The Blue Book

GUIDELINES ON GOVERNMENT TENDER PROCEDURE
GUIDELINES ON
GOVERNMENT
TENDER PROCEDURE
Revised Edition - August 1997

Re-printed - May, 2004
(Includes Circulars issued up to end of 2003)
1997
MINISTRY OF FINANCE AND PLANNING
SRI LANKA
xvii
H 20832 - 1,500 (03/2004) Department of Govt. Printing, Sri Lanka
ii
CONTENTS
PART I
PROCUREMENTS FINANCED BY PUBLIC FUNDS
Guideline Page
CHAPTER I General 1
CHAPTER II Commencement of Tender Process and
Appointment of TBB and TECC 4
Sanctioning of Total Cost Estimate 12.1 4
*Annual Programmes and Rentals 12.3 4
Initiation of Tender Process 13.1 4
Financing Sanction 13.2 5
* Limits of Authority 14 5
* Minor Tender Boards 15 5
Departmental Tender Boards 16.1 5
Composition of Departmental Tender Boards 16.2 6
Ministry Tender Boards 17.1 6
Composition of MTB 17.2 6
Cabinet Appointed Tender Boards 18.1 6
Composition of CATB 18.2 6
Standing Cabinet Appointed Tender Boards 18.3 7
Justification for Standing CATB 18.4 7
Payments to the Members of TBB 18.5 7
Appeal Board pertaining to CATB 19 8
CHAPTER III Procedure Applicable to Appointment of TBB 9

and TECC
Appointment of CATB 20 9
* Range of Cost Estimates 21 9
Alternate Members 22.1 9
Priority 22.2 9
Meetings of TBB 23 10
Appointment by Designation 24 10
Validity of Decisions 25 10
Absence of a Member 26 10
Minutes of the Meeting 27 10
Treasury Information 28 11
Note : * Refer P. F. Circular amendments
iii
Guideline Page
CHAPTER III (Contd.)
Technical Evaluation Committees 29 11
Examination of Draft Documents 30 11
Reports of TEC and Attendance at TB Meetings 31 11
Composition of TEC 32 11
Membership of TEC 33.1 11
Assistance of Consultants 33.2 12
Appointment of TEC to assist CATB 34 12
Appointment of other TECC 36 12
External members 37 12
Release from Normal Duties 38 12
Period of evaluation 39 13
Expansion of TEC 40 13
CHAPTER IV Tender Documents 14

Tender Documents 41 14
Use of Standard Bidding Documents 42.1 14
SBDD prepared by ICTAD 42.3 15
Drafting of Tender Documents 43.1 15
Initiating of Drafting Tender Documents 43.2 15
Approval for Tender Documents 43.3 15
Tender Notice 44.1 16
Instructions to Bidders 44.2 16
Form of Tender 44.3 16
*General Conditions of Contract 45.1 16
Special Conditions of Contract 45.3 16
Bid Data Sheet / Contract Data Sheet 45.4 17
Technical Specifications 45.5 17
Securities and Guarantees 46.1 17
*Acceptable Securities and Guarantees 46.2 17
*Unconditional Securities and Guarantees 46.3 18
Quantum of Securities and Guarantees 46.4 18
Quantum of Tender Deposit and Bid Bond 46.5 18
*Refundable Tender Deposit 46.6 18
Exemption from Refundable Tender Deposit 46.7 18
Performance Bond to be submitted by all Tenderers 47 19
Arbitration 48.1 19
iv
Guideline Page
Chapter IV (Contd.)
Procedural Rules 48.2 19
Place of Arbitration 49 19
Check list for Head of Departments 50 19
Clarity of Language 51 20
Tendering Period 52 20
Transport by Sea 53 20
*Transport by Air 54 21
The Basis of Supply 55.1 21
E. X. W. 55.3 21
F. O. B. 55.4 21
C. I. F. 55.5 22
F. C. A. 55.6 22
C. F. R. 55.7 22
Local Materials 56 22
Standard and Quality 57 23
*Local Labour 58 23
Insurance of Contractors Risk 59 23
Worldwide Tenders 60 23
Foreign and Local Tenderers to be Treated Equally 62.1 24
Quoting in Foreign Currency 62.1.1 24
*B.T.T. and Custom Duties 62.1.2 24
Corporate Tax and Income Tax 62.2 25
Currency of Payments 62.3 25
*Mobilisation Advances for Works Contract 62.4 25
Recovery of Mobilisation Advance 62.5 26
*Mobilisation Advance to Certain Approved Societies
without guarantees 62.6 26
Chapter V Other Methods for Selection of Tenderers 27

General 63 27
Registration of Suppliers 64.1 27
Yellow Pages 64.3 27
National Registration System 65 27
Registration of Contractors for Construction Works 66 28
Restricted Tenders 67 28
Restricted Tenders for Minor Services 68 28
v
Guideline Page
Chapter V (Contd.)
*Limited Quotations 69.1 28
Quotations for Small Contracts 69.2 29
Pre-qualification of Tenderers 70.1 29
Procedure for Pre-qualification 70.2 29
Criteria for Determination 70.3 29
Two Stage Bidding System 72.1 30
Evaluation and second stage bid 72.2 30
Use of Two Stage Bidding System 72.3 31
Two Envelope Bidding System 73.1 31
Use of Two Envelope Bidding System 73.2 31
Chapter VI Use of Consultants 32

Use of Consultants 74.1 32
Scope of Consultancy 74.2 32
Authority for Determination 74.3 32
Preparation a long list of Consultants 74.4 33
Short Listing of Consultants 74.5 33
Short Listing Criteria 74.7 33
Dis-qualifications 74.8 33
Terms of Reference 75.1 34
Components of TOR 75.2 34
Budget Estimate on Consultancy 75.3 34
Letter of Invitation 75.4 35
Selection Procedure 75.6 35
Time Frame for Submission of Proposals 75.7 36
Evaluation of Technical Proposal 75.8 36
Evaluation Criteria for Technical Proposal 75.9 36
Evaluation of Technical Proposal 75.10 36
Ratinsg for Major Groups of Technical Proposal 75.12 38
Financial Analysis 75.13 38
Negotiations 75.14 38
Parameters in discussing Financial Terms 75.16 38
Project Implementation - Mobilisation Advance 75.17 39
Part Payments 75.18 39
Reports to be Submitted by Consultants 75.19 39
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Guideline Page
Chapter VI (Contd.)
Regular Periodic Meetings 75.20 39
Treatment of Contract Variation 75.21 39
Deviation from TOR 75.22 40
Typical reasons for deviations from TOR 75.23 40
Replacement of Personnel 75.24 40
Individual Consultants 75.25 40
Chapter VII Tender Notification and Issue of Tender Documents 41

Publication of Tender Notice 76 41
International Competitive Bidding 80 41
Place of Issue 81 41
Free Inspection 82 41
Non-refundable Tender Fee / Tender Deposits 83 42
Record of Issue 85 42
Defaulters List 86 42
Prior Conditions 87 42
Publication of Pre-qualification Notice 89 42
Chapter VIII Receipt of Tenders and Opening of Tenders 43

Sealed Tenders to be Accepted 90.1 43
Bids to be in Duplicates 90.2 43
Mode of Submission 91 43
Place of Receipt of Tenders 92.1 43
Acknowledgement 92.2 43
Safe Deposit 93 44
Tender Box 94 44
Closing of Tenders 95 44
Late Tenders 96.1 44
*Opening of Tenders 97 44
Right to be Present at Bid Opening 98 45
*Supervision of Opening 99 45
Acceptance of Samples 100 45
Opening Procedure 101.1 45
Original to be opened 102.1 45
Records of TB / BOC 103.1 46
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Guideline Page
Chapter VIII - (Contd.)

Numbering of Tenders 104 46
Tenders to be Sent for Evaluation 105.1 46
Original is the Governing Document 105.2 46
Independent Packages 106 46
Scheduling of Tenders for Evaluation 107 47
Safety of Originals 108.1 47
Chapter IX Evaluation of Tenders 48

General Bid Evaluation 109.1 48
Bid Examination 109.2 48
Bid Evaluation 109.3 48
Responsibility of TEC 109.4 48
Meetings of TEC 109.5 49
Time Frame for Bid Evaluation 109.6 49
Extension of Bid Validity 109.7 49
*Payments for Evaluation of Tenders 109.8 49
Confidentiality 109.9 50
Obtaining Consultants Service for Bid Evaluation 109.10 50
Evaluation of bids - General Principals 110 50
Bid examination - Eligibility of Bidders 111.1 51
Post-qualification Process 111.2 52
Deviations from the Provisions of Bid Documents 112.1 52
Completeness of Bids 112.2 53
Delivery Schedule 112.3 53
Price Escalation 112.4 54
Sub-contracting 112.5 54
Absence of Bid Security 112.6 54
Insufficient Amount of Bid Security 112.7 54
Form of Bid Security 112.8 55
Lack of Supporting Documents 112.9 55
Minor deviations 113 56
Scheme of Evaluation 114 56
Determination of Technical Responsiveness 115.1 57
Determination of Substantially Responsive Tenders 115.2 57
Rejection of Tenders due to Material Deviations 116 57
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Guideline Page
Chapter IX (Contd.)
Debatable Deviations 117 58
Substantially Responsive Tenders not to be Rejected 118.1 59
Limit for Substantially Responsive Bids to be Evaluated 118.2 59
Clarifications of Tender Responses 119 60
Clarifications to be Handled through EA 120 60
Avoiding Deviations 121 60
Validity of Original Bid 122 61
Detailed Evaluation of Bids 123 61
Correction of Errors 124.1 62
Unrealistic Rates 124.2 62
Unbalanced Bids 124.3 63
Evaluation of Unbalanced Bids 124.4 63
Precautionary Steps 124.5 64
Missing Items 124.6 64
Factors other than Price 125.1 65
Fuel Consumption Cost 125.2 65
Life Cycle Cost Evaluation 125.3 65
Currency Conversion 125.4 65
Evaluation of alternative Bids 125.5 66
*Application of Preferences 126 66
Negotiations with Tenderers 127.1 67
*Comparison with Cost Estimate 127.2 67
Evaluation of Bids Under the Two Stage Bidding System 128.1 68
Evaluation of Bids Under the Two Envelope System 128.2 68
*Bid Evaluation Report 129 68
Chapter X Responsibilities of the Tender Board in Relation to

Final Determination 70
Tender Board 130.1 70
Powers of the Tender Board 131.1 70
Negotiations with Tenderers 132.1 71
Decisions to be Justified 133.1 71
Final Determination 134 71
Determination of Tender Award 135 71
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Guideline Page
Chapter X (Contd.)
Appeals Against Determination 136 72
Refund of Deposits 139 72
Publication of Award 141 73
Preservation of Tender 142 73
Tender Board Termination 143.1 73
Chapter XI Implementation of Tender Award 74

*Award of Contract 144 74
Contents of Contract Agreement 145 74
Basis of Payment 146 75
Form of Agreement 147.1 75
Authority to Sign the Contract 147.2 75
Contract Documents 147.3 75
Clients Obligations 147.4 76
*Contract Management 148 76
Extension of Time 149.1 76
Extensions for the Convenience of Contractor 149.3 77
Part Payments 150.1 77
Completion Report 150.2 77
Taking Over / Completion Certificate 150.3 77
Assigning or Sub-letting of Contract 151 77
*Extra contractual payments 153.1 78
*Approving Authority for Extra Contractual Payments 153.2 78
*Revision of Total Cost Estimate 154 78
Price Escalation Formula 156.1 79
Defaulting Contractors 157 79
District Price Fixing Committees 162.1 80
Procedure for Fixing Rates 162.2 80
Composition of the Committee 162.3 81
Divisional Price Fixing Committees 162.4 81
Chapter XII Exceptions and Deviations 82

Exceptions and Deviations from Tender Procedure 163 82
*Entrusting of Construction Works to Approved Societies 164.1 82
Approved Societies 164.2 82
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Guideline Page
Chapter XII (Contd.)

*Emergency purchases 165 83
Sri Lanka Missions 168 83
Repairs to motor vehicles and other machinery 169.1 84
Purchasing of spare parts for vehicles 170.1 84
Spare parts for machinery 170.2 84
Periodicals and publications 171 85
Procurements of supplies from Govt. Institutions 172 85
Responsibility for construction 173 85
*Exceptions relating to works 176 86
Preparation of plans, specs, etc. 177 86
Damages caused by floods etc. 178 86
*Authority for deviating from tender procedure 179 86
Late tenders cannot be entertained 181 87
Register of Deviations 182 87
Single Source Supply 183 87
Deviations in Regard to Foreign Funded Projects 184 88
Repeat Orders 185 88
Service Agreements 186 88
*Procurement of Insurance Services 187 88
Purchasing of Fuel 188 89
Servicing of Vehicles 189 89
Labour Services 190 89
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Guideline Page
APPENDICES
Appendix I Specimen Form of Tender Notice ........................................................... 97

Appendix II Specimen Instructions to Bidders .......................................................... 98
Appendix III(A) Specimen Form of Tender (Works) ...................................................... 102
Appendix III(B) Specimen Form of Tender (Goods) ...................................................... 103
Appendix IV(A) Specimen Form of Tender Security ...................................................... 105
Appendix IV(B) Specimen Form of Performance Bank Guarantee
(Unconditional) .................................................................................. 107
Appendix IV(C) Specimen Form of Bank Guarantee for Mobilisation
Advance Payment .............................................................................. 109
Appendix V Specimen of Checklist .......................................................................... 111
Appendix VI Possible Evaluation Criteria ................................................................. 113
Appendix VII Flowchart of the Procurement Process ................................................ 114
Appendix VIII Flowchart use of Consultants ........................................................... 115
xii
Annexure (S)
THE LIST OF PUBLIC FINANCE CIRCULARS ISSUED UP TO 13TH NOVEMBER, 2003
Srl. Circular No. Date Heading of the Circular Page

No.
01 Public Finance Circular 11.02.1998 Tender Evaluation Summary Report 01

No. 352(2)
02 Public Finance Circular 23.02.1998 Amendments to Guidelines on Government Tender 03

No. 352(1) procedure - Revised Edition - 1997 ; Award of
small Scale Construction Contracts to Approved
Societies and District Level Contracts to
Approved Societies and Registered Contracts
on Competitive basis.
03 Public Finance Circular 02.03.1998 Exemption of 100% Government Owned 06

No. 352(3) Companies from the Requirement of Refundable
Tender Deposit/Bid Bond
04 Public Finance Circular 21.05.1998 Speeding up of Tender Procedure 07

No. FIN 352(5)
05 Public Finance Circular 29.06.1998 New Procedures applicable to International 09

No. FIN 357 Companies Bidding for Large Scale Government
Tenders and BOO/BOT Projects
05A Public Finance Circular 03.08.1998 New Procedures applicable to International 11

No. 357(1) Companies Bidding for Large Scale Government
05B Public Finance Circular 25.09.1998 New Procedures applicable to International 12

No. 357(2) Companies Bidding for Large Scale Government
06 Public Finance Circular 02.07.1998 Enhancing the Effectiveness of Procurement 14

No. FIN 358 Procedures and Strengthening Procurement
Capacity
06A Public Finance Circular 30.07.1998 Enhancing the Effectiveness of Procurement 17

No. FIN 358(1) Procedures and Strengthening of Procurement
Capacity
06B Public Finance Circular 11.08.1998 Enhancing the Effectiveness of Procurement 18

No. FIN 358(2) Procedures and Strengthening Procurement
Capacity
07 Treasury Circular No. FIN 352(7) 25.08.1998 Project Tender Boards 19
xiii

No.
08 Public Finance Circular 02.10.1998 Creation of Awareness on Government Tender 20

No. FIN 363 Procedure
09 Public Finance Circular 20.10.1998 Award of Contracts to Government Institutions 21

No. FIN 365
09A Public Finance Circular 10.12.1998 Award of Contracts to Government Institutions 22

No. FIN 365(1)
10 Public Finance Circular 26.02.1999 Transport by Air - Guideline on Government 24

No. 368 Tender Procedure - No. 54
11 Public Finance Circular 04.05.1999 Introduction of New Guidelines No. 97.1 and 25
No. FIN 352(9) No. 99.1 to Guidelines on Government Tender
Procedure (Opening of Tenders)
12 Public Finance Circular 23.09.1998 Acceptable Securities and Guarantees 26

No. 352(8)
12A Public Finance Circular 06.05.1999 Acceptable Securities and Guarantees 27

No. FIN 372
12B Public Finance Circular 30.12.1999 Acceptable Securities and Guarantees 29

No. FIN 372(1)
12C Public Finance Circular 10.03.2000 Acceptable Securities and Guarantees 30

No. FIN 384
12D Public Finance Circular 22.07.2002 Acceptable Securities and Guarantees 31

No. FIN 372(2)
12E Public Finance Circular 06.05.2003 Procurement of Insurance Services 32

No. PF 406
12F Public Finance Circular 18.11.2003 Procurement of Insurance Services 33

No. 406(1)
13 Public Finance Circular No. 29.05.1998 Payments to Members of Technical Evaluation 34

FIN 352(6) Committees Assisting Ministry Tender
Board (MTB) and Department Tender
Boards (DTB)
14 Public Finance Circular 16.07.1999 Use of Expatriate Labour for Local Contracts 35
No. FIN 376
xiv

No.
15 Public Finance Circular 29.11.1999 Enhancing the effectiveness of Procurement 37

No. FIN 358(4) Procedures and Strengthening Procurement
capacity - introduction of a Tender Monitoring
System
15A FIN-1076-260-164 04.03.2002 Enhancing the effectiveness of Procurement 64

(Circular letter) Procedures and Strengthening Procurement
capacity - introduction of a Tender Monitoring
System (Attention to PF
Circular 358(4) - 29.11.1999
16 Public Finance Circular 19.01.2000 Guidelines for Undertaking Consultancy work by 65

No. 380 Universities and Research and Development
(R and D) Centers and their Staff
17 Public Finance Circular 24.08.2000 Appointment of TECC 67

No. FIN 352(10)
18 Management Services 26.12.2000 Recruitment of Staff for Project Management Unit 68

Circular No. 10 (PMU) of Projects Assisted by Foreign
Financing Agencies and their Emoluments
18A Public Finance Circular 09.02.2001 Amendments to the Guidelines on Government 82

No. 352(11) Tender Procedure. (Advance payment,
guarantees for the payments to the contractors,
application of preference, comparison of cost
estimates, Procurement of insurance services etc.)
18B FIN-1076-200-209 24.09.2001 Appointment of Technical Evaluation Committees 85

(Circular letter of S. T.) in Terms of GL 153.4 of Guidelines on
Government Tender procedure
19 Public Finance Circular 23.02.2001 Award of Small Scale Construction Contracts to 86

No. FIN 352(12) Approved Societies
19A Public Finance Circular 04.03.2002 Award of Small Scale Construction Contracts to 88
No. FIN 352(19) Approved Societies
20 Public Finance Circular 03.09.2001 Amendments to the Guidelines on Government 89

No. 352(13) Tender Procedure (Inclusion of mandatory
provision of 10% of the cost estimates as
contingency provision. (Guidelines 12.2 and 12.3)

No. 352(14) Tender Procedure (Guideline 155, 21 and 144)
22 Public Finance Circular 04.10.2001 Award of Contracts to Contractors Registered 91

No. 398 under the National Registration
System of ICTAD
No. 352(15) Tender Procedure (New Guideline No. 148.1,
Approval of contract variation orders for
consultancy contracts)
xv

No.
24 Public Finance Circular 27.11.2001 Eliminating Delays in the Tendering Process - 94

No. 399 Foreign Financing Agency Funded Tenders

No. 352(17) Tender Procedure (Guideline 62.4 Mobilization
Advance for works contracts)
26 Public Finance Circular 04.03.2002 New Procedures Applicable to International 97

No. FIN 357(3) Companies Bidding for Large Scale Government
Tenders and BOO/BOT Porjects
27 Public Finance Circular 21.06.2002 Cancellation of Tenders 99

No. FIN 352(20)
28 Public Finance Circular 06.09.2002 Enhancing the effectiveness of procedures to 100

No. FIN 358(5) expedite the Implementation of Development
Projects (CATB, Cabinet approval Authority
limits, payment to members of TECC,
procurement of vehicles for Foreign Funded
Projects, payments to the officer performing
project works etc.)
28A Addendum (1) to Public 25.10.2002 Enhancing the effectiveness of procedures to 109
Finance Circular No. FIN expedite the Implementation of Development
358(5) Projects (Cabinet Sub-committee on Budget
and Tender)
28B Addendum (2) to Public 13.11.2002 Enhancing the effectiveness of procedures to 110
Finance Circular No. FIN expedite the Implementation of Development
358(5) Projects
29 Public Finance Circular 30.09.2002 Impact of Value Added Tax (VAT) on the Tender 111
No. 364(3) Process
30 Public Finance Circular 15.10.2002 Domestic Preference to Local Manufacturers 113

No. 352(21)
30A Addendum to Public Finance 26.11.2002 Domestic Preference to Local Manufacturers 115
Circular No. 352(21)
30B Second (2nd) Addendum to 12.05.2003 Domestic Preference to Local Manufacturer 117
Public Finance Circular
No. 352(21)
31 Public Finance Circular 21.03.2003 Intimation of Tender Award 118

No. 404
32 Public Finance Circular 13.11.2003 Authority Limits for Projects funded by 119
No. FIN 358(6) Consolidated Fund
33 Public Finance Circular 29.12.1995 Arbitration Act, No. 11 of 1995 120

No. 344
Above circulars are available in the web site of the Public Finance Department (www.pfd.gov.lk)
xvi
Public Finance Circular : 352(2) Annexure 1
My No. : FIN 1076-260-180.

Department of Public Finance,
General Treasury,
Colombo 01.
11th February, 1998.
Secretaries of all the Ministries and

Heads of Departments.
TENDER EVALUATION SUMMARY REPORT
H. E. the President has directed that every Technical and Financial Evaluation Committee assisting
Cabinet Appointed Tender Boards should submit a Tender Evaluation Summary Report, along with its
Tender Evaluation Report. This report should be attached to the Cabinet Memorandum when the
recommendations of CATBs are submitted to the Cabinet.
2. Accordingly, I enclose herewith a specimen format for submission of Tender Evaluation

Summary Report. You are kindly requested to ensure that this requirement is complied with.
3. In order to accommodate the above requirement the "Guidelines on Government Tender

Procedure - Revised Edition 1997" is hereby amended by introducing a new Guideline 129(1) as given
below, with immediate effect.
New Guideline 129(1) :
The TEC assisting the CATB should submit a Tender Evaluation Summary Report as per
Appendix XII, to the Tender Board. The CATB, in turn should attach this summary report
as an Annexture to their report.
D. Y. LIYANAGE,
Acting Secretary to the Treasury.
1
3 - H20832
Appendix XII
SPECIMEN FORMAT FOR
TENDER EVALUATION SUMMARY REPORT
1. Name of the project :
Opening date of tenders :
2. Name, Address and tender sum of all tenders received
as declared at the opening of tenders :
Name and address of tenderer Tender sum Corrected tender sum
if arithmatically corrected
3. Details of Tender Examination as per Guideline 111.1

Give a list of all tenders rejected at this stage with reasons :
Name of Tender Reasons for rejection Reference to TEC report
4. Details of Technical Evaluation :

Give a list of substantially not responsive and therefore rejected tenders with reasons
as per Guideline 115.1 and 115.2 :
Name of tender Reasons for rejection Reference to TEC report
5. Give a list of substantially responsive, detailed evaluated tenders, commencing from

the lowest evaluated tender :
Name of Tender Evaluated tender sum Ranking order
6. Application of preferences :
If preferences applied, give following details with the changed ranking order :
Name of tender Hypothetically calculated New ranking order
tender sum, if so calculated
7. Total Cost Estimate :

Recommanded tender is % lower/higher than the Total Estiamted Cost.
8. Whether the lowest evaluated tender is recommended for award.

