Present Procurement Rules and Regulations (Procurement of Consulting Service)

Chapter 5
Present Procurement Rules and

Regulations (Procurement of
Consulting Service)
Consulting Service
Legal Provision
• A public entity may procure consultancy services from any
person, firm, organization or company in the following
circumstances:
 Any act can’t done by human resource available in the
concerned public entity; or
 Service is required to be obtained from a consultant
under the foreign aid source in accordance with an
agreement with a donor party.
• Procurement of consultancy service shall be made by
fulfilling the procedures stated in Public Procurement Act
2063 and Regulation 2064.`
Consulting Service cont…
Procurement Method
• Direct Procurement : Up to 5 Lakh
• Issuing RFP to consultants contained in standing list of
concerned public entity if available in standing list
: 5 to 20 Lakh
• Through open EOI : Above 20 Lakh
: Above 5 Lakh (if required consultants are
not available in standing list.)
• International EOI : Above 100 million (Generally)
• Through direct negotiation by chief of public entity (Training,
seminar etc.) : Up to 5 Lakh
: Above 5 Lakh (From approval of one
level higher authority)
Basic steps of procurement
• Preparation of cost estimate
• Preparation of TOR
• Preparation of short list by making request of proposals
publicly (EOI)
• Preparation of RFP documents
• Request for proposals
• Opening of technical proposals and evaluation
• Opening of financial proposals and evaluation
• Selection of proponent
• Negotiation with proponent
• Agreement
Cost of Consulting Services
• Remuneration for professional

• Administrative and support staff
• Office running cost
• Reimbursable expenses
• Test, investigation cost
• Equipment and machinery cost
Cost Estimation Consulting Services
• Ministry Norms
• TOR
• Actual cost for similar services in the past in the organization
or in similar organization
• To be mentioned
 Key expert and Remuneration
 Travel cost, Subsistence allowance, office expense,
equipment, reporting, translation, Printing
 Training, workshop, travel and other cost
Terms of Reference (TOR)
• TOR is a written document presenting the purpose and scope
of the work to be done, the methods to be used, the standard
against which performance is to be assessed or, the resources
and time allocated, and the reporting requirements.
• TOR is a selection as well as a communication tool between
the employer and the consultant
• TOR is also a follow up and monitoring tool during the
execution of the contract.
Objectives
• Set boundaries of the services
• What are inputs and outputs are required
7
Terms of Reference (TOR) Preparation
• The public entity shall, for the procurement of consultancy
services, prepare TOR indicating following matters:
 Background and objective of assignment to be performed
by the consultant
 Scope of work of consultant and the assignment to be
performed by the consultant
 Description of existing relevant studies and basic data, if
any
 If the consultants is required to transfer knowledge or skill
to public entity, description thereof
 Payment
Terms of Reference (TOR) Preparation cont…
 If any training is to be provide, the number of employees to be
trained
 Functions and qualifications of key personnel of the consultant
and the estimated time required for the assignment to be
performed by the consultant
 Time for the commencement and completion of assignment by
the consultant
 Description of information, physical facilities and equipment
to be provided by the public entity to the consultant
 Description of reports, data, designs, survey reports etc. to be
submitted by the consultant
Consideration for Preparation of (TOR)

• TOR should be adequate and clear for the understanding of the
assignment and consequently its correct execution.
• TOR should explain the objectives, scope of work, activities,
tasks to be performed, responsibilities of client and consultant,
expected results and deliverables of the assignment.
• TOR should contain sufficient background information on the
assignment to enable consultants to present responsive
proposals.
10
Consideration for Preparation of (TOR) cont..

