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The Evaluation of Public Procurement

The Joint Stock Company « Electric Power Plants ». The Evaluation of Public Procurement. Experts : Bazakeeva Zhyldyz Zhamanchaevna Abdymomunova Saina Ryskeldievna. Stages of Public Procurement. The responsibility for procurement. Planning.

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The Evaluation of Public Procurement

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  1. The Joint Stock Company «Electric Power Plants» The Evaluation of Public Procurement Experts: Bazakeeva ZhyldyzZhamanchaevna Abdymomunova SainaRyskeldievna

  2. Stages of Public Procurement The responsibility for procurement Planning Implementation of tender documents and Invitation Tender period Opening and evaluation of tenders Selection of the winner and Conclusion of a contract Managing of a contract

  3. Overview of the obtained information The study examined: • Estimate of cost and its execution; • Procurement plan and the demand of departments in the goods and services; • 23 documents held by tenders, 31 conducted ones in 2010.

  4. The actual expenses are 4 104 444,000 soms. 300 707,000 soms - 534 687,000 soms- Current repairs Other services (13%) Equipment (7%) 645598,500 soms - Capital repairs Equipment (16%) 2 623 451,000 soms - goods;( 64%) The chart of actual expenses for 2010

  5. Procurement of goods and services Total amount of purchased goods is 2 623 ,4 million soms: • by tender for sum of 1 717, 2 million soms (65%); • Except the tender for sumof 906 ,2 million soms (35%) Total amount of purchased works is 946,3 million soms: • by tender for sum of 298,2 million soms (32%); • except the tender for sum of 648,1 million soms(68%). Total amount of purchased services is 534,7 million soms: • by tender for sum of 1,1 million soms (0,2%); • Except the tender for sum of 533,6 million soms (99,8%)

  6. Procurement plan • There is no common procurement plan based on the needs of departments. • The plan does not indicate the technical specifications for the goods . • The sums indicated in the procurement plan does not match with the sums spent purchasing. • The selected methods of public procurement , except the unrestricted auction, are not justified. Example: According to the Article «The lifting machines, cars, tractors and spare parts», there are 24 types of goods for different procurement methods. Some products never provided a method of procurement.

  7. Procurement methods • From allocated 4 104.4 million soms for the purchase of goods and services, on the tender, basically by unlimited participation, were purchased only 49% to the amount of 2 016.5 million soms; • From one source were purchased to the amount of 2 087,9 million soms, in other words, 51% of allocated funds; • There is no information purchased amount on the basis of Article 38 of the Act, with the consent of the Authorized Agency.

  8. Department of supply chain and logistics Department of Procurement and Logistics (3 person) Department of Logistics (5 person) Department of Fuel Supply (4 person) Functions: Procurement Plan Implementation of Tender Contract Invitation Storing of Tenders Functions: Procurements up to 2 mln soms Collection of departments’ demands Conclusion of a contract Functions: Timely provision of fuel oil and coal, Conclusion of contracts for the supply of fuel oil and coal Potential of the procuring organization(Department of Procurement)

  9. Potential of the procuring organization(Tender Board) • Tender board is formed for each tender. • The tender board included employees and representatives of JSC “EPP” departments, in some cases, the representatives of the Ministry of Energy of KR, and only by coal tender – public representatives.

  10. Potential of the procuring organization (results of questionaire) • In the study, experts conducted a survey of 3 employees of the procurement department, and 8 members of the tender board. In the questionnaire, respondents rated their knowledge of public procurement as: • good - 4 (36% of respondents), 3 representatives of the procurement department and a representative of the tender board. • satisfactory - 7 (64% of respondents), all members of tender boards. • The results of a survey showed a very low qualification of tender board members and lack of qualifications of the procurement department.

  11. The organization of tender(monitoring) One of the functions of procurement department is to conduct at least two monitoring: • during the procurement planning; • and immediately prior to the tender. However, the procurement department is not running this feature to the full extent.

  12. The organization of tender(implementation of tender documents) In violation of Article 21 of the Act, according to some tenders of goods purchasing: • criteria for evaluation of tenders is not provided ; • the requirements for the technical controlling and testing are not established ; • documentations for receipt and payment, also the payment terms are not specified ; • references to State Standards in the technical specifications, which must be set the requirements of goods quality are missing; • delivery dates are not specified, long-term correction of defects are established.

