PROCUREMENT PROCEDURE

1. SCOPE OF WORK

Contractor scope of work for EPC of Simultaneous Water And Natural Gas Disposal (SWAN) Project shall include but not limited to procurement and supply of materials including valves, fabrication, inspection and testing, transportation, construction and installation activities required to achieve the successful completion of the project. In procuring these items: Piping Fittings, Bolts and Nuts, Pipe Supports, Fittings, Valves Gasket.
COMPANY shall prepare the Project procurement Plan Procedures, which outline guidelines for Procedures and Schedules to be implemented by all Contractor / sub-contractor and applicable Suppliers for carrying out all procurement as contained in the Procurement Packages Dossier (All Packages) and related services; however Contractor Sub-Contractor shall purchase within their procedural requirements through their nominated Vendors/suppliers. The Procurement Plan Procedure shall be prepared by CONTRACTOR Project Engineer and the Procurement Officer. It shall be reviewed by the Project Manager (PM) and approved by the Project Director (PD).

COMPANY / CONTRACTOR shall ensure the following standards and specifications are met:

• 3201.11.DLST.14127- Technical Specification for  Valves.
• 3201.11.DLST.14129 - Technical Specification for Flanges, Anchor Flanges and Gaskets and Bolting.

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2. ABBREVIATIONS

COMPANY:	ABC
CONTRACTOR:	XYZ

COMPANY: ABC

CONTRACTOR: XYZ

MRR: Material Receiving Report

MRF: Material Request Form

PO: Purchase Order

RF: Request for Quotation

RFP: Request for Procurement

MDS: Material Data Sheet

BEF: Bid Evaluation Form

FEED: Front End Engineering Design

LPO: Local Purchase Order

RGIR: Receipt of Goods Inspection Report

PM: Project Manager

PD: Project Director

3. REFERENCE

3201.11.DGSP.10053- QA/QC Plan.

3201.10.BGRV.10701- Scope of Work.

3201.11.DLST.14127- Technical Specification for Valves.

3201.11.DLST.14129- Technical Specification for Flanges, Anchor Flanges and Gaskets and Bolting

4. EVALUATION AND CONTROL

The assessment and qualification of Vendors and suppliers shall be carried out in accordance with the Contract and the CONTRACTOR procedure for managing vendors and suppliers in the case of project materials for permanent structure, CONTRACTOR shall solicit bids from Company’s approved Suppliers list in the approved Vendor List.
The Contractor shall ensure that Vendor and suppliers shall adopt and implement all inspection and Test plans in accordance with company’s standard in all their activities on the project. No deviation from the vendor/Supplier list shall be accepted without prior approval from Company, if the Vendor/Supplier has been assessed against the appropriate Quality System standards and approved by a third Party accredited national body, the Vendors/Supplier shall be requested to return a copy of their current approval certificate and Quality Manual.
If the vendor/Supplier does not have an approved certificate for their Quality System but does have a Quality Manual, the Vendor/Supplier shall be requested to return a current copy of the Quality Manual, (unless CONTRACTOR Party is already in possession of the current issue) together with a list of any government, national or major industrial bodies that have formally approved Quality System in a recognized Quality Standard and any certificate showing QC / product approvals, such as ASME, etc.
In addition, CONTRACTOR shall have firm control over its Vendors and suppliers and shall cause them to adopt and implement all Inspection Test Plans relevant to the vendors’/Suppliers’ specific activities on the project.

5. PURCHASING PROCESS

5.1 Purchased Goods / Material quality Requirements

CONTRACTOR’s purchasing process is tailored to ensure that goods and materials purchased for project use are in accordance with the requirements of the contract.
At each stage of the purchasing process and depending on the overall effect of the decisions on the final product, Company representative will be invited to agree with the decisions to complete the stage and move to the next.

