Procurement Procedure

Procurement Procedure

1. Scope

This procedure describes the procurement and sales activities of Semper Fidelis Group Inc.

2. Definitions

  1. Vendor: Means the person, firm or corporation who manufactures or produce the items.
  2. Supplier: means the person or firm who is responsible for purchasing items.
  3. Contractor: means the firm or corporation which the Purchase Order is placed for.
  4. Site: means those parts of the lands and other places where the goods will be delivered.
  5. Goods: means the equipment, materials and machinery to be supplied by the Supplier for Contractor as per the Purchase Order.
  6. Contract: means the agreement contemplated by the Purchase Order, and its Terms and Conditions including technical description and other requirements thereof.

3. Procurement Philosophy

The Supplier shall procure and supply equipment and materials to Site from the worldwide Vendors.

3.1 Worldwide Purchase

The procurement goal of Contractor is to purchase equipment and materials from the most qualified and reliable Vendors in accordance with the specifications and within the delivery requirements from worldwide sources in the Approved Vendor List.

3.2 Equipment Standardization

The Contractor will also purchase standardized equipment as much as applicable. Such equipment will be, in general, cataloged off-the-shelf delivery items built to manufacture’s standard including piping materials, instrumentations, valves and control systems, electrical equipment and chemicals.

4. Bidding Procedure of the Contractor

The Contractor’s Bidding Procedure will be implemented in accordance with “Typical Flow Chart for Bidding Procedure” in Attachment No. 1.

Based on the material requisition, the Contractor’s experts will prepare Inquiry, which will compose of the followings;

Bidders will be selected from the Approved Supplier List and minimum of three (3) bids will be solicited where applicable. A copy of inquiry will be submitted to selected bidders.

The bidders have to submit their Technical and Commercial Offers to the Contractor in the appointed time period in sealed envelopes.

4.1 Bid Evaluation

After the technical bid evaluation is Approved and/or commented by the Contractor, they will announce the bid opening date. In the appointed date of opening bid the winner will be selected.

The Contractor will prepare and issue a Purchase Order to the final successful Supplier. If the delivery of certain items is very critical, the Contractor may issue a Letter of Intent to the Vendor prior to the issuance of the Purchase Order under the responsibility of the Contractor.

4.2 Purchase Order

Based on the Purchase Requisition, the Contractor will prepare and issue the Purchase Order signed by the authorized signatory to the selected Supplier.

4.3 Acceptance of Orders by Vendor

Within ten (10) days of receipt of the Purchase Order, the Supplier shall be required to send an acknowledgement to the Contractor as a formal acceptance.

5. Organization

In the procurement Team of Supplier following personnel will be full time assigned.

5.1 Technical Team

The Technical Team has the responsibility for overall control of procurement activities to meet quality and specifications through the technical survey and close coordination with the manufacturer under the direction of the Technical Manager.

5.2 Commercial Team

Purchasing of equipment and materials including spare parts will be executed by Commercial Team. The experts will be responsible for all categories of equipment and materials.

5.3 Executive Manager

The coordination between Technical & Commercial Teams and decision making for procurement related issues will be performed by the Executive Manager.

6. Vendor List

The equipment and materials procured for the Contractor will be manufactured or fabricated by the firms named in the “Approved Vendor List”. The Supplier will submit additional Vendor name with pertinent qualification documents of the Contractor’s Approval.

7. Purchasing

The purchasing will be implemented in accordance with “Typical Flow Chart for Purchasing” in Attachment No. 2.

7.1 RFQ

An inquiry will be sent to the relevant approved Vendor by the Supplier’s Technical Expert after the technical evaluation of the good description mentioned in the bid documents. The Vendor will send their quotation based on Supplier’s request. The items should be offered in accordance with the technical requisition mentioned in the Supplier’s inquiry.

7.2 Technical and Commercial Offers

Supplier will send Technical and Commercial Offers for the Bidder and after associated assessments a purchase order will be issued by the Contractor.

7.3 Contract

Subsequently a contract will be signed by the authorized signatory of the Contractor and the Supplier.

7.4 Purchase Order Placement

The Supplier will proceed to place the order to the Vendor. The P/O will contain the followings:

The technical requisition and description of the goods

7.5 Technical Requisitions

The Vendor will ensure to fabricate, produce or supply the goods exactly in accordance with the required description and conditions mentioned in the purchase order such as technical description, packing, marking, certificates and reports.

7.6 Quantity of Each Item

Vendor must fabricate, produce or supply each item based on the quantity mentioned in the purchase order.

