Procurement Policy

1. Procurement planning

1.1. The ultimate aim of procurement planning is coordinated and comprehensive action to meet the need for goods, services or works on time and at a reasonable cost. Early and accurate planning is important to avoid “last-minute”, emergency or unplanned purchases, which run counter to efficient, effective and therefore transparent procurement. In addition, most of the potential savings in the procurement process are achieved by improving the planning stages. Even where planning is difficult, as in emergencies, preventive measures can be taken to ensure contingency planning and better preparedness for upcoming procurement requests.

1.2. Effective procurement planning enables Hamqadam and its staff to work consistently towards the Organization’s goals with the right quality and quantity of available resources; ineffective procurement planning can cause those goals to be missed. Procurement planning and good procurement practice consistently deliver the best value for money, higher-quality projects and service delivery, and lower risks for the Organization. Once a complete request has been received and the funding approved by the organization’s management, the relevant department may submit its requests to the Administrative Procurement Department / accountant or the chief accountant of the organization. At the level of the Organization, responsibility for drawing up the plan usually lies with the Administrative Procurement Department / accountant or the chief accountant, but in some cases it may lie with the requester. A procurement plan is always based on estimates of the procurement actions to be carried out in a given period. Some procurement needs cannot be foreseen, so plans can never be entirely accurate. But a plan for purchasing goods/services based on the project plan is still better than having no procurement plan at all. The administrative manager’s role in setting an appropriate procurement plan and strategy is essential.

1.3. When choosing a procurement strategy, the procurement administration / accountant or the chief accountant of the organization, or their designee, must take into account factors such as financial regulations and rules, the Organization’s procurement procedures, delegation of authority, financial thresholds, internal clearance/approval procedures and the corresponding administrative timelines, the type of procurement (goods, services or works), the complexity or nature of the requirement, market conditions, existing agreements and/or contracts (e.g. LTAs) and the potential for joint procurement.

2. Stakeholder engagement

2.1. Where the situation is complex, it may be a good idea to analyse stakeholders systematically and involve them in procurement planning. Stakeholders are all those with an interest in the procurement activities that deliver the actual or expected objectives. They may include development partners, clients, end users, civil society, senior management, finance, technical experts and others. It is important to identify the interests and relative importance of each party. Sometimes the interests of different parties diverge and may conflict or compete with each other. In practice, the Administrative Procurement Department / accountant or the chief accountant of the organization usually needs to develop collaborative but centralized relationships with stakeholders. This means listening to their concerns and ideas, obtaining their agreement and keeping them informed where necessary, discussing needs and wishes, and accommodating their needs where appropriate.

3. Procurement requirements

3.1. Defining a procurement requirement means identifying and describing what is needed and will be purchased, gathering information, identifying suitable solutions and setting out the requirement in specifications for goods and equipment, terms of reference (TOR) for services, technical descriptions and plans for construction works. Formally, defining the requirement is the responsibility of the Administrative Procurement Department / accountant or the chief accountant of the organization. At the same time, the Administrative Procurement Department / accountant or the chief accountant is responsible for making sure that the technical description provided by the requester is clear and understandable and supports fair competition between suppliers.

3.2. For a systematic, team-based approach, it is recommended that the programme/project and the administrative department draw up the general technical description together. Involving the administrative department early can add value through its experience with similar requirements. At the end of this process, the requester should review the finished description to make sure it meets the identified need.

4. Written specifications for procurement

4.1. It is important to use clear and precise language in all descriptions to minimize the risk of misinterpretation. It is good practice to involve a specialist to review and validate the specification/TOR before it is finalized.

4.2. Specifications, or descriptions of the physical or functional characteristics of a tangible item, should give a detailed description of the requirement. They should be generic in nature to allow the widest possible competition. A specification may be expressed as one of the following or a combination of them:

1. Functional — focuses on what the product must do and pays less attention to materials and dimensions.
2. Performance — describes what must be achieved rather than specifying exactly how it should be done. To ensure quality, reference should be made to the relevant product standards and environmental requirements.
3. Technical — defines the design and exact details of the item (i.e. physical properties, materials to be used, power input and output, the manufacturing process required or, in the case of services, the working methods to be used). Because of their uniqueness, design specifications can restrict competition owing to differences in engineering practice.

4.3. All three types of specification can be combined. Wherever possible, it is better to use performance and functional specifications rather than technical ones, as this allows suppliers to offer alternative and innovative ideas and solutions, which often lead to more efficient use of resources. However, depending on the product and the end user’s needs, some requirements cannot be adequately defined in purely functional and performance terms. In addition, minimum requirements must be stated.

