GIZ-To Consultancy Study- TOR.

Request For Proposal: MSME Umbrella Programme

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Micro Small and Medium Enterprise (MSME) Umbrella Programme

Component: MSME Support Policies and Programme

PN: 09.2459.7-003.00

REQUEST FOR PROPOSAL

Enabling Effective Implementation of Public Procurement Policy for Micro and Small Enterprises (MSEs)

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, GIZ Office, B 5/1, First Floor, Safdarjung Enclave New Delhi 110029, India

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Table of Contents

Section 1: Letter of Invitation ................................................................................................ 4 Section 2: Instructions to Consultants .................................................................................... 5 Address and Formal Requirements............................................................................................. 5 The Technical Proposal................................................................................................................ 6 The Financial Proposal................................................................................................................. 6 Cost of preparing the Bid ............................................................................................................ 6 Material and Equipment ............................................................................................................. 7 Formation of Consortium............................................................................................................ 7 Modification/withdrawal of the bid ........................................................................................... 7 Other Requirements ................................................................................................................... 7 Bid Data Sheet ............................................................................................................................ 8 Section 3: Terms of Reference ............................................................................................. 11 Background................................................................................................................................ 11 Context ...................................................................................................................................... 11 Objective ................................................................................................................................... 13 Scope of Services and Deliverables ............................................................................................ 13 Deliverables and Time Schedule ............................................................................................... 14 Payment Schedule ..................................................................................................................... 15 Eligibility Criteria and Expertise/Skill sets required .................................................................. 15 Other Terms and Conditions ..................................................................................................... 16 Section 4: Technical Proposal: Standard Formats ................................................................. 17 Section 5: Financial Proposal: Standard Formats .................................................................. 21

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Section 1 — Letter of Invitation

From: Procurement Manager German Development Cooperation Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, GIZ Office, B 5/1, First Floor, Safdarjung Enclave New Delhi 110029, India

To: All Prospective Bidders

Dear Sir/Madam,

1. Office of DC MSME, Ministry of Micro Small and Medium Enterprises, Govt. of India - Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH are implementing the “MSME Policies and Programmes” component of the “MSME Umbrella Programme for MSME Promotion”.
2. GIZ invites bids from reputed and experienced consultancy firms for providing the following consulting services: a. Work Package 1: “Enabling Effective Implementation of Public Procurement Policy for MSEs, Office of DC MSME, Ministry of MSME”
3. This RFP is available to all eligible prospective consulting firms.
4. The RFP includes following documents: Section 1 - Letter of Invitation Section 2 - Instructions to Consultants (local) Section 3 - Terms of Reference Section 4 - Technical Proposal - Standard Formats Section 5 - Financial Proposal – Standard Formats
5. A firm will be selected under Single Stage- two envelop bid on Quality-cum-Cost Based Selection (QCBS ) Method and procedures described in this RFP, in accordance with the policies of GIZ.
6. GIZ reserves the rights to cancel / modify this tender without assigning any reasons.

Yours sincerely,

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Section 2 — Instructions to Consultants

The Consultants are invited to submit a Technical Proposal and a Financial Proposal, as specified in the Data Sheet, for consulting services required for this assignment. The Proposal will be the basis for contract negotiations and ultimately for a signed Contract with the selected Consultant. Consultants are expected to familiarize themselves with conditions and take them into account in preparing their Proposals.

1. Address, and formal requirements Bids are to be sent to- Procurement Manager GIZ Office India B 5/1, First Floor, Safdarjung Enclave, New Delhi 110 029

Deadline for submission of bids: 4:00 pm, 31st July 2012

The bids are to be sent in double envelopes. The inner envelope must be sealed and bear the following inscription:

Envelope 1 Financial Proposal for Consulting Services for “Enabling Effective Implementation of Public Procurement Policy for MSEs”, Office of DC MSME, Ministry of MSME PN: 09.2459.7-003.00

Envelope 2 Technical Proposal for Consulting Services for “Enabling Effective Implementation of Public Procurement Policy for MSEs”, Office of DC MSME, Ministry of MSME PN: 09.2459.7-003.00

The Outer envelope containing these two envelopes should be marked: “Enabling Effective Implementation of Public Procurement Policy for MSEs”, Office of DC MSME, Ministry of MSME PN: 09.2459.7-003.00 Not to be opened before (31st July 2012)

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All copies of the bid must be submitted by courier/post/hand in letter form. The technical and financial proposal will also be presented in electronic format – on a CD duly labeled as such.