If not, give reference of TEC report, justifying such recommendation :
1. 3.
2. 4.
Signatures of members of TEC
The TEC assisting the CATB should submit this summary report to TB along with their report.
Public Finance Circular No. : 352 (1) Annexure 2
My No. : FIN-1076-260-180.
Department of Public Finance
General Treasury,
Colombo 1.
23rd February, 1998.
Secretaries of all the Ministries,
Heads of Departments,
Heads of all Govt. Corporations/Statutory Bodies,
Chief Executive Officers of Fully Govt. Owned Companies,
Chief Secreataries of all the Provincial Councils, and,
Heads of Local Authorities.
AMENDMENTS TO GUIDE LINES ON GOVERNMENT TENDER PROCEDURE REVISED

EDITION-1997: AWARD OF SMALL SCALE CONSTRUCTION CONTRACTS TO APPROVED
SOCIETIES AND DISTRICT LEVEL CONTRACTS TO APPROVED SOCIETIES AND
REGISTERED CONTRACTORS ON COMPETITIVE BASIS
YOUR kind attention is drawn to the Public Finance Circular No. 352 dated 25th September, 1998,
which introduced the Guidelines on Government Tender Procedure-Revised Edition 1997.
2. With a view to strengthening village level organizations so as to encourage them to use

their own resources, to develop village areas, for creation of more employment opportunities especially
for unemployed youths, expedite construction works at District level parallel to other development
programmes at the National level and meet the inadequacy of construction contractors at District level,
the Government has decided to effect the following changes to Guidelines on Government Tender
Procedure-Revised Edition, with effect from 01.03.1998.
Guideline 164.1 Entrusting of Construction works to Approved Societies.
Guideline 164.1 (1) and (2) will be replaced by inserting following new sentences :
164.1(1) Total number of works in hand at a given time should not exceed 6
164.1(2) Total value of works at a given time should not exceed Rs. 3.0 Mn.
The other provisions of this Guideline remains unchanged.
Incorporation of New Guideline Nos. 164.3 to 164.7

The following new Guidelines will be incoperated to be read immediately after the Guideline 164.2.
164.3 Award of District/ Divisional Level Construction Contracts to registered tenderers and Approved
Societies on Competitive Basis :
A Heads of Department or an officer under delegated atuthority may call for tenders only from
the tenderers registered by the Governments Agent/District Secretary as per Guideline 164.4
and 164.5 and, from Approved Societies registered as per Guideline 164.4 and 164.6, for the award
of constructions contracts not exceeding Rs. 10.0 Mn., on competitive basis.
3
164.4 Registration of Tenderers and Approved Societies for consideration to award of Construction
Contracts on Competitive Basis :
Government Agent/District Secretary, giving wide publicity, may call for applications for
registration of tenderers and Approved Societies for the selection of contractors on a competitive
basis for award of construction contracts not exceeding Rs. 10.0 Mn. under the criteria stated in
Guideline 164.5 and 164.6. On receipt of these applications Government Agent/District Secretary
may evaluate them through a committee chaired by him with the participation of respective
Divisional Secretary and one another member qualified in civil construction works, and prepare
a list of registered tenderers and Approved Societies not exceeding 10 in number per Divisional
Secretary Division.
164.5 Criteria for Registration of Tenderers for District/Divisional Level Construction Contracts :
Government Agent/District Secretary may call for applications from the tenderers who have
following qualifications, for registration for the purpose of Guideline 164.4.
I. The tenderer should be a permanent resident of the respective Divisional Secretary Division
where he is applying to register. In case of company its registered office should be within the
respective division.
II. The tenderer/company should have a valid registration from the Institute for Construction
Training and Development (ICTAD) Gr. M-VI for civil works or registration in a Government
Department for the above value.
III. Where the Government Agent/District Secretary is of the view that sufficient number of eligible
tenderers are not available in a Division/District as stated above, may call for applictions for
registration upto Rs. 5.0 Mn. and Rs. 10.0 Mn. seperately with ICTAD registration of Grade M-
VII or M-VI, or Departmental registration upto Rs. 5.0 Mn. or Rs. 10.0 Mn. respectively.
IV. Evaluation criteria for applicants may be determined by the Government Agent/District
secretrary on the basis of Guideline 70.2 with necessary amendments or improvements.
V. Once the list is finalised, it should be circulated among all the Government Agencies within
the District.
VI. The registration list should be revised periodically but at least once in two years.
VII. One tenderer can register in respect of one Divisional Secretary division.
VIII. A tenderer registered in respect of one Divisional Secretary Division is eligible to compete
for any construction tender within the district not exceeding Rs. 10.0 Mn.
4
164.6 Criteria for registration of Approved Societies for District/Divisional level Construction
Contracts :
Government Agent/District Secretary may call for applications from the Approved Societies
specified in Guideline 164.2 and having following qualifications for registration for the purpose
of Guideline 164.4.
1. The Approved Society specified as per Guideline 164.2 should have valid registration issued
by approving authority and should operate within the relevant District.
2. The criteria stipulated from Guideline 164.5 (II) to (VIII) also are applicable to this category,
with necessary changes.
164.7 Criteria for award of contracts :
I. After calling for tenders award should be done on competitive basis subject to the provisions
of Para (II) below, and all other provisions of these guidelines, as appropriate, should be adhered
to.
II. 5% preference for Approved Societies as per Guideline 126 may be considered for these tenders
provided, tender sum does not exceed the Total Cost Estimate or to the extent not exceeding
TCE.
III. The requirement of NCCASL membership as per Guidelines 65 is waived off for the purpose
of this Guideline.
The following amendments too, are introduced to facilitate Ministry level procurments. Guideline
165: Emergency Purchases.
The following sentence is inserted to be read immediately after the sentence This authority
shoud not be delegated.
New sentence: However, where the Secretary of a Line Ministry is the Appropriate Authority,
this authority may be delegated to one Additional Secretary.
Guideline 179: Authority for deviating from Tender procedure.
The following new sentence is inserted immediately after the words Heads of Department His
personal approval-upto Rs. 100,000
New sentence: In case of a Line Ministry, the Secretary may delegate this authority, in writing,
to one Additional Secretary.
D. Y. LIYANAGE,
5
Public Finance Circular No. : 352(3) Annexure 3
My No. : FIN 1076-260-180.

General Treasury,
Colombo 1.
02nd March, 1998.
Secretaries of All the Ministries,

Chairmen of State Corporations,
and Chairmen of 100% Govt. owned Companies.
EXEMPTION OF 100% GOVERNMENT OWNED COMPANIES FROM THE REQUIREMENT OF

REFUNDABLE TENDER DEPOSIT/BID BOND
IT has been decided to exempt the 100% Government Owned Companies from the requirement of
refundable tender deposit/bid bond, when tenders are called for the public sector procurements, under
the Consolidated Fund provided the particular company has not defaulted in entering into agreements
in earlier occasions.
2. This facility should not given to Government Companies where the stake of the Government
is less than 100%.
3. Accordingly, the Guideline 46.7 of the Guidelines Government Tender Procedure will be
amended as given below with effect from 02.03.1998.
46.7 The following new sentence will be added to read immediately after 46.7(4)
46.7 (5) 100% Government owned companies.
D. Y. LIYANAGE,
6
Public Finance Circular No. : Fin. 352(5) Annexure 4
My No. : FIN-1076-260-180.
Colombo 01.
21st May, 1998.
Secretaries of all the Ministries and

SPEEDING UP OF TENDER PROCEDURE
EVEN though clear Guidelines and time schedules are included in the Guidelines on Government
Tender procedure for expediting of tenders, it is observed that finalisation of tenders still take long
period of time. This is an unsatisfactory situation as it affects the development programmes of the
Government adversely.
Considering the situation H. E. the President has directed that all tenders should be finalised
and awarded within one to three months from the date of appointment of the CATB. Accordingly,
following procedure should be adopted in finalisation of tenders :
1. Draft tender documents including B. O. Q. , technical specifications and technical drawings

etc., should be ready before the Ministry makes the request to appoint the Cabinet Appointed
Tender Board (CATB).
2. The period within which the tender should be finalised based on priority should be indicated
in the request. (This period should not exceed three months).
3. Along with the request the Secretary of the relevant Ministry should request the Treasury to
appoint the Technical Evaluation Committee (TEC).
4. The Chairman of the CATB should give the earliest date possible within one week for the
first meeting of the CATB once he is informed of his appointment.
5. At the very first meeting of the CATB a time frame should be prepared indicating possible
dates up to the submission of its recommendations to the Cabinet.
6. The Chairman of CATB and Secretary of the relevant Ministry should strictly follow this
time schedule.
7
7. The Secretary of the relevant Ministry should ensure that actions regarding the process is
strictly kept to the time schedule. i. e. advertisement for calling of tenders, bid opening and
evaluation of tenders etc.
8. The Secretaries of Ministries should designate a senior staff officer to co-ordinate tender
works as well as to function as Secretary to the CATB. As stipulated in the Guidelines on
Government Tender Procedure this officer is entitled to an extra payment equal to members
of the CATB.
The Secretary of the relevant Ministry and Chairman of CATB are requested to follow up
personally the process to ensure the completion of the tender within the stipulated time period.
D. Y. LIYANAGE,
Deputy Secretary to the Treasury.
8
Public Finance Circular No. : Fin. 357 Annexure 5 G
r
My No. : FIN-1O76-260-180.
Department of Public Finance.
Colombo 01.
29th June, 1998. I ~
I I
To: All Secretaries,
~
Head of Departments and
Chairmen of Corporations, Boards and Statutory Bodies. -
NEW PROCEDURES APPLICABLE TO INTERNATIONAL COMPANIES BIDDING
FOR LARGE SCALE GOVERNMENT TENDERS AND BOO/BOT PROJECTS
THE Government intends to undertake several large public investment projects in infrastructure as
well as projects with private investment on a BOO/BOT basis. While the commitment to transparency
adhered to by the Government would enable reputed international contractors or investors to deal
I directly with the Ministry or Government Agency involved in calling for tenders. contracts or
\
investment projects it should be recognized that local agents playa legitimate role in obtaining and
analysing the documentation and assisting the foreign party through the various processess involved
I
in the submission of bids and negotiation of contracts, due to the complexity of such large scale
I I projects.
2. In view of the large expenditure involved and the fact that the structuring of large tenders
involve complex negotiations, the Cabinet of Ministers has decided that all ministers and stare
agencies should follow the under-mentioned procedure in respect of international companies bidding
for large scale Government tcnders and BOO/BOT projects.
2.1 Any foreign investor or contractor bidding for projects should enter into a valid agency
I \ agreement with a local company listed on the Colombo Stock Exchange where the market
capitalisation of the listed company is not less than Rs. 200 million.
I
Accordingly, unless a valid agency agreement with a listed company is submitted for scrutiny
by the relevant CANC or CATS appointedfor rhe evaluationof a bid relating to a BOO/ I
BOT project or a public investment contract, an international company would not qualify
for participating in the bidding process. If necessary, the CANC or CAfB would have rhe ,
right to obtain the opinion of the Attorney General with regard to the veracity of the agen~y
agreement. I
2.2 As far as tenders and BOO/BOT projects floated by the Ministry of Port De\'elopment. I
Rehabilitation and Reconstruction for the port sector, the Ministry of Transport and Highways
I
for the road sector and the Ministry of lITigation and Power for the power sector are concerned.
the above stipulation shall apply with immediate effect for all projects and
the value is in excess of Rs. 250 million,
tenders where I
I
2.3 With regard to tenders and contracts floated by other ministries such as Defence and Transport
(excluding roads) the requirement that international companies enter into valid agency
9
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I
agreements with listed companies when bidding for contracts/tenders in excess of Rs. 250
million shall take effeCt with effect from 01.10.1998. .
f
. I -
f
!
3. The justification for public listed companies representing reputed international suppliers,
contractors and investors is that they are compelled to operate more transparently than an unlisted
private or public company and with a greater degree of accountability towards shareholders.
Furthermore, public listed companies are required to comply with the continuing listing requirements
of the Securities and Exchange Commission including regular financial disclosures. Moreover, the
benefits of such alliances would accrue to a large number of domestic shareholders as shares of listed
companies are more widely held than unlisted companies
~
1
4. These provisions will be applicable to tenders already called but not closed in port, road
r
and power sectors. Therefore, with regard to tenders falling into these categories, immediate action
should be taken to issue an addendum embodying this requirement and if necessary closing date of
tenders may be extended to fall in line with tender requirements.
5. The above proposals are intended to benefit the national economy by obtaining the best
possible terms from the bidders and benefits to local companies and their shareholde,rs.
6. The new procedure enumerated above will supersede and supplement the relevant
provisions in the "Guidelines on Government Tender Procedure- (RevisegEdition - August, 1997)"
published by the Ministry of Finance and Planning.
7. Please acknowledge receipt of this circular.
DIXON NILAWEERA,
Secretary, '. .
Ministry of Finance and Planning.
, I
";
to
J
Public Finance Circular No. : Fin. 357 (1) Annexure 5A
My No. : FIN-1076-260-187
General Treasury,
Colombo 01,
03rd August, 1998
To : All Secretaries, to Minitries,

Heads of Departments and
Chairmen of Corporations, Boards and Statutory Bodies.
NEW PROCEDURES APPLICABLE TO INTERNATIONAL COMPANIES BIDDING

FOR LARGE SCALE GOVERNMENT TENDERS AND BOO/BOT PROJECTS
YOUR kind attention is invited to para 2.1 of the Public Finance Circular No. FIN-357 dated
29.06.1998 issued on the above subject.
In view of the fact that stock markets fluctuate, the market capitalization value of the agent,
which has been established at Rs. 200 million should be the value prevailing as at 31st December of
the year immediately preceding the date on which the tender is called and will remain unchanged
till the 31st December, of the currenct year.
If international bidders or tenderers wish to participate in a project without an accredited

agent, which is a listed company, they may do so, provided the international company concerned
has set up a local liaison office directly owned by the parent company, with necessary staff to perform
the fuctions of a local agent.
DIXON NILAWEERA,
Secretary,
Ministry of Finance and Planning.
11
-
~'-- .",,_.~-,.':'.~.:-',~Ji\I;..," ~."~
Public Finance Circular No. : 357(2) Annexure SB
My No. : FIN-1O76-260-180.
Colombo 01.
25th September, 1998.
To: All Secretaries,

~
Chairmen of Corporations, Boards
and Statutory Bodies.
f
NE\V PROCEDURES APPLICABLE TO INTERNATIONALCOMPANIES BIDDINGFOR LARGE
SCALE GOVERNMENT TENDERS AND BOO/BOT PROJECTS
1. Your kind attention is invited to public Finance Circular Nos. 357 and 357(1) dated June 29,
1998 and 3rd August, 1998 respectively.
..
2. Public Finance Circular Nos. 357 and 357(1) are amended as follows :-
3. Each bidder for a Government tender or BOO/BOT project, the value of which exceeds Rs.
250 million shall furnish the following information in the bid or proposal :-
(a) Whether the b~dder uses a local agent (s) ;
(b) Where the bidder uses a local agent (s),
(i) the name and address of the local agent (s) ;
(ii) the.year of registration of the business of the local agent (s) ;
(iii) a certified copy of the audited accounts of the local agent (s) for anyone of the two,
financial years immediately preceding the date of submission of bids or proposals, ,
audited by an independent external auditor in accordance with Sri Lanka Auditing I

Standards together with the auditor's report confirming that the accounts were prepared
in accordance with the Sri Lanka Accounting Standards; and
(iv) all details of commissions or gratuities, if any, paid or to be paid to the local agent (s)
connected with or relaing to the bid or proposal up to contract execution if the bidder
is awarded the contract, including any success fees payable.
4. In the case where a bidder uses a local agent (s), the bid will be rejected if
(a) the bidder fails to furnish any of the information specified in paragraph 3(b),
I' .
(b) the accounts of the local agent (s) for any' one of the two financial years immediately
preceding the date of submission of bids or proposals have not been audited by an
independent external auditor in accordance with the Sri Lanka Auditing Standards, and
12 ..
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.:"
(c) the auditor's report does not confirm that the accounts of the local agent (s) have been
prepared in accordance with the Sri Lanka Accounting Standards.
5. Bidders for Government tenders and BOO/BOT projects may submit bids or proposals without
. ! local agent (s).
6. These provisions will be applicable to new bids or proposals as well as bids and proposals
already invited but not close. In the latter case, immediate action should be taken to inform
all prospective bidders that have received the bidding documents of the requirements by an ~
addendum. In order to allow prospective bidders reasonable time in which to take the
addendum into account in preparing their bids or proposals, the deadline for the submission
of bids or proposals may be extended.
DIXON NILAWEER.\,
Secretary,
'j
Ministry of Finance & Planning.
..
OJ
Is,~!
ng
ed.
(s)
!cler
13
~
Public Finance Circular No. : FIN-358 Annexure 6
My No. : FIN-1O76-260-164..
No. 31,
Sir Chittampalam A. Gardinar Mw.,
P. O. Box 418, Colombo 2
~ ~
02nd July, 1998. .
To: All Secretaries of Ministries,

Chief Secretaries of Provincial Councils,
Heads of Departments, Heads of Corporations, Boards and Statutory Bodies
ENHANCINGTHE EFFECTIVENESSOF PROCUREMENT PROCEDURES AND

STRENGTI-IENIN?G
PROCUREMENTCAPACITY
..
THE Government and the donor agencies have been concerned for sometime about the extent
to which development projects are being delayed, particularly before implementation, by .
lengthy internal approval procedures for procurement of civil works and goods and for the
appointment of consultants. Lengthy pre-implementation delays in respect of development
projects have led to considerable increases in project costs, loss of project benefits and to
an overall slowdown in delivery of the Government's Development Programme.
02. The Cabinet of Ministers has decided to establish ten permanent Cabinet Appointed Tender
Boards (CATBs) and a procurement support Bureau (PSB) to facilitate the acceleration of
the procurement process and to strengthen the procurement capacity. The Cabinet of Ministers
has also proposed changes in the composition of the Technical Evaluation Committees in
order to enhance their effectiveness.
03. Permanent Cabinet Appointed Tender Boards and Procurement Support Bureau (PSB)
3.1 Permanent Cabinet Appointed Tender Boards
Under the proposed system all tenders relating to projects will be handled by ten permanent
CATBs. The Cabinet of Ministers has already appointed these permanent CATBs. This
system will apply to new tenders only.
3.2 Procurement Support Bureau
(a) The procurement Support Bureau will be established under the ministry of Finance and
Planning initially for a period of two years to undertake the functions enumerated at para
3.2.1 PSB will be administratively attached to the Department of Public Finance. , i
(b) PSB will be established with immediate effect.
14 J
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3.2.1 Gener.al Functions of the PSB
General functions of the PSB are to :
. I
(a) Oversee and facilitate tenders using donor funds with a value in excess of Rs. 100 M.' ;
I
(b) Appoint Technical Evaluation Committees to assist the permanent CATBs, including a I
representative from the PSB and another representative from the Treassury, with the, I
approval of the Secretary to the Treasury;
~
(c) Monitor the progress of tenders against agreed time scales;
'1
(d) Develop and implement training programmes for those in the procurement process including
preparation of selection criteria for praticipants to undergo donor agency training
r
programmes;
(e) Develop procedures and standard requirements regarding procurement in conjuction with
donor agencies; .
(t) Assess, on an ongoing basis, the level of procurement expertise within individual Ministries
with a view to making recommendations to Government on a Ministry's ability to process
tenders with increased limits.
3.3 Tender Procedures .

3.3.1 The procedure stipulated in "Guidelineson GovernmentTenderProcedure - (RevisedEdition,
August, 1997)"shall continue to be followed in the handling of t~nders, subject to the
changes proposed in this Circular.
3.3.2 Attention of all concerned is also drawn to Public Finance Circular No. FIN-352-(5) dated
21st May, 1998 titled "Speeding up of Tender Procedure" The procedure enumerated in
, this Circular regarding finalisation of tenders should be strictly complied with.
3.4 Initiating Action on Tenders
3.4.1 As soon as funds are approved, for procurements exceeding the value of Rs. 100 million
under the donor funded projects, the Secretary to the Ministry concerned shall make a request
to the Secretary the Ministry of Finance and Planning, with a copy to the Director General
of Public Finance, to appoint a TEC, recommending the names and designations of officers
for appointment to the TEe. The PSB will make the appointmentspromptly, with the apporval
of. the Secretary to the Treasury.
14.2 Simultaneously the Secretary to the Ministry concerned shall make a request to the Secretary
to the Ministry of Finance and Planning, with copy to Dierector General of Public Finance.
for the nomination of one of the permanent CATBs to handle that tender.
35 Composition of TECs
The Composition of TECs assisting Standing CATBs shall be as follows:
(i) Secretary of the relevant line Ministry-(Chairman) ;

(ii) Two to four members nominated by the Secretary of te relevant line Ministry;
(iii) Representative of the Treasury; .
(iv) Repr~sentative of the PSB.
15
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3.6 Payments to Members of Permanent CATBs
The Payments applicable at present to members of CATBs will be applicable to members of

the permanent CATBs.
3.7 Payments to Members of TECs Assisting Standing CATBs
The members of TECs assisting t~e Standing CATBs will be paid the allowances applicable
to members of TECs assisting CATBs and will be entitled to the folIowing additional
.., allowances: I
jr
(a) Tenders upto Rs. 500 Mn. - Additional 50% I
(b) Tenders between Rs. 500 - Rs. 1000 Mn. - Additional 75%
(c) Tenders over Rs. 1000 Mn. - Additional 100%
The above additional payments wiII be subject to the TEC submitting their report within
three weeks of opening of tenders in cases of tenders. Failure to keep within the stipulated
periods shall result in the members of TECs being paid reduced allowances on the basis
of a 25% reduction of the additional allowance for &very week's delay.
These payments shall be made by the respective Excuting Agencies.
3.8 Servicing of Tenders handled by Permanent CATBs
. The Secretaries of Ministries should designate a senior staff officer to co-ordinate tender
works as well as to function as Secretary to the Permanent CATB whenever a CATB
begins processing a tender relating to his/her Ministry. This officer is entitled to a payment
equal to members of the Permanent CATB.
04. General
4.1 CATBs already handling tenders will continue to handle such tenders until they are
finalised.
4.2 TECs already evaluating tenders will continue to evaluate such tenders until they are
finalised.
I
05. Please acknowledge receipt of this circular.
~
DIXONNILAWEERA,
Secretary, - I
Ministry of Finance '& Planning &

,
Secretary to the Treasury.
" i
16
" I
Public Finance Circular No. : FIN-358 (1) Annexure 6A
My No. : FIN-1076-260-164.
General Treasury,
Colombo 01.
30th July, 1998.
To : All Secretaries of Ministries,

Heads of Corporations, Boards and Statutory Bodies
ENHANCING THE EFFECTIVENESS OF PROCUREMENT PROCEDURES AND

STRENGTHENING OF PROCUREMENT CAPACITY
YOUR attention is drawn to paragraph 3.5 of the Public Finance Circular No. FIN-358 dated 02.07.1998
on the above subject.
It has become necessary to make changes in order to clearly define the role of the Line Ministry
Secretaries in the Technical Evaluation Committees and the Permanent Cabinet Appointed Tender
Boards.
It has been decided that the Line Ministry Secretaries will function as co-ordinators and act
as a link between the relevant TECs and the Permanent CATBs. Hence, they will not function as the
Chairman of the TECs. They will recommend names of suitable officers for appointment as Chairmen
of TECs. Once the TEC is appointed the relevant line Ministry Secretary should summon a meeting of
the TEC and fix a time schedule for the completion of the TEC report, taking into consideration the
needs to finalize the entire tender within a period not exceeding three months. (Vide - Public Finance
Circular No. FIN - 352 (5)). Thereafter they should review the progress of work of th TEC and ensure
that the time targets are kept. They will be entitled to the payments stipulated in paragraph 3.7 of the
Public Finance Circular No. 358.
The relevant line Ministry Secretary should also attend the meetings of the Permanent CATB
as an observer, if he/she is not a member of the permanent CATB, already. This will help to forge
effective co-ordination between the TEC and the permanent CATB, which in turn will expedite the
entire tender process.
DIXON NILAWEERA,
17
4 - H20832
Public Finance Circular No. : FIN-358 (2) Annexure 6B
My No. : FIN-1076-260-164.
No. 31,
Sir Chittampalam A. Gardinar Mw.,
Colombo 02,
P. O. Box 418,
11th August, 1998.

Heads of Corporations, Boards and Statutory Bodies.

STRENGTHENING OF PROCUREMENT CAPACITY
YOUR kind attention is invited to Public Finance Circular No. Fin-358 dated 02.07.1998 on the above
subject.
02. Scope of the Permanent Cabinet Appointed Tender Boards
Her Excellency the President has directed that the Permanent Cabinet Appointed Tender Boards
referred to in paragraph 02 of this circular will handle all tenders, including those not funded by foreign
donors. This would mean that all tenders involving projects above Rs. 20 million will be handled by
the permanent CATBs.
Hence, Secretaries are requested to make a request, in the future, to the Ministry of Finance
and Planning, with a copy to the Director General of Public Finance, to nominate one of the ten
permanent CATBs to handle tenders exceeding the value of Rs. 20 million, as soon as funds are
approved. They need not write to the Secretary to the Cabinet of Ministers for such appointments in
the Future.
03. Technical Evaluation Committees (TECs)
It has been found that in many of the TECs recommended by the Ministries the names of
some officials appear almost.
The relevant line Ministry Secretary should also attend the meetings of the permanent CATB
as an observer, if he/she is not a member of the Permanent CATB, already. This will help to forge
effective co-ordination between the TEC and the permanent CATB, which in turn will expedite the
entire tender process.
DIXON NILAWEERA,
18
Treasury Circular No.: FIN - 352 (7) Annexure 7
My No.: FIN - 1076 -260 - 180.

General Teasury, Colombo 01,
, '
25th August, 1998.

~
Chairmen of Corporations, Boards,
Statutory Bodies and r
Government .owned Companies,
PROjECT TENDER BOARDS
YOUR attention is invited to Guideline 198 of the Guidelines on G~)VernmentTender Procedure.
It has been decided that even in instances where Project Director/Project Manager is not a
Class I Officer belonging to anyone of the All Island Services, Seconded or recruited after retirement
on contract basis, a Project Tender Board could be established with the approval of the Secretary to
the Treasury. The request for the establishment of such a Project Tender Board should be made by
the Head of the Department/Corporation and forwarded to the Department o(Public Finance with
the recommendation of the Secretary of the Ministry concerned for approval by the Secretary to the
Treasury.
D. Y. LIYANAGE,
19
,~-,~'~- '~-
f"
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~~*,,;,~ ~
I
Public Finance Circular No. : FIN ~ 363 Annexure 8
My No. : FIN - 1076-209-208.

Department of Public Finance, I
Colombo 01,
02nd October, 1998. I

~
., Chairmen of Public Corporations and Statutory Bodies -
CREATION OF AWARENESS ON GOVERNMENT TENDER PROCEDURE
THE Guidelines on Government Tender Procedure were issued with the view to expedite the ten-
der process while maintaining transparency and ensuring equal opportunities to all the tenderers.
It became necessary to conduct an awareness programme on Tender Guidelines t~ achieve the

above objectives and the Treasury took action to organise seminars country- wide to introduce the
document with the assistance of the MOF/ADB Financial Management Project during 1997.
At present most of the staff handling procurements in Government Institutions follow the Tender
Guidelines and it is believed that most of them have a fair knowledge about the process.
In view of the above it is proposed to explore the possibility of implementing the following pro-
posals with a view to further strengthening the knowledge of the Public Officers regarding the pro-
curement procedure: -
(i) To enhance the section on " Procurement Procedure" in the syllabus for Departmental
Efficiency - Bar Examinations and Promotional Examinations for Public Servants.
(ii) To Include same in various Promotional Examinations for Corporation employees.
I Shall be thankful if you wiil kindly take action to include Government Tender Procedure in the
syllabus for all such Departmental examinations.
I thank you for your co-operation.
DIXON Nn.,AWEERA,
. Secretary,
Ministry of Finance and Planning
and Secretary to the Treasury.
N. PA1HMANATHAN,
Director General of Public Finance. ,-i
20
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Public Finance Circular No. : FIN. 365.
I Annexure 9
I!
i
t . ' My No. : FIN - 1076-209-208.
General Treasury,
Colombo 01,
20th October, 1998. ~
To:All Secretaries of Ministries,
Chief Secretaries of Provincial Councils.
. -
AWARDS OF CONTRACTS TO GOVERNMENT INSTITUTIONS
THE Government has formulated the Guidelines on Tender Procedure with the view to keep the
tendering process fully transparent and to obtain financially the most advantageous and qualita-
tively the best services and supplies to the Country.
2. It is observed that frequent requests are being made by the" Ministries to award contracts
to Government institutions deviating from the Tender Procedure in contrary to the conceptual
framework of the Tender Guidelines.
3. Her Excellency the President has directed that all the Government contracts should be
awarded on competitive basis, strictly adhering to the Government Tender Procedure and that the
Government institutions also should compete and win the contracts on their own merit in order
to ensure a level playing field for all the tenderers.
4. All the Ministries are kindly requested not to make such requests for deviation from
tender prcedure in the future and are also requested to inform the Heads of Departments,
Corporations, Boards and Statutory Bodies coming under their purview accordingly.
D. Y. LIYANAGE,
Copies: All Heads of Departments, Corporations, Boards and Statutory Bodies.
21
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1 -=- " =- .. -
Public Finance Circular No.; FIN. 365 (1)
Allllexure 9 A
My No. : FIN - 1076-209-208.

