PUBLIC PROCUREMENT AUTHORITY (PPA)

ACCRA, GHANA

CONTRACT ADMINISTRATION MANUAL FOR

GOODS

MANUAL 1

PREPARED BY

GIMPA Consultancy Services

P.O. Box AH 50, Achimota
Greenhill
Accra.

FEBRUARY, 2018
 Contract Administration Manual For Goods – Manual 1

FOREWORD
On 31st December 2003, the Government of Ghana enacted the Public Procurement Act, 2003 (Act
663) which became operational in August, 2004. The Act provided a framework for the conduct
of procurement in the Public Sector to guarantee best value for money in the context of poverty
reduction, private sector development, good governance and anti-corruption. The overriding aim
of Act 663 is to ensure judicious, economic and efficient use of Public Funds with procurement
being carried out in a fair, transparent and non-discriminatory manner. The Public Procurement
Authority (PPA) considers sustainable training a critical component of its efforts aimed at
strengthening the public procurement systems and achieving value for money.

The Public Procurement Authority, in 2007, developed twenty-five (25) Training Modules and
Manuals for training of various categories of Stakeholders on the provisions of the Public
Procurement Act, 2003 (Act 663). Over 20,000 Public and Private Operatives have since benefitted
from various training programmes on Public Procurement Act, 2003 (Act 663) using these
Modules. The Modules, however, were mainly on Procurement and did not cover Contract
Administration. To address this shortcoming, the PPA, in January 2015, commissioned the Ghana
Institute of Management and Public Administration (GIMPA) with funding from the African
Development Bank under the Ghana Institutional Support Project (GISP) to develop detailed
Contract Administration Modules and to review the existing Manuals on Goods, Works and
Services. These documents are to be used for the PPA’s capacity development activities. The
Contract Administration Modules and Manuals for Goods, Works, Consulting Services and
Technical Services have come at an opportune time, given that in Ghana and other developing
countries the procurement regime in the public sector has not been able to address most of the
challenges of managing contracts in line with international best practices and standards.

It is in the light of this that the Public Procurement Authority (PPA) of Ghana, with funds from
supporting Development Partners, has developed these important Contract Administration
Training Modules and Manuals which will go a long way to assist Procurement Entities in the
Public Sector to manage contracts after contract award. These Training Modules and Manuals will
also be useful for the Oversight Institutions like the Judiciary, Police, EOCO, Media and other
Anti-Corruption Agencies to monitor and manage Public Sector Contracts. It will also serve as
reference literature for Lecturers and Students teaching and pursuing courses in Public
Procurement Management and related courses.

These Modules and Manuals touch essentially on the following areas: Contract Principles; Basics
of Contract Administration; Forms of Standard Goods/Works/Technical/Consultancy Contract;
Contract Administration Processes Especially Post Award Preliminary Tasks; Monitoring of
Contract Performance and Reporting and Contract Modification. The remaining areas are Payment
and Cost Control using GIFMIS System; Claims and Settlement of Disputes; Contract
Termination; Contract Records Management; Contract Performance Evaluation and Post-
Implementation Tasks of Contract Administration.

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The Authority, therefore, anticipates that with the proper adherence to the principles espoused in
these Manuals, procurement stakeholders will achieve value for money through the avoidance of
time and cost over-runs.

Public Procurement Authority

Accra, Ghana
January, 2018

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ACKNOWLEDGEMENT
The Public Procurement Authority (PPA) extends profound gratitude and appreciation to the
Donors: Department for International Development (DFID), Deutsche Gesellschaft für
Internationale Zusammenarbeit (GIZ) who initially funded the preliminary development of the
Procurement Manuals and the Guidelines. Special appreciation goes to the African Development
Bank (AfDB) through its Ghana Institutional Support Project, which funded the development of
the current Contract Administration Training Modules and Manuals for Goods, Works, Consulting
Services and Technical Services together with the cost of facilitation and logistics involved in the
training of some Procurement Stakeholders across the country.

Special acknowledgement goes to the PPA Technical Working Group (TWG) that reviewed the
initial Manuals and Guidelines which were prepared by Crown Agents, UK. Special mention is
made of A. B. Adjei Chief Executive of PPA, Eric V. Appiah, Director, Benchmarking, Monitoring
& Evaluation (BM & E) of PPA, Lesley Dodoo, Director Legal, PPA, Carl Lokko, Director, Policy
& Strategy (P&S), Emelia Nortey, Director, MIS, Vidal Creppy, Director Capacity Development
and the External Consultants namely Messrs. Godfrey Ewool, Stephen Tackie, Nii Amasa Kotey
and. Jacqueline Angate.

Our special appreciation also goes to the PPA Team and the External Consultants that reviewed
the draft Contract Administration Manuals and Modules prepared by Ghana Institute of
Management and Public Administration (GIMPA), namely: Yvonne Quansah, Minawara Adams,
Andrew Baafi, Rhoda E. Appiah, Thomas K. Bondzi, Abraham Ablorh Mensah, Joseph Kuruk,
Faustina A. Okuadjo, Hilda A. Agyemang, Prince Agyemang-Badu, Edwina Safee-Boafo and.
Miriam Osei; and External Reviewer, John Benson. Additionally, the Authority wishes to
recognize the valuable contributions of participants of the Training of Trainers/Validation
Workshop which enhanced the final output of this document.

It is worthy to acknowledge the pioneering role of Hon. Samuel Sallas-Mensah, former Chief
Executive Officer of PPA and David Bennin, former Director, Capacity Development of PPA in
the development of these Manuals.

Finally, the Authority wishes to thank the GIMPA Consulting Team of Messrs. N.S.K. Appiah,
K. H. Osei-Asante, Michael Kofi Quashie and Paul Nartey, who eventually developed the final
Contract Administration Manuals and the accompanying Training Modules. Appreciation also
goes to the following personnel of the GIMPA Consultancy Services, who assisted in finalizing
the Manuals: Dr. Kofi Fred Asiedu, former Managing Consultant, Julius Hawkson-Aikins, Ag.
Managing Consultant, Fred Appiah and Asafo Adjei, both Consultants.

The Public Procurement Authority (PPA) wishes to record its appreciation for the time and effort
devoted by all the above-mentioned persons and organizations in the development of these
documents.

However, the ultimate responsibility for the form and content of the Manuals rest with PPA and
GIMPA.

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TABLE OF CONTENTS
FOREWORD................................................................................................................................................ i
ACKNOWLEDGEMENT ......................................................................................................................... iii
TABLE OF CONTENTS ............................................................................................................................ i
LIST OF ABBREVIATIONS/ACRONYMS ............................................................................................. i
GLOSSARY OF TERMS ............................................................................................................................ i
INTRODUCTION....................................................................................................................................... 1
Background ............................................................................................................................................... 1
Purpose of the Manuals ............................................................................................................................ 1
Scope of Manual on Goods-1 .................................................................................................................... 1
Content/Structure of the Manual on Goods-1 ......................................................................................... 2
Exceptions to the Manual ......................................................................................................................... 2
Forms/Templates ...................................................................................................................................... 2
1.0 CONTRACT PRINCIPLES......................................................................................................... 3
1.1 Introduction .................................................................................................................................. 3
1.2 Contract – Definition ..................................................................................................................... 3
1.3 Essential Elements of a Valid Contract ......................................................................................... 3
1.4 Formation of a Contract ................................................................................................................ 4
1.5 The Law Applicable to a Contract ................................................................................................. 4
1.6 The Nature and Types of Goods ................................................................................................... 4
1.7 Types of Contracts for Goods Procurement ................................................................................. 5
1.8 Factors Affecting the Choice of Contract Type ............................................................................. 6
1.9 General Principles for Contracts ................................................................................................... 6
2.0 BASICS OF CONTRACT ADMINISTRATION ........................................................................ 7
2.1 Introduction .................................................................................................................................. 7
2.1.1 Nature of Contract Management and Administration ......................................................... 7
2.2 Objectives of Contract Administration ......................................................................................... 8
2.3 The Role of Contract Administration ............................................................................................ 8
2.4 The Benefits of Good Contract Administration ............................................................................ 9
2.5 Summary of Main Tasks of Contract Administration .................................................................... 9
2.5.1 Important Parties in a Goods Contract ................................................................................. 9
2.6 Organization for Contract Administration .................................................................................. 10
2.6.1 Legal and Institutional Arrangements for Contract Administration in Ghana .................... 10
2.6.2 Organization of Principal Procurement Bodies/Structures in Contract administration ..... 11
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2.6.3 Contract Administration Organization for Supply of Goods ............................................... 13
2.7 Responsibilities of the Contract Administrator........................................................................... 13
2.8 Skills of the Contract Administrator ............................................................................................ 14
2.9 Poor and/or Fraudulent Contract Administration ...................................................................... 14
2.10 Fraud and Corruption in Contract Implementation .................................................................... 15
2.11 Conflicts of Interest ..................................................................................................................... 18
3.0 FORMS AND CONDITIONS OF STANDARD GOODS CONTRACTS ............................... 19
3.1 Introduction ................................................................................................................................. 19
3.2 Basic Documentation for Goods Contract .................................................................................. 19
3.2 Form of Goods Contract.............................................................................................................. 19
3.2.1 Standard Contract for Request for Price Quotation ........................................................... 19
3.2.2 Standard Contract Form for National Competitive Tendering ........................................... 22
3.2.3 Standard Contract Form for International Competitive Tendering .................................... 24
3.3 General Conditions of Contract (GCC) ........................................................................................ 26
3.3.1 Clauses under the GCC ........................................................................................................ 26
3.4 Summary List of Clauses in SCC for National Competitive Tendering ........................................ 30
3.5 General Conditions of Contract (GCC) & Special Conditions of Contract (SCC) for International
Competitive Tendering ........................................................................................................................... 30
4.0 CONTRACT ADMINISTRATION PROCESS: POST-AWARD PRELIMINARY TASKS 31
4.1 Introduction ................................................................................................................................ 31
4.2 Contract Administration Planning (Policies, Systems and Procedures) ...................................... 31
4.3 Contract Administration Plan (CAP) ............................................................................................ 31
4.3.1 Main Elements of a Contract Administration Plan ............................................................. 32
4.3.2 Key Milestones of a Contract for Supply of Goods ............................................................. 33
4.3.3 Monitoring Performance of Key Milestones....................................................................... 33
4.3.4 Contract Milestone Checklist for Each Contract ................................................................. 35
4.3.5 Managing the Contract Checklist ........................................................................................ 36
4.4 Commencement/Kick-off Meeting(s) ......................................................................................... 38
4.4.1 Critical issues to be established during the kick-off meeting ............................................. 38
4.5 Verification of Advance Payment Security and Performance Securities .................................... 38
4.6 Verification of Insurance Policies ................................................................................................ 39
4.7 Inspections .................................................................................................................................. 40
5.0 MONITORING CONTRACT PERFORMANCE & REPORTING ....................................... 42
5.1 Introduction ................................................................................................................................ 42

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5.2 Time Control ............................................................................................................................... 42
5.3 Quality Control ............................................................................................................................ 43
5.4 Resolution of Performance Problems & Contract Remedies ...................................................... 43
5.4.1 Effects of Performance Problems ....................................................................................... 44
5.5 Internal and External Communication ........................................................................................ 44
5.5.1 Contract Reporting .............................................................................................................. 44
5.6 Processing Payments .................................................................................................................. 45
5.7 Contract Modifications ............................................................................................................... 45
5.8 Maintaining Documentation ....................................................................................................... 45
5.9 Site Visits ..................................................................................................................................... 46
5.10 Securities and Insurance ............................................................................................................. 46
5.10.1 Tender Security ................................................................................................................... 46
5.10.2 Performance Security.......................................................................................................... 46
5.10.3 Mobilization Security .......................................................................................................... 46
5.10.4 Insurance ............................................................................................................................. 46
6.0 MANAGING CONTRACT CHANGES/VARIATIONS .......................................................... 47
6.1 Introduction ................................................................................................................................ 47
6.2 Types of Variation ....................................................................................................................... 47
6.2.1 Main issue to consider when analyzing a Variation ............................................................ 47
6.3 Contract Amendment ................................................................................................................. 47
6.4 Contract Variations Checklist ...................................................................................................... 48
7.0 PAYMENTS .................................................................................................................................. 49
7.1 Introduction ................................................................................................................................ 49
7.2 Payment Terms ........................................................................................................................... 49
7.3 Review and Approval of Payment Applications .......................................................................... 49
7.4 The GIFMIS Payment System ...................................................................................................... 50
7.4.1 Introduction ........................................................................................................................ 50
7.4.2 GIFMIS Budget Reforms At MOF......................................................................................... 53
7.4.3 GIFMIS Procure To Pay Process (P2P) ................................................................................. 53
7.4.4 GIFMIS Detailed Business Processes ................................................................................... 55
7.4.5 GIFMIS Implementation Status ........................................................................................... 58
8.0 CLAIMS & SETTLEMENT OF DISPUTES ............................................................................. 61
8.1 Introduction ................................................................................................................................ 61
8.2 Claims .......................................................................................................................................... 61

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8.2.1 Checklist on Claims ............................................................................................................. 61
8.3 Disputes ...................................................................................................................................... 62
8.4 Contract Provisions ..................................................................................................................... 62
8.5 Dispute Avoidance ...................................................................................................................... 63
8.6 Contract Condition ...................................................................................................................... 63
8.7 Dispute Management ................................................................................................................. 63
8.8 Dispute Resolution Procedures ................................................................................................... 63
8.8.1 Negotiation ......................................................................................................................... 64
8.8.2 Alternative Dispute Resolution (ADR) Procedures.............................................................. 65
8.8.3 Arbitration ........................................................................................................................... 66
8.8.4 Litigation ............................................................................................................................. 68
9.0 TERMINATION OF CONTRACT ............................................................................................. 69
9.1 Introduction ................................................................................................................................ 69
9.2 Liquidated Damages.................................................................................................................... 69
9.3 Termination for Default .............................................................................................................. 70
9.4 Termination for Corrupt or Fraudulent Practices ....................................................................... 70
9.5 Force Majeure ............................................................................................................................. 70
9.6 Termination for Insolvency ......................................................................................................... 71
9.7 Termination for Convenience ..................................................................................................... 71
9.8 Issues to be considered by Procurement Entity before deciding to Terminate the Contract .... 72
9.9 Actions for terminating the contract by the Procurement Entity............................................... 72
9.10 Contingency Planning.................................................................................................................. 72
10.0 CONTRACT RECORDS MANAGEMENT .............................................................................. 73
10.1 Introduction ................................................................................................................................ 73
10.1.1 What Is Records Management? .......................................................................................... 73
10.1.2 Importance of Records........................................................................................................ 73
10.1.3 Procurement and Contract Records ................................................................................... 73
10.1.4 Benefits of Good Records Management ............................................................................. 74
10.1.5 Principles of Good Records Management .......................................................................... 74
10.1.6 Consequences of Failure to Maintain Adequate Procurement Records ............................ 75
10.1.7 The Records Life Cycle......................................................................................................... 75
10.1.8 Opening a New File ............................................................................................................. 76
10.1.9 Filing of Papers .................................................................................................................... 76
10.1.10 File Movement Controls.................................................................................................. 76

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10.1.11 Closing a File.................................................................................................................... 77
10.1.12 Records Accommodation/Space ..................................................................................... 77
10.1.13 Equipment ....................................................................................................................... 78
10.1.14 Records Personnel .......................................................................................................... 78
10.2 Contract Administration File and Documentation ...................................................................... 78
10.2.1 Contracts Register ............................................................................................................... 79
10.2.2 Separate Contract Files ....................................................................................................... 79
10.2.3 Contract Sub-files ................................................................................................................ 79
10.3 Automation of Records Management (Electronic Records Management) ................................ 80
10.3.1 Benefits of Automation ....................................................................................................... 80
10.3.2 Records Management Functions That Can Be Automated ................................................. 80
10.3.3 E-mail .................................................................................................................................. 80
10.3.4 Digitization (Imaging/Scanning) .......................................................................................... 81
10.3.5 Challenges in the Management of Electronic Records ....................................................... 81
11.0 EVALUATION OF CONTRACT PERFORMANCE ............................................................... 83
11.1 Introduction ................................................................................................................................ 83
11.2 Evaluation of Supplier Performance ........................................................................................... 83
11.3 Evaluation of Management (Supervision of Contract) ............................................................... 84
11.4 Evaluation Processes ................................................................................................................... 84
11.5 Evaluation Checklist .................................................................................................................... 86
11.6 Contract Review .......................................................................................................................... 86
12.0 POST- IMPLEMENTATION TASKS........................................................................................ 87
12.1 Introduction ................................................................................................................................ 87
12.2 Operational Acceptance Certificate(s) ........................................................................................ 87
12.3 Warranty ..................................................................................................................................... 87
12.3.1 Rights under Warranties ..................................................................................................... 87
12.3.2 Timely Notice ...................................................................................................................... 87
12.3.3 Extension of Warranty Period ............................................................................................. 87
12.3.4 Other Factors Affecting Warranties for Goods ................................................................... 88
12.3.5 Refusal of Supplier to Accept Remedies ............................................................................. 88
12.3.6 What to note about Warranties.......................................................................................... 88
12.4 Contract Close-out ...................................................................................................................... 88
13.0 INCOTERMS (2010) .................................................................................................................... 90
13.1 Introduction ................................................................................................................................ 90

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13.2 Categories of INCOTERMS........................................................................................................... 90
13.3 Description of INCOTERMS and Characteristics.......................................................................... 91
13.4 Advantages of INCOTERMS ......................................................................................................... 94
REFERENCES .......................................................................................................................................... 95
APPENDIX 1: TEMPLATES .................................................................................................................. 97
APPENDIX 2 ........................................................................................................................................... 101

LIST OF FIGURES
Figure 1: Institutional Arrangements for Contract Administration in Ghana ............................... 11
Figure 2: Organization of Principal Procurement Bodies/Structures ........................................... 12
Figure 3: Process To Pay .............................................................................................................. 58

LIST OF TABLES
Table 1: Contract Milestone Checklist ......................................................................................... 36
Table 2: Description of INCOTERMS and Characteristics .......................................................... 92

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LIST OF ABBREVIATIONS/ACRONYMS
Act 663 Public Procurement Act, 2003
ADR Alternative Dispute Resolution
CAGD Controller and Accountant General’s Department
CAP Contract Administration Plan
CoA Chart of Accounts
CFR Cost and Freight
CIF Cost, Insurance and Freight
CIP Carriage and Insurance Paid To
CPT Carriage Paid To
DANIDA Danish International Development Agency
DAF Delivered at Frontier
DAP Delivered at Place
DAT Delivered at Terminal
DDU Delivered Duty Paid
DEQ Delivered Ex Quay
DFID Department for International Development
ERMS Electronic Records Management Strategy
ERP Enterprise Resource Planning
EXW Ex Works
FAA Financial Administration Act (Legal and Regulatory Framework)
FAR Financial Administration Regulations (Legal and Regulatory Framework
Reform)
FAS Free Alongside Ship
FCA Free Carrier
FOB Free on Board
GCC General Conditions of Contract
GIFMIS Ghana Integrated Financial Management Information Systems
GoG Government of Ghana
ICT Information & Communication Technology
ICT International Competitive Tender
IFIs International Financial Institutions
IGF Internally Generated Funds
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ISO International Standardization Organization
INCOTERMS International Commercial Terms
IPPD2 Integrated Personnel and Payroll Database
LPO Local Purchase Order
MDAs Ministries, Departments and Agencies
MMDAs Metropolitan, Municipal and District Assemblies
MoF Ministry of Finance
NCT National Competitive Tender
NITA National Information Technology Agency
PE Procurement Entity
PFM Public Financial Management
PO Purchase Order
PPA Public Procurement Authority
PRAAD Public Records and Archives Administration Department
P2P Procure to Pay
PUFMARP Public Financial Management Reform Programme
PV Payment Voucher
RFQ Request for Quotation
RM Records Management
SCC Special Conditions of Contract
SRA Store Receipt Advice
SRV Stores Receipt Voucher
SWIFT Society of Worldwide International Financial Telecommunication
TIN Tax Payer Identification Numbering
UK United Kingdom

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GLOSSARY OF TERMS
TERM DEFINITION
Acceptance Refers to the acceptance of goods, works or services by the
Purchaser/Employer/Client.

Assignment The Consultancy Services defined in a consultant's contract.

Back Stopping Technical and Administrative Support provided by the Consultants

Office to field staff.

Bank Guarantee An undertaking by a ‘Guarantor’ (usually a commercial bank) to

pay the employer or purchaser a specified sum in the event of
default of a tenderer or supplier or contractor.

Bill of Lading A document evidencing a contract of carriage, a receipt for the

goods and, if in negotiable form, constitute a document of title to
the goods; carrier acknowledges on Bill of Lading (B/L) that
goods have received on board in apparent good order and
condition; a clean bill of lading does not bear any clause declaring
a defective condition of the goods and/or packaging and it is on
board B/L because it bears an on board notation signed and dated
by the carrier.

Consultancy Services which are of intellectual and advisory nature provided by

Services firms or individuals using their professional skills to study, design
and organize specific projects, advise clients, conduct training or
transfer knowledge.

Contract An agreement, enforceable by law, between two or more

competent parties (legal entities) to perform or not to perform a
specific act or acts for a consideration.”

Contract Administrator An individual appointed by the head of entity to administer a

contract on behalf of the entity.

Court Court of competent jurisdiction

Contract package The logical assembly of items within a contract that takes into
consideration timeliness, economies of scale, geographic
distribution, etc.

Contractor’s Machinery, equipment and vehicles brought temporarily to the site

Equipment by the contractor to be used exclusively for the execution of the
works.

Economy Buying only what is needed for the project at the lowest evaluated
price.

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TERM DEFINITION
Efficiency Buying timely only what is essential to implement a project; e.g.,
do not buy a luxury automobile if all that is needed is transportation.

Evaluation Procedure used to evaluate tenders or proposals in accordance with

pre-disclosed evaluation criteria.

Framework Agreement A long-term agreement with suppliers, contractors and providers of

non-consulting services (technical services) which sets out terms
and conditions under which specific procurements (call-offs) can be
made throughout the term of the agreement. Framework agreements
are generally based on prices that are either pre-agreed, or
determined at the call-off stage through competition or a process
allowing their revision without further competition.

Force Majeure An event that interferes with the performance of a contract which
an experienced supplier or contractor or consultant could not have
foreseen nor reasonably made provision for, e.g., war, riot, and
earthquake.

Goods Objects of every kind and description including raw materials,

products and equipment and objects in solid, liquid or gaseous form,
and electricity, as well as services incidental to the supply of the
goods if the value of those incidental services does not exceed that
of the goods themselves.

Guidelines Policies, practices, and procedures that guide the procurement of

goods, works consulting services and non-consulting services.

INCOTERMS International Chamber of Commerce (ICC) definitions of

international commercial terms used in trade and universally
recognized and accepted.

Indefinite Delivery Framework Contract for on-call specialized services for which the
Contract extent and timing cannot be defined in advance.

Joint Financing Co-financier to participate in financing the project by providing

funds that are pooled with other financiers' funds to finance
contracts awarded under a project.

Long List List of Consulting Firms considered in preparing a short list.

Management In construction, a management contractor usually does not perform

Contractor the work directly but contracts out and manages the work of other
contractors, taking full responsibility and risk for price, quality, and
timely performance.

Methodology Work-plan, programme, schedule or method of operation to carry

out a particular assignment.

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TERM DEFINITION
Overhead Consultant's Administrative and Business cost not directly related
to carrying out an assignment.

Parallel financing Co-financier agrees to finance specific contracts in a project and its
procurement procedures apply for the items it finances.

Perform To act on so as to accomplish or bring to completion; execute; carry

out (a task, process, etc.); meet the requirements

Performance The act of performing; execution, accomplishment, fulfillment, etc.

Performance Contract A contract between the procurement entity and a supplier,

contractor or consultant resulting from procurement proceedings.

Plant Any integral part of the works that have a mechanical, electrical,
chemical, or biological function.

Post review A review by the funding agency of awarded contracts and related
procurement documentation below a stated contract threshold.

Procurement plan The document prepared by each procuring entity annually to plan
all procurement requirements necessary to perform the activity plan
of the procuring entity. The plan shall indicate:
(a) contract packages,
(b) estimated cost for each package,
(c) the procurement method, and
(d) processing steps and times.

Reimbursable Assignment specific expenses that are reimbursed by the Client on

the basis of the services performed.

Responsive tender A tender that has been determined to be substantially responsive to

the tender documents and has the lowest evaluated tender price,
provided that the tenderer has been determined to be eligible and
qualified.

Services “Service” means the furnishing of labour, time, or effort not

involving the delivery of a specific end product other than
reports, which are merely incidental to the required
performance; and includes consulting, professional and
technical services but does not include employment agreements
or collective bargaining agreements;

Technical Services Services which are tendered and contracted on the basis of
performance of a measurable physical output such as drilling,
mapping, aerial photography, surveys, seismic investigations,
maintenance of facilities or plant and similar operations.

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TERM DEFINITION
Tender An offer to supply goods or works conforming to particular
specifications.

Tenderer A person who puts in a bid or offer in a procurement contract.

Works Work associated with the construction, reconstruction, demolition,
repair or renovation of a building or structure or surface and
includes site preparation, excavation, erection, assembly,
installation of plant, fixing of equipment and laying out of materials,
decoration and finishing, and any incidental activity under a
procurement contract.

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INTRODUCTION

Background
Since the establishment of the Public Procurement Authority (PPA) as a result of the promulgation
of the Public Procurement Act, 2003 (Act 663) Amended, it has instituted a number of pragmatic
and far-reaching initiatives aimed at ensuring maximum returns for the tax-payers’ money. Despite
these laudable efforts, the annual procurement assessment conducted by the PPA in the
procurement entities reveal several challenges relating to the administration of contracts awarded
by most entities.

These challenges can be attributed to the absence of credible arrangements for contract
administration. The observation has been that contract administration in most public procurement
entities usually involve disjointed processes unfortunately resulting in poor supervision of
contracts and compliance as well as missed opportunities for achieving value for money. As part
of the means to address the above challenges, the PPA commissioned a firm to develop separate
contract administration manuals for Goods, Works, Consulting Services and Technical Services.

Purpose of the Manuals

The purpose of the Contract Administration Manuals is to serve as reference material for Public
Entities, Contract Administrators and Procurement Personnel as well as students pursuing courses
in contract administration.

There are four Manuals on contract administration. Manual 1 is on Goods, Manual 2 is on Works,
Manual 3 is on Consulting Services and Manual 4 is on Technical Services. To have full
knowledge of contract administration in Public Procurement, one will need to read all the four
Manuals. It is hoped that the manuals will prove to be useful as a handbook or resource material
for practitioners, facilitators and students.

Scope of Manual on Goods-1

The Manual covers contract administration for the supply of goods for the post-award phase. The
period commences from signing of the contract agreement by both Purchaser and Supplier through
contract performance up to contract close-out. It has to be noted that pre-award activities like
determination of contract type and strategy, contract terms and conditions as well as contract
negotiations prior to contract signing are not the focus of this manual. These may be mentioned
briefly, where necessary, but will not form part of contract implementation activities.

