MANUAL FOR CONDUCTING VERY SMALL-VALUE PROCUREMENT
UNDER WORLD BANK/IDA SMALL GRANTS, LOANS AND CREDITS
II. PROCUREMENT UNDER COMPETITIVE GRANTS (CG)
For the efficient use of the following small grant-related
procurement methods and wherever feasible the beneficiary of the grant should take,
if necessary in consultation with the PMU/PIU/PCU, the following steps:
In connection with the small grant project, Establish a Register
of Potential Suppliers, Contractors and Consultants, if such a register does not
already exist. A list of local suppliers, contractors and consultants should be prepared.
Information about their experience, staff, references, financial situation should be
collected either through personal contacts with them or through mail. This information
should be evaluated using a simple common benchmark (for example, years of experience,
number and quality of its staff (engineers, accountants, surveyors, etc.), and references
(i.e., the contact information of the firm’s recent clients), and the annual turnover,
etc. The firms that meet the minimum requirements should be listed.
Create a Unit Price Reference Register. Information on unit
prices for goods, works and services required in the grant funded project area should be
collected. This information can be collected through direct contacts with local
shopkeepers, contractors and consultants (mostly individual experts) as well as their
clients. This information should be placed on a register which may be a simple exercise
book used when conducting purchases with small grant funds. This is a task for the
selected beneficiary which may also seek assistance from the project implementation
agency.
The steps to be taken for procurement of goods, works or
services, estimated up to US$5,000 equivalent per purchase, are detailed below. For
purchases estimated to cost US$5,000 or more per purchase, the applicable procurement
methods described in Part III should be used. Please note that in order to expedite
procurement some of the steps listed below may be taken in parallel:
II. 1 "Shopping" or "Comparison of Prices" (for
goods contracts estimated at less than US$10,000 equivalent each):
Steps to be followed
If possible, establish a small procurement decision committee;
determine the type and units of the required equipment and their delivery time;
prepare list of suppliers (for this purpose use the register of suppliers, if
available);
obtain information about the availability of the required goods either by phone or in
person (shop around) from the suppliers;
record information in an exercise book about the suppliers, prices, etc.;
obtain brochures and lists of prices if available from the suppliers; if not obtain
prices by phone or in person;
consider the quality of goods, whether items are readily available, how much the final
cost will be, etc.;
compare the prices with the unit price reference database, if available (see para 1
above);
negotiate the prices if higher than the unit price reference database, or in the absence
of such a database, higher than market prices;
prepare a brief evaluation report showing the names of the suppliers from whom the
prices were obtained, and justifying the selection of a supplier based on the quality and
availability of goods and the price;
submit the evaluation report, along with the brochures, etc., obtained, to the committee
or the official authorized to approve the recommendation for contract award;
after approval, purchase goods from the selected shop/supplier;
pay the suppliers;
obtain written receipt from the supplier; and
keep all documents, including list of suppliers, receipts, etc. on file.
II.2 Comparison of Prices (for works estimated at less than US$10,000
equivalent each)
Steps to be followed
if possible, establish a small procurement decision committee;
prepare documents customarily prepared for such works (such as simple specifications,
bill of quantities, etc).
determine required completion time.
prepare list of contractors (for this purpose use the register of suppliers, if
available).
if possible, send the documents relating to the works, to several contractors in order
to obtain a minimum of three written quotations;
if it is not possible to obtain written quotations, invite at least three contractors
from the list one by one, interview them, and obtain their prices;
record all information in an exercise book;
use the unit price reference database, if available, to check the prices;
prepare a brief report showing the names of the contractors from whom the prices were
obtained, including a comparison of the prices, completion time, etc, and justifying the
selection of one of them;
submit the report to the procurement committee or the official authorized to approve the
recommendation for contract award;
after approval of the report, sign a contract with the selected contractor;
obtain written receipts for payments from the contractor;
certify that works have been completed satisfactorily; and
keep all documents, including list of contractors, receipts, etc. on file.
