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This procurement handbook is for both private and public sector purchasing personnel by Dr Rovel Shackleford

This procurement handbook is for both private and public sector purchasing personnel by Dr Rovel Shackleford

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Dr Rovel Shackleford procurment open v2 handbook drs 14112011 Dr Rovel Shackleford procurment open v2 handbook drs 14112011 Document Transcript

  • Procurement Technical Practice Manual June, 20011 DRAFT VERSION (RELEASE 8.2)FOR REVIEW AND COMMENT Manual Author: Dr. Rovel Shackleford
  • TABLE OF CONTENTS PART 1 GENERAL___________________________________________ 2 1.1 Background ____________________________________________ 2 1.2 Scope and purpose of this manual __________________________ 3 1.3 Supporting documentation _________________________________ 5 1.4.1 Abbreviations used in this Manual ......................................... 6 1.4.2 Special abbreviations............................................................. 7 1.4.3 New Terminologies ................................................................ 7 1.5 The approach to procurement management ___________________ 9 1.5.1 Procurement management .................................................... 9 1.5.2 The procurement process .................................................... 13 1.5.3 Other issues impacting on procurement............................... 15 1.5.4 The procurement team......................................................... 16 PART 2 – PROCUREMENT MANAGEMENT __________________________ 20 2.1 Use of generic contract documentation ______________________ 20 2.1.1 Standard delivery terms for contracts................................... 20 2.1.2 Bid and contract documents ................................................ 24 2.2 Procurement planning and scheduling_______________________ 25 2.3 Determination of contract packages ________________________ 31 2.4 Determination of bidding requirements ______________________ 31 2.5 Preparation of bid/contract package documents ___________________________ 32 2.5.1 General................................................................................ 32 2.5.2 Elements of the bid package................................................ 32 2.5.3 Technical specification......................................................... 34 2.5.4 Schedules............................................................................ 35 2.6 Pre-qualification of Bidders _______________________________ 36 2.6.1 General................................................................................ 36 2.6.2 The assessment process ..................................................... 36 2.6.3 The assessment criteria....................................................... 38 2.7 Calling bids ___________________________________________ 40 2.7.1 General................................................................................ 40 2.7.2 Notification of opportunity to bid........................................... 42 2.7.3 Provision of documents to Bidders....................................... 42 2.7.4 Communication with Bidders................................................ 42DRS520011 Version 0.1
  • TABLE OF CONTENTS 2.7.5 Receiving bids ..................................................................... 43 2.8 Evaluation of bids_______________________________________ 44 2.8.1 General................................................................................ 44 2.8.2 Opening of bids ................................................................... 45 2.8.3 Preliminary examination....................................................... 45 2.8.4 Evaluation and comparison of bids ...................................... 47 2.8.5 Summary and recommendation ........................................... 51 2.9 Selection, negotiation and award of contract __________________ 52 2.9.1 Selection.............................................................................. 52 2.9.2 Negotiation .......................................................................... 53 2.9.3 Award .................................................................................. 53 PART 3 – LOGISTICS ____________________________________________ 56 3.1 Verification of product conformance during manufacture ________ 56 3.1.1 General................................................................................ 56 3.1.2 Inspection ............................................................................ 59 3.1.3 Acceptance.......................................................................... 65 3.2 Expediting ____________________________________________ 67 3.2.1 General................................................................................ 67 3.2.2 Schedule for expediting ....................................................... 67 3.2.3 Progress reporting ............................................................... 69 3.2.4 Corrective action.................................................................. 70 3.3 Customs and tax clearance _______________________________ 70 3.3.1 Opening letter of credit......................................................... 72 3.3.2 Release of goods imported by sea freight............................ 74 3.3.3 Release of goods imported by air freight.............................. 77 3.3.4 Particular arrangements....................................................... 80 3.4 Monitoring delivery and distribution _________________________ 83 3.5 Final acceptance _______________________________________ 83 3.5.1 General................................................................................ 83 3.5.2 Acceptance Inspection......................................................... 83 3.6 Dispute resolution ______________________________________ 87 3.6.1 General approach ................................................................ 87 3.6.2 Preparatory activities ........................................................... 88 3.6.3 Informal dispute resolution................................................... 89 3.6.4 Formal dispute resolution..................................................... 90DRS520011 Version 0.1
  • TABLE OF CONTENTS 3.6.5 Arbitration ............................................................................ 92 3.6.6 Records ............................................................................... 92 3.7 Asset management _____________________________________ 93 3.8 Records and contract completion __________________________ 93 3.8.1 General................................................................................ 93 PART 4 – FINANCIAL MANAGEMENT ______________________________ 96 4.1 Financial planning ______________________________________ 96 4.2 Financial controls _______________________________________ 96 4.3 Financial monitoring_____________________________________ 96 4.4 Expenditure reporting____________________________________ 96 PART 5 – ASSET MANAGEMENT ____________________________________ 4.1 Asset planning ___________________________________________ 4.2 Asset controls ___________________________________________ 4.3 Asset monitoring _________________________________________ 4.4 Asset reporting___________________________________________ PART 5 – AUDIT CONTROL _________________________________________ 4.1 Audit planning ___________________________________________ 4.2 Audit controls ____________________________________________ 4.3 Auditing Performance _____________________________________ 4.4 Audit reporting ___________________________________________ ANNEX 1: REQUIREMENTS FOR LOCAL GOVERNMENT UNITS _______________________________________________ ANNEX 2: INSPECTION PLAN ____________________________________ Part 1: Arrangements _________________________________________ Part 2: Inspection schedule_____________________________________ ANNEX 3 PRE-QUALIFICATION ASSESSMENT CHECKLIST __________ Corporate data _______________________________________________ Management strengths and limitations _____________________________DRS520011 Version 0.1
  • TABLE OF CONTENTS Work processes ______________________________________________ General indicators _____________________________________________ Business management system ___________________________________ ANNEX 4 PROJECT INSPECTION REPORT ________________________ Part 1 – Format for PROJECT Inspection Report _____________________ Part 2 – Example of a completed Inspection Report___________________ ANNEX 5 ETHICAL CONDUCT ___________________________________ ANNEX 4 PROBITY IN CONTRACTING ____________________________ Part 1 – Explanation odf Probity __________________________________ Part 2 – Technical Asspects of Implimentation/Practice ________________DRS520011 Version 0.1
  • SAMPLE - PROCUREMENT MANUALAttention: Author’s NoteThis manual is by Deed of Contract copyright protected to the Arrina Global LLC.Please contact the following Agency to obtain the appropriate approvals to copy eithermanually, electronically or by any other data transfer means all or any singlecomponent of this Manual.Development LiaisonAll feedback is extremely useful. If you have a contribution to make to the developmentof this Procurement Manual please contact the author;Dr Rovel ShacklefordEmail admin@arrinaglobal.comDOCUMENT AUTHORISATIONDocument Number: DRS52001Version: 8.2 (draft) for submission and ongoing reviewAbbreviated Title: Procurement Manual Document reviewed by: Date : Document approved by: Date : Release of this version authorised Date by: :REVISION HISTORYDRS520011 Version 0.1
  • SAMPLE - PROCUREMENT MANUAL Version Date DetailsDRS520011 Version 0.1
  • SAMPLE - PROCUREMENT MANUAL PART 1 GENERALDoc DRS 52001 Version 0.1 (draft) Page 1
  • SAMPLE - PROCUREMENT MANUALPART 1 GENERAL1.1 BACKGROUND This Manual has been developed in response to the DEPT. Subcontractor Contract output requirement within the Procurement Hurdle Specialists terms of reference (TOR) 5.1 (1) “Draft Standards for procurement management by agencies in a form suitable for inclusion in a practical technical manual that is relevant in the Thai context”. This project referred to in its totality as the Procurement Management Hurdle covers four fundamental elemental activities initiated and completed by the hurdle specialist in conjunction with the stakeholders counterparts teams. The functions are as follows;  Development of a technical procurement manual  Development of procurement guides  Development of a reform migration/implementation strategy  Development/introduction of core IT support tool. A more detailed work activity plan is available on request from the procurement hurdle specialist. The sources of information that have been utilized to develop this technical manual are in accordance with and deemed by the Dept. to be most relevant to meet the department’s requirement at an operational level in it’s Commodity Group. The predominant information sources are;  Country or Company procurement practice information PMO and Pilot Agencies.  Best practice publications as listed in the bibliography.  World Bank Procurement Practice/Policy Guides.  Asia Development Bank Practice/Policy Guides. The technical manual is not intended to be the definitive procurement practice technical handbook in its current form; it is fundamentally an indicative model of a best practice manual that should be augmented with current procurement resource materials utilized by procurement personnel in their respective agencies. The author anticipates and recommends that relevant elements of the manual may be integrated where appropriate into existing Country or Company Procurement Manuals and Practice Guides.Doc DRS 52001 Version 0.1 (draft) Page 2
  • SAMPLE - PROCUREMENT MANUAL This product is not a stand alone technical manual a series of supporting Procurement Guides will be developed to provide additional overlaying procurement practice guidance to all personnel involved in managing or expediting the procurement function within the Country or Company. This activity forms an integral part of the specialists TOR 5.1 (2) ‘to develop a checklist for the Dept. and line agencies’. The author intends this technical manual and its content to be as relevant as practicable for those personnel who are predominantly involved in managing and undertaking the day- to-day task of preforming the procurement function in the public sector. Direct consultation with end users has greatly assisted in the evolution of this manual from a conceptual document to a tool that it is hope will greatly assist procurement practitioners in their daily work activity. The author wishes to convey a special note of thanks to the following personnel for their support and candid feedback; both necessary ingredients in the development of a technical manual;1.2 SCOPE AND PURPOSE OF THIS MANUAL This document – the Dept. Procurement Manual – describes the arrangements, systems and practices that will be applied to the procurement, and logistics activities for the Dept.. It provides descriptions of the various requirements and activities that are used in providing goods and services for the Dept., and identifies indicative forms and templates that are may be used in carrying out procurement, logistics and financial management activities. The purpose of the technical manual is to provide a comprehensive source of information to support the procurement teams in the Dept.. It will also provide the basis for delivering consistent and effective training to the participants in the procurement activities. The manual is presented in four parts: Part 1 – General – (this part) that contains a description of the general approach to procurement management. This is intended to set the context for the particular activities and processes described in the following parts of the technical manual. Part 2 – Procurement Management – which is focussed on identifying the end-user needs, preparation of procurement plans and obtaining supplies of products and services to meet those needs.Doc DRS 52001 Version 0.1 (draft) Page 3
  • SAMPLE - PROCUREMENT MANUAL Part 3 – Logistics – which is directed at the delivery, inspection, acceptance and distribution of the procured items to the end-users. Part 4 – Financial Management – which is concerned with the provision of funding and control of disbursements associated with the procurement and logistics activities.Doc DRS 52001 Version 0.1 (draft) Page 4
  • SAMPLE - PROCUREMENT MANUAL1.3 SUPPORTING DOCUMENTATION Where appropriate, this procurement manual will utilise particular arrangements described in other, specific documents. Where a supporting document is used as a general reference, it will be identified by its title alone. (For example: Standard Bidding Documents.) Where a particular section of a document is referenced, it will be identified by the title and the principal section in which the referenced information is located. (For example: Standard Bidding Documents – Procurement of Pharmaceuticals and Vaccines: Section III – Bid Data Sheet) The title and a brief description of the scope of the various documents which support the implementation of this Procurement Manual is provided in the following table. Docu Version Title and scope of application ment No N/A 1996 Standard Bidding Documents: Procurement Contains bidding and contract documentation for use on World Bank-funded procurements. N/A N/A (No title indicated) Contains bidding and contract documentation for use on Asian Development Bank-funded procurements. N/A 1 Jan, 2000 Incoterms 2000 The ICC official rules for the interpretation of trade terms. N/A January, Standard Bidding Documents: Procurement of 1995 Goods. Amended Contains bidding and contract documentation for Oct 6, 1996 use on World Bank-funded procurements.Doc DRS 52001 Version 0.1 (draft) Page 5
  • SAMPLE - PROCUREMENT MANUAL1.4.1 Abbreviations used in this Manual The following abbreviations are used in this document: Abbreviation Abbreviation Definition ADB Asian Development Bank Dept. Bureau of the Budget FCL Full Container Load GCC General Conditions of Contract PA Pilot Agency ICC International Chamber of Commerce L/C Letter of Credit LCL Less than (full) Container Load LGU Local Government Unit RTG Country or Company WB World Bank ADB Asia Development Bank BHTDoc DRS 52001 Version 0.1 (draft) Page 6
  • SAMPLE - PROCUREMENT MANUAL1.4.2 Special abbreviations The abbreviations listed below are used in bid and contract documents to specify particular terms and conditions for carriage, delivery and cost responsibility. Term Meaning Associated detail EXW Ex Works …named place FCA Free carrier …named place FAS Free Alongside Ship …named port of shipment FOB Free On Board …named port of shipment CFR Cost and Freight …named port of destination CIF Cost. Insurance Freight …named port of destination CPT Carriage Paid To …named place of destination CIP Carriage and Insurance Paid …named place of destination to DAF Delivered At Frontier …named place DES Delivered Ex Ship …named place of destination DEQ Delivered Ex Quay …named place of destination DDU Delivered Duty Unpaid …named place of destination DDP Delivered Duty Paid …named place of destination Source: Incoterms ICC1.4.3 New Terminologies The terminologies listed below are used in modern procurement practice around the world. This table is only for general reference purposes, those wishing to adopt the terminology, as a way of doing business should read the full document to gain a thorough understanding of how the terminologies are applied in practice. Term MeaningDoc DRS 52001 Version 0.1 (draft) Page 7
  • SAMPLE - PROCUREMENT MANUAL Term MeaningDoc DRS 52001 Version 0.1 (draft) Page 8
  • SAMPLE - PROCUREMENT MANUAL1.5 THE APPROACH TO PROCUREMENT MANAGEMENT This section of the Procurement Manual has been included as guide to help the procurement personnel to understand the general approach that should be applied to ensure timely and cost-effective procurement of goods and services. This approach is fundamental in achieving ‘best value for money’ in procurement practice and process.1.5.1 Procurement Management Procurement management is not just tendering, contracting, canvassing or buying. It is a professionally managed interaction of many and varied activities including the effective use of resources. Vision The indicative procurement Vision in the public sector should be as follows, ‘Procurement will serve the outcomes and objectives of the Country or Company by delivering resources to government in a timely cost effective, transparent and ethical manner’ Mission; Utilize a level of professional procurement practice/development that produces an environment that uses the tools of good communication, governance and cross-functional activity to achieve the Vision. The procurement management process involves the management of both ‘upstream’ and ‘downstream’ activities. The ‘downstream’ activities involve process issues such as;  budgeting,  production of tracking documents,  receiving goods and services  paying Suppliers. While each activity is important, the more significant in achieving value for money is the ‘upstream’ activity. The concept of ‘upstream’ activities underpinning procurement management is important in understanding how procurement is managed to produce ‘best value for money’ and can be illustrated by the following steps.Doc DRS 52001 Version 0.1 (draft) Page 9
  • SAMPLE - PROCUREMENT MANUAL SUPPLY PLANNING SPECIFIC REQUIREMENTS IDENTIFICATION CONTRACT STRATEGY SUPPLIER SELECTION FINALISING THE CONTRACT MANAGING THE SUPPLY REVIEW Each of the activities is not discrete but overlaps with other activities. 1.5.1.1 Supply planning The purpose of supply planning is to ensure the existence of a viable and dynamic supply market to which buyers have ready access now and in the future. There are three main tasks:  Establish the significance to buyers of the goods or services sought. (Critical needs evaluation)  Gain an understanding of the present and possible, future market conditions.  Change some features of the current supply market to meet the full requirements of buyers in the future. A number of techniques can be used by buyers to assist in each task including:  Supply positioning.  Vulnerability analysis.  Supplier preference overview.  Procurement marketing.  Reverse marketing.  Supplier improvement. 1.5.1.2 Specific requirements identification Requirements identification is a cross functional activity, (cross functional teams) it includes appropriate representation from all stakeholders in the procurement outcome. Stake holders represented in a cross functional team may be;  End users/beneficiariesDoc DRS 52001 Version 0.1 (draft) Page 10
  • SAMPLE - PROCUREMENT MANUAL  Finance/accounts personnel  Asset management  Commodity specialists By working with a cross-functional team to establish the true nature of the requirement, the supply market can be effectively managed by the Buyer to produce the optimal result for all stakeholders. The development of a culture where all interested parties become involved at an early stage of the procurement cycle can be useful. It is also useful to understand what is really required as opposed to what is specified. The Buyer/Supplier relationship should be pro-actively managed. A number of techniques can be used by Buyers to identify requirements such as:  Market intelligence.  Supplier intelligence.  Supplier conditioning. 1.5.1.3 Contract strategy The purpose of contract strategy is to define the right contractual arrangements within which Suppliers can make a maximum contribution to a Buyer’s organization. Contract strategy includes deciding on the number of Suppliers to be used, whether contracts should be short, medium or long- term, and the intended relationship with the supply market. It also includes taking note of the prevailing market conditions and setting in place ways and means of dealing with monopolies, cartels and other market distortions, and then managing the risk inherent in all of these situations including the issue of Supplier dependency. A number of analytical techniques and tools can be used by Buyers to evaluate the supply market such as:  Supplier dependency analysis.  Vulnerability management.  Managing monopolies and cartels.  Competitive advantage matrix.  Accredited sourcing. 1.5.1.4 Supplier selection The purpose of Supplier selection is to find the Supplier that can best achieve the objectives of the contract strategy.Doc DRS 52001 Version 0.1 (draft) Page 11
  • SAMPLE - PROCUREMENT MANUAL Supplier selection involves appraisal and evaluation, conditioning, and identifying the appropriate methodology to be used. This result can determine strategic issues such as whether it is appropriate to go to tender, to seek competitive quotations or to negotiate. The techniques used include:  Conventional appraisal.  Alliance evaluation.  Buyer/Supplier conditioning.  Bid/negotiate grid. Conventional appraisal is the standard technique concerning an assessment of capability in terms of quality, delivery and financial strength. The focus is usually on the current level of product or service that is offered with the emphasis on the need for Suppliers to offer a higher level of performance or lose the business. In some cases Buyers may wish to consider an alliance with a particular Supplier. Alliance evaluation techniques are used to assess whether there is a true management and financial orientation fit and whether the two parties can work together for mutual benefit. The alliance evaluation will include seeking evidence of the following:  A genuine commitment from the top to make it work.  A clear understanding by both parties concerning what is required.  The existence of capable staff trained to make the relationship work.  Sufficient resources and flexibility to ensure success.  Patience to overcome obstacles and teething problems.  Channels of open communication between the parties.  Goodwill trust implying an open commitment to resolve issues.  A culture of change and continuous improvement as the norm.  A dynamic approach to cost reduction and value enhancement. In all relationships of whatever type, skilled Suppliers will subject Buyers to conditioning. In addition to ensuring that they are fully aware of the process, Buyers may wish to employ some of the techniques to reverse the process. Most Buyers are obligated to use some form of competitive bidding, and others impose this obligation on themselves. Experience provides substantial evidence that, while this approach is valid in many instances, it can often be inappropriate. Experienced buyers now make use of the bid/negotiate matrix to assist in deciding on the most appropriate approach.Doc DRS 52001 Version 0.1 (draft) Page 12
  • SAMPLE - PROCUREMENT MANUAL 1.5.1.5 Finalising the contract The purpose of this activity is to create a contract with terms and conditions that provide buyers with adequate protection and remedies against possible difficulties and disputes while at the same time motivating Suppliers to perform in the best possible manner. This requires an understanding of all the legal, cost and other implications associated with the placement of the contract.1.5.2 The procurement process 1.5.2.1 Key steps in the procurement process The diagram on the following page identifies the key steps in a procurement process.Doc DRS 52001 Version 0.1 (draft) Page 13
  • SAMPLE - PROCUREMENT MANUAL UNDERSTAND THE NEED IDENTIFY AN APPROPRIATE PROCUREMENT STRATEGY APPOINT THE CROSS FUNCTIONAL TEAM COLLECT ALL AVAILABLE INFORMATION DEVELOP A BUSINESS CASE DEVELOP A PROCUREMENT PLAN DEVELOP AN EVALUATION PLAN DEVELOP, APPROVE AND RELEASE DOCUMENTS TO POTENTIAL SUPPLIERS EVALUATE RESPONSES SELECT SUCCESSFUL SUPPLIER NOTIFY OTHER SUPPLIERS NEGOTIATE KEY ISSUES WITH SELECTED SUPPLIER DEVELOP, APPROVE AND SIGN CONTRACT DEVELOP AND IMPLEMENT SUPPLIER DEVELOPMENT PLANS MANAGE CONTRACT MEASURE AND EVALUATE SUPPLIER REVIEW, MEASURE AND EVALUATE THE PROCUREMENT PROCESS REVIEW AND UPDATE ORGANISATION’S PROCUREMENT PROFILE A number of steps will normally take place in parallel rather than sequentially as illustrated. Specifically, it may be necessary to identify a procurement strategy and establish a cross functional team before it is possible to commence collecting information leading to the development of a business case and an acquisition plan.Doc DRS 52001 Version 0.1 (draft) Page 14