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Content/Structure of the Manual on Goods-1

The Manual consists of an introduction and thirteen (13) chapters as follows:

 Introduction
 1.0: Contract Principles
 2.0: Basics of Contract Administration
 3.0: Forms and Conditions of Standard Contract for Goods
 4.0: Contract Administration Process: Post-Award Preliminary Tasks
 5.0: Monitoring Contract Performance & Reporting
 6.0: Managing Contract Changes/Variations
 7.0: Payments
 8.0: Claims & Settlement of Disputes
 9.0: Termination of Contract
 10.0: Contract Records Management
 11.0: Evaluation of Contract Performance
 12.0: Post- Implementation Tasks
 13.0: INCOTERMS

Exceptions to the Manual

The contract administration principles and procedures contained in this manual, although cover
best practices, do not replace contract administration policies and procedures followed for
contracts funded by Donor agencies or International Financing Institutions (IFIs), unless
specifically stated.

Forms/Templates
In some of the chapters, templates/formats deemed useful have been presented in Appendix 1.

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1.0 CONTRACT PRINCIPLES

1.1 Introduction
The award of a contract is essential to public procurement as it marks the starting point for contract
execution and administration. Some basic legal concepts relating to contracts are explained.

1.2 Contract – Definition

A Contract has been defined as “An agreement, enforceable by law, between two or more
competent parties (legal entities) to perform or not to perform a specific act or acts for a
consideration.”1

A contract may be oral or written. However, contracts financed with public funds are generally
made up in writing.

According to Public Procurement Act, 2003 (Act 663) as Amended, “a ‘procurement contract’
means a contract between the procurement entity and a supplier, contractor or consultant
resulting from procurement proceedings.”2

1.3 Essential Elements of a Valid Contract

For a contract to be valid and legally enforceable, the following elements must be present:
a) Capacity to contract – The parties to the contract must have legal right and contractual
authority to enter into the contract, with respect to age, competency and corporate
authority.

b) Certainty – The parties to the contract must be of the same mind about what is being
offered and accepted and thus the essential terms must be definite and agreed upon by
them.

c) Consideration – The parties to a contract must each give something of legal value to the
other or a third party in return for the benefit he/she receives.

d) Legality of Purpose/Object – The object of the contract must not be one of which the law
disapproves. The law will not enforce an illegal contract, or when it is against public policy.

e) Possibility of Performance – A contract must be possible to perform.

With certain exceptions, a contract need not be in writing. However, enforceability will
depend on being able to prove the existence and terms of a contract. It is therefore highly
recommended that all contracts be put into writing.

1
Culled from Gosta Westring and George Jadoun (Rev.15th November 1996). Public Procurement Manual.
2
Refer to Section 98 of Public Procurement Act, 2003 (Act 663) as Amended.

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1.4 Formation of a Contract
A contract is formed on the basis of offer and acceptance. An offer is not always in international
practice the first move in the formation of a contract. In public procurement, the procurement
entity usually takes the first step by inviting offers, for an example, a tender notice or invitation to
tender. Interested tenderers may submit tenders or offers. There is an agreement when a
procurement entity accepts an offer made by a Supplier, Contractor, Consultant or Service
Provider. Instructions to tenderers regularly require the tenderer to maintain the validity of his or
her offer for a specific number of days after the deadline for tender submission. In addition, many
procurement entities demand as an extra precaution that security in the form of a bank guarantee
or a tender bond is submitted along with the offer in order to reinforce the tenderer’s promise to
keep the offer binding for a specific period of time. When offers are submitted before a specific
deadline, it is normally permissible for the tenderer to withdraw his or her offer so long as the
deadline for tender submission has not arrived.

Acceptance of an offer poses few legal problems so long as it is a “clean” acceptance, meaning
that no reservations are attached. Acceptance, thus, must be positive, unconditional, unequivocal
and unambiguous.

Attaching reservation to an acceptance generally constitutes a counter offer. In most legal systems,
a counter offer counts as a rejection of an offer, unless specifically permitted.

1.5 The Law Applicable to a Contract

No contract exists in a void. There will always be one national law applicable to the formation,
interpretation and application of the contract. Under most legal systems, the parties to international
sales contracts are free to choose the law applicable to their relationship. This rule, like so many
others, is not without exceptions. The laws of one particular country may be of so-called stringent
or mandatory character, meaning that those rules override any provision to the contrary in the
contract between the parties.

The importance of the applicable law, then, is first of all to regulate matters which the parties have
not addressed in their contract and, secondly, to hold the parties within limits drawn up by the
stringent provisions of the law. In addition, the applicable law is used by the judge or arbitrator to
interpret the contract and to fill gaps in the contract where no contractual provisions exist.

Under Public Procurement Act, 2003 (Act 663) as Amended, the Law Applicable to a Contract
is that of Ghana.

1.6 The Nature and Types of Goods

According to Act 663(amended) Section 98, ‘Goods’ means objects of every kind and description
including raw materials, products and equipment and objects in solid, liquid or gaseous form and
electricity, as well as services incidental to the supply of the goods if the value of those incidental
services does not exceed that of the goods themselves.’ The following are examples of goods:

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 Computers and accessories

 Stationery
 Bottled liquid
 Drinks
 Books
 Furniture
 Vehicles
 Plant and equipment
 Spare parts
 Manufactured components, products
 Commodities-rice, sugar, cereals
 Fertilizer
 Farm produce
 Detergents
 Glassware
 Generators
 Air conditioners
 Etc., etc.
The delivery/supply of some of these goods may, in addition, include siting and installation of
equipment and/or machinery.

1.7 Types of Contracts for Goods Procurement

Different types of contract are used in the public sector in Ghana for goods procurement depending
on the methods of procurement which are determined in accordance with thresholds specified in
the Public Procurement Act, 2003 (Act 663) as amended. The methods which have forms of
contract in the tender documents are Request for Quotations (RFQ), National Competitive
Tendering (NCT), Restricted Tendering and International Competitive Tendering (ICT).

The standard forms of contract for goods procurement under the Public Procurement Act, 2003
(Act 663) as amended. are as follows:
i. Standard Contract for Request for Price Quotations
ii. Standard Contract for National Competitive Tendering & Restricted Tendering
iii. Standard Contract for International Competitive Tendering
iv. Framework Agreement

The standard forms of contract have terms and conditions. Most contracts for goods procurement
are of short-duration and therefore fixed price. Long duration contracts, usually exceeding
eighteen (18) months will have a provision for price adjustment in the terms and conditions.

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In accordance with Public Procurement Act, 20003 (Act 663) as amended, “Framework
Agreement, means a long-term agreement with suppliers, contractors and providers of non-
consulting services which sets out terms and conditions under which specific procurements (call-
offs) can be made throughout the term of the agreement. Frame work agreements are generally
based on prices that are either pre-agreed or determined at the call-off stage through competition
or a process allowing their revision without further competition.”

It has to be noted that no contract exists until the procurement entity issues a Purchase Order (PO)
or “call-off” against the Framework Agreement.

1.8 Factors Affecting the Choice of Contract Type

The factors affecting the choice of contract are largely dependent on the methods of procurement
as specified in the Public Procurement Act, 2003 (Act 663) Amended. The contract type is
determined prior to tendering and contract award.

1.9 General Principles for Contracts

The following general principles apply to contracts:
 The terms of contract must be precise, definite and without any ambiguities.
 Standard forms of contracts should be adopted wherever possible, if not, legal and financial
advice should be sought in drafting the clauses.
 Price variation clause to be provided only in long-term contracts, where the delivery period
extends beyond eighteen (18) months.
 The contract should also contain the mode and terms of payment.
 The terms of a contract, including the scope and specifications once entered into, should
not be materially varied.
 All contracts shall contain a provision for recovery of liquidated damages for defaults on
the part of the supplier or service provider.
 A warranty clause should be incorporated in the contract
 Suitable provision for settlement of disputes shall be incorporated into the contract

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2.0 BASICS OF CONTRACT ADMINISTRATION

2.1 Introduction
Contract administration is the management of contracts made with suppliers, contractors,
consultants or technical service providers to assure that all the parties comply with and fulfil
the terms and conditions of the contract.

It includes all dealings between parties to a contract from the time a contract is awarded until the
task has been completed and accepted or the contract terminated, payment has been made, disputes
have been resolved and the contract closed.

Contract Administration is the responsibility of the Procurement Entity and is distinguished from
physical performance of the contract which is the responsibility of the Supplier, Contractor,
Consultant or Technical Service Provider.

Contract Administration is similar to project management. Each contract is a mini-project. It has

a unique goal, consumes resources, has a beginning and end date, and requires coordination and
planning of relevant activities, as well as documentation in a contract file throughout the process.

The stages of Contract Administration are intended to ensure that the parties work together to
achieve the objectives of the contract. Contract Administration is based on the idea that the contract
is an agreement, a partnership with rights and obligations that must be met by both sides to achieve
the goal. Contract Administration is aimed not at finding fault, but rather at identifying problems
and finding solutions together with all contracting parties involved.

2.1.1 Nature of Contract Management and Administration

“Contract Management is commonly understood as a broader and more strategic concept that
covers the whole procurement cycle including planning, formation, execution, administration and
close-out of a contract and goes beyond the day to day “administrative” activities in the
procurement cycle”3.

Although the actual planning begins during the selection process, Contract Administration actually
starts upon the signing of the contract, which is the point at which the parties to the contract are
bound by its terms and conditions. As with contract management, contract administration ensures
that each party adheres to the contract and performs at or above the levels specified in the contract.
If we compare the nature or characteristics of the activities associated with both contract
management and contract administration (see below) then we can see that the differences are
fundamental, yet without efficient contract administration, then effective contract management
becomes very difficult, if not impossible.

3
UN Handbook on Procurement, 2006
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Contract Management Contract Administration
Relationship focus Operational focus
Strategic Tactical
Process development Process compliance
Longer term time frame Short-term/transactional
Holist view Narrow focus
Driven by added value Driven by key performance indicators

In the light of the above, most organizations/institutions use the two interchangeably.
However, in this Module, the Public Procurement Authority (PPA) has decided to use the term
‘Contract Administration’.

2.2 Objectives of Contract Administration

The main objectives of Contract Administration are:
 The successful execution of the contract in a timely and economic manner; and
 To ensure performance by all parties in accordance with the requirement of the contract.

For Contract Administration to be effective, it is necessary to develop control procedures of

contract performance, which will enable the Procurement Entity to obtain value for money from
the contract within the framework of the applicable law. Effective Contract Administration seeks
to obtain the goods of the required specification within the time frame and cost parameters
stipulated in the contract in order to satisfy the needs of the end-user and also minimize disputes.

2.3 The Role of Contract Administration

The need for the Contract Administration function stems from the fact that a contract brings into
existence a relationship over a period of time between the parties to the contract shaped by the
necessity of mutual compliance with its terms and conditions. Contracts may not be perfect
because of the difficulty of foreseeing all possible developments with absolute accuracy, and
therefore the role of Contract Administration is to steer this relationship as governed by the
contract document. Contract Administration therefore involves:
 Planning the relationship;
 Monitoring its development as the contract proceeds;
 Measuring its achievement;
 Taking corrective action to safeguard the interests of the Procurement Entity to ensure
successful execution of the contract.

Contract Administration requires multi-disciplinary skills which, if inadequately coordinated and

discharged, can adversely affect the outcome of an otherwise impeccable tendering process. A
flawed Contract Administration process will undoubtedly lead to increased costs and delay in
contract completion and may also expose the Procurement Entity to legal complications with
unpredictable results.

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2.4 The Benefits of Good Contract Administration
Effective contract administration will provide the following benefits:
i. Effective control, ensuring that both parties know their obligations and implementing a
contract controls system that reflects the performance requirements of the contract and
provides mechanisms of the coordination and dissemination of information.
ii. Performance to the required standard: full use should be made of the Supplier’s own
management information and performance measurement systems, with the vendor
reporting progress through agreed procedures.
iii. Compliance with contract terms and conditions: managing the contract terms and
conditions will help to ensure that they are met; if they are not , they provide for remedies
to be applied properly and promptly
iv. Clear and documented records which are essential in the event of invoking default
procedures for seeking correction of failures to perform.
v. Management of change: it is the contract administrator’s responsibility to define
appropriate change control procedures which enable him/her to anticipate, manage and
control changes to requirements and/or costs.
vi. Value for Money: this is a balance of cost, risk, delivery and quality which should be
managed to;
 Record costs;
 Ensure no change in the balance of risks;
 Ensure timely delivery;
 Ensure quality.
vii. Performance rating: the performance of the supplier would be evaluated and rated at the
end of the contract by the Contract Administrator. The supplier would be informed of the
result and this will help him/her to improve upon future performance.

2.5 Summary of Main Tasks of Contract Administration

 Contract Administration Planning (Policies, Systems and Procedures)
 Monitoring Contract Performance and Reporting
 Management of Contract Changes/Variations
 Processing Payments
 Resolution of Claims and Settlement of Disputes
 Contract Termination
 Managing Contract Records.
 Evaluation of Contract Performance
 Contract Close-out

2.5.1 Important Parties in a Goods Contract

The important parties in a goods contract are the Procurement Entity and the Supplier
 The Procurement Entity/Purchaser
The Procurement Entity is an entity conducting public procurement under Act 663 as
amended.
The Procurement Entity sources for an item in order to satisfy a need.

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 The Supplier
The Supplier is any potential party or the party to a procurement contract with the
procurement entity.
The Supplier delivers the item ordered by the Procurement Entity at a cost.

The two parties-Procurement Entity and Supplier- and their assigns are bound by the terms
and conditions of the contract.

2.6 Organization for Contract Administration

2.6.1 Legal and Institutional Arrangements for Contract Administration in Ghana

Figure1 illustrates the current legal and institutional arrangements for Contract Administration in
Ghana. The figure displays the coordination and reporting obligations of the Procurement Entity
on the national and international levels (depending on whether foreign financing is involved). The
Procurement Entity has to conform to the set procedures of the national and international parties
involved in its activities and has to correspondingly develop its reporting and operational
procedures to comply with the requirements of the relevant parties.
For wholly Government of Ghana funding, it is only the right side of the figure that is applicable.
The institutions involved in public contract administration include the following:
 The Procurement Entity
 The Line Ministry and other Sector Ministries
 The Ministry of Finance (MoF)
 The Auditor-General’s Department
 The Controller & Accountant–General’s Department (CAGD)
 The Ministry of Justice & Attorney-General’s Department
 The Public Procurement Authority (PPA)
 The Courts

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Figure 1: Institutional Arrangements for Contract Administration in Ghana

[Reporting & Coordination Obligations of the Procurement Entity]

INTERNATIONAL LEVEL NATIONAL LEVEL

Line Ministry and

other Ministry of
Sector Ministries Finance

Funding
Agency 2 Courts

Public Ministry of
Procurement Justice/AGD
Authority

Funding
Auditor-General
Agency 1

Controller &
Accountant General
Sources of
Information
Sources of
PROCUREMENT Information

ENTITY

2.6.2 Organization of Principal Procurement Bodies/Structures in Contract

administration
The procurement structures for post-contract activities are outlined in Figure 2 below. The
involvement of Entity Tender Committees and Tender Review Committees is minimal in the
contract administration process.

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Figure 2: Organization of Principal Procurement Bodies/Structures

For Contract Administration

Head of Procurement Entity

Tender Review
Reports Committees (TRC) Procurement Entities
Public Procurement
Authority (to transact procurement for
(to regulate, control and all its own requirements in
monitor public accordance with the Act and
procurement, set standards Reports Submissions Regulations)
and formulate public
procurement policy) Appoints
Request and queries
Head of Procurement Unit
Reports
Entity Tender
Submissions
Committee (ETC)
Procurement Units

TRC & ETC to ensure Liaises Reports

compliance with the
Public Procurement Originating Departments,
Act, 2003 Project or User Unit
(Act 663) Amended
and Regulations on a
transaction basis
within their defined
Contract Administrator
thresholds.

The roles and responsibilities of the bodies that are involved in post contract activities are:

The Public Procurement Authority

The primary role of the PPA is to regulate, control and monitor public procurement and set
standards and formulate procurement policy.

The Tender Review Committees and the Entity Tender Committees

The role of the Tender Review Committees and the Entity Tender Committees is to ensure
compliance with the Public Procurement Act, 2003 (Act 663) Amended and Regulations at the
transaction level by reviewing and accepting or rejecting submissions received from or via the
Procurement Entity’s Procurement Unit. The Tender Review Committees and the Entity Tender
Committees are primarily active during the tendering stage but can be required to review matters
of a post contract nature where amendments to contract are necessary.
The Entity Tender Committees are responsible for the facilitation of Contract Administration.

The Procurement Entity

The Procurement Entity is any entity conducting public procurement and is responsible for
carrying out its own procurement in accordance with the Public Procurement Act, 2003 (Act 663)
Amended and Regulations.
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The Procurement Unit

The Procurement Unit is the person or unit within the Procurement Entity that is dedicated to
providing technical procurement services for the tender committee.

The Originating Departments, Projects or User Departments

The Originating Departments, Projects or User Departments are the various departments that raise
the requirements for procurement that are approved by the Procurement Entity and budgeted for.

The Contract Administrator

The role of the Contract Administrator is to manage, coordinate and control each Contract and the
Consultant’s performance of that contract in accordance with the terms and conditions of the
Contract placed and in accordance with existing legislation. The Contract Administrator is
appointed by the Head of Procurement Entity.

Finance/Accounts Department
The Department within the Procurement Entity responsible for the financial affairs of the Entity
and the control of the Entity’s budget.

2.6.3 Contract Administration Organization for Supply of Goods

There must be one person who will serve as the primary contact in the Procurement Entity for
administering goods contracts, and that person is called the Contract Administrator. In
procurement entities, where goods procured are usually simple and of low values, the Contract
Administrator may be called an Expediter. It is important that the Supplier gets direction from only
one person for day-to-day matters involving expediting of orders, etc., so as to avoid conflicting
directions and to establish the authority of that one person. It is equally important that this person
be accountable for and have the authority to administer the day-to-day activities in order to develop
a sense of ownership of the project or procurement transaction and to make sure that the person
closest to the assignment is able to directly see that the contract requirements are met.

The number of staff in the contract administration process will vary in number from one to many
depending on the nature, size, level of risk and complexity of the contract. Early in the procurement
process, there is the need to identify the contract administrator and those who are to assist him/her;
this will allow for roles and responsibilities to be assigned.

It is worth noting that in most simple supply of goods contracts, the Expeditor, acting as the
Contract Administrator can handle all responsibilities with the support of an Assistant.

2.7 Responsibilities of the Contract Administrator

The Contract Administrator is ‘an individual appointed by the head of entity to administer a
contract on behalf of the entity’. The primary responsibilities of the Contract Administrator
include:

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 Participating, as necessary, in developing the solicitation and writing the draft documents.
(Contract administration must be considered during this process.)
 Monitoring the Supplier’s performance to ensure that delivery conforms to the contract
requirements.
 Authorizing payments consistent with the contract terms.
 Exercising remedies, as appropriate, where a Supplier’s performance is deficient.
 Facilitating resolution of disputes in a timely manner.
 Meeting with the Supplier when the need arises so as to review progress, discuss problems
and consider necessary changes.
 Establishing control of correspondence, data and reports.
 Identifying potential problems and solutions.
 Managing any public property used in contract performance.
 Documenting significant events.
 Maintaining appropriate records.

2.8 Skills of the Contract Administrator

Contract administration is not a clerical activity. The Contract Administrator must be proactive
and ideally needs to have the following competencies:
 A basic understanding of procurement policies, procedures and practices;
 An understanding of organizational goal;
 An ability to communicate well both internally and with Suppliers;
 An ability to operate in a team and as a team leader;
 An understanding of the terms and conditions of the contract being managed and their
significance;
 An understanding of project planning methods;
 The ability to organize and manage effective business meetings;
 The ability to motivate Suppliers to meet tough targets/deadlines.
 The ability and fortitude to ensure performance of the Procurement Entity.

2.9 Poor and/or Fraudulent Contract Administration

A badly managed contract occurs when the contract administration team fails to act (proactively
or reactively) in order to keep a firm control on the contract implementation. This usually results
in at least one of the following:
 Scope of contract is not achieved (the end product is either not delivered, or has a very poor
quality);
 Delays;
 Cost overruns.
The worst case scenario is a situation where all these three situations described above are met (the
contract does not achieve its objective and ends up with time and cost overruns).

The most frequent causes of badly managed contracts are often linked to:
(i) the capacity of the contract administration team
(ii) its willingness to act according to its mission and purpose, and/or
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(iii) delay in payment

Poor capacity, while dangerous for the contract implementation, can be remedied through
continuous and intensive training (both formal and on-the-job); hiring staff with the appropriate
expertise and experience; and through close supervision. Consequently, the negative effect of lack
of capacity can be successfully mitigated, especially if the issue of capacity is addressed at an early
stage during contract implementation.

Lack of willingness to act in the best interest of the contract can have two major causes, which are
radically different from an ethical perspective, but can be equally damaging to the success of
contract implementation:

i. The first cause (which is more benign and thus potentially less harmful) has to do with the
lack of motivation of the staff. This can also have many causes: dissatisfaction with the
level of remuneration; lack of professional challenges; eroding routine; lack of recognition
from the superiors; sense of futility etc. These symptoms must be identified early in the
implementation stage and properly addressed through appropriate management decisions
(incentives; motivation; correct allocation of tasks and responsibilities; correlation between
responsibilities and rewards; increased ownership of the process etc.)

ii. The second possible cause of staff inactivity has its roots in fraud and corruption and is
therefore the most dangerous risk during contract implementation. Whenever corruption is
involved, there is a high degree of certainty that the proper execution of the contract is
compromised in one way or another.

Delay in payment most often can be attributed to lack of funds from central government or
improper cash flow planning by the procurement entity. It is only in rare instances that it can be
due to deliberate unwillingness of the contract administration team to act.

2.10 Fraud and Corruption in Contract Implementation

The contract implementation stage is the most prone to fraudulent and corrupt practices. This is a
common-sense conclusion, since the implementation phase is when money enters into the equation
of relations between the two parties – Procurement Entity and Supplier. Fraud and corruption
undermine the very foundation of these relations, which should be based on responsibility (in
achieving the scope of the contract efficiently) and accountability (for every action).
Section 93 of Public Procurement Acts 663 & 914 on Corrupt Practices states the following:
(1) “Entities and participants in a procurement process shall, in undertaking procurement
activities, abide by the provisions of article 284 of the Constitution”.
(2) “An act amounts to a corrupt practice if so construed within the meaning of corruption as
defined in the Criminal Offences Act,1960 (Act 29)”.

As part of international best practices, guidelines and tender documents of international financing
institutions as well as national procurement systems have provisions which require Suppliers and
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their agents to observe the highest standard of ethics during execution of contracts. The following
forms of corrupt and fraudulent practices are defined here for the attention of Suppliers:

a) “Coercive practice” means impairing or harming, or threatening to impair or harm,

directly or indirectly, any party or the property of any party, to influence the actions of a
party in connection with the implementation of any contract supported, in whole or in part,
including such actions taken in connection with the execution of a contract,

b) “Collusive practice” means a tacit or explicit agreement between two or more parties to
perform a coercive, corrupt, fraudulent, obstructive or prohibited practice, including any
such agreement designed to establish prices at artificial, noncompetitive levels or to
otherwise deprive the Employer of the benefits of free and open competition,

c) “Corrupt practice” means the offering, giving, receiving or soliciting, directly or

indirectly, of anything of value to influence the actions of a public official, Employer staff,
consultants or employees of other entities engaged in work supported in whole or in part,
including otherwise advancing the contract execution or the making of any payment to any
third party in connection with or in furtherance of a contract,

d) “Fraudulent practice” means any act or omission, including any misrepresentation, that
misleads or attempts to mislead a party in order to obtain a financial or other benefit in
connection with the implementation of any contract supported, in whole or in part,
including any act or omission designed to influence or attempt to influence the execution
of a contract, or to avoid or attempt to avoid an obligation.

e) “Obstructive practice” means any act taken in connection with the implementation of any
contract supported, in whole or in part:
i. That results in the destroying, falsifying, altering or concealing of evidence or making
false statement(s) to investigators or any official in order to impede an investigation
into allegations of a coercive, collusive, corrupt, fraudulent or prohibited practice,
ii. That threatens, harasses or intimidates any party to prevent him or her from either
disclosing his or her knowledge of matters relevant to an investigation or from pursuing
the investigation and/or
iii. Intended to impede the conduct of an inspection and/or the exercise of audit rights
provided under Act 663 as amended and related regulations, manual agreements and
standard tender documents, and

f) “Prohibited practice” means any action that violates Compliance with Anti-Corruption,
Anti-Money Laundering, Terrorist Financing, and Trafficking in Persons Statutes and
Other Restrictions of the United Nations.

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Despite all efforts to prevent and fight these practices by International Financing Institutions and
Public Anti-Corruption Agencies, corruption still persists. The most frequent cases of fraud and
corruption involve:
 Scope of the contract is not achieved as goods ordered are not delivered per the Purchase
order, although the money has been spent;
 Unjustified variations and change requests granted by the Procurement Entity;
 Products are substituted by inferior, less expensive and lower quality products than
specified in the contracts;
 Delay in delivery/installation of Goods and Equipment.

Possible indicators of Corruption:

Often these are clues that something may go wrong in the future and therefore requires attention
now. Examples are:
 frequent change orders / variation requests especially with regard to items with high prices;
 requests for subcontracting, especially to firms that took part in the bidding process and
were rejected or offered higher prices;
 failure to report any deviations from the contract;
 poor filing and recordkeeping (missing invoices, supporting documents etc.).

Remedial and pro-active Actions:

 Maintain close control on the Supplier (permanent contact, spot checks, site visits, issues
log, inspection and control logbook etc.);
 Enforce a relevant and comprehensive reporting system (monthly, quarterly, by milestone
etc.) to monitor closely all aspects that are important for contract management: actual vs.
planned progress (both quantity and quality); timeliness of deliverables, etc.;
 Enforce internal audit procedures, four eyes principle (particularly with regard to the actual
verification of invoices and supporting documents). The transaction must be approved by
at least two people as a form of control mechanism. The person approving the payment
should not be involved in the verification of payment documents;
 Penalize promptly any failure to report delays, variation orders, deviations from the
technical specifications and any leniency towards the Supplier;
 Enforce all applicable and reasonable contract remedies – liquidated damages for delays or
for non-compliance; remedies against the insurance policies and performance securities,
etc.;

However, all these precautionary measures should not be interpreted as instigations to abuse the
contract mechanisms and remedies against the Supplier. Overzealous and abusive Contract
administration is equally dangerous in terms of perceived fraud and corruption because any
obvious tendency to abuse the discretionary powers could be interpreted as an attempt to force the
Supplier into agreeing to kickbacks or other kinds of informal payment.

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2.11 Conflicts of Interest

The Supplier shall not have a conflict of interest. All Suppliers found to have a conflict of interest
shall be disqualified, unless the conflict of interest has been mitigated and the mitigation is
approved by the Public Procurement Authority or the Procurement Entity. The Procurement Entity
requires that Suppliers hold its interests paramount at all times, strictly avoid conflicts of interest,
including conflicts with other assignments or their own corporate interests and act without any
consideration for future work.

Without limitation on the generality of the foregoing, a Supplier, including all parties constituting
the Supplier and any agents or sub-suppliers for any part of the Contract, including related services,
and their respective personnel and affiliates may be considered to have a conflict of interest in
terms of Conflicting activities, Conflicting assignments and Conflicting relationships and in the
case of a Supplier, the Contract may be terminated.

