CI Procurement Procedures for European Commission Funded Contracts

1. CI Procurement Procedures for European Commission Funded Contracts

2. PRELIMINARY REMARKS • EC funding • Grants from ECHO for humanitarian projects • Grants from DEVCO for development projects • Scope of the Manual • All projects funded by the European Commission for its external actions, through its different sources of funding (EU Budget and EDF) • The manual has to be complied with by CARE and CARE partners when implementing EC funded projects

3. WHY ANOTHER PROCUREMENT GUIDELINE? • Existing CARE procurement manuals did not fully met EC’s specific procurement requirements • To fully comply with ECHO’s requirements, procurement rules approved by ECHO shall strictly apply to both ECHO partners and COs • EU CAREs which are ECHO partners have P-Status: • They can use their own procurement procedures • ECHO has clarified that will not accept other LM procurement regulations • Failure to develop this manual and harmonize its implementation throughout the organization will result in: • Terminating EU CARE’s preferred P-Status with ECHO, degrading European CARE’s to an A-Status with much more stringent regulations and additional ECHO controls • For DEVCO projects, procurement rules as outlined in Annex IV of the standard grant contract are compulsory

4. GENERAL PRINCIPLES • Procurement is the process of: • Identifying what is needed • Determining the best source to supply the need • Ensuring what is needed is delivered to the right place, at the right time, for the best price in a fair and open manner • The contract must be awarded to the most economically advantageous tender (best price-quality ratio) • In accordance with the principles of : • Transparency • Proportionality • Equal treatment • Non-discrimination • Best value for money • Freedom from conflict of interest • The estimated value of a contract shall not not be artificially split up to evade the applicable requirements

5. GENERAL PRINCIPLES • For EC funded contract no derogation is permitted without written formal approval from the CMP which holds the contract • Transactional waivers may be justified in the following circumstances: • Repetetive purchases • Items available only through a sole source • Meeting needs during the early stages of an emergency

6. CARE PROCUREMENT CODE OF CONDUCT • Procurement and vendor representatives must adhere to strict standards in order to assure ethical conduct in business practices • A supplier of goods, services and/or works should not be selected for any other reason than its ability to fulfil the organisation’s needs • Staff must scrupulously avoid any conflict between their individual interests and the interests of CARE • Staff must work to maintain the highest degree of accountability and prevent situations that may compromise CARE’s position • Staff is expected to protect and keep all confidential information in strict confidence, and must avoid using any information regarding CARE contrary to its interest or its partners • Staff has the obligation to report losses, illegal acts, and other violations above policies if they have any information about such conduct

7. PROCUREMENT RESPONSIBILITIES • Initiating and maintain professional relationships with all vendors, both current and potential • Making final determination of supply source, price and delivery schedule, joint with the Procurement Evaluation Committee and other units when appropriate • When forecast plan is presented, to compile data, check market availability, lead time and market costs and provide timely feedback to the CO • Assuring confidentiality • Follow-up after placement • Maintain open line of communication and inform CD about economic and market conditions

8. SEGREGATION OF DUTIES • To help maintain segregation of duties: • Confirm that there are no conflicting duties when revising or developing new job descriptions • Review procurement-related roles and responsibilities when there are organisational changes • Develop a back-up plan for how you will maintain segregation of duties when a key employee is unexpectedly absent • Audit and update system access when staff are transferred, promoted or terminated

9. AUTHORITY AND SIGNATORY APPROVALS • COs must establish and maintain an updated ASF including every employee with authority to approve financial, administrative and/or procurement transactions • Each CO should establish its own authorisation levels, in consultations with regional or other line management, which may be reviewed by the CMP • COs must always seek formal written approval from the relevant CMP for all purchases exceeding EUR 100.000

10. SOLICITATION • Solicitation process must be ethical, fair, competitive and in compliance with donor requirements • Primary identification of the need to seek derogation rests with the CO • However, relevant CMP is responsible for its request at proposal stage through a Special Condition introduced to the Contract • Solicitations shall not contain specifications which unduly restrict competition (such as brand names)

