AGENCY FOR ASSISTANCDEVELOPMENT OF AFGHA

PROCUREMENTS AND LOGRULES AND REGULATION

Revised: June 2011

Dr Roohullah Shabon

Date: October 2011

1

AGENCY FOR ASSISTANCE AND

DEVELOPMENT OF AFGHANISTAN (AADA)

PROCUREMENTS AND LOGRULES AND REGULATION

Revised: June 2011

Approved by: Dr Roohullah Shabon

President/CEO

Date: October 2011

E AND NISTAN

PROCUREMENTS AND LOGISTICS RULES AND REGULATIONS

2

Contents

Procurements and Logistics Rules and Regulations ...................................................................................... 1 1. Procurement ................................................................................................................................................. 4

1.2 Procurement Functions ..................................................................................................................... 4 1.3 Authorization Guidelines ................................................................................................................... 5 1.4 Approval Levels .................................................................................................................................. 5 1.5 Donor Regulations .............................................................................................................................. 5 1.6 Procurement Process ........................................................................................................................ 5

1.6.1 Needs Identification ....................................................................................................................... 5 1.6.2 Requisitioning Policy...................................................................................................................... 6 1.6.3 What to Procure ............................................................................................................................. 6 1.6.4 Requisition Form ............................................................................................................................ 6 1.6.5 Considerations for Requisition Processing ................................................................................ 6 1.6.6 Supplier Selection and Determination of the Source of Procurement .................................... 7 1.6.7 Solicitations for Goods and Services .......................................................................................... 7 1.6.8 Closing Date for Acceptance of Bids ........................................................................................... 8 1.6.9 Rejection of Offers/Proposals....................................................................................................... 8

1.7 Source of Procurement (Local Or International) ............................................................................ 8 1.8 Solicitation and Processing Of Quotations ..................................................................................... 8

1.8.1 Guidelines/Considerations in Supplier/Bid Solicitation: ............................................................ 9 1.8.2 Securing Quotations ...................................................................................................................... 9 1.8.3 Receipt of Bids ............................................................................................................................. 10 1.8.4 Additional Guidelines for Sealed ................................................................................................ 10 1.8.5 Cost Analysis ................................................................................................................................ 10 1.8.6 Purchase Orders and Contracts ................................................................................................ 10

1.9 Composition of a Purchase Order .................................................................................................. 11 1.10 Amendments to Contracts ............................................................................................................... 11 1.11 Contract Formulation Guidelines .................................................................................................... 11

1.1.1 Basic Contents 0f a Contract ...................................................................................................... 12 1.2 Delivery of Goods/Services ............................................................................................................. 13 1.3 Return Procedures ........................................................................................................................... 14 1.4 Payment Procedures ....................................................................................................................... 14 1.5 Payment Methods ............................................................................................................................ 14 1.6 Vendor File ........................................................................................................................................ 15

2. Ethical Guidelines ...................................................................................................................................... 15 2.1 Relationships with Suppliers ........................................................................................................... 15 2.2 Ethical Conduct for AADA Staff During Procurements ............................................................... 16

3. Subcontracting For Goods/Services/Technical Services ..................................................................... 16 4. Procurement Procedures .......................................................................................................................... 17 5. Basic Procurement Forms ........................................................................................................................ 18

5.1 Requisition Form :( Mandatory for Purchases over Us$100) ..................................................... 18 5.2 Request for Quotation ...................................................................................................................... 18 5.3 Bid Summary Sheet ......................................................................................................................... 19 5.4 Purchase Order :( Mandatory for purchases over USD 4,999 or AFS 24999) ........................ 19

6. Allow ability of Costs .................................................................................................................................. 19 7. Reasonable Costs ...................................................................................................................................... 19 8. Warehousing Management ...................................................................................................................... 20

8.1 Warehouse Inspection ..................................................................................................................... 20 8.2 Acceptance of Materials / Goods ................................................................................................... 20 8.3 Storage of Goods ............................................................................................................................. 21 8.4 Stock Record and Control: .............................................................................................................. 21 8.5 Monitoring .......................................................................................................................................... 22 8.6 Procedure for Releasing Goods ..................................................................................................... 22 8.7 Waybill ................................................................................................................................................ 22 8.8 Transportation of Goods .................................................................................................................. 22

9. Vehicles Management ............................................................................................................................... 23

3

9.1 Types of Vehicles in AADA ............................................................................................................. 23 9.1.1 Personal vehicles of staff ............................................................................................................ 23 9.1.2 Rented Vehicles ........................................................................................................................... 23

9.2 Technical and Safety Rules for AADA Drivers ............................................................................. 24 9.2.1 Body Checking of the Vehicles .................................................................................................. 24 9.2.2 Mechanical check: ....................................................................................................................... 24 9.2.3 Vehicle inspection ........................................................................................................................ 24 9.2.4 Driving conduct and safety ......................................................................................................... 24

9.3 Tool kit ................................................................................................................................................ 24

4

1. Procurement

One of the main responsibilities of the Logistics/Procurements Unit of AADA main office is to assure that goods and services required to support program operations are supplied at the right time, with adequate quality for the best overall cost. It also acts as the main contact between the suppliers and other departments (Finance and Program) in the central office.

The Logistics/Procurements Unit serves as the channel through which requests regarding goods and services are handled. It is responsible for initiating and maintaining good relationships with suppliers. Negotiations with suppliers should only be undertaken by logistics/procurements staff duly authorized. In consultation with President/CEO, only the General Director or his designee, Operation Manager, Project Manager and Finance Manager are authorized to make/assign and dismiss committee for the purchase of goods and services.

The Logistics/Procurements Unit is responsible for developing a wide range of sources to provide adequate competitive bids of comparable overall quality and cost. They should maintain an up-to-date database of qualified vendors that meet objectively justifiable minimum requirements. Bids or quotations submitted to the Logistics/Procurements unit should be kept confidential.

