PATH Procurement Capacity Toolkit, Version 2

Publication date: 2009

Multiple files are bound together in this PDF Package. Adobe recommends using Adobe Reader or Adobe Acrobat version 8 or later to work with documents contained within a PDF Package. By updating to the latest version, you’ll enjoy the following benefits: • Efficient, integrated PDF viewing • Easy printing • Quick searches Don’t have the latest version of Adobe Reader? Click here to download the latest version of Adobe Reader If you already have Adobe Reader 8, click a file in this PDF Package to view it. Combined Glossary This glossary includes all terms and acronyms used throughout the Procurement Capacity Toolkit. Numbers and abbreviations in parentheses indicate the primary section in which each term is used. Agent (3, 4, 6, 7, SG1, ST2) A supply term for an independent contractor authorized by a manufacturer to promote and sell the manufacturer’s products within a designated geographic area. Often, an agent will contract to represent several manufacturers of noncompeting products. AIDS (1–6, 9, AG3, SG, ST) Acquired Immunodeficiency Syndrome. Air waybill (10, ST) A shipping document issued by airlines and air freight carriers when cargo is loaded on board an aircraft. It contains a description of the commodity being shipped, shipping instructions, terms and conditions of the shipment, and applicable transportation charges. Applicant (ST) A legal term used in banking to describe the party guaranteeing funds for a commercial transaction using a letter of credit. Also known as the buyer. AQL (2, 6, 9, ST) Acceptable quality limit: The lowest allowable limit of quality in a lot. Award notification (8) A notification from the purchaser to the successful bidder recommended for a contract. 1 SG = Summary Guide for Policymakers, Ministry Personnel, and Program Managers. 2 ST = Supplementary Topics. 3 AG = Procurement Assessment Guide. Procurement Capacity Toolkit Combined Glossary-1 Combined Glossary Procurement Capacity Toolkit Combined Glossary-2 Batch Certificate of a Pharmaceutical Product (6, 9, ST) A document issued for each batch by the manufacturer certifying the quality and expiry date of a specific batch of a product that has already been licensed in the importing country. BEC (7, AG, ST) Bid evaluation committee: A committee of ministry and program representatives, often including the Ministry of Finance, that oversees, guides, and approves key steps in the procurement process, including final selection. Also known as a bid review committee. Beneficiary (5–8, ST) A legal term used in banking to describe the party entitled to collect funds guaranteed by a commercial letter of credit upon presentation of stipulated documents (usually shipping and quality assurance documents). Also known as the seller. Bid (2–9, AG, SG, ST) A procurement term describing a written offer for a quantity of goods, works, or services at a stated price based on a technical specification and specific terms and conditions. Bids are submitted to an intending purchaser by an intending seller in response to an Invitation for Bids. Bid Data Sheet (6, AG, ST) Term for the World Bank bidding document that modifies the Instructions to Bidders document by providing information specific to the bid. Bidder (2–9, AG, SG, ST) An intending seller or supplier that submits a bid offering goods or services in response to an invitation or request for bids and offers. Bidding documents (2–10, AG, SG, ST) The written description and set of terms and conditions of an intended purchase that is circulated by the intending buyer to prospective sellers. Bid security (6–8, AG, SG, ST) A financial instrument used to guarantee compensation to the prospective buyer for inconvenience and expense if a winning bidder rescinds its offer after the bid is closed and an award has been made to the bidder. Each bidder provides an amount stated in the bidding documents with its bid submission. Combined Glossary Procurement Capacity Toolkit Combined Glossary-3 Bill of lading (6, 9, 10, ST) A shipping document issued by a carrier (usually an ocean shipping line) to a shipper that provides a written receipt for the goods, describes the conditions by which transport is made, and includes a written commitment to deliver goods at a stated destination to the lawful holder of the bill of lading. BOC (7, AG, SG) Bid opening committee: Committee of a minimum of three members that administers and oversees the opening of sealed bids. Brand/Brand name (1, 2, 4, 6, 7, SG, ST) The registered trademark name given to a specific product by its manufacturer. Cash against documents (5, ST) A payment method: A contracted bank acts as an intermediary, transferring the buyer’s funds (payment) to the seller when the seller furnishes documentary proof of shipment to the contracted bank. Centralized procurement (3, AG, SG, ST) The government owns, funds, and manages the supply chain for the public-sector health system. Procurement is conducted at the central level. Certificate of Analysis (2, 6, 9, AG, ST) A document certifying quality and composition of goods. Certificate of Pharmaceutical Product (2, 6, ST) A certificate establishing the status of the pharmaceutical product and of the applicant for the certificate in the exporting country. It is for a single product only, since manufacturing arrangements and approved information for different dosage forms and strengths can vary. CFR (4, 8, 10) Cost and freight: Title and risk insurance cost pass to buyer when delivered on board the ship by seller, which pays the transportation cost to the destination port. cGMP(s) (2, 5–7, 9, SG, ST) Current good manufacturing practice(s): Manufacturers must employ technologies and systems which are up to date to the performance standards for pharmaceutical and medical device manufacturers established by the World Health Organization and many national governments. Includes criteria for personnel, facilities, Combined Glossary Procurement Capacity Toolkit Combined Glossary-4 equipment, materials, manufacturing operations, labeling, packaging, quality control, and in most cases, stability testing. CIF (4, 8–10) Cost, insurance, and freight: Title and risk pass to buyer when delivered on board the ship by seller, which pays transportation and insurance costs to destination port. CIP (4–6, 8) Carriage (freight) and insurance paid to: Costs paid to the named destination by the seller. Title and risk pass to buyer when delivered to carrier. Commercial invoice (6, 8–10, ST) Document required by customs to determine the true value of imported goods for assessment of duties and taxes. Commodity (1–10, AG, SG, ST) Any piece of tangible property, supplies, or equipment that is the subject of a procurement activity. Compliance testing (2–4, 6, 9, ST) A methodology of prescribed inspection and testing procedures applied to a product to ensure the product meets its defined specifications and/or performance requirements. Component (1–10, SG) An important function or process that occurs within an element of the reproductive health supply process. Each module of the Toolkit focuses on one element. Consignee (9, 10) A term used in shipping to describe the party to which something is entrusted (e.g., the “ship-to” party). Consumption (1, 4, 9, AG, ST) What individuals and households are able to utilize. Contraceptive prevalence rate (1) Percentage of the population using a contraceptive method, frequently disaggregated by modern versus traditional methods and by individual contraceptive methods. Contract (1–10, AG, SG, ST) An agreement entered into by two parties for the execution of a certain activity (e.g., sale and purchase, construction, service provision, etc.). Contract grouping (5) Assemblage of goods or services of a similar nature into one group. Combined Glossary Procurement Capacity Toolkit Combined Glossary-5 Contract performance monitoring (9, SG) Tracking system developed by the purchaser that uses monitoring system key performance indicators to monitor the supplier’s compliance with contract requirements. Convertible currency (SG) Currency that can be quickly bought and sold for other currencies. Commonly traded internationally. Correspondent relationship (3, ST) An affiliation that a local developing-country bank establishes with a major, international bank that allows the local bank to expand its availability to implement international financial transactions, such as letters of credit. Corruption (3, 6, AG, SG, ST) The dysfunction of a system or institution in which officials or employees seek illegitimate personal gain through actions such as bribery or extortion. Cost (4, 7, AG, SG, ST) What the purchaser ultimately pays for an item, delivered to its facility. Cost, not price, is used for budgeting. Criteria (2–7, 9, AG, SG, ST) Specific points, standards, qualities, and/or requirements against which something is judged. Customs clearance agent (3, 10, SG) A licensed professional agent appointed by an importer to clear a shipment (consignment) coming from abroad through the port and customs authorities. Also called a customs broker. CYP (1) Couple years of protection: The amount of contraceptive commodities that will cover a couple for 12 months from unwanted pregnancy. DAC (3, AG) Development Assistance Committee: Currently working to strengthen procurement capacities in developing countries under the auspices of the World Bank and the Organisation for Economic Co-operation and Development. DAF (4) Delivered at frontier: Title, risk, and responsibility for import clearance pass to buyer when delivered to named border point by seller. Combined Glossary Procurement Capacity Toolkit Combined Glossary-6 DDP (4) Delivered duty paid: Title and risk pass to buyer when seller delivers goods to named destination point cleared for import. DDU (4) Delivered duty unpaid: Seller fulfills its obligation when goods have been made available at the named place in the country of importation. Debarred (6, 7, AG) Denied opportunity to compete for contracts of a purchasing authority. Decentralized procurement (3, AG, SG, ST) Different levels of responsibility for procurement are handled by the provincial, district, municipal, or even the facility level. Demand (1) The quantity of a commodity or service wanted at a specified price and time. Within the context of family planning or HIV/AIDS prevention services, price includes not only monetary and program personnel costs, but also the cost in time and inconvenience for the client who wishes to obtain services. Definition from Contraceptive Forecasting Handbook for Family Planning and HIV/AIDS Prevention Programs (Family Planning Logistics Management, 2000). Demurrage charges (3, 10, AG, SG) Charges assessed against the consignee (purchaser) by a carrier, shipping agent, or customs agent for delay beyond the time allowed or agreed upon for unloading and/or removal of goods from port facilities. DEQ (4) Delivered ex quay (duty paid): Title and risk pass to buyer when delivered on board the ship at the destination point by the seller, which delivers goods on dock at destination point cleared for import. DES (4) Delivered ex ship: Title, risk, and responsibility for vessel discharge and import clearance pass to buyer when seller delivers goods on board the ship to destination port. Direct procurement (1, 3, 8, AG, SG) Purchaser contracts for goods directly with a manufacturer or its representative. Combined Glossary Procurement Capacity Toolkit Combined Glossary-7 Discrepancy (5, 7, 10, ST) Used in banking and trade to indicate lack of agreement with stated requirements and/or documents. Distribution tier (4, ST) A supplier’s position in the chain of entities involved in distributing goods to purchasers. Documentary evidence (6, 7, SG, ST) Being, consisting of, or contained exclusively in documents. Domestic preference (6, 7) A term used in World Bank procurement documents to describe a competitive advantage, expressed in a percentage, that is sometimes given to local manufacturers of goods competing for contracts against international sources. Drug regulatory authority (2, 3, 6, ST) Same as national regulatory authority: An independent government entity responsible for establishing procedures to ensure that medicines intended for use in the country are safe, potent, and effective. Duty (10) A tax charged by a government, especially on imports. Efficacy (2–6, SG, ST) The capacity of a drug to produce scientifically proven therapeutic effects. e-Government (ST) Term used by the World Bank which is synonymous with e-procurement. Element (1–10, AG, SG) One of the ten key operational, broad-based activities in the reproductive health supply process. Eligibility (criteria) (3, 4, 6–9, AG, SG, ST) Not excluded from competing for contracts in general by reason of nationality, debarment, lack of regulatory approval, etc. Entity (2–8, SG, ST) A business and legal term to describe something that exists and functions as a separate and distinct body (e.g., a corporation, Ministry of Health, or committee). Combined Glossary Procurement Capacity Toolkit Combined Glossary-8 e-Procurement (6, AG, ST) The automation of any part of the procurement process with electronic tools, ranging from a system that is fully integrated with purchasers’ systems (e.g., linked with the warehouse management system), to partial automation of an organization’s processes, to simply using a supplier’s online tools. Evaluated cost (6–8, AG, SG) An offered price adjusted for corrections, discounts, domestic preference, and usage factors. Evaluation criteria (6–8, AG, SG, ST) Basis for judgment (announced in bidding documents) that will be used to select the winning bidder. Exercise date (8) The latest date on which an option needs to be executed for it to become effective. Expiration (Expiry) date (1, 2, 4–10, AG, SG, ST) The date beyond which the manufacturer will not guarantee the product. EXW (4, 8) Ex-works: The buyer bears all costs and risks involved in taking the goods from the seller’s premises to the desired destination. FAS (4) Free alongside ship: Title and risk pass to buyer, including payment of all transportation and insurance costs, once delivered alongside ship by the seller. Fast-track licensing (5, 6, AG, SG, ST) Regulatory licensing based on confidence in the quality of a product as evidenced by similar licensing in countries with stringent, highly respected regulatory authorities. FCA (4) Free carrier: Title and risk pass to buyer, including transportation and insurance costs, when the seller delivers goods cleared for export to the carrier. Seller is obligated to load the goods on the buyer’s collecting vehicle. It is the buyer’s obligation to receive the seller’s arriving vehicle unloaded. Financial threshold (3, 5, SG, ST) Monetary division used to trigger an action or requirement. (Procurement method selection is often tied to financial thresholds.) Combined Glossary Procurement Capacity Toolkit Combined Glossary-9 FOB (4, 9) Free on board: The seller fulfills its obligation when the goods pass over the ship’s rail at the named port of shipment. Force majeure (6, 8) Unforeseen circumstances (e.g., natural disasters, other “Acts of God,” or war) which excuse a party from fulfillment of a contract. Forecast (1, 3, AG, SG, ST) To calculate beforehand. Formal procurement record (9, AG) File system established by the purchaser for each procurement transaction (contract). Contains all the critical documents and information that are pertinent to the transaction. Formulation (2, 3, 6, ST) The amounts of active ingredients per tablet. Framework contract (8, ST) General term for an agreement with a supplier setting out terms and conditions against which specific purchases (call-offs) can be made throughout the life of the agreement. Also see indefinite quantity contract. Funder (3–8, SG, ST) Organization (or person) providing funds for a specific project, program, or purpose. GAVI Alliance (4, SG) A global health partnership whose members work together to save lives by increasing access to vaccines in 70 of the poorest countries around the world. General Conditions of Contract (6–8, AG) Mandatory contract wording for issues such as payments, obligations, risks, rights, and performance. Global Fund (4, AG, ST) Global Fund to Fight AIDS, Tuberculosis and Malaria: An innovative approach to health financing supported by public-private partnership. Offers a price-reporting mechanism, quality assurance information, and a compliance list. GNI (4, SG) Gross national income. HIV (1–3, 5, 6, 9, SG, ST) Human Immunodeficiency Virus. Combined Glossary Procurement Capacity Toolkit Combined Glossary-10 ICB (7, 8) International competitive bidding. ICH (6, SG, ST) International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use: Addresses how harmonization of technical guidelines and requirements for product registration might be achieved. IDA Foundation (3–5, 8, SG, ST) Claims to be the world’s largest not-for-profit supplier of essential medicines and medical supplies to low- and medium-income countries. Established in 1972 in Amsterdam by a group of pharmacists. INCOTERMS (4, 6, 8, 9) Rules for interpretation of the most commonly used terms in foreign trade to describe how goods will be shipped, who is responsible for them at each stage of the process, and who pays which costs. Published by the International Chamber of Commerce. Indefinite quantity contract (8, AG) Also referred to as a framework contract, it establishes terms and conditions applicable to each order a purchaser places with the supplier during the fixed period of the contract. Indirect procurement (3, 8, AG, SG) Purchaser contracts for goods through an intermediary that has or will purchase directly from a manufacturer. Injectable (1–6, 9) Injectable contraceptive. INN (2, 6, ST) International nonproprietary name: A name that facilitates the identification of a pharmaceutical substance or active pharmaceutical ingredient. Each international nonproprietary name is a unique name that is globally recognized and is public property (also known as a generic name). Inspection company (9) Independent, professional organization with staff trained in random sampling and visual inspection procedures. Hired by the purchaser to visit the supplier and inspect a commodity prepared for shipment prior to shipment. Interlineations (7) Notations written between the lines of the original bidding documents. Combined Glossary Procurement Capacity Toolkit Combined Glossary-11 International supply service (3–5, 8, AG, SG) An international agency such as the United Nations Population Fund that purchases standardized commodities in large quantities and supplies them to developing-country government institutions at cost plus a fixed fee. Invitation for Bids (2–8, SG, ST) An invitation to manufacturers or contractors, through a bidding process, to submit a proposal on a specific product or service to be furnished. ISO (2, 6, 9, ST) International Organization for Standardization: A nongovernmental organization that develops and publishes international standards. It is a network of the national standards institutes of 162 countries. ITB (6) Instructions to Bidders. IUD (1, 2, 4, 5) Intrauterine device. Joint venture (7, 8, AG) A business enterprise in which two or more companies enter a temporary partnership. L/C (3–10, SG, ST) Letter of credit: An arrangement by banks for settling commercial transactions; specifically, a written promise by a bank given to the seller in accordance with instructions (backed by a cash deposit) of the buyer to pay up to a given sum of money within a prescribed time limit when and if the seller presents specified documents that give evidence of its performance. Lead time (1, AG, ST) The time interval needed to complete the procurement cycle. LIB (7) Limited international bidding. Liquidated damages (10, AG) In sales contracts, a specified sum to be paid to the purchaser should the seller default on its obligation (usually pertaining to a delivery schedule). LMIS (1, ST) Logistics management information system(s): A system that collects, processes, and reports logistics data. Lot (Batch) (2–7, 9, AG, ST) In manufacturing, a single, uniform, and homogeneous quantity produced from one compounding formulation, in one manufacturing Combined Glossary Procurement Capacity Toolkit Combined Glossary-12 and production operation, and that has received entirely the same processing treatment. Lot (Batch) number (2, 6, 9, ST) A series of numbers or letters, or both, established to record production and control of a product. Unless otherwise specified, the lot number is the series of numbers or letters that identifies a single, uniform, and homogeneous quantity produced from one compounding formulation, in one manufacturing and production operation, and that has received entirely the same processing treatment. Lot size varies by product, product type, dosage form, and manufacturing process. Lot-by-lot (2–4, 6, 9, ST) Applicable to each manufacturing lot (batch). Major (Material) deviation (6, 7) Used in evaluating bids to describe a significant and unacceptable difference from the requirements stated in the bidding documents. More precisely, a material deviation is one that affects, in any way, the price, quantity, quality, or delivery of the goods as required in the bidding documents, or limits in any way the responsibilities, duties, or liabilities of the bidder or any rights of the purchaser. See Module 7 for more information. Manufacturer’s Batch Certificate (2) A document issued for each batch by the manufacturer certifying the quality and expiry date of a specific batch of a product that has already been licensed in the importing country. Manufacturer’s (Bidder’s) representative (3–7, SG) A direct employee of a manufacturer with responsibility to promote the use of, provide information on, and sell the manufacturer’s products. In some cases, the representative also facilitates importation. Sometimes the term “agent” is used to convey the same relationship. Market segmentation (4) The practice of dividing potential purchasers (the market) into defined groups (segments) based on specific selection criteria. Marks, markings (2, 4–6, 8–10, ST) An application of numbers, letters, labels, tabs, symbols, or colors for handling or identification during shipment and storage. Combined Glossary Procurement Capacity Toolkit Combined Glossary-13 Method mix (1, SG) Mix of products used by the target population, expressed as the percentage that each method constitutes among all contraceptives used. Methods of funds remittance (ST) Processes by which money will transfer from one party to another. Misprocurement (2) A declaration that goods have not been procured according to the agreed procedures in the loan agreement. Missionpharma (3, 8, SG, ST) Supplies generic pharmaceuticals and medical devices to governments, United Nations agencies, and nongovernmental organizations in developing countries. MOH (5) Ministry of Health. MSH (4, 5, ST) Management Sciences for Health: A nonprofit international health organization with a mission to save lives and improve the health of the world’s poorest and most vulnerable people by closing the gap between knowledge and action in public health. N/A (n/a) (2, 4, 6) Not applicable. Need (1) When an individual is exposed to risk or a condition that could be prevented or satisfied via access to specific products or services, that individual is defined as needing the service or product. Negotiated bill of lading (10) Term for a bill of lading that has been released to the purchaser following payment to the supplier. Negotiated procurement (6, AG) A competitive procurement method in which proposals are requested from suppliers and the purchaser can discuss the supplier proposals to determine the best value. NGO (1, 3, 4, ST) Nongovernmental organization: Usually involved in providing services to or alongside government entities. Often financed through projects using donor funds. Nonresponsive (7) A procurement term used to describe an offer that does not comply with the most basic instructions and requirements stated in the Combined Glossary Procurement Capacity Toolkit Combined Glossary-14 bidding documents provided by the purchasing organization. For example, an unresponsive bid may be one that is not signed, is bid in the wrong language, or does not offer the required products. No Objection Certificate (2, 3, 6) Issued by a manufacturer or a government when goods to be imported into a