Supplies and Food Aid - Field Handbook (UNHCR, 1989, 296 p.) CHAPTER 3 - PURCHASING AND DONATIONS (introduction...) 3.1 Sources of Supplies and Food Aid (introduction...) Chart 3.A: UNHCR Sources of Supplies and Food Aid for Refugees 3.2 UNHCR Authorization to Purchase (introduction...) Chart 3.B: Checklist for Obtaining Purchase Authorization Chart 3.C: UNHCR Purchasing Limitations and Procedures at Headquarters and in the Field 3.3 The Purchasing Process (introduction...) Chart 3.D: Purchasing Checklist Selection of Suitable Suppliers Chart 3.E: Supplier Information Files Quotation Requests Chart 3.F: Content Requirements for Quotation Requests Tabulation of Bids Submissions to the Committee on Contracts Chart 3.G: Submissions to the Committee on Contracts Purchase Orders and Supplier Contracts Chart 3.H: Contents of a Purchasing File Inspection of Consignments 3.4 Shipping and Insurance 3.5 Payments to Suppliers 3.6 International Purchases 3.7 Local and Regional Purchases (introduction...) Chart 3.I: Local or Regional Purchasing 3.8 Purchases by UNHCR's Implementing Partners (introduction...) Chart 3.J: Purchasing Procedures of Implementing Partners Chart 3.K: Benefits of Consolidated Purchasing 3.9 Donations in Kind and Cash

Supplies and Food Aid - Field Handbook (UNHCR, 1989, 296 p.)

CHAPTER 3 - PURCHASING AND DONATIONS

UNHCR MANUAL - CHAPTER 10
Update of Chapter 3, February 1997

Since the publication of Chapter 10 - The Supplies and Food Aid Field Handbook in June 1996, UNHCR procurement procedures and policies have undergone a number of developments. The Supply and Transport Section plans to reissue the document in 1998 following the finalisation of the new purchasing structure that is emerging from Delphi. In the meantime, we wish to highlight the following major changes in Chapter 3 that are applicable to procurement by all Field Offices.

· Please read Supply and Transport Section (STS) for Supply and Food Aid Service

· Chart 3.C (Page 51) is revised to differentiate between purchasing procedures at Headquarters and the Field.

· Paragraph 3.3.3 (Page 52) should now read, "Purchases by Field Offices under US$5,000 and by STS under US$20,000 do not require formal Quotation Requests. Purchasing Officers are expected......."

· Paragraph 3.3.7 (Page 53) should now read, "All purchases of more than US$5,000 by Field Offices and US$20,000 or more by STS are subject to the issue of a formal written Quotation Request to selected suppliers, asking them to submitted sealed quotations within a specified time frame. See Annex VIII...."

· Paragraph 3.3.11 (Page 55) should now read, "For purchases by Field Offices under US$50,000, the Purchasing Focal Point may place the order based on the documented selection. Procurement of goods and services by Field Offices of US$50,000 or more and up to US$100,000, must be approved by a Purchasing Committee. The authority and responsibilities of the Purchasing Committee are defined in Paragraph 7 of Section 4.7 of Chapter 4 of the UNHCR Manual. STS staff may place orders up to the level of their delegated authority on their own authority. Above this limit, the Purchase Order must be co-signed by a senior STS officer before it is issued to the supplier. For purchases of US$100,000 or more a submission to the local or Headquarters Committee on Contracts, as applicable, for their approval is required. The authority and responsibilities of the Local Committee on Contracts is defined in Paragraph 8 of Section 4.7 and the Headquarters, Committee on Contracts in Annex 8.5."

· Paragraph 3.3.12 (Page 55) should now read. "The UNHCR Committee on Contracts reviews general contracting policy and approves all UNHCR purchases and contracts exceeding US$100,000 per single order or series of related orders. Related orders are defined in UNHCR as all contracts entered into with one supplier within the previous period of 90 days which, in total, amount to US$100,000 or more, excluding, however, contracts that have been the subject of the Committee's previous approval. Related orders must be notified to the Committee as per the instructions contained in memorandum OPS 8.7 dated 1 March 1996 attached."

· In the event of other contradictions between Chapter 10 and Chapter 4 on procurement issues, Chapter 4 takes precedence.

3.1 Sources of Supplies and Food Aid

3.1.1 Donors are UNHCR's primary source of all programme supplies and food aid for refugees. Donors provide contributions in kind and in cash to UNHCR to meet the needs of refugees located in many parts of the world. A large portion of donor contributions for food aid are channelled through WFP. Annual donor cash commitments fund UNHCR's General Programmes. Donors provide additional funding and in-kind contributions for UNHCR's special appeals for refugee emergencies. Donors may also choose to earmark their contributions for particular refugee programmes. All UNHCR personnel, at Headquarters and in the field, must recognize our dependency on these donors. Use the resources they provide to protect and assist the refugees in the most effective and efficient manner, and be accountable to our donors for the results achieved.

