Contract Administration Guildlines

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MILLENNIUM CHALLENGE ACCOUNT – MOZAMBIQUE

Contract Administration Guidelines

November 2011 Version 2

Contract Administration Guidelines

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Table of Contents
SECTION I: OVERVIEW OF CONTRACT ADMINISTRATION AND PRINCIPLES OF EFFECTIVE CONTRACT ADMINISTRATION 1.0 Overview of Contract Administration
1.1 1.2 1.3 Introduction Definition, Scope and Objectives Contract Administration Functions

2.0

Principles of Effective Contract Administration
2.1 2.2 2.3 Basis Contract Administration Principles Contract Administration

SECTION II: CONTRACT ADMINISTRATION PROCEDURES FOR WORKS
3.0 Contract Administration Procedures For Works
3.1 3.2 3.3 3.3.1 3.3.2 3.3.3 3.3.4 3.4 3.5 3.6 3.7 3.8 3.8.1 3.8.1.1 3.8.1.2 3.8.1.3 Contract Administration Process Contract Administration System (CAS) Contract Commencement Procedures Purpose Pre-commencement/ Kick-off Meeting Planning Meeting Pre-commencement/ Kick-off Meeting Commencement Checklist Tracking Contracts Progress Monitoring and Performance Reporting Contract Files Communication with MCA-M Contractors Deliverable Management Process Managing Contract Deliverables – Works Contract Administration and Supervision The Project Manager Roles and Responsibilities of the Project Manager During Contract Administration 3.8.1.4 The Engineer 3.8.1.5 Roles and Responsibilities of the Engineer During Contract Administration 3.8.1.6 The Implementing Entity

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SECTION III: CONTRACT ADMINISTRATION PROCEDURES FOR GOODS
4.0 Contract Administration Procedures For Goods
4.1 4.2 4.3 4.3.1 4.3.2 4.3.3 4.4 4.5 4.6 4.7 4.8 4.8.1 4.8.2 4.8.3 4.8.4 4.8.5 4.8.6 4.8.7 4.8.8 4.8.9 4.8.10 4.8.11 4.8.12 4.8.13 Contract Administration Process Contract Administration System (CAS) Contract Commencement Procedures Purpose Pre-commencement/ Kick-off Meeting Planning Meeting Pre-commencement/ Kick-off Meeting Tracking Contracts Progress Monitoring and Performance Reporting Contract Files Communication with MCA-M Contractors Deliverable Management Process Managing Contract Deliverables – Goods Separation of Duties to Eliminate the Risk of Errors Packing and Shipping Standards Expediting of Deliveries Aspects to Consider When Receiving Goods Preparing the Goods Received Report Based on the Supplier’s Delivery Documents Unloading, Unpacking and Assembly of Goods Inspection Testing - Test Report (if Applicable) Action to be Taken at the End of the Warranty Period (if Applicable) Certification of Acceptance of Goods Procedure for the Rejection of Non-Conforming Goods Liquidated Damages

SECTION IV: CONTRACT ADMINISTRATION PROCEDURES FOR INTELLECTUAL SERVICES
5.0 Contract Administration Procedures for Intellectual Services
5.1 5.2 5.3 5.3.1 5.3.2 5.3.3 5.4 5.5 5.6 5.7 5.8 Contract Administration Process Contract Administration System (CAS) Contract Commencement Procedures Purpose Pre-commencement/ Kick-off Meeting Planning Meeting Pre-commencement/ Kick-off Meeting Tracking Contracts Progress Monitoring and Performance Reporting Contract Files Communication with MCA-M Contractors Deliverable Management Process

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5.8.1 5.8.2 5.8.3 5.8.4 5.8.5 5.8.6 5.8.7

Managing Contract Deliverables – Intellectual Services Introduction Separation of Duties to Eliminate the Risk of Errors Contract Administration and Supervision Aspects to Consider When Receiving Consultant´s Deliverable Procedure for approval of Reports and Deliverables Procedure for Rejection of Non-Conforming Reports and Deliverable

