Construction Management: Tender and Procurement Procedure - Assignment Example

Tender and procurement procedure Name of the student Name of the Institution Date of submission Task three ELIGIBILITY OF THE PROSPECTIVE BIDDERS Various procurement entities in Kenya through the Public Procurement Oversight Authority (PPOA) came up with suitable mechanisms to gauge tender applicants so as identify the qualified applicant to award the tender (Authority, 2007). Several aspects are normally taken into consideration in the process of inviting applicants for instance:- An organization that wants to construct a new building to host its office will advertise the tender through its procurement entity to the public (Authority, 2007). The interested parties will eventually drop their applications to the office of the organization upon payment of the stated fee as advised in the advert (Authority, 2007). Once the applications have been received, the procurement entity through its Bids & Award committee will determine the eligibility of the applicants through the following steps:- Invitation for the tender opening phase: This is where the Bids & award committee invites all the applicants to verify their applications and confirm if all the attachments are correct. The application for any tender is normally supposed to include the following documents. Copies of the applicant’s certificate of incorporation: This is the document of registration that indicates the name of the firm, type of business or activity it does, physical contacts, date of registration and status of the firm, that is, whether it is a local or foreign firm. Copies of the applicant’s KRA PIN certificate: This is a document that is obtained from the Kenya Revenue Authority indicating that the firm is a registered tax payer, it states the name of the firm, physical address, date of application and tax obligation of the firm. Copies of Business permit: It is a document issued by the sub-counties formerly known as Local Government Authority to carry out a given type of business within a prescribed region. It contains the name of the firm, physical address, business permit number, fees paid and date of the issuance of the document as well as the expiry date of the document (Akech, 2004). Copies of the latest Tax Compliance Certificate: This document outlines the status of the firm with regard to its tax obligations as indicated in the PIN Certificate. It confirms if the firm normally submits its tax returns as required by the Kenya Revenue Authority (Akech, 2004). Copies of the VAT Registration Certificate: This is a document obtained from the Kenya Revenue Authority which indicates that the firm is obligated and registered as a Value Added Tax compliant. Copies of Memorandum & Article of Association: These are documents indicating the type of business the firm does, the number of shareholders and the amount of shares they owned among others (Akech, 2004). Copies of Current Bank statement: This shows the liquidity position of the firm applying for the tender hence their ability to carry out the tender in the event that they are awarded the contract. Copies of the Previous Contracts: These documents should state the type of contract did that are similar to the one advertised for the last three years (Akech, 2004). Evaluation of the Bids: Once those documents have been verified, the Bids & Award committee will approve whether the applicants have passed or failed on that stage. Thereafter, the committee will confirm whether the solutions proposed by the remaining bidders are realistic and desirable, that is, they meet the minimum requirements outlined, and the estimates costs are consistent with proposals. At this stage, those bidders who pass undergo detailed examination as recommended by the Bids & Award committee. This is where a thorough comparison of the bidders proposed quotation cost is done. The quotation that is technically compliant and with the least evaluated bid cost will be the one that will be considered to have won the tender, hence regarded as the eligible bidder. However, despite the eligibility of a bidder, organization that intends to offer the building contract has the rights to review the entire bidding process to verify the qualification of the bidder. The main purpose of such review is to unleash any form of illegality that might have been made in the entire bidding process, upon discovery of some mischief the “eligible” bidder shall be disqualified automatically from the process and thus have the bidding process carrying out a fresh. Awarding of the Tender: Once the organization is certified that the bidding process was free and fair as reported by the Bids & Award committee, the eligible bidder will eventually be awarded the contract to spearhead the construction of the building. Task six Identify on the various security /guarantee for the bid as well for the work, with explanation A bid is a form of written guaranty from third party guarantor which is submitted to the principal client by the contractor or the bidder with the bid. The form of tender security refers to the assurance given by the tenderer to the employer that the said work will be performed as per terms and condition of the contract (Authority, 2007). Mostly the guarantees for the bid are always given in terms of monetary value and the Bank act as the guarantor. Some of the risks that involve in giving out tender include the tenderer withdrawing his or her tender immediately after the opening of the tender (Authority, 2007). If the tenderer refuses or fails to execute the form of agreement in accordance with the instruction or terms of agreements, the guarantee undertakes to pay the employer the initial money required having to prove the required, as long as his demand the employer will note that the claimed amount by him is due to him, owing the incidence of one or all of the two circumstances, specifying the occurred condition or conditions. This is one form of the guarantee where a guarantors standards in for the tenderer and pledges to meet the cost of the bridge of any contract. In Kenya, tender guarantee will always remain in force up to and including thirty days after the period of tender validity, and any kind of demand therefore in respect should reach the bank not later than the prescribed date. Performance guarantee documents issued by the bank and protect the tender beneficiary against the failures of the principal to meet its contractual obligation in any given contract. This form of guarantee is being issued before the tender contract is concluded while the recital assurance is an issue by the winner of the tender after the contract has already been awarded. A bid bond is another form of security, and it ensures that on acceptance of a bid by the client the contractor will proceed with the contract and will replace the bid bond with the performance bond. However, the guarantor will pay the customer the difference between the contractors bid and the next highest bidder. The distinction between the two is called liquidated damages, which cannot exceed the amount of the bid bond (Authority, 2007). In case of the fidelity bond, a bid bond is not an insurance kind of policy and in case it is cashed by the client, the amount paid can be recovered by the guarantor from the contractor. It is also called bid guaranty or the bid surety. In Kenya, the individuals who apply for tender should give their intention and security bills and in circumstances of a bid security the amount should be specified, and the currency specified (Authority, 2007). An unconditional guarantee normally issued by a bank or any other financial institution like insurance, bonding or surety from the company. The company can give an irrevocable credit letter that can act as a surety. Hence the bidders can use this form of a letter. Another form of surety is a cashier or certified check or another security which is specified in the BDS in case it is from the reputable source of the eligible country (Authority, 2007). For works, the bidder may offer other standards of quality, brands names among others provided it demonstrates, to the purchasers satisfaction that the substitutions ensures substantial equivalence or are somehow superior to the ones which are specified in the section VII schedule of requirement. The bid security as specified in pursuant to the ITB 19.1 bids which do not have any good security are normally rejected by the client as a non-responsive. For unsuccessful bidder, security should be returned by the client (Authority, 2007). References Akech, J. (2004). Development partners and governance of public procurement in Kenya: enhancing democracy in the administration of aid. NYUJ Intl. L. & Pol., 37, 829. Authority, P. P. O. (2007). Assessment of the procurement system in Kenya.Nairobi: PPOA. . 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