11. ELIGIBILITY FOR CONTRACTSRULE OF NATIONALITY AND RULE OF ORIGIN • Rule of Nationality: Refers to the nationality of the service providers, suppliers, and contractors. It applies to all service, works and supply contracts. The rule of nationality does not apply to experts proposed by service providers for service contracts financed by the grant. • Rule of Origin: Refers to the origin of goods and equipment. Goods originating in a country shall be those wholly obtained or produced in that country. Goods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing or working. • Relevant CMP shall provide the CO with the necessary information and support on the nationality rule and rule of origin

12. ELIGIBILITY FOR CONTRACTSRULE OF NATIONALITY AND RULE OF ORIGIN: IMPORTANT! • In principle, the rules of nationality and of origin do not apply to ECHO funding • However, if the ECHO project is being funded through the EDF, the rules of nationality and of origin still apply • The rules of nationality and of origin do apply to both EU Budget and EDF funding • However, the rules vary depending on the source of funding, the budget year and the basic legal act • Essential to systematically verify the applicable procedures for a particular contract and/or CfP • The European CMP is responsible for providing the CO with the necessary information and support for a specific contract

13. ELIGIBILITY FOR CONTRACTSRULE OF NATIONALITY AND RULE OF ORIGIN: IMPORTANT! • Both rules must be complied with when making any purchases of goods or equipment as part of a project co-financed by EuropeAid • Even for the goods that are not covered by the EC co-financing in the project’s accounts • If there are multiple donors with conflicting requirements the CMP must be consulted • Both rules apply to the entire budget proposed • Rule of nationality • Apply for all service, work and supply contracts within grant agreements • Rule of origin • Apply only to supply contracts • Experts (service contracts) can be of any nationality • Unless the funding instrument is EDF, then rule of nationality applies • Implementing partners must also respect both rules and the procurement procedures • For multi-country projects within the DCI covering both LDC and non-LDC countries, CARE should formally request to apply the rule applicable for LDC (wider definition)

14. ELIGIBILITY FOR CONTRACTSRULE OF NATIONALITY AND RULE OF ORIGIN: IMPORTANT! • For further detail on the applicable rules of nationality and origin see the following EuropeAid documents : http://ec.europa.eu/europeaid/work/procedures/implementation/eligibility/index_en.htm • “Annex A2: Eligibility - Programmes 2007-2013” for contracts signed under the 2007-2013 European Commission funding instruments • “Annex A2: Eligibility - Programmes before 2007” for contracts signed under European Commission funding instruments before 2007 • “Annex A2: EC External Aid Programmes” which has 3 parts: • Regulations/legal bases concerning EC external assistance programmes • Developing countries according to OECD/DAC (Development Assistance Committee) • European Development Fund (EDF), and Africa, Caribbean and Pacific (ACP) countries

15. ELIGIBILITY FOR CONTRACTSGROUNDS FOR EXCLUSION • Candidates or tenderers will be excluded from participation in a procurement procedure if: • they are bankrupt or being wound up; • they have been convicted of an offence concerning their professional conduct; • they have been guilty of grave professional misconduct proven by any means which CARE can justify; • they have not fulfilled obligations relating to the payment of social security contributions or the payment of taxes in accordance with the legal provisions of the country in which they are established or with those of the country of the grant beneficiary (CARE) or those of the country where the contract is to be performed; • they have been found guilty of fraud, corruption, involvement in a criminal organisation or any other illegal activity detrimental to the institutional donor and/or CARE’s financial interests; • following another procurement procedure or grant award procedure financed by an institutional donor, they have been declared to be in serious breach of contract for failure to comply with their contractual obligations

16. ELIGIBILITY FOR CONTRACTSEXCLUSION FOR AWARD CONTRACTS • Contracts may not be awarded to candidates or tenderers which, during the procurement procedure: • are subject to a conflict of interests; • are guilty of misrepresentation in supplying the information required by CARE as a condition of participation in the contract procedure or fail to supply this information.