  13. The organization of tender(implementation of tender documents) In developed tender documents for the services the following violations were identified : • qualification requirements for the completed frame size for each item separately were established; • the requirements of early termination of a contract are not set in the special cases ; • types of purchased services are not specified in the Bills of services . Example: Repair of the filters protective coating of crude rubbersmall parts (elbows, tees, etc.). JSC "EPP" does not compose the estimated cost by defective act, during the preparation of a defective act all necessary works should be estimated. Illiterate defective act drafting may lead to an increasing volume of work in process.

  14. The organization of tender(announcement of tenders) • JSC "EPP" invites tender in accordance with Art. 17 of the Act, the copies of published announcements of tenders in the Public Procurement Bulletin and in Mass Media are attached in documents. • There is no database of potential participants; • a direct invitation after the announcement is not practiced .

  15. The organization of tender (tender period) • Despite of the large amount of purchased goods and services JSC "EPP" does not enjoy the right to conduct pre-bid meeting as provided by the Law. • At the tender period for the repair of basic equipment of Bishkek Heat Station the requirements regarding the implementation of the last two years changed from 20.0 million to 6 million soms.

  16. The organization of tender(estimation and comparison of proposals) The tender board evaluates and compare tenders with claim violation: • The evaluation reports of tender board members are not available in documents; • JSC "EPP" selects winners only by the presence of certain documents and at the lowest price; • The established evaluation criteria of winner selecting are not included; • In some tenders, in violation of Article 27 of the Act, when assessing the proposals of participants, the tender board rejected proposals from minor inconsistencies; • Misconduct of the tender board is evident , so after opening and evaluation, the tender board requests a copy of the license, certificate of conformity and the origin of the goods and sets deadlines for the missing documents.

  17. Examples of proposals evaluation • At the tender for the purchase of electro gas switches with built-in transformer, despite the fact that all three participants did not provide warranty of tender securities, certificates from the Social Fund and the STI, the lack of which is the basis for rejecting the proposals of all applicants by the results of the tender JSC VO "Electroapparat" has been recognized as a winner.

  18. Examples of proposal evaluation The tender for the purchase of Kazakh coal (Shubarkuland Kulanskiy sections): • TOO «North power trade» granted a contract with the coal mining company JSC "Shabyrkul Komur" for the supply of coal almost at the moment of conclusion a contract with JSC "EPP"; • in the statement of qualifications, the company noted $ 2100.000 as the similar delivery of the contract with a private entrepreneur for the supply of coal (without specified amount of value); • the remaining supply of specified provider can not meet the requirements of similar delivery, as well as supplier delivers the food.

  19. Examples of proposal evaluation At the tender of purchasing of fuel oil M-100 for Bishkek Heat Station: • there is the debt amounting to 713 soms in tax penalties in the documents submitted by the winning bidder LLC "Asura", . • The report of procurement procedures indicated the absence of debts. • Price winner for heating oil was 308 U.S. dollars. • It should be noted that in the statement of qualifications it is indicated that this company supplied to JSC "Kant Cement Plant" in the amount of 5,000 tons in February at a price of 250 U.S. dollars. In this tender violation of Article 8 of the Law "On State Procurement ", that is the supplier must perform its obligations under Taxes. Also, in order to save public funds the tender commission should make inquiry about the reason for the increase in the price of fuel oil for 6 months to 58 U.S. dollars as the price difference amounted to 348,000 U.S. dollars.

  20. Examples of proposal evaluation At the tender for the purchase of clothing and footwear with quotations: • To achieve the main goal of the Act, considered by experts the rejected proposal of LLC “New format", an applicant for work boots at the price of 870 soms per piece. The company has provided a letter of dealership in Kyrgyzstan from the manufacturing plant LLC "Talanprom", which is certified to a special shoe to protect from oil, petroleum products and acids, but the tender board decided that a sample of the company does not comply with standards, then there is a pattern made of synthetic leather, without laboratory analysis. • A similar situation with kersey boots, so that the LLC "Todas" offered at the price of 988.75 soms per unit, and the winner determined by PE "Bulanchiev" costs 1200 soms per unit. Thus, experts think that because of the weak preparedness of procurement specialists the alleged overspending of public funds for the purchase of footwear in total amount of 775 600 soms is identified.