A Supplier has an obligation to disclose any situation of actual or potential conflict of interest that
impacts their capacity to serve the best interest of the Procurement Entity or that may be reasonably
perceived as having this effect. Failure to disclose said situations may lead to the termination of
the Contract.

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3.0 FORMS AND CONDITIONS OF STANDARD GOODS

CONTRACTS

3.1 Introduction
This chapter identifies the set of documents that comprise a goods contract and explains the types
of PPA Standard Forms of Contract, including the General Conditions of Contract and the Special
Conditions of Contract.

3.2 Basic Documentation for Goods Contract

Documentation for goods contract comprises a set of documents that constitutes the contract
between the Procurement Entity and the Supplier. These normally include the following
documents:
 the Purchaser’s notification of award
 The Tender submitted by the Supplier
 The Price Schedules
 The Schedule(s) of Requirements
 The Technical Specifications and any accompanying drawings and samples of the
Purchaser;
 The form of the contract- the actual document signed by both parties;
 General Conditions of Contract;
 Special Conditions of Contract;
 Copies of any relevant meeting minutes of negotiations or letters which have been
exchanged;
 Securities or bonds.
 Amendments to the tender documents (if any)
 Special agreements on subjects such as installation, commissioning, etc.

3.2 Form of Goods Contract

The Contract Form represents the agreement between the two parties concerned, i.e. the
Procurement Entity and the Supplier and is the document signed by both parties. In brief it
summarizes the obligations of the Supplier and the Procurement Entity and defines in broad terms
the basis of the agreement. Central to this agreement are the documents forming part of the
contract. The Revised Standard Forms of Contract for Goods of the Public Procurement Authority
(PPA) are discussed below.

3.2.1 Standard Contract for Request for Price Quotation

A typical Form of Contract for Request for Price Quotation is presented below.

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Section 111: Form of Contract

THIS AGREEMENT made the …. day of ………………20…..between [name of
Purchaser] (hereinafter called “the Purchaser”) of the one part and [name of Supplier] of
[city and country of Supplier] (hereinafter called “the Supplier”) of the other part:

WHEREAS the Purchaser invited bids for certain goods and ancillary services, viz.,

[brief description of goods and services]

and has accepted a tender by the Supplier for the supply of those goods and services in the sum
of [contract price in words and figures] (hereinafter called “the Contract Price”).

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

1. In this Agreement words and expressions shall have the same meanings as are respectively
assigned to them in the Conditions of Contract referred to.

2. The following documents shall be deemed to form and be read and construed as part of this
Agreement, viz.:

a. Tender Form and the Price Schedule submitted by the Supplier;

b. The Schedule of Requirements;

c. The Technical Specifications;

d. The Conditions of Contract; and

e. The Purchaser’s Notification of Award.

3. In consideration of the payments to be made by the Purchaser to the Supplier as hereinafter

mentioned, the Supplier hereby covenants with the Purchaser to provide the goods and
services and to remedy defects therein in conformity in all respects with the provisions of the
Contract.

4. The Purchaser hereby covenants to pay the Supplier in consideration of the provision
of the goods and services and the remedying of defects therein, the Contract Price or such other
sum as may become payable under the provisions of the contract at the times and
in the manner prescribed by the Contract.

5. This Agreement shall not be valid unless;

(a) signing by both parties;

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(b) authorization in the form of a Purchase Order (PO) generated from the Ghana
Integrated Financial Management Information Systems (GIFMIS) or in a form specified
by the Ministry of Finance (MoF) pursuant to the Applicable Law;

(c) the fulfillment of conditions precedent such as the submission of performance bond, if
any, that may be required on the part of either party under the Agreement or under the
Applicable law.

IN WITNESS whereof the parties hereto have caused this Agreement to be executed in
accordance with their respective laws the day and year first above written.

On behalf of the Purchaser On behalf of the Supplier

Name: Name:

Designation: Designation:

Sign: Sign:

Seal: Seal:

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The Price Quotation Form of Contract is the simplest of the standard forms of contract of the PPA
and has one set of integrated Conditions of Contract with seventeen (17) clauses, ranging from
Definitions to Operations, Maintenance and Spare Parts Manual.

3.2.2 Standard Contract Form for National Competitive Tendering

Contract Form

THIS AGREEMENT made the _____ day of ________[mm] 20_____ between [name of Purchaser] of
[country of Purchaser] (hereinafter called “the Purchaser”) of the one part and [name of Supplier] of [city
and country of Supplier] (hereinafter called “the Supplier”) of the other part:

WHEREAS the Purchaser invited Tenders for certain goods and ancillary services, viz., [brief description
of goods and services] and has accepted a Tender by the Supplier for the supply of those goods and services
in the sum of [contract price in words and figures in Cedis] (hereinafter called “the Contract Price”).

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

1. In this Agreement words and expressions shall have the same meanings as are
respectively assigned to them in the Conditions of Contract referred to.
2. The following documents shall be deemed to form and be read and construed as
part of this Agreement, viz.:
(a) the Tender Form and the Price Schedule submitted by the Tenderer;
(b) the Schedule of Requirements;
(c) the Technical Specifications;
(d) the General Conditions of Contract;
(e) the Special Conditions of Contract;
(f) the Purchaser’s Notification of Award; and
(g) Contract Data Sheet (to be used only when there are corrections to the original price schedule
submitted by the supplier).

3. In consideration of the payments to be made by the Purchaser to the Supplier as

hereinafter mentioned, the Supplier hereby covenants with the Purchaser to provide the goods and
services and to remedy defects therein in conformity in all respects with the provisions of the
Contract.

4. The Purchaser hereby covenants to pay the Supplier in consideration of the provision of the goods and
services and the remedying of defects therein, the Contract Price or such other sum as may become payable
under the provisions of the contract at the times and in the manner prescribed by the Contract.

5. This Agreement shall not be valid unless;

(a) signing by both parties;

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(b) authorization in the form of a Purchase Order (PO) generated from the Ghana Integrated Financial
Management Information Systems (GIFMIS) or in a form specified by the Ministry of Finance
(MoF) pursuant to the Applicable Law.
(c) the fulfillment of conditions precedent such as the submission of performance bond, if any, that
may be required on the part of either party under the Agreement or under the Applicable law.

IN WITNESS whereof the parties hereto have caused this Agreement to be executed in accordance
with their respective laws the day and year first above written.

On behalf of the Purchaser On behalf of the Supplier

Name: Name:

Signature: Signature:

Designation: Designation:

Seal: Seal:

Date: Date:

Witnessed By: Witnessed by:

Name: Name:

Signature: Signature:

Designation: Designation:

Date: Date:

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3.2.3 Standard Contract Form for International Competitive Tendering

Presented below is the form of contract for International Competitive Tendering.

Contract

THIS AGREEMENT made the day of, _________ between _______________of (hereinafter
“the Purchaser”), of the one part, and of (hereinafter “the Supplier”), of the
other part:

WHEREAS the Purchaser invited Tenders for certain Goods and Related Services, viz., and has
accepted a Tender by the Supplier for the supply of those Goods and Related Services in the sum
of_____-_______ (hereinafter “the Contract Price”).

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

1. In this Agreement words and expressions shall have the same meanings as are respectively
assigned to them in the Contract referred to.

2. The following documents shall be deemed to form and be read and construed as part of this
Agreement, viz.:

(a) the Purchaser’s Notification to the Supplier of award of Contract;

(b) the Tender Submission Sheet and the Price Schedules submitted by the
Supplier;
(c) the Special Conditions of Contract;
(d) the General Conditions of Contract;
(e) the Schedule of Requirements
(f) the Technical Specifications and
(g) the Minutes of Negotiation.

3. In consideration of the payments to be made by the Purchaser to the Supplier as indicated

in this Agreement, the Supplier hereby covenants with the Purchaser to provide the Goods and
Related Services and to remedy defects therein in conformity in all respects with the provisions of
the Contract.

4. The Purchaser hereby covenants to pay the Supplier in consideration of the provision of the Goods
and Related Services and the remedying of defects therein, the Contract Price or such other sum as
may become payable under the provisions of the Contract at the times and in the manner prescribed
by the Contract.

5. This Agreement shall not be valid unless;

(a) signed by both parties
(b) authorized in the form of a Purchase Order (PO) generated from the Ghana Integrated Financial
Management Information Systems (GIFMIS) or in a form specified by the Ministry of Finance
(MoF) pursuant to the Applicable Law.
(c) the fulfillment of conditions precedent such as the submission performance bond, if any, that may
be required on the part of either party under the Agreement or under the Applicable law

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IN WITNESS whereof the parties hereto have caused this Agreement to be executed in
accordance with the laws of Ghana on the day, month and year indicated above.

For the Purchaser:

Name

Signature

Witnessed by

For the Supplier:

Name

Signature

Witnessed by

ITT 36.4(b) requires that no agreement shall be valid unless a purchase is duly authorized in
the form of a Purchase Order (PO) generated from the Ghana Integrated Financial Management
Information Systems (GIFMIS) or in a form specified by the Ministry of Finance (MoF)
pursuant to the relevant laws on public expenditure under the Applicable Law. Until then any
written acceptance of the Tender/notification of award, shall not constitute a binding Contract

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3.3 General Conditions of Contract (GCC)

Section III. General Conditions of Contract (National Competitive Tendering)

The GCC, read in conjunction with the Special Conditions of Contract (SCC) and other
documents listed therein, express all the rights and obligations of the Procurement Entity and
the Supplier. The General Conditions of Contract included in the Standard Tender Documents
shall not be altered. Any changes and complementary information, which may be needed, shall
be introduced only through the Special Conditions of Contract. The contract documents shall
always be the reference documents during the contract execution, in particular in the event of
disputes.

3.3.1 Clauses under the GCC

There are thirty-two clauses in the General Conditions of Contract for National Competitive
Tendering. These are briefly explained below:

1. Definitions- The definitions are for the interpretation of terms used in the contract.

2. Application- These General Conditions shall apply to the extent that they are not
superseded by provisions in other parts of the Contract

3. Country of origin- All goods and services supplied under the contract shall have their
origin in Ghana or in eligible countries as specified in the Special Conditions of Contract.
For purposes of this clause “origin” means the place where the goods are mined, grown,
produced or manufactured, or from which Services are supplied. The origin of goods and
services is distinct from the nationality of the Supplier

4. Standards- Goods supplied under this Contract shall conform to the standards or codes
mentioned in the Technical Specifications, and, when no applicable standard is mentioned,
to the authoritative standards appropriate to the Goods’ country of origin. Where such
standards and codes are national or relate to a particular country or origin, other
authoritative standards that ensure substantial equivalence to the standards and codes
specified will be acceptable. Such standards shall be the latest issued by the concerned
institution unless otherwise expressly stated in the Contract.

5. Use of Contract Documents and Information- The Supplier shall not, without the
Purchaser’s prior written consent, disclose the contract, or any provision thereof, or any
specification, plan, drawing, pattern, sample, or information furnished by or on behalf of
the Purchaser in connection therewith, to any person other than a person employed by the
Supplier in the performance of the Contract. The Supplier shall make use of the said
information only for purposes of performing the Contract. Any other mentioned document
apart from the Contract shall remain the property of the Purchaser and shall be returned
by the Supplier to the Purchaser on completion of the Contract if so required.

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6. Patent Rights- The Supplier shall indemnify the Purchaser against all third-party claims
of infringement of patent, trademark, or industrial design rights arising from use of the
Goods or any part thereof in the Purchaser’s country.

7. Performance Security- The Supplier shall furnish the Purchaser with a performance
security within fourteen (14) days after receipt of notification of award of contract. The
proceeds of the security shall be paid to the Purchaser by the Supplier as a compensation
for any loss in case of breach of contract or non-performance by the latter. The amount of
the performance security and the period of warranty shall be specified in the SCC. This is
normally 5% to 10% of the Contract price. The security shall be in the form provided for
in the Tender Document or any other form acceptable to the Purchaser. It will be
discharged by the Purchaser and returned to the Supplier not later than 28 days after the
expiration of the one year warranty period following the date of issue of the certificate of
final acceptance of equipment and after the installation and commissioning of the
equipment.

8. Inspections and Tests- The Purchaser has the right to inspect and/or to test the goods to
confirm their conformity to the Contract specifications. The specific scope and procedure
to be followed for the inspection and tests are specified in the SCC. The Purchaser may
reject the goods if it does not conform to the specification. The Supplier shall replace the
rejected goods or make alterations necessary to meet the specification at no extra cost to
the Purchaser.

9. Packing- This condition specifies that the Supplier shall provide such packing for the
Goods as is required to prevent their damage or deterioration during transit to their final
destination, as indicated in the Contract. The Supplier is also to adhere to any additional
packing requirement specified in the SCC or subsequently instructed by the Purchaser.

10. Delivery and Transfer of Risk- This requirement of the contract shall normally be in
accordance with the INCOTERMS governing the supply of the goods, otherwise it should
follow international practice or as specified in the SCC.

11. Insurance – The goods supplied under the Contract shall be fully insured in a freely
convertible currency against loss or damage incidental to manufacture or acquisition,
transportation, storage and delivery. This shall be in accordance with the stated
INCOTERMS in the Contract, otherwise it should be as specified in the SCC or must
follow international practice.

12. Transportation- Unless otherwise specified in the SCC, responsibility for arranging
transportation of the goods shall be in accordance with the stated INCOTERMS in the
Contract.

13. Incidental Services-Incidental services may be part of the Contract, to the extent that they
are specified elsewhere in the contract document, usually in the SCC. This may require the
Supplier to provide a supervision service on site for assembly/or start- up of the supplied

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goods, furnishing of tools required for assembly, training of the Purchaser’s personnel at
the Supplier’s plant and also maintenance or repair of the goods for an agreed period of
time. This does not, however, relieve the Supplier of any warranty obligations under the
contract.

14. Spare Parts- Spare parts may be part of the Contract , to the extent that they are specified
elsewhere in the contract document , usually in the SCC

15. Warranty-The Supplier warrants that the quality of the goods meet the specification
requested for in the Tender document. This provision protects the Purchaser in case of poor
quality of the goods, during a certain period of delivery, which is to be specified in the
SCC. It shall remain valid for 12 months after the goods have been delivered to the final
destination indicated in the Contract, installed and commissioned to the satisfaction of the
Purchaser.

16. Payment- Payment terms and methods shall be in accordance with international
commercial practices applicable to the specific goods. General principles are specified in
the GCC, while specific terms and methods applicable to the Contract shall be specified in
the SCC. Letters of credit are normally used to pay for imports. The documentation required
is specified in the SCC

17. Prices-Prices charged by the Supplier for goods and services delivered and services
performed under the Contract shall not vary from the prices quoted by the Supplier in its
Tender, with the exception of any price adjustments authorized in the Special Conditions
of Contract. The price adjustment formula must be stated in the SCC.

18. Change Orders- The provisions and obligations of either party to the contract may have
to be changed within the general scope of the contract. This may include, for example
drawings, designs, method of shipment, packing, place of delivery and or services to be
provided. If any such change causes an increase or decrease in the cost of the time required
for the Supplier’s performance of any provisions under the contract, an equitable
adjustment may be made in the contract price or delivery schedule, or both, and the Contract
may accordingly be amended. Any claims by the Supplier for adjustment under this clause
must be assessed within twenty-eight (28) days from the date of the Supplier’s receipt of
the Purchaser’s change order. This has to be in writing.

19. Contract Amendments-Variations or modification of the terms of the Contract can only
be made in writing and needs to be signed by the Parties

20. Assignment –The Supplier shall not assign, in whole or in part, its obligations to perform
under the Contract, except with the Purchaser’s prior written consent.

21. Subcontracts- The Supplier shall notify the Purchaser in writing of all subcontracts
awarded under this Contract if not already specified in the Tender .Such notification, be it

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in the original tender or later, shall not relieve the Supplier from any liability or obligation
under the Contract.

22. Delays in the Supplier’s Performance-Delivery of the goods and performance of services
shall be made by the Supplier in accordance with the time schedule specified by the
Purchaser in the Schedule of Requirements.

23. Liquidated Damages- Subject to GCC Clause 25,if the Supplier fails to deliver any or all
of the goods or to perform within the time period(s) specified in the Contact, the Purchaser
shall, without prejudice to its other remedies under the Contract, deduct from the Contract
Price, as liquidated damages, a sum equivalent to 0.5% of the Contract price of the delayed
goods for each week of delay until actual delivery, up to a maximum deduction of 10% of
the delayed goods Contract price as is stated in the SCC. Once the maximum is reached,
the Purchaser may consider termination of the Contract pursuant to GCC Clause 24.

24. Termination for Default- Purchaser may terminate the Contract for default on the part of
the Supplier. Some of the circumstances for termination by the Purchaser for default are
when the Supplier fails to deliver any or all the goods within the time period(s)specified in
the Contract or if in the judgment of the Purchaser the Supplier has engaged in corrupt or
fraudulent practices in competing for or in executing the Contract. The related clauses
specify all the circumstances, implication and procedure for the termination.

25. Force Majeure- It is normal practice that contracts include a clause of force majeure. This
protects both parties from certain risks in events such as natural disasters, which are beyond
the control of either party, and have major consequences for the Contract.

26. Termination for Insolvency- The Purchaser may at any time terminate the Contract by
giving written notice, without compensation to the Supplier due to insolvency on the part
of the Supplier, provided that such termination will not prejudice or affect any right of
action or remedy which has accrued or will accrue thereafter to the Purchaser.

27. Termination for Convenience- Purchaser may terminate the Contract for convenience.
The related clauses specify the circumstances, implication and procedure for the
termination.

28. Resolution of Disputes- Disputes may occur during contract execution resulting in claims
from either party. General provisions are specified on how to settle disputes either by direct
informal negotiations, mutual consultation and amicable resolution, or arbitration. The
provision for international arbitration may be considered when the Supplier is from a
foreign country as this is seen as contributing to fairness of treatment of tenderers. Specific
procedures to be followed in the event of disputes and arbitration are specified in the SCC.
It requires that the dispute shall be settled by arbitration in accordance with the provisions
of the United Nations Commission on International Trade Law (UNCITRAL)

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29. Governing Language- The Contract shall be written in the language as specified in the
SCC. Subject to GCC Clause 30, the version of the Contract written in English shall govern
its interpretation. All correspondence and other documents pertaining to the Contract which
are exchanged by the parties shall be written in the English language. Act 663 specifies
English as the governing language.

30. Applicable Law- The applicable law prescribed in the GCC is the law of the Purchaser’s
country, Ghana. This provision may be modified in the SCC, if need be.

31. Notices-Any notice given by one party to the other pursuant to the Contract shall be sent
in writing to the other party’s address as specified for that purpose in the SCC.

32. Taxes and Duties- The Supplier shall be entirely responsible for all taxes, duties, license
fees, etc incurred until delivery of the goods to the Purchaser. The application of this
general provision is straightforward, when the Contract is limited to the delivery of the
goods. In the case of more complex contracts, where the scope includes provision of related
services within the Purchaser’s country, the problem of tax liabilities may become more
complicated. Usually, the Supplier is made liable for taxes on related services. In such a
case appropriate specific provision shall be specified in the SCC

3.4 Summary List of Clauses in SCC for National Competitive Tendering

The following SCC shall supplement the GCC. Whenever there is a conflict, the provisions in
the SCC shall prevail over those in the GCC. The list of clauses of the SCC are:
i. Definitions
ii. Country of Origin
iii. Performance Security
iv. Inspection and Tests
v. Packing
vi. Delivery and Documents
vii. Insurance
viii. Incidental Services
ix. Spare Parts
x. Warranty
xi. Payment
xii. Prices
xiii. Liquidated Damages
xiv. Resolution of Disputes
xv. Governing Language
xvi. Notices

3.5 General Conditions of Contract (GCC) & Special Conditions of

Contract (SCC) for International Competitive Tendering
The General Conditions of Contract (GCC) & the Special Conditions of Contract (SCC) for
International Competitive Tendering are provided in Appendix 2 for ease of reference.

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4.0 CONTRACT ADMINISTRATION PROCESS: POST-

AWARD PRELIMINARY TASKS

4.1 Introduction
Post contract-Award Preliminary Tasks are essential for the eventual success of contract
performance monitoring and any follow-up actions. These involve all the preparatory activities
necessary to enable commencement of contract implementation. The chapter discusses
formation of the contract administration team and assigning roles and responsibilities; setting
up administrative, financial/payment, time control and inspection and quality assurance
procedures; determining communications and reporting requirements; preparation of contract
administration plan, including contract milestones; determining meeting procedures; and
devising verification procedures of securities and insurance policies.

4.2 Contract Administration Planning (Policies, Systems and Procedures)

The Purchaser must first ensure that proper internal arrangements with respect to Contract
administration are made in its organization. This mainly has to do with the Procurement
Entity’s staff and processes as described below:
 Assign detailed tasks to the individual or the team responsible with specific duties
during the contract administration process. This would be equivalent to creating job
descriptions for everyone involved. The tasks assigned to each individual should be
precise and realistic (taking into account the specific experience, expertise and
workload of each staff). For example, the Procurement Specialist should know that
he/she would be responsible for keeping track of the main contract milestones (effective
date; deadlines for delivery, installation, payment, warranty period etc.); the technical
expert should supervise all aspects related to the technical specifications, functional
guarantees, inspections and tests, etc.
 Establish internal procedures (hierarchy, communication, level of authority, flow of
documents, verification and acceptance procedures, payment procedures, internal audit
etc.);
 Evaluate risks associated with the implementation of the contract, identification of the
main remedies or mitigation measures, as well as parties responsible for their
enforcement;
 Coordinate arrangements with third parties (other agencies, end users, beneficiaries
etc.)
 Develop procedure for keeping track of the contract’s price adjustment mechanism (if
any)
 Develop Contract Administration Plan and Contract Milestones.

4.3 Contract Administration Plan (CAP)

In contract administration, the focus is on obtaining supplies and related services, of requisite
quality, on time, and within budget. While the legal requirements of the contract are
determinative of the proper course of action of public officials in administering a contract, the
exercise of skill and judgment is often required in order to protect effectively the public interest.
The Contract Administration Plan is a compilation of required “action schedules”,
implementation supervision procedures and payment procedures that must be followed and

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coordinated by the Procurement Entity to ensure compliance with contract terms and conditions
during contract performance by “both” parties to the contract. In other words, it details “what”
needs to be done and by “whom”, “how” and “when” it needs to be done for the proper
functioning of the contract.

The Contract Administration plan should aim at identifying the administrative and technical
tasks required for the successful performance of the contract and at putting in place “checks
and controls” to detect non-performance by either the Procurement Entity or the Supplier at
the appropriate time in order to reduce the risks to the delivery of the procurement package
caused by possible implementation problems.

4.3.1 Main Elements of a Contract Administration Plan

A Contract Administration Plan can be very simple or very elaborate depending on the
nature/type, scope, value and complexity of the assignment or project. Elements of the CAP
include the following, among any others:

Deliverables
 Read your contract thoroughly and create checklists for all contract deliverables.
 When you list the contract deliverables, make note of specific standards for acceptance
and allowances for substitutions.

Schedules
 Contracts cover a specific period. The contract administration plan must include a
schedule for startup dates, deadlines for deliverables/requirements and the closing date
of the contract.
 Take note of milestones that affect the production or submission of any deliverables,
and put them into the contract calendar.
 The master schedule with milestones and deadlines is a planning tool that your
institution can use to monitor progress and adjust the contract administration plan.

Finances
 Your institution must have a contract budget that details expenses to be incurred in the
performance of the contract. The person responsible for financial administration also
needs to reconcile projected expenses against actual expenses.
 The person who manages the contract budget must know what documentation
accompanies every invoice and how payment will be made.
 Expenditure on the contract will also be posted in the organization’s books in a manner
that lets you track contract accounts receivables and payments.

Work Plan
 Create a work plan that allocates the personnel and financial resources required to meet
the terms of the contract.
 Assign responsibilities for each deliverable to internal personnel or identify temporary
help and external experts you need to meet contract schedules.
 Draft a reporting schedule that keeps you informed of resources required, resources
allocated and the cost burden of your resources

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Risk Management
 Identify risks that could hinder successful execution of the assignment.
 Loss of key personnel, natural disasters and financial constraints are common risks
Suppliers face.
 Prepare a strategy for addressing the risks that you identify.
 Build some leeway into the work plan for making possible course corrections or
adjusting contract milestones without incurring additional costs or missing deadlines.

4.3.2 Key Milestones of a Contract for Supply of Goods

There are certain key milestones that need to be monitored during contract administration.
These include the following:
 Contract Effectiveness;
 Contract Commencement;
 Receipt of Advance Payment Security;
 Receipt of Performance Security;
 Payment of any required Advance payment;
 Pre-delivery, post- delivery or destination inspection of the goods (if stated in the
Contract);
 Delivery dates of the goods according to the contract delivery schedule;
 Delivery of related services -installation and commissioning of goods (if stated in the
Contract);
 Payments made in respect of the goods in accordance with the contract payment
terms;
 Release of all Securities (required under the contract terms; and
 Contract Closure.
Individual contracts may have additional key milestones and these need to be identified by
the Contract Administrator.

4.3.3 Monitoring Performance of Key Milestones

Receipt of a Performance Security

Upon Contract signature the first task is to return the Tender Security to the successful
Tenderer in exchange for the Performance Security.

Contract Effectiveness
This is usually stated in the contract and the period usually starts from the date of contract
signature or as otherwise stated in the contract. Whatever definition is used in the contract is to
facilitate calculating the effective date of the contract. It should not be assumed that the
definition of effectiveness is the same between contracts. The date of effectiveness is usually
the date by which all else in the contract is calculated (i.e. delivery periods). Occasionally a
Supplier may require a further period following effectiveness before delivery of other contract
variables can be calculated. Such a period may be termed a Contract Commencement (or a
Contract Mobilization)

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Contract Commencement (or Contract Mobilization)
If applicable to a contract for goods, this will also be stated in the contract as a period following
contract effectiveness.

Receipt of Advance Payment Security

An advance payment cannot be initiated until an Advance Payment Security is first received
and verified as correct. Once the Security is received then actions can be taken to arrange the
payment with an invoice from the Supplier.

Payment of Any Required Advance Payment

Once the Advance Payment Security and an invoice for the advance payment is received,
payment needs to be made. It is very common for contract effectiveness to be the receipt by
the Supplier of the advance payment. Where this is the case then the Contract Administrator’s
efforts will be focused on making the payment to achieve early contract effectiveness.

Pre-delivery, Post Delivery or Destination Inspection of the Goods

Inspection requirements will be stated in the contract, and tasks will need to be scheduled into
the Contract Milestone Checklist so that appropriate arrangements are initiated by the
Procurement Entity at the time they are required to be tasked.

Delivery Dates of the Goods According to the Contract Delivery Schedule

The contract will usually specify the delivery periods that will apply to the items contracted.
Delivery dates will be calculated from the date of contract effectiveness (or contract
commencement). The delivery dates will be included in the Contract Milestone Checklist and
be central to the Contract Administrator’s activities throughout the contract period.
There is a further need to hold the factual record of delivery dates just in case the Procurement
Entity decides to claim against the Supplier in respect of late delivery in accordance with the
terms of the contract.