7.7 Payment Term

The payment will be done partially or completely once the purchase approval is issued by the Vendor or after goods delivery based on the conditions that both sides agree on.

7.8 Delivery Term

The goods must be delivered to the site which is mentioned in the P/O.

7.9 Delivery Time

Vendor must deliver the goods to the specified site in the time determined in the P/O and any delay will lead to a penalty which is discussed in the P/O terms.

8. Quality Surveillance / Inspection

The testing and inspection activities as well as quality control shall be conducted in accordance with the Quality Control Procedure and General Inspection Requirement.

Responsibility

To ensure conformity with the Purchase Order, Inspector will witness equipment and materials in accordance with the Inspection Test plan.

It is primary responsibility of the Vendor to carry out the necessary inspection and tests of all equipment and materials to assure conformity with Purchase Order.

The Supplier’s Inspector will be entitled to access, at any time to the Vendor’s and Sub-vendor’s shop and record for inspection of equipment and materials being fabricated, or for examination of Vendor’s in house inspection activities and quality control system to satisfy the Project requirement provided that it does not unreasonably suspend or disturb the Vendor’s and Sub-vendor’s works.

Duty of Supplier’s Personnel

Inspection Coordinator

The Supplier’s Commercial Experts conduct coordination with the Vendor and the Inspector on the matters related to inspection.

The Inspection Coordinator will;

Report to the Commercial Manager on the shop inspection findings and Status.

Follow up status of an inspection meeting with the Vendor.

Follow up shop inspection schedule and status.

Receiving of nonconformance notice of an equipment or materials not conforming to the Purchase Order and follow up the results.

Arrange for the Contractor to witness the inspection reports and record Attend the meeting with the Contractor to discuss the matters of inspection.

Inspectors

The Inspectors will;

Report to the Inspection Coordinator on shop inspection matters and Vendor’s shop activities

Witness the inspection and verify conformance to acceptance criteria.

Review the Vendor’s inspection and test records as specified in the Purchase order.

Prepare inspection report after witness inspection at the Vendor’s shop.

Prepare the non-acceptance note.

Witness on the nonconforming items and issue inspection release note to the vendor, if any Issue inspection release note to release item for shipping preparation.

8.1 Application for Inspection

The application for inspection will be received by the Supplier at least five (5) calendar days prior to the schedule inspection and/or test and forward to the Vendor at least three (3) days prior to the actual inspection date.

8.2 Non-Conformance Control

The non-conformities are dealt with during the supply phase in accordance with the Supplier’s quality system procedure.

This covers the control procedure of the non-conformance of the equipment and materials occurring during fabrication and inspection.

Non-Conformance during Fabrication

When any non-conformance is detected during fabrication and inspection, etc., the Inspector will issue non-acceptance note to the Vendor for the noted equipment or materials.

The Inspector will report a Non-Acceptance Note and recommended the solution to the Inspection Coordinator.

Resolution of Non-Conformance

The Inspection Coordinator will review and check the solution prepared by the inspector. If the non-conformance can be solved without significant impact, he will issue recommended disposition to the inspector. After correction work has been accomplished in accordance with the recommended disposition, the Inspector will issue Inspection Release Note for the non-conformance and submit report to the Inspection Coordinator.

If the non-conformance cannot be solved or if correction of the non-conformance has an impact on the delivery schedule or detract the quality of the items, the Inspection Coordinator reports to the Commercial Manager without delay.

The Inspection Coordinator, the Lead Engineer, the Commercial Manager/Contractor and the Executive Manager will discuss the non-conformance and decide the recommended disposition with the Vendor.

The final disposition will be notified to the Vendor by the Commercial Manager Non-conformance log is kept with the registration of resolution.

8.3 Inspection Report

Inspection Reports will be forwarded to the Contractor as soon as they are received from the Inspector through Inspection Coordinator.

8.4 Shop Inspection Status Report

The Inspection Coordinator will manage and control Inspection activities with the Inspectors and Shop Inspection Status Report will be forwarded to the Contractor.

9. Transportation Plan for Traffic and Logistics

This plan describes the method of trade business, handling, transportation, and documentation as related to the traffic function, and the Supplier will submit the Transportation Plan for Contractor’s Approval.

Transportation

Export Packing and Marking

All equipment and/or materials must be packed securely in the least possible volume.

The nature of the product, conditions at seaport of exit and entry, and transit to and from the inland points determine the type of packing needed.

Other factors are the hazards of loading and unloading, stevedoring handling, warehousing and shipment. Protection from damage due to saltwater, condensation, rain, snow, heat or contamination during shipment shall be considered.

