1 Purpose and Scope of the Manual 6


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8.1 Process
8.1.1. Purchase Requisition Forms

Forms will be completed and submitted, normally 3 weeks in advance to enable the planning and procurement of the items/services in good time.

i) The program officer or any officer in charge of the program obtains a purchase requisition form from the network or the logistics officer. See Appendix 17

ii) He prepares the requisition, giving full details or specifications, desired delivery time etc, takes it to accounts to confirm for budget balance.

iii) Then it’s reviewed by the immediate supervisor.

iv) If there is a budget balance, the requisition goes to DOFHOF/SG for approval and then back to the originator, a copy being retained by finance department.

v) If funds are unavailable or the budget is overspent, accounts will return the requisition to the originator with a note stating the same where the originator will seek authority to spend anyway, from the immediate supervisor and the SG. There has to be a genuine need to overspend.

vi) Approved purchase requisition is forwarded to the logistics officer, who makes a copy for the originator.

vii) Purchase requisitions should be consolidated as much as possible, to realize economies of scale

iix) Officers are hereby reminded that purchase requisitions should not be sub-divided so as to bypass the laid authority limits.
8.1.2. Request for Quotations

i) The logistics officer will obtain at least 3 quotations from the KRCS list of approved suppliers using the request for quotations form. See Appendix 14

ii) Program officers will be requested where necessary to provide additional information regarding suppliers to be used.

iii) If a sample is required, this will be clearly stated in the request for quotes

iv) Any quotation of a total value of over Kshs 250,000 must be sent in a sealed envelope addressed to the chairman of the tender committee giving reference to the tender number

v) A locked tender box will be kept at the reception and will only be removed at the closure of the tender period. The box will be locked by two people with different keys for purpose of transparency and the sealed quotations will only be opened by the tender committee.

vi) It is desirable that the logistics officer uses randomness to select suppliers from whom to request for quotes to ensure all suppliers in the list have an equal chance of being chosen. In special cases he may use his judgement to select.

vii) When unsolicited for offers/quotes are received.

a) They will be brought to the attention of the tender committee for review

b) As a general rule, unsolicited for offers will be rejected

c) However, if they indicate a significant saving to KRCS they will be accepted and if there is an indication that the soliciting process was not fairly handled,

d) The request for quotes will be reinitiated by a different officer appointed by the chairman of the tender committee.

iix) Quotations received after the tender closure period will be stamp dated and filed but will not be considered for CBA

ix) All quotes must bear the name and signature of the supplier, otherwise they will be rejected

x) Corrections or alterations on the quotes must be signed by the person who signs the bid

xi) No alterations or corrections will be accepted after the bids have been closed, but if for a justified reason there is need to modify (eg typing errors, transposition of figures etc), the tender committee will decide whether to allow this. However, it must be documented and attached to the quote.

xii) If a supplier quotes for goods/services of inferior or exceeding quality, the logistics officer will have to consult the reqisiting officer if the items may be accepted
8.1.2.1. Exceptions

Contracts/orders may be awarded without calling for proposals, advertising or any formal invitation for bids. This is acceptable when:

i) The prices are controlled/fixed by the government or any other regulatory bodies and the logistics officer has no control whatsoever

ii) Supplies have been standardized with publication and dissemination, thus rendering competition impracticable. The tender committee will review such a case before approval

iii) The case is dealing with such an emergency such that it would not allow time for bidding process. This must be dealt on a case-by-case basis, and has to be approved by the SG before awarding the order/contract.

The logistics officer will however, examine the case and see if the order can be split, buy the first batch without the bids (emergency) and the other part will go through the bidding process.

iv) Supplies are available only from a monopoly.

v) There was a similar supply requested for and a bidding process was followed to award the order within the last 30 days.

