Documents - Training Modules - General - Procurement Overview. Module C. Participant Book. 27.11.09

District Participatory Planning and Budgeting Process
Procurement Overview Module C Training Material

(Step 4: Implement Work Plan and Budget)
Participant Book
November 2009
SUPPORT PROVIDED BY UNITED NATIONS SOMALIA
Procurement Overview Module C Participant Book
Table of Contents
List of Abbreviations .......................................................................................................4 INTRODUCTION TO THE TRAINING ..................................................................................5 INTRODUCTION TO THE TRAINING ..................................................................................5 Training Overview ..........................................................................................................7 GETTING STARTED...................................................................................................................10 GETTING STARTED...................................................................................................................10 UNIT 1: INTRODUCTION TO PROCUREMENT.................................................................11 UNIT 1: INTRODUCTION TO PROCUREMENT.................................................................11 OVERVIEW OF IMPLEMENTATION AND PROCUREMENT..........................................................................12 OVERVIEW OF IMPLEMENTATION AND PROCUREMENT..........................................................................12 1.1.3 Step 4 in the planning and budgeting guidelines..................................................14 WHAT IS PROCUREMENT?...........................................................................................................18 WHAT IS PROCUREMENT?...........................................................................................................18 1.2.1 What is procurement?..........................................................................................18 1.2.2 Why is procurement important to District Councils? ............................................19 1.2.3 When is a procurement process needed?............................................................19 1.2.4 What is the role of the District Council in procurement?.......................................20 1.2.5 Glossary...............................................................................................................21 PROCUREMENT PRINCIPLES AND ETHICAL CONDUCT........................................................................22 PROCUREMENT PRINCIPLES AND ETHICAL CONDUCT........................................................................22 1.3.1 What are public procurement principles?..............................................................22 1.3.2 Explaining the procurement principles..................................................................22 1.3.3 Ethics in public procurement.................................................................................25 1.3.4 The Code of Ethics...............................................................................................26 1.3.5 What is Corruption? .............................................................................................27 1.3.6 Preventing Corrupt Behaviour..............................................................................28 UNIT 2: PROCUREMENT AND CONTRACT MANAGEMENT...........................................30 UNIT 2: PROCUREMENT AND CONTRACT MANAGEMENT...........................................30 ROLES AND RESPONSIBILITIES.....................................................................................................31 ROLES AND RESPONSIBILITIES.....................................................................................................31 2.1.1 What are the main Roles and Responsibilities in district local government procurement? ...............................................................................................................31 2.1.2 The District Tender Committee.............................................................................34 PROCUREMENT METHODS..........................................................................................................36 PROCUREMENT METHODS..........................................................................................................36 2.2.1 What are the main procurement methods available to districts?...........................36 2.2.2 Overview of Procurement Methods.......................................................................37 2.2.3 Overview of the Open Competitive Bidding Process.............................................40 CONTRACTS AND CONTRACT MANAGEMENT...................................................................................44 CONTRACTS AND CONTRACT MANAGEMENT...................................................................................44
2.3.1 What is a contract? ..............................................................................................44 2.3.2 What are the obligations of the contracting parties?.............................................44 2.3.3 How are contract documents prepared and signed?............................................45 2.3.4 What is involved in Contract Management? .........................................................46 2.3.5 Overview of the steps in Contracting and Contract Management.........................47 GLOSSARY........................................................................................................................49 GLOSSARY........................................................................................................................49 ACTIVITY SHEETS.............................................................................................................50 ACTIVITY SHEETS.............................................................................................................50 Agreement.....................................................................................................................56
List of Abbreviations CDC ICB JPLG LPO MOI/MOILG NCB RFQ USD VC Community Development Committee International Competitive Bidding Joint Program for Local Governance Local Purchase Order Ministry of Interior National Competitive Bidding Request for Quotations United States Dollar Village Council
Introduction to the training

This Participant Book is designed to assist you as a District Councillor to develop an understanding of local government procurement, so that your District Council can successfully implement its district priority projects. This training has been specifically developed for District Councillors and other non-technical personnel who are not involved in the detailed procurement process, but who need to have a general idea of procurement as it relates to District Councils. The purpose of this training is to ensure that the districts implement equitable basic service delivery in a participatory, accountable and transparent manner. Before the training starts, you will receive 3 documents: 1. The Participant Book 2. Local Government Procurement Guidelines (pls confirm) 3. Bidding Documents and Bid Opening and Evaluation Documents (pls confirm) Also mention that they should bring their copy of the District Planning and Budgeting Guidelines from earlier trainings? This is the Participant Book with all the details of the training. You will see that the Participant Book is divided into Units and each Unit contains a number of Sessions. These training materials will be subject to ongoing review and improvement, so your comments and suggestions will be very helpful, to ensure that the materials are as useful and relevant as possible. You will find the following symbols in this Participant Book: Activity Sheet Symbol:
Some of the activities require you to complete or refer to an Activity Sheet. When you
see this symbol, you need to use the corresponding Activity Sheet at the end of your Participant Book. Book Symbol:
A book symbol tells you where you can identify relevant information in reference documents, such as the planning and budgeting guidelines, the local government procurement guidelines and the Somaliland District Bidding Documents and Somaliland District Bid Opening and Evaluation Documents. (pls confirm whether they will receive these docs) Eye Symbol:
The eye symbol tells you that there is a table, diagram or example to look at.
Hand Symbol:
The hand symbol indicates a point that is important to note.
Question Symbol:
This symbol indicates some questions for discussion or reflection.

Talking Symbol:
This symbol indicates there is an activity to participate in.
Glossary: You will also see that some words in this Participant Book have been written in bold. These words may be unfamiliar, so they are explained in a glossary, which you will find at the end of your Participant Book. Text Boxes:
Sometimes you will see some writing in a box with a symbol like this. This means that the information in the box is important and you should make sure that you understand it before you continue. If you do not understand, please ask your trainer.
Shaded Box: Other important information is put into a shaded box like this, so that you will notice and read it.
Training Overview This Procurement Overview Training (Module C) is one in a series of modules that you will participate in, as indicated in the italicised text below. Other modules are shown as follows: Table I.1 Overview of Training Modules
Module
Induction Module
Relevant step in planning and budgeting guidelines
Content
Roles and responsibilities of District Councils, Councillors and staff How to prepare a District Development Framework How to prepare a District Budget Financial Management procedures How to prepare the District Annual Work Plan and Budget Covers all aspects of project management, from project design through to implementation. Covers local government procurement concepts and processes in detail.
n/a separate Induction Module document produced by MOI to guide this training. Step 1: District Development Framework Step 2: Forecast district resources and assess budgets
Planning Module Budgeting and Financial Management Module Investment Programming Module Implementation and Procurement Module A Project Management Implementation and Procurement Module B Local Government Procurement Implementation and Procurement Module C Procurement Overview Monitoring and Evaluation
Step 3: Prepare District Annual Work Plan and Budget Step 4: Implement Work Plan and budget
Step 4: Implement Work Plan and budget
Step 4: Implement Work Plan and budget
Gives an overview of the concept of procurement and some general understanding of what is involved in procurement for district projects. How to conduct monitoring and evaluation of the District Development Plan Framework and its projects.
Step 5: Monitoring and Evaluation
Table I.2 Procurement Overview Training, Module C - Training Overview
Unit
Session Title
Content
Introductions, welcome etc Aims and Objectives Expectations and Ground Rules Overview of Step 4 in the district planning and budgeting process and related tasks. Definition of procurement. Explore why procurement is important for district projects. Introduce the role of the District Council in the procurement process. Explain some principles of public procurement. Explore the concept of ethical conduct and how it is relevant to procurement. Outline the roles and responsibilities of key bodies and individuals in procurement. Introduce the different procurement methods available to districts. Identify when it is appropriate to use the different procurement methods. Give overview of the steps involved in open competitive bidding. Understand the purpose and importance of contracts. Become familiar with the relevant contract documents for districts. Outline the different activities in contract management.
Introductory Session: Getting Started 30 minutes
Unit 1: Introduction to Procurement
Session 1.1: Overview of Procurement and Implementation 1 hour Session 1.2: What is procurement? 1 hour
Session 1.3: Principles of procurement and ethical conduct 1.5 hours Unit 2: Procurement and Contract Management Session 2.1: Roles and Responsibilities 1.5 hours Session 2.2: Procurement Methods 1.5 hours
Session 2.3: Contracts and Contract Management 1.5 hours
Evaluation of Training 30 minutes
Activities to gauge participants views on the completed training.
Total training time = approximately 9 hours (2 days)
Table I.3 Indicative Timetable This timetable is a suggested guide to the timing of the 2 day training. Note that the timetable may need to be adjusted during the training, depending on circumstances. Day 1 Time 8am-10am
Session Introductory Session: Getting Started (30 mins) Session 1.1: Overview of Implementation and Procurement (1 hour) Session 1.2: What is procurement? (30 mins)
10-10.30am 10.30am 10.35-12.30pm
Break - Morning tea Energiser Session 1.2: What is procurement? (cont) (30 mins) Session 1.3: Principles of procurement and ethical conduct (1.5 hours)
End of Day 1
Day 2 Time 8am-10am
Session Session 2.1: Roles and Responsibilities (1.5 hours) Session 2.2 Procurement Methods (30 mins)
10-10.30am 10.30am 10.35-12.30pm
Break - Morning tea Energiser Session 2.2 Procurement Methods (1 hour) Session 2.3: Contracts and Contract Management (1.5 hours)
Evaluation Session (30 mins) End of Day 2, End of training
Introductory Session
Getting Started
To create a comfortable and encouraging learning environment. To outline what the training aims to achieve and how this will happen. To provide an overview of the training. To understand participants expectations of the training. To set some agreed ground rules for the training.
Session
Objectives:
In this session you will get to know your trainer and the other participants. You will find out what the training involves and what you are expected to do. Here are some of the things that your trainer might cover in this session: Welcome Introductions Aims and Objectives of the training Training Overview and Documents Expectations and Ground Rules Car Park for questions
Questions for Reflection:

