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Kemi 2

The document discusses key changes and requirements of Kenya's new Public Procurement and Asset Disposal Act of 2015. It outlines new regulations around procurement planning, committees, methods of procurement including e-reverse auctions, and framework agreements. It provides guidance to procuring entities on implementing the new law.

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0% found this document useful (0 votes)
165 views73 pages

Kemi 2

The document discusses key changes and requirements of Kenya's new Public Procurement and Asset Disposal Act of 2015. It outlines new regulations around procurement planning, committees, methods of procurement including e-reverse auctions, and framework agreements. It provides guidance to procuring entities on implementing the new law.

Uploaded by

athembo george
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
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You are on page 1/ 73

DR.

MAURICE ODONDO
KEMI

8/23/2018 1
 Public procurement is part of Public Financial
Management(PMF) reforms that the Government of
Kenya has been carrying out.
 This is to enhance transparency and accountability

including prudent utilization of public resource to


improve service delivery to the public.
 Article 227 of the Constitution of Kenya requires

that “An act of Parliament shall prescribe a


framework within which policies relating to
procurement and asset disposal shall be
implemented” 5/23/2017 2
The National Treasury in consultation with
stakeholders embarked on reviewing the Public
Procurement and Disposal Act, 2005 to resonate
with the Constitution.
This process resulted in the enactment of the Public

Procurement and Asset Disposal Act,2015 repealing


the 2005 Act.
The Act is designed to achieve the following;
◦ Address the challenges of the repealed law
◦ Enhance devolution of procurement decisions
◦ Incorporate emerging issues such as e-
procurement, framework contracting among
others, 5/23/2017 3
◦ Embrace new procurement methods such as e-
Reverse Auctions, Design Competition, Force
Account, Competitive Negotiations and Two
Stage Tendering Method among others
◦ Bring under its ambit New Procuring Entities such
as Independent and Constitutional Offices, Kenya
Diplomatic Missions, County Government Entities,
Pension Funds and any other entity that uses, is
maintained or assisted by public Funds.
◦ Harmonize procurement procedures to simplify
operations and compliance, by increasing clarity.
5/23/2017 4
1) Commencement of the new PPAD Act, 2015
◦ The effective date was 7th January 2016 and was applicable to all
procurements which commenced on or after 7th January 2016.
◦ All procurement proceedings commenced before the commencement
date of the Act shall be continued in accordance with the Public
Procurement and Disposal Act,2005 and its subsidiary regulations.

2) Processing of Procurements under the new Act


Procuring entities are instructed to use/apply the existing Public
Procurement and Disposal Regulations including standard Tender
Documents, manuals, and directives issued under the repealed PPD
Act, 2005 until the National Treasury develops Regulations for this
Act. This is in line with sec 24 of the Interpretation and General
Provisions Act, Cap 2 of the Laws of Kenya.

5/23/2017 5
3) Regulation of Public Procurement and Asset Disposal
The following are the bodies tasked with regulation of
public procurement and disposal under the new Act;
The National Treasury,
Public Procurement Regulatory Authority(PPRA)
Public Administrative Board
4) Procurement Function
The procurement function shall be handled by a
procurement professional and the head of the procurement
function in a procuring entity shall among other functions
be responsible for rendering procurement professional
advice to the accounting officer.

5/23/2017 6
5) Procurement Planning
Sec 44(2) (C) and (i) of the Act, provides that an accounting
officer shall ensure procurement plans are prepared in
conformity with the medium term fiscal framework and fiscal
policy objectives. It should also demonstrate application of
preference and reservations schemes.
Sec 53(2)also provides that preparation of procurement plans
must be realistic and within the approved budget and be
made prior to the commencement of a financial year.
6) Segregation of responsibilities
Sec 46 of the Act provides for appointment of an ad hoc
evaluation committee to deal with technical and financial
aspects of a procurement.
The accounting officer may establish an ad hoc inspection
and acceptance committee pursuant to Sec 48 of the Act.