The above formal requirements regarding envelopes and marking also apply to further copies of the bid.

2. The Technical Proposal It should include detailed working concept which allows us to examine the technical aspects in the light of the project objective (only in case, a detailed concept is not already given by GIZ). Also, if applicable, special tasks requested within the scope of the terms of reference (TOR). Technical proposals should be submitted in the following format using standard forms as outlined in Section 4.

1. Executive Summary
2. Profile
3. Relevant Experience
4. Technical Response
5. Description of the Team
6. Matters not appropriate in any other section

There should be no price information anywhere in the technical proposal document. Failure to comply will result in disqualification of the bid.

3. The Financial Proposal Price quotation is to be submitted in a separate envelope together with your technical proposal and should be prepared using the Standard Formats as outlined in Section 5. It shall list all costs associated with the assignment, including (a) remuneration for staff, and (b) reimbursable expenses indicated in the Data Sheet. If appropriate, these costs should be broken down by activity.

4. Cost of preparing the bid No remuneration will be granted for the preparation of the bid and the documents to be attached thereto. The bids, together with the attached documents, shall become the property of the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, without entitlement to remuneration. A request that the first-ranked bidder present candidate staff

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members previous to the awarding of the contract does not constitute grounds for a claim for reimbursement of related costs from the GIZ.

5. Material and Equipments Details on the materials and equipment needed, generally to be procured by the GIZ; the TORs for planned subcontracts, other measures as well as training planned for partner experts or staffs in the framework of preparation for the assignment are also to be provided, if needed.

6. Formation of consortium Should you form a joint venture group or consortium, the bid must specify the members of this group/consortium and lead pertner. Furthermore, the authorised representatives of the members are to be named. Furthermore, the members must declare that they are jointly and severally liable for the performance of the contract. The formation of joint ventures with a company, also invited by GIZ to submit a bid (in a two stage bid process), requires the prior written consent of GIZ.

7. Modification/withdrawal of the bid Adjustments to or withdrawal of bids are to be communicated in writing by post by the deadline for submission of bids. Subsequent adjustments or modifications to the bid, which can be submitted up to the deadline for submission of bids, shall also be subject to the requirements for sending in the bid. The front of the envelope is to be clearly marked as...

Adjustment to Financial Proposal or Technical Proposal for consulting services for “Enabling Effective Implementation of Public Procurement Policy for MSEs”, Office of DC MSME, Ministry of MSME PN: 09.2459.7-003.00 (as the case maybe)

8. Other requirements Agreements with third parties in restraint of competition, which are to the disadvantage of the GIZ, are not permissible and will lead to the bid not being considered. The documents submitted in response to the request to bid shall be treated confidentially by yourself and may only be made available to third parties in connection with potential

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subcontractors in relation to your bid. Non-compliance may result in the bid not being considered.

9. Data Sheet

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Section 3: Terms of Reference

1. Background

Office of DC MSME, Ministry of Micro Small and Medium Enterprises, Government Of India - Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH are implementing the “MSME Policies and Programmes” component of the “MSME Umbrella Programme for MSME Promotion”. The project aims at improving the effectiveness and efficiency with which MSME support policies and programmes are implemented, thus promoting increased responsible competitiveness of MSME.

Under this project of “MSME Support Policies and Programmes” , it has been decided by both the implementing partner i.e Office of DC MSME and GIZ to provide support for effective implementation of the Public Procurement Policy for MSEs. A successful roll out of this policy will require an enabling framework at various levels which is aimed to be set-up and strengthened through this project. GIZ is accordingly looking to engage qualified agency to provide required technical support as outlined herein.