country are already manufactured in that country. States that there is no objection to the goods being imported. NRA (2–9, AG, SG, ST) National regulatory authority (same as drug regulatory authority): An independent government entity responsible for establishing procedures to ensure that medicines intended for use in the country are safe, potent, and effective. Null and void (6, 8) Cancellation or lapse of an agreement (contract) with no legal effect. OC (3–5) Oral contraceptive. OECD (3, AG, SG, ST) Organisation for Economic Co-operation and Development: An international organization helping governments tackle the economic, social, and governance challenges of a globalized economy. OECS (3) Organisation of Eastern Caribbean States: Nine- member group that promotes cooperation in defense issues, international diplomacy, and economic policies. Offer (3–7, 9, AG, SG, ST) Used interchangeably with “bid,” “tender,” and “proposal.” Onboard joint insurance survey (10) An inspection of an arriving ocean freight shipment by both the marine insurance company surveyor and the vessel surveyor to document the condition of the shipment. Open bid (5, AG, ST) Sealed bids are solicited by means of a widely advertised invitation open to all suppliers that choose to participate in the competition. Option (8, AG) If a purchaser knows there is potential for additional quantities in the future, but the budget is not yet available, an option may be structured Combined Glossary Procurement Capacity Toolkit Combined Glossary-15 in the contract. An option is an additional quantity or period in a contract that can be exercised or executed at the buyer’s discretion. Packaging (2–6, 9, 10, AG, SG, ST) The primary wrapping and marking of a product. Packing (2, 4–6, 8–10, AG) The assembling of a packaged product into multiple units. Prepared for shipment in appropriate cartons or crates with all necessary blocking, bracing, cushioning, weatherproofing, reinforcement, and markings. Packing list (9, 10, SG, ST) A schedule showing detailed packing information, including items and totals, number of units or items per box or crate, total number of boxes or crates with individual identification numbers provided, shipping marks, total volume of the cargo, weights and dimensions per box or crate, etc. Parastatal (3, AG, SG, ST) Self-supporting, quasigovernmental organization. Pay voucher (4) A document authorizing disbursement of cash to cover a liability. Performance indicator (1–10, AG, ST) Measures and evaluates success against a specific goal. Performance security (5, 6, 8, 9, AG) A procurement term describing the financial instrument used to guarantee compensation to the buyer for inconvenience and expense if the seller does not perform (i.e., does not produce and ship the contracted goods or provide the contracted services within the stated period). The seller puts up its own funds, often through a bank or insurance company, to be held in reserve until the contract terms have been met. Pharmaceutical Inspection Convention (6, 7, ST) One of two international instruments (Pharmaceutical Inspection Co-operation Scheme is the other) between countries and pharmaceutical inspection authorities dedicated to standardizing and ensuring current good manufacturing practices and inspections. Currently, it has 31 member countries, with the European Medicines Agency, the United Nations Combined Glossary Procurement Capacity Toolkit Combined Glossary-16 Population Fund, and the World Health Organization as partners/observers. Pharmaceutical Inspection Co- operation Scheme (6, ST) One of two international instruments (Pharmaceutical Inspection Convention is the other) between countries and pharmaceutical inspection authorities dedicated to standardizing and ensuring current good manufacturing practices and inspections. Currently, it has 31 member countries, with the European Medicines Agency, the United Nations Population Fund, and the World Health Organization as partners/observers. Phase (1–10, SG) A natural division of the ten elements of the supply process into three sequential parts: program planning, procurement process, and contract performance. PIC/S (SG, ST) Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme: Two international instruments between countries and pharmaceutical inspection authorities dedicated to standardizing and ensuring current good manufacturing practices and inspections. Currently, it has 31 member countries, with the European Medicines Agency, the United Nations Population Fund, and the World Health Organization as partners/observers. PPA (3, 4, AG, SG, ST) Private procurement agent: Undertakes a procurement process on behalf of a procuring entity using competitive bidding procedures and may or may not select the winning bid. Prequalification (of manufacturer/ supplier/bidder) (5–7, 9, AG, SG, ST) A process of preapproving suppliers for participation in bids based on a judgment of reliability, technical competence, and financial stability. Prequalification (of product) (6, SG, ST) A process of predetermining that a specific product (usually a pharmaceutical, device, or vaccine) of a specific manufacturer meets stated requirements. Combined Glossary Procurement Capacity Toolkit Combined Glossary-17 Preshipment compliance (5, 6, 9, 10, AG) Process by which the purchaser confirms the acceptability for shipment of the supplier’s commodity prior to shipment. There are three basic levels of preshipment compliance a purchaser can institute, ranging from document review to visual inspection up to full laboratory or physical testing of the commodity. Preshipment inspection (3–7, 9, SG, ST) An inspection of manufactured goods ready for shipment undertaken by an internationally recognized inspection agency (such as Societe Generale de Surveillance). Price (4, 7, AG, SG, ST) What the seller asks for an item. Procurement cycle (3, 5, AG, SG) The repeating sequence of steps in a procurement process, generally starting at the initial planning phase and ending at possession of the goods. Procurement method (1–3, 5–8, AG, SG) Process a purchaser uses to reach an agreement with a seller. Procurement option (3–6, 8, AG, SG, ST) Approach to procurement: Direct or indirect, and several subdivisions of each are differentiated by who contracts with the original manufacturer (or its representative). Procurement requirements (6) A complete description of the product to be purchased, including technical attributes (especially manufacturing and quality assurance norms), program specifications (including packaging and packing), shipping terms, payment terms, port of delivery, delivery date, quantity, documentation, and any other relevant detail of the expected purchase. Procurement requisition (4–6, 9, AG, SG, ST) A document describing what is to be purchased and giving authority to do so. Procurement unit (2–7, 10, AG, SG, ST) Individuals organized around procurement duties within a larger entity. Combined Glossary Procurement Capacity Toolkit Combined Glossary-18 Product neutral (2, 6, AG, SG) Specifications that use generic terms, relative characteristics, and performance requirements rather than brand names and superficial descriptions. Purchase order (2, 4, 6, 8, AG, ST) A commercial document issued by a buyer (purchaser) to a seller indicating the type, quantities, and agreed prices for products or services the seller will provide to the buyer. Purchase orders usually specify additional conditions such as terms of payment, INCOTERMS for liability and freight responsibility, any inspection or testing procedures that may be required, and required delivery date. QA (1–10, AG, SG, ST) Quality assurance. For more information, see Supplementary Topics, Section H: Product Quality Assurance. Qualification criteria (6, 7, AG, ST) An attribute that must be met or complied with that makes a competing firm fit to perform a specific contract. Quantification (1, AG, SG, ST) Process of estimating product quantities to supply adequate stocks according to standard medical and program guidelines. Registration (2, 3, 6–8, AG, SG, ST) A term used in regulating medicines, pharmaceuticals, and vaccines; exact usage varies from country to country. It is often synonymous with licensing, but it can mean simply that the particulars about a shipment are recorded as it enters a country. Request for Quotation (2, 5–9, ST) A procurement method without sealed bidding or formal bidding procedures in which potential suppliers are contacted and asked to provide a price for specified goods. RH (1–10, AG, SG, ST) Reproductive health: A state of complete physical, mental, and social well-being—not merely the absence of disease or infirmity—in all matters relating to the functions and processes of the reproductive system. Reproductive health implies that people are able to have a satisfying and safe sex life and that they have the capability to reproduce and the freedom to decide if, Combined Glossary Procurement Capacity Toolkit Combined Glossary-19 when, and how often to do so; implicit in this last condition is the right of men and women to be informed and to have access to safe, effective, affordable, and acceptable methods of family planning of their choice, as well as other methods of their choice, for regulation of fertility. SBEF (7, ST) Standard Bid Evaluation Form: A World Bank document that outlines a step-by-step procedure for examining and evaluating bids. Schedule of Requirements (6–8, AG, ST) Part of bidding documents that describes the quantity of goods and expected delivery time. Sealed bids (2, 3, 5, 6, 8) A procurement process in which formal bids are submitted in sealed envelopes and held unopened until an appointed date and time, then opened and read in public with bidders in attendance. Service delivery point (1) Any health facility that provides services directly to the customer. Shipping term (4, 6, 8) Generally an INCOTERM. SOPs (3, ST) Standard operating procedures: Provide a clear set of instructions, or steps, for procurement personnel to follow to ensure the procurement process is implemented in compliance with legislative and regulatory requirements and in keeping with good procurement practices. See Supplementary Topics, Section L: Standard Operating Procedures, for additional information. Special Conditions of Contract (6–8, AG, ST) Modifies or adds to General Conditions of Contract to suit specific goods and situations. Specification (1–9, AG, SG, ST) A definitive description of the commodity to be procured. Combined Glossary Procurement Capacity Toolkit Combined Glossary-20 Standard (2, 4, 5, 8, 9, AG, SG, ST) Establishes the minimum level of performance and safety requirements for the product, and generally specifies methods of use when carrying out basic tests for quality verification. Standards are traditionally developed and published by international and national regulatory authorities or standards bodies. STI (1) Sexually transmitted infection. Stringent regulatory authority (6, SG, ST) A national regulatory authority participating in the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use and its affiliates as defined by the Global Fund to Fight AIDS, Tuberculosis and Malaria, or those countries participating in the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co- operation Scheme. Substantially responsive (6, 7) A bid that contains no material deviations from or reservations to the terms, conditions, and specifications in the bidding documents. Supplier (1–10, AG, SG, ST) The party that transfers goods out of its own control to a named recipient. Supply (1–10, AG, SG, ST) Goods and services of a specific kind that are provided to businesses, public agencies, or directly to consumers. Surety (7) A person or firm that is legally responsible for the debt, default, or delinquency of another. Target population (1, SG) The collection of individuals or regions that are to be investigated in a statistical study. TEC (7, AG) Technical evaluation subcommittee to the bid evaluation committee: A committee of technical experts that reviews bids for responsiveness to technical specifications. TFR (1) Total fertility rate: The average number of live births a woman would have if she survived to age 49 and had births at the prevailing age-specific rates. Combined Glossary Procurement Capacity Toolkit Combined Glossary-21 Turnover (6) The amount of business transacted during a given period of time; for example, annual sales value. UNAIDS (2–4, 6, 9, SG, ST) Joint United Nations Programme on HIV/AIDS: Brings together the efforts and resources of ten United Nations system organizations in the AIDS response to help the world prevent new HIV infections, care for people living with HIV, and mitigate the impact of the epidemic. UNFPA (1–6, 8, 9, SG, ST) United Nations Population Fund: A semiautonomous United Nations agency working to ensure universal access to reproductive health, including family planning and sexual health, to all couples and individuals. Operates a global procurement service for public-sector purchasers of contraceptives and related products. UNICEF (2, 4, SG, ST) United Nations Children’s Fund: A semiautonomous United Nations agency working for sustainable human development to ensure the survival, protection, and development of children. Operates a global supply service that contracts with manufacturers for large quantities of vaccine and other products which it then supplies in smaller quantities to individual clients in the public sector on a reimbursable, but not-for- profit basis. United Nations (1–10, SG, ST) An international organization founded in 1945 after the Second World War by 51 countries committed to maintaining international peace and security; developing friendly relations among nations; and promoting social progress, better living standards, and human rights. USAID (1, 2, 4, ST) United States Agency for International Development: An independent federal government agency that receives overall foreign policy guidance from the Secretary of State. Its work supports long-term and equitable economic growth and advances United States foreign policy objectives by supporting economic growth, agriculture, and trade; global health; and democracy, conflict prevention, and humanitarian assistance. Combined Glossary Procurement Capacity Toolkit Combined Glossary-22 USAID | DELIVER PROJECT (1, 2, 4) A United States Agency for International Development-funded project that strengthens supply systems for essential health commodities and works to ensure their sustainability. Use tax (4) A tax levied by governments on goods purchased elsewhere. Generally paid by the purchaser. Value added tax (4, 6, 10, ST) A tax levied by governments on values added resulting from an exchange of property; for example, from wholesale value to retail value. Generally paid by the seller (but passed along to the customer via sale price). Visual inspection (2, 5, 6, 9, AG, SG, ST) A comparison of a product to written specifications (e.g., packaging, labeling, and marking instructions) that is performed without the aid of test instruments. Warranty (6–8, 10) A written guarantee given to the purchaser of health-sector goods by the manufacturer or dealer, usually specifying that the manufacturer will replace poor-quality goods free of charge for a stated period of time. WHO (1–7, 9, 10, AG, SG, ST) World Health Organization: The directing and coordinating authority for health within the United Nations system. WHO prequalification (2–6, SG, ST) Included on the WHO list of prequalified medicines. WHO assesses quality, efficacy, and safety of specific medicines from specific manufacturers and accepts or rejects them for inclusion on its list. For more information, see Supplementary Topics, Section E: Prequalification. World Bank (3–10, AG, SG, ST) The World Bank Group offers loans, advice, and an array of customized resources to more than 100 developing countries and countries in transition. Procurement Capacity Toolkit Tools and Resources for Procurement of Reproductive Health Supplies Version 2: November 2009 PATH Mailing address: PO Box 900922 Seattle, WA 98109 USA Street address: 2201 Westlake Avenue, Suite 200 Seattle, WA 98121 USA Tel: 206.285.3500 www.path.org info@path.org Copyright © 2009, Program for Appropriate Technology in Health (PATH) and the World Health Organization (WHO). All rights reserved. The material in this document may be freely used for educational or noncommercial purposes, provided that the material is accompanied by an acknowledgement line. Acknowledgements This document was written by Dian Woodle, Todd Dickens, and Betsy Wilskie, with additions from Keith Neroutsos, Fay Venegas, Ariana Knight, Beatriz Ayala-Ostrom, Liz Shea, and Janet Vail from PATH. Our thanks go to the following reviewers for their considered and detailed contributions: Linda Allain, Teresa Gingras, Nurul Hossain, David Jamieson, Steve Kinzett, Adrienne Kols, Helene Moller, Raja Rao, Mark Rilling, Andreas Seiter, Morten Sorensen, David Smith, and Olena Wagner. Many thanks also to Elizabeth Matteson, Cindy Reeh, and Matthew Havlik for their editing assistance. We would like to convey a special note of gratitude to our partners in Zambia and Malawi, without whom the field-testing and revision of Version 1 of the Procurement Capacity Toolkit would not have been possible. In Malawi, we particularly thank Ms. Ivy Zingano, Mr. Patrick Nkunika, Mr. Darlington Mtupa, and their staff at Central Medical Stores. In Zambia, we thank Mr. Kenneth Mapani, Dr. Reuben Mbewe, and their staff at the Ministry of Health. The work on this toolkit was carried out under the Quality Medicines for Reproductive Health Project, Phase Two, funded by the World Health Organization through a grant from the Bill & Melinda Gates Foundation. Endorsed by: Introduction Procurement Capacity Toolkit Introduction-1 Procurement Capacity Toolkit A. Introduction – Overview of Procurement Capacity Toolkit B. Modules of the Procurement Capacity Toolkit C. Supplementary Topics D. Summary Guide for Policymakers, Ministry Personnel, and Program Managers E. Procurement Assessment Guide F. Trainer’s Guidelines G. Combined Glossary Introduction Procurement Capacity Toolkit Introduction-2 Introduction – Overview of Procurement Capacity Toolkit Contents A. Introduction B. Modules of the Procurement Capacity Toolkit C. Supplementary Topics D. Summary Guide for Policymakers, Ministry Personnel, and Program Managers E. Procurement Assessment Guide F. Trainer’s Guidelines G. Combined Glossary Introduction Procurement Capacity Toolkit Introduction-3 A. Introduction Rationale As developing-country governments and major programs increasingly take on responsibility for their health commodities supply chain—including the responsibility for procurement— requisite skills such as decision-making, planning, and technical skills often require strengthening. Resources for strengthening procurement systems exist, but they are often focused on other health topics (such as malaria and HIV/AIDS), and there are information gaps where resources specific to reproductive health (RH) product supply are needed. Purpose The Procurement Capacity Toolkit is intended to bring together existing resources in a manageable framework and aims to fill major gaps in the body of materials available to those responsible for and involved in RH product supply. In broad terms, the Procurement Capacity Toolkit: • Is intended for country-level use. • Stands alone (i.e., can be used as a resource guide) or can be used as part of a training. • Addresses all three phases of the RH supply process: program planning, the procurement process, and contract performance. • Provides training tools that can be adapted to a specific country setting. • Focuses on strengthening good procurement practices, particularly for RH supplies. • Addresses known problems in procurement at the country level. • Provides the user with current information on product specifications, manufacturer prequalification, and various procurement mechanisms. • Provides tools and techniques for assessment, monitoring, and performance evaluation to allow for continuous improvement of the procurement process. Specifically, the Procurement Capacity Toolkit: • Describes the RH supply process within the context of good public-sector procurement practices. Introduction Procurement Capacity Toolkit Introduction-4 • Describes measures to ensure procurement of safe, effective products. • Provides tools for training personnel involved in the RH supply process. • Lists existing resources and provides links to relevant websites. Target Audience 1. Personnel Responsible for Purchasing Public-Sector Reproductive Health Supplies a. Those With a Background in the Procurement Process Often, these staff work with funding from a range of donors and must comply with many different donor and national requirements. They work in an environment where staff may have basic procurement training but little or no specialized training in RH supply, and no knowledge of existing resources that could help them ensure the quality and timeliness of essential RH supplies. b. Those With a Background in Public Health/Program Planning These individuals are acutely aware of quality and timeliness issues, budget constraints, and supply problems at the user level, but often have minimal knowledge about the rules and technical procedures of good public-sector procurement or where to find the resources that could help guide them through the necessary process. This group includes technical assistance providers who conduct procurement training or carry out technical assistance to strengthen procurement capacity. The inclusion of this group as an audience can have the additional potential of enhancing consistency and quality of health care procurement training. Terminology Some terms used in this document may not be intuitive for every audience, thus are defined in this introduction to ensure accurate communication: • Procurement versus supply process: The word “procurement” has both a broad meaning and a narrow meaning. In the broad sense, many people view it as the entire supply process. In a narrower sense, it is limited to the technical process of soliciting offers and placing a contract. This document will use “procurement” to mean the technical process of soliciting offers and placing contracts, while “supply process” will be used to describe the entire acquisition effort, from estimating need through the delivery of goods. Introduction Procurement Capacity Toolkit Introduction-5 • Prequalification: The term “prequalification” has two applications: the first is a process purchasers use to narrow the field of potential suppliers to those with a viable financial, technical, and commercial history. This document will describe this as “prequalification of manufacturers (suppliers/bidders).” The second use of “prequalification” describes a quality assurance (QA) screening mechanism of the World Health Organization (WHO) that examines specific products of specific manufacturers and publicly lists those deemed to be safe and effective based on information submitted by manufacturers and inspections of their facilities. This document will describe the WHO mechanism as “WHO prequalification” or “prequalification by WHO for safety and efficacy.” For more information, see Supplementary Topics, Section E: Prequalification. • Element, phase, component (of the RH supply process): This document uses a hierarchy of terms to describe parts of the overall supply process. A “phase” is one of three sequential parts—program planning, procurement process, and contract performance. “Element” is used to describe one of ten sequential steps in the supply process. A “component” is a subset of a single element. For example, cost estimates are a component of the budget and funding element in the program planning phase. • Module: A module is a chapter of the Procurement Capacity Toolkit that describes one of the ten elements of the supply process. A glossary covering relevant vocabulary is included in each of the learning and reference modules, and a combined glossary is provided as a separate section at the end of the Toolkit. Introduction Procurement Capacity Toolkit Introduction-6 Reproductive Health Product Supply Process 1. Three Phases, Ten Elements The RH supply process consists of three phases: program planning, procurement process, and contract performance, with critical path links between the phases. Each phase is divided into elements, for a total of ten roughly sequential