Even though careful packing is essential, the packing shall be economized to eliminate unnecessary freight expenses and reduce customs duties.

Arrangement of Vessel

The Trade and Traffic Coordinator shall expedite the Vendor to make their shipment at the time stipulated in the Purchase Order.

When equipment and/or materials are purchased on the basis of cost and freight (CFR), cost, insurance and freight (CIF), Delivered Duty Paid (DDP) or free on board (FOB) the Trade and Traffic Coordinator shall arrange the Vessel space.

Upon receipt of shipping notice from the Vendor, the Trade and Traffic Coordinator shall forward the information to the Contractor and the department concerned.

For heavy equipment special heavy lift cargo vessel shall be arranged for the loading and unloading.

9.2 Shipping Control

Forwarding Agent for Shipping Arrangement and Marine Transportation.

All transportation business will be commissioned to International Forwarding Agents for good performance of Project.

The usual work scope of forwarders are as follows:

Checking of packing status, warehousing and other related and incidental works Inland transportation, stevedoring and its expediting.

9.3 Booking for loading

Service for setting bill of lading, commercial invoice and certificate of origin Service for payment of packing charge, stevedoring fee, freight and other commissions related to loading and discharging works.

9.4 Insurance

Distribution of shipping documents

Checking of loading and discharging cargoes and submitting of Overage,

Shortage and Damage report (OS & D Report)

Expediting works about material movement

Other works related to transportation.

The Trade and Traffic Coordinator shall execute a forwarding works with one of the reliable forwarding companies who have good experiences with world-wide forwarding networks.

10. Warehousing

10.1 Receiving

When the materials are delivered to the Site, the Material Controllers are input into Field Material Control System (FMCS) through the material receiving function. Whenever the materials are received against the Purchase Order concerned, the on-hand stock quantities of warehouse are simultaneously increased and Purchase Order status is accordingly pdated.

A receiving report is automatically distributed to all departments concerned and required. Also, shipment of overage, shortage & damage (OS & D) are identified immediately.

10.2 Warehousing

The warehousing function of the system is to keep the track of the status of materials such as their specifications, quantities and locations stocked in the warehouse.

It also provides the ability to take periodic stocks inventory certifying whether on-hand quantity in system is coincided with the actual stock quantity. If discrepancies are found, inventory adjustment can be made.

10.3 Materials Issue

The materials can be issued from the warehouse for field use by several methods. The first and most common way is issued by Bill of Materials. When the materials are issued against Bill of Materials, either entire Bill of Materials can be issued or individual items can be selected to be issued according to erection schedule at Site. As the materials is requested to issued, a materials issue slip is automatically printed from the computer identifying what the materials is to be issued for, the quantity required, and the warehouse locations from which the materials are issued against Bill of Materials. A status of remaining stocks is always maintained by the computer system.

Details of the Field Material Control Procedure shall be submitted separately to the Contractor.

11. Spare Parts Procurement

11.1 General Information

The Supplier is obliged to provide to the Contractor spare parts upon the Contractor’s request.

The Supplier shall recommend those spare parts that are deemed necessary based on his experience.

11.2 Definitions

Commissioning Spares

Those spares are necessary for the Pre-commissioning and Commissioning of the Plant.

Two (2) Years Spare Parts

Those spare parts are recommended by the Vendor necessary for Two (2) years operation of the plant.

Insurance Spares

Those are high value or long delivery items whose failure would cause serious Plant outages.

11.3 Spare Parts Required

Commissioning spare and special tool

Commissioning spare and special tool shall be procured by the Supplier based on Vendor’s recommendations and the Contractor’s commissioning schedule and reimbursed by the Contractor.

Two years operation spares

Two years operation spares shall be identified and quoted by the Supplier based on Vendor’s recommendations during procurement of each equipment scheduled and communicated to the Contractor for Approval.

Two years spares shall be procured by the Supplier and reimbursed by the Contractor.

Insurance Spares

Insurance spares shall be identified by the Vendor and communicated to the Contractor by the Supplier for Contractor’s procurement and storage.

Insurance spares utilized by the Contractor during construction and commissioning prior to handover shall be replaced at Contractor’s expense.

11.4 Consumable

The Supplier shall identify, recommend and furnish to the Contractor for Approval lists of all chemicals, catalysts, solvents, lubricants, greases, refrigerants, filter elements and all other requirements for start-up and Tow years of operation.

12. Attachments

Flow Chart for Bidding Procedure

Flow Chart for Bidding Procedure

Flow Chart for Purchasing

Flow Chart for Purchasing