Department of Public Finance, II
{}eneral Treasur~
.
Colombo 01,
10th December, 1998. !
~
Secretaries of All Line Ministries, fr
Chief Secretaries of Provincial Councils, and
Heads of Departments, Corporations,
Boards and Statutory Bodies
AWARD OF CONTRACTS TO GOVERNMENT INSTITUTIONS
YOUR kind attention is requested to Public Finance Circular No. 365 dated 20th October, 1998 on
the above subject. .
The intention of the above circular was not to amend the provisions made in the {}uidelines on
Government Tender Procedure, Revised Edition 1997, but to prevent the liberal use of provisions
with regard to deviations from the tender procedureto award contracts to {}overnmentagencies. -
It is observed - that the only criteria considered in such situations is that the contracto~is a {}ovemment
Agency irrespective of their specialization.
Any deviation from the Tender Procedure should be strictly in accordance with the provisions in
Chapter XII of the {}uidelines on specific issues described therein, where the executing agencies\
are compelled to deviate from the tender procedure.
As regards consulting services and designing, Chapter VI, of the {}uidelines still applies and
excluded from the circular which includes procurement of following services.
Pre - Investment Studies

Investment Priorities
Sector Policies
Feasibility Studies
Justification of Investment Studies
Detailed "Engineering and Design

Preparation of detailed design, Specifications.
Cost Estimates and Tender Documents
/-.
22
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Project Implementation
11
Execution of Training Programmes
Supervision of Project Execution
t
Institutional Capacity Building
, ,
~
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I Accordingly if a Government Agency so wishes, award of works, identified in Chapter VI to
f
~
Government Corporations, Statutory Bo~rds and Fully Government Owned Companies, without
,.
I'
following tender procedure, may be continued.
j
~
t However, the State Agencies, specialized in above works (UDA, CECB etc.) should not undertake
contracts or supplies and those should be handled by'the relevant agencies, in accordance to the
1
Tender Guidelines. Provisions of above Circular will apply to all matters including award of
contracts, works and supply of goods.
D. Y. LIYANAGE,
..
..
23
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Public Finance Circular No. : 368. Annexure 10
My No. : FIN-1076-260-180.
General Treasury,
Colombo 01.
26th February,1999.
To : All Secretaries to Ministries,

Heads of Department,
District Secretaries and Chief Secretaries of
All the Provincial Councils.
TRANSPORT BY AIR - GUIDELINE ON GOVERNMENT TENDER

PROCEDURE - No. 54
YOUR attention is drawn to Guideline No. 54 of the Government Tender Procedure on Transport of
Goods, Materials and other Imports by Air.
02. The said authority is hereby delegated to the secretaries of the Line Ministries with the
view to avoid unnecessary delays in the process of obtaining approval for transportation of goods
and materials by air in cases where it is absolutely necessary to transport them urgently.
03. In exercising the authority, the Secretaries are kindly requested to ensure that approval
is granted only under exceptional circumstances where it is unavoidable. Therefore all applications
should indicate the full reasons and special circumstances, if any, warranting such transport and
explain in cases where failure of timely arrangements has caused the need for air freight. If air freight
has been occasioned by oversight or neglect, the officers responsible would be liable to a surcharge
up to a maximum of 2/3rd of the air freight charges.
04. It is also necessary to take all precautionary measures to avoid recurrence and proper
consideration should be given to the cost aspect.
DIXON NILAWEERA,
Secretary / Ministry of Finance & Planning,
and Secretary to the Treasury.
24
Public Finance Circular No. Fin 352(9) Annexure 11
My No. : FIN-1076-260-180.
General Treasury,
Colombo 01.
4th May, 1999.
To : Secretaries of all Line Ministries,
Chief Secretaries of Provincial Councils, and
Heads of Departments, Corporations
Boards and Statutory Bodies.
INTRODUCTION OF NEW GUIDLINES No. 97.1 & No. 99.1 TO GUIDLINES ON

GOVERNMENT TENDER PROCEDURE
YOUR Kind attention is drawn to Guidlines No. 97 and 99 of the Guidelines on Government Tender
Procedures Revised Edition 1997, on Opening of Tenders and Supervision of Opening.
The above guidelines are amended as follows:
Guideline No. 97
The opening of tenders other than tenders handled by Cabinet Appointed Tender Boards is
the responsibility of the respective Tender Board. However, if the TB is unable to attend to the opening
of tenders they may delegate this authority to a Bid Opening Committee (BOC) consisting of
at least two Staff Officers and one of whom should be appointed as Chairman, BOC.
Guideline No. 99
The tenders other than tenders handled by Cabinet Appointed Tender Boards shall be opened
by or under the immediate supervision of the Chairman, TB/BOC. The following new guideline will
be introduced soon after the amended Guidelines No. 97 and No. 99 respectively.
Guideline No. 97.1
In respect of tenders handled by Cabinet Appointed Tender Boards the opening of tenders
is the responsibility of the Secretary of the Line Ministry. However if the Secretary is unable to
attend to the opening of tenders he may delegate the authority to a Bid Opening Committee (BOC)
consisting of at least two staff officers, one of whom shall be appointed as Chairman, BOC.
Guideline No. 99.1
Tenders handled by Cabinet Appointed Tender Boards shall be opened by or under the
immediate supervision of the Secretary of the Line Ministry or Chairman, BOC.
DIXON NILAWEERA,
Secretary to the Treasury & Secretary to the
Ministry of Finance & Planning.
25
Public Finance Circular No. : 352(8). Annexure 12
FIN-1076-260-180.
General Treasury,
Colombo 01.
23rd September, 1998.
To : Secretaries to all The Ministries,

Chairmen of State Corporations and
Chairmen of Government Owned Companies.
ACCEPTABLE SECURITIES AND GUARANTEES
YOUR Kind attention is drawn to the Guidline No. 46.2 of the Guidelines on Government Tender
Procedure (Revised Edition- August, 1997)
Item 3 of the above Guidline states that the securities and guarantees issued by a reputed
Insurance Company operating in Sri Lanka and accepted by the Treasury are acceptable for the
tender purposes.
This is to inform you that no Insurance Company operating in Sri Lanka has been
registered by the Treasury for acceptance of securities and guarantees so far.
D. Y. LIYANAGE,
26
Annexure 12A
PublicFinance Circular No.: FIN 372

My No.: FIN-1O76-260-181.
. , Dept., of Public Finance,
General Treasury, ,
Colombo 01.
06th May, 1999.
To : All the Secretaries of Ministries, ~
Heads of Departments;
Chairmen of Corporation and Statutory Bodies
-
and Govt., owned Companies.

YOUR attention is drawn to the Guideline 46.2-3 of the Guidelines on Government Tender Procedure
(Revised Edition - August 1997) and to Public Finance Circular No. 352(8), with regard to issue,of
securities and guarantees by the Insurance Companies.
It has been decided to allow the acceptance of securities and guarantees issued by Insurance
Companies operating in Sri Lanka, subject to the following conditions :-
(i) All such Securities and Guarantees should be 'On Demand' Guarantees;
(ii) Once a claim is made to forfeit a b~nd by an executing agency, two weeks' time should be
given to the'Insurnace company that has issued the bond to negotiate with the executing
agency and after such negotiations, the damage claimed by the executing agency should
be settled by the company. In case of contracts over 'a value of Rs. 100 million this
period should be determined by the executing agency in consultation with the Insurance
Company.
(iii) The Head of the Department of the executing agency should ensure that the contract period
is realistic and only if he is satisfied that the contractor had delayed the contract deliberately
and perpetually, the Performance Bond should be claimed. In this regard the percentage of
the progress of the contract should also be taken into consideration.
(iv) After considering the progress made in respect of the contract as per sub paragraph (iii)
above, if the damage. recovered from the Insurance Company is in excess of the damage
actually caused by the contractor, the balance should be paid back to the Insurance
company.
(v) The Insurance companies should be kept informed regularly about the part payments made
to the contractors when they have submitted Advance Payment Guarantees Bonds.
(vi) The maintenance period of the work should not be covered with the Performance Bond and
that period should be covered with a separate Maintenance Bond. Once the Maintenance
Bond is submittedthe PerformanceBond should be released.
27
'.
1
. -. ---~ ~-v -
(vii) The insurance premium with regard to issue of securities and guarantees for public contracts
will be decided by the Insurance companies taking the risk factor of the individual contractor
into consideration. In this regard recommendation of the National Construction Contractors'
Association could be obtained on the reliability of the contractor for the purpose of issuing
bonds.
(viii) All Insurnace Companies which desire to issue Securities and Guarantees with regard to
Public Contracts under Guideline No. 46.2-3 of the Guidelines on Government Tender
Procedure should make an application to the Controller of Insurance and should have been ~
registered with him/her on behalf of the Treasury.
1 r
D. . LIYANAGE,
!I
/-.
28
L
I"
1 I
Annexure 12B
Public Finance Circular No.: FIN 372(1)

My No.: FIN 1076-260-181,
Dept. of Public Finance,
General Treasury,
Colombo 01.
30th December, 1999.
To: AIl Secretaries of Ministries,
Chief Secretaries of Provincial Councils, ~
Heads of Departments, and
Chairmen of Corporations,
Boards and Statutary Bodies.
YOURkind attention is drawn to Public Finance CircularNo. FIN-372 of 06-05-1999 and to the Guideline
No. 46.2 on Government Tender Procedure (Revised Edition - August 1997) with regard to issue of
securities and guarantees.
It has now been decided to extend the terms and conditions siipulated with regard to
administration 'Df insurnace securities and guarantees in the Circular No. 372 to the other securities
and guarantees which are prescribed under the Guideline No. 46.2 on Government Tender Procedure.
Further, the details of insurers who are registered under the Control of Insurnace Act and
Authorised to issue securities and guarantees for the year 1999 are also given below :-
(1) Sri Lanka Insurnace Corporation Ltd.

21, VauxhallStreet, Colombo 2
(2) National Insurance Corporation Ltd.

47, Muttiah Road, Colombo 2
(3) Ceylinco Insurance Co. (Pvt.) Ltd.,

15A, Alfred Place, Colombo 3
(4) CTC Eagle Insurance Co. Ltd.,

75, Kumaran Ratnam Road, Colombo 2
(5) Union Assurance Ltd.,
20, St. Michael's Road, Colombo 2
(6) lanashakthi General Insurance Co. Ltd.,

46, Muttiah Road, Colombo 2
(7) Co-operative Insurance Co. Ltd.,

"Co-op House", 455, Galle Road, Colombo 3
. D. Y. LIYANAGE,
29
"""""""""""""""" '-.", "'-

Annexure 12C
Public Finance Circular No.: FIN 384

My No.: FIN 1076-260-181,
General Treasury,
Colombo 01.
10th March, 2000.
~
and Statutary Bodies,
and Govt. owned Companies.
YOUR attention is drawn to Public Finance Circular No. FIN-372 of 06th May 1999 and Guideline No.
46.2 of the Guidelines on Government Tender Procedure. ..
The Government has decided to allow the acceptance of the Securities and Guarantees issued
by the Construction Guarantee Fund. This fund comes under the purview of the Ministry of Urban
Development, Housing and Construction.
The sub clauses I to VI of the above Circular No. FIN 372 will be applicable to the securities and
guarantees issued by the Construction Guarantees Fund as well.
~B.JAYASUNDERA,
'\
I' ;
30
---~~"
Annexure 12D
PublicFinance Circular No: FIN 372(2).
My No. FIN - 1O76-260-18l.

. !

General Treasury,
Colombo 0 l.
~
22nd July,2002.
All Secretaries of Ministries,

Chief Secretaries of Provincial. Councils,
Heads of Departments and Chairmen of Corporations,
Statutory Boards and Government Owned Companies.

..
THIS is furtner to the Public Finance Circulars No. FIN 372 of 6th May 1999, FIN 384 of 10th March
2000 and the Guideline No. 46.2 of the Guidelines on Government Tender Procedure.
The Treasury has observed that in many instances, the provisions are not made in the tender
documents to accept the securites and guarantees issued by the Construction Guarantee Fund (CGp)
by the Executing Agencies. The objective of establishment of CGF is to allow the construction
constractors to obtain reliable. securites and guarantees at the least cost with the view to promote the
local construction industry.
In.the above circumstances, the tender documents should state that for procuremnet of con-
struction works, the securities and guarantees issued by the CGF are also acceptable.
You are kindly requested to ensure that the above instructions are complied with and also direct
all theTenderBoards and Technical Evalution Committees which function under your purview to adhere
to this requirement.
N. PATHMANATHAN,
31
,.. ~--~._~~-- ----

1 .....
Annexure 12E
Public Finance Circular No: PF 406.
My No: 1076-260-181.
General Treasury,
Colombo 01.
~
, To:
06th May,2003.
r-
I All Secretaries of Ministries, i I
I I
I Chief Secretaries of Provincial Councils, ! I
Heads of Departments, i I
Chairmen of State Corporations, I

Statutory Boards,
I
Fully Government Owned Companies and Project Directors.
.
PROCUREMENT OF INSURANCE SERVICES
THE Tender Guideline No. 187of the Guidelines on Government Tender Procedure (Revised Edition-
1997 August) and the Public Finance Circular No. FIN 382 dated 07th February, 2000 pertaining to the .!--I
procurement of insurance services from Government Owned Insurance Companies and the Co-opera-
tive Insurance Company are hereby repealed to enable the Government Institutions to procure insur-
ance services on competitive basis.
In furture, insurance services required for Government institutions should be procured on a

competiti ve basis from any insurance Company operating in Sri Lanka.
However, the insurance services should be obtained directly from the companies and not through
their agents.
I J. CHARITHA R.UWATTE,
I'
"i
I'
32
I
I
..,
'"
~ I
Public Finance Circular No. : 406(1) Annexure 12F
My No. : 1076-260-181.
General Treasury,
Colombo 01.
18th November, 2003

Chairmen of State Corporations, Statutory Boards,
Fully Government Owned Companies,
Heads of Loacal Authorities and Project Directors.
PROCUREMENT OF INSURANCE SERVICES
YOUR attention is drawn to the Public Finance Circular No. 406 dated 06.05.2003 on the above matter.
The Treasury has decided to amend the said circular in order to encourage competitiveness, as
follows:
The insurance services required for Government Institutions should be procured on a com-
petitive basis directly from any of the Insurance Companies operating in Sri Lanka and through
the registered Insurance Brokers. Howerver, such services should not be obtained through
the Agents of the Insurance Companies.
J. CHARITHA RATWATTE,
33
5 - H20832
Public Finance Circular No. : FIN - 352(6) Annexure 13
My No. : FIN - 1076-260-180.

General Treasury,
Colombo 01.
29th May, 1998.
Secretaries to all Ministries and

PAYMENTS TO MEMBERS OF TECHNICAL EVALUATION COMMITTEES ASSISTING

MINISTRY TENDER BOARDS (MTB) AND DEPARTMENTAL TENDER BOARDS (DTB)
YOUR reference is drawn to the guideline 109.8 of Chapter IX of Guidelines on Government Tender
Procedure. (Revised Edition - August 1997).
Sub Section (D) of the above guideline is hereby amended as follows :
(D) Members of the TEC assisting MTB and DTB handling tenders between
Rs. 5Mn. and Rs. 10 Mn. in value.
Rs. 500 per member is payable. The composition of TEC should not exceed 3
members.
Members of TEC assisting MTB and DTB handling tenders between Rs. 2 Mn.
and 5 Mn. in value
Rs. 400 per member is payable. The composition of TEC should not exceed
3 members.
Also additional sub section marked (E) is introduced to the above guideline as
follows:
(E) No payment should be made for evaluation of tenders with value less than
Rs. 2 Mn.
N. PATHMANATHAN, D.Y. LIYANAGE,

Director General of Public Finance. Deputy Secretary to the Treasury.
34
Public Finance Circular No. : FIN - 376 Annexure 14
My No. : FIN - 1076-260-180.

General Treasury,
Colombo 01.
16th July, 1999.
Heads of Departments, and
Chairmen of Corporations, Boards,
Statutary Bodies and
Government Owned Companies,
USE OF EXPATRIATE LABOUR FOR LOCAL CONTRACTS
YOUR kind attention is drawn to Section 58 of the Guidelines on Government Tender Procedure on
use of expatriate labour for local contracts.
Despite of the instructions given not to use expatriate labour for Local Contracts, the Treasury
has been made to understand that some Government institutions have allowed foreign contractors to
bring expatriate labour to the country.
Since this is not a satisfactory trend, especially in view of the unemployment problem of the
country, you are kindly requested to adhere strictly to the said Guideline and ensure that permission
is not granted to the foreign conractors to bring expatriate labour, in future. This condition should be
included in the General Tender Conditions of future tenders. However, if skilled expatriate labour is
required due to extraordinary circumstances prior permission of the Treasury should be obtained
giving valid reason for such requests. Such requests should be made in accordance with the attached
format.
The above conditions will not be applicable to the projects approved by the BOI.
DIXON NILAWEERA,
Secretary to the Treasury and the
Secretary to the Ministry of Finance & Planning.
35
APPLICATION FOR USE OF EXPATRIATE SKILLED
LABOUR FOR LOCAL CONTRACTS
1. Ministry /EA :
2. Project/Local Contract :
3. Name of the Contractor/Company :
4. Category and number of Staff to be used :
Category No. of Persons Man months
5. Why expatriate labour is required ? :
6. Whether sufficient attempt has been made to obtain local labour ? :
If, Yes - What are those ? :
7. The Country, the expatriate labour come from :
8. Recommendation of the Line Ministry Secretary :

S/Line Ministry.
Date :
36
.- ._,,~,
i!
i!i
!I.
~
IIi!
APPLICATION FOR USE OF EXPATRIATE SKILLED

LABOUR FOR LOCAL CONTRACTS
1. Ministry lEA:
2 ProjectILocal Contract:
~
3. Name of the Contractor/Company:
,
4. Category and number of Staff to be used: r
Category No. of Persons Man months
5. Why expatriate labour is required? : ..
6. Whether sufficient attempt has been made to obtain local labour? :
If, Yes - What are those? :
7. The Country, the expatriate labour come from:

'1
8. Recommendation of the Line Ministry Secretary:
........................
S/Line Ministry.
Date: .... ................
I' .
I
36
I
L
Public Finance Circular No. : FIN. 358(4) Annexure 15
My No. : FIN. 1076-260-164

General Treasury,
Colombo 01.
29th November, 1999.
Boards Statutary Bodies and
The Chairman and Members Permanent Cabinet,
Appointed Tender Boards

STRENGTHENING PROCUREMENT CAPACITY INTRODUCTION OF A TENDER
MONITORING SYSTEM
THE Procurement Support Bureau (PSB) of the Department of Public Finance proposes to introduce
a systematic Tender Monitoring System (TMS) to be adopted by all Line Ministries executing agencies
and Project Officers in order to improve Procurement System and Procedure.
The proposed Tender Monitoring System (TMS) is designed to ensure the completion of the
tendering process and the award of contracts for the procurement of consultancy services, civil works,
machinery and equipment, goods and services, in a timely manner while monitoring the progress of
the individual tenders and the performance of Technical Evaluation Committees (TECs), Tender Boards
and implementing agencies.
A suite of documents has been developed in this regard, which are attached to this circular
for your reference.
(1) Tender Monitoring System - Annexure 15(i)

(2) The Procurement Planning Meeting - Annexure 15(ii)
(3) Procurement Activity Schedule - Annexure 15(iii)
(4) The Contract Award Process - Annexure 15(iv)
(5) Timeframe Guide I - Annexure 15(v)
(6) Pre Procurement Activities - Annexure 15(vi)
The document on Tender Monitoring System (Annexure 1) describes the role and reponsibilities
of the individual officials and agencies involved in the tender award process, along with the working
systems and procedures that should be adopted in the tender monitoring process. This procedure
has been developed on the basis that the Implementing Agencies, the Line Ministries, the Project
Directors and the Ministry of Finance and Planning (the Procurement Support Bureau of the Dept. of
Public Finance) are jointly, responsible, for implementation.
37
Procurement Planning Meeting (PPM)
The fundamental element of the TMS is to set time targets for the milestone activities of each
tender, at the PPM, in order to monitor the progress of the said tender against the agreed time framework.
The PPM is a forum for the chief stakeholders involved in this process to meet and agree on
realistic time target to complete the tender. This meeting can be conducted as a separate meeting or
else, time targets can be set at the very first meeting of the CATB, along with the TEC, with the
participation of the Line Ministry, the Executing Agency and the Project Director. The document on
PPM (Annexure 2) - introduces a procedure for the conduct of PPM and outlines the objectives of the
PPM, the participants, their functions and responsibilities, in the process.
The participants at the PPM will include :
* the Line Ministry Secretary (convenes and chairs the meeting)

* the C. A. T. B. Chairman
* the T. E. C. Chairman
* head of the Executing Agency and Project Director
* the P. S. B./Treasury Representative
Attached Schedule I (Annexure 3) should be used to set the time targets at the PPM and the
Procurement Activity Schedule (Annexure 4) will provide further details with regard to the tender
award process, for the procurement of consultancy services, civil works, machinery and equipment,
goods and services.
Timeframe Guide I (Annexure 5) provides the recommended time spans for each tender activity,
with a view to complete the tender, within the shortest possible period. However, taking special
circumstances into consideration, the Timeframe may be adjusted with prior approval of the Treasury.
The Project Director is responsible to maintain the records of the PPM. Once the Time Table
is prepared to complete the Procurement activity Schedule (PAS), the Project Director should take
immediate steps to circularize the time table among the chief stakeholders, with a copy to CEO/PSB.
Based on the agreed time tables, Heads of the Executing Agencies and Secretaries to Line
Ministries are expected to maintain a proper database, of each tender, with the view to monitoring the
progress of the tenders.
In order to avoid unnecessary delays, all executing agencies are requested to commence/
complete the relevant pre-procurement activities described in annexure 6, related to the particular tender
before the Line Ministry makes a request to appoint a CATB and a TEC to handle the tender. (See
Annexure 6).
Reporting
Since Project Directors are primarily responsible for the monitoring of Tender award activities,
the Heads of the Executing Agencies and Secretaries of the Line Ministries should directly liaise with
him to ensure the completion of each activity on time. The Project Director should submit a monthly
report on or before the 05th day of every month on the progress of the ongoing tenders using the
PAS (Annexure 3) to the Secretary to the Line Ministry and to the Heads of the Executing Agency,
with a Direct copy to the PSB. In order to implement the monitoring process successfully,
38
the Chairmen of TECs are expected to closely liaise with Project Directors and to keep them regularly
informed about the progress of each tender activity, without divulging its content.
On receipt of the same report PSB will take action to disseminate information on the progress
of all ongoing projects. The Treasury will take appropriate action, when and where it is necessary,
with regard to the deviation from the agreed time target.
All the Line Ministry Secretaries and Heads of the Executing Agencies are kindly requested
to nominate a Senior Officer-in-charge of tender monitoring, under their respective institutions. On
receipt of the monthly report, they should take appropriate corrective action immediately, with regard
to the delays of the tender, if any.
Your co-operation is solicited to create an awareness among the officials who handle
procurements in all agencies, under your ministry, about the Monitoring System and its implementation,
in order to improve the efficiency of procurement practice.
P. B. JAYASUNDERA,
Secretary to the Treasury and
Secretary to the Ministry of Finance and Planning.
39
Annexure 15(i)
TENDER MONITORING SYSTEM
Proposed System for monitoring the Procurement Progress of

Contract Award Activities
1. Purpose
1.1 To introduce a systematic procedure for monitoring the progress of contract award activities
in order to promote timely completion and maximum efficiency in the award of contracts
for the procurement of goods and services.
2. Background
2.1 The monitoring role of the Procurement Support Bureau (PSB) was introduced after
Government identified that in many instances delays in the implementation of donor funded
development projects could be attributed to slowness in the contract award process.
3. Objectives
3.1 The key objectives of monitoring the progress of contract award activities are as follows:
* To identify and respond to any difficulties or delays in the tender process so that
procurement is conducted in the proper and most expeditious manner and maximizes benefit
from the limited resources available ;
* To gather information necessary for the development and testing of improved procurement
procedures and practices ;
* To identify the competency levels of Procurement Officers within executing agencies and
based on the identified level of skills available, make recommendations on further delegation
of expenditure authority to the better performing agencies ;
* To assess the effectiveness of training programs and enable ongoing revisions as

necessary.
4. Implementation
4.1 Tender monitoring shall be the joint responsibility of the Line Ministry Secretary, Head of
the Executing Agency, Project Director and the Procurement Support Bureau of the
Department of Public Finance.
4.2 The Project Director or the officer who is responsible for implementation of the project,
shall collect information and report on the achievement date of all milestone contract award
activities and their conformity with the target dates set at the procurement Planning Meeting.
4.3 The Project Director shall report monthly as required to the PSB on the progress of milestone
contract award activities with a copy of the report provided to the relevant Line Ministry
Secretary and to the Executing Agency.
40
4.4 Monitoring Officers from the Procurement Support Bureau, or appointed PSB cum Treasury
representatives, will receive and analyse information of all current procurement contract
awards on a national level.
4.5 The Monitoring Officer on the basis of information received from the Project Director on
Procurement Activity Schedule - Annexure 3, will prepare a monthly statement indicating
any delays identified and inform relevant authorities so that appropriate action will be
taken.
4.6 Initially the PSB Monitoring Officers will be supported by the guidance and advice of the
Tender Monitoring Specialist Consultant provided under ADB Technical Assistance
T.A. No. 2950-SRI.
5. Methodology
Methodology developed for the contract award activity monitoring system will involve for
interlinked components as follows :
(i) Collecting information and Reports ;