elements that begin with defining the requirements and end with the delivery of goods. Three Phases Ten Elements Defining Reproductive Health Supply Requirements Specifications Assessment of Procurement Options I. Program Planning Budget, Funding, and Procurement Requisition Critical Link: Funded Procurement Requisition Procurement Planning Developing Bidding Documents and Inviting Offers Selecting Suppliers II. Procurement Process Contracts Critical Link: Signed Contract and Payment Guarantee Contract Performance and Monitoring III. Performance Delivery of Goods Critical Conclusion: Delivery and Acceptance of High-Quality Products Each module of the Toolkit corresponds to one of the ten elements. Introduction Procurement Capacity Toolkit Introduction-7 2. Quality and Timeliness Quality and timeliness are key considerations for RH product supply. Every element of the process affects or is affected by the following principles. Element Principles Quality Timeliness 1. Defining reproductive health supply requirements Ability to procure low-cost, quality-assured commodities Ability of the forecasting team to mobilize resources and information in suitable time 2. Specifications Safety, efficacy requirements, and QA criteria clearly stated Ability of the technical team to mobilize resources and information in suitable time 3. Assessment of procurement options Strong consideration for assurance of safety and efficacy Strong consideration regarding likelihood of on-time delivery 4. Budget, funding, and procurement requisition Enough funding to purchase safe, effective products Funding in place in time to ensure timely receipt of products 5. Procurement planning Aimed at obtaining high-quality products Aimed at on-time delivery 6. Developing bidding documents and inviting offers High-quality product is required, assured by bidding document clauses, such as QA provisions Well-prepared bidding documents improve chances of trouble-free bidding, which impacts timely delivery; efficiency of the procuring entity 7. Selecting suppliers Evidence of ability and intent to deliver high-quality product is mandatory Promise of on-time delivery and evidence of capacity to comply is mandatory 8. Contracts Quality requirements are detailed in the contract Timely receipt provisions spelled out in contract 9. Contract performance and monitoring Proof of quality prior to payment; provisions to protect goods during transport; and supplier performance monitoring Payment arrangements made promptly; penalty for late delivery; specified departure and estimated time of arrival 10. Delivery of goods Inspection of goods upon receipt Understand and support customs clearance to clear shipments 3. Good Public-Sector Procurement Practice Good public-sector procurement practice is based on competitive bidding and a transparent, well-documented supplier selection process. These widely held standards and procedures are required of procuring entities by development banks and donors around the world, as well as by many governments, when their funds are being used, in order to attract Introduction Procurement Capacity Toolkit Introduction-8 the best prices and ensure fair competition. In the past, details have varied by institution, but in recent years, the Organisation for Economic Co-operation and Development has spearheaded a movement to harmonize rules, procedures, and documents across their membership. The World Bank Standard Bidding Document: Procurement of Health Sector Goods (revised August 2008), which can be found on the World Bank website at http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/PROCUREMENT/0,,contentMD K:21890171~menuPK:84284~pagePK:84269~piPK:60001558~theSitePK:84266~isCURL:Y,00 .html, offers a good example of public health-sector procurement practices. Health-sector procurement involves an additional challenge. Products such as contraceptives, pharmaceuticals, and vaccines have unique safety, efficacy, and regulatory requirements that must be added to normal provisions for public-sector procurement. The World Bank recognizes this and has begun producing special bidding documents for procurement of health-sector goods. 4. Overview of Key Decision Points for the Reproductive Health Supply Process a. Source of Funds Funds may come from a variety of sources: a government’s own revenue budget, loans or grants from development banks (for example, the World Bank), bilateral donor arrangements, and foundation gifts. Confirmed funding—regardless of source—is the most critical link between program planning and the procurement process. In addition, the source of funding may dictate how the procurement should proceed, who should do it, and what markets can be solicited for offers. For example, a development grant may stipulate procurement through a United Nations supply agency for certain products, while a government health program using its own revenue funds may expect its centralized national procuring entity to carry out a competitive bidding process. b. How Quality Will Be Ensured (Modules 1–10) As shown in the table on the previous page, every one of the ten elements of RH supply influences or is influenced by quality considerations. Some of the measures available for ensuring quality include limiting bidders to WHO-prequalified manufacturers and products, special contract provisions, preshipment inspection and testing, and regulatory licensing. In addition to each module, more information about these topics is available in Supplementary Topics. Introduction Procurement Capacity Toolkit Introduction-9 c. Who Will Do the Work (Module 3) Two main roles are required for carrying out the ten elements of RH supply: program management and procurement processing. In addition, critical contributors play peripheral but important roles, ranging from banking to customs clearing and receiving. The decision to be made here is which tasks of the ten-step RH supply process will be handled by program management personnel and which tasks will be done by procurement personnel. It is not uncommon to see program management doing some of the procurement processing tasks and vice versa. d. Specifics of Annual Procurement Requirements (Modules I, 2, 4) Annual procurement requirements for each commodity must be defined before the procurement process can begin. Program management decisions about coverage goals, product mix, and quantity are required and must be adjusted for existing inventories. From there, quantities required for procurement can be calculated and adjusted as necessary, based on availability of funds and cost estimates. Delivery dates and product specifications complete the specifics of annual procurement requirements. e. Whether or Not to Pursue Direct Procurement (Module 3) Within the context of this series, “direct procurement” means the organization requiring RH goods contracts directly with manufacturers or their representatives (using good public- sector procurement practices), and “indirect procurement” means the organization deals with an intermediary who contracts with manufacturers or their representatives. Direct procurement usually returns the lowest price, but requires the most expertise. The decision to choose either direct or indirect procurement should be made based on what is possible, what is practical, who can/will do the work, and cost implications. f. Procurement Plan (Modules 3, 5) The procurement plan requires decisions as to the best way to purchase each item. It is not uncommon for several different procurement options and several different procurement methods to be used for purchasing annual RH supply requirements. The procurement plan also includes a provisional timeline for procurement, a notation of the applicable rules, and whether or not prequalification by the procuring entity will be carried out. g. Details of Bidding Documents (if direct procurement) (Module 6) In order to develop formal bidding documents, decisions must be made about rules and conditions for bidding and how a winning bidder will be chosen, as well as conditions of the Introduction Procurement Capacity Toolkit Introduction-10 contract and the payment modality. Bidding documents also require formal specifications, quantities, and a delivery schedule. Under good public-sector procurement practice, everything must be stated and clear. Nothing can be changed once the bids are opened, so careful decisions at this point are extremely important. h. Selection of Supplier (Module 7) The criteria for selecting a supplier are decided along with other details of bidding documents. The actual selection decision is based on evaluation and comparison of the bids received. Good public-sector procurement practice requires a transparent, equitable process and timely award. Approval by the financing authority is often required, and disagreements over selection or process can result in delayed procurement and delayed delivery. i. Contracting (Module 8) The appropriate contract type must be selected based on the procurement circumstances, and the actual contract must be prepared and awarded. The critical link between the procurement process and contract performance is a signed contract and payment guarantee. j. Acceptance of Product (Modules 9, 10) Several layers of decision-making may be involved, including regulatory licensing, results of preshipment inspection (and sometimes, testing), review of QA documents, customs entry procedures, and receiving warehouse inspection. The critical conclusion is on-time delivery and acceptance of high-quality products. Introduction Procurement Capacity Toolkit Introduction-11 B. Modules of the Procurement Capacity Toolkit 1. Overview of Module Topics Module 1: Defining Reproductive Health Supply Requirements • Defining Reproductive Health Supply Requirements • Program Goals • Commodity Considerations • Calculations of Desired Procurement Quantities and Time Frame Module 2: Specifications • Technical Specifications • Methods for Development of Product Specifications • Format and Content • Sample Specifications Module 3: Assessment of Procurement Options • What Are the Options? • Centralized vs. Decentralized Procurement • Options Assessment • Options Evaluation and Consensus • Advice Memo Module 4: Budget, Funding, and Procurement Requisition • Pricing Research: Representative Pricing and Variables; How to Use Pricing Guide • Cost Estimating: Additions to Price • Budget Exercise: Case Study—Part One • Funding and Budget Adjustment: Case Study—Part Two • Procurement Requisition: Case Study—Part Three Introduction Procurement Capacity Toolkit Introduction-12 Module 5: Procurement Planning • Procurement Options, Methods, and Cycles • Official Procurement Requisition • Rules, Constraints, and Selection of Procurement Method • Demonstration Timeline for Procurement of a Single Contraceptive Product: Case Study—Part One • Procurement Plan, Schedule, and Monitoring Tool: Case Study—Part Two Module 6: Developing Bidding Documents and Inviting Offers • Documents for Public-Sector Competitive Bidding • Preparing Draft Bidding Documents • Inviting and Receiving Bids • Prequalification: Issues and Documents • Request for Quotation: Issues and Documents Module 7: Selecting Suppliers • Framework for the Selection Process: Guidelines for Committees and Subcommittees • Bid Opening • Bid Securities • Bid Evaluation: Format and Code of Conduct • Bid Evaluation: Initiation and Preparation • Bid Evaluation Stage 1: Examination • Bid Evaluation Stage 2: Financial Evaluation • Bid Evaluation Stage 3: Verifying Qualifications of Lowest Evaluated Cost Bidder • Award Recommendation • Approvals, Delays, and Extension of Bid Validity Introduction Procurement Capacity Toolkit Introduction-13 Module 8: Contracts • Contract Types and Use • Contract Selection and Preparation • Contract Award • Contract Amendments • Contract Payment Module 9: Contract Performance and Monitoring • Contract Performance Monitoring • Preshipment Compliance • Monitoring Commodity Transport • Payment Management Module 10: Delivery of Goods • Customs Clearance • Warehouse Delivery and Inspection • Freight Claims and Damages 2. Standard Module Format Each module follows the format below: • Introduction • Learning Objectives • Components, Considerations, and Challenges • Informational Essays and Case Studies (where appropriate) • Reference Material • Learning Evaluation • Performance Indicators • Glossary and Acronyms Introduction Procurement Capacity Toolkit Introduction-14 C. Supplementary Topics A number of activities performed during the procurement supply process involve additional systems, conventions, and procedures. In order to adequately monitor and sometimes facilitate performance, RH personnel may benefit from information on the following topics: A. Anticorruption Issues Forms and causes of corruption, and measures the procurement unit can take to curb corrupt practices. B. e-Procurement Description of e-procurement and its benefits, challenges, and costs of implementation. C. Letters of Credit Types and processes of letters of credit. D. Payment Terms and Methods of Funds Remittance Payment terms and methods of funds remittance establish risks and costs for each party to the contract. E. Prequalification Prequalification of manufacturers and the WHO Prequalification Programme. F. Procurement Agents Whether or not to use a procurement agency is examined, with advantages and disadvantages summarized in tables at the end of the section. G. Procurement Models: Centralized vs. Decentralized Whether to purchase centrally or delegate the procurement task to regional and local facilities is a system-wide financial control issue. Each alternative is examined and summarized in tables at the end of the section. H. Product Quality Assurance Key activities and the roles of different parties in ensuring quality in the supply chain. I. Product Inspection and Testing Laboratory testing and visual inspection guidelines. Introduction Procurement Capacity Toolkit Introduction-15 J. Recordkeeping Best practices in keeping required documentation of the procurement process. K. Regulatory Authorities Aspects of regulatory licensing that affect the supply process, including national authorities and international schemes. L. Standard Operating Procedures Development and usage of standard operating procedures for the procurement unit. M. World Bank Standard Bid Evaluation Form The entire Standard Bid Evaluation Form, as referenced in Module 7. Introduction Procurement Capacity Toolkit Introduction-16 D. Summary Guide for Policymakers, Ministry Personnel, and Program Managers The objective of the Summary Guide is to help policymakers, senior health ministry personnel, and program staff members develop the insight necessary to effectively support the goals of RH supply: safety and efficacy of the product (quality) and timely delivery. It seeks to instill realistic expectations about RH supply matters, and to give an overview of where support and coordination are most needed. Introduction Procurement Capacity Toolkit Introduction-17 E. Procurement Assessment Guide The purpose of the Procurement Assessment Guide is to provide designated assessors with a structured format to use in reviewing and evaluating the procurement system for the purpose of improvement. The questionnaires are designed to obtain environmental, structural, operational, and performance information on a public-sector procurement system. Information from the assessment can then be used to develop a customized training program to enhance performance. The Assessment Guide also explains the importance and role of performance indicators in a procurement assessment. Performance indicators measure and evaluate success against a specific goal. Introduction Procurement Capacity Toolkit Introduction-18 F. Trainer’s Guidelines The Trainer’s Guidelines are intended to serve as a basic illustration of how training materials can be adapted from the various tools in the Procurement Capacity Toolkit. The document also includes information on the training implemented in the two field-test countries, Zambia and Malawi; the role of procurement system assessments and performance indicators when developing training; and guidance on developing and implementing a workshop. Introduction Procurement Capacity Toolkit Introduction-19 G. Combined Glossary The combined glossary contains all of the terms and acronyms used throughout the Toolkit by combining the glossaries from each of the modules and the Summary Guide. Acronym entries are indexed by their abbreviated (rather than spelled-out) form in both locations. The purpose of the Procurement Assessment Guide is to provide designated assessors with a structured format to use in reviewing and evaluating the procurement system for the purpose of improvement. The questionnaires are designed to obtain environmental, structural, operational, and performance information on a public-sector procurement system. Information from the assessment can then be used to develop a customized training program to enhance performance. 1 Defining Reproductive Health Supply Requirements Three Phases Ten Elements 1. Defining Reproductive Health Supply Requirements 2. Specifications 3. Assessment of Procurement Options I. Program Planning 4. Budget, Funding, and Procurement Requisition 5. Procurement Planning 6. Developing Bidding Documents and Inviting Offers 7. Selecting Suppliers II. Procurement Process 8. Contracts 9. Contract Performance and Monitoring III. Performance 10. Delivery of Goods 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-1 Contents A. Introduction B. Learning Objectives C. Components, Considerations, and Challenges D. Defining Reproductive Health Supply Requirements E. Program Goals F. Commodity Considerations G. Calculations of Desired Procurement Quantities and Time Frame H. Reference Material I. Learning Evaluation J. Performance Indicators K. Glossary and Acronyms 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-2 A. Introduction This module covers Element 1 of the reproductive health (RH) supply process. It describes the requirements and processes necessary to quantify and forecast needs for RH commodities. Defining requirements, in most cases, is the first step in the program planning phase, followed by specification development, selection of a procurement method, and budgeting. Forecasting is not an exact science. Many factors must be determined in order to estimate consumption within a given time for a certain group of commodities: the rate of consumption, user behavior, level of demand, whether the commodity tends to be out of stock, and a number of other factors. Factors such as target coverage and the time it takes an order to arrive at its point of consumption must also be considered. Looking into the future and making estimations for procurement purposes is always challenging. When reading Module 1, consider these four key concepts, used throughout this section: • Need is when an individual is exposed to a risk or a condition (e.g., unintended pregnancy or HIV transmission) that could be prevented or satisfied via access to specific products or services. The individual may need a particular service, but may not wish to satisfy the need or may not be aware of their exposure to risk. • Demand refers to the quantity of products or services that an individual or household wants at a specified price and time. • Consumption refers to what individuals and households are able to utilize to meet their needs, whether bought on the market or provided free by government agencies or nongovernmental organizations (NGOs). • Supply refers to the goods and services that are provided to businesses, to public agencies, or directly to consumers. If forecasting were not conducted regularly, RH programs would face serious consequences. Health programs would not have the right supplies available for treatment or prevention programs. This would affect service protocols, disease and transmission rates, and maternal mortality. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-3 B. Learning Objectives At the end of this module, the reader will be able to: • Discuss programmatic considerations for forecasting. • Name the types of forecasting methods and the basic principles of how they are used. • Explain how to monitor the supply system. • Explain how to arrive at the required program quantity. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-4 C. Components, Considerations, and Challenges 1. Components Each element of RH supply forecasting is made up of several components. Three broad components (and representative subcomponents) for defining requirements are: a. Program • Program goals. • Target population. • Factors affecting the success of RH programs. b. Commodity Based • Commodity mix based on standard treatment guidelines and essential medicines lists. • Quantities needed per person. • Commodity-sharing among programs. c. Estimating Requirements • Choice of forecasting methods. • Data collection. • Forecast development. • Forecast validation and consolidation. • Order planning. • Lead time. 2. Considerations The main considerations for Element 1 are: a. Overarching Principles of Quality and Timeliness Good procurement practice allows a country to benefit from economies of scale by undertaking direct procurement from qualified suppliers. The country will be able to 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-5 procure low-cost, quality-assured commodities without resorting to unreliable sources. Timeliness depends on the ability of the forecasting team to mobilize resources and information so that forecasting can be carried out at the beginning of the financial year or at a suitable time convenient to the country, and subsequently, at the same time on an annual basis. b. Critical Component: Data • Data must be available to proceed to budget development and the securing of finances. c. Key Decision Points • Choosing a forecasting methodology. • Determining the forecast period. • Ensuring that the appropriate staff are engaged in developing and providing the forecast. d. Expected Outputs • Validated forecast. • Commodity requirements based on stock-on-hand, orders in the pipeline, losses, adjustments, and transfers. • Determination of final quantities, cost estimates, and staggered orders based on consumption patterns. 3. Challenges The main challenges of Element 1 are: • Maintaining and improving coordination between those with forecasting and procurement responsibilities. • Limited capacity of RH programs to collect data and conduct routine forecasts. • Reliance on short-term forecasts as opposed to medium- to long-term planning. • Budgets available for product procurement—available funds often drive procurement, rather than the other way around. • Poor-quality data. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-6 • Understanding and quantifying how consumers obtain their supplies from the commercial or NGO sector. • Monitoring the supply chain and making supply decisions based on consumption patterns. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-7 D. Defining Reproductive Health Supply Requirements Estimating requirements is in most cases the first step in the procurement process. The estimate triggers a series of actions to obtain low-cost, quality-assured commodities. An estimate that is too low could negatively affect the budget and eventually limit clients’ continued access to products. An estimate that is too high could cause excess holding costs, storage-capacity strain, and increased potential for obsolescence. For these reasons, a good relationship between the forecasting and procuring departments is fundamental. Quantification tends to happen in isolation from the rest of the supply chain—it is often considered a chore, rather than an opportunity to efficiently utilize resources. Forecasting is not a solitary activity; it involves groups of people or departments, depending on the forecasting approach. When RH stands alone as one department, the program managers and their staff—namely, information systems, warehousing, and logistics officers—conduct quantification, receive the logistics management information system (LMIS) data when available, and make estimates. Sometimes this is done by one person who performs multiple functions within the health supply system. When family planning is included in the health care system, forecasting often falls to the program manager rather than to experienced essential medicines forecasters, because this level of integration frequently does not exist. If there is donor support for the commodity, technical assistance may be provided to help ensure more accurate forecasting. In some national programs, particularly those that receive donor assistance, stakeholders approve the forecast after being presented with the required quantities and informed of the assumptions and issues that accompany them. Regardless of donor assistance in the procurement process, procurement departments tend to act as functional silos for other departments, limited to only the requests and timelines provided by program managers. The benefits of procurement staff reaching out to other program and technical staff to clarify requirements and timelines are discussed in Modules 4 and 5. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-8 E. Program Goals Without appropriate commodity quantification, RH programs face serious challenges, such as greater unmet need, inadequate supplies, and possibly increased morbidity and mortality. Though quantification is not complicated, it is a complex and dynamic activity with no right or wrong answers; it is an “informed guess” based on a number of issues that have been carefully examined and considered. 1. Program Objectives Program objectives are significant to the quantification exercise. If, for instance, the objective is to gain a greater outreach by growing the program progressively on a compounded 10 percent growth per annum, there should be a corresponding annual addition. However, program objectives are often qualitative, rather than quantitative: to “decrease maternal mortality”; to “provide a comprehensive family planning service, including its associated method mix”; or to improve certain indicators. Those responsible for quantification must understand program objectives and incorporate them to help ensure an effective commodity-quantification process. Inexperienced and/or cautious forecasters tend to overestimate quantities on a “just in case” basis. This is as counterproductive as underestimating the program’s needs, as the result will be a commodity surplus that may strain the service delivery capacity and result in a waste of valuable resources. A new program with minimal data beyond population demographics and perceived need should establish a 6-month monitoring mechanism to track quantities according to real consumption. See Section G for more information on forecasting methods. It is also important to determine the unmet need for specific products within the program product mix. To do so, the supply chain can be supervised at the user point to ensure that the appropriate product mix (with the nationally available brands) is available at each service delivery point, or that clients who require an unavailable product or brand can be logged for tracking purposes. 2. Population Demographics The primary demographic for RH programs is sexually active individuals; family planning programs, for example, often focus on women of child-bearing age (generally 15 to 49 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-9 years). Many developing countries have a very young population base, and demand for RH services often surpasses available financial resources. Depending on the product to be purchased, a subset of the population may be of interest, such as pregnant women or those at risk of sexually transmitted infections (STIs). 3. Target Coverage It is important to clarify the population sector on which each RH program is focused. RH services and their associated commodities must be carefully planned. Different contraceptive methods will have different levels of demand, due to access, acceptability, culture, lifestyle, or personal preference. These factors will directly impinge on the demand of each of the methods and the need for each of the commodities. Treatment drugs for STI programs target a smaller set of clients with different requirements. 4. Private-Sector Involvement During the planning stage of forecasting, it is necessary to understand the percentage of the need that is covered by the private sector (the market share). This percentage could include services provided through public-private partnerships, NGOs, or other international service providers. A national RH program might not be the only program providing RH services and its associated commodities; therefore, other service providers must be considered. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-10 F. Commodity Considerations Prior to gathering data to conduct a quantification exercise, issues surrounding commodity mix and quantity need to be thoroughly considered. This can be done once a program’s needs and coverage goals have been determined. 1. Commodity Mix Commodity mix refers to the number of products used in a particular national RH program given the program’s stated objectives and target coverage. This could include different contraceptive methods for the family planning program, or various antibiotics for an STI program. No matter what the “mix,” the products generally need to come from standard treatment protocols and essential medicines lists in the country. In family planning programs, different countries have very different commodity mixes. In some countries, sterilization and intrauterine devices (IUDs) are the most prevalent contraceptive methods; in other countries, pills or injectables may be more prevalent. The particular method mix used in a country is important, as forecasters must be able to ascertain both the commodity mix and the percentage of each commodity relative to the overall method mix. 2. Person Year of Use Calculations will differ depending on the type of RH program and the commodities it offers. For family planning programs, requirements per person are calculated in terms of “couple years of protection” (CYPs). One CYP is equal to 1 year of contraceptive protection for one couple. For example, a year’s worth of protection using oral contraceptives is calculated as 15 cycles of pills. For infectious disease clinics, a client may need one course of antibiotics over a year, which may be 3 doses. For condom programs, a year’s protection is often calculated as 120 condoms. 3. Sharing Among Programs When defining requirements for forecasting, it is important to keep in mind the commodities that are used across a number of programs. Condoms, for instance, may be dispensed in family planning, STI, and HIV/AIDS programs for different health reasons drawing from different data sets: 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-11 • Sometimes cross-program use is perceived as a problem: one service outlet might hesitate to give condoms to a client if the client seeks them for a use different from the program objective. • If condoms are given out, the distribution may not be recorded at all if they are not given for the purpose the program is intended to serve. These situations compromise the success of a program, either by denying commodities to a client and potentially endangering that person’s life or someone else’s, or by improperly tracking quantities and creating an undersupply problem. Emergency contraception is another commodity for which use and distribution may be dependent on context: for example, emergency contraception may be available in some countries as part of post-exposure prophylaxis treatment in cases of rape, but not routinely available at family planning clinics. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-12 G. Calculations of Desired Procurement Quantities and Time Frame After examining, analyzing, and understanding the forces that affect national RH programs and their planning processes, the next step is to understand what types of forecasting methods are commonly used to estimate commodity requirements and how forecasting is done. This section provides tools for understanding the most popular forecasting methods. 1. Forecasting Methods Different methods can be used to estimate commodity requirements, depending on the time frame to be projected, the geographic area to be covered, the purpose of the forecast, and the availability of data to develop the forecast. Four of the most common methods utilize forecasts based on historical consumption data, logistics data, service statistics, and population data. They are compared in Exhibit 1-2. Forecasts are usually made with more than one method; these forecasts are then compared and reconciled. This is done because data from one method alone are inadequate, and because different methods have different advantages. Consolidating forecasts from different data sources improves the accuracy of the overall forecast. a. Forecasting Using Historical Consumption Data This method develops a forecast extrapolated from quantities of products dispensed to clients in the past. It can be used for short- and medium-term planning (1 to 5 years). Basis for the method The historical consumption data method assumes that future consumption can be predicted by past trends. If consumption has been increasing, for example, it is assumed that future trends will increase at the same rate. The data may need to be adjusted for missing time periods and seasonal patterns. Data requirements and sources Data are required on commodity quantities for a specific product consumed over a period of time. Data need to be available from at least 8 quarters (2 years) to obtain sufficient information. Sources of data include program data, quantities dispensed to users, and quantities distributed to the lowest service delivery points. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-13 Exhibit 1-1, taken from Principles of Forecasting: A Handbook for Researchers and Practitioners, illustrates the historical and future trends for a hypothetical Clinic 1 for IUDs. Exhibit 1-1 Quantity of IUDs Consumed by Clinic 1 in 1999 and Forecasts for 2000 Source: Principles of Forecasting: A Handbook for Researchers and Practitioners. Advantages, limitations, and disadvantages Projecting past consumption into a future trend is a reliable method, particularly if past consumption demonstrates a stable trend. However, the method is limited if consumption is erratic. For example, if a certain method/brand was temporarily out of stock and its regular clients switched to an available method/brand, this use pattern will create troughs and peaks in the consumption pattern. Data must be available, and the most accurate information will come from the lowest level of dispensing in the service system (ideally, dispensed to the end user). If either the method or program is new, then sufficient historical data will not be available. Additionally, if program expansion is foreseen, past consumption will not be a useful basis for future forecasts. b. Forecasting Using Logistics Data When combined with consumption information, logistics data bring the benefit of additional information not utilized in other forecasting methods, such as stock-on-hand, orders in the pipeline, desired buffer stock, and replenishment frequency. Consideration of these factors reduces the risk of overestimation, overstocks, and stock shortages. If consumption information is not available, logistics data can be used to develop a forecast based on the stock issued from higher levels in the distribution system. This is not ideal, 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-14 however, since stock issued has not necessarily been consumed; it may be in storage or expired. A logistics data forecast can also be based on quantities that the program wants to have available in-country for the next year. Logistics data-based forecasts are best used in short-term planning. Forecasting out 1 to 3 years is ideal, using 2 to 3 years of past consumption data to determine the quantification. Basis for the method The forecast needs to take into account a country’s desired supply beyond the forecasted period of time. The logistics forecast aims to provide a constant supply of commodities so that at the end of the year, commodities are at desired levels, taking into account consumption patterns and lead time needed for resupplying. Data requirements and sources This method requires stock records (e.g., receipts, issues, and inventory levels) for at least the 2 most recent years, for as much of the supply chain as possible. Visiting facilities and taking physical inventories is critical in verifying the data. Information is needed on products that have been ordered but are not yet received, as well as on product losses or adjustments (such as whether products have expired, been damaged, or are otherwise unusable). Information is also needed regarding the expected minimum and maximum stock levels throughout the supply chain, and whether the country is expecting to have a buffer stock or a different quantity. Advantages, limitations, and disadvantages This methodology does not automatically generate delivery intervals to satisfy demand and ensure an efficient throughput at the warehouse level. Stock-on-hand data may be inaccurate or misreported, and lack of reporting may require adjustments. Nonetheless, if logistics data are available and presented in a clean and validated form, they will provide a useful and realistic basis for forecasting future requirements. However, if there is a serious lack of data from large parts of the country, the amount of estimation may result in a serious underforecasting or overforecasting of needs. This is a particular risk when different regions of a country have very different consumption rates—hence the need for field inventory data collection to verify logistics data. c. Forecasting Using Service Statistics Forecasting using service statistics involves extrapolation techniques similar to those described above; that is, it uses historical data about client visits to project future visits and 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-15 the products each client needs. This method is suited for short- to long-term planning periods of up to 10 years. Basis for the method The service statistics data method assumes that future use can be predicted by past trends of consumption related to past levels of service. If the number of patients treated for malaria has been increasing, for example, it is assumed that a correlating need for malaria medications will increase at the same rate. The data may need to be adjusted for missing time periods, product mix, and seasonal patterns. Data requirements and sources Service data are needed from existing service delivery sites. Information is needed on new clients, continuing clients, and revisits. Information is also needed on what products are dispensed per client visit; this method works well when standardized protocols govern dispensing and when they are followed by clinic personnel. Advantages, limitations, and disadvantages An advantage of this method is that it collects statistics based on users, and therefore, takes into account service delivery and consumption at the lowest level. If the program has service delivery targets, they can easily be included in the forecast. As with the historical consumption method, this method assumes that the future will be similar to the past. d. Forecasting Using Population (Demographic) Data Population-based forecasting does not require historical program data; rather, it uses demographic or disease surveillance data. This method is suited for short- to long-term planning periods of up to 10 years. Basis for the method The method chooses a program goal, such as contraceptive prevalence rate or provision or use of HIV testing services. This goal is then linked to available demographic or census data, such as fertility rates or disease prevalence rates among the target population. This method uses regression equations to calculate the relationship between the variables. Using population data, a forecast can be made based on program goals during a specific period of time to determine the number of end users required to reach the goals. Data requirements and sources Population-based forecasting for contraceptives requires specific information on total fertility rate (TFR) and married women of reproductive age—sometimes referred to as the 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-16 number of women in union. The method relies on demographic data from Demographic and Health Surveys, the national census, other national fertility surveys, population data sheets, and TFR projections from the United Nations Population Fund (UNFPA) or other sources. For other RH programs, data are required on the relevant disease prevalence rates among the target populations. Advantages, limitations, and disadvantages This methodology has a significant advantage over consumption and logistics methods because it does not require historical program data. Population data-based forecasts are particularly appropriate when historical service or logistics data are unavailable or inaccurate, and for new programs that have no past consumption yet. Population-based forecasts tend to estimate higher quantities than those derived from logistics forecasts. They do not differentiate between brands of products used and do not include information about the capacity of the service delivery system to actually dispense the products. These are all important reasons why forecasts need to be consolidated. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-17 Exhibit 1-2 Comparison of Forecasting Methods Summary Method Forecast Duration Conditions Favoring This Method Disadvantages a. Historical consumption 1 to 5 years When data are available for past consumption/past end-user distribution for a period of time no shorter than 8 quarters (2 years). This method assumes the future trend will continue to be the same as in the past. It is not useful for commodities that have not been consistently available. b. Logistics 1 to 3 years Reliable method, provided data are cleaned, verified, and adjusted for nonreports. This method also includes the country stock status, which reduces the risks of overestimation, overstocks, and stock shortages. Timely and full reporting is crucial to this method. Logistics data, such as stock-on-hand or quantities consumed, might be incomplete or unreliable, and care should be taken to ascertain the quality of the data. c. Service statistics 1 to 10 years When data of client visits and of product requirements per client are available, especially when prescribing protocols are standardized. Can be used to project new service targets or service expansion. This method assumes the future trend will continue to be the same as in the past. It is not useful for services that have not been consistently available. d. Population using demographic data 1 to 10 years Data are usually available and reliable. Historical data not required. Useful for new programs. Because it is goal based, this method will likely result in an overestimate. Does not take into account service delivery and logistics system constraints. Produces forecasts for the entire country; and therefore, further estimates have to be made for the public-, private-, NGO-sector split. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-18 e. Consolidation of Projections All of the forecasting methods are useful and can be used together, as they are not mutually exclusive. In particular, quantifying with both population and demographic data, as well as comparing logistics and population quantifications, demonstrates the scope of a program. It also serves as a reality check; the logistics method is expected to be well below the population estimates, which assume 100 percent success and tend to cover the whole population (all sectors—public, private, and NGO). f. Logistics Management Information Systems LMIS assist in collecting, processing, and reporting logistics data. Forecast data feed LMIS and are used for calculating resupply quantities and maintaining appropriate stock levels. These data are critical to maintaining the overall inventory control system and helping personnel collect data to support procurement, transportation, and storage decisions in managing the supply chain. LMIS software ranges from simple to complex and should be selected based on a detailed evaluation of the needs within the particular supply chain. g. Forecasting Process Timeline As stated at the beginning of this module, forecasting is not complicated, but it is a complex activity with many variables. If done well, forecasting generates efficiency, cost savings, and program success. Depending on who is responsible for the forecast and the quality of data available, it may take up to 10 weeks to develop a forecast. h. Forecasting Quality Assurance To ensure that quantification is done rationally and that forecasts remain accurate over time, periodic checks should be made on forecast data versus actual data. A few monitoring measures should be adopted for both the data and the systems/personnel that generate the data: • At the end of every quarter, LMIS data should be compiled, and nonreporting levels (regions, states, districts) should be made aware of the importance of maintaining and reporting accurate and timely data. • For “reluctant” reporters, conduct site visits and identify the reasons for the lack or infrequency of reporting and address those issues. They may include limited understanding of the reporting form and/or limited human resources with which to undertake the reporting. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-19 • Keep a close eye on consumption patterns and commodity availability to ensure that program orders will arrive as required. • On a periodic basis—twice per year—take a “snapshot” of the supply system to ensure that enough commodity is available given current demand patterns. If this is not the case, identify the actions that need to be taken to rectify this. Effective monitoring requires clear communication, clear understanding of plans and goals, regular review of the system, and adequate human and financial resources with which to provide follow-up feedback and receive corrective measures. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-20 H. Reference Material 1. References Armstrong JS, ed. Principles of Forecasting: A Handbook for Researchers and Practitioners. Boston, MA: Kluwer Academic Publishers; 2001. Family Planning Logistics Management (FPLM). Contraceptive Forecasting Handbook for Family Planning and HIV/AIDS Prevention Programs. Arlington, VA: FPLM/John Snow, Inc., for the United States Agency for International Development; 2000. Management Sciences for Health in collaboration with the World Health Organization. Managing Drug Supply: The Selection, Procurement, Distribution, and Use of Pharmaceuticals (2nd Edition). Hartford, CT: Kumarian Press; 1997. PATH/United Nations Population Fund (UNFPA). Meeting the Need: Strengthening Family Planning Programs. Seattle, WA: PATH/UNFPA; 2006. UNFPA Global Population Policy Update, Issue 39 [online newsletter]. August 27, 2004. Available at: http://www.unfpa.org/parliamentarians/news/newsletters/issue39.htm. United Nations Population Fund (UNFPA). State of World Population 2005: The Promise of Equality. New York, NY: UNFPA; 2005. Available at: http://www.unfpa.org/swp/ 2005/pdf/en_swp05.pdf. United Nations Population Fund (UNFPA). Reproductive Health Essentials: Securing the Supply—Global Strategy for Reproductive Health Commodity Security. New York, NY: UNFPA; 2002. United Nations Population Fund (UNFPA). The Global Initiative on Contraceptive Requirements and Logistics Management Needs—Lessons and Methodologies [Technical Report No. 30]. New York, NY: UNFPA; 1995. United Nations Population Fund (UNFPA). Contraceptive Needs and Logistics Management. New York, NY: UNFPA; 1991. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-21 United Nations Population Fund (UNFPA). Achieving the ICPD [International Conference on Population and Development] Goals: Reproductive Health Commodity Requirements 2000–2015. New York, NY: UNFPA; 2005. Available at: http://www.unfpa.org/upload/lib_pub_file/ 584_filename_achieving-icpd.pdf. Tools to Help Countries Manage Their Own Supplies. United Nations Population Fund website. Available at: http://www.unfpa.org/public/cache/offonce/supplies/pid/3592; jsessionid=E9265EA228659EE171C95578959B037D. Promoting Family Planning page. World Health Organization website. Available at: http://www.who.int/reproductive-health/family_planning/index.html. Sexual and Reproductive Health Publications page. World Health Organization website. Available at: http://www.who.int/reproductive-health/publications/essential_drugs/text.pdf. 2. Documents Family Planning Logistics Management/John Snow, Inc. Programs that Deliver: Logistics’ Contributions to Better Health in Developing Countries. Washington, DC: United States Agency for International Development; 2000. 