SECTION V: CONTRACT MODIFICATION PROCEDURES
6.0 Contract Modification Procedures
6.1 6.1.1 6.1.2 6.2 6.3 6.4 6.5 6.5.1 6.5.2 6.6 6.7 6.7.1 6.7.2 6.7.3 Contract Modification Rationale Definition – Contract Modification Objectives of Contracts Modification System Procedure for Modification of Contracts Replacing a Key Staff in Consultant Services Contracts Claims Administration System Basic Principles General Procedures Resolution of Disputes Contract Termination Definition Reasons for Termination Procedures for Termination

SECTION VI: CONTRACT CLOSURE AND CONTRACTOR PAST PERFORMANCE SYSTEM
7.0 Contract Closure And Contractor Performance Reporting
7.1 7.1.1 7.1.2 7.1.3 7.2 Contract Closure Procedure Contract Closure Documentation Formal acceptance and closure Contractor Past Performance Reporting System (CPPRS)

ANNEXES

Annex 1: Organizational chart for Contract Implementation Annex 2: Contract Close-Out Form Annex 3: Contract Administration Form (CAF) Consultancy Services Annex 4: Contract Administration Form (CAF) Works Annex 5: Contractor Past Performance Reporting System (CPPRS)
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Annex 6: Goods Receipt Form Annex 7: Contract Administration Information Flow Chart Annex 8: Contract Modification/Change Order Flow Chart Annex 9: IPC Process Annex 10: MCA-M and Implementing Entities Responsibilities Under Contract Administration - Goods Contract Annex 11: MCA-M and Implementing Entities Responsibilities Under Contract Administration - Services Contract

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LIST OF TABLES
Table 3.1: Sample Agenda for the Kick-off/Pre-Commencement Meeting – Works Contract Table 3.2: Commencement Checklist for Works Contract Table 3.5: Contract Administration for Works Table 4.1: Sample Agenda for the Kick-off/Pre-Commencement Meeting – Goods Contract Table 4.7: Contract Administration for Goods Table 5.1: Sample Agenda for the Kick-off/Pre-Commencement Meeting – Intellectual Services Contract Table 5.5: Contract Administration for Intellectual Services Table 6.1: Standard Format for Contract Modification / Change Order Form

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LIST OF ACRONYMS & ABBREVIATIONS
BD CA CAF CAS CFO DED ED ENG FA GRN IE IEA MCA-M MCC PA ESR PROC M PM PC LC Board of Directors Contract Administrator(s) Contract Administration Form Contract Administration System Chief Financial Officer Deputy Executive Director Executive Director Engineer Fiscal Agent Goods/Works/Services Receipt Note Implementing Entity(s) Implementing Entity (s) Agreement Millennium Challenge Account-Mozambique Millennium Challenge Corporation Procurement Agent Employer Site Representative Procurement Manager Project Manager Project Coordinator Legal Counsel

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SECTION I: OVERVIEW OF CONTRACT ADMINISTRATION & PRINCIPLES OF EFFECTIVE CONTRACT ADMINISTRATION

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SECTION I: OVERVIEW OF CONTRACT ADMINISTRATION & PRINCIPLES OF EFFECTIVE CONTRACT ADMINISTRATION

1.0
1.1

OVERVIEW OF CONTRACT ADMINISTRATION
Introduction This Contract Administration Guidelines provides information and practical guidance for use by the Contract Administrators (CAs) and the Millennium Challenge Account - Mozambique (MCA-M) in general regarding the administration of contracts with contractors, suppliers of goods, consultants and non-consultant services providers. MCA-M shall appoint a CAs for all contracts. For large works contracts, the role of CAs will be executed by the Supervising Engineer that should indicate the person who will be MCA-M focal point.

