Question Tag: Tendering

a) Challenges Banky Construction Ltd is Facing in Winning Contracts
Banky Construction Ltd may be failing to win contracts due to the following reasons:

• Lack of Professional and Technical Qualifications: The company may not possess the necessary professional and technical qualifications and competence required to meet the tender specifications.
• Inadequate Financial Resources: The company might not have adequate financial resources to successfully execute the contracts, making them less competitive compared to other bidders.
• Insufficient Equipment and Physical Facilities: The company may lack the necessary equipment and other physical facilities required for the performance of the procurement contract.
• Managerial Capability and Experience: The company may not have the managerial capability, reliability, or relevant experience in the procurement object, which is crucial in winning tenders.
• Legal Capacity and Compliance Issues: If the company does not possess the legal capacity to enter into contracts, or if it is in receivership, bankrupt, or facing legal proceedings, this could disqualify them from winning contracts.
• Unfulfilled Obligations: Failure to fulfill obligations such as paying taxes and social security contributions can also be a reason for disqualification from tender processes.

b) Explanation of Public Procurement Terms
i) Tender Security:
Tender security refers to an amount provided by a contractor, supplier, or consultant to secure the fulfillment of any obligation under the tendering process. It typically takes the form of a financial deposit, a surety bond, or an irrevocable letter of credit.

ii) Least Cost Selection:
Least cost selection is a procurement method used for small value assignments where the assignment is standard or routine in nature, and well-established practices and standards exist. This method selects the lowest evaluated bid that meets the technical and financial requirements.

iii) Tender Evaluation Panel:
A Tender Evaluation Panel is an ad hoc committee set up by the Entity Tender Committee to evaluate tenders. The panel assesses the bids and makes recommendations to the Entity Tender Committee, which uses these recommendations to award contracts.

iv) Board of Survey:
A Board of Survey is a committee established to examine the condition of government stores or assets that are to be disposed of. The board assesses the condition of the assets and submits a report to the head of the Entity Tender Committee, recommending the best method for disposal.

c) Recognition and Measurement under IPSAS 32: Service Concession – Grantor

i) Service Concession Asset (SCA):

• Initial Recognition:
  The grantor shall recognize a service concession asset provided by the operator if:
  • The grantor controls or regulates the services the operator must provide, to whom, and at what price.
  • The grantor controls any significant residual interest in the asset at the end of the term.
  • For a whole life asset, the grantor recognizes the asset even if it is used up completely during the arrangement period.
• Subsequent Recognition:
  After initial recognition, service concession assets are accounted for as a separate class of assets under IPSAS 17 (Property, Plant, and Equipment) or IPSAS 31 (Intangible Assets).
• Measurement:
  The service concession asset is initially measured at fair value. If it is an existing asset reclassified as a service concession asset, it is measured at its carrying amount according to IPSAS 17 or IPSAS 31.

ii) Service Concession Liability:

• Recognition:
  When a grantor recognizes a service concession asset, a corresponding service concession liability is also recognized.
• Measurement:
  The liability is initially measured at the same amount as the service concession asset (fair value), adjusted for any other consideration exchanged between the grantor and the operator.

iii) Revenue Recognition:

• Revenue Recognition:
  The grantor recognizes revenue from the service concession arrangement, other than revenue from granting rights to the operator, in accordance with IPSAS 9 (Revenue from Exchange Transactions).
  • The operator may compensate the grantor through upfront payments, a series of payments, revenue-sharing provisions, reduced payment requirements, or rent payments.
  • The timing of revenue recognition depends on the specific terms of the service concession arrangement.