5/23/2017 7
A key departure from past practice is that procurement awards
are not to be done by either the tender or procurement
committees, since committees have been done away with by
the Act. Sec 84 (1) provides that the head of procurement
function shall provide a signed professional opinion to the
accounting officer on the procurement or asset disposal
proceedings on receiving the evaluation report from the
evaluation committee.
Committees provided under the new Act are;
Tender opening committee – Sec 78(1)
Evaluation Committee – Sec 46(1)
Inspection and Acceptance Committee – Sec 48(1)
Disposal committee – Sec163(1)

5/23/2017 8
• Sec 78(1) of the Act provides that the accounting officer
shall appoint a tender opening committee specifically for
the procurement in accordance with the following
requirements
– The committee shall have at least three members and
– At least one member shall not be directly involved in the evaluation
of tenders.
FUNCTION
– Conduct a preliminary check of the received quotations to ensure
that they comply with conditions preset in the quotation request
form.
– Prepare list of all tender applications received and opened
– Prepare List of all qualified applications
– Prepare List of all disqualified applications
5/23/2017 9
An accounting officer shall appoint an adhoc evaluation committee
established in accordance with the Act and regulations and from
within the members of staff, with relevant expertise.
Composition
• Between 3-5 members appointed by the accounting officer on

rotational basis comprising of user department and two other


departments or their representatives.

Function
• Deal with the technical and financial aspects of procurement as

well as the negotiation of the process including evaluation of bids,


proposals for prequalification, registration lists, Expression of
Interests and any other role assigned to it.

5/23/2017 10
Composition
• Chairperson
• Members – At least two others appointed by the
principal upon recommendation by PU.
Functions
• Inspect & where necessary test the goods and
services received to ensure compliance with the
terms and specifications of the contract. They accept
or reject the delivered goods or works on behalf of
the institution
• Determination of value for money. (Quality, Quantity,
Timeliness, Proper documentation/manuals.
5/23/2017 11
 The principal shall cause the establishment of a
disposal committee in writing comprised of five
members as follows.
 Chairman- a member appointed by the principal
 Two heads of departments
 Officer in charge of stores
 Accountant/finance officer

5/23/2017 12
 Disposal of unserviceable asset
 Disposal of obsolete asset
 Disposal of obsolescent assets
 Disposal of surplus stores
 Verification of all disposal recommendations by

the employee in charge of the assets requiring


disposal in liaison with the head of procurement
function
 Recommend the best disposal method to the

accounting officer

5/23/2017 13
7) Methods of Procurement
The following are the methods of procurement provided
for by the new Act.
Open Tendering Method- this is the default method
Two - Stage Tendering Method
Design Competition
Restricted Tendering
Direct procurement
Request for Quotation
Low value procurement Method
Force Account
Electronic Reverse Auction
Framework Agreement
Request for Proposal

5/23/2017 14
Electronic Reverse Auction means an online real-
time purchasing technique utilized by the
procuring entity to select the successful
submission, which involves the presentation by
tenderers, suppliers or contractors of
successively lowered bids during a scheduled
period of time and the automatic evaluation of
bids;
E-procurement means the process of

procurement
using electronic medium such as the internet or
5/23/2017 15

other
 Conditions for use of Reverse Auctions.
 a procurement portal;
 an appropriate secure software with electronic procurement
capabilities and functionalities approved by the Authority;
Procedure for Reverse Auction.
(a) A school shall;
(i) Invite all registered suppliers in the specific category to compete;
(ii) Advertise its requirements on its website including the period of
time and goods specifications;
(b) The prices of bidders within the prescribed time shall be visible to
other bidders without revealing the bidder’s identity; and
(c) A pre-qualified supplier shall not revise its bid upwards within the
prescribed time.
Subject to the reserve price set by the school, the successful bid shall
be the bid with lowest price at the bid submission deadline.

