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Evaluation Committee/ Panel

A committee made up of an odd number of members (at least three) with the necessary technical and administrative expertise to give an informed opinion on tenders or grant applications.

BVM

Short for “Best Value for Money”; the best combination available of monetary and non-monetary requirements that an organization can get from its selection of suppliers.

HPCs:

Short for “Humanitarian Procurement Centers”. Are not-for-profit organizations specialized in the technical and commercial management of supplies and services necessary for the implementation of humanitarian actions. They can provide technical assistance in procurement or supply pre-established stocks, purchasing or logistics capacity

ISO

Short for “International Organization for Standardization”. An independent entity that has been thinking and standardizing the formulas that describes the best way of doing something.

ISO Certification

Guarantee that a product and/or company has followed a quality process.

Lead time:

The time between initiation of the acquisition of the goods and services up to the time of delivery.

Market Analysis:

An essential component of context analysis, collecting information that will be useful to program the intervention and how to implement it.

Market Research:

Activities and means to identify suppliers in a specific market.

Negotiated Procedure

Procedure without prior publication of a procurement notice, in which the Contracting Authority consults the candidate or candidates of its choice and negotiates the terms of the contract with one or more of them.

Procurement

The process of identifying and obtaining goods and services

Purchase:

The specific function associated with the actual buying of goods and services from suppliers.

QA:

Short for “Quality Assurance”; A procedure to ensure the quality of products or services by preventing mistakes and defects in manufactured products and avoiding problems when delivering products or services to beneficiaries.

QC:

Short for “Quality Control”; checks to ensure quality in a product or a service.

Quality

All the elements and characteristics which constitute the product and which contribute to its compliance with the defined technical specifications.

Sourcing:

Identifying and working with appropriate suppliers.

Services:

Intellectual and non-intellectual services.

Supplies:

Know as well as Goods, Products, Materials…. are tangible items and/or inter-related sets.

Segregation of duties:

Principle by which must have more than one person to complete a procurement activity.

TCO:

Short for “Total Cost of Ownership”; Cost involved in buying and using a product over time.

Tender Procedure

The overall process of putting a contract out for tender, starting with the publication of a procurement notice and ending with the award of the tendered contract

Works:

The design and/or the execution of a rehabilitation, construction, etc. in accordance with the previously specified requirements

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Procurement, an Introduction

It is common to see the procurement as a bottle neck and a time-consuming activity, usually associated with delays and strict bureaucracy. However, the Procurement activities can be agile and practical if we understand the roll that procurement plays, why exist and what are the principles that guide it, and how to manage the procedures that implements.

Through procurement activities we are going to acquire the needed things to perform our daily organizational activities and provide the resources to accomplish with the project needs.

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Procurement Definition

Procurement is the process of identifying and obtaining goods and services. It includes sourcing, purchasing and covers all activities from identifying potential suppliers through to delivery from supplier to the users or beneficiary[1].

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The words Purchase and Procurement are frequently used interchangeably, however, even if is common this 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.  This is how procurement and purchasing will be defined throughout this guide.

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Procurement in the humanitarian context

Procurement objective. (6 Rights)

A successful procurement process is the one capable to accomplish with several requirements that can be summarized in the six ‘Rights’. Therefore, every purchase should be procured

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By assuring these ´Rights´ one of the guiding rules of every intervention, the Best Value for Money in the procurement activities is accomplished. Notice that is not mentioned here the lowest price or the highest quality, but the one that can accommodate best the needs in a holistic way.

Procurement Principles

There are certain principles that will govern the way in which a procurement activity is carried out. These principles are not random or chosen by chance; they are the result of many experiences and lessons learned, set up after several discussions and revisions. Humanitarian actors can have a great financial impact in the context they work, and procurement takes an important role on it since it has to do with the exchange of money, selection of providers, distributions in contexts that are not always safe, and constant exposure to various risks that need to be mitigated for the correct implementation of the programs.

Hence, a series of principles have been developed that should govern the procurement actions, to which the procurement entity must adhere and ensure its compliance with the ultimate goal of having an economic and efficient intervention with the best quality-price ratio.

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BEST VALUE FOR MONEY

Best Value for Money (BVM) refers to the best combination available of monetary and non-monetary requirements that an organization can get from its selection of suppliers. It does not mean to achieve the cheapest offer but to balance the attributes such as quality and availability according to the organization needs[2].