It is the responsibility of the procurement/logistic staff to assure delivery of goods and services by the supplier are done on a timely manner, clearance of any imported materials or equipment and negotiations of any returns or adjustments, when necessary. The Logistics/Procurements Unit should also maintain open line of communication with departments (Finance and Program) that have made requests for the purchase of goods and services.

The following is a detailed step by step procedure that must be completed on all purchases for the AADA. If in

any event this procedure is in conflict with those of a donor, the donor requirements will take precedence.

For Staff procurement authorization, refer to financial AADA authorization chart:

In general, the General Director will take approval of any procurement above $ 5000 from President/CEO. Purchases exceeding $10,000, or are classified as capital assets and need approval of

President/CEO and one board member.

1.2 Procurement Functions

The following brief job descriptions represent the main responsibilities required of a procurement operation:

• Coordinates local and (international if required) procurement activities

• Hire, train and supervise logistics/procurement staff involved in procurement

• Adhere to established policies and procedures

• Update the General Director/Project Manager and finance manager/officer of significant economic issues

• Contact with suppliers, if necessary

• Reviews purchase requests for completeness and approvals

• Prepares requests for quotations to be sent to suppliers

• Analyze quotations and prepare bid analysis

5

• Maintain product and supplier information

• Negotiate with suppliers, within limits of authority

• Meet with suppliers, if necessary

• Follow up with suppliers to ensure prompt delivery

• Clear imported goods from government customs

• Perform other functions are required

1.3 Authorization Guidelines

Policy: Only those staff that has been given approval authority may commit AADA to a purchase order or other form of contract.

1.4 Approval Levels

See the finance section, Article 6.

1.5 Donor Regulations

AADA procurement policies and procedures as outlined in this manual have been developed to assure general compliance with standards and various donor regulations. However, additional donor requirements not outlined in this manual should be considered and it is responsibility of Program Managers to inform AADA management about any changes or additions about donor specific requirements regarding procurements.

1.6 Procurement Process

1.6.1 Needs Identification

Planning of requirements by the requestor must be at the forefront of all purchases. Most supply requirements are anticipated and result from the program budget.

If exceptional circumstances prevent planning and early notification of the requirement, it is still required that purchasing processes and procedures are followed. If this is not possible because of urgency, approval should be sought from the Authorized Signatories and the reasons and circumstances for the urgency should be fully documented.

Before initiating any procurement, it should be a standard measure to check if the goods, and in particular assets, are available from other sources than procurement (e.g. redeployment).

In addition, where appropriate, an analysis is made of lease and purchase alternatives to determine which would be the most economical and practical procurement for the donors.

The procurement staff/buyer should provide planning support i.e. he/she supports and advises the requestor in completing the requisition and gives appropriate input as regards to:

• Quality • Delivery expectations • Detailed specifications • Policy and procedures

6

1.6.2 Requisitioning Policy

A formal written request should be made by a department to the Logistics/Procurements Unit in order to initiate the procurement process.

If the value of the purchase is above USD100, a Requisition form is required to be filled in. Sufficient detail and proper approval are the most important elements of a complete Requisition form.

If the value of the amount to be purchased is below USD100, the procedures will be proceeding without any Requisition and requisition form should be filled and authorized later. Form but only for allowable items. Fancy and other restricted items should not be included in petty cash procedure.

1.6.3 What to Procure

The procurement of any item should be based on the actual needs of the program. Hence, it is important to avoid purchasing unnecessary items. For purposes of this guideline, needs is defined as project costs such as equipments, commodities, supplies and services required to achieve the objectives of the program and are allowed to be procured by the donors.

1.6.4 Requisition Form

A completed Requisition Form is required for all purchases in excess of $100.00. The Procurement Requisition Form must include:

• A complete description of the item and unit for each item

• Quantities required estimated cost and budget/codes.

• Stock position for each item.

• Date required.

• Special shipping requirements, if any.

• Whether the purchase is to be made locally or internationally.

• Suggested vendor, if known

• Obtaining all required signatures which are indicated in Requisition Form.

1.6.5 Considerations for Requisition Processing

Upon receipt of the request from the other departments, the Logistics’ staff should make sure that:

• Check the requisition for authorization and completeness of the specifications and determines whether bids, signatures or additional information are required.

• Review of the specifications detailed in the requisition like requests to purchase from a sole source, for quantity greater than required, those inconsistent to actual needs or insufficient detail. Any changes to the purchase requisition should be discussed with the department who made the request together with appropriate approval.

• The Logistics/Procurements unit should maintain a list of suppliers. The requestor may recommend a source, but the selection of vendors to be solicited is solely responsibility of the Logistics/Procurements staff assigned to do the procurement.

7

• When the requisition is presented as “urgent”, or mentioned ASAP (As Soon As Possible) the timeframe for the requirement should be clearly stated. All departments should make every effort to minimize rush transactions.

The procurement staff should open a subject file for use during the bidding process if it is required to be conducted.

In order to avoid unnecessary delays and confusion, open lines of communication between Logistic/Procurements and other departments should be maintained. This is to move the requisition efficiently.

1.6.6 Supplier Selection and Determination of the Source of Procurement

Suppliers List

The Logistics/Procurements Unit should maintain a database of potential and current suppliers. The following basic information should be present in each file whenever possible:

a) Full name and addresses

b) Product information

c) After sales service

d) Quality of products, delivery time, payment terms, warranties

e) Packing and shipping facilities

f) Company profile, including financial data

g) References

h) Past performance record

1.6.7 Solicitations for Goods and Services

Once the review process for requisition is done, suppliers are identified. The choice of suppliers to be approached is made by the Logistic/Procurements unit, with suggestions from the department who made the requisition.