• The objectives and scope of work should be realistic without
unnecessary requirements and consistent with the available
budget.
• TOR should take into account the organization, technical
expertise and the institutional strength of the client.
To be remembered
• Not to be too detailed to make inflexible
• Clear responsibility of client and consultants
• Consistent with budget
11
Typical TOR contents

1. Project background
Client detail, project history, rationale of the assignment, need
of consultant, source of fund, issues to be resolved etc.
2. Objective of the assignment
Describe objective (development program, design, institutional
strengthening, supervision of works etc.) in brief.
3. Scope of the work of the assignment
Should detail all the main activities to be carried out by the
consultant and their expected results.
12
Typical TOR contents cont…
4. Capacity building and transfer of knowledge
If capacity building and transfer of knowledge is specific
objective of the service provide specific details on
requirements
5. Training requirement
Specify in detail the type of training required and numbers to
be trained.
6. Required competencies of the consultancy
Specify key staff requirements, their qualifications, functions
and staff inputs (estimate only).
13
Typical TOR contents cont…
7. Time for commencement and completion
Specify expected time of commencement and completion.
8. Facilities provided by the client
Information, data, report, computer, vehicles, office space,
equipments etc.
9. Reporting requirements
Specify reports to be submitted by the consultants and their
schedule.
10. Institutional and organization arrangement
Organization and role of individuals involved.
14
Preparation of shortlist (By inviting LOI)
• For values more than 2 million, the public entity shall publish
a notice inviting Expression of Interest (EOI) also called
Letter of Intent (LOI)
• For consultancy service of greater than 100 million rupees,
generally international letter of intent is invited
• The notice, which shall be published giving a period of at least
15 days in a national newspaper of national inviting the letter
of intent, shall indicate the following matters.
 Name and address of public entity
 General description of the proposed assignment
 Source of funding
Preparation of shortlist (By inviting LOI) cont…
 Qualification of consultant submitting LOI
 If the consultant submitting LOI is firm or company
• A profile of the firm or company, its organization and staffing
• If two or more firms or companies are to provide consultancy
service as joint venture, the names, addresses, profiles of such
firms or companies name of lead firm or company
• Details of experience of similar assignments undertaken in the
previous seven years and their locations
• Bio data of key human resources to be involved in the proposed
assignment.
 In case of an individual consultant, details of experience of
similar assignment in the previous four years and their
locations and his or her bio-data.
 Estimated time required for the completion of the proposed
assignment.
 Statement that only shortlisted persons, firms, organizations,
or company shall be invited to submit proposals on
consultancy service procurement.
 Document required to be submitted by the consultants
submitting the LOI
 Instruction for preparation of LOI and deadline and place for
submission of LOI.
 Contact address of public entity and contact person.
• In inviting international level LOI approval from one level
higher authority is required
• The public entity shall select the consultant submitting LOI by
making evaluation of qualification, experience and capacity
of the consultants.
• In selecting international consultant submitting LOI, the public
entity shall make selection of firms or companies including
different nationalities, background and having local agent.
• A renowned consultant who did not submit LOI may be
included in shortlist after making contact with such consultant.
• If at least three consultants (required 3 to 6) submitting LOI
can’t be selected, the public entity shall re-publish a notice
inviting LOI.
• If even after publishing notice second time, number of
consultant selected are less than three, the list including only
the selected consultants submitting the LOI may be
maintained.
• The public entity shall give information to all consultants
submitting LOI about the shortlist.
Evaluation criteria for short listing
Sample ranking criteria [out of 100 score]
1) Experience
• General experience of the consultants in related field
[weightage: 20 % to 30 %]
• Experience of working in similar geographic area
[Weightage: 0 % to 15 %]
• Specific experience of consultants in assignment related