The Combination of which this definition speaks are those of cost, quality and sustainability that best meets the organization´s requirements.

  • Cost understood as those of the entire life cycle of the product or service, which is known as Total Cost of Ownership (TCO) that takes into consideration not only the price but all the cost involved in buying and using a product over time.
  • Quality understood as sufficient specifications to meet the organization requirements, which in part can be summarized in the term Fit for Purpose.
  • Sustainability, taking into account the economic, social and environmental impacts.

Those responsible for procurement will look for the lowest overall cost to get the best return of investment.

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COMPETITION

The Supplier selection and therefore the procurement of products and services is based in a competitive process. That means that solicitation documents shall be issue to several and different suppliers enabling an effective competition to achieve the Best Value for Money while guarantying the respect and care to the local market.  

This entails:

  • promoting a culture of neutral specifications (avoiding over/under-specification);
  • providing suppliers with adequate notification to ensure that there is sufficient time to participate in the procurement processes; and
  • ensuring the comprehensive, impartial and timely evaluation of offers.

It is a good practice to give feedback to the non-successful bidders, explaining them the reasons for not being selected to allow them to improve their processes.

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TRANSPARENCY

Purchases are part of the joint action of many actors - headquarters, project managers, technical services, field staff, suppliers and communities - it is key, therefore, that each party know separately at any time the means and processes implemented to achieve procurement objectives. Both inside and outside the organization, procedures should be shared and available to ensure that each person or group can know and question the steps taken for each of the processes. Transparency does not mean that a humanitarian organization loses independence, but rather that it can reason the actions and clarify the principles that have guided it, accrediting the decisions made in the purchase of goods or services.

Transparency is also an important part of security management, since a perception of partiality or lack of transparency could lead to threats or increase risk for the teams in the ground.

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PROPORTIONALITY

In the search for efficiency, aid agencies must diligently ensure principles guide procurement activities. It is strongly advised that there should be increases in control measures and procedures proportional to the value the contract or procurement. The higher that value, the more measures, resources, and stricter procedures will be required. In the same way, if the value is reduced, procedures should be more lax. This principle is the base of the different Procurement Procedures.

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FAIRNESS (EQUAL TREATMENT AMONG ALL POTENTIAL SUPPLIERS)

Humanitarian aid organizations are generally important economic actors in the places in which they operate, due to the high volume of products and services involved in humanitarian operations. Normally aid organizations operate in very small or disrupted markets, so it is convenient to pay attention to the market assessments and keep it in mind in each context analysis.

Humanitarian organizations need to be aware of the local market composition and who are the different actors involved. When designing and implementing interventions, there is a need to assess and analyze local markets and supporting supply chains, in order to facilitate their recovery. This principle is intended to ensure that all potential suppliers have the same tools and information to compete fairly; agencies must be clear in the requirements and the criteria that we are going to use to award the contracts.

The equal treatment of suppliers does not mean that market categories that exclude or include certain suppliers cannot be made, but agencies must ensure that all of them have the same opportunities to be awarded.

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SEGREGATION OF DUTIES

Segregation of duties is a core principle of internal control and must be preserved in all procurement actions. According to the principle of segregation of duties, no single individual or team shall control all the stages of procurement process[3].

For the sake of quality and control, segregating responsibilities during the purchase process helps not only to identify errors by adding review and oversight steps, but also limits the possibility of fraud, adding clarity and confidence in the process.

Having more than one person involved in the process helps, as well, to protect those with procurement responsibilities from vague accusations.

The best result of duties segregation is the involvement of different points of view, knowledge and ideas, making decisions more likely to be successful while everyone is informed and in agreement.




The table below shows different examples on how to ensure the Segregation of duties:

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The anti-fraud policy must contemplate three elements: prevention, control and reaction.

PREVENTIONthrough the appropriation of the organization's values ​​by its workers, which in turn explains the possible consequences of fraud for the organization. Organizations should also seek to establish a code of Ethics and Conduct, which must be communicated and disseminated throughout the organization, including the appropriate communication channels and complaint formats. Thus, staff should be trained in the identification, categorization and use of these channels and formats. In short, establish alert mechanisms that can anticipate and prevent the commission of fraud.
CONTROLcreating an Anti-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 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, so 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 strong evidence. This is only achieved with the collaboration of whistleblowers and in-depth investigations and the prior establishment of appropriate and consistent measures. Except for security risks that advise against it, these 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 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 institution. 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 the organization and the individuals that comprise it.

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