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Outline the Procurement Risks Planning Inputs Required for the Procurement of a Specified Work, Service or Goods for a Stated State Owned Organization in the Republic of Ghana.
GROUP THREE
ANSWER
Organization/Entity: KUMASI POLYTECHNIC Procurement Category : Goods
Item: Split Air conditioners (200 number) (Value at: Gh 100,000.00) Act 663: The Public Procurement Act 2003 is the Legal Framework which regulates and minimises risk in Public Procurement in Ghana
Risk
Understatement of the need
Action /Remedy
Purchase of unsuitable product or Section 21 of Act Analyse need accurately service Procurement Regulation Money wasted Procurement Manual Need not satisfied Section 33 (Specification Requirement) Greater expense Poor competition Section 21 of Act Procurement Regulation Procurement Manual Section 33 (Specification Requirement) Analyse need accurately Use functional and performance requirements
Misinterpretation of user needs Totally unacceptable purchase or Section 21 of Act not most suitable product or Procurement Regulation service
Time lost Increased costs Procurement Manual Section 33 (Specification Requirement)
Possible downtime
Identifying the need and planning the purchase (cont.) Likely Legal Frame/ Action Risk
consequences Act 663 /Remedy
Insufficient funding Delay in making the purchase Additional costs for re-tender Impractical timeframe Inadequate responses from tenderers Section 21 Prepare annual Proc Plans Section 21 Section 47 (2,3) Section 48 (c) Obtain appropriate approvals before undertaking process Improve planning Improve forecasting, planning and consultation with users
Reduced competition
Delivery schedule not met Non conformance with National Standards Probity issues Not being cleared at the Port of entry. High energy consumption Increased procurement costs Misuse of resources
Procurement Manual (pg 31 32) Ghana Energy Commission LI Adherence to Energy Commission 1815 (2005) and Standard Authority standards Section 77 (Confidentiality) Implement best practice policies, guidelines and practices Maintain ethical environment
Section 86 (Code of Conduct)Section 91 (Statutory Most suitable product not obtained Audit), Section 92 (Offenses Relating to Procurement) Unethical conduct Section 93 (Corrupt Practices) Procurement Manual
Action /Remedy
Define the specification in terms of required outputs Use functional and performance specifications
Definition of inappropriate product Need not satisfied or service Time lost Increased costs Possible downtime Biased specification Inadequate responses from tenderers Claims of unfair dealings
Ensure specification is consistent with needs analysis Improve market knowledge Use functional and performance specifications
Use functional and performance specifications Implement a control mechanism to review specification before release
Action /Remedy
Section 33 (Description of Goods Be familiar with requirements Works & Services) Use functional and performance Regulation (Pg 18) specifications Use an Expression of Interest or Request for Information to clarify requirements (be careful not to infringe intellectual property rights or copyright)
Selecting the purchasing method Likely Legal Frame/ Risk consequences Act 663
Failure to identify potential sources Lack of offers from suitable tenderers Part IV of Act 663
Action /Remedy
Thresholds
Improve procurement planning processes Improve market knowledge Seek industry participation Use the Industry Capability Network (ICN)
Need to seek offers again Possible cost variations Failure to obtain value for money
Improve implementation of procurement policies, guidelines and practices Improve tender documentation and clearly identify the evaluation criteria in Request for Tenders Provide staff with appropriate training and experience
Purchasing documentation
Risk
Likely Legal Frame/ consequences Act 663 Action /Remedy
Use standard documentation prepared by Crown Law Select appropriate documentation for purchase type (ie. goods, services, goods and services, or information technology related) Improve tender planning Assess and allocate risks appropriately Consult with Crown Law Use commercially acceptable terms Provide staff with appropriate tender planning and procurement skills Terms and conditions unacceptable Loading of costs in offers Section 49 (Provision of STD) to tenderers Schedule 4 of Act Having to modify tender terms and conditions Section 50, 51, 52 Disruption Engaging Suppliers in capacity Programmes
Low response
Action /Remedy
Ensure staff have appropriate tender planning and documentation training and experience Improve tender planning and preparation Review tender documents before issuing them and ensure evaluation criteria contain the critical factors on which assessment of tenders will be based
Action /Remedy
Implement standardised procedures for responding to enquiries Provide staff with appropriate tender management training and experience Respond in a timely manner to enquiries
Action /Remedy
Establish formal security procedures Train staff in their obligations Perform regular audits and reviews of security processes Advise tenderers of security measures Use appropriate tender advertisement strategy to increase competition (eg. consider advertising tenders in other publications as well as the local paper) Consult with the ICN to identify potential tenderers Provide potential tenderers with advance notice of tender requests Improve tender documentation and specifications Allow sufficient time for tenderers to respond