. Why did you come here today? What do you hope to take away from this training?
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Unit 1: Introduction to Procurement
This unit contains the following sessions:

Session 1.1: Overview of Implementation and Procurement Session 1.2: What is procurement? Session 1.3: Principles of procurement and ethical conduct
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Session 1.1
Overview of implementation and procurement
Session
Objectives:
To revisit the District Planning and Budgeting guidelines. To understand where procurement fits into the overall planning and budgeting process. To give an overview of Step 4 in the district planning and budgeting process, including tasks and responsibilities. To identify procurement as one element of Task 4.10.
The procurement process is one part of the overall district planning and budgeting process. In this session we will revisit how procurement fits into this process and what this means for our role as District Councillors.
1.1.1 What are the District Planning and Budgeting Guidelines? The District Planning and Budgeting Guidelines are a set of steps and tasks that outline how District Councils should undertake all their planning and budgeting activities. Each step in the planning and budgeting process has a relevant training module, as you can see in the table below.
Table 1.1: Steps in the guidelines and relevant training modules

Step in the guidelines Step 1. Preparing a District Development Framework A document outlining the 5 year vision and priorities within the district. Step 2. Resource forecasting and budget assessment Compile the best possible information on all financial resources available for the coming year. Step 3. District annual work plan and budget Decide which priorities in the District Development Framework should be funded in the coming year. Step 4. Implement Work Plan and Budget Selected projects are planned and designed in detail. Projects are implemented, using identified Relevant training module Planning Module
Budgeting and Financial Management Module Investment Programming Module Implementation and Procurement Modules Module A Project
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project management, procurement and contract management procedures.
Management Module B Local Government Procurement Module C Procurement Overview
5. Monitoring and Evaluation Monitoring and review of projects to feed back lessons learned into the District Development Framework.
Monitoring and Evaluation
1.1.2 A closer look at the planning and budgeting guidelines
You will need to refer to your District Planning and Budgeting Guidelines to look
at the following diagram and table.
Please look at the following in Section 2: The District Participatory Planning

and Budgeting process an overview in your guidelines. Overview diagram of the participatory planning and budgeting process
SE 1 TP : C M U I Y O S L AIO S O M N C NUT T N T A SS T C N A A D SES E H I L N C N TO A RQ I AI N L E UR E ET MNS D TI T I R S C DVL P E T E EOMN FA E O K R MW R
M N OI G OI R T N A D ES N N LSO S L AN D ER E
D T I T A T I AOY L N I G N B D EI G I R P RI P T R PA N A D U GT S C C N N
SE 2 TP : A SS RSO RE V I A I I Y N SES ES U C A AL B T A D L B D E RQ I E E T U GT E U MN S R
RSO RE ES U C F RC S A D OE AT N BDE U GT SE 5 TP : ET BI H O I O I G YT M SA LS M N R S SE T N U DRA E O I O I G N NET K M N R A D T N E AU T N I H O M N I S V L AI W C M U I E O T T SE 3 TP : P I R I E I TI T R R I S R I S D R PI I E OT S C OT A A S B D E A A AI I Y G INT U GT V I BL L T A SSMN SES E T
I PE E T ML MN WR PA A D OK L N N BDE U GT
D T I T OK I R WR S C SE 4 TP : DT I E PO C DSG W H EA D R JET EI N I L T CM UI I S O MN E T POE TML MNA I N N R J C I PE E T TO A D M N GMN AA E E T PA A D LN N A N ABD E N U L U GT
Table 1: Overview of steps and tasks

Table 1: The district planningand budgeting cycle: Overview of steps, estim ated time input, annual cycle, and responsibilities
S ub -com . E con/F in . Execut ive Secr etar y Ot her S u b- com 's District Cou ncil Tech ni cal d epar tm en t Head ? ? ?
Inpu t d ays
Jan
Feb
Mar
Apr
May Ju n
Jul
Aug Sep Oct Nov Dec
Step1: Developingthe Distric Development Fra wo t me rk

1 .1 1 .2 1 .3 1 .4 1 .5 1 .6 1 .7 1 .8 1 .9 1 .1 0 1 .1 1 1 .1 2 Prepare Distr ict Profile (adjust) Determine national/line-ministry requirements to consider Take stock of any consultation/ planning proc esses already taken place Introduce District Council t o the district planning an budgeting process d Carr y out an awareness raising campaign Do participatory consultation process at village level of their long-term needs and priorities At end of visioning process, select village-based Community Development Committees Prepare draft District Development Framework (in subsequent years review DDF) Carr y out participatory consult ations to get feedback on t he Distr ict Development Framework2 Revise District Development Framework Adopt the District Development Framework Disseminate and publicize the final District Development Framework 10 2 2 1 5 -10 21
1/ 2 ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
5 5 -10 2 1 1
Step2: F cas dis ore t trict resources a ass nd ess budg ts e

2 .1 2 .2 2 .3 2 .4 Conduct national budget conference For ecast revenues and existing budget commitments Initial budget assessment by the District Council Communicate budget forecast to VC/CDCs 1- 2 5 5 1
? ? ? ?
Step3: Preparedistrict annu Work Plan and B al udg et

3 .1 3 .2 3 .3 3 .4 3 .5 3 .6 3 .7 Do f irst selection of priorities to be included in the District annual Work Plan Prepare first budget assessment of the annual Work Plan Prioritise Work Plan interventions within the budget ceiling Finalise annual Work Plan and Budget Present to and discuss with t he VCs/ CDC representatives the final Work Plan and Budget Adopt Work Plan and Bud get Disseminate information on the Work Plan and Bud get to citizens 2 5 2 2 1 1 1
? ? ? ? ? ? ?
Step4: Implement Work plan an Bud t inclu d ge dingd ided p ec rojects

4 .1 4 .2 4 .3 4 .4 4 .5 4 .6 4 .7 4 .8 4 .9 4 .1 0 Decide on modalities and participation in work plan implement ation Consult with VC/ CDCs wh will benefit f rom or be involved in the selected wor k plan interventions o Set up a work group to oversee design, managemen and monitoring of the project or intervention t Design and/or plan the project or intervention in detail Check environmental or social safeguards Prepare detailed cost estimate and financing plan for the project or intervention Prepare operation and maintenance plan Ensure align ment and con sistency with central level requiremen where needed ts Submit docu mentation for any projects funded by ext ernal partners for approval Implement projects or interventions 1 5 -10 1 5 -10 1 2 2 1 1 n.a .
? ? ? ? ?
Step5: Monitoringa evaluation nd

5 .1 5 .2 5 .3 5 .4 5 .5 5 .6 5 .7
1
Set up a monitoring framework for the District Development Framework Collect data to feed into the monitoring framework Do r egular monitor ing and follow-up on work plan and project implementation Prepare progress report on annual work plan and budget out-t urn Submit monit oring result s to MOI f or d iscussion and appr oval Regularly sh are updates on work plan pr ogress and budget outturn with VC/CDCs Present DDF, work plan and budget monitioring results in consultative forum with VC/CDCs
5 -10 n.a . n.a . 5 3 n.a . 1

Foc us sed effor t On- going/r outine
? ? ?
? ? ?
P er distri ct
? ?
P ri mary responsible S ec ondary responsibl e
Facil itator s
M ayor
M OI
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1.1.3 Step 4 in the planning and budgeting guidelines
Step 4 in the Planning and Budgeting Guidelines relates to the implementation of the districts annual work plan, which includes the district priority projects for the year. There are a number of tasks associated with Step 4, most of which involve the District Council. We will go through this table so that you are familiar with all the tasks in Step 4. Procurement activities are part of Step 4, as we will see below in Task 4.10.
Please refer to Step 4 in your copy of the District Planning and Budgeting Guidelines for more detail about each of the tasks outlined below.
Table 1.2: Step 4 tasks and responsibilities

Task Task 4.1 Decide on implementation of projects: which, who, when, where and how? Description The following needs to be determined: Organise projects according to budget size, complexity, technical requirements, size. Decide whether the project will be implemented by the District Council, or delegated to others (private contractors or community based organisations). Identify roles of District Council, VC/CDC and beneficiary/user groups in project planning and monitoring. Who and When? The District Council is responsible for making these decisions. These decisions are made in January.
See Box 4A: Determining a

Community Project in your set of District Planning and Budgeting Guidelines. Task 4.2 Consult with VCs/CDCs Announce and consult with beneficiary VCs/CDCs. Explain the planning and development process and how VCs/CDCs will be involved. Outline what is expected from VCs/CDCs and what they can expect from the District Council level. The following are responsible for this task: District Council Executive Secretary Heads of Technical Departments This task takes place in January.
See Box 4B: Community

