LESSON 8

PUBLIC PROCUREMENT

Redeemer Krah (Lead), Thompson Kubaje and Prince Sunu

 What is Public Procurement?
• The term procurement refers to the processes involved
in the acquisition of goods, works and services.
• Public procurement relates to procurement undertaken
by central government MDAS, boards, commissions,
authorities, public universities, local government entities
and to the extent of the use of public fund in acquiring
goods, works and services by commercial entities.
• Public procurement constitute about 60% -70% of the
annual budget after compensation for employees in
developing countries.
• Public procurement is an important element to tackle in
public financial management strategies.
Principles of public procurement
• The six principles of public procurement
Need for regulating public procurement in Ghana
• Public Procurement (PP) is among the most dynamic
areas of anti-corruption reforms being championed by the
World Bank and many countries including Ghana.
• PP is a high level risk area in public financial management,
particularly in developing countries.
• Source of leakages in PP include:
• Bribery and inducement (10%?)
• Inflation of prices of goods, services and works,
• Acquisition of inferior goods, works and services at
exorbitant prices
• Cronyism and favouritisms
• etc
Needs for regulating PP
• Laws on PP has been scattered in several legislation making
enforcement difficult.
• They include:
• The District Tender Board Regulations. 1995 (L.I 1606)
• The Ghana National Procurement Agency Decree.,1976 (SMCD,
55)
• Ghana Supply Commission Law, 1990 (PNDCL 245)

• In 2003, the Public Procurement Act 2003 (Act 663) was passed to
provide a single source of procurement rule for the entire public
sector.
• The Public Procurement Act 2003 has been amended and repealed
by Public Procurement Act 2016.
Review of the Public Procurement Act
• The object of the Act is to provide for public
procurement, establish the public
procurement Authority, make administrative
and institutional arrangement for procurement,
stipulate tendering procedures and provide for
purposes connected with these.
• The Act 663 is divided into nine parts.
Parts of Act 663 /Amendment Act 2016
Part Heading
I Establishment of the Public Procurement Board (now
Authority)

II Procurement Structures
III Procurement Rules
IV Methods of Procurement
V Tendering Procedures
VI Methods and procedures to procure consultants

VII Reviews
VIII Disposal of stores, plant and equipment

IX Miscellaneous provisions
The Public Procurement Authority
• Logo of the Authority
Object of PPA

• The object of the creating the authority is to harmonize

the public procurement in the public service to secure a

judicious, economic and efficient use of state resources

and to ensure that public procurement is carried out in a

fair, transparent and non-discriminatory manner.

Functions of PPA
• Section 3 of Act 663 provides for more than 20 function of the PPA and these
include, among others:
• To make proposal for formulation of public procurement policies
• To develop draft rules, instructions and other regulatory documents on PP
and format for relevant documents
• To establish and implement public procurement information systems
• To facilitate the training and professional development of public officers
involved in public procurement at various levels
• To develop, promote and support training and professional development of
persons engaged in public procurement.
• To publish a public procurement bulletin.
• To assist the local business community to become competitive and efficient
suppliers.
• To maintain a list of firms that have been barred from participating in public
procurement and communicate the list to procurement entities.
Procurement structures
• The structures in-built in the Act include:

• Tender Review Board

• Procurement entity

• Tender Committee

• Tender Evaluation Panel

Tender Review Board
• TRBs are established at four levels based on the

authorized thresholds:

• These are:

• Central Tender Review Board

• Ministerial/Headquarters Tender Review Boards

• Regional Tender Review Boards

• District Tender Review Board

Functions of TRB
• Functions of TRBs (s.20) include among others:

• Review the activities carried out in a particular procurement at

each step of the procurement cycle to ensure compliance with

the law, instructions and guidelines.
• Give concurrent approval or otherwise to enable the

procurement entity continue with the procurement process;

• Review decisions of heads of entities in respect of a

compliant;\
• Furnish the authority with relevant reports

• Participate in public procurement fora;

Procurement Entity
• It refers to any entity that is responsible for public
procurement under the law.

• The head of entity is responsible and accountable for

actions taken in the procurement process.
Tender Committee
• Tender Committee refers to a body within an entity with
the responsibility for planning, processing and
generally making procurement decisions and ensuring
compliance with the law and other guidelines.
• Each procurement is required to established a Tender
Committee.
• The committee is chaired by the head of entity.
 Functions of Tender Committees
• Functions of TC (schedule 1) include:
• Review procurement plans and ensure the connection
with the objectives and operations of the entity
• Approved cost of items in the plan and ensure they fit
into the budget amounts.
• Review procurement schedules and ensure
compliance with law
• Secure concurrent approval from the relevant TRB
• Facilitate contract admin and ensure compliance with
all reporting requirements
• Ensure that stores and equipment are disposed off
according to the law.
Tender Evaluation Panel
• This is an expert group appointed by the entity to
evaluate tenders and assist the TC in its works.