3.1.2 A major part of refugee food aid comes from WFP and in-kind contributions to UNHCR. Some food aid and most other material assistance for refugees must be purchased from available cash resources:

(a) SFAS at Headquarters - makes international purchases which are transported to the countries hosting the refugees who need assistance, in response to requests for programme supplies from UNHCR field offices which have been reviewed and authorized by the geographic desk. SFAS is assisted by the Purchasing Liaison Officer in Nairobi and the Regional Logistics Officer in Djibouti, who make international purchases from suppliers located in East Africa.

(b) UNHCR field offices - make local or regional purchases in the host country or neighbouring countries with funds authorized and allocated by the geographic desk at Headquarters.

(c) Implementing partners - make purchases from their own funds and UNHCR-sponsored and approved project budgets.

3.1.3 Whether you are involved directly in identifying and acquiring material assistance for refugees or only monitor the supply process, ensure compliance with the purchasing policies, standards and practices outlined in this Handbook to minimize costs, maximize quality and assure prompt, safe and reliable delivery to the beneficiaries whose needs must be met.

Chart 3.A: UNHCR Sources of Supplies and Food Aid for Refugees

3.2 UNHCR Authorization to Purchase

3.2.1 In UNHCR, purchasing authority means the authority to enter into a legally binding agreement with a supplier for the provision of goods or services to UNHCR. Normally, these arrangements are in the form of a written Purchase Order or contract, which includes all the terms and conditions relating to the supply of goods or services to UNHCR and the payment to be made by UNHCR to the supplier.

3.2.2 Purchasing authority may be exercised only by those officers in UNHCR to whom this authority has been delegated. SFAS staff at Headquarters and designated UNHCR officials in the field have been assigned purchasing responsibilities, to enable them to act speedily to obtain what is needed, while conforming with the principles of getting the best value for money spent, in a timely, fair and open manner. These purchasing responsibilities are subject to the following restrictions and limitations:

- No purchase may be initiated without first receiving authorization from the geographic desk or other UNHCR official who certifies that the necessary funds to purchase the specified goods or services have been allocated and are available to pay the supplier.

- Within established US-dollar limitations, all purchasing procedures are followed, including competitive pricing or bidding, selection of the most suitable supplier, and approval by the Committee on Contracts where necessary.

3.2.3 Except where locally administered budgets have been provided or where implementing partners make purchases from their allocated project funds, all UNHCR purchases must be authorized through the geographic desk at Headquarters:

(a) International purchases - The geographic desk issues a Purchase Authorization (see Annex VII) to SFAS for programme supplies or informs the Budget and Management Section concerning requests for administrative supplies.

(b) Local or regional purchases - The geographic desk issues an LOI which includes authorization and the necessary budget for the UNHCR field office to make a local or regional purchase.

3.2.4 The purchasing authority signifies that the necessary funds have been allocated to pay for the requested supplies. The Purchasing Officer subsequently charges the related costs of the purchase to the specified project, budget, sector and line item.

Chart 3.B: Checklist for Obtaining Purchase Authorization

1. Are the needs identified essential to fulfil UNHCR's mandate for assisting refugees?

2. Can the needs potentially be met by donations in kind?

3. Have full specifications for the goods to be purchased been documented, including technical and quantitative details, packing, labelling and shipping requirements? Is local servicing and technical support available for proposed equipment and vehicle purchases?

4. Are the goods available locally at comparable quality and price, or should they be purchased internationally?

5. Are sufficient funds available in the budget to which the purchase will be charged?

6. Has proper approval to purchase been delegated in an LOI, MOD or other document?

7. Has all information been provided:

- to the focal point for purchasing in the field office?
- to the geographic desk at Headquarters?

