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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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A filing system has no value if the documents are not duly completed and signed. Only employees to whom such responsibility has been formally assigned should be authorised to sign documents. Those employees must understand the meaning of their signature in terms of their responsibilities and consequences for the organisation. Files must be kept for months or years, depending on donor requirements or internal audit guidelines. 

Standardisation Tools

Codes

Most of the forms handled by logistics personnel have or should have specific codes (references) that allow them to be connected and subsequently tracked. Typically, a form includes its own reference for easy identification, as well as one or more references to link it to the other documents. Forms are filed according to their references, and the proper use of references has a direct impact on the archive. When someone (internal or external) needs information about the history of our operations, the correct use references (encoding) facilitate access.

These codes might include information about the country, the office and the department requesting the purchase plus a running number. An example might look like:

As an example, a purchase requisition for the logistics team in Rome, might follow the below convention.


HTML
<center> <table width="700" style="border:#ffffff thick solid; text-align:center">
<tr>
<td bgcolor="#e0e0e0" width="200"><center><font size="5">
Unique Number
</td>
<td bgcolor="#e0e0e0" width="200"><center><font size="5">
Document Type
</td>
<td bgcolor="#e0e0e0" width="300"><center><font size="5">
Country 
</td><td bgcolor="#e0e0e0" width="300"><center><font size="5">
Sub-office
</td>
<td bgcolor="#e0e0e0" width="300"><center><font size="5">
Department
</td>
</tr>
<tr>
<td bgcolor="#f1f1f1"><center><font size="10">
1234
</td>
<td bgcolor="#f1f1f1"><center><font size="10">
PR
</td>
<td bgcolor="#f1f1f1"><center><font size="10">
IT
</td>
<td bgcolor="#f1f1f1"><center><font size="10">
RM
</td>
<td bgcolor="#f1f1f1"><center><font size="10">
LOG
</td>
</tr>
</table> </center>

Labelling

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tr>
<tr>
<td bgcolor="#e0e0e0"><center><font size="4">

</td>
<td bgcolor="#e0e0e0"><center><font size="4">
Purchase Requisition
</td>
<td bgcolor="#e0e0e0"><center><font size="4">
"Italy"
</td>
<td bgcolor="#e0e0e0"><center><font size="4">
"Rome"
</td>
<td bgcolor="#e0e0e0"><center><font size="4">
"Logistics"
</td>
</tr>
</table> </center>


When written, the code might look like:


HTML
<center><font size="12">
1234/PR/IT/RM/LOG</font>
</center>


This short hand code will allow any person to quickly identify documents and know at least some level of information about the document. The order types of information are specific to the agency managing the files, however. Some agencies may wish to use the date as a unique code, while others may choose to use a running number sequence. Also - some agencies prefer to have unique number sequences for each document type (PR/PO) while others may want to have singular numbers that do not change throughout the different documents within the dossier. The need for each will be specific to individual agency's needs. 

Labelling

Large volumes and types of documentation are common in emergency response. Labelling each folder and/or box in the most harmonised way possible with the thought process of who will coming after the initial response phase is important. The common archiving approach allows documents to be tracked more easily, while also allowing sensitive files to be identified faster in an emergency. All related folders must be clearly labelled . A and separated using a colour, number, or other identifiable pattern should be set to help determine what to do with those files based on the security level. This measure should also be applied by the other departments, especially finance and human resources, and stored in a safe, dry and secure location. Electronic filing systems should match paper files.

Procurement Process

Procurement is common - almost everyone does it automatically every day. However, for a procurement officer, procurement is a challenge in itself. Humanitarian logisticians purchase using funds provided by external donors to buy items and services defined by other colleagues with the aim to cover beneficiary needs. In order to align all those interests becomes essential to have some norms and tools.

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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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  • The requesting unit.
  • The requirements, including the criteria for evaluation.
  • The quantity.
  • The Estimated cost or the maximum authorized authorised amount to be spent (If possible).
  • The Delivery delivery date and location.
  • Confirmation that funds are available.

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In other words, the requester should fill the format with the information provide all information and fill out forms as agreed during planning. If a pre-plan was not done, the request may have some delays while the feasibility is assessed.

The PR is usually the standard and official form to request a purchase. The PR is where the different members involved in the procurement process combine and validate the details, turning these requests into commitmentsactual procurement:

  • The requesting unit undertakes that all information included in the PR is accurate and sufficient. Attaching detailed specifications if necessary.
  • The procuring unit undertakes to provide the requested goods or services as stablished established in the PR respecting quality, price and lead time.
  • The financial unit undertakes to release the available funds.

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 requestorsrequesters, heads of unit, and the procurement team where the requests can be discussed and validated.

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Once potential suppliers have been selected (or before launching an open bidding process), solicitation documents must be carefully prepared. The way in which these offers are solicited and received conditions impacts the rest of the process; there is an inverse and direct relationship between what is solicited and what is offered. Procurement teams will only choose from the options offered by the providers, but what is offered largely depends on how and what the providers have been asked to offer. That is why the specifications Specifications of required products or services must be clear, and the terms of the requested bid must be well defined.

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The documents involved in the solicitation process can be different depending on the type of competition that applies (see Procurement Procedures) and the nature and complexity of the good and services being procure. It is important that all documentation contains details on procedural, technical, financial and contractual components, which suppliers must follow when submitting their offers. They These documents are build based on templates, customized customised to fit the specificities specificity of the procedure undertaken and completed with the details applicable to each solicitation.

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.

The solicitation document must to be distributed simultaneously among the preselected pre-selected suppliers with sufficient time to analyze analyse and properly build offers. The solicitation document could contain a standard submission format facilitating the comparison among the offers during the evaluation phase.