Projects in your set of District
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Planning and Budgeting Guidelines. Task 4.3 Set up Project Work Group Each project requires a project work group to oversee the design, management and monitoring of the project. The following people should be on the Project Work Group: Member of the Economic and Finance Sub-Committee. Head of relevant Technical Department. Relevant Technical Officers. At least 2 CDC members representing the beneficiary villages. 2 representatives of community user groups (must be non-CDC). This task takes place in January. Task 4.4 Detailed project design Relevant Technical Department works with the Project Work Group to design the project in detail. This involves the relevant Technical Department Head and the Project Work Group. The project design takes place in February. This task is covered in detail in Module A Project Management. The Economic and Finance SubCommittee is responsible for this task. This task takes place in March. This task is covered in detail in Module A Project Management. Task 4.6 Prepared detailed cost estimate and financing plan This task involves the following: Calculate cost of construction work and apply this to the Bill of Quantities (works projects). Prepare a financing plan for the project, showing any community contributions. The Head of the relevant Technical Department is responsible for this task. The project engineer must conduct the calculations for the works. This task takes place in March. This task is covered in detail in Module A Project Management. Task 4.7 Prepare Operations and Maintenance Prepare a plan which identifies: What Operations and Maintenance activities are needed The Head of the relevant Technical Department is responsible for this task.
See Box 4C: Design and

Management of Community Projects in your set of District Planning and Budgeting Guidelines.
See Box 4D: Technical

Design and Specification in your set of District Planning and Budgeting Guidelines. Task 4.5 Check environmental or social safeguards Check that the project will not have any bad impacts on the environment or people living in the area.
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plan
How much they will cost Who will pay the costs
This task takes place in March. This task is covered in detail in Module A Project Management. The District Mayor is responsible for this task. The MOI is responsible for reviewing and approving the project design. This task takes place in March.
Task 4.8 Ensure alignment and consistency with central level requirements
Submit the project design to MOI for review and approval. MOI may request changes to the project design if it: Conflicts with sector planning. Does not conform to sector technical standards. Results in recurrent costs that have not been agreed to. This applies to projects which are funded by external partners.
Task 4.9 Submit documentation for approval Task 4.10 Implement projects
The Economics and Finance SubCommittee and MOI are responsible for this task. This task takes place in April.
This includes the following: Preparation Procurement Contracting Contract Management Direct participation in project activities Financial management and reporting Asset management
A number of parties have responsibilities for the different elements of Task 4.10. Task 4.10 is carried out over an extended period, which will vary depending on the nature of the project. A table of who is responsible for the various elements of Task 4.10 is given below.
Table 1.3: Implementation responsibilities

Implementation task Project/intervention implementation preparation Procurement Contracting Contract management Undertake project/intervention activities Financial management and reporting Asset management Responsible Project work group District Board for the Award of Tenders District Council District Council Village members/contractors District Council District Council Participation Affected village members Affected VC Affected VC Village members/contractors
As you can see, Task 4.10 is a very big task with a lot of different elements. The rest of this training will focus on one of these elements - Procurement, with a
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brief look at Contracting and Contract Management as well.
Quick Questions
Study the information in Table 1.2 above. In pairs, discuss and answer the following questions: 1. In which task does the District Council make decisions about how to implement its projects for the year, including whether projects will be implemented by the District Council itself, or outsourced to Community Based Organisations/private contractors? When does this take place? . . 2. True or False? There are no District Council members on the Project Work Group. . . 3. Which task involves the activities of procurement, contracting and contract management? When do these activities take place? . .
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Session 1.2
What is procurement?
Session
Objectives:
To define the term procurement. To understand why procurement processes are important for District Councils. To introduce the role of the District Council in procurement.
1.2.1 What is procurement? Procurement is the process of acquiring goods, works or services from suppliers. It is similar in meaning to purchasing, but it can also include hiring the services of something or someone. Here are some examples: Contracting a builder to construct a school classroom (works). Hiring a technical expert to assist with the design of a project (services). Purchasing some furniture from a supplier (goods). There are certain procurement procedures that District Councils must follow in order to carry out any activities that require the expenditure of district funds. This is to ensure that funds spent on behalf of the districts population are directed in the most effective ways. The procurement process spans a whole cycle of activities, which are outlined in the diagram below.
Diagram 1.1: The procurement cycle

6. Evaluating the impact and learning from the procurement process. Using lessons learnt to develop benchmarks for the future. 1. Assessing needs in specific areas or among particular target communities.
5. Contract Management to ensure that outcomes are delivered, as well as controls, continuous improvement and sound relationships with suppliers.
2. Allocating resources whether from own budget or donor funds.
3. Determining how best to deliver the service, including whether to outsource or keep it in-house.
4. Designing and managing the tender process, with specification and selection process.
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1.2.2 Why is procurement important to District Councils?
The procurement process involves the consideration of a number of quotes from

different suppliers, or a number of bids from different contractors, to determine which contractor or supplier will give the district the best value for its money. Such a procurement process can help District Councils in the following way:
Diagram 1.2
District Councils are responsible for promoting economic growth in their locality.
$$$$
Procurement is a tool that can promote local economic development through providing employment and business opportunities for people living within the district.
This results in a greater local tax and economic base for the district, which can be used for better service delivery.
The procurement process is also important because it helps districts to organise contracts for development activities that are accountable, transparent and good value for money. We will look at the meaning of these terms in the following session.
1.2.3 When is a procurement process needed? A procurement process is generally needed when a district has a requirement for goods, works or services and these different categories are explained in the table below.
Table 1.4: Goods, Works and Services

Category Works Refers to: Making, repairing or maintaining anything that is constructed or Examples: Rehabilitation / construction of transport infrastructure (roads, bridge, etc.) Construction of schools and health centres 19
made by excavation or drilling in the ground and that is fixed in the ground and cannot be moved. Goods Any kind of physical thing that can be moved from one place to another. Services Any kind of contract output that is not works or goods, including: technical services physical services
Installation of drinking water supply systems Rehabilitation / construction of irrigation systems
Supplies (e.g. stationery, etc.) School text books and educational materials (e.g. desks, chairs, etc.) Medical equipment (e.g. fridges, freezers, hospital beds, etc.) Miscellaneous tools (e.g. shovels, wheelbarrows, etc.) Project design and costing, technical supervision of works and project implementation, training exercises (technical services) Transportation, waste collection, repairs to mechanical equipment (physical services)
1.2.4 What is the role of the District Council in procurement?
The District Council is ultimately responsible for all contracts relating to district
projects. The District Council therefore has an important role in ensuring that: All district money is spent in the best possible way. The proper procurement rules are being applied. The following questions can help guide a District Council to make decisions on how to achieve the above aims. What are we spending as a Council and what are we spending it on? Are we clear on which works, goods and services are critical to the Council? Are we getting value for money and the outcomes we want from our contracts? How well are we complying with procurement rules from the centre? How do we keep fraud and corruption in check and ensure there is good practice throughout the Council? How well do we manage contracts? Are relationships with our suppliers/contractors good? If not, how can we improve them?
District Councils and Sub-Committees also have specific roles and responsibilities with regard to the procurement process and these will be outlined in Session 2.1.
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1.2.5 Glossary At the end of this Participant Book there is a glossary, which contains some terms that you will come across in procurement.
Please refer to your Glossary now and ask your trainer if there are any definitions that
you are not sure of.
Questions for Discussion 1:

Share your experience about the following: What (if any) procurement processes currently take place in your district? Are there any aspects of the procurement process in your district that could be improved? What are they?
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Session 1.3
Procurement Principles and Ethical Conduct
Session
Objectives:
To understand some important principles of public procurement and their role in the proper use of public funds. To understand the meaning of ethical conduct and how it relates to practice. To explore the meaning of corruption and how it can be prevented in local government procurement.
1.3.1 What are public procurement principles?
Note that procurement for district projects is concerned with the use of public
funds, that is, funds which come from the tax payers of the district. Therefore, such a procurement system is referred to as public procurement. The overall objective of the public procurement system is to provide value for money to the districts, by ensuring that funds are spent in a transparent, efficient and fair manner. There are certain principles which must guide the public procurement process. These principles flow through every aspect of the procurement process. This is to ensure that districts get the best value for money in their use of public funds and that the whole community benefits from the process, not just 1 or 2 individuals.
1.3.2 Explaining the procurement principles
The principles are explained below. Note that some of them might seem obvious, but
they are critical to a successful procurement and contract management process. Transparency: All steps in the procurement process should be recorded and available for public viewing. All interested parties must understand the actual procedures and processes by which contracts are awarded and managed. What does this mean? A District Council must be able to clearly demonstrate how it has reached a decision about who to award a contract to. It also means that a District Council must have clear procedures and standardised tender and contract documents.
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Accountability: The District Council and all public officials who deal with procurement activities have responsibilities and obligations in the procurement process. These parties are accountable for all contracts awarded that involve district funds. What does this mean? The District Council is ultimately responsible for the decisions made about the award of contracts and must be able to take responsibility for the decisions made about district contracts. Equal treatment/fairness: All bidders should be given an equal chance to compete for contracts, regardless of where they are from. No particular bidder should start from a position of advantage. What does this mean? The District Council must ensure that all bidders receive the same information about a tender and that no one is given special consideration because of who they are. Value for money: The District Council has a responsibility to make sure that it gets the best value possible for the funds it will be spending. What does this mean? Because the District Council is dealing with public money, it is essential that the quoted price for goods, works or services is as low as possible, but still ensuring a high quality result. Appeal rights: Potential contractors should be provided with a mechanism for review of grievances. What does this mean? There needs to be a clear process that bidders can access should they have any grievances with the procurement or the contracting process for a district project. Integrity: Public officials responsible for procurement activities should not involve themselves in corruption or collusion with suppliers or others. What does this mean? District Councillors must avoid unethical conduct in any of their dealings relating to procurement using district funds. (Specific examples of unethical conduct are provided later in the session). Competition: The District Council should provide an opportunity for a number of contractors to bid, in order to select the best bid of quality and price. What does this mean? The more contractors that are competing for a tender, the more likely that the District Council will get a better price and better quality of work for the project.
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Other principles which guide the procurement process include the following: Procurement According to Specifications: The District Council should specify accurate, clear, specific and suitable specifications for the works, services or goods to be purchased. This will ensure quality and avoid disputes between the district and the contractor on receipt. What does this mean? This means that the District Council has to provide details about its projects, such as measurements and materials. If not, the contractor might build something that is too big or too small, or not suitable in some other way. Quality of Works: The District Council should monitor all works to ensure that the specifications are adhered to in terms of quality and quantity. What does this mean? There needs to be a system of monitoring and supervision of works, to make sure that a contractor is completing the work to a high standard and according to the specifications. Separation of Roles: All stakeholders are identified and their roles and responsibilities are agreed to and clearly defined. What does this mean? Project Engineers cannot be contractors, contractors cannot conduct technical supervision of contracts and project owners cannot be contractors. The separation of roles is a very important principle for District Councils to be aware of. If these roles are not clearly defined and separated, there can be a conflict of interest. The diagram below illustrates the separation of roles and how each role needs to be kept apart:
Project Owner (District Council)
Contractor (Private Sector)
Project Engineer (Works)

