2  Procurement Policy Context

This page contains a sample procurement policy. It is important to recognise the organisational context for which this policy was written. The organisation was a real estate development organisation with a focus on placemaking–that is large multi mixed-use real estate development. It employed highly technical and intellectual individuals to fulfill its vision of executing state-of-the-art placemaking projects.

Consequently, the tonality of the procurement policy focuses on principles rather than rules i.e. prescriptive.

3 Procurement Policy Introduction

3.1 Policy Purpose

This Policy governs the procurement of all the Company goods, works and services (other than the exceptions in the following section) and it is the responsibility of all Company personnel (and any consultants or others employed by the Company as its agent) to adhere to this Policy.

The Procurement Policy is set at the holding level to maximise the benefits of a common approach to Procurement across all business activities. This Policy also establishes parameters for development projects that will be created for each individual programe/project.

This Policy should be read in conjunction with the Procurement Procedures Manual. The Procurement Procedures Manual provides detailed information and the topics covered in this Policy.

3.2 Scope of this Policy

This Policy applies to the acquisition of goods, works and services for the Company including consultants, contractors and Suppliers.

The Policy does not cover requirements for:

  • Insurance
  • Legal services
  • Real estate and office lease agreements
  • Employment contracts
  • Agreements with financial institutions

4 Key Procurement Principles

Procurement activities must adhere to the following key principles:

4.1 Conflict of Interests

Without limiting the need to comply with the Company conflict of interest policy, it is essential that all personnel and anyone acting on behalf of the Company acts with the highest levels of integrity when procuring goods, works and services.

All personnel shall avoid any situation that might introduce a conflict of interest or otherwise constitute an Unethical Business Practices. In particular personnel who are involved in procurement shall:

  • Have no direct or indirect interest in an organisation seeking to secure business with the Company
  • Accept no gifts, services or other inducements from any organisation seeking to secure business with the Company
  • Not provide any information to an organisation seeking to secure business with the Company other than strictly in accordance with the procurement procedures. The above examples are not exhaustive and if in doubt, personnel are required to declare any potential conflict of interest or other situation that may constitute unethical business practice and otherwise act in accordance with the Company’s conflict of interest policy.

4.2 Value for Money

The Company is committed to delivering Value for Money in all its activities. The procurement of all goods, works and services will be based on the principles of Value for Money.

It is the responsibility of the Procurement Department to consider all options and develop procurement strategies that achieve Value for Money on a case-by-case basis.

4.3 Fair and Genuine Competition

Fair and genuine competition is fundamental to efficient procurement and for delivering Value for Money.

All procurement processes will be carried out in an open and transparent manner and all Bidders will be treated equally and fairly. All Bidders will be provided with the same information at the same time (subject to any confidentiality issues) and bids will be evaluated on an equal and non- discriminatory basis.

Compliance with the foregoing will ensure that the market has confidence in the Company and help sustain market interest, genuine competition and competitiveness.

4.4 Proportionality

The range of goods, works and services to be procured for the Company will be wide and diverse. The Procurement Department will ensure that the procurement process followed for a given requirement is proportionate to the size and nature of a particular procurement process. This will ensure that the procurement process is not overly burdensome for the Company and for the Bidders, whilst at the same time respecting the principles of Value for Money and fair and genuine competition.

4.5 Enhancing the Reputation of the Company

All procurement actions should be aligned with the Company’s vision of becoming a leading player in its chosen market. This should include, if appropriate, the sourcing of environmentally friendly and acceptable goods, works and services and ensuring that requirements are delivered in a way to ensure a safe and healthy environment for all people.

4.6 Protecting the Interests of the Company

All procurement actions should protect the interests of the company This shall include:

  • Considering and evaluating Risks to the Company interests and developing appropriate mitigation strategies
  • Maintaining comprehensive records of all documentation, correspondence and other issues
  • Ensuring that all personnel operate within the limits of the applicable delegation of authority and financial limits
  • Compliance with the law
  • Compliance with this Policy

5 General Procurement Guidelines

Personnel may only create purchase orders or award contracts for goods, works or services where sufficient funds are allocated in the budget, and following the appropriate approval as per the applicable delegation of authority.

Personnel may only procure goods, works or services from Suppliers who are validated, registered, and on the Company’s Database.

