HDAL Group Procument

5/7/10

Supply Offers and Contracting with HDAL

Like most organisations, HDAL and its subsidiaries’ has a formal process for establishing procurement contracts, supply offers with suppliers and contractors. All supply tenders and contracts are managed by Group Procurement.

The process can be scaled depending on the nature of the work involved.

Before commencing the contracting process, HDAL develops a contracting strategy that considers:

• health, safety, security and environment (SHEQ) related issues specific to the contract specification or scope of work

• risks and opportunities

• a review of the market

• local content opportunities (HDAL’s policy is to provide full and fair opportunity to local suppliers and contractors)

• appropriate forms of contract and reimbursement models

• identification of potential vendors and the need for prequalification.

• lessons learned from previous similar contracts

HDAL’s contracting process

Once a strategy is decided, the contracting process itself takes place. The process normally involves:

• site visits (if deemed appropriate)

• two-part evaluation (technical and commercial)

• opportunities to clarify content or provide additional information, as required.

The initial stages of HDAL’s contracting process are designed to identify bidders with the necessary technical and SHEQ attributes and the ability to deliver the scope of work to the quality required. Selected bidders then participate in a competitive process designed to identify the best value solution, taking into account the technical and commercial elements of the bids.

Note that in some cases HDAL will contract for services or works that in turn require further subcontracts awarded by the main contractor. Where this is the case, HDAL has minimum requirements that the main contractors must meet and cascade to subcontractors. These include compliance with HDAL business principles concerning:

• SHEQ capability, experience and track record

• quality systems and management

• assessment and consideration of local capability and capacity

• business principles and ethical conduct.

These factors are incorporated into the evaluation process of main contractors.

Site visits

It may be appropriate for HDAL Grp Procurement representatives to visit the work site or other locations of companies selected in the prequalification process. HDAL conducts these visits to further assess capability and systems. The prequalification pack will indicate whether such visits are likely and outline a timetable for potential visits.

Suppliers whilst on a HDAL site –

Must wear your Identification Card at all times and make it available for inspection upon request.  You must not allow any other person to use your Identification Card.  If you are performing work on Site, you must be appropriately qualified to perform the work. You must ensure you hold all relevant licences and prescribed occupational certificates for the work.

Issue of Request for Tenders

Once a tender list has been selected, a tender package will be issued. This will comprise:

• instructions to tenderers, detailing the procedure for completing tender documents

• a scope of work, setting out HDAL’s requirements

• a number of schedules, or contractual exhibits, for completion, including compensation

• proposed HDAL contract terms which would form the basis of the contract award.

Tenderers should consider a number of factors when completing their tender, including:

• ability to deliver the scope

• ability to manage the risk associated with the contract terms and performance of the work

• attractiveness (in terms of the proposed technical solution, commercial proposal and acceptance of contract terms) of their offer to HDAL, and overall value for money

• compliance with the specification

• how their proposal could eliminate or mitigate potential execution risks to HDAL.

Evaluation of RFT

At this stage, HDAL Group Procurement will form an internal tender evaluation panel consisting of relevant technical, Contracts & Procurement and/or SHEQ representatives, and other support as may be required. The panel evaluates the submitted offers against predetermined criteria and reaches a recommendation based on scores against those criteria.

The panel will often weigh scoring to ensure appropriate emphasis on key requirements, e.g. SHEQ or the value of the technical solution, rather than simply the lowest price.

HDAL systems

Manual Purchase orders are raised by the site requiring the goods or services and issued to the supplier for invoicing.

The supply of goods or services should not take place before receipt of a valid purchase order number. All invoices must carry the relevant purchase order number – without it HDAL’s accounts payable team will not be able to match the invoice to a valid purchase order, and payment will be delayed.

HDAL Standard Payment Terms
HD policy is to pay supplier on-time in accordance with our contractural commitments. HD standard payment terms are 32 days from the end of the month of the date of the invoice. This means that invoices, will be paid 32 following the month in which the invoice has been validly submitted to HD.

All Procurement and Supply activity is managed by our Group Procurement Department