Delivery of Related Services - Installation and Commissioning of Goods

The contract will also specify the related services to be provided in respect of the contracted
goods. The delivery dates will be included in the Contract Milestone Checklist and be
synchronized by the Contract Administrator with the site delivery of the goods.

Payments Made in Respect of the Goods in Accordance with the Contract Payment
Terms
The Contract Administrator’s task in respect of payments is to initiate the payment process by
verifying that the request for payment is in order and confirm that the payment be made
accordingly. In doing this the Contract Administrator is guided by the contract terms applicable
to each contract and by the total amount of payments already made against the contract. This
is monitored by the maintenance of a payment record for each contract which compares the
total payments made against the contract total value (including any amendments to contract).

Release of all Securities

Once the Contract Administrator maps out the events of the contract, provisions must be made
for the return of all Securities to the Supplier once these have expired or may be returned as
their purpose has been met.

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Contract Closure
Once all obligations by both the Procurement Entity and the Supplier have been completed, the
Contract Administrator must review the contract performance and conclude that all tasks and
actions have been completed and that the file should be closed.
The Contract Administrator must be familiar with all new contracts as the terms and conditions
will be different and require different methodologies.

4.3.4 Contract Milestone Checklist for Each Contract

As the composition of each contract differs, so the Contract Milestones for each contract will
also differ. Additionally it is important to take a view of the key events of each contract in
advance to determine the likely dates that those key events have to occur so that these are
transferred into the Contract Administrator’s Diary or Journal.

A Contract Milestone Checklist Form is shown in Table 1 and includes a number of typical
tasks that may be covered in a contract.

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Table 1: Contract Milestone Checklist for Supply and Installation

Task Original Target Revised Target Actual

Date Date Date
Contract Effectiveness (e.g.) 28 Jan 20...
Contract signature (Procurement 30 Nov 20...
Entity (PE))
Contract dispatched to Supplier 01 Dec 20...
Contract signature (Supplier) 02 Dec 20...
Return of signed contract to PE 06 Dec 20...
Production of Advance 10 Dec 20...
Payment(A/P) Security
Production of A/P Invoice 15 Dec 20...
Dispatch of Invoice & A/P Security 16 Dec 20...
Receipt of Supplier Invoice & A/P 21 Dec 20...
Security
Approval of A/P Security 27 Dec 20...
Approval of A/P Invoice 30 Dec 20...
Payment of A/P Invoice 20 Jan 20…
Funds released to Supplier 24 Jan 20…
Funds received by Supplier 28 Jan 20…
Production Period 18 Apr 20…
Supplier commences production 31 Jan 20…
Production period 11 Apr 20…
Supplier delivery scheduled 18 Apr 20…
Delivery and Installation Period 01 Jun 20...
Shipment scheduled 25 Apr 20...
Shipment received in Ghana 11 May 20...
Shipment received on site 20 May 20…
Plant installed 27 May 20…
Plant commissioning 01 Jun 20…
Commissioning certificate signed 01 Jun 20…

As can be seen in Table 1, a complete view of the likely timescale and all associated tasks that
must be completed prior to receiving the actual goods concerned, are fully apparent to the
Contract Administrator.

4.3.5 Managing the Contract Checklist

This checklist could be used by the contract administrator or a senior manager with
management oversight responsibility for a contract or contracts to gain assurance that the
necessary governance arrangements are in place at the commencement of the contract. The
ongoing management section of the checklist could be used periodically to check that the
necessary actions are being taken to manage the contract.

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Contract commencement
 Does the contract manager have the required level of skills and experience?
 Does the contract manager have a satisfactory level of understanding of the contract
and of the relevant subject matter?
 Have risks to the management of the contract been identified and risk treatments
identified?
 Is it clear who is responsible for implementing any necessary risk treatments?
 Has responsibility for all aspects of managing the contract been clearly assigned?
 Do delegations exist for the approval of contracts, contract variations and the approval
of expenditure?
 Have all stakeholders been identified and arrangements agreed to obtain feedback/input
throughout the life of the contract?
 Have the benefits of flow charting internal processes, e.g. dispute escalation
arrangements, been considered?

Ongoing management
 Are contract payments linked to satisfactory contract performance?
 Are all invoices, and any supporting documents, checked to ensure they are in
accordance with contract requirements and are in order to be paid?
 Is timely action taken when contract performance is unsatisfactory?
 Are all variations to the contract agreed on value-for-money grounds?
 Are all amendments to the contracts subjected to formal contract variations? Is a record
maintained of all contract variations?
 Where the contract does not meet agreed levels of performance, are any actions taken
adequately documented? Where it is decided not to take action, is this decision properly
approved and documented?
 For longer term contracts, is the contract subject to periodic review?
 Are disputes addressed in a timely manner and satisfactory efforts made to resolve
them?
 Is the contract being actively managed so that there is reasonable assurance that the
contract outcomes are being achieved?

Contract extension/renewal
 Do systems/procedures enable the timely consideration of the need for contracts to be
extended or renewed?
 Are all contract extensions justified on value for money grounds?
 Are there arrangements in place designed to ensure that probity issues are identified
and addressed during contract extension and re-tender processes?

Ending the contract

 Has the Supplier delivered all the goods required?
 Has the Supplier met all the contractual obligations?

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 Has an evaluation of the contract been undertaken and, where appropriate, lessons
learnt been built into future contracting activities?
 Has the Supplier’s performance been evaluated, properly documented, and feedback
provided to the Supplier?

4.4 Commencement/Kick-off Meeting(s)

Although not as critical in goods procurement as in the case of civil works or consulting
contracts, a Commencement or Kick-off meeting with the Supplier is recommended at the start
of the project. The meeting should not be attended by only the Contract Administrator/ Project
Manager or Purchaser’s staff involved in contract supervision, but also by representatives of
the end users or beneficiaries of the goods being procured, if applicable (e.g. when goods are
procured for certain schools, local communities, other Government agencies etc.)

4.4.1 Critical issues to be established during the kick-off meeting

These include:
 Introducing the parties, their roles and responsibilities - this applies equally to
Supplier’s representatives as well as Purchaser’s staff charged with managing the
contract.
 Establishing communication procedures - (mechanisms, frequency etc.).
 Study of contract documents - priority and inter-correlation of contract documents;
conditions of contract; specifications; payment schedules and covenants;
implementation milestones (delivery, installation, commissioning, acceptance etc.);
 Review of applicable legislation and any obligations in connection with the execution
of the contract in the Purchaser’s country (e.g. contract registration; registration of
goods; applicable tax regime, reporting obligations to other Government agencies;
import licenses; customs clearance procedures etc.);
 Establish a reporting system between the parties (level, frequency, templates for reports
for each party involved) if applicable (particularly in the case of more complex supply
and installation contracts);
 Define escalation procedures to unblock critical situations or bottlenecks (delays in
performance or in obtaining permits and approvals; non-performance of Supplier etc.);
 Ensuring that all parties involved in the contract implementation share the same
understanding of their rights, roles and responsibilities derived from the contract
documents; of each other’s expectations of the timeframe; of any particular constraints
in the implementation.
 Establishing a tentative Effective Date or Commencement Date, by which all conditions
required by the Contract would be met (signing of Contract Agreement, submission of
performance security and advance payment guarantee, payment of advance etc.), where
applicable (e.g. supply and installation of information systems).

4.5 Verification of Advance Payment Security and Performance Securities

The Purchaser’s staff should:
i) Check the securities (performance security, advance payment guarantee) for the correct
(i) amount; (ii) validity; (iii) wording and format. The text of the security should not
contain any significant deviation from the sample forms included in the bidding

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documents. The Purchaser should reject any additional texts introducing conditions that
would render the security invalid or make it harder to forfeit.
ii) Submit the securities to the Purchaser’s commercial bank and request verification of
the authenticity of the signatures of the issuing bank. This process should not normally
exceed a few business days and the cost of this service is usually negligible, so the
Purchaser should always request this verification. This is especially important in the
case of (i) unknown suppliers; and (ii) securities issued in questionable jurisdictions
(e.g. offshore fiscal havens).

A special mention should be made regarding the requirement that the Supplier maintains a
(reduced) performance security during the warranty period. The Purchaser shall make sure that
the security is duly provided and is enforceable throughout the warranty period.

4.6 Verification of Insurance Policies

Purchaser’s staff should check whether the requested insurance has been properly contracted
by the Supplier, particularly with regard to the amount and the coverage, which should be as
requested by the conditions of contract and the applicable INCOTERMS delivery condition.
More complex insurances should be demanded by the Purchaser from the Supplier in the case
of complex contracts, such as supply and installation of information systems or supply and
installation of plant and equipment. Given the nature of these contracts, which include more
activities than just the simple supply of goods, special attention should be paid to the additional
insurance policies that the Supplier (and its subcontractors) needs to take out and maintain,
such as:
 Installation “All Risks” Insurance;
 Third Party Liability Insurance;
 Employer’s Liability Insurance;
 Contractor’s Professional Liability Insurance (if requested, under a plant design, supply
and installation contract).

Purchaser’s staff should check if the policies have been contracted, paid and maintained
according to the conditions of the contract. Important aspects to consider:
 Insured parties – does the Cargo Insurance and Installation “All Risks” Insurance
expressly name both the Purchaser and the Supplier as jointly insured? Policies where
only the Supplier is insured are not acceptable as they may leave the Purchaser liable
for certain risks.
 Exclusions – events (risks) that are not covered by the insurance policy (i.e. if the goods
are damaged following the occurrence of an excluded event, the insurer does not pay
for the damage). There are many cases where the Supplier gets very cheap insurance
precisely because most events are excluded (usually through “silent” addenda to the
insurance policy). This is why the Purchaser should always check the exclusions of the
policies and should request directly from the insurance company confirmation about
the exact list of exclusions and their applicability.
 Terms and conditions that may render the policies invalid under certain circumstances
or events – the Purchaser should check any conditions attached to the insurance policies
such as prior notification requirements and any other clauses that may affect its rights

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under the terms of the policy. Special attention should be paid in the case of changes in
the scope of contract because most of the insurers would require to be notified whenever
such changes occur. The same applies to extensions of time for supply – the Purchaser
should make sure that the policies are properly extended to cover the new reality of the
contract.

4.7 Inspections
The reason for inspecting goods is to ensure their conformance to the specifications of the
Purchase Contract. This may be done by an outsourced inspection company at the country of
shipment, at the port of destination or by the Procurement Entity .The Procurement Entity’s
storekeepers and technical staff or the inspection committee/department may perform the
inspection function. It normally consists of quality inspection combined with checks of the
quantity or weight/volume of the goods, their marking and packing. Common methods of
inspection include visual inspection, performance, and safety testing.

Visual inspection is normally conducted by the inspection team, who would look at the
physical appearance of the item supplied so as to ascertain if it complies with the specification
provided by the Purchaser to the Supplier.

Performance testing is done by the inspector subjecting the item supplied to a strict test so as
to determine whether it complies with the performance specification or requirements

Safety test is conducted by subjecting the item supplied to a strict check to ensure that it would
not compromise the health and safety of the user department. For example, a sample of lime
hydrated supplied for water treatment would be tested by the Chemist/Bacteriologist to
ascertain if it is safe to be used for water treatment or not. His/her report will determine whether
the bulk consignment supplied should be accepted or rejected by the Procurement Entity.

The following activities need to be undertaken before goods can be received into the
Procurement Entity’s store:
 Verification
 Checking technical requirements
 Certification

Verification
The receipt of non-technical items at the store requires that the verification procedures listed
below are followed by the Stores Unit
 Check the number of cases or other packaging units against the delivery docket’s detail.
 Sign for the number of cases or other units against the delivery docket details.
 If a detailed check is not possible, write the word,’ unchecked’ on delivery document
before signing them
 Check the quantity received against the packing or delivery note.
 Notify the superior officer if the material is damaged or if there is a discrepancy in
quantity and prepare a ‘Claim Form’.

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 Notify the Purchasing Unit that materials have been received and also report on any
damaged item or discrepancy observed.
 Prepare and sign Stores Receipt Voucher(SRV)
 Internal Audit Unit conducts pre- audit exercise of the items supplied
 Copies of the SRV, Purchase Order and invoice are sent to the Accounts Unit for
payment to be effected after the Purchase Clerk has recorded the supply in the purchase
register.

Checking
Certain items delivered to the store require checking by inspectors with the necessary technical
competency, from the Procurement Entity, before they are accepted. This is to ensure that the
items, delivered by the Supplier, comply with the specification on the Purchase Order (PO) and
the sample(s), if any.

Certification
This requires the exercise of engineering judgment where progress payment is to be made
before the contract is completed.
A typical contract such as the manufacture of a large steam boiler would allow for payment to
be made at the various stages of the work. At certain stages, judgment must be made of the
total value of the job, which has been completed. The user department or Consultant prepares
an engineer’s certificate stating that work to the invoiced value had been properly done (or
materials to the invoiced value had been delivered in good condition, on time, etc.) The
Contract Administrator may then initiate payment request on behalf of the Supplier.

Under GCC 8.2 the inspections and tests may be conducted on the premises of the Supplier or
its sub-Supplier(s) at point of delivery and/or at the Goods final destination. If conducted on
the premises of the Supplier or its sub-Supplier(s), all reasonable facilities and assistance,
including access to drawings and production data, shall be furnished to the inspectors at no
charge to the Purchaser.

GCC 8.3 stipulates that should any inspected or tested Goods fail to conform to the
Specifications, the Purchaser may reject the Goods, and the Supplier shall either replace the
rejected Goods or make alterations necessary to meet specification requirements free of cost to
the Purchaser.

GCC 8.4 states: “The Purchaser’s right to inspect, test and, where necessary, reject the goods
after the goods arrival in the Purchaser’s country shall in no way be limited or waived by reason
of the goods having previously been inspected, tested and passed by the Purchaser or its
representative prior to the goods’ shipment from the country of origin.”

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5.0 MONITORING CONTRACT PERFORMANCE &

REPORTING

5.1 Introduction
During contract performance, the contract administrator and his team must observe
performance, collect information, and measure actual contract progress and prepare reports.
These activities are essential to effective control. The purpose is to ensure that the consultant
is performing all duties in accordance with the contract and for the Procurement Entity to be
aware of and address any developing problems or issues.

The resources devoted to these tasks and the techniques used to perform them will depend on
the nature of the contract work, the size and complexity of the contract, and the resources
available.

Monitoring contract performance covers key areas of contract administration, namely: time
control, quality and quantity control, resolution of performance problems & contract remedies,
internal and external communication, processing payments, contract modifications/changes,
site visits, maintaining contract documentation, scheduling and holding meetings and
managing securities and insurance policies.

5.2 Time Control

To ensure timely control with the objective of prompt delivery by the Supplier, the Contract
Administrator may need to do the following:
 Check compliance with the contract milestones (delivery, installation, pre-
commissioning, commissioning, functional testing, acceptance etc.).See Section 4.2;
 Check if separate times for completion are provided for different parts of the facilities
or subsystems (in supply and installation contracts);
 Take actions to speed up progress and ensure compliance with contractual time for
completion. This may call for the need to expedite the order so as to ensure that there
is no delayed supply of goods ordered. Expediting may commence immediately the
contract is placed with the Supplier and continue with the following:
 Ensure the contract document is received by the Supplier
 Ensure the contract document is signed and returned by the Supplier
 Establish the effective date of the contract
 Ensure Performance Security is received from the Supplier (if the contract
stipulates so)
 Ensure the Letter of Credit is established in favour of the Supplier (if required
by the contract)
 Ensure Advance Payment Security is received (if required)
 Initiate payment process for Advance Payment (if required)
 Ensure that installment payments are made (if the contract stipulates so)
 Liaise with Supplier to ensure adherence to delivery schedule
 Follow up to ensure prompt payments to Supplier
 Application of liquidated damages for delay should the need arise.

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5.3 Quality Control

Quality control is concerned with defect detection and correction. It relates to such activities
as determining where, how and at what intervals inspection should take place, the collection
and analysis of data relating to defects and determining what corrective action should be taken.
This is addressed by GCC 8.1, below;

“The Purchaser or its Representative shall, at no extra cost, have the right to inspect and/or
to test the goods to confirm their conformity to the contract. The Special Conditions of Contract
and /or the Technical Specifications shall specify what inspections and tests the Purchaser
requires and where they are to be conducted. The Purchaser shall notify the Supplier in writing
of the identity of any representatives retained for these purposes within 21 days after award of
the contract.”

The above GCC Clause is to ensure that the Supplier does not deviate from delivering the
required specification. It is therefore seen as a means to achieve strict quality compliance with
the PO.
.
GCC Clause 15.1 addresses the issue of warranty. It requires that the Supplier warrants that
the Goods supplied under the Contract are new, unused, of the most recent or current models,
and that they incorporate all recent improvements in design and materials unless provided
otherwise in the Contract. The Supplier further warrants that all Goods supplied under this
Contract shall have no defect, arising from design, materials, or workmanship (except when
the design and/or materials is required by the Purchaser’s specifications) or from any act or
omission of the Supplier that may develop under normal use of the supplied Goods in the
conditions prevailing in the country of final destination.

Functional guarantee could also help to achieve quality control in Goods procurement. It may
be in the form of a need to have standard rating for the items to be supplied from a recognized
body, such as the International Organization for Standardization (ISO) or its equivalent. The
Supplier may also be required to issue warranty with respect to the items supplied.

5.4 Resolution of Performance Problems & Contract Remedies

A performance problem may be caused by the Supplier, the Procurement entity or both. It may
be as a result of an action or inaction by either or both parties. This can result in a breach of the
contract terms and conditions. Examples of performance problems are as follows:
 The Supplier’s inability to deliver the goods on schedule to the Procurement Entity.
 Delay in processing Supplier’s payment by the Procurement Entity.
 A claim for warranty repairs or replacement by the Procurement Entity, which has been
rejected by the Supplier

Performance problems could affect timely delivery of supplies as well as result in delayed
payment to the Supplier.

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5.4.1 Effects of Performance Problems
Performance problems may affect:
 Timely execution of the procurement
 Cost of the procurement

Resolution of performance problems needs to be tackled by the Contract Administrator so that

there will be successful execution of the procurement. The Contract Administrator should go
through a fact–finding process with his team, the Supplier and end-user. He/she must do well
to reach a practical solution that will allow the contract to proceed, while at the same time
safeguarding the interest of the Procurement Entity. In certain situations, the Contract
Administrator may decide to suspend contract progress fully or partially, while a solution is
being worked out, or may consider termination of the contract in an extreme case.

The Contract Administrator must do well to tackle performance problems by taking the
following steps:
 Interpret contract clauses related to the problem. Clause 22 of the GCC for example
addresses delays in Supplier’s performance.
 Collect evidence from all parties
 Establish facts
 Determine cost/delivery impact related to the problem
 Devise an optimum solution
 Inform parties concerned of decision taken in writing

5.5 Internal and External Communication

Establishing a good means of communication is one of the keys to successful contract
administration. Normally the practice of communication begins immediately after the end of
tender procedure and signature of contract, with a kick –off meeting between the Contract
Administrator and Supplier. This sets the foundation for continuous information exchange
between the parties. Personnel authorized by both parties to have written communication with
each other must be identified. Also the frequency of official communication between the
Procurement Entity and Supplier must be defined so as to ensure effective expediting of the
Purchase Order. There might also be the need for review meetings so as to ensure that any
challenges that might lead to delayed deliveries by the Supplier are quickly addressed. In
addition to that, there must be an established procedure for keeping minutes of the meetings
held.

In order to avoid problems with communication between the Procurement Entity and the
Supplier, the following need to be observed:
 Deadlines for communication must be adhered to
 Any notice, consent approval or decision by any person required by the contract shall
be made in writing unless otherwise defined in the contract

5.5.1 Contract Reporting

The reporting requirements are usually listed in the contract. It is important to set a monitoring
mechanism for timely receipt and review of reports in order to ensure adequate reaction to them

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This ensures that information regarding the appearance of a problem in the execution of the
contract is reported promptly to those who have the power to act in taking the necessary
mitigating measures. For example, when the Supplier is deemed by the Contract Administrator
to have unduly delayed the delivery of goods as required by the contract, the head of Legal
Department must be informed in order for a decision to be taken as to what relief measures are
to be sought under the contract; a relief available to the Procurement Entity in this case might
be to, for example, invoke the liquidated damages clause.

5.6 Processing Payments

A sound payment system must:
a) Detail how to deal with the receipt, verification, certification and authorization of
invoices.
b) Detail how, and by whom, invoices are authorized and then passed for payment.
c) Ensure that there is a clear audit trail.

The Contract Administrator must ensure that the established procedures are followed and that
payments are in compliance with contract provisions. The Contract Administrator must also
ensure that over payments are avoided and payment is made for accepted goods and associated
services only. Delays in processing payment requests may result in a Supplier raising claims
for interests on delayed payments.

5.7 Contract Modifications

Modifications or Variations of various aspects of the contract may arise during contract
implementation. The modification/variation may change an item in the contract or add a new
item, related to scope, time and cost. A formal modification/variation is an amendment to a
contract that changes the original terms or conditions of the contract. The general conditions in
each standard form of contract define what constitutes a variation in that particular standard
form. It is accepted practice for the variation mechanism to provide for variations to be agreed
between the Procurement Entity and the Supplier in writing through a formal amendment of
the contract.

Changes in the scope, the implementation arrangements, Performance Specifications or the

delivery date may or may not have cost implications. The contract Administrator must ensure
that all modifications/variations are formally instructed in writing and are covered by
amendment documents in accordance with the terms and conditions of the contract.

5.8 Maintaining Documentation

Maintaining documentation is essential in order to provide proof of performance, management
of changes, justification for claims, and evidence in the unlikely event of litigation. The most
important documentation is the official copy of the contract, contract modifications, and
conformed working copies of the contract. Other important forms of documentation include:
external and internal correspondence, meeting minutes, progress reports, telephone logs,
expediting reports and contract close-out documents.

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5.9 Site Visits
The Contract Administrator may need to arrange regular meetings of all stakeholders at the
Project site as a means of ensuring that there is timely delivery and installation, testing and
commissioning of equipment supplied by the Supplier.

5.10 Securities and Insurance

A security is a legally enforceable instrument given by a third party “guarantor” to a purchaser
to guarantee the obligations of a supplier of goods and associated services under a contract.
The guarantor, usually a bank or insurance firm, is obliged to pay a sum of money to the
Purchaser should the Supplier fail to meet the guaranteed obligation. Examples of securities
are Tender Security (GCC 16), Performance Security (GCC37).

5.10.1 Tender Security

A tender security is intended to ensure the seriousness of the tenderer. Tender Security secures
the payment of the guaranteed amount:
 If the tenderer withdraws the offer before its expiry date;
 If the contract, after being awarded, is not accepted by the tenderer;
 If after a contract award, the tender security is not replaced by a performance security,
where required.
The tender security can be in the form of a bank guarantee or an insurance bond.

5.10.2 Performance Security

A performance security is usually provided at the time of contract award, for an agreed
percentage of the total contract value. Performance securities, in the form of a bank guarantee
or an insurance bond, are also widely used in the procurement of goods and associated services.
A performance security will not of itself guarantee that contracts are carried out efficiently and
to time, but would be one of a number of commercial pressures on the Supplier to supply the
goods on schedule.

5.10.3 Mobilization Security

Advance payment to a Supplier should be avoided wherever possible. Where it cannot be
avoided it should be secured with a mobilization security in the form of a bank guarantee or
insurance bond from a reputable financial institution.

5.10.4 Insurance
From the Supplier’s factory and or warehouse en route to the buyer’s place of delivery, goods
may often have to cover long distances by various modes of transport. The goods supplied
under the contract must be insured against loss or damage incidental to manufacture or
acquisition, transportation, storage and delivery in the manner specified in the conditions of
contract. Such insurance shall be arranged and paid for by the Supplier as indicated in SCC
11.1.

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6.0 MANAGING CONTRACT CHANGES/VARIATIONS

6.1 Introduction
Variations are meant to facilitate adaption to unanticipated events or changes within the general
scope of the contract. The contract defines the permitted circumstances and limits within which
the change can be made. It also identifies the person who is to authorize the change.

6.2 Types of Variation

GCC Clause 8.1 states: “The Purchaser may at any time, by a written order given to the Supplier
pursuant to GCC Clause 31, make changes within the general scope of the Contract in any one
or more of the following:
1. drawings, designs, or specifications, where goods to be furnished under the Contract
are to be specifically manufactured for the Purchaser;
2. the method of shipment or packing
3. the place of delivery
4. services to be provided by the Supplier.”

6.2.1 Main issue to consider when analyzing a Variation

The change must not distort the initial conditions of competition; in effect there must not be a
drastic change in the original specification based upon which the procurement was made This
is to ensure that there is transparency, fairness and non-discrimination in the public
procurement process (Public Procurement Act, 2003 (Act 663) as Amended, Section 2)

6.3 Contract Amendment

A contract amendment is any written change to the original terms and conditions of the
contract. The contract amendment may become necessary, for example as a result of additional
or reduced requirements by the Procurement entity. The contract may allow the Purchaser to
modify the contract values by a pre-determined percentage when it is deemed to be in the public
interest and essential for the work of the Procurement Entity. This must be approved at the
appropriate level by the Entity’s Tender Committee and the Supplier and confirmed in a formal
contract amendment or addendum. GCC 19.1, “Subject to GCC 18, no variations or
modifications of the terms of the Contract shall be made except by written amendment signed
by the parties.”

The Procurement Entity shall:

 Identify and agree with the Supplier the specific clauses in the contract, which need to
be changed, and the new values or terms as well as conditions that may apply. There
is the need to keep minutes of the Contract Variation Meetings as a record for reference
in case of disputes.
 Prepare a draft amendment document for approval by the Entity Tender Committee
together with a report justifying the reasons for the amendment

After the approval by the Entity Tender Committee, the Contract Administrator must ensure
that:

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There is record of any change in contract value in the Commitment Register and also
in the Contract Register
 Record any other contractual changes in the Contract Register
 Obtain any necessary addition to the Performance Security from the Supplier
 Arrange for signature for the contract amended document
 Distribute copies to all concerned
The contract amendment should be done in accordance with Section 87 of Public Procurement
Act, 2003 (Act 663) Amended.

6.4 Contract Variations Checklist

Key issues to consider in managing contract variations include:
 following the procedures required by the contract;
 assessing the reasons for the proposed variation and whether these may indicate an
emerging or actual performance problem;
 assessing the impact of the proposed variation on the contract deliverables, particularly
whether the variation or the work it represents is actually required and whether it was
part of the original contract deliverables;
 determining the effect the proposed amendment will have on the contract price;
 considering the authority for making the variation, and obtaining and documenting the
required approvals;
 instructing a variation should only be done by the Procurement Entity;
 properly documenting the details of the variation and its impact; and
 Meeting any reporting requirements, such as updating the entity’s contract register.

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7.0 PAYMENTS

7.1 Introduction
It is the obligation of the Contract Administrator to initiate payment process following the
supply of goods by the Supplier. The Supplier is required to deliver the goods ordered by the
Procurement Entity to a designated point by a specified date. The Supplier’s delivery obligation
may be specified by the applicable INCOTERMS used in the contract (INCOTERMS are
covered in Chapter 13)

When this is done, the items are inspected by the inspection team/committee, which includes
the Procurement Officer, Storekeeper, User Department, etc. A pre-audit is undertaken by the
Internal Audit Unit and passed if there is no audit query of the items supplied. The goods are
accepted by the Storekeeper if there is strict compliance with the specification, amount and
quantity as contained in the GIFMIS generated Purchase Order, the invoice and waybill. The
Storekeeper then prepares a Stores Receipt Voucher (SRV). This is forwarded together with a
copy of the Purchase Order and invoice to the Accounts department/Controller and Accountant
General’s Department for payment to be made to the Supplier.

