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RURAL ELECTRIFICATION AUTHORITY

REA OPERATIONAL MANUAL:

PROCUREMENT AND SUPPLY

March 2009

Plot No. 1613 Sheki Sheki Road Post Net Box 349 Private Bag E891 LUSAKA

REA Operational Manual: Procurement and Supply

TABLE OF CONTENTS
ABBREVIATION AND TERMS USED 1.0 INTRODUCTION PAGE iv 1

PART A- GENERAL 2.0 PROCUREMENT AND SUPPLY MANUAL 2.1 Purpose and Use of the Manual 2.2 Organization, Intent and Modification of the Manual 3.0 4.0 ORGANIZATION AND FUNCTIONS OF THE PROCUREMENT AND SUPPLIES UNIT 3.1 Introduction 3.2 Procurement and Stores Unit 3.3 Rea Management Tender Committee 3.4 Technical Evaluation Committee REA STAFF ETHICS AND PROFESSIONAL RESPONSIBILITY

2 2 3 3 3 3 4 6 6

PART B OVERVIEW OF THE PROCUREMENT PROCESS 5.0 6.0 7.0 8.0 9.0

7 7 7 8 8 8 9 9 10 10 10 10 10 10 11 11 11 12 12 12 12 12 13 13 14 15 15 15 16 16 16 17 17

REGISTRATION OF SUPPLIERS 5.1 Introduction 5.2 Supplier Registration Process 5.3 Evaluation of Supplier Application 5.4 Suppliers Recommendation 5.5 Supplier Performance Rating 5.6 Suspension or Removal from Supplier Data Base 5.7 Criteria for Suspension PROCUREMENT PLANNING 6.1 Introduction 6.2 Short Term Planning 6.3 Long Term 6.4 Annual Plan 6.5 Contents of the Procurement Plan PROCURING 7.1 Purchase Requests Specifications 7.2 Procurement Strategy 7.3 Submission of Request to the Procurement Officer PREPARATION AND ISSUANCE OF TENDERS 8.1 Introduction 8.2 Preparation of the Tender document 8.3 Identification of Potential Recipients of Requests for Bids Methods of Solicitation 8.4 Methods of Tendering 8.5 Low Value Procurement/Informal Tendering 8.6 Formal Methods of Tendering OPENING, EXAMINATION, EVALUATION AND COMPARISON OF FORMAL TENDER 9.1 Opening 9.2 Examination 9.3 Evaluation 9.4 Report on Evaluation 9.5 Extension of Validity of Tenders 9.6 Clarification or Alteration of Tenders 9.7 Exceptions to Tender Procedures

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REA Operational Manual: Procurement and Supply

10.0 ORDERING 11.0 RECEIVING OF GOODS AND SERVICES 11.1 Returning Materials to Supplier 11.2 Control over Good Received 11.3 Issues from Stores

18 18 19 19 19

PART C 12.0 GENERAL PROCUREMENT CYCLE AT REA 20

PART D 13.0 APPENDICES 22

REA Operational Manual: Procurement and Supply

iii

ABREVIATIONS AND TERMS


GRV GRN MTC PSU LPO CEO MAF ZESCO REA ZPPA RFP RFQ IFB CONTRACT DELIVERABLES REQUISITIONER SUPPLIER Goods Received Voucher Goods Returned Note Management Tender Committee Procurement and Supplies Unit Local Purchase Order Chief Executive Officer Manager Administration and Finance ZESCO Ltd Rural Electiricafication Authority Zambia Public Procurement Authority Request for Proposal Request for Quotation Invitation for Bid A Contract is a written document, containing the Agreement, and the Terms and Conditions, between the REA and the Supplier, which serves as proof of the obligation. Goods or Services delivered or to be delivered to the REA pursuant to the Terms and Conditions of a Contract. REA staff, who is responsible for submitting to the PSU, for their action, an approved purchase requisisition. Provider of Goods, Services and Works to the REA.

iv

REA Operational Manual: Procurement and Supply

1.0

INTRODUCTION

In November 2003, Parliament passed a new law entitled the Rural Electrification Act Number 20 of 2003. The law was passed to lend impetus to Governments determination to improve the effectiveness in the implementation of the rural electrification program. The Rural Electrification Authority established by the Act is intended to be a special purpose vehicle for promoting the rural electrification agenda as the national utility, ZESCO Limited, which has hitherto been implementing the program on behalf of Government, is encouraged to concentrate on commercially viable ventures and projects.

REA has been mandated to carry out several functions as outlined in the ACT. In the course of carrying out these functions, REA would be required to do procurement that would be acceptable both locally and internationally.

REA Operational Manual: Procurement and Supply

Part A. - GENERAL
2.0 PROCUREMENT AND SUPPLY MANUAL
This Procurement and Supply Manual has been developed to assist the REA carry out procurement in a consistent, efficient and transparent manner. The manual is applicable to all types of procurement (goods, works and services) and derives its authority from the Zambia Public Procurement Authority (ZPPA) ACT No. 12 of 2008 of the Laws of Zambia. The tenders for all goods, works and services shall be invited, examined and evaluated. The Contract shall then be awarded in accordance with the procedures specified herein.

2.1

PURPOSE AND USE OF MANUAL

The Rural Electrification Authority (REA) needs to procure goods, services and works to support its activities or projects throughout the country. The Procurement and Supply Unit (PSU) is in charge of the procurement of goods, services and works.

The Procurement Officer is responsible for the procurement activities. However, the REA may from time to time, depending on the value of services to be procured, request the Zambia Public Procurement Authority (ZPPA) to perform the procurement on its behalf, as is stipulated in the ZPPA Act.

(a)

The Zambia Public Procurement Authority ACT No. 12 of 2008 of the laws of Zambia, and the Financial and Accounting regulations of the REA govern the procurement activities of the REA.