Employee who wishes to do business or invite a quotation from a non-registered Supplier must first contact the vendor management team and ensure that the Supplier is properly registered.

A valid purchase order is a strict requirement for any Agreement to purchase from a Supplier. Please refer to

Personnel should distribute standard conditions of purchase as part of the documentation pack for all bidding processes (including RFPs, framework mini- competitions, emergency procurement bid requests and any other requests for quotations as part of any procurement process).

Fragmentation of requirements (or similar structuring techniques) in order to avoid relevant procurement spend thresholds is strictly prohibited. Transactions are monitored by the Procurement Department to detect any non-compliance.

6 Tender Committee

The Tender Committee (TC) is the governance body which has oversight and accountability for matters related to procurement and contracting. The TC has ultimate decision-making and approval responsibility at several key points in the procurement process, depending on the overall value of the relevant procurement requirement or decision. Its precise areas of responsibility and the related value thresholds are defined in the DoA and the TC Charter/Terms of Reference

7 Consequence for Policy Breach

Personnel (and any consultants or others employed by the Company as its agent): - agree to adhere to this Policy and acknowledge that failure to do so puts themselves, their colleagues, and the Company at risk of fines, penalties, and reputational damage, and -acknowledge that they may personally be subject to disciplinary action, including loss of employment and litigation to recover losses incurred by the Company.

The Company also reserves the right, at its sole discretion, to disclose information about violations of law to relevant authorities.

8 Supplier Code of Conduct

The Procurement Department will ensure that all procurement activities are carried out in compliance to the Supplier Code of Conduct, which shall comply with all legal obligations to ensure that the procurement is conducted ethically.

9 Database of Qualified Suppliers

The company will establish an electronic Supplier database which will provide information on potential Bidders for procurement requirements. Bidders will need to provide information on their audited financial statements, financial standing, capabilities, capacity and right to do business in KSA in order to gain entry into the database. It will still be necessary to assess Bidders’ capability and technical expertise fully as part of a PQQ/procurement process prior to awarding business.

10 Procurement Planning

Accurate and timely future planning is extremely important to ensure that goods, works and services represent Value for Money and are procured in a timely manner. All departments are required to provide the Procurement Department with a demand list showing all known procurement requirements for the year. This should include:

  • Nature of goods or services required
  • Forecast volumes
  • Estimated costs
  • Date when the goods or services are required

It is recommended to complete this process following the finalisation of annual budgets; other useful sources of information to guide departments include planned projects and upcoming contract expiries.

The demand list should be submitted to the Procurement Department on an annual basis and should be refreshed and resubmitted on a pre-agreed basis, or as and when new requirements arise. The Demand Lists will be consolidated by the Procurement Department into annual procurement plans for each procurement category, clarified and validated with stakeholders within the relevant Departments where required, and used to plan and prioritise procurement activities and assign resources accordingly.

The Procurement Department shall prepare a procurement variance report no later than 60 days following the end of each fiscal year. The procurement variance report shall compare the actual procurement throughout the preceding fiscal year against the planned procurement as per the relevant procurement plan and highlight all captured variances in the procurement process.

11 Procurement Route

Type Procurement Route When is it used
Ordering Catalogue Order The goods/services required are available through an online procurement catalogue
Ordering Call-off Order The goods/services required are an outstanding deliverable of a valid agreement (PO or contract)
Tactical Purchasing Framework Mini- Competition A Framework Agreement exists which includes in its scope the goods/services required
Tactical Purchasing Emergency Procurement The requirement is an emergency, and taking the time to following the relevant procurement process would represent a significant Risk to the Company
Tendering RFP (including single / sole sourcing)

  • None of the above conditions apply

  • A formal sourcing process is required

  • Formal proposals will be sought, evaluated and negotiated from one or more Bidders

11.1 Policy Notes on Routes

11.1.1 Single/Sole Sourcing

The Single/SoleSource approach is a subset of the RFP Procurement Route, which may be used for example when:

  • Only one available Supplier can provide the services required e.g. due to the availability of one particular solution, technology or existence of a patent

  • The Company decides at a senior level to cultivate a strategic partnership with a particular Supplier, because it can be demonstrated that the long-term benefits will outweigh the competitive advantages of tendering

Before commencing Single/Sole Sourcing, the buyer must obtain approval as per the delegation of authority. The process is detailed in the Procurement Procedures Manual.

