProcurementMethods

1. OpenAdvertisedBidding

2. RestrictedBidding

This method is ideal to obtain value for money through increased competitionandshouldbeusedforhighvalueprocurementswherethereis alargenumberofsuppliers.Itmayalsobeusedinsituationswherethereis alimitednumberofunknownsuppliers. Thisprocurementmethodisusedwhere: (a)thegoods,worksorservicesareavailableonly fromalimitednumber ofsuppliersandallofthemareknown (b)suppliersofspecializedgoodsandserviceshavebeenpreapprovedby thepublicbody,andarepartofasuppliereligibilitylist(section19ofthe Act) c) the time and cost of considering a large number of bids is disproportionate to the value of the procurement, provided the estimated value of the contract does not exceed five million rupees, and at least 5 biddersaredirectlysolicitedor (d)the evaluation of the financialproposalcannotbebasedsolelyon the quotedpriceperitemforsmallvalueprocurementasotherfactorssuchas operational costs, performance, reliability etc. have to be included to determinetheevaluatedcost.

3. TwoStageBidding (section29oftheAct) 4. RequestforSealedQuotations (section20oftheAct)

In the case of large or complex contracts for goods or works, for which open or restricted bidding is not suitable because of the difficulty in definingpreciselythegoodsorworks. Forthepurchaseofreadilyavailablegoodsorprocurementofsmallworks orsmallotherservicesforwhichthereisanestablishedmarket,solongas theestimatedvalueofthecontractdoesnotexceedfivemillionrupees,and wherepriceistheonlydeterminingfactor. (1) For procurements not exceeding the following prescribed thresholds (Regulation44asamended): (a)inthecaseofprocurementofgoods,wherethevaluedoesnot exceed 500,000 rupees provided the total cost per single item does not exceed 100,000rupeesand (b) in the case of procurement of works, consultancy services or other

5. DirectProcurement (section25oftheAct)

services,wherethevaluedoesnotexceed500,000rupees. (2)Whereonesupplierhastheexclusiverighttomanufacturethegoods, carryouttheworks,orperformtheservicestobeprocured,andnosuitable alternativeisavailable (3) For additional deliveries by the original supplier which are intended eitherasreplacementpartsforexistingsupplies,services,orinstallations, orastheextensionofexistingsupplies,services,orinstallationswherea changeofsupplierwouldcompelthepublicbodytoprocureequipmentor servicesnotmeetingrequirementsofinterchangeabilitywithalready existingequipmentorservices,providedthatthevaluedoesnotexceed 50%oftheinitialcontractvalue (4)Whereadditionalworks,whichwerenotincludedintheinitialcontract have, through unforeseeable circumstances, become necessary and the separation of the additional works from the initial contract would be difficult for technical or economic reasons, provided that the value does not exceed30%oftheinitialcontractvalue. (5)Wherethenatureof theconsultancyservicesrequiresthataparticular consultantbeselectedduetouniquequalifications. 1)Apublicbodymayprocuregoods,worksorotherservicesfromasingle supplier without competition, in case of emergency or extreme urgency. The scope of the emergency procurement shall, as far as possible, be limited to the period of the emergency, so that appropriate competitive procurement methods may beutilised atthe conclusionoftheemergency period."Extremeurgency"includesasituationwherein: (a)thecountryiseitherseriouslythreatenedbyoractuallyconfrontedwith adisaster,catastrophe,warorActofGod (b) life or the quality of life or environment may be seriously compromised. (2) Where the condition or quality of goods, equipment, building or publicly owned capital goods may seriously deteriorate unless action is urgentlyandnecessarilytakentomaintainthemintheiractualvalueor usefulnessand (3)Whereinvestmentprojectmaybeseriouslydelayedforwantofanitem ofaminorvalue. Where: (1) community or enduser participation may result in enhancing the economy,qualityorsustainabilityoftheservicetobeprocuredand (2) the objective of a project is to create employment and community involvement. Where: (1)anactivityisnotlikelytoattractbiddersormay imposeunacceptable risksonthecontractorasthecostcannotbepredeterminedor (2)theriskofunavoidable interruptionscanbebetterborneby thepublic bodyor (3)anactivityrequirespracticalmethodforconstruction,maintenanceand conservationunderspecialconditionsor

