procurement guidelines for essential medicines · inn international nonproprietary names ......

Procurement Guidelines for Essential Medicines

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TABLE OF CONTENTS

Acronyms ................................................................................................................................... v

Glossary ................................................................................................................................... vii

Acknowledgments..................................................................................................................... ix

Foreword .................................................................................................................................... x

1. Introduction ........................................................................................................................ 1 1.1. Background ...................................................................................................................... 1 1.2. Purpose and Objectives of the Pharmaceutical Procurement Guidelines ........................ 3 1.3. Applicability of the Guidelines and Target Users ............................................................ 4

1.4. Version Change Control ................................................................................................... 4

1.5. Procurement Standard Operating Procedures .................................................................. 5 1.6. Definition of Procurement ................................................................................................ 5

1.7. Procurement Methods ...................................................................................................... 6 1.7.1. Open Bidding ....................................................................................................... 7 1.7.2. Restricted or Limited Bidding ............................................................................. 7 1.7.3. Competitive Negotiations (Request for Quotation with Negotiation) ................. 7

1.7.4. Request for Quotation without Negotiation (Request for Quotation) .................. 7 1.7.5. Direct Procurement .............................................................................................. 8

1.8. Strategic Objectives for Good Pharmaceutical Procurement ......................................... 10 1.9. Summary of Principles for Good Pharmaceutical Procurement .................................... 11

1.9.1. Separation of Key Functions .............................................................................. 11 1.9.2. Transparency and Formal Clear Written Procedures ......................................... 13

1.9.3. Procurement Limited to Essential Medicines List or Formulary List ................ 13 1.9.4. Procurement by Generic Name .......................................................................... 13

1.9.5. Order Quantities Based on a Reliable Estimate of Need ................................... 13 1.9.6. Procurement in Large Volume ........................................................................... 13 1.9.7. Formal Supplier Qualification and Monitoring ................................................. 14

1.9.8. Competitive Procurement .................................................................................. 14 1.9.9. Monopsony Commitment .................................................................................. 14

1.9.10. Pharmaceutical Quality Assurance Mechanisms ........................................... 14 1.9.11. Reliable Funding and Good Financial Management ...................................... 15 1.9.12. Annual Financial Audit with Published Results ............................................ 15 1.9.13. Proper Planning and Monitoring of Procurement Performance ..................... 15

1.10. Supplier Prequalification ................................................................................................ 15 Procedures for Undertaking Prequalification ............................................................................ 16

1.11. Procurement Cycle ......................................................................................................... 18 1.11.1. Phase I—Planning Phase ................................................................................ 21 1.11.2. Phase II—Bid Preparation and Process .......................................................... 23 1.11.3. Phase III—Contract Management .................................................................. 29

1.12. Monitoring and Evaluation............................................................................................. 33

2. Recommended minimum Standards for pharmaceutical procurement ............................ 34 2.1. Efficient and Transparent Structure and Management ................................................... 34

2.1.1. Structure and Organization for Procurement ..................................................... 34 2.1.2. Separation of Functions ..................................................................................... 35 2.1.3. Roles and responsibilities .................................................................................. 36

2.1.4. Levels of Authority ............................................................................................ 38 2.1.5. Formal and Written Procedures for Transparent Procurement .......................... 38

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2.1.6. Communications ................................................................................................ 39 2.1.7. Recordkeeping ................................................................................................... 39 2.1.8. Disclosure of Conflict of Interest ....................................................................... 40 2.1.9. Conduct of Procurement Staff ........................................................................... 40 2.1.10. Conduct of Suppliers/Bidders ........................................................................ 40

2.2. Prequalification and Selection of Potential Suppliers .................................................... 41 2.3. Selection and Quantification of Pharmaceuticals ........................................................... 44 2.4. Financing Procurement .................................................................................................. 44 2.5. Competition and Selection of Procurement Methods .................................................... 44 2.6. Procurement Planning .................................................................................................... 45

2.7. Unplanned and Emergency Procurements ..................................................................... 45 2.8. Preparation and Contents of Bid Documents ................................................................. 46

2.9. Bid Security .................................................................................................................... 48 2.10. Bid Validity Period......................................................................................................... 48 2.11. Bid Currency .................................................................................................................. 49 2.12. Approval of Bid Documents .......................................................................................... 49 2.13. Invitation to Bid ............................................................................................................. 49

2.14. Receiving Bids ............................................................................................................... 50 2.15. Opening Bids .................................................................................................................. 50

2.16. Bid Evaluation ................................................................................................................ 52 2.16.1. Bid Evaluation Committees ........................................................................... 52

2.16.2. Guidelines for Bid Evaluation ........................................................................ 52 2.16.3. Bid Evaluation Methodologies and Criteria ................................................... 53 2.16.4. Preliminary Evaluation ................................................................................... 53

2.16.5. Technical Evaluation ...................................................................................... 54

2.16.6. Financial Evaluation and Comparison ........................................................... 55 2.16.7. Post-Qualification........................................................................................... 55 2.16.8. Negotiation ..................................................................................................... 56

2.16.9. Evaluation Report and Award Recommendation ........................................... 56 2.17. Cancelation and Rejection of Bids ................................................................................. 57

2.18. Award Notice and Contract Awarding ........................................................................... 58 2.18.1. Award Notice to All Bidders .......................................................................... 58 2.18.2. Award Letter to Successful Bidders ............................................................... 59

2.18.3. Contract Documents ....................................................................................... 59 2.18.4. Performance Securities ................................................................................... 60

2.18.5. Contract Signing and Awarding ..................................................................... 60

2.18.6. Distribution of Signed Contracts .................................................................... 61

2.18.7. Effectiveness of Contracts .............................................................................. 62 2.18.8. Final Notification to Unsuccessful Bidders ................................................... 62

2.19. Dispute Resolution ......................................................................................................... 62 2.20. Contract Management .................................................................................................... 63

2.20.1. Contract Management and Responsibilities ................................................... 63

2.20.2. Contract Amendments .................................................................................... 64 2.20.3. Port Clearing, Receiving, and Inspection ....................................................... 64 2.20.4. Quality Assurance of Pharmaceuticals ........................................................... 65 2.20.5. Payments to Suppliers .................................................................................... 66

2.21. Monitoring and Evaluation of Procurement Performance ............................................. 66

2.21.1. Financial and Procedural Audits .................................................................... 67

2.21.2. Supplier Performance ..................................................................................... 67 2.21.3. Key Performance Indicators for Monitoring and Evaluation ......................... 67

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Annex 1: Prequalification Document....................................................................................... 70

Annex 2: Sample Prequalification Evaluation Scoring Sheet for Individual Supplier and

Evaluator .................................................................................................................................. 77

Annex 3: Sample Summary of Prequalification Result ........................................................... 79

Annex 4: Procurement Plan and Tracker Template ................................................................. 80

Annex 5: Activities and Timelines by Procurement Method................................................... 81

Annex 6: Procurement Indicators Reference Sheet ................................................................. 82

Resources ................................................................................................................................. 86

List of tables

Table 1: Comparison of Procurement Methods ............................................................................. 9

Table 2: Prequalification Criteria and Examples for Pharmaceutical Procurement ..................... 17

Table 3: Separation of Functions .................................................................................................. 35

Table 4: Contents of a Prequalification Document ....................................................................... 41

Table 5: Criteria for Prequalification of Suppliers......................................................................... 42

List of figures

Figure 1: Prequalification of suppliers and its relation to procurement processes ..................... 18

Figure 2: Procurement cycle ......................................................................................................... 20

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ACRONYMS

AADA Agency for Assistance and Development of Afghanistan ADR alternative dispute resolution AFN Afghanis AKHS Agha Khan Health Service ARV antiretroviral BEC bid evaluation committee BOC bid opening committee BPHS Basic Package of Health Services CAF Care of Afghans Families cGMP current good manufacturing practices CIF Cost, insurance and freight CPDS Coordinated Procurement and Distribution System DDP delivery duty paid Dept. Department EML Essential Medicines List EPHS Essential Package of Hospital Services EU European Union FOB free on board GCMU Grants and Service Contracts Management Unit GDPA General Directorate of Pharmaceutical Affairs INN international nonproprietary names IPC Interagency Pharmaceutical Coordination Group IRS Indicator Reference Source KPI key performance indicator LC letter of credit M&E monitoring and evaluation MoPH Ministry of Public Health MSH Management Sciences for Health NGO Nongovernmental organization PATH Program for Appropriate Technology in Health PLA Procurement Law of Afghanistan QA quality assurance QC quality control QTWG/C Quantification Technical Working Group TWG/Committee SCI Save the Children International SCMS Supply Chain Management System SMART specific, measurable, achievable, relevant, and time bound SOP standard operating procedure SPS Strengthening Pharmaceutical Systems TWG technical working group UN United Nations UNFPA United Nations Population Fund UNICEF United Nations Children’s Fund USAID US Agency for International Development

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USD United States dollar WB World Bank WHO World Health Organization

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GLOSSARY Contract is a legally binding agreement between a purchaser and a supplier for a specified period of time for the supply of pharmaceuticals. Cost-benefit ratio is an indicator, used in the formal discipline of cost-benefit analysis that attempts to summarize the overall value for money of a project or proposal. Coordinated Procurement and Distribution System (CPDS) stakeholders are the partner organizations (public, private, and nongovernmental) that are involved in the procurement and supply of pharmaceuticals for the public sector under the coordinated procurement and distribution system with the goal of eventually bringing coordination uniformity to operations. Implementing organizations are those nongovernmental organizations (NGO) that are contracted by the Grants and Service Contracts Management Unit (GCMU) of the Ministry of Public Health (MoPH) to implement the Basic Package of Health Services (BPHS) and Essential Package of Hospital Services (EPHS) to address the most immediate needs of the population in their assigned provinces. Incoterms® or International Commercial Terms are a set of rules that define the responsibilities of sellers and buyers for the delivery of goods under sales contracts. They are published by the International Chamber of Commerce and are widely used in commercial transactions. Letter of credit (LC) is a document from a bank guaranteeing that a seller will receive payment in full as long as certain delivery conditions are met. Margin of preference is the benefit extended by preference to assist a specific group (usually a local business) to become a competitive and efficient supplier to the public sector. Material deviation is a difference that is not administrative or clerical and that changes the meaning or the intent of a document. Prequalification is a process whereby prospective suppliers are assessed against pre-determined criteria and then only those that satisfy the set criteria are selected and invited to bid. Procurement is the process of purchasing pharmaceuticals from national or international suppliers in accordance with good pharmaceutical procurement principles. Procurement entity is any organization that undertakes procurement of goods or services. The word “buyer” may also be used to mean the same thing. Procurement cycle is a series of steps, including most of the decisions and actions that determines the specific pharmaceutical quantities obtained, price paid, and of quality pharmaceutical received. It starts from the identification of a need for pharmaceuticals and

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ends with the possession of the required pharmaceuticals, after which payment is made to the supplier. Substantially responsive bid is an offer that meets the requirements of the bidding document without material deviation, reservation, or omission.

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ACKNOWLEDGMENTS The development of these guidelines would not have been possible without the full support of the Leadership and Technical Review Committee of the General Directorate of Pharmaceutical Affairs (GDPA)/Ministry of Public Health (MoPH). The MoPH wishes to express its heartfelt gratitude to the Committee for its commitment and dedication to the review process. It would also like to acknowledge the Committee’s member organizations, including: Kabul University/Faculty of Pharmacy, Agency for Assistance and Development of Afghanistan (AADA), Agha Khan Health Service (AKHS), Care of Afghan Families (CAF), Save the Children International (SCI), and the World Health Organization (WHO). Special thanks go to the Strengthening Pharmaceutical Systems (SPS) Project, funded by the US Agency for International Development (USAID) under the terms of cooperative agreement number 306-A-00-11-00532-00, for its technical and financial support throughout the development of these important guidelines.

The Procurement Guidelines Technical Review Committee members are:

1. Dr. Ajmal Yadgari, CPDS Coordinator, MoPH 2. Pharm. Omar Mansoory, Licensing Issuing and Registration Dept. Manager, GDPA 3. Pharm. Niamatullah Nawroozian, National Medicines & Food Board Advisor, MoPH 4. Pharm. Uzair Sekendari, Head of Procurement Department, Pharmaceutical Enterprise 5. Pharm. Nazir Ahmad Ahmadzad, Medicine Planning Affairs Dept. Manager, GDPA 6. Dr. Eklil Ahmad, Grand Consultant, MoPH/GCMU 7. Dr. Alawi, Consultant, Health Economics and Financing Directorate/MoPH 8. Pharm. Ahmad Wali Amiri, MoPH/Procurement Department 9. Pharm. Ahmad Jawid Ehsan, Pharmaceutical Services Program Manager, SPS 10. Dr. Najia Dehzad, Supply Chain Development Planning Advisor, SPS 11. Dr. Sohail Nazari, CPDS Officer, SPS 12. Pharm. Khalid Banazada, CPDS Officer, SPS 13. Dr. Mohammad Osman Zaki, Supply Chain Officer, SPS 14. Mr. Sayed Asmatullah Fatimi, PLIS Consultant, GDPA 15. Pharm. Mahmood Nawabi, Central Medical Store/MoPH 16. Associated Professor Mohd Mosa Sherzad, Pharmacy Faculty, Kabul University 17. Pharm. Asadullah Noori, National Program Officer, Drug and Medical Materials, AKSH 18. Dr. Qasim Noori, Pharmacy Manager, AADA 19. Pharm. Hashmatullah Hayat, Pharmacy Manager, CAF 20. Dr. Sayeed Safiullah Nadeeb, National Program Officer, WHO

International technical advisory team:

Andualem Oumer, Senior Technical Advisor, Management Sciences for Health (MSH)

Gashaw Shiferaw, Senior Technical Adviser, MSH

Andy Barraclough, Pharmaceutical Management Technical Adviser, MSH

Shiou-Chu (Judy) Wang, Senior Technical Adviser, MSH

Kwesi Eghan, Portlio Manager, MSH

Special thanks go to Mohammad Zafar Omari, Chief of Party, MSH/SPS Afghanistan, for his valuable input.

With best regards,

Pharmacist Abdul Hafiz “Quraishi” General Director of Pharmaceutical Affairs

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FOREWORD

The Ministry of Public Health (MoPH) of the Islamic Republic of Afghanistan is responsible for providing public health services and ensuring access to safe, effective, and quality essential medicines for the people of Afghanistan. One of the strategies was to establish the Basic Package of Health Services (BPHS) and the Essential Package of Hospital Services (EPHS) throughout the country, in close collaboration with national and international partners. To understand the supply chain management situation in the pharmaceutical sector and to identify possible solutions to address the challenges, a procurement, distribution, and quantification assessment was conducted in 2012. The review found that stakeholders’ existing systems did not operate uniformly enough to serve as the basis for future coordinated system development. In addition, the quality of practices varied among the various entities. Based on the assessment’s findings and recommendations, the General Directorate of Pharmaceutical Affairs (GDPA) of the MoPH, in collaboration with the Coordinated Procurement and Distribution System (CPDS), decided to develop guidelines for the procurement, distribution, and quantification of essential medicines. The guidelines in this document are one result of this initiative. The key objectives of these Procurement Guidelines are to:

Procure medicines of assured quality

Procure medicines at an affordable cost

Procure medicines at the right time

Procure medicines in the right quantity for the right place

Acquire quality supplies at a competitive price through the use of competitive procurement procedures

For the guidelines to be technically sound and appropriate to the local context, a Technical Review Committee consisting of different national and international organizations was established, with coordination and support of the CPDS. The Technical Review Committee thoroughly reviewed the guidelines. The MoPH wishes to express its heartfelt gratitude to the committee members for their commitment and dedication to the review process. The MoPH is likewise grateful for the technical and financial support of the Strengthening Pharmaceutical Systems (SPS) project funded by the US Agency for International Development (USAID). Implementation of the guidelines is expected to lead to good procurement practices, the effective use of resources, and good governance of medicines.

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The MoPH is committed to overseeing the application of these guidelines by all public sector health service providers at different levels. With best regards, Dr. Ahmad Jan “Naeem” Policy and Planning Deputy Minister of MoPH


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1. INTRODUCTION

1.1. Background The Ministry of Public Health (MoPH) of the Islamic Republic of Afghanistan strives to ensure access to safe, effective and quality essential medicines for the people of Afghanistan. It supports the principle that the availability of essential medicines not only improves the health of patients, but also increases the peoples’ trust in health facilities and promotes their further participation in health programs. To fulfill its mandate, the MoPH has been receiving assistance from several partners, including the three major international donors—the World Bank (WB), European Union (EU), and the US Agency for International Development (USAID). With this assistance, since 2003, the MoPH and its partners have been providing essential pharmaceuticals for the Basic Package of Health Services (BPHS) and the Essential Package of Hospital Services (EPHS) throughout Afghanistan. USAID supports Afghanistan with the procurement and supply of essential pharmaceuticals for 13 provinces, with the remaining provinces being supported by the WB and EU. The Strengthening Pharmaceutical Systems (SPS) project is funded by USAID for the quantification, clearing, storage, inventory management, and distribution of pharmaceuticals for the 13 provinces. The WB and EU have contracted nongovernmental organizations (NGO) as sub-recipients to procure medicines, primarily from the local market, to supply health facilities with essential pharmaceuticals in the remaining provinces. In general, the existence of different, vertical financing and management systems, coupled with multiple, significantly different, implementing organizations, have created non-standardized and highly fragmented pharmaceutical supply operations characterized by limited transparency, limited efficiency, stock-outs, and wastage of resources. The MoPH invited representatives of donors, NGOs, United Nations (UN) agencies, government agencies, private sector representatives, and other agencies involved in the procurement and supply of pharmaceuticals for the public sector to work together. This resulted in the development of a Coordinated Procurement and Distribution System (CPDS) committee and CPDS governance framework. The mission of the CPDS is to promote good governance in pharmaceutical management for the public health sector through clearly defined roles and responsibilities of each of the different partners involved in quantification, procurement, and distribution activities. The overarching goal is to have a fully coordinated and uniform methodology of operations and increased effectiveness and efficiency in the use of limited resources. In 2012, the Systems Strengthening and Commodity Security Advisory Sub-committee of the CPDS conducted an assessment of procurement, distribution, and quantification activities and


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functions to review the status of the existing procurement and supply systems. The specific purpose of the assessment was to:

Establish an overview of the existing pharmaceutical supply management situation.

Identify existing gaps, weaknesses, strengths, and opportunities in the current systems.

Determine the degree of similarity, uniformity, and commonality among the different operating systems from which a coordinated system could be developed.

Major findings of the assessment included the following:

General findings: All assessed BPHS and EPHS implementing organizations play specific roles and responsibilities in the quantification, procurement, and distribution of essential medicines and medical supplies.

A number of strengths were identified. The main ones include:

Maintaining written records of procurement proceedings, evaluations, and outcomes.

Availability of specialized staff to undertake procurement activities. Undertaking open competitive bidding. Preparation of procurement plans. Existence of qualification requirements for bidders. Availability of lists of registered suppliers. Existence and use of bid evaluation procedures. Timely payment to suppliers.

However, major gaps and areas for improvement were identified. In general, very few of the BPHS and EPHS implementing organizations:

Could clearly describe in a consistent manner the full range of activities they

undertake.

Were comfortable or able to provide documentation of their systems, activities, and procedures, including essential procurement records and documents.

The major gaps and areas for improvement identified around pharmaceutical procurement functions of the assessed BPHS and EPHS implementing organizations included the following:

Most do not have clear and documented organizational structures. Very few have procurement staff familiar with: other procurement policies,

guidelines, and standard operating procedures; international procurement experience; or training in the last two years.


