Procurement management consists of preparing procurement documents which make up the most integral part of the early stages in the procurement process. The primary purpose of using procurement documents is to file the organizational elements in the procurement process. The documents represent the contractual relationship between the buyer (client or customer) and the seller (supplier) of goods or services. Procurement document examples include documents like the buyer’s commencement to bid and the summons by the party responsible for financial dispensation. You can access a few procurement documents samples online to give you an idea of how to prepare the documents you need. But in order to understand the types of procurement documents you’ll be working with, it’s necessary to know more about the procurement cycle first.
The Procurement Cycle
The procurement cycle involves 6 stages:
1. Information gathering
This is the first step in the procurement cycle and involves the buyer to do research on potential suppliers who could satisfy the requirements for the buyer’s needs.
2. Supplier Contact
Once the buyer has identified a prospective supplier, the next thing to do would be for the buyer to file a request for quotations, proposals, information, and tender. This can be accomplished via direct contact with the potential supplier, or through advertisements.
3. Background Review
The buyer examines the goods or services to be ordered from the prospective supplier. This is also the right time for the buyer to take samples or trials of the goods or services.
4. Negotiation
If the goods or services meet the standards required, the next step would be for both parties to conduct negotiations on price, availability, customization options, and other relevant details. After a successful round of negotiations, the contract for the purchase of goods or services is now complete.
5. Fulfillment
The seller ships and delivers the goods or services ordered to the buyer. Details on shipment and delivery are also indicated in the contract and should be met by the supplier. This is also the time for the buyer to complete all pending payment. Additional training and or installation of the product will be provided by the supplier if needed.
6. Renewal
After such time that the goods or services are consumed, exhausted, or the contract has expired, the product or service is up for evaluation and consideration for renewal. It is now up to the buyer to decide whether to continue with the same supplier, or to look for an alternative.
Types of Procurement Documents
These are the most basic types of procurement documents:
• RFP
RFP stands for request for proposal. Essentially, the buyer issues a formal invitation for suppliers to submit their individual proposals on a specific product or service, and subject it to a bidding process.
• RFI
RFI stands for request for information. The buyer requests from a prospective seller (product or service provider) to identify which goods or services are available in the marketplace that meets the buyer’s needs. Another purpose of this proposal is to be able to gauge the capabilities of a specific seller in terms of strengths, advantages, and offerings.
• RFQ
RFQ stands for request for quotation. The buyer calls for this document specifically when discussions with suppliers aren’t required, and the buyer only needs information on price as the main deciding factor in selecting the winning bidder or supplier.
• Solicitations
This type of document includes invitations of bids, requests for proposals and requests for quotation prepared by buyers to prospective suppliers. These documents more often than not, serve as binding contracts.
• Offers
This type of document includes bids, proposals, and quotes submitted by prospective suppliers to prospective buyers.
• Contracts
These documents are the formal and final signed agreements between the buyer and the supplier.
• Amendments or Modifications
This type of document refers to changes in solicitations, offers, and contracts if any.
The Procurement Document Structure
One more thing you need to know to understand procurement documents is that these documents follow a set structure. Following the structure is important because it simplifies and expedites the documentation process, and also makes it ready for computerization. Computerization overall, makes the procurement process more efficient. Here are some general qualities of procurement documents:
• All documents submitted must be completed in a clear and honest manner. This is to ensure that the short listing or selection process is fair and unambiguous.
• The documents should clearly define the nature and the quality of the products or services provided.
• The contract should clearly state the definition of responsibilities, rights, and commitments of both the buyer and supplier.
• The documents should be written in a clear and easy to understand language.
• The provisions of the contract should be without any prejudice to the interests of both parties.
• Prospective bidders should submit all documents to the buyer for evaluation on or before the specified deadline.
Common Procurement Documents
These are types of contracts commonly encountered in government procurement:
1. Construction and Engineering Work
Some examples include constructing new office spaces or infrastructure like roads and bridges, repairs, installation of new updated technology, etc.
a. Low risk/Minor contracts
This type of contract involves those kinds of services needed by a federal agency for a short period of time. It usually entails simple, repetitive tasks. Apart from the simplicity of the work involved, it’s also low risk because it doesn’t require high end maintenance practices.
b. High risk/Major contracts
This type of contract involves services with a more difficult nature, thereby requiring sophisticated, specific, and thorough management techniques.
2. Services
Some examples include contracting janitorial or maintenance services, security services, IT expertise, etc.
a. Facilities
This type of service more often than not, involves either maintenance of outsourced work or operation of an existing structured system.
b. Professional
This type of service usually involves managers with knowledge-based expertise, and who are very willing to input time and effort into doing additional research to satisfy the buyer’s needs, requirements, and specifications.
3. Supplies
Some examples include medicines and surgical instruments for clinics and hospitals, computers and office equipment for office spaces, books and instruction manuals for employee training, etc.
a. Simple/Local purchases
This involves goods or products that are readily available and that do not need strict management of the buying and delivery process.
b. Complex/International purchases
This involves goods or products that need to be transported from an overseas source. Since delivery and shipping would be more complicated, the management process and the manager’s task overall, is more complex. Cross-border formalities and laws must be applied and followed.
Procurement officers have the toughest job of all in the procurement department. They need to purchase goods or services to ensure the smooth running of their respective agencies or organizations. Procurement management is a busy endeavor, and one that requires thoroughness, clarity, honesty, transparency, and strict compliance to rules, format, and deadlines. Furthermore, the procurement process won’t be a success at all without all the necessary procurement documents. Procurement documents are the agreements that pass between the buyer and the supplier. These documents essentially, make the procurement process more efficient by simplifying and expediting it, and also by making the process ready for computerization.
