1. USAID Procurement Procedures Kampala, Uganda 8-11 December 2009

2. 2 Procurement Procurement is the process of acquiring goods, supplies and services. It includes: Equipment, spare parts & supplies for program activities Equipment, office furniture & supplies for project offices Technical assistance by individuals or organizations

3. Procurement Rules and Regulations  22 CFR 226 contains: –Inventory requirements –Property Management requirements –Other procurement requirements including definitions and regulations on equipment, codes of conduct including avoidance of conflict of interest, competition, written procurement procedures, required flow-down clauses, and record keeping 3

4. USAID Rules and Regulations 22 CFR 226 Award Admin 2 CFR 230 Cost Principles For Non Profits Audits Circular A-133 U.S.-based organizations ($500,000 threshold) USAID Guidelines for Financial Audits Contracted by Foreign Recipients Foreign Entities ($300,000 threshold) Standard Provisions ADS Chapter 303 USAID Circular A-110 – Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations Required as Applicable Provisions: 17 for U.S. based 35 for Non- U.S. based Mandatory Provisions: 21 for U.S. based 17 for Non- U.S. based

5. Procurement Policy You may use your own procurement policies and practices as long as they conform with the following USAID’s eligibility requirements and: 1.A written code of conduct preventing and addressing conflict of interests 2.Procurement transactions providing, to the maximum extent practical, open and free competition 3.Document price or cost analysis in its procurement files 4.Define sound and complete contract for contracts in excess of $10,000. The contract should include provisions that allow administrative, contractual, or legal remedies for contractor violation of terms; and suitable provisions for termination by the recipient. 5

6. Recipient Procurement Procedures At a minimum they should:  Avoid purchasing unnecessary items  All solicitations should provide for: clear and accurate description, requirements that bidder/offeror must fulfill; description of technical requirements; specific features –Remember to compare ‘Apples with Apples’  Procurement made with responsible contractors –Based on best value to organization (if not the lowest price, the reason must be documented)  Make available to USAID procurement documents 6

7. USAID Thresholds  Note the following USAID procurement thresholds: 1.$3,000 (micro-purchase threshold): over this transactional amount must obtain at least 3 quotations and conduct analysis to justify vendor selection. 1.$100,000 (simplified acquisition threshold): requires “full and open competition”. You must issue solicitation publicly and establish criteria for evaluating submissions. 7

8. Organizational Thresholds  Taking into account USAID thresholds, DGP Partners must establish and follow their own organizational purchasing thresholds in coordination with signatory policies and levels of authority.  *Note* Purchases of similar types of items that can be obtained from the same vendor cannot be separated to avoid meeting thresholds (i.e. separate computer and printer equipment to avoid reaching the $100,000 threshold where public solicitation is required) 8

9. 9 Restrictions on Goods  Standard Provision entitled “USAID Eligibility Rules for Goods and Services” –Ineligible Goods & Services: Cannot be procured under any circumstances. –Restricted Goods: Need prior approval from the Agreement Officer (AO). –Ineligible Suppliers: Cannot procure from firms or individuals whose name appears on the “Lists of Parties Excluded from Federal Procurement and Nonprocurement Programs.” www.epls.gov and terrorism databases

10. What You Cannot Buy – Ineligible Goods and Services 10 Abortion equipment and services Luxury goods and gambling equipment Weather modification equipment Military Equipment Surveillance Equipment Commodities and services for support of police or other law enforcement activities

11. 11 What You Need Prior Approval For – Restricted Goods  Motor vehicles  Pharmaceuticals  Used Equipment  US.. Government-owned excess property  Agricultural commodities  Pesticides  Fertilizers  Contraceptives

12. Rules and Regulations  22 CFR 228 contains: –List of geographic codes –Waiver definition and criteria –Source, origin, and nationality definitions and requirements 12

13. 13 Procurement – USAID Geographic Codes When undertaking procurement activities first look at: –The USAID-specified Project Geographic Code: a three digit code which designates a country or a group of countries –In Section A of your Cooperative Agreement

14. 14 Procurement – USAID Geographic Code  The Source and Origin of the goods procured must comply with the authorized Geographic Code. –Source means the country from which a commodity is shipped to the Cooperating Country, or the Cooperating Country if the commodity is located in-country at time of purchase. –Origin means the country where a commodity is mined, grown or produced.

