Procurement of Consulting Services

1. Procurement of Consulting Services June 02, 2017 By: Ashok Kumar Jha

2. A Journey of Thousand Miles begin With a Single Step : Procurement

3. Consult, Consultant and Consulting Services To consult is to give or get help or advice A consultant (from Latin: consultare "to deliberate") is a professional who provides expert advice in a particular area such as security (electronic or physical), management, education, accountancy, law, human resources, marketing (and public relations), finance, engineering, science or any of many other specialized ... The legal definition of consulting services is simply the provisioning of services by an independent contractor by means of consultations. Over time, “consulting” ...

5. Consult, Consultant and Consulting Services PPA, 2063/ 2 ( e) : The Consulting Services are meant by study, research, survey, design, drawing, supervision, Training, auditing, development of software or any types of intellectual or professional services. WB/ADB : A wide variety of private and public entities including international and national consulting firms, engineering firms ,-------------

6. When could consultants be hired? Consultants may be hired if:Ref : PPA 2063 , 29 (1) • The services they would be providing is beyond the capability of the Procuring Entity to undertake, either because it does not have the expertise or it could not devote enough time to the work due to numerous other assignments; and Or • As per Financing Agreement with The Development Partners; subject to use of foreign sources .

7. Guiding Principles of Selection of Consultants • Need for high quality Services • Need for Economy and Efficiency • Need to give equal opportunities to all eligible/qualified consultants to complete in providing the services • Encouraging the development and use of national consultants in case of International Consulting/ Consultants to be procured • Need for transparency in the selection process

8. Methods of Selection of Consultants Principally ( Ref Act 8 (1) (Kh) Through Competitive Proposals from the respective consultants/consulting firms Direct Negotiation No piecemeal procurement to limit the competition : Ref Act 8(2)

9. Scope of Consultants • Private and Public entities • Consulting and Engineering Firms • Management Firms • Procurement Agents • Inspection Service Providers • Auditors • UN Agencies • Investment and Merchant Banks • Universities and research instituitions • Government Agencies • NGOs • Individuals

10. Procurement Guidelines Used • Guidelines : SELECTION AND EMPLOYMENT OF CONSULTANTS UNDER IBRD LOANS AND IDA CREDITS & GRANTS BY WORLD BANK BORROWERS January ,2011 • Guidelines on The Use of Consultants by Asian Development Bank and Its Borrowers March, 2013 • Public Procurement Act 2063, & Public Procurement Rules ,2064 ( Inclusive of Amendment 2073)

11. Consultant’s Procurement Cycle Identification of Services Preparation of Procurement Plan Completion or Termination of Contract Short listing Preparation and Approval of Designs, Cost Estimates, PQ and Bid Documents Contract Implementation Start Issuing EOI/RfP Documents Award of Contract Pre-Proposal Conference Contract Negotiations RFP Evaluation RFP Submission Technical /Financial Opening

12. Basic Requirement for Selection of Consultants • Procurement Plan required to • Identify the types of services required • establish the mode of procurement • know the type of Consultant ( Individual, firm, National, International ) • determine the ABC • Approved Budget for Contract (ABC)

13. Methods of Selection of Consultants • QCBS: Quality Cost Based Selection • QBS: Quality Based Selection • FBBS: Fix Budget Based Selection • LCBS: Least Cost Based Selection • CQBS: Consultant Qualification Based Selection • SSS: Single Source Selction • Individual Consultants

14. Quality Cost Based Selection (QCBS) • A competitive process among short-listed firms • Takes into account the quality of the proposal and the cost of the services • Cost as a factor of selection is used as judiciously • Weight to the quality and cost depends upon the nature of the assignment

15. Quality Based Selection (QBS) • Appropriate for complex or highly specialized assignments • Difficult to define precise TOR and required input from the consultants: examples: country economic or sector studies, multi sector feasibility studies, design of hazardous Waste remediation plant, Urban plan, financial sector reforms competitive process among short-listed firms • Submission of TP with or without FP ( Two envelop System) • RFP either provides estimated budget or time inputs of key experts • Highest ranked Consultants will be asked to submit the FP if not submitted • Financial Negotiation include the negotiations of all consultant’s remuneration and others.