5/23/2017 16
 Framework Agreement means a pact between a
procuring entity(school) and a selected supplier (or suppliers) or
contractor (or contractors) identified for a definite term to
supply goods works or service whose quantities and
delivery schedules are not definable or determinable at the
beginning.
 Framework Contract means a pact between a procuring
entity(school) and a selected supplier (or suppliers) or
contractor (or contractors) identified for a definite term to
supply goods works or service whose quantities and deliveries
are not definable or determinable at the beginning, with a
commitment to order a minimum quantity of the required
goods, works, or services;

5/23/2017 17
(1) A school may enter into a Framework Agreement
through open tender if—
(a) The procurement value is within the thresholds
prescribed under Regulations to this Act;
(b) The required quantity of goods, works or non
consultancy services cannot be determined at the time
of entering into the agreement; and
(c) A minimum of seven alternative vendors are included
for each category.
The maximum term for the framework agreement shall
be three years and, for agreements exceeding one year,
a value for money assessment undertaken annually to
determine whether the terms designated in the
framework agreement remain competitive. 5/23/2017 18
When implementing a framework agreement, a school
may;
(a) Procure through call-offs order when necessary; or
(b) Invite mini-competition among persons that have
entered into the framework agreement in the respective
category.
Call-offs order means an order made using a framework
agreement with one or more contractors, suppliers or
consultants for a defined quantity of works, goods,
consultancy, covering terms and conditions including price
that users require to meet the immediate requirements.
Evaluation of bids is by an evaluation committee as
provided for under this Act.

5/23/2017 19
Design Competition means a procurement procedure
for obtaining competitive tenders for services which
are creative in nature and which require that part of
the services be carried as part of the tender to
facilitate evaluation of the tenders. Such services
may include; architecture, landscaping, engineering,
fine arts, interior design, marketing, advertising and
graphic designs.

5/23/2017 20
An accounting officer of a public school may use
a design competition procedure for the purpose
of determining the best architectural, physical
planning, engineering, graphic or any other design
scheme for its use.
Procedure for design competition.
(a) invite design proposals through a public
advertisement;
(b) ensure the preparation of an invitation sets out
the following;
(i) the name and address of the school;
(ii) the tender number assigned to the procurement
proceedings by the school; 5/23/2017 21
(iii) Description of technical and functional needs;
(iv) An explanation of where and when tenders shall be
submitted and where and when the tenders will be opened;
(v) A statement that those submitting tenders or their
representatives may attend the opening of the design
proposals;
(vi) A statement that a copyright or other intellectual property
shall vest in the school.
The evaluation shall be conducted by the evaluation

committee
The best three assessed design schemes shall receive a

honorarium as set by the school


All bidders shall undertake to transfer all copyrights,

intellectual property rights and patents relating to their designs


to the school. 5/23/2017 22

Upon completion of the competition, all submitted designs


A school may engage in procurement by means of
two-stage tendering when;
◦ Due to complexity and inadequate knowledge on
its part or
◦ Advancements in technology,
It is not feasible for the school to formulate
detailed specifications for the goods or works or
non-consultancy services in order to obtain the
most satisfactory solution to its procurement
needs.
5/23/2017 23
 The provisions of this section shall apply to two stage
tendering proceedings except to the extent those
provisions are excluded from this section and the
tendering document shall call upon tenderers to
submit, in the first stage of the two-stage tendering
proceedings, initial tenders containing their proposals
without a tender price.
 In the second stage, the school shall invite tenderers

whose tenders were retained to submit final tenders


with prices with respect to a single set of
specifications and in formulating those specifications,
the procuring entity may modify any aspect, originally
set forth in the tendering document.
5/23/2017 24
Any such modification or addition shall be
communicated to tenderers in the invitation to
submit final tenders and a tenderer not wishing
to submit a final tender may withdraw from the
tendering proceedings without forfeiting any
tender security that they may have been required
to provide.
The final tenders shall be evaluated and

compared in order to ascertain the successful


tenderer.
The specifications developed above shall meet

the requirements specified in this Act.