Chart 3.C: UNHCR Purchasing Limitations and Procedures at Headquarters and in the Field

	PROCEDURES
	International Purchases Through STS			Regional/Local Purchases
LIMITATION OF AUTHORITY/VALUE BAND	STS Purchasing Officers, Assistants and Clerks*	Chief of STS, Senior Purchasing Officers and Heads of Units		UNHCR Representative, Regional Procurement Officer and Designated Purchasing focal Point
Less than US$2,500				· Funds available · Compare prices from at least 3 catalogues or informal offers · Best offer selected
Over US$2,500 up to US$5,000				· Funds available · Formal Quotation Request not required · At least 3 written offers received · Best offer selected · Written record of selection criteria
Under US$4,000	· Funds available · Compare 3 prices from at least 3 catalogues or informal offers · Best offer selected
US$4,000 up to US$20,000	· Funds available · Formal Quotation Request not required · At least 3 written offers received · Best offer selected · Written record of selection criteria
Over US$5,000 up to US$50,000				· Funds available · Formal Quotation Request required · At least three written offers received · Offers tabulated and compared · Written record of selection criteria
US$20,000 up to US$100,000	· Funds available · Formal Quotation Request required · At least three competitive written offers received · Offers tabulated and compared · Written record of selection criteria	For purchases above the authority level of the responsible buyer: · Verify documented selection · Approve Bid Tabulation · Co-sign Purchase Order before issue to supplier
Over 50,000 up to US$100,000				· Funds available · Formal Quotation Request required · At least three competitive written offers received Offers tabulated and compared · Purchasing Committee to consider offers and approve purchase. · Written record of selection criteria
US$100,000 or more	· Funds available · Formal Quotation Request required · At least 4 competitive written offers received · Offers tabulated and compared · Written recommendation to Committee on Contracts justifying selected offer made in conjunction with Desk or PCS where appropriate. · Approval of Committee on Contracts obtained.		· Review and sign recommendation to the Committee on Contracts. · Approve Purchase Order to supplier as approved by the Committee on Contracts.	The procedure in the field is the same as for international purchases through STS.

* STS staff may make purchases up to the level of their delegated authority.

Revised: 2/97

3.3 The Purchasing Process

3.3.1 Once the geographic desk provides purchasing authority, the SFAS Purchasing Officers at Headquarters, the Purchasing Liaison Officer in Nairobi, the Regional Logistics Officer in Djibouti or a designated Purchasing Officer in a UNHCR field office may initiate the purchasing process.

3.3.2 Before proceeding, confirm that the requirement is clearly defined in terms of specifications, timeframe for delivery, consignee, destination and allocated budget. Depending on the US-dollar limitations for a particular requirement for material assistance, follow the appropriate procedures outlined below to select a suitable supplier, place the order and follow through to delivery to the consignee and payment to the supplier.

3.3.3 Purchases under US $20,000 do not require formal Quotation Requests. Purchasing Officers are expected, however, to comply with established UNHCR purchasing principles and whenever possible, negotiate with suppliers to obtain the best price available for the goods to be purchased. Written Purchase Orders or supply contracts are necessary for all purchases, and all deliveries and payments must be documented.

Chart 3.D: Purchasing Checklist

1. Are the details of the goods required and the funds allocated sufficient to place an order with a supplier?

2. Has the purchase been properly authorized?

3. Does the value of the goods require quotations or competitive bids from suppliers?

4. For purchases over US $20,000, has a formal Quotation Request, providing a full description of the goods to be supplied, been issued to at least three potential suppliers and bids received by the stated closing date and time?

5. Have the suppliers' quotations been tabulated and compared?

6. Does the selected supplier appear to provide the best value for money spent?

7. For orders over US $35,000, but under US $70,000, has another UNHCR officer reviewed the supplier comparison for agreement with the selection:

- the geographic desk at Headquarters, for local or regional purchases?
- the Head of SFAS or the Senior Purchasing Officer, for international purchases?

8. For orders over US $70,000, has a submission been prepared for and approved by the UNHCR Committee on Contracts?

9. Has a Purchase Order, including full details of the goods to be supplied, been issued to the supplier and acknowledged as accepted, in writing?

10. Have copies of the Purchase Order been sent to all UNHCR officers concerned?

11. Have other suppliers who bid, but were unsuccessful, been notified that the contract has been awarded?

12. Should the goods be inspected? If yes, has an inspection company been contracted?

Selection of Suitable Suppliers

3.3.4 Maintain detailed information files on potential UNHCR suppliers, so that those who are selected to quote on particular requirements are known, insofar as possible, to be able to do so competitively.

3.3.5 SFAS at Headquarters operates an automated inventory of approved international suppliers of items commonly required by UNHCR. Each Purchasing Officer in the field should have a list, with supporting information files, of approved local or regional suppliers who can meet UNHCR's purchasing needs. Identify potential suppliers from local telephone books, trade directories, the local Chamber of Commerce, the government ministry responsible for commercial affairs, or by referral from other international organizations.

