PROCUREMENT POLICY

PROCUREMENT POLICY

RESPONSIBILITY: Hromadahub  Board
DATE ISSUED: 1 September 2022
DOCUMENT NUMBER: HP N 1/ 1.09.22
PUBLICATION STATUS: Internal use only

Purpose and Scope
Foundation ‘Hromadahub” (Hromadahub ) will source goods, services and construction works that provide good value (balancing quality, time and total costs) for our programs and accountability to those we serve, through procurement processes which are fair, transparent and in compliance with donor rules and applicable laws.  
This policy applies to all Hromadahub  staff, volunteers and partners that are procuring or in any way involved in the procurement of goods, services or construction works with Hromadahub ’s funds.  
This Policy may be shared with potential suppliers, donors and external partners, and incorporated into any resulting contractual relationship.
If legislation or donor rules are stricter than the rules or guidance in this policy, then the stricter rules must be followed in addition to these rules.
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Definitions

Contract principles, review and management
All procurement must be transparent using an open procurement process wherever possible, and must ensure equal treatment of suppliers, without discrimination or favouritism.
Procurement must be accountable to beneficiaries and compliant with donor regulations, in particular it must be based on justifiable needs and in line with the objectives of the project or programme. Enough time must be built into the project plan for the relevant procurement process.
All Hromadahub  contracts (including related to a procurement process) are subject to execution in accordance with internal Hromadahub  procedures. This also includes contract review by Legal Services, in accordance with its quality management practices.
Legal Services must be involved as soon as possible in the procurement process so as to help identify and mitigate any risks, as well as increase efficiency for contract review and negotiation. Variation from Hromadahub  internal procedures should be kept to a minimum.
Legal advice should be sought for contracts:
Which are for long term, substantial or high risk procurements (whether it is substantial will depend on the value and number of items)
For all large scale construction projects
Where a significant advance payment is required
Where the supplier requests a variation to Hromadahub  internal procedures
Procurement must only be carried out if funds are available for the proposed procurement and it is approved by the relevant budget holder in writing (which may be by email), as set out in the Scheme of Delegation.  
Email approval by budget holders is acceptable provided it is from their official Hromadahub  email address, and the relevant budget codes and total value are clearly outlined in the e-mail chain.
Budget holders shall be responsible, within their delegated authority, for ensuring that:
Procurement is based on justifiable need and in line with the objectives of the project or program
Enough time is built into the project plan for the relevant procurement process
This procurement policy and appropriate procurement procedures as set out above have been followed before giving the authorisation to purchase.
There is a budget for the proposed procurement and there are sufficient remaining funds within the project budget to include all costs associated with the item including transport, storage, distribution, servicing and running commitments
Procurement plans are developed with all relevant project proposals to ensure accountability to beneficiaries and that project deliverables are achievable, and approval for any necessary exceptions is obtained prior to the grant being awarded.
No procurement commitment should be made for a longer period than appropriate having regard to the life cycle of the grant, risk of project cancellation, and other external factors.
Local procurement is preferred to promote the local economy and have a positive impact on the environment, presuming it is good value for money and quality can be assured. International procurement should be considered when goods and services required are not available on the local market to the right quality, quantity or timeframe in line with the project needs.
If legislation or donor rules are stricter than the rules or guidance in this policy, then the stricter rules must be followed in addition to these rules.
This Policy may be referred to in contract review and negotiation.
All contracts, including amendments, purchase orders and other contractual documentation should be properly kept by Hromadahub , in accordance with internal Hromadahub  practices on archiving and record-keeping.
Any relevant feedback regarding performance, including possible breaches or failures to perform, should be timely notified to those responsible and/or Legal Services, as appropriate.
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Procurement Process
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Thresholds have been put in place to ensure proportionality between the procedures followed for awarding contracts and the value of the contract; these are designed to mitigate organisational risk. The table below sets out the procedures that need to be used relative to the financial value of the purchase.
RATE USD to UAH – as of 29.06.2022 – 29,2549