  • SAMPLE - PROCUREMENT MANUAL 1.5.2.2 Key deliverables to support the procurement process Buyers should be guided by the above steps, noting the key steps and key deliverables required to support a significant, complex or high value procurement activity, specifically as illustrated in the diagram below. Business Case Acquisition initiation Acquisition Plan Acquisition planning Procurement Contract recommendation development Contract Contract finalisation Periodic and Contract annual reporting management and evaluation1.5.3 Other issues impacting on procurement Issues that have the potential to impact on the management of a procurement are: Cost. - Most organizations are seeking ways to cut costs in order to reduce budgets and taxes. Supply changes – more or less Suppliers? - Buyers in capital intensive situations now face a reduced number of potential Suppliers. Buyers in non-capital intensive environments face a very large increase in potential Suppliers; the response has been buyers rationalising the supply market in order to consolidate volumes to give themselves bigger leverage with Suppliers and to ensure that they can exert greater control and influence over a smaller number of Suppliers.Doc DRS 52001 Version 0.1 (draft) Page 15
  • SAMPLE - PROCUREMENT MANUAL International procurement. Buyers are finding that, in order to obtain the most cost competitive and technically advanced Suppliers, they are having to switch the basis of their sourcing from local to regional and often international markets. Increased contracting out of non-core activities. Many organizations are focusing on core activities and are contracting to third parties the responsibility for all others. This results in a proliferation in the variety of procurement activities. Centralisation/decentralisation. This is a dilemma facing most organizations. Whatever choice the organization makes, the procurement function should have the flexibility to work with and respond to the changing needs of the organization. Impact of technology. Technology has provided an enormous capability to collect and analyse data and convert it into effective information as the basis of decision-making. If procurement is to make full use of technology, it must learn to manage and control it. The search for new relationships. The emphasis is on developing a range of relationships depending on the needs of the organization and the nature of the supply base.1.5.4 The procurement team Buyers should manage and coordinate information and develop clear and logical procurement documents. However, Buyers cannot undertake this task alone and ideally should seek input from a wide range of people and sources including representatives from the appropriate Government Departments, and other specialists. The need to have other organizations involved in the approval process should not be seen as introducing unnecessary levels of difficulty or complexity, rather it should be viewed as an opportunity to gain value from other buyers who may be more experienced in strategic, complex and higher value procurement activities. This will ensure that strategies, plans and processes are developed in accordance with key procurement principles while minimising the potential for delays. 1.5.4.1 A team approach Successful procurement is enhanced by the establishment of an appropriate, cross functional team. When establishing the team consider the following factors: What does the team need to do ? – Is it responsible for the development of?  The specification.  A business case.Doc DRS 52001 Version 0.1 (draft) Page 16
  • SAMPLE - PROCUREMENT MANUAL  An acquisition plan.  The tender evaluation plan.  The tender document. Will the team be involved in?  The evaluation.  Negotiations.  Contract development.  Contract management. Who is needed on the team? The team may be made of representatives from the  end users,  legal and or finance areas,  engineering/technical,  industry sector expert/s  representatives from the Dept. or other Government Departments (if appropriate), and others who may be involved in the development of the requirement, the evaluation of tender responses, or the management of the contract. It is important to consider the following issues,  What experience and skills do the team have and need?  Is training required?  What resources are required to manage the procurement process?  When should the team meet?  Do roles and responsibilities need to be defined?  Who manages the procurement process in the organization?  Is it the buyer, or is someone appointed?  Does the organization have the necessary level of knowledge, experience and skills to manage complex procurement processes? If buyers do not have the necessary level of knowledge, experience and skill required, advice and support should be sought, initially from senior management within the buyer’s organization, then from the appropriate member or representative of the Government Departments or external advisers and specialists. 1.5.4.2 Knowledge, experience and skills in managing the procurement process The knowledge, experience and skills required for managing complex procurement processes include:Doc DRS 52001 Version 0.1 (draft) Page 17
  • SAMPLE - PROCUREMENT MANUAL  Interpersonal experience and skills  communications and negotiation experience and,  project/risk management.  subject specific knowledge,  relevant industry knowledge;  high-level procurement,  financial management/budgeting experience;  human resources skills; and  legal contract/process knowledge.Doc DRS 52001 Version 0.1 (draft) Page 18
  • SAMPLE - PROCUREMENT MANUAL PART 2 PROCUREMENT MANAGEMENTDoc DRS 52001 Version 0.1 (draft) Page 19
  • SAMPLE - PROCUREMENT MANUALPART 2 – PROCUREMENT MANAGEMENT Bid and contract activities undertaken by Agencies for the procurement of supplies must comply with the requirements of Rule XXXV – Local Government Supply and Property Management Act XX – Rules and Regulations Implementing the Local Government Code of XX and the National Government. A summary of the principal requirements is provided in Annex 1. The generic contract documentation provided by the World Bank and the Asian Development Bank for use on projects funded by those entities are not inconsistent with the requirements of the Rule.2.1 USE OF GENERIC CONTRACT DOCUMENTATION Generic contract documentation is standard documents that can be used to make up a specific contract document. This is by either using the generic document exactly as it is or else by starting with a standard document and making changes to suit the particular needs of the contract. There are a number of standard terms used to nominate specific delivery arrangements – known as ‘Incoterms’ – that are based on the official ICC rules for the interpretation of trade terms. A short description of each term appropriate for Dept. procurements is provided in Section 2.1.1 It is standard practice for the Dept. to provide generic contract documents as word processing (or spreadsheet) computer files which are in ‘Read Only’ format. This is to ensure that the base document is not accidentally ‘overwritten’ and thus lost when a new document is being generated. The various types of generic contract documents available for use in the are listed below. The details of how each type is to be used are provided in the subsections of this Manual, following the list. Bid and contract documents (see Section 2.1.2).2.1.1 Standard delivery terms for contracts Shipper In some cases it has been necessary to use the same term to express two different meanings simply because there has been no suitable alternative. Traders will be familiar with this difficulty both in the context of contracts of sale and also of contracts of carriage. Thus, for example, the term ‘shipper’ signifies the person handing over the goods for carriage .and the person who makes the contract with the carrier. However, these two ‘shippers’ may be different persons, for example under an FOB contract where the seller would hand over the goods for carriage and the buyer would make the contract with the carrier.Doc DRS 52001 Version 0.1 (draft) Page 20
  • SAMPLE - PROCUREMENT MANUAL Carrier Any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport, by rail, road, air, sea, inland waterway or by a combination of such modes. If subsequent carriers are used for the carriage to the agreed destination, the risks passes when the goods have been delivered to the first carrier. This term may be used irrespective of the mode of transport, including multimodal transport. Delivery It is particularly important to note that the term ‘delivery’ is used in two different senses in Incoterms. Firstly, it is used to determine when the seller has fulfilled his obligation which is specified in clauses throughout Incoterms Secondly, the term ‘delivery’ is also used in the context of the buyer’s obligation to take or accept delivery of the goods, and obligations which appears in Incoterms. The word delivery means first that the buyer ‘accepts’ the very nature of the ‘C-’ term (such as CIF, CPT), namely that the seller fulfils his obligations upon the shipment of the goods and second that the buyer is obliged to receive the goods. Ship and In the terms intended to be used for carriage of goods by Vessel sea, the expression, ‘ship’ and ‘vessel’ are used interchangeably. Needless to say, the term ‘ship’ would have to be used when it is an ingredient in the trade term itself as in ‘free alongside ship’ (FAS) and ‘delivery exship’ (DES). Also, in view of the traditional use of the expression ‘passed the ship’s rail’ in FOB, the world ‘ship’ has had to be used in that connection. Checking In the A9 and B9 clauses of Incoterms the headings, and ‘checking-packaging-marking’ and ‘inspection of the goods’ Inspection respectively have been used. Although the words ‘checking’ and ‘inspection’ are synonyms, it has been deemed appropriate to use the word ‘checking’ with respect to the seller’s delivery obligation under A4 and to reserve the word ‘inspection’ for the particular case when a ‘pre-shipment inspection’ is performed, since such inspection normally is only required when the buyer, or the authorities of the export or import country, want to ensure that the goods conform with contractual or official stipulations before they are shipped. EXW The seller delivers when he places the goods at the disposal of the buyer at the seller’s premises or another named place Ex Works (such as works, factory, warehouse, and so on) but not cleared for export and not loaded on any collecting vehicle. This term thus represents the minimum obligation for the seller, and the buyer has to bear all costs and risks involved in taking the goods from the seller’s premises. FCA The seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. It should Free be noted that the chosen place of delivery has an impact on Carrier the obligations of loading and unloading the goods at that place. If delivery occurs at the seller’s premises, the seller is responsible for loading, If delivery occurs at any other place,Doc DRS 52001 Version 0.1 (draft) Page 21
  • SAMPLE - PROCUREMENT MANUAL the seller is not responsible for unloading. This term may be used irrespective of the mode of transport, including multimodal transport. FAS The seller delivers when the goods are placed alongside the vessel at the named port of shipment. This means that the Free buyer has to bear all costs and risks of loss of or damage to Alongside the goods from that moment. The FAS term required the Ship seller to clear the goods for export. The term can be used only for sea or inland waterway transport FOB The seller delivers when the goods pass the ship’s rail at the named port of shipment. This means that the buyer has to Free On bear all costs and risks of loss of or damage to the goods Board from that point. The FOB term requires the seller to clear the goods for export. This term can be used only for sea or inland waterway transport. If the parties do not intend to deliver the goods across the ships’ rail, the FCA term should be used. CFR The seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the costs and freight Cost and necessary to bring the goods to the named port of destination Freight but the risks of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer. The CFR term requires the seller to clear the goods for export. This term can be used only for sea and inland waterway transport. If the parties do not intend to deliver the goods across the ship’s rail, the CPT term should be used CIF The seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the costs and freight Cost, necessary to bring the goods to the named port of destination Insurance but the risks of loss of or damage to the goods, as well as and any additional costs due to events occurring after the time of Freight delivery, are transferred from the seller to the buyer, However, in CIF the seller also has to procure marine insurance against the buyer’s risks of loss of or damage to the goods during the carriage. Consequently, the seller contracts for insurance and pays the insurance premium. The buyer should note that under the CIF term the seller is required to obtain insurance only on minimum cover, the buyer would either need to agree as much expressly with the seller or to make his own extra insurance arrangement. The term CIF requires the seller to clear the goods for export. This term can be used only for sea and inland waterway transport. If the parties do not intend to deliver the goods across the ship’s rail, the CIP term should be used. CPT The seller delivers the goods to the carrier nominated by him but the seller must in addition pay the costs of carriage Carriage necessary to bring the goods to the named destination. This Paid To means that the buyer bears all risks and any other costsDoc DRS 52001 Version 0.1 (draft) Page 22
  • SAMPLE - PROCUREMENT MANUAL occurring after the goods have been so delivered. CIP The seller delivers the goods to the carrier nominated by him but the seller must in addition pay the costs of carriage Carriage necessary to bring the goods to the named destination. This and means that the buyer bears all risks and any additional costs Insurance occurring after the goods have been so delivered. Paid to However, in CIP the seller also has to procure insurance against the buyer’s risk of loss or damage to the goods during the carriage. Consequently, the seller contracts for insurance and pays the insurance premium. DAF The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport not unloaded, Delivered cleared for export, but not cleared for import at the named At Frontier point and place at the frontier, but before the customs border of the adjoining country. The term ‘frontier’ may be used for any frontier including that of the country of export. Therefore, it is of vital importance that the frontier in question be defined precisely by always naming the point and place in the term. This term may be used irrespective of the mode of transport when goods are to be delivered at a land frontier. When delivery is to take place in the port of destination, on board a vessel or on the quay (wharf), the DES or DEQ terms should be used. DES The seller delivers when the goods are placed at the disposal of the buyer on board the ship not cleared for import at the Delivered named port of destination. The seller has to bear all the costs Ex Ship and risks involved in bringing the goods into the named port of destination before discharging. If the parties wish the seller to bear the costs and risks of discharging the goods, then the DEQ term should be used. This term can be used only when the goods are to be delivered by sea or inland waterway or multimodal transport on a vessel in the port of destination. DEQ The seller delivers when the goods are placed at the disposal of the buyer not cleared for import on the quay (wharf) at the Delivered named port of destination. The seller has to bear costs and Ex Quay risks involved in bringing the goods to the named port of destination and discharging the goods on the quay. The DEQ term requires the buyer to clear the goods for import and to pay all formalities, duties, taxes and other charges upon import. This term can be used only when the goods are to be delivered by sea or inland waterway or multimodal transport on discharging from a vessel onto the quay (wharf) in the port of destination. However, if the parties wish to include in the seller’s obligation the risks and costs of the handling of the goods from the quay to another place (warehouse, terminal, transport station, etc,) in or outside the port, the DDU or DDP terms should be used. DDU The seller delivers the goods to the buyer, not cleared forDoc DRS 52001 Version 0.1 (draft) Page 23
  • SAMPLE - PROCUREMENT MANUAL Delivered import, and not unloaded from any arriving means of Duty transport at the named place of destination. The seller has to Unpaid bear the costs and risks involved in bringing the goods thereto, other than, where applicable, any ‘duty’ (which term includes the responsibility for and the risks of the carrying out of customs formalities, and the payment formalities, customs duties, taxes, and other charges) for import in the country of destination. Such ‘duty’ has to be borne by the buyer as well as any costs and risks caused by his failure to clear the goods for import in time. This term may be used irrespective of the mode of transport but when delivery is to take place in the port of destination on board the vessel or on the quay (wharf), the DES or DEQ terms should be used. DDP The seller delivers the goods to the buyer, cleared for import, and not unloaded from any arriving means of transport at the Delivered named place of destination. The seller has to bear all the Duty Paid costs and risks involved in bringing the goods thereto including, where applicable, any, ‘duty’ (which term includes the responsibility for and the risk of the carrying out of customs formalities and the payment of formalities, customs duties , taxes and other charges) for import in the country of destination. While the EXW term represents the minimum obligation for the seller, DDP represents the maximum obligation. This term should not be used if the seller is unable directly or indirectly to obtain the import license. However, if the parties wish to exclude from the sellers’ obligations some of the costs payable upon import of the goods (such as value added tax; VAT) this should be made clear by adding explicit wording to this effect in the contract of sale. This term may be used irrespective of the mode of transport but when delivery is to take place in the port of destination on board the vessel or on the quay (wharf), the DES or DEQ terms should be used2.1.2 Bid and contract documents (INSERT RELEVANT AGENCY DOCUMENT REQUIREMENT HERE) The documentation used for bids and contracts must conform to the requirements of the organization providing the funds for the procurement. Each bank has issued a set of generic bid and contract documents that they require to be used for procurement activities they are funding. The Asian Development Bank (ADB) has issued a single set of generic documents, while the World Bank (WB) has issued two sets. One set is procurement of pharmaceuticals and vaccines; the other is for all other goods.Doc DRS 52001 Version 0.1 (draft) Page 24
  • SAMPLE - PROCUREMENT MANUAL The WB document for pharmaceuticals and vaccines is titled: Standard Bidding Documents – Procurement of Pharmaceuticals and Vaccines and contains the following sections:  Invitation to Bid  Instructions to Bidders  Bid Data Sheet  General Conditions of Contract  GCC Data Sheet and Special Conditions of Contract  Technical Specifications  Schedule of Requirements  Bidding and Contract Forms  Eligibility for the Provision of Goods, Works and Services in Bank Funded Procurement The WB document for general procurement activities: Standard Bidding Documents – Procurement of Goods and contains the following sections:  Invitation for Bids  Instructions to Bidders  Bid Data Sheet  General Conditions of Contract  Special Conditions of Contract  Schedule of Requirements  Technical Specifications  Sample Forms  Eligibility for the Provision of Goods, Works and Services in Bank-Financed Procurement The ADB document covers all procurements; it does not have a formal title. It contains the following sections:  Instructions to Bidders  General Conditions of Contract  Special Conditions of Contract  Technical Specifications  Sample Forms  List of Eligible Member Countries of the Asian Development Bank2.2 PROCUREMENT PLANNING AND SCHEDULING Procurement planning and scheduling is based a standard procurement-logistics cycle with five key elements, as illustrated in the following diagram.Doc DRS 52001 Version 0.1 (draft) Page 25
  • SAMPLE - PROCUREMENT MANUAL END-USER NEEDS DEFINED Bid call and Contract award Manufacture of supplies Delivery and distribution END-USER NEEDS SATISFIED The cycle commences with the definition of the end-user needs – what they need and when it is to be provided to them. This forms the basis for preparation of technical specifications, delivery schedules and so on that are to be called up in the contract. The next element is the selection and engagement of a cost- effective Supplier of goods and services to meet the defined needs of the end-user. The element commences with the preparation of the documents that will be used to call bids – terms and conditions, technical specifications and so on. The quality of end-user satisfaction is directly dependent on the quality of the planning of procurement activities and the quality of the documentation used in the bid call and contract award process – so this is a critical step in the cycle. After bids have been received and evaluated for conformance, the preferred Supplier is selected and, after the recommendation has been approved, the contact is awarded. Award of contract initiates the commencement of the next element – the Supplier’s activities to provide the items being supplied. The exact nature of these activities will depend on the circumstances of the contract, but could include one or more of the following: Manufacture of the items. Purchase of the items from an overseas Supplier which will include a period to allow for shipment of the items from the country of origin. Purchase of the items from a local Supplier. This may be either from stock held locally, or may require the Supplier to import the required stock from overseas. The end of this element occurs when the procured items are ready for delivery to the group effecting the procurement. The next element – delivery and distribution – is the logistics aspect of the procurement cycle. The procured items areDoc DRS 52001 Version 0.1 (draft) Page 26
  • SAMPLE - PROCUREMENT MANUAL delivered to the group effecting the procurement and are inspected for acceptance. After the items are accepted, they are distributed to the end-users’ receiving points. The cycle is finished when the end-users receive the procured items. This simple procurement cycle contains seven main stages in its progress from defining the end-users’ needs to providing the goods to meet those needs, and within those seven stages there are two significant milestones; the diagram following illustrates these seven main stages and two principal milestone. Prepare and issue bid documentation Bids prepared and submitted by suppliers Bid closing date Bid evaluation Award of contract Supply of goods Delivery to acceptance point Acceptance by purchaser Distribution to end- users The main activities and typical duration for each stage is described below. Preparation and issue of bid documentation: The principal activities undertaken in this stage are preparation of bid documentation, based on the user needs, in terms of specific requirements in the special conditions of contract and technical specifications, production of document sets for Bidder, advertising the bid, issuing bid documentation and handling requests for information and clarification. For bids over the stipulated value, the bid documentation must be submitted to the funding bank organization for their review and ‘no objection’ to proceed. The duration of this stage depends on the complexity of the procurement and the extent of bid documentation to be prepared.Doc DRS 52001 Version 0.1 (draft) Page 27