II.3 Selection of consultants (US$10,000 per contract)
Steps to be followed
prepare a job description if an individual to be selected as a consultant, or terms of
reference if a firm is to be selected;
prepare a list of potential individuals or firms (if possible, of three). Use the
register of consultants, if available;
select the best candidate (individual/firm);
contact the selected candidate;
negotiate the contract terms and conditions; and
sign a simple contract.
II.4 Direct Contracting or Sole Sourcing. In case
of the procurement of proprietary items, such as licensed materials, required items
available only from the manufacturer, extension of an existing works contract for
additional works (estimated to cost not more than 20% of the original contract value), in
case of emergencies (where there is no time to wait for comparing prices, etc.), this
method can be used. The justification of this method must be documented and kept on file.
This method can also be used when there is only one supplier, contractor or consultant in
the grant-funded project area and in the neighboring areas, and when it has been
determined that getting quotations from other localities will add no value and will result
in higher cost because of transportation, etc. In such cases, reasonableness of the price
quoted by the single supplier must be certified and kept on file.
II.5 Financing "Operating Costs"
represent expenditure incurred on account of project implementation for salaries, project
related auditing services, communications, utilities, office supplies, and maintenance,
fuel and vehicle operations and maintenance, travel, per diem, training workshops,
including renting of training equipment, conference rooms, etc. Operating costs are
incurred in accordance with a periodic (normally annual) budget. In case of grants, the
operating expenditure budget should be elaborated during negotiations between the project
implementation agency and the selected beneficiary. The procurement methods discussed
above may be used in relation to the operating costs if considered appropriate. The
beneficiary’s own purchasing practices (commercial practices), if it has any, may also
be applied as long as the principle of efficiency is respected. For example, while for
the purchase of a low-cost railway ticket, no competitive procedure is expected to be
applied, for the purchase of an expensive air ticket for travel for the purpose of the
project, it is assumed that the beneficiary will inform itself of the airfares from
different travel agencies, airlines, etc., and will decide upon the best airfare.
II.6 Eligibility for Grants. All government
agencies, universities, research institutes, NGOs and private sector would be eligible to
apply for grants. The structure of the Competitive Grant Board and its procedures should
be such that there is no conflict of interest between the board members and recipients of
the grants. In practical terms, this would mean that a board member may not participate in
any decision in which an institution in which he/she has any affiliation, is an applicant
or potential beneficiary.
Box 1 – A Case Study on
Procurement under a Small Grant
A small team of three researchers at a Research
Institute has submitted a research proposal budgeted at US$100,000 involving applied
on-farm research on soil conservation practices. The team received a grant of US$80,000
equivalent to implement the study (the "beneficiary contribution" amounts to 20%
of the total budget and is represented by research staff salaries).The study will take
three years and involves in addition to the research itself, inviting a consultant and
also an end-of-project national workshop. The Institute is located at a remote location;
the nearest town is at a distance of 30 miles.
The agreed budget comprises the following:
Purchase of one 4WD vehicle estimated at US$18,000, and a tractor with trailer with
several pieces of field equipment, estimated at US$14,000
Purchase of laboratory equipment (five pieces of specialized equipment), estimated at
US$ 5,000.
Non-salary research operating costs estimated at US$25,000 (power and water charges,
telephone charges, casual labor, fuel, vehicle/tractor maintenance charges, laboratory
supplies (chemical reagents, glassware etc.), field experimental supplies (small
quantities of seeds and fertilizers, harvest bags, markers).
Services of a consultant on minimum tillage practices, estimated at US$8,000 (comprising
US$6,000 in fees and US$2,000 for travel/per diem).
Travel and per diem for research staff estimated at US$5,000.
Workshop expenses estimated at US$5,000 (rental of a facility, meals for participants,
rental of bus for fieldtrip, fees for workshop facilitator).
The research team has requested guidance from the project
implementation agency located in the capital (500 miles away), on appropriate procurement
practices.
