1. 1 Project Orientation – Oct 2011 Kenya Red Cross EU-ACP Isiolo Water - Sanitation & Hygiene Project EU Procurement

2. 2 EU – ACP Isiolo WASH Project Introduction & DRC/KRCS MoU EU Annex IV EU thresholds & procedures Single - Competitive Negotiated & Local Open Tenders Rule on Nationality & Origin Tax (duty / VAT) exemption Project Orientation – EU Reporting – Oct 2011 EU Procurement Contents

3. 3 EU – ACP Isiolo WASH Project In EuropeAid funded projects there are strict rules applied to procurement and the way which contracts for services - supplies & works are awarded These rules help to ensure that suitably qualified contractors are chosen impartially; best value for money is obtained; & there is full transparency in the use of EU taxpayer funds DRC & KRCS must comply with the procurement rules for contracting services - supplies and works that are set out inAnnex IV of the Project Grant Agreement The EU decides about the eligibility of costs based on compliance with the procurement rules in Annex IV. If the rules are not properly observed - the EU can demand reimbursement of part of their grant from DRC/KRCS. Project Orientation – EU Reporting – Oct 2011 EU-ACP Procurement Introduction

4. 4 EU – ACP Isiolo WASH Project KRCS will ensure that all requirements & formalities will be provided in relation to procurement - import of equipment and supplies - exemption of duties - customs clearance and insurance of all items needed by the Project. KRCS tendering and contracting procedures must be in accordance EU Annex IV. The KRCS Supply Chain Department - in charge of procurement - will ensure that appropriate procedures are followed. Project Orientation – EU Reporting – Oct 2011 EU-ACP Procurement DRC / KRCS MoU Article 9 of the MoU between DRC & KRCS for the EU-ACP Project outlines the responsibilities regarding procurement

5. 5 EU – ACP Isiolo WASH Project the eligibility for contracts – including rules on nationality and on origin - exceptions to the rules - grounds for exclusion. rules common to all tender procedures rules specifically applicable to service contracts - to supply contracts - or to work contracts the use of the negotiated procedures for tendering Project Orientation – EU Reporting – Oct 2011 EU-ACP Procurement EU Annex IV Annex IVAnnex IV details:

6. 6 EU – ACP Isiolo WASH Project The Concord Reader on the 2007 version (Aug 2009)Concord Reader on the 2007 version gives practical advice on all aspects of EuropeAid Grant including eligible costs - procurement - reporting etc. Project Orientation – EU Reporting – Oct 2011 EU-ACP Procurement Understanding Annex IV 3 websites / documents that assist in understanding Annex IV punto.sud HELPDESKpunto.sud HELPDESK website for EuropeAid funded projects The Trenino Guidelines for the Management of EuropeAid funded projects (September 2011) – including procurement with many useful samples & templates that apply to all aspects of EU contracting procedures The Trenino The EUs PRAG 2010 (PRActical Guide) websitePRAG very detailed; also gives many useful samples & templates that apply to all aspects of EU contracting procedures it is not Annex IV – it is more a best practice guide

7. 7 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 EU-ACP Procurement Establish Procedures DRC/KRCS must establish standard procedures on procurement and internal guidelines for tender documents to ensure that amongst other things conditions allow fair competition. In particular that: the time-limits for receipt of tenders and requests to participate must be long enough to allow interested parties a reasonable and appropriate period to prepare and submit their tenders (Annex IV) All requests to participate in tenders that satisfy the requirements must be evaluated and ranked by the tender evaluation committee on the basis of exclusion - selection and award criteria announced in advance and included in the tender dossier.

8. 8 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 EU-ACP Procurement What does it mean for you ? Service - supply & works contracts: thresholds & procedure to be applied Single tender - competitive negotiated tender & local open tender Outline of tender procedure & tender evaluation committee Rule on nationality and origin Tax exemption (import & other duties / VAT)

9. 9 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 EU-ACP Procurement Thresholds & Procedures

10. 10 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 Single Tender (& negotiated with single tender) Service - supply or works contracts < 10 -000 There are some special cases where single tender can be used: Or for additional works not included in initial contract - or where a contracts needs an extension - but which due to unforeseen circumstances - become necessary Or where competitive negotiated tender is unsuccessful (no qualitatively or financially tender received): after initial tender is cancelled - KRCS may negotiate with one (or more) tenderers of its choice provided the initial terms of the tender procedure are not substantially altered There are other special cases (see The Trenino)

11. 11 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 Competitive Negotiated Procedure Service (10 -000 – 200 -000) / Supply ( 10 -000 – 60 -000) / Works ( 10 -000 – 300 -000) KRCS invites in writing at least 3 tenderers of their choice at the same time to negotiate the terms of the contract. KRCS communicates the intention to launch procurement procedures in writing and include a tender dossier. Publication is not required. Chosen candidates must be allowed at least 30 days from dispatch of letter if invitation to submit their tenders. Tenders opened and evaluated by KRCS Tender Evaluation Committee

12. 12 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 Local Open Tender Procedure Supply ( 60 -000 – 150 -000) / Works ( 300 -000 – 5 -000 - 000) Open to all eligible operators / companies A tender notice is published in all appropriate media in Kenya Chosen candidates must be allowed at least 30 days from dispatch of letter if invitation to submit their tenders. Tenders opened and evaluated by KRCS Tender Evaluation Committee

