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It´s important to note that procurement is not a single action but a process; a series of activities aimed at meeting the needs of humanitarian projects as well as our operation in general. This process is standardised in such a way that it can be replicated it regardless of the place, time or context. At the same time the process should be flexible enough to encompass each of the different challenges that the purchasing manager faces.

The words purchase and procure are frequently used interchangeably; while common using the two words interchangeably is not necessarily accurate. Purchasing is just a part of the procurement process, an important one, but only the specific function associated with the actual buying of goods and services from suppliers.  For the sake of this guide, procurement and purchasing will be differentiated along these lines. 

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Procurement Principles in the Humanitarian Context

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A best practice might be the segregation of duties segregation among persons with different points of view, knowledge and ideas. Decisions are more likely to be successful when everyone is informed and in agreement. The table below shows different examples on how to ensure the Segregation of duties:

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Humanitarian aid has evolved its own defacto code of conduct. This set of principles has led to the development of multiple norms, or even rules, that agencies observe while implementing programs. There are - for example - codes of conduct, which are understood and signed by all employees which may include rules that humanitarian staff:

  • Do not use their authority or status for personal gain.
  • Maintain a high level of integrity and ethics in business relationships.
  • Use the resources and assets of the organisation responsibly.
  • Do not accept personal gifts from suppliers or engage in any other anti-competitive conduct.
  • Act and behave in a professional manner as representative of the organisation and donors, and avoids anything that could bring discredit to the organisation or donors.

When possible it is best practice to include ethical requirements in published tenders, and use ethical requirement compliance as part of the selection criteria. Frequently suppliers do not have standard certifications, nor are they used to complying with ethics standards, which is why it is important to conduct a good market analysis. It is also important to conduct regular visits to suppliers' premises to evaluate their ways of working.

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  • An employee, directly or indirectly, appears to benefit improperly from a procurement activity.
  • A third-party benefits improperly from his/her association with an employee.
  • Any person within an organisation holds a financial interest in an enterprise that engages in any business or transaction with the organisation.

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Goods/Supplies

The goods or supplies category includes the purchase of tangible items and/or their interrelated sets. In general, a market is considered as goods/supplies when there is a transfer of ownership of tangible products.

A product is defined by two elements:

  • Technical specification or detailed description (including images if necessary)
  • Purchase Unit (Kg, Lt, piece, etc)

All the costs associated to production, preparation, installation, maintenance and disposal related to the purchased products (total cost of ownership), can be considered as part of goods market if the additional services have been procured, delivered and invoiced together and as long as these costs remain lower compared to the total purchase cost.

The typical purchases in the goods market are include food, tools, construction materials, office supplies, equipment, etc.

Construction/Maintenance

Construction/maintenance is a market category that includes the design of the work and/or its execution in accordance with the previously specified requirements.

Construction/maintenance procurement and monitoring procedures usually includes visiting the place where the works should be performed with potential contractors, allowing them to better understand what is needed and the requirements in order to make a more accurate offer. As the works usually takes time to be finalised, an execution timeline must to be included in the plans as well as moments where inspection visits have to be performed.

Common examples are; a building rehabilitation (in full or part), any kind of construction, road sections, etc.

Services

The services market category includes the intellectual and non-intellectual services that do not fit in goods and works markets definitions. Evaluations, technical assistance, or any other activity not involving the transfer of a tangible product are considered as a service.

Under this market its possible to hire the services of dispatchers, lawyers, consultants, translation services, transport, etc.

Property/Rental

Property/Rental markets refer to the rental of real state, whether land or buildings, regardless of their purpose. This market possesses certain characteristics that makes the sourcing and selection process slightly different from the other markets:

  • There are no suppliers or provider but landlords.
  • There is no transfer of ownership but right of use for a period of time.
  • There are specific laws applying to property.

The complexity of of the property market means it is difficult to measure two or more premises exactly by the same criteria. While there are some similar comparable aspects such as the location, the structure, the internal distribution, security considerations, makes the selection process more complex. Logistics personnel associated with procurement must evaluate the local market (actively) and choose the more economical option that fits the initial requisites as much as possible.

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  1. Sourcing and Identifying Vendors
  2. Product/Service Requisition 
  3. Solicitation 
  4. Evaluating and Awarding
  5. Ordering and Contracting
  6. Reception and Payment 


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Sourcing and Identifying Vendors  

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These formal requests should be based on templates that will allow users to build a more accurate opinion about view of the product or service that we pretend to acquire and its their availability in the context we are workingof operation.

Product and Service Requisition

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One of the best ways to assure that each request is well presented, understood and agreed among all the units involved in the process  is to create a coordination space to do it. The usual coordination tool is the implementation of a recurrent meeting between requestsrequesters, heads of unit, and the procurement team where the requests can be discussed and validated.