(ii) Logging and Analyzing Data and Information Collected ;
(iii) Reporting on Findings Resulting from Monitoring Activities ;
(iv) Responding to Identified Problem Areas ;
A brief description of each component is as follows :
5.1 Collecting Information and Reports
* Project Directors shall report monthly as required to PSB on the progress of the contract
award activities ;
* The progress of contract award activities shall be measured against the timetable of
scheduled activities established at the Procurement Planning Meeting ;
* All information collected shall be either recorded on the contract file or logged in the contract
award information database ;
* The Project Director from within each Executing Agency or Line Ministry shall provide a
monthly written report to the Chief Executive Officer of the Procurement Support Bureau
on the progress of each individual contract award, with a copy to the relevant Line Ministry
Secretary for his information and or action as appropriate ;
* The report, to be submitted on a standard form identified as Procurement Activity Schedule

- Annexure 3 will provide information on meeting timing, and identification of any, problematic
issues arising from the conduct of contract award activities ;
* The report shall not, under any circumstance, release the actual findings or recommendations
of the TEC or CATB meetings.
41
5.2 Recording and Analysis of Information Collected
* The Procurement Support Bureau shall develop and maintain a computer database of
information on each indiviual procurement project Initially this database will be established
for donor assisted procurement contracts with an estimated contract value of over SLR
100 Mn. and later expanded to include all major procurement contract awards regardless
of funding source ;
* Maintenance of the computer - based information database will be the responsibility of

the PSB Monitoring Officer ;
* Following the Procurement Planning Meeting the agreed PAS dates shall be logged on
the database and to form the basis for future progress performance monitoring ;
* Thereafter all details provided in reports by the Project Director of the Executing Agency
or Line Ministry, shall be transferred onto the database and a comparison between reported
actual achievements against scheduled achievements shall be possible ;
* Any delays or significant problems identified shall be noted and thereafter monitored closely
by the PSB Monitoring Officer ;
* On the receipt of the Procurement Activity Schedule - Annexure 3 from the Project Director
the Secretary to the Line Ministry, Head of the Executing Agency and the PSB shall take
appropriate corrective measures at their respective levels if there are any delays.
6. Functions and responsibilities of Officers
6.1 Project Director
Functions and Responsibilities of the Project Director are as follows :
* Prepare and maintain a register of current and proposed contract awards under his purview
and forward such information onto the PSB ;
* Report to the PSB on a monthly basis on the achievement date of milestone activities in
the contract award process ;
* Liaise closely with the Chairman of the TEC who will keep him advised of the dates TEC
meetings are held ;
* Reports shall only be prepared on the standard reporting form identified as Procurement
Activity Schedule - Annexure 3 and issued for the attention of the CEO/PSB with copies
to the Line Ministry and the EA ;
* The schedule date of the contract award activity and if the activity takes place on the
actual date, it will be indicated in Black. In the event of a variation, it will be indicated in
Red ;
42
* The monthly report is to be submitted by hand delivery or facsimile transmission and to
be provided to the Chief Executive Officer of the procurement Support Bureau on or before
the 05th day of each month.
6.2 Nominated Liaison Officer of the Line Ministry
The nominated Liaison Officer is the representative of the Secretary to the Line Ministry
who is responsible to
* obtain and review, Monthly Reports on Procurement Activity Schedule - Annexure 3 from
the Project Director ;
* Maintains the database on progress of tender award activity for all active tenders within
the Ministry ;
* Advise the Line Ministry Secretary of any delays in the Contract Award Process and action
necessary to rectify and expedite the process ;
* Liaise with Procurement Support Bureau, Dept. of Public Finance and Ministry of Finance
Officers on behalf of the Line Ministry Secretary as required.
6.3 PSB Monitoring Officer
Functions and Responsibilities of PSB Monitoring Officer are as follows :
* Report immediately after the receipt of the Procurement Activity Schedule - Annexure 3
from the Project Director to the Chief Executive Officer of the Procurement Support Bureau
on any findings that indicate significant delays or serious problems that are occurring
within any particular contract award that is being monitored, to take appropriate action,
with copy to LMS ;
* Establish and maintain file storage and recording of all correspondence, information and
reports relevant to each individual contract ;
* Operate and maintain the computer database of contract award activities, utilizing the
information provided by the Project Director of the Executing Agency or Senior Officer of
the Line Ministry ;
* Enter onto the database project details, including the timetable of scheduled activity dates,
established at the Procurement Planning Meeting, for each individual contract ;
* Promptly process (log and analyze) the information provided in reports submitted monthly
by the Project Director of the Executing Agency ;
* Prepare reports summarizing the status and action required, if any, for each individual
contract within the various Executing Agencies. The status report will clearly identify if
the contract award is on schedule or delayed and the reasons for any delay ;
43
* Encourage all other officers involved in the procurement process to carry out their duties
in such a manner as to promote timely completion, achieve maximum efficiency and obtain
value for money in the award of procurement contracts ;
* On a monthly basis, on information provided by the Project Director, the PSB Monitoring
Officer shall prepare and submit to PSB - Chief Executive Officer a summary report in
triplicate. This form reports on the results of monitoring activities across all ongoing
contract awards that are being followed across all Ministries. This report in tabular format
shall identify each contract award by project name, reference number and donor and
executing agency together with the status of contract award activities ;
* The report will highlight or identify any contracts that encounter delays, record appropriate
action taken to resolve the difficulties and make recommendation on any improvements
necessary to expedite the tender award process ;
* Include with the monthly summary report recommendations for remedial action that can
be taken on any delayed contract awards or those encountering difficulties ;
* Copies of the report shall be submitted to the Director General - Public Finance Department
and through him to the Secretary to the Treasury ;
* A copy of the relevant sections from the report shall also be issued to the Secretary of
each individual Line Ministry which have projects included in the report.
6.4 Responding to problems or delays reported
* The Chief Executive Officer of the Procurement Support Bureau shall be responsible to
follow up on any contract awards that are found to have lapsed behind the scheduled
program or are encoutering some other difficulties.
7. Reporting Schedules
The following schedules shall be used for PSB Monitoring Activities :
7.1 Procurement Activity Schedule - Annexure 3
(i) The Project Director of the Executing Agency will submit monthly the Procurement Activity
Schedule - Annexure 3 to the Chief Executive Officer of the Procurement Support Bureau
with copy to Line Ministry Secretary and the EA.
It reports on the progress of schedule milestone contract award activities for each contract
currently within the agency.
(ii) The PSB Monitoring Officer will prepare a monthly statement of all tenders and submit in
triplicate to the Chief Executive Officer of the Procurement Support Bureau. The statement
shall briefly report on the status of all contract awards that are currently in progress which
have been monitored in the month under review, indicating recommended action to be
taken to resolve any problems.
The duplicate and triplicate copies to be forwarded by Chief Executive Officer of the
Procurement Support Bureau to the Director General of the Dept. of Public Finance, who
will forward the triplicate copy to the Secretary to the Treasury.
44
Annexure 15(ii)
PROCUREMENT PLANNING MEETING
Proposed working System for Supporting the Conduct of a

Procurement Planning Meeting (PPM)
1. Activity
1.1 To conduct a planning meeting between the key officers responsible for activities in the
contract award process prior to commencement of procurement for each contract with an
estimated value in excess of Rs. 100M and funded with donor assistance.
1.2 This meeting shall be called the Procurement Planning Meeting (PPM).
2. Objectives
2.1 The primary objective of the meeting is to produce a target timetable for milestone activities
leading to contract award that has been established and agreed to by the key responsible
officers. This timetable shall be identified as the Procurement Activity Schedule (PAS) -
Annexure 3.
2.2 The Secondary objective is to establish the agreed timetable as a mechanism for monitoring
the progress and performance of all necessary contract award activities. This monitoring
will be the joint responsibility of the Line Ministry Secretary, Head of the Executing Agency,
Project Director and the Procurement Support Bureau.
3. Participants
3.1 The following persons will participate in the Procurement Planning Meeting :-
* Head of Executing Agency ;

* Project Director ;
* The Line Ministry Secretary (convenes and chairs the meeting) ;
* The PSB Representative ;
* The TEC Chairman ;
* The CATB Chairman.
4. Meeting Activities
The activities to be undertaken during the Procurement Planning Meeting will include, but not
be limited to the following :
4.1 Participants will
(i) review and consider a checklist of pre-procurement activities that should be either
satisfactorily completed or in progress before entering the contract award phase.
45
(ii) determine and confirm the status of checklist items and where necessary initiate follow up
action to ensure that potential delays are avoided in the subsequent contract award phase.
(iii) wherever possible, and practical, set the target dates for completion of contract award
milestone activities within the timeframe of the guidlines (Timeframe Guide 1 - Annexure 5)
or any specific donor agency requirements.
(iv) ensure target timeframes for each activity or phase of activities, will generally be based
upon and set against the documented guideline timeframes for similar types of contract
awards that have been established by the PSB - Timeframe Guide 1 - Annexure 5.
(v) evaluate the Tentative Procurement Activity Schedule prepared by the Head of the
Executing Agency and Project Director and finalise it.
These five participants will collaborate, negotiate, modify and agree on a schedule of
timeframes and set specific target dates, whereve practical.
4.2 The agreed Procurement Activity Schedule - (Annexure 3) of timeframes and target dates
will reflect appropriate consideration of the nature and complexity of the particular tender
in question, the priority accorded to the project in terms of national development and the
overall project timeframe.
5. Functions and Responsibilities of Meeting Participants
5.1 Head of Executing Agency (HEA) and Project Director (PD) - Prior to the Procurement
Planning Meeting
5.1.1 The Head of the Executing Agency and the Project Director will
(i) be responsible for ensuring that Pre-procurement Activities have, or are int he process of
beng, carried out, a Tentative Procurement Activity Schedule drafted and draft tender
documentation prepared, by the Project Director and those associated with the project.
(ii) pre-procurement Activities that need to be completed, or in the process of being carried
out, in preparation for Procurement and prior to the Procurement Planning Meeting, are as
indicated in Annexure 6 and may include the following :
(a) Environmental Clearance ;

(b) Social Impact Assessment ;
(c) Land Acquisition, Compensation and Resettlement ;
(d) Relocation of Utilities ;
(e) Draft Pre-qualification Documentation and Tender Documentation ;
(f) Tentative Procurement Activity Schedule.
(iii) report to LMS, prior to requesting Treasury appointment of a permanent CATB and a TEC,
that the pre-procurement activities have been completed, or are in the process of being
carried out. 46
5.2 At the Procurement Planning Meeting the Head of the Executing Agency and the Project
Director will
(i) discuss the Tentative Procurement Activity Schedule drafted by them as a starting basis
for the PPM.
(ii) confirm to the PPM that applicable Pre-procurement Activities have been completed, or
are in the process of being carried out, as in the check listed in Annexure 6.
(iii) confirm to the PPM the finalisation of Draft Pre-qualification Documentation and Tender
Documentation.
(iv) the Project Director is responsible to document the agreed contract award process and
ensure it is signed by tall participants. Thereafter, he shall circularize the agreed Procurement
Activity Schedule - Annexure 3 to Chairman CATB/Members, Chairman TEC/Members,
LMS, HEA, CEO/PSB. This will be the main document used to monitor the Tender progress.
5.3 Line Ministry Secretary
The Line Ministry Secretary at the Procurement Planning Meeting will
(i) prepare for the meeting by conferring with the Head of the Executing Agency, Project
Director and Officers involved within the Executing Agency or Line Ministry to ascertain
if activities that need to be carried out in preparation for Procurement, as specified in
Annexure 6 have been completed, or are in the process of being carried out and draft
documentation requirements and a Tentative Procurement Activity Schedule have been
prepared. Familiarize with important project requirements relevant to the contract award
under consideration.
(ii) communicate with all other meeting participants necessary to convene a meeting at a
mutually suitable time, date and venue for the PPM.
(iii) take action to ensure that the Procurement Planning Meeting is held without delay after
appointment of the CATB and TEC and ensure that the necessary secretarial and support
services are provided by the Project Director.
(iv) issue written confirmation of the meeting venue, time and date to all participants with a
copy to the Chief Executive Officer of the Procurement Support Bureau.
(v) inform the meeting of brief contract details, the overall timescale and relative importance
of the project and any other important matters surrounding the proposed contract award.
(vi) advise the meeting on general arrangements in place for Line Ministry monitoring of the
progress and performance of the contract award activities against the agreed target
timetable.
(vii) chair the meeting to ensure that the required outcomes are achieved. i. e. an agreed
Procurement Activity Schedule (Annexure 3) of contract award activities is produced
and a copy of the timetable is provided to the Chief Executive Officer of the Procurement
Support Bureau.
47
(viii) Obtain the concurrence of the Chiarman CATB (in the event of his absence) with regard
to the decisions taken at Procurement Planning Meeting.
5.4 Treasury/Procurement Support Bureau Represenative
Representative of the Treasury/Procurement Support Bureau at the Procurement Planning

Meeting will
(i) provide expert advice on the scheduling of contract award activities in line with the
established PSB guideline timeframes (Timeframe Guide 1 - Annexure 5).
(ii) provide procedural advice and guidance to the meeting related to the sequencing of the
contract award activities to be completed.
(iii) ensure that the Project Director documents the Procurement Activity Schedule indicating
target dates and activity timeframes on the standard format prepared by the Procurement
Support Bureau (Procurement Activity Schedule - Annexure 3).
(iv) ensure that all participants are signatories to the agreed Procurement Activity Schedule
(Annexure 3) and that each is provided with a copy by the Project Director.
(v) report back to the Chief Executive Officer of the Procurement Support Bureau on any
pontential shortcomings or perceived difficulties identified in the contract award process
for the proposed procurement under consideration.
5.5 TEC Chairman
TEC Chairman at hte Procurement Planning Meeting will :
(i) confer with the HEA and the PD to determine and establish the status of Pre-Procurement
Activities, draft tender document preparation and a Tentative Procurement Activity
Schedule.
(ii) familiarize with any special problems of the contract award under consideration.
(iii) communicate with fellow TEC members to ascertain likely availability and the most suitable
dates for proposed sittings of the TEC.
(iv) collaborate and negotiate with other meeting participants to establish an achievable
timetable for contract award activities within the established Procurement Support Bureau
guideline timeframes, as indicated in Timeframe Guide 1 - Annexure 5.
(v) provide technical advice and guidance to the meeting related to any particular technical
complexity of the contract under consideration.
(vi) assist the meeting to identify and resolve any potential impediments to the smooth flow
of activities ; for example the involvement of any external agencies.
(vii) commit the TEC to the agreed Procurement Activity Schedule of target timeframes and
dates.
48
(viii) communicate the Scheduled dates of TEC meetings to fellow TEC Members and
subsequently, confirm that advice in writing, i. e. provide them with a copy of the agreed
target Procurement Activity Schedule (Annexure 3).
(ix) confirm that he will advise the Project Director of the dates after each TEC meeting.
5.6 CATB Chairman
CATB Chairman at the Procurement Planning Meeting will
(i) prepare for the meeting by communicating with fellow CATB members to ascertain their
likely availability and the most suitable dates for proposed sittings of the CATB.
(ii) provide guidance and expertise to the conduct of the meeting particularly in regard to
establishing realistic and achievable timeframe targets for contract award activities in line
with Procurement Support Bureau Guidelines.
(iii) commit the CATB to the agreed Procurement Activity Schedule of target timeframes and
dates.
(iv) communicate the target dates set for CATB Meetings to fellow CATB Members and
subsequently confirm that advice in writing, i. e. provide them with a copy of the agreed
target Procurement Activity Schedule (Annexure 3).
(v) if the Chairman is unable to attend the Procurement Planning Meeting, the Line Ministry
Secretary will convey information on the Procurement Activity Schedule to him and obtain
his approval with regard to the decisions taken and target dates set at the meeting.
6. Aids/Supporting Mechanisms
The following aids will be provided by the PSB to support and assist the conduct of the
Procurmeent Planning Meeting :
(i) Attachment A - Annexure 6 - Pre-procurement Activities that need to be completed or are

in the process of being carried out in advance in preparation for Procurement, prior to
requesting the S. T. to appoint a permanent CATB and the Procurement Planning Meeting.
(ii) Attachment B - Timeframe Guide 1 - Anenxure 5 - Guideline Timeframes to be used for

setting Procurement Activity Schedule for Procurement of Consultancy Services, Civil
Works, Machinery and Equipment, Goods and Services.
(iii) Attachment C - procurement Activity Schedule - Annexure 3 - Standard format for

documenting the agreed target timetable for completion of milestone contract award
activities.
49
6 - H20832
7. Meeting Outcomes
The necessary outcomes form the Procurement Planning Meeting will include
(i) production of Procurement Activity Schedule for completion of key milestone contract
award activities that has the agreement and commitment of all those responsible for activity
attendance.
(ii) document and distribute the agreed Procurement Activity Schedule for activity completion
so that the Line Ministry Secretary, project Director and the Procurement Support Bureau,
can thereafter monitor the timeliness, progress and performance of all necessary contract
award activities.
(iii) distribute the agreed Procurement Activity Schedule to all participants at the meeting.
(iv) complete review of a checklist of pre-procurement activities and tender doucmentation

that should normally be attended to prior to entering the procurement and contracting
phase.
(v) nomination of a Project Director or a Senior Officer from the Executing Agency to be the
responsible contact person on behalf of the Line Ministry Secretary for any necessary
follow up action regarding the contract award.
50
PROCUREMENT ACTIVITY SCHEDULE Annexure 15(iii)
Consultancy / Civil Works / Machinery and Equipment / Goods and Services
Project : Third Road Improvement Project Line Ministry : Ministry of Highways and Transport Executing Agency : Road Development Authority
Credit No./Loan No./Value : SRI:1312/$150M Donor Agency : A.D.B. Credit/Loan Closing Date : 31.12.1999 - extention
requested
Title of Contract Est. Jan Feb Mar Apr May Jun Jul Aug. Sep. Oct. Nov. Dec. Reasons for Proposed
Cost Variation Remedia Action
1998
Scheduled
XYZ CATB meeting Set fresh
B26 K18 delayed, two
Actual date 10/2
members
B10 K27 indisposed.
TEC meeting Set fresh date
1999
delayed, one
51
Scheduled 27/5
member overseas
Actual
1999
Scheduled
Actual
2000
Scheduled
Actual
Activity Description Responsibility Activity Description Responsibility
Phase 1 - Documentation Phase 2 - Invitation
(A) TEC scrutinizes Tender (D) HEA invites Expressions of Interest/

Documentation/Request for Proposals TEC Pre-qualification HEA
(B) CATB approves Tender Documentation/RFP CATB (E) Close Expressions of Interest/Pq CATB
(C) Donor concurrence of Tender HEA (F) TEC evaluates and ranks EOI/PQ TEC
Documentation/RFP (G) CATB determines short list instructs, to
invite proposals CATB
(H) Donor conurrence of short list HEA
(I) Invitationof Proposals HEA
(J) Closing date of proposals CATB
Activity Description Responsibility Activity Description Responsibility
Phase 3 - Evaluation Phase 4 - Award
52
(K) TEC evaluates and ranks proposals TEC (O) CATB determines Contract Award CATB
(L) CATB determines preferred tenderer CATB (P) Donor concurs Contract Award HEA
(M) Donor concurrence of preferred tenderer HEA (Q) Submission of Cabinet Memorandum LMS
(N) CATB completes financial negotiations CATB (R) Expected date of Cabinet approval LMS
(S) Contract Signed LMS/EA

Project Director
Date : 30.11.1999
Annexure 15(iv)
THE CONTRACT AWARD PROCESS
Detailed Activities of the contract Award Process for Procurement of

Consultancy Services and Documentation Requirements
Contract Award Activity Responsibility Documentation Required
1. Pre-Procurement Activities Project Director 1.1 HEA informs LMS as Co-ordinator of the
have commenced (A) (where Head of Executing commencement of Pre-Procurement
applicable) and Draft Tender Agency (HEA) Activities and finalization of Draft Tender
Documentation (B) and Tentative Documentation and Tentative
procurement Activity Schedule Procurement Activity Schedule for
for implementation finalised. implementation.
2. Permanent CATB assigend, Line Ministry 2.1 LMS writes to S. T. and requests to
TEC appointed and provides a Secretary (LMS) as designate a permanent CATB appoint
copy of the Tentative Co-ordinator and TEC and informs commencement of Pre-
Procurement Activity Schedule attends CATB Procurement Activities and finalization of
to Chairman CATB. meetings as an Draft Tender Documentation and
observer Tentative Procurement Activity Schedule,
with copy to DG/PFD.
2.2 S. T. to confirm by letter to LMS

assignment of permanent CATB with
copy to DG/PFD.
2.3 LMS writes to members of CATB advises

them that ST has appointed them and
provides a copy of the Tentative
procurement Activity Schedule to
Chairman CATB.
3. LMS nominates TEC members LMS 3.1 Simultaneously with 2.1 LMS provides
and recommends suitabe list of nominees to the TEC and
officers for appointment as recommends suitable officers for
Chairman of the TEC for appointment as Chairman of the TEC in
selection, by CEO/PSB and writing to CEO/PSB for selection and
provides in duplicate a copy of
the Tentative Procurement provides in duplicate a copy of the
Activity Schedule. Tentative Procurement Activity Schedule.
4. PSB selects from names 4.1 From the nominees provided by the LMS,
PSB
provided by Ministry Secretary the CEO/PSB selects members and the
and requests S. T. to appoint Chairman of the TEC and submits to S.
TEC and TEC Chairman and T. for approval.
provides a copy of the
Tentative Procurement Activity 4.2 S. T. countersigns the letter submitted by
Schedule to Chairman TEC. CEO/PSB and approves the nominations
Chairman TEC to inform the and appoints TEC and its Chairman
53
Project Director of the dates that 4.3 CEO/PSB writes to members of the TEC
TEC meetings are held. and advises them that S. T. has
appointed them to the TEC and provides
a copy of the Tentative Procurment
Activity Schedule to Chairman TEC with
copy to LMS, informing him to keep the
Project Director advised of the dates TEC
meetings are held.
5. Procurement Planning Meeting LMS/PSB 5.1 LMS as Co-ordinator to expeditiously

expedititiously convened by contact Chairman CATB, Chairman TEC,
LMS and consisting of CATB HEA, Project Director and CEO/PSB and
Chairman. TEC Chairman, HEA, finalise a date for the Procurement
Project Director and CEO/PSB or Planning Meeting.
his Representative. All
participants to be signatories to 5.2 LMS to write to Chairman CATB,
the agreed Procurement Activity Chairman TEC, HEA Project Director and
Schedule 1. CEO/PSB and convenes : the
Procurement Planning Meeting on the
agreed date with Project Director to
assist.
5.3 In the event the Chairman CATB is

unable to be present at the PPM, LMS
will conduct the meeting and finalise the
target dates in association with the other
members and subsequently seek the
concurrence of Chairman CATB.
5.4 Project Director will document the agreed

contract award process which will be
signed by all participants and thereafter
provide in writing to Chairman CATB/
Members, Chairman TEC/Members,
LMS, HEA, CEO/PSB the Procurement
Activity Schedule 1 of target dates set
chronologically of Contract Awarding
Activities as agreed at the Procurement
Planning meeting which will be the main
document to monitor the Tender
Awarding process.
6. TEC Meetings conducted to PSB 6.1 Project Director collects information and
consider and recommend for reports on the conformity of milestone
approval of Tender activity achievement dates against target
Documentation to CATB. dates set at the Procurement Planning
Meeting and maintains a record against
54
the Schedule provided and keeps CEO/

PSB advised.
6.2 Chairman TEC recommends by letter to

CATB of his findings and submit for
approval the Tender Documentation
with copies to CEO/PSB and LMS.
7. CATB meets to approve CATB(c) 7.1 CATB Chairman arranges for meeting to
Tender Documentation as approve Tender Documentation
recommended by the TEC and submitted by TEC in accordance with
authorises to invite E. O. I. on the dates set at the PPM.
Donor concurrence of Tender
Documentation. 7.2 CATB Chairman advises in writing to the
HEA the approval of the Tender
Documentation* and authorises to invite
E. O. I. on receipt of Donor concurrence
with copy to LMS.
8. Donor confirm concurrence of HEA 8.1 HEA advises Donor by letter and seeks
documentation. concurrence of Tender Documentation.
8.2 Donor confirms concurrence of Tender