(b)

This Procurement and Supply Manual clarifies the principle of segregation of responsibilities between requisitioners and the procurement office by specifying several separate and distinct functions within the procurement process. Moreover cooperation between the requisitioners and the procurement office is essential and of utmost importance to ensure the REA obtains good quality goods, services and works that meet the specifications at competitive prices within the required time frame in order to further the statutory mandates of the organization.

(c)

The Procurement Officer is responsible for the purchase of products, services and works on behalf of the organization for both budgeted funds allocated to the REA, and projects actions funded by other sources of financing.

(d)

The Requisitioners (e.g. budget holders) are responsible for identifying the needs of the REA and developing of generic specification to fulfill such needs.

(e)

This manual is intended to provide guidance on procurement policies and procedures to all REA officers involved in various stages of procurement action conducted by the REA.

(f)

The procedures in this manual are designed to ensure that such officers can give those seeking to conduct business with the REA confidence that their submissions are considered in a fair and transparent manner. It will also assist stakeholders to have confidence that the funds entrusted to the REA will be utilized as intended.

REA Operational Manual: Procurement and Supply

(g)

Given the commercial environment and technological changes over time, this manual will be updated and refined from time to time.

(h)

All REA officers will be required to be familiar and comply with the provisions of this Manual.

2.2

ORGANIZATION, INTENT AND MODIFICATION OF THE MANUAL

(a)

This manual brings together policies, procedures and activities dealing with the REA procurement processes, and consists of four parts namely General Introduction, Overview of the procurement Process, General Procurement Cycle at REA and Appendices & Forms.

(b)

The main intent of this manual is to allow for efficient REA Procurement actions. Some procedures contained in this manual may require modification, depending on the task at hand.

(c)

As indicated earlier, this manual will require modifications from time to time as deemed necessary.

General or specific comments and suggestions to this manual for improvements or additional provisions that may be needed should be addressed to the Chief Executive Officer of the REA. Any specific or general suggestion to modify it would be discussed at appropriate forum and feed back would be made known to all REA staff.

3.0

ORGANIZATION AND FUNCTIONS OF THE PROCUREMENT AND SUPPLY UNIT

3.1

INTRODUCTION

The REA Procurement Office shall ensure efficient, effective and economical administration of the procurement activities and related support services.

The Chief Executive Officer is authorized to establish policy and procurement related procedures and direct activities of the REAs Procurement and Supply Unit. In additional, the CEO shall:

(a)

Provide execution, direction, planning and management of the operations of the PSU.

(b)

Develop and coordinate a responsive and coherent policy for procurement activities.

(c)

Provide appropriate reporting information to the overseeing bodies.

(d)

Overview and review the preparation of submission to audit observation, reports and management letters relating to procurement activities.

REA Operational Manual: Procurement and Supply

3.2

PROCUREMENT AND STORES UNIT (PSU)

The PSU comprises the Procurement Officer and any staff reporting to him/her.

The PSU shall:

(a)

Plan and Manage Procurement activities in accordance with the requirements of the REA activities.

(b)

Process and expedite requisitions, solicitation documents, submissions, contractual instruments and invoices.

(c)

Prepare and submit written reports on pending activities on procurements for review and advice.

(d)

Negotiate, prepare and administer contracts for goods, services and works.

(e)

Liaise with requisitioners in developing technical specification/drawings/BOQs for goods, services and works to be procured.

(f)

Monitor Supplier performance evaluations in conjunction with other related sections of the REA.

(g)

Maintain records of every Contract entered into by the REA.

(h)

Arrange and coordinating MTC meetings and drafting of minutes of the same, and maintaining a permanent record of all minutes/recommendation and cases reviewed by it.

(i)

Responsible for administering and maintaining the Suppliers database.

(j)

Conduct bid opening functions as and when needed.

(k)

Perform any other duties assigned by the Chief Executive Officer from time to time.

3.3

REA MANAGEMENT TENDER COMMITTEE

3.3.1 GENERAL FUNCTION OF THE REA MANAGEMENT TENDER COMMITTEE

The formal responsibility of the REA Management Tender Committee is to ensure that proposed procurement actions are based on fairness, integrity and transparency, and that such are impartial and unambiguous. The Management Tender Committee reviews presentations and provides advice to the Procurement Officer on whether the proposed procurements are in accordance the ZPPA.

REA Operational Manual: Procurement and Supply

It is the duty of the Management Tender Committee to:

(a)

Ensure that general policy laid down by the ZPPA regarding the procurement of goods, works and services is adhered to.

(b)

Standardize goods, equipment and services procured in the interest of efficiency, economy, quality and reliability and ease of maintenance; and

(c)

Encourage many eligible registered Suppliers to participate in tenders.

3.3.2 COMPOSITION OF THE REA MANAGEMENT TENDER COMMITTEE (MTC)

The MTC shall be composed of six voting members from the following offices: (a) (b) (c) (d) (e) (f) (g) The Chief Executive as Chairperson The Senior Manager Planning & Projects The Manager Administration & Finance The Manager Public Relations The Legal Officer Two external members approved by ZPPA The Procurement Officer shall serve as the Secretary to the MTC and shall have no voting rights.

3.3.3 DUTIES OF THE REA MANAGEMENT TENDER COMMITTEE

(a)

The Management Tender Committee will from time to time be convened to review and provide advice on whether proposed procurement actions of values within the threshold authorized by the ZPPA are in accordance with the ZPPA regulations.

(b)

Two thirds of the members of the committee will form a quorum. The quorum shall always include the two external members who are not REA staff. Members of the committees are required to study the committee documents before the meeting. Therefore, the documents shall be circulated to the members at least 24 hours before the meeting.

(c)

All members of the MTC are obliged to attend all MTC meetings. In their absence, the proxies delegated in writing shall attend.