16. Fixed Budget Selection(FBS) • Appropriate for simple assignments • Budget is fixed • Easy to define TOR and required input from the consultants: examples • Submission of TP with FP ( Two envelop System) • RFP provides available budget • FP exceeding Budget rejected. • Highest ranked Consultants will be asked to negotiate

17. Least Cost Selection(LCS) • Appropriate for assignments of routine nature such as audits, engineering design where established practices and standards exist • Minimum qualifying mark for quality is established Budget is fixed • Submission of TP with FP ( Two envelop System) from short list • TP with less than qualifying marks rejected • FP with the lowest price selected and

18. Consultant Qualification Selection(CQS) • Appropriate for smaller assignments or emergency situation • Highly specialized expertise is required • “ Boutique “ consulting firm that provides depth of expertise in specific area • One Firm is selected from short-list. • Asked to submit the TP and FP

19. Single Source Selection(SSS) • Prevents the benefit completion in quality and cost • Exceptionally used for • Natural continuation of previous work • Emergency works • Very small assignments • Only one firm or individual is qualified.

20. Individual Consultant • No need of Advertisement • But advantageous if advertisement is done • Comparison of Three Best CVs • Selected on the basis of relevant experience, qualification and capability to carry out the assignment • Negotiation .

21. Experience Sharing

22. Selection Process under QCBS Steps: Preparation Of ToR Preparation of Cost Estimate and Short Listing Criteria Advertising for EoI Preparation of Short List of the Consultants Preparation and Issuance Of RFP which includes LOI, ITC, Data Sheet, TOR, Proposed Draft Contract Agreement Document Receipt of Proposals Evaluation of Technical Proposal Public Opening of Financial Proposal Evaluation of Financial Proposal Combined Evaluation Of TP and FP Negotiation and Award of Contract to the selected firm

23. TOR Preparation Basic Elements of TOR: Rules 69 Introduction of the Project Background of the Services Objective of the Services : If transfer of knowledge and training are objectives ; should be specifically stated Scope of the Services Client’s Input to the consultant Qualification Required Time for completion of the services Client’s obligation to the Consultant Deliverables Selection Method Types of Contract

24. Cost Estimate How do you compute the cost of consultancy? The cost of consultancy shall be computed on the basis of cost to the consultant of actual services to be rendered by the consultant plus a reasonable level of management fee. The amount of management fee depends on the complexity and magnitude of the project, and other direct expenses associated to the undertakings. The cost of consultancy shall consist of the following and shall be presented in the agreement in like manner: 1. Remuneration Costs These are the remuneration to be paid to the consultant’s staff/personnel who are directly engaged in the consulting services as per agreed manning schedule. It covers the basic rates of the staff multiplied by a billing factor of the consulting firm. a. Basic Rates The basic rates represent the salaries actually being received by the professional staff from the consulting firms as certified by the consultant with a sworn statement to be submitted to the Procuring Entity. The basic rates of all individual members of the staff shall be clearly indicated in the contract. In determining the basic rates, the following may be considered as bases: i. Salary history; ii. Industry rates; and iii. Two hundred percent (200%) of the equivalent rate in the Procuring Entity as the floor.

25. Cost Estimate b. Billing Factor or Multiplier The billing factor or multiplier shall be derived from the following to be supported by audited financial statements prepared by an independent auditing/accounting firm/entity and certified by the consulting firm with a sworn statement: i. Overhead Cost These are incidental and general administrative and managementexpenses of the firm other than those directly related to the project, and are expressed in percent of the total of the basic salaries of all the personnel of the firm. ii. Social Charges These are cost items for the welfare and benefit of the consultant’s staff in accordance with the policies of the consultant and of the government. Their totality expressed as a percentage of the basic rates of the consultant’s personnel, these cost items may include any or a combination of the following, based on audited and sworn statement to be submitted by the consultant to the Procuring Entity: • Bonuses; • Vacation/sick leave and paid public holidays; • Medical Care; • Pension plan – retirement and/or terminal pay;• Company insurance; and • Other benefits as required by law.

26. Cost Estimate 2. Reimbursable Costs These include all other expenses associated with the execution of the services. These costs may be classified into: Per Diems International /Domestic Travel Domestic Transportation Communication Expenses Cost of office/engineering supplies and cost of preparing/reproduction drawings and other documents to be submitted; Cost of field office either through rental or construction; Equipment rental and purchases whenever justifiable; Acquisition of software licenses; and Cost of other items deemed necessary for the project as certified bythe agency concerned.