After researching possible sources, the Logistic/Procurements Unit forwards the RfQ (Request For Quotation) to three or more vendors and follows up to obtain timely bids and to work out details.

The following information should be included in the Request for Quotation to the supplier:

• Date when reply is requested.

• A clear and accurate description of the technical requirements for the material, product or service to be procured. In competitive procurement, such a description shall not contain features, which unduly restrict competition. The specific features of "brand name or equal" descriptions that bidders are required to meet when such items are included in the solicitation.

• A description, whenever practicable, of technical requirements in terms of functions to be performed or performance required, including the range of acceptable characteristics or minimum acceptable standards.

• Quantity of each item required

• Delivery date by which items are expected

8

• Packing and shipping requirements (if any)

• Terms and methods of payment

• Other requirements the bidder/offer or must fulfill and all other factors to be used in evaluating bids or proposals.

1.6.8 Closing Date for Acceptance of Bids

The closing date for each RfQ must have at least three days to provide the bidders sufficient time to prepare responsive bids.

1.6.9 Rejection of Offers/Proposals

The RfQ should contain a statement concerning AADA’s right to accept or reject offers/proposals prior to the award of the order/contract. Such action should not be taken for the sole purpose of obtaining lower prices.

1.7 Source of Procurement (Local Or International)

Several factors have to be considered when determining whether to purchase the item locally or source them out of the country:

• Item specifications

• Product availability

• Overall cost

• After sales service

• Procurement restrictions imposed by donors

• Emergency requirements

However, due consideration is to be given to the procurement of goods and services in the area of operation to support the economy of local host country. It is also important that provided local products/services are of adequate quality and offer competitive price.

If the item required needs to be sourced internationally, solicitations should have a wide geographical distribution, i.e. not limited to a procurement agent or vendors domiciled in the country where AADA’s headquarter is situated. However, if the program is funded by USAID, the source, origin, nationality requirements of the grant should be complied with. Documentation is always required regarding inability to meet delivery dates, substitutions, sole source reasoning and failure to meet required number of bid responses.

1.8 Solicitation and Processing Of Quotations

Policy: AADA’s policy is to conduct procurement transactions, which provides free and open competition. This would require three or more suppliers to solicit for written quotations.

The Director General or his designee may make exceptions from the competitive bidding rule only in the following cases:

• Prices or rates are fixed pursuant to national legislation or by regulatory bodies (e.g. Fuel).

9

• Standardization of supplies, equipment or spare parts render competition impracticable like toner cartridges for a particular photocopier.

• When the required number of sources of the items are unavailable.

• When emergency factors require a break from policy to achieve certain objectives in a limited amount of time.

• When the item is not available in the open market at the time it is needed.

• RfQ/RfP would not give satisfactory results or would not be deemed in the interest of the organization, as e.g., a contract is to be extended and changing the entity would not provide continuity in the work.

• The proposed contract relates to procurement from a sole source of supply or services (e.g. sole authorized vendor).

• Any other situation that can be documented to justify lack of competitive bidding.

1.8.1 Guidelines/Considerations in Supplier/Bid Solicitation:

Preference, to the extent practicable and economically feasible, should be given for products and services that conserve natural resources, protect the environment, and are energy efficient.

Positive efforts shall be to utilize small businesses, minority-owned firms, and women's business enterprises, whenever possible. AADA shall take all of the following steps to promote and achieve this goal.

Ensure that small businesses, minority-owned firms, and women's business enterprises are used fully practicable.

Make information on forthcoming opportunities available and arrange periods for purchases and contracts to encourage and facilitate participation by small businesses, minority-owned firms, and women's business enterprises.

Consider in the contract process whether firms competing for larger contracts intend to subcontract with small business, minority-owned firms, and women's business enterprises.

Encourage contracting with consortiums of small business, minority-owned firms and women's business enterprises when a contract is too large for one of them to handle individually.

Use the services and assistance, as appropriate, of such organizations as the Small Business Administration and Department of Commerce's Minority Business Development Agency in the solicitation and utilization of small businesses, minority-owned firms and women's business enterprises.

1.8.2 Securing Quotations

a) Bids should be solicited only after a decision has been made to procure goods and services through the standard requisition process.

b) Subject to donor regulations, phone bids are applicable for purchases above USD100 but below USD200. Written quotations are required for purchases above USD200. The following points should be made clear to the supplier:

� Discussions held between AADA staff and the supplier before conclusion of the contract will not bound AADA for execution of any term or condition in the contract.

10

� AADA is not under any obligation to cover any cost incurred by the supplier prior to confirmation of order, unless otherwise agreed to in advance and in writing by the Main Office.

1.8.3 Receipt of Bids

Quotations/Bids received should be immediately brought to the person designated to receive them for recording/safekeeping. All bids received should be kept confidential.

1.8.4 Additional Guidelines for Sealed

The Logistics/Procurements Unit should be aware of donor requirements for sealed bidding. For USAID, once the procurement goes beyond the small purchase threshold of USD100,000 sealed bidding process should be undertaken by the grantee.

Bids received prior to the closing time specified in the RfQ should be kept secure and unopened until the bid opening date. However, bids maybe withdrawn or modified prior to bid opening.

A late bid will not be considered even though it is due to circumstances beyond the bidder’s control. It will be returned unopened to the bidder. A late bid will only be considered if the cause of it becoming delayed is attributable to the contracting agency.

Sealed bidding shall be open by at least two AADA procurement staff, which shall record at a minimum the name of the bidder and the total bid.

1.8.5 Cost Analysis

Upon receipt of the bids or quotes, the procurement staff reviews them for compliance with the specifications.

