Logistics Operational Guide (LOG)

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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.

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.

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.

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.

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.

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.

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.

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