Discuss the following questions in pairs and then feedback to the group: 1. Why do you think it is important to have principles to guide the procurement process? 2. From your experience, can you give an example of what can happen if these principles are not upheld in the procurement process?
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1.3.3 Ethics in public procurement When we talk about ethics we are referring to the moral principles and values which govern our beliefs, actions and decisions. In local government procurement, ethical standards are needed to ensure that decisions made are not tainted by conflict of interest. A conflict of interest is a situation where a public officials decisions are influenced by their personal interest. An example is the awarding of a district contract to a bidder who is a family member, without an open process. Given the above, here are some examples of what Councillors should do in order to avoid a conflict of interest and maintain high ethical standards with regard to procurement. Question: Is further explanation required, or are they ok as they are? A Councillor must not arrange or participate in any meeting or other form of communication with bidders or potential bidders for Council contracts that has not been arranged by Council officers. A Councillor who is or will be involved in the process that leads to the award of any Council contract must not discuss the matter if they are approached by or on behalf of anyone interested in obtaining that contract. A Councillor who is a representative of an organisation that tenders or quotes for Council work, may not take part in the process that leads to the award of any contract in that area of service or be involved in the subsequent administration of that contract. If a Councillor is a representative of an organisation that tenders or quotes for Council work, the organisation can only be awarded Council work through a process of open competition. A Councillor must not seek to influence the procurement decisions of officers or do anything that compromises or is likely to compromise the impartiality of officers. A Councillor must not pressurise any officer to change his/her professional opinion on procurement issues or give direct instructions to officers. A Councillor must not take a proactive part to represent or in any other way advocate on behalf of any bidder or contractor. Confidential information relating to any tender, bidder or prospective bidder must remain confidential, and a Councillor must ensure that no confidential information is disclosed to unauthorised persons or organisations.
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Activity 1.1 Taking your ethical temperature
This activity gives you an opportunity to reflect on some of your own views on ethics and integrity and how they apply to your role as a District Councillor. It is often difficult to think about how our views and actions in our everyday lives might relate to concepts like ethics and integrity. This activity asks you to read some statements related to ethics and indicate how much you agree or disagree with them. Note that this activity is not a test and you do not have to share your answers with anyone. In this way, the more honest you are in your answers, the more you will benefit from the exercise. Your trainer will guide you in this activity with further instructions and explanation.
You will need to refer to Activity Sheet 1 at the end of this Participant Book in order
to do this activity. 1.3.4 The Code of Ethics All officials involved in public procurement are required to abide by the Code of Ethics, which includes the following: An employee or member of the District Tender Committee should not use his/her authority or office for personal gain. Honesty among district staff, District Tender Committee members and suppliers/ contractors should be paramount and a pre-requisite. Employees of a district and District Tender Committee members shall reveal any personal interest that may impinge on their dealings in the procurement process. Information gained in regard of procurement work has to be treated as confidential and not used for personal gain. Employees of a district and District Tender Committee members shall avoid any business arrangement that might prevent the effective operation of fair competition. Business gifts should not be accepted from current or potential suppliers and contractors of the district.
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Employees of a district and District Tender Committee members should refrain from any business hospitality (e.g. dinners) that may be viewed by others as having an influence in decision-making. Staff and District Tender Committee members and employees of the district
Some examples of unethical conduct include the following: Revealing confidential or inside information either directly or indirectly to any bidder or prospective bidder. Discussing a procurement with any bidder or prospective bidder outside the official rules and procedures for conducting procurements. Favouring or discriminating against any bidder or prospective bidder in the drafting of technical specifications or standards or the evaluation of bids. Destroying, damaging, hiding, removing, or improperly changing any official procurement document. Accepting or requesting money, travel, meals, entertainment, gifts, favours, discounts or anything of material value from bidders or prospective bidders. Discussing or accepting future employment with a bidder or prospective bidder. Requesting any other public servant or government official representing the district in a procurement process to violate the public procurement rules or procedures. Ignoring evidence that the Code of Ethics has been violated by a member of the Tender committee, public servant or other employee or representative of the district. Ignoring illegal or unethical activity by bidders or prospective bidders, including any offer of personal inducements or rewards.
1.3.5 What is Corruption? Corruption can be explained as the opposite of ethical conduct. It is essentially the use of public power for private gain. Corruption comes in various forms, which include for example: Embezzlement where a person steals money that has been placed in their trust or is under their control. Nepotism favouritism shown to relatives or friends, especially by giving them jobs. Over-invoicing and claiming payments for no goods/services supplied.
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Taking bribes Bid rigging Split purchasing (Question: will everyone be familiar with these examples or do they require some further explanation?) The problem with corruption is that it benefits a small group of people, but most of the general population suffer the effects of corruption in the following ways: It impairs economic development, because development funds and aid money are not spent as intended, but rather directed into the hands of a small group of people for their own personal gain. It leads to economic waste, inefficiency and reduction in productivity, which means that the general population finds it difficult to make a decent living. It generates administrative inefficiency and ineffectiveness, because people are more concerned with their own personal gain, rather than doing their job properly. It promotes nepotism, which means that only a small select group of people are given good employment and business opportunities. It frustrates competent and honest suppliers/contractors, which is bad for overall economic development.
1.3.6 Preventing Corrupt Behaviour So what can we do to prevent corruption in the procurement process? Perform internal audit to monitor the process. Institute checks in the various stages of the procurement cycle. Require strict observance of procurement regulations. Disqualify bidders who engage in any form of canvassing. Penalise all those found guilty, blacklisting errant suppliers, and sanction staff and tender committee members by disciplinary action. What are the penalties for any Councillors or staff found to be engaging in corrupt or unethical behaviour? Procurement staff and District Councillors are in a position of public trust regarding public funds. Therefore, there are special rules governing their behaviour, which apply to all, regardless of position or function.
Any official suspected of non-adherence to the rules and regulations will be suspended and his or her benefits, including salary, withheld pending investigation.
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Officials found misappropriating government funds, regardless of the value, will be summarily dismissed. Other offences involving non-adherence to the rules and regulations, including negligence and irresponsibility will result in sanctions. Any bidder, supplier, contractor or consultant who attempts to influence a procurement process, or the administration of a contract by any unfair method, will be subject to sanctions. This may include debarment of the company from Government contracts for a period of five years, in addition to any remedies that may be sought in a court of law.
Further information about procurement principles and ethics can be found in 2. Principles of Public Sector Procurement in your Local Government Procurement Guidelines.
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Unit 2: Procurement and Contract Management
This unit contains the following sessions:

Session 2.1: Roles and Responsibilities in Procurement Session 2.2: Procurement Methods Session 2.3: Contracts and Contract Management
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Session 2.1
Roles and Responsibilities
Session
Objectives:
To identify the roles and responsibilities of the different individuals and bodies in the district procurement and contract management process.
To discuss where confusion over roles and responsibilities occurs and identify ways to improve understanding and clarity of roles and responsibilities.