  • SAMPLE - PROCUREMENT MANUAL Bids prepared and submitted by Suppliers: While the preparation and submission of bids is the responsibility of the intending Suppliers (the Bidders), the effectiveness of this stage of the procurement process is determined by the quality of the bidding documentation provided to the Bidders and the time allowed for Bidders to prepare their bids. The main activities for the Bidders are, firstly, to examine the bid documentation and understand the requirements for their bids, then – secondly – to develop and cost an offer which conforms to the bid requirements. The third activity is to prepare the documentation for the offer and then – as the fourth and final activity – to submit the offer, as a formal bid, at the stipulated time and place. The duration of this stage – the bid preparation period – depends on both the complexity of the bid and the extent of information to be included in the submitted bid. For simple bids, such as supplying standard items from local stock, the bid period may be as short as five working days from issue of the bidding documentation. For extremely complex bids, a period of up to eight weeks may be necessary to allow the Bidders sufficient time to collect information form sub-tier Suppliers and prepare the documentation required to support their bid. Another factor in determining how long to allow for the bid preparation period is the reasonable time required to allow the Bidders to collect the bid documentation once it is released, and how long it takes for the Bidders’ documentation to be sent to the bid lodgement location. For overseas Suppliers, it may be necessary to allow an additional week to allow transmission of bidding documentation. Typically, for the Dept., a period of 60 calendar days (two months) is allowed for Bidders to prepare and submit their bids. Bid evaluation: The first set of activities in the evaluation of submitted bids are review of each received bid to ensure that it complies with the general and special conditions of contract, complies with the technical requirements for the supplies. Following these activities, the details of the conforming bids are listed to allow comparative analysis and selection of the preferred Supplier. A formal recommendation is then prepared as the vehicle to proceed to award of contract. The duration of this stage will be typically between three to five days. Award of contract: Award of contract covers the review and acceptance of the recommendation, notification of the preferred Supplier, preparation of the contract documents and their presentation for signature by the authorised individuals. The levels of authority and particular requirements for award will be determined by the value of the contract.Doc DRS 52001 Version 0.1 (draft) Page 28
  • SAMPLE - PROCUREMENT MANUAL For contracts over the stipulated value, award documentation must be submitted to the funding bank organization for their review and ‘no objection’ to proceed. The duration of this stage is typically between one and two weeks. Supply of goods: The management of activities in this stage is the sole responsibility of the Supplier. It may include the manufacture of the items being procured, importation of the items from an overseas Supplier, or assembly of the items from stocks held locally by the Supplier or by some other Supplier (or subcontractor). The duration of this stage is dependent on the nature of the supply arrangements; for supply from local stocks it may be as short as one or two weeks, for supply through overseas manufacture and shipment it may be as long as two to four months. Because the duration of this stage is under the control of the Supplier, it is essential that – during the bidding stage – the Supplier be required to provide a factually based statement of the expected duration for the supply period. Delivery to acceptance point: In general, the Supplier is required to deliver the procured items to the receiving point for a formal acceptance inspection. This stage of the procurement process – which is also the first part of the logistics process – commences either with completion of manufacture or arrival of imported items, followed by inspection by the Supplier to establish that only conforming supplies will be delivered to the Agency. The Agency performs an acceptance inspection – which may be either a full inspection of the delivery or else an inspection of a random sample of the delivery – leading to acceptance and issue of the required inspection report and acceptance certificate. The duration of this stage is usually around two to four weeks; the longer period is when there are additional activities involved, such as customs and tax clearance. Distribution to end users: This stage – the second part of the logistics activities – involves the movement of the procured items from the Agency warehouse to the receiving point for the end users in the three regions. Once the items arrive at the receiving point in the they are checked to identify any damage or loss in transit, a receiving report completed, and the items made available to the end-users. The duration of this stage is typically between one and five weeks. The two principal milestones are: Bid closing date: This is the date on which all bids are to be received – it is the ‘gate’ between the period used by prospective Suppliers to prepare and document their offerDoc DRS 52001 Version 0.1 (draft) Page 29
  • SAMPLE - PROCUREMENT MANUAL to supply, and the start of the period of evaluation of the offers to select the successful Supplier and proceed to award of contract. Acceptance by Purchaser: This is the date on which the Purchaser accepts the goods from the Supplier as conforming to the requirements of the contract and therefore able to be distributed to the end-users. The Procurement Plan is the master planning document for the Agency. It is maintained as a spreadsheet and summarises – by commodity – the main features of each tender (Draft included in the appendicis to this manual). The entries – one entry per row – on the Plan are: Tender number: The full tender number used on all documentation. Life-Plan reference: The reference number to the item as it appears in the Agency Life-Plan – this number also appears in the tender number to allow easy cross referencing. Funding: The source of the funds for the items to be procured. Procurement Type: The method for sourcing the items is identified here. Examples of the methods are: International Competitive Bidding (ICB), Sole Sourcing (SS), International Shopping (IS), National Shopping (NS). Title: The title of the (tender) contract. Comments: This is used to provide brief notes or comments about the contract. For example; it may expand on the title of the contract by indicating the materials by type or commodity. Year: The calendar year of the for procurement of the materials. Prepare documents: The planned (month-year) date in which all documentation for award of contract will be completed. Once the documentation is completed, the entry in this column is changed to ‘completed’ so that the status is easily recognised when scanning the document. Acceptance date The planned (month-year) date for acceptance of the procured items. Scheduling is the assignment of times (typically, as dates) for the start or end of the planned procurement activities. To be effective, the dates need to be realistic; for example, the duration of the period for preparation and submission of bids is 60 days (approximately 8 weeks) is a fixed requirement andDoc DRS 52001 Version 0.1 (draft) Page 30
  • SAMPLE - PROCUREMENT MANUAL thus the start of the bid evaluation activity will always be at least seven weeks after the end of the end of the period for preparation and issue of the bid documentation. The duration of some activities will be determined by the IA; these are the activities that are under the control of the IA and include the time required to prepare the bid documentation, evaluate the bids, award the contract, and so on. The time required for completion of other activities will be determined by external influences outside the control of the IA, such as manufacture or import of the goods, customs inspection and clearance, and so on. Adding the time required for each activity – illustrated graphically below – determines the expected completion date for each activity. Wk 1 Wk 2 Wk 3 Wk 4 Wk 5 Wk 6 Wk 7 Wk 9 Wk 8 Wk 10 Wk 11 Duration: 4 weeks Duration: 6 weeks These accumulated durations for the individual activities determine the start and end dates which are entered into the procurement plan. Keeping the procurement plan on schedule and tracking progress is covered later in this Manual, in Section 3.2: Expediting.2.3 DETERMINATION OF CONTRACT PACKAGES2.4 DETERMINATION OF BIDDING REQUIREMENTSDoc DRS 52001 Version 0.1 (draft) Page 31
  • SAMPLE - PROCUREMENT MANUAL2.5 PREPARATION OF BID/CONTRACT PACKAGE DOCUMENTS2.5.1 General The preparation and issue of bid documentation requires the development of a complete set of bid and contract BID PACKAGE documents, known collectively as the Bid Package. This package of documents contains the invitation to bid, instructions on how the bid is to be submitted, general conditions of contract that will apply to the successful Bidder, the technical specification and schedule of requirements, and a set of standard forms to be competed by the Bidder and submitted as their formal offer to supply. The bid package is created from the generic documents(refer to Section 2.1), modified as appropriate to suit the particular needs and circumstances of the bid being called. The individual elements of the bid package are described below.2.5.2 Elements of the bid package Form of response Schedule of requirements Technical Specification GCC Data Sheet and Special Conditions of Contract General Conditions of Contract Bid Data Sheet Instructions to Bidder Invitation to BidDoc DRS 52001 Version 0.1 (draft) Page 32
  • SAMPLE - PROCUREMENT MANUAL Invitation to Bid: The invitation to bid states the general requirements for interested parties to obtain a complete set of bidding documents. This will cover the purchase cost (if any) for the documents, the amount of security deposit (if any) required to be submitted with the bid, and details of the time and place for lodging bids. Instructions to Bidders: The instructions identify the rules that will apply to the acceptance of bids, how requests for information and clarification by Bidders will be handled and how amendments to bid documents will be managed, and the format to be used for presentation of the bid. The instructions also provide information on the process to be followed by the Purchaser for the opening and evaluation of bids, and the award of contract. Bid Data Sheet: The bid data sheet is a list of specific information applicable to the exact nature of the bid being called, referenced to the individual clauses of the Instructions to Bidders. General Conditions of Contract (GCC): This is a set of standard clauses that sets out all the rights and obligations of the parties to the contract when it is awarded. These are standard clauses provided by the World Bank and Asian Development Bank for use on the projects they fund – they must not be altered in any way. Any changes and complementary information, which may be needed for a particular contract, is to be provided only through the Special Conditions of Contract. GCC Data Sheet and Special Conditions of Contract: This contains a data sheet – similar to that used in the Instructions to Bidders, which provides a list of specific information applicable to the exact nature of the contract to be awarded, referenced to the individual clauses of the General conditions of contract. The Special Conditions of Contract cover particular aspects such as packaging, delivery, insurance, currency, payment, warranty and the like. Schedule of Requirements: This is a listing of the individual items that are to be procured, identifying the quantity and the delivery schedule required by the Purchaser. Technical Specifications: A set of clear and precise standards covering the supplies, expressed in terms of dimensions, configuration, performance and other user-focussed criteria. Wherever possible, the technical specifications should incorporate (by reference) applicable national and international standards Form of Response: A set of forms to be completed by the Bidder to ensure that the bid is complete and consistent. Typical forms to be completed by theDoc DRS 52001 Version 0.1 (draft) Page 33
  • SAMPLE - PROCUREMENT MANUAL Bidder are acknowledgment of supply in accordance with the provided conditions of contract, price and delivery schedules, bid security form, contact form, performance security form, Supplier’s authorisation (where applicable) and qualification information.2.5.3 Technical specification The technical specification describes the nature of the items to be supplied – the requirements – and the packaging in which the items are to be supplied. The requirements may be identified in terms of the desired performance characteristics, or else specified in terms of applicable standards. To some extent, the technical specification is a compromise between providing particular details to ensure that the end user requirements are exactly satisfied and general detail to allow the Supplier flexibility. Unless there are good reasons to the contrary, the specification should allow for a Supplier to provide equivalent alternatives. In these circumstances it is the responsibility of the Supplier to establish that the alternative offered is equivalent, and is acceptable to the Purchaser. The packaging specification should specify the type of packaging and the required labelling and marking to be applied. There are two terms used in this context: Packaging – which is the container in which the items are placed, such as a wooden box, metal drum, cardboard box, and so on. Packing – which is the material placed around the items to protect them inside the packaging. The packaging should be specified in terms of its expected handling, transport and storage requirements; that is, protection of the contents from shock, vibration, heat, dust, moisture, liquids, vermin, pilferage, and so on. Packing materials are not usually specified; it is the responsibility of the Supplier to meet the expected handling, transport and storage requirements by providing a suitable combination of packing and packaging. Preparation of the technical specification should take into account the needs for both final inspection for conformance by the Supplier and acceptance inspection by the Purchaser. To this end, the technical inspection should specify individual requirements as objective criteria; that is, their assessment for conformance is not dependent on the subjective judgment of an individual. For example, printing of a book cover in ‘medium blue ink’ is not able to assessed objectively, but ‘ink – Pantone Blue 072U’ can be assessed objectively against a standard colour chip. The technical specification may be accompanied by a ‘Statement of Work’ which describes the services and activities that are to be performed by the Supplier as part of the contract.Doc DRS 52001 Version 0.1 (draft) Page 34
  • SAMPLE - PROCUREMENT MANUAL As far as possible, this should be expressed in terms of ‘outputs’ or ‘deliverable items’ that will be the end result of work activities.2.5.4 Schedules Schedules are usually presented as lists or tables and form part of the contract’s technical requirements or special conditions. The three most common schedules are: Delivery schedule – which indicates the quantity, time (date) of delivery and location for each separate delivery point or part delivery to be made by the Supplier. Payment schedule – which indicates the amount (usually as a percentage of the total contract value) to be paid on completion of a defined event or activity. For supply of items Price schedule – which the Supplier completes to give a breakdown for the main components of the price offered. The following table illustrates the World Bank pro-forma for the Price Schedule for locally purchased goods. 1 2 3 4 5 6 7 8 9 Item Descript Count Quantit Unit Cost of Total Unit price Sales and ion ry of y price1 local price per item other origin EXW per labour, EXW per final taxes item raw item destination payable if material, and unit Contract (cols. 4 x and price of is 5) compone other awarded nt2 incidental services3 1 Currencies to be used in accordance with Clause XYZ of the Instructions to Bidders. The price shall include all customs duties and sales and other taxes already paid orDoc DRS 52001 Version 0.1 (draft) Page 35
  • SAMPLE - PROCUREMENT MANUAL payable on the components and raw material used in the manufacture or assembly of the item or the customs duties and sales and other taxes paid on the previously imported item offered ex warehouse, ex showroom, or off-the-shelf. These factors should not be entered separately. 2 Indicated as a percentage of the EXW price. 3 Optional and only when required in accordance with Clause XYZ (a)(iii) and (iv) in the Instructions to Bidders and the related provisions in the Bid Data Sheet.2.6 PRE-QUALIFICATION OF BIDDERS2.6.1 General The initial assessment is focussed on identifying both the capabilities of the Supplier and the potential risk areas. Capability is based on both resources and systems; risk is determined by inadequacies of the resource and instabilities in the systems. The key aspects of the evaluation are: Planning: Are there arrangements in place to ensure that there is conscious and deliberate progress towards meeting the Purchaser’s requirements? Control: Does the Supplier apply systematic and effective performance evaluation to ensure that planning objectives are satisfied? Verification: Does the Supplier undertake checking at critical stages to ensure that all contractual and technical requirements are being met? Visibility: Is there tangible evidence that previous contracts have been completed properly and results can be evaluated objectively? The answers to these questions determine the ability of the Supplier to provide the products being procured by the Purchaser; they also indicate the nature and extent of the areas of risk within the Supplier’s organization.2.6.2 The assessment process Each assessment needs to be tailored to the particular nature of the contract – the type of goods and the Supplier’s processes. The criteria for assessment of Suppliers are listed in Section 2.6.3, below. An alternative approach for assessment of overseas Suppliers is described in Section 2.6.2.1. The principal stages in the assessment process are as follows: Prepare the assessment checklist. The checklist needs to be specific for each Supplier. A general purpose checklist is provided in Annex 3, covering the following topics:Doc DRS 52001 Version 0.1 (draft) Page 36
  • SAMPLE - PROCUREMENT MANUAL Corporate data: The general information about the financial aspects of the Supplier’s business. Management strengths and limitations: Evaluation of the ways the main aspects of the business are managed. Work processes: Evaluation of the equipment and capability of the people using the equipment to produce the goods as required. General indicators: Evaluation of the activities used to support production and delivery. Business management system: Evaluation of how the Suppliers recognises and addresses problems. This checklist should be examined and modified to suit the pre- qualification assessment about to be undertaken. Conduct the assessment of the Supplier’s capability – at the Supplier’s premises. So that the Supplier is able to assist in the evaluation, it may be helpful to provide them with a copy of the checklist before the assessment visit. During the visit, the assessment uses the checklist and seeks to collect information on each checklist item through a process of asking questions, observing how Suppliers activities, looking at equipment and facilities, and examining products and processes. Evaluate the results. Using the results of the assessment visit to identify those aspects of the Supplier’s business that may create difficulties in achieving the time and quality requirements should the contract be awarded to the Supplier Report the results. The purpose of the report is to identify risks to the Purchaser should the contact be awarded to the Supplier. Ideally, where a risk is identified, the report should also identify – in the opinion of the assessor – how the impact of that risk could be minimised. The report is also to contain an overall recommendation, in terms of one of the following: Proceeding to award of contract on the basis that the Supplier is capable of meeting the requirements of the contract. Proceeding to award of contract, but with reservations about the capability of the Supplier to meet some of the requirements of the contract unless the Supplier undertakes to implement nominated remedial actions. Not proceeding to award of contract unless implements specific actions to redress the specific deficiencies identified in the report. Where there are specific matters to be addressed by the Supplier, an extract of the report with the relevant information should made available to the Supplier.Doc DRS 52001 Version 0.1 (draft) Page 37
  • SAMPLE - PROCUREMENT MANUAL 2.6.2.1 Overseas Suppliers It is not practical to conduct a direct assessment on an overseas Supplier, but there are some alternative approaches which ma be used. These are:  Use an international inspection agency (for example, SGS, DNV or BVQI) to conduct the evaluation. The instructions to the agency should include both a copy of the checklist for them to use and instructions on how they are to report their findings to the Purchaser.  Perform a ‘desk top’ review of the Supplier, using the checklist and known information from previous contracts that the Supplier has completed.2.6.3 The assessment criteria Each individual assessment utilises a detailed checklist, based on the following evaluation criteria. FEATURE EVALUATION CRITERIA Equipment Is the equipment appropriate to the tasks and processes involved? The capacity and process capability need to be known and there should be an appropriate maintenance program to ensure that capability is maintained. Processes Are the processes capable? The specific process capability must be determined and monitoring systems established to detect drift and instability before capability is compromised. Are processes controlled? The monitoring systems should identify the need for process corrections and provide positive feedback. Personnel Are the assigned personnel competent? Individuals should be qualified for the processes to which they are assigned, and skills training provided before new types of tasks are undertaken. Succession plans for key staff should be maintained. Management Is management proactive? Management should ensure that problems are anticipated and known risks are evaluated – risk mitigation planning should be a part of the management planning process. Policies Are policies defined and promulgated? There should be unambiguous policies for critical aspects of the Supplier’s organization, particularly for communicating with theDoc DRS 52001 Version 0.1 (draft) Page 38
  • SAMPLE - PROCUREMENT MANUAL FEATURE EVALUATION CRITERIA Purchaser and for quality and schedule. Policies should be defined and published so that all those involved in the implementation of policy have a clear understanding of their responsibilities. Technical Are requirements known? review The Purchaser requirements – from the drawings, specification and contract – should be assessed and translated into specific arrangements. Documentation Is documentation controlled? control Purchaser drawings and specifications must be maintained at current versions, and made available where required. Are records maintained? Records of purchased items and materials – certificates, test reports, analyses and their like – should be maintained and identifiable to the related work activities. Verification records should be collected and maintained so that there is an unambiguous trail of conformance through the production processes. Planning Are operations planned? The production plan should identify the schedule for all work- related activities, including purchase of raw materials and components, from the start of work through to final delivery to the Purchaser. Are verification activities planned? The verification plan should identify all the inspections and tests that will be performed through the entire production cycle to ensure that quality is maintained at all stages. Supplier’s Is the Supplier’s purchasing effective? Purchasing There should be a system to ensure that the Purchaser’s requirements are adequately reflected in the Supplier’s purchasing documentation provided to subcontractors and sub- tier Suppliers. Subcontractors should be selected on the basis of their capability and capacity to meet requirements. Identification Is positive identification provided? All materials – including records – should be able to be positively identified to the items supplied to the Purchaser. Trace ability Is trace ability provided? The identity of individual items and materials should be traceable through all transformations from the finished product back to the original supply. Verification Is conformance established at all stages in the process? The provision of inspection and testing to establish conformance should begin with incoming materials and items, cover all critical phases of the production cycle and end with final inspection to establish conformance to Purchaser requirements prior to release. For batch or continuous production, set-up should be validatedDoc DRS 52001 Version 0.1 (draft) Page 39
  • SAMPLE - PROCUREMENT MANUAL FEATURE EVALUATION CRITERIA through ‘first-off’ inspection. Is verification systematic and rigorous? Inspection and test activities should be planned, and performed according to defined procedures. These procedures should also cover effective control of inspection, measuring and test equipment so that its accuracy and precision is maintained. Non- Is there positive non-conformance control? conformance Nonconforming items and materials should be detected, control identified and removed from further use until the deficiencies have been remedied. Records of non-conformance and the related remedial actions should be maintained. Handling Are handling processes controlled? Special handling requirements should be documented and ensure that the integrity of components, materials, work-in- process and finished product is maintained. Storage Is acceptable storage provided? All items held in store should be protected against loss, damage or deterioration. Where items are held for lengthy periods there should be regular inspections to ensure that stock integrity is maintained. The store management system should ensure that only authorised removals are permitted, and that the identity and location of all material is known. Packing and Are the packing and marking requirements addressed? marking Purchaser requirements for packing and marking should be identified. Final inspection before release should ensure that these requirements have been addressed. Transport Are transport requirements addressed? The arrangements for transport to the Purchaser should be identified as part of the process control plan.2.7 CALLING BIDS2.7.1 General 2.7.1.1 Closing date The standard period allowed for Bidders to prepare and submit their bids is 60 calendar days. This period may be lengthened, but only if the bank (WB or ADB, or both) has no objection. There is no set time of day for closing of the bidding period, but 10:00 am is the custom. If the deadline for the submission of bids is extended, the bidding documents are to be amended and all rights and the obligations of the Purchaser and Bidders previously subject toDoc DRS 52001 Version 0.1 (draft) Page 40