project
20
Evaluation criteria for short listing cont…
Sample ranking criteria [out of 100 score] cont…
2. Qualification
• Professional employees of the consultants (only assignment
related experts to be considered)
3) Capacity
• Average annual turnover of the consultants for the last five
years (Maximum 1.5 times the cost estimate)
• Equipment and facilities
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Soliciting proposal
• After preparing shortlist of consulting firms, a public entity
shall send request for proposal (RFP), at free of cost, to the
proponents that are included in shortlist and request for
proposal from them by giving them a period of at least 15
days for consultancy service of up to 2 million and at least 30
days for consultancy service greater than 2 million.
• Statements that have to be stated in RFP document:
 Name and address of public entity
 Nature of services to be procured, time and place when and
where the services are to be provided, TOR of services,
task to be completed and expected result
 Instruction for proponents to prepare proposals
Soliciting proposal cont…
 Requirement that the technical and financial proposals have to be
sealed in separate envelops, each of which has to clearly indicate
the proposal inside it and that both envelopes have then to be sealed
in a separate envelope and that the required services have to be
mentioned thereon;
 Technical and financial evaluation weightage;
 The criteria and weightage for the evaluation and comparison of
proposals;
 Conditions of the procurement contract;
 Deadline and place for submission of proposal.
 The place, date and time for the submission of proposal
 Procedure for the selection of proposals;
 Information that proposals are not entertained in the event of
conflict of interest or information relating to legal action for
fraud or corruption;
 Provision that any bidder may make an application for review,
against any error or decision made by the public entity in
carrying out procurement proceedings;
 Letter of invitation to proposals;
 Requirement that the key human resources proposed by the
proponent certify that their respective updated bio-data are
accurate and complete;
 Matter that financial proposals shall be opened only after
evaluation of technical proposals;
 Minimum pass score to be obtained by proponent on the
technical proposal;
 Whether the proponent is allowed to propose a separate action
plan of its own and human resources for the concerned
assignment;
 Whether the proponent is allowed to comment on the TOR and
 Source of finance required for the proposed assignment
• While stating criteria of evaluation of technical proposal, following
criteria, all or any as per requirement, have to be stated:
 The experience of consultant in the task to be performed by
consultants;
 The quality of proposed methodology for the performance of the
task by consultants;
 The qualification of the proposed core human resource;
 Provision of knowledge and technology transfer;
 In the case of international proposals, the details of the core
Nepalese human resource proposed for the performance of the
task.
• While setting forth, in the RFP, the method for the selection of
proposals one of the following methods shall be stated:
 Quality and Cost based Selection (QCBS)
 Quality Based Selection (QBS)
 Selection under a Fixed Budget (FBS)
 Least-Cost Selection (LCS)
• For consulting services of exceptionally complex or such services
are likely to have considerable impact on national economy or
future project, the selection of proposals may be made exclusively
on the basis of QBS.
• Score weight of proposals to be stated as per follows:
 For QCBS depending upon nature and complexity of work,
the weight shall be determined in such a manner that the
total weight of technical and financial proposals be one
hundred; out of total score, the total weight for technical
proposal should be in the range of 70 to 90 and that for
financial proposal should be in the range of 30 to 10.
 For QBS, FBS and LCS, the weight for technical proposal
should be 100.
• Incase of fixed budget system, while inviting proposal for
selection of consultant, available budget shall be indicated in
the proposal.
• While indicating weights in documents relating to proposal for
the selection of consultant, the public entity shall indicate
appropriate weights according to nature and complexity of the
assignment that such weight do not exceed the ceiling of the
weights as follows:
 Consultant’s specific experience
: up to 25 % of total score
 Methodology of performance and responsiveness to the TOR
: 20 to 35 % of total score
 Qualification and experience of key human resources
: 30 to 60 % of total score

