Development of Integrated Project and Financial Management Tools in Conformity with the 2003 FPA

1. Development of integrated project and financial management tools in conformity with the 2003 FPA The procurement In collaboration with

2. Value of contract Two variables Type of contract transparancy Two principles Fair competition Ex ante planning One approach Procurement The integration of procurement as one of the tools of the humanitarian intervention requires, withthe adoption of the best value of money principle the following:

3. Key-ideas about Annex V • Partners must have codified procurement procedures! • Partners must have a procurement strategy when presenting a proposal • A procurement plan is compulsory in the proposal • According to this strategy and plan, waivers to Annex V may be granted • Any requests for derogations have to be justified in the proposal • If accepted, derogations are included in the Grant Agreement  legal force, art 9

4. ANNEX V Defines the procedure to follow for contracts for the purchase of services, supplies and work. The types of purchasing procedures to follow are divided in relation to: • Types of contracts (services, supplies and work) • Value of purchasing contracts for each type of contract (services, supplies and work)

5. Introduction 1. Definition of aim General principles and structure of document Objective of procedure and general principles Criteria and causes for the inclusion or exclusion from the procedures Basic rules for all procedures Forms of procedures according to type of contract Primary Emergency, Emergency, Stocks, Procurament Centers, Co-funding… 2. Eligibility criteria 3. Common rules 4. Types of contracts 5. Special rules ANNEX V The Annex is organized as follows:

6. A. Supply contracts Property contracts Rent of land, existing buildings or other properties. ECHO can’t finance the purchase of properties. Supply contracts Purchase, leasing, rent or hire purchase, with the purchase option or not, of products. The delivery of products can include settlement, installation and maintenance expenses. B. Work contracts Work contracts They cover execution – or execution and design – costs of works, or realization of work corresponding to the specific demand. A work is the result of a construction work or of a civil engineering in its total, enough to fulfil a technical or economic function. C. Service contracts Service contracts They cover intellectual and non-intellectual service costs, which differ from the ones covered by the supply and work contracts. They also include study and technical assistance contracts. ANNEX V Contracts for supply, works and services have the following characteristics:

7. ANNEX V ATTENTION • A contract which covers both the supplying of products and services shall be considered a service contract whenever the value of the services exceeds that of the products included in the contract. The same principle shall apply to define the procedure to be followed in other hybrid contracts. • In the presentation of a project the NGO shall specify in ANNEX I how it intends to follow the purchasing procedure. Purchasing procedures implemented by the NGO beyond the contracting procedures will be assessed in the audit.

8. ANNEX V New rules applicable • Rules of nationality and origin • New notions: dedicated supplies/non dedicated commodities • Different thresholds dipending on the nature of contracts, nature of supplies, amounts • 4 offers (instead of 3) in the Restricted and Negotiated procedure

9. Applies to companies participating in tenders (not their staff). • Accepted countries are: operating countries, E.U., EEA and, third countries mentioned in the Cotonou Agreement (if Operation country = ACP) • No more neighbouring countries • Applies to the goods: the origin of the supplies. • Applies to supplies and equipment purchased by a contractor, if they are to become property of the beneficiaries of the project. • Eligible countries are the same as for nationality rule. Rule of nationality Rule of origin ANNEX V In the new FPA, ECHO introduces new rules:

10. ANNEX V ATTENTION • Any departure from the rules of nationality and origin is subject to prior written approval from the ECHO, which will deal with any request properly justified on: • technical or quality reasons, • unavailability on the eligible markets, • cost or delay due to transport, • Legislation in the country. • Humanitarian organization shall request waiver in proposal and justify it. • Derogations will be included in the Grant Agreement.

11. In the new FPA, ECHO makes distinction in supply contracts between: Form ECHO definition • Supplies subject to international quality standards, and/or • Supplies relative to the implementation of activity in the field of health, nutrition, water and sanitation. • Exceptionally, products not available in the country of the operation Dedicated Supplies Non-dedicated commodities all those supplies not considered dedicated supplies ANNEX V

12. ANNEX V ATTENTION • The classification of all supplies as non-dedicatedcommodities or dedicated supplies shall be made keeping in mind the context in which the project is carried out. The availability of goods in the country of the operation for example, may be considered in order to classify a certain type of goods as dedicated supplies when it must be imported. • The NGO shall always concord with the commission which products are to be considered as dedicated supplies in a given project.

13. Open International procedure Restricted Local procedure Negotiated procedure Single quote ANNEX V FORMS OF PROCUREMENT PROCEDURES

17. Always Check Overview: no-tender situations • Single quote- dedicated supply • Framework contracts: • Awarded by restricted procedure • Max 4 years • Useful for medical supplies • Humanitarian Procurement Centres: • Not for profit • Open to all humanitarian organizations • Equal treatment • Compliance with international standar • Technical capacity • Point 4.1.4

18. Form Quality standard required Purchase shall be based on the pre-qualification of pharmaceutical manufacturers who comply with WHO Good Manufacturing Practice Guidelines Medicines • Standards for suppliers of medical equipment: ISO 9001/EN46001 o ISO 9002/EN46002 • Council Directive 93/42/EEC del 14 June 1993 (OJ L 169, 12/07/1993) Medical equipment Other supplies Always verify the existance of recognized international standard for each supply (above list is neither definite nor complete) ANNEX V Supplies subject to international quality standards

19. In conclusion Whatever the procedure is…..: • Value for money: quality, price, compliance with international standards, timely delivery • Transparency • Equal treatment of potential contractors • No conflict of interest • No corrupt practices • Ethical principles (e.g. child labour)

20. The end