Discuss this question in pairs and then feedback to the group. Is there ever any confusion about roles and responsibilities in relation to procurement and contract management processes in your district? If so, what is the cause of the confusion, what are the consequences, and how can it be resolved? 2.1.1 What are the main Roles and Responsibilities in district local government procurement?
Table 2.1: Roles and Responsibilities in district local government procurement

Individual/Body
District Councillors
Procurement Responsibilities
Receive quarterly reports on procurement Approve procurement plan annually Ensure that procurement rules are being applied District Council acts as project owner/employer, thus it is ultimately accountable for all district contracts signed. (Confirm who signs contracts? Guidelines say it is the Executive Secretary, while the Notes document says the Mayor signs contracts on behalf of the district) Any specific roles and responsibilities?
Economic and Finance Sub-Committee of the District Council The District Tender Committee Composed of: Chairperson a Head of Department or similar
Ensuring that best practices in relation to procurement are strictly adhered to by the district. Coordinate the development and approval of the Annual Procurement Plan. Approve entries and removals from the Register of Suppliers and Consultants. Recommending the appointment of ad hoc Sub-Committees as 31
Individual/Body
Secretary Procurement Officer (Head of Procurement Unit) 3 other Heads of Departments or similar.
required for preparation of specifications, bid opening, bid evaluation, receipt of goods and certification of works. Review and approve prior to any announcement of a procurement process: the method of procurement the bidding and contract documents the specifications, classifications, bills of quantities, plans, drawings and terms of reference as appropriate advertisements, letters of invitation and shortlists Consideration and approval of recommendations for award of tenders issued under competitive tendering proceedings. Review of all applications for variations, addenda or amendments to on-going contracts. Maintain detailed minutes of meetings and records of all decisions and recommendations.
All positions are appointed for 3 years, by the Executive Secretary.
! No politicians
(including District Councillors) should be members of the District Tender Committee.
Refer to 4.3 Tender Committee in your set of Local Government procurement guidelines for more information. Overall responsibility for the execution of the procurement process in the district. Establishing the District Tender Committee and appointing its members. Establishing a Procurement Unit and staffing it to an appropriate level. Appointing the Tender Evaluation Committee. Certifying the availability of funds to support the procurement activities. Communicating tender award decisions. Signing contracts and LPOs for the procurement activities on behalf of the district. Investigating complaints by suppliers, contractors or consultants. Ensuring that the implementation of the awarded contract is in accordance with the terms and conditions of the award.
Executive Secretary
Procurement Unit Is part of the Department of Finance and includes qualified procurement staff. Responsible for much of the day-to-day work relating to procurement.
Refer to 4.2 Executive Secretary in your set of Local Government procurement guidelines for more information. Managing all procurement activities of the district except adjudication and the award of contract. Provide secretariat services and advice to the District Tender Committee. Implementing the decisions of the District Tender Committee. Planning the procurement activities of the district. Recommending procurement procedures. Preparing tender documents and advertisements of tender opportunities. Respond to requests for clarifications from bidders. Preparing contract documents.
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Individual/Body

Ensure that all contractual obligations of the District are performed promptly and efficiently. Register and maintain warranties and retentions. Notify the supplier immediately of any failings in performance of his obligations. Process claims against retentions. Monitor delivery schedules and the inspection and certification of delivery or performance. Coordinate the process for payment to suppliers. Maintaining and archiving records of the procurement process. Maintain a Register of pre-qualified suppliers. Carry out any other associated procurement tasks as assigned by the Tender Committee.
Tender Evaluation Committee Members must have specialist knowledge in the procurement undertaken and can be from outside the district.
Refer to 4.4 Procurement Unit in your set of Local Government procurement guidelines for more information. Technical assessment of all bids, ranking them in order of quality and responsiveness. Report on the technical and commercial compliance of each bid in a technical evaluation. Analyse the financial bids and report the results in a financial evaluation. Prepare an Evaluation Report, including justified recommendations for rejection of bids and for the award of contract, for approval by the tender committee.
Bid Opening Committee
Refer to 4.7 Tender Evaluation Committee in your set of Local Government procurement guidelines for more information. Bid Opening Committees are formed as required by the District Tender Committee to conduct and supervise each opening session in accordance with the required procedures for bid openings.
User Departments
The User/Originating Department is the initiator of requests for procurement action and has responsibility to: Ensure that the requirement for procurement is: justified by the needs of the department not for goods already available in the Stores within the annual procurement plan covered by available funding in the recurrent budget or development plan Prepare procurement requisition Provide input in the technical evaluation of tenders Certify for payments to contractors, suppliers and consultants Report any departure from the terms and conditions of an awarded contract to the procurement unit. Proposes technical specifications.
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Individual/Body

Initiate departmental procurements as approved in the district budget. Prepare any reports required for submission to procurement unit, the District Tender Committee or the Executive Secretary. Ensures goods are received, checked and certified as to quantity and quality before payment. Forward details of any required contract amendments to the procurement unit for action. Maintains and archives records for contracts management. Contract supervision.
Ministry of Interior and Local Government (MOILG)
Refer to 4.5 User/Originating Departments in your set of Local Government procurement guidelines for more information. Overall coordination, direction and development of procurement practices and procedures in Local Government. Professional development and training of staff and officials engaged in procurement. Independent review of procurement complaints by aggrieved bidders, suppliers and the general public.
District Internal Auditor
Refer to 4.1 Ministry of Interior in your set of Local Government procurement guidelines for more information. Conduct audits to ensure the district receives value for money.
2.1.2 The District Tender Committee The District Tender Committee has some important responsibilities with regard to a districts procurement. It has the power to approve the recommendations for the award of district contracts and therefore needs to operate with high ethical standards and ensure that no members have any conflict of interest in all district procurements.
The Executive Secretary may determine the appointment of Chairperson and members at any time for abuse of office, corruption, incompetence, physical or mental incapacity that renders a person incapable of performing the duties of that office and conviction of an offence. The District Tender Committee may invite government officers from within the district or other public institutions to attend its meetings for the purpose of assisting the committee on technical matters. However, such invitees shall have no vote. The District Tender Committee must maintain detailed minutes of meetings and records of all decisions and recommendations. Minutes shall be recorded by the Secretary of the
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Tender Committee and shall be confirmed by the committee in its following meeting and signed by the Chairperson and Secretary. All approvals for award of contract must be within the annual procurement plan for the financial year and the Committee must confirm that sufficient funding is available. A district shall not advertise, invite, solicit, or call for tenders or proposals in respect of a contract unless authorised by the Tender Committee. Likewise, a district shall not award any contract unless the award has been approved by the Tender Committee. The Tender Committee will be required to approve the detailed annual procurement plans for goods, works and services, as part of the annual budget submission process, and to revise the procurement plan based on priorities. A copy of the detailed final Procurement Plan for the district must be provided to the MOI. The Tender Committee will report quarterly to the MOI on all procurement activities undertaken by the local government.
Activity 2.1: Roles and Responsibilities Scenarios This activity is designed to help you explore the different roles and responsibilities in procurement and what can happen when there is disagreement over them.
You will need to refer to Activity Sheet 2 at the end of this Participant Book in order
to do this activity. 1. Your trainer will assign you to a group of about 3 or 4 people. 2. Your trainer will assign you with a scenario from Activity Sheet 2. In your group, read through the scenario and answer the question that follows. 3. You will need to refer to Table 2.1 and the shaded box in 2.1.2 The District Tender Committee above, to help you answer the question.
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Session 2.2
Procurement Methods
To understand the different procurement methods available for districts and when it is appropriate to use them. To become familiar with the tendering process for the open competitive bidding method of procurement.
Session
Objectives:

Discuss the following questions in pairs and then respond to the wider group: Can you name any of the procurement methods that are currently used in your district? Which method would you say is most commonly used? Why? 2.2.1 What are the main procurement methods available to districts?
The local government procurement guidelines specify that an open competitive
bidding method should be considered first before any other procurement method for goods, works or services. Open Competitive Bidding (National and International)
However, in some cases it is not efficient or appropriate to use the open competitive bidding method, in which case there are other procurement methods that can be used as follows: Restricted Bidding Request for Quotations (RFQ), also referred to as shopping Single Source
Section 6. Methods of Procurement in your Local Government procurement guidelines outlines each of the methods in detail. These different methods are also summarised for you in the following table.
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2.2.2 Overview of Procurement Methods
Table 2.2: Procurement Methods

Procurement method
1. National Competitive Bidding (NCB) See 6.2 in the procurement guidelines.
What is it?
An open competitive bidding process for all interested bidders. The tender is only advertised nationally. International bidders may participate, however it is not expected they would be interested in such contracts.
When is it used?
Can be used when:
Payment may be made wholly in Somalia