Several factors should be considered when comparing the overall cost of an offer. Among them are price, quality, delivery, terms of payment, insurance and transportation costs, packaging and handling costs, source (local or international) of procurement, among others.

A “responsive” bid is one that complies with all the terms and conditions of the RfQ without material modification. A material modification is one which affects in any way the price, quality, scope or completion date or which limits in any way responsibilities, duties or liabilities of the bidder or any rights of AADA as any of the foregoing have been specified or defined in the RFB.

No bidder is allowed to modify nonresponsive bids after bid opening to make them responsive. However, AADA may request the bidder to provide clarifications of the bid as long as no material modification is made.

A comparative analysis of local and international procurement of assets and large purchases must be documented all the time. The process of cost analysis should be assigned to properly trained staff, as this requires good judgment. This will provide the authorized entity and other delegated individuals to approve the analysis done prior to confirmation of the order.

1.8.6 Purchase Orders and Contracts

A purchase order is prepared and issued to the vendor, upon receipt of the approval in writing from all authorized personnel. The purchase order gives the supplier authorization to deliver and invoice the

11

ordered goods or services, and therefore becomes a commitment for the amount and value of those items.

Purchase orders are based on the approved Requisition Form and Bid Analysis.

Contract is a deliberate agreement between two or more competent persons/parties to perform or not to perform a specific act or acts. A Purchase Order when accepted by the vendor becomes a contract.

The Purchase Order or Service Contract shall be awarded to the qualified bidder whose bid is evaluated to be the lowest offer/proposal meeting the requirements. In other words, any criteria specified in the solicitation documents, such as quality, delivery time, payment terms and compatibility with existing equipment, may be used to evaluate the offers/proposals.

Before issuing a purchase order, the vendor is contacted to verify the bid, availability of all items, shipping procedures, special handling, shipping date, and method of payment.

Prior to issuing a purchase order, it must be verified that there are sufficient funds remaining in the grant line item. This can be accomplished by reviewing the most recent financial statement to determine the amount of funds already spent. All open purchase orders must then be reviewed in order to determine amounts that have been obligated.

1.9 Composition of a Purchase Order

A list of basic information required in a purchase order follows:

a) Date of purchase order

b) Date goods or services are required on site

c) Payment terms

d) Full name and address of supplier

e) Item numbers and quantity of each item required

f) Units requested for items like piece, set, liter

g) Full description of goods and services

h) Total price of the purchase order

i) Signature of authorized personnel

1.10 Amendments to Contracts

Approval of an amendment to an existing contract like increasing the scope of work is required to be obtained from authorized personnel.

1.11 Contract Formulation Guidelines

The establishment of contracts of any kind in any central or provincial office is normally the responsibility of the Logistics/Procurements Unit, although in some situations, other departments may be delegated by the Operation Manager under the supervision of General Director for this responsibility.

12

1.1.1 Basic Contents 0f a Contract

The following briefly covers some of the more essential elements of the standard contract:

a) Construction contracts

� Statement of intent

� Specifications

� Drawings, blueprints, schedules

� Insurance provisions

� Definitions of responsibility

� Permits, licenses

� Inspection requirements

� Subcontracting regulations

� Penalty and escape clauses

� Statement of warranty

� Payment timetable

� Performance bonds

b) Lease agreement for property

� Identification of lessee and lessor

� Location of property

� Description of property

� Terms and conditions of the lease

� Payment amount and period

� Terms for renegotiation of the lease

c) Lease agreements for equipments

� Identification of lessee and lessor

� Description of equipment

� Terms and conditions of the lease

� Payment amount and period

� Terms for purchase or optional renewal

� Delivery, maintenance and other special charges

� Conditions or restrictions on use

d) Lease agreements for vehicles

� Identification of lessee and lessor

13

� Description of vehicle

� Terms and conditions of the lease

� Payment amount and period

� Terms for optional renewal

� Maintenance and other special charges

� Conditions or restrictions on use

e) Contracting for individuals for services

� statement of work

� cost provisions

� allowances and benefits

� advance payments provisions

� worker’s compensation coverage, if applicable

1.2 Delivery of Goods/Services

The responsibility for the coordination of clearance of goods is with the Logistic/Procurements Unit. This responsibility also includes the determination, before confirmation of order, of relevant regulations regarding the assessment of import duties, levies or taxes on purchased items. It is also the responsibility of the Logistic/Procurements unit to assure that goods move in an expeditious manner from the supplier to the central/provincial offices through follow-up.

The Field Office will follow-up with the vendor prior to shipping to ensure deadlines will be met and to keep the freight forwarder and the Operations Manager informed as to status at all times.

For international, and if applicable, local procurement, the appointed freight forwarder shall be instructed to send at a minimum the following documents:

• advance shipping advice by fax or e-mail

• waybill

• invoice and packing list

• other documents as required

Upon receipt of material, the Field Manager (if the items are received in the site rather than the central office) inventories the material against the purchase order and forwards the original packing slips with the signed inventory to the AADA Central Office.

If the order is incomplete, a back order report is prepared containing:

• Date of original order.

• Purchase Order Number

• vendor

• Description of items not received.

14

• Quantity ordered.

• Quantity received.

• Date received.

The vendor is then contacted to determine the reason for delay and confirm new delivery dates.

The process described above is continued until all items have been received, all packing slips, verifications, and invoices have been received, and payment in full to the vendor and freight forwarder has been made. The file is then closed and transferred from the pending files to the central file cabinet for storage.

1.3 Return Procedures

It sometimes becomes necessary to return materials because the goods are no longer required, excess material was ordered, or the material as received is not acceptable. The requisitioning department is responsible for the identification and return of all items requiring return, in coordination with the Logistic/Procurement unit. The requisitioning department should provide a list of items to be returned to the Logistics/Procurements Unit who will negotiate return of the materials to the supplier. If the return cannot be negotiated, the matter should be referred to the Operation Manager or GeneralDirector.