5. Consolidated procurement plan

5.1. Once information has been gathered from all relevant sources, it should be consolidated into an overall procurement plan. Analysing the plan makes it possible to identify where purchases could be combined to achieve economies of scale and better use of resources, and gives an overview of the scale of procurement activity. Plans also serve as a management tool and can identify periods when a large share of procurement actions will be needed. This information can help plan and share the workload between programmes/projects and the administrative/finance departments. Consolidated procurement plans are usually prepared annually, but where needs are harder to identify they may be prepared quarterly or every six months. Information for the consolidated procurement plan should be gathered by the responsible member of the administrative department from requesters, project/programme plans, the forecasting system and funding requests.

5.2. The minimum information to be gathered for the plan:

1. the expected requirement for goods/services/works;
2. quantity;
3. required delivery time;
4. estimated budget.

6. Procurement process and thresholds

6.1. The aim of identifying and selecting the appropriate procurement process is to find the best way of obtaining a solution/outcome that meets the end user’s need for goods, works and services by securing favourable prices and contract terms through a competitive process, on time and in line with the organization’s procurement principles.

6.2. The Administrative Procurement Department / accountant or the chief accountant of the organization should send reminders in line with the deadlines set in the procurement plan. Contracts for the provision of services/supply of goods with the selected vendors are prepared and concluded by the administrative department.

6.3. The process of preparing the documents required to purchase goods and services is best described by the table below.

Under no circumstances should a single purchase be split into several purchases, or reduced in duration or scope, with the intention or unintended result of changing the approval level or avoiding a threshold.

Table 1. Documents required to purchase goods and services

7. National and international procurement

7.1. Buying goods and services within the country is usually preferred, and national procurement may have advantages over international procurement in certain cases and for a number of reasons, including:

1. emergencies and the need for immediate availability;
2. locally available items are better suited to local needs;
3. services that are not available outside the country;
4. low-cost bulky items are usually bought more efficiently locally;
5. the project seeks to encourage or use local procurement to promote sustainability;
6. the total cost of the purchase, including international transport costs, is lower if bought locally.

7.2. At the same time, there are cases where international procurement makes more sense, such as when:

1. special technical expertise is needed to purchase the item;
2. cost-effectiveness or market conditions require it;
3. local production capacity for the product is insufficient;
4. quality control capacity is insufficient;
5. the product is not available locally.

8. Solicitation process

8.1. Solicitation documents are the documents used to invite potential suppliers to submit commercial offers, quotations or proposals to supply goods, services or the works required. Both commercial offers and quotations are offers.

8.2. The responsible Administration staff must ensure that all potential vendors receive the same information at the same time to prepare their offers; that the evaluation criteria are measurable and give vendors a fair opportunity to win the contract; and that the terms of the final contract are clearly stated so that vendors understand the rights and obligations they are taking on. All requirements must be stated clearly enough to attract a sufficient number of responsive offers, so that the result best meets the Organization’s needs. Procedures must be stated clearly so that the responsible staff member does not waste time on explanations.

8.3. The Organization’s financial rules and regulations require that, with certain exceptions, all purchases result from competitive bidding. Tendering is an important part of the procurement process. Beyond regulatory and ethical considerations, fair competitive tendering is a very effective way of obtaining the best value for money.

9. Type and method of competition

9.1. Hamqadam uses the following main methods of solicitation:

1. request for quotations;
2. invitation to tender.

The appropriate method is chosen according to the estimated value of the goods and services to be purchased.

9.2. Depending on the value of the purchase, market conditions and knowledge of the market, different types of competition can be used. A choice must be made between “open competition”, in which any supplier may take part, and “closed/limited competition”, in which a shortlist is drawn up and specific companies are invited. A decision must also be taken on geographical sources and on whether to use international competition or to limit competition to national or regional vendors.

9.3. Limited competition allows only selected vendors/suppliers to take part in the solicitation. It restricts competition to a shortlist of suppliers chosen without discrimination from approved vendor lists/rosters, market research and so on.

9.4. In limited competition, where only selected vendors may take part in the solicitation, the solicitation documents must be made available only to shortlisted vendors. The shortlist must be prepared by the procurement committee and then approved by the Executive Director before the solicitation documents are issued.

9.5. Solicitation documents must be sent to all vendors at the same time by post (paper copy), courier, fax or email or, in the case of an open tender, published electronically on websites (untj.org, tenders.tj, etc.).

10. Request for quotations

10.1. Requests for quotations are used for purchases worth up to 10,000 somoni and for well-defined goods and services. There may be a requirement to obtain one quotation for purchases up to 10,000 somoni and at least three valid and acceptable quotations for the range 10,000 < X ≤ 30,000 somoni. This process is not formalized, and there is usually no fixed deadline for submitting quotations.

11. Invitation to tender

11.1. An invitation to tender, also called an invitation to bid, is usually used for purchases of goods and services worth more than 30,000 somoni. It is recommended to send the request to more than three suppliers in order to receive at least three valid responses.

