2 NOTE: The following provides guidance on IRDs Procurement process. This is not a policy document.
3 What is Procurement? When we use the word procurement, we mean: The act of buying goods and services This can be on behalf of our donors to fulfill project requirements or, This can be purchases of goods or services to meet IRDs internal needs. Procurement refers to the entire process from identifying a need and submitting a requisition to receipt and approval for final invoice and payment.
4 What is Procurement? Goal: to obtain quality products and services at the best price Good procurement requires: - planning - budgeting - sourcing - receipt of goods or services - payment It may be the job of the procurement manager/ officer, but it requires the combined efforts of management, finance, admin and program to get it right!
5 Objectives of this training: Help you understand basic principles of procurement Outline the correct procedures Achieve best value for IRD and our donors Highlight effective internal controls Emphasize objective, transparent, fair and consistent selection process
7 Procurement Process: Step 1 Identify need and/or requirement Sources include funding agreement, client requests, office needs Define how or what will meet the need and/or requirement (specifications) Avoid over-specifying: it will only increase the cost and restrict the competition. Or; under-specifying: it may compromise the quality level and you may not receive the product or service adequate to fulfill your needs
8 Procurement Process: Step 2 Prepare procurement requisition form (PRF) All procurements of services or goods must start with a signed Requisition Form. A PRF is a request to PROCURE not to PAY for goods or services Provide specifications and other relevant information Indicate which project and line item we are procuring for Give an estimated price for the request State when goods/services are needed by and where
9 Procurement Requisition Form (PRF) Requirements: Allowable: within the scope of the project (source and origin; ineligible goods) Allocable: direct vs indirect Right quantity: how much Right quality: specifications, quality, education etc. Right time: date or schedule Right place: location Auditable and transparent: clear paper trail
10 Allocability Right Quality Right Quantity Within budget Right time Clearly identify where the goods and services are to be delivered Attachments must be included
11 Procurement Process: Step 3 Submit PRF to authorized personnel for approval The form must be signed and must certify that: 1.funds are available 2.within budget This form ensures a segregation of duties by requiring multiple layers of approval!
12 Procurement Process: Step 4 Develop procurement strategy Where will you find what you are in need of? – Identify the relevant market and sources (This will determine where you publicize the procurement – Step 5) What are your competition requirements? – IRD has policies and procedures that outline competition requirements for specific dollar amounts – Our donors may also have competition requirements
13 Procurement Process: Step 4 Develop procurement strategy What type of agreement or contract will be needed? Identify your key selection criteria. What will your final decision be based on? Examples include: PriceTechnical approach Qualifications of staffPast performance QualityTimeliness ManagementOther
14 Procurement Process: Step 4 Develop procurement strategy Determine who will make the selection. Selection committees with representation from different functional areas promote fairness and transparency. Prepare a solicitation which lists the requirements, selection criteria, rules of submission, and other relevant information companies need to know in order to submit their bid or proposal Solicitations may also be called Request for Quotes (RFQ), Requests for Proposals (RFP), or Invitations for Bids (IFB)
15 Procurement Process: Step 5 Request bids or proposals This step is determined by the procurement strategy and competition requirements identified in step 4! You may do this by: or a combination of the above TelephoneInternet Newspaper adsPosting on bulletin boards Word of mouth
16 Procurement Process: Step 6 Evaluate responses In this step, score the responses in accordance with the key criteria identified in step 5 and rank them
17 Procurement Process: Step 7 Make selection Based on the rankings identified in Step 6, make and document the selection
18 Procurement Process: Step 8 Execute Agreement The type of agreement is identified in step 4 Consult with your Contracts and Grants specialist before drafting the contract/ agreement between IRD and the provider of the goods/services needed. Obtain signature from an IRD staff member authorized to sign contracts!
19 Procurement Process: Step 9 Obtain goods or services Document your receipt with a goods receipt report !!!
20 Procurement Process: Step 10 Receive invoice and make payment NO requests for payment will be made without the following: Purchase Requisition Form (PRF) Invoice or Receipt Goods Receipt Form - Anything that deviates from the original documented requirement, yet still accepted, must be explained. - The receipt form should make reference to the PRF/PO number. - For services: time sheets, photocopies of deliverables, proof of inspection, are acceptable proof of work done
21 Competition Requirements IRDs procurement policy sets forth mandatory competition requirements for particular dollar amounts. Procurement files must contain minimally required information on competition for all procurements of $500 or more. Additional procurement documentation is required for procurements of $3,000 or more If you cannot show that you adhered to required procedures the donor may disallow the cost and you may face disciplinary actions.
22 BEWARE Improper business practices, including fraud and corruption are frequently associated with procurements. Accordingly, donors, auditors, and investigators look for indicators of tainted procurements or fraudulent activities. IRD staff must maintain the integrity of the procurement process! What follows are some prohibited practices that are frequently identified by auditors and investigators. Other prohibited practices are set forth in IRDs Code of Business Ethics and Conduct.
23 Splitting Bids Breaking up required services or products into smaller sizes to avoid the requirements for larger dollar value contracts is called splitting bids
24 Restrictive Specifications Writing specifications to meet the qualifications of one particular company, supplier, or product. NOTE - Staff may not have intentionally drafted restrictive specs to favor a particular company or product, but nevertheless, the procurement may have restrictive specs.
25 Conflicts of Interest Upholding the integrity of the procurement process ensures that transactions are fair, transparent and made at an arms-length distance A conflict of interest exists when there is an actual or perceived bias toward a person or business which may create, or appear to create, an unfair advantage. Showing any type of favoritism, or the appearance of favoring one person or business over another creates a conflict of interest situation. Always ask yourself, How will my decision look to an outsider? Actual, potential, or apparent conflicts of interest MUST be disclosed to IRDs Chief of Compliance.
26 Buy-Ins Modifications or change orders are sometimes scrutinized less than the original procurement. Accordingly, some bidders will buy-in by submitting a low bid to ensure receiving the award. The bidder then makes up the low bid through change orders or modifications.
27 Collusion Collusion is an agreement between two or more persons or businesses to limit competition to divide the market, set prices, or limit production. It can involve wage fixing, kickbacks, or misrepresenting the independence of the relationship between the colluding parties
28 Leaking Procurement Information Selectively sharing information about an upcoming procurement, which may include IRDs procurement strategy, specifications, or other proprietary information. If procurement information is disclosed to one entity, it must be shared with others to ensure fairness
29 Remember: Regardless of dollar amount, IRD personnel must ensure that all business transactions are transparent, fair, objective, and documented. If you have questions, seek advice before proceeding. Documentation and record-keeping is key!
30 Please Note: This presentation educates all IRD personnel on the basic elements of the procurement process. IRD has additional procurement training geared towards procurement professionals, contracts and grants specialists, finance, compliance, audit and other IRD personnel regarding IRDs Procurement Policy.