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  • Unit measurements (weight, volume).
  • Packaging measurements (weight, volume).
  • ColoringColouring/Visual appearance.
  • Chemical composition.
  • Conformity to specific ISO standards.
  • Strength/durability.
  • Packaging and handling specifications.
  • Branding and marking specifications.

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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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Item TypeSome products with well established designs - such as machine parts - might require less spelled out specifications, and might rely more on specifying product capacity or functionality. Other products frequently used by the humanitarian sector - such as household products - are far more defined by specific needs, and are often combined with mutually recognized recognised standards such as SPHERE. Though humanitarian agencies may have specific needs, the global understanding of those needs among vendors may not be well understood. For this reason, specifications for products specially developed or used for humanitarian interventions tend to be more explicit - usually the product is "developed" along side the vendor to match the purchasing agency's needs.
Agency Needs

Humanitarian agencies purchasing a small quantity of an item, or that buy already standardized standardised products may have very little need to explicitly state product material specifications. However, agencies that purchase large quantities of one type of specialty special product from a long term supplier or limited series of suppliers are more likely to have more advanced material specifications in their contracts.   Detailed product specifications will help vendors source the correct raw materials, and will help keep quality assurance up.

MarketsCommonly used large international vendors are usually more likely to be able to meet detailed product specifications requested by humanitarian agencies. The manufacturing capabilities and raw materials available to local companies may not meet the overall requirements of the requesting agency for key relief items. The balance between international and local procurement is something agencies must weigh, depending on local laws, import and transport costs, the ethics surrounding procurement, the desire to support local markets, and overall project needs.

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BLANKET, SYNTHETIC, 1.5x2m, high thermal

Samples for testing purpose


Samples of blankets must be from compressed bales.

All criteria to be passed on the same sample.

(Samples of compressed bales to be prepared with only 5 blankets folded once more than in normal bales, at 60% compression ratio, and to remain compressed for one week minimum before testing).

Make

Knitted or woven, dry raised both sides. If any, inner layer can be non-woven type.

Content ISO 1833 on dry weight

100% pure polyester and/or acrylic fibres or polyester/cotton

Colours

Other than black, red, or white, dark uniform colour.

Size

150 x 200cm +3%/-1%. To be taken on flat stabilised sample, without folds.

Weight

500g/m2 minimum maximum 1000g/m² weight determined by total weight/total surface.

Thickness ISO 5084

9.5mm minimum (1KPa on 2000mm²)

Tensile strength ISO13934-1

250N warp and weft minimum

Tensile strength loss after washing ISO13934-1 and ISO 6330

Maximum 5% warp and weft after 3 consecutive machine washing at 30°C and one flat drying.

Shrinkage maxi. ISO 6330

Maximum 5% warp and weft after 3 consecutive machine washing at 30°C and one flat drying.

Weight loss after washing

Maximum 5% after 3 consecutive machine washing at 30°C and one flat drying.

Thermal resistance ISO 11092


Rct= 0.40m².K/W minimum, rounded to the nearest 0.01, passed on samples picked from compressed bales.

Mechanical conditioning: after opening of the bale, the blanket shall be dry tumbled in a dryer (500l minimum capacity) without any other load for 15 minutes at a temperature of less than 30°C. Then, the blanket shall be conditioned for at least 24 hours by flat lying at ambient conditions (20°C and 65% Relative Humidity).

Resistance to air flow ISO9237 under 100Pa pressure drop

Maximum 1000 L/m²/s

Finish

Whipped seam at 10mm from the edge with 10 to 13 stitches/10cm or stitched ribbon or hemmed on 4 sides. Corners can be round up to 10cm radius, or square.

Organoleptic test

No bad smell, not irritating to the skin, no dust. 4<pH<9.

Free from harmful VOC (Volatile Organic Components).

Fit for human use.

Fire resistance ISO12952-1

Resistance to cigarette - No ignition

Fire resistance ISO12952-2

Resistance to flame - No ignition

Primary packing

No individual packing of the blanket, in order to reduce plastic wastes in the environment.

Packing

  • Bales to be wrapped in a water-tight micro perforated plastic film and covered with a polypropylene or jute woven bag.
  • Quantity per bale: 15pieces15 pieces.
  • Compressed and strapped with 5 straps (2 lengthwise, 3 crosswise).
  • Bales dimensions: Length 85cm +/-5cm, Width 55cm +/-5cm, Height 75 cm +/-5 cm (height of the bales to be compressed by maximum 60% from free state to final compressed and strapped state)

Marking on the blanket

Every blanket should include a tag, stitched in the hem. The tag should include the manufacturer’s name, a unique reference batch number and the date of manufacturing. No company logo should be included with the manufacturer’s marking.

Marking on the package

BLANKET, SYNTHETIC, 1.5x2m, high thermal – 15 pieces.

Other markings as specified in contract.

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Many agencies may choose to use what is known as a Bid Evaluation Committee/Panel bid evaluation committee/panel to properly facilitate the process of analyzing analysing and scoring incoming offers in a fair and transparent way. After properly recording every step undertaken during solicitation process, and before bids are open, the Evaluation Committeeevaluation committee/Panel panel will join together to study the offers. The Evaluation Panel An evaluation panel composition could be as simple as two people (requester and purchaser) performing and informal evaluation or be regulated formally and integrated by teams of different departments. No matter the value of the procurement or procedure followed, there should always be a set of people to respect the segregation of duties principle. In the case of the most restrictive procedureprocedures, it is common to form it evaluation teams at the very beginning of the process, officializing it formalising the process by signing a “Declaration of Objectivity and Confidentially” and /or a “Disclosure of Conflict of Interest”.