3. Websites Demographic and Health Surveys The Demographic and Health Surveys program has collected, analyzed, and disseminated accurate and representative data on population, health, HIV, and nutrition through more than 200 surveys in 75 countries. http://www.measuredhs.com International Planned Parenthood Federation The International Planned Parenthood Federation is a global service provider and a leading advocate of sexual and reproductive health and rights for all. Several helpful tools relative to RH programming are available on their website. http://www.ippf.org/en/Resources/Guides-toolkits/ 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-22 United States Agency for International Development (USAID) | DELIVER PROJECT The USAID | DELIVER PROJECT, working with national and international partners, increases the availability of essential health supplies to clients and customers around the world by ensuring transparent and cost-effective procurement and delivery of commodities and strengthening and integrating national and international supply chains. The USAID | DELIVER PROJECT website contains many useful resources on commodity planning and LMIS and logistics, as well as a wealth of information and publications on countries and RH issues. Home page - http://ww.deliver.jsi.com LMIS software - http://ww.deliver.jsi.com/dhome/resources/tools/softwaretools Publications - http://deliver.jsi.com/dhome/resources/publications United Nations Population Fund UNFPA is an international development agency that promotes the right of every woman, man, and child to enjoy a life of health and equal opportunity. UNFPA supports countries in using population data for policies and programs to reduce poverty and to ensure that every pregnancy is wanted, every birth is safe, every young person is free of HIV/AIDS, and every girl and woman is treated with dignity and respect. The web page on securing essential supplies contains key information for RH program and procurement professionals. http://www.unfpa.org/public/supplies 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-23 I. Learning Evaluation 1. What is forecasting? 2. What skill set should the forecasting/procurement team have? 3. What programmatic considerations should be taken into account for forecast planning? 4. What commodity considerations should be taken into account when planning a forecast? 5. What is CYP? 6. Which forecasting methods are suitable for quantification? 7. What period of time does a forecast cover? 8. What are the benefits of the historical consumption method? 9. How does the population method calculate requirements given a known population? 10. Why should different forecasting methods be consolidated? 11. What monitoring mechanisms should be built into the system? 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-24 Learning Evaluation Answers 1. Forecasting is the process undertaken to create a future estimate of commodity requirements needed to begin the procurement process and ensure that commodities are ordered in sufficient quantities to fill the anticipated needs. See Section D. 2. The team needs to be skilled in quantification, logistics, supplier management, and estimation. Forecasting is not a solitary activity; it involves groups of people or departments working together to produce the most accurate forecast possible. See Section D. 3. The main programmatic considerations impacting quantity forecasts are projected program growth and contraceptive method mix. However, the forecasting element should also include qualitative measurements such as decreasing maternal mortality. See Section E.1. 4. Commodity mix (the number of products used in a particular RH program), person year of use (requirements per person in terms of couple years of protection), and sharing among programs (commodities used across different programs, such as condoms) should all be taken into account. See Sections F.1–3. 5. CPY is couple years of protection, or the requirements needed to protect a couple for 1 year. For example, a CYP using oral contraceptives is calculated as 15 cycles of pills. See Section F.2. 6. The four most common methods of forecasting are historical consumption data, logistics data, service statistics, and population data. See Sections G.1.a–d. 7. Forecasts can cover a period of between 1 and 10 years and are usually expressed in a yearly quantity. See Section G. 8. The historical method is particularly accurate if the past consumption demonstrates a consistent and stable trend. See Section G.1.a. 9. Using known population, the method uses total fertility rate and the number of married women of reproductive age to calculate requirements. See Section G.1.d. 10. All of the forecasting methods are useful and can be used together, as they are not mutually exclusive. In particular, quantifying with both population and demographic data, as well as comparing population and logistics quantifications, demonstrates the scope of 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-25 a program. It also serves as a reality check and improves the accuracy of the overall forecast. See Section G.1.e. 11. To ensure that quantification is done rationally, LMIS data should be compiled every quarter, monitoring reluctant field reporters and consumption patterns and taking a periodic snapshot of the supply system. See Section G.1.h. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-26 J. Performance Indicators Performance indicators measure and evaluate success against a specific goal. The process begins by selecting performance indicators that are relevant for the procurement environment. This is followed by identifying and collecting appropriate data for each performance indicator to establish a baseline on the level of performance in the country. After training and corrective actions have been implemented, the same performance indicators are evaluated to determine the revised level of performance. Further information on conducting an assessment can be found in the Procurement Assessment Guide. The following performance indicators can be used for monitoring and evaluating key aspects of this module: 1. Percentage of stock-outs at the central level for all RH commodities on the essential medicines list. 2. Percentage of districts/states reporting consumption data. 3. A program is in place to continuously monitor product supply. 4. Total dollar value of commodities disposed of due to poor management of expiration dates. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-27 K. Glossary and Acronyms AIDS Acquired Immunodeficiency Syndrome. Brand/Brand name The registered trademark name given to a specific product by its manufacturer. Commodity Any piece of tangible property, supplies, or equipment that is the subject of a procurement activity. Component An important function or process that occurs within an element of the reproductive health supply process. Each module of the Toolkit focuses on one element. Consumption What individuals and households are able to utilize. Contraceptive prevalence rate Percentage of the population using a contraceptive method, frequently disaggregated by modern versus traditional methods and by individual contraceptive methods. Contract An agreement entered into by two parties for the execution of a certain activity (e.g., sale and purchase, construction, service provision, etc.). CYP Couple years of protection: The amount of contraceptive commodities that will cover a couple for 12 months from unwanted pregnancy. Demand The quantity of a commodity or service wanted at a specified price and time. Within the context of family planning or HIV/AIDS prevention services, price includes not only monetary and program personnel costs, but also the cost in time and inconvenience for the client who wishes to obtain services. Definition from Contraceptive Forecasting Handbook for Family Planning and HIV/AIDS Prevention Programs (Family Planning Logistics Management, 2000). Direct procurement Purchaser contracts for goods directly with a manufacturer or its representative. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-28 Element One of the ten key operational, broad-based activities in the reproductive health supply process. Expiration (Expiry) date The date beyond which the manufacturer will not guarantee the product. Forecast To calculate beforehand. HIV Human Immunodeficiency Virus. Injectable Injectable contraceptive. IUD Intrauterine device. Lead time The time interval needed to complete the procurement cycle. LMIS Logistics management information system(s): A system that collects, processes, and reports logistics data. Method mix Mix of products used by the target population, expressed as the percentage that each method constitutes among all contraceptives used. Need When an individual is exposed to risk or a condition that could be prevented or satisfied via access to specific products or services, that individual is defined as needing the service or product. NGO Nongovernmental organization: Usually involved in providing services to or alongside government entities. Often financed through projects using donor funds. Performance indicator Measures and evaluates success against a specific goal. Phase A natural division of the ten elements of the supply process into three sequential parts: program planning, procurement process, and contract performance. Procurement method Process a purchaser uses to reach an agreement with a seller. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-29 Quality assurance See Supplementary Topics, Section H: Product Quality Assurance. Quantification Process of estimating product quantities to supply adequate stocks according to standard medical and program guidelines. RH Reproductive health: A state of complete physical, mental, and social well-being—not merely the absence of disease or infirmity—in all matters relating to the functions and processes of the reproductive system. Reproductive health implies that people are able to have a satisfying and safe sex life and that they have the capability to reproduce and the freedom to decide if, when, and how often to do so; implicit in this last condition is the right of men and women to be informed and to have access to safe, effective, affordable, and acceptable methods of family planning of their choice, as well as other methods of their choice, for regulation of fertility. Service delivery point Any health facility that provides services directly to the customer. Specification A definitive description of the commodity to be procured. STI Sexually transmitted infection. Supplier The party that transfers goods out of its own control to a named recipient. Supply Goods and services of a specific kind that are provided to businesses, public agencies, or directly to consumers. Target population The collection of individuals or regions that are to be investigated in a statistical study. TFR Total fertility rate: The average number of live births a woman would have if she survived to age 49 and had births at the prevailing age-specific rates. 1 Defining Reproductive Health Supply Requirements Procurement Capacity Toolkit 1-30 UNFPA United Nations Population Fund: A semiautonomous United Nations agency working to ensure universal access to reproductive health, including family planning and sexual health, to all couples and individuals. Operates a global procurement service for public-sector purchasers of contraceptives and related products. United Nations An international organization founded in 1945 after the Second World War by 51 countries committed to maintaining international peace and security; developing friendly relations among nations; and promoting social progress, better living standards, and human rights. United States Agency for International Development An independent federal government agency that receives overall foreign policy guidance from the Secretary of State. Its work supports long-term and equitable economic growth and advances United States foreign policy objectives by supporting economic growth, agriculture, and trade; global health; and democracy, conflict prevention, and humanitarian assistance. USAID | DELIVER PROJECT A United States Agency for International Development-funded project that strengthens supply systems for essential health commodities and works to ensure their sustainability. World Health Organization The directing and coordinating authority for health within the United Nations system. 10 Delivery of Goods Three Phases Ten Elements 1. Defining Reproductive Health Supply Requirements 2. Specifications 3. Assessment of Procurement Options I. Program Planning 4. Budget, Funding, and Procurement Requisition 5. Procurement Planning 6. Developing Bidding Documents and Inviting Offers 7. Selecting Suppliers II. Procurement Process 8. Contracts 9. Contract Performance and Monitoring III. Performance 10. Delivery of Goods 10 Delivery of Goods Procurement Capacity Toolkit 10-1 Contents A. Introduction B. Learning Objectives C. Components, Considerations, and Challenges D. Customs Clearance E. Warehouse Delivery and Inspection F. Freight Claims and Damages G. Reference Material H. Learning Evaluation I. Performance Indicators J. Glossary and Acronyms 10 Delivery of Goods Procurement Capacity Toolkit 10-2 A. Introduction This module covers Element 10, the last element of the reproductive health (RH) supply process. It describes the activities that begin after the purchaser authorizes the supplier to ship the commodities to the port of entry and concludes when the commodities have been cleared through customs, received, and inspected at the central warehouse and any outstanding insurance claims have been resolved. Delivery of goods is an important element of the procurement supply process, since delays in receiving commodities, which can occur when customs clearance procedures are not managed efficiently, can have a negative impact on program objectives. If commodities are damaged in shipment and commodity replacement plans and insurance claim procedures are not handled effectively, then normal delays encountered in replacing goods can become extensive. 10 Delivery of Goods Procurement Capacity Toolkit 10-3 B. Learning Objectives At the end of this module, the reader will be able to: • Cite the information and documentation needed to support customs clearance of ocean and air freight shipments. • List the responsibilities of the purchaser and supplier in supporting customs clearance procedures. • Discuss the purchaser’s responsibilities upon receipt of commodities at the central (receiving) warehouse. 10 Delivery of Goods Procurement Capacity Toolkit 10-4 C. Components, Considerations, and Challenges 1. Components The three main components of Element 10 are: • Supporting the customs clearance process. • Receiving goods at the central warehouse. • Settling insurance claims or outstanding liquidated damages. The purchaser is primarily responsible for these components, although the supplier supports the customs clearance process by providing required documentation in a timely manner. 2. Considerations The main considerations for Element 10 are: a. Overarching Principles of Quality and Timeliness • Inspection of goods upon receipt at the central warehouse for damage during shipment helps ensure that only good-quality products are entered into program inventory. • Understanding and supporting customs clearance requirements helps to ensure that shipments are cleared in a timely manner and additional costs, such as demurrage (storage) charges, are avoided. b. Critical Component: Commodity Loss or Damage During Shipment If the commodities are lost or damaged during the shipping process to the point that they must be replaced, then the time required to process an insurance claim and replace the commodities could jeopardize RH program implementation. c. Required Input From Other Elements • Shipping instructions with details of the documents required for customs (Element 9). • Appropriate terms and conditions regarding any liquidated damage requirements from the bidding documents (Element 6) and the contract (Element 8). 10 Delivery of Goods Procurement Capacity Toolkit 10-5 d. Key Decision Points There are no key decision points for the purchaser at this stage. Established procedures for customs clearance and warehouse receipt and inspection are followed. e. Expected Output • Quality-assured commodities accepted into inventory at the central warehouse on time. 3. Challenges The main challenges inherent in Element 10 are: • Understanding and supporting customs clearance requirements so that the clearance process is completed in a timely manner. • Ensuring proper inspection of goods upon receipt at the receiving warehouse. 10 Delivery of Goods Procurement Capacity Toolkit 10-6 D. Customs Clearance Customs clearance of shipments entering a country is traditionally managed by the national customs bureau and is, therefore, outside the direct control of the purchaser or supplier. However, both parties play an important role in providing the documentation and information needed to support the clearance process and ensuring that it is done in the most effective and timely manner possible. Delays in customs clearance can result in the shipment incurring additional demurrage charges, which the purchaser is responsible for paying. 1. Preparing for Customs Clearance After the shipment has met the preshipment compliance requirements and the purchaser has authorized shipment, the supplier proceeds to finalize shipping arrangements with a shipping company and prepare the commodities for shipment. As noted in Module 9, it is in the purchaser’s best interest to provide the supplier with a specific set of shipping instructions that describe the requirements for shipment preparation and documentation. See Exhibit 9-5 in Module 9 for a sample form for preshipping and marking instructions. a. Information Required Prior to Shipment The purchaser needs to confirm the commodity information (type, quantity, and cost), consignee and notify party information, and ship-to destination prior to the shipment being released. The request for the shipping documents should be made by the purchaser at least 7 days prior to shipment for ocean shipments. The following information should be provided by the supplier: • Copy of commercial invoice and the packing slip, containing: – Type, quantity, and value of product(s) to be shipped. – Number of shipping cartons. – Weight of shipment. • Copies of quality assurance (QA) documents and certifications. • Estimated departure date and estimated time of arrival. • Port of destination. • Vessel name and voyage number (if available). • Booking number (if available). 10 Delivery of Goods Procurement Capacity Toolkit 10-7 • Bill of lading number (if available). Similar information should be requested for air shipments at least 3 days in advance: • Copy of commercial invoice and the packing slip, containing: – Type, quantity, and value of product(s) to be shipped. – Number of shipping cartons. – Weight of shipment. • Copies of QA documents and certifications. • Estimated departure date and estimated time of arrival. • Routing and transfer points during transit. • Airport of destination. • Air waybill number (if available). The purchaser should advise port clearance staff, central warehouse staff, and program managers when an estimated time of arrival has been set. This allows warehouse staff time to plan for any space adjustments that may be necessary to accommodate the incoming shipment and alerts them to the upcoming arrival of shipping documents. b. Information Required Upon Shipment As soon as the goods have been shipped, the supplier is required (by contract conditions) to notify the purchaser and provide the following documents: • Copies of commercial documents, including a commercial invoice and packing list. • Copies of QA documents and certifications (analysis and origin). • Insurance certificate. • Certifications regarding packing and markings (if applicable). • Original bill of lading that includes the bill of lading number, vessel name, sailing date, destination port, container number, estimated time of arrival, number of crates or pallets, quantity and description of commodities, weight, and estimated value (for air shipments, equivalent information is provided from the air waybill). It is common practice for an original bill of lading set to consist of three original bills (although some purchasers request only one or two). At least one of the original bills of lading will need to be signed by the consignee and provided to the customs clearance agent (also called a customs and forwarding agent) in order to 10 Delivery of Goods Procurement Capacity Toolkit 10-8 clear the shipment at customs. If a letter of credit (L/C) has been issued, an original bill of lading is usually required to be sent to the issuing bank. The most important thing to remember is to check where original bills of lading need to go and to have them sent accordingly in good time, as this is a legal document that will need an original signature from the consignee in order for the goods to clear customs. It is imperative to check what documents are needed by the clearance agent to avoid any customs clearance delays and possible demurrage charges. 2. Requirements for Processing Shipping Documents for Payment a. Seller’s Distribution of Shipping Documents for Letter of Credit Payment For ocean shipments, the supplier hands over the goods to a freight company or freight forwarder and receives at least one of the three original onboard bills of lading. For air shipments, the supplier receives only a copy of the air waybill; the original is sent with the shipment. The supplier puts the original bill of lading (copies are acceptable for air waybills) together with the other documents required by the L/C (such as certified QA documents) and presents them for payment at the commercial bank named in the L/C. The bank reviews the documents submitted by the supplier, and if the documents are in order, and the supplier has complied fully with the L/C requirements, the bank releases payment to the supplier and forwards the documents to the purchaser. If there are any discrepancies in the required documents submitted by the supplier with the L/C, then the bank withholds payment and informs the purchaser of the noted discrepancies. The purchaser must then decide whether (1) to accept the discrepancies and authorize the bank to release payment, or (2) not to accept the discrepancies, in which case, the bank does not release payment to the supplier. If a discrepancy is considered insignificant or minor and does not affect the key requirements of the L/C, the purchaser is generally in a position to accept the discrepancy and authorize release of payment. For significant discrepancies, the supplier must address the discrepancies in full, or the purchaser and supplier must agree on an alternative settlement to the discrepancy, with the supplier receiving payment from the bank upon submitting documentation that it has complied with the conditions of the settlement. 10 Delivery of Goods Procurement Capacity Toolkit 10-9 b. Purchaser’s Distribution of Documents The purchaser, as the consignee, receives the negotiated bill of lading or the air waybill and other shipping documents from the bank named in the L/C. The purchaser sends copies of the documents to the following: • Customs clearance agent (receives original documents). • Insurance surveyor for the onboard joint insurance survey. • Central warehouse for receipt and accounting records. • Procurement files. 