• The panel uses the predetermined and published

evaluation criteria.
Procurement Rule
• Procurement plan:

• Every procurement entity is required to prepare a

procurement plan for the year.

• Such plan should be submitted to the TC one month

before the end of the current financial year.

• Procure plan beyond the threshold should be submitted

to the relevant TRB for publication in the Public

procurement bulletin.
Procurement Rules
• Qualification of Tenderer:

• Tenderer qualifies to participate in public procurement when it :

• Has the required resource capacity and technical and

professional competence to perform the contract

• Has the legal capacity to contract

• Solvent (evidence of going concern)

• Has fulfilled its obligations to pay taxes and SSF contribution

• Has directors in good standing in the eye the laws

• Mets other entity specific rules.

 Methods of Public Procurement
• Five methods are identified for the procurement of goods, services

and works (s.35)

• Competitive tendering (national competitive tendering and

International competitive tendering)

• Two stage tendering

• Restricted tendering

• Single/sole sourcing

• Request for quotation

• NB: Competitive is a default method .

 Competitive Tendering
• Competitive tendering refers to the method in which all potential suppliers
or contracted are invited to take part in public bidding for supply of goods,
services or work.
• There are two types of competitive tendering

• National competitive tendering: It is where only domestic suppliers or

contractors are invited to participate in public tender for supply of goods

and services
• International competitive tendering is a type of competitive tendering

where the tendering is opened to foreign firms to enhance effective

competitive.
• All public procurement should be carried out using competitive tendering,

unless otherwise provided.

Competitive tendering
• Competitive tendering is a default method but most
appropriate when:
• It is feasible to formulate detailed specifications

• The value of goods, services or works sought is

very high
• Where several suppliers or contractors are

available.
Two stage tendering
• The method is of two folds:
• In the first stage of two-stage tendering, the suppliers or
contractors are invited to submit initial tenders which
contain their proposals without a tender price.
• In the second stage the suppliers or contactors whose
tenders have been accepted are invited to submit final
tenders with prices on a single set of specifications.
• Conditions for use of two stage
• Where it is not feasible for procurement entity formulate
detail specifications for the goods or works.
• Where the procurement entity seeks to enter into
contract for research, experiment, study or
development, except for commercial purpose.
Restricted Tendering
• It is a method in which only few suppliers or contractors
are invited to participate in procurement process for the
reasons of economy and efficiency.
• It is normally opened to tenders who have been selected
through prequalification process
• Conditions appropriate for restricted tendering are:
• If goods, services or works are available only from a
limited number of suppliers or contractors
• If the time and cost required to examine and evaluate a
large number of tenders is disproportionate to the value
of the goods, services and works to be procured.
Single Sourcing
• This is a method where only one supplier or contractor is hand
pick to supply the goods, services and works required.
• The method does not permit any competition and therefore
remain a major risk area in public procurement.
• To use the singe source, the entity need to seek approval for the
PPA.
• Condition for use:
• Goods or services are only available from a single supplier or
the supplier has excusive right.
• Urgent need for the GSWs not caused by dilatory conduct of
the procurement entity.
• Contract for research, experiment, study or development not
for commercial purpose
Condition – Single source
• Condition for use of single sourcing

• Goods or services are only available from a single supplier or the supplier has excusive

right.
• Urgent need for the GSWs not caused by dilatory conduct of the procurement entity.

• Contract for research, experiment, study or development not for commercial purpose

• National security concerns

• Where additional supplies need to be procured from a supplier who had made supply in the