3.3.6 To assure the effective operation of an open, competitive purchasing system, deal with all suppliers fairly and equally. When issuing Quotation Requests, normally select four to eight potential suppliers, depending on the estimated value of the order. For large or technically complex orders, a prequalification process may be advisable, to direct the Quotation Request to a list of selected suppliers known to have the necessary capabilities to deliver to UNHCR's specifications.

Chart 3.E: Supplier Information Files

1. Full legal name of supplier, mailing address, street address, telephone, telex and facsimile numbers.

2. Historical and business data: business ownership, when founded, manufacturing facilities, number of employees, and name of parent, subsidiary or affiliated companies.

3. Financial data: annual sales volume for the past several years, recent financial statements and bank reference.

4. Management data: names of senior executives, corporate memberships in trade or professional associations, and industrial certifications.

5. Supply information: management and quality assurance techniques involved in supplying goods or services. Details of the goods or services supplied, timing of delivery, warranties, packing and shipping capabilities, normal payment terms, after-sales service facilities.

6. Corporate brochures: product information and other descriptive literature.

7. References: current and recent major clients, goods or services supplied, and value of the orders.

8. Comments on past performance: performance information about previous contracts with UNHCR.

Quotation Requests

3.3.7 All purchases exceeding US $20,000 are subject to the issue of a written Quotation Request to selected suppliers, asking them to submit sealed quotations within a specified timeframe. See Annex VIII for an illustrative example.

3.3.8 Give a copy of the Quotation Request to an independent third party who will receive all quotations submitted. At Headquarters, the Secretary to the Committee on Contracts verifies that all potential suppliers have complied with the bidding procedures and that quotations being considered were received before the closing date and time. Late quotations are not accepted.

Chart 3.F: Content Requirements for Quotation Requests

1. Provide complete, accurate information, intended to have the same Impact on all prospective suppliers, to obtain information from the supplier which will be needed for comparison in the bid tabulation phase. Avoid giving supplementary information to one supplier after the Quotation Request is issued, without sharing that information with all the potential bidders.

2. Identify UNHCR as the originator, giving full particulars of where and by when (date and time of bid closing) the offer must be submitted. Normally, at least one week is permitted to respond, but this time should be extended for more technical requirements, and can be considerably shorter for special or emergency purchases.

3. Identify the individual supplier, showing the full legal name and mailing address, and other details such as the telex number and the name of the contact person. Individual bidders are not usually told which other suppliers have been asked to bid, a practice intended to avoid possible collusion which would adversely affect the competitive process.

4. Provide full specifications of the requirement, including minimum quality standards, where appropriate, which can be verified by inspection. Samples of smaller items to be purchased in quantity and descriptive literature may also be requested for evaluation purposes.

5. Specify shipping requirements, requesting the supplier to quote C&F (cost and freight) to a named destination or, less frequently, FOB (free on board), Ex-Works or any other shipping terms. Also, include packing and labelling requirements, mode of transport (sea, air, land), distribution of shipping documents and shipping notification, and the destination where the supplier is expected to deliver the goods.

6. State the timeframe for the proposed order, from issue of the contract to final delivery at destination, and the period during which the supplier's quotation should remain valid pending placement of the order (usually at least 30 days).

7. Outline any other UNHCR requirements, such as independent inspection prior to loading. Consider requesting performance bonds or the use of holdbacks to assure contract performance.

8. Request the supplier to quote total value, currency for payment and payment terms, usually identifying the cost of the goods or services and any freight or other charges separately. UNHCR's normal payment terms may be included for information.

Tabulation of Bids

3.3.9 After the closing date and time stipulated in the Quotation Request, assess each quotation received to identify any secondary factors or conditions, such as payment terms or delivery timing, which disqualify the bid and may be renegotiated to qualify it.

3.3.10 Compare each acceptable quotation using the Tabulation of Bids form and Continuation Sheet (see Annex IX), to minimize the supporting narrative. List the bidders on the comparison table and analyze each supplier's compliance with the specifications, delivery and pricing data. Also, consider special factors which may apply, such as the operating costs of a piece of equipment or the local availability of after-sales service. Based on your analysis, note the recommended supplier at the bottom of the form and provide the reasons for your selection.

3.3.11 For purchases under US $35,000 the Purchasing Officer may place the order based on the documented selection. For purchases under US $70,000 the Purchasing Officer must seek the agreement of another Purchasing Officer in SFAS for international purchases, or the Head of Desk for local or regional purchases. For purchases in excess of US $70.000 a submission to the Committee on Contracts for their approval is required.

Submissions to the Committee on Contracts

3.3.12 The UNHCR Committee on Contracts reviews general contracting policy and approves all UNHCR purchases and contracts exceeding US $70,000 per single order or series of related orders. A series of purchases from the same supplier or related major purchases from different suppliers which, in the aggregate, exceed US $70,000 should be presented to the Committee for their consideration and agreement.

