Procurement Methodology

Last Updated: May 15, 2007

The following information is intended to provide a brief overview of the procurement methods utilized by the Fund. As a matter of policy, the Fund does not normally use one-person companies. It is not considered prudent to assign the responsibility for the management and delivery of an activity to a single individual, as an essential element of any contractual or outsourcing activity is to provide reliable, independent delivery of such services on an uninterrupted basis.

The Fund may utilize purchase orders, general agreements, long-term contracts, fixed price agreements, cost-plus agreements, technical consulting agreements or other similar contracting methods to provide best value to the Fund. In specific cases, the Fund may retain the right to audit the supplier's records throughout the term of the agreement, to verify that the costs incurred are as represented.

The section, "General Purchasing Conditions" in the Procurement Guide for Suppliers, indicates the terms and conditions most often utilized on purchase orders. However, there are several other terms or conditions that may be used depending on the type of contract. A sampling of those terms may be, but is not limited to:

  • Deliverables/ownership of contract outputs/products
  • Maintenance provided by the supplier
  • Accounting standards to be maintained by the supplier
  • Penalties for non fulfillment of contract
  • Fund immunities
  • Audit rights
  • Insurance and indemnification requirements
  • Criteria for input/output quality control

Competition

The Fund endorses the basic principles of competition and equal treatment of suppliers. The principles of fair and equal competition ensure that the Fund can obtain the best condition in the market by solicitation of a number of qualified bidders. The principle of equality requires the Fund to avoid preferring or discriminating against one supplier to the detriment or benefit of other suppliers.

Bids may be sought by three general methods:

  • Oral competitive bids from at least three suppliers (where sources are clearly available) for goods or services valued less than $10,000;
  • Written competitive bids (fax, letter, e-mail) from at least three suppliers (where sources are clearly available) are required for goods or services between $10,000-$25,000;
  • Sealed bids/RFPs are generally used for goods and services in excess of $25,000. As a rule, the Fund may make awards to suppliers providing the best overall value to the Fund, considering price and other related performance or quality factors.

Submission and Bid Receipt

Bidders must comply with the specifications set out in the bid or RFP to allow for the fair and non-discriminatory evaluation of the bids. All bids are secured upon arrival at the Fund and are kept until the date and time set for the opening. Bids may be modified prior to the closing date but, in all cases, may not be modified after the bid/RFP closes.

The Fund will review all bids/RFPs for completeness, mathematical accuracy, price and responsiveness. The bids are tabulated on an abstract form which is certified by those in attendance at the opening. Bids openings are not required to be public.

Once bids have been opened, they will be evaluated to determine which of them best responds to the requirement of the solicitation. The evaluation will be coordinated by Fund Procurement staff who may utilize technical assistance from experts within the Fund, or from outside consultants, as required. Although bidders may not alter or withdraw any bid after the close, the Fund may request clarification of any bid during the evaluation process.

Request for Information (RFI)

There may be occasions when the goods or services sought are very unusual and no clear supply chain is available. In such circumstances, the Fund may issue a Request for Information (RFI) to several sources soliciting interest and/or information to enable the Fund to analyze the nature of the user department's needs or pre-qualify companies for a proposed procurement. Depending upon the RFI responses, the Fund may choose to issue an RFP to selected RFI respondents or to enter into direct negotiation with only one respondent.

Financial Analysis of Suppliers

The comprehensiveness of the financial analysis to be performed in any particular contract situation will vary, depending upon such factors as contract or project size complexity, criticality and other factors. Financial information may be secured in a variety of ways, including but not limited to, the use of commercial financial reporting services, or the submission of financial documents by the bidders.

Steps Included in a Detailed Financial Analysis

(a) A detailed financial analysis will include a review of the three (3) most recent years of audited financial statements of the prospective supplier(s). If the supplier has not maintained audited financial statements, the best financial statements will be used. The availability of audited financial statements then may become a factor in the overall assessment of the supplier. Any audited financial statements must be prepared in accordance with generally accepted accounting principles and include the report of an independent auditor, an income statement, balance sheet, statement of changes in cash position and footnotes.

(b) The analysis will include, but not be limited to, an analysis of the current position and trends in:

  • the supplier's liquidity (ability to meet current obligations)
  • the supplier's cash flow
  • the supplier's leverage (ratio of debt to equity)
  • the supplier's profitability
  • the supplier's activity (how effectively the firm is using its assets)
  • the value of the Fund Agreement in relation to the total annual revenue of the supplier
  • the value of the Fund Agreement in relation to the total assets of the supplier
  • the supplier's concentration of customer base.