CONTRACT MANAGEMENT ACTIVITIES

Transcription

1 CONTRACT MANAGEMENT ACTIVITIES 6 CONTENT: 1. Procedures and Templates for Award of Contracts 2. Template for Informing Successful bidders 3. Template for Informing the World Bank 4. Contract Management Definitions/Legal Framework 5. Contract Management Staffing 6. Contract Management Systems 7. Contract Management Procedure-Goods/Services and Consulting Services Chapter 6, Contract Management Activities, version /02/2015 Page 1

2 6.1 PROCEDURES FOR AWARD OF CONTRACTS Procedures for ICBs Following the technical and financial evaluation process, a Bid Evaluation Report (BER) is prepared and drafted by the evaluators. The BER includes recommendations for Award of Contract(s). The BER is then submitted to the Evaluation Committee of DoHS for approval. On approval, the BER is returned to LMD for onward transmission to the WB for NOL. Once the NOL is received from the Bank, all the requirements are in place for the Award of Contract(s). (During a workshop held on 20 August 2013, the WB representative was asked if the WB would approve a seven day grace period between the decision to award contracts and the start of the clock for the 14 days period for the Supplier to sign the contract. This was agreed by the WB on that day.) Thus, LMD may now issue a Letter of Intent to all bidders of the intention to award the contract and to whom LMD plans to award it to. Unsuccessful bidders then have a grace period of seven days with which to raise any objections. Because seven days is a very short period, LMD will have to ensure a good procedure for informing bidders and ensuring that they have actually received the LoI. To achieve this, it is recommended that all LMD staff cease to use their own Hotmail/Yahoo/ Gmail accounts and use the government one that has already been allocated to them. When this has been achieved, the LMD staff should then use Microsoft Outlook. Microsoft Outlook has a facility whereby one can Request a Delivery Receipt. This is achieved after opening an in Outlook, clicking on Options and selecting the first option Request a Delivery Receipt. When the has been delivered, a return will be received stating that the message has been delivered. This should be sufficient to prove delivery to the recipients. Immediately following the end of the seven day grace period if there are no objections from losing bidders, the winning bidder will be sent a Letter of Award as per the attached template. In that letter s/he will be invited to attend LMD within 14 days accompanied by a Performance Security in the form of a Bank Guarantee supplied by a Class A Commercial Bank in Nepal in the format laid down in the Bidding Documents and in the amount as specified in the Letter of Award. Immediately following the award of contract (and within 14 days of the NOL from WB to the award of contract), LMD shall publish the result on dgmarket and UNDB Online in accordance with the attached template. Additionally, for the sake of increased transparency, these same details should be published on LMD s website Procedures for NCBs Chapter 6, Contract Management Activities, version /02/2015 Page 2

3 The procedure for NCBs is the same as that for ICBs with the exception that there is no requirement for an NOL from the WB. Chapter 6, Contract Management Activities, version /02/2015 Page 3

4 6.2 Template for informing the successful bidder Government of Nepal Tel: Ministry of Health & Population Fax: DEPARTMENT OF HEALTH SERVICES Logistics Management Division Pachali, Teku Kathmandu, Nepal Ref No. Date: (Awardee) Dear Sirs, Subject: Contract for supply and delivery of for Fiscal Year ), IFB No: NHSP-II/G/ /ICB----. With reference to your sealed Bid No. ---, dated submitted against our publication of Bid Notice on in the national daily newspaper "The Rising Nepal" for the supply and delivery of (IFB No. NHSP-II/G/ /ICB ). In this context, we are glad to inform you that as per the decision taken by the Ministry of Health and Population, Department of Health Services, you have been awarded the contract to fulfill the supply of under Division program as mentioned below: Slice No. Particular Quantity Unit CIP Rate Total Inland Transpiration Total Price (without customs duty and VAT) Total Accordingly, you are requested to present your authorized signatory at this office at the earliest possible opportunity but in any event no later than 14 (fourteen) days after receipt of this letter to enter into a contract of total order value Your signatory is required to bring a Performance Security in the form of the Performance Bond (as prescribed in the Bid Document) valid from Contract date up to and including the end of the warranty period. The Performance Bond is to be made out in favour of Logistics Management Division in an amount equal to 5% of total contract value that is (in figures) (in words). Failure to comply with these requirements will result in withdrawal of this Letter of Intent and forfeiture of your Bid Security. The contract shall be subject to the laws of Nepal and IBRD Loans and IDA Credits and Grants by World Bank Borrowers (May 2004, revised October 1, 2006) and the Jurisdiction of the courts of Nepal. All terms and conditions mentioned in Bid Documents shall remain unchanged and shall be enforceable. Yours faithfully,... Dr Tinkara Director : Chapter 6, Contract Management Activities, version /02/2015 Page 4