It should be noted that:
The values apply to the estimated cumulative value of goods or services to be procured over the life of a contract or framework agreement and are not an annual value
The values include the value of goods as well as the supplier’s/agent’s fee should that be applicable
Purchases must not be split to avoid the appropriate procurement procedure
The threshold values are the maximum values to be used; stricter limits should be put in place locally where appropriate.
A procurement contract refers to a legally binding agreement with a supplier to provide goods and/or services to Hromadahub . Purchase orders, short term contracts and framework agreements are all types of contract, and should have the relevant terms and conditions attached.
Contracts should normally be for 2 years or less in duration.
A framework agreement refers to a legally binding agreement with a supplier to provide goods and/or services over a fixed period of time. The terms and conditions of supply are fixed, but the quantities to be procured and delivery schedules are not fixed and will be determined as and when the program needs the goods and/or services. It is preferable but not vital to have fixed prices in a framework agreement. The agreement does not commit our program to procure the goods and services, so whilst having the intention of procuring, we are not obliged to. Where possible, programs should maximise buying power through the use of framework agreements. The thresholds set out in rule 14, should be used to determine whether a tender or quotation process should be used to put in place each framework agreement in accordance with the anticipated cumulative spend over the life of the contract.
Procurement should be planned – all proposals with a procurement value of over 50,000 USD must have a procurement plan completed at proposal development stage in line with the relevant activity/work plan.
A discussion and decision on specifications, quality standards and the key criteria for selecting suppliers should be taken before the procurement, and requirements should be outlined in the request for quotations or tender documents to enable genuine competition.
Goods and services must be fit for purpose, and quality standards and specifications must conform to relevant international safety standards.
The relevant international safety standards will depend on the goods or services you are buying. You can contact the relevant technical team or the Logistics Department for further advice.
It should be noted that:
When procuring Hromadahub  standard products, the goods should comply with the specifications and quality standards set out in the Purpose and Scope
Products Catalogue
Medical supplies must only be purchased from suppliers that have quality standards in accordance with the Medical Procurement Guidelines, and are approved for use by the Head of Logistics / Regional Logistics Manager
New vehicles and other equipment, where applicable and possible, should be bought from a reputable international recognised manufacturer or its official local dealership, and have a standard manufacturer’s warranty all equipment should be bought new, but exceptions can be made with good rationale, such as second hand town vehicles where there is good road infrastructure, or equipment that is being bought as part of a job lot, i.e. if Hromadahub  is taking over a program office or project site from another NGO
All construction of transitional, permanent and semi-permanent buildings must be safe and the buildings structurally sound for the purpose they are designed, taking into consideration the local environmental conditions and risks, such as seismic activities, cyclones etc. The program must seek to have the buildings independently assessed and verified that they meet national, and wherever possible, international standards of safety by a suitably qualified individual (eg. an engineer). Where no national standards exist, or there is no local requirement, the program should seek professionals
Advice on requirements. For all large construction contracts a qualified engineer (internal or consultant) must sign off on the specification, be part of the tender committee, sign off on stage payments and the final payment post retention during the life of a project.
Reasonable time must be allowed to carry out the required procedure and to give suppliers time to prepare and submit their quotations or bids. Tenders must allow a minimum of 21 days for submissions of supplier bids; for International Tenders this should be a minimum of 30 days.
The procurement must be awarded to the supplier offering the best value for money after considering the criteria for procurement, which may include areas such as:
Price
Quality and compliance with specifications
Timeframe and availability
Reliability and after sales service
Financial and technical capacity
All associated costs (including transport, storage, customs, local taxes, additional costs due to long lead-times)
Payment terms
Use of local resources where possible and appropriate
Donor requirements, with particular attention to rules of nationality and origin where relevant.For single purchases, contracts or framework agreements where the estimated value requires a Formal Quotation process or Tender, a procurement committee must be formed to evaluate the bids. This committee should be made up of a minimum of 3 staff to ensure accountability. The committee will select the supplier which they believe provides the best value for money based on the evaluation criteria.
Procurement committees for Formal Quotation processes can be undertaken as a short meeting to review the submitted quotes or in a discussion by e-mail/phone. Tender committees for Open and International Tenders should happen as a meeting to review all bids. In all cases, the recommendation must be documented and signed off by all members of the committee promptly, and then endorsed by the budget holder. The procurement person who has been responsible for managing the tender/quote process cannot be a voting member of the procurement committee.
All suppliers should be treated in a professional manner. Staff involved in the procurement process must declare in writing to the budget holder (or if they are the budget holder, to their line manager) any personal connection to suppliers before supplier selection, to avoid any conflict of interest and excuse themselves from the procurement process.
Appropriate due diligence checks must be carried out on suppliers in line with the level of potential risk.
The due diligence checks should include ensuring:
The supplier exists (this might include a site visit) and has the appropriate resources and expertise
The supplier is registered for trading and tax purposes as necessary in the country and is financially viable
The supplier complies with the ethical principles of Hromadahub , in particular in respect of employment laws and child rights and does not use child labour
Necessary checks are undertaken in line with the Prohibited Transactions Policies, including compliance with government anti-terrorism lists (through [email]).
Any proposal put forward by a supplier that is known to have engaged in corrupt, fraudulent, collusive or coercive practices must be rejected.
Bribery of any sort is unacceptable. Suppliers must be discouraged from giving gifts of goods or services to individuals working for or with Hromadahub , their family or friends, and high value gifts should not be accepted.
Payment: a clear authorisation and audit trail must accompany the payment for any goods or services procured and a record should be kept of the procurement at the relevant office.
Advance payments to suppliers are not encouraged; as it is rarely necessary if the most appropriate supplier is chosen (i.e. the supplier’s financial capacity is a criterion in their selection). Where an advance is absolutely necessary, it must only.
Breaches of this procurement policy must be reported and investigated.  Serious and consistent breaches may be considered malpractice and, if these are discovered or suspected, they must be dealt with in accordance with the Fraud and Dishonesty Policy and the Code of Conduct using the appropriate disciplinary procedures.
Artificial splitting of contracts or projects in order to avoid the implications of another procurement process category is strictly prohibited.
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Exceptions (if any)
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Exceptions to this policy (other than those specific circumstances covered by rule 35) can only be made if approval has been given in writing from the Chief Financial Officer.