(d)

If deemed necessary, any requisitioning officer initiating the procurement action that require the MTC review shall attend, in a non-voting capacity during the MTC review and consideration of the said procurement action.

REA Operational Manual: Procurement and Supply

(e)

The MTC may invite any other officer whose presence is, in its opinion, desirable to attend and to participate in the deliberations for the purpose of advising the committee on the suitability of a particular purchase or specific matter. However, such a person will have no vote. In case of a perceived of actual conflict of interest, the concerned member should disclose the matter to the committee, and excuse himself or herself from consideration of that matter. The Chairman of the MTC shall ask members with interests in matters under considerations to leave the meeting. Minutes of the Tender Committee proceedings shall be recorded, maintained in sequential order, and submitted to the ZPPA within seven (7) days after comfirmation.

(f)

(g)

3.4

TECHNICAL EVALUATION COMMITTEES The REA shall from time to time constitute Technical Evaluation Committees. Their duties shall be to give advice to the Procurement Officer and the MTC on matters of highly technical nature. The Committee may also meet with the requisitioner and the Procurement Officer at the time of formulation of the draft tender document so as to ensure all necessary technical parameters are adhered to.

4.0

REA STAFF ETHICS AND PROFESSIONAL RESPONSIBILITIES


(a) All staff of REA involved in the procurement processes are expected to exercise loyalty and discretion in the execution of the duties entrusted to them and to discharge these functions and regulate conduct in the interest of the public. Procurement Unit of the REA is obliged to comply with the Financial Regulations and Laws of the Republic of Zambia as set out by the ZPPA. It is absolutely essential that all procurement activities are above reproach, with complete impartiality and with no preferential treatment. REA shall endeavor to deal with Suppliers that adhere to highest ethical standards both during the bidding process and the execution of the contract. REA staff shall not allow any Suppliers access to information on a particular acquisition before such information is available to the business community at large. Staff shall not intentionally use unnecessarily restrictive or tailored specification or statements that restrict competition. The REA procurement process that includes the preparation of specifications and scope of work, tendering or identification of potential Suppliers, evaluation of bids and award of Contracts to successful bidders, is designed to enable bidders compete for REA business on a fair basis. Staff associated with the procurement function, therefore, are responsible for protecting the integrity of the procurement process while maintaining fairness in the REA treatment of its bidders. Officers involved in the procurement processes are not allowed to accept any gift from suppliers regardless of the value and whether the supplier is soliciting dealings with REA or not. Officers shall decline gifts, drinks, meals, transportation or any other form of benefit. In the event that there is any doubt, the matter should be brought to the attention of the CEO.

(b)

(c)

(d)

(e)

(f)

REA Operational Manual: Procurement and Supply

Part B OVERVIEW OF THE PROCUREMENT PROCESS


5.0 SELECTION OF SUPPLIERS
5.1 INTRODUCTION

Performance of the REA in terms of execution of projects depends greatly on the quality and delivery performance of its Suppliers, Contractors and Consultants.

In order to maintain reliable and regular sources of goods, services and works, REA will assess the database of Suppliers who are registered with the ZPPA, and or National Council for Construction (NCC) for specific categories of goods, services and works.

Consultants recommended by Cooperating Partners funding specific projects will be contracted from time to time depending on conditions laid down.

However, the REA may purchase goods, services and works from Suppliers who are not registered with the ZPPA or NCC depending on the procurement method employed and nature of goods, services and works sought. This would only happen after REA uses established criteria to evaluate information provided by prospective Suppliers, and determines compliance to conditions set forth by the REA and in accordance with the ZPPA guidelines.

A proper and updated data base of registered Suppliers is required to be kept by the PSU at any one time. This will include information on services provided by each supplier, general particulars of the Suppliers, telephone and fax numbers, email address, physical address and any other relevant detail. This would also include details regarding evaluation of supplier performance.

5.2

SUPPLIER INVITATION PROCESS

The REA shall invite applications from would be Suppliers for its goods, services and works on an annual basis.

The following are the minimum documents to be provided at the registration stage:

(a)

Completed application forms

(b)

Copy of certificate of incorporation (privately owned companies)

(c)

Latest certified/audited financial statements

(d)

General information about the firm and its products/services

(a)

Letters of reference from at least two clients to whom the firm has provided goods, services and works in the recent past.

REA Operational Manual: Procurement and Supply

(b) (c)
5.3

Letter of Registration from the ZPPA or NCC. VAT registration certificate.

EVALUATION OF SUPPLIER APPLICATIONS

Where a pre-qualification of is considered necessary,the Technical Tender Committee of the REA, in consultation with the appropriate user department, would evaluate the applications received. Evaluation criteria would include:

(a) (b) (c) (d)

Relevance to the product/service required by REA. Financial capacity and stability Applicant business capacity and experience Technical competence

The REA shall use established criteria to evaluate information provided by prospective suppliers, and determine the compliance of the conditions set forth by the ZPPA and the REA.

Registration or refusal shall be granted by the REAs Technical Tender Committee and shall be communicated to the applicant within twenty one (21) working days from date of opening.

5.4

SUPPLIERS RECOMMENDATIONS

(a)

As a general rule, requisitioners and users may recommend suppliers. However while this can undermine the principle of segregation of responsibility between requisitioning and procurement offices it will be the ultimate responsibility of the Procurement Officer to ensure that those suppliers invited to bid are independent of REA, have no links business or personal with members of staff of REA and that they are the suppliers lest able to respond to the bid requirements. A consultant engaged to prepare or review technical specification and/or assist in the evaluation of bid or proposal concerning a particular requirement, shall not be allowed to recommend any supplier or submit a bid or an offer.