2. Context

The Public Procurement Policy was approved by the Cabinet on November 1, 2011 and notified by the Central Government through an order dated March 23, 2012 (under Section 11 of the MSMED Act, 2006). The Policy comes into force with effect from April 1, 2012.

2.1 The salient features of the Public Procurement Policy are as under:

• Every Central Ministry or Department or Public Sector Undertaking (PSU) shall set an annual goal of procurement from MSEs from the financial year 2012-13 and onwards, with the objective of achieving an overall procurement of minimum of 20 per cent, of total annual purchases of products produced and services rendered by MSEs in a period of three years. After a period of three years i.e. from 1st April 2015, overall procurement goal of minimum of 20 per cent shall be made mandatory.
• Out of 20% target of annual procurement from MSEs, a sub-target of 4% (i.e., 20% out of 20%) will be earmarked for procurement from MSEs owned by SC/ST entrepreneurs
• Every Central Government Ministry/Department/PSU will report the goals set with respect to procurement to be met from MSEs and the achievement made thereto in their Annual Reports

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• In tender, participating MSEs quoting price within price band of L1+15 per cent shall also be allowed to supply a portion of requirement by bringing down their price to L1 price in a situation where L1 price is from someone other than a MSE and such MSE shall be allowed to supply up to 20 per cent of total tendered value.
• The Central Ministry/Department/PSU will continue to procure 358 items from MSEs, which have been reserved for exclusive purchase from them
• Given their unique nature, defence armament imports will not be included in computing the 20% goal for M/o Defence. In addition, Defence Equipments like weapon systems, missiles, etc. will remain out of purview of such policy of reservation
• In addition, a ‘Grievance Cell’ would be set up in the Ministry of MSME for redressing the grievances of MSEs in Government procurement.

An effective implementation of the above would require a significant build-up of knowledge and institutional capacity that must be nurtured over time for meeting the ever growing challenges of public procurement for Micro and Small Enterprises (MSEs), Public Sector Undertakings(PSU) and other stakeholders some of which are as outlined below:

2.2 Key challenges faced by the MSEs:

• Difficulties in obtaining information related to tenders
• Short notice to prepare the tenders
• Lack of expertise in preparing the tenders
• High cost of preparing the tenders (since many costs are fixed, MSEs face disproportionately high costs in comparison with larger enterprises)
• Disproportionate qualification levels and certification requirements
• Excessive requirements for financial guarantees
• Late payments by contracting authorities

2.3 Key challenges faced by the PSUs:

• Lack of knowledge about tender procedures
• Lack of expertise in designing tenders in a way so that MSEs can participate on an equal footing with large enterprises
• Setting proportionate qualification levels and financial requirements
• Excessive administrative burden

Recognising the enormity and complexity of issues, there is a need to work closely with all the relevant stakeholders (MSEs, PSUs, Policy Makers among others) to develop institutional

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mechanisms necessary for the successful of off take of Public Procurement Policy, which constitutes the prime objective of this project

3. Objective

The broad objective of this consultancy is to assist office of DC MSME in the implementation of “Public Procurement Policy” through provisioning of technical, analytical, facilitation and coordination support. In addition to providing the inputs on different aspects of public procurement current scenario, it will also focus on facilitating the development and strengthening of institutional arrangements and mechanisms necessary for evolving and enforcing the policy and regulatory framework for public procurement. Carrying out consultation process with different stakeholders, development of guidelines, checklists and monitoring framework are other important aspects of this consultancy assignment.