The offers should be evaluated using the criteria and weight specifications of each previously communicated PRs/bid solicitations, or any other part of the process prior to receiving bids.  Common offer evaluation criteria might include:

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  • Objective - criteria that are verifiable and designed to measure facts rather than assumptions and promises from the supplier. Objective criteria are tangible, with little likelihood of being construed differently by different suppliers.
  • Unambiguous - there should be no confusion or overlap in the criteria selection, description and evaluation.
  • Reliable - clear and measurable criteria that can be evaluated consistently across multiple submissions and evaluators.
  • Fair - criteria that do does not unduly exclude suppliers from the procurement or give undue advantage to a specific supplier.
  • Balanced - criteria with appropriate and defensible weightings when viewed objectively in the context of the procurement action.

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To be able to present the evaluation results, is common practice to make a summary document, either in the form of a comparative table or a full report that has be signed by all the member of the Evaluation Panel. In any case, any evaluation panel. Any summary document must have a reasoned recommendation on the supplier selection and contain as many explanations as necessary about this selection.

Once the proposal to award a supplier has been validated, the selection of the suggested supplier should be validated by the requisite internal approval process of the agency. The award decision should be communicated to the winning supplier, and unsuccessful suppliers shall be notified establishing a mechanism able to debrief them and take note of any possible complaintcomplaints.

Ordering and Contracting

Each order has to be formalized by modifying the standard templates for this purpose, the contract or the simpler formalised through a contract, Purchase Order(PO), or other official award document. 

  • POs are a financial commitment that confirms the purchase details (Units, quantity, price, delivery time and Location, etc), officialising formalising the Orderorder. The PO is used for simpler orders, one-off purchase and smaller amounts, where there is no need to define any complex situation, and/or where the purchase represent low risks for the organisation.
  • Contracts are legally binding agreements between the organisation and the suppliers. They define the Terms and Conditions for the good goods and services provisionprovided, as well as the signatories related rights and obligations. (see Contracts ). Contracts are used when there is a need to specify the conditions in a complex order (partial deliveries, different timings or location, special conditions of the product, high financial volume or potential risk for the organisation, etc) and always for a work or a specialized specialised service.

Some agencies my prefer the use of some form of a Long-Term Agreement (LTA), where by a supplier is pre-vetted using the a standard solicitation process, but has an open-ended contract for delivery of goods and services. Requesting agencies can use the PO as the confirmation to use the conditions applicable to it and concretizing, holding LTAs with vendors can use simple notifications for procurement needs, such as a PO, specifying units, quantities, delivery details, etcand 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 pre-set period of time instead of having to bid every time

The organisation must 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 formalized formalised through a PO and a contract becomes necessary. HoweverIrrespective of the procurement method, each organisation´s Terms and Conditions (TC) applies in any case, therefore, a simplified TC must to be communicated (attached to the PO) and respected by both parties. The act of signing the PO - and the organisation´s TC- by the supplier makes the PO become a simplified contract.Terms and Conditions (TC) must be applied, and it is advisable to attach TCs to all contracts and POs. 

Reception and Payment

The order documents (PO or contract) must clearly indicate the delivery conditions, . Delivery conditions detail who will assume responsibility for moving goods, when and where it is intended to transfer the responsibility for the products is transferred, and all the necessary details to plan accordingly and put in place any necessary means in terms of transport and logistics.

Delivery planning involves the review and consideration of all logistics related aspects of the procurement process. It starts at the needs assessment phase by considering the desired result of the Requesting Unit and the end user and identifying the actions needed to ensure the successful completion of the activity. [5]

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. An agreed destination , can be either the an agency's premises, warehouse, or other and 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 procurements 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.

For simpler deliveries, in addition to the above, or when the Supplier is in charge to delivery at supplier delivers to final destination, is common to use a Delivery Note that must contain at least:

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  • The Quantity - That the number received is the same as the one written in the documents and correspond to number requested in the PO.
  • The Quality - That the product received is in the conditions mentioned in both the shipping documents and matches what was defined in the procurement contract, has is not received any damage damaged and corresponds to the ordered specifications.

If any deviation discrepancy is found in either of these two elements, it is crucial that it is mentioned in writing in the delivery documents, since otherwise the quantity or quality,  it should be recorded in writing on the delivery documents. Without written statement taken at the time of delivery it will be very difficult to claim later the deviations or damage sufferedproducts did not conform to the order.

The transfer of responsibility becomes effective when the representative of the organisation signs the Delivery Note. The signed Delivery Note, the PO and the Commercial Invoice will be the minimum mandatory documents to process payment. In the case that the supplier/carrier is not able to provide any delivery document nor even a Delivery Note, agencies may wish to create and sign a Reception Goods Received Note (GRN), officializing formalising the transfer of responsibility over the of cargo and stating any potential deviationdiscrepancies. Agencies generating their own GRNs should still request the delivering supplier or the supplier's duly appointed transporter to countersign.

Procurement Procedures

A procurement procedure is an internal process established by every organisation to set up the minimum requirements to ensure that the purchases made are compatible with the basic principles of responsibility, accountability, transparency, equal treatment of suppliers and proportionality, while guaranteeing the best value for money. The procurement Procurement procedures ensure objectivity during the supplier awarding process. However, the The awarding criteria themselves will need to be adapted to the context, program needs and donor regulations.

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  • Suppliers’ survey and /or publication (tender, Expression of Interest).
  • Collection of technical/financial offers.
  • Internal review of survey (offers analysis and comparison).
  • Approval of the supplier selection.
  • Review of the documentation and financial commitment authorizationauthorisation.
  • Publication/Communication of results.
  • Order and/or contract’s signature.
  • Receipt/transport of the purchase.
  • Payment to the supplier (based on previously agreed conditions).
  • Final update, review of purchase dossier and its archiving.