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In general, any Solicitation document, no matter the procedure, will contain:
What is Required
  • Depending on the nature:
    • For goods; Technical specifications or statement of work (SOW) (Functional, conformance and performance Specifications for products).
    • For services; Terms of Reference (TOR) (background, objectives, deliverables, standards to be met, performance evaluation method, timelines, etc.).
    • For construction works or services; Statement of works (SOW) shall provide all information required to allow the contractor to undertake the works (e.g., location, time schedules for the execution of the works, relevant information about the construction site and other technical requirements that are deemed necessary).
    • Quantities
  • Expected Delivery Conditions; times, locations, Incoterms 
Instruction to suppliers
  • Instructions for preparation and submission, submission language.
  • Timing: deadline for submission, offer validity and expected award times.
  • Details of pre-bid where applicable. (meetings/site visits, and/or samples/ demonstrations).
  • Provision of prototype samples of products were required. 
  • Method of evaluation and evaluation criteria, including permitting third party inspection -party inspection companies where required.
  • Payment terms.
  • Contact information.
The applicable Terms and Conditions
  • Ethical policies to be adhered by the supplier.
  • Special conditions applicable as; Termination; Trade Terms; Inspection; Warranties; Rights and Obligations; Remedies; Subcontracting; etc.

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Contracts with suppliers - Material specifications included in contracts will legally hold vendors to the standards set by their bids. The material specifications in contracts should match the specifications provided in the bid process.

Instructions to third-party inspection companies - Once a vendor is selected, and a contract agreed upon, third-party inspection companies can be used to test products against the contracted material specifications. Inspection companies may use visual inspection or laboratory testing to confirm all material specifications are met. Many agencies prefer to receive prototype samples of items prior to the final order, and conducting inspection at multiple points throughout the entire process. Purchasers may also chose to withhold payment until the final inspection is complete. 

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Some agencies my prefer the use of some form of a Long-Term Agreement (LTA), where by a supplier is pre-vetted using a standard solicitation process, but has an open-ended contract for delivery of goods and services. Requesting agencies holding LTAs with vendors can use simple notifications for procurement needs, such as a PO, specifying units, quantities, delivery details, and other important information. The theory behind an LTA is that a single supplier used for routine procurement can be competed and vetted once in a preset pre-set period of time instead of having to bid eveyr every time. 

The act of signing the PO - and the organisation´s Terms and Conditions - by the supplier makes the PO become a simplified contract. An organisation should establish a threshold beyond which the relationship can no longer be formalised through a PO and a contract becomes necessary. Irrespective of the procurement method, each organisation´s Terms and Conditions (TC) must be applied, and it is advisable to attach TCs to all contracts and POs. 

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The transfer of responsibility between the seller/carrier and the agency is a key an important moment in the procurement process. The transfer of responsibility can be done in at the manufacturer/seller premises, or be undertaken fully by the supplier who will be responsible transporting the cargo to the agreed destination, either the agency . An agreed destination can be either an agency's premises, warehouse,   and or in special cases directly to the beneficiaries. The most standard used method of defining the method and location of the transfer of responsibilities is through defining Incoterms in the procurement contract. Incoterms are only applicable for international procurement however, so the transfer of responsibility in domestic procurement may need to be spelled out explicitly. In every case, the transfer of responsibility has to be clearly recorded through the standard set of shipping documents.

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A purchase dossier might contain:

  • The fully signed Procurement Request that initiated the process.
  • The Purchase Order signed by the relevant persons.
  • Copy of the invoice.
  • Proof of delivery of the items might include one of the following:
    • Supplier’s Delivery Note.
    • Internal Reception Note when delivered without supplier delivery note.
    • Internal Delivery Note when delivered to the requester without supplier delivery note.
    • Original invoice, ideally with some form of formal approval written on it.

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A purchase dossier ideally should contain:

  • The fully signed Procurement Request that initiated the process.
  • The originals of the different suppliers’ quotations received and the request for those quotations (especially if no quotes were received).
  • The negotiated procedure evaluation table with all necessary validations, along with an explanatory note, if relevant.
  • The PO or Contract signed by the parties.
  • Copy of the invoice, ideally referencing the solicitation number or other tracking number. 
  • Proof of delivery of the products:
    • Supplier’s Delivery Note.
    • Reception Note when delivered without a supplier delivery note.
    • Internal Delivery Note when delivered to the requester without a supplier delivery note.

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Sometimes it is difficult to get an idea of ​​a supplier only through official bid documents. Purchases may want to visit the suppliers in their workplace, especially when agencies intend to start a lasting relationship with a given supplier. Do not underestimate the power of an in-person conversation, or the details that can be learned by knowing their facilities.

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Helpful steps to follow:

  • Establish a first contact with the supplier.
  • Analyse supplier capacity and professionalism: number of workers, work methods, general cleaning, etc.
  • Analyse the products or services available. Where does the supplier buy , how do they bring them. the product or raw material? How are products delivered? Can they import better/cheaper products?
  • Understand the supplier's business model, its challenges, its sources, its problems.
  • Gather information that would never otherwise be reflected on paper.
  • Identify other possible selection criteria in addition to price.