5 6.3 Template for Contracts Awarded Template for Contracts Awarded (in case of Direct Procurement, please delete the last two tables) Drafted by:, LMD Date: Name of Project (include project country): Bid/Contract Description: Duration: Project ID: Scope of Contract: Contract Signature Date: *At least the city & country Awarded Bidder Name & Address* of awarded bidder Bid price at bid opening Final Contract Price Evaluated Bidder(s)** Name & Address* of evaluated bidder(s) Bid price at bid opening Total Comparison Price (NPR) * At least the city & country ** This shall include the awarded bidder Rejected Bidder(s) Name & Address* of rejected bidder(s) Bid price at bid opening Total Comparison Price (NPR) Reason(s) for rejection *At least the city & country Chapter 6, Contract Management Activities, version /02/2015 Page 5

6 6.4 CONTRACT MANAGEMENT DEFINITIONS/LEGAL FRAMEWORK The contract management phase is the period, which follows the signing of contract or purchase order. The Chapter 7 in the Public Procurement Act, 2007, deals with the contract management phase, but without detailed describing what it should include in regard to organisational issues such as file management and staff/supplier obligations. The chapters 11 and 12 in the Public Procurement Regulations, 2007, provide also guidance in regard to contract management. The World Bank guidelines and other documents deal briefly with the contract management phase, partly as the mandatory requirements from the Bank to the purchaser and supplier is decided upon in the process of development of the bidding document such as the payment, delivery dates, advanced payment, etc., partly as the Bank s in unchangeable General Conditions of Contract (GCC) clarify most of the operational issues, which will come up during the contract management phase. The contract management procedures are to a large extent determined by the terms and conditions of the individual contract. Effective contract management is critical to successful contract implementation and meeting the objectives of the procurement requirement. The procedures described in this chapter are designed to ensure that: the supplier performs the contract in accordance with the terms and conditions specified in the contract; the procuring entity fulfills its obligations and duties under the contract; and swift remedial or preventative action can be taken, when problems arise or are foreseen Legal Framework on Contract Management (GoN) The Public Procurement Act, 2007, includes in Chapter 7 the following relevant information: Section 52: The contract content Section 53: Contract amendment procedures Section 54: Variations in the order Section 55: Price adjustments during the period of the contract Section 56: Extension of contract Section 57: Payment Section 58: Dispute settlements Section 59: Contract termination. The Public Procurement Regulations, 2007, provides guidance in regard to how the contract management should be organised and obligations of staff and suppliers. The main issues are Chapter 6, Contract Management Activities, version /02/2015 Page 6