6. Emergency Procurement (section21oftheAct)

7. Communityorenduserparticipation (section22oftheAct)

8. DepartmentalExecution (section23oftheAct)

(4) in the case of a pilot project for the development of a technology, whereworkcannotbecarriedoutbyacontractoror (5)workshavetobecarriedoutwithoutdisruptingexistingoperationsor (6) there is an emergency such as a national disaster which calls for immediateaction Whenthepublicbodyseekstoobtainconsultingservicesorotherservices forwhichOpenAdvertisedBiddingisnotsuitablebecauseofthedifficulty indefiningpreciselytheservices.

9. RequestforProposals (section24oftheAct)

4.MarginofPreference Section 28(2)of the Public ProcurementAct (2006) stipulatesthat in appropriate cases andsubjecttoregulationstothateffect,abiddingdocumentmayprovideanadvantageor preferencetoabidder. Inthatrespect,marginofpreferenceswillbegrantedinthefollowingcircumstances: A. NationalBidding Goods:10% marginofpreference willbegiven for goods manufactured by smallandmediumenterpriseswherethevalueofthelocalinputsinrespectof labourand/ormaterialsaccountforatleast30% Works:7.5% marginofpreferencewillbebestowedondomesticcontractors, subject to performance by the foreign subcontractors or, in case of joint venture,performanceby theforeignpartnernotexceeding50%oftheworks. B. InternationalBidding Goods: 15 % will be given for goods manufactured by domestic enterprises where the value of the local inputs in respect of labour and/or materials accountforatleast30%and Works:10%todomesticcontractors,subjecttoperformancebythe foreign subcontractorsor,incaseofjointventure,performancebytheforeignpartner notexceeding50%oftheworks.

Note:SMEsaredefinedasbidders(individualsorfirms)havinganannualturnovernot exceedingRs50million.

4.1Exampleofhowthemarginofpreferenceworks Inthecaseofanationalbiddingongoods,themarginofpreferenceprovidedtotheSME will operate in such a way that10% will beadded on the bids made bytheother non SME bidders. Thus, the bid of Rs 9,900,000 initially made by Other Bidder A is increasedbyRs990,000(10%ofRs9,900,000) toRs10,890,000.
Bid 10% Preference Total Rank SME 10,000,000 10,000,000 1 Other Bidder A 9,900,000 990,000 10,890,000 2 Other Bidder B 9,950,000 995,000 10,945,000 3 Other Bidder C 9,970,000 997,000 10,967,000 4 Other Bidder D 9,980,000 998,000 10,978,000 5

While the SME bidder would have ranked fifth without the margin of preference, it rankedfirstaftertheapplicationofthemarginofpreference. 5.Format oftheCoststructuredocument
COSTSTRUCTUREFORVALUEADDEDCALCULATIONPRODUCT Rs RawMaterials,Accessories&Components Local(VAT&ExciseDutyFree) ................ ................. Rs

LabourCost DirectLabour ................. ..................

Utilities

ClericalWages SalariestoManagement

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Electricity Water Telephone

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Depreciation InterestonLoans Rent Other(pleasespecify) ........................................ ........................................

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TOTALCOST

6.Procurement Planning Members are informed that public bodies will publish on their website an annual procurementplanwithperiodicalupdatestoinformsuppliersoffutureprojects. Theannualprocurementplan,whichwillbepreparedatthebeginningofeveryfinancial year, shallinclude thetypeandquantityofthegoods,worksorservicestobeprocured thetimingandimplementationoftheprocurement anindicationofpossiblepackagesofprocurement,andtheirvalue an indication of possible prequalification proceedings and procurement methodstobeused such other information as may be required in accordance with instructions issuedbythePolicyOffice. 7.ProcurementLegislations

Acts Regulations

PublicProcurementAct2006 PublicProcurementRegulations2008 PublicProcurement(SuspensionandDebarment)Regulations2008