Procurement

Principle 4 Procurement procedures ensure that contracts are awarded to experienced and qualified consultants and drilling contractors.

Sub-Principles

This breaks down into the following sub-principles:

Procurement should be undertaken through national government systems rather than those of the donor or support organisation. If national government systems are particularly slow or weak, a mix of approaches should be used in order to improve the national systems, at the same time as achieving results in the field. There will also be cases where procurement is best undertaken directly by the end-user of the well (e.g. community or institution).
The engagement of consultants and construction companies for borehole provision should be through a national (or local) competitive bidding process, involving pre-qualification. Engineers’ estimates and recent tenders for similar works or services should be used for comparison against the tender prices. This should avoid contracts being awarded to tenders that are significantly below the estimated cost price.
Procurement should be for a multi-borehole package, in a fairly close geographic area, with similar depth and hydrogeology. Lots could be for a reasonably high number of boreholes, depending on the need to provide opportunities to smaller drilling companies in order to build in-country capacity.
In order to draw upon and build in-country capacity, and enable smaller enterprises to compete with larger companies, mechanisms of awarding packages which include an option for follow-on work should be considered. Alternatively, a contract which spans a number of years (subject to clear performance measurement) should be considered.

Discussion

Where in-country tender and contract award procedures (i.e. the constituted public procurement system) are weak, these should be strengthened and utilised. In order to ensure that contracts are awarded to experienced and qualified consultants and drilling contractors a process of pre-qualification, tender and contract award is recommended:

Human resource needs and equipment capability requirements should be clearly defined. These should be in line with well design, construction method and contract size.
A transparent and thorough pre-qualification process should be based on the company profile, equipment and staff skills, turnover, experience and past performance as well as on adherence to national regulations with respect to drilling permits, licensing and membership of national professional associations. Pre-qualification, which can be undertaken every one to three years, should include visits to the company premises and, if possible, their on-site operations during and after completion of a recent borehole installation. The list of pre-qualified contractors should be published.
The tender or award process involving the submission of a method statement should only be open to pre-qualified contractors.
Tender documents, drawings and specifications should be based on the findings of the well siting and design process and should be endorsed by Local Government and other key stakeholders prior to tendering.
The required outputs (e.g. locations, depths, drilling conditions) should be clearly defined at the tender stage. If this is not possible then an open negotiated agreement, based on typical costs, as set out in the sample bill of quantities (Annex A), can be undertaken.
A tender meeting should be held whereby a hydrogeologist who is intimate with drilling conditions in the area describes the scope of work and “categories of risk”. This is discussed further under Principle 2 on Siting.
A clear and transparent contract award process with clearly defined evaluation criteria, programme of key dates, public opening of tenders, evaluation to include clarification and discussion with tenderers, notification of results and award and procedures for disputing the result.

Contract packaging in terms of boreholes within close proximity is intended to reduce mobilisation costs and to facilitate contract supervision. It is advisable to package wells together; bearing in mind the total number of wells in a programme and the possibility that when too many wells are in a package this may exclude small local contractors.

What do we know?

A major cost is transport, which can be reduced by clustering wells to limit expenditure. However, decentralisation in its current form works against this. In the case of Uganda, each of the 80 Districts contracts out its own boreholes (MWE, 2007). There are cases in Tanzania where a contractor had to enter five or six contracts to drill nine or ten wells (Baumann et al, 2005). In Nigeria, many contracts are packaged as one or two boreholes (Adekile, 2007). Doyen (2003) states that in Kenya, costs could rise by as much as 25% if drilling campaigns are not in economic lots of 50 wells or more.

However, it is essential that community mobilisation efforts and response to the demand driven approach by end users is reconciled with clustering of wells to achieve economies of scale.