disposal of public assets

8/13/2019 Disposal of Public Assets

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Public Disposal Methods

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LEARNING OBJECTIVES

Highlight Legal requirements forDisposal Planning

Highlight the Disposal cycle

Appreciate contents of a Disposal

Plan

Understand key steps in Disposal

Process

Appreciate the methods of Disposal

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Learning outcomes

At the end of this session, participantsshall be able to:-

Define disposal of Public assets

Explain the different methods and

rules of disposal

Outline the stages involved in the

disposal

List the types of documents commonly

used

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Definition of Disposal

The Act defines disposal as the divestiture ofpublic assets, including intellectual and

proprietary rights and goodwill, and any

other rights of a PDE by any means,

including sale, rental, lease, franchise,

auction, or any combination however,

classified other than those regulated by the

Public Enterprise Reform Divestiture(PERD) statute, 1993.

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Disposal Planning

The Accounting officer shall ensure that theassets of a PDE are reviewed on an annual

basis, to identify those which are obsolete

and should be subject to disposal.

Assets to be grouped in contracts or lots.

Board of survey may be used to identify

assets to be disposed off on a periodic

basis.Refer to Regulation. 295

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LEGAL REQUIREMENTS /RESPONSIBILITY FOR

DISPOSAL PLANNING

Sections 34(1) and (2) of the Act specifies keyfunctions of the User Dept some of which are:

To initiate disposal requirements

The Procurement and Disposal Unit should plan allprocurement and disposal activities (Sections 31(f)of the Act) and aggregate all the individual user deptplans into annual and multi- annual consolidatedprocurement and disposal plans

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LEGAL REQUIREMENTS /RESPONSIBILITY FOR

DISPOSAL PLANNING- contd

Section 58 of the Act emphasizes that

Disposal planning must be rationally

planned in such a way as to:Avoid emergency disposal

Aggregate requirements

Avoid splitting of requirements Integrate disposal of all assets in the PDE

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CONTENTS OF A DISPOSAL

PLAN Detailed description of asset to be disposed off

in order of priority

Type/category and lots of assets

The quantities of assets and the unit of issue

Location of assets Year of purchase

Expected/Actual life span of asset

Brief justification for disposal

The estimated value Confirmed source of funding for the disposal

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CONTENTS OF A DISPOSAL

PLAN - continued

Proposed method of disposal for each

or group of asset(s)

Time when each asset will no longer be

required by the user department

Total time the disposal process will take

Required level of approval for each or

group of asset(s)

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Disposal Initiation

User department or PDE shall initiate theprocess for assets under its management.

Initiation may follow recommendation of a

board of survey. Use DPA Form 120

Disposal requirement shall be allocated a

specific reference number.

Refer to Regulation. 296

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Methods of Disposal

Public auctionPublic bidding

Sale to public officers

Direct negotiationsTrade-in

Transfer to another PDE

Conversion or classification of assets into

another formDestruction of assets

Refer to Regulation. 297 to 305

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When selecting method, PDEs to

consider Potential market value of the asset The volume of the asset, whether one-off or

bulk.

The number and location of potentialbidders

The location of the asset

National security and public interest issues

Health and safety issues Legal or human rights issues

Environmental considerations

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Valuations

A PDE to obtain two valuations of an assetprior to commencement of any disposal

proceedings.

If required by law, first valuation to beobtained from a competent authority and a

second independent, market-based

valuation to be obtained from an

appropriate authority or provider.

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Public Auction

Conditions for use of this method

Existence of a large number of potential bidders orassets to be disposed.

A public invitation notice using at least one

publication of wide national circulation. Display on PDEs notice board and PPDAs

website.

Any other appropriate media such as radio.

No formal solicitation document

Bids shall be presented orally and bid to beevaluated on the basis of price.

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Public Auction contd

No minimum bidding period

No negotiations

Contract to be orally awarded to the bidder offering

the highest price as determined by the auctioneer

and shall be announced at the auction.

Successfully bidder shall pay at least 50% of

contract price immediately after award of contract,

balance within 5 working days of award of contract.

Refer Regulation 298 & Regulation 306

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Public Bidding

Conditions for use of this method

High-value or unusual assets

Assets located in remote areas

Where conditions need to be attached tothe sale of the asset

Where post-bid negotiations may berequired.

Public invitation notice. Advertisement for atleast 4 working days.

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Public Bidding contd

Minimum bidding period shall be 10 workingdays.

PDE to request for a written sealed bid.

Evaluation based on price only shall be thepreferred evaluation methodology.

Contract placement shall be by issue of a

contract to a successful bidder.

Refer to Regulation. 299 & 308

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Sale to Public Officers contd

Public officer initiating disposal shall not participateas a bidder.

Bids shall be solicited by the publication of a non-public invitation.

Advertising period shall be at least 4 working daysand bidding period shall be 10 working days.

Written sealed bids

Evaluation based on price only.

PDE to send PPDA copies of all bids received,evaluation report and contract awarded.

Refer to Regulation 300 & Reg.309

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Direct negotiations

Conditions and rules for use of this method

The market is limited and a single buyer is willing

to pay reserved price

National security, public interest, legal,

environmental considerations or human rightsissues are served by selling to a particular

company, group or individual.

A potential buyer is a tenant, occupier or user of an

asset at the time of the decision to dispose.

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Direct negotiations contd

An asset is located on a potential buyers premiseson hire or free-use basis and it is reasonable to

give that person first option to buy the asset at a

market rate.

No minimum bidding period. Bidders to submit written sealed bids

Evaluation based on price only

Evaluation based on price and other factors may

also be used.

Refer to Regulation. 301 & 310

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Trade-in

Conditions and rules for use of this

method

Where the trade-in of surplus assets to

offset the purchase price of new itemsprovides a convenient, economic and

efficient way of upgrading equipment.

The disposal process shall be an integral

part of the procurement process.

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Transfer to another PDE

Conditions and rules for use of thismethod

Where another PDE can make further useof an asset.

Cost to be agreed by the two PDEs.

Transfer may be at no cost, if it isuneconomic to charge for the asset.

A recipient PDE shall issue an authorizedreceipt for the asset to the originating PDE.

Refer to Reg. 303 & 312

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Description of Assets

Solicitation documents or notices, andany other additional information made

available to a prospective bidder shall

specify that the asset is to be sold onan as is, where is basis and shall

disclaim all liability after sale.

No warranty required.Refer to 316

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Inspection of assets

PDE to offer reasonable a reasonableopportunity to potential bidders, to

inspect an asset before the date or

deadline for bidding.Arrangements for the inspection of the

assets shall be included in the

invitation notice or bidding documents,where appropriate.

Refer to Reg. 321

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Negotiations

Under public bidding, negotiations mayrelate to the conditions of sale, where

evaluation is based on factors other than

price, and shall not relate to the price of the

bid.

Under direct negotiations, negotiations may

relate to the conditions of sale, where

evaluation is based on factors other thanprice.

Refer to Reg. 332 & 333

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Reserve price

If best evaluated bid is less than the reserveprice, a contracts committee inconsultation with an accounting officermay-

Obtain a further valuation from anindependent source.

Negotiate under direct negotiation

Arrange for new bids to be submitted.

Use of alternative method

Sell at the reduced price

Refer to Reg. 334

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Record of Disposal Activities

PDE shall maintain a record of itsproceedings and contract

management for a period of seven (7)

years from the date of a decision toterminate a disposal activity or the

date of completion of a disposal

activity, whichever comes first.

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disposal of public assets

Documents