If the above exceptions have to be applied, they must be documented, used genuinely and with caution.
8.1.3. Competitive Bid Analysis (CBA)

i) Based on the quotations received, the Logistics Officer or the tender committee, whichever is applicable, will prepare a CBA. See appendix 15.

ii) This is prepared to ensure that KRCS gets value for money.

iii) The CBA considers such variables like compliance with specifications, price, delivery time, terms of payment, after sale service, warranty, reliability, past experience, etc.

iv) When an alternative delivery point is offered by the supplier, other than the one KRCS had proposed, the logistics officer will determine the extra cost of delivery and add it to the cost of goods to determine the full cost of supplies. The impact on delivery time will also be considered in selecting the supplier
8.1.4. Selection of Supplier

i)The Logistics Officer or the tender committee will recommend the most competitive supplier from the CBA.

ii)The CBA is approved as follows:

  • Prepared by the logistics officer

  • Checked by the program officer

  • Reviewed by the respective program director

  • Approved by either the DOFHOF or SG depending on the authority limits.


iii) Suppliers who are not selected but had been requested for quotes will be advised in writing of their non-selection and the reason why.

iv) In cases where a CBA is not done, the DOFHOF should put a note explaining the reasons. These goods should be of a consumable nature and not fixed assets.
8.1.4.1 Tie Bids

i) When there is 2 or more quotes having same prices and terms, the decision maker is here required to look at other factors, however small, that make one bid more favourable than the other(s).

ii) However, the decision must be seen to be rational

iii) If no such favourable factor is seen, an acceptable random selection will be applied. This will be documented in the CBA.
8.1.5. Raising a Local Purchase Order (LPO)

Finance department will be advised by the DOFHOF to raise an LPO to the selected supplier. The LPO is system generated and is serially numbered and is authorized by either the DOFHOF or SG depending on the authority limits.

In the absence of the two authorities, any Director who is at that time acting for each respectively will authorize on their behalf. Sample LPO see appendix 15
8.1.6 Contracts

In certain cases eg rental, constructions etc, it may be necessary to replace LPOs with a written agreement to ensure that the obligations and rights of both the buyer and the seller are adequately defined.

It is advisable that KRCS enter into such contracts after consulting with the legal adviser.

The above procedure 8.1.1 to 8.1.4 above applies.


8.1.7. Placing a Local Purchase Order

The original copy of the approved LPO is given to the logistics officer to send to the supplier, a copy left with Finance to attach to payment documents and a third copy retained by the logistics officer.

8.1.8. Receipt of goods

Upon delivery of the goods, the logistics officer will sign on the delivery note upon checking and certifying the quantity and specifications, for technical goods (eg First Aid items) that need specific checks, the programme officer will be consulted to receive. The delivery note should be forwarded to finance to awaiting invoice for agreeing to the LPO and invoice for subsequent payment. A copy will be forwarded to the logistics officer for stores files.
8.1.9 Receiving Services

For services received, the officer supervising the activity will sign on the invoice for certification of services rendered eg hotel accommodation.
8.1.10. Discrepancies in delivery

i) Occasionally, there may be discrepancies between the physical goods delivered and what is in the suppliers delivery note and/or invoice.

ii) It is the responsibility of the logistics officer to resolve the issue by either requesting for replacement or a credit note thereof.

iii) The discrepancy will be indicated on the delivery note, notifying the accounts staff how payment is expected to be done.

iv) In case of disputes in the invoice amounts, the logistics officer will advise the accounts staff to pay the undisputed amount, for the time being to avoid undue delay in payments.
8.1.11. Returning items to the Supplier

i) When it becomes necessary for items to be returned to the supplier after delivery, the logistics officer will contact the supplier and advise on the proposed action.

ii) He will give reference to the LPO and the specific items being returned and for what reason(s).

iii) The logistics officer will negotiate the manner in which the issue will be resolved, whether the supplier will give a credit note, replace or refund if payment is already made.

iv) He will also agree with the supplier if the cost of transport back to the supplier will be borne by the supplier or KRCS.
8.1.12. Accruals

The delivery notes will form part of the source document to do the month end procedure of accruing liability if the invoice has not been received.
8.1.13. Payments of Invoices

The following steps are followed:

i)Invoice is received by SG and is forwarded to finance department for checking against the delivery note. For services rendered, invoice will be forwarded to the respective program officer to certify for services received.

ii) Finance will then raise a serially numbered payment voucher and a cheque. This will be attached to

- Purchase requisition,

- CBA

- LPO and

- Delivery note.