Documentation or otherwise to HEA.
9. HEA to invite E. O. I. HEA 9.1 HEA inserts the approved press

advertisement calling for expressions of
interest.
10. TEC evaluates E. O. I.'s and TEC 10.1 Opening of E. O. I. by TEC checks
recommends short listing to conformity and registers submissions.
CATB.
10.2 TEC evaluates E. O. I.'s conforming to
the target dates set. Provides a detailed
report of the evaluation on the basis of
the approved tender documentation and
ranks short-list and recommends findings
to CATB.
11. CATB meets to determine short- CATB 11.1 CATB meets on dates pre-planned to
list recommendation by TEC determine short-list as submitted by the
and advises to invite proposals TEC and advises HEA by letter of their
on Donor concurrence. decision, and to invite proposals on
donor concurrence with copy to LMS.
12. Donor reviews and endorses HEA 12.1 HEA writes to the Donor and requests
concurrence of short-list. for concurrence of the short-list.
55
12.2 Donor advises HEA by letter of their

concurrence of short-list.
13. Tender Proposals invited with HEA 13.1 HEA invites Proposals from short-listed
closing date. tenderers by providing them (1) Letter of
Invitation (2) Evaluation Criteria and
marking Systems (3) Terms of Reference
(4) Format for Preparation of Financial
Proposal (5) Draft Contract Document (6)
Format for Mobilization Advance Bank
Guarantee and advises date of closure
of proposals.
14. TEC Evaluates proposals and TEC(c) 14.1 TEC meets on dates pre-planned for
recommends to CATB the opening of tenders, checks eligibiilty and
preferred tenderer. conformity of Tender proposals. Then
meets to evaluate proposals, on the
approved evaluation criteria and scoring
system.
14.2 TEC advises CATB by letter of the

evaluation, ranks; conforming proposals
and recommends findings by providing
all details of the evaluaton as provided
in the Tender Documentation.
15. CATB determines preferred CATB 15.1 CATB determines the preferred tenderer
tenderer after review of TEC and advises HEA to invite the successful
recommendation and advises tenderer for financial negotiation on
HEA to invite preferred tenderer receipt of Donor concurrence with copy
for financial negotiations on to LMS.
Donor concurrence.
16. Donor concurrence on preferred HEA 16.1 HEA advises Donor by letter of the
tenderer. preferred tenderer and seeks concurrence
to invite for financial negotiations.
16.2 Donor advises by letter to HEA of

concurrence with determination of
preferred tenderer.
17. HEA invites preferred tenderer HEA 17.1 HEA invites preferred tenderer for
for financial negotiations with financial negotiations with CATB or
CATB or authorised TEC. authorise TEC with copy to LMS.
17.2 On successful completion of the

financial negotiations by the CATB, the
notes of the meeting, the negotiated
56
financial proposal and the Contract

Documents are initialled by the Chairman
and Members of the CATB, HEA and
preferred tenderer ; or
17.3 If the financial proposal is negotiated by

the authorised TEC, on successful
completion of the financial negotiations,
the notes of the meeting the negotiated
financial proposal and the Contract
Documents are initialied by the Chairman
and Members of the TEC, HEA and the
preferred tenderer.
17.4 If TEC as authorised, negotiates the

financial proposal, Chairman TEC reports
in writing together with notes of the
meeting and the negotiated financial
proposal to Chairman CATB its
successful negotiation and submits
recommendation.
18. CATB determines the financial CATB/HEA 18.1 CATB determines the financial proposal
proposal or the financial and advises HEA of award decision ; or
proposal negotiated by
authorised TEC. 18.2 CATB determines the financial proposal
negotiated recommended by TEC and
advises HEA of award decision.
19. Donor concurrence with the HEA 19.1 HEA advises Donor by letter with
financial proposal negotiated by necessary documentation and seeks
the CATB requested. concurrence to the financial proposal
negotiated by CATB with copy to LMS.
19.2 Donor advises HEA by letter of

concurrence with the financial proposal.
19.3 HEA advises LMS by letter of TEC

recommendation, CATB determination
and Donor concurrence and requests
formal Cabinet approval be sought.
20. Line Ministry prepares Cabinet Sec./Min. 20.1 The additional Secretary to the Ministry
Memorandum required for prepares the Cabinet Memorandum and
Cabinet approval of the Award. submits to the LMS who accepts or edits
it.
57
20.2 LMS submits the Cabinet Memorandum

to the Minister for his endorsement and
signature.
20.3 LMS reproduces the Cabinet

Memorandum in 35 to 40 copies and
ensures copies are sent to Secretary to
the President, Secretary to the Prime
Minister, Secretary to the Minister of
Public Administration, Secretary to the
Minister of finance and Planning and to
the Secretaries of other concerned
Ministries. 35 copies are sent to the
Secretary to the Cabinet.
21. Cabinet approval of Award. Cab./Sec. 21.1 Any observations on the Cabinet
Memorandum are required to be provided
to the Cabinet Secretary by the recipients
indicated in 20.3 within a period of a
week.
21.2 The Cabinet Secretary then sends the

Cabinet Memorandum to all other Cabinet
Ministers together with the observations
received.
21.3 All other Ministers other than those
mentioned in para 20.3 refer the Cabinet
Memorandum and the observations to
their Secretaries. The Secretaries in turn
provide their observations if any, to the
Minister which will be passed on to the
Cabinet Secretary or by the Minister who
may bring up the observations at
discussions at the Cabinet Meeting.
21.4 The Cabinet Secretary will provide the
written observations received from each
Minister to all the other Ministers.
21.5 The Cabinet Secretary will include the
Cabinet Memorandum in the Order Paper
(agenda) for the Cabinet Meeting.
21.6 The Cabinet of Ministers will discuss or
request for further information or
approve the Cabinet Memorandum. The
decision will be recorded by the Cabinet
Secretary in his Minutes of the Meeting.
58
21.7 The Cabinet Secretary will then send the

Minutes of the Cabinet Meeting to all the
Ministers, together with a new set of
Cabinet Memoranda for the next weekly
Cabinet Meeting.
21.8 At the following week's Cabinet meeting,

the contract award decision will be
reconfirmed.
21.9 Cabinet Secretary will formally convey

the decision of the Cabinet to the
appropriate LMS with copies to
Secretary to the President, Secretary to
the Prime Minister and Secretary to the
Minister of Finance and Planning.
22. Contract Awarded and Contract LMS/HEA 22.1 LMS advises in writing to HEA
Finalised. confirming the approval of the Cabinet
Memorandum.
22.2 HEA informs the successful Tenderer of

the Cabinet award and invites him to sign
the Contract, ensuring affixing of Stamp
Fees as required, embossing the
document with the Company Seal of the
consultant and the client.
23. HEA issues notice to Contractor HEA 23.1 HEA issues notice to Contractor to
to proceed. proceed granting 45 days within which
to mobilize on signing of the contract.
(A) Pre-Procurement Activities (B) Tender Documentation/Request for

(where applicable) Proposals
(a) Environmental Clearance (a) Press Advertisement - Calling for

(b) Social Impact Assessment E. O. I.
(c) Land Acquisition, (b) Letter of Invitation
Compensation and (c) Evaluation Criteria - Marking Systems
Resettlement (d) Terms of Reference - Technical
(d) Relocation of Utilities Proposal inclusive of drawings where
appropriate
(e) Format for preparation of Financial
Proposal
(f) Draft Contract Documents
(g) Format for Mobilization Advance Bank
Guarantee.
59
Annexure 15(v)
TIMEFRAME GUIDE 1
Guideline Timeframes to be used for setting procurement activity Schedule (PAS) for Procurement of
Consultancy Services / Civil Works / Machinery and Equipment / Goods and Services
Min._____Max.
Activity ID Milestone Activity Description Weeks
Phase 1 Documentation
A TEC scrutinizes Tender Documentation / Request for Proposals 2.0 3.0

B CATB approves Tender Documentation / RFP 1.0 1.0
C Donor concurrence of Tender Documentation / RFP 1.0 2.0

4.0 6.0
== ==
Phase 2 Invitation
60
D HEA to invite Expressions of Interest / Pre-qualification 1.0 1.0
E Close Expressions of Interest / PQ 3.0 4.0
F TEC evaluates and ranks EOI / PQ 2.5 3.5
G CATB determines short-list, instructs to invite proposals 1.0 2.0
H Donor concurrence of short-list 1.0 2.0
I Invitation of Proposals 1.0 1.0
J Closing date of Proposals 4.0 *6.0

13.5 19.5
=== ===
Phase 3 Evaluation
K TEC evaluates and ranks propsals 2.0 3.0

L CATB determines preferred tenderer 1.0 2.0
M Donor concurrence of preferred tenderer 1.0 2.0
N CATB completes financial negotiations 2.0 3.0

6.0 10.0
=== ===
Min._____Max.
Activity ID Milestone Activity Description Weeks
Phase 4 Award
O CATB determines Contract Award 1.0 2.0

P Donor concurs Contract Award 1.0 2.0
Q Submission of Cabinet Memorandum 1.0 1.5
R Expected date of Cabinet Approval 2.0 2.5
S Contract Signed 1.0 2.0

6.0 10.0
=== ===
Total 29.5 45.5
==== ====
61
C. DPF/PSB / CATB Members / TEC Members * Special consideration of complex procurements may require further time.
Annexure 15(vi)
ATTACHMENT - A
PRE - PROCUREMENT ACTIVITIES
A List of Pre-Procurement Activities that need to be carried out in advance in preparation for
procurement, prior to requesting the S. T. to appoint a permanent CATB and to the procurement planning
meeting.
(A) Environmental Clearance
A.1 Has a study on environmental impact assessment being carried out and a report
provided ?
A.2 After the study was completed, was it advertised in the papers and the views of the
public sought ?
A.3 Was it finally approved by the Central Environmental Authority ?
(B) Social Impact Assessment
B.1 Has a study on social impact assessment being carried-out, views of the public sought
and a report provided ?
B.2 After the study was completed, were the views of the public taken into account when
drafting the Terms of Reference to the project ?
(C) Land Acquisition, Compensation and Resettlement
C.1 Were the people, who are affected and their lands to be vested - advised of it and their
agreement reached ?
C.2 Were the land required surveyed and benchmarks fixed ?
C.3 Has this been gazetted ?
C.4 Has the amount to be paid for the land amicably agreed ?
C.5 Has compensation for the land being paid ?
C.6 Have owners been advised that their buildings will be fully or partly broken ?
C.7 Has this been surveyed and gazetted ?
C.8 Has the amount to be paid as compensation for the buildings been mutually agreed ?
C.9 Has compensation been paid accordingly in advance prior to breaking down the
buildings ?
62
(D) Relocation of Utilities
D.1 Water Lines
D.2 Drainage Lines
D.3 Electricity Poles and Electricity Lines
D.4 Telephone Poles and Telephone Lines
1.0 Has a meeting of key official of all Government Departments - Handling Services
1.1 National Water Supply and Drainage Board

1.2 Colombo Municipal Council / Local Authority
1.3 Ceylon Electricity Board / Lanka Electric Company Limited
1.4 Sri Lanka Telecom
Met and discussed the requirements of shifting the services and agreement
reached ?
2.0 Have target dates been set for the shifting of the services with the Department Officials
concerned ?
3.0 Has compensation / costs for shifting of the services been agreed between Government
Departments / Local Authorities ?
4.0 Has compensation / costs for shifting of the services as agreed been paid in advance,
to expedite the shifting of the services ?
5.0 Have any constraints been discussed and appropriate action taken to resolve any
impediments to expedite shifting of the services ?
(E) Draft Pre-Qualification and Tender Documentation
Have the followind Documents been finalised ?
E.1 Press Advertisement - Calling for Expressions of Interest
E.2 Letter of Invitation

E.3 Evaluation Criteria - Marking System
E.4 Terms of Reference - Technical Proposal
E.5 Format for preparation of Financial Proposals
E.6 Draft Contract Documents
E.7 Format for Mobilization Advance Bank Guarantee
E.8 Format of Bid Bond
E.9 Format of Performance Bond

(F) Tentative Procurement Activity Schedule
Has this tentative schedule been finalised ?
63
"I
Annexure 15A
Public Finance Circular Letter No.: 1076-260-164

04th March, 2002
To : All Secretaries of Ministries, ~

ENHANCING THE ~FFECTIVENESS OF PROCUREMENT

.~
PROCEDURES AND STRENGTHENING PROCUREMENT'
CAPACITY - INTRODUCTION OF A
-
TENDER MONITORI]\\G SYSTE1\1
fill
YOUR attention is kindly invited to Public Finance Circular FfN-358 (4) of 29.11.99 on the above subject
a copy of which is annexed.
I
It has been observed that the awarding of tenders for procurement of supplies and for awarding
of works contracts etc. are unduly delayed due to non-adherence to the proc~ure laid down in the
J
said circular.
.
You are therefore kindly requested to pay personal attention to this matter and see that the ~
I
provisions in the above circular are followed and the processing of tenders in respect of agencies! '", .
projects coming under your purview are done as expeditiously as possible. '
",1
;..,
CUARITIIA RAT~TTE,
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Public Finance Circular No.: 380 Annexure 16
My No.: PF/FS/18.
Colombo 01.
19th January, 2000.
To: All Secretaries to Ministries,

Heads of Departments and Chairmen of
Boards & Corporations.
GUIDELINES FOR UNDERTAKING CONSULTANCY WORKS BY UNIVERSITIES AND

RESEARCH & DEVELOPMENT (R & D) CENTRES AND THEIR STAFF
THE accepted policy of the Government is that Universities and R & D Centres generate income through
training, R & D and consultancy services (hereinafter referred to as consultancy services) Considering
the emphasis being laid on institute/industry partnership, Universities and R & D Centres and their
staff are encouraged to market, promote and undertake consultancy services beneficial to the Industry.
This shall take cognizance of the recommendations of the Presidential Task Force on University Reforms
that universities generate income through consultancy and R & D services and the need to promote
active institute/industry links/partnerships. Such assignments for consultancy services will be subjected
to the following conditions :
1. All consultancy services shall have the prior approval of the Vice Chancellor of the
University or the CEO of the R & D institution concerned, with the authorized delegation
by the University Council or the Board, or their duly authorized officers.
2. The consultancy services undertaken should not in any way be detrimental to their
contractual responsibilities to the institution or in conflict with the law of the country, and
international standards applicable in the country.
3. Priority shall be given to consultancy services directed towards improvement of efficiency

and productivity of the local industries and helping to realize the country's socio-economic,
environmental and human development policies. The nature and the level of the consultancy
work must be of adequate standard so as to bring credit to the Intitution.
4. The Vice Chancellor of the University or the C. E. O. of the R & D Centre (or the duly
authorized officer) reserves the right to withdraw the permission granted to the staff member
or members to carry out consultancy services if the member or members are found to violate
any of the conditions under which the consultancy services were allowed.
5. Honoraria and supervision fees for staff engaged in supervision work for Post-graduate
degree candidates as well as earnings by staff on no pay leave or authorized leave, including
sabbatical leave are not covered by this circular.
65
7 - H20832
6. Estimation Procedure
Whenever consultancy services are carried out by the Institutions or by individual staff of
the Institution, the fees for consultancy services charged to be based on the following:
Direct expense costs
(a) The direct costs such as travelling, subsistence, materials consumed etc. and equipment usage
charges related to the capital costs of the high-value equipment including vehicles ;
(b) Field expenses, surveys, meetings etc. ;
(c) Payment to outside consultants and team members who are not employees of the
institution, if included in the consultancy team ;
(d) Government taxes if any.
Overheads costs
(e) Other overhead costs such as for utilities etc. (minor laboratory equipment usage charges
could also be included) ;
(f) Staff time in person days at unit rates based on the market rates of the personnel.
The total estimate shall include a profit margin, to be added at the discretion of the Institution,
depending on market factors for the specific job.
7. Disbursement Procedure
Disbursement of revenue earned, as fees for consultancy services will be on the following
basis :
After deducting the direct costs [(a) + (b) + (c) + (d)] from the amount received, the balance
will be disbursed as follows :
7.1 10% to 25% will be retained by the Institution, the exact percentage to be decided by the
Institution.
7.2 In addition, 5% to 10% to the Institution to meet the cost of (e) utilities, stationary etc.,
the exact percentage to be decided by the Institution.
7.3 65% to 85% to the staff directly and indireclty involved. The proportion of distribution
will be decided by the Institution concerned based on the input of each individual to the
consultancy service.
7.4 In the case of individuals undertaking consultancy services, lower percentages given at
(7.1) and (7.2) above will apply.
Funds received under (7.1) above by Universities and R & D Institutions in respect of
consultancy services provided to third parties will not be transferred to the Consolidated Fund but
will be transferred to a special fund maintained for this purpose in the General Treasury. In order to
minimized the work involved, this transfer will be done once every 3 months. Funds thus received will
be transferred back to the respective Institutions by the Treasury, immediately on receipt of the same,
to be used for improvement of facilities and research. eg. acquiring new equipment, state of the art
technology and staff on contract. These funds are to be utilized in addition to the normal Treasury
allocations to the institutions concerned.
N. PATHMANATHAN,
Director General of Public Finance.
66
Public Finance Circular No. 352(10) Annexure 17
My No. : 1076-260-180.
General Treasury,
Colombo 01.
24th August, 2000.
To: Secretaries of all Ministries,

Heads of Government Departments,
Public Corporations,
and Statutory Boards.
APPOINTMENT OF TECC
YOUR attention is hereby drawn to Chapter III of the Guidelines on Government Tender Procedures
(Revised Edition-August 1997) regarding the appointment of TEC members.
It has been suggested that Technical Evaluation Committees (TECC) appointed for the
assistance of Cabinet Appointed Tender Boards (CATBB) should consist of technically competent
and skilled officials who could objectively undertake the responsibilities cast on them in terms of
government Procurement Procedure. The members of the TEC should feel free to express their
independent views and make recommendations to the Tender Board in this context the inclusion of
Chief Executive Officers (Managing Director, General Manager, Chairman etc.) of organisations in TEC
tend to undermine the role of other members of TEC drawn from same organisation. Therefore, you
are kindly requested to refrain from nominating appointing such officers to TEC.
P. B. JAYASUNDERA,
67
,
: Annexure 18
Management Services Circular No.: 10
,
Department of Management Services,
Ministry of Finance & Planning,
4
The Secretariat Building, ~
ii1
Colombo 01. 1;1
26th December.2000.
Chief Secretaries of Provincial CounciIs, '~~
Heads of Departments, -
II Chairpersons of Public Corporations/Statutory Boards.
RECRUITMENT OF STAFF FOR PROJECT MANAGEMENT UNITS

(PMU) OF PROJECTS ASSISTED BY FOREIGN FINANCING
AGENCIES AND THEIR EMOLUMENTS '\
THE Government has decided to implement the following procedure in respect of recruitment of staff
for Project Management Units (PMU) of projects assisted by Foreign Financing Agencies and their
emoluments. This circular will be effective from 01.01.2001. t
..
2 Recruitment of Staff for PMUs of Projects Assisted by Foreign Financing Agencies ~,
2.1 The<requiredcadre for the management of projects assisted by Foreign Financing Agencies
should be identified at pre-appraisal/appraisal stage of a project depending on the necessity.
.
Approval for the creation of such posts should be obtained in terms of ER.71 using a
simplified version of ER. 71 FOim given in Annex 1. '
22 The ensure smooth and quick preparation and implementationof a project, a team of identified
'Core Project Staff' as agreed with the Foreign Financing Agency may be recruited prior to
the signing of the Loan/Grant Agreement. The procedure for the creation of posts and
recruitment of such staff is varied as given in Paragraph 3 of this Circular.
2.3 Appointment to all posts including "Core Project Staff' should be done only after calling
for applications by open advertisements followed by interviews. ~-
2.4 The selection of Project Directors (also referred to as Project Manager/Co-ordinator) for "
projects of which loan/grant amount is over US $ 10 million shall be done by the Ministry of
Finance & Planning in consultation with the concerned Ministry. The selection of Project ;f,',
,;>
$'
Directors for projects of which loan/grant amount is below US $ 10 million,shal~be done by -,
the Secretary of the line Ministry/Chief Secretary of the Provincial Cou~cil as the case may
,be. ,J,
~
'.
25 (a) The interview board for the selection of Project Directors of projects over US$ 10 million ~~,.
'if!
shall be chaired by the Secretary to the Ministry' of Finance & Planning or his "\,
representative and for projects below US$ 10 million by the Secretary of the line Ministry/
Chief Secretary of the Provincial Councilor his representative. In the case of the former, ,t '..
the other members of the interview board shall be the Secretary of the 'Line Ministry/
, '
Chief Secretary of the Provincial Councilor his representative, Implementing Agency I
and a representative from the Ministry of Public Administration. In the case of the latter'
,
a representative from the Treasury shall be included in the interview board.

68
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(b) The interview board for the selection of other senior staff of the PMU (Category B & C
II .
specified in para 5.1) shall be chaired by the Secretary of the line Ministry/Chief Secretary
of the Provincial Councilor his representative and consists of the Project Director, Head
of the Implementing Agency and a Technical Specialist of the relevant field.
! .f
(c) The interview board for the selection of project secretary and other support staff of the
PMU shall be chaired by the Project Director and consisting of representatives from the
line MinistrylProvincial Council and the Implementing Agency.
2.6 The appointing authority for the Project Director and senior staff of the PMU shall be the ~
, Secretary of the Ministry or Chief Secretary of the Provincial Council for projects implemented
by the MinistrylProvincial Council and Head of the implementing agency for projects " r-
implemented by Departments/Statutory BoardslPublic Corporations.The Project Director shall
be the appointing authority for all other posts. t
I
2.7 All appointments should be on contract basis, with a three year term renewable annually t! I
subject to satisfactory performance appraisals as specified in Paragraph 8 of the Circular. jl
't
Such contracts may be extended for further .term subject to satisfactory performance. !'
i
2.8 Persons above the age of 60 years are considered only on exceptional grounds when
technically competent people below 60 years of age are not found at the interview. Such
appointments will require Cabinet approval.
2.9 The Schemes of Recruitment for PMU Staff (method of recruitment and salary.scales) are
included in this Circular. Specimen Job descriptions including educational and professional
qualifications, experience and competencies required is given in Annex II.
3. Recruitment of Core Project Staff
3.1 The Core Project Staff, consisting of the Project Director and one post each of either Finance
Manager or Project Accountant, Technical Specialist/Officer, Procurement Specialist/Officer
and Project Secretary, May be recruited at pre-appraisal/appraisal of the Pn?ject as agreed
with the Foreign Financing Agency.
3.2 On a written request from the Director General External Resources the appointing authority
may proceed to recruit the Core Project Staff, until formal approval is obtained for creation
of new posts in terms of F.R.71.
3.3 If budgetary provision has not been l1).adeto incur the expenditure of PMU staff in the annual
estimates, the MinistrylProvincial CouncillDepartmentlAgency should take action in advance
to negotiate with Director General, National Budget to obtain necessary provision.
4. Appointment from the Public ServiceIPublic Institutions
4.1 Subject to provisions of Paragraph 2.4 and 2.3 of this Circular officers confirmed in the Public : II
ServicelPublic Institutions could be appointed to a PMU of a project assisted by a Foreign

Financing Agency on the following basis:
69
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(a) Released or Assignedto a PMU
or '~ ~~'
(b) On no-pay leave . . .
""1
'No-pay leave' for a total period not exceeding five years as pet Public AdminIstratIon I
Circular No. 13/99 dated lith June 1999 - Amendmentto Sub Section 16:1:4Chapter XII
-i
of the Establishments Code of the Governmcnt of Sri Lanka.
."
42 A Public Officer appointed under Paragraph 4.1 (a) of this Circular may retire from the ~ublic
service on reaching retirement age, with the approval of the appointing authority of hIs/her
substantive post. Any obligatory period of service of the officer could be covered under !~
such an appointment.
f
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., 4.3 Salaries and Benefits of Officers Recruited from the Public Sen'iceJPublic Institutions.
4.3.1 Remuneration of the Public Officers released/assigned to a PMU under Paragraph 4.1
(a) shall be the salary of the subsanity post plus an allowance not exceeding 50% of
that salary.
4.3.2 Remuneration of the Public Officers appointed to a PMU under Paragraph 4.1(b) should
be decided on the criteria given in Para 5.1 of this Circular.
4.3.3 Employees of Public Corporation and Statutory Boards appointed to PMUs of Foreign
Financing Agency assisted Projects may be paid an allowance not exceeding 50% of ~
the salary of the substantive post, subject to the approval of the respective governing
body of the Corporation/Statutory Board.
4.3.4 Public Officers released/assigned to a PMU of a Foreign Financing Agency assisted

project will continue to have their normal privileges and obligations.
4.3.5 No payments should be made for officers working in PMUs on part time basis for
projects below the value US$ 5 million.
5 Remuneration of PMU Staff Recruited from Outside the Public Senice or on No-pay Leave.
5.1 Remuneration of the senior staff of the PMU and the Project Secretary are given in the "',
following table: ..
I
MomMy Salary According to the
wan/Gra1l1 AIIlOIl1l1in US Dollars ..
" I
Staff Category us $ 510 10 Above US $ 10 !t;
million million
A Project Director Rs. 50,000 Rs. 75,000 1\'[-
~<.
B Deputy Project Director ~
Finance Manager ~
TechnicallProcurement Specialist Rs.45,000 Rs. 70,000

C Project Accountant
TechnicallProcurement Officer Rs.40,000 Rs.60,OOO
D Project Secretary Rs. 20,000 Rs.-25,000
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52 Staff managing projects with a value below 5 million US Dollars are not entitled to the salaries
specifiedin Paragraph5.1 of this Circular. -
5.3 (a) All limits given in Paragraph 5.1 of this Circular should be treated as maximum limits and
it should not be treated as an entitlement. The appointing authority should determine a
, -I
suitable salary, considering qualifications and experience of the officer. Approval ofthe
Department of Management Services should be obtained if there is any variation from
this Circular. - -
(b) Salaries of support staff, recruited from outside the public service, should be based on
~
salary scales of similar posts in the Public Service plus a maximum limit of 50% of the
salary of such post depending on the qualifications, experience and other requirements.
(c) Adjustment of salaries of PMU staff may be specified under their respective letters of
contract subject to maximum limits. Such adjustments should be based on the annual
performance appraisal referred to at paragraph 8.
5.4 (a) The PMU staff recruited from outside the Public Service should contribute to the
Employee Provident Fund (EPF). The employer's contribution to the EPF and ETF shall
be in terms of the relevant statutes. ..
(b) The PMU staff recruited from the Public Service in terms of Paragraph 4.1 (a) should
continue to contribute his or her W&OP Contribution.
(c) Employer should pay 25% of the consolidated salary of the substantive post to the
Treasury as pension contribution of Public Officers released/assigned to a PMU of a
Public Corporation/Statutory Board.
6. Other Benefits to Project Management Staff

--,
6.1 (a) The PMU staff above the category of Technical/Procurement Officer who are required to
visit project sites may claim reimbursement of actual cost of accommodation not exceeding
Rs. 600 per day subject to prior concurrence of the appointing authority and availability
of funds or subject to reimbursement by the foreign financing agencies.
(b) The actual cost of acco~modation may be reimbursed when PMU Senior Staff have to
accompany officials of foreign financing agencies for field visits subject to prior
concurrence of the appointing authority.
62 The Project Directors are permittedto use an official vehiclefor official purposes and travelling
between the office and the residence. In this instance maximum distance between the residence
and the office should not exceed 40 kilometers. The Project Directors are entitled to use the
official vehicles for their private travelling as well on payment of Rs. 100 per month, within
the monthly fuel allocation of 120 litres for petrol vehicles or 145 litres for diesel vehicles as
in the case of Heads of Departments.
6.3 The PMU Staff shoud be full time employees of the unit to be eligible for aforesaid salaries
and benefits.
71
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7. PMU Staff of Projects Financed Under Special Counterpart Funds

, ,
7.1 The provisions of this Circular shall also be applicable for project staff recru~ted.for
implementation of projects funded with proceeds of Special Counterpart Funds maIntaIned
underForeign FinancingAgency fu~dedcommoditygrant aid programmes. .
8. Performance Appraisals t '

)J
'
8.1 All project management staff should be subject to annual performance appraisal, the criteria
i).
, .
~
,
for which may be developed in consultation with the Foreign Financing Agency. The
Appointing Authority is responsible for the conduct of performance appraisal and the
assistance of the Foreign Financing Agency may also be obtained for such appraisals.
r
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9. Recruitment of Consultants for Projects Assisted b,yForeign Financing Agencies'
9.1 This Circular will not govern the procedure for recruitment of consultants for the
implementation of projects assisted by Foreign Financing Agencies. The procedure for
recruitm'ent of consultants would be according to the provision of :
~
(a) The Loan/Grant Agreement of the project and/or Revised ~uidelines on Government
,
Tender Procedure. t
'<
10. Salaries of Project Management Staff of On-Going Projects
10.1 A committee comprising the Secretary of the Ministry/Chief Secretary of the Provincial
Council, Head of the implementing agency and a representative-each from the Treasury and
Ministry of Public Administration should review remuneration of Project Directors and senior
project management staff of on-going projects and make suitable adjustments. Such
adjustment in the service contract should be made after' the performance appraisal referred
to at Paragraph 8 is undertaken. .
10.2 For the other project management staff a committee comprising a representative of the
Secretary of the Ministry/Chief Secretary of the Provincial Council, Head of the implementing }
~;.
agency and the Project Director should review the remuneration and other conditions in the "
service contract of the other staff on the same basis as in Paragraph 10.1. i-
J
11. Earlier Budget Circular 79 dated 29.09.1998 and its amendment, Budget Circular 79(1) dated .\\
12.03.1999, on the same subject, are hereby repealed. '~.'