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Most do not have provisions in bid and contract documents regarding anti-bribery and anti-corruption conditions. In addition, only half of them reported having procedures for curbing/controlling corruption.

Very few conduct a prequalification of suppliers or have formal procedures to follow when purchasing without a formal bid, and only a few of them update lists of suppliers regularly to delete or add new ones.

Performance security in appropriate amounts and formats is not a requirement of most implementing organizations.

More than half of the implementing organizations do not have clear procedures for advertising and bidding procurements.

Most implementing organizations allow less than 30 days for prospective suppliers to prepare and submit bids.

Most implementing organizations secure received bids but few have clear procedures for this, and only half of the organizations reject late bids received.

Bid opening is not done on the same day as bid closing by most implementing organizations, and more than half do not conduct public bid opening.

Few invite bidders to the bid opening and keep minutes of the bid opening. Half of them do not have clear rules and procedures on the selection of bid

evaluators. Most do not have procedures on dispute appeal and resolutions. More than half of them do not have a manual or computerized systems for contract

management and supplier performance monitoring on a routine basis. Subsequently, recommendations were made by the CPDS to address the existing challenges and constraints. One of the major recommendations was the development of “minimum standard guidelines” to better standardize the different supply chain functions performed by the different BPHS and EPHS implementing organizations. Accordingly, the General Directorate of Pharmaceutical Affairs (GDPA) and CPDS, with technical assistance from USAID | SPS Afghanistan developed minimum standard guidelines for quantification, procurement and distribution of pharmaceuticals in Afghanistan. Continuous training will be provided to relevant staff from all BPHS and EPHS implementing organizations and other partners on each of the guidelines. Minimum standards and guidelines for quantification and distribution of pharmaceuticals are provided in the “Quantification Guidelines” and “Distribution Guidelines,” respectively. This document focuses on the procurement of pharmaceuticals. 1.2. Purpose and Objectives of the Pharmaceutical Procurement Guidelines The purpose of these guidelines is to provide CPDS stakeholders, especially those financed by USAID, WB, and EU to implement the BPHS and EPHS, with clear minimum standards to follow so that legal and public health requirements can be met in procuring quality pharmaceuticals in a timely and cost effective manner. These procurement guidelines should also be used as the basis for the development and implementation of specific organizational structures, systems, and standard operating procedures (SOP) for the procurement of pharmaceuticals. Moreover,


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the guidelines can serve as reference or source material for training staff from relevant organizations on the procurement of pharmaceuticals.

Adherence to and the proper implementation of the minimum standards described in these procurement guidelines will ultimately:

a. Increase coordination, standardization, and uniformity of procurement operations. b. Facilitate transparency and accountability while maintaining appropriate confidentiality

of information. c. Promote diverse participation through fair and non-discriminatory treatment of bidders. d. Achieve economic, efficient, and maximum competition to ensure value for money in

the use of public and donor funds. e. Facilitate compliance with:

i. Procurement Law of Afghanistan (PLA) ii. Requirements of donors, such as the WB, EU, and USAID

iii. The World Health Organization’s 1999 Operational Principles for Good Pharmaceutical Procurement

f. Improve the availability of quality pharmaceuticals at the right time and place and reduce wastage.

1.3. Applicability of the Guidelines and Target Users In all cases relating to procurement, the PLA will apply, while at the same time noting that the PLA permits different procurement regulations to be applied for different conditions depending on donor requirements. The applicability of all procurement regulations and these procurement guidelines, in particular, are dependent on the source of funding for the procurement. This is recognized and authorized in the PLA’s “Article 4: Scope of Application.” In essence, this Article stipulates that when international donor funding is used, international donor procurement regulations apply. The primary target users of these procurement guidelines are BPHS/EPHS implementing organizations—the national and international NGOs that are using international funding from the WB, EU, and USAID. However, other organizations undertaking pharmaceutical procurement functions in Afghanistan can adapt and use these guidelines, as applicable, within the scope of the PLA. 1.4. Version Change Control Change control is a formal process used to ensure that changes to a document, product, or system are introduced in a controlled and coordinated manner. As procurement policies, laws, and practices evolve and change, these guidelines are expected to change as well to retain their usefulness as comprehensive and up-to-date technical guidance. Changes that could occur to


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these guidelines include amendments, additions, or deletions. To ensure an orderly, logical, and timely updating of the guidelines, certain responsibilities should be designated and specific procedures followed. The GDPA will have ownership and control of this manual. The GDPA is responsible for ensuring that:

All procurement and other relevant entities have the most current version of the guidelines.

Requests for changes and feedback on these guidelines are obtained from different users.

The requests and feedback are compiled and submitted to an assigned technical committee for review.

Necessary changes will be approved, reproduced, and distributed to all users, as required, at least every three (3) years.

When governing documents (such as laws and policies) are updated, this document will also be updated accordingly within six (6) months after receipt of the updated governing documents.

Electronic and hard copies of all previous versions are retained as references. 1.5. Procurement Standard Operating Procedures Each implementing organization is expected to develop and implement formal written procurement SOPs based on the procurement principles and minimum standards described in these guidelines. The SOPs should detail the way activities are expected to be performed to facilitate consistent conformance with technical and quality standards. Copies of developed SOPs need to be readily accessible for reference in the work areas of those individuals actually performing the activity, either in hard copy or electronic format. 1.6. Definition of Procurement Procurement has been defined in different ways by different scholars. In this section, selected relevant definitions from different sources are presented for comparison, followed by an operational definition of procurement for the purpose of these guidelines. Procurement is the acquisition of goods, services, or works from an external source (national or multinational), at the best possible cost to meet the needs of the acquirer in terms of quality, quantity, time, and location. (Source: Purchasing and Supply Chain Management: Analysis, Planning and Practice, Fifth edition).

http://en.wikipedia.org/wiki/Purchase

http://en.wikipedia.org/wiki/Total_cost_of_ownership


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Procurement is the acquisition by any contractual means, including but not limited to purchase, leasing of goods, work, or services, and included but not limited to any acquisition on which any public funds are utilized. (Source: Procurement Law of Afghanistan) Procurement of pharmaceuticals is the process of acquiring pharmaceuticals, including those obtained by purchase, donation, and manufacturing (Source: Managing Drug Supply, Third edition). For the purposes of these guidelines, procurement of pharmaceuticals is defined as the process of purchasing pharmaceuticals from national or international suppliers according to good pharmaceutical procurement principles, as described in section 1.9 (Summary of Principles for Good Pharmaceutical Procurement). Procurement is a key activity in the supply chain. Procurement can significantly influence the overall success of any health service. It is a major determinant of pharmaceutical availability and total pharmaceutical costs. In most developing countries, pharmaceutical purchases represent the largest single health expenditure, after personnel costs. Pharmaceuticals also consume the major share of health-related foreign currency exchange. An effective procurement process should:

Seek to manage the buyer-seller relationship in a transparent and ethical manner.

Procure the right pharmaceuticals in the right quantities.

Obtain the lowest practical purchase price.

Ensure that all pharmaceuticals procured meet recognized standards of quality.

Arrange for timely delivery to avoid shortages and stock-outs.

Ensure supplier reliability with respect to service and quality.

Set the purchasing schedule, order quantities, and safety stock levels to achieve the lowest total cost of purchasing at each level of the system.

Achieve these objectives in the most efficient manner possible.

Given the impact of procurement activities on the operation and effectiveness of health services, it is essential that these activities be performed by competent staff using sound procedures, working in adequate offices with good communication, and with access to reliable logistics information. Good procurement management also demands medical, pharmaceutical, managerial, financial, and often, political expertise. 1.7. Procurement Methods There are numerous methods by which organizations manage procurement. Pharmaceutical procurement methods generally fall into five basic categories: open bidding, restricted bidding, competitive negotiations, request for quotation, and direct procurement. The first four are competitive; direct procurement from a single supplier is not. Prospective suppliers are


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prequalified in the case of restricted bidding. Prospective suppliers may or may not be prequalified for the competitive negotiation and request for quotation methods of procurement. There is no prequalification in the case of open bidding. Each procurement method has different tasks, requirements, applications, and timelines. 1.7.1. Open Bidding In open bidding, sealed bids are solicited by means of a widely advertised invitation open to all suppliers—national or international—that choose to participate in the competition. Open bidding is the most competitive method of procurement. It ensures that only the contractor with the best price and meeting all the technical requirements wins the contract. 1.7.2. Restricted or Limited Bidding In restricted bidding, only prequalified bidders are allowed to participate in the procurement, and thus, invitations are sent to prequalified suppliers only. See section 1.10 (Supplier Prequalification) for details on prequalification. The criteria considered for selection may include: adherence to good manufacturing, storage, and distribution practices; past supply performance; financial viability; and related factors. Restricted bids are not advertised in newspapers; as a result, other bidders generally do not come to know that such bids are floated. The bidder with the lowest price wins the contract. Procurement systems using restricted bids with prequalification should make continuous efforts to seek out potential new suppliers in order to maintain competitive pressure on established suppliers that have been previously prequalified. The prequalification process should also be open to any supplier or manufacturer that wishes to apply. 1.7.3. Competitive Negotiations (Request for Quotation with Negotiation) In competitive negotiations, the procurement entity approaches a limited number of selected local or international suppliers or manufacturers for a price quotation. It bargains to achieve a specific price and other agreements. This procurement method uses one-on-one discussion with prospective suppliers to negotiate the terms of a contract. This method is usually used by the private and NGO sectors because negotiation with suppliers is generally prohibited in the government sector. For example, NGOs, such as the United Nations Children’s Fund (UNICEF), the Clinton Health Access Initiative, and the USAID-funded Supply Chain Management Systems (SCMS) project, have successfully negotiated to achieve reduced prices for antiretroviral (ARV) medicines. 1.7.4. Request for Quotation without Negotiation (Request for Quotation) As with competitive negotiation, under the request for quotation method, the procurement entity obtains at least three quotes from suppliers. However, bargaining or negotiation of any kind is generally not permitted.


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1.7.5. Direct Procurement Direct or single source procurement is the method under which a bid is obtained directly from a single bidder, without competition. It is the simplest, but usually the most expensive method of procurement. Procurement may be either at quoted or negotiated prices. For single source pharmaceuticals, the procurement unit has three options: to negotiate procurement prices, to procure directly from a supplier, or to select an alternative pharmaceutical(s). During selection of an alternative pharmaceutical(s), the procurement unit, in collaboration with the concerned department, should clearly specify the quality standards required while maintaining the generic name(s). Table 1 compares the five methods of procurement in terms effect on cost, procurement lead time, workload, and conditions favoring use.


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Table 1: Comparison of Procurement Methods

Procurement method Brief description Effect on price

Procurement lead time

Workload on procurement entities Conditions favoring use

Open bidding Bidding is open to all interested suppliers (national and international)

Usually lowest price Moderate to long High • When many reputable suppliers are available and likely to be interested. • If prequalification is not feasible or not allowed by regulation or a donor’s provisions.

Restricted/ limited bidding

Participation of suppliers is limited to those who have already been prequalified

Favorable Moderate to long High • When a substantial list of registered suppliers has been developed. • When capacity exists to manage prequalification and supplier monitoring.

Competitive negotiation

The procurement entity approaches a small number of potential suppliers and negotiates a specific price and other arrangements

Can be favorable Short to moderate Moderate • Experienced purchasing office with good access to market intelligence. • Low-price or small-volume items. • When there are few suppliers. • When special terms or specifications are required for items not widely available. • Emergency purchases to supplement bids.

Request for quotation

The procurement entity approaches a small number of potential suppliers, but there is no negotiation of price or other arrangements

Can be favorable Short to moderate Moderate • Experienced purchasing office with good access to market intelligence. • Low-price or small-volume items. • When there are few suppliers. • When special terms or specifications are required for items not widely available. • Emergency purchases to supplement bids.

Direct procurement

Purchase is made directly from a single supplier at the quoted price

Usually highest prices

Short to moderate Low • Emergency purchases when negotiation is not possible. • Purchase of single-source pharmaceuticals. • Low-price or small-volume items.


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1.8. Strategic Objectives for Good Pharmaceutical Procurement Any good pharmaceutical procurement system (public or private or a combination of public and private) has four major strategic objectives that it aims to achieve. Achieving these strategic objectives ensures the availability of the right pharmaceuticals in the right quantities, in the right place, at the right time, at reasonable prices, and at recognized standards of quality, and contributes to the rational use of pharmaceuticals.

A. To procure the most cost-effective pharmaceuticals in the right quantities

The first strategic objective is to procure the most cost-effective, priority pharmaceuticals in the right quantity. The development and effective use of an essential medicines list (EML) helps to ensure that only the most cost-effective and relevant pharmaceuticals with proven safety and efficacy are purchased. Essential medicines are those that are deemed to satisfy the health care needs of the majority of the population and that should be available in the appropriate form at all times. Effective systems, processes, procedures, and tools should be in place to accurately estimate procurement quantities to ensure the continuous availability of pharmaceuticals and at the same time, avoid overstocking and expiry. B. To select reliable suppliers of high-quality products

The second strategic objective is to select or pre-select reliable suppliers that can supply high-quality pharmaceuticals based on international and national standards. Active and continuous quality assurance mechanisms involving both surveillance and testing may be implemented to maintain reliable suppliers. C. To ensure timely delivery of pharmaceuticals

The third strategic objective is to ensure the timely delivery by suppliers of quality pharmaceuticals in the appropriate quantities to where they are needed. On-time delivery of pharmaceuticals avoids stock-outs, irrational use of pharmaceuticals, and more expensive emergency procurements. D. To achieve the lowest possible total cost

The fourth strategic objective is to achieve the lowest possible total cost, considering the following four main components:

Product acquisition price: This is the actual purchase price of products. Increasing competition among suppliers and products usually decreases product prices.


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Inventory holding costs: This is the stock holding cost at various levels of the supply system; the volume of the stock determines the inventory holding cost. It is usually affected by the order frequency, the amount of safety stock allowed across the system, and the time that it will take to complete delivery of products.

Operating costs: This is the cost associated with the management of procurement and distribution systems. For example, the number of staff, warehousing cost, transportation cost, communication cost, stationary cost, etc.

Wastage costs: This is the cost not only of wastage of products due to short shelf life and expiry, but also due to poor product quality, poor suppliers’ performance, and costs associated with stock-outs.

Some of the above costs are easily visible to managers, for example, the total expenditure for product acquisition or the salary of staff. However, the cost associated with stock-outs and the poor performance of suppliers is hidden. For instance, poor supplier performance could lead to an emergency procurement, which would increase acquisition cost as well as the health and economic costs of stock-outs resulting from delay or default on delivery. To achieve the lowest total cost for a pharmaceutical, procurement entities should consider and compare all types of costs, as described above, and choose suppliers that can render the lowest possible total cost or best value. 1.9. Summary of Principles for Good Pharmaceutical Procurement There are different principles and practices being used worldwide in good pharmaceutical procurement to achieve the four strategic objectives of good pharmaceutical procurement. Based on the best procurement practices, these principles were developed and endorsed by the Interagency Pharmaceutical Coordination Group (IPC), involving the pharmaceutical advisers of UNICEF, the United Nations Population Fund (UNFPA), the World Health Organization (WHO) and the WB. These internationally-accepted general principles provide the basis for the minimum procurement standards outlined in section 2 of these procurement guidelines. 1.9.1. Separation of Key Functions All functions of the pharmaceutical procurement process should not be left entirely in the

hands of one unit or official to avoid a conflict of interest and to increase accountability and transparency.

Separate key functions that require different expertise.


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Functions that involve different committees, units, or individuals may include selection, quantification, prequalification of suppliers, preparation of bid documents, evaluation of suppliers, and the award of contracts.


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1.9.2. Transparency and Formal Clear Written Procedures The appearance and reality of open and fair competition are essential to attract the best

suppliers and the best prices. When procurement processes are less transparent, they tend to be perceived as unethical or unfair and discourage prospective suppliers from participating.

Develop and follow clear and formal written procedures and criteria for all procurement actions to award contracts.

Make information on the bid process and results public to the maximum extent possible.

1.9.3. Procurement Limited to Essential Medicines List or Formulary List Select and procure safe, effective, cost-effective, relevant, and priority pharmaceuticals. Use formal approval procedures for the procurement of non-listed pharmaceuticals. This allows the health system to focus limited resources on the most cost-effective and

affordable products to treat prevailing health problems.

1.9.4. Procurement by Generic Name Use generic names (international nonproprietary names [INN]) of pharmaceuticals for fair

competition. This promotes participation of all potential suppliers of pharmaceuticals, including those that supply pharmaceuticals with brand names.

Specify quality standards, not specific brands, for pharmaceuticals with bioavailability problems.

1.9.5. Order Quantities Based on a Reliable Estimate of Need To avoid stock-outs, and at the same time to reduce wastage, the procurement

requirements of essential pharmaceuticals should be established based on reliable data. The accuracy, reliability, and use of quantification results may also be increased through the

use of coordination structures/technical working groups (TWG), and the implementation of standard quantification processes, steps, and tools.

A reliable system for quantification and the accuracy of procurement quantities increases the confidence of suppliers to participate and offer the lowest prices, on one hand, while increasing effective and efficient use of limited resources, on the other hand.

1.9.6. Procurement in Large Volume Larger procurement volume makes favorable prices and contract terms more likely by

increasing suppliers’ interest in bidding and by providing them with an incentive to offer a competitive price.

Procurement limited to EML items avoids duplicate pharmaceuticals and helps procure larger volumes of a limited list of pharmaceuticals.


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When necessary, specify divided deliveries to avoid overstocking of a pharmaceutical at a particular time.

1.9.7. Formal Supplier Qualification and Monitoring Use formal supplier qualification procedures based on pharmaceutical quality, service

reliability, and financial viability. Approve suppliers before bidding (prequalification) or after bidding (post-qualification). Prequalification is the procedure of evaluating supplier capacity and reputation before bids

are solicited for specific products. It helps to eliminate substandard suppliers. Post-qualification is the procedure of evaluating supplier capacity and reputation when

bids are solicited for specific products before starting to evaluate technical criteria. It helps to eliminate substandard suppliers from further evaluation.

Prequalification and post-qualification systems reduce the time and effort necessary to carry out procurement and increase the chance of procuring quality pharmaceuticals from reliable suppliers.

Use a formal monitoring and evaluation system to ensure continued supplier monitoring and qualification. Set and regularly collect specific, measurable, achievable, relevant, and time bound (SMART) indicators to monitor the performance of suppliers.

1.9.8. Competitive Procurement Inducing supplier competition is key to obtaining favorable pricing and quality. Use competitive procurement methods at all times, except for very small or emergency

procurements, to obtain the best total cost. See section 1.7 (Procurement Methods). The operational cost to undertake competitive procurement can be too high, as compared

to the procurement value, when very small quantity procurements are involved. On the other hand, the time required to undertake competitive procurement may not allow for the acquisition of products promptly for emergency needs. In such instances, procurement entities can justify the use of direct (non-competitive) procurement methods.

1.9.9. Monopsony Commitment Procure all contracted pharmaceuticals from winning suppliers. Entering into separate

deals with non-contracted suppliers during the contract period and for the contracted pharmaceuticals discourages suppliers from participating in the future, may result in higher prices of products, and compromises transparency.

1.9.10. Pharmaceutical Quality Assurance Mechanisms Establish and maintain a formal system for pharmaceutical quality assurance. Apply quality assurance mechanisms such as: selection of reliable suppliers, product

certification, inspection of shipments when received, targeted quality control testing, good


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storage and transportation practices, and systems for pharmacovigilance and defect reporting.

