Ask The Expert - PROCUREMENT GOVERNANCE - Assets

Health Procurement Africa experts discuss PROCUREMENT GOVERNANCE  which encompasses control and direction for an organisation's procurement function via a framework.    

This surgery explores some of the characteristics which are commonly associated with successful governance. 

Ask the Expert - Procurement Governance Q&A

Q 1- Can you explain more about framework contracts and long-term agreements?

A – A framework contract is an arrangement between two parties which commits one of the parties to purchase at least a certain volume of a particular good or service from the other over a specified period say, 2 to 3 years. This differs from a framework agreement which is an agreement between two parties for the supply of an unspecified amount of a product over a specified period. The objective is to save on transactional costs and commonly used for frequently demanded items. The period suggests this is a long-term contract.

However there a slight difference, a long-term agreement often shortened as LTA, may be used to refer to an arrangement that focuses on “significant purchases”. Significant purchases are those goods, works, or services which have been identified as being of high relative expenditure and/or are difficult to secure. It could also mean an agreement for a large number/volume of low value purchases to be supplied within a year. The objective is again to achieve economies.

Q2 – Is it a best practice to have resources with Law qualifications as part of the Procurement / Contracting / Contract Management team?

A –Yes. Law qualifications as part of procurement or contracting is a good start. However, you need not have law qualifications to be an effective procurement officer. It is an added advantage. There are a number of reasons that justify the need for purchasers to at least have a working knowledge of commercial law. Such include and are not limited to the following:

• Contractual matters cannot be left to managerial discretion; purchasers who have a responsibility for contract management must be able to interpret both their own organizations’ obligations under the contract and the obligations of suppliers;
• Requirements are dynamic as a result of court decisions and interpretations. Similarly, by legislative process that issue new amendments and provisions. Such include public procurement laws and regulations.
• “Ignorance of the law is not an excuse”, is a common law principle and the courts will not accept an “I didn’t know excuse” in contractual dispute litigations or non-compliance;
• Important to understand liabilities and responsibilities of contracting parties.

In the public sector and some companies, you will find legal officers being in-charge of interpreting legal documents on behalf of their organizations in complex and high risk procurements and projects. In some jurisdictions like Kenya, some threshold of procurement requires the State Law approval and advice before contracting.

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