~'
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~
12 The relevant sections of the Establishments Code and Financial Regulations, incorporating the
new arrangements, will be amended in due course by the Ministry of Public Administration and
the Ministry of Finance and Planning.
~B.JAYASUNDERA; -
Secretary to the Treasury and
Secretary, Ministry of Finance ~nd Planning.
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Annex 1
CREATION OF POSTS FOR PROJECT MANAGEMENT UNITS (PMUs) OF PROJECTS

il
L
ASSISTED BY FOREIGN FINANCING AGENCIES '~
, ,J
1.- Ministry
2. Departmen tiCorpora tioniS ta tutory

Board
r
3. Name of the ProgrammelProject and I
i
Time span - I
!
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4. Core activity
5. Title of the post
6. Number of Posts required ..
7. Salary Scale
8. The basis on which posts are required

(Casual/Temporary/Contract) and the
period
9. Main responsibilities of the Post
10. Requirement of the post (whether

expansion of existing activity or a
new activity)
11. Source of funding for payment for

the Cadre
12. Certificate of the Head of the I hereby certify that the information
Departm en tiC a rporati a n/S tatutory given in Para 1 to 11 above are true
Board and accurate.
. . .. . .. . .. . .. . .. . .. . .. . .. . .
Signature
,,
Name: . . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . . !!'
Post:...................................
~
~
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Part II - Views of the Ministry :,. I
13. Is the proposal in terms of any Source of the Directive:

Directives from the Ministry, or any ~-' I
Date: ,.,
other authority (if so give details) :- I
I I
Reference No.:
!~
14. Whether the post/s has/have been
identified in the Loan/Grant Agreement -
I
or Memorandum of Understanding
(MOU) signed with the Foreign
Financing Agency.
15. Recommendation of the Secretary :- Creation of .......,. Posts is

recommended/not recommended.
,
.................................... .i
Signature of the Secretary ~
'"
to the Ministry.
.
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Annex 1I I
!
SPECIMEN JOB DESCRIPTIONS OF PROJECT STAFF

1. Project Director
Duties:
,,
!
The incumbent who functions as the Head of the Project Management Unit (PMU) is responsible for
managing/co-ordinating the full range of project activities during the project cycle from preparation, I
i
implementation to completion reporting and winding up.
~ I~
Specifically, the incumbent should- ~
*
efficiently manage the PMU with proper delegation of responsibilities to the PMU Staff, co-
ordination and supervision of their activities and performance appraisal of them.
*
prepare project implementation and disbursement plans with clearly defined responsibilities for
project activities
*
implement the project with due diligence to achieve the agreed development objective and in
conformity with the Loan/Grant Agreement
..
*
effectively organise, co-ordinate and monitor the implementation of project activities
*
attend project procurement matters as specified in the GovernmentProcurement Guidelines including
the functions of Secretary of Technical Evaluation Committee
*
ensure preparation of annual budget estimates and submit to the relevant authorities in time
*
maintain an appropriate financial management system that will produce monthly/quarterly/annual
financial statements in compliance with the Government Accounting Standards and procedures
*
ensure timely withdrawal/reimbursement of funds from the foreign financing agency for project
expenditure.
*
fulfil audit requirement of the Loan/Grant Agreement
*
identify problems promptly as they arise during implementation and take timely remedial actions
*
submit project progress and other reports ad required by the Loan/Grant Agreement and as
requested by higher authorities
*
establish and maintain close and cordial relationships with the Foreign Financial Agency and
other stakeholders pertaining to the implementation of the project.
Required Qualifications and Experience:

:;:
Bachelors Degree in the field of Engineering, Science, Law,Economics, Commerce, Agriculture,
Business Administration/Management, Accounting or any other relevant field with 12 years
experience of which 8 years in. Senior Management level preferably in the implementation of
development projects funded by Foreign Financing Agencies.
75
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or ,,'
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Bachelor's Degree and a Postgraduate Qualification (MastersIDiploma) in th~ ;elevant field or
Corporate Membership of a recognised professional institution in the relevant field with 8 years
{
experience of which 5 years preferably in the implementation of development projects funded by '.
Foreign Financing Agencies. ' .:
i
Professional Competencies:
:;: j~
Ability to plan and implement a project with complex and diverse activities.
:;: -
Ability to promote stakeholders' participation and commitment for effective implementation to
.. ensure long term sustainability of the project.
I
:;:
Ability to effectively organise and lead the work of a multi-disciplinary team.
*
Effectiveness in analysing and resolving project implementation issues.
*
Strong communication, and negotiating skills and good interpersonal relations
*
Familiarity with Government procedures and regulations.
*
*
Computer literacy.
.
High level of proficiency in written and spoken English.
2. Deputy Project Director
The duties, required qualifications and experience, professional competencies are similar to that
of the Technical Specialist. The incumbent is responsible for handling of a main component of a
project or a geographically demarcated area of the-prnject indepenently.
3. Finance Manager
Duties :
The incumbent is responsible for establishing and maintaining financial management systems, including
accounting systems, internal control, planning, budgeting and financial reporting systems and auditing
,.
systems. Specifically the incumbent should - . ,'.
'"
establish sound accounting practices and systems to manage resources available to the project.
'" "
provide accurate, complete and timely financial information for managing and monitoring project .i;',-
activities. '..
'"
prepare' annual budget estimates and disbursement plans of the project.
'"
ensure accountability and promote the efficient use of financial resources allocated for the project iI'.
based on Government and Foreign Financing Agency procedures. -. . ."
'~
'"
ensure timely withdrawal/payment/reimbursement of funds from the foreign financing agency for t
project expenditure. t,
'"
preparemonthly,quarterly
, . and annual financial statementin time and comply with audit requirement. '-1'
:I<
establish and maintain closer relationship with other Government agencies involved in the
disbursement of funds under foreign financing agency funded projects.
I
76
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Required Qualificationsand Experience:
* Corporate membership of recognised Professional Institution in the field of financial or management

accountancy (CIMA/ACCA/ICASL) and minimum of 8 years experience pr~ferably in Financial f
- Managementof Foreign Financing Agency FundedDevelopmentProjects.
! ,I
*
Good knowledge on current internatiomilliocal accounting standards and generally accepted
accounting practices. r-
*
Good knowledge on accounting policies and practices in force in Sri Lanka; knowledge of and,
experiencewith, public sector accountingand expenditurecontrol systems. ",
*
Experience in th~ design, documentation and implementation of accounting systems at a project
. and/or entity level.
*
Computer literacy.
II *
4. ProjectAccountant ..
~
I Duties:
The incumbent should responsible for establishing and maintaining financial management systems,
including accounting systems, internal control, planning, budgeting and financial reporting systems
and auditing systems. Specifically the incumbent should -
*
establish sound accounting practices and systems to manage resources available to the project.
I
i * provide accurate, complete and timely financial information for managing and monitoring project
II activities.
I
I *
prepare annual budget estimates and disbursement plans of the project.
*
ensure accountability and promote the efficient use of financial resources allocated for the project
based on Government and Foreign Financing Agency procedures.
1*
I
ensure timely withdrawal/payment/reimbursement of donor funds for project expenditure.
*
prepare monthly,quarterly and annual financial statementin time and comply with audit requirement.
*
establish and maintain closer relationship with other Government agencies involved in the
disbursement of funds under donor funded projects.

*
Class 1 Officer of the Government Accountancy Service with 10 years experience preferably in
Financial Management of Foreign Financing Agency funded Development Projects.
or
77
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*
Corporate membership of recognised ProfessionalInstitution in the field of financialbe management
accountancy (CIMNACCA/ICASL) and minimum of 5 years experience preferably in Financial ~
Management of Foreign Financing Agency Funded Development Projects.
*
Proven analytical ability to evaluate bid proposals.
* Good cqmmunication (written/oral) and interpersonal relations.
*
. Demonstrated ski lis in working resourcefully. consistently and with perseveranc~ in the ~
procurement field. r-
..
:;:
Computer literacy.
*
High level of proficiency in written and spoken Engli~h.
5. Technical Specialist in the field of ............

Duties :
The incumbent should provide relevant technical inputs in the area of. required specialisation and
handle all aspects of project preparation and implementation as detailed out in the Loan/Grant
Agreement and the Project Implementation Plan.

*
Bachelor's Degree in the relevant field and 12 years experienc_eJ~.!)o~ r~late~ to the required
technical speciality,
or
:;:
Bachelor's Degree and a Postgraduate Qualification (Diploma! Masters) in the relevant field or
Corporate Membership of a recognised professional Institution in the relevant field with minimum
of 8 years experience in a job related to the required technical speciality.
:;:
Ability to deliver technical services as required by the project and advice Project Director. :<
:;:
Proven ability to handle project activities related to the required area of specialisation independently.
:;:
Ability to function effectively in a team environment inspiring trust and co-operation of other
team members.
*
Ability to analysis and resolve implementation problems rel,ated to his field. .
*
Computer literacy.
* -I
Ability to communicate effectively orally and in written.
*
78
I r--- - ". '-"""--',,~,.-

I ~.~' ' "'!"'"""~
Professional Competencies :
*
Good knowledge on current international/local accounting standards and generally accepted
accounting practices.
* , ,I Good knowledge on accounting policies and practices in force in Sri Lanka; knowledge of and
experience with, public sector accounting and expenditure control systems.
*
Experience in the design, documentati'on and implementation of accounting systems at a project
~
and/or entity level.
* r-
r-I Computer literacy.
*
6. Technical Officer in the field of ............
Duties:
The incumbent will provide technical inputs and handle all aspects of project preparation and
implementation in the area of required specialisation. .
*
Certificate/Diploma in the relevant field offered by a recognised institution and 10 years experience
in the required area specialisation, ,
or
* A Bachelor's Degree or Corporate Membershiop of a recognised Institute in a relevant field and

a minimum of 5 years experience in the required area of specialisation.
The incumbent should have a broad knowledge on the functional speciality and possess an in-
depth understanding of the particular area.
* Ability to deliver technical services as required by the project and advice Project Director.
*
Proven ability to handle project activities related to the required area of specialisation independently.
* Ability to function effectively in a team environment inspiring trust and co-operation of other
team members.
* Ability to communicate effectively orally and in written.
*
Ability to analysis and resolve implementation problems related to his field.
* Computer literacy.
*
Proficiency in written and spoken English.
79
I
L ",," "'!"'--.-
-
]
7. Procurement Specialist
I
Duties : I
'.
The incumbent should assist the Project Director in carrying out of project procurement in conformity
I ~ith the Foreign Financing Agency and the government procurement guidelines and provisions in
the Loan/Grant Agreement.
I
Required Qualifications and Experience: .

~
*
A Bachelor's Degree and 12 years experience of which 8 years should be in procurement/contract r--
management in the public or private sector,
or
*
A Bachelor's Degree and 10 years experience in procurement/contract management in the public
or private sector with Diploma offered by the Ins~ituteof Supplies and Material Management of
Sri Lanka.
*
GeE Advance Level and Diploma offered by the Institute of Supplies and Material Management
of Sri Lanka with 15 years experience and demonstrableability in procurement/contact management
in public.orprivate sector. '
ProCessional Competencies:
*
Knowledge on government and Foreign Financing Agency procedures related to internationaU
local procurement.
*
Ability to plan and execute project procurement.
*
Ability to understand scrutinises and prepares different bidding and contract documents.
8. Procurement Officer
Duties :
The incumbent assist the Project Director in carrying out of project procurement in conformity with
the foreign financing agency and government procurement guidelines and provision in the Loan/Grant
Agreement.

*
A Bachelor's Degree, and 8 years experience of which 5 years work experience in procurement
contract management in the public/private sector, ,
jjC
or \
~
* . . t.
GeE Advance Level and Diploma offered by the Institute of Supplies and Material Ma!1agement ,.ti-
I of Sri Lanka with 10 years experience in procurement/contract management in the public or private Jr,
sector.
L
I 80
I
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I . .: c~'" .~~~'. T""
*
An overall working knowledge of donor procurement procedures and practices as related to the
specificproject activities. .
* !IAbility to handle the whole procurement process covering planning and monitoring, bid document
preparation, bid evaluation, contract award and administration.
* Demonstrated communication (written/oral) and consultation skills.
*
Demonstrated skills in working resourcefully, consistently and with perseverance in the
~
procurement field.
*
Proficiency in written and spoken English.
9. Project Secretary
Duties:
The incumbent should manage all secretarial support functions to run an efficient project office and
to support the Project director and technical staff.
..
Required Qualjfications and Experience:
(a) Pass in all (three or four, as the case may be) subjects at the GCE AIL with a secretarial
course from a recognised institution or pursuing examinations leading to Chartered
Secretary with five years experience,
or
(b) a Chartered Secretary.
* Excellent command of English and computer literacy.
* Good communication skills (written and spoken) and ability to attend to correspondence
independently.
* Ability to establish and maintain office systems, such as filing, correspondence, logistics of office
staff and office procedures.
*
Maintenance of office equipment, including maintenancecontracts and regular back up of computers.
*
Ability to function effectively in a team environment inspiring trust and co-operation of other
team members and to promote good public relations.
* Ability to manage and achieve tight deadlines and to work under pressure.
81
8 - H20832
-,
Public Finance Circular No. ': 352 (11) Annexure IRA
My No. :FIN 1076-200208 (Vol.Vii),

".
Department of Public Finance, 4
General Treasury, ~
Colombo - 01, f
09th February, 2001. ~. I
; ~
- Chief Secretaries of Provincial Councils,
I"""
Chairmen of Corporations.
Boards and Statutary Bodies.
AMENDMENfS TO THE GUIDELINESON GOVERNMENTTENDER PROCEDURE
YOUR attention is drawn to the Guidelines on Government Tender Procedure, Revised Edition - August
1997. Following amendments are introduced with immediate effect.
.
(1) The following new Guideline Nos. 62.7 and 62.8 are introduced immediately after Guideline
No. 62.6 :-
62.7Advance Payment for Import of Goods/Machinery and Equipment
Where the tender document allows the opening of letters of credit on supplier's account, the
Tender Board may decide to pay an advance not exceeding 30% of the value of the letter of
credit on the submission of a "On Demand Bank Guarantee". The full amount so advanced should
be recovered from the payment due on the supply of goods.
62.8 Guarantees for the Payments to the Contractors
All Executing Agencies should issue encashable payment guarantees, covering 10% of the
contractual amount, to the civil work contractors, within one month of commencement of the
contract, subject to following conditions:
. 0) Executing Agency should be liable to settle all payments, due to the contractors, that
come under the contracted amount, within 14 days on receipt of the voucher along with
the bills certified by the Engineer. If the circumstances are beyond control of the Executing
Agency, the earliest date that payment can be made, should be determined by the Executing
Agency, with the concurrence of the contractor.
, I
(ii) If the Executing Agency fails to settle the bills within the specified Period of time, contractor I
~
should be entitled to encash the Payment Guarantee, to recover 75% of the payment,
approved by the Engineer, after deduction of any dues from the contractor, including the ..
installment of the Mobilization Advance. In this regard, Head of the Executing Agency on , .iII
the request of the contractor, should issue a certificate to the Bank indicating the total ,~
amount due to the contractor, and the amount equivalent to 75%, which the contractor is .i.
J;'.
entitled to recover. ,
~
82
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187. Procurement of Insurance Services (Please refer P. F. Circular No. 406 (1) dated 18.11.2003) r
~
Procurement of Insurance Services may be done from Government-OwnedInsurance Companies 1/.'

directly and should not be procured through their Insurance Agents.
I
P. B. jAYASUNDERA,
~
. Secretary to the Treasury.
-
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~
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84
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Accountant responsible for the payment and the Engineer are equally responsible to make the
payment within the specified period of time in the agreement and Engineer should take action to
keep the Accountant informed in advance, with respect to the value of the bills in his hand, in
order to make prior arrangements for the payments.
.1
(2) Guideline No. 126- Application of Preferences
7 1/2% preference applicable for work contracts funded by the Consolidated Fund is increased
to 10% and line No.3 of the above guideline should be read as follows :- ~
- * 10% preference for works contracts (eligibility criteria is more than 50% Sri Lankan ownership
r'"
of the company).
Preference applicable for Projects funded by the Foreign Financing Agencies will remain
unchanged. .
(3) Guideline No. 127.2 is replaced with the following paragraphs :-
127.2 Comparison of Cost Estimate

.
If the bid, which results in the lowest evaluated bid price, is seriously unbalanced or front loaded.
in relation to the engineer's total cost estimate of the items on the work to be preformed under
the contract, the TEC/TB may request the bidder, through the Executing Agency to pr01uce
detailed price analysis for any or all items of the bill of quantities to demonstrate the internal
consistency of those prices with the construction methods and schedule proposed.
After evaluation of the price analysis, taking into consideration the schedule of estimated contract
payments, on the recommendation of the TEC/TB, the Executing Agency may request the bidder
that the amount of the performance security set forth be increased at the expenses of the bidder
to a level sufficient to protect the Executing Agency against financial loss in the event of default
of the successful bidder under the contract.
Tenders which are considerably high or low in comparison to the TCE may be rejected.
(4) Guidelines No. 153.1- heading is changed as "Contract Variation Orders Related to the Projects
Funded by the Consolidated Fund".
(5) GuidelineNo. 153.2- heading is changedas "Approving Authority for Contract Variation Orders"
and the content will be as follows:
153.2Contract' Variation orders may be authorized by the Head of the Department, provided
that the net sum of the variation order and any previous variations does not exceed the
amount of the contingency provisions, provided in the approved Contract Budget (normally
10% of the original contract amount).
The Guideline Nos. 153.3 and 153.4 will remain unchanged.

! ~
(6) Guideline No. 187 on Procurement of Insurance Services will be amended as follows:
I
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Tender Circular letter 1076-200-209 Annexure 18 B
My No. : FIN 1076-200-209

. I
General Treasury, ,
Colombo - 01,'
24th September, 200 1.
IIIII!
TO.: All Secretaries of Ministries, -
APPOINTMENT OF TECHNICAL EVALUATION COMMITTEES IN TERMS OF GL 153.4 OF
SEVERAL instances have been brought to the notice of the Treasury where there have been
~onsidetable delays in payments to contractors for extra work/contract variations undertaken by them
on instructions given by consultantslExecutive Agencies. In some instances procedural delays have
led to these payments not being made in time.
..
In termsof Guideline153.4of the Guidelineson GovernmentTenderProcedure, a CabinetMemorandum
may be submitted in respect of CATB tenders requesting approval for extra contractual payment and
award of change order without going through the process of CATB and TEC, provided the Secretary
of the Ministry concerned is satisfied with the variation. For this purpose the Secretary may obtain
the assistance of a TEC appointed by him with a Treasury representative nominated by the Secretary
to the Treasury.
There is however no objection to the Treasury Representative who had served on the original TEC
assisting the relevant CATB also functioning on this TEC without seeking fresh approval for the
nomination of a Treasury representative. .
P. B. jAYASU:'>IDERA, .
, I
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Public Finance Circular No. : Fin 352(12) Annexure 19
My No. : Fin-1076-260-180
General Treasury,
Colombo 01.
23rd February, 2001
Fully Govt. Owned Companies, and
AWARD OF SMALL SCALE CONSTRUCTION CONTRACTS TO APPROVED SOCIETIES
YOUR kind attention is drawn to the Public Finance Circular No. 352(1) dated 23rd February 1998
which introduced amendments to the Guidelines on Government Tender Procedure - Revised
Edition 1997.
It has been noted, on many occasions, that the approved societies have failed to perform
the contracts awarded to them satisfactorily mainly due to lack of financial and other resources and
inexperience in handling construction work.
As Such, it has been decided to replace the Guideline No. 164.1 of the Guidelines on
Government Tender Procedure - Revisesd Edition 1997, as follows, with immediate effect.
164.1 Entrusting of Construction Works to Approved Societies
Entrusting of construction works to approved societies, deviating from competitive

bidding, may be authorized by Head of Department/Executing Agency on the recommendation of a
committee comprising of the following :
(a) Two nominees of the relevant Head of Department ;

(b) The Divisional Secretary of the area or his nominee.
Before recommending, the committee should ascertain that the award confirms to the
following conditions :
(1) The works so entrusted should be within the area of authority of the approved society.
(2) Total number of works in hand with the approved society at a given time should not
exceed three.
(3) Total value of works being performed by the approved society at a given time should
not exceed Rs. 1.0 Mn.
86
(4) Approved society should have the required capacity to handle the project which should
be supported by the following :
(a) Evidence to prove financial resources in the form of bank statements, letters from
banks approving overdraft facility etc. ;
(b) Evidence to prove past experience of the society on similar works.
(5) The approved society should have been registered at least two years prior to the date of
calling offers.
The works entrusted to the approved society should not be sub-let or sub-contracted.
The General Treasury from time to time will determine the approved societies.
S. B. DIVARATNE,
87
-.-,'e<
-- - --- ",.,
I
Public Finance Circular No. : FIN.352(19) Annexure 19 A
I
,
My No.: FIN-1O76-260-180 I
),
-
Department of Public Finance, t
I General Treasury,
Colombo I, .
.~
I 04th March. 2002. ~
I
To: ~
All Secretaries of Ministries, r
Fully Government Owned Companies,
and Heads of Local Authorities:
.-\\\C4.RDOF SMALL SCALE CONSTRUCTIONCONTR.\CTS TO APPROVED SOCIETIES
YOUR kind reference is drawn to the Public Finance Circular No. 352 (12) dated 23rd February, 2001,
which introduced amendments to Guideline No. 164.1 of the Guidelines on Government Tender
Procedure-Revised Edition 1997.
The above circular is amended by deleting the sentence.
"(3) -Total value of works being performed by thl: approved society at a given time should
not exceed Rs. 1 Million" -- .
and substituting the following sentence therefor,
"(3) -Total value of works being performed by the approved society at a given time ~hould
not exceed Rs. 2 Million".
N. PATHMANATHAN, (;
Deputy Secretary to the Treasury. f
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Annexure 20
Public FinanceCircularNo.: 352(13)
., My No.: FIN - 1O76-200-209(Vol. Vll).

General Treasury, I
Colombo01,
03rd September,2001:
~
1
To:
r
Statutory Boards, Fully Government Owned Companies and
Heads of Local Authorities. .
AMENDMENTS TO THE GUIDELINES ON GOVERNMENT TENDER PROCEDURE
YOUR attention is drawn to the Guidelines on Government Tender Procedure, Revised edition-
, I
August 1997.
In Chapter II of the Guidlines under the heading 'Sanctioning of Total Cost Estimates (TCE)' the
following new Guideline No. 12.3 is introduced -immediately after Guidline 12.2.
"12.3 - The total cost estimate in respect of work Estimates should include a mandatory provi-
sion of 10% of the cost estimate as contingency provision. This allowance for contigencies should be
indicated separately in the TCE and not be disclosed at the time of calling tenders."
P.B. JAYASlJNDERA,
89
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Annexure 21 ,
i~
PublicFinanceCircularNo: 352(14)
My No.: FIN - 1O76-200-209(VoI.Vii)

~
General Treasury,
Colombo 01.
~
17th September,200 1.
~
To:
Heads of Departments, Chairmen of State Corporations.
Statutory Boards, Statutory Bodies Fully Government Owned Companies and
AMENDMENTS TO THE GUIDELINFS ON GOVERNMENT TENDER PROCEDURE

.
YOUR ~ttention is drawn to the Guidelines on Government Tender Procedure, Revised edition-
August 1997. The Following amendments are introduced with immediate effect:-
1. Guideline 155 on price escalation is amended by the inclusion of the following new para at
end of existing last para of GL 155,
Price escalation in a works contract, for the works less than a period of 12 months, being
executed after 1st January 2001 may also be paid by the Executing Agency under an accepted
formula. This will not apply to Foreign Financing Agency funded projects.
2. Guideline 21 to be amended to read,
The application for the appointment of a CATB should indicate the range of the Cost Esti-
mate of the project proposal and whether provision is available, to meet the expenditure dur-
ing the full period of the project. The Secretary to the Ministry should not recommend the
appointment of a CATB if financial provision is not available.
"
3. Guideline 144Award of Contract,
Add the following sub-para to Guideline 144.
However before awarding the contract the Head of the Executing Agency should ensure that
sufficient provision is available to meet the cost of the contract award.
I .
~,
P.B. JAYASUNDARA, j
.
Secretary to the Treasury. IJ
90 it
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Public Finance Circular No: 398
(
Annexure 22
II
My No: FIN. : 1076-206-61. ,
, .f Department of Public Finance,
General Treasury,
Colombo 01, i .
04th October, 2001.