11.1.2 Request for Proposal (RFP)

In this method, the Company invites a number of suitably qualified Suppliers to submit a tender. This approach is appropriate where:

  • the buyer has identified a small number of potential Suppliers with which it wishes to engage, or;

  • there is a limited number of Suppliers in the market capable of delivering the services and to open the requirement to the market would offer limited benefit.

The buyer will identify the Suppliers that are to be invited to submit tenders and confirm their willingness to participate.

It is anticipated that in most cases, any Supplier that is invited to submit a tender will have been assessed through the use of the Pre-Qualification Questionnaire (PQQ) Procedure detailed in the Procurement Procedures Manual.

The number of Suppliers invited to submit tenders should be sufficient to ensure genuine competition and should be not less than three (3).

The only exception to this is where Single/Sole Sourcing has been specified in the Procurement Strategy (see below) and approved.

11.1.3 Emergency Procurement

The Emergency Procurement route may only be used in situations where there is an imminent threat to safety, the reputation of the Company or other comparable circumstances.

In this case the requesting Department should complete and submit the Emergency Procurement Form.

The Procurement Department will review the justification for the emergency procurement and, if required, convene a panel comprising senior persons representing the Company, for example the Legal and Financial Departments.

This panel will have the authority to decide any action deemed necessary to manage the emergency and to authorise derogations as authorised by the the Company CEO from the requirements of the Procurement Policy.

12 Developing Procurement Strategies

If the RFP Procurement Route is selected (including Single/SoleSourcing), the requesting Department must collaborate with the relevant Procurement Representative to prepare a Procurement Strategy. The level of detail included in the Procurement Strategy should be proportionate to the total value and complexity of the requirement. At a minimum, the Procurement Strategy must define the following matters, which are also covered in more detail in the Procurement Procedures Manual:

12.1 Procurement Approach

The Strategy should describe the planned approach to the market, e.g. which Bidders will be invited, what are the planned tender timescales and what are the planned roles of the tender team.

12.2 Form of Agreement

The Strategy should specify what type of contractual arrangement the Buyer plans to put in place with the successful Bidder(s), and, in conjunction with the Legal Department, the proposed terms of the Agreement.

The Procurement Department in consultation with the requesting Department and Legal Department is required to select an appropriate form of Agreement which aligns with the objectives and allocates the Risks appropriately between parties on the basis of sound judgement and good industry practice.

Guidance from the relevant Legal Department representative should always be sought when deciding on the appropriate form of Agreement. Further information on the types of Agreement available can be found in the Procurement Procedures Manual.

12.2.1 Tender Evaluation Criteria

The Tender Evaluation Criteria are the parameters used to evaluate and award the Agreement to ensure the correct quality is attained representing Value for Money.

The Tender Evaluation Criteria must be determined in advance by the Procurement Department in collaboration with the Requesting Department.

Evaluation criteria fall into two broad categories: - Commercial Criteria – representing forecast total cost to the Company across all tender requirements and over the life of the Agreement, and taking into account prices, rates, discounts, rebates and incentives

  • Technical Criteria – including quality of products and solutions proposed, accreditations and certifications, proven track record, innovation, data and reporting capabilities, case studies and references, etc.

The final scoring will be on commercial evaluation alone (for those bids that have already qualified in terms of technical requirements), or a weighted combination of both commercial and technical scores. The scoring methodology and weighting is to be agreed in advance as part of the Procurement Strategy for each requirement.

13 Tender Evaluation Report

A Tender Evaluation Report (TER) will be prepared to summarise the tender evaluation findings.

Where non-competitive negotiations have been specified and approved in the Procurement Strategy, an award recommendation will be made at this stage, and the points to be negotiated with the preferred Bidder will be detailed. Where competitive negotiation approach is being followed, a shortlisting recommendation will be made and the negotiation strategy set out.

Following negotiations and receipt of best and final offers (BaFOs) (if applicable), the TER will be updated to recommend to which Bidder(s) the business should be awarded, based on the outcomes of the evaluation criteria.