7.2 Payment Terms

The contract will detail the payment terms in the SCC. The terms will include some of the
following:
 Milestones against which payments will be made
 Portion or percentage to be paid against each milestone
 Methods by which foreign and local currency costs would be paid
 Documents that would be required for payments to be made
 Period that payment would be made

7.3 Review and Approval of Payment Applications

The following aspects are important in the process of verification of payment applications:
 Well-established mechanism for the verification and approval of payment documents
– internal audit, four eyes principle (i.e. the transaction must be approved by at least
two people as a form of control mechanism), etc.
 Verification of unit rates, prices and quantities;
 Verification of supporting documents (invoices; bills of lading; insurance policies;
delivery protocols; operational acceptance certificates; etc.);
 Existence of required approvals from the Project Manager (if applicable);
 Check if the requested amounts have not been already paid;
 Verification of invoices (correct name, address, identification information and bank
account of the payee);
 Check if the payee’s information in the invoice is the same as in the contract and
previous payments;
 Check if the payment request fits the payment schedule/milestones in the contract;
 Availability of funds and applicable payment method (payment from Special Account;
Direct Payment; Special Commitment for Letters of Credit etc.);

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7.4 The GIFMIS Payment System

7.4.1 Introduction
It is Government decision to deploy GIFMIS for the management of all public funds
(Consolidated Funds (CF), Internally-Generated Funds (IGF), Statutory Funds (SF) and Donor
Funds (DF)) across MDAs and MMDAs in the country, as part of the broader PFM reforms
programme. The use of GIFMIS for processing financial transactions at MDAs and MMDAs
started in 2012. It is a legal requirement to use GIFMIS for processing public financial
transactions under section 25(6) of the new PFM Act, 2016 (Act 921). The objective is to
improve efficiency, comprehensiveness and transparency in Public Financial Management
through the GIFMIS platform (Objective II of the PFM Strategy, 2015- 2018).

GIFMIS is jointly funded by four development partners- the (i). World Bank (ii). DFID of
UK (iii). European Commission-EU (iv). Danish International Development Agency-
DANIDA.

Implementation of GIFMIS and Government Directive

As of April, 2014, the GIFMIS System of budgeting and payment was been piloted in 33 MDAs
and 10 Regional Treasuries. The implementation would be extended to cover all MDAs. In
December, 2013, the Government of Ghana issued a Public Announcement on the GIFMIS
System, which read as follows:

‘’The Ministry of Finance has observed with concern the indiscriminate award of contract
by Ministries, Departments and Agencies without due regard to their budgetary allocation.

With effect from 1st January, 2014, the Ministry is determined to safeguard the integrity of
the budget by ensuring that all contract awards are informed by the budgetary allocation
and cash ceiling.

Thus, beginning from January, 2014, the general public is being informed that this Ministry
will recognize contracts as valid if only they are duly authorized by PURCHASE ORDER
(PO) generated from the GIFMIS SYSTEM. (Please refer to paragraph 937 of 2014 Budget
Statement and Economic Policy.)

By this announcement the general public especially contractors and suppliers should take
note and ensure their contracts follow the due process to be assured of prompt payment’’

From the above announcement, it can be concluded that procurement planning, budget
approval, purchase order/contract award and contract administration (in terms of payments and
reporting) must all be linked to the GIFMIS platform.

It means that if the particulars of a Contractor, Supplier, Consultant or any other identified
procurement service provider are not linked to the GIFMIS Platform from the time of contract
award and subsequent approval on GIFMIS, the service provider will not be recognized for
payment during contract administration.

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What is PFM System?
Public Financial Management (PFM) System refers to a framework of three Ps…
 Policies (including rules, regulations, procedures),
 Processes & technology
 People
…put together in a coordinated fashion to ensure effective and efficient use of public funds to
meet the needs of a Nation (M.K. Adadey, 2014)

What Is GIFMIS?
The Ghana Integrated Financial Management Information System (GIFMIS) is an
integrated computerized financial management system used in:
 Budget preparation
 Budget Execution
 Accounting and Financial Reporting
 Cash Management.
 Assets management
 Human resource and payroll management
 Among others

PFM Definition of GIFMIS (PFM Act 2016, (Act921) Section102) P

“Ghana Integrated Financial Management Information System” means the
electronic platform used by the Government to
a. manage commitments made against appropriation,
b. process payment
c. record revenue and expenditure transactions
d. produce monthly, quarterly and annual financial reports

Aims of GIFMIS
To establish an INTEGRATED ICT-based PFM Information Systems in Ghana at the MDAs
located at National, Regional and District levels and MMDAs to improve efficiency in
public financial management including Consolidated Fund, IGF, Statutory Funds and Donor
Funds.

Why GIFMIS?
 Lack of timely, accurate and current information on budgetary allocations,
commitments and actual revenue and expenditures
 Publish Annual Financial Reporting and reduce delays in the payment processing
 Poor feedback mechanism for assessing Budgetary Performance
 Lack of uniform chart of accounts (COA) which make the comparison of the
performance of various budgets difficult.
 Strengthen Internal Controls and Auditing Capabilities.
 Modernize the Technical Infrastructure
 Interface Data from Existing Data Stores
 Empower Local Government Units
 Enhance and Modernize Revenue Collection Processes
 Performance
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 Lack of uniform chart of accounts (COA) which make the comparison of the
performance of various budgets difficult.
 Strengthen Internal Controls and Auditing Capabilities

Expected Outcome of GIFMIS

With the introduction of GIFMIS we expect to achieve the following:
 Improved budgetary, financial management and reporting processes
 Provide accurate, timely and reliable financial information to Central Government and
Decentralized Institutions and Organizations
 Uniformity in accounting and reporting with the introduction of a common Chart of
Account and Database.
 Improvement in accountability, control, monitoring and auditing of Governmental
finances.
 Ensure that, Ministries, Department and Agencies (MDA’s/MMDA’s) spend within their
budgetary allocations

GIFMIS Financial Modules

1) Purchasing - for Purchase Requisition, PO, SRA
2) Accounts Payable - for preparing PVs, accounting (i.e Dr & Cr. ) and tracking
liabilities.
3) Cash Management- for making Payments, Bank Reconciliation, cash forecasting,
etc.
4) Accounts Receivable- for recording & tracking o f revenues
5) Fixed Assets M o d u l e - for managing fixed assets register through recording,
tracking and accounting for fixed assets
6) General Ledger- repository of all accounts which holds the budget and facilitates
financial reporting.

Key PFM Problems Being Addressed By GIFMIS

1. Lack of interface/integration of various PFM Systems
2. Inadequate budgetary controls over public expenditure
3. Lack of transparency in budget execution
4. Poor record keeping on public financial transactions
5. Undue delays in processing transactions due to cumbersome manual processes
6. Lack of reliable data for effective fiscal planning due to weak accounting and fiscal
reporting system
7. Delays in financial reporting, especially at the National level

Key Users of GIFMIS

1. 1.Vote controllers
2. Spending Officers
3. Budget Officers
4. Accountants
5. Procurement officers
6. Store officers
7. Treasury officers

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8. Administrators and HR Managers
9. Internal Auditors
10. 10.External auditors

7.4.2 GIFMIS Budget Reforms At MOF

The key budget reform initiatives under the GIFMIS include:
1. Switch from Activity Based Budgeting (ABB) to Program- Based-
Budgeting (PBB)
• To directly link planned expenditures to clearly determined
results
2. Installation of a new budget software
• To seamlessly integrate the Budget Preparation software with the
Financial Accounting System

Budget Preparation
The budget preparation steps include:
1. Budget circular and instructions issued by MoF to all MDAs/MMDAs (FAR 152 &
153)
2. MDAs/MMDAs prepare and submit their budget proposals/estimates to MoF (FAR
156)
3. MoF holds budget hearing with MDAs/MMDAs (FAR 161)
4. MoF consolidates MDAs/MMDAs budgets into a National Budget Estimates and
submits/presents it to Parliament for approval
5. Parliament debates the Budget and approves it for execution

7.4.3 GIFMIS Procure To Pay Process (P2P)

The flow process of the GIFMIS Procure To Pay Process (P2P) is illustrated in a graphical
form below:

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Figure 3: Procure To Pay Process

Demand Source

Purchase Request for quote Supplier Quotation

Requisition (RFQ)

Order Receive Enter Pay

Purchase order Receipts Invoice

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Summary of GIFMIS Business Processes (P2P)
The Standard Processes are:
1. The approved Budget (by Parliament or local Assembly) for the year is first
loaded and activated on the GIFMIS at the beginning of each year.
2. Requests are made on GIFMIS by end-users for release of Budget.
3. Budgets are released through Warrants that are issued on the GIFMIS
• NB: The Budget is controlled by the issuance of warrants. Expenditure
cannot be processed on GIFMIS without budget.
4. When warrants are issued on the GIFMIS, users (at MDA/MMDAs) are then
able to process expenditure on the system.
The expenditure processes include:
 Purchase Requisition (for expenditure initiation)
 Purchase Order (when supplier is selected)
 Stores Receive Advice (when goods/services are taken on charge)
 Payment Voucher/Invoice (to pay for the transaction)
5. Run Cash requirement report to establish total bills due for payment
6. Run cash pooling report to establish total cash available on the bank accounts,
as set-up on the GIFMIS.
This is not used at the moment due to some few issues like ABR that needs
to be resolved.
7. Effect payments on the system
 Electronic Funds Transfer for 3rd party’s transactions
 System Cheques for moneys required for internal payments

7.4.4 GIFMIS Detailed Business Processes

Step-by-Step Business Processes (P2P)-For Procurable Items (T &T etc)

1. User Department Submit a Memo through their head to the

Chief Director (CD) for approval (Manual)
2. Upon approval of the Memo, Warrant is prepared and approved on the
GIFMIS. For Goods and Services warrants will now be done in bulk. No
more specific warrants per Memo. The release for May was done on GIFMIS
successfully.
3. Once the Warrant is approved a Requisition is then booked on GIFMIS
by the User Department.
4. Route the Requisition through an approval hierarchy for approval by the
Spending Officer based on the limit for approval
5. Select Supplier (manual) – Tendering Process.
6. Once a supplier is selected, the Procurement Department prepare PO

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7. The PO is routed for Approval on GIFMIS once its approved budget
encumbered.
8. Print PO on GIFMIS
9. Give a copy of printed PO to the supplier (manual)
10. Supplier delivery (manual)
11. Goods inspected and taken on charge (manual) by Internal Auditors and
Stores.
12. Enter results/details on the system (i.e. create SRA). Stores will enter the
results to be delivered by Internal Auditor
13. Collect and book invoice on the system
14. Match invoice to SRA/PO
15. Invoice Approval
16. Payment for the transaction

Expenditure Process (P2P)

Type of Purchase Orders on GIFMIS
a. Standard Purchase Order
b. Contract Purchase Order
c. Planned Purchase Order
d. Blanket Agreement

1. Standard Purchase Orders: You generally create standard purchase orders for one-
time purchase of various items. You create standard purchase orders when you
know the details of the goods or services you require, estimated costs, quantities,
delivery schedules, and accounting distributions. If you use encumbrance
accounting, the purchase order may be encumbered since the required information
is known.

2. Contract Purchase Orders: You create contract purchase agreements with

your suppliers to agree on specific terms and conditions without indicating the
goods and services that you will be purchasing. You can later issue standard
purchase orders referencing your contracts, and you can encumber these
purchase orders if you use encumbrance accounting.

3. Planned Purchase Order

a) A planned purchase order is a long-term agreement committing to buy items
or services from a single source. You must specify tentative delivery schedules
and all details for goods or services that you want to buy, including charge
account, quantities, and estimated cost.

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b) You can issue scheduled releases against a planned purchase order to place the
actual orders. If you use encumbrance accounting, you can use the planned
purchase order to reserve funds for long term agreements.
You can also change the accounting distributions on each release and the system
will reverse the encumbrance for the planned purchase order and create a new
encumbrance for the release.

4. Blanket Purchase Agreements

a. You create blanket purchase agreements when you know the detail of the
goods or services you plan to buy from a specific supplier in a period, but
you do not yet know the detail of your delivery schedules. You can use
blanket purchase agreements to specify negotiated prices for your items
before actually purchasing them.
Blanket purchase agreements can be created for a single organization or to be
shared by different business
units of your organization.
b. You can issue a blanket release against a blanket purchase agreement to place
the actual order as long as the release is within the blanket agreement
effectivity dates). If you use encumbrance accounting, you can encumber each
release.

Preparation of Store Receipt Advice (SRA) on GIFMIS

•Receive: -Stores Keeper Receives.
•Inspection: - Goods and Services are inspected physically by stores and internal
auditors and recorded on GIFMIS by storekeeper
•Delivery: -This is done by Internal Auditors to acknowledge the inspection
results captured.

Setting up of Suppliers
Supplier details to be submitted on Company Letter Head to the MDAs/MMDAs to
be forwarded to the GIFMIS Secretariat for setup, are as follows:

Company details
1. Supplier Name (Company Name)
2. Tax Identification Number (TIN) – Attach Certificate of Registration
3. VAT Registration Number (for VAT registered companies)
4. Complete Address (Including P.O. Box, City/Town, Country)
5. Telephone Numbers
6. E-mail Address

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Supplier Bank Details:

1. Bank Name
2. Branch Number
3. Account Number
4. Account Name

NB.
1. Without Certificate of Registration suppliers will not be registered.
2. Going forward TIN numbers will be verified via a portal from GRA
before setting them up.

Definition and Scope of Fixed Assets for MDAs/MMDAs

Fixed assets are those assets with a long life (a life that generally extends beyond the
fiscal year of acquisition) held by an MDA/MMDA for either generating revenue or
providing services and are not primarily held for resale or for conversion into cash.
Any expenditure on an asset with these qualities therefore qualifies as a fixed asset

The GIFMIS Fixed Assets Module

 This module is useful for managing and tracking MDAs and GoG Fixed
Assets.
 It provides a comprehensive database on the location, condition, movement
and value of Fixed Assets belonging to respective MDAs.
 It will also help in assigning responsibilities for protection and care and in
addition serve as a Fixed Assets Register to determine the Ownership, Cost,
Value, Existence and Condition of Fixed Assets in the MDAs.

Implementation Strategy
 Categorization of Fixed Assets in 3 Categories
 Main (Transport Equipment)
 Major (Motor Vehicles)
 Minor (Salon Cars)
 Mapping of Fixed Assets Categories to Natural Accounts which are used to
prepare Appropriation Budget.
 FA has been deployed to the following MDAs:
CAGD, MOF, MOH, MWRWH, MTR
7.4.5 GIFMIS Implementation Status
1. Systems Set-ups
Hardware and software have been procured, installed and operational for:
 Budget component
 Financial Accounting(FA) component

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 HR Management component
 Payroll component
Additional hardware and software are being installed for enhancement

2. System Rollout
The Financial Accounting Modules (Oracle EBS) have been rolled-out as follows:
 All MDAs subsisting on consolidated fund resources since 2012
 250 national Spending Units (SUs) covered • 350 Regional SUs covered
 7 MMDAs out 216
 49 IGF Institutions out of 59 are live as at end of April, 2016
 Fixed Assets module at 5 headquarters MDAs
 The Budget Modules was rolled-out to all MDAs since 2014
 HRMIS Modules rolled-out to 3 MDAs (PSC, GSS, GFS) as at Feb. 2016.
 Payroll module has been operational since the 1990s

3. System Maintenance
 Business Continuity strategy was developed
 Disaster recovery site operational and being upgraded
 Tools have been installed for system security monitoring, service desk,
messaging and collaboration
 Capacity building for GoG staff is on-going for enhanced system and user
support

Next Steps
1. Bringing on board other public funds
 IGFs
 Donor funds
 Statutory funds
2. Extend financial modules to the remaining 209 MMDAs
3. Extend PBB and budget module to all MMDAs
4. Extend HRMIS module to all MDAs.
5. Complete interface with all key PFM Systems under the new PFM Strategy
6. Complete implementation of fixed assets module.

Some Challenges
 Inadequate ICT infrastructure in the public sector of Ghana, especially
Network connectivity. NITA must be supported for this.
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 Relatively low computer literacy in the public sector
 Change management- expectation by end-users that the system should
support old ways instead of current best practices.
 People having the Mentality that the system has failed before and will still
fail when enough progress has been made.

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8.0 CLAIMS & SETTLEMENT OF DISPUTES

8.1 Introduction
Claims and disputes are inevitable in contract administration. It is only logical that when they do
arise concrete measures are taken to resolve them before they escalate.

8.2 Claims
A claim is a request from either party for entitlement under the contract that is not being fulfilled.
Claims might result from:

 unforeseen costs
 disputes over the interpretation of contract clauses
 disputes over what is included within the contract price
 breaches of contract
 adjustment of contract performance duration.

Any claim should include:

 full explanation of the problem as well as the causes of the problem
 the contract clause under which the claim is being submitted.

Claims may be genuine and will have to be assessed for their merits. Protracted disagreements
over settlement of claims usually lead to disputes. Either the Procurement Entity or the Supplier
may make a claim in respect of procurement of goods contract. However, the most common case
is that of a Supplier submitting a claim for the Procurement Entity to pay interest on an outstanding
amount of money for goods supplied thirty (30) days after the agreed due date. (GCC16.4)

Contracts cannot be closed out until all claims are resolved.

8.2.1 Checklist on Claims

Reasons why a Supplier may submit claim for additional payment:
 Delayed payment by Procurement Entity
 When the Supplier is requested by Procurement Entity to deliver the goods to a farther
destination than originally indicated in the Contract
 A law, Regulation or other Administrative Act is promulgated or amended by the
government, which directly results in an increase in the price of the goods.
 An increase in price as a result of a change in drawings, designs or specifications. This is
in a situation where goods to be supplied under the Contract are to be specifically
manufactured for the Procurement Entity.

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Lessons learned
It is good practice for the Procurement Entity, through the Contract Administrator, to complete a
lessons’ learned report. This allows the procurement entity to gather and use information to
improve chances of success of future procurement actions.

8.3 Disputes
A dispute normally arises under a contract when there is a disagreement about:
 Money due to either party;
 Time for performance
 Performance standards
 Interpretation of contract terms and conditions

As a general rule, a disagreement becomes a dispute when it is not possible for the parties to resolve
it without resort to a formal resolution mechanism. Generally, what a dispute is and when it is
deemed to have occurred is defined in the contract, often in a dispute resolution clause.
A dispute is to be avoided if possible as any dispute arising either during the life of a contract or
at its termination can be expensive and time consuming. It can add substantially to the cost of a
contract as well as nullifying some or all of its perceived benefits or advantages. If there is dispute,
a fast, efficiently and cost-effective dispute resolution procedure is essential.
Where a dispute arises, the Contract Administrator is to protect the Procurement Entity’s and hence
public interest in all cases.

8.4 Contract Provisions

GCC Clause 28 in the contract for National Competitive Tendering (NCT) makes provision on the
Resolution of Disputes as follows:

GCC Clause 28.1 states that: “The Purchaser and the Supplier shall make every effort to resolve
amicably by direct informal negotiation any disagreement or dispute arising between them under
or in connection with the Contract”.

GCC Clause 28.2 says that “If, after twenty-eight (28) days from the commencement of such
informal negotiations, the Purchaser and the Supplier have been unable to resolve amicably a
Contract dispute, either party may require that the dispute be referred for resolution to the formal
mechanisms specified in the Special Conditions of Contract. These mechanisms may include,
but are not restricted to, conciliation mediated by a third party, adjudication in an agreed national
or international forum, and/or national and international arbitration”.

This contract provision is the same for International Competitive Tendering (ICT) contract on
Settlement of Disputes (GCC Clause 10.1-10.2)

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8.5 Dispute Avoidance
Given the expenses and disruption caused to any contract when a dispute arises, it is important to
follow dispute avoidance techniques which are an aspect of good contract administration. All
contract administration techniques should include monitoring for the early detection of such
problems. In any contract, the Supplier should be required to give early warning of the possibility
of any dispute, and regular discussions between the Procurement Entity and the Supplier should
include a review of possible areas of conflict.

8.6 Contract Condition

As early as possible (preferably at the Invitation to Tender stage) a clause should be included in
the contract requiring both parties to adopt a suitable dispute resolution procedure which should
include a reference to an appropriate appointing body if arbitrations are to be used or to an ADR
procedure, or both. For many industries and professions, there are trade bodies or organizations
that are appropriate in the case of a specialized contract. It is advisable to take advice from legal
counsel on the suitability of such clauses for a particular contract.

8.7 Dispute Management

If a dispute arises, it is important to manage it actively and positively to encourage early and
effective settlement. Unnecessary delay and inefficiency can lead to rapid escalation of costs and
may impede or prevent the successful resolution of the dispute. Moreover, there are statutory, and
often contractual, limitation periods for the issue of proceedings.

8.8 Dispute Resolution Procedures

Resolution of disputes comprises of series of processes that are aimed at the settlement of any type
of disagreement that may arise between the Purchaser and Supplier under the Contract. The
methods for dispute resolution are characterized by two key parameters:
 The degree of involvement of the parties in the decision: The dispute may be resolved
exclusively between the two parties without any third party involved or through a third
party intervention or by a decision of a court of competent jurisdiction.
 The degree of formality: The dispute resolution may be formal or informal or totally formal
These two parameters are revolving around a common axis, that is, the greater the degree of
consent of the parties in the final decision, the less formal the method of resolving the dispute and
vice versa.

Generally there are four main avenues for dispute resolution

 Negotiation
 Alternative Dispute Resolution(ADR)
 Arbitration
 Litigation

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8.8.1 Negotiation
Direct negotiation should be used and all possible efforts made to reach an agreement before
possibly progressing to other resolution procedures.

Negotiating between the Procurement Entity and the Supplier is the most common approach to
resolving disagreements and disputes. Direct negotiation should always be used and all possible
efforts made to reach an agreement before progressing to other dispute resolution procedures. At
this stage of the procurement cycle, the intention of the negotiations is to reach a mutually
acceptable solution, where both sides consider they have gained the best possible result in the
circumstances. It is important that one party does not consider they have been unduly pressured to
agree to a particular solution as a result of the negotiation, as this can lead to an escalation or
reappearance of the dispute at a later stage.

At the early stages of a potential dispute it is generally preferable to attempt to resolve the matter
by first discussing the issues with the Supplier. These discussions may take place in the course of
regular meetings between the parties or as separate discussions. Such an approach may mean that
it is possible to resolve any disagreements and prevent a formal dispute arising.

When these informal arrangements do not result in a resolution of the issue, invoking the dispute
resolution provisions of the contract will need to be considered. When this step is taken, careful
preparation and planning needs to be taken, including determining the need to obtain specialist
advice and assistance.

Irrespective of the approach adopted, negotiations should be undertaken by a person(s) who has
the appropriate authority and skills, and care needs to be exercised to ensure the outcome does
not contravene any legal or policy requirements. It is also important that the details of all
discussions and negotiations are recorded and a record maintained of all the agreements reached.

Techniques for initiating negotiated techniques to a dispute include:

 Discussing and negotiating the various elements of the disagreement, on a ‘’without
prejudice’’ basis
 Dividing the problems into separate elements, i.e. technical and financial to enable
discussion of technical differences in isolation of financial implication;
 Seeking the assistance of independent experts to identify possible solutions that may be
mutually satisfactory.

Advantages of Negotiation
 It is free from any procedural formalities
 The costs of any third-party involvement are usually avoided (except in the case of an
independent advisor)
 A solution acceptable to all parties may be achieved on an amicable basis

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Disadvantages may be that:
 it may not result in a settlement;
 the process of resolving a problem may continue over a long period, which
 may lead to acrimony between the parties, preventing effective communication.

8.8.2 Alternative Dispute Resolution (ADR) Procedures

ADR clause in an agreement normally ensures that the use of this avenue takes precedence over
arbitration or litigation. The current ADR law in Ghana is the Ghana Alternative Dispute
Resolution Act 2010, Act 798. ADR can be used at any time by agreement of the various parties.
The various procedures are:
 Mediation/Conciliation
 Adjudication
 Dispute Review Board/Dispute Advisor

Mediation
 It is a private voluntary dispute resolution mechanism in which a neutral mediator (an
impartial third party) assists the parties in reaching a mutually acceptable solution to the
dispute.
 It is a private voluntary dispute resolution in which a neutral mediator assists the parties in
reaching a mutually acceptable solution to the dispute.
 Mediators have no authority to impose a judgment. They work with the parties jointly and
in private sessions, assessing strengths and weaknesses of the parties’ positions, areas of
common ground, and the possibility of creative forward-looking solutions
 Mediations are conducted on a ‘’without prejudice’’ basis.
 Private meeting between the mediator and each party are confidential to that party, unless
authority is given to the mediator for disclosure.
 If there is a settlement as a result of the mediation, it is normal practice for the parties to
record the terms in writing. Parties may elect to have legal representation during
mediation.
 About 90 per cent of cases that go to mediation/conciliation are settled (There are
insignificant technical differences between mediation and conciliation-in practice, the
name of the process is irrelevant provided all parties agree and understand the procedure
they wish to use).

Mediation is usually regarded as a faster, less formal and less costly process than court proceedings
or arbitration. There are a number of commercial organizations who maintain registers of
mediators, and who can be approached to appoint a mediator for a dispute. The outcome, however,
is not binding on the parties.

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Adjudication
The Adjudicator is an expert in the subject matter of the contract. He/she may be proposed by the
Procurement Entity and accepted by the Supplier. If both parties cannot agree on the Adjudicator,
then an appointing authority, which is usually a professional body perceived by both parties as an
impartial mediator, will select the Adjudicator. He/she will look into the matter of the dispute as a
step toward its resolution. Although the Adjudicator’s decision is not binding, it is usually
respected by both parties. However, should any of them disagree with the decision, then that party
may refer the matter to arbitration.

Dispute Review Board/Dispute Advisor

This is a more formalized version of mediation
 Dispute review board comprises a group of experts at the beginning of a contract, before
disputes arise, to develop cooperation between Purchaser and Supplier and to advise on
controversial matters that may arise.
 It is intended for large complex contracts

Advantages of using ADR

 Keep cost of dispute to a minimum
 Speedy resolution
 Confidentiality, avoiding the publicity of a court hearing
 The parties retain control over the procedure and outcome
 Maintain and improve communication between the parties

8.8.3 Arbitration
Arbitration is a formal dispute resolution process governed by legislation in which two or more
parties refer their dispute to an independent third person (the arbitrator) for determination. The aim
of arbitration is to obtain a final and enforceable result without the costs, delays and formalities of
litigation (i.e. court proceedings). Arbitration proceedings are private and can be held at a mutually
convenient time. The actual proceedings are less complex than litigation and the arbitrator can be
a person who is able to provide technical expertise relevant to the contract.
It is, nevertheless, an adversarial procedure with the possibility that neither party will be satisfied
with the outcome and it may be costly. Other possible drawbacks that should be considered before
entering into arbitration include: the difficulty in selecting an agreed arbitrator; the expertise of the
arbitrator for the particular case; uncertain appeal rights; and the lack of legal precedence.