13. 13 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 Tender Process Publication of Tender Notice + deadline for submission KRCS make tender dossier available Tender Opening & Submission Compliance + Tender Evaluation: Administrative & Technical Compliance Evaluation of Financial Offer Evaluation Report Establish clear selection & award criteria Establish composition of evaluation committee Award of the Contract notify successful tenderer / contract preparation Contract signature / publication of award Tender Report Tender submitted Envelope A = Technical Offer Envelope B = Financial Offer I Receipt & Registration of Tenders

14. 14 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 Tender Evaluation Committee Minimum 3 voting members; odd number recommended One chairman One secretary An observer (optional) All members must sign a declaration of impartiality & confidentiality

15. 15 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 EU Rule on Nationality and Origin Rule on Nationality refers to the nationality of the company signing a contract for works and services to verify compliance with the nationality rule - the tender dossier must require tenderers to declare their country of nationality with legal documents. In terms of contracting for EuropeAid ACP funded projects in Kenya this refers to where someone - or something - comes from. Only certain countries are accepted: European Union or European Economic Area countries Kenya African - Caribbean and Pacific (ACP) States

16. 16 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 EU Rule on Nationality and Origin Rule on Origin Refers only to the supplies & materials purchased The supplier must certify that the goods tendered comply with the origin requirement specifying the country or countries of origin (the country in which the goods have undergone their last substantial transformation) When tendering for systems comprising more than one item - the origin of each item in the system must be specified For equipment or vehicles with unit cost > 5 -000 - suppliers must present proof of origin (certificate of origin) to KRCS no later than when the first invoice is presented

17. 17 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 EU Rule on Nationality and Origin Member State of the European Union: Austria - Belgium - Bulgaria - Czech republic - Cyprus - Denmark - Estonia - Finland - France - Germany - Greece - Hungary - Ireland - Italy - Latvia - Lithuania - Luxembourg - Malta - Netherlands - Poland - Portugal - Romania - Slovakia - Slovenia - Spain - Sweden & UK. Official candidate country as recognised by the EU: Croatia - Macedonia - Turkey - Iceland & Montenegro. Member State of the European Economic Area: Iceland - Lichtenstein & Norway

18. 18 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 EU Rule on Nationality and Origin An EU-ACP State (Africa Caribbean & Pacific): Angola - Antigua and Barbuda - Belize - Cape Verde - Comoros - Bahamas - Barbados - Benin - Botswana - Burkina Faso - Burundi - Cameroon - Central African Republic - Chad - Congo (Brazzaville) - Congo - Cook Islands – Côte d'Ivoire - Djibouti - Dominica - Dominican Republic - Eritrea - Ethiopia - Fiji - Gabon - Gambia - Ghana - Grenada - Republic of Guinea - Guinea-Bissau - Equatorial Guinea - Guyana - Haiti - Jamaica - Kenya - Kiribati - Lesotho - Liberia - Madagascar - Malawi - Mali - Marshall Islands - Mauritania - Mauritius - Micronesia - Mozambique - Namibia - Nauru - Niger - Nigeria - Niue - Palau - Papua New Guinea - Rwanda - St. Kitts and Nevis - St. Lucia - St. Vincent and the Grenadines - Solomon Islands - Samoa - Sao Tome and Principe - Senegal - Seychelles - Sierra Leone - Somalia - South Africa - Sudan - Suriname - Swaziland - Tanzania - Timor Leste - Togo - Tonga - Trinidad and Tobago - Tuvalu - Uganda - Vanuatu - Zambia - Zimbabwe

19. 19 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 EU Rule on Nationality and Origin in a least developed country according to the UN: Afghanistan - Angola - Bangladesh - Benin - Bhutan - Burkina Faso - Burundi - Cambodia - Central African Republic - Chad - Comoros - Congo Dem. Rep. - Djibouti - Equatorial Guinea - Eritrea - Ethiopia - Gambia - Guinea - Guinea-Bissau - Haiti - Kiribati - Laos - Lesotho - Liberia - Madagascar - Malawi - Maldives - Mali - Mauritania - Mozambique - Myanmar - Nepal - Niger - Rwanda - Samoa - Sao Tome & Principe - Senegal - Sierra Leone - Solomon Islands - Somalia - Sudan - Tanzania - Timor-Leste - Togo - Tuvalu - Uganda - Vanuatu - Yemen - Zambia Countries excluded include: Australia – Canada – China – India – Japan – Korea – New Zealand – Russia – Singapore – Switzerland – Taiwan – United States

20. 20 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 Taxes (Duty & VAT) Taxes (including import duty & VAT) are not considered by EU as eligible costs KRCS has blanket exemption on VAT However field reality may be that contractors & suppliers are unable to comply: in these cases efforts must be made to ensure that all invoices & paperwork do not specifically mention VAT If KRCS/DRC cannot reclaim taxes (through exemption and/or refund) then KRCS/DRC have to provide evidence to that effect. An official document (declaration or refused claim for reimbursement) by tax authority - extract of the relevant law - and DRC/KRCS annual accounts are examples that may be submitted as proof

21. 21 EU – ACP Isiolo WASH Project Project Orientation – EU Reporting – Oct 2011 Taxes (VAT exemption)