1.9.11. Reliable Funding and Good Financial Management It is critical to establish appropriate and reliable funding for pharmaceutical procurement

as a high priority, and to implement mechanisms that provide for adequate and timely funding.

Developing and implementing mechanisms for on-time and reliable payment encourages more suppliers to participate and have confidence in the procurement system. More supplier participation increases competition and brings down pharmaceutical prices more than bulk discounts.

When applicable, establishing financial mechanisms with separate pharmaceutical accounts (for example, revolving drug funds) to allow the procurement cycle to operate on a separate schedule from the treasury cycle can solve problems related to payments.

1.9.12. Annual Financial Audit with Published Results Conduct internal and external financial audits to assess compliance with procurement

procedures, promptness of payment, and related factors. Present results to the appropriate public supervising body. Take measures to improve practices based on results and recommendations of the audits.

1.9.13. Proper Planning and Monitoring of Procurement Performance To ensure that pharmaceuticals are available where and when they are needed, their

procurement should be carefully planned and performance monitored against the plans. Proper procurement planning, with specific activities and a timeline, helps ensure the

achievement of objectives to obtain quality pharmaceuticals at the right time by providing a framework and focus for necessary actions.

Set, collect, and report on SMART procurement performance indicators to monitor procurement performance and make improvements, when necessary.

1.10. Supplier Prequalification Prequalification is a process whereby prospective suppliers are assessed against pre-determined criteria. Only those that satisfy the set criteria are selected and invited to bid. It is a strategy best used when the procurement entities procure pharmaceuticals on a

regular basis, and the procurement tends to be complex and/or costly and/or there is a high degree of risk involved in the procurement.

It is a useful method for gaining knowledge of prospective eligible suppliers, with the primary aim of minimizing cost and risk for both procurement entities and suppliers. The


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cost to suppliers of preparing and submitting an offer and the cost to procurement entities of managing the bidding process and evaluating offers can be expensive. Prequalification provides procurement entities with enhanced confidence in the ability of their suppliers to deliver satisfactory outcomes in terms of cost and quality of the pharmaceuticals and time to process the procurement. Consequently, it is in the procurement entities’ and suppliers’ interests to confine the invitation to offer to suppliers with a proven track record and that have a reasonable chance of winning the procurement.

A critical component of the prequalification process is determining the criteria that procurement entities need suppliers to satisfy in order to successfully complete contracts or supply the pharmaceuticals. The prequalification criteria need to facilitate reliable, valid, and objective assessments to ensure that bidders are capable of effectively performing the proposed contract while maintaining competitiveness, taking into account the size, complexity, and technical requirements of the proposed contract. Procedures for Undertaking Prequalification A. The procurement unit prepares a prequalification document that contains all the

information and criteria required for applicants to prepare and submit applications to prequalify. A standard prequalification template shall be prepared and used to make preparation of the prequalification document faster and easier. i. In cases where prequalification is for multiple contracts, the prequalification notice

and document shall contain an estimate of the period of time covered by the prequalification, an estimate of the number and value of contracts to be awarded, and any categories to be used in prequalifying applicants.

ii. The prequalification document shall have at least three sections, namely: instructions for applicants, evaluation and qualification criteria, and application forms. See section 2.2 (Prequalification and Selection of Potential Suppliers) for details.

iii. The prequalification document has to be reviewed and approved by an approval authority and amended, as needed, before it is sent out to potential suppliers/applicants.

B. The procurement entity publishes a prequalification notice inviting all potential suppliers to

submit applications to prequalify. C. The procurement entity promptly issues prequalification documents to all potential

suppliers who request them and maintains a record of all potential suppliers to whom documents are issued.

i. A sufficient period of time should be allowed to enable applicants to prepare and submit their applications to prequalify. The minimum period of time for preparation and submission of applications to prequalify should be defined by considering the capacity of applicants and the nature of the procurements.


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D. The implementing organization shall establish a prequalification committee, preferably using an existing bid evaluation committee (BEC) to undertake the evaluation and make recommendations on potential prequalified suppliers.

E. The prequalification committee evaluates applications and makes recommendations on potential prequalified suppliers using the criteria outlined in the prequalification document. It also submits the prequalification report and recommendations to the approval authority for review and approval.

F. The approval authority reviews and approves the report and recommendations or asks for an explanation and amendment, as necessary.

G. The procurement unit maintains a database of prequalified suppliers. Depending on the market in which the pharmaceuticals are being procured, the prequalification criteria may vary. Table 2 provides six broad categories of factors to be considered as criteria during prequalification of suppliers, and examples of specific criteria for each group. Table 2: Prequalification Criteria and Examples for Pharmaceutical Procurement

No. Category of criteria Examples of specific criteria

I General Eligibility Criteria Certificate of registration and trading license; valid copy of tax registration, tax clearance certificate; clearance on criminal offense related to procurement and debarment of the supplier.

II Technical competence and experience

Past experience and satisfactory performance with similar contracts in the area of interest; length of time in business, with valid references and litigation record.

III Financial capability and viability

Financial position, including but not limited to financial soundness, sufficient turnover or sufficient cash flow, assets, liabilities, and profitability.

IV Systems and managerial capability

Formal SOPs, quality management systems, compliance with specific legislation (workplace health and safety), recordkeeping, and information management systems and technologies to support such systems.

V Human resources The number of employees and managers; ratio of temporary to permanent employees; organizational structure and position descriptions; qualifications and experience; length of employment; training development opportunities.

VI Business/organizational factors

Resources available, commitments and workload; demonstration of commitment to client satisfaction; business plan strategy; registration (board or professional body); insurance.

In addition to these criteria applied to national or international suppliers, the implementing organization may use WHO’s list of prequalified medicines used for HIV and AIDS, malaria, tuberculosis and for reproductive health. The WHO Certification Scheme on the Quality of Pharmaceutical Products Moving in International Commerce is a way of exchanging information on manufacturers and their pharmaceutical products between the regulatory authorities of the exporting country and those of the importing country. This scheme does not constitute an absolute assurance of product quality, but does provide a mechanism for ascertaining that a pharmaceutical comes from a reputable manufacturer.


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Figure 1 provides an overview of how a prequalification system fits within a procurement process. Potential suppliers are assessed against specific criteria and, if successful, are placed in a prequalification database. When a specific procurement need arises, the prequalified suppliers are invited to offer bids. The bids are evaluated according to the specific bid evaluation criteria and the successful winner(s) is/are awarded the contract(s). Performance monitoring and reporting about suppliers is an integral part of any prequalification system. It allows for the continual evaluation of suppliers to determine whether or not they should remain in the database. The prequalification system should include procedures to identify potential new suppliers at least every two to three years to maintain competitive pressure on suppliers already prequalified and in the database.

Figure 1: Prequalification of suppliers and its relation to procurement processes 1.11. Procurement Cycle The procurement cycle is a series of steps that includes most of the decisions and actions that determine the specific pharmaceutical quantities obtained, prices paid, and quality of pharmaceuticals received. It starts with the identification of a need for pharmaceuticals and

Prequalificaiton process

Database of pre-qualified prospective

suppliers

Prequalififed prospective

suppliers in the database are invited

to quote/bid

Contract awarded to successful offerer/

bidder

Supplier performance monitoring and

reporting during and after contract

New Prospective Suppliers


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ends with receipt of the required pharmaceuticals, after which payment is made to the supplier. The steps and timing may vary based on specific situations and the selected procurement methods. The complete procurement cycle in the public sector, using the competitive method of procurement, may span six to eighteen months, depending on the nature of the pharmaceuticals, value of the procurement, and number of approvals required. The rest of this section provides details on the processes and steps that can be applied to the four competitive procurement methods (i.e., open bidding, restricted bidding, competitive negotiation, and request for quotation). Refer to section 1.7 (Procurement Methods) for details on these procurement methods. Figure 2 provides a summary of the procurement cycle.


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Figure 2: Procurement cycle

Defining requirements

Specifying additional

quality standards

Getting approval and

securing funds

Assessing and choosing

procure-ment

methods

Developing procure-

ment plan

Preparing & approval of

bid documents

Inviting for bidding

Receiving bids

Opening bids

Evaluating bids and selecting suppliers

Contract awarding

Port clearing

Receiving and

inspection of orders

Making payments to

suppliers

Procurement monitoring &

evaluation

The cycle starts here


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1.11.1. Phase I—Planning Phase Defining Requirements A. Select the pharmaceutical items to be procured from the EML or national formularies. This

allows the health system to focus its limited resources on the most cost-effective and affordable products to treat prevailing health problems. i. Essential pharmaceuticals are those that are deemed to satisfy the health care needs of

the majority of the population and that should be available in the appropriate dosage forms and strengths at all times.

ii. Selecting a limited number of essential pharmaceuticals leads to better supply chain management, more rational use, and lower costs.

iii. Selection criteria can include: a. Relevance to the pattern of prevalent diseases b. Proven quality, efficacy, and safety c. Adequate scientific data and evidence of performance in a variety of settings d. Favorable cost-benefit ratio e. Desirable pharmacokinetic properties

B. Estimate the quantity, cost, and required time for procurement based on reliable data

through the use of coordination systems, such as quantification TWGs, and robust, standard quantification processes and tools. i. Quantifications shall be based on reliable consumption, service, morbidity and/or

demographic data together with other logistics information, such as stock on hand, stock on order, safety stock, etc.

ii. The accuracy, reliability, and use of quantification results can also be increased by: a. Use of appropriate coordination structures/TWGs staffed with trained

professionals to share information and make shared decisions based on validated evidence.

b. Implementation of appropriate quantification processes and steps. c. Use of appropriate quantification tools/software.

iii. Total procurement cost requirements should be compared with the available budget.

Adjustments may need to be made such that the total procurement requirements are in line with available budget.

iv. The procurement unit/department should support the quantification TWG by providing important input for planning purposes on: product prices; availability of formulations; costs related to shipping, insurance, storage, and port clearance; status and quantity of stock on order, etc. Refer to the “Quantification Guidelines for Essential Medicines” for more information on quantification. (Available from: http://gdpa.gov.af/Content/Media/Documents/Quant_Guid_E_2014094112014132720706553325325.pdf.)

http://gdpa.gov.af/Content/Media/Documents/Quant_Guid_E_2014094112014132720706553325325.pdf



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Specifying Additional Quality Standards A. In addition to the basic pharmaceutical product descriptions and specifications outlined in

the selected list of pharmaceuticals, it is important to include clear information about additional specifications and quality standards so that prospective suppliers (bidders) receive adequate information about the requirements in a comprehensive manner and may therefore bid accordingly.

B. The additional specifications and quality standards may include, but are not limited to:

i. Proof that products are manufactured at facilities that meet current good manufacturing practices (cGMP) certification requirements, or have WHO prequalification status.

ii. Standards for raw materials iii. Requirements for total and remaining shelf life iv. Inner and outer packaging and labeling, including language, etc.

Getting Approval and Securing Funds A. Availability of and regular access to funds are very important for procurement. B. The procurement unit, in collaboration with program managers, should be able to identify

and collect information related to possible funding sources and their criteria. C. Demonstrated compelling evidence for total budget requirements, including

pharmaceutical and other costs, visible and invisible, to convince budget decision makers. Quantification reports consisting of data inputs, assumptions, and results, or their summary, can be used for this purpose. See the “Quantification Guidelines for Essential Medicines” for details on quantification reports and sharing quantification results.

D. Coordinate with the MoPH, Ministry of Finance, funding agencies, and other stakeholders to get on-time budget approval and release of funds for procurement.

E. Ensure that funds are secured and accessed in a timely manner for procurement of pharmaceuticals. Assuring complete availability and timely access to funds budgeted increases the effectiveness of procurement systems and attracts more suppliers to bid, resulting in more competition, more favorable quality, and lower total costs.

Assessing and Choosing Procurement Methods A. Decide on the method of procurement to be used based on various factors, such as: the

nature and quantities of pharmaceuticals to be procured; amount of funds available; procurement personnel’s skills and experience; infrastructure; access to foreign currency; and timeline.

B. Overall, the decision regarding which procurement method to choose requires understanding of the risks and benefits of each method and a careful evaluation of internal capacity and needs.


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C. Refer to section 1.7 (Procurement Methods) for more details and a comparison of procurement methods.

Developing a Pharmaceutical Procurement Plan A. The procurement plan is used to provide information about the procurement of

pharmaceuticals, how suppliers will be selected, what kind(s) of contract(s) will be used, how suppliers will be managed, and who will be involved at each stage of the procurement process.

B. The preparation of a realistic pharmaceutical procurement plan, using a suitable template, is important for its successful implementation and monitoring. The plan should be approved by appropriate individuals before the actual procurement process begins.

C. The procurement entity should prepare a comprehensive procurement plan for each financial year and revise it, as appropriate, during the course of the year (usually for every order interval).

D. The procurement plan includes a supply plan, an estimate of the value of each package of pharmaceuticals required, and details on the possible budget available and sources of funding. See the “Quantification Guidelines for Essential Medicines” for more information. (Available from: http://gdpa.gov.af/Content/Media/Documents/Quant_Guid_E_2014094112014132720706553325325.pdf .)

E. The identification of the procurement method to be used, a list of key steps in the procurement process (such as advertise the bid, open the bid, evaluate the bid, award the contract, disburse payments, etc.), and a timeline with estimated dates for completing each step of the process, including the names of the responsible parties.

1.11.2. Phase II—Bid Preparation and Process Preparing and Approval of Bid Documents A. Bid documents shall provide clear, concise, and adequate information necessary for a

prospective bidder or supplier to prepare a bid for the pharmaceuticals to be procured.

Major outputs of Phase I: Planning phase 1. Defined requirements by type of pharmaceutical (with full specification),

quantity, total cost, time of delivery

2. Approved, secured, and accessible funds

3. Procurement plan




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B. While the detail and complexity of these documents may vary with the size and nature of

the proposed bid package and contract, they generally include: i. Invitation to bid: Describes the scope of the procurement; the procurement entity;

the conditions under which bids will be accepted; the address for submission; the date and time bids are due; and the period to be covered by the contract.

ii. Instructions to bidders: Covers instructions on what documents should be submitted; how to submit documents, including how to state prices; dates of bid validity; currencies, bid securities, and performance bonds/securities; format for submitting offers; domestic preference (if any); time and place of bid opening; criteria for bid evaluation; criteria for rejection of substantially nonresponsive bids; and procedures involved in adjudication, award, and notification.

iii. Conditions of contract: This describes the general conditions in the contract that will be signed with successful bidders and any special conditions applicable to the current procurement. This may include: advance payments; terms and methods of full payment; and penalties for default, among others.

iv. General technical specifications: These provide information on cGMP standards; pharmacopoeia standards; nomenclature and description required for each pharmaceutical; shelf life and expiration date parameters; labeling instructions; packaging instructions; cGMP and quality assurance certificates required; and other evidence of product quality to be submitted with the bid and with each shipment.

v. Financial specifications: This includes financial capacity of the bidders, which is the bid security, and includes the following:

i. Amount of bid security ii. Formats of the bid security (an unconditional bank guarantee issued by a bank,

letter of credit, certified check) in case of bid guarantee should include the complete name of bidder.

vi. List of pharmaceuticals and quantities: This provides a concise description of each

product and the quantity required, along with any technical specifications unique to that item. The schedule of requirements should include the INN or generic name, the strength of each component, the basic unit (tablet, capsule, vial, and bottle), the package size, and the number of packages needed.

vii. Delivery time and destination: This covers information on specific dates and the pace of delivery of the contracted pharmaceuticals by suppliers.

viii. Selection criteria that will be used to evaluate and select suppliers: The bid documents shall specify any criteria, in addition to price, which will be taken into account in bid evaluation for the purpose of determining the best evaluated bid.

ix. Necessary appendices: This may include formats for various securities (as necessary).

C. It is important to review the bid documents carefully before they are finalized to ensure clarity, conciseness, and consistency throughout the documents.


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D. Once the bid documents are prepared, it is necessary to obtain approval from the appropriate authority before they are sent out to potential suppliers or made publicly available. The appropriate approval authority must review the documents thoroughly before giving approval and returns the document for amendments, if necessary.

Invitation to Bid A. Bid documents can be advertised in newspapers, trade bulletins, journals, organizational

and government websites, and local bulletin boards. These methods are used for the open bidding method of procurement.

B. In addition, the procurement entity can send invitations directly to a limited number of pre-selected suppliers. This applies to restricted bidding, request for quotation, and competitive negotiation procurement methods.

C. All prospective bidders should be provided the same information and assured of equal opportunities to obtain additional information in a timely manner.

D. The procurement entity may use an electronic system to distribute bidding documents, provided that the electronic system is secure to avoid modifications to the bid documents and does not restrict the access of bidders.

Receiving Bids A. The time allowed for the preparation and submission of bids is determined with due

consideration of the particular circumstances as well as the magnitude and complexity of the procurement. Generally, not less than six weeks from the date of the invitation to bid or the date of availability of bidding documents, whichever is later, should be allowed for International Competitive Bidding.

B. Bidders may be permitted to submit bids by hand or electronically, depending on the method and local regulations of procurement.

C. Procurement entities may use electronic systems for the submission of bids by bidders, provided that the system is secure enough to maintain the confidentiality and authenticity of bids submitted, uses an electronic signature system or equivalent to keep bidders bound to their bids, and only allows bids to be opened with due simultaneous electronic authorization of the bidder and the procurement entity. In this case, bidders shall continue to have the option to submit their bids in hard copy.

D. It is also common to prepare a tender/bid box—a box that is used to receive the physical bid document from each bidder. The bid box is open for interested parties to submit their proposals for the duration of the bid or tender. Once the duration is over, the tender box is closed and sealed until the bid opening time.

E. To ensure confidentiality and to avoid accusations of price fixing or undue influence on decisions, the procurement entity should strictly adhere to the bid closing date and time. No bids should be received after the date and time specified in the bid documents.

F. A written record should be kept of all bids received, documenting the date received and the person who received the bid. The unopened bids should be stored in a locked, secure area until the bid opening time.


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Opening Bids A. Qualified personnel should be assigned and be in place well in advance of the bid opening

date. B. Good procurement practice generally dictates that bid opening tasks be undertaken by

personnel not directly connected with the preparation of the bid documents. The degree to which this principle is followed in actual practice varies based on the size of the procurement entity and other factors.

C. A bid opening committee (BOC) made up of at least three members, one of whom also serves on the BEC, presides over the scheduled public opening of bids for specific contracts.

D. Specifics on how bids are opened and documented vary by country and method of procurement. For example, bidder representatives may be allowed to be present during the bid opening process.

E. Each party present at the bid opening is required to register his or her attendance in a special log set up for this purpose.

F. At the specified date and time, the bids should be formally opened by the assigned BOC. G. Details, such as the bidder's name and address, and required documentation, such as bid

form and bid security, for each opened bid are often read out loud. If the bid security has not been deposited, an immediate disqualification usually results.

H. Each opened bid is logged in a ledger and numbered for future reference. If possible, writing the number of enclosed pages on the outside of the tender envelope may be useful to avoid confusion during bid evaluation.

I. The secretary of the BOC documents the meeting proceedings, and at the end of the meeting, attendees sign the minutes, which everyone in attendance receives later.

J. The time for the bid opening shall be the same as the deadline for receipt of bids or promptly thereafter, and shall be announced in the invitation to bid, along with the place for the bid opening.

K. The BOC shall open all bids at the stipulated time and place. Bids shall be opened in public. Bidders or their representatives shall be allowed to be present (in person or online, when electronic bidding is used).