Purchases are accompanied by significant cash flows, so agencies must take into account the impact they generate in the contexts where they workhave on local markets, and the effect they may have on the beneficiaries. 

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Although each organisation and/or donor uses different names to the different purchasing proceduresuse different terminology, they all share the same logic and basic principles. In For the purpose of this guide we are going to name the names of different procedures will be as follows.:

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The direct or single quotation procedure is the most relaxed one in terms of documentation, evaluation and requirements, as it is . Direct purchases are usually done for purchases goods or services with a low total value. Its The main characteristic of direct purchasing is that the goods or services are acquired without prior documented comparison of prices or purchase conditions, which makes the purchasing process relatively quick and easy.

The unit or person responsible for procurement will buy from the most advantageous supplier identified in the supplier catalogue. If the ordered article good or service is not listed in the supplier catalogue or is the first time to purchase a specific item or service, is mandatory or at least a the supplier catalogue or is new, it is good practice to ask a supplier for an RFI that will help to decide and plan the purchase purchasers more accurately and make an informal survey of the marketplan the procurement. The unit or person responsible for procurement has to should contact the supplier to confirm the price and assure the criteria of satisfactory quality, delivery times, competitive market prices and correspondence with the available budget.

A purchase dossier would 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 to the stock without supplier delivery note.
    • Internal Delivery Note when delivered to the requester without supplier delivery note.
    • Original invoice, ideally with a some form of formal approval written on it like: “Purchase Dossier reference + “RECEPTION APPROVAL” + date + name and position of the person receiving the goods/services + signature”.


Example PRExample PO


Competitive, Negotiated Procedure

Comparative bidding is the process of soliciting cost/project proposals for products, services or works from “bidders". The selection criteria must be established and communicated in advance to potential bidders. For procurements of higher amounts, more information is usually required to objectively evaluate and justify the best quality-price ratio. In order to do so, a cost effectiveness. A documented comparison of prices and purchase conditions must should be carried out prior to the purchase itself.

Once the terms of the purchase request have been agreed, an official and detailed RFQ must be prepared in writing, which will be sent to multiple suppliers (most organisations use at least 3 three different suppliers), or the sufficient number of candidates to ensure a genuine competition. The RFQ must should ideally set a date for the offer’s delivery, all list the technical specification specifications, and detail the selection criteria that will apply in to the process. In the event that three the minimum number of quotes cannot be obtained, as a good practice the purchaser will should attach copies of the quote requests sent to the different suppliers to justify that it was not possible to collect the three quotationsas evidence all efforts were taken properly. All quotations must be complete and must clearly indicate the name and address of the suppliers, as well as the offer validity.                                                                                                             Exceptions might apply when a quotation is when an exactly similar purchase previously made and the quotations received back then

Some agencies make exceptions in cases where a quotation from a supplier is exactly the same as a previous purchase and the supplier quotations are still valid.

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Dossier of Information




Product, Service Information




Selection Criteria 



Terms and Conditions 



Expected Offer Composition


Feedback Mechanism

Deadlines and Signatures  

A quotation for Submersible pumps in ACF-Syria 2016.


Quotations are analyzed analysed based on the selection criteria mentioned in the RFQ and the results will be presented in a bid matrix. The supplier selection is generally the joint responsibility of the Procurement unit and the Requester.person or team managing procurement and the person or team making the request for procurement. 

Before the financial commitment becomes effective, some agencies choose to add an additional layer of validation, whereby the heads of the procurement and financial departments approve the purchase, certifying that both the process followed and the financial allocation are correct. In the case of contracts with a high amount, the validation of the preidentified pre-identified relevant persons is usually mandatory.

A purchase dossier would 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 Noteexplanatory note, if relevant.
  • The PO or Contract signed by the parties.
  • Copy of the invoice mentioning “Purchase dossier reference[i] + paid + payment method + date”, ideally referencing the solicitation number or other tracking number. 
  • Proof of delivery of the products:
    • Supplier’s Delivery Note.
    • Reception Note when delivered to the stock without a supplier delivery note.Internal Delivery Note when delivered to the requester without a supplier delivery note.

Public/Open Tenders

The comparative bidding process is the system for acquiring products, services or works, by requesting proposals (RFP/Tender Dossier) from “bidders” and choosing the supplier from the offers received. As in the previous procedures, the selection criteria must be established and communicated in advance to potential bidders.

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    • .
    • Internal Delivery Note when delivered to the requester without a supplier delivery note.

Public/Open Tenders

Unlike the negotiated procedure where an organization recognises at least three (3) potential suppliers from whom it requests a quote, a public or open tender process is is the process of opening bids to the public and inviting anyone can to submit an offer. The offers Offers are evaluated by a tender evaluation committee created at the beginning of the process. All It is strongly advisable that all members of the evaluation committee and the employees involved in the bidding process have the obligation are obliged to understand and sign the Declaration of Objectivity and Confidentiality some sort of declaration of objectivity and confidentiality or a similar document.

All documents necessary for the tender must be prepared and have been verified before the start of the tender. These documents are generally sent to headquarters for approval prior to the publication of the tender. An open national tender might consist of:

  • Creation of the evaluation committee.
  • Definition of the supplier selection criteria.
  • Tender Notice publication in the media.
  • Sending the Tender Dossier/RFP to interested suppliers who have requested it.
  • Complete the List of Applicants applicants and Biddersbidders.
  • Evaluation of all bids received using the Bid Evaluation Report.
  • Complete the Report to look for validations.
  • Award the some sort of evaluation report.
  • Awarding a contract to the chosen provider and inform those not chosen.
  • Sign the Signed contract.