4. Scope of Services

The scope of services and key activities outlined should be delivered in close collaboration with Office of DC MSME and GIZ. Consultants involved in the project would work closely with all the relevant stakeholders e.g. DC MSME and its field institutions, GIZ, MSEs, public sector units, cluster groups, business associations, research and educational institutes among others to achieve the objectives as outlined in Section 3. The scope of services will include but will not be limited to the following key activities:

4.1 Market estimation and Demand Side Profiling

a) Review the current scenario and estimate the overall market potential for MSEs w.r.t. public procurement opportunity through a judicious mix of various cost effective and faster instruments such as expert opinion, stakeholder consultations and secondary research etc. b) Identify and analyse the current procurement norms and mechanisms of 30 PSUs/Central Ministries including the following: i. Indian Railways, BHEL, BEL, NTPC and ONGC ii. Five PSUs each in following five identified sectors i.e. (i) Electronic Services and Design Manufacturing (ii) Mechanical and Mechatronics (iii) Chemical and Pharmaceutical (iv) Defence related to both inland and homeland security and (v) IT and IT enabled units. The selection of PSUs/Central Ministries be such so that the scope and coverage of the analysis and study include all i.e. North, South, West, East (including North-East) regions.

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The analysis and study of selected PSUs should include but not limited to the following:

• New supplier/ Vendor empanelment process including registration forms
• Requirement of standards, capacity etc from prospective vendors
• Suppliers’ Profile along with the good and services rendered
• Main products (as per HS code) and services which are currently sourced by the identified PSUs and which can be supplied by MSEs
• Analyse previous tender/procurement norms to find out the practices which may be an hindrance for MSEs

c) Identify the challenges faced by the identified PSUs in procurement from MSEs and prepare these as case studies ( challenges and best practices ) wherever possible

4.2 Institutional Support

a) Provide need based ongoing “Technical Support” to the “unit in Office of DC MSME” responsible for implementation of this policy. This would include support to institutional framework such as Review Committee, Grievance Cell – as outlined in public procurement policy by way of development of SOP, creation of stakeholder’s forum etc. b) Identify the institutional arrangements and mechanisms necessary for effective implementation including monitoring of public procurement policy for MSEs, prepare the detailed requirements and an actionable roadmap for the implementation of same. Assistance as required by the Office of DC MSME will also have to be provided by the consultant for setting up of the agreed institutional arrangements. For e.g. i. Currently, one such institutional mechanism being planned is related to hosting and maintaining the supply side MSE data, on existing platforms such as Credit Information Bureau of India Limited (CIBIL), of those MSEs whose capacity grading is conducted by a third party. ii. Another such institutional arrangement being planned is the design of a national web portal (http://www.dcmsme.gov.in/National_Portal.pdf) which shall provide an interactive platform to MSMEs for establishing forward and backward linkages, running of a web based electronic depository inclusive of related fields like capacity credit rating of MSEs etc. and generation of ten digit product-code based information both for PSUs and MSEs

The consultant is required to coordinate and facilitate the consultation process with relevant stakeholders e.g. CIBIL, rating agencies, Office of DC MSME, GIZ, analyse the

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feasibility, vet the design, identify the key requirements and develop an actionable roadmap for such agreed institutional mechanisms and arrangements to work.

4.3 Information systems

a) Develop the relevant awareness material (flyers / newsletter/ fact sheet), code of best practices/guidelines for PSUs and practical guides (info on forms, process, standards, products and checklists) for MSEs on how they can better tap the market offered by the public procurement market. Also, provide assistance to the office of DC MSME in carrying out consultation process with public institutions, MSEs and other stakeholders to validate and finalise the above codes/guidelines. This is to enable improvement in existing procurement systems for an effective implementation of public procurement policy. b) Design the requisite monitoring framework and associated tools for systematic monitoring of performance achievement of PSUs w.r.t. meeting the planned target of minimum 20% in 3 years.

5. Deliverables

a) Deliverable D1: Within 1 month of start of the assignment the consultant will submit the first 3 months work plan (inception report), and at 3 months thereafter for the remaining of the assignment period, both of which will be discussed and approved by GIZ and DC MSME. b) Deliverable D2: This would comprise a report on “Public Procurement from MSEs – Market potential and Procurement Norms” with specific focus on sections as detailed below (Final report structure to be developed by the consultants in consultation with office of DC MSME):  Market assessment including current status and future market potential with detailed insights on product, sectors, buyer categories among others  Procurement norms & mechanisms including demand side profiling of 30 PSUs/Central Ministries  Challenges and constraints of officers responsible for public procurement in PSUs and other stakeholders The timeframe for this deliverable is 3 months from the start of the assignment. c) Deliverable D3: Analyze, design and put in process the implementation plan for agreed upon institutional mechanisms for effective implementation of the public procurement

