ALFRED & HAMID SYNDICATE
PROCUREMENT AUDIT
LECTURE 10
TEST QUESTIONS
SOLUTION
Q4)
PROCUREMENT COMMITTEE: A committee that is set up to evaluate,
analyze, monitor and review the procurement process of goods, works or
services by the procurement unit of an entity to ensure transparency,
accountability and value for money.
a) MAIN FUNCTIONS OF THE PROCUREMENT COMMITTEE
*Approve all procurements in accordance with the thresholds stipulated in
the law.
*Review submissions from the procurement unit that are above the
authorized financial limit.
*Approve the detailed annual procurement plans for goods, works and
services, as part of the annual budget submission process.
*Revise the procurement plan based on priorities, in the event of
insufficient funds being voted by Parliament.
*Provide a copy of the detailed final procurement plan for the MDA to the
National Public Procurement Authority
*Report monthly to NPPA on all procurement activities undertaken by the
procurement unit during the calendar month.
*Ensure that all technical guidelines and regulatory instructions issued by
the NPPA, or the procuring entity, are followed by procurement staff.
*Nominate evaluation teams, review evaluation reports, and approve the
award of contract to the selected bidder;
*Review and approve prior to any announcement of a procurement process
(method of procurement, the bidding documents, advertisements, etc)
*Maintain detailed minutes of meetings and records of all decisions and
recommendation
* Approve entries and removals from the Register of Suppliers and
Consultants;
* Rejection of unsuccessful bids
b)
Procurement Planning: Section 29 of the Act and Regulation 28 both
require procuring entities to prepare a procurement plan for each fiscal year
and prepare quarterly updates and in consultation with the Ministry of
Finance and the NPPA. The Regulations require that the procurement
planning process is fully integrated with applicable budget processes and
circulars issued by the NPPA and the budget preparation instructions of the
Ministry of Finance
Note that procurement planning is a complex undertaking that requires
coordination with other departments to ensure its usefulness as a guide and
as a control tool as well as its coherence with end-user departmental activity
plans.
KEY REASONS FOR PROCUREMENT PLANNING
*It helps to properly managed the procurement process in order not to
undermine the budget process and its objectives.
*To ensure that the priority aims of a procuring entity are adequately met
before spending on less essential procurements.
*Effective planning allows requirements to be gathered/ aggregated into
larger purchases at lower unit costs,
*It helps to curtail frequent sourcing of quotations for identical items and
issuing many individual local purchase orders.
*It helps in the aggregation of common user items within a procuring entity
or for more than one procuring entity into framework (Call-off) contracts for
six months or a year
*Helps to save time wasted by separate procurements, and a reduction of the
need to maintain high stock levels.
*Publication of realistic annual procurement plans allows the private sector
to respond more effectively to the requirements and specifications of
Government.
*It helps to decide what to buy, when and from what source
*Its an opportunity for all stakeholders involved in the process to meet in
order to discuss procurement requirements.
*Planners can estimate the time required to complete the procurement
process and award contract for each requirement
*It helps to assess the feasibility of combining pr dividing procurement
requirements into different packages.
*Ensures transparency and predictability
*Provide a good basis for monitoring
c) 2 STAGE BIDDING METHOD
Two-stage bidding is an appropriate method of procurement when it is not
feasible for a procuring entity to formulate detailed and precise
specifications for the required goods, or to identify their characteristics, or
when the character of the goods is highly technical or is subject to rapid
technological advances.
It is an infrequently used procurement process in which a procuring entity
invites bidders in the initial stage to contribute to the detailed specification
of the goods through the submission of only technical bids. Following
initial evaluation and consultations, new detailed specifications are prepared
and a restricted bid requesting both technical and financial information is
issued in the second stage to all participants who were not rejected in the
first stage.
As the Audit Manager, am strongly advising that Health is paramount
parastatal utilize the Two Stage Bidding method due to the fact that the said
procuring entity, is unable to draft or create detailed specifications for the
intended goods to be procured.
PROCEDURES TO BE USED
Listed below are the procedure to be used for two-stage bidding for goods:
*prepare bid documents, with evaluation criteria, detailing out the general
requirements and specifications of the proposed goods;
*obtain all required approvals from the procurement committee and
endorsements from the NPPA;
*identify list of pre-qualified suppliers;
*invite suppliers to submit the first stage proposals, without bid prices, that
meet the requirements of the bidding documents;
*evaluate the proposals and select the most feasible and responsive bids to
be considered during the second stage of the process and reject non-
responsive bids at this stage;
*finalize requirements with respect to specifications and features using the
selected proposals as a guide. This might require the deletion and
modification of specific aspects of technical or quality characteristics of the
selected proposals;
*develop bid documents and detailed evaluation criteria.;
*invite only the responsive bidders to submit technical and financial
proposals;
*evaluate and select the best evaluated offer.
Q5)
a) AREAS OF WEAKNESS ON THE SYSTEM
*No advertisement was done
*Failure to appoint or select a procurement committee
*The value of the contract is $50,000 and at an exchange rate of Le 11000 =
Le550,000,000
*This should have been an Open Bidding-National Competitive Bidding
(NCB) but the Mayor chose Sole sourcing
*Failure to obtain specific waiver from NPPA before opting for sole
sourcing
*Ayorinde was selected by the Mayor using sole sourcing for which
conditions were not adequately met
*Poor planning which resulted into the Mayor incurring extra cost
*Incompetency on the side of the administration which led to the work to be
halted or paused
*Evidence of self interest on the side of the Mayor
*Failure to disclose how Ayorinde was selected, if he was in the list of pre-
qualified or pre-approved contractors list.
*The project is a contract for works
*The final procurement undertaken by the Mayo is sole system.
b)
The contract was awarded to Ayorinde Construction Company using Sole
sourcing
EVIDENCES required for selecting Ayorinde Construction Company
(Sole Sourcing)
Sole Sourcing: A procurement method used wherein a single supplier has the
exclusive rights, mandate, authority, permission, skills, techniques, to supply to
particular goods, render a service or undertake some work.
Approval / justification from procurement unit for the use of sole sourcing
method
Minutes of procurement committee approving sole sourcing method
Letter sent to NPPA requesting waiver
Approval from NPPA granting waiver
Bid register
CONDITION / JUSTIFICATION for use of sole sourcing:
Only one supplier has the exclusive right to manufacture the
goods/works/services to be procured.
In the case of emergency
Additional works, which were not included in the initial contract.
for additional deliveries of goods by the original supplier which are intended
either as parts replacement for existing goods, services,
Service requires selection of a particular consultant due to his unique
qualification.
If the advantages of using a certain supplier are abundantly clear
For the continuation of work that cannot be reproduced by another supplier
If the procurer requires a certain product or services that is only available
from one supplier.