A Purchase Dossier would might include:

  • Declarations of objectivity and confidentiality.
  • The HQ’s Tender Dossier Validation.
  • Any waiver (ex. nationality and provenance of the goods).
  • Copy of the newspaper/ website carrying the Call for Tender.
  • Participation requests.
  • Tender dossier.
  • Opening Session session minutes.
  • Offers received.
  • Tender Evaluation evaluation report with comparative table.
  • Tender Reportreport.
  • The HQ’s authorization authorisation of the award.
  • Signed contract and any subsequent addenda.
  • Report of acceptance of goods or completion of services and/or works.
  • Commercial invoice.
  • Delivery notes.
  • Payment.
  • Payment receipt.

The tenders could have a different geographical scope, allowing only local economic operators to see and submit and offer, or allow anyone nationally or internationally to present their offer. Principles to take in consideration while choosing between these two options are the support of Things to consider when selecting geographical restrictions include local economies, the efficiency in the process, the ethical standards and environmental care while assuring the availability of the product/service in the terms that are needed by the organisation.

It is also possible as well, to make tenders:

  • Open - where all interested suppliers may submit a tender

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  • Restricted - only suppliers within a pre-defined scope or category may take part.

Setting Thresholds

The concept of "thresholds" is key to determine the determining appropriate procedure procedures to apply. The notion of thresholds is essential to Thresholds ensure the principle of proportionality between the purchase market cost and the level of effort dedicated required to obtaining the best purchase conditions.

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  • Below $500 USD, only a local logistic officer and requestor requester are required to sign off, and only a PO is require.
  • Above $500 USD, the head of base/mission and/or the head of finance may be required, and a competitive bid may be required.

The nature and limit of each threshold will be determined by individual agencies, based on their own financial oversite oversight needs and guided by:

  • Donor regulations
  • Country/national level requirements
  • Internal organisational audit procedures 

The level of thresholds and the required procedures should be included in each agencies' procurement manual or procurement policies. 

Comparative Table Different Procedures

Following the proportionality principle, it is advised to increase the

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complexity of bidding and

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evaluation if the total amount is higher that the value of the proposed procurement.


Direct Purchase or Single Quotation

Competitive, Negotiated Procedure

Tender Value 

Threshold:

Low value

Medium

High

Level of publicity:

None

Medium (min. 3 suppliers contacted)

High (publication in media, public opening of offers, public award notice)

Evaluation:

Light, one person

Medium (Logistician + Requester)

High (Tender Evaluation Committee, min. 3 people)

Documents:

Few (PR, PO, Invoice)

Medium (PR, QR, Qs, ET, PO, Invoice, DN)

High (13 templates)

Validation:

Field level

Country Level + HQ (in some cases)

Country + HQ for Tender Dossier and supplier selection

Bid Splitting

"Bid splitting is when " is the act of artificially splitting a bid among several smaller purchases are done instead of a single large purchase, artificially . Artificially splitting a bid within a budget in order is usually done to avoid a relevant procedure. Bid splitting , and is considered a bad practice , and may constitute fraud.

Bid splitting becomes fraudulent when the objective of the persons managing procurement is to apply a less restrictive procurement procedure than what best practice or agency wide procurement procedures might advise. Splitting a bid may not always be fraudulent when circumstances necessitate it for security, cost-effectiveness, and other justifiable reasons. Any decision to split a bid must be clearly explained and documented.

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Any person or team responsible for procurement must be familiar with donor procurement-related regulations at all stages of the project cycle and ensure that the Organisation fulfills a organisation fulfils its contractual obligations to the donor. Among other actions, the procurement unit must verify if the donor has specific rules on thresholds and procurement procedures, as well any specific regulation applicable to the acquisition of medical or agricultural products, equipment, etc.

  1. General Regulations of the Donorregulations donors:
    1. Donor thresholds.
    2. Obligation about the Nationality and/or origin requirements of the purchase productproducts.
    3. If they have to approve the ToR or the purchasing process donor approval is required (evaluations, audits, etc.).
    4. Specific regulations for some type of specific products (medicines, medical supplies)medical supplies).
    5. Sanctions or anti-terrorism controls
    6. Denied entities to procure from.
    7. Possibility of using HPCs (Humanitarian Procurement CentersCentres).
  2. Specific regulations pertaining to the contract any agreement signed with the donor.
  3. Expense eligibility or contract start and end dates – allowing time enough for the procedure to take place and the goods/service to be delivered.

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In a crisis context the humanitarian sector has an enormous capacity to impact the local market, hence it is necessary . It is important to act based on humanitarian principles and values , having and keep in mind the concept of “Do not Harm”. For this reason, it is essential to analyze the market in which we operate and thus be able to better control the role the organisation plays in it Market analysis is an essential component of context analysis, collecting information that will be useful to program the intervention and how to implement it. It is also a critical element of contingency planning and preparedness.

Key factors in a market analysis:

  • Nature and origin of the products offered.
  • Local manufacturing capabilities.
  • Main local products.
  • Storage capacities of suppliers.
  • Transportation routes and potential risks to the stock.
  • Knowledge of the relationships between the different agents.
  • External, political, meteorological factors.

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  • .

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IFRC introduction to Market Analysis Video

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There are several key tools from where the information about the market can be extracted.  As an agency or individual conducts procurement, there is a quite important amount large volume of information that will help to analyze analyse the market that surrounds the organisation. Humanitarian agencies should to conduct revised market assessments and revise them with an analytical look when is as needed.