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policy including carrying out the feasibility analysis, developing an actionable roadmap for hosting and maintaining the supply side MSE data, facilitation of stakeholders’ consultation workshop and vetting of design of national portal among others d) Deliverable D4: This would include a) Relevant awareness materials (flyers / newsletter/ fact sheet) targeted at different stakeholders (e.g. PSUs, MSEs , Associations) b) Code of best practices and practical guides for PSUs and MSEs c) Detailed report on monitoring and training requirements e) Deliverable D5: A final report on completion of all the activities with recommendations for the ongoing and future activities towards implementation of public procurement policy

6. Estimated Timeframes

To carry out the above activities and achieve the outlined objectives and deliverables, the consultant is required to deploy a core team comprising 3 members namely a Team Leader, a Senior Resource Person and a Research Fellow/Executive. In addition, the consultant is also required to propose a pool of experts comprising short term “national and or international experts” which can be available on a flexible basis at any time during the contract period, for the work not outlined herein but deemed necessary for implementation of public procurement policy by the Office of DC-MSME. The payment, if any w.r.t. flexible pool of experts would be done on a pro-rata basis based on actual number of man-days involved.

The estimated man days for the core team are as given below:

The maximum number of man-days for experts comprising the flexible pool (as described above) is estimated up to 70 days.

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• The allocation of days from the flexible pool between senior and middle level resource person is flexible and would be decided on a need basis by the Office of DC-MSME and GIZ in consultation with the consultant.

The drawing of resources/experts from the flexible pool will be decided by the Office of DC MSME and GIZ for specific need and not by the consultant for the tasks already outlined in this TOR.

7. Eligibility Criteria and Expertise/Skill-sets required

• The consulting team should demonstrate detailed technical knowledge and competencies across important issues concerning MSEs specifically those related to access to markets, MSE support mechanisms in India and policy implementation.
• The consulting team should have carried out similar assignments i.e. advising policymakers on public sector policy reform and implementation in the last 5 years on issues related with Public Procurement.
• All the consulting team members should have a minimum 5 years of consulting experience and hold a post graduate in the relevant field of public administration, management, and economics and or sector related areas with strong analytical, writing and communications skills.
• The Team Leader should have a minimum of 10 years experience with specific expertise in leading similar engagements in public sector policy reform and implementation in addition to excellent communication and project management skills
• The Senior Resource Person should have first-hand experience in areas related to public procurement such as policy design and implementation, legal and economic analysis, training and monitoring etc
• The Research Fellow should be an expert with experience in the areas related to public procurement, good understanding of MSE related issues and strong analytical skills
• Past experience of the team members in working with Govt. of India is an added advantage
• Past experience of the team members in areas related to design and implementation of public procurement policy in international (e.g. EU or US) markets would be an added advantage

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8. Duration

Total duration of this will be 9 months from the date of signing of the contract

9. Reporting

During the assignment, consultant will be required to maintain a continuous liaison with Additional Development Commissioner responsible for implementation of “public procurement policy” or his representatives. Reporting will be on monthly basis and should be submitted to both office of DC MSME and GIZ. During the assignment, consultant will adhere to following reporting schedule  An Inception Report within 30 days of start of the assignment , setting out the first 3 months work plan  Monthly progress report thereof.

10. Payment Schedule

• % of total contract value

Feedback will be communicated to the consultant continuously at the end of several activities carried during all phases. Where necessary, consultant shall make appropriate changes to improve the deliverables and address this feedback. On the completion of a milestone and it acceptance by the respective division at office of DC-MSME, written confirmation shall be provided to the consultant who will trigger the relevant milestone payment. No payment will be processed without the acceptance of the deliverables. The payment, if any w.r.t. flexible

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pool of experts would be done on a pro-rata basis based on actual number of man-days involved.