~
-
Chairmen of State Corporations, Statutory Bodies,
Fully Government Owned Companies
and Heads of Local Authorities.
AWARDS OF CONTRACTS TO CONTRACTORSREGISTERED UNDER THE NATIONAL

REGISTRATIONSYSTEMOF ICTAD
WHEN a contract is awared to a contractor registered under the Natiot1alRegistration System of

ICTAD, the relevant entries regarding the Record of Works in the Contractors Record Book
issued by ICTAD should be entered by the Executing Agency at athe time of the signing of the
contract agreement and after completion of the work on the contract.
P. B. JAYASIDo;OERA,
91
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Public Finance Circular No. : 352 (15).

{
J[i
j
Annexure 23
~
My No.: FIN.: 1076-200-209 (Vol. vii).
Depanment of Public Finance,
General Treasury, t ,
Colombo 01.
08 th October, 2001. ~
...
r-
Chairmen of State Corporations, Statutory Bodies.
AIVIENDMENTS TO THE GUIDELINES ON GOVERNMENT TENDER

PROCEDURE .
YOUR attention is drawn to the Guidelines on Government Tender Procedure Revised Edition -
August,1997.
2. According to experience and representations received. there have been several instances
of delays in payments to contractors for extra work/contract variations undertaken during the con-
struction stages of projects. These delays have resulted in additional interest payments being made
in some instances the Head of the Department/Executing Agency has not even been aware of the
extra work/contract variation orders being undertaken.
3. Therefore the following new Guildeline148.1is introducedafter Guideline 148- Contract

Management:-
GL 148. 1 (i) The Consultancy Contract Agreements should specify that no extra work!
contract variation orders be approved by the Consultant I Engineer without ,
obtaining the prior approval of the Head of the Depanment I Executing Agency.
(ii) The Head of the Department I Executing Agency should satisfy,the neeo
for such works and ensure necessary funds for such variations or extra
work are available before approving such requests.
(iii) A ProjectPanel shouldbe appointedby the Head of DepartmentI Execut- '
ing Agency at the commencementof a project to advise him as and when

required until the contract is completed. This Panel should comprise the
4'
following officers:- :I:
~.
1. Head of the Department I Executing Agency or authorized representative ".

(Chairman). i
92
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2 Chief Accountant of the .Department / Executing Agency or his

representative.
3. Representative of the user unit of the Department / Executing Agency.
.,
The Head of the Department / Executing agency could get the service of a technically
competent person if required to assist the ~roject Panel. i
~
The Consultant / Engineer or his representative, the Contractor / or the Contractor's represen-
tative may be invited to make representations to the Panel, but they will not be members of the
Panel.
-
I
(iv) The terms of reference of the Project Panel would be to-
1.. review the request/or Extra work / Contract variations, identify require-
ments and make recommendations to Head of the Department / Execut-
ing Agency. '
2. assess whether additional financial provision is required for variations if

recommended and whether funds can be secured to meet such costs, prior
to making commitments.
3. Report on whether the T C E needs revision in terms of FR 72 and the

authority required for contract variations in terms of Guideline 153of the
Guideline on GovernmentTender Procedure (Aug'ust 199}.)
4. Review whether there has been undue delay in payments for works
completed and if so to suggest remedial steps to be taken for prompt
settlement.
5. specify extra time required for project completion and identify costs
payable together with cost: arising out of the extra work.
The decisions of the Project Panel should be r~corded in the official minute book of the Panel.
(v) The Head of the Department / Executing Agency should Apply a for the nec-
essary authority under FR 72 and Guideline 153 as soon as increase in cost is
anticipated without waiting till the work is over, to avoid delays in payments
to contractors.
4. In respect of ongoing contracts a memorandum of understanding should be signed

giving effect to the provision that no extra work / variation orders be approved by the Consult-
ant / Engineer without the prior approval of the Head of Department / Executing Agency.
P. B. JAYASUNDERA,
93
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Public Finance Circular No. : 399..
Allllexure 24
~y No.: FIN. - 1076-209-208 Vol. (vi).

General Treasury. I
27 th Novermber 2001.
~
Heads of Departmenfs,
r
Chairmen of State Corporations, Statutory Bodies,
ELIMINATING DELAYS IN THE TENDERING PROCESS- FOREIGN

FINANCING AGENCY FUNDED TENDERS
.
YOUR Kind attention is drawn to Revised Chapter 13 of the Guidelines on Government Tender
Procedure:;;December 2000 on' Projects assisted by Foreign Financing Agencies.
2. The objective of issuing the Revised Chapter 13 was to improve the effciency of the
procurement process and to ensure timely procurement of goods, works and services by delegating
the authority to the Project Directors and Executing Agencies and by entrusting the ownership of
the projects to the project management. To achieve this objective it is essential to implement the
procedural changes introduced in the Revised Chapter 13 and to delegate the authority to the re-
spective levels of the project management and to allow them to exercise it, within t.heframeworkof
the guidelines. Management Services Circular No. 10, which sets out the procedures for selecting
and appointing project directors, has been developed among other reasons to complement Chapter
13,by ensuring that officers appointed as project directors have the skills and capacity to effec-
tively accept the responisibilities that are now being delegated to them. Treasury has observedthat
the progress made by the Executing agencies in implementationof revised guidelines is not satisfac-
tory and hence deleays continue to occur. Some of the salient features of the revised Chapter 13 are
highlighted below so that remedial actions can be taken by the Executing Agencies and Project
Directors for effictive utilization of foreign funds.
3. The role of th~ Project Directors in the tendering process has been strengthened in
revised Chapter 13. In particular, under Guidelines 198,200,202,206and 208 Project Directors have
been entrustedwith the responsibility of preparing procurementactivity schedules, preparing tender
documents, assisting in evaluating offers, providing assistance to Tender Boards monitoring to
progress of tenders etc. Project Directors also function as Chairmenof Project Tender Boards deal-
ing with Tenders upto Rs. 25 Mn. As regards the monitoring of the progress of tenders Project
Directors are primarily responsible for monitoring of tenders under the supervision of the Head
of the Executing Agency and have to submit a monthly report to the Secretary to the Ministry
and to the Head of the Executing Agency with a copy to the Procurement Support Bureau. It is I;
essential therefore that Project Directors be entrusted with the required authority and the facilities
to carry out these responsibilities.
.
,
94
""",.
4. Under Guideline 204 which provides for advance procurement procedures in tendering it
is essential that early action be taken to nominate a P,-"ojectDirector and relevant officers and estab-
lish a Project Directorate.The Managemen~ServicesCircularNo 10of 26.12.2000 on "Recruitmentof
Staff for Project Management Units (PMU) of Projects Assisted by Foreign Financing Agencies
and. ,their Emoluments has laid down the recruitment procedure to be followed in this regard.
5. In respect of ConsultancyServices,revisedChapter 13providesunder GL 218 for shortlists

;; of consultancy firms to be obtained from Foreign Financing Agencies where the relevant agency's
proceduresprovide for this and the lists could be utilizedfor calling for proposals.Where an agency's
,.. procedures do not provide for this it should be requested to provide a long list of consulta~ts
from which the project directorate could prepare shortlists in accordance with the agency's proce-
dures. This procedure if adpoted will eliminate delays in shortlisting of consultants by advertise-
ment.
6. Further the document for Request for Proposals (RFP) in respect of Consultancy Services
and bidding documents for civil works/goods and supply contracts could be issued with the ap-
. proval of the TEC and the Foreign Financing Agency without reference to the Tender Board. (vide
Bidding Process outlined at Appendix 1,2 and 3)
.
. 7. Guideline 203 permits the use of procurement procedures such as International / Na-
tional Shopping, Local Competitive Bidding etc. in accordance with the Procurement Guidelines of
Foreign Financing Agencies.
8. Guideline No 210 permits the Project Director to seek for clarfificationsdirectly from the
tenderers during tendering and at the evaluation stage without referring them to the tender board
as earlier, with the view to speeding up the process. This arrangement will minimize the number of
sittings of the Tender Board and Tender Boards should be aware of this guideline and to allow
Project Director to excrcise the delegated authority within the limitation of the Guideline.
9. In terms of the Guideline No. 226.1 contract variation orders can be authorized
by the Project Director, provided the net sum of the variation order and any perevious variation
does not exceed the contingency provision. This provision has been made considering enor-
mous delays in approving variationorders leading to delays in completion of contracts. However,
it is the responsibility of the project Director to ensure that all officers functioning under the
project management office including Project Consultants strictly adhere to the procedure laid down
in GL No. 226.2 in case contingency provisions are exceeded. Please note that the recently issued
Public Finance circular No. 352 (15) of 08.10.2001 is not applicable to Foreign Financing Agency
funded tenders.
10. Futher, in terms of revised Chapter 13 the Head of the Executing Agency/
Department and Secretary of the line Ministry should directly liaise with the Project Director to
ensure the timely completion of each project.
11. The Department of Public Finance may be referred to if further clarifications are
required on revised Chapter 13 of the Guidelines on Government Tender Procedure (December 2000).
P. B. JAYASUNDER,
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Public Finance Circular No. : 352(17) Annexure 25
1
My No. : AN - 1076-200-209(Vol vii). 1
,.
Department of Public Finance, !.
General Treasury,
Colombo OJ.
04th December, 2001.
To:
Statutory Bodies, Fully Government Owned Companies.
and Heads of Local Authorities. .
'"
I
AMENDMENTS TO THE GUIDELINES ON GOVERNMENT TENDER PROCEDURE

1
YOUR attention is drawn to the Guidelines on Government Tender Procedure revised edition -
August, 1997.
I
2. The first para of Guideline 62.4 "Mobilization Advance for Works Contract", is amended to
I ' read as follows:
Mobilization advance should be paid for works contracts, having regard to the con-
struction or other work involved. However in respect of contracts that do not exceed
Rs. 500,000 in value and where the construction period does not exceed one month such
advances need not be paid. In the payment of mobilization advances the following instruc-
tion should be complied with
3. The rest of the Guideline 62.4 remains unchanged.
P. B. JAYASUNDERA,

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Public Finance Circular No. : 357 (3). Annexure 26
My No. : FIN - 1076-260-180.

., Colombo 01.
04th March, 2002.-
- To:
Heads of Departments, -

Statutory Bodies, Fully Government Owned Companies,
NEW PROCEDURES APPLICABLE TO INTERNATIONAL COMPANIES BIDDING FOR

.
LARGE SCALE GOVERNMENT TENDERS AND BOOIBOT PROJECTS
1. PLEASE be informed that the Public Finance Circulars No. 357 of 29.06.1998, 357, (1)
03.08.1998 and 357(2) of 25.09.1998 on the above subject are hereby repealed and the
following new procedures are introduced with regard to international companies bidding
for large scale government tenders and BOO/BOT Projeqs'-
2. Any foreign investor!contractor bidding for a Government tender or BOOIBOT Project the
Value of which exceeds Rs. 250 Million - shall furnish the following information along
with the bid or proposal: -
(a) Whether the bidder uses a local agent (s) ;

(b) Where the bidder uses a local agent (s),
(i) The name and address of the local agent (s) ;

(ii) the year of registration of the business of the local agent (s) ;
(iii) a certified copy of the audited accounts of the local agent (s) for anyone of the two
- financial years immediately preceding the date of submission of bids or proposals,
.audited by an independent external auditor in accordance with Sri Lanka Auditing
Stand~rds
. . were prepared
together with the auditor's report comfirming that the accounts
ioaccordance
. with the - Sri Lanka Accounting Standards; and
(iv) .
all details of commissions or gratuities, if any, paid or to be paid to the local agent(s)
c0ryne~tedwith or relating to the bid or proposal up to contract execution if the bidder
is awarded the contract including any success fees payable.
97
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3.
In the case where a bidder uses a local agent (s), the bid will be"rejected if;
(a)
the bidder fails Jo furnish any of the information specified in paragraph
(3) (b),
(b) the accounts of the local agent (s) for anyone of the two financial years
" "
immediately. preceding the date of submission of bids or proposals have not

been audited by an independent external auditor in accordance with the
Sri Lanka Auditing Standards, and
(c) the auditor's report does not confirm that the accounts of the local agent (s)
have been prepared in accordance with the Sri Lanka Accounting Standards.
4.
Bidders for Government tenders and BOO/BOT Projects may submit bids propos-
als without local agent (s).
5.
These provisions will be applicable with immediate effect to new bids or proposals
, as well as bids and proposals already invited.
to
CHARITIIA RATWAITE,
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Public Finance Circular No. : FIN - 352(20). Annexure 27
My No. : FIN - 1076-209-208.

Deparment of Public Finance,
General Treasury,
Colombo 01,
21st June, 2002.
All the Secretaries of Ministries,
Heads of the Departments and Chairmen of Corporations,
Statutary Bodies and District Secretaries.
CANCELLATION OF TENDERS
IT has been observed that the tenders are being cancelled by the implementing agencies at different
levels of the tendering process without reasonable causes to do so. When considering the financial
and other resources involved in floating a tender, they should not be cancelled in an abrupt manner
and such cancellation would lead to delays in the implementation of development projects funded by
both the foreign financing agencies and the Consolidated Fund.
In the above circumstances, cancellation of any tender floated by Department Tender Boards
should be with the approval of the Secretary to the Line Ministry. With regard to the tenders handled
by the Ministry Tender Boards and the Cabinet Appointed Tender Boards prior approval of the
Secretary of the Ministry of Finance should be obtained. Such an approval will not be required in the
cases where all the bids submitted for a particular tender are not in conformity with the tender
conditions.
Further, in order to avoid unnessary cancellations, requirements of the procuring agency should
be well assessed, before commencing the tender process.
99
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Public Finance Circular No. : Fin 358 (5) Annexure 28

I
. My No.: FIN 1076-260-164. J
I ~
General Treasury,
I Colombo - 01. "i,
opth September, 2002.

~
Chairmen of State Corporations, Statutary Bords,
Fully Government Owned Companies and Heads of Local Authorities.
ENHANCING THE EFFECTIVENESS OF PROCEDURES TO EXPEDITE THE

IMPLEMENTATIONOF DEVEWPMENT PROJECTS
,
YOUR kind attention is drawn to the Guidelines on Government Tender Procedure in August 1997,
Revised Guidelines on Government Tender Procedure for projects a~isted by Foreign Financing
Agencies - December 2000 and subsequent circulars related to the amendment of the Guidelines.
02. Since the first publication of the Guidelines on Government Tender Procedure, revisions were
progressively made to those guidelines to further enhance the effectiveness of procurement procedure
and strengthening of procurement capacity of Public Sector Agencies. However still there is a
considerable delay in procurement of development projects resulting in low disbursement of funds
both foreign and local, cost overrun and delayed project benefits to the people. In this context, the
Government has identified some of the rules, regulations, processes and procedures that inhibit
expeditious implementation and decided to amend them as follows :-
Cabinet Appointed Tender Boards (CATBB)
1. The Secretary of the respective Line Ministry will chair, as a rule, the CATBB handling tenders
under Foreign Funded Projects and the other members should be a representative of the Treasury
(A Senior Officer) and a Secretary or an Add!. Secretary of another Ministry. Regarding projects
funded by consolidated fund, the present arrangement will stand.
2 Appointment of such CATBB will be do~e by the Secretary to the Treasury with the concurrence
of the Cabinet Sub-committee,pn Budget and Tenders and the requests for such appointments .
should be directed- to tf1e Director General of Public Finance along with the "Request for
Appointment of CATB and TEC" in Annex: 1.- ,
3. Line Ministry'Secr~tary'is.fully responsiblefor coordinationand ensuring timelyimplementation

of the projects under his/her purview. '
f
4. With the view ~oensure timely implementation of the project. Line Ministry Secretary should
delegate the authority t~ the Pr:oject Director as stipulated in the Several Treasury Circulars; in ". ;;
..
>;<.
order to make him accountable for the pro"gress of the project and to provide a conducive
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environment to perform his responsibilities. A summary of responsibilities that should be

delegated is attached in Annex II.
5. The recruitment and performance monitoring of project managers should be done periodically
. , in terms of Treasury circulars. A summary of the procedure to be adopted is in Annex III and
the Department of Management Services will issue a revised circular with immediate effect.
'i
Cabinet Approval
6. In future, the recommendations of the CATBB,along with a briefing note will be submitted to
1 the Cabinet Sub-committee on Budget and Tenders by the Chairman of CATB with a copy to
the Line Ministry. The Line Ministry observations, if any, should b~ submitted to the Cabinet
Sub-committee within one week of CATB recommendations. These documents should be
submitted to the Secretary of the Sub-committee, Dr. R. M. K. Rathnayake, Add!.'Secretary of
the Ministry of Finance~The Cabinet Sub-committeewill review the recommendationsof CATB
and make its observations to the Cabinet.
7. In order to avoid unnecessary delays at the review stage, Treasury Representatives of TEC
and CATB should consult the Procurement Support Bureau (PSB) of the Dept. of Public Finance
before Finalization ,of the Evaluation report and the CATB recommendations. The CATB also
may consult the PSB, if any clarification regarding the tender process is required.
Procurement Planning Meeting
8. In terms of the para 205 and 206 in the Guidelines on Government Tender Procedure applicable
to the foreign funded projects, the Line Ministry Secretary is responsible for to conduct
procurement planning meetings, prepare the Procurement Activity Schedule (PAS) for all MTB
and CATBB tenders under Foreign Funded Projects, provide it to the all connected parties,
monitor the progress against the set procurement activity schedule, and to report the progress
to the PSB to prepare the monthly monitoring report identifying tenders that are failing to meet
, their agreed time schedule. This report will be brought to the attention of the committee of the
Secretaries and placed before the Cabinet Sub-committee on Budget and Tenders.
The Chairman of the CATB/MTB is responsible to keep the Cabinet Sub-committee informed,
if there is any delay in the tender process as measured against the PAS, with the remedial
actions to be taken to overcome such delays.
Authority limits for Projects Funded by Consolidated Fund (CF)
9. The authority limits for projects funded by the Consolidated Fund are increased as per annex
- IV, with effect from 10th September 2002. Guideline No. : 14 of the Guidelines on Government
Tender Procedure will be amended accordingly.
"
10. In terms of Guideline 196 of the Guidelines on Government Tender Procedure applicable to the
foreign funded Projects, the decisions of the MTBB are subject to the approval of the Secretary
'to the Treasury and the Secretary to the Line Ministry is entrusted with such approval, in
future, as the financing agencies are required to give their concurrence for such decisions.
101
10 - H20832
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Payment to Members ofTECC ;.
11.
The payment scheme to the TEC members who are handling CF Funded projects stipulated in
~
Guideline 109.8 of the Guideline on Government TenderProcedure - August 1997 is amended
as in Annex - V.
Procurement of Vehicles for Foreign Funded Projects
12. In the cases where funding has been provided under Foreign Funded Projects, Secretary of
... the Line Ministry is responsible for approving procurement of vehicles. in terms of the guidelines
that will be issued by the Department of National Budget.
Payments to the Officers performing Project Works
13. In the circumstances where it islequired to obtain the services of officers of other government
departments and institutions in surveying for land acquisition, for preparation of drawings
and estimates etc. for expeditious implementation of Foreign Financed Projects, Secretary to
the Treasury will determine the payments where necessary, in consultation with the Line Ministry
and the Project Managers. .
j. CHARITIIA RATWATIE,
, .
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102
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Annex 1
REQUEST FOR APPOINTMENT OF CATB & TEC
FOR PSB OFFICE USE ONLY
MOFP File No. :
Date File Opened:
, I Tender No. :
1. Name of the Project

2. Source of Funding
3. Ministry
4. Executing Agency
5. Description of Tender
6. (i) Value of the Total cost
Estimate (in Rs. Mn.)
(ii) Whether the Total
Cost Estimate is approved
(iii) Whether the Draft Tender
Documents are ready to be
submitted to the TEC
.
(iv) If the issues such as land acquisition, payment of
compensation, re-settlement of people etc. are
involved with this project, give target date tot be
finalized them.
(v) State whether all environmental factors effect to

the project have been cleared. If answer is "No" give
target date to be finalized them.
(vi) What is the total number of days
required for the completion of the
tender. According to the Procurement
Activity Time Schedule (PATS)
(prepared by the Project Director) (PD)
(Please attach a copy)
7. Project Director and/or the Ministry or Executing
Agency Liasion Officer
a. Name
b. Post
c. Address
d. Tele. No.
e. Fax No.
f. E-mail address
8. Proposed Officers for the TEC
Name Designation/Post Institution Expertise Field
i
ii
iii
.
iv
v
vi
vii
Date: .................................... ,..............................................

Signature, Secretary to the Ministry
103
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Annex II
Summary of Responsibilities that should be Delegated to the Project Director by the Secretary
*
authority to handle tenders up to 25 m. to the Project Tender Board, in terms of the Guideline
195 of Govt. Tender Procedure;
*
.. to be the Secretary of the TECC assisting CATBB,MTBB and DTBB, in terms of Guideline 200
of the Gavt. Tender Procedure;
>"
preparation of pre-qualification invitation and is submission to the TEC for review and approval;
>"
preparation of Expression of Interest invitation and its submission to the TEC for review and
approval;
*
preparation of draft bid documents and their submission to the TEC for review and approval;
*
evaluating pre-qualification applications or in the case of consultancy contracts, Expressions of
Interest, and submitting the findings to the TEC and the ,];B for review and approval;
*
evaluating bids and submitting the findings to the TEC and the TB for review and approval;
*
directly respond to requests for clarifications during the pre-qua~ification and bidding phase,
and seek any necessary clarification from tenderers during the evaluation phase, on behalf of
the TEC, \vithout referring to the Tender Board, in terms of Guideline 210 of the Govt. tender
I. Procedure;
*
issuing the invitations and otherwise facilitating the meetings of DTBB, MTBB and CATBB ;
*
taking and circulating the minutes of the meetings of DTBB, MTBB and CATBB ; and,
*
drafting all other documents necessary to complete the procurement including the first draft
briefing note to be submitted to the Cabinet Sub-committee.
I.
104
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Annex 1Il
Recruitment and Performance Monitoring of Project Directors
1. Recruitmentof ProjectDirectorsof projectsshouldbe purelyon competitivebasis. A more rigorous

. . selection criterion will be developed in consultation with financing agencies-
2. The Interview Board for selection of Project Directors of projects over US$ 10 million shall be
chaired by the Secretary to the Ministry of Finance or his representative and for the projects
below US$ 10 million by the Secretary of the Line Ministry/Chief Secretary of the Provincial
Councilor his representative. In the case of former the other members of the interview board
shall be ;
* A representative of Ministry of Policy Development and Implementation

* Secretary of the Line Ministry / Chief Secretary of the Provincial Council
In th~ case of latter, a representative from the Treasury shall be included.

3. After selection he shall enter in to a contract with the Secretary
.. of the Line Ministry. '"
4. Before the beginning of any year, project directors should submit a Work Plan, developed in
consultation with the Foreign Financing Agency for the corresponding year to the Secretary,
Policy Development and Implementation through the Line Ministry Secretary.
5. Semi-annually, based on progress report submitted by the Project Director against the agreed
Work Plan, performance of the Project Director will be assessed by a three member committee,
appointed by the Secretary of MoPD&I.
6. If the performance of a particular project directorfalls well below a defined standard, his contract
will be terminated. He will revert back to the substantive post, if he is a public officer.
105
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Annex IV
Authority Limits for Projects Funded by Consolidated Fund
1 2 3
I I I I
Guideline No. Current Financial Proposed Authority

Authority Limits Limits
Guideline No. 1,4- Limits of

Authority for Tender Awards
1. Head of Dept. Upto Rs. 100,000 Upto Rs. 200,000

2.DTB Upto Rs. 10 Mn. Upto Rs. 20 Mn.
3.MTB Upto Rs. 20, Mn. Upto Rs. 50 Mn.
4. CATB Above Rs. 20 Mn. Above Rs. 50 Mn.
Guideline No. 15 - Minor .

,'J:enderBoards - Staff Officer
not below the rank of Asst.
Head of Dept. subject to
approval of the Head of Dept. Upto Rs. 2 Mn. Upto Rs. 3 Mn.
Guideline No. 45.2 -

Use of ICTAD GCOC for works
or \Vorld Bank Document for
large works (General
ConditionSof Contract). Upto Rs. 500 Mn. Up to Rs. 800 Mn.
Guideline No. 69.1- Limited

Quotations
1. Secretary of a Line Ministry Upto Rs. 10 Mn. Upto Rs. 20 Mn.
2. Secretary to the Treasury Upto Rs. 10 - 20 Mn. Upto Rs. 20 - 50 Mn.
3. Cabinet Above Rs. 20 Mn. Above Rs. 50 Mn.
I.
106
", --
Guideline No. 165 -
Emergency Purchases
1. Head of Dept. , Upto Rs. 10,000 Upto Rs. 20,000
. /
Guideline No. 176-

Exceptions relating to works-
Direct Purchases
Guideline No. 179 - Authority

for deviating from the Tender
Procedure
..