  • List of suppliers - For many reasons it is likely that the number of people who handle purchases throughout a project is high, so it is highly desirable that there be a catalog Many persons may be involved with procurement in a single agency. It is highly suggested to keep a catalogue of suppliers where basic information about the products they offer can be found, as well as past experiences or any other relevant information.
  • Request for Information (RFI) and Expression of Interest (EOI) - RFI and EOI are Documents through which information will be requested from suppliers to make their offers official, but also through which can be carry out the market analysis of a specific product. 
  • Purchase Tracking and  - Used tracking - Any system used to track the current status of procurement, be able to and inform other departments about the status of their requests and in general. 
  • Price list - Used to track Track historical procurement costs, inform planning assumptions, and track the evolution of the costs of goods and services on the market. 

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Sometimes it is difficult to get an idea of ​​a supplier only through their official bid documents. It Purchases may be key want to visit the suppliers in their workplace, especially when agencies intended intend to start a lasting relationship with the 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.
  • Analyze Analyse supplier capacity and professionalism: number of workers, work methods, general cleaning, etc.
  • Analyze 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.

Supplier Ineligibility

Bidders must be excluded It is strongly advised to excluded suppliers from any procurement procedure in for any one of the following casesreasons:

  • They are bankrupt or are ceasing activities.
  • They have been found guilty of serious professional errors.professional errors.
  • They are found to engage in child labour, sexual exploitation and abuse, slavery, bribery, gross environmental negligence, or undue worker safety. 
  • They have not fulfilled the obligations related to payment of social contributions or taxes as per legislation of the country or in the country benefiting from the contract.
  • They have been tried and finally convicted for fraud, corruption, participation in criminal organisations or any other illegal activity.
  • They have been declared seriously in default for failing to observe contractual obligations in other purchase procedures made with the organisation.

As evidence proving that potential supplier does not come under one of the above-mentioned situations, the candidate supplier shall submit at least one of the following documents:

  • A recent extract of judicial records.
  • An equivalent document issued by a judicial authority.
  • An affidavit testifying that the candidate supplier respects basic social rights and working conditions and does not exploit child labour.
  • Affidavit sworn by the company’s legal representative before an administrative or legal officer, an auditor or a qualified body in the country of origin or provenance.
  • Self-certification on the above-mentioned judicial status.

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  • Where possible, agencies should conduct background checks on vendors and suppliers using the available local means.
  • Some donor agencies require screening of vendors against additional international lists pertaining to criminal activity or terrorism.
  • Aid agencies should always ask for references from other known sources who may have procured goods or services from the identified supplier in the past.

Contracts will should not be awarded to bidders who during the procurement procedures:

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Supplier management is a set of principles, processes, and tools that can help organisations to maximize the value of maximise supplier relationships, minimize minimise risks, and manage overheads throughout the entire relationship lifecycle. It 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 what are the specifications of the products or services neededrequired, the legal framework for their acquisition and the existence of these their availability in the market. Not taking these three concepts into account increases the risk of not finding what are expectedrequired items, procuring something not neededincorrect items, or not respecting local norms and behaviors behaviours when purchasing them.

The objectives of an effective supplier relationship management are to:

  • Foster long-term relationships and joint value creation.
  • Prioritize Prioritise resources and interaction with suppliers that can provide the greatest value for money.
  • Ensure measurement of quality and service levels.
  • Develop a consistent mode of interaction with suppliers across the organisation.
  • Ensure fairness, integrity and transparency.

Process

Supplier Registration

Once identified, the suppliers must meet some requirements in order to be register, to assets the compliance with them the suppliers will be requested to assure It is strongly advised to register suppliers who meet key criteria, including assuring that:

  • They have legal personality and legal capacity to enter into a contract.
  • They shall have sufficient financial capacity (where required, the last two years audited accounts) to successfully undertake a contract awarded by the organisation.
  • The products or services offered must be of interest to the organisation and the supplier must have the necessary professional and technical competence.
  • The supplier must not be on any sanctions list and has not performed fraudulent, unethical or illicit acts.
  • The supplier shall have the adequate experience.

For certain categories of goods and services, or in certain country specific contexts, suppliers may be required to meet additional/different criteria in order to be registered.

Supplier Catalogue

The registration will be the base of the A supplier catalogue , is a tool where to insert every supplier is registered and all the information about the their relationship between them and the organisation.with the purchaser is stored. 

Supplier Pre-Qualification

Pre-Qualification is generally used to preselect pre-select suppliers for the provision of complex/strategic goods and services based on very specific needs. This selection can be from the Supplier Catalogue a supplier catalogue or include other providers. Only invited suppliers that meet established criteria are then should be invited to bid. This ensures , ensuring that only companies with a high level of quality and/or expertise are invited to included in the solicitation.

Supplier Monitoring

The monitoring Monitoring of supplier activities with the organisation, are in is most cases done through the Procurement Documentsstandard set of procurement documents. Each procurement step has to be explained and justified ; therefore, and all the official communication has to be documented. It is a best practice to create and update a tool that could to record key indicators in the procurement process. Such a tool might record of all the interactions with the suppliers allows the agency to analyze analyse and monitor the relations through the time. Key indicators might include, but are not limited to response rates, records of evaluated proposals, number of contracts awarded, POs managed, and expenditures.

Supplier Performance Evaluation

Measurement the performance of suppliers in support of an organisation’s needs is important. Supplier Historical supplier evaluation in turn influences the identification of suppliers as past performance of suppliers may influence the process of drawing up shortlists.supplier who may be short listed in the future. 

Surveys are an important source of information, that could facilitate the analysis of the supplier and procurement unit performance. The requesting unit should be asked about their opinion about the supplier performance ( in a standardized standardised and official manner) and that . Responses should be included in the Supplier Cataloguesupplier catalogue, to be referenced when new procurement actions are being planned.