1.4 Payment Procedures

For goods and materials:

� If not already received, invoices for any unpaid balances are requested.

� If all the goods ordered were received, the invoice is verified and, if complete, the invoice with a payment request is forwarded to the Finance Department for payment. If the goods are not all received, a corrected invoice is requested.

� After receipt of a complete and correct invoice, a Payment Request is prepared. Any advance payment made to the supplier should be taken into consideration when preparing the payment request. Originals of the following must be attached to the Payment Request: purchase order, request for bid, vendor's bid, requisition, invoice, cash advance voucher (if applicable) and Letter of Approval, if needed. These documents are then submitted to the Accounting Department for processing.

For Contracts

The contract should be closed out in an orderly fashion upon satisfactory completion of work of the contractor. Final payment to the contractor is withheld until the contractor provides evidence that it has met all of its obligations under the contract and all required certifications (including acceptance of the work by AADA) have been executed.

1.5 Payment Methods

Several (available) payment options may exist depending upon agreement reached between a central office and the supplier. The payment option should always be clearly detailed in the purchase order as follows:

a) Direct payment by cheque.

15

b) Wire transfer directly from the central bank offices accounts of applicable or available.

c) Cash payment when wire transfers or direct payment by cheque is not possible. This should be avoided unless there is no other option.

d) Wire transfer from a central bank account on behalf of the central office.

1.6 Vendor File

A vendor file would contain the following:

a) Procurement Requisition.

b) Bids/Quotes.

c) Purchase Order.

d) Invoice stamped “Paid” to avoid any possible double payments.

e) Shipper's Bill.

f) Receipt of Shipment Confirmation has to be available or invoice needs to be stamped “Received” with receiving party signature and date.

g) All related reconciliation material.

Correspondence Letters

a) Memos/Fax’s

b) Records of Conversations

c) Donation letter (if applicable)

d) Packing list

e) Pro forma invoice

f) Other related documents if applicable or available

Procurement records and files should include the following at a minimum: (a) basis for contractor selection, (b) justification for lack of competition when competitive bids or offers are not obtained, and (c) basis for award cost or price.

Operations Manager or his/her designee verifies the inventory, and if complete, files in the vendor file with related purchase order material.

Throughout the process, the Operations Manager or his/her designee audits the file against the Procurement File to ensure all required documents are received in a timely fashion and are filed appropriately.

2. Ethical Guidelines

2.1 Relationships with Suppliers

The following should be observed when dealing with vendors and their representatives:

a) Give fair and equal treatment to their suppliers and representatives.

b) Provide equal opportunity for all suppliers to make quotations.

16

c) Keep all quotations received confidential.

d) Keep vendors informed of current and anticipated requirements.

e) If, for any reason, one vendor is allowed to re-quote, all competitors should be given the same opportunity.

f) Remain free from obligations to any supplier.

2.2 Ethical Conduct for AADA Staff During Procurements

AADA maintains a code of standards of conduct that shall govern the performances of its employees engaged in the award and administration of contracts. No employee, officer, or agent shall participate in the selection, award, or administration of a contract supported by donor funds if a real or apparent conflict of interest would be involved. Such a conflict would happen when the employee, officer, agent, any member of his/her immediate family, his/her partner, or an organization employs or is about to employ any of the parties indicated above, has a financial or other interest in the firm selected for an award. AADA officers, employees, or agents shall neither solicit nor accept gratuities, favors, or anything of monetary value from contractors, or parties to sub-agreements. These standards shall provide for disciplinary actions to be applied for violations of such standards by AADA officers, employees, or agents.

3. Subcontracting For Goods/Services/Technical Services

• The following provisions shall be adhered to for subcontracting:

• The process of contractor selection shall be conducted in a manner to provide, to the maximum extent practical, open and free competition. AADA should be alert to organizational conflicts of interest as well as noncompetitive practices among contractors that may restrict or eliminate competition or otherwise restrain trade. In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, invitations for bids, and or requests for proposals should be excluded from competing for such procurement. Awards shall be made to the bidder or proffer whose bid or offer is responsive to the solicitation and is most advantageous to AADA, price, quality and other factors considered. Solicitations shall clearly set forth all requirements that the bidder or proffer shall fulfill in order for the bid or offer to be evaluated by AADA. All bids or offers may be rejected when it is in AADA's interest to do so.

• Contracts shall be made only with responsible contractors who possess the potential ability to perform successfully under the terms and conditions of the proposed procurement. Consideration shall be given to such matters as contractor integrity, record of past performance, financial and technical resources or accessibility to other necessary resources.

• The type of procuring instruments used (e.g., fixed price contracts, cost reimbursable contracts, purchase orders, and incentive contracts) shall be appropriate for the particular procurement and for promoting the best interest of the program or project involved.

• Contracts should be written in English unless AADA agrees otherwise.

Contracts in excess of the small purchase threshold shall contain contractual provisions or conditions that allow for administrative, contractual, or legal remedies in instances in which a contractor violates or breaches the contract terms, and provide for such remedial actions as may be appropriate.

All contracts in excess of the small purchase threshold shall contain suitable provision for termination by the recipient, including the manner by which termination shall be effected and the basis for settlement. In addition, such contracts shall describe conditions under which the contract may be

17

terminated for default as well as conditions where the contract may be terminated because of circumstances beyond the control of the contractor.

