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CHAPTER 1
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].
1.4.1 BEST VALUE FOR MONEY
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.
1.4.2 EQUITY, FAIRNESS, INTEGRITY AND TRANSPARENCY
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