immediate past.
• Where compatibility with existing goods or equipment
Request for quotation
• This is a method in which the entity request invoices from
as many suppliers , but at least three and pick the supplier
with the lowest invoice or quotation.
• Here there should be no negotiation between the entity
and the supplier.
• Conditions for use:
• Where the goods are readily available ( they are not
specially made for the entity)
• Where established market exist for the goods and
services.
• Where the low cost goods and services are required.
Competitive Tendering procedures for GSWs
• Four main stages (s.44-65)
• Invitation of tenders and prequalification
• Submission of tenders
• Evaluation and Comparison of tenders
• Contract offer and administrations
Invitation of tenders
• The mode of invitation of tenders may depend on whether
it is national competitive tendering (NCT) or international
competitive tendering (ICT).
• For NCT:
• Invitation is made in national newspaper for the supply of
GSWs
• The tenders should be given at least four week to submit
their tenders.
• For ICT
• Invitation to tender is place in a newspaper with adequate
circulation to attract foreign competition
• At least six weeks is required for submission
Invitation (cont)
• In either case the following processes are carried out:
• Invitation should indicate how the tender document can
be obtained and the price payable. (see S.50 for detail
content)
• Clarification and modification of tender documents is
allowed, provided it is done fairly and non-discriminatorily
• The tender document should clearly indicate the
language to be English
 Submission of tenders
• The place for, and the specific date and time as the deadline for the
submission of tenders
• Tenders should be submitted in writing, signed and in sealed
envelop.
• The tenderer who submits a tender should be given a receipt
showing the date and time of delivery.
• A tender submitted after the deadline should be returned to the
tenderer unopened.
• The tenderer may submit a tender security together with the tender
document when required by the entity.
• Tender security is the security provided to the entity as a pledge
against fulfilment of an obligation under the law.
• It may include bank guarantee, surety bonds, stand-by letter of
credit, cheque issued by banks, cash deposits and bill of exchange.
Evaluation and comparison of tenders
• The stage involves opening, examination and evaluation of
tenders.
• Opening of tenders
• It should ne opened at the time and place specified in the
tender document
• Those who submit tenders should be permitted to be
present at the opening of tenders
• The name of the supplier and the tender price should be
announced when opened and recorded immediately in
the tender proceedings.
Evaluation (cont)
• Examination of tenders
• Tenders submitted and opened should be examined to ensure that they
meet the requirements of the tender document.
• A tender shall be considered responsive if it conforms to the requirements
of the tender invitation documents.
• A tender should not be accepted such as if
• the supplier is not qualified to tender
• The tender is not responsive
• The supplier refused to effect minor correction indicated
• There is evidence of inducement from the supplier
• Evaluation of tenders
• Responsive tenders should be evaluated based on the set criteria
• Margin of preference should be considered
• Successful tender should be selected based on lower cost or any other
selection criteria indicated in the tender invitation documents.
Contract Offer and Administration
• The tender selected should be notified of the
acceptance within 30 days
• Where a formal contract agreement is required to
be signed by the tenderer, then supplier should be
given 30 days after the receipt of the acceptance.
• Where the successful supplier fails to sign the
agreement within 30 days or fails to provide the
required tender security, the entity shall select a
successful tender from the remaining tenders,
unless the remaining tenders are rejected.
• Once the contracted comes into force, the entity
should administer the contract through follows ups.
Methods of procuring consultants
• Consultants may be procured through either competitive
method or direct invitations.
• A procurement entity causes a notice seeking expression
of interest in submitting a proposal to be published in the
public procurement bulletin for consultancy contract
• Direct invitation is used when economy and efficiency is
considered.
• Approval from PPA is necessary
• Where services needed are available from limited
consultants
• Time and cost variant
• Confidentially in to protect national security.
Review procedure
• Any contractor or supplier that claims to have suffered, or
that may suffer loss or injury due to breach of a duty
imposed on the PE by law may seek review
• Two levels of review
• Review by the procurement entity
• Administrative review
Review by Procurement Entity
• This review is exercised only when the contract in question is not
already in force.
• Here the aggrieved supplier seeks redress from the head of the
procurement entity amicably.
• Procedure include
• Supplier submits his complaint in writing to the head of the entity
within 20 days after becoming aware or should become aware of
the matter.
• HOE should attempt to resolve the complaints by mutual
agreement of the supplier.
• HOE issues his written decision within 21 after submission of the
complaints, including the reason for the decision as well as
corrective actions to be taken.
Administrative Review
• This is redress sought from the PPA.
• Administrative review may be evoked by a supplier when:
• The contract has been entered in to force prior to the time that the supplier
became aware of the matter.
• the HOE fails to make decision on the matter within 21 days required
• when the supplier disagrees with the decision of the HOE.
• Procedures:
• The supplier submits complaint to the PPA within the required period.
• The PPA notifies the HOE about the complaints against him
• PPA enters review process and other interests affected may be permitted to
participate
• PPA within 21 days issues a written decision on the complaints and gives
reason
Disposal of stores, Plant and Equipment
• Procedure
• Head of entity convene a BOS
• BOS reports on the item and recommend a method of
disposal
• Head approves the recommendations of the BOS and
items disposed off accordingly.
• Methods of Disposal
• Transfer to government department or other public
institution
• Sale by public tender
• Sale by public auction
• Destruction, dumping or burying as appropriate.
 TRIAL Questions
1. Explain five (5) principles of public procurement
2. Discuss the object of the Public Procurement Authority and its
functions
3. Explain the responsibilities of each of the following structures
in public procurement.
a) Entity tender committee
b) Tender Review Board
c) Evaluation panel
d) Procurement entity
4. State the five (5) methods of public procurement under the law
and give two conditions for the use of each.
5. Explain the stages of competitive tendering procedure for
procuring goods and services.
6. Explain the review procedures in public procurement.