2. Types of Procurement
Over a period of time, several procurement practices have emerged among public entities, such as, direct negotiations, suomoto/unsolicited proposals (Swiss Challenge proposals), and competitive procurement, through single stage and / or two stage procurement process.
The first two options of procuring a private partner are not encouraged due to inherent lacunae in delivering the services in the best possible manner. The direct negotiation approach in project procurement is used cautiously as it lacks transparency and competition in procurement. States like Andhra Pradesh and Gujarat, which have specific legislations to enable the infrastructure development process, have provided a set of situations in which direct negotiation could be adopted by a public entity.
Unsolicited proposals/suomoto proposals refer to proposals that are not requested by a Government and usually originate in the private sector (generally referred to as "Original Project Proponent"). The proposal submitted by the original project proponent should be supported by project specifications, and proof of its technical, commercial and financial viability and the technical and financial capacity of the original project proponent to undertake the proposed project.
Like direct negotiations, the unsolicited approach is also adopted as an exception to the competitive rule. Discomfort with the use of unsolicited proposals in the public sector is because of the lack of competition, the lack of transparency and the lack of fair and equal treatment of potential bidders associated with it.
A competitive procurement strategy is the one that is largely followed in India. Competitive procurement strategies include a single stage or a two stage bid process. Sometimes, even Expressions of Interest (EoI) are invited from interested parties as part of competitive procurement strategies.
| The competitive procurement process is the most efficient forms of procurement as it ensures the highest transparency and competition when compared to the other procurement processes that are discussed earlier in this Module. It takes into consideration most of the key principles governing procurement. Even though this strategy is not as cost and time effective as direct negotiation, it is preferred as it ensures that the public service is procured in a manner that stands the test of public scrutiny. Competitive procurement process is seen as the preferred procurement strategy to identify the private partner for a PPP arrangement. |
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Even the Government of India support schemes such as the Financial Support to Public Private Partnership Projects in Infrastructure (Viability Gap Funding Scheme) and India Infrastructure Project Development Fund (IIPDF) require that the private partner is selected through a transparent and open competitive procurement process. Depending upon the requirements and characteristics of the project, the public entity may opt for either a single-stage or multiple-stage bid process.
The online PPP Toolkit for Improving Decision Making Processes sets out certain factors to be considered by the public entity when choosing a procurement option; and such factors are set out in the table given below:
| Procurement Options | Factors to consider | |
| How well defined is the project? | How well defined are the bidders? How much work will the proposal require? | |
| Single-stage: RFP | Project scope is clear Service options have been well-defined | • Number of interested bidders limited • Potential bidders are known and identified • In this case it is not necessary to identify interested bidders or to reduce their number |
| Multi-stage option 1: RFQ +RFP (with or without request to submit technical proposal) | Project scope is not clear, extensive discussions are needed to finalise the service option | • Potential bidders are known and identified but Number of interested bidders is large. • Considerable effort required by bidders to submit proposals. In this case RFQ is useful to reduce the number of bidders |
| Multi-stage option 2: EOI +RFP (with or without request to submit technical proposal) | Project scope is not clear, extensive discussions are needed to finalise the service option | • Number of bidders likely to be limited, but potential bidders not yet well known or identified. • Considerable effort required by bidders to submit proposal • In this case EOI is useful to identify interested bidders |
| Project scope is not clear, extensive discussions are needed to finalise the service option | • Uncertainty about the level of interested in the project- unknown if interest is large or limited • Considerable effort required by bidders to submit proposals • In this case EOI is useful to identify interested bidders and level of interest ; RFQ to reduce the number of bidders if necessary | |
Source: http://toolkit.pppinindia.com/ports/module2-leapsfp-dotpp.php?links=ctbspm1b