PARCEL Standards – Procurement
Procurement Procedures, Donor Requirements and Eligible Expenditure
Documented procurement procedures ensure that all goods, services and construction works are sourced (either directly or goods in kind) in compliance with donor policies and all applicable laws.
While these standards are aimed at ensuring compliance with most donor requirements, the organisation is aware of and able to comply with exceptions in individual donor contracts. Checks are also in place to ensure that expenditure is eligible according to donor contract rules. Procurement processes are initiated and completed within the eligibility period(s) of their donor contracts.
Procurement Methods and Thresholds – Normal Business
For normal operations (not first phase of an emergency response), the procurement method is chosen based on a defined framework with value thresholds. The framework includes, as a minimum, levels for Direct Purchase, Competitive Quotations and Tendering. The levels of the thresholds are based on the context, taking into account monetary values; frequency of transactions; lead time to process the procurement and organisation’s risk tolerance. The threshold set is continuously respected throughout the normal operations.
The threshold levels reflect donor and INGO requirements.
Procurement Methods and Thresholds – Emergency Response
For the initial period of an emergency response and not exceeding THREE MONTHS, the procurement method is chosen based on a defined framework with value thresholds. A derogation from normal procedure is required and validated before the process is initiated. The process may include:
- Waivers / derogations
- Increasing threshold levels
- Suspension competitive bidding
The Emergency Procurement framework includes, as a minimum, levels for Direct Purchase, Competitive Quotations and Tendering. The levels of the thresholds are based on the context, taking into account monetary values; frequency of transactions; lead time to process the procurement and organisation’s risk tolerance. The threshold set is continuously respected throughout the emergency.
The threshold levels reflect donor and INGO requirements.
Authorisations and Segregation of Duties
Authorisation roles and responsibilities have been defined at different points in the Procurement process, with an appropriate management level escalation for high value spends. Authorisation roles are compliant with segregation of duty requirements.
Clear segregation of duties is documented and adhered to in order to ensure, as a minimum, that the Procurement, Receiving and Payment of goods and services are separated and not conducted by a single person. Procedures specify who is responsible for each part of the process and examples of their signatures and authorisation limits are clearly displayed.
Specifications for procurement of goods and services are clearly detailed through the sourcing process and detailed enough to clearly express needs while not limiting potential suppliers in the market.
Quality and Appropriateness
Goods and services procured are locally appropriate, of acceptable quality, and consider beneficiary needs in their specifications. Quality of technical goods and services match international standards.
Competitive bidding (multiple quotation or tender) is used for the majority of project procurement needs. If an exception to competitive procurement is needed, this is pre-authorised internally and is externally compliant with all donor requirements.
Equal Opportunity to Bid
Suppliers in a competitive procurement process have equal opportunity to bid, are provided with the same information at the same time, and are allowed a pre-determined and sufficient amount of time to provide a quotation.
Conflicts of Interest
Conflicts of Interest are adequately identified and managed so that no opportunities are provided for staff members to take advantage of their position for their personal benefit. Conflicts of Interest are defined as situations in which a staff member has a private or other interest which influences, or may appear to influence, the impartial and objective performance of his or her duties. Any potential or existing Conflicts of Interest must be declared, documented, and a decision whether or not to substitute with an alternative staff member must be taken.
Prices are regularly checked and updated via market surveys and consultations with suppliers. Quotations provided by suppliers have a validity period. When the validity period expires before a commitment to purchase is made, suppliers are asked to re-quote with a new validity period.
Quotation / Bid Analysis
For all procurement transactions, bids are collected in a fair and transparent manner and evaluated against specified criteria so as to achieve the best value for money (VFM) for the Project. Criteria are determined based on the goods / services, but always include as a minimum:
- Payment terms
- Availability / delivery time
- Supplier capacity / performance / references
- Buying locally where possible
- Ethical minimum checks
Analysis of Bids / Quotes is transparent, clearly documented and involves assessment by at least two individuals who are not connected by a direct management line.
Medical Supplies and Food Standards
For the sourcing of pharmaceutical, medical and food products (directly or Goods In Kind), the organisation can demonstrate adherence to National Regulations, donor requirements and there is evidence of strict quality assurance processes.
Procurement policy includes ethical criteria when selecting suppliers such as:
- Child labour
- Human Rights abuses
- Links to Arms industry / military groups
Suppliers who are found to be violating any of the above Ethical criteria are not used unless there is no other option. Where they are used, this is pre-authorised internally and communicated with donors and INGO partners.
Confidentiality of Procurement Information
Procurement information is kept confidential other than where procedures require information to be made available to suppliers or internally. Specifically, no supplier is made aware of sensitive information such as prices quoted by rivals or internal budget levels which could give them an unfair advantage.
Payment Terms & Conditions and Supplier Management
Supplier Performance is managed against each Contract. To reduce the risk of supplier performance issues (e.g. late or non-delivery), payments are made after receiving goods and services. Where a pre-payment / instalment payment structure is needed, the management team pre-authorises this based on the risk. Suppliers are informed of the payment terms and conditions ahead of contract signing.