Shillings. The goods, services and works are available locally at prices below international markets
The estimated cost of the goods, works or

services is small and does not exceed the threshold for open international tendering Need to specify contract value? Works or services are scattered geographically or spread over time Works are labour intensive
Where foreign suppliers or contractors are not

expected to be interested in the bid The advantages of international competitive bidding are clearly outweighed by the administrative or financial burden involved.
2. International Competitive Bidding (ICB) See 6.2 in the procurement guidelines.
An open competitive bidding process for all interested bidders. Can be used when the participation of foreign suppliers or contractors is intended. The tender must be advertised nationally and internationally.
Should be used in the following circumstances:
For high value or complex procurements. Where payment for the contract is to be made in
whole or in part in foreign currency.
Where it is desired to attract tenders from a widest

range of suppliers or contractors, regardless of the estimated value of goods or works to be procured. Where the goods, works or services by their nature or scope, are unlikely to attract adequate local competition.
3. Restricted Bidding See 6.3 in the procurement guidelines.
A process of direct invitation to a shortlist of prequalified, preregistered or known suppliers. This is also the method used to procure consultancy services. The shortlist should be broad enough to assure competitive prices, and should include all suppliers when there
Can be used when:
The estimated contract values are within the limit

for restricted tendering (specify limit?)
The requirement is of a specialised nature or has

requirements of public safety or security, which make an open competitive bid impossible.
Due to the urgent nature of the requirement, an

open competitive bid is not practical (provided that the circumstances giving rise to the urgency could not have been caused by negligent conduct on the part of the district).
The number of potential suppliers is limited. An open competitive bid has failed to bring an
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are 6 or fewer. The rest of the process is the same as for Open Competitive Bidding procedures. 4. Request for Quotations (Shopping) See 6.4 in the procurement guidelines. This is based on comparing price quotations obtained from several suppliers, usually at least 3, to ensure competitive prices.
award of contract.
This method is appropriate when:
The goods are readily available off-the-shelf or

are standard specification commodities of low value.
The goods to be procured are so diversified that it

would be of no commercial interest for any single supplier to tender for them. Before this method can be used, the list of the suppliers to be contacted must be submitted to the District Tender Committee for approval and once approved, the request for quotations should to be sent to all approved suppliers simultaneously, in the interests of fairness and competition.
5. Single Source / Direct Contracting See 6.5 in the procurement guidelines.
This is a procurement method where goods are procured directly from a single supplier or manufacturer. The use of single source procurement method should be approved by District Tender Committee and the district should secure a specific waiver by the MOILG.
Can be used in the following circumstances:
When only one supplier has the exclusive right to

the manufacture of the goods, carry out the works, or perform the services to be procured, and no suitable alternative is available.
For additional deliveries of goods by the original

supplier, which are intended either as parts replacement for existing goods, services, or installations, or as the extension of existing goods, services, or installations where a change of supplier would compel the district to procure equipment or services not meeting requirements of inter-changeability with already existing equipment or services.
Additional works, which were not included in the

initial contract have, through unforeseeable circumstances, become necessary since the separation of the additional works services from the initial contract would be difficult for technical or economic reasons.
There is extreme urgency, provided the

circumstances which gave rise to the urgency were neither foreseeable by the district nor the result of negligent conduct on its part.
The services require that a particular consultant

be selected due to his/her unique qualifications, or when it is indispensable to continue with the same consultant.
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Activity 2.2: Procurement Methods

Study the information above about the different procurement methods in Table 2.2: Procurement Methods. In groups of 3, discuss and try to answer the questions that follow: 1. A project is approved for a primary school rehabilitation project in Sandy District. The estimated cost is 200,000,000Ssh. Which procurement method would you recommend? Why? ... ... 2. Seaside District wants to conduct a tendering process for a road construction project, estimated to cost around USD 50,000, with payment made in USD. It wants to attract a wide range of contractors and believes that the project is unlikely to attract sufficient local competition due to its large scope. Which procurement method is best suited to this project? Why? .. .... 3. Friendly District conducted an open competitive tendering process for the supply of some school and office furniture. The process failed to bring an award of contract, so the Procurement Unit has decided that another procurement method is needed. Which procurement method can now be used? Why? ...... 4. A flash flood in the west of Somaliland resulted in the collapse of a bridge, which is part of a highway linking outlying towns to the main market centre in the district. The District Council has an urgent need for procurement of works in order to repair the bridge as soon as possible. Which procurement method can be used in such a situation? Why? .. ....
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2.2.3 Overview of the Open Competitive Bidding Process Because the Open Competitive Bidding process (national and international) is the preferred procurement method for districts, it is important to familiarise ourselves with the process involved. The Open Competitive Bidding process can be divided into a number of stages: Preparation Stage Invitation to Tender and Advertising Stage Response Management Stage Contract Award Stage Contract Management Stage These stages are outlined in Diagram 2.1 and Diagram 2.2 below, as well as Diagram 2.4 in the following session.
Diagram 2.1: Steps in the tendering process for open competitive bidding
Preparation Stage What steps? 4. Prepare Tender Documents and Tender Notice What information?
See 9.2 and 10.1 in the procurement guidelines See Form A.1 and B.1-B.6 in Somaliland District Bidding Documents. See 9.2 and 10.1 in the procurement guidelines
Who is involved?
3. Identify procurement method
- Procurement Officer drafts tender documents and tender notice. - Tender Committee reviews and approves, following any necessary revisions.
- Procurement Officer determines method to be used. - Tender Committee reviews and approves method. - User Department proposes technical specifications. - Procurement Unit/Technical Advisor may need to assist with specifications. - User department initiates procurement request. - Procurement Officer checks cost and funding source.
2. Specify the requirement
See 9.1.2 in the procurement guidelines
1. Identify requirement to be procured
See 9.1.1 in the procurement guidelines
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Invitation to Tender/Advertising Stage and Response Management Stage What steps? What information?
See 14.7 in the procurement guidelines and Form E.2 in District Bid Opening and Evaluation Documents. See 14.1-14.6 in the procurement guidelines and Form E.1 in District Bid Opening and Evaluation Documents. See 13.2 in the procurement guidelines and Form D.1 in Somaliland District Bid Opening and Evaluation Documents.
Who is involved?
6. Recommendation to Tender Committee
- Tender Evaluation Committee submits a report to the District Tender Committee with a recommendation for the award of contract. - Tender Committee approves or rejects the recommendation. - Tender Evaluation Committee conducts technical and financial evaluation of bids and completes an evaluation report.
5. Tender Evaluation
4. Tender Opening
- Procurement Unit coordinates the administration of the bid opening process. - Bid Opening Committee is responsible for the opening of each bid according to set procedures. - Procurement Unit is responsible for receiving bids and keeping them safe in a locked tender box until the designated opening time. - Secretary of the Tender Committee is responsible for the keys to the locked tender box. - Procurement Unit coordinates sale of tender documents to interested bidders and any necessary clarification of the documents. - Procurement Officer arranges for advertisement of approved tender notice.
3. Receipt and Custody of Tenders
2. Issue Tender Documents
See 13.1 in the procurement guidelines
See 11.2 in the procurement guidelines. See 11.1 in the procurement guidelines.
1. Advertisement of Tender
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Diagrams 2.1 and 2.2 apply to both National Competitive Bidding (NCB) and International Competitive Bidding (ICB). There are no procedural differences between ICB and NCB, apart from the need to advertise international bids in the international media and to allow a longer time before bid closing, to reflect the slower communications involved.
Question: should we include these tables below so that they have an overview of the composition of the Bidding Documents/Bid Opening and Evaluation Documents, or is this more detail than they need? Can take these out if they are not necessary.
Table 2.3: Summary of Somaliland District Bidding Documents

Form Form A.1 Invitation to Bid Form B.1 Instructions to Bidders Form B.2 Form of Tender Form B.3 Appendix to Form of Tender What is it for? For advertising tenders through an open competitive process. This gives the bidders some information on how to complete the tender forms and other important information about the tender process. This is completed by the bidder and states his/her bid price for the tender. This has additional information about the tender. Some information is filled in by the bidder and some information is filled in by the Tender Committee. This form is submitted by the bidder, along with Form B.2 Form of Tender. This document is submitted as part of the bid, along with Form B.2 and Form B.3. The form is designed to demonstrate how the bidder is qualified to undertake the required work. The bidder must complete it with information about his/her company, staff, labour and equipment. This document is completed by the bidder and submitted as part of the bid. It contains a works programme for all the different activities that are part of the project. This letter is filled in on behalf of the District Council (the employer) and signed by the Executive Secretary? It is addressed to the winning bidder to indicate that his/her bid has been accepted. This document is essentially the contract signed between the District Council and the winning bidder. It should include the following attachments: Form B2 Form of Tender Form B3 Appendix to Form of Tender
Form B.4 Qualification Information
Form B.5 Proposed programme of works Form B.6 Letter of Acceptance
Form C.1 Form of Agreement
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Form C.2 Conditions of Particular Application Form C.3 Statement of Works
This document outlines the general conditions of the contract, for example, those relating to labour, environment, health and safety and reporting.
This document contains the following information: Summary description of works Bill of Quantities Drawings Specifications
Table 2.4: Summary of Somaliland District Bid Opening and Bid Evaluation
Documents Form Form D.1 Bid Opening What is it for? This is used during the bid opening process and includes: 1. Received Bids lists all bids received along with the bid amounts. 2. Attendance Register for Tender Committee, MOI, JPLG representatives present. 3. Attendance Register for Bidder representatives present. This form is used during the bid evaluation process and includes: 1. Eligibility This assesses each bid and bidder against a number of criteria to determine whether the bid is eligible for technical evaluation. 2. Technical Qualification This assesses each eligible bid against a number of criteria and gives each bid a score, to determine whether a bid can go on to the next stage, which is Financial Evaluation. 3. Financial Evaluation This assesses each bid according to financial criteria. 4. Example This is a completed example of how to conduct a Financial Evaluation of a number of bids. This set of forms is related to the evaluation of bids and includes: 1. Evaluation Report 2. Technical Evaluation Team Justification for Preferred Bidder 3. Bid Evaluation - Engineers 4. Tender Committee decision and justification 5. Bid Evaluation Tender Committee
Form E.1 Bid Evaluation
Form E.2 Bid Evaluation Summary
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Session 2.3
Contracts and Contract Management

To understand the importance of a contract as a legal document and the role of the District Council as the contracting party. To become familiar with the format of a typical district contract document. To raise awareness of the activities involved in contract management.
Session
Objectives:
2.3.1 What is a contract? A contract is a formal legal agreement, usually written, between different parties. The procurement contract enters into force when the contract is signed by the supplier, contractor or service provider and by the Local Government. By law, the District Council is the contracting party, which means that it issues and signs the contract. It also means that the District Council is ultimately responsible for the terms of the contract agreement. Therefore, the District Council has an important responsibility in terms of accountability, with regard to all district contracts.
2.3.2 What are the obligations of the contracting parties? Both sides have contractual obligations that need to be upheld. The specifics will vary depending on the actual contract, but generally they include the following:
Table 2.5: Contractual Obligations