3.3.13 The responsible Purchasing Officer prepares submissions to the Committee on Contracts. The recommended supplier is normally the one who submitted the lowest quotation which meets the required specifications and timeframe for delivery. The Head of Desk or Chief of the support service concerned cosigns the covering memorandum.

3.3.14 Regular submissions to the Committee at Headquarters must reach the Secretary to the Committee at least 24 hours prior to their weekly meeting, normally scheduled for Friday morning. Concerned Headquarters staff from SPAS, the geographic desk, or FRS in the case of purchases from earmarked cash contributions, attend the meeting. They may provide additional clarification at the request of Committee members and also learn of the Committee's decision immediately. The Secretary records the decisions of the Committee in the minutes of each meeting, and signed copies are forwarded to all concerned UNHCR personnel.

3.3.15 In emergency situations, the Secretary may circulate a submission to the Committee members immediately. The members record their individual decision on the submission. Committee approval for a fully documented emergency submission can usually be obtained the same day. The collective decision is confirmed at the Committee's next formal meeting.

3.3.16 In the field, the UNHCR Representative may consider establishing a Local Committee on Contracts, particularly in the early stages of a major operation when required goods are known to be available locally or regionally. Seek authority from Headquarters to establish this Committee. A period of validity and any upper limits on the value of contracts which can be awarded are normally stipulated, and other conditions may apply. Additional information is provided in Part II of the UNHCR Handbook for Emergencies.

Chart 3.G: Submissions to the Committee on Contracts

1. Include the following information in the covering memorandum:

- Project symbol and title.

- CAF or MOD number, if applicable.

- References to other relevant correspondence and authorizations.

- Brief summary of the need, to explain the purchasing action.

- List of the items or services for which the Purchase Order will be issued.

- Recommended supplier(s), items and quantities to be provided.

- Delivery terms.

- Costs of the goods/services, freight, insurance and inspection, as appropriate, and total costs.

- Justification for selecting the recommended supplier.

- Certification that sufficient funds are available to cover the proposed expenditure.

2. When requesting emergency procedures, give the reason in the first paragraph.

3. Attachments:

- Tabulation of Bids.

- Any other details or documents to support the recommendation for supplier selection.

Purchase Orders and Supplier Contracts

3.3.17 After all the necessary steps for supplier selection have been completed and approvals obtained, the authorized officer issues a Purchase Order (see Annex X) or contract for the goods or services quoted. Include all terms and conditions which apply to the purchase, consistent with the selected quotation. The Purchase Order is signed on behalf of UNHCR and forwarded to the supplier for signature. One fully executed copy is returned to the Purchasing Officer to establish the legal contractual obligations between UNHCR and the supplier.

3.3.18 Forward copies of the Purchase Order to the geographic desk, the consignee, other concerned parties and, for purchases from cash donations, to FRS at Headquarters. Retain the original, signed copy for the Purchasing File.

3.3.19 As a sign of courtesy and to maintain goodwill, notify unsuccessful bidders for the same supply requirement that the Purchase Order has been issued. An example of a Letter of Regret is shown in Annex XI. If enquiries are received from unsuccessful bidders, the Purchasing Officer may tell them the country or origin of the winning bid, the approximate difference in price as a percentage, and the reasons their bid was technically or commercially unacceptable.

3.3.20 Informal contact with UNHCR suppliers is discouraged. All conversations should be documented in a note to file. Any amendments to a written agreement with a supplier must be issued in writing, showing full details of the original agreement and the amended terms. To avoid any confusion about who told what to whom and when, suppliers must deal exclusively with Purchasing Officers; other UNHCR personnel should never contact suppliers directly concerning their purchasing requirements or UNHCR contractual arrangements.

Chart 3.H: Contents of a Purchasing File

Place copies of all documentation related to each purchasing action on a Purchasing File:

1. Basic Documents

· Purchase Authorization, relevant LOI or other project authority to proceed.
· Supporting documentation or any amendments.

2. Quotation Request*

· Copy of Quotation Request sent to suppliers.
· Suppliers' bids (unsuccessful).
· Regret letters.

3. Successful Bidder/Committee on Contracts

· Bid of successful supplier.
· Tabulation of Bids.
· Submission to the Committee on Contracts (if applicable).

4. Purchase Order*

· Original copy of the Purchase Order, signed by the supplier and UNHCR.

* If more than one, please subdivide.

5. Inspection (if applicable)

· Inspection contract.
· Inspection Certificate.