17. BIDDING PROCESS • Applicable to any goods or services valued at EUR 10.000 • Contract awards will be based n overall best value, not simply on the lowest cost • Any vendor that assists in developing or drafting requirements, specifications, statements of work, bids and/or Request for Proposals shall be excluded from the competitive bid process

18. TYPES OF CONTRACT • Supply contract • Service contract • Works contract • Hybrid contract • Property contract

19. PROCUREMENT PROCEDURES • Single quote procedure (sole sourcing) • Negotiated procedure • Restricted procedure • Open procedure • Local public tender • International public tender • International public tender

20. RULES, THRESHOLDS AND PROCEDURES • COs may choose to apply additional controls taking into account local circumstances • Tender documents must be drafted in accordance with best international practice • Time-limits must be long enough • Evaluation by a Procurement Evaluation Committee (min 3 – odd number)

21. RULES, THRESHOLDS AND PROCEDURES

22. PROCUREMENT EVALUATION COMMITTEE • Evaluation by a Procurement Evaluation Committee (min 3 – odd number) • Mix of representatives from: • Procurement, Finance, Administration and Programme • Members Committee must declare conflict of interests • Evaluation process recorded in a written form in the Summary Bid Analysis • Responsibility to regularly review the Approved Vendor List and their approval is required for changes

23. SEALED BIDS PROCEDURE • Tracking sheet for sealed bids • Analysing sealed bids • Summary bid analysis process • If the lowest bidder is not selected, reasons must be fully explained on the SBA form • Responsibilities in the SBA process • Procurement Unit and Programme Department • Documenting insufficient bids • Not enough vendors • Insufficient bids received • Only one quote received

24. FILE DOCUMENTATION AND RETENTION • Finance Department will maintain all original documents • Procurement Unit shall maintain separate vendors/payee files and may keep copies of purchase orders for reference • Files and documents retained and available for inspection for a period of seven (7) years following the transfer of the final payment

25. RIGHT OF ACCESS AND CONTROLS • The EC or persons mandated by the EC, has automatic rights of access to all CMP, COs as well as partners and contractors • Inclusion of the necessary provisions in bidding and contractual documents • Provision of complete information on procurement procedures and abstention from any obstructive practice

26. SPECIFIC RULES FOR EUROPEAID FUNDING • Wherever possible, the need for derogation from procurement procedures should be anticipated by the CO • Impossible/impractical compliance with procurement procedures: • CMP shall secure derogation from the donor at proposal stage through a Special Condition introduced to the Contract • For derogations during contract life: • Written application to the EC via the CMP is required, but approval is not guaranteed • Article 7 of EuropeAid Annex IV envisages circumstances for derogation: • A simple quotation may be sufficient (even when the amount exceeds EUR 10 000) • Exception: Co-financing where the other donor contribution to the total cost of the action is greater than that of the EC • In such cases, the general principles and rules on nationality and origin still apply • In case of conflict between rules of multiple donors financing the same action • CO should consult relevant CMPs and inform relevant line of management

27. SPECIFIC RULES FOR ECHO FUNDING • CARE procedures are considered as an acceptable substitute to ECHO’s own procurement procedures • So, full compliance must be ensured • Once ECHO has approved these procedures for CARE there is no derogation system required for ECHO funding • Unless the CARE CO whishes to deviate from these procurement procedures

28. SPECIFIC RULES FOR ECHO FUNDINGNEGOTIATED PROCEDURE WITH A SINGLE TENDER • For Urgent Actions, whatever the estimated value of the Contract • No tenders/offers or no suitable tenders/offers have been submitted in response to an open or negotiated procedure after the initial procedure has been completed • For technical or operational reasons of for reasons connected with the protection of exclusive rights • Additional contracts consisting in the repetition of services, works or supplies • Period elapsed shall not be longer than one year • Renewed up to twice • Additional supplies, works and services not included in the initial Contract • The aggregate amount does not exceed 50% of the value of the initial Contract • For Property Contracts, whatever the estimated value of the Contract and after prospecting the local market • Contracts in respect of purchases on particularly advantageous terms