1.2

Definition, Scope and Objectives Contract administration is the process of ensuring that the contractor, supplier, consultant, or service provider’s performance meets the key contractual obligations with the Millennium Challenge Account – Mozambique (MCA-M) on one hand, and that MCA-M meets its contractual obligations on the other as efficiently and effectively as possible. It is the administration of all actions after the award of a contract that must be taken to ensure compliance with the contract; e.g., receiving timely delivery, acceptance, payment, closing contract, etc. Similar to project management, each contract is viewed as a mini-project or activity with a unique goal with a beginning and an end date requiring planning and coordination of relevant activities as well as documentation throughout the process. All the effort undertaken through the procurement process – planning, preparation of procurement documents, submission of bids, evaluation and award – is of little value unless the intended benefits are actually realized during the contract implementation period. Effective contract administration therefore aims at: i) ii) iii) iv) v) vi) vii) viii) Ensuring that the necessary steps for contract kick-off are all addressed i.e. securities where applicable, site handing over, advance payments; ensuring timely delivery of goods, works or services thus ensuring that parties are aware of key dates in the contract; that all deliverables are inspected/checked that they are compliant with terms and conditions of the contract; when acceptable, necessary acceptance procedures are followed; minimizing risks of overruns by providing timely information and alerts; ensuring that necessary amendments made to the contract have been properly administered and received necessary approvals; smooth administration and resolution of disputes and remedies identified and implemented as necessary; ensure that termination, where absolutely necessary, is effected in accordance with the provisions of the contract;

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ix) x) xi)

ensuring that there is smooth contract close-out; ensuring that necessary documentation is effected throughout the duration of the contract; and completing contractor performance reports after the completion of the contract, or as otherwise required.

The key to effective contract administration is to have a clearly defined set of contract outputs or deliverables as well as defined obligations and rights and timing of the same. A well-designed contract should encompass clear procedures for effecting these rights and obligations as well as remedies in case of nonperformance of either party. Contract administration is based on the concept that the contract is a partnership with rights and obligations that must be met by both parties to achieve the intended goal. It is not aimed at finding faults but rather identifying solutions to problems that the parties face in the course of achieving the objectives. 1.3 Contract Administration Functions The guiding framework for contract administration system involves the following: (i) Developing, in an Excel sheet or any other form, a clear statement of the key contract details in the Contract Administration Form (CAF) detailing key dates and deliverables. (ii) Ensure and keep track of supplier and contractor compliance with terms and conditions of contracts, addressing delays in delivery or performance, troubleshooting problems, and certifying performance of services, completion of works and delivery of goods. (iii) Ensure that there is a proper system in place for review, or testing and inspection before acceptance of goods, works or service deliverables. (iv) Ensure that there is a proper system for oversight and review to address the quality of the performance of services and acceptance of deliverables. (v) Ensure that payments due to consultants, suppliers and contractors pursuant to procurement contracts are made within 30 days in accordance with the Fiscal Accountability Plan (FAP). (vi) Manage and administer the processes for acceptance and rejection of goods, works or service deliverables, curing of defects, enforcing warranties and addressing delays in delivery and performance. (vii) Ensure the integrity and transparency of the process, with properly filed back-up documentation to comply with the standard procurement and contract administration procedures, and in compliance with procurement and contract audit standards. (viii) Manage and administer any change orders that modify the original contract. It is to be noted that change orders have to be approved by the specified officers for them to take effect. (ix) Maintain close communication and coordination to ensure a timely and effective exchange of information, goods requirements and technical specifications, design drawings, terms of reference, prior no-objections, and supervision of contracts to assure efficient, transparent and timely procurement processes.
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(x) (xi) (xii)

Manage and support resolution of contract disputes in accordance with the contractual provisions. Manage and administer termination of contracts. Ensure smooth contract closure.

The Contract Administration Guidelines have been prepared to address these critical tasks.