When developing the specifications, the
5/23/2017 25
A school may use Force Account method where the following
conditions are satisfied;
i. It has the requisite internal technical expertise, capacity and

competence to carry out the task by its own employees.


ii. It is uneconomical to outsource the works and services
iii. Items/materials are to be procured using convectional

methods provided under the Act


iv. It is established that the cost of the items to be procured are at

the prevailing competitive market price, and


v. It is established that the works/services are urgent and may be

carried out without any interruptions on ongoing operations


using available internal skills, equipment's and materials,
vi. Where the intention is to complete the works where the

contactors either abandoned or delayed completion of works/


5/23/2017 26

services and the cost of retendering is uneconomical.


This is the default method when no special
circumstances permit the application of restrictions
to the level of competition and when the estimated
value is not below the thresholds permitting the
application of a restricted competition such as RFQ
or Restricted tender for efficiency purposes. See ,Sec
96 of the Act
◦ International Open Tender
◦ National Open Tender.- thresholds
Goods- Minimum Kshs 3,000,000
Works – Minimum Kshs 3,000,000
Services – Minimum Kshs 1,000,000
5/23/2017 27
 This method shall be used only as allowed by the Act and
Regulations. The procurement method must be provided for in the
procurement plan. Sec 102 of the Act
 Applicable where contracts are complex or specialized nature of
the goods, works or services is restricted to prequalified
tenderers.
 The time and cost required to examine and evaluate a large
number of tenders would be disproportionate to the value of the
goods, works or services to be procured
 There is evidence to the effect that there are only a few known
suppliers of the whole market of goods works and services.
 Thresholds; where procurement is considered complex
◦ Maximum is budget allocation and minimum Kshs 500,000 Sec 73(2)
(a)of the 2005 Act
◦ Otherwise, the maximum is Kshs 3,000,000 and min Kshs 500,000
◦ The procurement shall be processed through a pre-qualification to
determine the pre-qualified bidders who shall participate in the bidding
process.
5/23/2017 28
 Used for goods, works and services which are readily
available in the market and whose costs is below the set
thresholds. Sec 105 of the Act
 The school must have a pre-qualified list of suppliers .
 At least three(3) quotations but as many as necessary
drawn from the list of approved suppliers, while ensuring
fair and equal rotation among the persons.
 RFQ should be prepared in duplicate and given to the
supplier. He submits original and retains duplicate.
 Suppliers shall be given seven-fourteen days to quote
 Threshold is Kshs 5,001-Kshs 500,000

5/23/2017 29
 Itis not a preferred method because it is completely devoid
of competition and transparency. Sec 103 of the Act
 Where it has to be used, it must be provided for in the
procurement plan
 Direct procurement of value of Kshs500,000 and above
shall be reported to PPOA within 14 days after notification
of award of contract.
 Conditions for direct tender
◦ When the goods works and services are available only from a
particular supplier, or a particular supplier has exclusive rights in
respects to the goods, works or services and no reasonable
substitute or alternative exists.
◦ Where goods procured are urgent and due to this urgency other
methods are not practical.(not dilatory conduct or negligence, not
foreseeable)
5/23/2017 30
 This method is used where the school does not see
any benefit accruing to it in terms of time or cost
implications by using any other method. Sec 107
 The procedure is not used to avoid competition
 The method is reflected in the annual procurement

plan.
 The purchase is done by the school through direct

shopping from a reputable outlet or provider .


 An original receipt or invoice is obtained to account

for the money and item purchased.


 The threshold is Kshs 5,000 per item.

5/23/2017 31
 Sec 115, provides that this method shall be used for
procurement of services which are predominately
intellectual or advisory in nature.
 It is therefore suitable for procurement of consultancy

services.
 The school should obtain a minimum of six (6)

proposals shall be shortlisted, but where less than six


proposals have been received, a minimum of three (3)
RFPs shall be shortlistedthrough expression of
interest procedure.

5/23/2017 32
8) Publication of Procurement Contracts
Section 138(1) of the Act requires that a procuring
entity shall publish and publicize all contracts
awards on their notice boards at conspicuous
places, and on its website if available, in addition to
submitting reports to the Authority.