29. SPECIFIC RULES FOR ECHO FUNDINGPHARMACEUTICAL PRODUCTS AND MEDICAL DEVICES • CARE shall abide by international norms and respect patents and national drug regulations • Principal objective is to ensure the quality of the products purchased • Pre-certification of potential candidates • Pre-qualification scheme meeting WHO recommended norms and standards • Priority to Contractors that comply at least with one of the following certifications or equivalent: • EN46001/EN46002; ISO13485/ISO13488; Japan QS Standard for medical devices 1128; United States QS (21CFR part 820); ISO9001/ISO9002, ISO9001/2000 • Medical devices shall: • Meet essential requirements as described by the Global Harmonization Task Force • Be produced in conformity with ISO standards and/or other equivalent standards • Be marketing their products according to at least one of the regulatory authorities of Australia, Canada, EU, Japan and/or USA • CARE shall take as a reference any internationally recognised standard that may be set and the updates and revisions of the standards mentioned herein • Irrespective of the value of the Contract: • Negotiated procedure inviting simultaneously and in writing only pre-qualified candidates • Consult the International Drug Prices

30. SPECIFIC RULES FOR ECHO FUNDINGFOOD AID • Priority shall be given to purchases in the country of operation or neighbouring countries • The characteristics of the products and their packaging shall respect quality standards laid down in the domestic legislation of the country of origin and/or the country of destination, whichever legislation has the higher quality standard • When the object of the contract is the supply of fresh food and the contract is divided into several lots taking into account the seasonal availability of products, each one of the lots will be considered individually, and not aggregated • When required, the contract notice shall specify the contractual Incoterms delivery conditions and edition applicable • When required, the transport insurance shall be for at least the awarded tender amount and shall cover all risk associated with carriage • Except in case of Urgent Actions, CARE shall contract a Monitoring Agency for verifying and certifying the quantity, quality, packing and marking supplies in contract of a value of more than EUR 300,000 • Provisions in the tender and contractual documents to assure the right of access and monitoring of the MA • Provisions on the accepted tolerance for weight and/or quantities delivered and identify the procedure for establishing reductions of price for quality deviations and deliveries beyond the contracted delivery date or period

31. SPECIFIC RULES FOR ECHO FUNDINGFRAMEWORK CONTRACTS • Framework Contract • Contract concluded between CARE and an economic operator for the purpose of laying down the essential terms governing a series of specific contracts to be awarded during a given period, in particular as regards the duration, subject, prices, conditions of performance and the quantities envisaged • Awarded by means of an open or restricted tender procedure following the local or international publication of a procurement notice based on the estimated value of the framework contract and depending on the life time of the framework contract (4 years maximum) • Procurement notice shall indicate the number of candidates who will be invited to submit tenders (from 3 to 8) • Only candidates satisfying the published selection criteria and invited in writing by CARE may submit a tender • FC may not be used to prevent, restrict or distort competition • Specific contracts based on a FC shall be awarded in accordance with the terms laid down in the FC they relate to.

32. SPECIFIC RULES FOR ECHO FUNDINGPROCUREMENT CENTRES AND PRE-ESTABLISHED STOCKS • Procurement centres • Shall comply with the relevant rules and procedures established by ECHO • Where needed, the procurement centre shall be responsible for launching the required tender procedure • Pre-established stocks • When CARE or its implementing partners incur expenditure before the date of submission of the proposal and related to the constitution of stocks of goods and equipment for use in connection with the action • Only considered as an eligible cost provided that these guidelines have been applied with due regard to the Mandatory Principles set out in Chapter 2 of Annex IV of ECHO’s FPA

33. SPECIFIC RULES FOR ECHO FUNDINGINTERNAL DEROGATION • Whenever it becomes necessary for a CO to derogate from these guidelines: • CO must submit a well justified written request to the CMP • Signed by the Country Director, or by proxy • The CMP’s Programme Director, and in his/her absence any Senior Management Team, can authorise and approve such requests • The CO shall be notified in writing accordingly • Derogation requests and approvals must take place before the concerned procurement activities are actually carried out • Derogations shall never be requested or approved on the grounds of circumventing these guidelines • Any deviation shall be properly documented and the request and subsequent authorisation shall be filed in the appropriate procurement documentation and/or project files