Supplier Management Tools

Once the supplier(s) are identified, and it is time to establish a negotiation, it is useful to:

  • Define exactly the exact needs and what you want to negotiate.
  • Understand exactly the supplier offer/bid.
  • Know your supplier and the market.
  • Manage the timestimelines for delivery of goods and services.

The objective of any negotiation is to achieve a “win to win” situation. If one of the parties party in a negotiation does not feel benefited in some way, the relationship tends to break down. 

When entering negotiation, it is important to have at least two real possible outcomes to choose from; this will make the negotiation more efficient by having a margin of safety and not feeling/establishing a dependency relationship.

The agreements An agreement between the two entities reach must be formalizedformalised, clearly establish the obligations of each party , detail what can clearly established, and a mutual understanding of what should be expected from the relationship and not least, be able to have tools well understood. There should be well understood steps to take in case of non-compliance that will be of great help if there is a to help avoid conflict. The best way to improve working practices in your a supply chain is to work hand-in-hand with your suppliers to help them to implement achievable improvements.

There are two main tools to manage the relation with a supplier, the Contract and the more flexible :

  • Contract
  • Long-Term Agreement (also called Framework Agreement)

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Contracts

A contract is an agreement with specific conditions between two or more people or entities in which there is a commitment to do something in exchange for an economic benefit known as considerationfunds. The existence of a contract generally requires the following elements:

  1. An offer.
  2. The acceptance of that offer.
  3. A commitment to carry out.
  4. A consideration (which may be a promise to pay in some form).
  5. The moment or the situation in which this commitment has to be carried out.
  6. The terms and conditions of execution, including the fulfillment fulfilment of the commitment.

Included in these six points are all the demands and expectations that the different parties may have. From the Everything that is worth mentioning must be included in the contract, including the technical quality of the product or service, through the form and conditions of payment, to details about compliance. Everything that is worth mentioning must be What is not included in the contract, since what is not in it a contract cannot be enforced. Hence, it It is advisable to dedicate enough time to build develop a good contract and properly agree with the supplier on it.with mutual agreement with a supplier. 

It is advisable to build a contract template, with as fixed a structure as fixed as possible, and with simple and direct language. It is common to review the signed contracts to resolve doubts and knowing the structure of our contracts helps to save time. A good practice is to have this any contract template reviewed by a local lawyer, who in addition to ensuring that our contracts are in can ensure any contract term is in accordance with the law, and who could advise us on local customs and practices.

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Going to court should be avoided whenever possible, anticipating this possible situation and remedying it before reaching these extremes. Hence, having . Having good contracts that anticipate how possible breaches will be resolved is key. The use of financial penalties is useful during negotiation and a tool in case of conflict.

Long Term Agreements (LTAs)

A Long Term Agreement, known as well as Framework Agreements, establish the commercial terms and conditions that will govern between the supplier and the procuring agency in the event that there is a firm order for the goods or services established in the agreement. An LTA aims to define the commercial conditions that will apply to the purchase of specifically determined goods and for a pre-established period of time. It is LTAs are especially relevant for small, low-value and less complex items purchased on a regular basis, such as office supplies, most spare parts, cement, prepaid mobile phone service, etc.

An LTA is applicable when several deliveries are expected, but neither specific quantities nor delivery dates can be foreseen. It is important to understand that a LTA is not in itself considered a purchase commitment, but simply sets out the conditions that would apply if the organisation decided to place an order; there . There is no commitment or exclusivity.!

To avoid confusion and possible conflicts, it is essential to make it very clear to suppliers from the beginning of the bidding process that the objective is to sign a LTA and not a regular purchase contract. It is important to ensure that bidders understand the mechanismdifference between these mechanisms. Since there is no exclusivity, a Long-Term Agreement an LTA can be signed with two or three different suppliers of the same products, under identical terms. 

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  • Plan - Organisation should plan and determine the processes that are required to deliver a high-Quality quality end product.
  • Do - Development and testing of processes and also "do" changes in the processes.
  • Check - Monitoring of processes, modify the processes, and check whether it meets the predetermined objectives.
  • Act - Implement actions that are necessary to achieve improvements in the processes.

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.

Standard Certifications

There is a wide range of quality certifications, from seals applicable to an entire sector or to a specific product to, those that certify the quality of a process or those that focus on compliance with ethical and environmental standards. Some have great added value, others have more to do with marketing. They can have a national value or be internationally recognizedrecognised. Although each stamp can be useful at a certain moment, International Organisation for Standardization Standardisation (ISO) standards are the considered the recognized recognised international best practice.

ISO is an independent, non-governmental Organisation created in 1946, and has been developing standards relating to making productsmanufacturing, managing  processes, delivering services or supplying materials.

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Buying a product with an ISO certification and/or to a company that has been ISO certified is a guarantee that the product or company has been followed a quality process. However, not Not all the suppliers have ISO or other kind of certifications, especially in low income, disaster or conflict settings. Without these standards in place, agencies may need to look for other sources of information to assure the quality before or during stablishing establishing a relation with a supplier.

Vendor Social/Financial Audit

A social/financial compliance audit, also known as an ethical audit, is an inspection of an external organisation that verifies whether the supplier operations complies with social and ethical responsibilities, health and safety regulations, and labor labour laws. These audits help to judge if a supplier meets the organisation code of conduct, assuring the ethical policies.

A Financial audit can be complemented with the country fiscal year declaration and/or with bank statements that will help to evaluate their solvency.