3. Clearing Customs In most cases, the purchaser contracts a specialized service company (such as a customs clearance agent) to work with the national customs bureau on the purchaser’s behalf to facilitate clearing the shipment through the customs process. These agents are often licensed by the government and have expertise in and knowledge of national customs requirements and procedures, and they charge a fee for their services. “Customs broker” is another term used to describe an agency that specializes in customs clearance services. a. Ocean Shipments For ocean shipments, the purchaser sends the original shipping documents to the customs clearance agent for customs clearance as soon as possible. These documents generally include: • Ocean bill of lading. • Commercial invoice. • Packing list. • Insurance policy. • Certificate of Origin. • Certificate of Quality. Sending documents late causes delays in port clearance, and demurrage charges may accrue after delays of as little as 4 days. It is also important to provide the correct number of original documents and copies to meet customs requirements. Although copies of these documents may have been sent earlier, the shipment cannot be cleared without the signed original bill of lading, which is a “negotiable instrument” and must be handled with secure 10 Delivery of Goods Procurement Capacity Toolkit 10-10 procedures (in other words, protected against theft, loss, forgery, etc.). If the commodities have received an exemption from customs duties and value added tax, an exemption certificate is also provided to the customs clearance agent. Upon receipt of the shipping documents, the customs clearance agent arranges for the following: • Unloading of the shipment at the port of entry. • Clearance from the port and customs. • Onboard joint insurance survey. • Preparation of insurance claim documentation, if required. When these activities have been completed, the shipment is released from customs. b. Air Shipments For air shipments, the purchaser passes the required documents to the customs clearance agent, who should quickly begin clearance procedures. These documents generally include: • Air waybill. • Commercial invoice. • Packing list. • Insurance policy. • Certificate of Origin. • Certificate of Quality. The original air waybill accompanies the shipment. It does not confer ownership as an ocean bill of lading does; therefore, only proper identification of the consignee or its designated customs clearance agent to customs is required in order to be given possession of the shipment. As with ocean shipments, the customs clearance agent arranges for the clearance of the shipment from customs at the destination airport. 10 Delivery of Goods Procurement Capacity Toolkit 10-11 E. Warehouse Delivery and Inspection 1. Transport From Customs Area to the Central Warehouse The customs clearance agent may also arrange for transport from the customs area to the central warehouse if required, but in most cases, this is arranged by the government agency responsible for distribution of program commodities. All necessary precautions should be taken to protect the commodities from damage during transport from customs to the central warehouse. The commodities should be insured during this transit; however, when this insurance coverage is provided by the international air or ocean cargo insurer, it can be very expensive. Local insurance, if it is available, can be significantly less expensive. The purchaser should determine the risk and need for insurance during this final stage of transit. 2. Receipt of Consignment The warehouse staff officially receives the shipment from the transporting agency along with the following documents: • Commercial invoice. • Packing list. • Onboard insurance survey report. In the case of domestic delivery, the documents will consist of: • Commercial invoice. • Packing list. • Local delivery receipt. 3. Warehouse Delivery Inspection Upon delivery, warehouse staff must inspect the commodities for the following details: • Correct commodity. • Shipping damage. • Special packing as required by the contract. 10 Delivery of Goods Procurement Capacity Toolkit 10-12 • Full quantities delivered. • Packing slip present and correct. • Correct markings on packaging, including expiry dates. • Manufacturer’s certification included in the shipment. • Any further testing required. The warehouse staff must immediately report any problems found to the procurement officer and appropriate officials. Commodities with unresolved questions should be quarantined and not put into distribution until all the problems are answered. 4. Accepting Goods Into Inventory After the warehouse staff inspects the commodities, those that comply with the warehouse delivery inspection requirements as described above are accepted into inventory. The commodities should be placed in the designated location for program distribution and use. The commodities should be stored in warehouse locations with appropriate environmental conditions. The warehouse records should then be updated to reflect the commodities received. All receiving paperwork should be provided to the procurement unit to process the supplier payment. This finalizes the receipt of the commodities. 10 Delivery of Goods Procurement Capacity Toolkit 10-13 F. Freight Claims and Damages 1. Freight Claims When an ocean shipment arrives in port, an onboard joint insurance survey is conducted to document the condition of the shipment. If the survey reveals damage or problems with the shipment, the shipment is received with “qualifying remarks.” In this situation, the customs clearance agent prepares the necessary papers to file an insurance claim. These papers include: • Copy of the onboard insurance survey report that documents the problem reported. • Copy of the bill of lading. • Copy of the commercial invoice. • Copy of the insurance policy is provided by the supplier in CIF (cost, insurance, and freight) contracts. • The insurance policy is secured by the purchaser in CFR (cost and freight) contracts. • Claim bill. The purchaser assembles the necessary documents and files the insurance claim with the insurance company. The insurance claim process is often managed by staff on the purchaser’s side who possess appropriate legal or technical expertise. Similar procedures are followed for air shipments with reported shipment damage. 2. Liquidated Damages Liquidated damages are usually monetary fines imposed against the supplier for late delivery. For the purchaser to be able to pursue liquidated damages, the right to do so must be included in the contract. If the contract allows for liquidated damages for late delivery, then once all shipments have been completed (but prior to release of final payment), the purchaser should review the delivery schedules to determine if the supplier has accrued any liquidated damages. If review indicates there were late shipments that were subject to liquidated damages, the purchaser then calculates the amount of liquidated damages according to the contract requirements. 10 Delivery of Goods Procurement Capacity Toolkit 10-14 This amount is then withheld from the final payment to the supplier. In managing the liquidated damages process, the purchaser should: • State in writing how the liquidated damages apply. • Calculate the amount of liquidated damages. • Advise the supplier of the applicability and amount of the liquidated damages. • Mark the supplier invoice for the amount to be paid after deduction of the liquidated damages amount. • Send invoices and supporting statements and calculations to the appropriate finance office for action. 3. Closing the Contract At the end of the commodity warranty period, if there are no outstanding issues or payments due, and no other valid reservations, the contract file can be marked closed and the file retained for the required minimum length of time. 10 Delivery of Goods Procurement Capacity Toolkit 10-15 G. Reference Material 1. Books Warehouse Receipt Managing Drug Supply: The Selection, Procurement, Distribution, and Use of Pharmaceuticals (Management Sciences for Health/World Health Organization, 1997) provides a complete overview as well as step-by-step approaches on managing pharmaceutical systems in developing countries. It contains substantially revised sections on selection, procurement, distribution, and use in addition to new or considerably expanded sections on pharmaceutical policy, financing, organization, management information systems, and human resources management. The book can be ordered at Amazon.com and other online retailers. 2. Websites Contracting for Services See World Bank documents: Standard Bidding Document: Procurement of Non-Consultant Services (revised April 2007), at http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/ PROCUREMENT/0,,contentMDK:21305355~isCURL:Y~menuPK:84284~pagePK:84269~piP K:60001558~theSitePK:84266,00.html, and Standard Request for Proposals: Selection of Consultants (revised March 2002), at http://web.worldbank.org/WBSITE/EXTERNAL/ PROJECTS/PROCUREMENT/0,,contentMDK:20061915~isCURL:Y~pagePK:84269~piPK:60 001558~theSitePK:84266,00.html. 10 Delivery of Goods Procurement Capacity Toolkit 10-16 H. Learning Evaluation 1. To prepare for customs clearance, what information should the supplier provide to the purchaser approximately 7 days prior to an ocean shipment? 2. Once the commodities have shipped what bill of lading information should the supplier provide to the purchaser? 3. What options does a purchaser have if the commercial bank notifies the purchaser that there are discrepancies in the documents submitted by the supplier for payment of the L/C? 4. What are the traditional documents required for clearing ocean shipments through customs? 5. What are the traditional documents required for clearing air shipments through customs? 6. What are the key activities a customs clearance agent will arrange to support customs clearance? 7. What documents do central warehouse staff receive with an arriving shipment? 8. What do central warehouse staff inspect upon the arrival of the commodities? 9. What documents are assembled by a customs clearance agent to support the filing of a marine insurance claim? 10. What steps should a purchaser take in managing settlement of a liquidated damages process with the supplier? 10 Delivery of Goods Procurement Capacity Toolkit 10-17 Learning Evaluation Answers 1. The supplier should provide the purchaser with the following documents 7 days prior to shipment: • Copy of commercial invoice and the packing slip, containing: – Type, quantity, and value of product(s) to be shipped. – Number of shipping cartons. – Weight of shipment. • Copies of QA documents and certifications. • Estimated departure date and estimated time of arrival. • Port of destination. • Vessel name and voyage number (if available). • Booking number (if available). • Bill of lading number (if available). See Section D.1.a. 2. After the commodities have shipped, the supplier should provide the bill of lading, which includes the bill of lading number, vessel name, sailing date, destination port, container number, estimated time of arrival, number of crates or pallets, quantity and description of commodities, weight, and estimated value. See Section D.1.b. 3. If there are discrepancies in the documents submitted by the supplier to the commercial bank for the payment of the L/C, then the purchaser has two options: (1) to accept the discrepancies and authorize the bank to release payment, or (2) not to accept the discrepancies, in which case, the bank does not release payment to the supplier. See Section D.2.a. 4. The traditional documents required for clearing ocean shipments through customs are the ocean bill of lading, commercial invoice, packing list, insurance policy, Certificate of Origin, and Certificate of Quality. See Section D.3.a. 5. The traditional documents for clearing air shipments through customs are the air waybill, commercial invoice, packing list, insurance policy, Certificate of Origin, and Certificate of Quality. See Section D.3.b. 10 Delivery of Goods Procurement Capacity Toolkit 10-18 6. The key activities of a customs clearance agent are: unloading of the shipment at the port of entry, clearance from the port and customs, onboard joint insurance survey, and preparation of insurance claim documentation, if required. See Section D.3.a. 7. The documents received by the central warehouse staff are the commercial invoice, packing list, and onboard insurance survey report. In the case of domestic delivery, the documents are the commercial invoice, packing list, and local delivery receipt. See Section E.2. 8. The central warehouse staff inspect: • Correct commodity. • Shipping damage. • Special packing as required by the contract. • Full quantities delivered. • Packing slip present and correct. • Correct markings on packaging, including expiry dates. • Manufacturer’s certification included in the shipment. • Any further testing required. See Section E.3. 9. The documents assembled by a customs clearance agent to support the filing of a marine insurance claim are: • Copy of the onboard insurance survey report that documents the problem reported. • Copy of the bill of lading. • Copy of the commercial invoice. • Copy of the insurance policy is provided by the supplier in CIF contracts. • The insurance policy is secured by the purchaser in CFR contracts. • Claim bill. See Section F.1. 10 Delivery of Goods Procurement Capacity Toolkit 10-19 10. The steps a purchaser should take in managing settlement of a liquidated damages process with the supplier are: • State in writing how the liquidated damages apply. • Calculate the amount of liquidated damages. • Advise the supplier of the applicability and amount of the liquidated damages. • Mark the supplier invoice for the amount to be paid after deduction of the liquidated damages amount. • Send invoices and supporting statements and calculations to the appropriate finance office for action. See Section F.2. 10 Delivery of Goods Procurement Capacity Toolkit 10-20 I. Performance Indicators Performance indicators measure and evaluate success against a specific goal. The process begins by selecting performance indicators that are relevant for the procurement environment. This is followed by identifying and collecting appropriate data for each performance indicator to establish a baseline on the level of performance in the country. After training and corrective actions have been implemented, the same performance indicators are evaluated to determine the revised level of performance. Further information on conducting an assessment can be found in the Procurement Assessment Guide. The following performance indicators can be used for monitoring and evaluating key aspects of this module: 1. Percentage of deliveries in which all required shipment information for the RH commodities were received from the supplier prior to arrival and transmitted to stores department (in accordance with contract requirements). 2. Percentage of contracts in which the purchaser notified port clearance and warehouse staff of the estimated arrival of the shipment. 3. Percentage of ocean shipments that arrived in port and received a set of clean findings from a marine insurance survey. 4. Percentage of shipments that were cleared through customs without incurring any demurrage charges. 5. Percentage of shipments that were received at the central warehouse, inspected, and accepted for inventory without any reported damage or discrepancies. 6. Percentage of contracts containing liquidated damages provisions. 7. Percentage of contracts in which the supplier did not accrue liquidated damages. 10 Delivery of Goods Procurement Capacity Toolkit 10-21 J. Glossary and Acronyms Air waybill r documents is bill of lading. t n port. invoice s. r t s A shipping document issued by airlines and ai freight carriers when cargo is loaded on board an aircraft. It contains a description of the commodity being shipped, shipping instructions, terms and conditions of the shipment, and applicable transportation charges. Bidding The written description and set of terms and conditions of an intended purchase that is circulated by the intending buyer to prospective sellers. Bill of lading A shipping document issued by a carrier (usually an ocean shipping line) to a shipper that provides a written receipt for the goods, describes the conditions by which transport made, and includes a written commitment to deliver goods at a stated destination to the lawful holder of the CFR Cost and freight: Title and risk insurance cos pass to buyer when delivered on board the ship by seller, which pays the transportation cost to the destination port. CIF Cost, insurance, and freight: Title and risk pass to buyer when delivered on board the ship by seller, which pays transportation and insurance costs to destinatio Commercial Document required by customs to determine the true value of imported goods for assessment of duties and taxe Commodity Any piece of tangible property, supplies, o equipment that is the subject of a procurement activity. Componen An important function or process that occur within an element of the reproductive health supply process. Each module of the Toolkit focuses on one element. 10 Delivery of Goods Procurement Capacity Toolkit 10-22 Consignee A term used in shipping to describe the party to which something is entrusted (e.g., the “ship-to” party). Contract An agreement entered into by two parties for the execution of a certain activity (e.g., sale and purchase, construction, service provision, etc.). Customs clearance agent A licensed professional agent appointed by an importer to clear a shipment (consignment) coming from abroad through the port and customs authorities. Also called a customs broker. Demurrage charges Charges assessed against the consignee (purchaser) by a carrier, shipping agent, or customs agent for delay beyond the time allowed or agreed upon for unloading and/or removal of goods from port facilities. Discrepancy Used in banking and trade to indicate lack of agreement with stated requirements and/or documents. Duty A tax charged by a government, especially on imports. Element One of the ten key operational, broad-based activities in the reproductive health supply process. Expiration (Expiry) date The date beyond which the manufacturer will not guarantee the product. L/C Letter of credit: An arrangement by banks for settling commercial transactions; specifically, a written promise by a bank given to the seller in accordance with instructions (backed by a cash deposit) of the buyer to pay up to a given sum of money within a prescribed time limit when and if the seller presents specified documents that give evidence of its performance. Liquidated damages In sales contracts, a specified sum to be paid to the purchaser should the seller default on its obligation (usually pertaining to a delivery schedule). 10 Delivery of Goods Procurement Capacity Toolkit 10-23 Marks, markings An application of numbers, letters, labels, tabs, symbols, or colors for handling or identification during shipment and storage. Negotiated bill of lading Term for a bill of lading that has been released to the purchaser following payment to the supplier. Onboard joint insurance survey An inspection of an arriving ocean freight shipment by both the marine insurance company surveyor and the vessel surveyor to document the condition of the shipment. Packaging The primary wrapping and marking of a product. Packing The assembling of a packaged product into multiple units. Prepared for shipment in appropriate cartons or crates with all necessary blocking, bracing, cushioning, weatherproofing, reinforcement, and markings. Packing list A schedule showing detailed packing information, including items and totals, number of units or items per box or crate, total number of boxes or crates with individual identification numbers provided, shipping marks, total volume of the cargo, weights and dimensions per box or crate, etc. Performance indicator Measures and evaluates success against a specific goal. Phase A natural division of the ten elements of the supply process into three sequential parts: program planning, procurement process, and contract performance. Preshipment compliance Process by which the purchaser confirms the acceptability for shipment of the supplier’s commodity prior to shipment. There are three basic levels of preshipment compliance a purchaser can institute, ranging from document review to visual inspection up to full laboratory or physical testing of the commodity. Procurement unit Individuals organized around procurement duties within a larger entity. 10 Delivery of Goods Procurement Capacity Toolkit 10-24 QA Quality assurance. For more information, see Supplementary Topics, Section H: Product Quality Assurance. RH Reproductive health: A state of complete physical, mental, and social well-being—not merely the absence of disease or infirmity—in all matters relating to the functions and processes of the reproductive system. Reproductive health implies that people are able to have a satisfying and safe sex life and that they have the capability to reproduce and the freedom to decide if, when, and how often to do so; implicit in this last condition is the right of men and women to be informed and to have access to safe, effective, affordable, and acceptable methods of family planning of their choice, as well as other methods of their choice, for regulation of fertility. Supplier The party that transfers goods out of its own control to a named recipient. Supply Goods and services of a specific kind that are provided to businesses, public agencies, or directly to consumers. United Nations An international organization founded in 1945 after the Second World War by 51 countries committed to maintaining international peace and security; developing friendly relations among nations; and promoting social progress, better living standards, and human rights. Value added tax A tax levied by governments on values added resulting from an exchange of property; for example, from wholesale value to retail value. Generally paid by the seller (but passed along to the customer via sale price). Warranty A written guarantee given to the purchaser of health-sector goods by the manufacturer or dealer, usually specifying that the manufacturer will replace poor-quality goods free of charge for a stated period of time. 10 Delivery of Goods Procurement Capacity Toolkit 10-25 World Bank The World Bank Group offers loans, advice, and an array of customized resources to more than 100 developing countries and countries in transition. World Health Organization The directing and coordinating authority for health within the United Nations system. 2 Specifications Three Phases Ten Elements 1. Defining Reproductive Health Supply Requirements 2. Specifications 3. Assessment of Procurement Options I. Program Planning 4. Budget, Funding, and Procurement Requisition 5. Procurement Planning 6. Developing Bidding Documents and Inviting Offers 7. Selecting Suppliers II. Procurement Process 8. Contracts 9. Contract Performance and Monitoring III. Performance 10. Delivery of Goods 2 Specifications Procurement Capacity Toolkit 2-1 Contents A. Introduction B. Learning Objectives C. Components, Considerations, and Challenges D. Technical Specifications E. Methods for Development of Product Specifications F. Format and Content G. Sample Specifications H. Reference Material I. Learning Evaluation J. Performance Indicators K. Glossary and Acronyms 2 Specifications Procurement Capacity Toolkit 2-2 A. Introduction This module covers Element 2 of the reproductive health (RH) supply process. It describes the considerations and processes necessary to develop technical specifications, which will help ensure delivery of a high-quality product that best meets the needs of the end user. Specification development is the second step in the program planning phase, which begins with defining requirements and proceeds with the selection of a procurement method and budgeting, after specification development is complete. Purchasers of RH commodities are uniquely positioned to ensure the quality of products they purchase. The primary tool they use to do this is the technical specification. Well- written and complete specifications help ensure that purchased products are made with high-quality raw ingredients, in current good manufacturing practices (cGMP)-certified facilities, tested according to international standards, packaged in compliance with national requirements, stored under conditions that do not compromise their quality, and delivered to end users in good condition. Specifications can be used to define a variety of areas, such as product information (quantity, size, color, and registration), manufacturing requirements (standards for raw materials and cGMP certification), testing requirements, and packaging and shipping requirements—all details that when taken as a whole, ensure product quality and acceptability to the end user. While the focus of this module is on specifications, it is important to note the role that standards can play in specification development. Standards for products are traditionally developed and published by international and national regulatory authorities or standards bodies to establish the minimum level of performance and safety requirements for the product. Standards also generally specify methods of use when carrying out basic tests for quality verification. The purchaser can incorporate a standard into a specification by reference to establish the minimum level of performance and safety required; however, the purchaser can also demand a higher level of product quality by including more detailed quality assurance (QA) requirements in the specification. 