Policies and Procedures

Many aspects of procurement are very sensitive. What we do in the area of procurement impacts directly on our clients and those who fund our activities. As procurement staff, our actions also impact on the suppliers we deal with from day to day and they are justifiably sensitive about any actions we may take that are not consistent with both the highest ethical and professional standards and established good procurement practices.

As a consequence, it is essential that all staff involved in any procurement activities are aware of their responsibilities and comply with practices that are widely understood and accepted across the sector in which we work. Certainly, it will be necessary from time to time to adapt and customise processes to meet the specific circumstances and requirements of each organisation, but the level of professionalism now expected of staff handling even relatively minor procurement activities is very high. All staff need to demonstrate adequate levels of subject and market knowledge, a sound understanding of good procurement practices and a professional approach to the procurement action in the particular case in hand.

This section provides a set of procurement guidelines and it is recommended that all procurement staff take the time to become familiar with them, if only as background information before embarking on the procurement of any goods and services.

Procurement Guidelines

Most of these guidelines are designed for large, centralised organisations with full-time procurement staff, often assuming that responsibility is divided between an organisation and its Head Office. The guidelines are therefore more sophisticated, and perhaps more prescriptive, than are necessary in many organisations. They are nevertheless an excellent basis on which all procurement staff can operate with confidence. It is recommended that staff become familiar with these guidelines, even if they are adapted somewhat to suit local conditions, because they demonstrate strong professional principles which are as applicable to small organisations as to larger ones. Understand the guidelines and adopt them in your own organisation - or at least consider the principles on which they are based and adapt them to suit your circumstances.

Questions to Consider

Even if the guidelines appear too elaborate for your purposes, they were written as they are to address specific real-world issues. They therefore embody important principles that are probably relevant to all organisations. Ask yourself questions such as:

• Why were the guidelines written the way they were?
• What issues are they designed to address?
• Could those issues ever be applicable in my situation?
• What do I need to do to address those issues here?
• Should I adopt the guidelines as they stand?
• Should I adapt them to meet local circumstances?
• What is the risk of criticism if I don't apply them in full?
• How might those risks impact on my procurement outcomes?
• If someone else was doing my job, would I want them to follow guidelines like these?
• Do we apply sound ethical practices as good or better than those in the guidelines?

Importantly, think about how you would feel if your livelihood depended on winning business from your organisation. Would you be completely happy if you were on the other side of the transaction, supplying goods and services to your organisation, and you knew exactly what practices are applied and how? Would you feel any different if you won, or if you lost, a particular contract as a result of those practices being applied?

Suppliers and Procurement Staff

The issues for suppliers and procurement staff are often quite different. As a procurement officer, your aim is to obtain the best deal available with the least effort. You want the required goods and services to be delivered at the lowest possible price, as quickly as possible, in excellent condition, and check off exactly with the Purchase Order. Ideally, you want payment to be delayed as long as possible with no enquiries to waste your time.

On the other hand, the supplier wants the best price possible for his goods and services with the smallest possible investment of time and effort in responding to requests for quotes or other enquiries. He wants a very fast stock turnover with equally fast payment and no time-consuming enquiries or disputes.

There are obvious conflicts between these respective objectives (e.g., pricing), but also some similarities (fast turnaround and no time-consuming disputes). It is essential that these factors be recognised and compromises reached in the interests of the higher objectives on which the commercial relationship is forged, i.e., of the purchaser optimising value for money and the supplier receiving an acceptable profit on the transaction. Without this, the relationship will fail and the purchaser will be unable to carry out his operational objectives and the supplier will cease to be competitive (and solvent) in the marketplace.

Suppliers generally accept that they are in a competitive market so are not always that disappointed if they fail to win any particular deal, but they expect (quite legitimately) a few things from their potential customer. These are things such as:

1. A fair opportunity to bid for the contract, including

• A short, simple, easy to read Request For Tender/Quotation
• A specification that has been prepared in an open, unrestrictive manner
• Sufficient, but concise, background information to enable the supplier to understand your requirement precisely, without asking additional questions
• Clear and justifiable evaluation criteria against which to frame a response, preferably with respective weightings disclosed
• A simple response document that does not take a lot of time or effort to prepare
• As few as possible options or add-ons, to enable a quotation to be given in simple terms
• Quick and appropriate responses to any necessary questions
• A reasonable amount of time in which to prepare a suitable response

2. A transparent evaluation process, including

• Clear and concise evaluation criteria, appropriate to the requirement and the use to which the goods or services are to be put
• Confidence that all bidders and potential bidders receive identical information and are treated equally: that no bidder receives more or different information from all the others
• Assurance that the evaluation criteria will be applied fairly and impartially to all offers
• Minimal post-bid enquiries and negotiations
• A quick decision, with detailed reasons for the decision being conveyed to each of the unsuccessful bidders

3. Simple contract management and payment arrangements

• Prompt settlement of all justified claims for payment
• Early, frequent, fair and open communication on all issues affecting the contract during its currency
• Fair and impartial reporting on contract performance, particularly where this may impact on winning future contracts

The sample policies provided here are designed to ensure that the processes surrounding the relationship that exists between purchaser and supplier are adequate to maintain the confidence of both parties, as well as to the bidders who would have liked to become a party to the contract had their bid been successful. They cover the full scope of the process, from establishing the initial need through to post completion reviews and all stages are important.

There may, of course, be other issues impacting on the choice of a contractor, e.g., a policy to maintain or increase local content, avoidance of support for incompatible enterprises, promotion of competition, support for small business or protection for inhouse supplies, etc., and the policies provided here are designed to address the widest possible range of issues you may encounter. They are not, however, appropriate to all circumstances and each organisation should tailor them to its own needs, without disregarding the principles on which they are based.