(b)

5.5

SUPPLIER PERFORMANCE RATING

REA shall from time to time evaluate Supplier performance in accordance with the following guidelines:

(a) (b)

Fulfillment of delivery schedules. Compliance with contractual terms and conditions.

REA Operational Manual: Procurement and Supply

(c) (d) (e) (f)


5.6

Quality of goods or services provided. Timely response to the REA requests to rectify discrepancies and resolve conflicts. Failure to disclose information which can affect performance of the Suppliers. Undue delay of the performance under the contract.

SUSPENSION OR REMOVAL OF SUPPLIER

A member of the REA or its related organizations may report and recommend to the REA Tender Committee, as appropriate whether to suspend a Supplier for a specific period of time or indefinitely. If the circumstances warrant suspension, the period of suspension must be clearly defined so as to afford the Supplier with an opportunity to correct the deficiency that lead to the suspension.

5.7

CRITERIA FOR SUSPENSION

The criterion for suspension or removal is as follows:

(a)

Based on substantial and documented evidence, that the Supplier has failed to adhere to terms and conditions of a contract with the REA so serious as to justify suspension or removal from the database such as:

i.

Failure to perform in accordance with the terms and conditions of the contract.

ii. iii. iv.

Lack of response or acknowledgement to three invitations to submit a bid.

The Supplier has been convicted of any criminal activity (e.g. fraud).

Abusive, unethical or unprofessional conduct, including corrupt practices and submission of false information.

v.

Any documented or compelling proof of misconduct which would negatively tarnish the REA reputation to its Cooperating Partners.

(b)

Notification by any reputable institution or other authoritative source that a Supplier has been charged with committing a criminal offence or fraud.

(c)

A criminal conviction or civil judgment issued against a Supplier indicating business dishonesty or lack of integrity.

However, non performance shall not automatically translate in suspension or removal from the database. Mitigating factors shall be thoroughly considered by the REA prior to recommending suspension or removal.

REA Operational Manual: Procurement and Supply

6.0

PROCUREMENT PLANNING
6.1 INTRODUCTION

Procurement Planning is essential for the effective and timely solicitation of bids or proposals, award of contract and delivery of goods, services and works required. Requisitioners together with the Procurement Officer are responsible for developing procurement plans yet maintain their separate roles. Overall responsibility of acquisition of goods, services and works rests with the procurement office.

6.2

SHORT-TERM PLANNING

In order to ensure that REA obtains good quality goods, services and works at competitive prices the requisitioners shall ensure rational and optimal use of funds throughout the budget. However last minute requisitions should be discouraged unless in very exceptional circumstances as this hampers the REAs ability to ensure transparent, open, efficient and timely procurement process.

6.3

LONG-TERM PLANNING

The requisitioning office and the procurement office shall from time to time perform long term planning covering the bulk of the budgetary period. This helps to lay the foundation on the best procurement terms for the Authority and will also serve to demonstrate the REAs ability to manage funds in a professional and transparent manner for the benefit of the public.

6.4

ANNUAL PLAN

The requisitioning and procurement office shall communicate and meet to set up Procurement Plan for the forthcoming budget year. Such plans, shall be to the extent possible help achieve economies of scale and other benefits to the REA.

Proposed revisions to the Procurement Plan may be done at the beginning of every quarter so as to ensure continuity of operation without impacting negatively on the budget.

6.5

CONTENTS OF THE PROCUREMENT PLAN:

(a) (b) (c) (d) (e) (f)

Item No. Type of goods, services and works. Purpose of Procurement Estimated quantity (number of units) or term (number of months) Specification and Description Method of Procurement

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REA Operational Manual: Procurement and Supply

(g) (h)

Estimate value in Kwacha

Delivery date or expected quarter when the goods would be required to be delivered, or services and works required would commence.

(i) 7.0 PROCURING


7.1

Any other relevant information.

PURCHASE REQUISITION SPECIFICATIONS

1.

The requisitioner must prepare a detailed purchase requisition and specification in time, bearing in mind all the steps of the procurement processes set forth in this manual, in order to initiate the process of fulfilling the said need in due time.

2.

The requisitioner is required to make preliminary contact with the Procurement Officer for the forthcoming requisition in order to gain insight into the typical time required to complete the procurement process.

3.

The requisitioner shall allow adequate lead time for the procurement office to properly conduct the procurement process. This process will normally commence upon receipt of a sufficiently funded, completed and authorized purchase requisition including specification, from the requisitioner and ends with contract award.

4.

When planning, the requisitioner should take into account the time required for preparation of bid documents, expression of interest, submission of bids by Supplier, evaluation of submissions, submission to and review by the MTC or the ZPPA (which ever would be applicable) and the need for negotiations and drafting of the contract.

5.

Requisitioners shall contact Administration and Finance to ensure that sufficient funds are available for the applicable purchases prior to submitting a purchase requisition to the procurement office.

7.2

PROCUREMENT STRATEGY

1.

For large and/or complex procurements to be performed by the REA, the requisitioner together with the Procurement Officer shall establish a procuring strategy setting forth the various steps in the procurements process and key issues to be resolved at each of these steps.

2.

The strategy should address a high level description of needs to be fulfilled, an estimate of the time to fulfill the process and other issues of higher importance to the process. Procurement strategy may also include special procurement techniques which bring value for money and best performance practices from Supplier

3.

Once agreed the final procurement strategy shall be submitted to the CEO by the Procurement Officer.

REA Operational Manual: Procurement and Supply

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7.3

SUBMISSION OF PURCHASE REQUESTIONS TO THE PROCUREMENT OFFICER The requisitioner shall submit to the Procurement Officer an approved Purchase Requisition, supported by a comprehensive description of goods, services and works to be delivered or performed, including detailed specification of construction and installations required, and architectural drawing, if appropriate. The specification should also specify the reasonable time within which the work or service is to be performed and the time limit for delivering the goods. The requisitioner is further required, as a priority, to provide assistance and cooperation in finalizing information for the Bidding Documents as and when requested by the Procurement Officer.