27. The measure of a success is not whether you have a tough problem to deal with but whether it is the same problem you had last year.

28. Short list Eligible Consultants Legal Reference: Act 30 (1), (2) (3) and Rules 70 (1)& (2)in relation to the requirements for the procurement of consulting services.>Nrs. 2mill - 100 mill: NCB ; >Nrs.100million : ICB What is short listing? The process of short listing determines the most qualified consultants from those that submitted eligibility documents to undertake the project. Why is there is a need to short list?If all eligible bidders are invited to submit proposals, the chance of a consultant being awarded the contract diminishes greatly.Considering the substantial costs incurred in preparing a proposal, this discourages a consultant from participating in the bid.A short list of, say, 6-8 nos greatly increases the chances of a consultant and thus encourages it to put in more time and effort in preparing a good proposal. In the end, government, in general, and the Procuring Entity, in particular, receive better proposals to choose from.

29. Selection Process of Consultants Under QCBS Steps 1 :Short-Listing :Notice for Expression of Interest EOI through National Daily News Paper :Contents : PPR , 2064 /Rules 70 (3) • Name and Address of Public Entity: For correspondence and submission of EoI • General Description of Project/ Services • Sources of Funding for intended Services • Qualification of the firm/individual in terms of general and similar experience , organizational management capacity showing firm’s turn over , logistics , human resources required • Profile of the works of similar nature in last 7 years ( but for individual 4 years) • Input ( PM / PD) of key personnel for the services • Tentative service completion time • Documents required to substantiate the Firm’s Qualification • Last date and time of submission of EoI(16th day of Ist date of Publication of EOI ) • If EOI is from the JV of firms • Description of Firm • In case of JV name, address description of all the JV indicating the lead /main partner

30. Selection Process of Consultants Under QCBS Steps 2: Evaluation of EoIs with reference to Evaluation Criteria approved before receiving EOIs Major Evaluation Criteria: Rules 70 (5) (12) • Qualification • Experience • Organizational/ Managerial Capacity (Turn Over): Not > 1.50 times the Cost estimate of Services • Selection of the Three top ranked EoIs : Rules 70 (8) WB Guideline (IPF,2016) : 5-8 Nos. ADB Guidelines: 6 Nos. • Issuance of RFP : LOI, ITC, Data Sheet, CV of the Human Resources, Qualification Criteria, GCC, SSC, Technical Proposal , Financial Proposal, Form of contract • RFP submission ( Minimum 15 days for NRs. 2 million and 30 days for > 2 million ) : Rules 71 (1) • Technical Proposal Opening and Evaluation • Financial Proposal Evaluation • Combined Evaluation ( 80 % TP and 20 % FP) • Selection of the Top Ranked Consultant • Negotiation with Top Ranked Consultant and Award of Contract

31. Qualification Criteria: Rules 71 (6) • Consultant’s specific Experience : 25% of total • Methodology : 20-35% • Key experts 30-60% • Transfer of Knowledge: 0-10% • Participation by National Experts: 0-10 Minimum Pass Marks should be Stated

32. Combined Evaluation • Technical Proposal P1 : 90 * 0.8 = 72 P2: 85 * 0.8 = 68 P3: 80 * 0.8 = 64 • Financial Proposal P1 : 450,000 P2 : 430,000 P3: 420,000 P1 : 420/450*20= 18.66 P2 : 420/450*20=19.53 P3: 420/420*20=20

33. Total Combined Evaluation • TP +FP • P1 : 72+18.66= 90.66 – Winner Consultant • P2 : 68+19.53= 87.53 • P3 : 64+20= 84

34. Types of Contracts • Lump-Sum Contracts • Time Base Contracts • Retainer and / or Contingency Contract • Percentage Contract • Indefinite Delivery Contract

35. Selection of Particular Types of Consultant • Selection of UN agencies • NGOs • Procurement Agents and Construction Managers • Inspection Services • Banks • Auditors • Service Delivery Contractors

36. Important Provisions Currency Price Adjustment Professional Liability Conflict of Interest Substitution of Experts

37. THIS WAS A TASTER NOW THE MAIN COURSE THANK YOU For Your Kind Patience