6. Shipping and Insurance

· All information regarding shipping and insurance, including telexes.
· One complete set of shipping documents.
· Insurance Certificate.

7. Payments

· Suppliers/inspection invoices.
· Payment requests and supporting documentation.

8. Receiving/Distribution Reports

· Receiving report from consignee.
· Distribution report (donations).
· Related correspondence and documentation.

9. Insurance Claim (if any)

· Copies of all claims documentation, including Protest Letter, survey report, etc.

10. General

· Other documents related to the particular purchase which cannot be placed in the file under one of the specified headings above.

Inspection of Consignments

3.3.21 Where inspection of the goods being supplied has been deemed appropriate and the inspection is indicated in the Purchase Order or contract issued to the supplier, select an inspection company to perform the quality and quantity assurances required. Follow standard UNHCR purchasing procedures to do so. Provide complete instructions concerning each consignment to the inspection company. See Chapter 1, Identification of Needs.

3.3.22 Inspections may be conducted during manufacture, prior to the shipment of a consignment, and/or on delivery. Notify the inspection company and the supplier when the timing for the prescribed inspection is known. On completion, the inspector issues an Inspection Certificate and releases the consignment, or he rejects goods which do not meet stated specifications. Inadequate, damaged or rejected goods must be the subject of further negotiation with the supplier.

3.4 Shipping and Insurance

3.4.1 For C&F purchases, shipping instructions are included in the Purchase Order or supplier's contract. If goods are accepted FOB or ex-works, separate shipping instructions are necessary, to the forwarding agent, transport company, implementing partner or consignee who will be responsible for picking up and delivering the consignment.

3.4.2 For international purchases, the supplier must notify SFAS at Headquarters by telex when the goods are ready for shipment, and again when the consignment is loaded and has departed from the point of origin. This information is relayed to the UNHCR consignee field office. Shipping instructions to the supplier also specify requirements for shipping documents and their distribution. SFAS normally arranges insurance for international purchases under the UNHCR Worldwide Open Cover Marine Cargo insurance policy.

3.4.3 For local or regional purchases, the supplier should be responsible, whenever possible, for delivering the consignment to the final destination ware house or storage area. This may be termed «Free delivered warehouse ... (final destination)». The cost of the goods includes delivery and the liability rests with the supplier until the goods are turned over to the consignee at the destination. With these delivery terms, UNHCR or the consignee does not have to arrange transportation or related shipping insurance for the consignment. Only the goods actually delivered in acceptable condition are paid for, thereby providing the maximum protection against loss or damage to the buyer.

3.4.4 Various other arrangements can be made to move and protect the goods between the supplier's premises and their final destination where the beneficiaries are located. If ownership remains with the supplier until delivery, he also retains the risk and the liability to replace any lost or damaged goods. When ownership is passed to UNHCR or other consignee, so also is the risk. The liability of contracted carriers is limited, and should not be relied on for restitution in the event of loss or damage. Insure goods transported at UNHCR's risk under the UNHCR Worldwide Open Cover Marine Cargo insurance policy, arranged through SFAS at Headquarters. If the risk has been transferred to an implementing partner, ensure that they have adequate insurance protection against loss or damage. Verify that the project agreement or budget makes provision to cover the cost of such insurance.

3.4.5 The Purchasing Officer must confirm that all documentation has been provided, insurance coverage is in place, and the consignee has been notified and is prepared to receive the consignment.

3.4.6 The consignee must make all local arrangements for clearing, inspecting, receiving, transporting, storing and distributing the consignment. See Chapter 4, Receipt of Shipments.

3.5 Payments to Suppliers

3.5.1 The Purchasing Officer establishes the payment terms in the Purchase Order or supplier's contract. Normal UNHCR terms for international purchases are payment by cheque or bank transfer within 30 days following receipt of the invoice and shipping documents in order. For purchases from countries with foreign exchange or banking restrictions, payments to suppliers can be made by letter of credit. For local or regional purchases, payments should be made by cheque in local currency, payable to the supplier and drawn against a local bank account, in accordance with standard field office practice and delegated authority. Any other payment terms require the approval of the geographic desk and SFAS at Headquarters.

3.5.2 On large orders with phased delivery, interim or progress payments against the contract may be authorized under the terms of the supplier agreement. Advance payments, however, are usually not allowed.