8.0

PREPARATION AND ISSUANCE OF TENDERS 8.1


INTRODUCTION The Procurement Office shall evaluate purchase requests received and should identify any issues which do not conform to the general requirement of the REA or the ZPPA procurement guidelines. Such issues should be brought to the attention of the requisitioner who must correct the requisition accordingly. Typical issues that do not strictly conform to REA or ZPPA requirements are:

1. 2. 3. 4. 8.2

Requirements designed to limit or do away with competition. Unjustified or persuasive request for exemptions from effective competition. Unrealistic short delivery period. Unrealistically low budget estimates.

PREPARATION OF TENDER DOCUMENT The requisitioner in consultation with the Procurement Officer and the Legal Counsel shall prepare the Tender Document or Tender Enquiry. The document, shall among other things, contain (depending on the purchase) Instructions to Bidders, Specifications, drawings and Bill of Quantities. The Tender Document shall need to be approved by relevant authorities prior to issuance.

8.3

IDENTIFICATION OF POTENTIAL RECIPIENTS OF REQUESTS FOR BIDS Duly registered Suppliers who conform to the general conditions as set out by the ZPPA or Cooperating Partners shall be contacted. In accordance with this manual, all tenders for capital projects would be invited by advertising. Potential Suppliers shall be identified, by placing an advertisement or by selective Tendering. Tendering shall be undertaken in a transparent manner to ensure integrity of the process and the confidence of all involved.

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REA Operational Manual: Procurement and Supply

Limitation of number of invitees may be allowed under the following: (a) When the list is unduly long for the PSU. (b) Single source. (c) Security reasons. (d) Low value purchases. (e) Other exceptional circumstances as the situation warrants. As a general rule, a minimum of three Suppliers should be invited for any particular purchase. However, jurisdiction should be used with due consideration to costs usually associated with tendering process. The PSU should always strive to ensure equitable issuance of tenders. 8.4 METHODS OF TENDERING Basically, there are two methods of tendering. These are Informal Methods of Tendering and Formal Methods of Tendering. The method to be employed largely depends on the nature and value of the items or services to be procured and also on the time frame in which to fulfill the need. Informal Methods are purchases in which the PSU shall obtain quotes from registered suppliers (via fax, email, or in personal), evaluate them, make a recommendation and submit the quotes for approval to either the CEO or the MTC for approval. Formal Methods are purchases in which the Requests for quotes are invited by either public or selective means, and the quotes are received as sealed bids. Opening of these bids shall be strictly as stated in the bid documents and bidder representative might be required. 8.5 LOW VALUE PROCUREMENT/INFORMAL TENDERING Low value purchases of less than one million kwacha do not need competitive bidding and the following procedures shall be followed:

(a) The Procurement Officer shall check if there is a current contract for the provision of
required item or service. If the contract is in place, the purchase shall be made under this contract.

(b) If REA has standardized purchases of certain goods, services and works with specific
Suppliers, those goods, services and works shall be procured from those Suppliers.

(c) The Procurement officer shall invite at least three prospective Suppliers via phone, fax,
and email or in person. The request for quotes shall include all requirements (quantity, delivery times etc.) In order to ensure economy, efficiency and fair market prices, the Procurement Officer needs to assess that s/he is getting the best possible value.

REA Operational Manual: Procurement and Supply

13

(d) The Procurement Officer shall document the assessment by issuing a memo to the case
file, stating that s/he has obtained the best possible value. In the above cases, the Procurement Officer shall issue a Local Purchase Order or Contract. 8.6 FORMAL METHOD OF TENDERING An Invitation to Bids (ITB) shall be used for the procurement of goods, services and works of standard and firm specification (very clearly defined and continuously used deliverables) of total estimate in excess of five hundred million kwacha, and shall be undertaken through open or public (formal) tenders. The requisitioner shall prepare a purchase request and submit to the PSU, upon approval by relevant head of department and confirmation of availability of funds. (a) The PSO would prepare the draft tender document with the help of the requisitioner and the Legal Counsel who shall provide technical specification for the required item. (b) All formal tenders shall be advertised in the Government Gazette and at least one English language Zambian mass circulation daily newspaper. (c) The use of selective or restrictive tenders shall be limited to exception cases as provided for in the ZPPA regulations. (d) All formal tender undertaken shall be subjected to prior review. This means REA shall need to obtain a no-objection from the ZPPA to the draft tender document before issuing to prospective bidders. (e) A no-objection shall also be obtained from the ZPPA before the evaluation and recommendation for contract award for purchases above the MTC threshold. (f) Request for Proposal (RFP) shall be used for procurement of deliverables that cannot be quantified or qualitatively expressed in sufficient detail to allow use of ITB the time Solicitation is Issued such as profession services or similar services.

(g) An RFP shall also be used when outsourcing non-core activities and service. An RFP shall also be used to purchase complex goods using a functional specification when proposals from invitees are preferred. Specification shall be clear, comprehensive and preferably performance oriented, in order to ensure fair and equal treatment of prospective Suppliers. (h) For RFP, the contract shall be awarded to the qualified proposer whose proposal, all factors considered, is the most responsive to the requirements set forth in the solicitation documents. 8.6.1 INSTRUCTIONS TO TENDERERS The invitation/notice for tenders must state details of the required supplies, services or works, the name and location of the officer from whom the documents are available, the tender conditions and, in particular the following: (a) Closing date and time;

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REA Operational Manual: Procurement and Supply

(b) (c)

Period of validity of tender; That no tender will be considered unless it is delivered by the closing time and at the place specified in the tender documents. Whether there will be a public opening and, if so the appointed time and place; and that is not bound to accept the lowest nor any tender.