5/23/2017 33
 The above legal notice amended the Public
Procurement and Disposal Regulations(Preference and
Reservations) following the presidential directive
 Regulation 31(1) of the amendment stipulates that 30%

of all government Tenders are awarded to youth, women


and persons with disability.
 Article 227 of the Constitution of Kenya 2010, require

that state organs or any other public entity to be fair in


contracting for procurement of public goods and
services, including the development of provisions to
designate categories of preferences in the allocation of
contracts, and the protection or advancement of
5/23/2017 34

persons, categories of persons or groups previously


 Treasury circular Ref No. Conf. 5/4/04(24) dated
17th October 2012 provided that the following are to
be reserved and preferred for youth, women and
persons with disability
 Reservations
◦ Provision of cleaning services
◦ Provision of garbage collection services
◦ Supply and delivery of newspapers, journals and magazines
◦ Supply and delivery of mobile phone air time
◦ Provision of printing services
◦ Provision of labour contracts
◦ Provision of motor vehicle repairs

5/23/2017 35
◦ Provision of repair services for the office equipment and
machines
◦ Event organizing
◦ Design and branding of promotional materials such as T/
shirts, caps, banners and posters
◦ Photocopy and videography.
 Preferences
◦ Car leasing
◦ Cab/taxi services
◦ Courier services
◦ Provision of security services
◦ Contracts for small works
◦ Provision of painting works

5/23/2017 36
 Procuring entities are mandatorily required ta
allocate 30% of all their procurement for the
purposes of procuring goods, services and works
from micro and small enterprises owned by youth,
women and persons with disabilities.
 Where applicable, express notification on the 30%

public procurement for the scheme must be


included in the following bid documents
◦ Expression of interest
◦ The tender document
◦ The request for quotation

5/23/2017 37
 Allprocuring entities shall implement the directive
through their Budgets, procurement plans, tender notices
and contract awards
 An entity may lot goods, works and services in quantities
that are affordable to the target group participating in
public procurement proceedings.
 Procurement entities shall facilitate the youth, women
and disabled persons by authenticating their
notifications of tender awards and local purchase or
service orders and subsequently entering into an
agreement with the relevant financing institution with
conditions that shall include paying the contracted
enterprise through their account opened with the
financier. 5/23/2017 38
 For purpose of ensuring sustained growth for
enterprises owned by youth, women and persons
with disabilities, procuring entities shall make
prompt payments for all performed contracts and
shall not delay beyond 30days.
 No tender securities shall be required of entities
owned by youth, women and persons with
disability under Preference and Reservation
Scheme. However, the enterprise shall be required
to sign a Tender Security Declaration Form.

5/23/2017 39
 The annual budget- only budgeted items can be
procured.
 Preparation of annual procurement plan –
The Act and Regulations makes procurement planning
mandatory. It is based on the approved annual
budget and should be approved by the BOM.
◦ Packaging or aggregation and lotting is necessary while
preparing the plan.

5/23/2017 40
S/No LOT ITEMS IN UNIT QTY RATE AMOUNT TENDER DATE OF
NAME LOT METHOD DELIVERY

• Approval of list of potential suppliers by the Evaluation committee.

5/23/2017 41
 Invitationof quotations
 Receiving quotations- completed quotation request

forms should be deposited in the tender box. Those


received through the post should also be deposited into
the box. Opening of tenders. The date of opening
tenders is the date of close of request submission. The
tender opening committee and representatives of
suppliers open the tender box and a preliminary report is
prepared.
 Evaluation of tenders by the evaluation committee. The

committee ranks the suppliers starting with the lowest,


second lowest e.t.c
5/23/2017 42
 Tender award, Sec 84 (1) provides that the head of
procurement function shall provide a signed
professional opinion to the accounting officer on the
procurement or asset disposal proceedings on receiving
the evaluation report from the evaluation committee.
The accounting officer shall award the tender.
 Appointment of suppliers. The principal appoints the

suppliers who qualify in writing while they submit


acceptance letters. Regret letters are also issued to
those who fail to qualify. Sec 87

5/23/2017 43
 Placingorders. This is done using the LPO/LSO or
as per contract agreement

 Inspectionand acceptance.- the committee


checks the quantity, quality standards,
documentation and timeliness of the delivery. The
committee may reject or accept the delivery. The
committee may invite technical persons for
inspection purposes depending on the nature of
goods or services being delivered.

