Eskom Procurement Book 2015

PRINCIPLES OF SUPPLY CHAIN AND PROCUREMENT MANAGEMENT

1.4 PROCUREMENT PRINCIPLES In 2010, the United Nations Office for Project Services produced a procurement manual that identified four key procurement principles: best value for money; equity, fairness, integrity and transparency; effective competition; and the best interests of the organisation and its clients [19]. The concept of best value for money is central to any procurement activity. It can be defined as the trade-off between price and performance that provides the greatest overall benefit under the specified selection criteria. The application of the best value for money principle in the procurement process means selecting the offer that represents an optimum combination of factors, such as appropriate quality, service, life-cycle costs and other parameters to best meet the defined needs. The principle of best value for money is applied throughout the procurement process in order to attract the offer that most effectively meets the stated requirements of the end user. In order to obtain best value for money, one should maximise competition wherever possible; simplify the tender process while minimising financial risk factors for the organisation; carefully establish the evaluation criteria (in order to select the offer with the highest expectation of meeting clients’ needs, in accordance with the evaluation parameters set out in the tender documents); consider all costs (including indirect costs, such as life cycle costs, maintenance costs and sustainable procurement considerations); ensure impartial and comprehensive evaluation of offers in a timely manner; and ensure selection of the contractor whose offer has the highest degree of realism and whose performance is expected to best meet the specified requirements at the lowest overall expense to the organisation. To achieve best value for money, the procurement process must guard against collusion and must be conducted on the basis of clear and appropriate regulations, rules and procedures that are applied consistently to all potential suppliers. The manner in which the procurement process is carried out must give all internal and external stakeholders of the organisation the assurance that the process is fair. Fairness can be defined as being free from favouritism, self-interest, or preference in judgment. In essence, fairness is similar to just, equitable, impartial, unprejudiced, unbiased, objective and dispassionate treatment. Whereas ‘just’ stresses conformity with what is legally or ethically right or proper, ‘equitable’ implies justice dictated by reason, conscience and a natural sense of what is fair. ‘Impartiality’ refers to a lack of favouritism and ‘unprejudiced’ means without preconceived opinions or judgments. ‘Unbiased’ implies absence of a preference

1.4.1 BEST VALUE FOR MONEY

1.4.2 EQUITY, FAIRNESS, INTEGRITY AND TRANSPARENCY

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