  21. Examples of proposal evaluation At the tender for the procurement of coal in the amount of 232 thousand soms: The representative of LLC "Kara-Keche" provided the application for lot number 5 and 6, at the price of 2000 and 2030, respectively (this price was minimum), and this proposal was rejected: • Based on the provision of the proposal security with the incomplete sum (instead of 201,500 soms, the supplier has provided only 100.000 soms); • Lack of information on the same supplies, although in the statement of the qualifications 12.5 million soms and the lack of licenses to develop coal deposits, copies of contracts and the balance sheet are indicated; • It should be noted that there were additional agreement previously entered into a contract with JSC "EPP" for the supply of coal production in 2009. Thus, there is a confirmation of previous deliveries by LLC "Kara-Keche".

  22. Examples of proposal evaluation At the tender for the purchase of the VL-110 Removal from the construction zone of Ash-and-Slad Trash: • tender of two participants was rejected because of inessential discrepancies (discrepancies validity of the proposal security); • tender of all three participants did not meet customer requirements for down payments ( the tender documents did not provide advance payment) as all participants have demanded an advance payment in different amounts; • the tender commission, violating paragraph 3 of Article 27 of the Act, has held talks with LLC "Enhollkom" for advance payment and guarantee of the contract performance; • LLC "Enhollkom" agrees to the contract without advance payment and to reduce the range of the contract performance up to 3%, though GOID demands 10%.

  23. Examples of proposal evaluation At the tender for the purchase of salt: • After opening the quotations, the tender board asked for samples of salt for chemical analysis. • In the tender documents have been set a criteria for quality of salt by 8 indicators. However, the chemical analysis was carried out in the laboratory Bishkek Heat Station only by 4 indicators. Chemical analysis of "EPP" was supposed to take place inindependent laboratories for compliance with allthe requirements for quality.

  24. Examples of proposal evaluation The tender for the repair of basic equipment of Bishkek Heat Station: • According the lot number 1 repair of electric boilers the rates proposed by the bidders on the types of work have a big difference. For example, manufacturing and replacement of 25 tons of ceiling superheater to seal the ceiling of the boiler; JSC "Sredazenergomontazh" offered 450.0 thousand soms per ton at $ 11.2 million soms, and the "Dastan" company for 60.0 soms per ton , $ 1.5 million soms. If we take for each type of work, the lowest rates, offered by two proposers, the cost of the work amounted to 21.7 million soms or 33% lower than the proposed minimum price for this lot. • By lot number 5 in the Bill of Quantities of JSC “Narynspechydromontaj” included work with coverage in the amount of 765,665 soms that are not listed in the defective act.

  25. Examples of proposal evaluation The tender for the repair of basic equipment of Bishkek Heat Station: • By lot № 3,9,11 for each type of work, by lot number 4 to 14 positions, the difference in rates have a few thousand, ten and hundreds of thousands, and in some positions in a million soms. • by lot number 9 Chemical protection equipment HVO bidder LLC "Anticor" provided its tender with supplies, JSC "EPP" accepts it, even though the tender documents do not specify the amount of supplies, they do not set requirements for the quality of supplies, in addition, provided documents expired. • by lot number 8 adopted works of LLC "Elektrosredazmontazh" that are not provided in the defective act amounting to 6133, 4 thousand soms.

  26. Examples of proposal evaluation At the tender for the repair of basic equipment of ToktogulHPS (Hydro Power Station): • There is a discrepancy in types of work specified in the tender documents, in the defective acts and bills of participants’ work volume,. • JSC "EPP" does not compose the estimated cost by the defective act, where should be estimated all types of work required. • The specified information on the availability of tender documents (“Dastan” coompany), and the lack of information about debt (LLC “Getest”, LLC “Hydrokurulush”), indicated in the report of procurement procedures, does not correspond to reality. • LLC "Getest" at the time of the tender had debt in the amount of 50.7 thousand soms, LLC “Hydrokurulush" provided an overdue certificate of the absence of debts.

