Procurement Management System

This covers procurement of goods and services including construction activities and consultancy services. The objective of public procurement management is to ensure availability of required goods and services including buildings, roads and other infrastructures at right time and right price so that planned activities may be carried out smoothly without disruptions. Billions of Ngultrums are spent annually by the Royal Government in the procurement of goods and services and construction works, which form major part of annual budget outlay. Moreover, procurement is one area, which is perceived to be prone to fraud, corruption and unethical practices. Thus promoting fair and transparent procurement practices is even more relevant in the context of strengthening financial resource management system.

FRR 2001 and in particular Procurement Rules and Regulations 2009 (an integral part of FRR 2001) outlines detailed procedures of procurement of goods and services including construction works and consultancy services. Technical standards and other matters regulating construction works are prescribed under Bhutan Schedule of Rates, Standard Specifications and other documents issued by the MoWHS. The Construction Development Board oversees registration and accreditation system of contractors. For funded procurements, procurement rules of lenders and donors may also be applicable.

For procurement of goods and services including consultancy services, major elements and stages of procurement management include planning and budgeting, administrative and financial sanctions, tendering and selection of suppliers, finalisation of TOR, contract award, contract execution and monitoring, receipt of goods and services, verification, inspection and recording of receipt of goods and services, processing and payments of bills/claims, etc.

For construction activities, there are specific additional requirements viz; Preliminary studies (geo-technical study, topographic survey, hydrological study, etc.), preparation of detailed project report, estimates, designs, drawings, BOQs, technical sanctions, work measurement and maintenance of technical records such as MB, Muster Rolls, MAS Account, Register of Dismantled Materials, etc.

The objective of assessment of procurement management is to ascertain that the procuring agencies procure goods and services and carry out construction activities in most economical, efficient and effective manner through applying transparent, fair and competitive procurement practices.

The auditor verifies, observes, compares and ascertains the compliance of each main indicator and sub-indicator against specific criteria derived from FRR 2001, Procurement Rules and Regulations 2009, Bhutan Schedule of Rates, Standard Specifications and other laws, rules, regulations and documents as may be relevant and applicable.

The main indicators and sub-indicators to assess and evaluate the procurement management system are given in Table – 7 (i-iii).

TABLE – 7(i): Indicators for Procurement Management System (Goods)

Sl. No. Main Indicators Sub-Indicators
1 Procurement planning i. Need Assessment
ii. Scheduling of procurement
iii. Budget availability
iv. Sourcing of materials
2 Committee i. Formation of main Committee
ii. Evaluation Committee
iii. Ethical requirements
3 Tendering i. Determination of appropriate procurement method
ii. Notice Inviting Quotation (NIQ)
iii. Preparation of Tender Document
iv. Receipt and recording of bids
4 Tender Evaluation i. Opening of bids
ii. Evaluation (Technical & Financial)
iii. Selection of supplier
iv. Award of contract & placing of supply order
5 Contract execution i. Receipt of goods
6 Monitoring & Follow-up i. Monitoring of supplies
ii. Follow-up of back orders

TABLE – 7 (ii): Indicators for Procurement Management System (Consultancy Services)

Sl. No. Main Indicators Sub-Indicators
1 Procurement planning i. Need Assessment (National/international)
ii. Budget availability
2 Committee i. Formation of main Committee
ii. Evaluation Committee
iii. Ethical requirements
3 Selection Method i. Quality and cost based selection (as an example from seven methods suggested in PRR)
4 Contract execution i. Fielding of consultant’s staff
ii. Assignment of counterpart staff
iii. Commencement of work
5 Monitoring & Supervision i. Monitoring progress of work
ii. Follow-up
6 Completion & Review i. Completed output
ii. Review of completed output
6 Impact i. Use of consultant’s output
ii. Impact

TABLE – 7 (iii): Indicators for Procurement Management System (Construction works

Sl. No. Main Indicators Sub-Indicators
1 Procurement planning i. Need Assessment
ii. Preliminary studies
iii. DPR/detailed designs
iv. Budget availability
v. Determination of Construction methods
2 Committee i. Formation of main Committee
ii. Evaluation Committee
iii. Ethical requirements
3 Tendering i. Determination of appropriate procurement method
ii. Notice Inviting Tender (NIT)
iii. Receipt & recording of bids
4 Tender Evaluation i. Opening of bids
ii. Evaluation (Technical & Financial)
iii. Selection of contractor
iv. Negotiation & award of contract
5 Contract execution i. Performance Security
ii. Site clearance & handing over of sites
iii. Advances
iv. Commencement of work
6 Monitoring & Supervision i. Monitoring progress & quality of work
ii. Maintenance of other construction records
iii. Follow-up
iv. Rectification of defects
v. Rescinding & termination of contract
vi. Completion and review
7 Receipt & processing of bills i. RA bills
ii. Final bills
8 Impact i. Use of constructed infrastructure
9 Maintenance of infrastructure i. Requirement of maintenance plan
ii. Execution