2 Specifications Procurement Capacity Toolkit 2-3 B. Learning Objectives At the end of this module, the reader will be able to: • Describe how specifications support the QA process. • Cite methods for developing specifications. • Develop the format and critical content of specifications. • Locate available resources for RH commodity specifications. 2 Specifications Procurement Capacity Toolkit 2-4 C. Components, Considerations, and Challenges 1. Components Each element of RH supply is made up of several components. Most components involve activities to be carried out by RH purchasers; others are dependent on activities performed by others. The main requirements of RH purchasers at Element 2 are: • Understanding of international and national quality standards for each RH commodity, including international testing requirements. • Knowledge concerning national registration status, including expiry dates of current registered products and new products under registration. • Management of the process to ensure that specifications are complete, comprehensive, and accurate, including obtaining input from all relevant governmental bodies, technical specialists, and program staff. A component of Element 2 that is dependent on the activity of others: • Product selection and quantity, as determined in Element 1. 2. Considerations The main considerations for Element 2 are: a. Overarching Principles of Quality and Timeliness • Safety, efficacy requirements, and QA criteria must be clearly stated in the specifications. • Specifications must be defined at the front end of the procurement process. Timely release of specifications is required to prevent delays in procurement. b. Critical Component: Approval of Specifications • Without completed and approved specifications, procurement cannot go forward. c. Required Input From Other Elements • Items, quantities, and delivery dates desired, as determined in Elements I and 4. 2 Specifications Procurement Capacity Toolkit 2-5 d. Key Decision Points • Methods for development of product specifications. • Format and content: product information, QA requirements, and packaging and shipping requirements. e. Expected Output • Completed and approved specifications ready to be included in bidding documents. 3. Challenges Three main challenges are inherent in Element 2: • Establishing a clear and effective process for developing specifications that ensures participation and approval of all relevant parties. • Presenting requirements in a concise, thorough, and easily understood manner. • Ensuring that technical specifications are “product neutral” through the use of generic terms and relative characteristics. 2 Specifications Procurement Capacity Toolkit 2-6 D. Technical Specifications Technical specifications are one of the most important elements of procurement: • They provide detailed information to suppliers about the goods to be purchased. • They are the benchmarks against which the purchaser will judge the technical responsiveness of suppliers’ bids. • They form the basis for the contractual obligation of the supplier to the purchaser. • They are the criteria against which the purchaser will determine the acceptability of specific goods prepared by the supplier for shipment. Technical specifications must be clear, accurate, and complete; otherwise, the procurement will not be able to proceed on schedule and the entire procurement process may need to be cancelled. For example: • Questions raised by suppliers can force the procuring entity to delay the deadline for bid submission to accommodate amendments to the bidding documents. • A significant number of suppliers may misunderstand the requirements and quote items that do not meet program needs, forcing the procuring entity to reject all bids and restart the process. • It may be impossible for the evaluation committee to correctly identify a winning bid, and if one is chosen for any other reason than what is specifically stated in the bidding documents, supplier protests may result. • Goods that do not meet program needs may be delivered because the supplier is under no obligation to supply goods other than what is specifically described in the technical specifications included in the contract. Under any of the above scenarios, time and resources will be wasted—at a minimum, the delivery schedule will be delayed. More importantly, needs will not be met, legal problems may ensue, misprocurement may be declared, and funding may be lost. In addition to specifications that are clear, accurate, and complete, public-sector procurement requires that specifications be prepared in a way that will encourage maximum competition. They must be “product neutral.” In other words, they must use generic terms, relative characteristics, and performance requirements rather than brand names and superficial descriptions. If there is no way to avoid stating a brand name, it must be followed by “or equivalent.” Nonfunctional requirements such as color and exact dimensions must 2 Specifications Procurement Capacity Toolkit 2-7 have strong justification and may not be used simply to eliminate all but a specific brand. Specifications must be written in industry-standard vocabulary so there is no question about what is required. A well-designed, comprehensive procurement specification is a health program’s first line of protection against: • Counterfeit products. • Shelf-life limitations: expired or near expiry date products sold at very low prices, usually by unscrupulous middlemen. • Deterioration due to temperature extremes during transit. • Substandard products due to poor manufacturing processes. • Mix-ups in warehouses or health facilities due to unclear labeling. 2 Specifications Procurement Capacity Toolkit 2-8 E. Methods for Development of Product Specifications It can be challenging for some procurement units to determine how to develop or obtain appropriate specifications, and/or to decide who should prepare them. Considering the depth of knowledge and specialized information required for writing effective, unambiguous procurement specifications, it is a job best done by a person with specific technical expertise. Program staff are aware of their requirements from the standpoint of using a product, but they may not be familiar with the scientific terms and product and performance characteristics needed to accurately describe it. The role of procurement staff in specification development involves gathering information, facilitating communication between technical personnel and end users, consulting with technical experts, and placing the completed specification in the bidding documents and Requests for Quotation that are released to suppliers. Writing the actual specifications is not a job for procurement officers. Procurement staff also should be aware of the registration status of the RH products they are procuring. Most RH products that are imported must be approved by the regulatory authority of the exporting country as well as the regulatory authority of the importing country. A specification should identify the national regulatory requirements with which the RH product will be required to comply. If an RH product has not been approved (registered) by the national regulatory authority of the importing country, the time required to secure this approval can be significant, and the procurement staff will need to factor additional time for regulatory approval into their planning timeline. For additional information on the role of the national regulatory authority in the procurement process, see Supplementary Topics, Section K: Regulatory Authorities. Specifications that have been developed in the past and preserved in a file or database for future use are very convenient; however, a technical expert should be asked to review them to make sure they accurately and completely reflect the current requirement before they are adopted for use in a procurement action. Many draft specifications for RH commodities are readily available, either in-country from earlier procurements or provided by the World Health Organization (WHO) and the United Nations Population Fund (UNFPA). These can provide an excellent starting place. The more challenging aspect may be the organization of the development process itself. 2 Specifications Procurement Capacity Toolkit 2-9 There is not a single recognized best practice for specifications revision or development, although most countries use similar approaches that rely heavily on input from varied contributors. A 2006 survey carried out by the United States Agency for International Development (USAID) DELIVER | PROJECT identified various methods used to develop product specifications in USAID priority countries.1 A theme common to all approaches is the inclusion of program staff. The following summarizes the process in select countries: Egypt: The logistics unit prepares technical specifications. Typically, the product specifications have been in circulation for years and need only be reviewed by experts in the particular field. Recently, specifications for family planning products were developed with technical assistance from the DELIVER PROJECT. Ghana: The procurement and supply division in the Ministry of Health works with each program unit (e.g., maternal and child health and tuberculosis) to develop specifications. Jordan: The contraceptive specification committee—with members representing the logistics unit in the maternal and child health department, the Jordan food and drug administration, the RH program, and others—are responsible for developing contraceptive product specifications. Mali: A commission establishes product specifications for all essential medicines. The commission meets semiannually and includes representatives from all technical departments of the Ministry of Health. Nepal: Program managers prepare specifications and quantify needs in collaboration with the logistics management division. In some cases—for example, malaria drugs—a technical subcommittee is assigned. Nicaragua: The Directorate of Health Resources guides all drug and nondrug consumables. A technical unit within the directorate works with program staff to prepare the specifications. The key to a successful process is ensuring that both technical experts and program staff are included in the development process and that all parties are given ample time and opportunity for clear communication. 1 Rao R, Mellon P, Sarley D. Procurement Strategies for Health Commodities: An Examination of Options and Mechanisms Within the Commodity Security Context. Arlington, VA: United States Agency for International Development DELIVER PROJECT; 2006. 2 Specifications Procurement Capacity Toolkit 2-10 F. Format and Content Failure to develop accurate specifications can result in the procurement of unsuitable products. A set of precise and clear specifications is a prerequisite for bidders to respond realistically and competitively to the requirements of the purchaser. The specification format should be comprehensive so that all important product features and requirements are addressed. The specification content should be clear and accurate to ensure the required product obtained is of good quality. 1. Format Potential suppliers are required to comply in full with all stated product specifications. To avoid confusion or misunderstanding, specifications should be presented in a manner that clearly categorizes and delineates all requirements. Sample specifications showing examples of format and presentation are included in Section G of this module. 2. Content Content of technical specifications can be divided into three broad categories: product information, QA provisions, and packaging requirements. Specific details to be addressed within each category will differ for each commodity; however, the following can be used as a general outline. a. Product Information • Generic name or international nonproprietary name. • Presentation, strength, and quantity in each container. • Color and size. • Regulatory requirements: – Certificate of licensing. – Compliance with cGMPs. – Quality certification of all raw materials. – WHO prequalification (if required). – Lots per order. – Shelf life. 2 Specifications Procurement Capacity Toolkit 2-11 b. Quality Assurance Provisions • Documentation: all documents, such as manufacturing records and Certificate of Analysis, to be provided by the manufacturer. • Inspection by the purchaser: the rights and timing for inspection of goods, if requested by the purchaser. • Sampling procedures: the steps of the product sampling procedure, if requested by the purchaser. • Sample retention: the manufacturer’s requirements to retain samples from manufacturing lots. c. Packaging and Shipping Requirements • Primary container: requirements of the primary container specific to the commodity. • Labeling: all information to be included on the product label, including but not limited to: – Product/brand name. – Lot/batch number. – Expiration date (month and year). – Date of manufacture. – Manufacturer’s name and address. – Contents and quantity, including tablet formulation (amounts of active ingredients per tablet). – Drug registration number (if applicable). – Brand or company logo. – Country of origin. • Product information sheets: language, quantity, and placement of product information sheets for consumers and physicians. • Inner boxes: packaging material, size, and quantity of inner boxes. • Exterior shipping cartons: type and strength of cartons necessary to protect commodities during shipment. • Markings: markings and information required on inner and outer cartons. 2 Specifications Procurement Capacity Toolkit 2-12 G. Sample Specifications 1. Checklist Checklist of Elements for Inclusion in Specifications for Pharmaceuticals and Contraceptives � Description: Generic name (INN); Type of product; Intended use � Formulation (drug content): Pills & Injectables � Materials: Condoms & IUDs � Presentation: Dosage form; Dosage size � Filling Volume (as applicable) � Identification (markings): Marking/labeling of product � Primary Packaging: Materials and description; Package layout/dimensions; Markings; Special labeling/logo (if desired) � Overpacking (cartons): Materials and description; Markings � Exterior Packing (for shipping): Materials and description; Markings � Shelf Life: In months or years; Stability/storage temperature; Months remaining upon receipt in-country � Printed Materials: Language; Patient inserts; Physician inserts; Special instructions � Regulatory Requirements � Quality Assurance Requirements: Pharmacopoeia standard (if applicable) � Documentation: Test data; Certificate of Analysis; Regulatory certificates � Quality Compliance Provisions: Preshipment inspection (of physical attributes); Preshipment sampling and testing (for analysis of suspect products) INN: International nonproprietary name. IUD: Intrauterine device. 2 Specifications Procurement Capacity Toolkit 2-13 2. Documents Exhibit 2-1 Sample Technical Specifications: Oral Contraceptives (with visual inspection guidelines) The following is a sample format for use in devising procurement specifications for oral contraceptives. Examples of actual product specifications are in italics. When preparing procurement specifications, appropriate product specifications should be substituted for the italicized examples. This sample is designed to be used in conjunction with bidding and contract documents. Information for submission of samples The sample oral contraceptives submitted by the Bidder in response to this Invitation for Bids must be exactly the same2 as would be supplied if a contract were awarded to the Bidder. The packets containing the product need not have a printed logo as stipulated under Clause 1.12 of this specification; however, other information as stipulated under the aforementioned clause must be furnished. For sample submission only, this information (logo optional) may be printed on a sticker and affixed to the packets containing the product. 1. Requirements Oral contraceptive tablets in accordance with the following specifications: • Twenty-eight (28)-day cycle package consisting of twenty-one (21) oral contraceptive norgestrel and ethinylestradiol tablets and seven (7) ferrous fumarate tablets. Contraceptive tablets: 21 Each tablet shall contain 0.03 mg of ethinylestradiol and 0.3 mg of norgestrel. Spacing tablets: 7 Each tablet shall contain 75 mg ferrous fumarate. 1.1 Product and Brand Names Product name: ________________________________________________________ Brand names: _________________________________________________________ 2 For example, same tablet shape, color, weight, ingredients, and identification imprint; same blister pack size, material, text, and identification markings; same inner box size, material, text, and identification markings. 2 Specifications Procurement Capacity Toolkit 2-14 1.2 Raw Materials Oral contraceptives offered under this purchase description shall be produced from validated raw materials obtained from a licensed manufacturer or its authorized distributor.3 1.3 Registration Requirements Oral contraceptives offered under this purchase description shall be currently registered in the country of destination and approved by ________________ (local regulatory authority). 1.4 Certificate of Licensing Status Oral contraceptives offered under this purchase description shall be licensed for marketing by the drug regulatory authority of the country of origin. Prior to award of the Contract, the successful offeror(s) may be required to submit a “statement of licensing status of pharmaceutical product(s)” as provided under the World Health Organization (WHO) Certification Scheme on the Quality of Pharmaceutical Products Moving in International Commerce.4 1.5 No Objection Certificate In the case of goods of foreign origin, oral contraceptives offered under this purchase description shall have been awarded a No Objection Certificate by _______________ (local regulatory authority) on behalf of any local manufacturer(s) of the importing country. 1.6 Compliance With Current Good Manufacturing Practices The Supplier must be able to provide certification that the oral contraceptives are manufactured according to WHO current good manufacturing practices (cGMPs). Such certification can be found in the WHO Certification Scheme “Certificate of Pharmaceutical Product.” Supplier also must be able to provide copies of its annual cGMP audit reports. 3 Because the raw materials that make up both active and inactive ingredients are of great importance for final product bioavailability and stability, current good manufacturing practices require that manufacturers validate vendors for all raw materials. A typical validation includes, but is not limited to, these areas: • Manufacturing records and procedures for raw materials synthesis, processing, packing, and storage. • Quality control records and procedures for the raw materials, in-process, and final product. • Plant certification by local regulatory authorities (such as commerce, industry, health, labor, environment) as required. • Certification of workers’ training in current good manufacturing practices and safety protection. • Records demonstrating raw materials with the required physical and chemical characteristics. 4 Available at: http://www.who.int/medicines/areas/quality_safety/regulation_legislation/certification/en/index.html. 2 Specifications Procurement Capacity Toolkit 2-15 1.7 WHO Certification—Movement in International Commerce The Supplier must be able to provide documentation indicating that the manufacturer of the product has received confirmation from the Ministry of Health of the country of manufacture that the pharmaceutical meets the requirements in the WHO Certification Scheme. 1.8 Shape and Dimensions Tablets shall be of the shape and dimensions of the Bidder’s normal, standard commercial tablet. 1.9 Colors Contraceptive and ferrous fumarate (or inert, if applicable) tablets shall be similar to Bidder’s normal, standard commercial tablets. 1.10 Tablet Markings Each tablet shall bear the identifying imprint of its manufacturer. 1.11 Packaging 1.11.1 Monthly Cycle Presentation Each individual tablet shall be enclosed in a transparent blister pack of thermoformed polymer, with a minimum thickness of 0.1905 mm (.0075 inch) backed with aluminum foil, minimum thickness 0.0178 mm (0.0007 inch). Variations must be proven scientifically comparable by means of stability data. The size of the package shall not be less than 57.15 mm (2.25 inches) x 82.55 mm (3.25 inches). Thicker polymer or foil or the addition of a card to either the front or the back of the package (in addition to the minimum polymer or foil) is acceptable. 1.11.2 Mounting Tablets shall be mounted on four (4) rows of seven (7) tablets per row. Contraceptive tablets shall precede the ferrous fumarate tablets (or inert tablets, if applicable). 1.12 Identification Markings on Individual Blister Packs Each individual blister pack shall have the following information: • Product/brand name. • Lot/batch number. 2 Specifications Procurement Capacity Toolkit 2-16 • Expiration date (month and year). • Date of manufacture. • Manufacturer’s name and address. • Arrow indicating sequence of tablets. • Contents and quantity, including tablet formulation (amounts of active ingredients per tablet). • Drug registration number (if applicable). • Family planning logo (if applicable). • Made in ____________________. • Product use and storage instructions (accompanying the blister pack). 1.12.1 Printing and Layout On the front of each monthly cycle above the first row of tablets and in the left-hand corner, the trade or brand name of the product shall be printed in precision full registration. In parentheses, in reduced lettering (smallest type no less than 1 mm high) and below the product or brand name, shall be printed “Family Planning Pills.” Sequence of administration shall be clearly indicated by an arrow/line pathway on the unit. The month and year of expiration and the lot/control number shall be shown in Arabic numerals; for example, 6/11 will indicate the product expires in June 2011. Debossing is acceptable for these numbers. The tablet formulation and a “copy control code” (evidence that artwork/packaging has been approved by all parties) shall be printed on the individual packet and may be printed on the reverse side (smallest type no less than 1 mm high). 1.12.2 Color Background color shall be the natural color of the aluminum foil on the face, with a dark blue (PMS Blue 301) stripe across the top and the “Blue Lady” symbol depicted to the right but within the blue stripe. The reverse of the individual packet will not be inked except for necessary printing. 1.13 Workmanship Products and packaging shall be free of defects that impair their serviceability, affect their durability, or detract from their appearance. 2 Specifications Procurement Capacity Toolkit 2-17 1.14 Lots Per Order The Supplier shall fill the order using the fewest number of manufacturing lots possible. 1.15 Shelf Life The shelf life of the product provided under this solicitation shall be five (5) years from the date of manufacture when stored under tropical conditions such as those prevailing in _____________________ (recipient country name). The Supplier shall be able to provide to the satisfaction of the registration/national quality control authorities the manufacturer’s stability test data substantiating this five (5)-year shelf life at ambient temperatures at or greater than 32 degrees Celsius and at a relative humidity of 85% in the proposed blister package. At the time of inspection or acceptance for delivery to the country of destination, no more than nine (9) months shall have expired since the date of manufacture shown on the batch release or Certificate of Analysis. 