(d)

8.6.2

ADEQUATE NOTICE Advertising of public tenders must provide adequate time for the bidders to formulate; price and return their quotation to the REA.

8.6.3

EXTENSION OF TIME FOR TENDERING Any formal request for an extension to the tender period must be received by at least two weeks for National Competitive Bidding (NCB) and four weeks for International Competitive Bidding (ICB), before the tender expiry date, and, if acceptable to the relevant Tender Committee, extension shall be communicated to all bidders.

8.6.4 RECEIPT OF TENDERS Tenders received by the Secretary to Tender Committee will be numbered, then initialed by him/her with the date and time of receipt and deposited in the appropriate tender box. Any tender received by the Secretary of Tender Committee through the normal post or placed in a tender box, or received by any other means after closing date and time shall be returned, unconsidered and unexamined, to the bidders with the date and time when it was received.

9.0

OPENING EXAMINATION, EVALUATION AND COMPARISON OF FORMAL TENDERS 9.1


OPENING Prospective Suppliers who submit Tenders may designate one attendee to be present at the Tender Opening. Such attendee shall act as observers, and not as active participants in the opening process. All received Bid Submissions to ITBs shall be recorded, and publicly opened at the time and place specified in the Solicitation Documents. All received Submissions to RFPs shall be recorded, and publicly opened for the sole purpose of registering the details as provided in the Tender Abstract. Price information of proposals for RFPs shall not be announced at the Tender opening, as the nature of the Tender Document and Submission does not lend itself to a direct comparison of prices. 9.2 EXAMINATION

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Following the opening it should be ascertained whether material errors in computation have been made in tenders, whether the tenders are substantially responsive to the tender documents, whether the required sureties, guarantees or warranties have been provided whether the documents have been properly signed and whether tenders are otherwise generally in order. If a tender is not substantially responsive to the tender documents, or contains unacceptable qualification, it should be rejected, unless it is an alternative tender permitted or requested under the tender documents. A technical analysis should then be made to evaluate each responsible tender and to enable tenders to be compared.

9.3

EVALUATION The specific number and types of evaluation criteria, as well as their relative importance shall depend on the nature of the requirement and shall be developed by the evaluation committee. The evaluation criteria shall be determinant, not merely important. They shall be documented in writing prior to the release of the Tender Document. In general the relationship between the weight given to the price versus the technical factor should be determined by various several factors, e.g. the complexity of the requirement, the level of detail, and objectively to be used for conducting the technical evaluations The purpose of the source selection process is to identify the Suppliers(s) to whom the contract(s) is to be awarded, i.e. the process from the receipt of Tender Submission, through the evaluation of such submission to the decision to award the contract. Suppliers are qualified and evaluated as to their Responsiveness. In order to ensure that the procurement process is fair, objective and transparent, the source selection process shall also give due consideration to a balancing of the following general set forth. (a) (b) (c) (d) Best value for money Fairness, integrity and transparency; Effective international competition; The interest of REA

9.4

REPORT ON EVALUATION A detailed report on the evaluation and comparison of tenders setting out the specific reasons on which the decision for the award of the contract, or rejection of all tenders, is based should be prepared by the Chairman of the Management Tender Committee. If a consultant has been employed to evaluate a tender, an individual assessment and recommendation from the relevant Chairman must accompany the consultants report. EXTENSION OF VALIDITY OF TENDERS In the event of the assessment of tenders not being within the period of the validity of the tenders, an extension of time may be requested from the bidders. In these circumstances, REA should re-negotiate the validity period by exchange of letters or fax. Those who are willing to extend the period of validity of their tenders should neither be required nor permitted to modify their tenders.

9.5

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9.6

CLARIFICATION OR ALTERATION OF TENDERS Except as otherwise provided in this procedure, no bidders shall be permitted to alter his/her bid after his/her tender has been delivered to the REA. The REA, however, after the tenders are opened, may ask any bidders for a clarification of his/her tender but may not ask any bidders to change the substance or price of his/her tender. The Tender Committee may reject any tender or part thereof; it need not accept the lowest tender if it is considered not to be in interest to do so; details of the reasons for not accepting the lowest tender should be recorded in the minutes.

The award of a contract should be made within the period specified for the validity of tender to the bidder whose tender has been determined to be most advantageous to the REA and who meets the appropriate standards of capability and financial resources. The award of the contract shall be affected by the issue of a Purchase Order or by a formal letter or acceptance signed by the authorized officers, incorporating the Contract/Tender Reference and the value of the award.

9.7

EXCEPTION TO TENDER PROCEDURES For contracts exceeding the Management Tender Committee authorisation limit, any request for exemption from tender procedures should be made in writing to the Zambia National Tender Board, accompanied by full details to justify the exemption, and supported by Suppliers quotations where applicable. The ZPPA subject to the limits may approve purchases without reference to tender procedures in the following instances: (a) Where the goods and/or works required are of a specialized or proprietary nature and there is no compatible alternative, or there is a clearly establish policy of standardization (i.e. standardization of equipment or spares may require purchases from the original supplier in order to be compatible with the existing equipment); (b) Where the good and/or works required are proprietary in essential after-sales services cannot be obtained without purchase from one source; (c) Where tenders have been invited and no offers have been received or it is evident that tenders are collusive or unreasonable; and (d) Where urgency or the exigencies of the service prelude tendering. The exigency or the cause for the urgency must be established and place on record in the application for approval. (e) When the proposed procurement contract is the result of co-operation with other inprogress works. (f) When offers for identical goods, services and works have been obtained competitively within a reasonable period and the prices and conditions offered remain competitive; (g) When the value of the procurement is below the monetary threshold established for formal methods of solicitation.

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(h) When the proposed procurement contract relates to obtaining services that cannot be
objectively evaluated.

