Public Disposal Methods

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LEARNING OBJECTIVES

Highlight Legal requirements for Disposal Planning Highlight the Disposal cycle Appreciate contents of a Disposal Plan Understand key steps in Disposal Process Appreciate the methods of Disposal
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Learning outcomes
At the end of this session, participants shall be able to: Define disposal of Public assets Explain the different methods and rules of disposal Outline the stages involved in the disposal List the types of documents commonly used

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Definition of Disposal
The Act defines disposal as the divestiture of public assets, including intellectual and proprietary rights and goodwill, and any other rights of a PDE by any means, including sale, rental, lease, franchise, auction, or any combination however, classified other than those regulated by the Public Enterprise Reform Divestiture (PERD) statute, 1993.

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THE PUBLIC DISPOSAL CYCLE

Planning phase Initiation of a Disposal phase Valuation of Assets phase Selection and Approval of Disposal method Invitation of potential Bidder(s) Receipt and Evaluation of Bid(s) phase Contract Management phase
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Disposal Planning
The Accounting officer shall ensure that the assets of a PDE are reviewed on an annual basis, to identify those which are obsolete and should be subject to disposal. Assets to be grouped in contracts or lots. Board of survey may be used to identify assets to be disposed off on a periodic basis. Refer to Regulation. 295

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LEGAL REQUIREMENTS /RESPONSIBILITY FOR DISPOSAL PLANNING

Sections 34(1) and (2) of the Act specifies key functions of the User Dept some of which are: To initiate disposal requirements The Procurement and Disposal Unit should plan all procurement and disposal activities (Sections 31(f) of the Act) and aggregate all the individual user dept plans into annual and multi- annual consolidated procurement and disposal plans

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LEGAL REQUIREMENTS /RESPONSIBILITY FOR DISPOSAL PLANNING- contd

Section 58 of the Act emphasizes that Disposal planning must be rationally planned in such a way as to:
Avoid emergency disposal Aggregate requirements Avoid splitting of requirements Integrate disposal of all assets in the PDE

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Detailed description of asset to be disposed off in order of priority Type/category and lots of assets The quantities of assets and the unit of issue Location of assets Year of purchase Expected/Actual life span of asset Brief justification for disposal The estimated value Confirmed source of funding for the disposal

CONTENTS OF A DISPOSAL PLAN

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CONTENTS OF A DISPOSAL PLAN - continued

Proposed method of disposal for each or group of asset(s) Time when each asset will no longer be required by the user department Total time the disposal process will take Required level of approval for each or group of asset(s)
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Disposal Initiation
User department or PDE shall initiate the process for assets under its management. Initiation may follow recommendation of a board of survey. Use DPA Form 120 Disposal requirement shall be allocated a specific reference number. Refer to Regulation. 296

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Methods of Disposal
Public

auction Public bidding Sale to public officers Direct negotiations Trade-in Transfer to another PDE Conversion or classification of assets into another form Destruction of assets Refer to Regulation. 297 to 305
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When selecting method, PDEs to consider

Potential market value of the asset The volume of the asset, whether one-off or bulk. The number and location of potential bidders The location of the asset National security and public interest issues Health and safety issues Legal or human rights issues Environmental considerations
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Valuations
A PDE to obtain two valuations of an asset prior to commencement of any disposal proceedings. If required by law, first valuation to be obtained from a competent authority and a second independent, market-based valuation to be obtained from an appropriate authority or provider.

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Valuations contd
If no legal requirement, two independent valuations shall be obtained from appropriate authorities of providers. Valuations shall be confidential. Cost of valuation should not be higher than the expected money. Refer to Regulation. 315

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Public Auction
Conditions for use of this method Existence of a large number of potential bidders or assets to be disposed. A public invitation notice using at least one publication of wide national circulation. Display on PDEs notice board and PPDAs website. Any other appropriate media such as radio. No formal solicitation document Bids shall be presented orally and bid to be evaluated on the basis of price.

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Public Auction contd

No minimum bidding period No negotiations Contract to be orally awarded to the bidder offering the highest price as determined by the auctioneer and shall be announced at the auction. Successfully bidder shall pay at least 50% of contract price immediately after award of contract, balance within 5 working days of award of contract. Refer Regulation 298 & Regulation 306

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Auctioneer
PDE to appoint a registered and licensed auctioneer to conduct the disposal process on its behalf. Appointment shall take into account the appropriate procurement method for services. Refer to Regulation 307

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Public Bidding
Conditions for use of this method High-value or unusual assets Assets located in remote areas Where conditions need to be attached to the sale of the asset Where post-bid negotiations may be required. Public invitation notice. Advertisement for at least 4 working days.