5/23/2017 44
A supplier may apply for variation of procurement
contract terms. This may arise due to change of
prevailing market conditions, change of initial plan in
case of structural works. Such variations should be
occasioned by genuine causes.
 The variations should be on recommendation by the
evaluation committee.
 Contract prices shall not be varied upwards within
twelve months from the date of signing of the
contract. And shall only be considered if the following
are satisfied;- price variation is based on the
prevailing consumer index obtained from Kenya
National Bureau of statistics or the monthly inflation
rate issued by the Central Bank of Kenya 5/23/2017 45
 The quantity variation for goods does not exceed
15% original contract quantity
 Quantity variation of works does not exceed 20%
of original contract quantity
 The price or quantity variation is to be executed
within the period of the contract
 The cumulative value of all contract variations do
not result in an increment of the total contract
price by more than 25% of the original contract
price
 If the variation result to an increment of the total
contract price by more than 25% such variations
shall be tendered separately
5/23/2017 46
 Disposal is a critical element of the stores, equipment
and other assets management of a procuring entity.
 When any equipment is obsolete, its keeping, through
maintenance costs, storage, insurance etc may well
exceed the returns that can be derived from that piece of
equipment and the investment of additional monies.
 Disposal is necessary as it guarantees that public monies
are not applied to useless or obsolete equipment and
assets and that when stores are disposed of, they are
sold at the best achievable value in the market.

5/23/2017 47
 Disposalmaybe considered as the third life of any
acquired item.
◦ First, it is procured and accepted
◦ It is utilized by the school or procuring entity in the
discharge of its duties
◦ Disposed.
Since disposal involves values that may be received and can
contribute to the cost of renewal, it involves deciding when
to dispose of a certain item and may involve health and
safety standard issues. It has to be regulated and managed
as provided for by the Act and Regulations

5/23/2017 48
 Unserviceable
 Obsolete
 Surplus

Authority to Dispose
 The principal shall be primarily responsible for
ensuring the school fulfils its obligations under the
Act and Regulations and PPOA manual
 The user department shall have the responsibility
of identification of items to be disposed of while
the disposal committee shall recommend the
disposal including the disposal method

5/23/2017 49
 The principal in consultation with the BOM has the
final authority of accepting or rejecting the
recommendations of the disposal committee.
 Where items become unserviceable for reasons

other than normal wear and tear such as through


accidents or expiry the set procedure for handling
losses shall be followed before the disposal
process.
 Obsolescence should be avoided by schools by

disposal of items before they become obsolete.


 The cause of having excess surplus items in the

stores shall also require to be investigated and


justified before disposal process.
5/23/2017 50
 The head of end user department and the head of stores shall
identify the items which are due for disposal.
 The list of all items identified shall be submitted to the principal.
These submissions shall form the basis of the annual disposal plan.
 Contents of the plan shall include;
◦ Detailed breakdown of the stores, assets and equipments to be
disposed of
◦ Schedule of the disposal
◦ Indication of the justification for disposal
◦ Estimate of the value of each store, asset or equipment
◦ Reference to the asset register or records of the stores
◦ Indication of the envisaged method of disposal
◦ Indication of whether the disposal will be managed by the
school or any special agency
◦ Indication of the resource available for managing the disposal.

5/23/2017 51
 Methods of disposal include; sec 165
◦ Transfer to another public entity
◦ Sale by open tender
◦ Sale by public auction
◦ Waste disposal management (Destruction, dumping or
burying)
◦ Trade in

5/23/2017 52
The Act does not provide for a condition of reserve
price when disposal is by sale by open tender or by
public auction. However, schools are encouraged to
apply reserve price where it is found necessary to
ensure a fair price is achieved.
Under the circumstances care must be taken in the
establishment of reserve prices.
Where disposal is by public auction, the auctions
must be by registered auctioneers and the rates
charged shall be those approved by the regulating
authority.