  • SAMPLE - PROCUREMENT MANUAL the deadline will thereafter be subject to the deadline as extended. 2.7.1.2 Bid security It is a condition of the Instructions to Bidders that each one provide, as part of their bid, a bid security in the amount specified in the Bid Data Sheet. The bid security is required to protect the Purchaser against the risk of Bidder’s conduct which would warrant the security’s forfeiture, as described in the Instructions to Bidders. The bid security is to be in either BHT currency or in another freely convertible currency. The security is to be in one of the following forms:  A bank guarantee or an irrevocable letter of credit issued by a reputable bank located in the Thailand or abroad, in either the form provided in the bidding documents or another, acceptable form. The bid security is be valid for thirty days beyond the validity of the bid.  A cashier’s or certified check. If the bid security is not provided, or else not in the form required, the bid will be rejected as non-responsive. Unsuccessful Bidders’ bid security will be discharged or returned as promptly as possible but not later than thirty days after the expiration of the period of bid validity. The successful Bidder’s bid security will be discharged upon the Bidder signing the contract and furnishing the performance security, as described later in Section 2.9 of this Manual. The bid security may be forfeited by either of the following:  If a Bidder withdraws its bid during the period of bid validity specified by the Bidder on the Bid Form.  In the case of a successful Bidder, if the Bidder either fails to sign the contract or to furnish performance security. 2.7.1.3 Change or withdrawal of bids A Bidder may modify or withdraw its bid after the bid’s submission, provided that written notice of the modification, including substitution or withdrawal of the bids, is received prior to the deadline prescribed for submission of bids. The Bidder is required to prepare and transmit their modification or withdrawal notice a sealed, and marked envelope, in accordance with the provisions of the Instructions to Bidders. Clause 18. A withdrawal notice may also be sent by facsimile, but must be followed by a signed confirmation copy, postmarked not later than the deadline for submission of bids. When the notice of change or withdrawal, the identity of the Bidder and the date of receipt is to be recorded on a register for that purpose. This register will be part of the bid and contract record.Doc DRS 52001 Version 0.1 (draft) Page 41
  • SAMPLE - PROCUREMENT MANUAL2.7.2 Notification of opportunity to bid Individuals, companies and organizations with an interest in preparing and submitting a bid will be made aware of the opportunity to bid by the following means:  An advertisement in at least one newspaper of general circulation in the.  An advertisement in Development Business and/or well- known technical magazines, for large, specialised, or important contracts;  A letter addressed to interested Bidders who, following the publication of the General Procurement Notice, have expressed interest in bidding for the goods for which the invitation is issued.  Optionally, a circular to consular or diplomatic representatives of countries with potential Bidders. A copy of all advertisement, notices, letters and circulars must be retained as part of the bid file. (Refer also to Section 3.8 of this Manual.) Each respondent to the advertisement or notice is to be provided with a copy of the Invitation for Bids; this provides information that enables potential Bidders to decide whether to participate. The Invitation for Bids should be included with letters or circulars to potential Bidders. Apart from the essential items listed in the standard bidding documents, the Invitation for Bids should also indicate any important bid evaluation criteria (for example, the application of a margin of preference in bid evaluation) or qualification requirement (for example, a requirement for a minimum level of experience in manufacturing a similar type of goods for which the Invitation for Bids is issued). As the Invitation for Bids will be incorporated into the bidding documents, the information contained in the Invitation for Bids must conform to the bidding documents and, in particular, to the relevant information in the Bid Data Sheet.2.7.3 Provision of documents to Bidders (INSERTION FOR FUTURE CONSIDERATION)2.7.4 Communication with Bidders In general, it is not permitted for any person in the Purchaser’s procurement team to communicate with Bidders from the time the bidding documents are distributed to the prospective Bidders until the bidding period has closed. However, communication – which must be in writing – is permitted for the purpose of questions and clarification, and for the issue of amendments to the bidding documents. The applicable requirements for the communications are described in the following topics.Doc DRS 52001 Version 0.1 (draft) Page 42
  • SAMPLE - PROCUREMENT MANUAL 2.7.4.1 Questions and clarifications During the period allowed for preparation of bids, a prospective Bidder may requiring clarification of some aspect of the bidding documents. To do this the Bidder must submit the request for clarification in writing (letter or facsimile) to the indicated in the Instructions To Bidders. This request must be received no later than thirty days prior to the deadline for the submission of bids prescribed in the Bid Data Sheet. The response to any request for clarification of the bidding documents must be in writing. Written copies of the Purchaser’s response (including an explanation of the query but without identifying the source of inquiry) is to be sent to all prospective Bidders that have received the bidding documents. Each request for clarification is to be recorded in a register maintained for that purpose. The register is to record the identity of the Bidder making the request, the date the request was received, brief details on the nature of the clarification sought, and the date on which the details of the clarification was transmitted to all Bidders. 2.7.4.2 Amendments At any time prior to the deadline for submission of bids, the Purchaser, for any reason, whether at its own initiative or in response to a clarification requested by a prospective Bidder, may modify the bidding documents by issuing an amendment notice amendment. All prospective Bidders that have received the bidding documents will be notified of the amendment in writing or by facsimile, and will be bidding on them. In order to allow prospective Bidders reasonable time in which to take the amendment into account in preparing their bids, the Purchaser, at its discretion, may extend the deadline for the submission of bids. For each amendment issued, the amendment notice is to be dated with the date of use and numbered sequentially (Amendment Notice #1, Amendment Notice #2, and so on). The issue of each amendment is to be recorded in an amendment register maintained for that purpose. The register is to record the amendment notice number, the date of issue, and a brief description of the basis of the amendment. The original of each amendment notice is to be kept with the master copy of the bid/contract documents so that they can be included in the final version of the contract.2.7.5 Receiving bids The Bidders will have been instructed (in the Instructions to Bidders) that they are to seal the original and each copy of the bid in separate envelopes, marking the envelopes asDoc DRS 52001 Version 0.1 (draft) Page 43
  • SAMPLE - PROCUREMENT MANUAL ‘ORIGINAL’ and ‘COPY.’ The envelopes are then be sealed in an outer envelope The inner and outer envelopes are to be marked as follows:  Addressed to the Purchaser at the address given in the Bid Data Sheet.  With the contract name as indicated in the Bid Data Sheet, the Invitation for Bids (IFB) title and number indicated in the Bid Data Sheet, and a statement: ‘DO NOT OPEN BEFORE,’ to be completed with the time and the date specified in the Bid Data Sheet. As provided in the Instructions To Bidders.  The inner envelopes is also indicate the name and address of the Bidder to enable the bid to be returned unopened in case it is declared ‘late’ – this aspect is to be checked as each bid is received. Prior to the bid closing time, the bids are to be given to the Chair of the oversight committee for safe custody. At bid closing time, the XXXX committee will assemble in the designated room – with sufficient capacity for attendance by Bidders to observe the bid opening process (refer to Section 2.8). A box is t be provided to allow Bidders to deposit their bids; the chair of the XXX Committee will place bids received beforehand into the box. Any bid received after the prescribed deadline for submission of bids is to be rejected and returned unopened to the Bidder.2.8 EVALUATION OF BIDS2.8.1 General The requirements for evaluation of submitted bids described in this Manual are based on Royal Thailand Government, World Bank and Asian Development Bank requirements The review and evaluation of bids is to be performed by one or more competent persons, appointed for that purpose. (A competent person is one who is knowledgeable in the content of the technical specification and has no direct interest in the result of the bid evaluation.) The person, or persons collectively, performing the evaluation of the bids will be identified as ‘the Bid Reviewer’. The Bid Reviewer is responsible at all times during the evaluation process for the security and integrity of the bid documents and any associated review and evaluation documentation. Unless in active use, this documentation shall be kept in individual binders and maintained kept in locked cabinets or cupboards. The identity of all key holders shall be known at all times.Doc DRS 52001 Version 0.1 (draft) Page 44
  • SAMPLE - PROCUREMENT MANUAL During evaluation of the bids, the Bid Reviewer may, at its discretion, ask a Bidder for a clarification of its bid. This request for clarification, and the response to the request, must be in writing, and no change in the prices or substance of the bid can be requested by the Bid Reviewer, offered by the Bidder, or allowed by the Bid Reviewer. Except for the purpose of formal clarification, or other communication as may be allowed within the terms and conditions of the bid and contract process, no Bidder shall be allowed to the Bid Reviewer on any matter relating to its bid, from the time of the bid opening to the time the contract is awarded. Bidders are to be made aware – through the terms and conditions of the Instructions To Bidder documentation – that any effort by a Bidder to influence the Bid Reviewer in making decisions on bid evaluation, bid comparison, or contract award may result in the rejection of the Bidder’s bid. Evaluation of bids may be through a merit point system which assigns weighing evaluation factors to the various components of the bid. However, the selection of factors and the number of points allocated to each factor must have been previously specified in the Bid Data Sheet provided to Bidders.2.8.2 Opening of bids Bids will be opened in public; that is, the presence of Bidders’ representatives who choose to attend, at the time, on the date, and at the place specified in the Bid Data Sheet. All individuals attending the bid opening are required to sign a register provided for that purpose. Each bid presented to the Bid Reviewer shall be entered into a bid register. The register is to record the Bidders’ names, bid modifications or withdrawals, bid prices, discounts, the presence or absence of requisite bid security and other details that the Bid Reviewer considers appropriate. The Bid Reviewer may announce the details on the bid register at the opening. No bid shall be rejected at bid opening, except for late bids, which shall be returned unopened to the Bidder concerned. Bids (and modifications to bids that have been transmitted as permitted by the Instructions To Bidder ) that are not opened and read out at bid opening are not be considered further for evaluation, irrespective of the circumstances. Withdrawn bids are to be returned unopened to the Bidders. The Bid reviewer is to prepare minutes of the bid opening.2.8.3 Preliminary examination The Bid Reviewer is to examine the bids to determine whether they are complete, whether any computational errors have beenDoc DRS 52001 Version 0.1 (draft) Page 45
  • SAMPLE - PROCUREMENT MANUAL made, whether the required sureties have been provided, whether the documents have been properly signed, and whether the bids are generally in order. Arithmetical errors will be rectified on the following basis. If there is a discrepancy between the unit price and the total price that is obtained by multiplying the unit price and quantity, the unit price shall prevail, and the total price shall be corrected. If the Bidder does not accept the correction of the errors, its bid will be rejected, and its bid security may be forfeited. If there is a discrepancy between words and figures, the amount in words will prevail. The Bid Reviewer may waive any minor informality, nonconformity, or irregularity in a bid which does not constitute a material deviation, provided such waiver does not prejudice or affect the relative ranking of any Bidder. Before commencing the detailed evaluation, the Bid Reviewer is to determine the substantial responsiveness of each bid to the bidding documents. A substantially responsive bid is one which conforms to all the terms and conditions of the bidding documents without material deviations. Deviations from, or objections or reservations to critical provisions, such as those concerning bid security, applicable law, and taxes and duties, are material deviations. The Bid Reviewer’s determination of a bid’s responsiveness is to be based on the contents of the bid itself without consideration of any other information or documentation. If a bid is not substantially responsive, it must be rejected by the Bid Reviewer and may not subsequently be made responsive by the Bidder by correction of the nonconformity. 2.8.3.1 Conversion to single currency For comparison of bids submitted with prices and rates in currencies other than the Thai BHT, all bid prices expressed in the amounts in various currencies in which the bid prices are payable will be converted to either: The Thai BHT at the selling exchange rate established for similar transactions by the Central Bank or a commercial bank in Thailand. A currency widely used in international trade, such as US dollars, at the selling rate of exchange published in the international press for the amount payable in foreign currency; and at the selling exchange rate established for similar transactions by the Central Bank in Thailand for the amount payable in the currency of the Bid Reviewer’s country. Unless otherwise determined, bid prices in other currencies will be converted to the Thai BHT to provide a common base forDoc DRS 52001 Version 0.1 (draft) Page 46
  • SAMPLE - PROCUREMENT MANUAL evaluation of the bid. The source and date of the exchange rate for the conversion will be as specified in the Bid Data Sheet2.8.4 Evaluation and comparison of bids The Bid Reviewer will evaluate and compare the bids which have been determined to be substantially responsive. The Bid Reviewer’s evaluation of a bid is to exclude and not take into account the following: In the case of goods manufactured in Thailand or goods of foreign origin already located in Thailand, sales and other similar taxes, which will be payable on the goods if a contract is awarded to the Bidder; In the case of goods of foreign origin offered from abroad, customs duties and other similar import taxes which will be payable on the goods if the contract is awarded to the Bidder. Any allowance for price adjustment during the period of execution of the contract, if provided in the bid. The comparison shall be between the EXW price of the goods offered from within the Thailand; this price is to include all costs, as well as duties and taxes paid or payable on components and raw material incorporated or to be incorporated in the goods. In regard to the CIF named port of destination (or CIP border point, or CIP named place of destination) price of the goods offered from outside the Thailand. The Bid Reviewer’s evaluation of a bid is to take into account, in addition to the bid price quoted, one or more of the following factors as specified in the Bid Data Sheet: The cost of inland transportation, insurance, and other costs within the Thailand incidental to delivery of the goods to their final destination. The delivery schedule offered in the bid. Any deviations in payment schedule from that specified in the Special Conditions of Contract; The cost of components, mandatory spare parts, and service. The availability in Thailand of spare parts and after-sales services for the equipment offered in the bid. The projected operating and maintenance costs during the life of the equipment. The performance and productivity of the equipment offered. Any other specific criteria indicated in the Bid Data Sheet and/or in the Technical Specifications.Doc DRS 52001 Version 0.1 (draft) Page 47
  • SAMPLE - PROCUREMENT MANUAL For factors retained in the Bid Data Sheet, one or more of the following quantification methods will be applied, as detailed in the Bid Data Sheet: Inland transportation from EXW/port of entry/border point, insurance, and incidentals. Inland transportation, insurance, and other incidental costs for delivery of the goods from EXW/port of entry/border point to delivery site named in the Bid Data Sheet is to be calculated for each bid by the Bid Reviewer on the basis of published tariffs by the rail or road transport agencies, insurance companies, and/or other appropriate sources. To facilitate such computation, the Bidder is required in its bid the estimated dimensions and shipping weight and the approximate EXW/CIF (or CIP border point) value of each package. The above costs are to be added by the Bid Reviewer to EXW/CIF/CIP border point price. Delivery schedule. The evaluation shall be based on one of the following, as applicable: The Instructions To Bidder requires that the goods shall be delivered (shipped) at the time specified in the Schedule of Requirements. The estimated time of arrival of the goods at the delivery site is to be calculated for each bid after allowing for reasonable international and inland transportation time. Treating the bid resulting in such time of arrival as the base, a delivery “adjustment” is be calculated for the other bids by applying a percentage, specified in the Bid Data Sheet, of the EXW/CIF/CIP price for each week of delay beyond the base, and this is to be added to the bid price for evaluation. No credit is to be given to early delivery. The goods covered under this invitation are required to be delivered (shipped) within an acceptable range of weeks specified in the Schedule of Requirement. No credit is to be given to earlier deliveries, and bids offering delivery beyond this range are to be treated as non-responsive. Within this acceptable range, an adjustment per week, as specified in the Bid Data Sheet, is to be added for evaluation to the bid price of bids offering deliveries later than the earliest delivery period specified in the Schedule of Requirements. The goods covered under the Instructions To Bidder are required to be delivered (shipped) in partial shipments, as specified in the Schedule of Requirements. Bids offering deliveries earlier or later than the specified deliveries are to be adjusted in the evaluation by adding to the bid price a factor equal to a percentage, specified in the Bid Data Sheet, of EXW/CIF/CIP price per week of variation from the specified delivery schedule.Doc DRS 52001 Version 0.1 (draft) Page 48
  • SAMPLE - PROCUREMENT MANUAL Deviation in payment schedule. The evaluation shall be based on one of the following, as applicable: Bidders are required to state their bid price for the payment schedule outlined in the Special Conditions of Contract. The bids are to be evaluated on the basis of this base price. Bidders are, however, permitted to state an alternative payment schedule and indicate the reduction in bid price they wish to offer for such alternative payment schedule. The Bid Reviewer may consider the alternative payment schedule offered by the selected Bidder. The Special Conditions of Contract stipulate the payment schedule offered by the Bid Reviewer. If a bid deviates from the schedule and if such deviation is considered acceptable to the Bid Reviewer, the bid is to be evaluated by calculating interest earned for any earlier payments involved in the terms outlined in the bid as compared with those stipulated in the Instructions To Bidder, at the rate per annum specified in the Bid Data Sheet. Cost of spare parts The evaluation shall be based on one of the following, as applicable: The list of items and quantities of major assemblies, components, and selected spare parts, likely to be required during the initial period of operation specified in the Bid Data Sheet, is annexed to the Technical Specifications. The total cost of these items, at the unit prices quoted in each bid, is to be added to the bid price. The Bid Reviewer is to draw up a list of high-usage and high-value items of components and spare parts, along with estimated quantities of usage in the initial period of operation specified in the Bid Data Sheet. The total cost of these items and quantities is to be calculated from spare parts unit prices submitted by the Bidder and added to the bid price. The Bid Reviewer is to estimate the cost of spare parts usage in the initial period of operation specified in the Bid Data Sheet, based on information furnished by each Bidder, as well as on past experience of the Bid Reviewer or other Bid Reviewers in similar situations. Such costs are to be added to the bid price for evaluation. Spare parts and after sales service facilities in the Bid Reviewer’s country. The cost to the Bid Reviewer of establishing the minimum service facilities and parts inventories, as outlined in the Bid Data Sheet or elsewhere in the bidding documents, if quoted separately, is to be added to the bid price.Doc DRS 52001 Version 0.1 (draft) Page 49
  • SAMPLE - PROCUREMENT MANUAL Operating and maintenance costs Since the operating and maintenance costs of the goods under procurement form a major part of the life cycle cost of the equipment, these costs are to be evaluated in accordance with the criteria specified in the Bid Data Sheet or in the Technical Specifications. Performance and productivity of the equipment The evaluation shall be based on one of the following, as applicable: Where the Bidders are required to state the guaranteed performance or efficiency in response to the Technical Specification. For each drop in the performance or efficiency below the norm of 100, an adjustment for an amount specified in the Bid Data Sheet is to be added to the bid price, representing the capitalised cost of additional operating costs over the life of the plant, using the methodology specified in the Bid Data Sheet or in the Technical Specifications. Where the goods offered are to have a minimum productivity specified under the relevant provision in the Technical Specifications to be considered responsive. Evaluation is to be based on the cost per unit of the actual productivity of goods offered in the bid, and adjustment is to be added to the bid price using the methodology specified in the Bid Data Sheet or in the Technical Specifications. Specific additional criteria indicated in the Bid Data Sheet and/or in the Technical Specifications The relevant evaluation method, as detailed in the Bid Data Sheet and/or in the Technical Specifications is to be applied. 2.8.4.1 Domestic Preference If the Bid Data Sheet so specifies, the Bid Reviewer is to grant a margin of preference to goods manufactured in Thailand for the purpose of bid comparison. In accordance with the procedures described below, provided the Bidder has established, to the satisfaction of the Bid Reviewer and that its bid complies with the criteria specified in the Instructions To Bidder. The Bid Reviewer is to first review the bids to confirm the appropriateness of, and to modify as necessary, the bid group classification to which Bidders assigned their bids in preparing their Bid Forms and Price Schedules, as per the requirements in the Instructions To Bidder. All evaluated bids in each group are to be compared to determine the lowest evaluated bid for each group. The lowest evaluated bid of each group is then next compared with the lowest evaluated bids of the other groups. If thisDoc DRS 52001 Version 0.1 (draft) Page 50