5.2 Purchasing Process Description

A comprehensive series of corporate Procurement Management Procedures and Work Practices exist to satisfy the project execution methodology whilst providing a sound management basis at all times. The Procedures and Work Practices are formalised in manuals for each main discipline group and provide a clear and positive indication of the controls employed in the normal day-to-day execution of the procurement management activities.
Documentation is of a formalised nature and uses standardised formats (e.g. Proposal Requests, Proposal Status Reports, Proposal Summaries, Purchase Orders, Order Variations and Amendments, Cost Allocation, Expediting Requests and Reports, Inspection Requests and Reports, overall material status reporting, document transmittals, etc.). These Procedures and Practices forms the basis of the project specific documents and forms that will be produced to identify and incorporate the unique requirements of Company Project specific. “General Purchase Conditions” and “Instructions to Bidders” are prepared by the project team members in consultation with Department Heads, which also incorporate the Company requirements regarding documentation, inspection, commissioning assistance, warranty and spares. These are included in the RFP, which is sent to the vendors for submitting a quotation.
Technical questionnaires are sent to the vendors by the Procurement department and a Technical Bid Analysis is prepared, based on these, purchase orders are placed by procurement manager. Preference is given to vendors with proven track record or in the vendors list issued by Company Quality Control. Engineers from CONTRACTOR and Vendors also firm up the detailed quality control plan (witness, hold and review stages). Items procured from within Nigeria are inspected by CONTRACTOR’S QA department. However, for majority of other imported items, external inspection agencies are appointed to work with CONTRACTOR Internal Quality Management team to ensure that all purchase specifications are complied with. Only approved & certified TPI will be appointed for third party inspection.
The import department of CONTRACTOR handles all commercial matters related to the imports such as opening of letters of credit, payment to suppliers, etc. The procurement Officer keeps in touch with the import department to coordinate these activities. The procurement officer has a single point responsibility for all the items purchased. He closely monitors all the activities related to the procurement via floating enquiries, locating the right vendor, technical evaluation, commercial negotiations, purchase specification approval, drawing approval, expediting, inspection calls to external inspection agencies and Company’s inspectors, sea freight, customs clearance and local transport; and closely liaises with all other departments and consultants to remove any possible bottlenecks in the timely delivery of goods.

6. Expediting Process

All RFPs issued by the Procurement department where technical bids from vendors/suppliers are also received and analysed/ evaluated. The technical discussions with the vendors are held with the Procurement Officer and or Manager, and the commercial part of all procurement is handled by the procurement team. Priorities will be given to Vendors/Suppliers who have agents in iraq. The scope of procurement covers all permanent materials and equipment required by the project, excluding Company furnished materials.
The scope of procurement and deliveries are maintained by employing methods used by international Contractors for such jobs, such as:

Preparation for start of engineering prior to award, to avoid delay after contract award;

Making commitments for critical materials

Using materials from stock yards at higher cost, if necessary;

Air-freighting items when necessary,

Working round-the-clock, including weekends and holidays.

Monitor / expedite deliveries by vendors and deputing expeditors at each of such work centers

This approach calls for operating flexibility and decentralized decision making, which CONTRACTOR shall adopt for the project. Familiarity with international procurement procedures is essential. Refer to flow chart below for typical expedited purchasing processes developed by CONTRACTOR.

7. PURCHASE PLANNING

The Procurement Department and the Project Management and the Quality Department is responsible, for planning and monitoring of purchases. The supply system must be put in place to make it possible for availability of products and reliable suppliers and ensure the fulfillment of the requirements ofs service.
Supplies planning
When planning supply,  quality management and examination of product, the following topics should be discussed:

Development of supply

Requirements to be applied to various types of supply

Planning of supply

Qualification of new suppliers of products / services

Renewal of the qualification of suppliers

Information required for planning and monitoring of purchases
The need for new products / services and the planning of purchases are regulated by Contract/QA dept. through:

• Market research
• Processing and analysis of data related to customers
• Analysis of non-compliance

8. USE AND MANAGEMENT OF SUPPLIERS

8.1. Suppliers to be used

The Vendors/Suppliers to be used are those indicated in the Company’s approved Vendors list. The use of new Vendors/Suppliers shall be in accordance with process of evaluation, qualification and approval.

8.2. Documents governing the relationship of supply

The documents governing the relationship of supply are:

• Specific orders
• Contracts
• Letters of intent

8.3. Purchase of goods or services

Procurement / Quality dept is responsible for defining requirements, terms and conditions contents to be applied in the supply of products and services. When it may be necessary to use a new supplier, the name must be reported to Quality dept. with all the information necessary for its qualification.

9. ISSUANCE AND DISTRIBUTION

9.1. Issuance of RFP (Request for Proposal)

The purchase request is issued in written form by the Procurement officer and must indicate:

• The type of goods or services
• The quality requirements to which must respond
• The quantity
• Delivery time

9.2. Order Issue

The purchase order shall be signed after the Company and Contractor have agreed on the RFQ before sending to suppliers/vendors.