14 Award of Agreements

An Agreement will only be awarded once written approval is obtained in accordance with the applicable delegation of authority and approval from the Legal Department and from the Tender Committee where required.

After the successful Bidder has received the Company’s notice of acceptance and the Agreement has been successfully signed and the required securities submitted, the unsuccessful Bidders will be notified and thanked for their participation in the procurement process.

15 Amendments to Agreements

The amendment process enables Agreements (contracts and purchase orders) to be amended where required, for example to increase volumes, correct an error in the specifications or scope, or change the expiry date. Whenever an amendment is required, a change order request must be completed and approved as per the Delegation of Authority before any changes are made to the Agreement.

15.1 Agreement Extensions

Under normal circumstances, an Agreement cannot be extended beyond the permissible optional extensions specified in the original document, and must be retendered if the maximum term is reached. In the event that sourcing activity has not begun in a timely manner and an extension is required to allow time for the retendering process, approval must be sought via the Agreement amendment process set out above.

The extension may not exceed any maximum extension period set out by the applicable delegation of authority.

15.2 Amendments to Scope / Volume

Any revised scope should be in proportion to the original value of the Agreement and may not exceed any maximum percentage or absolute value set out by the applicable delegation of authority.

If the scope of the new requirement is qualitatively different from the scope of the original Agreement or represents a total cost increase above that allowed by the applicable delegation of authority, the Buyer must procure the new requirement using the relevant Procurement Route and a new PO/contract must be established.

16 Resolution of Disputes

Each form of Agreement shall have a defined procedure, approved by the Legal Department, for the resolution of disputes which may arise from the Agreement.

17 Departures from Procurement Policy

Any departures from the Procurement Policy, except for those listed in 2.2 above, will only be considered with approval from the CEO or his delegate provided that the basic procurement system requirements can be demonstrated, in terms of being fair, equitable, transparent, competitive, cost effective and compliant with promoting the Company’s required objectives, and that it in no manner creates any undue legal or other liability or increases any associated Risk to be detrimental to the Company’s vision and objectives.

18 Policy Maintenance & Updates

The Procurement Department is responsible for maintaining and updating this Policy and the Procurement Manual. Any revisions on this Policy or the Procurement Manual will be deemed invalid unless authorized and formally approved as per the authorities delegated by the Board of Directors. Approved amendments to this Policy or the Procurement Manual shall be updated by the Procurement Department and subsequently communicated to all relevant employees where necessary. The rights of interpretation are conferred to the CEO.