  • SAMPLE - PROCUREMENT MANUAL comparison results in a bid from Group A or Group B being the lowest, it is to be selected for contract award. If, as a result of the preceding comparison, the lowest evaluated bid is from Group C, all Group C bids are then be further compared with the lowest evaluated bid from Group A, after adding to the evaluated bid price of the imported goods offered in each Group C bid, for the purpose of this further comparison only, either one of the following: The amount of customs duties and other import taxes that a non-exempt importer would have to pay for the importation of goods offered in each Group C bid. NUMBER (X%) percent of the CIF (or CIP border point or CIP named place of destination, as the case may be) bid price of such goods, if the customs duties and taxes exceed NUMBER (X%) percent of the CIF (or CIP border point or CIP place of destination) price of such goods. If the Group A bid in the further comparison is the lowest, it is to be selected for award. If not, the lowest evaluated bid from Group C, as determined from the comparison requirements, as defined in the Instructions To Bidder, is to be selected for award.2.8.5 Summary and recommendation The Bid Reviewer is to prepare a brief report on the results of the evaluation process. The report is to contain the following: The identification of the preferred Supplier (the successful Bidder) as a recommendation to proceed to award of contract. A summary of the preferred bid, identifying the significant aspects – process, rates, delivery times – of the bid. A table of comparison of all responsive bids – this table is to identify the principal features of the bids as used for the evaluation and ranking process. A summary of any adjustments made during the preliminary examination (as per Section 2.8.3). A listing of all bids rejected as being not substantially responsive, with a brief description of the principal cause of the being not responsive (as per Section 2.8.3). A record of all significant communications between the Bid Reviewer and any Bidder during the opening and evaluation process. A copy of the register of attendees at the bid opening (as per Section 2.8.2). A copy of the bid register (as per Section 2.8.2).Doc DRS 52001 Version 0.1 (draft) Page 51
  • SAMPLE - PROCUREMENT MANUAL A copy of the minutes of the bid opening (as per Section 2.8.2) The report is to be submitted to the authority responsible for proceeding to award of contract.2.9 SELECTION, NEGOTIATION AND AWARD OF CONTRACT2.9.1 Selection The Bid Reviewer will have prepared and submitted a summary report on the bid evaluation process (refer to Section 2.8.5) that identifies the preferred Bidder. The Bidder that has submitted the lowest responsive bid and is qualified to perform the contract satisfactorily will be the one formally selected of the Bidder for award of contract. The preferred Bidder – as identified in the summary report – will be the one with the lowest responsive bid. The qualification of the technical capability of this Bidder will be determined either pre-evaluation (See 2.9.1.1, later) or post-evaluation (see 2.9.1.2, later). The following items are to be qualified as part of the selection process: In the case of the Bidder offering to supply goods under the contract which the Bidder did not manufacture or otherwise produce, the Bidder has been duly authorised by the goods’ Supplier or producer to supply the goods in Thailand. If the Bidder is not doing business within Thailand, the Bidder is or will be (if awarded the contract) represented by an Agent in Thailand equipped, and able to carry out the Supplier’s maintenance, repair, and spare parts-stocking obligations prescribed in the conditions of contract and/or technical specifications. The Bidder meets the qualification criteria listed in the Bid Data Sheet. If the Bidder is not qualified to perform the contract, the bid is to be rejected, in which event the Purchaser will proceed to the next lowest evaluated bid to make a similar determination of that Bidder’s capabilities to perform satisfactorily. 2.9.1.1 Pre-qualification of technical capability The pre-qualification of the Bidder is based on the evaluation of the capability of the Bidder to meet the technical requirements of the contract. This is performed as described in Section 2.6 and the results of the evaluation are documented in a report (refer Section 2.6.2) which identifies the conditions related to the capability being acceptable to the Supplier.Doc DRS 52001 Version 0.1 (draft) Page 52
  • SAMPLE - PROCUREMENT MANUAL 2.9.1.2 Post-qualification of technical capability An evaluation of the Bidder’s financial, technical, and production capabilities is to be performed. This may be by one of the following: Conducting an evaluation using the approach described in Section 2.6 and preparing the report as required in Section 2.6.2. Examination of the documentary evidence of the Bidder’s qualifications submitted by the Bidder, as required by the Instructions To Bidder, as well as such other information deemed necessary and appropriate.2.9.2 Negotiation There are no circumstances under which it is permissible to enter into an agreement with the preferred Bidder (or any other Bidder) to alter the basis on which the bid has been submitted. However, there are two matters that may be legitimately discussed and agreed with the Bidder prior to award of contract. These are as follows. 2.9.2.1 Mitigation of technical risk The assessment of Bidder (Supplier) capability (refer to Section 2.6.2) may have identified particular aspects of the Bidder’s business that represent a level of risk of adverse time or quality performance that could be minimised by appropriate remedial actions on the part of the Bidder. Before proceeding to award of contract, the Bidder should be required to implement the desired remedial actions. 2.9.2.2 Variation of quantities The Instructions To Bidder identifies that the Purchaser reserves the right at the time of contract award to increase or decrease, by the percentage indicated in the Bid Data Sheet, the quantity of goods and services originally specified in the Schedule of Requirements without any change in unit price or other terms and conditions. If it is intended to exercise this right, the Bidder should be informed and their formal acceptance of this secured before proceeding to award of contract.2.9.3 Award The criteria for award of contract is that, subject to the right to accept or reject any bid, the contract will be awarded the to the Bidder whose bid has been determined to be substantially responsive and has been determined to be the lowest evaluated bid; provided further that the Bidder is determined to be qualified to perform the contract satisfactorily.Doc DRS 52001 Version 0.1 (draft) Page 53
  • SAMPLE - PROCUREMENT MANUAL 2.9.3.1 Notification of award Before the period of bid validity has expired, the successful Bidder is to be notified by registered letter (or by facsimile or e- mail and subsequently writing by registered letter) that its bid has been accepted. This notification of award will constitute the formation of the Contract. (Refer also to Section 2.9.3.2, below.) The successful Bidder is to be required to provide the performance security – as stipulated in the Instructions To Bidder (see also Section 2.9.3.3, later.) – and, when this is the received, the unsuccessful Bidders are to be notified promptly and discharge each unsuccessful Bidder’s bid security. 2.9.3.2 Signing of contract At the same time the successful Bidder is notified that its bid has been accepted, the Purchaser is to send the Bidder the Contract Form provided in the bidding documents, incorporating all agreements between the parties. The Bidder is to be advised that, within thirty days of receipt of the Contract Form, the Bidder is to sign and date the contract and return it to the Purchaser. 2.9.3.3 Performance Security The successful Bidder is required to provide - within thirty days of the receiving notification of award of contract – the performance security in accordance with the Conditions of Contract, in the Performance Security Form provided in the bidding documents, or in another form acceptable to the Purchaser. Failure of the successful Bidder to comply with these requirements shall constitute sufficient grounds for the annulment of the award and forfeiture of the bid security, in which event the Purchaser may make the award to the next lowest evaluated Bidder or call for new bidsDoc DRS 52001 Version 0.1 (draft) Page 54
  • SAMPLE - PROCUREMENT MANUAL PART 3 LOGISTICSDoc DRS 52001 Version 0.1 (draft) Page 55
  • SAMPLE - PROCUREMENT MANUALPART 3 – LOGISTICS3.1 VERIFICATION OF PRODUCT CONFORMANCE DURING MANUFACTURE3.1.1 General The following meanings are used for the particular terms in this Manual. Conformance Conformance exists when the product or service meets the defined requirements for its provision. For manufactured items, conformance is achieved when the item meets the requirements of the technical specification; for services, conformance is when the service provided has met the requirements of the scope of service (or statement of work) provided in the controlling contract. The state of conformance is determined by verification activities; typically, inspections or tests and, if determined objectively, can only assessed in terms of the technical specification. If the specification is inadequate, or omits particular requirements, then items that otherwise would not be acceptable either must be accepted as conforming, or else agreement reached with the Supplier to amend the particular requirement of the specification. Accordingly, the effectiveness of inspection is determined directly by the effectiveness of the technical specification. For this reason, effort must be applied during the development of technical specifications to ensure that they are accurate and comprehensive statements of all the Purchaser’s requirements. Inspection In this Manual the term ‘inspection’ is used to cover the associated terms: Check; Test. In the strict sense, a check is a superficial examination to establish that quantity, packing and integrity (absence of damage) is correct. An inspection is used to establish that the form of the item meets specified requirements, while a test is used to establish that the function of an item meets the specified requirements. Inspection is the objective assessment of items to establish that conformance has been achieved. Typically, there are four stages of inspection: Initial inspection: Used to establish that raw materials meet requirements and manufacturing/production processes have been set up properly. For production of large quantities, it is often prudent to produce a ‘first off’Doc DRS 52001 Version 0.1 (draft) Page 56
  • SAMPLE - PROCUREMENT MANUAL item to prove the set-up is correct before authorising the start of mass production. In-progress inspection: Used to establish that the work is proceeding properly and that conformance will be achieved at completion. The philosophy of in-progress inspection is that it is more effective to detect and correct deviations and deficiencies early, rather than wait until the final inspection to detect non-conformance which, by then, can be both difficult to detect and expensive to correct. Final inspection: Performed by the Supplier at the end of manufacture to ensure that conformance has been achieved and thus the finished product can be shipped to the Purchaser. Acceptance inspection: Performed by the Purchaser to verify that the Supplier has provided conforming items. There are a number of different approaches to performing inspection. Two of particular interest to this Project are: Witness inspection: Where one party (typically, the Purchaser) observes the other party (typically, the Supplier) perform the inspection activities. Providing the inspection results are acceptable, the witness can use the inspection results authorise subsequent activities. This could be acceptance based on final inspection, or approval to commence manufacture based on a successful ‘first off’ inspection. Sampling inspection: Used when there are large quantities of items and it is not practical to insect each one individually. To be a valid type of inspection the sample taken must be statistically representative of the batch or group from which it is taken; this requires: The sample of items selected must be taken at random. The size of the sample must sufficient to ensure that the frequency of occurrence of defective items in the sample is equivalent to the frequency of occurrence of defective items in the batch or group. Acceptance Acceptance is where the Purchaser acknowledges that the items provided meet the specified requirements and the process of transfer of ownership from Supplier to Purchaser may proceed. It is a generally accepted principal that acceptance does not relieve the Supplier of the obligation to remedy (repair, rework or replace) any items subsequently found to be nonconforming – this principal should be reflected in the contract documents.Doc DRS 52001 Version 0.1 (draft) Page 57
  • SAMPLE - PROCUREMENT MANUAL Responsibility The division of responsibility between Supplier and Purchaser is generally as follows: [1] The Purchaser is responsible for providing the Supplier with an adequate and correct statement of requirements. [2] The Supplier is responsible for identifying and resolving any errors, omissions or ambiguities in the technical specification with the Purchaser before commencing supply activities. [3] The Supplier is responsible for ensuring that the equipment and processes are capable of producing conforming product. [4] The Supplier is responsible for ensuring all items are conforming before offering them to the Purchaser for acceptance. [5] The purchasing is responsible for establishing the acceptability of the items offered for acceptance. Where the Purchaser performs inspections during the manufacturing stage, the Supplier may believe that the Purchaser is therefore assuming responsibility for establishing conformance – this is not so. The Purchaser may decide to perform inspections before delivery as a means of managing risk of delays to schedule. These inspections – which could be called ‘independent verifications’ – are a means of establishing that the Supplier is meeting their contractual obligation (Responsibility [4]); the Purchaser is inspecting the Supplier, not inspecting the product – the product is the means by which the Suppliers performance is evaluated. An approach which can be used to minimise this possible confusion of responsibility is to require the Purchaser – through the contract – to perform inspections at nominated stages in the manufacturing process and the Purchaser can attend these inspections as a witness to their validity. Although the Supplier has the principal responsibility to offer conforming items for acceptance, the Purchaser would be negligent if they did not establish, to their reasonable satisfaction, that conformance had been achieve before accepting the offered items. To this end, the Purchaser could either undertake a receiving inspection or else witness the final inspection by the Supplier. Custody and ownership In some circumstances it is necessary to make the distinction between custody and ownership. When a Supplier makes a delivery into storage facilities owned or controlled by the Purchaser, the Purchaser assumes a responsibility for the proper control of the items. This includes protection against deterioration, damage or loss, but only to the extent of the accessible portions of the items; typically, the packaging. TheDoc DRS 52001 Version 0.1 (draft) Page 58
  • SAMPLE - PROCUREMENT MANUAL care of the items inside the packaging – principally, against deterioration – remains the responsibility of the Supplier. Until the Purchaser has accepted the items, the ownership of the items remains with the Supplier.3.1.2 Inspection 3.1.2.1 Approach to inspection Inspection can be performed at two levels of intensity of effort; superficial inspection and full inspection. Superficial inspection – a form of checking – is restricted to obvious (surface) aspects of the items, such as quantity, labelling and marking, packaging, damage in transit and so on. Full inspection is where each item in the delivery – or a representative sample of items – is examined to establish that it meets the nominated requirements of the technical specification. 3.1.2.2 Inspection checklists and inspection records Inspection checklists are part of the process of planning for effective inspection (see also Section 3.1.2.5 for use of inspection plans). The checklist is a listing of all the features of the goods that are to be examined to verify that conformance has been achieved. The use of checklists is not mandatory and, for inspection of a few, simple features the preparation of a checklist is not worthwhile. However, for items with many features, or complex features, the use of a checklist helps ensure that all features are examined and that none are overlooked. For acceptance inspection, each individual requirement in the technical specification should have a corresponding item in the inspection checklist. The exception to this is when a particular feature is not accessible due to it being obscured by a later activity or overlying feature. For example, the undercoat on a painted surface will be covered by the top coat when the item is presented for acceptance inspection. In these circumstances, conformance of the obscured features needs to be established in an earlier inspection. Inspection of features is classified as being either by attribute or by variable. An attribute is a characteristic of a feature that is either achieved or not achieved. For example, the technical specification may require that each carton of goods have a delivery destination address label (the label with the address is the ‘feature’ and ‘label on carton’ is the attribute). The carton being inspection may be either ‘with the label’ or ‘without the label’ which corresponding inspection results of ‘accept’ (pass) or ‘reject’ (fail).Doc DRS 52001 Version 0.1 (draft) Page 59
  • SAMPLE - PROCUREMENT MANUAL A variable is a feature which exists on a continuous scale, such as length or weight. For example, a sample of paper to be used for printing books is weighed and its density calculated to be 80.66 grams per square meter (gsm), a second sample has a calculated density of 80.24 gsm. These inspection results can fall anywhere, within reason, in the range 78 gsm to 85 gsm and hence are ‘variable’. In order to establish conformance of variables features objective, there are some additional criteria to be satisfied:  The equipment used to measure the variable must be appropriate to the type of measurement and must be in a known state of calibration.  The method of using the equipment must be specified (the inspection procedure) and must be followed.  The person using the equipment must be properly trained in its correct use.  The environment (typically, temperature and humidity) in which the measurements are taken must be known, appropriate and controlled. While the checklist for inspection by attributes can be a simple list of individual requirements, a checklist for inspection by variables should also include – either explicitly or by reference – information on the method of measurement and the measuring equipment to be used. For both inspection by attributes and inspection by variables, the checklist should state explicitly the criteria for making the ‘accept/reject’ decision. The inspection checklist can also function as the inspection record, by providing space to record the inspection results. The general format for a combined inspection checklist and inspection record is illustrated below.Insp Feature / Referenc Method Acceptanc Inspectio NotesNo requiremen e e criteria n results tNote Note 2 Note 3 Note 4 Note 5 Note 6 Note 71 Explanatory notes: 1 Each individual inspection activity is numbered sequentially for ease of reference in Inspection Reports and other documents. 2 A brief description of the feature to be inspected or the requirement to be satisfied.Doc DRS 52001 Version 0.1 (draft) Page 60
  • SAMPLE - PROCUREMENT MANUAL 3 Reference to the exact part of the technical specification where the requirement is stated. 4 For inspections which require measurements to determine conformance, the measurement method (as a reference to an inspection procedure) and the equipment to be used is recorded in this space. 5 The criteria which determines the conformance, or otherwise, of the item for this feature. For example: 80 gsm minimum. For attributes, the criteria is often contained in the description of the feature; for example: Destination label to fixed to top of carton. 6 Recorded as either ‘pass’ / ‘fail’ or ‘accept’ / ‘reject’. The use of terms such as ‘OK’ or check (√) marks should be avoided. 7 Provided for the inspection to make record any comments or observations about the results. 3.1.2.3 Inspection methods 100% inspection The term 100% inspection is used when all items in a delivery are to be inspected. However, the fact that 100% of the items have been inspected does not guarantee that all defective or nonconforming items will be detected by the inspector. When nonconforming items are present in a delivery at low levels, it is quite possible that the person doing the inspection will ‘miss’ the occasional nonconforming item simply because they have become ‘conditioned’ – by repeated exposure – to seeing only conforming items. The other main disadvantage of 100% inspection is that it is both labour intensive and time consuming. As an alternative sampling inspection may be used. This reduces the number of items to be inspected to a manageable level, thus reducing the inspection labour and item required to the inspection. Sampling inspection The simplistic approach to sampling inspection is take a reduced number of items, say 10% of the total being supplied, and inspect these. If the inspection does not find any nonconforming items then the entire of delivery of items is accepted. However, for the results of the sampling inspection to be valid there are a number of criteria that must be satisfied: The sample must be taken at random from the delivery. The approach of an inspector selecting items on an arbitrary basis is not random selection; to be truly random the sample must be drawn using a plan that nominates which particular items in the sequence of presentation are to be inspected. The plan utilises either a random numberDoc DRS 52001 Version 0.1 (draft) Page 61
  • SAMPLE - PROCUREMENT MANUAL table or a pseudo-random number generator, such as provided in spreadsheet software . The size of the sample taken is based on expected frequency of occurrence of nonconforming items1, as a percentage of the total. The smaller the frequency, the larger must the sample be to endure a given level of reliability in the results. The size of the sample is thus independent of the total number of items being delivered. A number of countries have published standards which specify the size of sample which must examined for a nominated frequency of occurrence of nonconforming items. Most are based on the US standard for sampling by attributes – MIL- STD-105. Witness inspection Witness inspection is an indirect form of inspection where one party (usually the Purchaser) observes the other party (usually the Supplier) perform the inspection. The advantage of this approach is that the conformance of the items to be delivered can be established before the items are enclosed in their packaging. Thus, the only inspection required when the delivery is made to the Purchaser is a superficial one to detect any damage or loss in transit; the items can remain within their original packaging and thus preserving their integrity. Calibration of equipment Where inspection is based on measurements of properties – for example, the concentration of active material in a pharmaceutical – there is a further consideration; the measuring equipment must be in a known and acceptable state of calibration. Calibration of measuring equipment must be carried out by a legitimate calibration authority using calibration methods which ensure traceability of measurements to national or international standards. Inspection environment Inspection of items must be performed in an environment which ensures that the results are valid. Generally this requires that either adverse effects from environmental factors – such as temperature or humidity – are eliminated or, alternatively, their effect on the variable being measured is taken into account when determining the final result. 3.1.2.4 Application of inspection methods Printed materials1 This is known as the Acceptable Quality Level (AQL) and is based on a Purchaser’s risk of 5%; that is, the results of the sampling inspection will not be valid only once in every twenty times it is used.Doc DRS 52001 Version 0.1 (draft) Page 62
  • SAMPLE - PROCUREMENT MANUAL In general, inspection of materials is carried out in three stages, as follows: Pre-production Inspection – before a Supplier can start production of printed materials, there is an inspection at the printer’s premises to check criteria such as the available capacity of the printer (can the printer handle this order and his other work and still meet the delivery schedule), capability of the printing and binding equipment to produce the materials to meet the technical specification, and other relevant factors that can affect the quality of the finished product. In-progress Inspection – this commences with an initial or first-off inspection which examines the preparation techniques, the actual printing operation, and the quality of the first-off material as produced. Once the set-up of the process has been proven, there will be on-going inspections (by the Supplier, which may be witnessed by the Purchaser) to monitor the quality of the materials being produced. During the in-progress inspections, any adverse findings of inspector must be corrected at once, that is, during the inspection. Pre-delivery Inspection – this is performed by the Purchaser and is based on the presumption that the Supplier has proven the quality of the material produced. Accordingly, this inspection is focussed mainly on superficial aspects such packing and packaging, labelling, and verifying that the required quantities have been produced. 3.1.2.5 Inspection planning Planning is the systematic preparation to take action – it may be undertaken as a formal activity, otherwise it happens informally. Generally, where the inspection activity is straightforward and the inspectors are experienced there is no need to undertake formal planning for inspections, However, for extensive or complex inspection activities, formal planning is an essential part of the process to ensure that valid results are obtained. This section of the Manual describes a simple, formal approach to inspection planning. It is applicable to inspections undertaken by the Purchaser (such as final inspection) and can also be used by a Supplier. The advantage of requiring a Supplier to use a formal approach is than it requires them to actively consider their manufacturing process in terms of how they will meet all the requirements of the technical specification and achieve conformance. These notes describe the main requirements for preparing an Inspection Plan by a Supplier; however, they are equally applicable to preparation of an Inspection Plan by the Purchaser for acceptance inspection.. An example of a simple Inspection Plan is included.Doc DRS 52001 Version 0.1 (draft) Page 63