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Public Bidding contd

Minimum bidding period shall be 10 working days. PDE to request for a written sealed bid. Evaluation based on price only shall be the preferred evaluation methodology. Contract placement shall be by issue of a contract to a successful bidder. Refer to Regulation. 299 & 308

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Sale to Public Officers

Conditions and rules for use of this method

Where there is no likely benefit or financial advantage to a PDE, in using any other method. Where assets for disposal are a small number of low value items which are unlikely to attract public interest. Where the personal use of disposal assets would directly benefit the performance of a public officer in the execution of his or her duties within a PDE. In remote location
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Sale to Public Officers contd

Public officer initiating disposal shall not participate as a bidder. Bids shall be solicited by the publication of a nonpublic invitation. Advertising period shall be at least 4 working days and bidding period shall be 10 working days. Written sealed bids Evaluation based on price only. PDE to send PPDA copies of all bids received, evaluation report and contract awarded. Refer to Regulation 300 & Reg.309

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Direct negotiations
Conditions and rules for use of this method The market is limited and a single buyer is willing to pay reserved price National security, public interest, legal, environmental considerations or human rights issues are served by selling to a particular company, group or individual. A potential buyer is a tenant, occupier or user of an asset at the time of the decision to dispose.

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Direct negotiations contd

An asset is located on a potential buyers premises on hire or free-use basis and it is reasonable to give that person first option to buy the asset at a market rate. No minimum bidding period. Bidders to submit written sealed bids Evaluation based on price only Evaluation based on price and other factors may also be used. Refer to Regulation. 301 & 310

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Trade-in
Conditions and rules for use of this method Where the trade-in of surplus assets to offset the purchase price of new items provides a convenient, economic and efficient way of upgrading equipment. The disposal process shall be an integral part of the procurement process.

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Trade-in contd
A solicitation document and a bid notice shall clearly state that the procurement involves a trade-in arrangement. Advertisement of the trade-in, issue of solicitation documents, bidding period and receipt and opening of bids shall be in accordance with the relevant procurement rules. Refer to Reg. 302 &311

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Transfer to another PDE

Conditions and rules for use of this method Where another PDE can make further use of an asset. Cost to be agreed by the two PDEs. Transfer may be at no cost, if it is uneconomic to charge for the asset. A recipient PDE shall issue an authorized receipt for the asset to the originating PDE. Refer to Reg. 303 & 312

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Conversion or classification of assets into another form.

Conditions and rules for use of this method

On grounds of national security or public interest, legal or human rights issues or environment considerations Where asset has no residual value in its current form, but where some sale value can be obtained through conversion or classification into any other form. PDE to identify a competent authority or an appropriate provider to undertake the conversion or classification. Refer to Reg. 304 & 31307/02/2014 MBA-1 CLASS 2013/2014 28

Disposal by Destruction
Conditions and rules for the use of this method
Least favored method. Used on grounds of national security or public interest, health and safety, legal or human rights issues or environment considerations Where the asset has no residual value, cant be transferred to another PDE or converted into another form. Destruction can be done by the PDE or a competent authority or provider. Refer to Regulation 305 & 314

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Description of Assets
Solicitation documents or notices, and any other additional information made available to a prospective bidder shall specify that the asset is to be sold on an as is, where is basis and shall disclaim all liability after sale. No warranty required. Refer to 316

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Inspection of assets
PDE to offer reasonable a reasonable opportunity to potential bidders, to inspect an asset before the date or deadline for bidding. Arrangements for the inspection of the assets shall be included in the invitation notice or bidding documents, where appropriate. Refer to Reg. 321

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Negotiations
Under public bidding, negotiations may relate to the conditions of sale, where evaluation is based on factors other than price, and shall not relate to the price of the bid. Under direct negotiations, negotiations may relate to the conditions of sale, where evaluation is based on factors other than price. Refer to Reg. 332 & 333

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Reserve price
If best evaluated bid is less than the reserve price, a contracts committee in consultation with an accounting officer may Obtain a further valuation from an independent source. Negotiate under direct negotiation Arrange for new bids to be submitted. Use of alternative method Sell at the reduced price Refer to Reg. 334
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Failure of bidder to pay

Where bidder fails to make payment in accordance with the terms and conditions of a contract, the contract may be terminated and formed with the next best bidder, where that bidder is known. Refer to Reg. 338

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Record of Disposal Activities

PDE shall maintain a record of its proceedings and contract management for a period of seven (7) years from the date of a decision to terminate a disposal activity or the date of completion of a disposal activity, whichever comes first.

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END OF PRESENTATION

THANK YOU & BRAVO FOR YOUR ATTENTION

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