Contractor/Supplier/Service Provider Deliver the goods, service or works in the way, at the time, and in the location that has been specified by the parties. Deliver the documents that are related to the goods or service. Transfer of title of ownership for a product. Ensure the conformity of the goods to the specifications. Act in good faith and deal fairly. Accept liability of the manufacturer of the goods in the case of injury to the persons or objects. Local Government (District Council) Accept the goods or services provided they meet the contract terms. Pay the agreed price. Act in good faith and deal fairly. Accept liability in the case of injury to persons or objects.
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Discuss the following questions in pairs and then respond to the wider group: What are some of the problems that you know about that can occur with contracts? If using a real example, can you explain what was the cause of the problem and how could it have been avoided? 2.3.3 How are contract documents prepared and signed? The Procurement Unit is responsible for preparing a contract document for submission to the successful bidder for signature. The contents of the contract document depend on the contents of the tender documents and the nature of the tender. The Procurement Unit completes the draft contract document and submits it to the District Tender Committee together with all relevant attachments, for approval. The major issues related to preparing the contract are: What outcome does the local government/district want as a result of the contract? What does the local government/district want to avoid in the contract? What options are available, (if all goes wrong), to protect the local government/district so that the negative impact on the business is as low as possible? The designated authority of the District Council is the Executive Secretary, who signs all contracts on behalf of the District. (need to confirm this) The contract for a works project consists of the following documents: The Form of Contract Agreement (based on the winning Bid) Form C.1 (with Attachments: Form of Tender Form B.2, Appendix to Form of Tender Form B.3) Conditions of Particular Application Form C.2 Statement of Works Form C.3 (includes Summary description of works, Bill of Quantities, Drawings, Specifications)
A format for district contract documents can be found in Forms C.1, C.2 and C.3,
in your set of Somaliland District Bidding Documents. The following diagram outlines the process of preparing and signing contract documents.
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Diagram 2.3: Contract Preparation and Signature
1. The approved contract document is finalised and produced for signature (4 copies?)
2. The winning bidder is formally invited to sign the contract.
LG
3. Check that the contract is correctly signed and each page initialled by both parties.
5. Publish the results of the award of contract in newspapers and on notice boards. Send 1 copy to MOILG and 1 copy to Auditor General.
4. Record the contract on the contract register of the Procurement Unit. Store 1 copy on file in the District Office and 1 copy to the contractor.
Unsuccessful bidders are notified.
2.3.4 What is involved in Contract Management? Contract Management is very important, because it is this part of the project implementation process that ensures the project is actually completed as intended. Contract Management includes the following activities: Supervision Any works must be subject to ongoing supervision to ensure good quality and adherence to the specifications. This is the role of the Technical Supervisor, who is usually the District Engineer. Progress Reports These reports are an important mechanism for monitoring progress and are a requirement whenever the contractor submits a payment claim. It is the job of the Technical Supervisor to prepare these reports. Payments For a works contract, there is usually a payment schedule, which outlines when payments can be made, based on completion of a certain percentage of the works. The contractor must submit a payment claim and a progress report will be completed by the Technical Supervisor before a payment can be made. Dispute Resolution Disputes can arise during project implementation for a number of reasons including disputes over payments or the conditions of the contract, disputes over delays in performance, or poor quality work on the part of the contractor. These are just a few examples, most of which should be resolved through discussion between the contractor and the responsible officer. In some cases the Executive Secretary will need to be consulted to reach a resolution of the dispute. Contract completion and handover On completion of the works an interim takeover certificate will be issued if the work is satisfactory. Then, the contractor must wait until the end of the defects liability period (is this 90 days for a works project?), to receive the final payment.
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2.3.5 Overview of the steps in Contracting and Contract Management The diagram below gives an overview of the steps involved in the contracting and contract management process.
Contract Award Stage and Contract Management Stage What steps? 7. Contract Completion What information?
See 15.6 in the procurement guidelines.
Who is involved?
- Inspection and Acceptance Committee issues a final takeover certificate and any final payment made. - Inspection and Acceptance Committee issues an interim takeover certificate. Some payment is retained until the end of the defects period. - Technical Supervisor approves payment certificates. - Procurement Unit processes payment claims. - Technical Supervisor prepares reports to monitor implementation progress and when the contractor submits a payment claim (for example, after 50% completion of works).
6. Defects Liability Period
5. Payments
4. Progress Reports
3. Contract Supervision
- Technical Supervisor (District Engineer) conducts day to day supervision and liaison with the contractor. - Procurement Unit finalises contract documents and prepares copies for signature. - Tender Committee approves final contract documents. - Contract is signed by the Executive Secretary and winning bidder. - The Tender Committee approves the recommendation for award of contract and gives authority to proceed to the award of contract stage.
2. Contract Award and Signing
1. Approval by the Tender Committee
See 14.14 in the procurement guidelines and Forms C.1, C.2 and C.3 in Somaliland District Bidding Documents.
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Activity 2.3: Sandy Desert District Council Contract A contract is an important legal document and therefore attention to detail is essential when preparing and signing contracts on behalf of the district. This activity is designed to familiarise you with the content of a typical contract for a district project. Your task will be to examine an example contract document and check to make sure that it has been filled in correctly.
You will need to refer to the example contract provided in Activity Sheet 3 at the end
of your Participant Book for this activity.
Note that these forms are also provided in your Somaliland District Bidding
Documents for future reference: Form C1 Form of Agreement Form C2 Conditions of Particular Application Form C3 Statement of Works In groups of 4, study the example contract and payment schedule in Activity Sheet 3 and answer the following questions: 1. Has the contract number been completed correctly? Y/N (If no, explain the error) .. .. .. 2. Has the correct person from the District signed the contract? Y/N (If no, explain the error) .. .. .. 3. Are the progress payments correctly calculated? Y/N (If no, explain the error) .. .. ..
This is the final session in this training program. Your trainer will now guide you through an evaluation session, to gauge your reactions and opinions to the training you have just completed.
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Glossary
Bidding Documents Refers to the bid solicitation documents or other documents for solicitation of offers or quotations for the delivery of goods, works, consulting services or technical services. Any participant or potential participants in the procurement process. Consulting Services Contract The circumstance of a public officeholder, business executive, or the like, whose personal interests might benefit from his or her official actions or influence. A situation in which a public official's decisions are influenced by the official's personal interests A situation in which someone making a decision in an official capacity stands to profit personally from the decision.
Bidder Conflict of Interest
Services of an intellectual or advisory nature, performed by individuals or firms having the required specialised expertise and experience. A legal document specifying an agreement between two parties for supply of goods or performance of work at a specified price. These are drawings and specifications, which are used as the basis for developing a particular construction. These are precise drawings which specify the dimensions of a particular construction, for example, a school or health clinic. Objects of every kind and description, including raw material, products and equipment. The stage of a project where you actually put in place the activities that have been identified during the planning process. The acquisition by any method of goods, construction, consultant services or technical services. An agreement between the District Council as procuring entity and a supplier or contractor for the acquisition of goods, works or services resulting from procurement proceedings. Detailed description of construction, workmanship and materials of work to be undertaken, prepared by an engineer. Any potential party or the party to a procurement contract with the District Council.
Designs
Drawings
Goods
Implementation
Procurement
Procurement Contract
Specifications
Supplier or contractor
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Activity Sheets
Activity Sheet 1: Taking your ethical temperature Activity Sheet 2: Roles and Responsibilities Scenarios Activity Sheet 3: Sandy Desert District Council Contract
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Activity Sheet 1: Taking your ethical temperature

For each statement, mark with an X where you feel your views are on the continuum. Strongly Disagree Strongly Agree
1. The only way to get things done is to bend the rules from time to time.
2. Giving and taking bribes is just part of the system. Its how things work.
Strongly Disagree
Strongly Agree
Strongly 3. It is very hard to make a decent Disagree living without accepting gifts and favours on the side.
Strongly Agree
4. Everyone engages in unethical Strongly conduct from time to time, so why Disagree shouldnt I?
Strongly Agree
5. I will be unpopular with my colleagues if I try to take a stand against unethical behaviour.
Strongly Disagree
Strongly Agree
6. It is ok to be ethical when you live in a wealthy country, but when you are poor, ethics are a luxury.
Strongly Disagree
Strongly Agree
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Activity Sheet 2 Roles and Responsibilities Scenarios