Need to undertake process again Increased costs Delayed delivery to the client Poor value for money due to limited competition
Action /Remedy
Actions as above for insufficient number of responses Improve your market knowledge
Evaluating offers
Risk
Failure to follow effective evaluation procedures
Action /Remedy
Provide staff with appropriate tender assessment and evaluation training and experience
Inconsistent evaluations
Possible complaints from tenderers Section 19 Subjective not objective evaluation Section 79, 80 of offers
Breaches of security
Maintain, audit and review security procedures Provide staff with appropriate training and experience and monitor performance Ensure that Evaluation Committee members understand and sign Confidentiality Agreements
Action /Remedy
Improve market knowledge Improve tender documentation Conduct market research Develop functional and performance specifications
Ensure evaluation criteria contain the critical factors on which the assessment of tenders will be based and that they are clearly identifiable to tenderers in tender documents Ensure evaluation criteria are appropriate and measurable Ensure that Evaluation Committee members sign Declaration of Conflict and Confidentiality Agreements
Action /Remedy
Provide staff with appropriate tender evaluation, financial and technical skills training and commercial expertise Improve evaluation procedures
Improve evaluation criteria and clearly identify them to tenderers in tender documents
Reject unacceptable offers Perform financial, technical and company evaluations before awarding contract Procurement Review Committee to review tender and selection process prior to awarding contract Ensure users are involved in the evaluation/selection process Improve technical evaluation procedures and train staff as appropriate Procurement Review Committee to review tender and selection process prior to awarding contract
Section 20, 33
Negotiations
Risk
Not matching the expectations of buyer and tenderer Contract disputes Delivery delays
Action /Remedy
Improve communication, including ensuring that Conditions of Contract form part of the Request for Tender Provide staff with training in contract planning and management Define terms carefully Record each party's obligations Clarify all ambiguities before signing the contract
Cost variations
Reduction in value for money Purchase of less suitable product Inefficient use of resources
Look at alternatives to share risk Distinguish between essential and non-essential goals and requirements Establish baseline before negotiations Distinguish essential goals from others
Negotiations (cont.)
Risk
Unfair or onerous requirements on Contract disputes the tenderer in the contract Invalidity of contract conditions Legal action Poor supplier/customer relationship Failure to reflect the terms offered Contract disputes and agreed in the contract Legal action Poor supplier/customer relationship Section 65 Section 65 Section 79, 80
Action /Remedy
Provide negotiators with adequate training and support Negotiate commercial terms
Contract management
Risk
Variations in price and foreign exchange Cost overruns Section 61
Action /Remedy
Agree on prices and the basis of prices Agree on a formula for calculating variations
Section 55
Seek legal redress if nonacceptance causes loss Negotiate but retain integrity of the contract
Failure of either party to fulfil the Contract disputes conditions of the contract Failure to satisfy needs Delays in delivery Downtime Legal action
Section , 78, 79, 80 Section 48, 50 Ensure good contract administration and performance management Hold regular inspections / meetings and ensure progress reports Ensure all staff know responsibilities and conditions Ensure good record keeping and documentation
Contract management(cont.)
Risk
Inadequately administering the contract
Action /Remedy
Cost increases Failure of contract Full benefits not achieved Delivery of unsatisfactory product Contract/supply disputes
Maintain up-to-date agency procedures and practices Ensure all staff are suitably trained and experienced in contract planning and management
Commencement of work by the supplier before contract is exchanged or letter of acceptance issued
Potential liability to pay for unauthorised work Possibility of legal action for perceived breach of contract
Confirm verbal acceptance of contract with written advice Accept all contracts in writing Ensure approvals are received before allowing work to start
Contract management(cont.)
Risk
Likely Legal Frame/ consequences Act 663
Section 50 Section 65 (7) Procurement Manual (57) Loss or damage to goods in transit Delays in delivery Downtime Liability disputes
Action /Remedy
Include appropriate packaging instructions in specification Agree on insurance cover for supplier to provide Accept delivery only after inspection Know when title of goods is transferred to buyer
Fraud
Action /Remedy
Develop systematic evaluation methods, techniques and evaluation criteria
Agree on performance criteria (with supplier and customer) Develop good relationships with suppliers Include evaluation clause in the contract Implement performance management strategies
Disposals
Risk
Collusive bidding at auction
Action /Remedy
Set reserve prices Deal with reputable firms Include disposal clause in initial contract Maintain ethical environment
Claims of bias and favouritism to organisations or individuals Reduction in value for money
Sell by open tender Document reasons for decision Provide staff with appropriate training