L. The name of the bidder and total amount of each bid, and of any alternative bids if they have been requested or permitted, shall be read out loud (and posted online) and recorded when opened, and a copy of this record shall be promptly sent to the funding agency and to all bidders who submitted bids on time. Bids received after the time stipulated as well as those not opened and read out loud at bid opening, shall not be considered.

Evaluating Bids and Selecting Suppliers A. Procurement success depends on selecting suppliers that will be able to deliver high-quality

goods at an affordable cost within the required timeframe. Therefore, after bids come in, it is important to ensure that the evaluation process is structured as fairly and transparently as possible.

B. Qualified personnel should be assigned and in place well in advance of the bid opening date.


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C. Good procurement practice generally dictates that bid evaluation tasks be undertaken by a group of personnel, a BEC not directly connected with preparation of the bid documents. The degree to which this principle is followed in actual practice varies based on the number of staff in the implementing organization and other factors.

D. The BEC has responsibility for reviewing and comparing bids and recommending one to the contracting authority based on its comparative merits (including but not limited to price).

E. An ideal BEC would be composed of at least five members and may be chosen from among the following groups:

i. Personnel from the concerned unit of the implementing organization (e.g., finance, commercial, and technical units NOT directly involved in preparing the bid documents).

ii. Personnel from the concerned ministry/division or from other agencies under the concerned ministry/division.

iii. Personnel from warehousing and distribution units, etc.

F. Preliminary Evaluation: The first step of the evaluation process is to examine the bids to ascertain whether they are substantially responsive to the bid documents, i.e., (a) meet the eligibility requirements, (b) are in the required format, (c) have been properly signed, (d) are accompanied by the required securities or required declaration signed as specified, and (e) are otherwise generally in order. i. The bidder shall not be permitted to correct or withdraw material deviations or

reservations once bids have been opened. Nonresponsive bids should not be entered into the collated adjudication report; rather, the problems should be documented in writing for review.

ii. If a bid is not substantially responsive, that is, it contains material deviations from or reservations to the terms, conditions, and specifications in the bidding documents, it should not be considered further.

G. Technical Evaluation: The BEC should conduct a technical evaluation by comparing each bid

to the technical requirements of the statement of requirements in the bid documents, to determine whether the bids are substantially responsive technically. Technical evaluation criteria may include: specification of pharmaceuticals, shelf life, quality parameters and documents, and delivery terms and payment terms.

i. The technical evaluation should not take into account any other technical

requirements that were not included in the bid documents. ii. Bids that are determined to be “non-substantially responsive” with regard to the

technical criteria should be rejected and cannot be further considered for financial evaluation.


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H. Financial Evaluation: The BEC should conduct a financial evaluation and comparison to determine the lowest priced bid, which is substantially responsive to the requirements of the evaluation criteria in accordance with the bid documents. i. Prices should be converted to a common currency and adjustments made for

differences in trade terms (for example, adding freight costs to those bids that do not include freight expenses). The bid price read out loud at the bid opening should also be adjusted to correct any mathematical errors, if they exist.

ii. Spreadsheets are now commonly used to simplify the collation of information and the preparation of an adjudication report. In addition, specialized procurement software is available that automates all of the processes related to collecting bids, collating offers, and ranking them according to predetermined criteria.

iii. The bid with the lowest evaluated total cost, but not necessarily the lowest submitted pharmaceutical price, should be selected for award. Consideration of all costs, both visible and invisible is important.

iv. A margin of preference may be provided in the evaluation of bids for domestic bidders, based on local policy and any agreement with funding agents. This should also be included in the bid documents, when applicable.

I. Post-qualification: If bidders have not been prequalified, the implementing organization

should determine whether the bidder whose bid has been determined to offer the lowest evaluated cost has the capability and resources to effectively carry out the contract as offered in the bid. The criteria to be met should be set out in the bidding documents, and if the bidder does not meet them, the bid should be rejected. In such an event, the implementing organization shall make a similar determination for the next-lowest evaluated bidder. The criteria described for prequalification can also apply to post-qualification. Sections 1.10 (Supplier Prequalification) and 2.2 (Prequalification and Selection of Potential Suppliers) provide more information on pre- and post-qualification criteria.

J. Negotiation: Depending on the method of procurement and local guidelines and SOPs,

negotiations may need to be conducted with bidders that have submitted substantially responsive bids with the lowest evaluated total cost and that have successfully passed post- or prequalification criteria.

i. Price negotiations are not allowed for open bidding, restricted bidding, and request for quotation methods of procurement. However, price negotiation is required to obtain the best value when the procurement is competitive negotiation or direct/sole source procurement or emergency.

ii. Negotiations may be conducted related to: a. Minor alterations to the general conditions of the contract b. Minor amendments to the special conditions of the contract c. Minor variations in the quantity of pharmaceuticals to be delivered

iii. Negotiations should be conducted in person, with the presence of members of the BEC or in writing.


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iv. The BEC should prepare minutes of the negotiations, which shall form part of the procurement record, and obtain the bidder’s written agreement that it is a true and accurate record of the negotiations held.

v. When required, technical experts may be assigned as part of the negotiating team. K. Once the qualified bidder with the lowest evaluated total cost is determined, the BEC writes

a report on the evaluation process and the bidders’ performance, including a recommendation for the contract award. This report and recommendation should include information on all bidders and a clear explanation of the recommended supplier. The BEC members should sign the report with their recommendation, certifying that it was a fair and transparent process.

L. Finally, an appropriate higher-level approval authority should review and approve the bid evaluation report before the contract is signed with suppliers. The appropriate contract award authority reviews the document thoroughly before approval or sends it back for amendments, if necessary.

Contract Awarding A. The contract is the outcome of the bidding process. It is the document that legally binds the

buyer and supplier. B. Important features of a contract or agreement include: specification/description; quantity;

cost; lead time/delivery time; place of delivery; performance, payment terms, and obligations of both parties; penalties for breach of contract; and legal recourse in the case of non-compliance on either side.

C. The final step is to obtain any necessary approval by the contracting authority and funder, if required. Proper signing and authorization of all documents should be ensured by the appropriate parties.

D. Information on the award decision, including who won the bid, may also need to be announced officially and formally to all participating bidders.

1.11.3. Phase III—Contract Management Once the contract has been awarded, the procurement entity has the critical responsibility of administering the contract to ensure the successful performance and achievement of the objectives of the procurement process. The implementing organization should designate staff member(s) as contract administrator(s) for each contract. The roles and responsibilities of these staff are to monitor the contractor’s performance and to ensure that all delivery or

Major outputs of Phase II: Bid preparation and process 1. Approved bid documents

2. Approved bid evaluation report

3. Approved and signed contract with the selected supplier(s)


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performance obligations are met. The administrator(s) actively track supplier’s lead time, delivery status, compliance with contract pricing terms, shelf lives, packaging of products, etc. If the contractor does not honor its obligations, the implementing organization takes appropriate actions, such as sanctions and penalties, as stipulated in the bid documents. The designated contract administrator(s) should use indicators to monitor the performance of the suppliers in the delivery of pharmaceuticals in the right quantity and quality, and at the right time. See sections1.12 (Monitoring and Evaluation) and 2.21 (Monitoring and Evaluation of Procurement Performance).

Port Clearing and Receiving of Pharmaceuticals A. Ensuring the timely receipt of quality pharmaceuticals in the right quantity, at the right

place, and with the right general and special specifications, as indicated in the bid and contract documents, is an important procurement activity.

B. One component of any procurement contract is Incoterms® or International Commercial Terms. Incoterms define who pays the cost of each transportation segment, who is responsible for the loading and unloading of procured pharmaceuticals, and who bears the risk of loss at any given point during transportation to the delivery or receiving point. Incoterms also influence the customs valuation basis of imported merchandise.

C. There are currently 13 Incoterms in use, however, Ex works, Free on Board, Cost Insurance Freight, and Delivery Duty Paid are the most frequently used Incoterms.

i. Ex Works: The supplier makes the pharmaceuticals available to the procurement entity at the supplier’s premises. The procurement entity is responsible for all transportation costs, duties, and insurance, and accepts the risk of loss of pharmaceuticals immediately after the goods are purchased and placed outside the seller’s door.

ii. Free on Board (FOB): The supplier is responsible for delivering the pharmaceuticals from its place of business and loading them onto a vessel at the port of export, as well as clearing customs in the country of export. As soon as the shipment leaves the port of export, the risk of loss transfers to the procurement entity or importer. The procurement entity pays for all transportation and insurance costs from that point, and clears customs in the country of import.

iii. Cost, Insurance and Freight (CIF): The seller or exporter is responsible for delivering the pharmaceuticals onto the vessel of transport and clearing customs in the country of export. The exporter is also responsible for purchasing insurance, with the procurement entity named as the beneficiary. Risk of loss transfers to the procurement entity when the shipment leaves the port of export. If the shipment is damaged or stolen during international transport, the procurement entity files a claim using the insurance procured by the seller. The procurement entity clears customs in the country of import and pays for all other transport and insurance costs in the country of import.

iv. Delivery Duty Paid (DDP): The seller or exporter is responsible for all costs involved in delivering the pharmaceuticals to a named place of destination and for clearing


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customs in both the countries of export and import. Under a DDP Incoterm, the seller provides, literally, door-to-door delivery. Thus, the seller bears the entire risk of loss until the shipment is delivered to the premises of the procurement entity.

D. When DDP or local procurement is used, the procurement entity will not have any responsibility to clear shipments from the port of import; port clearance is the responsibility of the supplier.

E. If either of Ex works, FOB, or CIF is applied in the procurement contract, the responsibility of port clearance in the country of import lies on the procurement entity.

i. Even if the responsibility of port clearance is the responsibility of the procurement entity, it is also the supplier’s responsibility to provide the required and relevant shipping and clearing documents.

ii. The main documents required for shipping and clearance of pharmaceuticals include: bill of lading/air waybill; packing list; certificate of origin; certificate of analysis; and invoice.

iii. Insufficient or incorrect documentation can cause unnecessary delays in clearance, which frequently leads to shortages and fees that the procurement entity is responsible for paying. Customs requirements should be clarified with the national agency, and shared with the supplier before a shipment is sent so that all documentation can be provided to the procurement entity in a reasonable time.

F. Whether the consignment is delivered to the destination or not, procurement or receiving unit staff should inspect the consignment to ensure that the shipment includes the correct products, in the correct quantities, in good condition (with no damage), in the correct packaging, and with the correct labeling.

G. The procurement and/or receiving unit should also ensure that the pharmaceuticals received match the documentation, such as invoices, packing lists, etc.

H. Following physical inspection, if no problems are detected, products can be accepted into the warehouse.

I. It is necessary to quarantine the received pharmaceuticals to sample and analyze their quality in laboratories before they are included in the working inventory and made ready for distribution or use.

J. Warehouse records, such as stock cards, bin cards, or electronic inventory records, should be updated to include the new shipment. All shipment paperwork should be shared with the procurement manager to show proof of delivery and to authorize the processing of payment to the supplier.

Making Payments to Suppliers A. The last step in the procurement process is making payments, according to the

procurement cycle in these guidelines.


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B. Proper management of contract payments allows the procurement entity to exert a certain measure of control in enforcing contract requirements and can help promote a good working relationship with suppliers.

C. Payments should be made based on payment terms and conditions specified in the bid and contract documents. Payment terms and conditions include the payment period, payment schedule, payment mechanisms, currency or currencies, and required documents, such as delivery notes, receiving vouchers, invoices, etc.

D. Make payments in the right currency, amount, and at the right time as stipulated in the bid and contract documents.

E. The exchange rates to be used for the purposes of payments should be those specified by the bidder in the bid documents, so as to ensure that the value of the foreign currency portions of the bid is maintained without any loss or gain.

F. The procurement entity should ensure that the supplier is paid according to the contract terms after delivery of pharmaceuticals and on submission of a valid invoice.

G. Where a letter of credit (LC) is required, an irrevocable LC should be established. A LC is a document from a bank guaranteeing that a seller will receive payment in full as long as certain delivery conditions are met. If advance payment has already been made, it should be deducted.

Procurement Recordkeeping A. Procurement records include all documents relevant to the pre-bidding (planning), bidding,

and contract management phases. The main procurement documents include: procurement plan, bid documents, contracts/ purchase orders, delivery notes and reports, invoices, and payment receipts.

B. It should be possible to reconstruct the entire procurement and contract administration processes from these records. Every event in the procurement process should be recorded and all records appropriately filed. This is important to maintain an audit trail of the requirements, from the initial receipt of the procurement requisition to the closing out of the contract.

C. The procurement entity needs to develop a filing system and maintain a complete record of the entire procurement and contract management processes.

D. The length of time procurement records are kept in active files, and the internal and external audit of those records, are determined by the procurement entity’s legal and regulatory framework. In general, it is essential that important procurement documents be kept safely for at least five years.

E. To avoid duplication of procurement documents when making them available to relevant stakeholders, such documents could be made available electronically, via an electronic document management system, on a controlled access network, or in a management information system.


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Closing the Procurement A. Once the delivery is made and no issues remain pending, the procurement should be closed

and appropriate procurement documents filed according to section 1.11 (The Procurement Cycle).

1.12. Monitoring and Evaluation Monitoring and evaluation (M&E) of procurement and supplier performance can ensure the timely achievement of procurement processes and contract plans and objectives. M&E also provide the information needed to evaluate how well the procurement system is functioning and to identify areas where additional measures may be required to improve overall procurement performance. Any procurement entity should monitor financial and procedural performance, supplier performance, and overall procurement processes. The main components required for M&E of procurement and contract performance are key performance indicators (KPI) and formal procurement records.

A. The procurement entity is expected to undergo regular financial and procedural audits by external independent auditors to ensure transparency and compliance.

B. KPIs should be defined and designed to provide timely, relevant, and concise information for the procurement entity to evaluate progress in achieving pre-established procurement performance goals and targets, and undertake necessary corrective measures.

Major outputs/outcomes of Phase III: Contract management 1. Delivery and acceptance of high-quality products in the right quantity and at

the right time.

2. On time payment to suppliers.

3. Filed procurement documents.

Recommended Minimum Standards for Pharmaceutical Procurement

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2. RECOMMENDED MINIMUM STANDARDS FOR PHARMACEUTICAL PROCUREMENT 2.1. Efficient and Transparent Structure and Management Establishment of well-defined structures for the management of procurement with clear roles, responsibilities and links improves the efficiency, effectiveness, and transparency of procurement activities and processes. 2.1.1. Structure and Organization for Procurement A. To effectively and efficiently implement these guidelines, an independent procurement unit

should be established reporting to the head of the implementing organization. B. The procurement unit shall be composed of at least one procurement coordinator and one

procurement officer with adequate qualifications and experience related to procurement of pharmaceuticals. The procurement coordinator shall be the head of the procurement unit.

C. An authorized Procurement Board shall be established to ensure that procurement guidelines are implemented.

D. The Procurement Board shall consist of at least four members, including a non-voting member:

i. The head of the implementing organization or a delegate, as a chair ii. The head of the Finance and Accounting unit

iii. Procurement coordinator, as non-voting secretary iv. Representatives from user departments (quantification unit, health facilities,

distribution unit)

E. The Procurement Board shall establish an ad hoc BOC. F. Members of the BOC shall be officially assigned, in writing, by the Procurement Board. G. The BOC shall consist of at least three members, one of whom will also serve on the BEC:

i. One member from the procurement unit ii. One user department representative (quantification unit, health facilities, distribution

unit) iii. Finance and accounting unit representative

H. The Procurement Board shall establish an ad hoc BEC. I. Members of the BEC shall be officially assigned, in writing, by the Procurement Board. J. Members of the Procurement Board shall not be members of the BEC, except for the

procurement coordinator, who is the non-voting secretary for both. K. The BEC shall be composed of at least four members, including the non-voting secretary:

i. Two representatives from user departments (quantification unit, health facilities, warehouse and distribution)

ii. The procurement coordinator, as the non-voting secretary


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iii. One representative from finance and accounting who is not a member of the Procurement Board

L. The BOC and BEC shall report to the Procurement Board. M. A “quantification unit” and “quantification technical working group” shall be established to

coordinate and execute quantification-related activities according to the “quantification guidelines.”

N. An independent Finance and Accounting unit reporting to the head of the implementing organization shall be established.

O. Membership of the Procurement Board, BOC, and BEC shall include the following expertise, where possible:

i. Procurement expertise ii. Sufficient financial expertise

iii. Technical knowledge of pharmaceuticals iv. Procurement rules and regulations expertise

P. Technical experts should be invited to help in the technical evaluation of bids, as required.

2.1.2. Separation of Functions To increase transparency and accountability and to make the procurement process more efficient, all functions should not be left entirely in the hands of one unit or official. It should be noted that it is NOT necessary to have an individual, full-time officer for every position. Many of the positions will require only short-term inputs, as and when procurement occurs. While the procurement unit is responsible for coordinating inputs to achieve the desired results, the following functions for quantification and procurement need to be conducted by different units/staff and/or committees:

Table 3: Separation of Functions

Function Responsible Unit/Committee/Staff Notes

Selection Essential medicines selection committee of Afghanistan, National and Hospital Drug and Therapeutic Committees, GDPA

Should be based on the national EML

Quantification Quantification Unit and Quantification TWG/Committee (QTWG/C)

The procurement unit is a member of the QTWG/C

Preparation of procurement plans, including selection of the procurement method

Procurement unit

Preparation of bid documents

Bid opening BOC Procurement coordinator is member

Bid evaluation BEC Procurement coordinator is non-voting secretary Award of contracts Procurement Board


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Function Responsible Unit/Committee/Staff Notes

Contract management Procurement unit Procurement officer shall be designated as the contract manager

Payment to suppliers Finance and accounting

All approvals Procurement Board Procurement coordinator is non-voting secretary

2.1.3. Roles and responsibilities Procurement Board A. The Procurement Board shall be responsible for overall oversight of all procurement activities

of the implementing organization, including establishing the BOC and BEC, and approval of procurement processes and documents.

B. The Procurement Board shall be responsible for approval and authorization of the following procurement processes and documents: i. SOPs for procurement activities

ii. Procurement requisitions and budgets iii. Procurement plans, including methods of procurement iv. Bid documents v. Bid invitations

vi. Contract amendments or terminations vii. Contracts, including signing contracts with suppliers

viii. Bid evaluation reports and recommendations ix. Payments

C. The Procurement Board shall also be responsible for the management of disputes with

bidders and suppliers. D. A member of the Procurement Board may nominate a proxy to attend a meeting of the

Procurement Board, or any Board established in accordance with these guidelines, on his/her behalf. To nominate a proxy, the member of the Procurement Board shall:

i. Consider a member of his/her organization who has the expertise to contribute to the Procurement Board decisions.

ii. Receive approval from the Chair of the Procurement Board that the proxy has sufficient expertise.

iii. Nominate another member of his/her organization for Procurement Board Chair approval if the Chair rejects the original candidate.

Procurement Unit A. The implementing organization procurement unit shall be responsible for coordinating all

procurement and related activities on behalf of the implementing organization.


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B. The procurement coordinator shall mainly be responsible for: i. Serving as non-voting secretary of the Procurement Board.

ii. Receiving approved requisitions and initiating procurement proceedings after getting authorization from the Procurement Board.

iii. Working closely with the finance and accounting unit to cooperate with funding management procedures and ensuring the timely disbursement of funds.

iv. Serving as a member of the BOC. v. Serving as the non-voting secretary of the BEC.

vi. Preparing procurement plans. vii. Preparing a written application for deviation from these guidelines to the Procurement

Board, including justification for the deviation from the guidelines. viii. Preparing, owning, controlling, and implementing procurement SOPs.

ix. Ensuring secure recordkeeping of all procurement-related documents according to section 2.1.7 (Recordkeeping) of these guidelines.