Scenario 1 Success District planned to advertise a tender nationally to build a water harvesting system. The Mayor approached the Procurement Unit and asked them to prepare the tender documents and the advertisements and to send them to him for approval, because he had a special interest in this project. The Procurement Officer said that he could not do this, as it is the District Tender Committee, not the Mayor, who must review and approve the draft tender documents and advertisement before any procurement can be announced. Question: .. .. .. Who is correct the Mayor or the Procurement Officer? Why?
Scenario 2 An open competitive bidding process was being initiated for a district construction project. The Executive Secretary said that for this process he would not appoint a Bid Opening Committee and that the bids could be opened by the Tender Evaluation Committee instead. The Chairman of the District Tender Committee said that it is the role of the District Tender Committee to appoint the Bid Opening Committee and that it is essential that the bids are opened by this Committee and not the Tender Evaluation Committee Question: .. Who is correct the Executive Secretary or the District Tender Committee? Why?
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.. ..
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Scenario 3 A district put out a tender for the supply of some school furniture. The Tender Evaluation Committee could not decide who should be awarded the tender. In their report they said that because it was a low value contract, the decision could be made by the District Tender Committee. The District Tender Committee said that it could only act on a recommendation from the Tender Evaluation Committee, so it was important that the Tender Evaluation Committee complete an Evaluation Report and make a recommendation about the contract. Question: Who is correct The Tender Evaluation Committee or the District Tender Committee? Why? .. .. ..
Scenario 4 Seaside District has had District Councillors serving on its District Tender Committee for a number of years. Recently, a new Executive Secretary started working in the District. He said that according to the rules, Councillors were not allowed to be on the District Tender Committee and that he had the authority to appoint the committee members, so therefore he would dismiss the Councillors from the Tender Committee. The Councillors said that the reason they were on the District Tender Committee was due to a lack of expert technical people and Department Heads in the district and that they should be allowed to stay on the committee until the end of their 3 year term. Question: .. Who is correct Executive Secretary or the Councillors? Why?
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.. ..
Scenario 5 A Tender Evaluation Committee was appointed to evaluate the bids for 2 different tenders. Because there was a tight deadline, they asked the staff of the Procurement Unit to do the evaluation for 1 of the bids and write the Evaluation Report. The Procurement Unit said that they could not do this task, as it was the responsibility of the Tender Evaluation Committee and in any case, the Procurement Unit had too many other tasks to do, such as preparing draft contracts for both of the tenders. Question: .. .. .. Who is correct The Tender Evaluation Committee or Procurement Unit? Why?
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Activity Sheet 3 Sandy Desert District Contract

Form C1
Agreement
Contract No:
This shows the contract is in Somaliland.
This is the code for the region, district and the village where the project will be.
S/L / 12 / 01 / 24 / 11 / 006
This shows the year and the project number for that year.
Sector - Circle The Correct Sector 1. Health 2. Education 3. Water and Sanitation 4. Infrastructure (Roads, Bridges, Culverts). 5. Livestock 6. Agriculture 7. Environment THIS AGREEMENT made this. 2010... between the District Council of Sandy Desert District ..herein after referred to as the Employer on one part and
19th
.. Day of . . . . . March. . . . . . . ..
Akber Construction (name of company) of Yardstick Rd, Unity Town, Sandy District ,Success Region, Somaliland (address) (hereinafter referred to as the contractor)
on the other part. The District Council desires the execution of certain works known as: Project NameConstruction of Primary School Staff Quarters in Friendly Village Location ..Friendly Village, Sandy District, Success Region, Somaliland.... Description of WorksBuild a 2 bedroom dwelling to accommodate teaching staff from the local primary school. (hereinafter called "the Works") and has prepared Drawings, Specifications and Bill of Quantities showing and describing the works to be done. These Drawings, Specifications and Bill of Quantities have been signed by and on behalf of the Employer and the Contractor,
56
OFFER: The Contractor has offered a bid for the services for the amount of US Dollars
$50,000 (in figures), fifty thousand US Dollars.(in

words) as per attached Form of Tender and Appendix to the Form of Tender, to execute the works shown upon the said Drawings and described in the Specifications and Bill of Quantities subject to the Conditions of Contract annexed hereto.
NOW THEREFORE, IT IS AGREED as follows:1. The Employer agrees to pay the Contractor the sum of US $......$50,000........... (in figures) ....................
fifty thousand US
Dollars..................................................(in words) (hereinafter called "the Contract Sum")

or such other sum as shall become payable to the Contractor in consideration of work performed at the given rates and at the time and manner stated in the Conditions of Contract. 2. The following documents shall form part of this Agreement: This Form of Agreement; The Letter of Acceptance; Contractors Bid Addenda to Bidding Documents; Statement of Works The Drawings; Conditions of Contract: Conditions of Particular Application, Part II, General Conditions of Contract, Part I; The Priced Bill of Quantities; Qualification Information. All the above documents are hereinafter referred to as "the Contract". They shall be taken as complementary and mutually explanatory of each other, however in the case of conflict or inconsistency they shall take precedence in the order set out above.
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3. In consideration of payment to be made by the Employer, the Contractor hereby agrees to carry out the above-mentioned works in conformity, in all respects, with the provisions of the Contract. Signed : For review: please confirm who can act as an Employers Witness and who can act as a Contractors Witness? .............. ...........
Countmoney.................................
Signature of Employer's Witness
Trustworthy...............................
... Signed on behalf of Employer Name:.... Mr Ibrahim
Name: ...
Mr
Countmoney...................... Designation:..Procurement Officer, Sandy Desert District ....... Palm Rd, Unity Town, Sandy District , Success Region, Somaliland................................
Address: ... .............Busyman................................. Signature of Contractor's Witness
Trustworthy.... Designation:... Executive Secretary, Sandy Desert District........................ Palm Rd, Unity Town, Sandy District , Success Region, Somaliland .................
Address:... ...........
Mohamed
Reliable............................
Signed on behalf of Contractor Name:.... Mr Mohamed
Name: ...
Mr Busyman........................ Akber
Designation:..Foreman,
Constructions ....... Yardstick Rd, Unity Town, Sandy District , Success Region, Somaliland................................
Address:
Reliable.... Designation:... Contractor, Akber Constructions........................ Yardstick Rd, Unity Town, Sandy District , Success Region, Somaliland .................
Address:...
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Not sure what information needs to go in this table below pls complete if possible JPLG OSR/Fiscal Transfer Others
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Payment Schedule: The payment schedule is as follows: First payment of US $.....20,000............... which is equivalent to 40% of the total contract value due within 2 weeks of; Signing of this Agreement
Second payment of US $ 20,000............ which is equivalent to 40% of the total contract value due within 2 weeks of: Progress Report on 50% Completion of the Project Certificate of Payment
Third payment of US $.....10,000............ which is equivalent to 10% of the total contract value due within 2 weeks of: Practical Completion Report (100% Completion) of the Project Certificate of Payment
Fourth (Final) payment of US $....10,000............. which is equivalent to 10% of the total contract value due within 2 weeks of: Final Completion Report (at expiry of defects period) Certificate of Final Payment
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District Participatory Planning and Budgeting Process

Procurement Overview Module C Training Material

SUPPORT PROVIDED BY UNITED NATIONS SOMALIA

Procurement Overview Module C Participant Book

Procurement Overview Module C Participant Book

Procurement Overview Module C Participant Book

Procurement Overview Module C Participant Book

Introduction to the training

The hand symbol indicates a point that is important to note.

Procurement Overview Module C Participant Book

This symbol indicates some questions for discussion or reflection.

This symbol indicates there is an activity to participate in.

Procurement Overview Module C Participant Book

Relevant step in planning and budgeting guidelines

Step 4: Implement Work Plan and budget

Step 4: Implement Work Plan and budget

Step 5: Monitoring and Evaluation

Procurement Overview Module C Participant Book

Table I.2 Procurement Overview Training, Module C - Training Overview

Introductory Session: Getting Started 30 minutes

Unit 1: Introduction to Procurement

Session 2.3: Contracts and Contract Management 1.5 hours

Evaluation of Training 30 minutes

Activities to gauge participants views on the completed training.

Total training time = approximately 9 hours (2 days)

Procurement Overview Module C Participant Book

10-10.30am 10.30am 10.35-12.30pm

Day 2 Time 8am-10am

10-10.30am 10.30am 10.35-12.30pm

Evaluation Session (30 mins) End of Day 2, End of training

Procurement Overview Module C Participant Book

Questions for Reflection:

Procurement Overview Module C Participant Book

Unit 1: Introduction to Procurement

This unit contains the following sessions:

Procurement Overview Module C Participant Book

Overview of implementation and procurement

Table 1.1: Steps in the guidelines and relevant training modules

Procurement Overview Module C Participant Book

project management, procurement and contract management procedures.

Management Module B Local Government Procurement Module C Procurement Overview

Monitoring and Evaluation

1.1.2 A closer look at the planning and budgeting guidelines

Please look at the following in Section 2: The District Participatory Planning

D T I T OK I R WR S C SE 4 TP : DT I E PO C DSG W H EA D R JET EI N I L T CM UI I S O MN E T POE TML MNA I N N R J C I PE E T TO A D M N GMN AA E E T PA A D LN N A N ABD E N U L U GT

Table 1: Overview of steps and tasks

Aug Sep Oct Nov Dec

Step1: Developingthe Distric Development Fra wo t me rk

Step2: F cas dis ore t trict resources a ass nd ess budg ts e

Step3: Preparedistrict annu Work Plan and B al udg et

Step4: Implement Work plan an Bud t inclu d ge dingd ided p ec rojects

Step5: Monitoringa evaluation nd

5 -10 n.a . n.a . 5 3 n.a . 1

P ri mary responsible S ec ondary responsibl e

Procurement Overview Module C Participant Book

1.1.3 Step 4 in the planning and budgeting guidelines

Table 1.2: Step 4 tasks and responsibilities

See Box 4A: Determining a

See Box 4B: Community

Procurement Overview Module C Participant Book

See Box 4C: Design and

See Box 4D: Technical