4. Procurement Procedures

The following is a detailed step by step procedure that must be completed on all purchases for the AADA. This procedure is meant as a guide, and while some exceptions are anticipated for emergencies, it should be followed as closely as possible. If in any event this procedure is in conflict with those of a donor, the donor requirements will take precedence. Based on 21 article of Afghanistan procurement law, the RFQ (request for quotation) method is applicable for all goods or services which are under Afs, 500,000. Less than Afs, 3000 needs single source purchasing with one person’s signature, 3000 up to Afs,15,000 2 person’s signature but with three quotations, and 15000 up to 500000, three person’s signature with three quotations. Our procurement policy should be arranged within these ranges.

• All Logistics/Procurements and Administration staff and those others specifically authorized by AADA management may make direct purchases using the petty cash fund for total orders of less than USD 100 or AFS 5000, but later on completing Requisition Form and obtaining approval of each expense needs authorization according to the list of authorized signatories.

• In the event that the order cannot be purchased, or paid for, at a site and must be procured through Central office, a Requisition Form must be completed and it must be sent to main office for further execution.

• If a purchase is less than the USD 100 or AFS 5,000, but cannot be paid for out of petty cash and requires payment by cheque, then a Requisition Form must be completed before purchasing the item.

• Any order, regardless of its value that is considered by a specific donor to fall into the category of unallowable items will not be processed. It is the responsibility of each authorized individual to be aware of the specific requirements related to the grants which fund your program as to what costs are unallowable. The U.S. Government grants have detailed listings of those items that cannot be purchased under any condition, or requires advance approval from the donor.

• All purchases require a requisition form, and it must be authorized.

• A requisition form must be completed and given to the Logistics/Procurements Department.

• Three written bids are mandatory for each purchase when exceeding USD 99 or AFS 4999. In the event that the specifics of the situation does not allow for the required written bids, the person completing the requisition must provide a detailed justification in the comments section of the Requisition Form.

• Once written bids have been completed, Logistics/Procurements must then complete the Procurement Bid Summary/analysis. It is normally the responsibility of the Logistics/Procurements Department to return the requisition form with the written quote sheet and bid summary to the issuing individual to determine, and justify which vendor with whom the order will be placed. In the event that the vendor awarded the bid is not the apparent low bidder, proper justification must be given for the selection of the vendor.

• It is the responsibility of the Finance Department to insure that sufficient funds are available to pay for the purchase, and that all donor requirements have been met under the terms of the specific grant to be charged. In the event that it does not appear that there are sufficient funds to pay for the purchase, or that the purchase is not allowable under the terms of the grant, Finance must discuss the issue with the person placing the requisition.

18

• If agreement cannot be reached between the individual placing the order and the Finance Department, approval must be received from the Director General or Board of Directors prior to the purchase being made.

• All purchases greater than USD 499 or AFS 24,999 require an issued purchase order.

• Three written bids must be solicited from prospective vendors. Approval in writing by the Controller and the authorized signatories must be obtained prior to purchase. All records of bids and subsequent purchases should be maintained in the AADA Central and Field Offices for review and subsequent audit.

• As each donor has different guidelines and requirements in determining capital assets, “attractive” items, each individual is responsible for knowing the requirements or consult the Finance Department to make the appropriate determination.

• All purchases must meet the criteria mentioned above.

5. Basic Procurement Forms

5.1 REQUISITION FORM :( MANDATORY FOR PURCHASES OVER US$100)

• Without any exception, it is mandatory to execute separate Requisition Form for each item which is going to be charged to separate budget line and separate grant.

• As most items on the form are self-explanatory, it is not necessary to give a line-by-line description of how to complete the form. Generally, more detail provided under the item description will make the process easier. Please be aware that the U.S. Government requires justification for procurement of items based on specific trade or brand names. Obviously, if you are looking for replacement parts for a particular item, you will need those authorized by the manufacturer.

• Please provide all information required as stated in the comment section. It is especially important that any information that would require you to choose other than low bid must be detailed and given to each prospective vendor. For example, if there is a specific time of delivery required, it must be listed. If this information were not provided to the vendor, you would not have justification for selecting another bidder based on the delivery time.

• The person making the requisition shall keep one copy and give the original one to the Logistics/Procurements Department.

• Logistics/Procurements unit will keep one copy for their internal record keeping.

• Once Logistics/Procurements unit has completed the purchase order, the original copy of the requisition will be attached to the purchase order. In the event that a purchase order is not used, one copy of the requisition will be attached to the invoice or the request for payment.

5.2 Request for Quotation

• AADA has developed sheet for Request for Quotation. The person who requests any type of bid should use this sheet and request the vendor to provide him/her the filled sheet of Request for quotation stamped and signed.

• Please insure that the description provided in Request for Quotation is sufficient and adequately covers the requirements relating to brand name items or unallowable items.

• The Logistics/Procurements Department is normally responsible for the completion, distribution and collecting of this sheet.

19

5.3 Bid Summary Sheet

• This summary page is intended to provide a side by side comparison of the information contained on the received Request for quotation from suppliers.

• Logistic/Procurement unit is responsible for forwarding the summary to the individual who is authorized for final decision to select one supplier.

• If the person placing the order determines that the order should be placed with other than the apparent low bidder, it is that person’s responsibility to fill in the section of recommended vendor and the reason why that vendor was chosen. If you are unsure as to the proper procedure for choosing a recommended vendor, please discuss the issue with the Operation Manager.

• Once the vendor is selected, the person making the choice should sign the first approved line. The summary should then be given to Operations Manager second approved line.

• Upon Operations Director approval of the summary, it is responsible to forward the summary back to Logistics/Procurements for that department to complete the purchase order.

5.4 Purchase Order :( Mandatory for purchases over USD 4,999 or AFS 24999)

• All information on the purchase order shall be taken directly from the bid summary. It is important that all line items be completely filled out, and should not vary from the information used to make the selection of the vendor.

• While it may seem redundant, each person, or department, who has signed the other forms, must also sign on the appropriate line. Once the purchase order has been sign, it will be returned to the Logistics/Procurements Department for presentation to the vendor.