Using Arbitration Procedures

At the Invitation to Tender stage a decision is necessary on whether to put an arbitration agreement
clause into the contract and, if so, what form it will take. The clause should contain a clear
intention, binding the parties to refer any dispute to arbitration. Some standard forms of contract
contain arbitration rules.

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Appointment of Arbitrator
When a dispute goes to arbitration, the arbitrator (or arbitrators) is appointed by agreement
between the parties or, in the absence of agreement, by the appointing authority specified in the
arbitration clause. If there is no agreement and no appointing authority able and willing to act, the
appointment can be made by application to a court.

Rules of Arbitration
After appointment, arbitrators are subject to any rules contained in the arbitration agreement and
to statutory provisions. Within these restrictions, they can determine their own procedures and
give any reasonable directions for the further conduct of the dispute resolution. Most major
arbitrations eventually come to a hearing that is similar to a court hearing before a judge but which
takes place in private. The arbitrator is bound by the same rules of evidence as a judge, unless the
parties agree to relax them. An interim award may be made concerning any part of the disputes,
with the final award being made at a later stage.

Jurisdiction of Arbitrator(s)
The arbitration agreement and the authority and jurisdiction of the arbitrator(s) that derive from it
are irrevocable by either party individually. Arbitration can only be terminated by agreement
between the parties or by order of a court. The arbitrator or arbitrators can only withdraw by
consent of both parties or with the permission of the court.

Arbitrators’ Fees and Awards

Arbitrators can charge an agreed fee or, if no fee is agreed, a reasonable fee for their decision
(called an ‘’award’’). They can order that their fees and expenses (‘’costs of the award’’ and the
costs incurred by the parties (‘’cost of the reference’’) are payable by either or both of the parties
in any proportion. When arbitrators have considered all the submissions and evidence, the award
is prepared and published. Arbitrators are entitled to (and usually do) retain the award, and refuse
to pass it to the parties until the appropriate fees and expenses have been paid. The final award
must deal with the question of costs, even if only to say ‘’no order as to costs’’; and arbitrators
have the power to assess their level. If arbitrators do not exercise this power, a court will assess
the costs.

Rights of Appeal
Rights of appeal against arbitrator’s decisions are very limited and can only be made on a question
of law. Parties can, and often do, exclude the right of appeal from the arbitration agreement.

Arbitration in International Contract

Arbitration Bodies: The need to ensure that arbitration proceedings are quick and effective has led
many countries and international organizations to sponsor institutions capable of administering
arbitration proceedings. These include:
 The International Chamber of Commerce, Paris
 The London Court of International Arbitration;

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 The American Arbitration Association;
 The Arbitration Institute of the Stockholm Chamber of Commerce.
Such bodies publish rules of arbitration and arbitration clauses for contracts, copies of which are
available from the relevant body.

Recognizing the need for harmonization, the United Nations Commission on International Trade
Law (UNCITRAL) has issued arbitration rules that are a set of generally accepted principles for
conducting international arbitration. The rules constitute an ad hoc procedure, i.e. one that does
not refer to any one institution for its administration.

Place of Arbitration: In international commercial disputes, the parties should specify in the
arbitration agreement the place where the proceedings are to take place and where the arbitration
award is to be issued. When selecting a place, it must be one that guarantees that arbitration awards
are enforceable in the countries where the parties have their normal place of business. The place
of arbitration can also be an important factor in the costs of arbitration.

Merits of Arbitration
 Carried out by experts
 Specifically organized
 Shorter time for decision

Demerits
 Selection of experts could be a challenge
 Expensive

8.8.4 Litigation
Litigation is the act or process of contesting a lawsuit or seeking redress through the law courts. It
can be an expensive and time-consuming procedure and is generally taken when other avenues of
dispute resolution have not been successful or are not available. Other approaches to resolving
disputes or Supplier’s defaults should therefore be considered prior to litigation. Appropriate legal
and other professional advice should be obtained prior to considering and commencing litigation.

Merits of Court Action

 Available to everybody
 Free process

Demerits
 Slow and long process
 Judges sometimes lack technical expertise of the subject matter of dispute

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9.0 TERMINATION OF CONTRACT

9.1 Introduction
Sometimes a decision is taken to terminate a contract prior to its conclusion and the completion of
the supply of goods. When a contract is terminated, the parties are relieved from further
unperformed obligations in accordance with the agreed terms and conditions. This may be for
various reasons, for example, political disturbances or natural disasters which are beyond the
control of the Supplier and the Procurement Entity. In some cases, termination is the optimal
choice; in others, it is detrimental to the overall intent of the procurement, which is generally to
support the implementation of an investment project. This implies a missed opportunity and a
waste of the funds already expended on the procurement. Termination of Contract needs to be
avoided if there is an opportunity to remedy the contract.

A contract may be terminated under distinct processes: Liquidated Damages, Termination for
Default, Termination for Corrupt or Fraudulent Practices, Force Majeure, Termination for
Insolvency and Termination for Convenience.

GCC Clauses 23, 24, 25, 26 and 27 of the Revised Draft Standard Tender Document for
Procurement of Goods (NCT) specify conditions under which contract termination can be effected.

9.2 Liquidated Damages

Subject to GCC Clause 25, Force Majeure, if the Supplier fails to deliver any or all of the goods
or to perform within the time period(s) specified in the Contract, the Purchaser shall, without
prejudice to its other remedies under the Contract, deduct from the Contract Price, as liquidated
damages, a sum equivalent to (0.5%) of the contract price of the delayed goods for each week of
delay until actual delivery, up to a maximum deduction of (10%) percent of the delayed goods
Contract Price. Once the maximum is reached, the Purchaser may consider termination of
the Contract pursuant to GCC Clause 24(Termination for Default).

Subject to GCC Clause 25, Force Majeure, if the Supplier fails to deliver any or all of the goods
or to perform within the time period(s) specified in the Contract, the Purchaser shall, without
prejudice to its other remedies under the Contract, deduct from the Contract Price, as liquidated
damages, a sum equivalent to (0.5%) of the contract price of the delayed goods for each week of
delay until actual delivery, up to a maximum deduction of (10%) percent of the delayed goods
Contract Price. Once the maximum is reached, the Purchaser may consider termination of
the Contract pursuant to GCC Clause 24(Termination for Default).

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9.3 Termination for Default
The Purchaser may, without prejudice to any other remedy for breach of Contract, by written
notice of default sent to the Supplier, terminate the Contract in whole or in part:

a. if the Supplier fails to deliver any or all of the goods within the time period(s) specified in
the Contract, or any extension thereof granted by the Purchaser pursuant to GCC Clause
22(Delays in the Supplier’s Performance); or
b. if the Supplier fails to perform any other obligation(s) under the Contract.

In the event the Purchaser terminates the Contract in whole or in part, pursuant to GCC paragraphs
24.1 and 24.3 (Termination for Corrupt or Fraudulent Practices), the Purchaser may procure, upon
such terms and in such manner as it deems appropriate, goods or services similar to those
undelivered, and the Supplier shall be liable to the Purchaser for any excess costs for such similar
goods or services. However, the Supplier shall continue performance of the Contract to the extent
not terminated.

9.4 Termination for Corrupt or Fraudulent Practices

The Purchaser may, without prejudice to any other remedy for breach of Contract, by written notice
of default sent to the Supplier, terminate the Contract in whole or in part if the Supplier, in the
judgment of the Purchaser has engaged in corrupt or fraudulent practices in competing for or in
executing the contract.

For the purpose of this clause:

“corrupt practice” means the offering, giving, receiving or soliciting of anything
of value to influence the action of a public official in the procurement process or in
contract execution; and

“fraudulent practice” means a misrepresentation of facts in order to influence a

procurement process or the execution of a contract, and includes collusive practice
among Tenders (prior to or after Tender submission) designed to establish Tender
prices at artificial non-competitive levels and to deprive the benefits of free and
open competition;

9.5 Force Majeure

For purposes of this Contract, “Force Majeure” means an event beyond the control of the parties
to the Contract and not involving either party’s fault or negligence and not foreseeable.
If, at any time during the existence of the Contract, either party is unable to perform in whole or
part any obligation under this Contract because of such events which include, but are not restricted
to, acts of God, acts of Government in its sovereign capacity, war, revolutions, hostility, civil
commotions, strikes, fires, floods, epidemics, quarantine restrictions, freight embargoes,

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explosions, then the date of fulfillment of Contract shall be postponed during the period when such
circumstances are operative.

The party which is unable to perform its obligations under the present Contract shall, within
fourteen (14) days of occurrence of the Force Majeure event, inform the other party with suitable
documentary evidence. Non-availability of raw materials from regular sources shall not be an
excuse for the Supplier for not performing its obligations under this clause.

Any waiver/extension of time in respect of the delivery/acceptance of any instalment or part of the
goods shall not be deemed to be a waiver/extension of time in respect of the remaining deliveries

If such inability to perform continues for a period of more than three (3) months, each party shall
have the right to be released from further performance of the Contract, in which case, neither party
shall have the right to claim damages from the other. All prior performance shall be subject to
Contract terms.

Notwithstanding the provisions of GCC Clauses 22, 23 and 24, the Supplier shall not be liable for
forfeiture of its performance security, liquidated damages or termination for default if, and to the
extent that it’s delay in performance or other failure to perform its obligations under the Contract
is the result of Force Majeure.

If a Force Majeure situation arises, the Supplier shall promptly notify the Purchaser in writing of
such condition and the cause thereof. Unless otherwise directed by the Purchaser in writing, the
Supplier shall continue to perform its obligations under the Contract as far as is reasonably
practical, and shall seek all reasonable alternative means for performance not prevented by the
Force Majeure event.

9.6 Termination for Insolvency

The Purchaser may at any time terminate the Contract by giving written notice to the Supplier,
without compensation to the Supplier, if the Supplier becomes bankrupt or otherwise insolvent,
provided that such termination will not prejudice or affect any right of action or remedy which has
accrued or will accrue thereafter to the Purchaser.

9.7 Termination for Convenience

The Purchaser, by written notice sent to the Supplier, may terminate the Contract, in whole or in
part, at any time for its convenience. The notice of termination shall specify that termination is for
the Purchaser’s convenience, the extent to which performance of the Supplier under the Contract
is terminated, and the date upon which such termination becomes effective.

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The Goods that are complete and ready for shipment within twenty-eight (28) days after the
Supplier’s receipt of notice of termination shall be accepted by the Purchaser at the Contract terms
and prices. For the remaining Goods, the Purchaser may elect:
a. to have any portion completed and delivered on the agreed terms and prices; and/or
b. to cancel the remainder and pay the Supplier an agreed amount for partially completed
Goods and for materials and parts previously procured by the Supplier.

9.8 Issues to be considered by Procurement Entity before deciding to

Terminate the Contract
 Has every possible effort been put forward, in order to assist the Supplier with resolving
the non- compliance?
 Have the terms of the contract as well as the relevant legislation been examined in order to
ensure the legality of terminating the contract?
 Has the Supplier justified in a convincing manner the appearance of the specific non-
compliance?
 How urgent is the need for the supply of the specific product? The Procurement Entity
must weigh the benefits against the disadvantage of continuing the cooperation with the
existing Supplier or conducting new tender to select another Supplier
 Is there availability of the specific products?
 If yes how much time is required to acquire them?

9.9 Actions for terminating the contract by the Procurement Entity

Before terminating the contract, the Purchaser must send notice to the Supplier affording him a
time period within which it shall invite him to comply with its contractual obligation.

Content of Termination Notice

 Reference number and date of signature of the contract.
 Date on which termination of the contract is to be put in effect
 Reference to the term(s) based on which the contract is terminated
 Complete and precise statement of the evidence justifying the termination
 Statement that the contract being terminated may be re-announced from the beginning
and that the Supplier is considered liable for the additional costs that the Purchaser will
incur in order to conduct a new tender. (Before this statement is drafted, the Procurement
Entity must be sure the contract provides this right to it)

9.10 Contingency Planning

The Procurement Entity must ensure that a plan is put in place in order to:
i. mitigate any adverse consequences of termination of contract, in whatever form; and
ii. complete the project without undue delay.

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10.0 CONTRACT RECORDS MANAGEMENT

10.1 Introduction
The Public Procurement Act, 2003(Act 663) as amended in Section 28, statutorily requires all
procurement entities to keep records of procurement proceedings in a structured and systematic
manner and in accordance with national and international standards. The annual procurement
assessment conducted in the Procurement entities by the Public Procurement Authority (PPA)
reveal challenges relating to the management of procurement and contract management
documentation by most entities thus contravening the Public Procurement Act, 2003(Act 663) as
amended. The observation has been that procurement and contract records management in most
procurement entities usually involve disjointed processes which result in loss of vital procurement
and contract information, thus undermining accountability, transparency and good corporate
governance. Good records management is therefore essential for any corporate body to function
effectively.

10.1.1 What Is Records Management?

Records management involves designing and directing a programme for achieving economy and
efficiency in the creation, use, maintenance, and disposal of records. This promotes efficiency
through improved access to information.

10.1.2 Importance of Records

An organization’s ability to function effectively and give account of its actions will be undermined
if sound records management principles are not applied. Procurement records play a significant
role as evidence of purchases of goods and services. Unorganized or otherwise poorly managed
records mean that an organization does not have ready access to authoritative information, to
support sound decision making or delivery of programmes and services. This factor contributes to
difficulties in retrieval and use of procurement records efficiently and therefore inability to carry
out the audit process.

10.1.3 Procurement and Contract Records

Procurement and contract records include all documents relevant to the pre-tendering, tendering
and contract administration phases. Every event in the procurement process must be recorded and
all records filed in such a manner that, if necessary the entire procurement and contract
administration process can be reconstructed from these records. Procurement and contract records
are also important for maintaining an audit trail of the requirement from the initial receipt of the
procurement requisition up to the closing out of the contract.
The procurement entity is responsible for maintaining the procurement and contract records of
each requirement. Although all records are maintained by the procurement entity, the entity
department or unit responsible for contract administration should also retain working copies of
relevant documents, while sending pertinent documents to the procurement entity and other entities
(such as finance) as determined in the contract administration plan.

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Depending on national and organizational policies, the public should have controlled access to
these files. However, the confidentiality of proprietary information of suppliers, contractors,
consultants and other service providers must be safeguarded.

A Procurement and Contract Records system promotes the efficient and systematic control of the
creation, receipt, maintenance, use and disposal of public procurement records.

10.1.4 Benefits of Good Records Management

Sound records management is a critical component for good governance, effective and efficient
administration, transparency, accountability and delivery of quality services to the citizens. Good
recordkeeping practices contribute, in general, to the following:
 Creation and maintenance of accurate and reliable information
 Easy accessibility to information
 Transparency and accountability
 Procurement Units and Procuring Entities performing their functions efficiently
 Availability of authentic, reliable and tangible records to fight corruption; and
 Resources being matched to objectives.

10.1.5 Principles of Good Records Management

The guiding principle of records management is to ensure that information is available when and
where it is needed, in an organized and efficient manner, and in a well-maintained environment.
Organizations must ensure that their records are:

 Authentic
It must be possible to prove that records are what they purport to be and who created them,
by keeping a record of their management through time. Where information is later added
to an existing document within a record, the added information must be signed and dated.
With electronic records, changes and additions must be identifiable through audit trail.

 Accurate
Records must accurately reflect the transactions that they document.

 Accessible
Records must be readily available when needed.

 Complete
Records must be sufficient in content, context and structure to reconstruct the relevant
activities and transactions that they document.

 Comprehensive
Records must document the complete range of an organization’s business.

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 Compliant
Records must comply with any record keeping requirements resulting from legislation,
audit rules and other relevant regulations.

 Effective
Records must be maintained for specific purposes and the information contained in them
must meet those purposes. Records will be identified and linked to the business process to
which they are related.

 Secure
Records must be securely maintained to prevent unauthorized access, alteration, damage
or removal. They must be stored in a secure environment, the degree of security
reflecting the sensitivity and importance of the contents. Where records are migrated
across changes in technology, the evidence preserved must remain authentic and
accurate.

10.1.6 Consequences of Failure to Maintain Adequate Procurement Records

Failure to effectively manage procurement records means:
 Decisions are taken on ad hoc basis without the benefit of records;
 Fraud cannot be proven and meaningful reporting and audits cannot be carried out;
 Government actions are not transparent;
 Citizens cannot protect or claim their rights;
 Citizens cannot make an informed contribution to the governance process; and
 A Procurement Entity’s (PE’s) or even a country’s memory is impaired.

10.1.7 The Records Life Cycle

Records should be managed throughout their life. A record goes through a life cycle consisting of
three phases: active or current, semi-current and inactive or non-current phases.

Current or active records are the open files that are in use for conducting the current business of
the organization. Current records and documents are constantly in use and should therefore be
maintained close to the users. They should be maintained and managed within a logical filing
system that facilitates their access. Current records are usually maintained in records offices (or
registries)

Semi-current records consist of the recently closed files. They are only infrequently used. They
should be entered in a closed record register and systematically transferred and organized in a
departmental records centre. The register acts as a retrieval tool.
Non-current or inactive records
These are documents that are hardly ever referred to for the conduct of business operations. Non-
current records should be reviewed and appraised in order to make judgment on their further
retention. Those that are selected as valuable records should be preserved in a departmental records

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centre or with prior arrangements transferred to the National Archives for long term preservation
as archival records. Note that procurement records must be kept for at least six (6) years from the
date the contract started.

10.1.8 Opening a New File

A file is a folder containing papers relating to a specific subject or activity. The following
information must appear on the file cover:
 Name of the entity;
 File reference number;
 File title;
 A specific subject or activity
 Date on which the file was opened;
 Related files;
 Security classification - open or confidential.
 Disposal information.

The disposal information indicates what is to be done with the file when it is closed. On the “related
files” space are indicted the titles and reference numbers of other files that are closely related with
the file.

A file is opened when an existing one matures for closing and the next volume is opened, when a
new subject or activity arises which cannot be accommodated in the existing files, or when an
existing file subdivides into new subjects. A file should be opened after adequate consultation with
the unit or officer responsible for records management. Consultation and care in file opening is
necessary to avoid opening files when similar or the same files are in existence, and which leads
to needless duplication of files.

This leads to uncertainty in filing of papers. The papers in the file should be neatly arranged in
chronological order, and on a specific subject.

10.1.9 Filing of Papers

Papers in the file should be filed in date order with the earliest ones at bottom and the latest
documents at the top. The papers in the file will be folio numbered, that is serially numbered. This
helps to maintain the order of the papers and facilitates early detection if the papers are removed
or tampered with.

10.1.10 File Movement Controls

The records office controls and monitors the movement and use of a file or a document within the
department. The purpose of controlling and monitoring of file movement is:
 To monitor access to records by users
 To ensure a particular matter is dealt with by the responsible officer

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 To ensure that the location of a file is known at all times
 Files are returned promptly to the registry once they have been seen by the indicated
officers
 Files do not go missing; and
 Officers do not overstay with files issued to them.

The principal file movement control tool is the file movement register, where the file name,
reference number, name of the officer to whom the file is issued, and date of issue and return are
recorded.
A file movement register should have the following format:
 Date out;
 File title;
 File reference number;
 To whom issued and signature;
 Date in; and
 Signature of officer receiving file in registry.

The file’s return to the records office will be marked on the “date in” column. By regularly
checking the column the registry officers will be able to tell cases where files are overdue for return
and therefore to take necessary steps to have the files returned.
There should be an administrative guideline stipulating how long an officer should hold a file -
usually no officer should possess a file for more than four days. Borrowed files should be promptly
returned to the records office once an officer has completed consulting it.
The records staff must ensure that a requested file is promptly provided. Speedy provision of
requested documents and files is one way of cultivating and maintaining confidence in the users
of the registry services.

10.1.11 Closing a File

A file should be closed when it gets full, or when the fastener cannot take any more papers. The
next volume will then be opened. A case file such as procurement action file can be closed once
the procurement activity is concluded. A file should not be permitted to become too thick and
unwieldy. The file closure date should be clearly indicated on the cover. Closed files should be
entered in the closed files register and removed from among the current files for storage in the
closed records room or centre.

Closed files should be reviewed after every six (6) years to determine whether they warrant further
retention.

10.1.12 Records Accommodation/Space

Adequate accommodation or space is essential for the proper functioning of the records service.

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10.1.13 Equipment
The right equipment and materials for the maintenance and storage of records need to be provided.
These will include
 File folders of the right quality;
 Good quality shelving including both secure file cabinets and mobile bulk filing units;
 Computers and related equipment;
 Relevant software programmes;
 Office furniture; and
 Boxes-archival boxes.

10.1.14 Records Personnel

Deployment of the right people to be in charge of records is a key step in the management of
records. Officers in charge of records should be people of integrity. Qualified and competent
people should be deployed to manage the records of a Procurement Entity. They should be clearly
assigned their duties in writing. Additionally, they should be given professional training.

10.2 Contract Administration File and Documentation

In the execution of a contract, record keeping is a key function particularly with regard to
documenting the progress and performance of the contract including contract variations. This is to
ensure that the contract is implemented in accordance with the terms and conditions of the contract
agreement.

A contract file or folder should be opened by the Contract Administrator and the contract should
be carefully analyzed, taking note of the rights and obligations of each party. Any issues requiring
clarification or change of the contract should be fully documented in this file.

Although practice may vary among organizations, the following documents normally are part of
the contract administration file/folder:

Contract Management File/Folder

 Bid Evaluation Report and Recommendation for Contract Award
 Notification of Contract Award
 Copy of Advance Payment Guarantee, if required.
 Copy of Performance Security or Performance Bond
 Copy of Signed Contract
 Contract Administration Plan,
 Minutes of Kick-off/Commencement Meeting
 Copies of Guarantees
 Payment Certificates and supporting documents
 Claims and Disputes
 Inspection certificates-Goods only
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 Delivery Certificates- Goods only
 Copies of all Correspondence between Purchaser and Supplier- Goods only
 Minutes of all Site Meetings-Works only
 Contract Supervision Reports-Works only
 Copies of all Correspondence between Employer and Contractor- Works only
 Change Orders- Works only
 Completion certificates (“provisional” and “final” acceptance)- Works only
 Minutes of Inception Meeting and any other meetings- Consultancy & Technical
Services only
 Copies of all Correspondence between Client and Consultant- Consultancy only
 Consultant Reports-Inception Report, Draft Report/Draft Final Report, Final Report,
Overall Assignment Report, if requested-Consultancy only
 Copies of all correspondence between Employer and Service Provider-Technical
Services only
 Copies of all Service Provider’s Reports - Technical Services only
 Pictures, Video Films
 Contract Performance Evaluation Report
 Contract Close out Report
 Electronic copies of all the above documents

10.2.1 Contracts Register

A contracts register should be maintained that contains the following details:
 Contract name;
 Date of contract award;
 Contractor’s name;
 Account charged;
 Total cost; and
 Payment dates and completion dates.
10.2.2 Separate Contract Files
It is good practice to maintain separate contract files for each assignment, where there are multiple
assignments for a project or programme.

10.2.3 Contract Sub-files

It is also recommended that for each assignment, separate sub-files can be opened, so that payment
documents can be separated from correspondences as well as bulky deliverables. The contract
identification numbers will remain the same but the sub-files will have their separate titles and
volume numbers.

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10.3 Automation of Records Management (Electronic Records Management)
The records management principles and policies applied to paper records must also govern the
management of electronic records. The paper-based records management system must be fully
functional before attempting automation. It will defeat the objectives of automation if a
dysfunctional and inefficient paper-based records keeping system is automated. Planning and
proper analysis of the manual system must be done before computerization.
It has to be noted that electronic records management is the modern method of managing contract
records. Every effort must therefore be made to go electronic because of the immense benefits to
be gained.

10.3.1 Benefits of Automation

There is widespread reliance on computer and information technology for most activities in the
public and private sector because of the demand for speedy access to information. There are
immense benefits that arise as a result of computerization. These include:
 Speedy access and retrieval of information;
 Ability to manipulate data;
 Greater accuracy and consistency in performance of routine tasks;
 Great capacity for storage of information, which translates to huge space and equipment
 savings;
 Sharing and simultaneous access to information;
 Automatic updating of file classification scheme and indexes; and
 Controlling the movement of files.

10.3.2 Records Management Functions That Can Be Automated

The following areas of records management can be automated:
 Classification and listing of files;
 Correspondence;
 Preparation of file labels;
 Identification of records that are due for transfer to the Archives or disposal;
 Location and tracking file movements;
 Information about authorized users of records; and
 Production of management information reports.

10.3.3 E-mail
E-mails that are evidence of business transactions are official records and should be managed and
kept for as long as is required for functional purposes.

E-mails that approve or authorize an action, contain guidance, advice or direction, relate to project
activities or contain policy decisions should be managed as records and should be filed in a file
plan.

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10.3.4 Digitization (Imaging/Scanning)
After the acquisition and installation of the records management software and hardware, it may be
necessary to migrate some or all the existing paper files and documents into the automated system.
This can be achieved through the process of digitization. The two main objectives of digitizing
paper records are access and preservation.
Digitization means conversion of information from analogue to digital media to facilitate
preservation, and sharing by use of IT. A digital image can be edited, manipulated, emailed across
the world, deleted, copied and inserted into other files including the www pages.
The other benefits of digitization include:
 Wide access and sharing of information;
 Preservation of the original while the digital surrogate is made available for
consultation, and therefore reducing the possibility of further deterioration;
 Digital forms a backup;
 Ease of access and sharing of digital information; and
 Minimized storage requirements - digitized information takes much less storage space
than information on paper.

The documents to be digitized must be analyzed to determine their suitability for scanning. The
documents must be well organized and indexed. Priority for digitization should be accorded to
documents or files that are heavily consulted and whose digitization will facilitate multiple and
simultaneous access. Important documents and files in poor physical form and whose frequent use
may lead to their further physical deterioration can also be a priority for digitization.

It is important to select the right scanner, and this will depend on the volume of materials to be
scanned and the compatibility of the scanner with the existing hardware and software. The
digitized images should be stored in an appropriate and secure media such as hard drives, optical
disks and magnetic tapes.
A functional network will be necessary for staff to access the digitized images. The software used
should be able to handle multiple simultaneous access and permit only authorized staff to access
the digital images.

10.3.5 Challenges in the Management of Electronic Records

Some of the challenges of managing electronic records include:
 Impermanence of the storage media and technological obsolescence. Electronic storage
media is fragile and changes with time;
 Changes in technology means that records that were generated in computer seven years
ago may not be accessible today. This calls for regular migrating of the records to new
computer systems to ensure they remain accessible;
 Security and integrity of the information can be compromised through inadvertent or
intentional alterations and unauthorized deletions. An electronic file can easily be
altered without leaving any evidence that alteration has been done;

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 High risk of wholesale loss or destruction of business records, and
 Evidential status of electronic records is unreliable and legal admissibility of electronic
records in Ghana has to be ascertained.

In spite of the challenges highlighted here automated records management and information has
immense benefits as observed elsewhere in this document. What is recommended is a hybrid or
dual system, meaning maintenance of paper records system parallel to the automated system.