10. 0

ORDERING
This section covers the ordering of goods, services and works, both of capital and revenue nature. The Purchase Order (PO) is a contract. It is generally used for acquisitions that follow the issuance of a request for quotation or an invitation to bid, such as for goods standardized items or simple services The Head of Department must approve a Purchase Requisition before the Purchase Order can be raised. Purchase Orders must be used for all goods, services and works, with the exception of regular services such as telephone and electricity charges. Purchase Orders are not required where formal contracts are being executed and for petty cash purchases. A Procurement officer shall raise a Purchase Order, after approval of the purchase. A Purchase Orders must contain the prices and/or rates that are agreed upon with the supplier, as well as the quantity and detailed description of the goods or services ordered, and the delivery schedules. The Procurement Officer may add special instructions to the PO. The order comes in triplicate copies; the first copy goes to the Suppliers, the second copy goes to Accounts and the third copy remains in the Purchase Order book. Purchase Orders for capital expenditure shall not be issued until the REA has committed funds for such expenditure, even though such items are included in the budget approved by the Board. Purchase Orders may not be split to circumvent the authority limits. Under exceptional circumstances, the Approving Officer may delegate a subordinate officer to sign the Purchase Orders on their behalf, provided such Purchase orders are countersigned by the authorized officer immediately on their return.

11.0 RECEIPT OF GOODS, SERVICES AND WORKS


The Stores Office is responsible for co-coordinating the receipt,inspection and the certification of acceptance or rejection of delivered goods, services and works in consultation with the Procurement Office and the requisitioning offices. Products and equipment that have been received, inspected and accepted or rejected are so certified on a Receiving and Inspection report. No payment shall be effected for projects, products, equipment or services that have been rejected, provided such rejection takes place prior to the REAs obligation to pay under the terms and conditions of the Contractual instrument. The REA, however, cannot unduly withhold inspection in order to prolong the payment terms. Therefore, such Inspection shall be performed as soon as possible after the delivery, as defined in the contractual terms and conditions, since this action commences the payment obligation. When deliverables are satisfactorily furnished, a receipt and/or Inspection are required to certify complete delivery or partial delivery of the order or contract.

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For services, the requisitioner or any appointed staff shall inspect to ensure that the services have been provided satisfactorily. Goods Received Voucher (GRV) must be completed for all goods received by the person receiving certifying that the goods received are in agreement with the orders placed. In the case of services, the requisitioner for the service shall sign the invoice to confirm that the services ordered have been done to his/her satisfaction. In the case of works, contract documents shall be authorized by the CEO prior to their issue. The PSU shall manage the contracts and oversee contracts management by the designated contracts manager. The PSU shall verify contractor invoices prior to payment. On completion of works the contracts manager shall issue a completion certificate and a copy shall be retained by the PSU.

11.1

RETURNING GOODS TO SUPPLIER When it is necessary to return goods to a Supplier, the Procurement Officer shall issue a Goods Return Note. The Goods Return Note shall include: (a) (b) (c) (d) (e) (f) Reference to the original Purchase Order number; A description of the item to be returned; The value of the items as shown in the Purchase Order; An indication of the reason for the return of the items; Additional remarks, if required, to explain the reason(s) for the return of the items; Instruction to Supplier on the action required by the REA, i.e.,replacement of the returned goods or the issue of an appropriate credit or refund in respect of its value; And whether the cost is to be borne by the REA or the Supplier.

(g)

11.2 CONTROL OVER GOODS RECEIVED


A Goods Received Voucher (GRV) must be completed for all goods received by the Stores Officer certifying that the goods received are in agreement with the orders placed. Goods received in stores shall be stored properly, in appropriate locations with Bin Cards describing the nature of the items, last receipt, last price, number of items, Supplier and condition.(Refer to appendix 5). 11.3 ISSUES FROM STORES

All goods issued from stores must be done after producing of a duly signed Stores Requisition Note. Only quantities sufficient to meet the immediate need or requirements of a user should be issued. The Stores Officer shall ensure that all goods are issued with care to avoid abuse.

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Part C
12. GENERAL PROCUREMENT CYCLE AT REA
The following in the summarized procurement cycle of steps/tasks that shall be executed in performing the procurement functions:

(a)

Each department or section shall fill in a Purchase Requisition Form (Refer to Appendix 1) clearly specifying its requirements and submit the requisition to the Procurement and Supplies Unit.

(b)

The PSU shall enter the requisitions details on a Procurement Indent Register serially according to departments or section from the beginning to the end of the financial year. The PSU will assign tender numbers to each requisition;

(c)

For informal tenders, the PSU shall invite tenders through Tender Enquiry Form and receive tenders (quotations) from at least (3) prospective Suppliers.

(d)

For formal tenders, the PSU in conjunction with the user department shall advertise the tender in at least one Zambian newspaper of mass circulation or submit to Zambia National Tender Board depending on the prevailing threshold.

(e)

Bids or tender enquiries shall be closed and opened at the exact time and place mentioned in the invitation to bid or tender enquiry and in public in case of formal tenders. Any interested individuals are free to attend the tender opening meeting and shall enter details such as; their names, signature, institutions they represent, the tender number of the tender they are witnessing and date on the tender opening attendance register.