7 found in Chapter 11, Provision relating to procurement contract, and Chapter 12, Provision relating to Dispute resolution. The main sections for daily contract management are: Section 110: Performance security Section 111: Execution of contract Section 112: Insurance Section 113: Advanced payment Section 114: Pre-shipment Section 115: Inspection and acceptance of goods Section 116: Action of goods Section 117: Work acceptance report Section 118: Variation in order Section 119: Price adjustment Section 120: Extension of contract Section 121: Liquidated damage Section 122: Bill of invoice Section : Payment and reports Section 128: Breach of contract 6.5 Contract Management Staffing Procedures on Contract Management (GoN) The Nepal procurement legislation leaves it to the LMD Director to set responsibility and tasks for the LMD contract management team Contract Management Team s Main Responsibilities and Tasks 1. The Director of LMD, or whoever is delegated the task, select the most appropriate person to head the contract management team, as well as the staff in the team. The Director of LMD makes sure that the staff members have the necessary skills and tools to fulfill their obligations, as well as he/she ensures that the required information from the procurement team are provided to the contract management team in time for them to conduct their work. It should be noted that under the present LMD organizational structure, the procurement and contract functions have been merged under the procurement section and hence there are no separate procurement and contract management sections. In practice however, while procurement and contract management are all in the one section there is still a division in that procurement is done by procurement specialists and contract management by contract managers. The procurement team shall ensure that: a. Any contract is prepared jointly with the contract management team. Preparation in this way brings together the procurement people who are familiar with the lead up process leading to the contract and the contract people who will be responsible for administrating the contract. Knowledge and expertise are changed between the two LMD sections. b. a signed copy of the contract or confirmed purchase order is received from the supplier and provided to the Contract Team as soon as it has been signed. A contract is signed Chapter 6, Contract Management Activities, version /02/2015 Page 7

8 in five original copies and the five copies are (from ) filed/provided as follows: the supplier, the World Bank, Finance Department, Storage and LMD. c. any required performance security is received from the supplier and that LMD has taken steps to meets any immediate obligations, such as advanced payment and eventually opening of a letter of credit. The last will, however, normally not happen until the goods are ready for shipment, which leaves it to be a task of the contract management team. 2. The contract management team shall: a. carry out a review of the contract to assimilate the details of the requirements and the program for fulfilling them. It is optimal to do this after the contract award, not waiting to the signing of contract. b. enter the signed contract into a Contracts Register. Such a register shall have the reference number of the contract, date of the contract signing, amount of the contract, and brief description of what is being procured and the name of the supplier, contractor, service provider or consultant. This register is now a part of the CMS system c. prepare a contract implementation plan, showing key milestones, such as dates for mobilisation, deliveries or completion of certain deliverables or sections of work, and the procuring entity s obligations, such as providing access to a works site, payment or approval of reports. d. monitor the performance of both parties against the contract implementation plan. Take action as required to address any problems or delays, whether actual or anticipated. e. ensure that all deliveries, targets or deliverables are completed by the supplier. Maintain a Contracts Implementation plan to control and monitor the contracts deliverables f. check all payment documentation and authorise payments, using the procuring entity s normal accounting and disbursement systems. Maintain a Contracts Payment record. g. identify and process any claims that may arise from the contract and take action to resolve all outstanding issues. h. Maintain a supplier s performance register that keeps a record of how a supplier has performed and whether the supplier is suitable for future work. 6.6 Contract Management Systems The following shows a contract management system outline for LMD. Some of the activities mentioned has been also detailed in other segments of this chapter under different headings however, the following summarises a system that should be followed for best practice. It should be noted that many contract management records are now held in a computerised contract management system (called CMS) that operates on a Microsoft Access platform. Chapter 6, Contract Management Activities, version /02/2015 Page 8