5/23/2017 53
 The disposal committee should be responsible for the
evaluation of the items indicated in the disposal plan.
 Where the school has no capacity to value the items

for disposal, it may use the services of an evaluation


agent
 The school should therefore ensure that sufficient

budgets provision are made to meet the costs of


valuation as part of its disposal plan.

5/23/2017 54
 The school should award the disposal proceedings in
compliance with the procedures described for each
disposal method
 No disposal should be awarded without due process

of the disposal procedures


 Where disposal is by open tender, the contracts shall

be awarded by the tender committee irrespective of


the value.

5/23/2017 55
 Inviting bids through the publication of an announcement of
tendering proceedings at least once in a newspaper of
national wide circulation
 Issue and sale of bidding documents (issue an official

receipt)
 Deposits for items for items on sale- amount should not be

more than two percent of estimated value of the stores,


assets or equipment.
 Site visits for the bidders to make their own evaluation of

price
 Receiving bids through tender box or appointed staff –

bidding period is 21 days for national tenders


 Bid closing- on the date and time of deadline as stated in the

bidding document 5/23/2017 56


 Public opening of the bids- managed by the disposal
committee through a bid opening committee
appointed by the disposal committee
 Opening shall not be later than two hours after the
deadline of submission.
 Evaluation of bids by the evaluation committee
 Evaluation report recommendations
 Contract award- the winner shall be given a period of
14 days from the date of notification within which to
pay and collect the items failure to which the contract
award shall lapse. He is deemed to forfeit the deposit
and the items shall be offered to the next highest
bidder.
5/23/2017 57
 The auctioneers shall be appointed through the public
procurement process.
 Bids should be invited through the publication of an auction
sale.
 The invitation should be in the printed media, in at least one
daily newspaper of wide enough circulation
 No prequalification may be conducted for disposing of
stores, asset or equipments under this method.
 The school should prepare an auction list containing all
items to be auctioned.
 This list should provide bidders with all the information they
require in order to participate with sufficient information in
the auction sale. 5/23/2017 58
 The notice period should start on the date of the first
publication of the announcement and should end on
the date of the auction sale.
 The auction should be conducted professionally with
all participating bidders being given chance to bid up
to the time the highest bidder is determined.
 The auction deposit shall not exceed 1% of the total
cost of the estimated cost of auction item or lot.
 A list of winning bidders per item/lot should be kept by
both auctioneers and the school staff for tallying and
signing.
 Winners shall be given 14 days to pay and collect the
items failure to which the second highest bidder shall
be offered.
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◦ Transfer to another public entity method of disposal shall
apply only when a school may dispose of stores, assets or
equipment to another procuring entity which should always be
a public entity as defined by sec3 of the Act.
◦ The transfer may be as a result of a request by the receiving
entity or the proposal by a school.
◦ The transfer should be justified by the disposal committee
when preparing the disposal recommendations to the
accounting officer.
◦ The justification should emanate from the need of the school
to dispose of the stores, assets or equipment.
◦ The receiving entity may pay an agreed amount of money for
the items or may be issued with the items free of charge.
◦ Any instructions issued by PPOA must be followed.

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 Where the transfer is free of charge, the approval
of the accounting officer and the BOM shall be
adequate and the approval of the tender
committee shall not be required.
 Where the transfer is subject to payment of any

money, the transfer shall be effected only after the


money has been paid by the receiving entity and
subject to approval by the tender committee.

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A school that conducts disposal using the destruction,
dumping or burying method should be cautious of the fact
that there are other laws regarding safety and health to be
observed in the disposal.
 Justification should be done by the disposal committee
 The disposal committee should conduct evaluation to
determine if the school is capable of disposing of the
stores, assets or equipment itself or if it should seek the
assistance of an agent or contract a qualified entity.
 The committee should determine if the destruction,
dumping or burying method presents a risk of non
compliance to public health and safety and environmental
protection laws and standards.