• There should be an indication at the bottom line showing number of purchase order copies and which department/section gets the copy.

• For more than 500000 Afs we can use either the open tendering, or restricted tendering procurement methods based on environmental or social situations.

• Procurement procedure for more than 500000 Afs in open tendering (bidding) method: to be sure the availability of cost and budget, formation of specifications in bidding document (Shartnama),procurement announcement, distribution of bidding documents for applicants, taking security payment for Shartnama, opening of bids’ meeting, announcement of the responsive offer, procurement acceptance announcement, procurement agreement with successful bidder, and payments, ,

6. Allow ability of Costs

• All items that are requested to be purchased should meet donor rules and regulations and be allowable.

• All purchased items should be adequately documented.

7. Reasonable Costs

• A cost is reasonable if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs.

20

• In determining the reasonableness of a given cost, consideration shall be given to: • Whether, the cost is of a type generally recognized as ordinary and necessary for the

operation of the organization or the performance of the award. • The restraints or requirements imposed by such factors as generally accepted sound

business practices, arms length bargaining and terms and conditions of the award. • Whether the individuals concerned acted with prudence in the circumstances, considering

their responsibilities to the organization, its members, employees, clients, and the public at large.

8. Warehousing Management

A warehouse is a storage facility where goods are kept in secured, systematic, and orderly form. The type of building AADA should maintain will be described according to the standard specification of AADA. The warehouse size, nevertheless, should be wide enough to allow movement of goods as well as to provide free access to people who make inventories and labeling. A bigger capacity of a warehouse is convenient in times of ordinary working days and essential in times of emergency where ample space for movement of people or goods may prove vital to this type of situation. The question of extra or ample space can also become critical especially in times of fire where wider isles can serve as a safety mechanism to prevent the collusion of people and goods.

The parking area as well as the loading, and unloading space should also be strategically convenient in terms of easy carriage of goods in and abut of the warehouse. The loading, and unloading zone is also recommended to be a location closer to the storage area of the particular item. This is expected to save time and reduce any confusion of storage areas designated for each type of consignment.

The warehouse should be water right, and constantly checked for the smallest leakage. Fire prevention and detection methods are also to be put in place for an immediate response in case of fire. To this end, fire extinguishers are to be located at each corner of the warehouse in addition to other strategic locations that are identified as critical to combat fire. In order to prevent any possible cause for fire, smoking cigarettes and other use of fire is also prohibited inside the warehouse. The warehouse personnel especially the guards, who are exposed to extreme weather condition, should be provided with heating and cooling systems, to that the need for warmth should not encourage the use of fire around the warehouse.

8.1 Warehouse Inspection

The warehouse inspection will be carried out by the AADA senior management to ensure that the standard is according to the specification of AADA warehousing procedure, which follows the method for inspecting order, safety, and maintenance. The following areas may be looked for as a regular inspection mechanism.

• Systematic and safe storage of goods.

• The space between stacked goods is within specification, and that the aisles are clear for movement.

• Fire warning and prevention system is in place.

• Security procedures are followed.

• The method and system of reporting the findings shall be recorded in a warehouse inspection form and duly signed by the person that performed the inspection.

8.2 Acceptance of Materials / Goods

21

This calls for a strict and well-defied regulation as to the circumstances of acceptance of goods at the warehouse. This means that the hours of acceptance of delivery should be defined, and authorized individuals should be assigned to take responsibility for accepting the delivered goods. The acceptance procedure should include the responsible inspection team that will verify the quality and identity of the goods. The general inspection is an initial process that must take place upon arrival of shipment of the warehouse that involves the physical counting of items, and an evident check of damage, that does not require the special expertise of the technical unit.

Incoming shipments, weather delivered by a supplier, a handling agent or even AADA must be accompanied by a complete documentation that would enhance the smooth running of the hand over process. Upon successful delivery of goods that follows quality check, physical quantity check, and correct documentation, the warehouse in charge will sign the way bill that has a record of the actual shipment.

The responsibility and procedure for receiving the goods and shipment will include:

• Unload and unpack goods.

• Check goods against purchase order and bills.

• Make quality control.

• Fill out and sign the goods received form.

• Sign on the Goods Delivery Note or the waybill which should have specific description of the items to be delivered.

The waybill, which is the final confirmation of receipt of goods, may not be signed unless all the above mentioned criteria have been fulfilled.

8.3 Storage of Goods

In terms of a physical layout, a warehouse showing the physical storage location of each group of goods should be drawn in order to have a quick reference to the identify and location of different types of goods and materials. First In – First Out mechanism may be used in order to reach to old items sooner that the new ones. Thus, new arriving items should not be piles up on top of old ones, as this would create a difficulty in retrieving the ones underneath.

Goods should be stored with a maximum possible space between them in order to allow comfortable movement for storage or removal.

8.4 Stock Record and Control:

The method is carried out to control and register the movement of times in the warehouse, and is kept by the storekeeper. The stock record is manually entered in a Stock RecordBook and kept up to date by the storekeeper. Similarly, an identical record is kept in a computerized system updated by the warehouse in charge. This is also a procedure to help for itemization, storage, order and accountability.

Stock control is an essential system to check on all items store or held at the warehouse. It may be carried out at the end of each month and or at the end of project. It may be carried out as often as required as a measure against loss and negligence by staff, as well as to identify potential problems at the early stage.

An inventory control will indicate that:

22

• All records are correct, complete and up to date.

• To check and balance of the goods are accurate. This means that the incoming, outgoing and stored goods should tally and balance out.

• The physical numbers of items equal the documented.

• To check for damaged goods.

• To check for loss goods.

• Physically checking warehouse and update all stock cards with proper dates and expiry period.