2.DTB Upto Rs. 5 Mn. No change
3.MTB Upto Rs. 10, Mn. No change
4.ST None Up to Rs. 20 Mn.
5. Cabinet Above Rs. 10 Mn. Above Rs. 20 Mn.
I.
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AnnexV
Payments for Evaluation of Tenders (Consolidated Fund)
109.8The Secretary to the Treasury will determine the rates of payments to members of the TECC.
The scheme of payments may provide incentives for early completion of evaluation.
The following scheme of payments will be applicable for the present:
'I 1. Members of TEC assisting CATB/Standing CATB
(i) If the value is Rs. 50 Mn. to 100 Mn. Rs. 1,000 per member per tender.
(ii) If the value of tender is not less than Rs. 100 Mn. - Rs. 2,000 per member per tender.
(iii) If the final report is submitted within 21 days of opening of tenders, the payment may be
increased to Rs. 2,500 and Rs. 5,000 respectively.This will not apply for the tenders handled
by the Standing CATB.
2. Members of TECC evaluating tenders between Rs. 20 Mn. and Rs. 50 Mn. in value.
.
Rs. 500 per member per tender is payable. If the evaluation report is submitted within 21 days of
opening of tenders the payment may be increased to Rs. 1,500.
3. Members ofTECC evaluating tenders between Rs.10 Mn. and Rs. 20 Mn. in value.
Rs. 500 per member per tender is payable.The compositionofTEC should be maximum 3 (three)
members.
4. Members of TECC evaluating tenders between Rs. 2 MD.and Rs. 10 Mn. in value.
Rs. 400 per member per tender is payable. The composition ofTEC should be maximum 3 members.
5. All the above payments should be made per tender and not per meeting and after the TEC
completes its work and submits its report to the Tender Board. TECC should be appointed only
in the cases where the assistance of TEC is extremely required depending on the Degree of the
complexity of the tender.
I'
. 108
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Annexure 28A
Addendum (I) to Public Finance Circular No. : FIN - 358(5)
My No. : FIN - 1076-260-164.

General Treasury,
Colombo 01.
25th October 2002.
To :
Chairmen of State Corporations, Statutary Boards,
Fully Government Owned Companies and Heads of Local Authorities

IMPLIMENTATION OF DEVELOPMENT PROJECTS
YOUR kind attention is drawn to Public Finance Circular No. FIN 358(5) dated 06.09.2002 on the above
subject.
An addendum is made to the Paragraph Six(6) of the Circular No. 358(5) with immediate effect and
the said para should read as follows:
Cabinet approval
6. In future, the recommendations of the CATB, along with a briefing note, will be submitted to
the Cabinet Sub-Committee on Budget and Tenders by the Chairman of The CATB, with a copy
to the Line Ministry. The Secretary of the Line Ministry will consult his Minister and submit
observations, if any, through a memorandum to the Cabinet Sub-Committee on Budget and
Tenders, within two weeks on receipt of CATB recommendations. In any case, the Cabinet Sub-
Committee will forward its recommendations to the Cabinet after two weeks.
The documents to the Cabinet Sub-Committee should be submitted to Dr. R. M. K. Ratnayake,

Addl. Secretary of the Ministry of Finance. The Cabinet Sub-Committee will review the
recommendations of CATB and make its observations to the Cabinet.
CHARITHA RATWATTE,
109
11 - H20832
Addendum (2) to Public Finance Circular No. : FIN 358 (5) Annexure 28B
My No. : FIN-1076-260-164.
General Treasury,
Colombo 01.
13th November 2002.
To :

Fully Government Owned Companies and Heads of Local Authorities.

IMPLEMENTATION OF DEVELOPMENT PROJECTS
YOUR kind attendtion is drawn to the Addendum to Public Finance Circular No. FIN 358(5) dated
25.10.2002 on the above subject and the said addendum is cancelled herewith.
The Paragraph Six (6) of the Circular No. 358 (5) should read as follows :
Cabinet approval
6. In future, the recommendations of the CATB, along with a briefing note, will be submitted to
the Cabinet Sub-Committee on Budget and Tenders by the Chairman of the CATB, with a
copy to the Line Ministry. The Secretary of the Line Ministry will consult his Minister and
submit observations of the Minister, if any, through a memorandum to the Cabinet Sub-
Committee on Budget and Tenders, within two weeks on receipt of CATB recommendations.
If there are no observations, it is presumed that the Ministry has no objections to the
proposals. In any case, the Cabinet Sub-Committee will forward its recommendations to the
Cabinet after two weeks.
The documents to the Cabinet Sub-Committee should be submitted to Dr. R. M. K. Ratnayake,

Addl. Secretary of the Ministry of Finance. The Cabinet Sub - Committee will review the
recommendations of CATB and make its observations to the Cabinet.
Please bring this new arrangement for approval of CATB recommendations to the notice of
your Minister.
J. CHARITA RATWATTE,
110
Public Finance Circular No. : FIN 364 (3) Annexure 29
My No. : FIN-1076-260-180.
General Treasury,
Colombo 01.
30th September, 2002.
To :
Chairmen of Corporations, Boards and Statutory Boards.
IMPACT OF VALUE ADDED TAX (VAT) ON THE TENDER PROCESS
YOUR kind attention is drawn to the Public Finance Circular No. 364 of 20.10.98, 364 (1) of 01.06.99,
addendum to circular 364 (1) of 08.07.99 and 364 (2) of 12.09.01.
Having considered the Vaue Added Tax System which was introduced with effect from
01.08.2002 and the recent tax revisions, the above circulars are repealed herewith, with effect from
01.08.2002.
01. When preparing the estimates :
When annual estimates are prepared by government institutions, provision should be made
seperately in the estimate for Value Added Tax which is 10% or 20% (wherever applicable) of
the net value, in addition to the net value of the estimates.
02. The tenderers, when submitting tenders :
(i) If they are registered for the purpose of VAT, they should indicate the amount of VAT
claimed separately in the bid documents, in addition to the net value of the tender, along
with the VAT registration number.
(ii) If they are not registered for VAT, they shold indicate only the net value of the tender.
03. When evaluating the tenders :
(i) The following taxes will become part of the cost of goods;
(a) Custom Duties and surcharges,
(b) Excise Duties including Special Excise Duties, and
(c) Ports and Airports Development Levy.
(ii) When tenders are evaluated, it should be done without the VAT being taken into account
and tender should be awarded to the lowest evaluated offers excluding VAT.
(iii) If the contract is awarded to a tenderer who is registered for VAT, the VAT of 10% or
20% (wherever applicable) payable to him should be treated as an additional charge and
paid out of provision made in the estimates.
111
(iv) When a contract is awarded to a contractor who is not registered for VAT, necessary
steps may be taken to utilize the funds provided for VAT in the estimates, since the VAT
is not payable to such contractors.
(04) When making the payments :-
(i) In respect of VAT registered persons, the amount of VAT on the value of work done or
goods supplied will be paid by the clients provided such goods and services are not
exempted or excluded from VAT.
(ii) Such payments of VAT should be made after obtaining a "tax invoice" from the supplier/
contractor. This payment of VAT will apply in respect of advance payments as well. No
bonds are required for payment of VAT component.
(iii) When retention monies are paid the relevant amount of VAT should also be paid by the
client.
(iv) Suppliers may charge Turnover Tax (TT) as well (normally at 1%) from the client on the
given sale price of the goods and as such, this amount will form a part of the cost of
goods supplied. However no TT is payable, if a manufacturer supplies the goods
manufactured by him.
(v) No withholding tax should be deducted from payments to be made to any contractor
under VAT. However withholding tax may be deductible under the Inland Revenue Act
for the payment of specified fees.
(vi) Any Continuous supply of goods and services commenced during the GST period and
supplies made or cash paid up to 31.07.2002, the GST at 12.5% should be paid. On the
same contract any supplies made or cash paid on or after 01.08.2002 the relevant rate of
VAT, either 10% or 20% should be paid.
(05) Informing the VAT payments to Commissioner General of Inland Revenue (CGIR)
(I) When the value Added Tax is paid to a tenderer or a supplier with regard to any goverment
procurement, including the hiring of buildings, the Agency making VAT payments that
exceed Rs. 25,000 only should take immediate steps to inform such payments, to the
CGIR in the relevant format except the payments made to following institutions :
(a) Department of Customs

(b) Sri Lanka Port Authority
(c) Sri Lanka Telecom
(d) Lanka Electricity Company
(e) Ceylon Electricity Board
The relevant Institution should obtain a "Tax Invoice" from the tenderer or supplier
showing VAT separately before making such payments.
(II) This information should be furnished monthly, on or before the 15th day of the
following month in respect of each contractor separately, with a copy to the Auditor
General.
N. B.Any clarification with regard to VAT may be referred to the Commissioner General of
Inland Revenue.
N. PATHMANATHAN,
Actg. Secretary to the Treasury.
Copy : 1. Commissioner General of Inland Revenue,
2. Auditor General.
112
,~ ~._-~ " -
Annexure 30
PublicFinance Circular No.: 352(21)
My No.: FIN - 1076-209-203(Vol. VI)

.. Dept. of Public Finance,
Genera} Treasury,
Colombo 01.
15th October, 2002.
To:
Chief Secretaries of Provincial CounciIs,
Chairmen of State Corporations, .
Statutory Bodies and

Fully Government Owned Companies and il
Ii
Heads of Local Authorities. Ii',
l
DOMESTIC PREFERENCE TO LOCAL MANUFACTURERS

~
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ALL provisions, related to the application of domestic preference for procurement under the Consoli-
dated Fund in the Guidelines on Government Tender Procedure (Revised Edition-August, 1997) and in J
I.
I
all subsequent circulars are hereby repealed.
02. New Guidelines on Application of Domestic Preference for procurement unCler Consolidated
Fund will be as follows:
Application of preferences ./
I
I
126. The General Treasury from time to time will determine and notify the quantum of preference
applicable and its eligibility criteria. Reference should be made in the tender documents to the appli-
cability of domestic preference and be considered .when evaluating tenders. The preferences and their
eligibility criteria are as follows:
* 5% preference for Approved Societies

* 10% preference for domestic works contracts (eligibility criteria is more than 50% of Sri Lankan
Ownership of the company.)
* 20% preference for locally manufactured articles subject to eligibility criteria given in the Guide-
line 126.1
Eligibilty Criteria for Domestic Preference for projects Funded by the Consolidated Fund -
Locally Manufactured Articles
126.1 When International or Local Competitive Bids are called and locally manufactured articles
are offered in competition with imported articles. 20% domestic preference should be given to locally
manufactured articles subject to the following:
J,
113
1
!,
jl
'" - . - ~
--- ...d,-, ,,", -......
(i) The input of local labour, local raw materials and local components in any locally manufac-
tured article accounting for at least 30% of the ex-factory price. For this purpose any other
components such as financing cost. factory overheads, depreciation of machines or profit
margin should not be considered as a part of the ex-factory price.
(ii) Production facility must be engaged in production of such articles at the time of bid submis-
SIon.
..
(iii) Other than the BaI projects registered under section 16 of the Greater Colombo Economic
Commission Law (including joint venture companies with majority ownership by Sri Lankans)
articles manufactured under BaI projects are not eligible for this preference.
(iv) It is the responsibility of the tenderer to provide acceptable evidence along with his tender
for the satisfaction of the Tender Board on his eligibility. Tenderers who fail to comply with
this condition should not be considered for domestic preference.
When evaluation of tenders, application of domestic preference should be done in accordance
with the method, prescribed in the annexure attached to this circular.
03., Applicability of domestic preference for procurement under the projects financed by foreign
financing agancies will remain unchanged as in the Guidline No.'"126 of the Government Tender Pro-
cedure, Revised Edition, August 1997 and Guideline No. 126.2 as amended by the Public Finance Cir-
cular No. 352(4) dated 07.04.1998.
F. MOHIDEEN,
Annexure to fhe PF Curricular 352(21)
Application of Domestic Preference (DP) in the Evaluation of Tenders

under Guideline No. 126.1 of the Government Tender Procedure
All offers received should be evaluated in terms of Chapter IX of Guidelines on Government Tender
Procedure (Revised Edition-August 1997), related other circulars and the evaluation criteria given in
the tender document and substantially responsive bids identified. Among those responsive bids, if
there are any bids which are eligible for domestic preference in terms of Guidline 126.1, then the fol-
lowing method should be adopted. .
* In the first instance all the bidders should be divided into two groups., i.e. preference entitled
group and preference not entitled group.
* at the next step, an amount equal to 20% of CIF price of each bid should be added to the
respective evaluated bid price of preference not entitled group, hypothetically for comparison
purpose. In the case of locally manufactured articles which are not entitled for domestic pref-
erence, 20% of the lowest CIF price quoted, should be added.
* Re-rank the bidders on the above basis.
Successful bidder should be decided according to the re-ranking order. However, award price shoLird
be the evaluated bid price of the tender and not the price computed for dertmination of domestic
preference.
114
"
" ",""
-~.,-'""-- .,,'"" c~
Annexure 30A
Addendumto Public Finance Circular No. : 352(21)
i
My No. : FIN - 1O76-209-203(VoI.VI) ili
D~pt. of Public Finance,

. I
General Treasury,
Colombo01.
26th November,2002.
To:

Statutory Bodies and
Fully Government Owned Companies and

..
YOUR attention is drawn

, to the public
- Finance Circular No. 352(21) dated 15.10.2002.
The first paragraph of the Annexure to the Public Finance Circular No. 352(21) is replaced with
the following.
"All offers received should be evaluated in terms of Chapter IX of Guidlines on Govern-

ment Tender Procedure (Revised Edition- August 1997), related other circulars and the
evaluation criteria given in the tender document, without customs duties and other im-
port taxes levied in connection with importation taking into account and substantially
responsive bids should be indentified. Among those responsive bids, if there are any
bids which are eIligible for domestic preference in terms of Guidline 126.1, then the fol-
lowing method should be adopted" '
Guidline No. 62.1.2 of Guidlines on Government Tender Procedure is amended to read as follows.
Custom Duty and other Import Taxes
62.1.2 If Customs Duty and other Import Taxes are paid by or reimbursed by the Executing Agency
as a tender condition it should be applied equally to both articles manufactured in foreign countries
and locally. However, in case where local manufacturer offers locally produced articles in competition
with articles manufactured in foreign countries, custom duty and other import taxes already paid by
him on raw materials or inputs to manufacture the said articles, may be shown separately without
adding to the total tender sum to bring both tenders for locally manufactured articles and tenders
received to supply articles manufactured in foreign countries to same level playing field. After evalu-
ation and comparison, if such tenderer becomes the successful tenderer the actual quantum of taxes
already paid should be added to the tender sum and award should be made accordingly. Determina-
tion of actual custom duty and other Import Taxes should be done in consulation with Director Gen-
eral of Customs or Director General of Economic Affairs and Fiscal Policy of the Treasury.
liS
"' ~'"'-~~'" '---

r
.-...
For the Purpose of this clause, a local tenderer means a Sri Lankan citizen or company reg-
isteredin Sri Lanka with majority ownership by Sri Lankans having registered manufaCturing
plant in the country.
The above concession should be given to a local manufacturer in addition to domestic pref-
erence stipulated in Guidel.ine 126 provided eligibility criteria are fulfilled in terms of Tender
Guidline 126.1(1).
In the case of International Competitive Bidding, a separate format should be issued with the
tender documents to enable the local manufactures to provide information with suporting
document on their entitlement of domestic preference and taxes paid.
N. P ATHMANATHAN,
..
I.
116
~-- ", ~.~~_.. - "'".,""""""-

Second (2nd) Addendum to Public Finance Circular No. : 352(21) Annexure 30 B
My No. FIN-1076-209-203 (Vol. VI)

General Treasury,
Colombo 01.
12th May, 2003

Chairmen of Corporations, Boards
and Statutory Boards,
Fully Government owned Companies and
Project Directors
YOUR kind attention is drawn to the Public Finance Circular No. 352(21) dated 15.10.2002 and the
Addendum dated 26.11.2002 on the above matter.
It has been revealed in several instances that the provisions for application of domestic
preference have not been included in the tender conditions, even in cases where there are local
products to compete with imported articles. As a result the benefit of domestic preference did not
reach the local manufacturers and in few cases it was decided to call for fresh tenders with provisions
for domestic preference, wasting considerable resources. In order to achieve the intended objective
of domestic preference, you are kindly requested to include provisions for application of domestic
preference in all the tender documents enabling all eligible suppliers to quote the prices in such a
way to prove their eligibility. In terms of the amended Tender Guidelines 126.1(1) of Public Finance
Circular 352(21), for computation of ex-factory price of local manufacturers, information should be
obtained as per the attached format which should be an annexure to the tender document.
Further, under the prevailing tender guidelines only the bids of local manufacturers are
considered in application of domestic preference and hereafter, the bids of authorized agents/
distributors of local manufacturers should also be considered for eligibility, provided that the
authorized agents/distributors prove that their local manufacturers are eligible for the domestic
preference. If the bidder feels that his local manufacturer fulfills the required eligibility criteria to
get the benefit of domestic preference for locally manufactured articles, the information as per the
Annexure stated under para (2) should be submitted with the certification of his local manufacturer,
along with the tender.
N. PATHMANATHAN,
117
31
Public Finance Circular No. : 404 Annexure 31
My No. FIN 1076-209-208.

General Treasury,
Colombo 01.
21st March, 2003.

Chairmen of Corporations, Boards and Statutory Boards,
Project Directors.
INTIMATION OF TENDER AWARD
YOUR kind attention is drawn to the Guideline No. 144 of the Guidelines on Government Tender
Procedure on issuing a Letter of Award to the party whose tender has been accepted as soon as the
approval for the award of the tender is received.
The Treasury has observed that there are instances where issuing of the Letter of Award has
been delayed for a considerable period of time even after approving the award by the Cabinet of
Ministers.
In future, it is mandatory to intimate the acceptance of the offer by a letter of Award to the
successful tenderer, within two weeks (14 - days) of the approval of the Cabinet of Ministers or the
appropriate approving authority.
CHARITHA RATWATTE,
118
32
Public Finance Circular No. : FIN. 358(6) Annexure 32
My No. FIN 1076-260-164.

General Treasury,
Colombo 01.
13th November, 2003.

Fully Government Owned Companies &
AUTORITY LIMITS FOR PROJECTS FUNDED BY CONSOLIDATED FUND
YOUR kind attention is drawn to the Public Finance Circular No. FIN 358(5) dated 06.09.2002 and
the Guideline No. 15 of the Guidelines on Government Tender Procedure.
The Treasury has decided to increase the authority limits of the Minor Tender Boards from
Rs. 3mn. to 5mn. with effect from 01st Novermber, 2003.
However, it is the responsibility of the Heads of the Departments to determine the authority
level of the Minor Tender Boards, operating under the respective Departments, subject to the above
ceiling, considering the capacity of such tender boards.
Secretary of the Treasury.
119
Public Finance Circular No. : 344 Annexure 33
My No. : FIN-1076-260-062.
General Tresury,
Colombo 01,
29th December, 1995
To : All Secretaries, to the Ministries

Heads of Departments and Heads of Government Institution,
ARBITRATION ACT, No. 11 OF 1995
ARBITRATION Act, No. 11 of 1995 has been passed in the Parliament and is effective from 1st
August, 1995. This Act has repealed the Arbitration Ordinance No. 15 of 1866 (Chapter 98) and
Sections 693-698 of the Civil Procedure Code (Chapter 101)
2. In terms of this Act where there is an arbitration agreement and either party to the agree-
ment wants to refer the matter to arbitration, it is compulsory to proceed to arbitration. Even Courts
do not have jurisdiction to hear any dispute which is subject to arbitration in terms of an arbitration
agreement, if either of the parties to the said agreement objects to the Court hearing the dispute.
A party to an arbitration held in Sri Lanka is allowed to make an application within 60

days to the High Court if dissatisfied with the award to set aside the award on one or more of the four
grounds referred to in Section 32 of the said Act.
The recognition and enforcement for foreign arbitral awards can also be refused only on the
same grounds. Subject to the said provisions an award of the arbitral tribunal is final and binding on
the parties.
An appeal is allowed from the high court to the Supreme Court on a question of law with
the leave of the Supreme Court first-obtained for that purpose.
All arbitration proceedings commenced after the effective date of the Act should be in
accordance with the provisions of the Act. whether the agreement was entered into before or after the
appointed date. Hence, after this date, appeals submitted for the consideration of central authority
for resolution of disputes will not be entertained by me.
03. Some of the important features of the Act are reproduced below for your information :
(a) Where the State is a party to an arbitration agreeement, the State shall be bound by the
provisions of the Act - (Para 2(3))
(b) An arbitration agreement may be in the form of an arbitration clause in a contract or in the
form of a separate agreement - (Para 3(1))
120
(c) The parties shall be free to determine the number of arbitrators of an arbitral tribunal sub-
jects to sub-provisions - [Para 6(1)] - where there is no such determination, the number of
arbitrator shall be three.
(d) The parties shall be free to agree on a procedure for appointing the arbitrators subjcet to the
sub-provisions - [Para 7(1)]
(e) The awards made by the arbitral tribunal shall be final and binding on the parties to the
arbitration agreement subject to the provisions of the part VII of the Act - (Para 26)
(f) An arbitral award made in an arbitration held in Sri Lanka may be set aside by the High
Court [Para 32 (1)].
04. Hence, Secretaries of all Ministries, Heads of Departments and Heads of Goverment
Institutions are hereby requested to include the dispute settling procedure as stipulated in the said
Act. As contract appeals are dealt with by the Secretary to the Ministry cocerned under the Finan-
cial Regulations, the State has to be represented by the Secretary to the Ministry in the case of
arbitration involving Ministries, Departments and Statutory Bodies.
05. The Treasury Circular No. FIN 308 of 27. 07. 1992 is hererby cancelled.
R. K. H. M. FERNANDO, D. Y. LIYANAGE,
Director General of Public Finance. Acting Secretary to the Treasury.
121

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GUIDELINES ON GOVERNMENT TENDER PROCEDURE

Revised Edition - August 1997

(Includes Circulars issued up to end of 2003)

H 20832 - 1,500 (03/2004) Department of Govt. Printing, Sri Lanka

CHAPTER III Procedure Applicable to Appointment of TBB 9

CHAPTER IV Tender Documents 14

Chapter V Other Methods for Selection of Tenderers 27

Note : * Refer P. F. Circular amendments

Chapter VI Use of Consultants 32

Note : * Refer P. F. Circular amendments

Chapter VII Tender Notification and Issue of Tender Documents 41

Chapter VIII Receipt of Tenders and Opening of Tenders 43

Chapter VIII - (Contd.)

Chapter IX Evaluation of Tenders 48

Chapter X Responsibilities of the Tender Board in Relation to

Chapter XI Implementation of Tender Award 74

Chapter XII Exceptions and Deviations 82

Chapter XII (Contd.)

Note : * Refer P. F. Circular amendments

Appendix I Specimen Form of Tender Notice ........................................................... 97

THE LIST OF PUBLIC FINANCE CIRCULARS ISSUED UP TO 13TH NOVEMBER, 2003

Srl. Circular No. Date Heading of the Circular Page

01 Public Finance Circular 11.02.1998 Tender Evaluation Summary Report 01

02 Public Finance Circular 23.02.1998 Amendments to Guidelines on Government Tender 03

03 Public Finance Circular 02.03.1998 Exemption of 100% Government Owned 06

04 Public Finance Circular 21.05.1998 Speeding up of Tender Procedure 07

05 Public Finance Circular 29.06.1998 New Procedures applicable to International 09

05A Public Finance Circular 03.08.1998 New Procedures applicable to International 11

05B Public Finance Circular 25.09.1998 New Procedures applicable to International 12

06 Public Finance Circular 02.07.1998 Enhancing the Effectiveness of Procurement 14

06A Public Finance Circular 30.07.1998 Enhancing the Effectiveness of Procurement 17

06B Public Finance Circular 11.08.1998 Enhancing the Effectiveness of Procurement 18

07 Treasury Circular No. FIN 352(7) 25.08.1998 Project Tender Boards 19

Srl. Circular No. Date Heading of the Circular Page

08 Public Finance Circular 02.10.1998 Creation of Awareness on Government Tender 20

09 Public Finance Circular 20.10.1998 Award of Contracts to Government Institutions 21

09A Public Finance Circular 10.12.1998 Award of Contracts to Government Institutions 22

10 Public Finance Circular 26.02.1999 Transport by Air - Guideline on Government 24

12 Public Finance Circular 23.09.1998 Acceptable Securities and Guarantees 26

12A Public Finance Circular 06.05.1999 Acceptable Securities and Guarantees 27

12B Public Finance Circular 30.12.1999 Acceptable Securities and Guarantees 29

12C Public Finance Circular 10.03.2000 Acceptable Securities and Guarantees 30

12D Public Finance Circular 22.07.2002 Acceptable Securities and Guarantees 31

12E Public Finance Circular 06.05.2003 Procurement of Insurance Services 32

12F Public Finance Circular 18.11.2003 Procurement of Insurance Services 33

13 Public Finance Circular No. 29.05.1998 Payments to Members of Technical Evaluation 34

Srl. Circular No. Date Heading of the Circular Page

15 Public Finance Circular 29.11.1999 Enhancing the effectiveness of Procurement 37

15A FIN-1076-260-164 04.03.2002 Enhancing the effectiveness of Procurement 64

16 Public Finance Circular 19.01.2000 Guidelines for Undertaking Consultancy work by 65

17 Public Finance Circular 24.08.2000 Appointment of TECC 67

18 Management Services 26.12.2000 Recruitment of Staff for Project Management Unit 68

18A Public Finance Circular 09.02.2001 Amendments to the Guidelines on Government 82

18B FIN-1076-200-209 24.09.2001 Appointment of Technical Evaluation Committees 85

19 Public Finance Circular 23.02.2001 Award of Small Scale Construction Contracts to 86

20 Public Finance Circular 03.09.2001 Amendments to the Guidelines on Government 89

21 Public Finance Circular 17.09.2001 Amendments to the Guidelines on Government 90

22 Public Finance Circular 04.10.2001 Award of Contracts to Contractors Registered 91

Srl. Circular No. Date Heading of the Circular Page