11.2. Sufficient time must be allowed to advertise invitations to bid or tenders and to receive responses. The complexity of the specification required for the tender should be taken into account. Where the specification is not complex, a period of 5 to 10 working days may be set. Where the specification is complex and requires expert or other technical input, a period of 2 to 3 weeks is allowed.

12. Receipt of offers

12.1. Responses to requests for quotations may be sent directly to the administrative department by hand, post, fax or email — info@hamqadam.tj. No formal receipt procedure is required for quotations.

12.2. Responses to invitations to bid and tenders are submitted in sealed envelopes marked on the outside with the solicitation number and other details as instructed in the invitation. All offers are kept sealed in a secure place until the date and time set for opening.

12.3. Email submissions for competitions and tenders must be sent only to a secure email address accessible only to designated staff authorized by the Executive Director to receive bids or proposals. Bids or proposals must be attached to the email, and all attachments must be in a non-editable format. Email submissions, including all attachments, must be printed and kept in a secure place together with other bids and tenders.

13. Opening of offers

13.1. No formal opening procedure is required for quotations for goods and services below the 30,000 somoni threshold.

13.2. Offers submitted in response to invitations to bid and tenders for goods and services above the 30,000 somoni threshold are usually opened by an authorized procurement meeting. Bids or proposals are opened at the set time by members of the procurement committee authorized by the Executive Director, in the presence of potential vendors. One member of the organization’s staff must be included in the bid committee as a designated witness; this person must be independent, i.e. not directly involved in the procurement for which the bids or proposals are being opened. Committee members must sign every page of each bid and hand it to the administrator to prepare the comparative analysis of the competition and tender.

13.3. Offers received after the closing date must not be accepted, unless there is reasonable evidence that the late submission was caused by factors beyond the vendor’s control. In such cases, and only if the offer was received before the formal opening, it may be considered. A commercial offer, quotation or proposal may be rejected if the specification is unsatisfactory or the offer is incomplete.

14. Bid/tender committee

14.1. A bid/tender committee must be established and authorized by the Executive Director (by order) to give written advice to management on recommendations and awards above the 30,000 somoni threshold. The responsibilities of the bid/tender committee are to ensure that:

1. the appropriate authority has been obtained to commit funds;
2. the interests of the Organization are protected;
3. procurement is carried out in accordance with the rules, regulations and instructions and is consistent with best business practice.

14.2. The bid/tender committee should include a person representing the end user or the department requesting the purchase, a member of the administration and a representative of the finance department. Three members are usually enough; if not, a five-member committee is proposed, which may include independent staff (not directly involved in the procurement for which bids or proposals are opened), an expert or a consultant. If the purchase or service requires specific expertise, the Organization may invite a specialist from UN agencies.

14.3. Decisions on which supplier to recommend should be reached through discussion leading to consensus. If no agreement is reached, the recommendation should be made by majority vote. In such cases, the discussion and the disagreement must be fully documented to assist the person authorized to take the final decision.

14.4. The committee prepares a report containing its recommendation and the selected bidder, with a justification, and sends it to the appropriate authority for final approval as set out in the delegation of authority.

15. Selection of offers

15.1. All quotations, commercial offers and bids must be evaluated on the basis of best value for money, taking into account all relevant factors. For tenders and other high-value/complex or specialized purchases, the factors may be more complex than price, delivery time, transport and payment terms. Accordingly, the bid/tender committee must assess how well each bid meets the requirements of the invitation to bid/tender.

15.2. A comparative analysis of bids/tenders (Annex 6) must be submitted for any purchase that requires three quotations or a bid/tender. The comparative analysis is a document used to summarize and compare offers from vendors or suppliers. It also records the documents and details justifying the choice of a given supplier. The comparative analysis is prepared by the responsible administrative staff and approved by the Executive Director.

15.3. For tenders, in addition to the comparative analysis, a final report recording the process and the final selection made by the bid/tender committee must be prepared and signed by all committee members. The report must describe the bid/tender process, including the names of all committee members, the winning bidder and the reasons for selecting that supplier, and include all annexes, including all quotations and supplier letters.

16. Exceptions to competitive bidding

16.1. The Organization’s financial policy and rules state that competition is usually the most effective way of ensuring the best value for money. However, these rules also recognize that exceptions are possible where competitive bidding does not give the Organization a satisfactory result. The requester and/or the Administrative Department must provide a justification for waiving competition.