9 1. Prepare the Contract- in LMD the contract should be prepared jointly by the Contract Management and Procurement Sections. This joint preparation has the advantages of procurement people involvement who were associated with bid document preparationincluding the segments involved with the conditions of contract- and bid evaluation and contract management people who will be responsible for managing and administering the contract.; 2. File the original contract in a secure location. 3. Record the contract in a Contract Register 4. Appoint a dedicated contract manager for the contract. 5. Dedicated contract manager reads the contract and records milestones and other points of interest for attention during the contract implementation. 6. Kick off meeting is arranged between contractor and LMD, this is particularly the need with consultancy services. 7. Contract is managed by the responsible contract manager who ensures that the various time and performance milestones are met. 8. Contract completion is correctly recorded after goods/works/services or consultancy services have been delivered and accepted. 9. Performance bonds are returned to the contractor except where a bond is still required for warranty purposes 10. Record of the supplier s performance is made in the CMS. 6.7 Contract Management Procedure-Goods/Services and Consulting Services Contract Management for Goods Contract management for goods focuses on ensuring that goods are delivered on time, that the goods are acceptable to the procuring entity, in terms of quantity, quality and supporting documentation, and that the procuring entity meets its obligations to pay for the goods delivered. For goods contracts, the Contract Team is typically responsible for: ensuring that the actual dates when deliveries are due are agreed with the supplier, based on the date of contract effectiveness; expediting during the delivery period, to ensure that manufacturing, freight-forwarding and deliveries are proceeding on schedule; witnessing tests or approving samples, where required; arranging collection, freight-forwarding, customs clearance or delivery, where the procuring entity is responsible for any of these tasks; arranging for receipt and inspection of the goods with stores officials; checking all documentation relating to the goods, such as delivery notes, and ensure that documentation is correct before signing; Chapter 6, Contract Management Activities, version /02/2015 Page 9

10 recording any missing, damaged or incorrect items and initiating claims against insurance policies or the supplier; reporting any contractual problems or requests for contract amendments to the Procurement Unit; checking that invoices for goods and supporting documentation for payment are correct and arranging payment; managing any securities, such as performance or payment securities, by ensuring that they are kept securely, ensuring that extensions to their validity are obtained in good time, when required, reducing their value, when required and releasing them promptly, when all obligations have been fulfilled; ensuring all documentation and information relating to warranties and warranty claims are in good order; ensuring that assets are registered and labelled, where required; and ensuring all user guides, manuals, licences etc. are kept with the goods or in an appropriate place. Reporting on the supplier s performance by recording in the Contract Master Register (CMS) in the Supplier Performance column. In cases where the supplier performance is graded unsatisfactory such entry should be approved by the Assistant Director, LMS (or higher LMD rank). Goods should be recorded in the procuring entity s asset records and issued to the end user in accordance with applicable stores and supply management procedures. From the Contract Implementation Plan, deliveries can be forecasted with a degree of accuracy that will enable necessary arrangements to be put into place locally to receive the goods, services or works planned. It is important that a record of the deliveries is kept to be able to determine, when the Supplier obligations have been completed. This is especially important for large value multi item contracts such as annual supply of medical consumables, vehicle spare parts, supply of school textbooks, newly equipping school laboratories, language training studios. CLAIM PROCEDURES For a majority of contracts for the supply and delivery of goods the most common types of claims made are: Discrepancies between Statement for Delivery and Actual Delivery Discrepancies between the statement for delivery and what is found in the consignment on arrival at the customers warehouse occur both in case of less and more supply than stated in the delivery document. Examples of this are: Delivery documentation states 100 boxes containing 10 bottles each box Received 98 boxes containing 100 bottles each (Shipment made in sealed 20 ft. container) Delivery documentation states 50 boxes containing 200 packs of syringes each Received 50 boxes containing 100 packs of syringes each. (Part of consignment made in sealed 20 ft. container) Warranty Claims Chapter 6, Contract Management Activities, version /02/2015 Page 10