10. ISSUANCE AND DISTRIBUTION OF ORDERS

The purchase order must be signed by Project Director, Project Manager and the Procurement Manager or persons designated by them before sending to suppliers.

10.1. Contents of purchase orders>

The order must necessarily include the following:

• Purchase order number and date of order
• Sender
• Job number (optional)
• The recipient: Name, Name of Supplier (optional address and phone)
• Name, of the person to whom to refer (i.e. attention of Mr xxx ... in case of prior agreements)
• The object (material or description of service required)
• Quantity and product number (if any)
• Precise description (for “catalog” products copy description from the catalog itself)
• Price (from list or catalog, or from agreed offer)
• Any discounts or special conditions agreed
• In the case of an offer by telephone, return the phrase "as in telephone talks with your Mr. xxxxxx the price of ...(list conditions agreed).
• Time of delivery and payment
• Mode of transport and in charge of whom ("transport by courier" ..... "Port assigned" or "free port", etc..)
• OBLIGATORY signature of Project Director, Project Manager and the Procurement Manager.

10.2. Order transmission

Purchase orders are made in written form and sent to suppliers by mail, by courier or fax. Any purchase orders by telephone, are always confirmed in writing (except for particular circumstances and urgent need) and transmitted to suppliers in the above rules, or by written order confirmation of the supplier.

10.3. Order Confirmation by suppliers

In the case where suppliers have a continuous relationship, it is considered that the confirmation of acceptance of an order is implied. In other cases, after a certain time without having received confirmation, PD/PM will have to activate and obtain it.
This approach calls for operating flexibility and decentralized decision making, which CONTRACTOR is equipped with, as a professionally managed company. It also calls for familiarity with international procurement procedures.

10.4. Purchasing Organization

Refer to Project Organizational Charts in the Project Execution Plan 3208.20.GBPG.00001 as attachment 1

11. MATERIAL CONTROL

11.1 Tracking of Materials

A material control chart (a Microsoft work sheet program) is prepared which contains all the necessary information about the procurement of goods from Purchase Order data covering through the period of shipment and arrival date. This work sheet is available in Contractor’s created Dropbox account and is periodically updated.

11.1.2. Recording of receipts for goods

Receive and inspect goods for damage during transport and complete the Good reciept Inspection Report (GRIR). This GRIR is transmitted to procurement specialists for action based on findings, if required.

11.1.3. Custom Clearance

In coordination with CONTRACTOR team, only approved companies who are based in iraq shall handle all customs clearance and forwarding.

11.1.4. Traceability of goods upon receipt

The traceability of goods upon receipt is followed as per stores procedures for receipt and issue.

11.1.5. Storage of goods

Adequate space will be provided at the port & site facilities to store goods in line with Manufacturers recommendations

11.1.6. Stock/inventory control

The stock and inventory are controlled as per stores procedure for receipt, storage issu

11.1.7. Inspection and expediting

Inspection shall be carried out as per the approved quality plan of the project with expediting being done on a regular basis.

11.2 Materials Receiving (Local Purchased)

All locally purchased materials are delivered to the warehouse, accompanied with original local purchase order(LPO), original delivery note, three invoices (one original and two copies); and received by the warehouse supervisor or his designated representative. The warehouse supervisor will inspect the material to ensure that the quantity and price (if applicable), match the LPO. Additionally, he will ensure that the quality of items meet the QC requirements, when items delivered to the warehouse does not meet the requirements, the warehouse supervisor rejects the materials and inform the local purchase office. When items are accepted, the warehouse supervisor signs the vendor’s delivery note/waybill. The vendor will provide the warehouse supervisor with original delivery note or original local purchase order. The warehouse supervisor will forward these documents to the local purchase office and copy the Construction Manager.

The Project manager will review the price, description of goods received by signing on the delivery note/waybill. He will also initial his name on the LPO and invoice, and then forward the documents to the warehouse administrative department.

12. FORMS

ABC FORM-PP-001 - Over Short and Damaged Report

BGS FORM-PP-002 - Materials Receiving Report

BGS FORM-PP-003 - Supply Issue Voucher

BGS FORM-PP-004 - Non-Conformance Report

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