1.16 Test Data Chemical and physical test data for raw materials, components in-process, and finished product testing must be on record for each lot shipped and must be available to Purchaser’s representatives when requested. 2. Quality Assurance Provisions 2.1 Compliance The Supplier shall guarantee that the products as packed for shipment comply with all provisions of the specifications and related documents. 2.2 Documentation 2.2.1 The Supplier shall provide evidence5 of the satisfaction of the technical specification requirements for which specific inspection instructions or protocols have not been provided. Such evidence is contained in the “Manufacturer’s Batch Certificate” under the WHO Certification Scheme. 2.2.2 The Supplier shall provide a copy of the manufacturing record and procedures to the Purchaser for each lot intended for shipment. 5 Evidence includes quality control and manufacturing records, in-process control records, and final product Certificate of Analysis. 2 Specifications Procurement Capacity Toolkit 2-18 2.2.3 The Supplier shall provide a copy of the Certificate of Analysis to the Purchaser for each lot intended for shipment. 2.2.4 The Supplier shall provide to the Purchaser a copy of the approval of each component for each lot intended for shipment. 2.3 Inspection by the Purchaser The Purchaser reserves the right to perform or cause to be performed any of the inspections and tests set forth in the Technical Specifications and Special Conditions of Contract to ensure that the goods conform to prescribed requirements. The Purchaser reserves the right, and/or may assign the right to a representative, to enter and inspect the production facility prior to shipment of the goods and to draw samples from the Supplier’s factory and/or warehouse. Except as otherwise specified in the Contract or purchase order, prior to shipment, the Purchaser will sample, or cause to be sampled, the product as packed in inner boxes preparatory to packing in exterior shipping cartons. The sampling shall be according to recognized standards.6 The Purchaser may have some or all of the tests specified in Section _____ of the Contract performed by a laboratory suitably equipped and qualified to conduct quality assurance tests on pharmaceutical products according to ______________ Pharmacopoeia. 2.4 Sampling Procedures The Purchaser or the Purchaser’s representative shall select the required samples from the lot according to Section _____ of the Special Conditions of Contract. If the order is to be filled using more than one production lot, each production lot shall be separately sampled and tested. When an inspection lot is smaller than 10,001 units, it will be deemed to be 10,001 for determination of sample sizes. The normal, tightened, and reduced inspection provisions of ISO 2859 (Inspection by Attributes) may be used for visual inspection. Sampling for analytical testing shall be done in accordance with pharmacopoeial requirements. 6 Depending on the tests required, sampling may be conducted according to the standards of the International Organization for Standardization (ISO 2859: Inspection by Attributes) (included as Appendix III.H), the report of the WHO Expert Committee on Specifications for Pharmaceutical Preparations (included as Appendix III.I), or as dictated by local or international pharmacopoeia. Following recognized sampling procedures helps to ensure that the products tested are representative of the whole. 2 Specifications Procurement Capacity Toolkit 2-19 All sampled boxes and shipping cartons shall be so marked and shall include the date and initials of the sampler. 2.5 Sample Retention The Supplier shall retain a sample of ten (10) cycles, or the equivalent required to perform three (3) complete chemical assays, from each lot shipped, for a period of one (1) year after the printed expiration date. 3. Packing 3.1 Inner Boxes 3.1.1 Products sealed in individual packets as specified in Section 1.11 shall be packed in inner boxes of one hundred (100) cycles.7 Inner boxes shall be made of light fiberboard (white) of a size sufficient to contain the specified number of cycles. The overall dimensions should be such that the product does not get damaged during transportation and storage. 3.1.2 For inner boxes, the Bidder shall fill in the blanks provided below: Each inner box will contain one hundred (100) cycles. The overall dimensions of a box will be _____ cm x _____ cm x _____ cm. 3.2 Exterior Shipping Cartons 3.2.1 Product and printed materials, packaged and packed as specified above, shall be contained in triple-wall corrugated fiberboard cartons made from weather-resistant fiberboard with a bursting test strength of not less than 1,900 kPa. The carton flaps shall be secured with water-resistant adhesive applied to not less than 75% of the area of contact between the flaps or with 75 mm-wide water-resistant tape applied to the full length of the center seams and extending over the ends not less than 75 mm.8 Plastic strapping shall be placed around the carton, with a minimum of two crossing bands. Cartons exceeding 760 mm (30 inches) in length shall have additional bands placed around the carton. 7 Sometimes oral contraceptives are packaged to contain three (3) cycles per inner box. If this is the preferred configuration, a three (3)-cycle-per-box packaging description should be detailed in the specification. 8 The use of additional tape along the joint of the outer lids and around the top and bottom corners will greatly increase each carton’s resistance to damage during shipment and storage. Tape can be made of plastic film, kraft paper, or fabric, either plain or reinforced with plastic threads. 2 Specifications Procurement Capacity Toolkit 2-20 3.2.2 The Bidder shall fill in the following blanks: The exterior shipping carton will contain _____ inner boxes. The overall dimensions of a carton will be _____ cm x _____ cm x _____ cm, and the gross weight of one shipping carton will be _____ kg. A standard 6.096-meter (20-foot) container will accommodate _____ exterior shipping cartons. 3.3 Markings 3.3.1 Inner Boxes The inner boxes shall be marked with the following information in a clearly legible manner that is acceptable to the Purchaser9: • Product/brand name. • Lot/batch number. • Expiration date (month and year). • Date of manufacture. • Manufacturer’s name and address. • Contents and quantity. • Drug registration numbers (if applicable). • Instructions for storage and handing. 3.3.2 Exterior Shipping Cartons The following information shall be stenciled or labeled on the exterior shipping cartons on two opposing sides in bold letters at least _____ mm high with waterproof ink in a clearly legible manner that is acceptable to the Purchaser.10 Regulatory information (on two opposing sides of carton) • Product/brand name. • Lot/batch number. 9 The smallest type shall be no less than 1 mm high, unless otherwise specified by the commercial laws of the country of importation. 10 The smallest type shall be no less than 10 mm high, unless otherwise specified by the commercial laws of the country of importation. 2 Specifications Procurement Capacity Toolkit 2-21 • Expiration date (month and year). • Date of manufacture. • Manufacturer’s name and address. • Contents and quantity. • Drug registration numbers (if applicable). • Instructions and symbols for storage and handling, such as KEEP DRY or DO NOT FREEZE. Customs and shipping information (on two opposing sides of carton) • Made in ____________________. • Supplier’s name and address (if different from manufacturer). • Consignee’s address in full. • Gross weight of each carton (in kg). • Port of entry. • Contract number. • Quantity of goods. • Carton _____ of _____. 3.4 Printed Materials—Product Information Sheets 3.4.1 Consumer information and directions for use shall be printed in English and/or in ________________ and provided as package inserts, one copy for each consumer unit. All copies are to be accumulated, fastened together, and included in each exterior shipping carton. 3.4.2 Information for physicians’ use shall be printed in English and/or in _______________. Two copies of such information shall be provided for each one thousand two hundred (1,200) monthly cycles and shall be placed in each exterior shipping carton. Inspection Sampling and Testing—Oral Contraceptives Prior to shipment, the Purchaser or its appointed representative has the right to sample and inspect each consignment of oral contraceptives at the factory or Supplier’s warehouse in accordance with ISO 2859 Inspection by Attributes (or WHO specifications) and Technical Specification ________________ of this Contract. 2 Specifications Procurement Capacity Toolkit 2-22 1.1 Packaging, Packing, and Markings a. One hundred percent (100%) of the exterior shipping cartons will be examined for: • General physical characteristics and condition. • Markings per Technical Specification _____. b. A representative sample of the inner boxes and individual packages will be drawn from the exterior shipping cartons at General Inspection Level II, or, at the discretion of the Purchaser, General Inspection Level III, Single Sampling Plan for Normal Inspection. The sample will be examined for: • General physical characteristics per Technical Specification _____, Section _____. • Markings per Technical Specification _____, Section _____. c. Inspection criteria and classification of defects shall follow the inspection guidelines outlined in Section 1.4 below. For critical defects, the acceptable quality limit (AQL) shall be 0%; for major defects, the AQL shall be 1%; for minor defects, the AQL shall be 4%. 1.2 Tablet At the discretion of the Purchaser, part of the selected sample may be sent to a qualified independent laboratory for physical and chemical testing as follows. Pharmacopoeial tests: • Identification. • Assay of active ingredient(s). • Content uniformity. • Disintegration and/or dissolution. • Uniformity of mass (not required if content uniformity test performed). Nonpharmacopoeial tests: • Package seal integrity test.11 A Certificate of Analysis for production lot(s) represented by test samples shall be made available to the inspector and/or Purchaser upon request. The certificate shall state all tests 11 Immerse package in 0.05 percent methylene blue solution under 15 vacuum gauge for two minutes. Observe for leakage. AQL 2.5%. 2 Specifications Procurement Capacity Toolkit 2-23 performed, their specifications, and actual test results obtained. All pharmacopoeial test results shall meet applicable pharmacopoeial limits. 1.3 Resolution of Defects a. Packaging, Packing, and Markings Defects in exterior shipping carton markings must be corrected by the Supplier prior to shipment. All goods from corresponding production lots with inspection lot defect in excess of the AQLs listed in Section 1.4 of this specification must be corrected and reinspected at Supplier’s expense or rejected. b. Tablet Any deviation from the manufacturer’s Certificate of Analysis, product specifications, or relevant pharmacopoeial limits shall result in rejection of goods from the entire production lot. 1.4 Visual Inspection Review Guidelines for Oral Contraceptives Oral contraceptives come in cycles of 21 or 28 tablets. In the 28-day cycles, 7 placebo or iron tablets are provided in addition to the contraceptive tablets. Iron tablets generally are larger and brown in color. Most oral contraceptives are packaged in blister packages with a cardboard overpack. Frequently, 3 cycles are packaged together in a sealed foil overpack. Oral contraceptive shelf life ranges from 3 to 5 years at 37 degrees Celsius, although the majority of brands have a 5-year shelf life. Blister packaging provides good protection from adverse environmental conditions. The following list of labeling criteria is comprehensive and useful not just in identifying the product, but in managing it successfully within the logistics system. However, not all contraceptives are procured with such extensive labeling specifications. If any of the following labeling criteria listed are not applicable, mark the appropriate box in the “n/a” (not applicable) column. Product procurement specifications should be consulted prior to finalizing the inspection criteria. 2 Specifications Procurement Capacity Toolkit 2-24 Product labeling criteria—oral contraceptives Date: Receipt Report Number: Product: Lot Number: Brand Name: Manufacturer: Expiration Date: Date of Manufacture: Inspection of Lot Size: Sample Size: Warehouse Location: Second Sample Size: Visual Inspection Criteria Meets Criteria Yes No n/a Defect Classification Shipping Cartons Examine 100 percent (100%) of the shipping cartons against the shipping documents Carton Labeling: Product/brand name � � � Major Lot/batch number � � � Major Expiration date � � � Major Manufacturer’s name and address � � � Minor Date of manufacture � � � Minor Contents and quantity � � � Minor Drug registration number � � � Minor Storage instructions � � � Minor Carton Condition/Content: Carton in good condition, undamaged � � � Major All inner boxes present, none missing � � � Major Proper flap/closure � � � Minor Inner Boxes Inner Box Labeling: Product/brand name � � � Critical Lot/batch number � � � Critical Expiration date � � � Critical Manufacturer’s name and address � � � Minor Date of manufacture � � � Minor Contents and quantity � � � Minor Drug registration number � � � Minor Storage instructions � � � Minor Inner Box Condition/Content: Inner box in good condition (undamaged, unopened) � � � Major All unit packages present, none missing � � � Major Inner box contains no foreign matter � � � Minor Unit Packages Unit Package Labeling: Product/brand name � � � Critical Lot/batch number � � � Critical Expiration date � � � Critical Manufacturer’s name and address � � � Critical Date of manufacture � � � Critical Product use instructions � � � Critical Arrow indicating sequence of pills � � � Critical 2 Specifications Procurement Capacity Toolkit 2-25 Visual Inspection Criteria Meets Criteria Yes No n/a Defect Classification Contents and quantity � � � Major Drug registration number � � � Major Storage instructions � � � Minor Print on unit package is legible � � � Minor Product use instructions properly folded � � � Minor Unit Package Condition/Content: Unit pack in good condition (undamaged, unopened) � � � Critical Pills in good condition (unbroken, correct color, none missing) � � � Critical Good package seal, no breaks � � � Critical Unit package contains no foreign matter � � � Critical Definitions: Acceptable Quality Limits Critical defect A defect which, according to experience and professional criteria, makes the product dangerous or not viable for its intended use. Major defect A defect which is unlikely to reduce usability and may make product use more difficult, but does not have the safety and efficacy risk associated with a critical defect. Minor defect A defect that is unlikely to affect usability of the product, but represents a departure from the specifications. When these guidelines are used to ensure compliance with procurement specifications, the following acceptable quality limits (AQLs) shall apply: for critical defects, AQL 0%; for major defects, AQL 1%; for minor defects, AQL 4%. 2 Specifications Procurement Capacity Toolkit 2-26 Exhibit 2-2 Sample Technical Specifications: Injectable Contraceptives (with visual inspection guidelines) The following is a sample format for use in devising procurement specifications for injectable contraceptives. The example presented here is for the long-acting injectable contraceptive medroxyprogesterone acetate. Examples of actual product specifications are in italics. When preparing procurement specifications, appropriate product specifications should be substituted for the italicized examples. This sample is designed to be used in conjunction with bidding and contract documents. Information for submission of samples The sample injectable contraceptives submitted by the Bidder in response to this Invitation for Bids must be exactly the same as would be supplied if a contract were awarded to the Bidder.12 The vial or ampoule containing the product need not have a printed logo; however, other information as stipulated under Clause 1.11 of this specification must be furnished. For sample submission only, this information (logo optional) may be printed on a sticker and affixed to the vials or ampoules containing the product. 1. Requirements Injectable contraceptives in accordance with the following specifications: • Long-acting progestin in sterile aqueous suspension for intramuscular injection once every three (3) months. • Each 1-ml vial or ampoule should contain a minimum of 1.1 ml of sterile aqueous suspension containing 150 mg/ml medroxyprogesterone acetate. 1.1 Product and Brand Names Product name: ________________________________________________________ Brand names: _________________________________________________________ 12 For example, vials or ampoules must be of the same glass type, closure type, color, size, text, and identification markings; contents must have same ingredients, color, and weight; same inner box size, material, text, and identification markings. 2 Specifications Procurement Capacity Toolkit 2-27 1.2 Raw Materials Injectable contraceptives offered under this purchase description shall be produced from validated raw materials obtained from a licensed manufacturer or its authorized distributor.13 1.3 Primary Packaging Requirements Injectable contraceptives offered under this purchase description shall be packaged in vials or ampoules that meet quality standards as specified in ISO 8362-1. Closures for injection vials shall meet quality standards as specified in ISO 8362-2. 1.4 Registration Requirements Injectable contraceptives offered under this purchase description shall be currently registered in the country of destination and approved by _____________________ (local regulatory authority). 1.5 Certificate of Licensing Status Injectable contraceptives offered under this purchase description shall be licensed for marketing by the drug regulatory authority of the country of origin. Prior to award of the Contract, the successful offeror(s) may be required to submit a “statement of licensing status of pharmaceutical product(s)” as provided under the World Health Organization (WHO) Certification Scheme on the Quality of Pharmaceutical Products Moving in International Commerce.14 1.6 No Objection Certificate In the case of goods of foreign origin, injectable contraceptives offered under this purchase description shall have been awarded a No Objection Certificate by _______________________ (local regulatory authority) on behalf of any local manufacturer(s) of the importing country. 13 Because the raw materials that make up both active and inactive ingredients are of great importance for final product bioavailability and stability, current good manufacturing practices require that manufacturers validate vendors for all raw materials. A typical validation includes, but is not limited to, these areas: • Manufacturing records and procedures for raw materials synthesis, processing, packing, and storage. • Quality control records and procedures for the raw materials, in-process, and final product. • Plant certification by local regulatory authorities (such as commerce, industry, health, labor, environment) as required. • Certification of workers’ training in current good manufacturing practices and safety protection. • Records demonstrating raw materials with the required physical and chemical characteristics. 14 Available at: http://www.who.int/medicines/areas/quality_safety/regulation_legislation/certification/en/index.html. 2 Specifications Procurement Capacity Toolkit 2-28 1.7 Compliance with Current Good Manufacturing Practices The Supplier must be able to provide certification that the injectable contraceptives are manufactured according to WHO current good manufacturing practices (cGMPs). Such certification can be found in the WHO Certification Scheme “Certificate of Pharmaceutical Product.” Supplier also must be able to provide copies of its annual cGMP audit reports. 1.8 WHO Certification—Movement in International Commerce The Supplier must be able to provide documentation indicating that the manufacturer of the product has received confirmation from the Ministry of Health of the country of manufacture that the pharmaceutical meets the requirements in the WHO Certification Scheme. 1.9 Appearance Injectable contraceptives shall appear as an aqueous white suspension contained in 1-ml or 10-ml glass vials or 1-ml glass ampoules. 1.10 Filling Volume Each 1-ml glass vial or ampoule shall contain a minimum of 1.1 ml of sterile aqueous suspension. Each 10-ml glass vial shall contain a minimum of 10.5 ml of sterile aqueous suspension. 1.11 Identification Markings on Individual Vials or Ampoules Each individual vial or ampoule shall have the following information: • Product/brand name. • Lot/batch number. • Expiration date (month and year). • Date of manufacture. • Manufacturer’s name and address. • Presentation (e.g., sterile aqueous suspension). • Formulation (amounts of active ingredients per vial or ampoule). • Drug registration number (if applicable). • Family planning logo (if applicable). 2 Specifications Procurement Capacity Toolkit 2-29 If space allows, the following information shall also appear on each individual vial or ampoule: • Recommended storage conditions. • Made in ____________________. 1.12 Workmanship Products and packaging shall be free of defects that impair their serviceability, affect their durability, or detract from their appearance. 1.13 Lots Per Order The Supplier shall fill the order using the fewest number of manufacturing lots possible. 1.14 Shelf Life The shelf life of the product provided under this solicitation shall be at least three (3) years from the date of manufacture when stored under tropical conditions such as those prevailing in ______________________ (recipient country name). The Supplier shall be able to provide to the satisfaction of the registration/national quality control authorities the manufacturer’s stability test data substantiating this three (3)-year shelf life at ambient temperatures at or greater than 32 degrees Celsius and at a relative humidity of 85% in the proposed vial or ampoule. At the time of inspection or acceptance for delivery to the country of destination, no more than nine (9) months shall have expired since the date of manufacture shown on the batch release or Certificate of Analysis. 1.15 Test Data Chemical, physical, and microbiological test data for raw materials, components in-process, and finished product testing must be on record for each lot shipped and must be available to Purchaser’s representatives when requested. 2. Quality Assurance Provisions 2.1 Compliance The Supplier shall guarantee that the products as packed for shipment comply with all provisions of the specifications and related documents. 2 Specifications Procurement Capacity Toolkit 2-30 2.2 Documentation 2.2.1 The Supplier shall provide evidence15 of the satisfaction of the technical specification requirements for which specific inspection instructions or protocols have not been provided. Such evidence is contained in the “Manufacturer’s Batch Certificate” under the WHO Certification Scheme. 2.2.2 The Supplier shall provide a copy of the manufacturing record and procedures to the Purchaser for each lot intended for shipment. 2.2.3 The Supplier shall provide a copy of the Certificate of Analysis to the Purchaser for each lot intended for shipment. 2.2.4 The Supplier shall provide to the Purchaser a copy of the approval of each component for each lot intended for shipment. 2.3 Inspection by the Purchaser The Purchaser reserves the right to perform or cause to be performed any of the inspections and tests set forth in the Technical Specifications and Special Conditions of Contract to ensure that the goods conform to prescribed requirements. The Purchaser reserves the right, and/or may assign the right to a representative, to enter and inspect the production facility prior to shipment of the goods and to draw samples from the Supplier’s factory and/or warehouse. Except as otherwise specified in the Contract or purchase order, prior to shipment, the Purchaser will sample, or cause to be sampled, the product as packed in inner boxes preparatory to packing in exterior shipping cartons. The sampling shall be according to recognized standards.16 The Purchaser

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