  27. Examples of proposal evaluation At the tender on capital repair of HPS equipment: • Defective act is conducted for the technical inspection. But applicants submitted an application to capital repairs with details of each type of repair work. • Overhaul and repair equipment is not assessed , as a result no one knows the real cost of repairs. • For lots № 1,2,3,4,5,8 tender did not take place, but the reasons for cancellation of the tender for these lots in the record of the procurement procedures are not specified. • Despite the fact that lots №6, 7, 9, 10 suggested price of participants exceeded the allocated funds for repairs, according to the results of the tender for lots № 6,7,9,10,11,12,13,14 contract was awarded to JSC “Narynspechydromontazh“ amounting to 57.8 million soms, which is a violation of Article 29 of the Act.

  28. Examples of proposal evaluation At the tender for the repair work on the eight lots: • At the opening procedure applications of 10 participants of tender were opened; • At the tender evaluation process participant LLC "Gidrokurulush" was not evaluated by the Tender Commission (because of the lack of letter about withdrawal of the proposal); • In the procurement procedures report there is no information on the participation of this participant to this tender; • By lot number 3 LLC "CT-Baltica" proposed work not covered in the defective act “Overhaul of protective structures in the mountain slopes of the right and the left sides of the Toktogul hydroelectric station,“ in the amount of 2,412,981 soms, the Customer accepts and enters into a contract;

  29. Examples of proposal evaluation At the tender for the repair work on the eight lots: • By lot number 5 - 1 824 thousand soms and the lot number 6 - 742.5 thousand soms, indicated in the tender LLC "ICS“ and voiced in the opening procedure of tender, does not meet the amount specified in the Bill of Quantities (№ 5 -2 038.6 thousand soms and the lot number 6 - 829.9 thousand soms). • After opening the tenders, the tender board has modified the price of the applicant, replacing the Statement of work with the new price; • Despite the fact that the LLC "Plant of Construction Materials" does not have a license for climbing work, according to the results of the tender it got a contract.

  30. The organization of tender(conclusion of a contract) At the tender for the purchase of sulfuric acid in an amount of 1378 tons: • after the defining the Winner, the tender board identifies an arithmetic error in the total amount of bid LLC “Himreagent" in the direction of increasing the amount of 1440 U.S. dollars, and the tender board takes a new price of U.S. $ 248,040 and signs a contract at the new price.

  31. The content of the contract for the supply of goods and services Agreement concluded in accordance with the Civil Code of KR, but in some contracts concluded by results of the tenders are not under the tender winners. In negotiated contracts a certain period of supply is not indicates, which makes it difficult to use norms of the Civil Code for the late delivery of: • Agreement on 02/20/10, with the LLC "Atolend" to supply tires for the total amount of 5 687 600 soms. The treaty does not indicate the includision of the price of all taxes and costs of delivery; • Agreement on 25/02/10, with LLC «Full mobili» for the supply of furniture. The amount of the contract is not indicated, there is no requirement for quality furniture, penalties for failure to fulfill contractual obligations are not specified, only supplier’s liability is indicated; • Agreement on 03/04/10, with the LLC "Starooskolskaya technology company" in the specification number 1 indicates that the prices are valid until 02/28/10, at that time as the contract was concluded on March 4, responsible parties are not specified. • Agreement on 05/03/10, with the LP "Kum Tau" to supply coal to the total amount of 4 100.0 thousand U.S. dollars. There is no timetable for delivery, liability of the supplier for late delivery of coal is not specified.

  32. The content of the contract for the supply of goods and services • Agreement on 03/15/10, on 15.03.10, and on 3/15/10 concluded the purchase of oil and grease with different conditions, so the LLC "Yumat" and LLC "Aleton" supply products with the payment of VAT, sales tax, excise tax, and also supplier LLP "Snabdormash" supplies its products without payment of excise and customs duties. Costs of transportation to the destination are not specified . • Agreements on 09.02.10, and 09.02.20 for the purchase of coal deposits indicate Kyrgyz coalfields to provide the collateral agreement, although this condition should be stated at the conclusion of the contract. Confinement conditions of this warranty are not specified. • Two contracts for the supply steel to the amount of 1,382,057 soms and 557,620 soms with a warranty of one month, with different payment terms (50% deposit, 100% prepayment) were concluded in one day . Paragraph additional terms and conditions indicate provision of a certificate of state registration, statistics registration card, certificate from the STI, these documents must be submitted before signing the contract.

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