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2.0

PRINCIPLES OF EFFECTIVE CONTRACT ADMINISTRATION
2.1 Basis The main basis of effective contract administration is having a clear description of rights and obligations. This is based on an accurate and complete description of the needs in the form of either terms of reference, specifications for works, goods or services, and accurate quantification of the same on form of deliverables with a clear timing for effective monitoring. Further, the principle of fairness should be considered as this is essential for smooth implementation of the contract. A good contract should also allow for the possibility and mechanism for effecting necessary and beneficial changes through the approved mechanism. A well-designed contract should also anticipate unforeseen events and put in place a mechanism for dealing with such events. It is the task of contract administrator to ensure that all these activities are implemented accordingly, tracked, documented and any adverse effects on contract performance mitigated in good time. A contract administration system has to address the entire life of a contract, from placement to finalization. It is absolutely critical that the CA reads and understands the contract thoroughly. The CA should also be familiar with MCA-M rules and procedures related to the contract implementation. 2.2 Contract Administration Principles

Effective contract administration shall be based on the following main principles and commitments: i) Ensuring that the objectives of the Millennium Challenge Compact are achieved by taking the appropriate and timely action; ii) Ensuring that contracts are based on clear and accurate description of deliverables, clear rights and obligations of all parties involved in the contract execution; Monitor performance, collect information and identify steps that should be taken to measure actual contract achievement; Proactive administration of contracts which should be based on close followup of implementation of the contracts and anticipating problems and responses before they impact on the contract performance; Successful contract administration based on open and effective communication between all parties using appropriate channels, means and providing feedback to enhance contract performance. These could be in the form of progress meetings, follow-up emails, calls, etc.; Identifying potential contractual risks such as not meeting the deadlines, receipt of less than acceptable quality deliverables and alerting relevant officers; and

iii) iv)

v)

vi)

vii) Implementing a system of monitoring and evaluating the performance of contractors, consultants, suppliers and other service providers based on the MCC Contractor Past Performance Reporting requirements.

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2.3 Contract Administration MCA-M, with the assistance of the PA, shall develop and adopt a Contract Administration Form (CAF) that will register all contracts main events, and therefore enable a close follow up of the status of the contract by the CA. Before a contract is signed, the PA and the CA enters the expected details of the contract deliverables into the respective CAF. Once the contract is signed, the PA adds the actual date(s) for contract signature and effectiveness (in consultation with PM and/or PROC M) and, if necessary, edits the forecast dates for each deliverable based on the provisions of the Contract. As the contract activity begins and continues the CA updates the CAF for each event that occurs. The PM, PROC M and the PA follow the evolution of the contract. If a contract event becomes overdue, or other problems occur, the PM and PROC M decide what action to take in liaison with the PA. Reports from the CAS are produced by the PM, and the PA, if required, will provide assistance in developing the report. These reports allow a close follow-up of the status of all contracts by Contract Administrators and MCA-M Management. The matrix below describes the different actors in the contract administration system and their main roles. Annex 1 provides the organizational chart for project implementation. Acronyms ED Full Identification Executive Director Contract Administration Main Role Gives the final authorization for contract interim reports, final reports, payments, variation orders, and addenda. Performs all the duties assigned by and on behalf of ED Monitor performance of contractors, providers and consultants, authorizes contract interim reports, final reports, payments, variation orders, addendums, claims and manages files and records. & The PM role for the specific Project. The PM role for the specific Project.

DED PM

Deputy Executive Director Project Manager

Water Supply Sanitation Project Roads Project

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Acronyms

Full Identification Land Tenure Project Services

Contract Administration Main Role The PM role for the specific Project. The PM role for the specific Project. The designated person for a particular project, for example: PC for a specific road project. Responsible for supervision of the works and services of the project assigned to him/her. Revision of contract interim reports, final reports, payments, variation orders, addendums and records of the specific project assigned. This PC is assigned amongst the members of the IE DT. CA is responsible for assuring that all contractual conditions for the goods, works and services contracts signed by MCA-M as set forth in the Compact and all related documents are followed. Keeps track of approvals, signatures, guarantees, insurance and all legal documents of the contracts implementation. Reviews and approves all contracts and contract modifications within the limit of the PROC M mandate. Responsible for initiating Past Performance Reporting and Close Out Form. Assist the PM and PC in their duties. Takes up the role of Employer Site Representative. Receives reviews and validates the information received regarding invoices, payments, penalties, bonus, assuring compliance with the contract terms and MCC guidelines.
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Farmer Income Support Project PC Project Coordinators