C. The procurement officer shall be responsible for the following activities:

i. Coordinating with the quantification unit to ensure that the estimated value is realistic

and based on up-to-date information on economic and market conditions. ii. Providing information for reports tied to funding disbursements on time.

iii. Preparing bid documents. iv. Tracking the value of contracts awarded. v. Contract management

Bid Opening Committee A. The BOC shall report to the Procurement Board. B. Bidders’ representatives should be permitted to attend the bid opening when open and

restricted methods of procurement are applied. C. The BOC shall open received bids for open and restricted bidding methods in public at the

date, time, and location indicated in the bid documents immediately after bid closing time. D. During public opening of bids, the following information shall be read out loud:

i. The name of the bidder

ii. The total value of the bid, including the currency

E. All members of the BOC shall sign all opened bids on key pages. Key pages shall include priced and signed pages, at a minimum.

F. The BOC shall record any discrepancies or missing documents at the time of the bid opening. G. The BOC shall ensure that all members present and bidders’ representatives (as applicable)

attending the bid opening register their attendance and put signatures, however, the absence of any signature from bidders’ representatives shall not invalidate the record.


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H. The BOC shall immediately take opened bids to a secure location where they will be kept until the evaluation begins.

I. The BOC shall prepare minutes of all bid openings, which shall be submitted to the Procurement Board for approval and kept as part of the procurement record. The record shall include at least the details read out loud, in accordance with section 2.1.3 (Roles and Responsibilities) of these guidelines, and the names of all members and bidders’ representatives attending the opening.

Bid Evaluation Committee A. The BEC shall report to the Procurement Board. B. The BEC shall be responsible for the evaluation of bids and quotations in accordance with set

criteria and the invitation document. C. The BEC shall be responsible for the preparation of bid evaluation report (s) and their

submission to the Procurement Board.

2.1.4. Levels of Authority A. The Procurement Board shall be the highest approval authority for procurement activities. B. The Procurement Board must approve and authorize procurements as well as stages in the

procurement process, such as procurement planning, bid documents, bid evaluation reports, and contracts.

C. The Chairperson of the Procurement Board shall notify the procurement unit, user departments, Procurement Board members, BOC members, and BEC members about the level of authority of any committee or unit with delegated authority from the Procurement Board by issuing a circular or instruction.

D. Contract documents may need to be reviewed by legal resources (if available and required) prior to their issue to ensure that they are in line with the authorization of relevant approval authority.

2.1.5. Formal and Written Procedures for Transparent Procurement A. The implementing organization shall have formal approved written procurement SOPs over

which the procurement coordinator shall retain ownership and control. B. The procurement SOPs shall include approved procurement tools and templates. C. The procurement SOPs must clearly describe at least the major stages of the procurement

processes, such as: i. Procurement planning

ii. Bid documents preparation iii. Bid evaluation iv. Contract documents preparation v. Contracts management

D. The procurement SOPs shall include at least the following:


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i. Title and number

ii. Purpose iii. Procurement process, sub-process, and activity iv. Responsible personnel performing each activity v. Revisions section, including the date of each change, person responsible for review, the

change, and reason for the change vi. Annexes, including standardized tools and templates to be used in procurement

2.1.6. Communications A. All communications between the implementing organization and a bidder or supplier shall be

in writing, and communication in any other form shall be referred to and transcribed in writing.

B. For the purpose of these guidelines, in writing means in a form that provides a record of the content of the communication and may include hard copy, fax, or electronic mail, except where otherwise indicated in these guidelines or in invitation documents.

C. Meetings between the implementing organization and bidders or suppliers shall be recorded in minutes and agreements shall be transcribed in writing.

D. Dari or Pashto and English shall be the languages of communication.

2.1.7. Recordkeeping A. The implementing organization shall maintain records of all procurement proceedings. B. Such records shall be maintained for a period of five (5) years. C. The type and number of procurement records to be kept by the implementing organization

may differ depending on the nature and type of procurement. Below is a comprehensive list: i. The request to initiate procurement proceedings

ii. A copy of any published notices iii. Any shortlist or list of prequalified bidders/suppliers iv. A copy of the prequalification and bid documents and any amendments or clarifications v. The records of bids received and bid openings

vi. Copies of all bids evaluated and any clarifications requested and responses received vii. Evaluation report(s)

viii. Minutes of any meetings related to the procurement ix. Notification of contract award x. Signed contract document

xi. Any contract amendments or variations xii. All procurement decisions of the Procurement Board, including contract amendments

and deviations xiii. All post-contract documentation relating to the fulfillment of contract obligations, in

particular, copies of bank guarantees or advance payment guarantees xiv. All documentation related to port clearance of pharmaceuticals


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xv. All documentation related to deliveries of pharmaceuticals xvi. Copies of all invoices for pharmaceuticals, and details of payment authorizations

xvii. Copies of any claims, disputes under the contract, and related decisions xviii. All correspondence with bidders/suppliers

2.1.8. Disclosure of Conflict of Interest A. Any staff of the procurement unit or member of the Procurement Board or BEC involved in

procurement of pharmaceuticals has an obligation to disclose any conflict of interest in any specific procurement matter and/or agenda item. That staff or member shall: i. Disclose such conflict of interest to the procurement unit, the Procurement Board, or

BEC, as applicable, as soon as possible after notification of a matter or receiving the agenda of the meeting.

ii. Not be present at, or participate in, the deliberations or decision-making process of the procurement unit, Procurement Board, or BEC in relation to the specific matter in question.

B. A disclosure of conflict of interest shall be recorded in the minutes of the meeting at which it is made.

2.1.9. Conduct of Procurement Staff A. All individuals who have responsibilities for procurement shall:

i. Always act in the public interest and in accordance with the objectives and procedures

set out in these guidelines, the PLA, and SOPs. ii. Discharge their duties impartially so as to assure fair competitive access to public

procurement by bidders. iii. Not use their position or information obtained because of their position improperly to

gain advantage for themselves or someone else or cause a disadvantage to the implementing organization.

iv. Not interfere with or exert unjustified influence on any person to affect a procurement activity or decision.

v. At all times avoid conflict of interest and the start of conflict of interest. vi. Not commit or assist corrupt, fraudulent, collusive, or coercive practices.

vii. Keep the information confidential that comes into their possession relating to procurement, including bidders’ proprietary information.

2.1.10. Conduct of Suppliers/Bidders A. Suppliers or bidders participating in pharmaceutical procurement shall:


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i. At all times abide by their obligations under these guidelines, contracts, and other instruments applicable to their conduct and activities related to pharmaceutical procurement.

ii. Not commit or assist, either knowingly or unknowingly, corrupt, fraudulent, collusive, or coercive practices.

2.2. Prequalification and Selection of Potential Suppliers A. The implementing organization is recommended to conduct regular prequalification of

potential bidders/suppliers, preferably to all pharmaceuticals, but at least for the high value pharmaceuticals. (“A” pharmaceuticals, according to the ABC analysis, as described in the “Quantification Guidelines of Afghanistan.”)

B. The implementing organization shall undertake regular monitoring of the performance of already prequalified suppliers and include new potential suppliers at least every two years.

C. Procedures for undertaking prequalification: i. The procurement unit shall prepare prequalification documents that contain all the

information required by applicants to prepare and submit applications to prequalify and shall be drafted using a standard document.

1. Where prequalification is for multiple contracts, the prequalification document shall contain an estimate of the period of time covered by the prequalification, an estimate of the number and value of contracts to be awarded, and any categories to be used in prequalifying applicants.

2. The prequalification document shall have at least the major sections as described in table 4.

Table 4: Contents of a Prequalification Document

Section Section description

Instructions for applicants This section consists of procedures to be followed by applicants in the preparation and submission of their applications for prequalification.

Evaluation and qualification criteria

This section contains the methods, criteria, and requirements to be used to determine how applicants shall be prequalified and later invited to bid.

Application forms This section contains the application submission form and all the forms required to be submitted with the application.

3. The prepared prequalification document has to be reviewed and approved by the Procurement Board and amended, as needed, before being sent out to potential suppliers/applicants. Annex 1 provides a sample prequalification document with recommended details. This sample can be adapted by implementing organizations.


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ii. The procurement unit should publish a prequalification notice inviting all potential suppliers to submit applications to prequalify.

iii. The procurement unit shall promptly issue prequalification documents to all potential suppliers who request them and maintain a record of all potential suppliers to whom documents are issued. Sufficient period of time has to be allowed to enable applicants to prepare and submit their applications to prequalify. The minimum period of time for preparation and submission of applications to prequalify shall be three (3) weeks.

iv. The implementing organization shall establish a prequalification committee, preferably using the BEC, to undertake the evaluation and make recommendations on potential prequalified suppliers.

v. Evaluation of applications for prequalification: 1. All applications for prequalification received on time shall be evaluated by a

prequalification committee, established in a similar manner as the BEC and appointed by the Procurement Board. See section 2.1.3 (Roles and Responsibilities).

2. Evaluation shall be undertaken against the criteria in the prequalification document. Annex 2 provides a sample prequalification scoring sheet for individual supplier and evaluator that can be adapted by implementing organizations.

3. The evaluation committee shall prepare a record of its evaluation of applications, which shall clearly state which applicants were determined to be qualified and the reasons why any applicant was determined to not be qualified.

4. The results of the prequalification, including the record of the evaluation of applications, shall be submitted to the Procurement Board for review and approval. Annex 3 has a sample summary of prequalification results that can be adapted by implementing organizations.

vi. The procurement unit of the implementing organization shall maintain a database of all

potential prequalified suppliers. D. Evaluation criteria: Table 5 provides six broad categories of factors to be considered as

criteria during prequalification of suppliers, and examples of specific criteria for each group: Table 5: Criteria for Prequalification of Suppliers


I General Eligibility Criteria

Valid copies of the certificate of registration, certificate of incorporation, trading license or similar document; Valid copy of tax registration/clearance/certificate; A signed statement that the bidder, or any of its directors or officers, have not been convicted of any criminal offense related to a procurement contract within a period of three years; A signed statement that the bidder is not subject to debarment pursuant to article 70 of the


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Afghanistan’s Procurement Law, or that any of its directors or officers have not been involved in a bidder or contractor currently subject to debarment. Annex 1, section VI has a sample letter of declaration of eligibility that can be adapted by the implementing organizations.

II Technical capability and experience

Past experience in the area and length of period in the business; references on past successful performance and quality of pharmaceuticals. Example: the bidder has supplied the specific pharmaceuticals that are the subject of bidding for at least two (2) years; adequate number of similar contracts completed by bidder; at least three (3) reference checks revealing satisfactory business dealings and quality of products supplied.

III Financial capability

Assets and liabilities, profitability, availability of funds/capital. Examples: bidder’s average annual sales value over the past three (3) years is at least five times the estimated contract value; bidder has maintained a business bank account for at least three (3) years.

IV Systems and managerial capability

Formal SOPs; quality management systems; compliance with specific legislation; recordkeeping and information management systems and technologies to support such systems.

V Human resources

The number of employees and managers; ratio of temporary to permanent employees; organizational structure and position descriptions; qualifications and experience; length of employment; training development opportunities.

VI Business or organizational factors

Resource availabilities, commitments and workloads; demonstration of commitment to client satisfaction; business plan strategy; registration (board or professional body); insurance.


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2.3. Selection and Quantification of Pharmaceuticals A. The implementing organization must procure only those medicines listed in the “National

Essential Medicines List (EML) of Afghanistan.” (Available from: http://gdpa.gov.af/Content/Media/Documents/AfghanistanEML_online20150127122015111112248553325325.pdf. )

B. BPHS and EPHS implementing organizations should procure only those pharmaceuticals included in the current BPHS and EPHS pharmaceuticals list issued by MoPH/GDPA. Note that these lists may be updated and it is important to obtain the latest versions from the GDPA when selecting and quantifying requirements.

C. Quantifications shall be based on reliable consumption, service, morbidity, and/or demographic data together with other logistics information, such as stock on hand, stock on order, safety stock, etc.

D. Each BPHS and EPHS implementing organization must undertake quantification exercises according to the “Quantification Guidelines for Afghanistan” involving major stakeholders, including representatives from the procurement unit.

E. The procurement unit should support the quantification TWG by providing important procurement-related input, such as: product prices; availability of formulations; costs related to shipping, insurance, storage, and port clearance; status and quantity of stock on order, etc. Refer to the “Quantification Guidelines for Essential Medicines” for more information on quantification.

2.4. Financing Procurement A. According to the “Quantification Guidelines for Afghanistan,” available budget for

procurement needs to be confirmed and communicated prior to starting the procurement process, during the quantification exercise, and the available budget should be reconciled with total procurement cost requirements.

B. The implementing organization should secure the budget before starting any procurement. C. When budgets are amended, especially downwards, the procurement unit should work with

the quantification unit and quantification TWG to make adjustments to supply plans until the total procurement requirement is equal to or less than the secured budget.

D. The implementing organization should procure the largest possible quantities of each pharmaceutical in order to achieve economies of scale, while still respecting program requirements/quantification results.

E. For a large volume pharmaceutical awarded to one supplier, divided deliveries over the period of the contract should be specified as part of the contract.

2.5. Competition and Selection of Procurement Methods A. The implementing organization must use competitive procurement methods for all but small,

emergency, or sole source procurements.

http://gdpa.gov.af/Content/Media/Documents/AfghanistanEML_online20150127122015111112248553325325.pdf

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B. Small procurements can be procured using the direct method of procurement without the need for competition.

C. Sole source procurement is mandated when it can be thoroughly documented and proved that only one supplier can provide the pharmaceutical(s) and no other supplier can.

D. All non-emergency and non-sole source procurements that are not small procurements shall be undertaken using any one of the four competitive methods of procurement.

E. Use of open bidding or restricted bidding methods of procurement are preferred. F. The implementing organization shall use threshold values of the prospective donor

organization, as necessary.

2.6. Procurement Planning A. The implementing organization must have a formal written procurement plan produced at

the beginning of each financial year. B. Annual procurement planning shall be integrated with applicable quantification and budget

processes and should be based on agreed quantification results and approved budgets. C. The procurement plan shall be prepared by the procurement coordinator and approved by

the Procurement Board before implementation, in accordance with section 2.1.3 (Roles and Responsibilities) of these guidelines.

D. The procurement plan shall include: i. A list of the pharmaceuticals required, with full specifications.

ii. An indication of the anticipated procurement method for each procurement requirement, including any need for prequalification, post-qualification, and the anticipated time for the complete procurement cycle, taking into account the applicable approval requirements.

iii. A schedule of procurement activities and delivery dates of the required pharmaceuticals.

iv. An indication of which items can be aggregated for procurement as a single package. v. An estimate of the value of each package of pharmaceuticals required and details of the

budget available and sources of funding.

E. The annual procurement plan should be monitored and updated throughout the procurement cycle, at least quarterly, until the procurement is closed. Annex 4 provides a sample template for a procurement plan and tracker that can be adapted by the implementing organizations.

2.7. Unplanned and Emergency Procurements A. When an implementing organization needs to procure pharmaceuticals that are not included

in its annual procurement plan, it shall: i. Require the requester/quantification unit to complete a procurement requisition.


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ii. Mark the requisition as unplanned or emergency procurement, providing an explanation for why it was not planned.

iii. Get approval for the unplanned or emergency procurement from the Procurement Board.

iv. Update its procurement plan to include the additional pharmaceuticals and ensure that an updated version is submitted to the Procurement Board and approved.

2.8. Preparation and Contents of Bid Documents A. Bid documents shall be prepared by the procurement unit for all procurements. They should

contain all the information required by the bidders to prepare and submit bids. B. Use of standard bidding documents is recommended; the level of detail in the bid documents

depends on the size, nature, and type of procurement. C. The following sections and contents shall be included in bid documents for open and

restricted bidding procurement methods: i. Invitation to bid: Describes general matters, such as:

The scope of the procurement; example: procurement of pharmaceuticals and name of the province

The name and address of the implementing organization

The address for submission; the date and time bids are due

The period to be covered by the contract; example: fiscal year 2016

ii. Instructions to bidders: Provides instructions on:

What documents should be submitted, such as registration, trading license, bid offer, bid security, etc., in accordance with section 2.16.4 (Preliminary Evaluation).

How to submit bid offers, in accordance with section 2.14 (Receiving Bids), including how to state prices: sealed envelope, unit prices, total prices for each pharmaceutical, and grand total price.

Bid securities, including amount, form, wording, and the conditions for forfeiture of the security, in accordance with section 2.9 (Bid Security).

Dates of bid validity: bids shall be valid until one week after signing of the contract.

Currencies, in accordance with section 2.11 (Bid Currency).

Performance bonds/securities

Format for submitting offers

Date, time, and location of bid opening

Details of pre-bid conferences, including the date, time, and location, as applicable.

Criteria for bid evaluation and rejection of substantially nonresponsive bids.

Procedures involved in adjudication, award, and notification.


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iii. Conditions of contract: Describes the general and special conditions in the contract that will be signed with successful bidders. This may include:

Advance payments

Terms and methods of full payment

Penalties for default

Dispute resolution procedures

iv. Technical specifications: Describes specifications, including:

Full specifications of the required pharmaceuticals, including nomenclature, dosage form, strength, basic unit of measure, packaging size, packaging materials, packaging instructions, and labeling required for each pharmaceutical

Quantities of each pharmaceutical required

Shelf life and expiration date parameters

Storage conditions

cGMP standards, pharmacopoeia standards, and quality assurance certifications required

Delivery time and destination: specific dates and place of delivery

v. Requirements related to the capacity and reliability of the supplier: Describes the capacity of the bidders in terms of the following. See also sections 2.2 (Prequalification and Selection of Potential Suppliers) and 2.16.7 (Post-qualification):

Capability to supply the required quantities

Verifiable business and financial stability

Verifiable history of successful performance

vi. Bid evaluation and selection process and criteria: Describes the criteria to be used in the bid evaluation process and selection of suppliers, in accordance with section 2.16 (Bid Evaluation) and includes:

General criteria: form and completeness, validity period, signature on the offer/bid, etc. See section 2.16.4 (Preliminary Evaluation).

Technical criteria: specification of the pharmaceuticals, quantity, quality standards, etc. See section 2.16.5 (Technical Evaluation).

Financial criteria: unit and total prices. See section 2.16.6 (Financial Evaluation and Comparison).

Post-qualification criteria (when prequalification is not already done): See section 2.16.7 (Post-qualification).

vii. Necessary appendices: such as formats for various securities (as necessary).

D. At least the following sections and contents will be included in the request for quotations:


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i. Full specifications of the required pharmaceuticals ii. Quantities of the pharmaceuticals iii. Bidding procedures, including the form and deadline for submission of bids iv. Criteria for bid evaluation and contract award v. Delivery dates and location vi. Payment terms and timeline vii. Any special conditions

2.9. Bid Security A. The bid security amount shall be fixed, but will not exceed 2% to 5% of the estimated value of

the procurement. B. However, when direct procurement and a request for quotation are used, no bid security

shall be required. C. The bid security shall be in the form of an unconditional bank guarantee issued as a letter of

credit or certified check. D. In all other instances, a bid security shall be provided with the bid. E. After the deadline for bid submission, bid securities should no longer be accepted. F. If the bid security is submitted in a non-compliant manner, changes or revisions will not be

accepted. G. All bids without bid securities or adequate bid securities shall be rejected. H. The implementing organization shall revoke the bid security if the bidder—

i. Withdraws its bid before expiry of its validity. ii. Refuses to sign the contract after bid acceptance. iii. Refuses to provide the required performance security after bid acceptance.