19 Terms & Definitions

Term Description
Agreement A legally binding agreement between parties, including both Contracts and Purchase Orders
Agreement Administrator The individual from the relevant business unit who is assigned as the main owner, administrator and internal point of contract for a given Agreement |
Best and Final Offer or BaFO The final proposal given by a Bidder at the conclusion of negotiations during a procurement process. BaFOs will typically be requested from multiple Bidders and compared as part of the final tender Evaluation. In cases where non-competitive negotiation has been agreed as part of the Tender Strategy, a BaFO will be requested only from the Preferred Bidder.
Bid Slate The list of bidders invited to participate in a specific Tendering activity
Bidder Any entity that is requested to submit a proposal or tender to the Company for the provision of goods, works or services as part of a procurement process. Bidders who are successful in the procurement process will become Suppliers to the Company.
Buyer The individual responsible for managing a given procurement initiative. In most cases this will be the assigned Procurement Representative; in some cases, when agreed in advance with the Procurement Department, it may be a representative from the Requesting Department.
Commercial Proposal The portion of a Bidder’s proposal which sets out proposed pricing, and financial terms.
Contract A legally binding document between parties which sets out the goods, works or services to be provided, the commercial arrangements, and the allocation of responsibility and/or risk between the parties.
Delegation of Authority or DoA The document which defines the level of decision-making or approval authority delegated to different individuals or groups within the company, for example based on thef financial value of the transaction or contract in question |
Emergency Procurement A fast Procurement Route which enables the rapid purchasing of goods or services in cases where the requirement must be procured immediately in order to prevent an immediate risk to health and safety, business continuity or corporate reputation.
Evaluation Criteria The predefined criteria applied to Bidders’ proposals to help with objective evaluation, with the goal of identifying the proposal that represents optimum Value for Money. Evaluation Criteria fall into two major groupings - technical (measuring technical/quality/methodology considerations) and commercial (concerned with financial elements and total cost).
Framework Agreement An arrangement where qualified Suppliers are engaged on an Agreement from which the Company may call off work as required. There is generally no guarantee of the level of work that will be instructed. | | Framework Agreements typically include fixed or capped rates, and pre-agreed terms and conditions and/or service levels. |
Framework Mini-Competition The bidding process whereby a given requirement is awarded to one or more of the Suppliers who are part of a Framework Agreement. This is typically a much faster process than an RFP, because the Suppliers are already qualified and only need to submit their proposals for the specific requirement in question.
Company Personnel Company employees, as well as any consultants or contractors who are authorised to act on behalf of the Company
Tender Committee or TC The senior governance body which has oversight and accountability for matters related to procurement and contracting, including the power to approve or decline Tender Strategies, Award Recommendations and other procurement decisions as defined in the DoA
Preferred Bidder The Bidder who, following bid evaluation, is scored the highest and therefore identified as offering best Value for Money, and to whom it is recommended to award the business.
Procurement Catalogue A list of items with pre-agreed fixed or capped pricing, which is available for ordering with no further competitive procurement process through an agreed channel (typically an online portal)
Procurement Category A grouping of similar goods and/or services requirements which is used to organise, aggregate and plan procurement activities. Typically aligned to the supply market so that the same group of suppliers will be able to supply most of the requirements within a given Category.
Procurement Planning The process of planning procurement activities by first forecasting demand requirements (from sources such as budget data, known upcoming projects, and contract expiries) and then prioritising, allocating resources and defining the approach to be taken
Procurement Route The specific approach to gathering one or more quotations/proposals from Bidders or Suppliers in order to obtain the goods or services required.
Purchase Order or PO A form of Agreement used to purchase specific goods and/or services from a Supplier. The PO contains a description of the requirement together with the quantity, price, payment terms and other associated information as appropriate.
Requesting Department Department The department which requires the goods or services to be procured, and which will play a major role in defining scope, specifications and technical requirements. Where the requirement is relevant to more than one department, the Requesting Department will typically be the one wiht the largest or most business-critical requirement for the goods or services and will co-ordinate on behalf of other departments.
Risk An event, that if it occurs, may adversely affect achieving an objective (for instance, time, cost and quality requirements).
Single or Sole- Source Procurement A method of procurement where only one Bidder is invited to participate in the Tendering process. This is a modified form of the RFP process, whereby all steps of the RFP process are followed, but with only one Bidder.
Single Sourcing Procurement from a single Bidder although other potential suppliers are available. This may be done only in exceptional circumstances, for instance where other potential bidders are excluded due to Conflicts of Interest or where the Company has made a strategic Single Sourcing decision to develop a strategic partnership.
Sole Sourcing Procuring from a single Bidder on the grounds that no other viable supply options exist (i.e. no other supplier is capable of providing the goods or services required)
Sound Judgment The capacity to assess situations, make a decision, or form an opinion objectively.
Sourcing A company or other legal entity which has a live Agreement with the Company for the provision of goods and/or services.
Tactical Purchasing Refers to Procurement Routes designed to be faster and less labour- intensive than full Tender processes, while maintaining the required fairness and rigour. This includes Framework Mini-Competitions and Emergency Procurement.
Technical Proposal The portion of a Bidder’s proposal which sets out information as to how the Bidder intends to execute the proposed work (i.e., the non-commercial element of the proposal).
Tender Evaluation Criteria The criteria applied to Bidders’ proposals to identify the proposal that represents optimum Value for Money.
Tender Strategy A strategy that is developed by the team for each requirement | to be Tendered, and which includes the proposed approach to the market, Bid Slate, Bid Evaluation Plan, and Form of Agreement.
Tendering The formal process of requesting proposals and selecting one or more Suppliers for the provision of goods and/or service.
Unethical Business Practices A situation which does not conform to the acceptable standards, and/or rules, and/or regulations, and/or policies of business. Ethics is the basis on which most of the procurement related principles, such as fairness, integrity, and transparency, are applied.
Value for Money The most advantageous combination of total cost, quality and sustainability to meet the Company’s requirements.