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Supplier management is a set of principles, processes, and tools that can help organisations maximise supplier relationships, minimise risks, and manage overheads throughout the entire relationship life-cycle. Active supplier management entails creating closer and more collaborative relationships with key suppliers to achieve greater value and reduce risks.

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It is important to know specifications of the products or services required, the legal framework for their acquisition and their availability in the market. Not taking these three concepts into account increases the risk of not finding required items, procuring incorrect items, or not respecting local norms and behaviours when purchasing them.

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Sometimes organisations do not have the capacity to assess in these terms for each supplier, however there are audit companies and standard certification organisations that can. Agencies should seek these third-party agencies out and/or include those certifications as criteria for vendor selection.

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  • Visual Inspection – If a vendor supplies prototype sample prior to final delivery, organisations or specialists may wish to visually inspect and test the product, either at the vendor premise or at another off-site location.
  • Laboratory Testing – In addition to visual inspection, agencies may wish to employ third-party laboratory testing. Lab testing may include testing for chemical composition (for durable construction materials or for pharmaceuticals), may test against pre-defined ISO standards (such as flame retardancy of NFIs) or even the quality of food stuffs.
  • Third-Party Inspection – Many agencies wish to employ third-party inspection companies to carry out quality assurance. Third-party inspection companies will generally conduct lab and visual product testing, but may also visit suppliers' warehouses and production facilities throughout the production process to ensure full compliance. Organisations that utilize third-party inspection services may want to include the obligation of suppliers to allow third-party inspection companies into production sites without advanced notice to enhance the randomness of the process.
  • Provision of Certification – Simpler than conducting independent laboratory testing, suppliers may be asked to produce certificates indicating conformity or quality. Typically, this pushes the cost and complexity of laboratory testing onto the vendor, but may also lead to forgery or fraud as the inspection process is out of the hands of the procuring agency.

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  • Fraud is defined as any intentional act or omission, designed to harm others, with the result that the victim suffers loss or damage and / or the pepetrator perpetrator makes a profit.
  • Corruption is the misuse of a power entrusted by delegation, for private purposes, such as personal enrichment or that of a third-party, a friend, a family member. It consists of refraining from doing, facilitating something, or taking advantage of its function in exchange for a promise, a gift, a sum of money, or advantages of various kinds.
  • Misappropriation consists of the theft or misuse by any means of a resource or material owned by a third-party.

We can place these three at the same level - they are all improper conduct. This guide will refer to fraud and anti-fraud policies when referring to all three of the aforementioned categories. To deal with fraud, it is necessary to for organisations establish an anti-fraud policy document. Likewise, the entity must periodically assess the exposure to the risk of fraud.

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Related to Personnel

  • Manipulation of the evaluation criteria after the opening of the tender.
  • Contracts awarded by single source or non-competitive process.
  • Requirements defined in a way that only a specific manufacturer or supplier can meet.
  • Multiple purchase requests started in close proximity for similar requirements to avoid boundaries threshold.
  • A staff member does not separate duties.
  • Excessively narrow or wide specifications.
  • Officials do not delegate their responsibilities or they refuse to go on vacation.
  • There is no clear information on the presentation of offers.
  • Inadequate documentation (no PR, OC, CBA and GRN).
  • Overly friendly relationship between a provider and a any persons conducting procurement.
  • Unusually high exemption rate.
  • Tender announcements scheduled to match with holidays.

Templates and Tools

TEMPLATE - Purchase Request

TEMPLATE - Bid Matrix

TEMPLATE - Purchase Order

TEMPLATE - Purchase RequisitionTender Report

TEMPLATE - Supplier List

Full Template Package

Sites and Resources

  • Sphere Project, Handbook (2018)
  • International Review of the Red Cross (2016). Principles guiding humanitarian action.
  • CALP The Cash Learning Partnership (2018). Minimum Standards for Market Analysis (MISMA)
  • ECHO, European Commission Directorate General for Humanitarian Aid (June 2019). Guidelines grant/contribution agreement with humanitarian organisations
  • ECHO, European Commission Directorate General for Humanitarian Aid (May 2020). Framework partnership agreement with humanitarian organisations
    • ANNEX III; General Conditions
    • ANNEX IV; Rules and procedures applicable to Property, Supply, Works and Service Contracts Awarded within the Framework of Humanitarian Actions Finance by the European Communities
  • ICRC, International Red Cross and Red Crescent Movement (2014). Market Analysis Guidance
  • ICRC, International Red Cross and Red Crescent Movement (2014). Rapid Assessment for Markets
  • WFP, World Food Programme, (2020). Goods and Services Procurement Manual
  • SC, Save The Children; Procurement guidelines
  • ACF, Action Against Hunger; Supply Chain guidelines
  • PARCEL Project 
  • Humanitarian Logistics Association (HLA) 
  • Core Humanitarian Standard 
  • Universal Logistics Standards in Humanitarian Logistics (ULS) 

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