11 Warranty Claims are dependent on the provisions of the warranty or guarantee clause of the General Conditions of Contract. Generally the warranty clause seeks to protect against faulty materials and/or workmanship and such defects typically become apparent during the use of the goods only. Warranty claims are therefore made against the supplier/manufacturer. Examples of possible warranty claims: Failure of medical drugs following use, despite valid shelf life and delivery and storage within temperature tolerances. Insurance claims are claims against the insurance policy for the loss of or damage to items received. Examples of probable claims would be: Shipment made of 44 heavy duty wooded crates of drugs packed in cartoon as general cargo (i.e. not shipped in 20 ft containers), 3 crates found damaged on arrival probable damage during unloading. 1 of the 3 damaged crates shows evidence of pilferage of crate contents General Procedures for Claims Action for a claim will need to be considered based on the individual merits, but need in general to undertake the following: Identification of a cause for a claim: Upon receipt of all deficiency/discrepancy reports, the Procurement Unit will need to identify whether there is a claim to be made. The claim will need to be categorised (as insurance, or short supply as it is unlikely that these reports will reveal any warranty defects) The reports will need to be further examined and reviewed or discussed with the end user prior to a claim being made to the party involved. Lodging of a claim Where the claim is felt to be an insurance claim, suitable action will need to be taken with the local insurance agent providing details of the claim and facts supporting the claim. Where the claim is felt to be a under or over supply by the supplier, a communication will need to be sent to the supplier providing the facts relating to the under or over supply and requesting their suggested remedies. Where the claim is felt to be a warranty claim a communication will need to be sent to the supplier providing the facts relating to the alleged warranty claim requesting their suggested remedies. Resolution of claim A majority of suppliers will respond to claims made where clearly the error is theirs. The resolution of each claim will depend upon the accuracy and strength of the facts and the completeness of the technical specification detailed in the contract. Settlement of claims may be the result of negotiation depending on the reason or origin for the discrepancy or deficiency. Suppliers will usually make good attributable errors on their part and the expectation would be the procuring entity will in certain cases need to recognise their own failings. Settlements therefore may represent a loss of funding to a procuring entity and officials need to appreciate the importance of comprehensive specifications when approving and authorising requisitions and documents. The approval of the appropriate approvals authority is required for any contract amendments. Chapter 6, Contract Management Activities, version /02/2015 Page 11

12 Payments must be approved in accordance with the procuring entity s normal finance and accounting Contract Management for Services Contract management for services focuses on ensuring that the services are available on time, that the services are acceptable to the procuring entity, in terms of quantity, quality and supporting documentation, and that the procuring entity meets its obligations to pay for the services delivered. Examples of services are transport, accommodation, vehicle maintenance etc. For service contracts, the Contract Team is typically responsible for: ensuring that the actual dates when services re due are agreed with the supplier, based on the date of contract effectiveness; checking all documentation relating to the services such as delivery notes, and ensure that documentation is correct before signing; reporting any contractual problems or requests for contract amendments to the Procurement Unit; checking that invoices and supporting documentation for payment are correct and arranging payment; managing any securities, such as performance or payment securities, by ensuring that they are kept securely, ensuring that extensions to their validity are obtained in good time, when required, reducing their value, when required and releasing them promptly, when all obligations have been fulfilled; ensuring all documentation and information relating to warranties and warranty claims are in good order; Contract Management for Consultancy Services Contracts management for services focuses on ensuring that services are delivered on time and to an acceptable quality. This can be difficult, as the quality of services, particularly consultancy services, can be subjective and difficult to measure. A good working relationship with the consultant and ongoing monitoring of services is therefore important, to ensure successful contract performance. The procuring entity must also ensure that it meets its obligations, particularly where the performance of consultancy services is dependent on certain inputs or information from the procuring entity or where staff must be made available to benefit from capacity building initiatives. For services contracts, the contract team typically has the responsibility to: ensure that the actual dates for mobilisation, key milestones or deliverables and completion are agreed with the supplier, based on the date of contract effectiveness; Chapter 6, Contract Management Activities, version /02/2015 Page 12

13 monitor contract performance to ensure that levels of service are maintained and that deliverables are submitted or completed on time; ensure that all required reports are submitted on time; ensure that, where required, the procuring entity provides written comments or approvals to deliverables or reports in a timely manner; ensure that any resources, assistance or counterpart staff to be provided by the procuring entity are made available at the appropriate time; check invoices and supporting documentation for payment are correct and arranging payment; manage any securities, such as performance or payment securities, by ensuring that they are kept secure, ensure that extensions to their validity are obtained in good time, when required, reducing their value, when required and releasing them promptly, when all obligations have been fulfilled; notify the service provider in writing of any failings in performance or failure to meet targets; and ensure all reports or deliverables are kept in an appropriate place and circulated or implemented as required. Chapter 6, Contract Management Activities, version /02/2015 Page 13