 Technology transfer or training
: up to 10 % of total mark
 Participation of native human resources (For international
proposal only)
: up to 10 % of total mark
Total score = 100
• All evaluation criteria stated above shall be divided into three
sub criteria and weights shall also be determined for the same.
Opening of proposals
• After expiry of deadline for the submission of proposals, the
outer envelopes of the proposals received from the proponents
shall be opened and the sealed envelopes of technical and
financial proposals shall be set aside.
• Out of the proposals set aside, the technical proposals shall be
opened first, and the envelopes of financial proposals shall be
kept apart unopened.
• The envelopes of financial proposals set aside shall be opened
only after making evaluation of technical proposals.
Opening of proposals cont…
• The public entity shall open the proposal in presence of
proponents or their agents as far as possible but there is no bar for
opening the proposal even if there is absence of proponents or
their agents.
• While opening technical proposal, following matters are read out
and recognizance deed is prepared thereof:
 Name and address of the proponent,
 Whether the proposal bears the signature of proponent or its
agent or not.
 If the documents relating to proposal contain any correction or
overwriting, whether it is initialed by the proponent or its
agent or not.
Evaluation of technical proposals:
• The technical proposal shall be evaluated in accordance with the
evaluation criteria set forth in the RFP.
• Each member of the evaluation committee shall individually
evaluate it based on the criteria set and determine the score gained
by the proponent.
• The committee shall draw the average score secured by such
proponent by calculating score given by each member of the
committee.
• The evaluation committee shall prepare a list of proponents who
have gained pass score.
• The list shall be prepared in order of the proponents who have
secured highest scores.
Evaluation of technical proposals cont…
• The evaluation committee shall not open financial proposals until
the evaluation of technical proposal is completed.
• The financial proposals of only the proponents included in the
pass list shall be opened.
• The proposals of the proponents who can not be included in the
pass list shall be returned unopened to the concerned proponents.
Evaluation Report on quality of proposal:
The report shall indicate the following matters:
• Name and address of proponents,
Evaluation report on quality of proposal cont…
• Whether proposals have signed by proponents or their agents or
not,
• Whether documents supporting that proponents are qualified to
submit proposals as per laws have been submitted or not,
• In event of requirement of a joint venture agreement, whether
such agreement has been submitted or not,
• Whether proposals are complete in conformity with the directions
set forth in the documents relating to proposal for proponents or
not,
• Relative strengths, weakness of and results of evaluation of each
proposal.
Notice to be given to proponents selected
• The public entity shall give a notice indicating the place, date and
time for opening the financial proposals and asking them to
present at that date and time to the proponents who have been
included in the pass list.
• In giving notice to the proponents, period of at least seven days
and that of at least fifteen days shall be given in the case of a
domestic proposal and an international proposal, respectively.
• The financial proposals of those proponents who fail to secure the
pass mark shall be returned them, accompanied by a notice setting
out the reason why their technical proposal have not been
selected.
Opening of financial proposals
• The evaluation committee shall open the envelop of financial
proposals in presence of the proponents or their agents but there is
no bar for opening the proposal even if there is absence of
proponents or their agents.
• After opening the envelop of financial proposal, the evaluation
committee shall announce the name of such proponent, the score
secured by the proponent in technical proposal and the service fee
proposed in the financial proposal and prepare a recognizance
deed setting out following matters:
 Name and address of proponent,
 Proposed service fee,
Opening of financial proposals cont…
 If the proposal offers any discount in the proposed service fee,
contents thereof,
 If there is discrepancy between figures and words, details thereof,
 Whether the financial proposal bears the signature of the
proponent or its agent or not,
 Where an matter or content of the financial proposal is corrected
or overwritten, whether such correction or overwriting has be
initialed by the proponent or its agent or not, and amount and
contents so corrected or overwritten
 Such other such necessary matters as per required
Evaluation of financial proposals
• Expect as otherwise mentioned in the documents relating to
proposal, for the purpose of evaluation of a financial proposal, the
service fee quoted in the proposal shall be deemed to include the
taxes leviable on the proponent under the prevailing laws other
than value added tax and reimbursable expenses such as travel of
consultant, translation of the documents concerned, report
printing or overhead costs.
• If, in evaluating the financial proposal of each proponent, the
evaluation committee finds any arithmetical error in the proposal,
the public entity may rectify such error;
Evaluation of financial proposals cont…
• If, in so rectifying the error, the unit rate and total amount differ,
the unit rate shall prevail and the total amount shall be corrected
according to that rate. In the event of such rectification of error,
information thereof shall be given to the concerned proponent.
• If there is a divergence between the figure and words of the
amount quoted by a proponent in the financial proposal, the
amount set in the words shall prevail.
• If any proponent offers any concession on the proposed quoted
price, the evaluation committee shall adjust the amount so
proposed for concession.
• After evaluation a list of the set quoted prices of all proponents
shall be prepared.
Selection of proponent
