Procurement Policy Office

Directive No. 5

(issued pursuant to section 7 of the Public Procurement Act)

Implementation of Budgetary Measures to promote SMEs participation in
Public Procurement

Public Bodies are hereby requested to follow the directives provided hereunder so as to promote the participation of Small and Medium Enterprises (SMEs) in Public Procurement.

1. For low value procurement up to Rs 500,000 undertaken through informal quotation under section 25(2)(a) of Public Procurement Act 2006, the number of suppliers to be solicited should include at least two SMEs, as far as reasonably possible.

2. For procurement up to Rs 5 Million, Regulation 41 of the Public Procurement (Regulations 2008) has been amended to include at least two SMEs, as far as reasonably possible, in the shortlisting of bidders under the Restricted Bidding Method. Similarly, for Request for Sealed Quotations, the short list should also include, as far as reasonably possible, at least two SMEs.

3. Non-inclusion of two SMEs under the Restricted Bidding, Request for Sealed Quotations and Low Value Procurements should be fully justified and properly recorded.

4. Public bodies should take reasonable steps to ensure that companies shortlisted as SMEs satisfy the criteria of annual turnover, as per the previous year’s financial statements, is not more than Rs 50 Million. For companies which are part of a group of companies, the threshold of Rs 50 Million applies to the consolidated annual turnover for the Group. Start-up businesses would normally qualify as SMEs unless there are clear indications to the contrary.

5. For compliance monitoring purposes, public bodies should submit to the Policy Office on a quarterly basis a report highlighting the following:

· number of SMEs invited to participate in procurement exercises for Restricted Bidding, Requested for Sealed Quotations and Low Value Procurement under Section 25(2)(a) of PPA 2006;

· number of SMEs having responded to the invitation;

· number of contracts and their corresponding value awarded to SMEs; and

· justification for non-inclusion of SMEs.

6. The effective date for the implementation of the above mentioned measures is 15 March 2012.

Procurement Policy Office
13 March 2012