15. 15 935 899 941 000 Procurement – USAID Geographic Code Code 000 The United States Code 935 Any area or country including the cooperating country, but excluding the foreign policy restricted countries. Cuba, Laos, Iran, North Korea, Syria. “SPECIAL FREE WORLD ”

16. 16 Procurement - USAID Geographic Code 935  Code 935: Special Free World. Includes any area or country in the Free World, including the Cooperating Country (least restrictive). Preference 1.U.S. 2. Host country 3. Code 941 4. Code 935

17. Local Procurement ( If USAID Geo Code = 000 ) All locally financed procurement must have source and nationality waivers except:  Commodities and services only available in the local economy (fuel, rent, etc.)  Commodities of 935 origin if transaction is <$5,000  U.S. origin items if the transaction is <$100,000  Professional Services Contracts < $250,000  Construction Services Contracts <$5,000,000 17

18. 18 Country Restrictions  Foreign Policy Restricted Countries –You cannot purchase goods made in, or shipped from, those countries. –Currently those countries are: Cuba, Iran, Libya, North Korea and Syria –If any component of a product is from one of those countries, it cannot be purchased.

19. Special Source Rules – Restricted Goods  Need prior approval from USAID and  USAID “Special Source Rules” require procurement from the U.S. (22 CFR 228.13) for: –Motor Vehicles (includes trucks, cars, buses, motorcycles, utility vehicles and motorized bicycles) –Pharmaceutical Products –Agricultural Commodities –Contraceptives 19

20. What Is a Waiver?  Waivers are required whenever the project needs to buy outside the authorized geographic code and has met one of the criteria for a waiver (see 22 CFR 228.50 Subpart F).  Waivers from USAID must be in writing, signed by the Mission Director, or as delegated to the AO. 20

21. Approval Requirements  Request approval from the USAID AO for the following: –Items not in the budget / program description –Restricted goods as noted above (including motor vehicles) 21

22. Motor Vehicle Example  To purchase motor vehicles, you need the following written documentation from the AO: 1.Approval to purchase the motor vehicle because it is a restricted good 2.A waiver to purchase the motor vehicle if it is non-U.S. source and origin (per special source rules) 22

23. Group Exercise  Plot the procurement process your organization will have to go through before purchasing an item. 23

24. Best Practices in Procurement 1.Conduct annual procurement planning that includes both office and program equipment, supplies and services 2.Link procurement planning to budget and workplanning processes 3.Follow established written procurement procedures 4.Provide for open competition to the extent possible 5.Obtain quotations, review quotations against established criteria, use evaluation committees and justify vendor selection –Ensure adequate segregation of duties – prepare/review/authorize 6.Document the procurement process 7.Keep an inventory of all equipment purchased and update it regularly, noting condition and location of items (see inventory register) 24

25. Documentation - Procurement  Should tell the “procurement story” without additional verbal explanation  ‘Procurement story’ should include: 1.Request for Quotations or Request for Proposals (including internet / newspaper postings) – if required 2.Quotations obtained 3.Bid analysis 4.Evaluation committee outcomes, and justification of vendor selection based on clear criteria  Depending on organizational policy, a checklist should be developed to ensure the organization is regularly keeping standard documentation 25

26. Documentation – Procurement Continued  Approval and/or waiver from USAID (if applicable)  Approval from organization signatory policy (as applicable)  Signed Purchase Order or Contract  Confirmation of receipt of item/Signed Property Management Letter (if recipient other than organization)  Copy of Vendor’s Invoice (stamped paid)  Relevant correspondence, memos, faxes, records of conversations collected throughout the procurement process  Terrorism searches 26

27. Procurement Scenarios  Use the following procurement scenarios to work through and evaluate: –Procurement systems and procedures working well –What could use improvement in the scenario –Potential procurement issues and how to prevent them 27

28. Questions? 28