CA

Contract Administrator

PROC M

Procurement Manager

ESR

Employer Site Representative

CFO

Chief Financial Officer

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Acronyms LC

Full Identification Legal Counsel

Contract Administration Main Role Provides legal advice, validates and approves information according to contract legal terms, MCC regulations and GoM regulations when applicable.

MCC

Millennium Corporation

Challenge

Monitors and approves actions of contract management, deliverables, addenda, variation orders, changing of key personnel and others according to the contract and MCC Guidelines. Approves actions of contract management according to the contract and MCC Guidelines. Monitors and coordinates the activities related with the works, services and goods contracts according to the related project and reports to MCA-M PM Prepares the CAF, keeps track of contracts performance in coordination with PM and PROC M, and advice during the execution of the contract. Receives reviews and certifies all the administrative documents and payments as per the FAP and MCC Guidelines.

BD

Board of Directors

IE

Implementing Entity

PA

Procurement Agent

FA

Fiscal Agent

For each critical project, a similar table identifying all the individuals and their role might be completed.

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SECTION II: Contract Administration Procedures for Works

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SECTION II: CONTRACT ADMINISTRATION PROCEDURES FOR WORKS

3.0

CONTRACT ADMINISTRATION PROCEDURES FOR WORKS
3.1 Contract Administration Process The following section provides guidance on general contract administration matters and those that relate to specific issues in a chronological order of key stages in a typical contract. The different tools are intended to enable timely tracking of contractual events and provide feedback on poor performance. This will enable MCA-M to take appropriate and timely action when necessary. The Contract Administration function consists of eight (8) major areas which commence immediately after contract award: 1. 2. 3. 4. 5. 6. 7. 8. Contract Commencement Tracking Contracts Following and Checking Deliverables Contract Modification procedures Dispute Management Closing a Contract Contractor Past Performance Reporting Archiving Contract Records

These are discussed in detail in the following sections. 3.2 Contract Administration System (CAS)