I. Bid securities of nonresponsive bidders shall be returned within 10 work days after the

contract is signed with the successful bidder or within 10 work days upon expiry of the bid validity period.

J. Bid securities shall be released to the successful bidders within 10 work days after signing of the contract.

K. Bid securities shall also be returned within 10 work days upon cancellation of the bidding proceedings or upon withdrawal of a bid prior to the deadline for the submission of bids.

2.10. Bid Validity Period A. The bid validity period specified in the bid documents shall be a period sufficient to allow for

evaluation and award of a contract. B. The bid has to remain valid until signing of the contract with the successful supplier. See

Annex 5 on timelines of procurement milestones by method.


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2.11. Bid Currency A. The currency of the bid will be Afghanis (AFN) or US dollars (USD) unless otherwise specified

in the bid documents. The base currency for evaluation purposes shall be the AFN or USD only.

B. The selling exchange rate established by the National Bank of Afghanistan, as specified in the bid documents, shall be used for conversion of other currencies to the USD for comparison.

C. The currency of the bid shall also be the currency of the contract and payment. 2.12. Approval of Bid Documents A. Bid documents prepared by the procurement unit should be thoroughly reviewed, approved,

and authorized by the Procurement Board before they are advertised or sent to potential bidders.

2.13. Invitation to Bid A. On completion and approval, the procurement unit shall advertise the bid documents in

newspapers, trade bulletins, journals, organizational and governmental websites, and/or bulletin boards. The above bid invitation methods should apply for open bidding and restricted bidding methods of procurement.

B. The procurement unit may send bid invitations directly to a limited group of pre-selected suppliers when the procurement method is a request for quotation or direct procurement.

C. All prospective bidders shall be provided with the same information, and shall be assured of equal opportunities to obtain additional information in a timely manner.

D. As a general rule, all invitations for bids shall allow sufficient bidding time (i.e., the period between the invitation for bids and the opening of bids) to enable bidders to prepare the bid documents and submit bids. Table 6 provides details on media for bid invitations by method and bidding time.

Table 6. Media for Bid Invitation and Bidding Time

Procurement method Media for bid invitation

Length of time for bid/offer preparation and submission

Open Newspapers, trade bulletins, journals, organization and government websites, and local bulletin boards; audio- visual media

21 work days for national and 30 work days for international bidding

Restricted Newspapers, trade bulletins, journals, organization and government websites, and local bulletin boards; audio- visual

14 work days for national and 21 work days for international


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media, direct (letter or e-mail) bidding

Request for quotation

Direct (letter or by e-mail) 5 work days

Direct procurement

Direct (letter or by e-mail) 5 work days

E. If, after issuing the invitation for bids but before the deadline for submission, it becomes necessary to make changes in specifications, delivery schedules, opening dates, etc., or to correct a defective or ambiguous statement in the invitation, an amendment shall be issued in the form of an addendum. The amendment addendum shall be provided to every bidder through the same media of communication.

F. A bidder may also request clarifications on the bid. In such situations, the implementing organization shall respond if the request is received within a reasonable time (as specified in the bid documents) prior to the deadline for submission of bids. Such a response shall be sent out to all potential bidders using the same media of communication and without revealing the source of the inquiry.

G. Before issuing an amendment to the bidding documents, the amount of time remaining for bid submission must be considered. If an amendment needs to be issued and there is less than one-third of the time allotted for the submission of bids left, the procurement unit shall extend the deadline by an appropriate number of days (a minimum of three days) for submission of bids, depending on the nature of the procurement and the addendum, after authorization by the Procurement Board. Such notification must be included in the amendment.

2.14. Receiving Bids A. Bidders shall submit bids in sealed envelopes, irrespective of the method of procurement—

competitive or direct. B. No bids should be received after the date and time specified in the bid documents. C. A written record should be kept of all bids received, documenting the date received and the

person who received the bid. The sealed bids should be stored in a locked, secure area until the bid opening time.

2.15. Opening Bids A. An adequate quorum, two-thirds of the BOC, in accordance with sections 2.1.1 to 2.1.3,

should be responsible for opening the bids. B. Representatives of bidders should be allowed to be present during the bid opening when

open and restricted bidding methods of procurement are used. C. Each party present at the bid opening is required to register his or her attendance in a special

log set up for this purpose.


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D. The time for the bid opening shall be the same as the deadline for receipt of bids or promptly thereafter. At the specified date and time, the bids should be formally opened by the assigned BOC.

E. For open and restricted bidding methods of procurement, at least the name of the bidder, total price of the bid, and currency shall be read out loud.

F. Each opened bid shall be logged in a ledger and numbered for future reference. If possible, writing the number of enclosed pages on the outside of the bid envelope may be useful to avoid confusion during bid evaluation.

G. The secretary of the BOC shall document the meeting proceedings, and at the end of the meeting, attendees should sign the minutes, which everyone in attendance will receive later.

H. Bids received after the time stipulated, as well as those not opened and read out loud at bid opening, shall not be considered.


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2.16. Bid Evaluation 2.16.1. Bid Evaluation Committees A. All members of the BEC shall understand the terms of reference for the committee and sign

declarations of confidentiality and conflicts of interest. B. The BEC shall be responsible for the evaluation of bids or quotations and the preparation of

bid evaluation and recommendation reports for submission to the Procurement Board, in accordance with sections 2.1.1 to 2.1.3.

C. Where required, specific technical experts should be invited to assist in the technical evaluation of bids.

D. The BEC may seek guidance and advice from the Procurement Board, where required. 2.16.2. Guidelines for Bid Evaluation A. All bid documents shall clearly state the methodology and criteria to be used in the evaluation

of bids and the determination of the best evaluated bid. B. No criteria, other than those stated in the bid documents, shall be taken into account, and all

criteria shall be applied equally to all bidders. C. The BEC may ask bidders for clarification of their bids in writing in order to assist in their

evaluation, but no changes in the substance of bids, including changes in price, shall be permitted after the date and time of bid closing.

D. The failure of a bidder to reply to a request for clarification may result in the rejection of its bid.

E. The BEC’s determination of a bid’s responsiveness shall be based on the contents of the bid itself, subject to any clarification received.

F. Where a bid is substantially responsive, the BEC may waive, clarify, or correct any non-conformity, error, or omission that does not constitute a material deviation.

G. The BEC may correct purely mathematical errors in bids in accordance with the procedure stated in the bid documents.

H. Bidders shall be notified of any mathematical corrections and requested, in writing, to agree to the correction.

I. Any bidder who does not accept the correction of a mathematical error shall be rejected and the bid security of that bidder may be forfeited.

J. It is very important for the bid evaluation work to take place promptly, and result in a Recommendation for Award and contract signing before the period of bid validity expires. Once begun, the BEC should work continuously to carry out its responsibilities.

K. In every case, original bids must be kept separately and locked. Bid evaluation work should be based on copies of the originals supplied by the bidders.

L. Evaluators must not consider any information contained in a bid submission that was not specifically requested in the bidding documents.

M. Technical experts enlisted to assist the bid evaluation should be allowed to see the relevant and necessary technical sections of bids only.


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N. A checklist of criteria should be developed based on the requirements in the bid documents issued to potential suppliers.

2.16.3. Bid Evaluation Methodologies and Criteria The lowest evaluated substantially responsive bid may or may not necessarily be the lowest priced bid. In order to determine accurately the lowest evaluated substantially responsive bid in accordance with the terms and conditions of the bidding documents, a systematic evaluation procedure designed to cover all aspects of the evaluation process should be followed. A. The methodology for the evaluation of the bids shall consist of the following phases:

i. Preliminary: An examination to determine whether bids are complete and are

responsive to the basic instructions and requirements of the bid documents on a pass or fail basis.

ii. Technical: An evaluation to compare each bid to the technical requirements of the statement of requirements on a pass or fail basis, to determine whether the bids are substantially responsive.

iii. Financial: An evaluation and comparison to determine the bid with the lowest evaluated price.

iv. Post-qualification: An evaluation of the bidder with the lowest evaluated cost for capability and resourcefulness to effectively carry out the contract as offered in the bid. Post-qualification is applied when prequalification is not done prior to the bidding process.

v. Negotiation: Discussions and agreement on modifications, usually minor, with the successful bidders.

B. A defined set of bid evaluation criteria should be applied during the evaluation of bids for

each of the above phases, according to the bid documents sent out to bidders. See sections 2.16.4 (Preliminary Evaluation) and 2.16.7 (Post-Qualification) for details on bid evaluation criteria by category.

2.16.4. Preliminary Evaluation A. The BEC shall conduct a preliminary examination to determine whether bids are complete

and are responsive to the basic instructions and general requirements according to the bid documents.

B. This step requires significant judgment and extreme care because bids that are determined to be “not substantially responsive” cannot be further considered. In other words, they cannot be evaluated on the basis of technical specifications or price. Mistakes in this step are likely to result in a protest and may lead to cancellation of the bid. Documentation of decisions is critical in defense of any protest.

C. Criteria for the preliminary evaluation/examination may include:


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i. Use of proper format and completeness of the submitted bid ii. Validity of the bid for at least the validity period specified in the bid documents iii. Bid security in the correct form and amount and validity period iv. If the bid has been correctly signed and authorized v. If only bids from prequalified bidders are included (if prequalification was required) vi. Correct number of copies (one original and two copies) of the bid documents have

been submitted vii. Declaration of eligibility viii. Current and valid regulatory, trade, and/or professional registration license ix. Current and valid manufacturing license x. Certificate of tax clearance from an appropriate authority xi. Receipt for purchase of the bid documents, as applicable xii. Whether the supplier or manufacturer of the pharmaceutical has been barred by a

government or donor xiii. Any alterations or changes to the bid documents

2.16.5. Technical Evaluation A. Each member of the BEC shall conduct a technical evaluation independently by comparing

each bid to the technical requirements in the statement of requirements in the bid documents to determine whether the bids are substantially responsive.

B. The technical evaluation criteria may include the following: i. Specification of the pharmaceutical, including name, strength, dosage form, packaging

material, pack sizes ii. Required pharmaceutical standards, for example, British Pharmacopoeia (BP), United

States Pharmacopoeia (USP), International Pharmacopoeia (Ph. Int.), European Pharmacopoeia (EP)

iii. Labeling specifications iv. Product packaging specifications v. Product shelf life: total remaining shelf life should be at least 75% of the shelf life of

medicines at the time of receipt vi. Quality Assurance Certificates of Analysis

vii. Delivery schedule and place viii. Terms, conditions, and timeline of payment

C. The technical evaluation shall not take into account any other technical requirements that

were not included in the bid documents. D. Bids that are determined to be “non-substantially responsive” with regard to the technical

criteria shall be rejected and cannot be further considered for financial evaluation. In other words, they cannot be evaluated on the basis of price.


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2.16.6. Financial Evaluation and Comparison A. The BEC shall conduct a financial evaluation and comparison to determine the lowest cost bid

that is substantially responsive to the requirements of the evaluation criteria in accordance with bid documents.

B. The evaluated cost for each bid shall be determined by: i. Taking the bid price, as read out loud at the bid opening

ii. In cases in which the bidders did not include visible costs, such as freight costs, the implementing organization shall adjust the price accordingly.

iii. Correcting any mathematical errors iv. Converting all bids to a single currency

C. Bids shall be compared by ranking them according to their evaluated costs. D. Where the lowest cost bid appears to be abnormally priced, the BEC may request a

breakdown and justification of prices in order to verify the responsiveness of the bid or the bidder’s qualifications.

2.16.7. Post-Qualification A. If bidders have not been prequalified, the BEC shall determine whether the bidder whose bid

has been determined to offer the lowest evaluated cost has the capability and resources to effectively carry out the contract as offered in the bid.

B. The criteria to be met shall be set out in the bidding documents, and if the bidder does not meet them, the bid shall be rejected. In such an event, the implementing organization shall make a similar determination for the next-lowest evaluated bidder.

C. Factors that need to be considered during post-qualification include: i. Adequate capability to supply the required quantities: Whether the bidder has adequate

capacity to supply the quantity of the required pharmaceuticals. ii. Verifiable business and financial stability: Whether the bidder has adequate average

annual sales over the past defined number of years; whether the bidder has supplied the specific pharmaceuticals that are the subject of bidding; whether the bidder has maintained a business bank account for a defined number of years.

iii. Verifiable history of successful performance: Whether the bidder has satisfactorily completed similar contracts in the past; whether a reference check reveals satisfactory business dealings and quality of products supplied.

D. If the post-evaluation result of the bidder that has offered the lowest evaluated cost is

positive, the BEC shall proceed to negotiations. If necessary, in accordance with section 2.16.8 (Negotiation) and/or preparation of a bid evaluation report and recommendations.


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2.16.8. Negotiation A. Price negotiations are not allowed for open bidding, restricted bidding, and request for

quotation methods of procurement. However, price negotiations are required to obtain the best value when the procurement is direct, either sole source procurement or emergency procurement.

B. The BEC shall only conduct negotiations with bidders that have submitted substantially responsive bids with the lowest evaluated total cost and that have successfully passed post-qualification criteria.

C. The BEC shall prepare a plan for the negotiations, which shall specify the issues to be negotiated and objectives to be achieved, and to the extent possible, quantify the objectives and set maximum and minimum negotiation parameters.

D. Negotiations shall be conducted related to: i. Minor alterations to the general conditions of the contract

ii. Minor amendments to the special conditions of the contract iii. Minor variations in the quantity of pharmaceuticals to be delivered

E. Negotiations shall not be conducted to:

i. Substantially change the technical quality or details of the bid, including the tasks or

responsibilities of the bidders ii. Materially alter the terms and conditions of the contract

iii. Substantially alter anything that was a deciding factor in the evaluation of the bid F. Negotiations shall be conducted in person and in the presence of members of the BEC or in

writing. G. If negotiations fail, the BEC shall obtain the prior authorization of the Procurement Board to

open negotiations with the next ranked bidder. H. The BEC shall prepare minutes of the negotiations, which shall form part of the procurement

record and shall obtain the bidder’s written agreement that they are a true and accurate record of the negotiations held.

I. When required, technical experts shall be assigned as part of the negotiating team. 2.16.9. Evaluation Report and Award Recommendation A. The BEC shall prepare an evaluation and award recommendation report for submission to the

Procurement Board. B. The evaluation and award recommendation report shall include:

i. The project overview

ii. The bid documents iii. A summary of bids received and opened iv. The results of the preliminary examination v. The results of the technical evaluation


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vi. The results of the financial evaluation vii. Results of the post-qualification evaluation

viii. Reasons why any bids were declared nonresponsive ix. Details of any non-material deviation, which were accepted and the way in which they

were quantified and taken into account in the financial evaluation. x. The evaluated cost of each bid, showing any corrections or adjustments to the bid

prices/costs and any conversion to a common currency. xi. The ranking of the bids, according to their total evaluated cost. xii. A statement of the best evaluated bid, for each product or procurement package.

xiii. A summary of the application of any conditional discounts and the best evaluated combination of bids, where applicable.

xiv. The results of any post-qualification xv. A recommendation to award the contract or contracts to the best evaluated bid or

combination of bids, or other appropriate recommendations, such as cancellation of the procurement process.

xvi. The relevant budget approval

C. The evaluation and award recommendations shall be submitted to and approved by the Procurement Board prior to proceeding with contract award or cancellation of the procurement process.

2.17. Cancelation and Rejection of Bids A. After competitive bids are opened, it is prudent to evaluate and make an award to the lowest

evaluated bidder unless there are valid reasons to reject all bids and cancel the invitation. B. The bidding documents should provide that the implementing organization may reject all bids

when:

i. There is justified lack of effective competition ii. All bids are not substantially responsive

iii. There is no bidder that meets the specified qualification criteria iv. The bid costs are substantially higher than the estimated cost or available budget

C. An invitation to bid may be cancelled if it is determined that all the bids were not

independently prepared and submitted in open competition, i.e., if bidders colluded and submitted their bids in bad faith.

D. Lack of competition shall not be determined solely on the basis of the number of bidders. Even when only one bid is submitted, the bidding process may be considered valid, if the bid was satisfactorily advertised, the qualification criteria were not unduly restrictive, and prices are reasonable in comparison to market values.

E. If all bids are rejected, the BEC shall review the causes justifying the rejection of all bids and make an appropriate report and recommendation to the Procurement Board for approval and revisions to the bidding documents before re-inviting bids.


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F. The revision of qualification criteria may be justified only when they were set too stringently. G. Generally, bids should not be cancelled due solely to an increase or decrease in requirements

of items. In instances of quantity increases or decreases after an invitation for bids, an award may be made with an increase or decrease of a maximum of 20% over/under the original quantity specified in the bid documents. If the increase or decrease is more than 20%, then the bid should be considered a new procurement and subject to a new bidding process.

H. Prior approval and authorization shall be obtained from the Procurement Board before rejecting all bids or soliciting new bids.

I. When it is determined that all bids should be rejected, the procurement unit shall notify bidders and keep records of the communications according to section 2.1.7 (Recordkeeping).

2.18. Award Notice and Contract Awarding 2.18.1. Award Notice to All Bidders A. Once the recommended lowest evaluated bidder has been approved, the procurement unit

should prepare, get approval from the Procurement Board, and publish/send an award notice to all bidders (successful and unsuccessful) to inform them about who has been selected as the successful bidder.

B. The award notice shall contain the bid with its reference number and the following information, as relevant and applicable: i. The name of each bidder that submitted a bid

ii. Bid prices as read out loud at the bid opening iii. Evaluated prices of each bid that was evaluated iv. The names of bidders whose bids were either rejected as nonresponsive or not meeting

qualification criteria, or not evaluated, with the reasons thereof. v. The name of the winning bidder, the final total contract price, as well as the duration

and summary scope of the contract.

C. The award notice shall be published in different media, as appropriate, in accordance with section 2.13 (Invitation to Bid).

D. The award notice shall include the procedures and timeline for any challenges/disputes in accordance with section 2.19 (Dispute Resolution) of these guidelines.

E. The implementing organization shall, when requested in writing, provide unsuccessful bidders with a briefing as to the reasons for the failure of their bids within five (5) work days.

F. The briefing shall state at which stage of the evaluation the bid was deemed unsuccessful, provide brief details on any material deviation, reservation, or omission leading to the rejection of the bid, or state any relative weakness of the bid that was substantially responsive but failed to offer the lowest evaluated cost or highest score, as required.

G. The briefing shall not provide details on any other bids, other than information that is publicly available from bid openings or published notices.


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2.18.2. Award Letter to Successful Bidders A. An award letter is the decision notice sent out to successful bidder(s) once the evaluation

decision has been made. It should be prepared by the procurement unit and approved by the Procurement Board.

B. Given that the implementing organization is likely to be entering into contractual relations with the successful bidder, the aim is to prepare the award letter in a positive way that gives encouragement and comfort to the successful bidder, while at the same time ensuring that the implementing organization does not commit itself to any binding legal obligations at this stage.

C. The implementing organization shall make sure that the letters do not imply the bid made by the supplier has been accepted, as any such acceptance is likely to be binding. The offer is deemed to be accepted and becomes biding when the contract is signed by the supplier and the implementing organization.