• Where the quality and cost based selection (QCBS) is adopted
for selection of proposal, the evaluation committee shall select a
successful proponent by making technical and financial
proposal as follows:
 The figure of quotient to be derived by dividing the figure,
which is drawn by multiplying the secured marks of the
technical proposal of the proponent to be evaluated with the
weight-age of marks allocated for the technical proposal,
with one hundred shall be the net secured marks of the
technical proposal.
Selection of proponent cont…
 The figure quotient to be derived by dividing the figure, which is
drawn by multiplying the lowest quoted price, out of the
proposals which have been successful upon the evaluation of
technical proposal with the weight-age of score allocated for the
financial proposal, with the quoted price of the proponent to be
evaluated shall be the net secured marks of the financial proposal.
 As a proponent who secures the highest marks on the basis of a
combined evaluation by adding the net secured marks of the
financial proposal and that of the technical proposal shall be
successful, that proponent shall be selected.
• Example
 Total weight-age of marks allocated for the technical proposal
= 75
 Total weight-age of marks allocated for the financial proposal
= 25
 Pass mark on technical proposal = 70
 Marks secured in technical proposal by A, B, C
A = 90
B = 92
C = 88
 Price quoted in financial proposal by A, B, C
 Price quoted in financial proposal by A, B, C
A = 500,000
B = 550,000
C = 480,000 (Lowest quoted price)
 Marks secured on technical proposal
A = 90 * 75/100 = 67.5
B = 92 * 75/100 = 69.0
C = 88 * 75/100 = 66.0
 Marks secured on financial proposal
A = 480,000 * 25/500,000 = 24.0
B = 480,000 * 25/550,000 = 21.8
C = 480,000 * 25/480,000 = 25.0
 Combined marks obtained
A = 67.5 + 24.0 = 91.5 ( 1st )
B = 69.0 + 21.8 = 90.8 ( 3rd )
C = 66.0 + 25.0 = 91.0 ( 2nd )
‘A’ is selected if QCBS method is adopted
• Where QBS method is adopted, the proponent having highest
score in technical proposal would be selected i.e. ‘B’ would be
selected
• Where FBS method is adopted, the proponent having highest
score in technical proposal and quoted amount is within available
budget would be selected. E.g. if budget limitation is 500,000,
then A would be selected.
• Where LCS method is adopted, the proponent who quote lowest
amount among qualified proponents would be selected i.e. ‘C’
would be selected.
Negotiation
• Negotiation may be held with proponent on TOR and scope of
proposed services, progress reports and facilities to be provided
by the public entity.
• Except in QBS method of selection, the remuneration of
professionals shall not be subject to negotiation in respect of
financial proposal but expenditures of reimbursable nature may
be subjected to negotiation.
• If negotiations are to be held with the proponent selected, the
public entity shall give a notice indicating the date, time and place
for negotiations.
Negotiation cont…
• When the negotiation held fails to result in an agreement
acceptable to both public entity and the proponent, the public
entity shall negotiate with the next proponent who have secured
the second highest mark and so on…
Agreement
• The proposal of the proponent agreed upon in the negotiation held
shall be selected for acceptance.
• No later than 7 days after selection of proposal, the public entity
shall give a notice on the intent of acceptance of proposal so
selected to concerned proponent and other proponents.
• If any proponent does not make application with complaint
against decision within a period of seven days the proposal shall
be accepted.
Agreement cont…
• A notice shall be communicated to the proponent to enter into
contract within 15 days.
• Where the proponent comes to enter into the contract within 15
days, the proponent shall sign the contract.
• Where the proponent fails to sign such contract, the public entity
shall negotiate and enter into contract with other proponent who
have secured the second highest marks and so on... But in case of
LCS method, public entity shall negotiate and enter into contract
with other proponent who have second lowest quoted amount and
so on...
• If selected proponent disagrees to enter into contract, PPMO may
blacklist the proponent on request of public entity.
 Rejection of proposals and cancellation of procurement
proceedings
• A public entity may reject all proposals or cancel the procurement
proceedings in following circumstances:
 When all proposals received are not substantially responsive
in accordance with TOR.
 Where the cost of proponent of the selected proponent is
substantially above cost estimate and available budget.
 Where the consultancy service are no longer required
 Where it is proved that the proponent has made proposal by
way of mutual collusion. However the proposal of a
proponent who is not engaged in such collusion may be
entertained.
 Matters to be set down in directions for preparation of the
proposal
• The public entity shall set down following matters in the instruction
for proponents to prepare proposals
 Standard form of technical and financial proposal,
 The manner of preparation and submission of proposal,
 Phasing of assignment and likelihood of follow-up assignment,
 Where the proponents are to obtain any information as to the
documents relating to proposals, the procedure for obtaining such
information,
 Whether the consultant is allowed to sub-contract any portion of the
proposed assignment,
 Information about notice, service, equipment to be provided by
public entity,
 Matters to be set down in directions for preparation of the
proposal cont…
 Statement whether a pre-proposal conference will be held or not,
 Validity period of proposal,
 Information as to tax to be paid by the proponent and its human
resource and other authentic body which the proponent should
contact to get more information,
 Language of proposal,
 Procedures for modification of the document relating to proposal
by the public entity,
 Manner of submission of the proposal,
 Manner of opening of proposal,
 Conditions relating to confidentiality etc…
Standard Request for Proposal (RFP)
52
Request for Proposal (RFP) cont…
The RFP is issued to all shortlisted firms & it includes:

• Letter of Invitation
• Instructions to Consultants
• Data Sheet
• Technical Proposal- standard Forms
• Financial Proposal- Standard Forms
• Terms of Reference (TOR)
• Standard Forms of Contract
53
Letter for invitation

• Project Details
• Source of Fund
• List of short-listed firms
• Selection method
• Client details;
• Date time and address for submission
• Request for confirmation of receipt of EOI and intention to
submit proposal
54
Instructions to Consultants
• Introduction
• Fraud and Corruption
• Conflict of interest
• Proposal Validity
• Clarification & amendment of RFP doc.
• Preparation of proposal (Technical &Financial)
• Submission, receipt and opening of proposal
• Evaluation of proposals (Technical &Financial),
• Negotiations and award of contract
55
Instruction to consultant (Data sheet)
• Client details ; method of selection;
• Pre-proposal conference;
• Language; permitted associations;
• Professional staff information;
• Payment currency; copies of proposal;
• Evaluation criteria;
• Submission & opening of proposal;
• Evaluation weight age;
• Formula for financial score
• Address for negotiation & Expected date of start
56
Standard Forms
1. Technical Proposal
• Technical proposal Submission Form
• Consultant’s Organization and Experience
• Comments /Suggestions on TOR ,Counterpart Staff &
Facilities provided by the Client
• Approach ,methodology , and Work Plan
• Team Composition/Task Assignment/Summary CV
information
• Curriculum Vitae format
• Personnel Schedule
• Work Schedule
57
Standard Forms
2. Financial Proposal
• Financial proposal Submission Form
• Summary of Costs
• Breakdown of Remuneration
• Breakdown of Reimbursable Expenses
• Acknowledgement of Compliance
• Appendix: instructions for preparation of the financial
proposal
58
Evaluation Criteria
1. Purpose of evaluation criteria
• Fixes measures for evaluation proposal
• Reference to Committee members for evaluation of proposals;
so should not be ambiguous.
• Should facilitate ease in evaluation
• Ensures fixed selection criteria that will not be influenced by
the proposals received
• Ensures short listed consultants that the evaluation process is
fair.
59
Standard Form of Contract
• Lump Sum Contracts : Lump sum payment
• Time Based Contracts : Payment based on time
• Performance Based Fee Paying Contracts : Agreement based on
the condition that the consultant shall provide his services agreed
in the contract when called for as required
• Percentage Contracts : Inspection of goods, architect's services,
supervision or monitoring service
• Indefinite Delivery Contracts : when specific work load
unknown but services are required
60
Contract
General Contents:
i. Form of Contract
ii. General Conditions of Contract
iii. Special Conditions of Contract
iv. Appendices
• Description of Services; Reporting Requirement
• Personnel Schedule
• Cost Estimates in Foreign Currency/ Local Currency
• Services ,Equipment to be provided by the Client
• Form of Advance Payment Bank Guarantee
• Dispute Notification Form
• Agreed minutes of negotiation
• Technical proposal/ Methodology ? 61
Any Question?

Present Procurement Rules and Regulations (Procurement of Consulting Service)

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Present Procurement Rules and Regulations (Procurement of Consulting Service)

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Chapter 5

Present Procurement Rules and

• Remuneration for professional

Consideration for Preparation of (TOR)

Consideration for Preparation of (TOR) cont..

Typical TOR contents

Soliciting proposal cont…

The RFP is issued to all shortlisted firms & it includes:

Letter for invitation

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