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11.0 EVALUATION OF CONTRACT PERFORMANCE

11.1 Introduction
Contract evaluation encompasses the overall assessment of the performance of the contract and of
the Procurement Entity’s administration of the contract. The evaluation of the operation of the
contract and of contract outcomes can be very useful in understanding and improving overall
contract administration, improving Supplier performance and can assist in future stakeholder
decision-making.

An evaluation should be undertaken at the end of all contracts and should be planned for in
advance. This could be done periodically (quarterly, mid- term). When a transition from one
contract to another is to occur, it is better practice for an evaluation to be undertaken before the
contract ends so that any problems that might have occurred with aspects of the contractual
arrangement are identified and, where appropriate, improvements made in future contractual
arrangements.

11.2 Evaluation of Supplier Performance

Supplier performance evaluation, normally referred to as ‘Vendor rating’ is the objective,
numerical assessment of a Supplier’s performance after a contract has been completed, and it is
used to help Suppliers improve their performance to contribute to future decisions about their
suitability.

Generally, Supplier performance evaluation is important for two reasons. First, it provides a means
of monitoring the quality of work done on a specific procurement task or project. Second, the
cumulative record of performance on previous projects is a key element in evaluation of the
Supplier’s qualifications for future work.

Performance evaluation of Suppliers can be done in two ways:

 in stages (quarterly, mid- term, etc.) as the contract implementation progresses.
 at the end of the procurement, when all the goods have been delivered.
If done in stages as the contract progresses, performance evaluations can result in a better outcome
than if the evaluation is done only at the end of the project.

Factors, criteria or indicators to evaluate a Supplier’s performance will normally include, among
others, the following:
 Price
 Quality
 Delivery(Milestones Timelines)
 Service/Customer satisfaction (including supplier administrative effectiveness)

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Performance indicators measure how well the Supplier is meeting the key deliverables of the
contract. Performance management systems should include alerts when key performance
indicators (KPIs) are not met.

The factors are weighted in relation to their importance to the organisation.The result of a Supplier
evaluation or assessment is the ‘rating’ obtained by the supplier on the basis of the weighted
factors.A Supplier's declining standards can be highlighted and brought to their attention.

The feedback will enable the Supplier to improve upon their performance in future so as to be
more competitive and thus offer value for money in subsequent business dealings.

Supplier performace can form part of the criteria for evaluation of tenders in future procurements.

11.3 Evaluation of Management (Supervision of Contract)

Evaluation of management performance will involve assessment of professional conduct and
timely discharge of the tasks allocated to delegated officer(s) of the Procurement Entity.
Ineffective management/supervision of a contract by the Procurement Entity or Contract
Administrator can result in unsatisfactory performance of the Supplier. Therefore, it is important
for the Contract Administrator to put in place measures to monitor the performance of the Supplier
as the contract implementation progresses. This should then be complemented by interviews with
representatives of the beneficiary institution(s) and other key stakeholders at the end of the
contract.

Factors for evaluating management/supervision of a contract will include the following:

 Discharging Procurement Entity’s or Purchaser’s obligations in accordance with the terms
and conditions of the contract.
 Collaborative relationship.
 Providing Procurement Entity’s inputs, for instance data, as and when required.
 Reviewing Supplier’s correspondence and providing feedback on time.
 Maintaining regular contacts with supplier to keep track of progress and any challenges in
executing the contract.
 Facilitating payments when due.

11.4 Evaluation Processes

Evaluations can be conducted in-house by the acquiring entity or a third party can be contracted
to undertake the evaluation. This latter approach has advantages in providing an independent view
of the contracting arrangement. Whatever the approach used, there are some principles that can
assist to make the evaluation relevant and useful. These include having:
 an evaluation plan that sets out clear terms of reference, methods and sources of data
collection and analysis, budget, clear timeframes and reporting arrangements;

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 relevant skills to manage and conduct the evaluation (either in-house or through contracted
personnel);
 senior management support;
 an evaluation report in which conclusions are supported by the data; and
 recommendations that provide an indication of their likely benefits.
For big contracts, the evaluation should be a thorough and independent review that is informed by
those involved in establishing and managing the contract.
The evaluation will need to be tailored to the particular circumstances but should consider both
the effectiveness and efficiency of the arrangement. To get the best out of the evaluation, entities
should:
 review all aspects of contract performance and its management;
 provide feedback to the Supplier; this should not be done as part of another procurement
process;
 report to stakeholders; and
 identify lessons learnt.

Potential sources of information that can be used to inform the evaluation include: notes from
meetings; performance data; interviews with management and the supplier; client and end-user
feedback; quality assurance reports; complaints data; and reports of any disputes.

Feedback to the Supplier

Where a Supplier may have a continuing or future relationship with the Procurement Entity,
relevant findings from the evaluation should be discussed with the Supplier. This can assist the
parties to better understand what is required and give the Supplier an opportunity to comment on
the findings.

Lessons Learnt
It is better practice that the findings of any evaluation be analyzed to provide lessons learnt to
underpin both continuing and future contracting activity. Lessons learnt should be documented
and provided to the appropriate parties. Any manuals, plans or policies should be reviewed and
updated as necessary.

Report to Stakeholders.
An evaluation report should be provided to relevant stakeholders, for example, senior management
of the Procurement Entity. The approach used to inform stakeholders about the evaluation findings
should be tailored to suit their particular role in the contract and may include both written and oral
briefings. This enables particular attention to be given to significant matters that need to be
considered by decision-makers.

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11.5 Evaluation Checklist
The checklist listed below provides a basis for conducting an evaluation of the contract.
 Has the contract facilitated the performance of the tasks under the scope of services and
achievement of the objectives of the assignment?
Review the requirements set out in the original business case and tender. Assess how these
requirements have developed during the life of the contract, then analyze the effectiveness
of the contract in achieving the stated requirements. This should involve a comparison of
planned and actual milestones and activities carried out under the contract.
 Did the contract achieve its objectives?
 Were stakeholders’ requirements met?
 Did the contract deliver quality outcomes?
 How well did the performance regime work?
Review performance against all the standards and indicators set in the contract. Assess
whether the Supplier provided all the required services in line with agreed timeframes.
Examine the monitoring and assessment arrangements, including the performance regime
established in the contract to ensure that they assisted with achieving contract outcomes.
 Did the management arrangements established by the Procurement Entity facilitate
achievement of contract outcomes?
Examine how the relationship was managed and whether the level of resources and/or skills
was sufficient to achieve the contract outcomes.

11.6 Contract Review

Evaluation of contract performance is sometimes referred to as contract review and is conducted
just before the contract is closed. The process is the same as explained above.
In large procurement contracts it is good practice after the contract is completed to conduct a
contract close-out review. This should be done by the contract administration team. The review
should consider the following:
a) The timeliness of contract performance.
b) Cost and quality performance.
c) Risks analysis.
d) Organizational and operational effectiveness.
e) Appropriateness of the procedures.
f) Supplier’s performance.

After the review a report should be prepared and distributed as necessary. The report shall provide
good lessons for management of future contracts. Where there is need for action resulting from the
report the management of the Procurement Entity shall decide. Where the team has performed well
it should be commended and where it has not done very well it shall note for future improvement.

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12.0 POST- IMPLEMENTATION TASKS

12.1 Introduction
Post-implementation tasks in goods contracts involve three main areas – Operational Acceptance,
Warranty and Contract Close-out. These post-implementation tasks are discussed within the
context of contract administration.

12.2 Operational Acceptance Certificate(s)

Under operational acceptance there is the need for the Procurement entity do the following:
 Functional guarantees- check if all the functional guarantees are met and all tests on
delivered items have been successfully passed
 Acceptance of goods-check against delivery lists and specifications.
 Inventory procedures-check that all goods have been properly registered in end users’
records and that they could easily be tracked down and identified
 Succession planning-determine who takes over the goods; is appropriate funding available
for the proper maintenance and operation of the goods; do the end users know what to do
in case of defects etc.)

12.3 Warranty
Contracts for goods typically provide for a warranty clause. A warranty is normally a promise that
the goods will meet the required standard. Warranty for goods must be invoked during a specified
period from acceptance in accordance with contract requirements.

12.3.1 Rights under Warranties

The Procurement Entity’s rights under warranty are founded on either:
 Standard warranties for off-the-shelf commercial goods
 Specific warranties for purpose-made equipment

12.3.2 Timely Notice

Timely notice of a warranty claim to the Supplier is of paramount importance and is usually
initiated by the Contract Administrator in writing specifying the defective part of the procurement
(and the nature of the defect) and requesting the Supplier to rectify the defect within a certain
period of time called for under the contract. The costs to remedy the defects are borne by the
Supplier and include either:
 Cost of repair; or
 Cost of replacement.

12.3.3 Extension of Warranty Period

In goods contracts, the Contract Administrator may also require an extension of the warranty
period to compensate for the down time as a result of the repair or replacement. In order for the

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Procurement Entity to retain the means to enforce the Supplier’s/Contractor’s/ obligations under a
warranty or defects liability period, the validity of the Performance Security (or a specified portion
of it) must remain in form throughout this period (usually one year from final acceptance.)

12.3.4 Other Factors Affecting Warranties for Goods

In international goods contract, unless there is an explicit statement in the contract that shipment
cost of defective components are to be borne by the Supplier, the latter may decline to bear such
expenses. It is important that the contract provides for repair/replacement of defective components
at the expense of the Supplier should the latter fail to act within the specified period under the
warranty clause. The vendor’s liability can extend beyond the warranty period should defects in
the procurement package be discovered that can be attributed to:
 Supplier’s gross negligence;
 Supplier’s fraud (misleading information, falsified test, etc.);
 Latent defects which could not be discovered through reasonable inspection at the time
of acceptance.

12.3.5 Refusal of Supplier to Accept Remedies

If the Supplier does not consent to any of the above remedies, then the issue has to be addressed
through a dispute settlement mechanism which has been covered in detail in Session 9.

12.3.6 What to note about Warranties

 Ensure that Performance Security for the amount has been submitted and is valid and
enforceable for the duration of the warranty period;
 Ensure that the contractor is promptly notified about any defect and duly remedies the
defects in due time (enforce the conditions of the Service Level Agreement in the case of
contracts for supply and installation of information systems);
 Check how the Supplier fulfilled its duties during the warranty period;
 Ensure that the Supplier has no outstanding obligations, duties or debts;

12.4 Contract Close-out

Contract close-out is a Procurement Entity’s housekeeping exercise governed by its operational
procedures. For goods contract, close–out formalities may be completed upon delivery and
acceptance of the goods.

The contract file must be closed by the Contract Administrator on finalization of all administrative
matters related to the contract subsequent to its completion. The contract is complete when all the
goods ordered have been delivered by the Supplier and accepted by the Purchaser.
Activities involved in contract close out are:
 Receipt of Supplier’s invoice
 Processing of payment
 Release of advance payment security

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 Preparation of evaluation report as to performance of the Supplier
 Findings and lessons learnt from the particular contract to be used as guidance for future
procurement so as to avoid the shortcomings of the current contract in future

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13.0 INCOTERMS (2010)

13.1 Introduction
International Commercial Terms, known as “INCOTERMS”, are internationally accepted terms
defining the responsibilities of exporters and importers in the arrangement of shipments and the
transfer of liability involved at various stages of the transaction.

INCOTERMS do not cover ownership or the transfer of title of goods. It is crucial to agree on an
INCOTERM at the start of a negotiation/quotation of a sale, as it will affect the costs and
responsibilities involved in shipping, insurance and tariffs.

The new INCOTERMS 2010 rules were revised by the International Chamber of Commerce and
became effective on January 1, 2011. Four terms were eliminated (DAF, DEQ, DES, DDU) and
two were added: Delivered at Place (DAP) and Delivered at Terminal (DAT).
The modifications affect obligations, risk transfer, and cost sharing for the Seller and Buyer,
resulting in better clarification and application of the eleven (11) INCOTERMS, and consistent
with the way global trade is actually conducted since the last update in 2000.
It should be noted that INCOTERMS are revised every ten (10) years.

13.2 Categories of INCOTERMS

There are two categories of INCOTERMS:

i. INCOTERMS (2010) Applicable for All Modes of Transport:

 EXW: ex-works
 FCA: free carrier
 CPT: carriage paid to
 CIP : carriage and insurance paid to
 DAT: delivered at terminal
 DAP: delivered at place
 DDP : delivered duty paid

ii. INCOTERMS (2010) Only Applicable for Sea and Inland Waterway Transport
 FAS : free alongside ship
 FOB : free on board
 CFR : cost and freight
 CIF : cost, insurance and freight

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13.3 Description of INCOTERMS and Characteristics

E Terms (EX-WORKS) - The only term where the seller makes the goods available to
the buyer at the seller’s own premises.

F Terms (FCA, FAS, FOB)- Under the F terms the seller is obliged to deliver the goods to a
carrier.

C Terms (CFR, CIF, CPT, CIP)- Under the C Terms the seller has to contract for carriage but
without assuming the risk of loss or damage to the goods or
additional cost, due to an event occurring after shipment and
dispatch.

D Terms (DAT, DAP, DDP)- The seller under the D Terms has to bear all costs and risks
needed to bring the goods to the country of destination.

A detailed description of INCOTERMS and their characteristics are presented in Table 2 below:

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Table 2: Description of INCOTERMS and Characteristics
Term Description Seller’s Costs & Risks Transport
Obligations
Fulfilled When

EXW Ex-Works Goods are made Seller not Any mode

(named place) available to the responsible for
buyer at the loading or export
seller’s premises clearance. Buyer
bears costs and
risks of
transportation

FCA Free Goods are cleared If buyer does not Any mode
Carrier(named for export and name precise
place) handed to the point, seller can
carrier at the choose within the
place named by range or place
the buyer stipulated. Seller
may be
responsible for
clearing the
goods for export.
Buyer bears cost
and risk from
when the goods
are handed to the
carrier.

FAS Free Alongside Goods are placed Buyer bears costs Sea or inland
Ship (named port alongside the and risks of loss waterway
of shipment) vessel at the or damage from
named port quayside. The
export clearance
obligation rests
with the seller.

FOB Free on Board Goods cleared for Buyer bears cost Sea or inland
(named point of export, passed and risks after waterway
shipment) over the ship’s goods have been
rail at named port delivered on
of shipment board the ship by
seller

CFR Cost and Freight Goods are cleared Risk of loss or Sea or inland
(named port of for export and damage and any waterway
destination) transported to the other cost is
transferred to the

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Term Description Seller’s Costs & Risks Transport

Obligations
Fulfilled When
named port of buyer when the
destination. goods have been
delivered on
board the ship by
the seller.

CIF Cost, Insurance Cost, insurance Risk passes to the Sea or inland
and Freight and freight paid buyer when the waterway
(named port of to named port of goods are
destination) destination. The delivered on
marine insurance board the ship.
is against the
buyer’s risk of
loss or damage
during carriage

CPT Carriage paid to Goods are cleared Buyer bears risks Any mode
(place of for export and after the goods
destination) delivered into the have been
custody of the delivered to the
carrier carrier. However,
seller must pay
for carriage to the
named place of
destination

CIP Carriage and Same as CPT but Seller only Any mode
Insurance Paid To seller has to required to obtain
named place of contract and pay insurance on
destination. for cargo minimum
insurance against coverage. Risk
the buyer’s risk of shifts to buyer
loss or damage when seller
during carriage delivers goods to
carrier at an
agreed place.

DAT Delivered At Goods are made Seller bears all Any mode
terminal available at risks involved in
named terminal at bringing the
port or place of goods to and
destination unloading them at
the terminal at the
named port or

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Term Description Seller’s Costs & Risks Transport

Obligations
Fulfilled When
place of
destination

DAP Delivered At The seller Seller bears all Any mode

Place(named delivers when the risks involved in
place of goods are placed bringing the
destination) at the buyer’s goods to the
disposal on the named place.
arriving means of
transport ready
for unloading at
the named place
of destination

DDP Delivered Duty Goods are Seller bears all Any mode
Paid(named place transported and risks and costs
of destination) duty paid at including duties,
named place in taxes, etc. Buyer
country of is responsible for
importation unloading at
place of
destination.

INCOTERMS DO NOT…
 Determine ownership or transfer title to the goods, nor evoke payment terms.
 Apply to service contracts, nor define contractual rights or obligations (except for delivery)
or breach of contract remedies.
 Protect parties from their own risk or loss, nor cover the goods before or after delivery.
 Specify details of the transfer, transport, and delivery of the goods. Container loading is
NOT considered packaging, and must be addressed in the sales contract.
 Remember, INCOTERMS are not law and there is NO default INCOTERM!

13.4 Advantages of INCOTERMS

 They determine the stage during carriage when responsibility passes from seller to buyer.
 They determine who is responsible for the cargo when same is lost or damaged
 They oblige the seller to pack goods in such manner as is required for transport
 They define the role of Carrier

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Procurement, Module V: Tendering for Services.

5. International Training Centre (ILO), (November 2014). Selection and Employment of

Consultants in World Bank –Financed Projects: Code of Conduct, Module 4.

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9. The World Bank (2011). Manual for Contract Management Procedures in World Bank-
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Management: EPM Module 3.
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a. Standard tender document for selection of technical service providers

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23. Public Procurement Act (Act 663) Amended 2015

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Document for request of Expression of Interest

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27. Lyson, K. ‘Purchasing’ (1996)

28. UN Handbook on Procurement, 2006

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APPENDIX 1: TEMPLATES

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I. CONTRACT MILESTONE CHECKLIST TEMPLATE

Task Original Target Revised Actual Date

Date Target
Date

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II. CONTRACT PAYMENT RECORD

Contract Reference No:

Particulars Currency Amount Cumulative amount

Original Contract Total 0.00

Amendment no 1 amount (+ increase or - decrease) 0.00
Amendment no 2 amount (+ increase or - decrease) 0.00
Amendment no 3 amount (+ increase or - decrease) 0.00

A Total Contract amount 0.00 0.00

Payments made
Invoice No 0.00
Invoice No 0.00
Invoice No 0.00
Invoice No 0.00
Invoice No 0.00
Invoice No 0.00
Invoice No 0.00
Invoice No 0.00
Invoice No 0.00
Invoice No 0.00
Invoice No 0.00
Invoice No 0.00
Invoice No 0.00
Invoice No 0.00

B Total Payments made 0.00 0.00

C Maximum balance payable 0.00

Total in line B should not exceed total in line A. If balance

shown in line C is negative, then payments exceed contract
total. 0.00 0.00

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III. CONTRACT ADMINISTRATOR CONTRACT STATUS REPORT

Contract Consultant Source Contractual Dates Physical progress Financial Progress

Ref / Funding %
Contractor
/ Supplier
(Subject) Contract Commence Original Revised During Cumul Curr- Original Revised Payments Cumulative
signature Date completion Comple month ative ency Contract contract in month payment
Date Date tion sum sum
Date

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APPENDIX 2

General Conditions of Contract (GCC) & Special Conditions of

Contract(SCC) for International Competitive Tendering

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Section VII. General Conditions of Contract
Table of Clauses

1. Definitions......................................................................................................................... 82
2. Contract Documents.......................................................................................................... 83
3. Corrupt Practices............................................................................................................... 83
4. Interpretation ..................................................................................................................... 84
5. Language........................................................................................................................... 85
6. Joint Venture, Consortium or Association........................................................................ 87
7. Eligibility .......................................................................................................................... 87
8. Notices .............................................................................................................................. 87
9. Applicable Law ................................................................................................................. 87
10. Settlement of Disputes ...................................................................................................... 87
11. Scope of Supply ................................................................................................................ 88
12. Delivery and Documents................................................................................................... 88
13. Supplier’s Responsibilities ............................................................................................... 88
14. Contract Price.................................................................................................................... 88
15. Terms of Payment ............................................................................................................. 88
16. Taxes and Duties............................................................................................................... 89
17. Performance Security ........................................................................................................ 89
18. Copyright .......................................................................................................................... 90
19. Confidential Information .................................................................................................. 90
20. Subcontracting .................................................................................................................. 91
21. Specifications and Standards ............................................................................................ 91
22. Packing and Documents.................................................................................................... 91
23. Insurance ........................................................................................................................... 92
24. Transportation ................................................................................................................... 92
25. Inspections and Tests ........................................................................................................ 92
26. Liquidated Damages ......................................................................................................... 93
27. Warranty ........................................................................................................................... 94
28. Patent Indemnity ............................................................................................................... 94
29. Limitation of Liability....................................................................................................... 95
30. Change in Laws and Regulations...................................................................................... 96
31. Force Majeure ................................................................................................................... 96

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32. Change Orders and Contract Amendments....................................................................... 96

33. Extensions of Time ........................................................................................................... 97
34. Termination....................................................................................................................... 97
35. Assignment ....................................................................................................................... 99

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Section VII. General Conditions of Contract
1. Definitions 2.1 The following words and expressions shall have the meanings
hereby assigned to them:
(a) “Contract” means the Agreement entered into between
the Purchaser and the Supplier, together with the Contract
Documents referred to therein, including all attachments,
appendices, and all documents incorporated by reference
therein.
(b) “Contract Documents” means the documents listed in the
Agreement, including any amendments thereto.

(c) “Contract Price” means the price payable to the Supplier

as specified in the Agreement, subject to such additions
and adjustments thereto or deductions therefrom, as may
be made pursuant to the Contract.

(d) “Day” means calendar day.

(e) “Delivery” means the transfer of ownership of the Goods

from the Supplier to the Purchaser in accordance with the
terms and conditions set forth in the Contract.
(f) “Completion” means the fulfillment of the Related
Services by the Supplier in accordance with the terms and
conditions set forth in the Contract.
(g) “Eligible Countries” means the countries and territories
eligible as listed in Section V.

(h) “GCC” means the General Conditions of Contract.

(i) “Goods” means all of the commodities, raw material,

machinery and equipment, and/or other materials that the
Supplier is required to supply to the Purchaser under the
Contract.
(j) “Purchaser” means the entity purchasing the Goods and
Related Services, as specified in the SCC.

(k) “Related Services” means the services incidental to the

supply of the goods, such as insurance, installation,
training and initial maintenance and other similar
obligations of the Supplier under the Contract.

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(l) “SCC” means the Special Conditions of Contract.

(m) “Subcontractor” means any natural person, private or

government entity, or a combination of the above, including
its legal successors or permitted assigns, to whom any
part of the Goods to be supplied or execution of any part
of the Related Services is subcontracted by the Supplier.

(n) “Supplier” means the natural person, private or

government entity, or a combination of the above, whose
Tender to perform the Contract has been accepted by the
Purchaser and is named as such in the Agreement, and
includes the legal successors or permitted assigns of the
Supplier.

(o) “The Site,” where applicable, means the place named in

the SCC.

2. Contract 2.1 Subject to the order of precedence set forth in the Agreement, all
Documents documents forming the Contract (and all parts thereof) are
intended to be correlative, complementary, and mutually
explanatory.

3. Corrupt 3.1 The Government of Ghana (GOG) requires that all Procurement
Practices Entities as well as Tenderers, Suppliers, Contractors and
Consultants participating in contracts financed from the public
funds of the Republic of Ghana, adhere to the highest ethical
standards, both during the tendering process and throughout the
execution of such contracts. The list of definitions set forth below
involves the most common types of corrupt practices, but is not
exhaustive. For this reason, the Public Procurement Authority
will also consider claims of similar nature involving alleged acts of
corruption, in accordance with the established procedure.

(a). “Bribery” means the act of unduly offering, giving, receiving

or soliciting anything of value to influence the process of
procuring goods or services, selecting consultants, or executing
contracts.

(b). “Extortion” or “Coercion” means the act attempting to influence

the process of procuring goods or services, selecting
consultants, or executing contracts by means of threats of
injury to person, property or reputation.

(c).“Fraud” means the misrepresentation of information or facts for

the purpose of influencing the process of procuring goods or
services, selecting consultants, or executing

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contracts, to the detriment of the Procurement

Entity/Purchaser or other participants.

(d) “Collusion” means an agreement between tenderers

designed to influence the outcome of a tender or for the
purpose of fixing by Tenderers of non-competitive prices
of a tender.
.

3.2 If, in accordance with the administrative procedures of the

Public Procurement Authority, it is demonstrated that
a government/public official, or anyone acting on his or her
behalf, and/or a Tenderer in a procurement process or
supplier/contractor during the execution of the contract carried
out in connection with a project financed from the public funds
of the Republic of Ghana has committed corrupt practices, the
Public Procurement Authority or the appropriate Tender review
Board will:

(a) reject a proposal to award a contract in connection with

the respective procurement process; and/or

(b) declare a firm and/or its personnel directly involved in

corrupt practices, temporarily or permanently ineligible
to be awarded future contracts financed from the public
funds of the Republic of Ghana.

3.3 The Tenderer shall disclose any commissions or fees that may
have been paid or are to be paid to agents, representatives, or
commission agents with respect to the tendering process or
execution of the contract. The information disclosed must
include at the name and address of the agent, representative, or
commission agent, the amount and currency, and the purpose
of the commission or fee. The information must be included in
the Tender Submission Sheet. Furthermore, Tenderers shall be
aware of the provision stated in Sub-Clause 3.2 and Sub-
Clause 35.1 (c) of the General Conditions of Contract.

3.4 Any communications between the Tenderer and the Purchaser

related to matters of alleged fraud or corruption must be made
in writing

4. Interpretation 4.1 If the context so requires it, singular means plural and vice versa.

4.2 Incoterms
(a) Unless otherwise specified in the SCC, the meaning of
any trade term and the rights and obligations of parties
thereunder shall be as prescribed by Incoterms.

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(b) The terms EXW, FOB, FCA, CIF, CIP, and other similar
terms, when used, shall be governed by the rules
prescribed in the current edition of Incoterms, published
by the International Chamber of Commerce at the date of
the Invitation for Tenders or as specified in the SCC.

4.3 Entire Agreement

The Contract constitutes the entire agreement between the

Purchaser and the Supplier and supersedes all communications,
negotiations and agreements (whether written or oral) of parties
with respect thereto made prior to the date of Contract.

4.4 Amendment

No amendment or other variation of the Contract shall be valid

unless it is in writing, is dated, expressly refers to the Contract,
and is signed by a duly authorized representative of each party
thereto.

4.5 Non-waiver
(a) Subject to GCC Sub-Clause 4.5(b) below, no relaxation,
forbearance, delay, or indulgence by either party in
enforcing any of the terms and conditions of the Contract
or the granting of time by either party to the other shall
prejudice, affect, or restrict the rights of that party under
the Contract, neither shall any waiver by either party of
any breach of Contract operate as waiver of any
subsequent or continuing breach of Contract.

(b) Any waiver of a party’s rights, powers, or remedies under

the Contract must be in writing, dated, and signed by an
authorized representative of the party granting such
waiver, and must specify the right and the extent to which
it is being waived.

4.6 Severability

If any provision or condition of the Contract is prohibited or

rendered invalid or unenforceable, such prohibition, invalidity or
unenforceability shall not affect the validity or enforceability of
any other provisions and conditions of the Contract.

5. Language 5.1 The Contract a s well a s all correspondence and documents

relating to the Contract exchanged by the Supplier and the
Purchaser, shall be written in the language specified in the SCC.
Supporting documents and printed literature that are part of the

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Contract may be in another language provided they are

accompanied by an accurate translation of the relevant passages
in the language specified in the SCC, in which case, for purposes
of interpretation of the Contract, this translation shall govern.

5.2 The Supplier shall bear all costs of translation to the governing
language and all risks of the accuracy of such translation.