D. Award letters shall include the following: i. The name and address of the implementing organization

ii. The name and address of the bidder iii. The description and quantity of the pharmaceutical products iv. The bid value/cost v. The date and reference number of the accepted bid

vi. Modifications, if there are any, to the bid, resulting from clarifications or corrections. vii. The description and quantity of items excluded from the original bid documents or any

other variations and negotiation results, if there are any. viii. Request for “award acceptance letter” from the selected bidder to confirm acceptance

ix. Provision of any required performance security, in accordance with section 2.18.4 (Performance Securities) of these guidelines, within ten (10) work days after issue of the award letter.

x. The planned date and time of conclusion and signing of the contract, 15 work days after issuance of the award letter.

E. The successful bidder shall confirm acceptance of the award in writing with an “award

acceptance letter.” F. The implementing organization shall keep records of the award letters and award acceptance

letters and related documents in accordance with section 2.1.7 (Recordkeeping).

2.18.3. Contract Documents A. The implementing organization shall prepare a contract document for all individual contracts

and for each of the suppliers selected to supply specific pharmaceuticals. B. It is the responsibility of the procurement unit to prepare the contract document and get

approval from the Procurement Board. C. The contract document shall include all contract terms and conditions included in the bid

invitation and the supplier’s bid, subject to any agreed modifications, as necessary.


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D. In particular, the contract document shall include the following: i. The general conditions of the contract

ii. The special conditions of the contract iii. A statement that the special conditions of the contract prevail over the general

conditions and the order of priority of other contract documents. iv. A clear description of the pharmaceuticals for the contract, including the technical

specifications and quantity. v. Delivery schedule, based on the requirements

vi. The total contract value/cost vii. The payment conditions, including the payment period, schedule, currency, and

documentation required viii. Any requirement for performance securities

ix. The procedures for dispute settlement x. Other contract terms may include, but are not limited to warranties, insurance,

subcontracting, inspection and acceptance, contract completion, delays in performance or other non-performance, force majeure and variation, modification, and termination of the contract.

2.18.4. Performance Securities A. The implementing organization shall request a performance security for all contracts, to

secure the supplier’s obligation to fulfil the contract. B. The contract shall state the requirements for a performance security, including its form and

wording and the conditions for forfeiture of the security. C. The value of any required performance security shall be expressed either as a fixed amount or

as a percentage of the contract value. The amount shall be 5% to 10% of the contract value. D. The selected bidder shall be required to provide the performance security within 10 work

days of the issue of the award letter before signing the contract. E. The performance security has to be in the form of an unconditional bank guarantee issued as

a letter of credit or certified check. F. The implementing organization shall release the performance security to the supplier within

10 work days upon completion of all the supplier’s contractual obligations.

2.18.5. Contract Signing and Awarding A. All contract award decisions shall be made by the Procurement Board according to sections

2.1.1 to 2.1.3. B. All contract award decisions shall be made in response to a recommendation for contract

award, contained in the bid evaluation report. C. Following the contract award decision by the Procurement Board, the implementing

organization shall confirm the availability and commitment of funds before proceeding to award the contract if that was not already done at the beginning of the procurement process.


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Note that it is recommended to secure and commit funds at the beginning of the procurement process in accordance with section 2.4 (Financing Procurement).

D. The procurement unit shall obtain prior authorization of the contract document from the Procurement Board before sending it to the supplier for signature.

Contract Signing and Awarding for Open and Limited Bidding

A. The contract shall be signed within 18 work days after the award notice, and eight (8) work days after submission of the performance security by the successful bidder.

B. If the recommended bidder fails to conclude a contract, or fails to provide a performance security or any other action required by the bid invitation document, the implementing organization shall award the contract to the next ranked bidder, subject to the bidder being qualified and prior authorization by the Procurement Board.

C. The procurement unit shall ensure that the supplier signs and returns a copy of the contract within three (3) work days from receipt of the contract draft.

Contract Signing and Awarding for Request for Quotations A. The contract shall be signed within eight (8) work days after the award notice. B. If the recommended bidder fails to conclude the contract or any other action required by the

bid invitation document, the implementing organization shall award the contract to the next ranked bidder, subject to the bidder being qualified and prior authorization by the Procurement Board.

C. The procurement unit shall ensure that the supplier signs and returns a copy of the contract within three (3) work days from receipt of the contract draft.

Contract Signing and Award for Direct Procurement A. When the implementing organization conducts direct procurement, the procurement unit

shall prepare a written contract or purchase order and send it to the selected bidder. B. The implementing organization shall obtain the signed contract or purchase order within

three (3) work days after the issue of the contract/purchase order. 2.18.6. Distribution of Signed Contracts A. After the contract documents have been duly signed by both the bidder and implementing

organization, copies shall be distributed with copies of the notice of award, as follows: i. One copy to the bidder

ii. One copy to the receiving warehouse and distribution unit for receiving purposes iii. One copy to the finance and accounting unit for payment purposes iv. One original copy to the procurement unit for recordkeeping v. One copy to the Procurement Board


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2.18.7. Effectiveness of Contracts A. Any procurement contract signed by the implementing organization and selected bidder shall

be effective starting from the date of signature. B. Other factors that may need to be considered for effectiveness of a contract could include:

i. Receipt by the bidder of an advance payment

ii. Receipt by the bidder of an acceptable letter of credit

2.18.8. Final Notification to Unsuccessful Bidders A. Upon signing of the procurement contract with the successful supplier, in accordance with

section 2.18.5 (Contracting Signing and Awarding), the implementing organization shall promptly notify, within five (5) work days, all unsuccessful bidders by sending out a letter.

B. The implementing organization shall also return any bid securities to all unsuccessful bidders within the same period.

C. The final notifications to unsuccessful bidders shall be kept as part of the procurement record, in accordance with Section 2.1.7 (Recordkeeping).

2.19. Dispute Resolution A. Generally, disputes/complaints may arise during procurement between:

i. The implementing organization and unsuccessful bidders

ii. The implementing organization and the selected supplier after the signing of the contract

B. Any dispute/challenge, regardless of the method used to resolve it, takes time and additional

expense, especially if it involves a legal proceeding in the court. C. As a matter of general practice, the implementing organization is best advised to take

practical steps during the bid and contract preparation and monitoring processes that can help to reduce the chances of dispute. These measures include but are not limited to: i. Incorporating clear instructions, specifications, conditions and criteria in the bid

documents. ii. Institutionalizing transparent and formally documented procurement procedures and

approval procedures. iii. Stating contractual requirements clearly (e.g., specifications, delivery dates, etc.). iv. Using plain and clear language in all contract documents. v. Addressing problems as soon as they arise, before they escalate.

vi. Not allowing a pattern of supplier defaults to develop. vii. Maintaining a good working relationship with the bidders and suppliers.


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D. Dispute resolution procedures should be established and included in the bid and contract documents (with both parties’ agreement for the latter).

E. The disputing party shall develop a document outlining its disputes and complaints and the basis for its dispute or protest, and send the document to the implementing organization and the Procurement Board in timely manner.

F. The dispute resolution options should be listed in order of precedence, and the least severe and least costly method should be attempted first, before resorting to more severe methods.

G. Alternative dispute resolution (ADR) methods, those used to resolve disputes without resorting to legal proceedings in court, will preferably be used. The basic premise of ADR is that litigation can and should be avoided whenever possible. When applied to public procurement, ADR seeks to resolve disputes equitably and expeditiously by keeping the process in the hands of procurement officials, the Procurement Board, and their legal advisers and away from litigating attorneys, judges, and courts.

H. ADR procedures include: i. Conciliation

ii. Mediation iii. Expert appraisals iv. Fact-finding v. Arbitration

vi. The use of ombudsmen

2.20. Contract Management 2.20.1. Contract Management and Responsibilities A. The implementing organization shall designate the procurement officer as the contract

manager for every contract awarded. B. The contract manager shall be responsible for:

i. Monitoring the performance of the suppliers to ensure that all delivery or performance

obligations are met or that appropriate actions are taken by the implementing organization and the supplier in the event that obligations are not being met.

ii. Documenting and reporting on the supplier and procurement performance according to section 2.21 (Monitoring and Evaluation of Procurement Performance).

iii. Ensuring that the supplier submits all required documentation, such as shipping and clearance documents.

iv. Ensuring that the implementing organization meets all payment and other obligations on time and in accordance with the contract.

v. Ensuring that there are adequate costs, quality, and time control, when required. vi. Preparing any required contract amendments and referring them to the Procurement

Board for authorization prior to issue. vii. Following and documenting the timely receipt of the pharmaceuticals.


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viii. Referring any recommendations for contract termination to the Procurement Board prior to issue.

ix. Notifying the Procurement Board of any disputes with suppliers and seeking guidance on resolution.

x. Ensuring that the contract is complete prior to closing the contract file. xi. Ensuring that all contract management records are kept and archived as required, in

accordance with section 2.1.7 (Recordkeeping). 2.20.2. Contract Amendments A. When any change to the terms and conditions of a contract is required, the procurement unit

shall prepare a written contract amendment. B. The procurement unit shall obtain authorization from the Procurement Board prior to the

issue of any amendment. C. Any contract amendment shall only be valid when signed by the authorized representatives of

both the implementing organization and the supplier.

2.20.3. Port Clearing, Receiving, and Inspection A. For international shipments, the supplier shall send the required original shipping

documents to the implementing organization on time for custom clearance. B. For ocean shipments/air shipments that need to be cleared by the implementing

organization, the following copy and original shipping documents shall be submitted to the implementing organization for customs clearance: i. Bill of lading (ocean) or air waybill (air)

ii. Commercial invoice iii. Packing list iv. Insurance policy v. Certificate of origin

vi. Certificate of analysis

C. If the pharmaceuticals are exempted from customs duties and value added tax, the implementing organization shall obtain an exemption certificate for customs clearance from the customs and tax authority.

D. If the pharmaceutical is not registered by the local regulatory authority, the implementing organization shall obtain prior written approval/ waiver for importation and shall provide the document for facilitation of clearance at the port of entry. “C” and “D” apply to both purchased and donated pharmaceuticals.

E. Once the pharmaceuticals are cleared from customs, they shall be transported to the warehouse location of the implementing organization in a manner that can maintain their quality and prevent any losses.

F. The warehouse staff shall officially receive the shipment, along with the following documents:


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i. Commercial invoice ii. Packing list

iii. Onboard insurance survey report iv. Local delivery receipt, in the case of domestic delivery

G. Upon delivery, warehouse staff shall inspect the pharmaceuticals for the following details

and against the shipping and contract documents: i. Correct pharmaceuticals

ii. Any damage iii. Special packing, as required by the contract iv. Whether full quantities are delivered v. Packing list present and correct

vi. Correct labeling on packaging, including expiry dates, batch numbers vii. Product certificate of analysis from the manufacturer included in the shipmen

viii. Certificate of quality control from the Afghanistan National Quality Control Laboratory ix. Certificate of product origin x. Any further testing requirements

H. The warehouse staff should immediately report any problems found, such as quantity and

quality discrepancies, damage or defects, etc. in writing to the procurement unit and implementing organization head.

I. Pharmaceuticals with unresolved questions should be quarantined until all the problems are resolved.

J. When there are no issues/problems, the warehouse staff shall issue proof of delivery to the procurement unit and the Procurement Board.

2.20.4. Quality Assurance of Pharmaceuticals Pharmaceutical quality assurance (QA) is the sum of all activities and responsibilities intended to ensure that the quality of received pharmaceuticals complies with the applicable quality specifications. A QA system can be divided into three parts: ensuring that products meet current standards for quality; verifying that received pharmaceuticals meet the required specifications; and monitoring and maintaining quality once products are received and until they are consumed by the end user.

A. The suppliers shall submit all quality-related information to the implementing organization. B. Pharmaceutical QA information is related to but not limited to:

i. Raw materials or active ingredients used

ii. Additives or fillers iii. Detailed information about packaging materials used iv. Information related to shipping, transportation, and storage requirements


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v. Quality control and testing procedures and required pharmacopeia standards, according to the contract, to verify that the product is of acceptable quality

C. If there is an independent national medicines quality control laboratory, the implementing organization shall arrange for sample testing of pharmaceutical products.

D. The implementing organization shall conduct quality control tests in accordance with the national quality control guidelines and SOPs using mini-laboratories if there is no available proper national medicines quality control laboratory.

E. The implementing organization shall receive or prepare quality control reports and communicate results to relevant stakeholders, including the procurement, warehouse, and distribution units, and the respective supplier.

F. Based on the results of the quality control test, if the results of the tests are confirmed to be outside the limits of the specifications, the batch should not be released from quarantine, and the supplier will have to be asked to replace the batch with another one which will be tested for conformity with specifications as well.

G. Pharmaceuticals should be inspected physically throughout the supply chain system.

2.20.5. Payments to Suppliers A. Once pharmaceutical products are received in good conditions, and appropriate relevant

documents—such as proof of delivery—are submitted, the implementing organization shall effect payment in accordance with payment terms and conditions specified in the bid and contract documents.

B. Payments may be made only after getting approval from the Procurement Board. C. The implementing organization shall ensure the correct amount and on-time payment using

the right currency or exchange rate in accordance with the contract document. D. The implementing organization must effect payments within 30 days (in accordance with

contract terms) after delivery of the pharmaceuticals in good condition. E. The method and conditions of payment to the supplier shall conform to those set out in the

contract documents. F. Prices/costs charged by the supplier for the received pharmaceuticals shall not, with the

exception of any price/cost adjustments authorized in the contract, vary from the prices/costs quoted by the supplier in its bid.

G. When LCs need to be established, the procurement unit shall use copies of the signed contract and other required documents and request the finance and accounting unit of the implementing organization to open LCs through the Da-Afghanistan bank (central bank of Afghanistan) .

H. Once the Bank establishes the LC, the procurement unit shall notify the supplier.

2.21. Monitoring and Evaluation of Procurement Performance The purpose of M&E of procurement performance is to ensure that procurement processes are implemented according to plan and that contract requirements are met. M&E also provide


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implementing organizations and their procurement units with the information needed to evaluate how well the system is functioning and to identify areas where additional measures may be required to improve overall procurement performance. The implementing organization is expected to monitor financial and procedural performance, supplier performance, and overall procurement processes. The key components required to monitor procurement and contract performance are KPIs and formal procurement records, such as contract documents. 2.21.1. Financial and Procedural Audits The implementing organization will undergo a financial and procedural audit by external independent auditors at least every two years in order to ensure transparency and compliance with the PLA and donor organization policies. 2.21.2. Supplier Performance Contract management and supplier performance monitoring are important components of the procurement process. Proactive contract management and performance monitoring that engages the supplier’s support allows the implementing organization to obtain information on supplier production and performance problems at an early stage in their development. Early identification improves the chances of resolving a problem before it significantly impacts the procurement as a whole. It can also be more cost-effective since early problem identification allows the implementing organization and supplier to consider a broader range of contingency options, thereby minimizing the need to resort to more costly solutions. A. Monitoring the performance of suppliers over a number of years allows one to:

i. Ensure that all technical specifications and contract requirements are met.

ii. Identify performance problems early and correct them. iii. Provide information on a supplier’s performance when considering the supplier for

future contracts.

B. The implementing organization shall monitor suppliers’ performance using the following components: i. Formal procurement records and KPIs

ii. Formal written procedures for addressing performance problems and contract disputes iii. Suppliers’ commitment (contract documents) to meet the contractual requirements

that form the basis for the performance indicators. 2.21.3. Key Performance Indicators for Monitoring and Evaluation KPIs are used to monitor and evaluate the performance of implementing organizations and suppliers in complying with set procurement objectives, guidelines and the contract requirements. For performance indicators to be effective, they need to be SMART.


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A. The following are examples of KPIs that can be used by the implementing organization to

monitor the performance of procurement activities and suppliers: i. KPIs for procurement organizational support:

a. Existence of organizational structures for the procurement unit b. Availability of procurement coordinator c. Availability of procurement officer d. Availability of a functional Procurement Board e. Availability of a functional BOC f. Availability of a functional BEC g. Existence of procurement guidelines h. Existence of procurement SOPs i. Existence of indicators with targets for measuring procurement performance

ii. KPIs for procurement processes:

a. Availability of a procurement plan for each procurement/contract b. Existence of prequalification procedures with a list of criteria c. Existence of prequalified suppliers d. Number of financial and procedural audits (external) e. Number of financial and procedural audits (internal) f. Percentage of procurements completed on time according to the procurement plan g. Percentage of the total value of contracts that were awarded through an open and

competitive process. (Note: the competitive processes/bids are open bidding, restricted bidding, competitive negotiations, and requests for quotation.)

h. Percentage of pharmaceutical procurement packages implemented through competitive processes

iii. KPIs for the implementing organization:

a. Percentage of bids or procurement packages developed based on quantification

results b. Percentage of procured products that are on the EML of Afghanistan, EPHS or BPHS

list c. Percentage price variance between contract unit price and the International Drug

Price Indicator Guide of Management Sciences for Health (MSH) d. Percentage of supplier payments made based on the conditions set in the contract

(time, amount, currency, etc.)

iv. KPIs for suppliers:

a. Percentage of orders delivered on time


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b. Percentage of shipments fully delivered or percentage of orders fulfilled c. Percentage of shipments with adequate documents received. (Note: Minimum

document requirements are the bill of lading/air waybill, packing list, certificate of origin, certificate of analysis and invoice.)

d. Percentage of pharmaceuticals delivered with correct package size e. Percentage of pharmaceuticals that passed quality control testing f. Percentage of pharmaceuticals that comply with shelf life requirements g. Percentage of invoices that comply with contract pricing and terms

B. For all KPIs, each implementing organization shall develop an Indicator Reference Sheet (IRS)

describing the indicators, explaining how to calculate them, data sources, frequency of reporting, etc. See Annex 6 for sample IRSs for selected KPIs that can be adapted by implementing organizations.


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ANNEX 1: PREQUALIFICATION DOCUMENT

ISLAMIC STATE OF AFGHANISTAN

MINISTRY OF PUBLIC HEALTH

GENERAL

DIRECTORATE FOR PHARMACEUTICAL AFFAIRS

PREQUALIFICATION OF SUPPLIERS

FOR PHARMACEUTICALS

Contact information:

Implementing Organization’s Name: ___________________________________________

Physical Address: __________________________________________________________

Province: ______________________City:____________District:______________________

Landline Phone: __________________________ Cell Phone: _______________________

Fax: ______________________________ Email: _________________________________

P.O.Box:__________________________________________________________________

Clarifications should be sent to: email address

mailto:[email protected]

Annex 1. Prequalification Document

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I. INTRODUCTION

The Ministry of Public Health (MoPH) of the Islamic Republic of Afghanistan strives to ensure access to safe, effective and quality essential pharmaceuticals for the people of Afghanistan. It supports the principle that the availability of essential medicines not only improves the health of patients, but also increases peoples’ trust in health facilities and promotes their further participation in health programs. One of the mechanisms for ensuring the availability of safe, quality, and effective medicines is through the implementation of efficient and competitive pharmaceutical procurement processes. One of the principles of good pharmaceutical procurement is prequalification and monitoring of suppliers. As part of the procurement process, the MoPH or implementing organizations conduct prequalification of suppliers every two years whereby prospective suppliers are assessed against pre-determined criteria and those that satisfy the set criteria are selected, maintained in the database of list of prequalified suppliers, and invited to bid. In view of the above, {implementing organization name} invites potential pharmaceutical

suppliers to apply for prequalification. Prequalified suppliers will be eligible to participate in a

restricted bidding process that will be conducted during the procurement process for the

supply of pharmaceutical products.