  • SAMPLE - PROCUREMENT MANUAL The Inspection Plan consists of two parts: Part 1: Arrangements Part: The Inspection Schedule Part 1 – Arrangements – presents the general information on the contract and the details for coordination of inspection activities between Supplier and Purchaser. It is divided into three parts: 1.1 – General details – lists the contact details for both Supplier and Purchaser. This information is needed to ensure that inspection (Supplier) and witness (Purchaser) activities can be coordinated. 1.2 – Schedule of goods to be supplied and inspected – lists the description, quantity and scheduled delivery date for each item to be Supplier under the contract. 1.3 – Inspection locations – lists the complete address for each inspection location identified in the table of Section 2 of the Inspection Plan. Part 2 – the Inspection Schedule – is prepared as a table with seven columns; the headings for these columns are: No. (Number): This is a simple sequential number to allow differentiation between various inspections and provide for ease of referencing. Although it is not mandatory to use sequential numbers, it is encouraged. Location: The location where the inspection activity will be performed. Do not enter the complete address, just an abbreviated reference, such as: ‘Supplier’s factory’; ‘Agency warehouse’; ‘Customs wharf’. The complete address for each location will be provided in Section 1. Inspection activity: The type of inspection to be carried out, as an abbreviated reference, which also includes identification of the parties involved. For example: ‘Final inspection – Supplier, witness inspection – Agency.’ Requirements: These are the criteria to be measured or evaluated to establish that the goods are conforming. This can be either as an explicit statement of requirements – such as: Size: A4, Weight: 80 gsm – or else it can be as a reference to the technical specification – such as; Refer to Section 5.4.6 of Technical Specification. Planned date: This is the date which has been proposed and agreed between Supplier and Purchaser for the inspection to be carried out. If the date is changed, the Inspection Plan should be changed as well. Actual date: This is the actual date on which the inspection activity was carried out. If the inspection is carried out over more than one day, the date is the last day of the inspection activity.Doc DRS 52001 Version 0.1 (draft) Page 64
  • SAMPLE - PROCUREMENT MANUAL Results: The overall results as determined by the inspection. Usually, this will be ‘pass’, ‘fail’, or ‘qualified pass’ or ‘qualified fail’. A qualified pass is one where, while there are some aspects that are not conforming, overall the goods generally meet the specified criteria. Conversely, a qualified fail is one where, while there are some aspects that are conforming , overall the goods generally do not meet the specified criteria. The full details of inspection results are recorded on a separate inspection report. The Inspection Plan is to be prepared by the Supplier and submitted to the Purchaser for their review and comment. The Purchaser will nominate which particular inspections they will witness and any other inspections they may require the Supplier to perform. The Supplier will update the Inspection Plan, provide a copy to the Purchaser, and ensure that the planed inspections are carried out according to the plan. Each time there is a change to the Inspection Plan – for example, if the date for a planned inspection is changed – then the plan is updated and a new copy provided to the Purchaser. The Supplier should ensure that any superseded versions of the Plan are removed from use. The general format for the Inspection Plan, together with instructions to assist in its preparation, is provided in Annex 2.3.1.3 Acceptance 3.1.3.1 Acceptance Inspection The person designated in the Agency making the purchase has to raise and complete an Inspection Request Form to notify the Inspection Team of the proposed inspection activity. Normally, the inspection team will be composed of the following: Representative from Property & Supply Division. Representative from Accounting/Finance. Representative from Management Group. Others (as appropriate). Acceptance Inspection will be performed at either the Supplier’s warehouse or at the delivery site (the exact location will be specified in the contract documents), depending on the urgency of the circumstances and the nature of item, particularly for bulk items. For inspection performed at site (end-user’s site), inspection is conducted in the presence of the Property/Supply Officer who has to check that the item conforms with the technical specifications as provided in the contract. The Property/Supply Officer also issues the Certificate of Acceptance. Generally, items delivered to the site have been inspected already by the Agency’s Inspection Team either on a random basis or 100% capacity based on what item is involved. Inspection at the site is also done to make sure that it reach theDoc DRS 52001 Version 0.1 (draft) Page 65
  • SAMPLE - PROCUREMENT MANUAL end-user’s place in good condition, quality and quantity, as further inland transportation is involved. The Property/Supply Officer is to record the results of the inspection on the Inspection Report or Delivery Receipt. This is to include the following:  The condition of the item when received  The total quantity received, separately identifying:  The total quantity received in bad condition  The total quantity received in good condition  The date of actual receipt  The name and position of the person who received the item NOTE: The recording of the actual date when the item was received and the person’s name and signature is essential. If after completing the inspection, the inspection team is satisfied that the items inspected conform with the technical specifications, a Certificate of Inspection, with the following data, is issued:  The particulars of the item.  The date the inspection was performed.  The place where the inspection was performed.  The name and signature of each of the inspectors.  The results of the inspection; whether or not the item was accepted.  The method of inspection; that is, random or 100 % inspection. Any discrepancy observed by the Inspector/Property or Supply Officer must be recorded on the inspection certificate or on the delivery receipt itself. The Supply Officer or Property Custodian must call this to the attention of the person delivering the item and have this confirmed by the delivery person signing the inspection certificate or the delivery receipt. The Supply Officer/Property Custodian, after inspecting/checking all the items in respect to the general specifications, quality, quantity and nature of the item received, is to issue the Certificate of Acceptance to that effect. As before, the date of receipt/acceptance, person’s name and signature must be clearly shown on the Certificate of Acceptance as this document serves four important functions namely:  It serves as a notice to Agency that the item has been received and accepted by the receiving institution.  It acts as source document for the receiving Agency’s asset registry.  It triggers financial payment to the Supplier.  It signifies the commencement of the warranty period.Doc DRS 52001 Version 0.1 (draft) Page 66
  • SAMPLE - PROCUREMENT MANUAL  It signifies the initiation of the contract management phase with between the Supplier and the Purchaser. After these activities have been performed, it is the responsibility of Supply Officer/Property Custodian to inform the Division Superintendent of the arrival of the items and for further distribution to the ultimate end-users evidenced by Material Requisition. After distributing the items to the ultimate end-users, the Property/Supply is to collect all pertinent documents related to the delivery and distribution of the items and forward them to the Division/Regional Office; who in turn will forward the documents to the Central Office for recommendation of payment. In those cases where it is necessary to make a claim (insurance claim, damaged item), the Procurement Officer will lodge the necessary claim form with the Supplier.3.2 EXPEDITING3.2.1 General Expediting is the process of monitoring and reporting progress to schedule for the procurement of goods, identifying deviations from schedule and implementing corrective actions to ensure schedule is maintained. The process commences when the Supplier is authorised to commence supply and finishes when the goods are delivered to the Purchaser. The key elements of expediting are:  The schedule – that identifies the critical dates that must be kept for procurement and logistics to remain on target  Progress reporting – regular communication of status of and changes to planned progress.  Corrective action – to minimise the effect of delays and keep progress on schedule. The main features of these are described in the following sections.3.2.2 Schedule for expediting The schedule for expediting is – in its simplest form – a list of key dates which must be achieved if the goods are to be received on time by the Purchaser. While each individual contract will have a particular set of key dates, there is a general structure for the schedule. The general structure for imported goods is different to that for locally purchased goods – the structure for each of these is described separately below. (Section 3.2.2.1: Imported goods – Section 3.2.2.2: Local purchase.)Doc DRS 52001 Version 0.1 (draft) Page 67
  • SAMPLE - PROCUREMENT MANUAL The general form of the schedule (with a typical entry as an example) is as illustrated below: Key event / activity Planed date Current Actual expecte Delivery d date Date Goods despatched June 16 June 22 June 30 from factory for delivery to wharf For each key event or activity (as defined in Sections 3.2.2.1 or 3.2.2.2, following) that represents a critical step in the procurement/logistics process, the planned date is recorded. These dates are supplied by the party with responsibility for that event or activity. In the case of the of goods despatched from the factory to delivery to the wharf, it is the overseas Supplier who provides the planned date. The planned date should be the realistic date, based on the best information available at the time the schedule is established. Each time the schedule is reviewed, the dates for each event or activity should be amended according to current, realistic expectations. The use of the schedule in progress reporting and corrective action is described in the later sections (3.2.3 and 3.2.4, respectively) on those topics. 3.2.2.1 Imported goods The main stages in the supply of imported goods are:  Issue of the authorisation to commence supply.  Goods delivered to overseas wharf and loaded for shipment.  Ship arrives Thailand wharf.  Goods unloaded and cleared through customs and tax.  Goods delivered to Purchaser receiving store. Each of these is a critical step in the procurement/logistics process; a delay in one will – if not corrected – cause a delay in all the subsequent steps. In order to effect better control over the process, it may be expedient to introduce other steps between these main ones. For example, inspection at the overseas Supplier’s factory may be introduced as a step before packing and transport to the wharf for loading onto the ship. 3.2.2.2 Local purchase The main stages in the supply of goods procured locally are:Doc DRS 52001 Version 0.1 (draft) Page 68
  • SAMPLE - PROCUREMENT MANUAL  Issue of the authorisation to commence supply.  Goods assembled and packaged ready for inspection.  Goods inspected and ready for delivery to Purchaser.  Goods delivered to Purchaser receiving store. As for imported goods, it may be expedient to introduce additional steps to effect better control.3.2.3 Progress reporting Progress reporting is an essential part of expediting – it provided the various parties involve with up-to-date information on the status of delivery and allows them to modify, if necessary, arrangements and plans. A typical format for a progress report – with a hypothetical entry – is illustrated below.Event / activity Planned Current status Expected Proposed Anticipated date date corrective date actionShip departs October On schedule October 1Singapore 1Bill of lading October Letter of credit October 10 Use electronic October 5received from 3 not sent to documentshipper shipper transferShipment October On schedule October 6unloads in Thai 6PortCustoms October On schedule October 6clearance 6applicationsubmitted There are two main approached to reporting for expediting; reporting by set periods and exception reporting. These are described in the following topics. 3.2.3.1 Set period reporting As the name suggest, set period reporting is providing a contract status update on a regular basis; for example, weekly. The person responsible for expediting a contract ascertains the current status, updates and issues the regular which summarises current status against key dates in schedule. Where actual progress is deviating from planned progress, the report also identifies the corrective action to be taken and the anticipated effect of the corrective action on current status. Set period reporting is a reliable approach, since it ensures that all aspects of the schedule are examined and evaluated. However, for contracts with multiple delivery points it does haveDoc DRS 52001 Version 0.1 (draft) Page 69
  • SAMPLE - PROCUREMENT MANUAL the disadvantage of producing large reports. The second approach – exception reporting – overcomes this disadvantage. 3.2.3.2 Exception reporting Exception reporting is focussed on reporting only those activities or event where progress is not according to plan. The progress report is updated and issued as before, but only contains entries for those events/activities which are not on schedule. For example, the full report, as illustrated in Section 3.2.3 above, would only show the entry where the expected date is not as per the planed date, thus:Event / activity Planned Current status Expecte Proposed Anticipat date d date corrective action ed dateBill of lading October Letter of credit not October Use electronic October 5received from 3 sent to shipper 10 document transfershipper The advantage of this approach is that it makes the problem aspects of the schedule immediately obvious. On the other hand, the individual updating the report needs to ensure that all events/activities are evaluated each for each reporting period, otherwise later changes in progress status may not be recognised.3.2.4 Corrective action While the progress status report identifies the proposed corrective action it is essential that the action is taken. Accordingly, the role of the expediter is to ensure that the corrective actions are implemented as intended; this will require follow-up by the expediter on a regular basis. Where the responsibility for taking corrective action is with an external party, such as the Supplier, the expediter will need to maintain ongoing communication with that party to ensure that:  They are aware of the need to take the required corrective action.  The corrective action is taken as taken as required.  The intended results are achieved.3.3 CUSTOMS AND TAX CLEARANCE When goods are procured from overseas sources, it will be necessary for them to be cleared through customs and tax requirements. Release of goods through customs and tax clearance requires presentation of the original shippingDoc DRS 52001 Version 0.1 (draft) Page 70
  • SAMPLE - PROCUREMENT MANUAL documents, which requires a letter of credit to have been opened to enable the Supplier to effect shipment. The flowchart illustrating the steps in opening the letter of credit, together with additional notes, as appropriate, is presented in Section 3.3.1. There are two processes for the release of goods through customs and tax: Releasing goods imported by sea freight; releasing goods imported by air freight. The general requirements for each of these is illustrated by a flowchart, supported by additional notes, as appropriate. These are presented in Section 3.3.2 and 3.3.3, respectively.Doc DRS 52001 Version 0.1 (draft) Page 71
  • SAMPLE - PROCUREMENT MANUAL3.3.1 Opening letter of credit Contract duly signed and accepted by the Supplier Consider BY L/C (imported material) Direct payment Mode of (local purchase) Payment Require Supplier to submit Pro- forma invoice and (form) Liase with the Apply for (form). Agency clearance with Dept. of Trade and Industry BIS application Undertaking Pro-forma invoice Copy of contract Notice of award, etc. Coordinate with Finance Department for L/C opening payment of charge, etc. Liaise/coordinate with responsible parties for L/C opening. Letter of Credit Lodge L/C application with the bank Inform all concerned party of A L/C No. and details including Supplier.Doc DRS 52001 Version 0.1 (draft) Page 72
  • SAMPLE - PROCUREMENT MANUAL A B Supplier/rep. prepares the materials for shipment and all necessary documents Shipment of the materials from Suppliers’ source or country of origin Procurement Officer informs Agency , etc. of shipping info/details Supplier to inform buyer of shipping details by fax/e-mail/telephone. Supplier presents all original shipping Agency to inform end-users of the documents to the bank as per L/C terms and details and approximate delivery date conditions; and one full set shipping by fax/telephone/email. documents to be sent directly to the buyer/procurement agent by courier 1) Orig. commercial invoice NOTE: REFER TO THE FLOW 2) Orig. clean on board B/L CHART IN FILING OF 3) Orig. Packing List IMPORT ENTRY / 4) Insurance Policy/coverage RELEASING FROM 5) Certificate of origin CUSTOMS. 6) Other documents Arrival of goods in Thailand clearing from Customs HouseDoc DRS 52001 Version 0.1 (draft) Page 73
  • SAMPLE - PROCUREMENT MANUAL3.3.2 Release of goods imported by sea freight Receive pre-shipment advice from Supplier with complete set of advance shipping documents Complete set of import documents from the Supplier with relevant certification from the Agency to be filed with Bureau of Customs Is the shipping document NO Secure bank guarantee or received bond from the opening bank original? for importation under L/C Get endorsement from YES shipping line Broker to arrange shipping import documents and prepare/accomplish Import Entry ready for filing with Bureau of Customs Marine Div. (B.C.) records entry number on import entry ADoc DRS 52001 Version 0.1 (draft) Page 74
  • SAMPLE - PROCUREMENT MANUAL A NO Request for stripping Is Cargo LCL of container at containerized stripping station IN FCL YES Request for de-banning of container for inspection Customs examiners examines the goods by opening the container at CFS/CY Customs appraisers appraise the value of the goods and consider basis of dutiable value, duty and tax to be paid BDoc DRS 52001 Version 0.1 (draft) Page 75
  • SAMPLE - PROCUREMENT MANUAL B Is YES Secure Tax Exemption from importation ??? Tax Free NO Appraiser computes total tax/duty to be paid and reflects findings on entry Broker applies for: Entry being passed 1) Banning Report to: 2) Customs Intelligence/Insp. 1) Assessment Div. Div. 2) Value Classification Div 3) Customs Police 3) Cash Division 4) Container Inter Change 4) Tax Exempt Div Clearance 5) Collector’s Office 5) Gate Pass Broker /Importer Pays Duty/Tax to the Bank and Present Payment of arrastre, Machine validation to cash div wharfage, storage, demurrage (BC) (if applicable) Arranging of truck trailer for loading of container at the CY/CFS Delivery of the container to importer’s site Asses procedure.Doc DRS 52001 Version 0.1 (draft) Page 76
  • SAMPLE - PROCUREMENT MANUAL3.3.3 Release of goods imported by air freight Received pre-shipment advice from Supplier with complete set of advance shipping documents Complete set of import documents from the Supplier with relevant certification from the Agency to be filed with Bureau of Customs Is airfreight NO Secures bank guaranty or documents bond from opening bank for received importation under L/C original? Get endorsement from YES Airline Company Broker arranges shipping import docs and prepares/accomplish Import Entry ready for filing with Bureau of Customs Marine Div. (B.C.) perporates entry no. on import entry ADoc DRS 52001 Version 0.1 (draft) Page 77
  • SAMPLE - PROCUREMENT MANUAL A Broker/Agent prepare Request Form for immediate examination of >porter gets tally sheet and Goods. locator’s chart of the cargo >porter brings the cargo to designated area for examination. Customs examiners examine the goods by opening the container/box At designated place Customs appraisers appraise the value of the goods and consider basis of dutiable value, duty and tax to be paid BDoc DRS 52001 Version 0.1 (draft) Page 78
  • SAMPLE - PROCUREMENT MANUAL B Is YES Secures Tax Exemption from Importation XXXX Tax Free? NO Appraiser computes total tax/duty to be paid and reflects findings on entry Broker applies for: Entry being passed to: 1) Customs 1) Assessment Office 2) Valuation Classification Intelligence 3) Cash Division Clearance 4) Tax Exempt Div. 2) Gate Pass 5) Collector’s Office Broker /Importer Pays Duty/Tax to the Bank and Present Payment of storage charges Machine validation to cash div direct to the airline company (BC) Arranging of truck trailer for loading of Cargo at the airline Cargo terminal Delivery of the container to importer’s site ENDDoc DRS 52001 Version 0.1 (draft) Page 79
  • SAMPLE - PROCUREMENT MANUAL3.3.4 Particular arrangements 3.3.4.1 Shipment and documentation After the contract has been signed and the Letter of Credit (L/C) has been opened, the Supplier advises the foreign Supplier/sources to prepare all required shipping documentation as stipulated in the Special Terms and Conditions of the Letter of Credit. This is to be performed concurrently with the materials ready for shipment from the Suppliers’ country of origin. The Supplier must inform the Purchaser of the shipping details either by fax, e-mail or by telephone. Failure by the Supplier to do so should be followed up by the Purchaser. As soon as they are known, the Purchaser is to inform the end- users of the shipping details, delivery information, and an estimated date of arrival of the goods to the site so that the necessary warehouse space allocation and inspection date can be arranged. The Supplier is to present the original shipping documents, as stipulated in the L/C, to the bank and send one original set of documents direct to the Purchaser by courier. This set of documents will include at least the following:  Original of the Supplier’s commercial invoice.  Original packing list.  Original clean on board bill of lading (negotiable copies).  Original insurance policy/coverage.  Original Certificate of Origin.  Certificate of Inspection. 3.3.4.2 Release of imported cargo at Customs House (Thai Customs) The importer is responsible for preparing a full set of original shipping documents and presenting them to the broker for filing of the import entry with the Bureau of Customs. The executing government office (Agency) is required to provide certification for the intention of such importation, especially for tax and duty free importation. In the absence of the original shipping documents for importation covered by Letter of Credit, a bank guarantee or bond, issued by the opening bank, is required. Endorsement of the bank guaranty to the shipping line is also needed to authorise release of the cargo.Doc DRS 52001 Version 0.1 (draft) Page 80
  • SAMPLE - PROCUREMENT MANUAL The Import Entry documentation is to be filed with the Bureau of Customs (Marine Division – Entry Processing Section). A request for de-banning of container – or for stripping of the container in case of loose cargo (LCL) – is to be prepared and presented for customs examination. The Customs Examiner will examine the goods (quantity and nature of cargo) based on the shipping document submitted by the importer/broker. The goods will be appraised according to the declared value in the commercial invoice against the appraised value and prevailing value from the exporting country at the date of exportation to the Thailand. Computation of duty and tax to be paid is being assessed against the corresponding tariff rate/duty as published in the Tariff and Customs Code and will be written on the back of the entry itself. NOTE: In case of the tax free importation, certification for tax exemption is being secured and issued by the ????. To expedite the processing/releasing of import entry, the broker can apply simultaneously for the following clearance/permits while the entry is being processed within various divisions of the Bureau of Customs:  Banning report.  Customs Intelligence/Inspection Division (CIID) entry.  Customs police clearance.  Container interchange clearance.  Gate pass/truck pass.  Warehouse/wharfinger clearance. Payment of the corresponding customs duty and tax is made to the bank that, in turn, will transmit proof of payment to the cash division of customs through electronic data transfer. Payment of arrestee, wharfage, storage and demurrage (if applicable) is to be made by the Broker. The Broker is to arrange a truck trailer for loading of the container at the Container Yard/Container Freight Station (CY/CFS) and to arrange delivery of the container to the importer’s site. 3.3.4.3 Letter of Credit (L/C) Opening Requirements The ? Bank requires various documents to be provided for opening a letter of credit or a bank guaranty on behalf of a Government Agency – these are listed below. L/C Opening Duly completed L/C application form. Notarised Certification as per ACT of Parliament ? (in ? copies for Govt. importation) Pro-Forma Invoice – (7 copies) Schedule 12-A – (2 copies)Doc DRS 52001 Version 0.1 (draft) Page 81