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 The disposal committee should conduct a
financial evaluation and comparison to determine
if the destruction, dumping or burying method is
the most economical method and efficient use of
public funds.
 An evaluation of cost benefit analysis should be

performed to assess; transaction costs, costs of


destruction, benefits to the school, potential
disruption of public service, other costs such as
health and environmental costs, any other
considerations that may inform the decision on
disposal. 5/23/2017 63
 The school should ensure that they have complied
with all relevant requirements prior to initiating
disposal procedures in accordance with this part
including disposal through trade in by the tender
committee
 All trade- in should be justified by the disposal
committee
 The justification should emanate from the
combination of the need of the school to dispose of
the stores, assets or equipment and of a disposal
requirement where the store, assets or equipment
and the immediate need for replacement.
5/23/2017 64
 The disposal of the asset shall be a means for the
school to obtain a discount as part of a disposal
requirement.
 Specific economic and financial analysis may be
required to demonstrate the advantage of the transfer
compared to public tender disposal.
 A disposal requirement executed using the trade in
method should always link directly to a procurement
requirement
 A trade in may be initiated and negotiated with the
selected bidder as a direct procurement subject to
justification and approval by the tender committee.

5/23/2017 65
 It may also be opened to all bidders participating
in the procurement in which case the bidders shall
quote the value of the item to be traded in.
 Where direct procurement is used, the value of the
item to be traded in shall be negotiated by the
parties.
 The disposal committee should conduct a
financial evaluation and comparison to determine
if the trade in method is the most economical
method and if it secures value for money and
efficient use of public funds.

5/23/2017 66
 Anevaluation of the costs and benefits of the trade in
should be performed to assess;
◦ Costs of trade in if different from procurement requirement
transaction costs,
◦ Transaction costs without trade in, such as sales
◦ Comparison of the estimated sale value of the assets with
the estimated discount as part of the procurement
requirement
◦ Any other considerations that may inform the decision of the
disposal committee to ensure value for money and efficiency
in the use of public funds.

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 The school may establish a reserve price below which
the asset, stores or equipment shall not be disposed.
 Such price should shall be disclosed to the bidder(s).
 If the price offered is below the reserve price, the
school can choose to award the procurement contract
at full price and retain the trade in item.
 The school may also choose to proceed to direct
negotiations with the selected bidders on the value of
the trade in item subject to approval by the tender
committee.
 The school may negotiate with the selected bidder of
the procurement proceedings where the reserve price
is not acceptable.

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 Ifthe negotiations do not result in an agreement, the
school should cancel all disposal proceedings without
cancelling the procurement proceedings subject to
approval by the tender committee.
 The school should prepare a plan for the negotiations
specifying the issues to be negotiated, objectives to be
achieved and to the extent possible quantify the
objectives and set maximum and minimum negotiation
parameters.
 Negotiations should be conducted by a minimum of two
staff of the school who should not commit the school to
any proposed arrangements or agreements, but should
seek approval of the relevant authority , prior to
confirming any agreement reached.
5/23/2017 69
 Staffconducting the negotiations should prepare
minutes of the negotiations which should form
part of the record of the disposal and should
obtain the other party written agreement that they
are true and accurate record of the negotiations
held

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 Schools should document the disposal cycle.
 For each disposal method, the school should
document;
◦ Initiation of disposal requirement i.e., need for disposal,
justification of the disposal method, reference to the
disposal plan.
◦ Selection of the winning candidate securing the best value
for money.
◦ Contract award
◦ Certification of completion of the disposal
◦ Receipt of monies as provided in the disposal documents.

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 The complete disposal cycle
 Establish annual assets and stocks
 Establish needs for disposal
 Appointment of disposal committee
 Plan each individual disposal
 Conduct Auction
 Advertise sale if open tender
 Receive and open bids
 Evaluate bids
 Award contracts
 Notify contract award
 Receive payments
 Administer contract
 Write off the records
 Report and deposit all monies from disposal

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THANK YOU

5/23/2017 73

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