3.5.3 Examine the invoice, the shipping/delivery documentation and the terms of the Purchase Order. Any discrepancy must be investigated and explained in writing. Provided the amount of the Purchase Order is not exceeded, initiate payment. If the invoice amount exceeds the amount on the Purchase Order, determine the reason. If the overexpenditure is justified, request an amendment of the purchasing authorization and establish that sufficient funds to cover the additional amount are allocated before making the payment. If the overexpenditure cannot be justified, negotiate with the supplier to reduce the amount of the invoice to an agreed sum. If there are any credit notes or amounts receivable from the supplier because of previous orders, offset these amounts against the current payment.

3.6 International Purchases

3.6.1 Acting on a Purchase Authorization (see Annex VII) issued by the geographic desk, SPAS at Headquarters makes international purchases on behalf of UNHCR field offices. SFAS confirms shipping and insurance arrangements up to the named destination, and follows through with suppliers and consignees to verify delivery of every international consignment.

3.6.2 Copies of all relevant documentation and information are forwarded to the UNHCR consignee field office to indicate progress on the acquisition of requested material assistance for the refugees. In addition to information telexes, SFAS provides copies of each Purchase Authorization registered to initiate purchasing action, the Purchase Order placed with the supplier, and a Shipping/Insurance Advice and Receiving Report with a complete set of shipping documents.

3.6.3 SFAS also produces several monthly status reports from data on their automated Purchasing System. These are sent to each geographic desk and UNHCR consignee field office that have outstanding purchase requests or shipments:

(a) Purchase Authorization Status Report - lists all Purchase Authorizations received during the month, and includes details on the issue of related Quotation Requests and Purchase Orders.

(b) Purchase Order Status Report - provides information on Purchase Orders placed, the name of the supplier, the value of the order and the proposed delivery timeframe and shipping mode.

(c) Shipping Status Report - lists all shipments for the month for which shipping documents were received and processed, and shows actual departure and estimated arrival dates, transport details and destination.

3.6.4 Use these reports to confirm that the geographic desk and SFAS have actioned purchase requests submitted, and to follow up on outstanding requests, planned deliveries, receiving reports and insurance claims.

3.7 Local and Regional Purchases

3.7.1 If funds are available through a donation or within a given budget, and proper purchasing authority has been given by Headquarters to proceed, goods may be purchased locally or regionally. Local purchases are made from suppliers in the host country where the UNHCR field office is situated. Regional purchases are actually international purchases initiated by a UNHCR field office, usually from suppliers located in nearby countries. The Purchasing Liaison Officer in Nairobi and the Regional Logistics Officer in Djibouti can assist field offices in making regional purchases in East Africa.

3.7.2 Examine the market potential and capabilities before deciding to purchase locally, regionally or internationally. Consult SFAS at Headquarters for information on comparative quality, prices and timing of delivery for internationally available goods to make your assessment. To stimulate the local economy, UN organizations are encouraged to make local purchases if goods are available and prices do not exceed the international C&F values by more than 10 to 15 per cent.

3.7.3 Avoid paying local taxes on purchases which, if purchased regionally or internationally, would be tax exempt. Try to extend UNHCR's tax exempt status to local purchases, or arrange for tax rebates from the government. Purchases from regional manufacturers or suppliers are usually supplied duty and tax free to UNHCR. Examine bilateral or regional trade conventions which may provide more advantageous terms.

3.7.4 When making local or regional purchases, field offices must follow UNHCR's prescribed purchasing practices to ensure an open, competitive process for selecting local suppliers and to obtain the best value for money.

3.7.5 Long delays between the submission of a purchase request and placement of a Purchase Order should be avoided. Particularly when requesting authority to make a local or regional purchase, the field office may discover that:

(a) proposed suppliers are out of stock or out of business by the time the order is placed; or

(b) currency exchange fluctuations have adversely affected the quantity of goods which can be purchased from the established budget.

Chart 3.I: Local or Regional Purchasing

Advantages	Disadvantages
Speed and flexibility of delivery, if goods are available ex-stock or manufactured locally.	Unacceptable demand on available stocks, causing scarcity and price increases for local citizens.
Acceptability of local goods by the refugee population.	Potential competition between international organizations to purchase the same goods.
Reduction of shipping costs, if goods are available in or near the area where the refugees are located.	Possibly poorer quality of locally supplied goods.
Benefits and incentives to the local economy, particularly in areas affected by a large refugee influx.	Prices uncompetitive with international C&F prices.
Positive impact on the country's balance of payments, when payments for local goods are made in foreign currency.	Possibility of having to pay local taxes hidden in purchase price.
	Inconsistency of local commercial practices with international purchasing standards, particularly competitive tendering and confidentiality.
	Unwillingness or inability of suppliers to fulfil their contractual obligations.