After completing the process of selecting the beneficiary
through competition, the project implementation agency invited the Research Institute to
negotiate the grant agreement. During these negotiations, among other items, both parties
discussed the procurement arrangements for goods, works and services funded with the grant
funds. For this purpose, the beneficiary completed the self-assessment form (Attachment
1). Both parties discussed the information in the form and given the fact that the
beneficiary already had some experience in conducting procurement, decided that the
assistance required from the project implementation agency will be minimum. They agreed
that the beneficiary will contact the agency whenever it needed such assistance. The
beneficiary will be responsible for conducting the whole procurement process itself.
However, both the agency and the beneficiary discussed the procurement methods to be
applied and, in light of the guidance given in Section II of this Manual, agreed to the
following procurement arrangements. The project implementation agency also agreed to
provide, through its procurement specialist, a one-day training to the beneficiary in
conducting procurement according to the procurement methods included in the procurement
plan.
Purchase of one 4WD vehicle estimated at US$18,000, and a tractor with trailer with
several pieces of field equipment, estimated at US$14,000
National Shopping (NS) will be used for the vehicles
and for the tractor with trailer etc. There will be two NS contracts. The NS steps given
in Section III will be followed and the documents (Invitation to Quote) referred to
therein will be used.
Purchase of laboratory equipment (five pieces of specialized equipment), estimated at
US$5,000
Both the parties agreed that these specialized pieces
of equipment were not available in the country. These will, therefore, be procured through
International Shopping (IS), using the IS steps and Invitation to Quote in Section III.
Non-salary research operating costs estimated at US$25,000 (power and water charges,
telephone charges, casual labor, fuel, vehicle/tractor maintenance charges, laboratory
supplies (chemical reagents, glassware etc.), field experimental supplies (small
quantities of seeds and fertilizers, harvest bags, markers).
For the operating expenditures, the beneficiary will
prepare an annual budget. This budget will show the items of expenditure and the estimated
amounts chargeable to the project during the year. The items such as laboratory supplies,
seeds, fertilizers, harvest bags, and markers will be purchased using the applicable
procurement procedures in Section II of this Manual, i.e., for each purchase a simple
shopping or price comparison procedure will be used.
Services of a consultant on minimum tillage practices, estimated at US$8,000
(comprising US$6,000 in fees and US$2,000 for travel/per diem).
This consultant will be selected using the procedure
discussed in Section II of this Manual, i.e., a job description will be prepared, if
possible three curriculum vitae will be obtained, evaluated and the best candidate
selected. A simple contract will be negotiated and signed with the consultant. The
contract will include the fees, travel and per diem which will make up the lump sum
amount of the contract.
Travel and per diem for research staff estimated at US$5,000.
These items will also be included in the annual budget
for operating expenditures. For travel best transportation fares will be used by obtaining
and comparing fares if available from different sources. For per diem the prevailing
rates, i.e., rates paid by other similar agencies, will be used and paid as these occur.
Workshop expenses estimated at US$5,000 (rental of a facility, meals
for participants, rental of bus for fieldtrip, fees for workshop facilitator).
For the workshop expenses also a budget will be
prepared which will show the expenditure on rental of a facility, meals for participants,
transportation, facilitator, etc. For preparing this budget, the beneficiary will obtain
prices from different sources of these supplies, compare them and select the best price
for each item and include it in the budget. Payments for these services will be made as
these are received.
Based on the above, the implementation agency and the
beneficiary prepared a procurement plan using the form at Attachment 2 of this Manual.
Ex-Post Reviews.
In order to expedite the implementation of grant-funded
project activities, normally no prior review of the beneficiary’s procurement actions is
conducted. However, the PMU/PIU/PCU has the right to conduct such reviews of the
beneficiary’s procurement actions on a sample basis. The main purpose of such reviews is
to ensure that the grant funds are being used for the purpose intended and with economy
and efficiency as well as to find a timely solution for any procurement actions of a
beneficiary that may not be consistent with the principles of the efficient use of the
available resources.