Interested potential suppliers should send a completed prequalification document enclosed

herein addressed to the following contact information before dd/mm/yyyy; hh:min

Implementing Organization’s Name: ___________________________________________


Province: ______________________City: ____________District: ______________________


Fax: ______________________________ Email: _________________________________

P.O.Box:__________________________________________________________________

Clarifications should be sent to: email address


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II. INSTRUCTIONS AND IMPORTANT NOTICE TO APPLICANTS

1. Please read these instructions carefully and respond to all questions.

2. This prequalification application, checklists, and necessary documents are intended to be

used to register and prequalify suppliers for {implementing organization name} for the

procurement of pharmaceuticals. It does not bind the implementing organization for

issuance of any bids or contracts.

3. Prospective suppliers providing incomplete submissions or false information will

automatically be rejected, and {implementing organization name} will not take any

responsibility.

4. Documents submission time is from date and time to date and time.

5. All applications for prequalification received on time will be evaluated by an evaluation

committee.

6. Evaluation will be on a pass or fail basis against the criteria in the prequalification document

described below.

7. The {implementing organization name} reserves the right to visit and inspect the business

premises of the supplier that will participate for prequalification.

8. If prequalified, the period lasts for two years starting from the prequalification date.

9. The number and value of the contract that could be awarded during the prequalification

period is not more than (______________)

III. PARTICULAR INFORMATION

Prospective Supplier's Name: _________________________________________________


Province: ______________________City:____________ District:______________________


Fax: ______________________________ Email: _________________________________

P.O.Box:__________________________________________________________________

Type Put check mark (√) where appropriate

Put appropriate certification number (cGMP, Trading license, Chamber of Commerce No., etc.)

Manufacturer

Distributor

Import Agent


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Managing/Technical Director:_________________________________________________

IV. DOCUMENTS FOR PREQUALIFICATION

1. Completed application, including checklists.

2. Valid and certified copy of trading license on manufacturing, importing/wholesale of

pharmaceuticals.

3. Certificate of Tax Clearance from Ministry of Finance.

4. A signed statement that the supplier, or any of its directors or officers, has not been

convicted of any criminal offense related to a procurement contract within a period of three

years. (Declaration of Eligibility attached with this document.)

5. A signed statement that the supplier is not subject to debarment pursuant to Article 70 of

Afghanistan’s Procurement Law, or that any of its directors or officers have not been

involved in a bid or contract currently subject to debarment.

6. At least three (3) reference checks revealing satisfactory business dealings and the amount

of contracts.

7. At least two (2) reference checks to show that a supplier has client(s) in at least two regions

of Afghanistan.

8. Summary of audited financial statements detailing the last three years annual turnover,

assets and liabilities, profitability, availability of funds/capital; supplier has maintained a

business bank account for at least three (3) years.

9. Copy of Standard Operating Procedures manual for executing day-to-day activities.

10. Organizational structure, job descriptions and resume of senior and technical employees.

11. Manufacturer’s WHO current Good Manufacturing Practice (cGMP) certificate, or other

stringent regulatory authority certificate to show that pharmaceuticals planned to be

procured are manufactured by a certified manufacturer.

12. Afghanistan product registration certificate showing that the pharmaceuticals planned to be

procured are registered in Afghanistan (including quality control certificates and market

authorization).

13. Letter from manufacturers authorizing prospective suppliers to sell or distribute the

pharmaceuticals they have manufactured.

V. PREQUALIFICATION CRITERIA

General Eligibility Yes or No

1. Valid copy of trading license as an importer/wholesaler, distributer, or

manufacturer of pharmaceuticals

Note: Please attach valid copy of trading license


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2. Certificate of Tax Clearance from Ministry of Finance available

Note: Please attach valid copy of Tax Clearance

3. Signed statement of “Declaration of Eligibility.” A signed statement that the

supplier, or any of its directors or officers, have not been convicted of any

criminal offense related to a procurement contract within a period of three

years; and not barred pursuant to Article 70 of the Afghanistan’s Procurement

Law.

Note: Please attach signed “Declaration of Eligibility”

Technical, Financial and Organizational Capability Yes or No

1. At least three (3) reference checks revealing that the supplier has been

operating as a distributor of medicines and medical supplies for the past three

or more years without ceasing and with a successful performance.

2. At least two (2) reference checks revealing that the supplier has clients in at

least two regions of Afghanistan.

3. Certificate of product registration for manufacturing and marketing in the

country of origin.

4. Certificate of product registration in Afghanistan.

5. Valid independent certificate revealing that the manufacturing company has a

quality control laboratory and quality assurance system.

6. Letter of market authorization from manufacturers for specified

pharmaceuticals or all pharmaceuticals planned to be procured.

7. cGMP certificate based on the WHO pharmaceutical manufacturing certification

scheme or from any stringent regulatory authority.

8. Summary of financial statement showing that the sales turnover for medicines

and medical supplies in the past three (3) years is at least five times the

estimated contract value.

9. Summary of audited financial statements detailing the last three years annual

turnover, assets and liabilities, profitability, availability of funds/capital;

supplier has maintained a business bank account for at least three (3) years.

10. Summary stock value report showing that the average stock value of medicines

and medical supplies in last fiscal year is at least 50% of proposed procurement

value.

11. Summary report with justification showing that the supplier has delivered

pharmaceuticals of at least 30% of eht proposed procurement value for one

order/contract in the last three fiscal years.

12. Availability of formal SOPs, and/or quality management systems, compliance


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with specific legislation, recordkeeping, and information management systems

and technologies.

13. Valid document showing that the supplier has a staff of at least 10 full time

employees, functional organizational structure, job descriptions and resume of

senior and technical employees.

VI. DECLARATION OF ELIGIBILITY FOR PREQUALIFICATON OF SUPPLIERS

Reference:

I/we hereby declare that [full name of the supplier/applicant], established in [year, city and

country of establishment] has not been convicted nor have any of our directors and officers

been involved in any criminal offense related to procurement contracts. We agree to

participate in the prequalification process for pharmaceutical procurement advertised/notified

on [dd-mm-yyyy], referenced (invitation reference number). In compliance with the principles

and declarations made hereunder, I/we is/are fully aware that any failure to comply thereto

could lead to dismissal from the prequalification and to the rejection of our application.

Signed on ……………. [dd-mm-yyyy]………………………..

Name: ……………………………...………………………..

Signature: ……………………………………………………

Title: ………………………………………………………….

VII. GENERAL DECLARATION

I declare that to the best of my knowledge the answers submitted in this prequalification document are correct. I understand that any misrepresentation will render my organization ineligible to participate in any future business activities with {implementing organization name}

Completed By:

Name, Surname:

Title:

Signature:


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Date:

Tel:

Email:

Note: Should be signed, stamped and sealed


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ANNEX 2: SAMPLE PREQUALIFICATION EVALUATION SCORING SHEET FOR INDIVIDUAL SUPPLIER AND EVALUATOR

Name of supplier/manufacturer: _____________________________________ Evaluator: ________________________________________________________

Criteria Parameters Maximum score

Score earned

Eligibility Valid copy of trading license

Certificate of Tax Clearance

Signed Declaration of Eligibility

Signed statement that the supplier is not subject to debarment

Subtotal

Technical Past successful performance/experience (three reference checks) 6

Experience in at least in two regions of Afghanistan 4

Certificate of product registration for manufacturing and marketing in country of origin 10

Certificate of product registration in Afghanistan 10

Quality control laboratory certificate 5

Manufacturer’s market authorization 5

cGMP certificate 10

Subtotal 50

Financial Summary information on audited financial statements detailing the last three years annual turnover, assets and liabilities, profitability, availability of funds/capital; supplier has maintained a business bank account for at least three (3) years annual turnover = total value sold ÷ average stock value where average stock value = (beginning stock value + ending stock value) ÷ 2

10

Summary stock value report showing that the average stock value of medicines and medical supplies in last fiscal year is at least 50% of the proposed procurement value average stock value = (beginning stock value + ending stock value) ÷ 2

10

Information about summary of financial statement showing that the sales turnover for medicines and medical supplies in the past three (3) years is at least five times the estimated contract value

10

Subtotal 30

Organizational Supplier has delivered pharmaceuticals valued at at least 30% of proposed procurement value 10


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Criteria Parameters Maximum score

Score earned

for one order/contract in the last three fiscal years

Availability of formal SOPs and/or quality management systems, compliance with specific legislation, recordkeeping and information management systems and technologies

5

Valid document showing that the supplier has a staff of at least 10 full time employees, functional organizational structure, job descriptions and resume of senior and technical employees.

5

Subtotal 20 Total 100

Name and Surname of evaluator: ___________________________________Signature: __________________

Date: ____________________________________


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ANNEX 3: SAMPLE SUMMARY OF PREQUALIFICATION RESULT

Supplier Score obtained Comment Qualified (Yes/No)

XX 100 - 90 Excellent!! High degree of confidence that supplier meets criteria to ensure quality of service and product during procurement

Yes

XY 89 - 80 Acceptable!! Moderate degree of confidence Yes

XZ 79 - 70 Lower degree of confidence No

XA Less than 70 Very low and not acceptable No

A paragraph about the evaluation process and result

……………………………………………………………………………………………………………………………………………………………………………………..……………………………………

………………………………………………………………………………………………………………………………………………..…………………………………………………………………………

…………………………………………………………………………………………………………..………………………………………………………………………………………………………………

……………………………………………………………………..……………………………………………………………………………………………………………………………………………………

………………………………..……………………………………………………………………………………………………………………………………………………………………………………..

Name and Surname of evaluators Signature of evaluators

1. ……………………………………………….. ……………………………………….

2. ……………………………………………….. ……………………………………….

3. ……………………………………………….. ……………………………………….


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ANNEX 4: PROCUREMENT PLAN AND TRACKER TEMPLATE


81

ANNEX 5: ACTIVITIES AND TIMELINES BY PROCUREMENT METHOD

Activities Open bidding Restricted bidding Request for quotation Direct

Time from invitation to deadline for

submission of bid/quotation



5 work days 5 work days

Bid opening & evaluation 10 work days 10 work days 1 work days 2 work days

Evaluation report, review, and approval 10 work days 10 work days 5 work days 2 work days

Preparation and issue of award notice and award letter; resolution of challenges

10 work days 10 work days 3 work days Not applicable (N/A)

Award acceptance letter and performance security preparation and submission by successful supplier

10 work days 10 work days 5 work days N/A

Preparation of contract documents 5 work days 5 work days 2 work days 2 work days

Signing of contract documents 3 work days 3 work days 3 work days 2 work days

Final notification to unsuccessful bidders and return of bid security

10 work days 10 work days N/A N/A

Total number of days 79-88 work days 72-79 work days 24 work days 13 work days


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ANNEX 6: PROCUREMENT INDICATORS REFERENCE SHEET

No Indicator Description Calculation Data Source Frequency Baseline Target Result

I. KPIs for procurement organizational support

1 Existence of organizational structure for procurement (Procurement Unit)

Yes or No (Yes = 100%; No = 0%)

Staff establishment Annual

2 Availability of procurement coordinator

Staff establishment Biannual

3 Availability of procurement officer Staff establishment Biannual

4 Availability of functional Procurement Board

Establishment letter, TOR Annual

5 Availability of functional BOC Assignment letter, TOR Annual

6 Availability of functional BEC Assignment letter, TOR Annual

7 Existence of procurement guidelines

Physical verification of availability of guidelines

Annual

8 Existence of procurement SOPs Physical verification of availability of SOPs

Annual

9 Existence of indicators with targets for measuring procurement performance

Document comprises set of procurement indicators

Annual

II. KPIs for procurement processes

1 Availability of updated procurement plans for each procurement/contract

Yes or No (Yes = 100%; No = 0%)

Observation and access to the document

Quarterly

2 Existence of prequalification procedures with a list of criteria

Prequalification document, including procedures and criteria

Annual

3 Existence of prequalified suppliers Database of suppliers Annual

4 Number of financial and procedural audits (external)

Count Audit report Annual

5 Number of financial and procedural audits (internal)

Count Audit report Annual

Annex 6: Procurement Indicators Reference Sheet

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II. KPIs for procurement processes (continued)

6 Percentage of procurements/ contracts completed within the standard timelines/ according to the procurement plan

Contract document, receiving voucher, payment documents

Annual

7 Percentage of total value of contracts that were awarded through an open and competitive process Note: competitive processes/ bids are: open bidding, restricted bidding, competitive negotiations, and request for quotation

Contract documents

Annual

8 Percentage of pharmaceutical procurement packages implemented through competitive bidding

Purchase orders

Annual

III. KPIs for implementing organization

1 Percentage of bids or procurement packages developed based on quantification results

Quantification report, bid documents

Annual

2 Percentage of procured products that are on the Essential Medicine List of Afghanistan/EPHS or BPHS list

EML, purchase orders, bid documents

Annual

# 𝑜𝑓 𝑝𝑟𝑜𝑐𝑢𝑟𝑒𝑚𝑒𝑛𝑡 𝑝𝑎𝑐𝑘𝑎𝑔𝑒𝑠 𝑐𝑜𝑚𝑝𝑙𝑒𝑡𝑒𝑑 𝑜𝑛 𝑡𝑖𝑚𝑒

𝑡𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑝𝑟𝑜𝑐𝑢𝑟𝑒𝑚𝑒𝑛𝑡 𝑝𝑎𝑐𝑘𝑎𝑔𝑒𝑠 × 100

𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑎𝑤𝑎𝑟𝑑 𝑡ℎ𝑟𝑜𝑢𝑔ℎ 𝑐𝑜𝑚𝑝𝑒𝑡𝑖𝑡𝑖𝑣𝑒 𝑏𝑖𝑑𝑑𝑖𝑛𝑔

𝑡𝑜𝑡𝑎𝑙 𝑎𝑤𝑎𝑟𝑑 𝑣𝑎𝑙𝑢𝑒 × 100

# 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑒𝑑 𝑡ℎ𝑟𝑜𝑢𝑔ℎ 𝑐𝑜𝑚𝑝𝑒𝑡𝑖𝑡𝑖𝑣𝑒 𝑏𝑖𝑑𝑑𝑖𝑛𝑔

𝑡𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑒𝑑 𝑑𝑢𝑟𝑖𝑛𝑔 𝑡ℎ𝑒 𝑝𝑒𝑟𝑖𝑜𝑑 × 100

# 𝑜𝑓 𝑏𝑖𝑑𝑠 𝑖𝑛𝑓𝑜𝑟𝑚𝑒𝑑 𝑏𝑦 𝑞𝑢𝑎𝑛𝑡𝑖𝑓𝑖𝑐𝑎𝑡𝑖𝑜𝑛 𝑟𝑒𝑠𝑢𝑙𝑡

𝑡𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑏𝑖𝑑𝑠 (𝑝𝑟𝑜𝑐𝑢𝑟𝑒𝑚𝑒𝑛𝑡 𝑝𝑎𝑐𝑘𝑎𝑔𝑒𝑠) × 100

𝑇𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑝𝑟𝑜𝑐𝑢𝑟𝑒𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠 𝑜𝑛 𝑡ℎ𝑒 𝐸𝑀𝐿

𝑡𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠 𝑝𝑟𝑜𝑐𝑢𝑟𝑒𝑑) × 100


84


3 Percentage price variance between contract unit price and MSH’s International Drug Price Indicator (IDPI) Guide

Contract document, MSH IDPI Guide Note: criteria for selection of products for this indicator must: 1. Be A categories from ABC analysis 2. Have similar Incoterm on actual price and IDPI

Annual

4 Percentage of supplier payments made based on the conditions set in the contract (time, amount, currency, etc.)

Invoices, contract documents

Annual

IV. KPIs for implementing organization

1 Percentage of orders delivered on time

Purchase orders, delivery notes, receiving vouchers

Annual

2 Percentage of shipments fully delivered or percentage of orders fulfilled

Purchase orders, delivery notes, receiving vouchers

Annual

3 Percentage of shipments with adequate documents received (Note: Minimum document requirements: Bill of lading/ Air way bill, packing list, certificate of origin, certificate of analysis and invoice)

Shipping documents

4 Percentage of pharmaceuticals delivered with correct package size

Warehouse receiving report, shipment delivery note, packing list

Every delivery period (annual)

𝑃𝑟𝑖𝑐𝑒 𝑝𝑎𝑖𝑑 𝑓𝑜𝑟 𝑠𝑒𝑙𝑒𝑐𝑡𝑒𝑑 𝑝𝑟𝑜𝑐𝑢𝑟𝑒𝑑 𝑖𝑡𝑒𝑚𝑠

𝑀𝑆𝐻′𝑠 𝐼𝑛𝑡𝑒𝑟𝑛𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑃𝑟𝑖𝑐𝑒 𝑓𝑜𝑟 𝑡ℎ𝑜𝑠𝑒 𝑖𝑡𝑒𝑚𝑠 × 100

# 𝑜𝑓 𝑠𝑢𝑝𝑝𝑙𝑖𝑒𝑟𝑠 𝑖𝑛𝑣𝑜𝑖𝑐𝑒𝑠 𝑝𝑎𝑖𝑑 𝑜𝑛 𝑐𝑜𝑛𝑡𝑟𝑎𝑐𝑡 𝑐𝑟𝑖𝑡𝑒𝑟𝑖𝑎

𝑇𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑠𝑢𝑝𝑝𝑙𝑖𝑒𝑟 𝑖𝑛𝑣𝑜𝑖𝑐𝑒𝑠 𝑝𝑎𝑖𝑑 × 100

# 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 𝑑𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 𝑜𝑛 𝑡𝑖𝑚𝑒

𝑇𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 × 100

# 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 𝑑𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 𝑓𝑢𝑙𝑙𝑦

𝑇𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 𝑟𝑒𝑐𝑒𝑖𝑣𝑒𝑑 × 100

# 𝑜𝑓 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡𝑠 𝑤𝑖𝑡ℎ 𝑎𝑑𝑒𝑞𝑢𝑎𝑡𝑒 𝑑𝑜𝑐𝑢𝑚𝑒𝑛𝑡𝑠

𝑇𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑠ℎ𝑖𝑝𝑚𝑒𝑛𝑡𝑠 × 100

# 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠 𝑤𝑖𝑡ℎ 𝑐𝑜𝑟𝑟𝑒𝑐𝑡 𝑝𝑎𝑐𝑘 𝑠𝑖𝑧𝑒 𝑎𝑛𝑑 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦

𝑇𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠 × 100


85


5 Percentage of pharmaceuticals that passed quality control (QC) testing

QC reports, delivery note, receiving voucher


6 Percentage of pharmaceuticals that comply with shelf life requirements

Receiving voucher, warehouse report, delivery notes, QC reports


7 Percentage of invoices that comply with contract pricing and terms

Accounts, payment vouchers, contract documents, purchase orders

Annual or every delivery

# 𝑜𝑓 𝑆𝑎𝑚𝑝𝑙𝑒𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠 𝑝𝑎𝑠𝑠𝑒𝑑 𝑄𝐶 𝑡𝑒𝑠𝑡𝑖𝑛𝑔

𝑇𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑠𝑎𝑚𝑝𝑙𝑒𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠 × 100

# 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠 𝑖𝑛 𝑐𝑜𝑚𝑝𝑙𝑖𝑎𝑛𝑐𝑒 𝑤𝑖𝑡ℎ 𝑠ℎ𝑒𝑙𝑓−𝑙𝑖𝑓𝑒

𝑇𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠 𝑑𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 × 100

# 𝑜𝑓 𝑐𝑜𝑟𝑟𝑒𝑐𝑡 𝑖𝑛𝑣𝑜𝑖𝑐𝑒𝑠

𝑇𝑜𝑡𝑎𝑙 # 𝑜𝑓 𝑖𝑛𝑣𝑜𝑖𝑐𝑒𝑠 × 100


86

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