11. Other Terms & Conditions

The end-deliverable and the achievement of final milestone should be approved by the Additional Secretary and Development Commissioner MSME, MoMSME as conditions for release of final payment. All the work/software/reports undertaken/developed/prepared under this assignment are the property of the Ministry of MSME and cannot be used, published, copied or otherwise disseminated without prior written approval.

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Section 4: Technical Proposal – Standard Formats

With reference to brief guideline provided in section 2 of this RFP, consultants are expected to use the following recommended formats and number of pages for their technical proposals for any of the work packages.

1. Executive Summary : Executive summary should capture important parts of your technical proposal including approach, timeline, milestones and staffing. Executive summary must be confined to maximum 5 pages.

2. Profile 2 page description of background, organisation and competencies of the consulting firms and each associate for this assignment

3. Relevant Experience This section should contain project credentials of the bidder. This section should mention 5 most relevant experiences and must not exceed 10 pages.

FORMAT FOR RELEVANT EXPERIENCE

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4. Qualification to Terms of reference : This section is intended to record understanding of the assignment and interpretation of the TOR and any observations/suggestions the bidder may have on the terms of reference. Facilities and support required/expected from counterpart should also be mentioned. Maximum number of pages to be used is 3.

5. Technical response : This section should define the approach, methodology, work plan including sub activities and deliverables and how the bidder intends to organise the project team to execute the engagement. Technical response must confine to 30 pages and in following 3 sub sections.

1. Approach and methodology Detailing out planned approach and methodology for carrying out the assignment to achieve the expected output
2. Work Plan including sub activities and Deliverables Detailing out Main activities, sub activities, duration, their interrelations, Milestones and linked deliverables. Work plan should be consistence with approach and methodology and should break out the TOR in feasible working plan.
3. Project Organisation This should contain the project team organogram and brief profiles of project team personnel. Details of which tasks your home office will be undertaking within the scope of the project (backstopping) and the designation of a contact person at the Head Office who is responsible for the project, with his or her CV included. Earliest possible date for commencing the work, with alternatives where appropriate

6. Description of the proposed team

1. Staffing This section should contain the staffing table which indicates the name, firm, area of expertise, designation and task assigned to the professional staff as per the following format.

FORMAT FOR STAFF (CORE TEAM/FLEXIBLE) TASK ASSIGNMENTS

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2. Schedule Staffing schedule (giving alternatives if necessary) with details of the personnel to be engaged in the home/field work with their person-days of involvement in the assignment as per the following format.

FORMAT FOR STAFFING SCHEDULE (Required only for the Core Team)

Staffing schedule should be specifically broken into Professional staff (International and Indian) and Support Staff.

3. Curricula vitae (CVs) The CVs of the experts designated for the project are to be in tabular form and should cover the points given in the format. Each CV must confine to maximum 3 pages in the following format.

FORMAT FOR CVs FOR PROPOSED PROFESSIONAL (CORE TEAM/FLEXIBLE) STAFF

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Record of Employment:

Languages Known:

4. Personnel Inputs and work plan (Required only for the Core Team) This section should contain a GANNT chart mapping project phases, activities and sub activities, milestones and deliverables and person-days involvement of each project team member. There should be no price information in this table, only estimates of person-days of each consulting team member.

7. Matters not appropriate in any other section

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Section 5: Financial Proposal: Standard Formats

Financial Proposal should be submitted with a covering letter clearly mentioning the validity of the quote for minimum 60 days and as per the following format for any of the work packages.

FORM 1: TOTAL COST SUMMARY*

*Including estimates for both Core Team and Flexible Staff. Please refer (Section 3, Sub-section 10) for payment related conditions.

FORM 2: FORMAT FOR STAFF INPUTS AND FEE RATES*

*Including both Core Team and Flexible Staff

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FORM 3: FORMAT FOR PROJECTED REIMBURSABLE COST

FORM 4: COST BREAK UP ACCORDING TO THE MAJOR DELIVERABLES (As Outlined in TOR)

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Annex I: Technical Evaluation Grid

Technical Assessment Grid of Offers (AURA)

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