  • SAMPLE - PROCUREMENT MANUAL Notarised Import Entry Declaration (Bureau of Customs form) Proof of Exemption from Payment of Advance Duties (if applicable) Proof of Approval re: Payment of Advance Duty under Deferred Payment Scheme (if applicable) Central Bank approval (if applicable) Bureau of Import Services (BIS) Clearance (for Govt. importation) Board Resolution/Secretary’s Certificate authorising the opening of the L/C Specimen card signature of the authorised signatories Bank Guarantee Duly completed bank guaranty form Copy of commercial invoice – (2 copies) Copy of Bill of Lading (non-negotiable) – 2 copies Certified true copy of approved waiver for any shipment effected by a non-Thai Flag vessel/air carrier (if applicable) Copy of SGS clean report of finding (if applicable) Amendment to an opened L/C Letter requesting amendment from importer signed by their authorised signatories Notarised import entry declaration (if L/C amount is to be increased) Pro-forma invoice for the amount to be increased (if applicable)Doc DRS 52001 Version 0.1 (draft) Page 82
  • SAMPLE - PROCUREMENT MANUAL3.4 MONITORING DELIVERY AND DISTRIBUTION3.5 FINAL ACCEPTANCE3.5.1 General The results of the acceptance inspection process are recorded in an inspection report. For the Agency there are two types of inspection reports: The standard inspection report as prepared by the inspector. The End User inspection report, prepared by the End User’s Procurement Coordinator. Inspections may be performed at various stages in the supply cycle to ensure that conformance is being achieved. For goods purchased locally, inspections may be carried out at production of the first-off item, during production, and as a pre-delivery inspection. For imported goods, inspection will performed at the location nominated in the bid/contract documents. An inspection report is to be prepared for each inspection performed.3.5.2 Acceptance Inspection When the goods have been delivered by the Supplier and are available for acceptance inspection, an inspection request form is to be prepared by End User Procurement Coordinator assigned to the Agency and forwarded to the Agency’s inspection team The inspection team will be made up of representatives from the Agency’s property and supply division, accounting finance division, and management division, and a representative from the End User/Beneficiary team. The inspection team will perform the inspection to establish conformance of the goods as per technical speciation and special conditions of contract The Procurement Officer is to prepare an inspection report using format in given in Annex 4 of this Manual. If the goods pass the inspection, then: The inspector is to issue the Certificate of Approval. The Property Supply Officer is to issue the Certificate of Acceptance, and sign both the Acceptance Certificate and the Inspection Receipt for Property (IRP).Doc DRS 52001 Version 0.1 (draft) Page 83
  • SAMPLE - PROCUREMENT MANUAL If the goods do not pass the inspection, then: The inspector is to prepare an inspection report (failure) and issue this to the supervisor and provide a copy to the receiving officer. The receiving officer is to inform the end user of discrepancy, notifying that a claim will be filed with the Supplier The receiving officer is to prepare and submits the claim to Supplier; – the end user will provide assistance with this process, as required. The Supplier will be required to either:  Provide replacement items.  Agree to a financial adjustment. This will be either a refund for items found defective after acceptance and payment to the Supplier, or else by making an adjustment to the contract payment. The accepted goods are to be registered in the Property Registry Book the end users are to be advised Distribution of goods to the end users is to be made using the Material Requisition. The Supply Officer or Property Custodian is to collect all the documents (Certificate of Acceptance, Invoice Receipt for Property, Material Requisition) and forward them to the Divisional Office or regional office. 3.5.2.1 Process Flowchart The flowchart for the acceptance inspection process is presented on the following pages.Doc DRS 52001 Version 0.1 (draft) Page 84
  • SAMPLE - PROCUREMENT MANUAL Purchased / Material to be purchased Inspection Team 1) Property and Supply - IA End user Rep. assigned to 2) Accounting Finance - I.A respective IA’s accomplish 3) End user inspection request form and 4) Consultant inform the Inspection Team 5) Management Division - IA LOCAL PURCHASE Inspection Team to do the IMPORTED actual inspection of the material Inspection to be done at Suppliers’ Inspection to be done at site warehouse (Location list provided in bid 1) First inspection document/contract) with the 2) Mass production presence of the Property/Supply 3) Pre-delivery insp. Office. Inspection will be based on general specifications stipulated in the contract = Issue Inspection Certificate Inspectors issued Certificate of Inspection Inspection and give approval Inspector issued inspection report Passed? to proved/acceptance (failure report) and submit to the Procurement Coordinator. NO YES Property Supply Officer issued Certificate of Acceptance End user to inform the Procurement Officer of the = Issue Certificate of discrepancy for filing of claim. Acceptance End user assists in filing claim with Property Supply Officer signs Supplier. the Acceptance Certificate and IRP. REPLACEMENT OR BY FINANCIAL ADJUSTMENT BDoc DRS 52001 Version 0.1 (draft) Page 85
  • SAMPLE - PROCUREMENT MANUAL B Register the accepted material to Property Registry book. Inform the Procurement Coordinator and end users. Distributed materials to end users using Material Requisition Supply officer/Property Custodian collects all documents and forward to Div./ Regional Office 1) Certificate of Acceptance 2) I.R.P. 3) M.R. etc. NOTE: THIS INSPECTION / ACCEPTANCE FLOW CHART IS TO BE FOLLOWED FOR E.C.D. PROJECT ONLY.Doc DRS 52001 Version 0.1 (draft) Page 86
  • SAMPLE - PROCUREMENT MANUAL3.6 DISPUTE RESOLUTION3.6.1 General approach Disputes usually occur between two parties when the performance of one party fails to met the expectations of the other. The resolution of disputes will be directed towards finding acceptable remedies for defective performance and managing inappropriate or unrealistic expectations. The general approach to resolving disputes is to identify the factual aspects or factors and the underlying issues, then seek to find ways to resolve the differences of opinion between the parties. Successful resolution of disputes requires that the process to reach resolution is actively managed, preferably by an individual – the ‘facilitator’ - who has had no active involvement in the matter and is independent of the immediate results of the resolution process. For the any procurement activity, it is reasonable to expect that many of the disputes will be contract-based; that is, the dispute will be between Supplier and Purchaser and will be focussed on some aspect of performance of the contract. In these circumstances it is advisable to have both parties identify the particular aspects of the contract which they believe are in contention, and submit this information to an independent person, who is knowledgeable in contract matters, to have them review the information and provide an informed opinion for consideration by the parties in the dispute. In presenting this opinion, it must be stated clearly that the opinions are being presented for consideration by the parties and are not to be construed as either a definitive interpretation or binding on either party. The main steps in dispute resolution to be followed in the resolution of disputes are:  Establishing the nature and extent of the matter in dispute.  Identifying the differing positions and interests of the parties involved.  Seeking an informal resolution of the differences in position. If this is not successful, then;  Convening and conducting a formal dispute resolution process. If this is not successful, then;  Appointing an independent arbitrator and proceeding to arbitration. The goal of the dispute resolution process is to allow the parties involved to reach a mutually acceptable solution to their differences in position, without the need to involve the legal process. However, there will be some disputes, which cannot be resolved and will ultimately become the subject of action in aDoc DRS 52001 Version 0.1 (draft) Page 87
  • SAMPLE - PROCUREMENT MANUAL court of law. Accordingly, it is essential that no aspect of the preceding dispute resolution process jeopardise or compromise the interests of any party in the dispute. The details of how this approach to dispute resolution is implemented are provided in the following topics.3.6.2 Preparatory activities Before commencing on the dispute resolution process, the basis for conducting the process should be established, in the form of a set of rules. These rules should cover aspects such as the following:  All parties involved in the process must act in good faith at all times and must work act at all times to advance the matter to a satisfactory conclusion.  Information (not already published) presented during the process is to remain confidential and not to be disclosed to any persons not involved in the process.  In the event of the dispute failing to be resolved satisfactorily, unpublished information presented during the process may not be used in a subsequent action.  Agreements reached during the process must be honoured.  The resolution process may be suspended to allow a party to seek independent advice on a particular matter. However, the person or organization providing that advice may not become a participant in the process, and the person or organization is to be bound to observe the confidentiality requirements of the process.  Unless all parties have agreed otherwise, the results of the resolution process are to remain confidential and may not be used in any, subsequent actions by any party. The facilitator is to meet separately with each party, present the rules for the conduct of the resolution process and have each party provide their formal agreement to abide by the rules. Should some aspect the proposed rules not be acceptable, the facilitator is to reach agreement on an appropriate modification or alternative. During these meetings, the facilitator is to require each party to state the facts of the matter – as they see them – and present any opinions on the circumstances of the matter or the position adopted by them. In this the role of the facilitator is solely that of recording and clarifying – as necessary – information and opinions as presented; the facilitator is not to attempt to progress the matter towards resolution at this stage. Each party is to appoint a representative to participate in the resolution process and ensure that all agreed actions resulting from the process are followed up without unreasonable delay. The individual appointed as representative needs to have sufficient standing in their organization to ensure that anyDoc DRS 52001 Version 0.1 (draft) Page 88
  • SAMPLE - PROCUREMENT MANUAL reasonable commitments they may make as part of the resolution process will be honoured subsequently by their organization. Once the meetings have been completed, the facilitator is to prepare and provide to each party to the dispute a position paper covering the following items:  The fact that a dispute exists and the general nature and extent of the dispute.  The identity of all parties to the dispute.  The general opinions and positions of each party.  A summary of the facts as presented by the parties individually to the facilitator.  The agreed basis (the rules) for conducting the resolution process.3.6.3 Informal dispute resolution After the position paper has been provided to the parties involved – and sufficient time has elapsed for each party to become familiar with its content, the facilitator is to convene an informal meeting of the parties to discuss the content of the paper. The meeting is to be held on neutral territory, that is, somewhere other than the premises of any of the parties and is to be attended by the appointed representative from each party. As the meeting is an informal meeting and no binding agreements will be made during the meting, there is no need for any other persons to attend. Under the direction of the facilitator, each representative is to state their currently preferred position for resolution of the dispute and identify the extent –if any – to which they are prepared to compromise their position to reach a mutually acceptable resolution. During this meeting, the facilitator is to encourage the modification of individual positions to work towards a solution. If a solution is reached, the facilitator is to record the basis of the solution and its implementation; each representative is to take this back to their organization for consideration. Within the agreed time, each representative will formally advise the facilitator that either the proposed solution is acceptable to their organization, or else the proposed solution is not acceptable and the process is to proceed to formal resolution. If a solution is not reached, the facilitator is to record the significant differences of opinion and position of the parties. Following closure of the meeting, the facilitator is to advise each party that resolution of the dispute has not been achieved and the matter will be carried forward to formal dispute resolution. If the facilitator is advised that resolution of the dispute has been achieved, the facilitator is to formally advise each party of the basis of the resolution and its implementation, remindingDoc DRS 52001 Version 0.1 (draft) Page 89
  • SAMPLE - PROCUREMENT MANUAL them that, in accordance with the agreed rules for the process, they are each bound to implement the solution as agreed and without unreasonable delay.3.6.4 Formal dispute resolution 3.6.4.1 Meeting agenda The facilitator is to prepare and distribute to each party an agenda for the formal meeting, covering the following items:  The date, time and place for the meeting.  The names of the individuals to attend and participate in the meeting. This will be the appointed representative from each party, and each representative may be accompanied by an observer. (The role of the observer is defined later in this section.)  Affirmation of the rules of conduct of the process.  Summary of the position reached at the end of the informal process (to be presented by the facilitator).  Summary of the current preferred position of each party (to be presented in turn by each representative).  General discussion and clarification of the stated positions, as presented by the representatives.  Development of the preferred proposal for resolution of the dispute.  Summary and closure. The agenda is to be accompanied by an invitation for each part to present – through the facilitator – a succinct statement of their preferred position and any information relevant to and in support of their position. This is to be circulated to each participating individual prior to the start of the meeting.3.6.4.2 Conduct of the meeting The meeting is to be chaired by the facilitator. The role of the facilitator is:  To record minutes of the meeting. These are to include significant items of discussion – including points of agreement and points of disagreement, conclusions reached and action items agreed. Each action item is to identify the individual responsible for implementing the action and the agreed timing for completion of its implementation.  To ensure that discussions are orderly, respectful of individuals, and kept to the point under discussion.  To clarify issues and the basis of differences of opinion so that they are understood by all participants.Doc DRS 52001 Version 0.1 (draft) Page 90
  • SAMPLE - PROCUREMENT MANUAL  To maintain an acceptable rate progress towards an orderly conclusion of the process. The role of the observer is to provide an independent evaluation of the progress and results of the process for the benefit of the party making the appointment. The observer may not contribute statements or opinions to the matters under discussion, but may seek – through the facilitator – clarification or explanation of any matter under discussion. The observer may also require the facilitator to record any significant aspect of discussions in the minutes. The continued attendance of the observer at the meeting is at the discretion of the facilitator, except that attendance at or during the meeting shall not be unreasonably denied. The facilitator shall terminate the meeting at a suitable time. While this is at the discretion of the facilitator, it will be generally under one or more of the circumstances:  The progress of the meeting has ‘stalled’ and the participants would benefit from some time separate to the meeting to consider developments so far.  One or more of the participants needs to attend to other, un- related matters.  One or more of the participants requests a halt to proceedings to allow them to seek clarification or consideration of some development by the party they represent.  The facilitator is of the opinion that the orderly progress of the meeting would benefit by a break in the proceedings. Each time the meeting is terminated, the facilitator shall summarise the proceedings of the meeting and seek from each participant that they are generally in agreement with the summary as presented. A copy of the minutes for the meeting, together with a revised agendas for the next meeting, is to be prepared by the facilitator and provided to each participant without delay. The formal process to reach resolution of the dispute through the meetings shall be terminated when all representatives agree that either:  Resolution has been reached, in which case the nature of the resolution, the way in which it is to be implemented, the responsibility for implementation and the timing for completion of implementation shall be agreed and recorded in the minutes. Each participant shall sign the minutes to conform that agreement has been reached as recorded.  Resolution has not be reached and there is no reasonable expectation that it can be reached. In this case the basis of the remaining issues in dispute shall be agreed and recorded in the minutes. Each participant shall sign the minutes to conform that no agreement can be reached, and the basis if the disagreement is as recorded.Doc DRS 52001 Version 0.1 (draft) Page 91
  • SAMPLE - PROCUREMENT MANUAL At the completion of the formal process the facilitator shall, according to the result, perform one of the following:  For successful resolution: The facilitator shall formally advise each of the parties involved of the agreed basis of the resolution and seek their formal acknowledgment that they are satisfied with the result and the matter is at an end. The facilitator shall then archive all records of the process as described in Section 3.6.6.  For unsuccessful resolution: The facilitator shall formally advise each of the parties involved resolution of the matter cannot be reached by the formal process and advise them that they may seek to have the matter placed before an arbitrator and seek their formal advice as to how they intend to proceed. If their intention is to place the matter before an arbitrator, the facilitator shall proceed as described in Section 3.6.5, following. Otherwise the dispute resolution process is ended and the facilitator shall archive all the records of the process as described in Section 3.6.6.3.6.5 Arbitration The facilitator is to recommend an appropriate individual, or organization providing an arbitration service, to act as arbitrator. The recommended arbitrator must be completely independent and acceptable to all the parties. The facilitator, with the assistance of the arbitrator, is to prepare and provide to each party a set of guidelines for the conduct of the arbitration process. Each party must formally advise the facilitator they will work within the guidelines and they accept that the decision of the arbitrator will be final and binding on all the parties. The role of the facilitator in the arbitration process is to assist the arbitrator through distribution of materials to the parties, and coordination of arrangements for the various activities. Apart from this, the facilitator is not to participate actively in the arbitration process; however, the facilitator may be an observer at meetings convened by the arbitrator. Once the arbitrator has reached a decision on the resolution of the dispute, this is to be formally advised to all the parties and they are to formally acknowledge that they are aware of and accept the arbitrator’s decision. All records of the arbitration process are to be archived as described in Section 3.6.6.3.6.6 Records The principal records generated during the dispute resolution process will be position and discussion papers, statements of fact provided by the various parties, agendas and minutes of formal meetings, facilitator’s notes for informal meetings. As theDoc DRS 52001 Version 0.1 (draft) Page 92
  • SAMPLE - PROCUREMENT MANUAL dispute resolution process is confidential, all records generated by the process are confidential. The facilitator is to collect all records, collate and index them, secure them in appropriate binders – labelled to indicate the contents of each binder – and place the binders in a secure repository. A reference to the separate filing of these records is to be provided in the current procurement activity files.3.7 ASSET MANAGEMENT3.8 RECORDS AND CONTRACT COMPLETION 3.8.1 General The World Bank expectations (Loan Administration Change Initiative – Implementation Handbook: September 1998 – Attachment 1) are that a loan recipient will maintain a complete record of the process used for competitive bidding, and adequate contract administration records. The specific requirements that form these expectations are as follows. 3.8.1.1 Competitive bidding process records The bidding process record should contain copies of the following types of documentation.  All public advertisements.  Pre-qualification documents (if used).  Pre-qualification evaluation report documenting any decisions not to pre-qualify certain potential Bidders.  Bidding documents and any addenda.  Record of any pre-bid meetings.  Bid opening minutes.  Final bid evaluation report, including a detailed record of the reasons used to accept or reject each bid.  Copies of bids.  Appeals against procedures or award recommendations.  A signed copy of the final contract and any performance and advance payment securities issued. Cross-references to pertinent files should be clear and pertinent. 3.8.1.2 Contract administration records The contract administration records should contain copies of the following types of documentation.Doc DRS 52001 Version 0.1 (draft) Page 93
  • SAMPLE - PROCUREMENT MANUAL Contractual notices issued by the Supplier, contractor, Purchaser or employer. Detailed record of all change or variation orders issued affecting the scope, quantities, timing or price of the contract. Records of invoices and payments. Progress reports. Certificates of inspection, acceptance and completion. Records of claims and disputes and their outcome.Doc DRS 52001 Version 0.1 (draft) Page 94
  • SAMPLE - PROCUREMENT MANUAL PART 4 FINANCIAL MANAGEMENTDoc DRS 52001 Version 0.1 (draft) Page 95
  • SAMPLE - PROCUREMENT MANUALPART 4 – FINANCIAL MANAGEMENT4.1 FINANCIAL PLANNING4.2 FINANCIAL CONTROLS4.3 FINANCIAL MONITORING4.4 EXPENDITURE REPORTINGDoc DRS 52001 Version 0.1 (draft) Page 96
  • SAMPLE - PROCUREMENT MANUALANNEX 1: REQUIREMENTS FOR LOCAL GOVERNMENT UNITS The requirements identified in this annex have been extracted from Rule XXXV – Local Government Supply and Property Management in the Act xxxx – Rules and Regulations Implementing the Local Government Code of xxxx. This material is presented for general information only, and is not presented as an authoritative interpretation of the Rule. Article xx The acquisition of supplies by Local Government Units shall be through competitive bidding. Article xx An annual procurement program shall be prepared by local chief executive on or before the 15th day of July each year. The program is to contain an itemised listing of supplies; complete description, quantity, quality, estimated cost, balance on hand. Article xx A requisition is to be prepared for each order for supplies, identifying their necessity for official use and specifying the project or activity where they will be used. Each requisition is to be accompanied by a request for obligation and allotment, showing certification of the local budget officer that an appropriation exists, that the estimated expenditure amount has been obligated and that funds are available. The requisition is to be accompanied by a Requisition and Issue Voucher (RIV) for supplies carried in stock or a Purchase Requisition (PR) for supplies not carried in stock. The requisition is to be approved by the head of the office or department with administrative control for the items. Article xx Calls for bids are to be made by the General Services Officer or the Treasurer. The call for bids is to include: Complete specification and technical description. All terms and conditions of participation and award. Terms of delivery and payment. All other covenants affecting the transaction. The right to waive any defect in the tender as well as the right to accept the most advantageous bid must be reserved, but in no case shall failure to meet specifications or technical requirements be waived.Doc DRS 52001 Version 0.1 (draft) Page 97