• To provide loss and damage report to operations or logistic department.

8.5 Monitoring

A warehouse monitoring procedure will be used in order to complement and assist the standard stock recording and accounting record procedures. Monitoring may be used as a tool to prepare the groundwork for periodical accountability of goods in the warehouse. Beyond that, it will assist in the general control of the day operation of the warehouse.

The control of accountability and efficiency will be supported through this system by using a routine check on goods and accompanying documents. This means that documents, such as waybills have been individually filed according to their identity along with the justification and document of accountability.

8.6 Procedure for Releasing Goods

The storekeeper is essentially responsible to carry out this procedure; however, other person delegated with the responsibility may also perform this duty. The procedure will follow that the person releasing the goods has to see Goods Requisition Form and check the availability of goods in the store. The warehouse in charge will then prepare the goods release form will be signed by the person receiving the goods. The original of this form will accompany the goods to be signed by the receiving end, while the copy will be filed as a receipt against which the goods have been released.

The request be made by the department concerned but must be approved by the General Director and bear the signature of the authorized personnel, whose name and signatures would have been pre-issued and introduced to the warehouse keeper. This form is a justification for materials to leave the warehouse. Any person receiving and signing as such on the release form will hold accountable for those items.

8.7 Waybill

The destination warehouse representative may also use this document as a delivery and acceptance letter document. This is possible because it contains the same information as to the precise details of shipment contents, points of origin, and destination point. This form also indicates specific accountability of goods at each point of the commodity’s journey.

8.8 Transportation of Goods

The logistic department is the sole responsible for the transportation and distribution of the goods to the provincial offices and project site. To carry out this responsibility, the logistic department will also be responsible for the follow up of effective and efficient transportation of goods.

23

9. Vehicles Management

AADA furnishes the use of vehicles in order to create an easy mobility to staff that should make an efficient contribution to their day to day implementation of program activities.

AADA tries its best effort to allocate vehicle for different sections/department up on the availability of its status of available budget. This will make every department/sections enable to forward their daily activities as smooth as it is required by the program.

All vehicles that assigned to the different programs, as well as their services and management will be the sole responsibility of the administration/operation department. Administration/operation department will manage purchase/rent of vehicles, spare parts and all other related services. Each vehicle will have logbook in which users and drivers record the vehicle movements when the staff getting in and getting down in the vehicle. This expects to enhance efficiency as well as accountability of the vehicle’s performance and longevity.

None of the AADA staff can use the transport for their personal use except the top management staff, but they have to inform the Operations Manager. In cases of certain occasions such as marriage, or emergencies such as death of spouse, parent, and children, AADA will (upon availability of vehicles), provides transportation, for the staff of central office.

9.1 Types of Vehicles in AADA

Two types of vehicles are available in AADA for the staff and program:

9.1.1 Personal vehicles of staff

Top management staff may use their own vehicles for their daily transportation to office, attending meetings, or for any other official business. Instead, AADA will provide fuel and all other kinds of lubricates to their vehicles.

9.1.2 Rented Vehicles

AADA will rent the vehicles for the project sites and for the central office based on following terms and conditions.

• The owner of the vehicle will ensure that all the necessary documents of the vehicle are valid.

• The rented vehicle will be at the service of the AADA seven days a week, 24 hours per day, or as required by AADA.

• The rent of the vehicle will be paid on monthly basis at the end of the month.

• The owner is to provide the vehicle in full working condition, good tires including one spare.

• The following items are required as standard equipments and accessories, and should be on fully working condition while handing over the vehicle to AADA. These items are jack and handle, fully function electrical system, very good brakes, proper seat and working seat belts, loud horn, spare tire, working wind shelf wipers, all mirrors, and emergency tool kit.

• At least one week in advance written notice from AADA and two week- notice from the owner of the vehicle is required at the time of termination of thecontract between AADA and vehicle’s owner..

24

• AADA reserves the right to terminate the contract due to misbehavior by the owner, funding constraints, or any other uncertain circumstances.

9.2 Technical and Safety Rules for AADA Drivers

9.2.1 Body Checking of the Vehicles

• Inspect air pressure of tires.

• Check tightness of axle, bolts and nuts.

• Check that there is nothing big underneath the vehicle that is likely to hit the vital parts of the vehicles.

• Check the leakage of oil and water.

• Check tie rod, and see if front and rear lights as well as signals are working proper.

9.2.2 Mechanical check:

• Check the level of oil.

• Check radiator water level.

• Check brake and clutch fluid, as well as power steering fluid level.

• Check battery electrolyte level, terminal corrosion and tightness.

• Check v-belt tension and damage.

9.2.3 Vehicle inspection

• Make sure that the inside and outside rearview mirrors is positioned to allow comfortable vision of cars from behind and the sides.

• Start the engine and leave it on idle for a while to warm up the engine.

• Check the gauge, windshield wiper, and emergency indicators for proper function.

9.2.4 Driving conduct and safety

• Follow strict traffic regulations.

• Take traffic signs seriously, as a measure of prevention for loss of life and property.

• Observe the maximum speed (Not over 80).

• Avoid conversation while driving; this could be a cause for loss of concentration.

• Avoid smoking , drinking, or eating while driving.

• Avoid giving lift to strangers, avoid loading unidentified cargo.

9.3 Tool kit

Any vehicle rented with AADA should have the following

25

• Spare tire

• Jug

• Different types of screw drivers

• Bolts opener (handle)

• Brake fluid, engine oil

• Extra filters

• Fuel container for long trips

• Sleeping bag if required for long trips

• Tube

• Adhesive glue

Accountability After approval of President/CEO, Director General and Senior Program Manager and Provincial Managers are accountable for safeguarding employees and assets under their area of responsibility and for implementing this policy and procedure.