3.8 Purchases by UNHCR's Implementing Partners

3.8.1 Through project agreements, UNHCR may delegate authority and provide funds to implementing partners to make purchases in support of refugee projects. The sums involved can be substantial. UNHCR officials in the field should facilitate and monitor these purchasing activities. The procedures and controls applied should provide an open, competitive and accountable process to obtain supplies which meet project requirements at the lowest available cost.

3.8.2 Where several implementing partners are involved in related refugee projects requiring quantities of similar supplies, UNHCR field offices can coordinate local or regional purchasing action. In Costa Rica, the UNHCR Regional Office in San Jos has been instrumental in forming a Purchasing Committee made up of officials from each implementing agency having responsibilities for refugees in various programme sectors and regions. The Committee consolidates the annual supply requirement of the agencies, oversees the tendering process and selects suitable local suppliers to meet the combined needs.

3.8.3 The Purchasing Committee, comprising one official from each agency and UNHCR, identifies total quantities and specifications for each item, prepares a list of qualified suppliers and formulates Quotation Requests, which are issued to potential bidders. The Committee then reviews the bids submitted in terms of quality of goods, prices and compliance with other terms in the Quotation Request, selecting suppliers and deciding on follow-up action. They may consider further negotiations with selected suppliers for additional discounts or re-tendering for items where response was inadequate.

3.8.4 The savings achieved can be significant, but the UNHCR effort to facilitate the process is time consuming. Where the potential for such procedures exists. UNHCR field offices should seek advice from SFAS at Headquarters. Consultants with relevant commercial and purchasing experience may be available to facilitate the periodic consolidated purchasing process.

Chart 3.J: Purchasing Procedures of Implementing Partners

Documented purchasing procedures should include a suitable division of responsibility and delegated authority for:

· Planning and budgeting for annual supply requirements.

· Identification of needs, development of specifications and approval to take purchasing action.

· Criteria for deciding to purchase locally or internationally.

· Lists of qualified suppliers.

· Budgetary and financial controls.

· Issue of Quotation Requests and receipt of sealed bids.

· Evaluation of suppliers' bids, supplier selection and placement of an authorized written Purchase Order, specifying type, quantity, quality of goods, packing and inspection, if necessary, delivery and insurance instructions, shipping documents and payment terms.

· Confirmation of receipt and, in the event of non-performance, loss or damage, requirements for follow-up action or insurance claims.

· Supplier payment methodology, authorizations and documentation requirements.

Chart 3.K: Benefits of Consolidated Purchasing

· Purchasing procedures are streamlined, reducing duplication of effort and unnecessary inter-agency competition for goods in the same marketplace.

· A consistent quality of goods is provided for all refugee assistance projects in the region.

· Generally accepted financial rules and bidding practices for competitive purchasing are applied.

· Quantity purchases result in better unit prices from suppliers.

· If UNHCR makes purchases on behalf of our implementing partners, potential added savings may result from local tax exemptions.

3.9 Donations in Kind and Cash

3.9.1 Annual cash donations are allocated to specific refugee programmes which have been approved by the Executive Committee. Most other donations, whether in kind or cash, have conditions attached to them, and the value of the donation is applied against the project budget to which it is pledged. If an approved budget already provides sufficient funds for needed items of material assistance, other than food, seek authority to purchase the goods, rather than considering the possibility of a donation. Asking FRS to negotiate with donors for a specific in-kind contribution can involve a disproportionate amount of time. Earmarked donations are considered primarily for Complementary or Supplementary Foods or special appeals, to fill gaps when donations can be provided expeditiously, or to supply previously undetermined needs.

3.9.2 Donations in cash for UNHCR's programmes are always welcome. Once applied to a project budget, cash may be used to make local, regional or international purchases of supplies and food aid. The only restriction for earmarked cash donations is that UNHCR field personnel must comply with the terms and reporting requirements stipulated in the donor agreement, the CAF and the project agreement.

3.9.3 Some offers of in-kind donations are timely and essential to the achievement of UNHCR's programme objectives. They may be for something you actually need and have planned. Some offers will be seen immediately to be outside the requirements of the refugee programme or inappropriate for the proposed refugee population. Others will be tempting - items for which there might be a need in the future. If you want them, why are they not planned needs already? If they were forgotten, include them now. Consider local handling and storage capacity for such gifts.

3.9.4 In accepting in-kind donations, confirm that the planned delivery date coincides with timing needs for effective programme operations. Also, examine the value of the donation and related costs carefully, especially if its value will be netted against the established programme budget. Goods supplied by donors, including freight and other costs, may be much more expensive than similar goods which meet minimum acceptable standards and are purchased from regular UNHCR sources.