16.2. The bid/tender process may be waived if it is determined, with acceptable justification, that competition is not in the Organization’s interest. Requests to purchase goods and services are exempted from competition in the following cases:

1. there is no competitive market — for example, where there is an officially recognized monopoly; prices are set by the government; the requirement involves a proprietary service or product; or the core project documents name the sole provider to be contracted; or
2. standardization — where specific items with specific requirements are being purchased and the Organization has standardized on a particular brand;
3. emergencies or urgent service needs do not allow time to issue invitations to bid or requests for proposals, or to reissue them where the solicitation did not produce satisfactory results; or
4. cooperation with other UN organizations; or
5. the last competition failed; or
6. invitations to bid or requests for proposals do not produce satisfactory results or, in a specific case, are not in the Organization’s interest.

16.3. In all the cases listed above, the relevant reasons must be recorded in writing and signed by the Executive Director or their designee. Judgement must be exercised and, in some cases, the market should be checked by the Administrative Department to make sure the price obtained is fair and reasonable.

16.4. Contracts may also be awarded on the basis of existing tenders less than six (6) months old without launching a new tender, provided the supplier is willing to reduce or maintain the original price on the terms of the original solicitation. However, the Administration must make sure that market conditions have not changed and that prices remain competitive.

17. Direct procurement

17.1. Direct procurement from specific suppliers for specific products/services may be carried out in the following cases:

1. if a long-term agreement has been concluded with the supplier;
2. if the supplier is on the Organization’s approved vendor list or roster;
3. if the procurement procedure and the issuing of tender requests have been waived (see Exceptions to competitive bidding).

18. Approved vendor list / roster

18.1. The approved vendor list contains information on vendors who have shown that they can meet the Organization’s quality and other requirements. Every item purchased that affects product quality must be bought from a supplier approved for that specific item, i.e. a supplier who has been vetted/assessed and is included in the Approved Vendor List.

18.2. The Organization may establish an approved vendor list for specific and fully defined procurement items.

18.3. The approved vendor list may not be used for professional and general service contracts, information technology contracts or construction projects.

18.4. Every update of the Approved Vendor List must a) be documented and b) be approved by the Administrative Department and the Executive Director. The Administrative Department is responsible for maintaining and controlling the vendor list, and for ensuring the quality assessment of suppliers, specifications and documentation.

18.5. Once the vendor list has been set up, the Administrative Department must review it periodically (annually) and, to keep a vendor on the list, may ask the vendor for its latest prices. If a vendor changes its policies, goes out of business or raises its prices, it may no longer be worthwhile doing business with it.

18.6. The vendor list may be kept in an MS Excel spreadsheet.

19. Negotiation

19.1. Negotiations are held with bidders whose quotations or bids have been evaluated and meet the mandatory and minimum requirements. The negotiation process and its outcome are recorded in the tender file. Negotiation is permitted in the case of a single-source request.

19.2. Negotiation is not permitted during the bid/tender process. However, once the selection process is complete, negotiation with the lowest-priced supplier is possible, but only in exceptional cases, such as when:

1. the available budget is insufficient to purchase the requested item(s) and the supplier agrees to lower the price;
2. the offer includes additional equipment or services not required in the solicitation document.

20. Conflict of interest

20.1. A conflict of interest arises when, in the course of their official duties, a staff member or committee member could influence a decision in which they have a personal interest. Staff must not use their position or knowledge gained in the course of their duties for personal, financial or other gain, or for the benefit of any third party.

20.2. Staff must not take part in the selection or management of a particular procurement if there is an actual or apparent conflict of interest.

20.3. Staff must not be involved in business dealings with the business interests of their spouse, children or other close family members or other dependent members of their household. Staff members may not accept a bribe, kickback or any personal benefit. If a staff member responsible for selection has concerns about a conflict of interest, they must first inform management or the bid/tender committee of any involvement or negotiations in the procurement process.

21. Payment request

21.1. End users submit a Payment Request for the purchase of goods and services (see Annex 6) in line with the approved forecasts/needs and the approved procurement plan discussed in the sections above.

21.2. The Payment Request is submitted by the designated person in the end user’s department. It must state the budget line category and codes against which the expenditure is to be charged.

21.3. Authorization/approval of the Payment Request is given in accordance with the delegation of authority table set out in the instructions.

21.4. Once approved by the relevant approving authority, the payment request is sent to the Administration for further processing.

21.5. The processing of payment requests is monitored monthly by the Administrative Department. A payment request must be submitted for all purchases of goods and services, except travel expenses, because the travel request form contains all the elements of a payment request.

22. Cash purchases

22.1. All purchases of up to 1,000 somoni are classified as petty cash purchases and are paid in cash; for each cash purchase, the relevant department prepares a financial payment request.

22.2. All cash purchases are approved by the chief accountant of the organization.

22.3. All approved payment requests are submitted to the finance department when the petty cash is replenished.

22.4. Whenever a purchase is to be made, the designated person in the relevant department prepares a payment request and submits it to the chief accountant of the organization for approval.

22.5. The designated person must submit all payment requests, with supporting documents, to the chief accountant of the organization for payment.