6. Joint Venture, 6.1 If the Supplier is a joint venture, consortium, or association, all of
Consortium or the parties shall be jointly and severally liable to the Purchaser for
Association the fulfillment of the provisions of the Contract and shall
designate one party to act as a leader with authority to bind the
joint venture, consortium, or association. The composition or the
constitution of the joint venture, consortium, or association shall
not be altered without the prior consent of the Purchaser.

7. Eligibility 7.1 The Supplier and its Subcontractors shall have the nationality of an
eligible country, in accordance with Section V, Eligible Countries.
A Supplier o r Subcontractor shall be deemed to have the
nationality of a country if it is a citizen or constituted,
incorporated, or registered, and operates in conformity with the
provisions of the laws of that country.

7.2 All Goods and Related Services to be supplied under the Contract
and financed from the public funds of the Republic of Ghana shall
have their origin in Eligible Countries.

7.3 For the purpose of this Clause, origin means the country where the
goods have been grown, mined, cultivated, produced,
manufactured, or processed; or through manufacture, processing,
or assembly, another commercially recognized article results that
differs substantially in its basic characteristics from its imported
components

8. Notices 8.1 Any notice given by one party to the other pursuant to the
Contract shall be in writing to the address specified in the SCC. The
term “in writing” means communicated in written form with proof
of receipt.

8.2 A notice shall be effective when delivered or on the notice’s

effective date, whichever is later.

9. Applicable Law 9.1 the Contract shall be governed by and interpreted in accordance
with the laws of Ghana, unless otherwise specified in the SCC.

10. Settlement of 10.1 The Purchaser and the Supplier shall make every effort to resolve
Disputes amicably by direct informal negotiation any disagreement or dispute
arising between them under or in connection with the Contract.

10.2 If the parties fail to resolve such a dispute or difference by mutual

consultation within twenty-eight (28) days from the commencement
of such consultation, either party may require that

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the dispute be referred for resolution to the formal mechanisms

specified in the SCC. These mechanisms may include, but are not
restricted to, conciliation mediated by a third party, adjudication
in an agreed national or international forum, and/or international
arbitration.

11. Scope of Supply 11.1 Subject to the SCC, the Goods and Related Services to be supplied
shall be as specified in the Schedule of Requirements.

11.2 Unless otherwise stipulated in the Contract, the Supply shall

include all such items not specifically mentioned in the Contract
but that can be reasonably inferred from the Contract as being
required for attaining Delivery and Completion of the Goods and
Related Services as if such items were expressly mentioned in the
Contract.

12. Delivery and 12.1 Subject to GCC Sub-Clause 32.1, the Delivery of the Goods and
Documents Completion of the Related Services shall be in accordance with
the Delivery and Completion Schedule specified in the Schedule
of Requirements. The details of shipping and other documents to
be furnished by the Supplier are specified in the SCC.

13. Supplier’s 13.1 The Supplier shall supply all the Goods and Related Services
Responsibilities included in the Scope of Supply in accordance with GCC Clause
11, and the Delivery and Completion Schedule, as per GCC
Clause 12.

14. Contract Price 14.1 The Contract Price shall be as specified in the Agreement subject
to any additions and adjustments thereto, or deductions therefrom,
as may be made pursuant to the Contract.

14.2 Prices charged by the Supplier for the Goods delivered and the
Related Services performed under the Contract shall not vary
from the prices quoted by the Supplier in its Tender, with the
exception of any price adjustments authorized in the SCC.

15. Terms of 15.1 The Contract Price, including any Advance Payments, if
Payment applicable, shall be paid as specified in the SCC.

15.2 The Supplier’s request for payment shall be made to the

Purchaser in writing, accompanied by invoices describing, as
appropriate, the Goods delivered and Related Services performed,
and by the documents submitted pursuant to GCC Clause 12 and
upon fulfillment of all the obligations stipulated in the Contract.

15.3 Payments shall be made promptly by the Purchaser, no later than

sixty (60) days after submission of an invoice or request for

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payment by the Supplier, and the Purchaser has accepted it.

15.4 The currency in which payments shall be made to the Supplier

under this Contract shall be those in which the Tender price is
expressed.

15.5 The Purchaser shall pay to the Supplier interest on any outstanding
amount at the prevailing interbank rate where the Purchaser has
received an accepted invoice or certificate from the Supplier but
has failed to make payment within the number of days stated in the
Data Sheet and where such period is not stated payment remains
outstanding for more than … days after the agreed due date

16. Taxes and 16.1 F o r goods supplied from outside Ghana, the Supplier shall be
Duties entirely responsible for all taxes, stamp duties, license fees, and
other such levies imposed outside Ghana.

16.2 For goods supplied from within Ghana, the Supplier shall be
entirely responsible for all taxes, duties, license fees, etc., incurred
until delivery of the contracted Goods to the Purchaser.

16.3 If any tax exemptions, reductions, allowances or privileges may

be available to the Supplier in Ghana, the Purchaser shall use its
best efforts to enable the Supplier to benefit from any such tax
savings to the maximum allowable extent.

17. Performance 17.1 The Supplier shall, within twenty-eight (28) days of the
Security notification of contract award, provide a performance security for
the due performance of the Contract in the amount specified in the
SCC.

17.2 The proceeds of the performance security shall be payable to the

Purchaser as compensation for any loss resulting from the
Supplier’s failure to complete its obligations under the Contract.

17.3 The performance security shall be denominated in the currency of

the Contract, or in a freely convertible currency acceptable to the
Purchaser, and shall be in one of the following forms:

(a) a bank guarantee or an irrevocable letter of credit issued by a

reputable located in Ghana or abroad, acceptable to the
Purchaser, in using the form included in Section IX
Contract Forms; or

(b) a cashier’s certified check.

17.4 The performance security shall be discharged by the Purchaser

and returned to the Supplier not later than twenty-eight (28) days

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following the date of completion of the Supplier’s performance

obligations under the Contract, including any warranty
obligations, unless specified otherwise in the SCC.

18. Copyright 18.1 The copyright in all drawings, documents, and other materials
containing data and information furnished to the Purchaser by the
Supplier herein shall remain vested in the Supplier, or, if they are
furnished to the Purchaser directly or through the Supplier by any
third party, including suppliers of materials, the copyright in such
materials shall remain vested in such third party

19. Confidential 19.1 The Purchaser and the Supplier shall keep confidential and shall not,
Information without the written consent of the other party hereto, divulge to any
third party any documents, data, or other information furnished
directly or indirectly by the other party hereto in connection with
the Contract, whether such information has been furnished prior to,
during or following completion or termination of the Contract.
Notwithstanding the above, the Supplier may furnish to its
Subcontractor such documents, data, and other information it
receives from the Purchaser to the extent required for the
Subcontractor to perform its work under the Contract, in which
event the Supplier shall obtain from such Subcontractor an
undertaking of confidentiality similar to that imposed on the
Supplier under GCC Clause 19.

19.2 The Purchaser shall not use such documents, data, and other
information received from the Supplier for any purposes unrelated
to the contract. Similarly, the Supplier shall not use such
documents, data, and other information received from the Purchaser
for any purpose other than the design, procurement, or other work
and services required for the performance of the Contract.

19.3 The obligation of a party under GCC Sub-Clauses 19.1 and 19.2
above, however, shall not apply to information that:
(a) the Purchaser or Supplier need to share with the Public
Procurement Authority of the Republic of Ghana or other
institutions participating in the financing of the Contract;

(b) now or hereafter enters the public domain through no

fault of that party;

(c) can be proven to have been possessed by that party at the

time of disclosure and which was not previously
obtained, directly or indirectly, from the other party; or
(d) otherwise lawfully becomes available to that party from a

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third party that has no obligation of confidentiality.

19.4 The above provisions of GCC Clause 19 shall not in any way modify
any undertaking of confidentiality given by either of the parties
hereto prior to the date of the Contract in respect of the Supply
or any part thereof.

19.5 T h e provisions of GCC Clause 19 shall survive completion or

termination, for whatever reason, of the Contract.

20. Subcontracting 20.1 The Supplier shall notify the Purchaser in writing of all
subcontracts awarded under the Contract if not already specified
in the Tender. Subcontracting s h a l l in no event relieve the
Supplier from any of its obligations, duties, responsibilities, or
liability under the Contract.

20.2 Subcontracts shall comply with the provisions of GCC Clauses 3

and 7.

21. Specifications 21.1 Technical Specifications and Drawings

and Standards (a) The Supplier shall ensure that the Goods and Related
Services comply with technical specifications and other
provisions of the Contract.

(b) The Supplier shall be entitled to disclaim responsibility

for any design, data, drawing, specification or other
document, or any modification thereof provided or
designed by or on behalf of the Purchaser, by giving a notice
of such disclaimer to the Purchaser.

(c) The Goods a n d Related Services supplied under this

Contract shall conform to the standards mentioned in
Section VI, Schedule of Requirements and, when no
applicable standard is mentioned, the standard shall be
equivalent or superior to the official standards whose
application is appropriate to the goods’ country of origin.

(d) Wherever references are made in the Contract to codes

and standards in accordance with which it shall be executed,
the edition or the revised version of such codes and
standards shall be those specified in the Schedule of
Requirements. During Contract execution, any changes in
any such codes and standards shall be applied only after
approval by the Purchaser and shall be treated in accordance
with GCC Clause 32.

22. Packing and 22.1 The Supplier shall provide such packing of the goods as is

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Documents required to prevent their damage or deterioration during transit to

their final destination, as indicated in the Contract. During transit,
the packing shall be sufficient to withstand, without limitation,
rough handling and exposure to extreme temperatures, salt and
precipitation, and open storage. Packing case size and weights
shall take into consideration, where appropriate, the remoteness of
the goods’ final destination and the absence of heavy handling
facilities at all points in transit.

22.2 The packing, marking, and documentation within and outside the
packages shall comply strictly with such special requirements as
shall be expressly provided for in the Contract, including
additional requirements, if any, specified in the SCC, and in any
other instructions ordered by the Purchaser.

23. Insurance 23.1 Unless otherwise specified in the SCC, the Goods supplied under
the Contract shall be fully insured—in a freely convertible currency
from an eligible country—against loss or damage incidental to
manufacture or acquisition, transportation, storage, and delivery, in
accordance with the applicable Incoterms or in the manner
specified in the SCC.

24. Transportation 24.1 Unless otherwise specified in the SCC, responsibility for
arranging transportation of the Goods shall be in accordance with
the Incoterms specified in the Schedule of Requirements.

25. Inspections and 25.1 The Supplier shall at its own expense and at no cost to the
Tests Purchaser carry out all such tests and/or inspections of the Goods
and Related Services as are specified in the Schedule of
Requirements.

25.2 The inspections and tests may be conducted on the premises of

the Supplier or its Subcontractor, at point of delivery, and/or at the
Goods’ final destination, or in another place in Ghana as specified
in the SCC. Subject to GCC Sub-Clause 25.3, if conducted on
the premises of the Supplier or its Subcontractor, all reasonable
facilities and assistance, including access to drawings and
production data, shall be furnished to the inspectors at no charge
to the Purchaser.

25.3 The Purchaser or its designated representative shall be entitled to

attend the tests and/or inspections referred to in GCC Sub-Clause
25.2, provided that the Purchaser bear all of its own costs and
expenses incurred in connection with such attendance including,
but not limited to, all traveling and board and lodging expenses.

25.4 Whenever the Supplier is ready to carry out any such test and

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inspection, it shall give a reasonable advance notice, including the

place and time, to the Purchaser. The Supplier shall obtain from
any relevant third party or manufacturer any necessary permission
or consent to enable the Purchaser or its designated representative
to attend the test and/or inspection.

25.5 The Purchaser may require the Supplier to carry out any test
and/or inspection not required by the Contract but deemed
necessary to verify that the characteristics and performance of the
Goods comply with the technical specifications codes and standards
under the Contract, provided that the Supplier’s reasonable costs
and expenses incurred in the carrying out of such test and/or
inspection shall be added to the Contract Price. Further, if such
test and/or inspection impedes the progress of manufacturing and/or
the Supplier’s performance of its other obligations under the
Contract, due allowance will be made in respect of the Delivery
Dates and Completion Dates and the other obligations so affected.

25.6 The Supplier shall provide the Purchaser with a report of the
results of any such test and/or inspection.

25.7 The Purchaser may reject any Goods or any part thereof that fail
to pass any test and/or inspection or do not conform to the
specifications. The Supplier shall either rectify or replace such
rejected Goods or parts thereof or make alterations necessary to
meet the specifications at no cost to the Purchaser, and shall
repeat the test and/or inspection, at no cost to the Purchaser, upon
giving a notice pursuant to GCC Sub-Clause 25.4.

25.8 T h e Supplier agrees that neither the execution of a test and/or

inspection of the Goods or any part thereof, nor the attendance by
the Purchaser or its representative, nor the issue of any report
pursuant to GCC Sub-Clause 25.6, shall release the Supplier from
any warranties or other obligations under the Contract.

26. Liquidated 26.1 Except as provided under GCC Clause 31, if the Supplier fails to
Damages deliver any or all of the Goods or perform the Related Services
within the period specified in the Contract, the Purchaser may
without prejudice to all its other remedies under the Contract,
deduct from the Contract Price, as liquidated damages, a sum
equivalent to the percentage specified in the SCC of the Contract
Price for each week or part thereof of delay until actual delivery
or performance, up to a maximum deduction of the percentage
specified in those SCC. Once the maximum is reached, the
Purchaser may terminate the Contract pursuant to GCC Clause
34.

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27. Warranty 27.1 The Supplier warrants that all the Goods are new, unused, and of
the most recent or current models, and that they incorporate all
recent improvements in design and materials, unless provided
otherwise in the Contract.

27.2 Subject to GCC Sub-Clause 21.1, the Supplier further warrants

that the Goods shall be free from defects arising from any act or
omission of the Supplier or arising from design, materials, and
workmanship, under normal use in the conditions prevailing in
the country of final destination.
27.3 Unless otherwise specified in the SCC, the warranty shall remain
valid for twelve (12) months after the Goods, or any portion thereof
as the case may be, have been delivered to and accepted at the final
destination indicated in the SCC, or for eighteen (18) months after
the date of shipment or loading in the country of origin, whichever
period concludes earlier.
27.4 The Purchaser shall give notice to the Supplier stating the nature
of any such defects together with all available evidence thereof,
promptly following the discovery thereof. The Purchaser shall
afford all reasonable opportunity for the Supplier to inspect such
defects.

27.5 Upon receipt of such notice, the Supplier shall, within the period
specified in the SCC, expeditiously repair or replace the defective
Goods or parts thereof, at no cost to the Purchaser.

27.6 If having been notified, the Supplier fails to remedy the defect within
the period specified in the SCC, the Purchaser may proceed to
take within a reasonable period such remedial action as may be
necessary, at the Supplier’s risk and expense and without prejudice
to any other rights which the Purchaser may have against the
Supplier under the Contract.

28. Patent 28.1 The Supplier shall, subject to the Purchaser’s compliance with
Indemnity GCC Sub-Clause 28.2, indemnify and hold harmless the
Purchaser and its employees and officers from and against any
and all suits, actions or administrative proceedings, claims,
demands, losses, damages, costs, and expenses of any nature,
including attorney’s fees and expenses, which the Purchaser may
suffer as a result of any infringement or alleged infringement of
any patent, utility model, registered design, trademark, copyright,
or other intellectual property right registered or otherwise existing
at the date of the Contract by reason of:
(a) the installation of the Goods by the Supplier or the use of

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the Goods in the country where the Site is located; and

(b) the sale in any country of the products produced by the
Goods.

Such indemnity shall not cover any use of the Goods or any
part thereof other than for the purpose indicated by or to be
reasonably inferred from the Contract, neither any infringement
resulting from the use of the Goods or any part thereof, or any
products produced thereby in association or combination with
any other equipment, plant, or materials not supplied by the
Supplier, pursuant to the Contract.
28.2 If any proceedings are brought or any claim is made against the
Purchaser arising out of the matters referred to in GCC Sub- Clause
28.1, the Purchaser shall promptly give the Supplier a notice
thereof, and the Supplier may at its own expense and in the
Purchaser’s name conduct such proceedings or claim and any
negotiations for the settlement of any such proceedings or claim.
28.3 If the Supplier fails to notify the Purchaser within twenty-eight
(28) days after receipt of such notice that it intends to conduct any
such proceedings or claim, then the Purchaser shall be free to
conduct the same on its own behalf.

28.4 The Purchaser shall, at the Supplier’s request, afford all available
assistance to the Supplier in conducting such proceedings or
claim, and shall be reimbursed by the Supplier for all reasonable
expenses incurred in so doing.

28.5 The Purchaser shall indemnify and hold harmless the Supplier
and its employees, officers, and Subcontractors from and against
any and all suits, actions or administrative proceedings, claims,
demands, losses, damages, costs, and expenses of any nature,
including attorney’s fees and expenses, which the Supplier may
suffer as a result of any infringement or alleged infringement of
any patent, utility model, registered design, trademark, copyright, or
other intellectual property right registered or otherwise existing at
the date of the Contract arising out of or in connection with any
design, data, drawing, specification, or other documents or
materials provided or designed by or on behalf of the Purchaser.

29. Limitation of 29.1 Except in cases of criminal negligence or willful misconduct,

Liability (a) the Supplier shall not be liable to the Purchaser, whether in
contract, tort, or otherwise, for any indirect or
consequential loss or damage, loss of use, loss of
production, or loss of profits or interest costs, provided that
this exclusion shall not apply to any obligation of the

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Supplier to pay liquidated damages to the Purchaser and

(b) the aggregate liability of the Supplier to the Purchaser,
whether under the Contract, in tort or otherwise, shall not
exceed the total Contract Price, provided that this
limitation shall not apply to the cost of repairing or
replacing defective equipment, or to any obligation of the
supplier to indemnify the purchaser with respect to patent
infringement

30. Change in Laws 30.1 Unless otherwise specified in the Contract, if after the date of the
and Regulations Invitation to Tender, any law, regulation, ordinance, order or by-
law having the force of law is enacted, promulgated, abrogated, or
changed in the particular area of Ghana where the Site is located
(which shall be deemed to include any change in interpretation or
application by the competent authorities) that subsequently affects
the Delivery Date and/or the Contract Price, then such Delivery
Date and/or Contract Price shall be correspondingly increased or
decreased, to the extent that the Supplier has thereby been
affected in the performance of any of its obligations under the
Contract. Notwithstanding t h e foregoing, su c h additional
or reduced cost shall not be separately paid or credited if the same
has already been accounted for in the price adjustment provisions
where applicable, in accordance with GCC Clause 14.

31. Force Majeure 31.1 The Supplier shall not be liable for forfeiture of its performance
security, liquidated damages, or termination for default if and to
the extent that its delay in performance or other failure to perform
its obligations under the Contract is the result of an event of Force
Majeure.
31.2 For purposes of this Clause, “Force Majeure” means an event or
situation beyond the control of the Supplier that is not
foreseeable, is unavoidable, and its origin is not due to negligence
or lack of care on the part of the Supplier. Such events may include,
but not be limited to, acts of the Purchaser in its sovereign
capacity, wars or revolutions, fires, floods, epidemics, quarantine
restrictions, and freight embargoes.

31.3 If a Force Majeure situation arises, the Supplier shall promptly notify
the Purchaser in writing of such condition and the cause thereof.
Unless otherwise directed by the Purchaser in writing, the
Supplier shall continue to perform its obligations under the Contract
as far as is reasonably practical, and shall seek all reasonable
alternative means for performance not prevented by the Force
Majeure event.

32. Change Orders 32.1 The Purchaser may at any time order the Supplier through notice

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and Contract in accordance GCC Clause 8, to make changes within the general
Amendments scope of the Contract in any one or more of the following:
(a) drawings, designs, or specifications, where Goods to be
furnished under the Contract are to be specifically
manufactured for the Purchaser;

(b) the method of shipment or packing;

(c) the place of delivery; and

(d) the Related Services to be provided by the Supplier.

32.2 If any such change causes an increase or decrease in the cost of,
or the time required for, the Supplier’s performance of any
provisions under the Contract, an equitable adjustment shall be
made in the Contract Price or in the Delivery/Completion Schedule,
or both, and the Contract shall accordingly be amended. Any claims
by the Supplier for adjustment under this Clause must be asserted
within twenty-eight (28) days from the date of the Supplier’s receipt
of the Purchaser’s change order.

32.3 Prices to be charged by the Supplier for any Related Services that
might be needed but which were not included in the Contract
shall be agreed upon in advance by the parties and shall not
exceed the prevailing rates charged to other parties by the
Supplier for similar services.

33. Extensions of 33.1 If at any time during performance of the Contract, the Supplier or
Time its subcontractors should encounter conditions impeding timely
delivery of the Goods or completion of Related Services pursuant
to GCC Clause 12, the Supplier shall promptly notify the
Purchaser in writing of the delay, its likely duration, and its cause.
As soon as practicable after receipt of the Supplier’s notice, the
Purchaser shall evaluate the situation and may at its discretion
extend the Supplier’s time for performance, in which case the
extension shall be ratified by the parties by amendment of the
Contract.

33.2 Except in case of Force Majeure, as provided under GCC Clause

31, a delay by the Supplier in the performance of its Delivery and
Completion obligations shall render the Supplier liable to the
imposition of liquidated damages pursuant to GCC Clause 26,
unless an extension of time is agreed upon, pursuant to GCC Sub-
Clause 33.1.

34. Termination 34.1 Termination for Default

(a) The Purchaser, without prejudice to any other remedy for

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breach of Contract, by notice of default sent to the

Supplier, may terminate the Contract in whole or in part:

(i) if the Supplier fails to deliver any or all of the Goods

within the period specified in the Contract, or within
any extension thereof granted by the Purchaser pursuant
to GCC Clause 33; or
(ii) if the Supplier fails to perform any other obligation
under the Contract.
(b) In the event the Purchaser terminates the Contract in
whole or in part, pursuant to GCC Clause 34.1(a), the
Purchaser may procure, upon such terms and in such
manner as it deems appropriate, Goods or Related
Services similar to those undelivered or not performed,
and the Supplier shall be liable to the Purchaser for any
additional costs for such similar Goods or Related Services.
However, the Supplier shall continue
performance of the Contract to the extent not terminated.
(c) if the Supplier, in the judgment of the Purchaser has
engaged in corrupt or fraudulent practices, as defined in
GCC Clause 3, in competing for or in executing the
Contract.

34.2 Termination for Insolvency.

(a) The Purchaser may at any time terminate the Contract by
giving notice to the Supplier if the Supplier becomes
bankrupt or otherwise insolvent. In such event,
termination will be without compensation to the Supplier,
provided that such termination will not prejudice or affect
any right of action or remedy that has accrued or will accrue
thereafter to the Purchaser

34.3 Termination for Convenience.

(a) The Purchaser, by notice sent to the Supplier, may
terminate the Contract, in whole or in part, at any time
for its convenience. The notice of termination shall
specify that termination is for the Purchaser’s
convenience, the extent to which performance of the
Supplier under the Contract is terminated, and the date upon
which such termination becomes effective.

(b) The Goods that are complete and ready for shipment
within twenty-eight (28) days after the Supplier’s receipt
of notice of termination shall be accepted by the

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Purchaser at the Contract terms and prices. For the

remaining Goods, the Purchaser may elect:

(i) to have any portion completed and delivered at the

Contract terms and prices; and/or

(ii) to cancel the remainder and pay to the Supplier an

agreed amount for partially completed Goods and Related
Services and for materials and parts previously procured
by the Supplier.

35. Assignment 35.1 Neither the Purchaser nor the Supplier shall assign, in whole or in
part, their obligations under this Contract, except with prior
written consent of the other party.

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Section VIII. Special Conditions of Contract

The following Special Conditions of Contract (SCC) shall supplement and / or amend the General
Conditions of Contract (GCC). Whenever there is a conflict, the provisions herein shall prevail
over those in the GCC. The corresponding clause number of the GCC is indicated in the left hand
column.

GCC The Purchaser is:

1.1(j)
GCC 1.1 The Site is:
(o)
GCC 4.2 The meaning of the trade terms shall be as prescribed by Incoterms.
(a) If the meaning of any trade term and the rights and obligations of the parties
thereunder shall not be as prescribed by Incoterms, they shall be as prescribed by:

GCC 4.2 The version edition of Incoterms shall be:

(b)
GCC 5.1 The language shall be:

GCC 8.1 For notices, the Purchaser’s address shall be:

Attention: Street
Address: Floor/
Room number: City:
Region: Country:
Telephone: Facsimile
number: Electronic
mail address:

GCC 9.1 The applicable law shall be the laws of Ghana

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GCC 10.2 The formal mechanism for the resolution of disputes shall be as follows:
(a). For contracts entered into with Foreign Suppliers:
In case of a dispute between the Purchaser and the supplier, the dispute shall be
settled by arbitration in accordance with the provisions of the United Nations
Commission on International Trade Law (UNCITRAL) arbitration Rules.

(b). For contracts entered into with suppliers from Ghana

In the case of a dispute between the Purchaser and a Supplier from Ghana, the
dispute shall be referred to adjudication or arbitration in accordance with the
Alternative Dispute Resolution Act 2010 (Act 798)

GCC 11.1 The scope of supply for the Goods and Related Services to be supplied shall be as
specified in:

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Delivery and Documents

GCC 12.1
For Goods supplied from abroad:

Sample provision (CIF terms)

Upon shipment, the Supplier shall notify the Purchaser and the Insurance Company
by cable the full details of the shipment, including Contract number, description of
Goods, quantity, the vessel, the bill of lading number and date, port of loading, date
of shipment, port of discharge, etc. The Supplier shall mail the following documents
to the Purchaser, with a copy to the Insurance Company:

(i) copies of the Supplier’s invoice showing Goods’ description, quantity,

unit price, and total amount;
(ii) original and copies of the negotiable, clean, on-board bill of lading
marked “freight prepaid” and copies of nonnegotiable bill of lading;
(iii) copies of the packing list identifying contents of each package;
(iv) insurance certificate;
(v) Manufacturer’s or Supplier’s warranty certificate;
(vi) inspection certificate, issued by the nominated inspection agency, and the
Supplier’s factory inspection report; and
(vii) certificate of origin.

The above documents shall be received by the Purchaser at least one week before
arrival of the Goods at the port or place of arrival and, if not received, the Supplier will
be responsible for any consequent expenses.

[Other similar documents should be listed, depending upon the Incoterm retained.]

For Goods from within the Purchaser’s country:

Sample Provision (EXW term)

Upon delivery of the Goods to the transporter, the Supplier shall notify the Purchaser
and mail the following documents to the Purchaser:
(i) Copies of the Supplier’s invoice showing Goods’ description, quantity,
unit price, and total amount;
(ii) Delivery note acceptable to the Purchaser such as railway receipt, or truck
receipt;
(iii) Manufacturer’s or Supplier’s warranty certificate;
(iv) Inspection certificate issued by the nominated inspection agency, and the
Supplier’s factory inspection report; and
(v) Certificate of origin.

The above documents shall be received by the Purchaser before arrival of the Goods
and, if not received, the Supplier will be responsible for any consequent expenses.

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GCC 14.2 The prices charged for the Goods delivered and the related Services performed
be adjustable.

If prices are adjustable, the method specified in the attachment to the SCC shall be
used to calculate the price adjustment.

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