(f)

The Chairman shall proceed to opening the bids while numbering them sequentially according to the order of opening and read out relevant information e.g. name of a bidder, bid sum (inclusive or exclusive of VAT), Bid Security amount and its source, delivery period or completion period and samples. The Chairman shall stamp bid forms and price schedules of each bid using the Chairmans Bid Opening Date Stamp. The Secretary of the tender opening meeting shall prepare minutes of the opening for record keeping. The Secretary shall ensure that all pages of all bids are stamped using the PSU date stamp immediately after opening;

(g)

A Tender Evaluation Committee shall be constituted to evaluate the tenders (quotation) received using Tender Evaluation Form, where applicable and recommend procurement in accordance with financial limits. For procurements within the departmental or Chief Executive financial limits, the Procurement and Supplies Unit shall recommend approval of purchase to the Head of Department or the Chief Executive as the case may be;

(h)

For procurements above the departmental financial limits, the Procurement Unit shall prepare a Tender Committee Paper and attach relevant documents e.g. quotations, for submission to the Management Tender Committee, for consideration; The Secretary to the Tender Committee, in consultation with the Chairperson shall arrange for a Tender Committee Meeting to consider authorizing procurements. The decisions for the Tender Committee shall within seven days after the meeting be communicated to the applicants.

(i)

(j)

Immediately upon receipt of the Tender Committees approval the Legal Officer in consultation

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with the user departments shall prepare a contract or the PSU can issue Local Purchase Order(Refer Appendix 2) and have it signed by designated personnel;

(k)

Upon signing the Contract, the Supplier/Contractor, where applicable, shall within fourteen days of signing the contract furnish the REA with a signed performance guarantee.

(l)

Once the performance guarantee has been submitted and accepted, the supplier/contractor/ consultant, where applicable, shall submit a bank guarantee for advance payment from a stated source;

(m)

Upon receipt of the goods, the PSU, user department and a hired expert, where necessary, shall inspect the goods. The PSU shall issue a Goods Received Voucher (Refer Appendix 3). Donated goods shall also be received and entered accordingly;

(n)

Rejected goods will be returned to the supplier as outlined on the Goods Return Note (Refer to Appendix 4). Returned goods note should be written in red to avoid confusing it with the goods received note;

(o)

Accepted goods shall be entered on the Bin Card (Refer to Appendix 5) and issues shall be entered progressively from thereon;

(p)

The goods shall be issued upon the user submitting correctly signed Stores Requisition Note to Stores Section (Refer to Appendix 6);

The PSU shall maintain consolidated registers and records for the following: i. ii. iii. iv. v. Purchase requisitions; Purchase orders; Tender Evaluation Forms; Management Tender Committee Decisions; and Any other documents which may relate to procurement and supplies function.

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Part D
13.0 APPENDICES
Appendix 1 Purchase Requisition Form

Appendix 2

Local Purchase Order (LPO)

Appendix 3

Goods Received Voucher (GRV)

Appendix 4

Goods Returned Note (GRN)

Appendix 5

Bin Card

Appendix 6

Stores Requisition/Issuing Voucher

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APPENDIX 1 RURAL ELECTRIFICATION AUTHORITY PURCHASE REQUISITION No.__________

To: Procurement Officer

Date___________________
Qty Required Estimated Value Purpose of Expenditure

Item No.

Description of Goods, Services and Works

Raised by:

REA Operational Manual: Procurement and Supply

Name : _______________________________

Manager-Admin & Finance ______________________ (Budget Approval)

Signature: ____________________________

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Approved by____________________________ _ (Head of Department)

Appendix 2

RURAL ELECTRIFICATION AUTHORITY Plot Number. 1613, Sheki Sheki Road, Post Net Box 349, Private Bag E891 Lusaka, Zambia

PURCHASE ORDER
Messrs____________________________________

ORDER No._________

Date__________________________

___________________________________________

Your Quotation No.______________

Item No.

Description

Quantity

Unit Price

Total Amount

Validity: 30 days from date of issue

Sub Total VAT Grand Total

Procurement Officer____________________________

Approved by___________________________

Supplier: ____________________________________

This Order is subject to the following conditions:

1. 2. 3. 4. 5.

All invoices must clearly indicate this order number. Subsequent alterations in prices/specifications of goods to be supplied must be communicated and agreed upon in writing with REA. A delivery Note must accompany the goods supplied. Payment shall be made within 30 days. This order is valid when authorized by all signatories.

Distribution of copies:

1. White copy Original: Supplier/Contractor 2. Pink copy Duplicate: Accounts/Payments 3. Blue copy Triplicate: Book copy

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Appendix 3

RURAL ELECTRIFICATION AUTHORITY GOODS RECEIVED VOUCHER

No.__________

Name of Supplier________________________________________

Date__________________________

______________________________________________________

Invoice No. ____________________

Purchase Order No.______________________________________

Delivery Note No._________________________________

Item Qty Ordered Qty Received Unit of Receipt

No.

Description

Unit Price

Total Cost

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Goods received by_______________________________

Date________________________________

Verified by_____________________________________

Date________________________________

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Comments by verifying officer: ______________________________________________________________________________________________________

Appendix 4

RURAL ELECTRIFICATION AUTHORITY

GOODS RETURNED NOTE


To: ______________________________________ Date__________________________

_________________________________________

GRN No._______________________

Item No.

Description

Qty Returned

Unit Price

Total Cost

Goods Returned by______________________

Date _______________________

Received by___________________________

Date_______________________

Reason for returning: ____________________________________________________________________ ______________________________________________________________________________________

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Appendix 5

BIN CARD No. _________

FIFO

Stock Item_______________________________________________

RECEIPTS LPO PRICE QTY UNIT TOTAL COST DATE. Dept..

ISSUES QTY QTY

BALANCE SIGNATURE

DATE

SUPPLIER

Stores Requisition No

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Appendix 6

RURAL ELECTRIFICATION AUTHORITY

STORES REQUISITION NOTE


Department/Unit:. Requested by: Date Required:.

Name:..

Signature

Item no.

Description

Unit of Issue

Quantity Requested

Qty Issued

Approved/Not approved Issued by (Head of Dept/Unit)

Received by

Name:

Name:

Name:..

Signature:

Signature:

Signature:

Date:..

Date:..

Date:.

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