  • SAMPLE - PROCUREMENT MANUAL Article xx Call for bids to be given widest publicity possible and must include: Informing any known prospective participant in the locality. Posting copies of the call for bids in at least three publicly accessible and conspicuous places. Article xx The committee on awards shall exercise jurisdiction in deciding winning bids and questions of award or procurement. Article xx Bids are to be received in sealed envelopes, and to be stamped with the time and date of receipt. Bids to be opened at the nominated time and place by the committee on awards. Opening of bids is to be made only in the presence of the nominated auditor, or authorised representative, who shall initial and secure copies of the bids and certify the abstract of the bidding. Award of contract shall be made to the lowest complying and responsible bid that meets all the terms and conditions of the contract. Article xx Procurement without public bidding is permitted as follows: Through personal canvass of at least three responsible merchants, subject to the financial limits as specified in the Rule. Emergency purchase – according to the circumstances and conditions as stipulated in the Rule. Negotiated purchase – after public bidding has failed on two consecutive occasions. Procurement from duly licensed Suppliers. Procurement from exclusive Thai agents or distributors. Procurement from Government entities.Doc DRS 52001 Version 0.1 (draft) Page 98
  • SAMPLE - PROCUREMENT MANUALANNEX 2: INSPECTION PLANPART 1: ARRANGEMENTS1.1 GENERAL DETAILSSupplier Organization Provide the full name of the company or organization name: identified as the Supplier in the contract. If this organization uses an agent to represent it in Thailand, enter the name of the agent below the organization’s name Address: Enter the full street address for the Supplier. If correspondence is to be sent to a different address – such as a post box – enter this below the street address. Contact person: Provide the name – or names if more than one person is involved – of the individual to be contacted for any discussions or queries concerning the inspection activities. Telephone: Enter the telephone number (or numbers) of the Supplier, including country and area codes as appropriate, that is to be used to reach the contact person or persons. Fax: Enter the facsimile number (or numbers) of the Supplier, including country and area codes as appropriate, that is to be used to reach the contact person or persons. E-mail: Enter the e-mail address (or addresses) of the Supplier that is to be used to reach the contact person or persons.Purchaser Organization Provide the full name of the department or organization name: identified as the Purchaser in the contract. Address: Enter the full street address for the Purchaser. If correspondence is to be sent to a different address – such as a post box – enter this below the street address. Contact person: Provide the name – or names if more than one person is involved – of the individual to be contacted for any discussions or queries concerning the inspection activities.Doc DRS 52001 Version 0.1 (draft) Page 99
  • SAMPLE - PROCUREMENT MANUAL Telephone: Enter the telephone number (or numbers) of the Purchaser that is to be used to reach the contact person or persons. Fax: Enter the facsimile number (or numbers) of the Purchaser that is to be used to reach the contact person or persons. E-mail: Enter the e-mail address (or addresses) of the Purchaser that is to be used to reach the contact person or persons.1.2 SCHEDULE OF GOODS TO BE SUPPLIED AND INSPECTED Item Description Quantity Scheduled No delivery date Provide a simple description Enter the Enter the date for of each item, sufficient to total quantity delivery as agreed allow it to be recognised. (volume, in the contract. weight or For part deliveries, number) to provide the be supplied individual deliveries and quantity of each delivery.1.3 INSPECTION LOCATIONSFor each separate location in the Inspection Schedule (Section 2) enter the brief nameof the location and the full address of the location. If the Supplier’s factory or storagepremises are different to that given above, the applicable address is to be included inthe following table. Inspection Address of location location Use an Provide the full address of the location, in sufficient detail abbreviated to allow any person attending the inspection activity to be name for the able to arrive at the location. site or location where the inspect will be performed.Doc DRS 52001 Version 0.1 (draft) Page 100
  • SAMPLE - PROCUREMENT MANUALPART 2: INSPECTION SCHEDULE An inspection schedule (table) is required for each individual item (type of goods) to be supplied as part of the contract, as per the schedule in Part 1. Before entering information into the table, select and copy the table and the heading, then paste as many copies as required beneath the first table.Schedule item to be inspected: <<insert number and description as per the schedule in Part 1>>No. Location Inspection activity Requirements Planned date Actual date Results Where the The type of inspection to The criteria to be The date as The actual The overall results inspection be carried out, as an measured or evaluated to agreed between date on which as determined by activity will abbreviated reference. establish that the goods Supplier and the inspection the inspection. be are conforming. Purchaser for activity was performed. the inspection to carried out. be carried out. Enter the abbreviated This can be either as an If the Usually, this will be address, as used in the explicit statement of inspection is ‘pass’, ‘fail’, or table in Part 1 requirements – such as: carried out ‘qualified pass’ or Size: A4, Weight: 80 gsm over more than ‘qualified fail’. – or else it can be as a one day, the reference to the technical date is the last specification – such as; day of the Refer to Section 5.4.6 of inspection Technical Specification. activity. Also include identification This can be either as an of the parties involved. explicit statement of requirements or else it can be as a reference to the technical specification.Doc DRS 52001 Version 0.1 (draft) Page 101
  • SAMPLE - PROCUREMENT MANUALANNEX 3 PRE-QUALIFICATION ASSESSMENT CHECKLISTCORPORATE DATAFull name It is important that the legal name of the Supplier, including terms such asand address ‘Pty’, ‘Ltd,’ ‘Inc’ etc. be recorded, rather than just a trading name. In theof the case on unincorporated businesses, such as partnerships, this should beSupplier positively identified.Phone and Self explanatoryfax numbers,e-mailaddressOwnership Indicate the number of directors, significant shareholdings, identity ofstructure active directors, partners and the like.Assets This information of general interest and should be restricted to categories of assets, such as land, premises, equipment and the like. The absence of tangible assets does not preclude a Supplier being acceptable, but it does indicate that the Purchaser should consider exercising more than normal vigilance in protecting its interests.Financial Since the Purchaser is interested in long term Suppliers, it is necessarystability to establish that they will be around for the long term. Credit references, bank references and extent of unencumbered assets are all indicators of financial stability.Principal Describe the main business activities undertaken by the Supplier. Fornature of example, printing and binding of books, production of vaccines,business packaging of pharmaceuticals, and so on.Doc DRS 52001 Version 0.1 (draft) Page 102
  • SAMPLE - PROCUREMENT MANUALCorporate What are the key drivers for the Supplier’s business, what do they see asphilosophy the principal reasons for being business, what do they believe sets them apart from similar business, what are they trying to achieve ? All are difficult questions, but the answers give an indication of the extent of compatibility with the Purchaser’s business philosophy.MANAGEMENT STRENGTHS AND LIMITATIONSInspection How well does the Supplier go about ensuring that its goods and servicesand testing are acceptable before they are provided to its customers ? To what(verification) extent is positive verification of conformance carried out.Documentati Can the Supplier keep track of its ‘paperwork’ - identification, issueon control status, distribution, currency and the like ? How can the Purchaser be sure that the documentation provided to the Supplier will be controlled properly ?Process What are the main ways in which the principal processes of thecontrol Supplier’s business are kept under control ? Does the Supplier recognise and apply limits on performance and monitor performance to ensure that those limits are observed.Records To what extent are records maintained ? Can traceability be demonstrated ?Doc DRS 52001 Version 0.1 (draft) Page 103
  • SAMPLE - PROCUREMENT MANUALWork Is planning formal and structured, or is it ad hoc ? What planning toolsPlanning are used ? Is actual performance reconciled to planning and adjustments effected ?Training and What is the level of skill and experience within the Supplier ? How is thisskills maintained ? How is developed ? Are new requirements translated intodevelopment training and staff development ?Extent of How do the people within the Supplier’s business know what is expecteddocumentati of them ? How is information on performance requirements transmitted toon that them ?supportsmainbusinessactivitiesOther factors Identify and describe any other (meaningful) factors that will affect thethat impact principal factors of performance in the provision of goods and services toon the the Purchaser - time, cost, quality.performanceof thebusinessWORK PROCESSESMain Identify the main processes used to provide the goods and servicesproductive offered by the Supplier. For example, printing, binding, capsule filling,processes tablet pressing, etc.Principal List the main types of equipment used in the processes identified above.types of For example: 4 colour press, sigma blade mixer, autoclave, etc. WhereDoc DRS 52001 Version 0.1 (draft) Page 104
  • SAMPLE - PROCUREMENT MANUALequipment computing equipment is used it should also be identified .Condition of Provide general observations on the state of the equipment.equipmentCharacteristi Since the quality of people’s performance is affected by their workingcs of work environment, describe the significant characteristics of the workenvironment environment.Characteristi The observations need to be relevant and - to the extent that this can becs of people determined - factual. Do people seem interested in their work, keen,employed enthusiastic and so on. Be careful of misinterpretation of the observations; for example, mistaking intense concentration for lack of enthusiasm.Nature of How does the Supplier establish objectively that work processes havecontrols used been set up properly before they commence running, and how are the- set up and processes controlled during running so that deviations are detected andrun corrected without delay. Final inspection at the end of a run is a poor approach to process control.Other factors Identify and describe any other (meaningful) factors that will affect thethat may effectiveness of process controls.impact onthe control ofprocessesDoc DRS 52001 Version 0.1 (draft) Page 105
  • SAMPLE - PROCUREMENT MANUALGENERAL INDICATORSInventory What approach is used to ensure adequate levels of materials andmanagement finished product are maintained ? Is this approach likely to be effective ? Will it ensure that the Purchaser’s interests are protected ?Stores How effectively is the movement of materials into and out of thecontrol Supplier’s store controlled ? To what extent has the system been formalised ?Safety To what extent has the Supplier recognised and addressed safety issues ?Housekeepin What is the nature of the housekeeping exercised ?gEmployee What is the extent and condition of facilities provided for employees ?facilitiesAttitudes, These are all intangible aspects of the Supplier’s business; how are theyimage, style characterised ?cultureOther factors Are there any other aspects of the Supplier’s business that needthat may consideration ?impact onthe generalconduct ofthe businessDoc DRS 52001 Version 0.1 (draft) Page 106
  • SAMPLE - PROCUREMENT MANUALBUSINESS MANAGEMENT SYSTEMMaturity of How stable or settled is the system. Note, immature systems are quitesystem acceptable providing the business recognises this and manages itself accordingly.Control of How are non-conformances recognised, controlled and disposed ?non- How effective is the system ?conformanceCorrective How is the need to take corrective action for systematic deficienciesaction recognised and implemented ? How effective is this approach ?approachPreventive What is undertaken to anticipate and prevent system deficiencies ?action How effective is this approach ?approachOther What other factors relating to business management should beconsiderations considered ?Doc DRS 52001 Version 0.1 (draft) Page 107
  • SAMPLE - PROCUREMENT MANUALANNEX 4 INSPECTION REPORTPART 1 – FORMAT FOR AN INSPECTION REPORTBACKGROUND Provide a brief statement describing the nature of the contract and the inspection being undertaken.ARRANGEMENTS Purchaser: Insert the full name of the Implementing Agency making the purchase, for example: Department of Education. Supplier: Insert the full name of the Supplier and their area of responsibility, for example: XYZ Book Services (Publisher – prime contractor) Subcontractor: If applicable, insert the full name of the subcontractor and their area of responsibility, for example: ABC Printing (Printing and binding subcontractor) Location of Insert the address of the location where the inspection: inspection was performed. Date of inspection: Insert the date of the inspection Inspection Insert the names, position and organization of each performed by: person on the inspection team. Inspection If applicable, insert the name and organization of witnessed by: each person present as an observer or witness. Supplier’s Insert the name and organization of each person representatives: present from the Supplier’s organization.GOODS INSPECTED ITEM DESCRIPTION QUANTITY 1 Insert name or description of item Insert quantity to be delivered 2Doc DRS 52001 Version 0.1 (draft) Page 108
  • SAMPLE - PROCUREMENT MANUALOBSERVATIONS AND COMMENTSProduct inspection Describe – in general terms – the source of the information on inspection criteria for the goods as used by the Inspectors. Describe – in general terms – how the Inspectors conducted the inspection of the goods. Describe – in general terms – the results of the inspection. Include any observations or comments on how the inspection was performed or the results of the inspection.Packaging and quantity inspection Describe – in general terms – the source of the information on inspection criteria for the packaging and quantities as used by the Inspectors. Describe – in general terms – how the Inspectors conducted the inspection of the packaging and checked the quantities. Describe – in general terms – the results of the inspection. Include any observations or comments on how the inspection was performed or the results of the inspection.CONCLUSIONS AND RECOMMENDATIONS State the extent of conformance – or otherwise – that has been verified by the inspection. From consideration of the observations and comments, state any reasonable conclusions that may be made. As appropriate, state any recommendations for action to address or implement the findings as stated in the conclusions.Doc DRS 52001 Version 0.1 (draft) Page 109
  • SAMPLE - PROCUREMENT MANUALPART 2 – EXAMPLE OF A COMPLETED INSPECTION REPORT INSPECTION REPORTBACKGROUND XYZ Book Services have been contracted to supply approximately 1500 sets of each of three book-sets to the Department of Education (DE)for distribution in Regions A and B. The inspection was performed by Inspectors from DE and observed by the end user as part of their evaluation of the processes used.ARRANGEMENTS Purchaser: Department of Education Supplier: XYZ Book Services (Publisher – prime contractor) Subcontractor: ABC Printing (Printing and binding subcontractor) Location of inspection: Date of inspection: Insert the date of the inspection Inspection performed by: Inspection witnessed by: Supplier’s representatives:GOODS INSPECTED ITEM DESCRIPTION QUANTITY 1 XYZ Books Volumes 1 to 5 1,489 sets 2 Thai Songs and Stories 1,489 sets 3 Storytelling for Young Children 1,489 setsOBSERVATIONS AND COMMENTSProduct inspection The Inspectors used a copy of the technical specification as their reference for their individual inspection activities.Doc DRS 52001 Version 0.1 (draft) Page 110
  • SAMPLE - PROCUREMENT MANUAL The process used by the Inspectors was to open a carton selected at random and conduct an intensive examination of a few items – taken at random from within the carton. The examination of the items was as follows:  Flicking through the pages and shaking the book to detect any loose (unbound) sheets.  Detailed examination to check the page sequence and orientation of the pages.  Superficial examination of a page to verify that 80 gsm paper had been used as required. While the restriction of product inspection to one item may not appear to have adequate rigour, there are a number of factors which validate the approach taken. Printing and binding was subcontracted to ABC Printing, who has been providing this service to XYZ (as their preferred printing subcontractor) for approximately twelve years, and has established its capability to meet the technical requirements for this type of work. The nature of the printing and binding process is that any production problem will usually be manifested in all items produced within the batch. Thus, if there is an error in the page sequence, it will appear in all items produced and inspection of a single item will detect the problem. The DE Inspectors have undertaken in-progress inspections which have demonstrated that the printing and binding process has been under control; therefore the final product should conform to requirements. The verification that 80 gsm paper had been used was not intended to be performed by superficial inspection. The contract requires that a sample of the paper to be used be submitted for laboratory testing, and the certified test report be made available to the Inspectors as part of the final inspection. As the test laboratory had not provided the certified report by the time of the inspection, it could not be presented to the Inspectors. The action of the Inspectors to establish that 80 gsm paper had been used by a superficial examination is a sensible one. As experienced Inspectors, and with access to a reference sample known to be 80 gsm for comparison, they could reasonably be expected to detect any significant deviation from the specified requirement and thus reject the goods. As the superficial examination confirmed that the required paper density had been used, the goods were deemed conforming, subject to the certified report being provided before acceptance.Packaging and quantity inspection The Inspectors used both a copy of the technical specification and a quantity/delivery location list as the reference for their individual inspection activities. The entire order was inspected to ensure that all packages were marked as required by the technical specification, and that the correct quantity had been provided. This was checked in terms of both total quantity for the order and individual quantities by order item and delivery location.Doc DRS 52001 Version 0.1 (draft) Page 111
  • SAMPLE - PROCUREMENT MANUAL The Inspectors were thorough in their examination of the goods: Each carton was examined to establish that all the required markings and labels had been provided; this was verified explicitly against the instructions and illustrations in the technical specification. Each carton was checked for the integrity of the packaging. The quantity of each item for each delivery was checked and marked off on the list provided for that purpose.CONCLUSIONS AND RECOMMENDATIONS The inspection at XYZ Book Services has verified the conformance of the goods to be delivered to DE. The success of the inspection is attributable, in part, to the use of a Supplier (and subcontractor) whose capability has been established by previous performance, and in part to the performance of in-progress inspections to verify that standards are being maintained during production. Because of this, and the nature of the items being supplied, the random – and limited – inspection approach used is both valid and successful. However, for inspections of goods from Suppliers whose capability to perform has not been established objectively, this approach is questionable. The inspection of product should be based on selecting a sufficient number of items to ensure that the inspection results are statistically valid. Another aspect of inspection for consideration is using the inspection data to build up a profile of a Supplier’s capability. This entails defining the attributes to be inspected (on a checklist) and recording the number of instances of non-conformance detected for each attribute (and the total number inspected for each attribute). Over a period of time, this information will allow the frequency of occurrence of various types of defects to be determined, which will allow more accurate selection of sample size which, in turn, will lead to enhanced reliability in the sampling inspection results. The use of assessments of Supplier capability to establish level of risk of non-conformance, and adopting an in-progress and final inspection process commensurate with this risk, should be considered for inclusion as a standard procedure for procurement officers.Doc DRS 52001 Version 0.1 (draft) Page 112
  • SAMPLE - PROCUREMENT MANUALANNEX 5 <<TITLE>>World Bank/ADB FeedbackI guess that drafting of project manual is a responsibility of theGovernment, and in the case of Dept. with your expert procurementadvise & assistance, based on the guidelines of the Banks for separatelocations and the nature of the procurement needs of the project.Banks comments should be required only for guidance vis-a-visalignment of the draft manual with the agreed procedures.Please let me compliment you and your team on a fine effort. The textis certainly concise and it does provide a procurement person with aconcise world’s best practice cook book.While we are not required to comment on the manual I would like toshare the ffg general obseravations on the basis of your request:1. The manual should be useful and understandable to all users bothin the national & Local levels, i.e. the approach to procurement mgtshould have covered the procurement planning cycles (both national &local) - its not sufficient to just limit the contents to GeneralPrinciples of good procurement practice or "cross functional" teams.2. Discussion on Procurement mgt is limited to those requiring useof Banks SBDs (e.g. NCB and ICB procurements), how about RFQprovisions for improving / making efficient procurement all levels?Terms of delivery should have been limited to those commonly used inThailand particularly the core Agencies. Other terms available andcopied from the inco-terms not in use in the country should bedeleted. There was a reference in the purchase of textbooks in otherlocations but the Banks textbook SBD is not covered in 2.1.2The definition of Supply of Goods in page 25 is misleading and notclear. While this is a general definition it should take into accountwhat are the requirements of the agencies in practical terms. In caseof the agencies, their CDS is actually the one managing the processnot the Supplier. Hence the definition should be corrected to itsright context. Why not cover the difficulty in preparing technical specifications?say the procurement people to prepare catalogues.3. Para 2.6 covering pre-qualification should be corrected / revisedto cover the post-qualification which is required for procurementunder World Bank financing. The World bank in the case of Thailandprefer to use pre-qualification instead of the inefficient postqualification. Also, why use international inspection agencies toconduct evaluation? the process should have been based on longexperience of the country and the project, including someother projects in the Agencies and not re-invent the wheels.4. Paras. 2.7 and 2.8 appeared to have been copied from the ITB ofthe bidding documents. Suggest that only the substance of the processbe covered and very detailed steps should be cross referenced instead.Also, copies of the Bidding Documents should be appended to themanual.Doc DRS 52001 Version 0.1 (draft) Page 113
  • SAMPLE - PROCUREMENT MANUAL5. Para. 2.9 includes provision for negotiation. Negotiation is a"no-no" unless a prior NOL is given by the Bank. It would have beenpreferred if the provision of the bank guidelines is adopted here. Thecurrent provisions are unclear and misleading.6. The provisions for Logistics appear to be the TOR of aprocurement agent rather than a Logistics which should be a functionof the agencies ensuring that goods procured are delivered safely, inaccordance with specs, to end user locations, and possibility ofleakages / misdeliveries are eliminated.7. In the context of recent large procurement the contentious issueof Implementing Agency addressing / directly handling customsclearances are eliminated by passing the responsibility to theSupplier.8. Opening of Letters of Credit in all cases should conform withthe respective Banks procedures, to avoid confusion.9. For clarity the term "Bidder" is should use consistently in themanual, reference to other terminologies as Supplier or importer etcshould be eliminated to avoid confusion.10. Provision for dispute resolution (in six pages) need not becovered in full as each procurement package has provision for disputeresolution.CheersJBDDoc DRS 52001 Version 0.1 (draft) Page 114