Due to the ‘snapshot’ "snapshot" nature of audits, and the fact that they are not designed to identify the causes or solutions of problems, they are limited in what they can tell about the suppliers’ working practice. For that reason, getting maximum benefit from audits involves being aware of these limitations, and adding the right questions to complement them.

Inspection and Quality Control

Agencies should schedule time and resources to perform inspection during the product evaluation, before the order, or during reception.  Quality Control (QC) is a continuous, standard and permanent process until the distribution/delivery to the beneficiaries, therefore must to be performed periodically while a product is the warehouse or under the organisation responsibility. Sometimes, QC is confused with the QA. Quality control is used to examine the product or service and check for the resultitself. Quality assurance is to examine the processes and make changes to the processes which led to the end-product.

  • Visual Inspection – If a vendor is supplying a 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.

It is strongly advised that product inspection must also be conducted once the procuring agency takes possession. Not only should products be inspected the first time they are delivered, they should be reviewed throughout the delivery process, especially for large orders. For large orders that may have multiple or ongoing deliveries, product substitution can be and is a real problem. Some vendors may unscrupulously swap legitimate products for false, inappropriate or incorrect products later down the line. Without ongoing vigilance, even fully tested and certified products may not actually show up.

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Corporate fraud in any organisation runs ethical risks and leads to waste. In the case of non-profit institutions dedicated to tasks such as development cooperation or humanitarian aid, it threatens basic elements of their programming and their credibility within the community. Consequently, fraud must be dealt with through a determined attitudeswiftly and thoughtfully, anticipating events and not only reacting once they have been perpetrated.

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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 decedent 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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PreventionThrough the appropriation of the organisation's values ​​by its workers, which in turn explains the possible consequences of fraud for the organisation. Organisations should also seek to establish a code of Ethics ethics and Conductconduct, which must be communicated and disseminated throughout the organisation, including the appropriate communication channels and complaint formats. Staff should be trained in the identification, categorization categorisation and use of these channels and formats. Establish alert mechanisms that can anticipate and prevent the commission of fraud.
ControlCreating an Antianti-Fraud Commission fraud commission whose responsibility is the investigation and verification of compliance with the policies of the institution, dedicated to the systematic or ad-hoc examination of the practices observed by persons or bodies of the institution. This commission will be in charge of establishing a compliance program with the established policies and norms and their monitoring. For a To obtain good information base to exist, staff must feel safe when reporting, but at the same time , they must feel the responsibility to provide truthful information. Clear responsibilities must be established and due protection to the complainant and protection against false reports.
ReactionDisplaying the principle of zero tolerance through quick and determined actions, always under reaction to fraud must always be undertaken using strong evidence. This is only achieved with the collaboration of whistleblowers whistle-blowers and in-depth investigations and the prior establishment of appropriate and consistent measures. Except for security risks that advise against where security may prohibit it, these reaction policies and processes should be made public, and communicated among the staff or even with our , donors and beneficiaries, so it will be necessary for there to be consistent in these actions. These communications . Communication of policies are usually sensitive and should be studied and planned in advance.

It is important to be aware that fraud prevention regulations cannot by themselves guarantee the non-existence of situations or events that have the potential to harm the institutionfraud. The effectiveness of fraud prevention guidelines will be based on the definition of the moral tone and the transmission of an ethical culture, which reflect the interests of relies on the organisation and the individuals that comprise it.

Here are some examples of types of procurement fraud (this is not an exhaustive list)Procurement fraud may include, but is not limited to:

  • Collusion between providers -  A group of suppliers work together to manipulate their bids in order to rotate winners.
  • Division of the offer - Demand is split into multiple bids to pass through a lower threshold and therefore reduced due diligence supervision.
  • Adaptation of the offer - Persons within the agency deliberately draft bid documentation to tailor it to the specific strengths of a specific supplier.
  • Price manipulation - A supplier charges a price higher than the one agreed in the Contract contract / Framework Agreementframework agreement.
  • Product substitution - The organisation obtains and pays for a certain specification, but the supplier provides a lower / different specification.

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Related to Suppliers

  • Undisclosed conflict of interest.
  • Winning suppliers outsource to losing bidders.
  • The last provider to submit a bid wins the contract.
  • Offers that look similar on paper, font, colorcolour, spelling errors, printing, etc. (collusive bid).
  • Inflated invoices or purchase orders.
  • The winning bid is higher than the rate from the market.
  • The winning bid is identical to the budget.
  • Fictitious suppliers or suppliers without existence or physical address.
  • Turnover pattern of winners.
  • Partial delivery of goods or services.
  • Substitution Quality of goods when the quality of the delivered items differs from the supplied/proposed samples at the bidding stage.
  • Qualified contractors do not submit bids.

Related to Personnel

  • Manipulation of the evaluation criteria after the opening of the tender to award the contract to a preferred suppliertender.
  • Contracts awarded by single source or non-competitive process.
  • Cancellation of large quantities of goods such as junk or obsolete merchandise.
  • Requirements defined in a way that only a specific manufacturer or supplier can meet.
  • Multiple purchase request 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 Head of Procurementany persons conducting procurement.
  • Unusually high exemption rate.
  • Tender announcements scheduled to match with holidays.

References

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Templates and Tools

TEMPLATE - Purchase Request

TEMPLATE - Bid Matrix.xlsx

Template TEMPLATE - Purchase Order.xlsxTemplate - Purchase Requisition.xlsx

TEMPLATE - Tender Report

TEMPLATE - Supplier List

Full Template Package

Sites and Resources


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References 

[1] Source: Mangan, J., Lalwani, C. and Butcher, T. 2008, "Global Logistics and Supply Chain Management", Hoboken, NJ, USA, John Wiley and Sons, Inc.

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