iii) The payment documents will then forwarded to the DOFHOF for approval

iv) Then forwarded to SG for authorization and signing of the cheque

v) Then the payment is forwarded to a NEC member for the second signature.

vi) After the cheque is fully signed, it is returned to finance for dispatch to the supplier.

vii) Finance department will recorded all dispatch cheques in a register, ready for collection by suppliers. Any supplier or his agent who comes to collect a cheque must sign for receipt.

viii) Inter-project and staff cheques will also be recorded in this register.
8.2. Payment for Utilities

All payments for non-purchase items must be supported by documentation e.g. letters, memos, field reports, requests, budgets, plans, etc. to authenticate the payment and the origin of the request.

The documentation should indicate the activity, program, donor codes and they will be approved by the respective program directors.


8.3. Authority Limits

To ensure proper controls are put in place, the following authority limits exist in the procurement procedure. This depends on the estimated single order value.
8.3.1. NEC Tender Committee

Purchase requisitions that are estimated to be above Ksh. 1.5million shall be referred to the NEC tender committee, comprising of:

1. The chairman Finance Committee -Chairman

2. The chairman Development Committee- member

3. The chairman Health Committee- member

4. The chairman Disaster Committee- member

5. The SG- member

6. The DOFHOF- member

7. The logistics officer –Secretary

8. Director of the requesting department- for technical advice
This committee will convene on a need basis. All quotations must be sealed and sent to the chairman of the tender committee. The tender committee will open the tender box and select the most competitive supplier.
8.3.2. Management Tender Committee

All purchase requisitions that are estimated to be between Ksh. 250,000 and Ksh. 1.5million shall be referred to the management tender committee. All quotations must be sealed and sent to the chairman of the same. The tender committee will open the tender box and select the most competitive supplier.

The quorum of a tender committee is four persons. The composition of the same is as follows:
1. Directors HOD’S –From the requesting department

2. DirectorHOD- Other than the one from the requesting department to chair the meeting.

3. Secretary General or her/his appointee- member

4. Director, Finance and AdministrationHead of Finance- member

5. Logistics Officer – Secretary to the committee

6. Program Officer- For technical advice if needed
8.3.2.1. Convening the Management Tender Committee Meeting

i) The quorum of the tender committee shall be four.

ii) The chairman shall have powers to co-opt one or two more officers to the committee from time to time for the smooth performance of the committee in which case the quorum of the increased membership of the committee shall be five.

iii) The tender committee shall meet as often as there is business to transact and in any case not later than once in a month (every second Tuesday).

iv) Should the committee fail to meet at least once in a month due to lack of quorum, a lower number of the membership shall be allowed to meet and transact business and the rest of the absent members shall be bound by the decisions taken thereat.

v) Minutes of the committee shall be kept as a permanent record of the proceedings of the committee and where required make them available to the legitimate organs and officers of the Society to peruse and audit.

vi)The tender committee may decide to exempt certain items of supply or service from the tendering procedures due to their urgency, nature or because the quantities are too small to justify their being tendered.
8.3.3. Secretary General

The Secretary General must approve CBAs and LPOs that have a value of Sh. 1,500000,000 and above.
8.3.4. Director, Finance and AdministrationHead of Finance

The DOFHOF will approve CBAs and LPOs of a value of up to Sh. 5001,000,000
8.3.5. Logistics Officer

The logistics officer will process a CBA and select a supplier for a value up to Sh. 250,000
8.4 Purchasing through the IFRC

KRCS may choose to procure through the IFRC in order to take advantage of the VAT exemption and their technical expertise.

i) The procedure of raising a purchase requisition and approval is same as above.

ii) IFRC will undertake to shop for the most cost effective supplier after KRCS logistics officer puts a Request for Purchase.

iii) IFRC will prepare a CBA at an agreed fee and send it to KRCS, where, the latter will either agree to the recommended supplier or suggest another

iv) KRCS will authorize IFRC to procure the goods/services. The supplier is advised to deliver the goods to the KRCS premises

v) The delivery note is signed and forwarded to IFRC

vi) IFRC pays the supplier and KRCS repays IFRC for the cost. In addition KRCS is required to pay an agreed fee to IFRC for administration cost.
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