Following contract signature, the Engineer is primarily responsible for administering the contract. The PM will provide contract administration oversight. These Guidelines outline the responsibilities of the Contract Administration activities. The objective of the Contract Administration System (CAS) is to ensure and keep track of contractor compliance with terms and conditions of contracts, addressing delays in delivery or performance, troubleshooting problems, and certifying performance of completion of works. This will be addressed by the use of the Contract Administration Forms (CAF) which will be first prepared by the PA and later updated by the designated CAs. The Contract Administration Form (CAF) shall provide the current status of performance of the respective contract. Essentially, the CAF is a checklist and a tool against which all essential features of the contract are tracked. The CAF shall be as presented in the format in Annex 3. There is a separate CAF for Consulting Services and Works. The CAF is prepared by the PA immediately a contract has been signed and passed on to the designated CA. The CAF is used by the CA to track contract performance. The PA, PROC M and LC will remain available for any advice in contract
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administration as requested by the CA. In any case, it is the primary obligation of the Engineer to track performance and act in regard to a contract under his/her directorate. 3.3 Contract Commencement Procedure 3.3.1 Purpose: To outline the process for commencement of contracts and conducting post award kick-off meetings; to provide guidelines for conducting performance meetings with contractors after the award of a contract to ensure that there is a mutual understanding of the terms, conditions, and requirements among all parties who are responsible for the management and performance of the contract. 3.3.2 Planning Meeting for the Kick-off Meeting Once an award has been made (especially for large Contracts as determined by the PM), an internal MCA-M meeting should be held involving all key stakeholders. These shall include the relevant Project Staff, Procurement Staff, Finance and Administration staff, Implementing Entity, Fiscal and Procurement Agents and the Supervising Consultant. The meeting, chaired by the relevant Project Manager shall deliberate on issues that will be covered in the kick-off meeting to ensure that there is a common understanding of the issues and also to ensure that all the information and documentation necessary for the commencement of the contract is in place. Sufficient time should be allowed between the Contract kick-off planning meeting and the actual kick-off meeting to ensure MCA-M is well prepared to address all issues that may come up in the meeting. 3.3.3 Kick-off Meeting Once an award has been made, a meeting is necessary with selected contractor, to make preparations for the start of the contract. Such a kick-off meeting will normally be attended by the respective Project Manager (PM) or his representative, who shall also chair the meeting, contractor (or representative). The meeting should also be attended by the PA in view of their role with regard to contract administration. The main objective of the meeting is to effect introductions of key staff from both sides as well as exchanging information about and agreeing on principal initial matters concerning each party. Items to be covered in the kick-off meeting include: (i) (ii) Confirmation of addresses, telephone numbers and lines of communications; Clarifying roles and powers (especially where MCA-M will be represented by an agent such a supervising consultant), if any; (iii) Arrangement for provision of sets of contract documents to the contractor, if necessary; (iv) Confirming proposed staffing and organizational arrangements; (v) Arrangements for mobilization (staff, plant, etc) and progress reviews made by the contractor, consultant, supplier or non-consultant service provider; (vi) Presentation of proposed approach and methodology, and method statement; (vii) Agree on the programme of implementation, where applicable; (viii) Confirm the procedures for provision and access to information, where this is applicable. A sample agenda for the kick-off meeting is included in Table 3.1.
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Table 3.1: Sample Agenda for the Kick-off Meeting – Works Contract
Agenda for Kick-off Meeting Date:……………………….................................................. Location…………………………………………….

Item 1: Introduction of MCA-M and IE Staff; Item 2: Adoption of the Agenda Item 3: Introduction of the Professional Team/Key Personnel including field staff; Item 4: Introduction of Contractors Management and Site Team (where applicable) and site handover; Item 5: MCC Program Particularities with impact on the Contract; Item 6: Inspection and formal handover of contract documents; Item 7: Presentation of the Master Programme and Other Programming Documents; (including construction schedule); Item 8: Information Release schedule and responsibilities; Item 9: Environmental, Health and Safety Arrangements, where applicable; Item 10: Permits and Other Statutory Compliance Needs; Item 11: Sub-contractor arrangements; Item 12: Dates for Progress Meetings and Reports; Item 13: Next Steps; and Item 14: Any Other Business.

3.3.4 Commencement Checklist For major infrastructure projects, it is proposed to have a commencement checklist to ensure that all preparatory aspects of the project commencement have been taken care of. Table 3.2 presents a proposed commencement checklist that should be used by the PM with necessary adjustments.

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Table 3.2: Commencement Checklist – Works Contract
Project Title: Project Manager: Project Coordinator In-Charge: Contract and Approvals Received copy of the signed contract with all annexes and other working documents (specify) Distributed copies of the contract and communicated key contract information to the internal project team including IEs All approved working documents or needed documents for Contractors are available for issue to the contractor (if applicable) Ensured that all necessary approvals to proceed have been obtained – MCC, and MCA-M as necessary Project Schedule and Budget Confirmed project schedule and reporting requirements Identified any significant constraints in terms of schedule, budget, or information needs Confirmed that the non-national firms have local work permit (when applicable) Team Member Roles and Contacts Re-confirmed availability of key persons, and formal introductions of key members Obtained contact details of key persons – e-mails, telephone numbers, physical address/locations, fax details Defined points of coordination, communication guidelines, and decision pathways (communication plan) Agreed on communication methods – as per contract requirements (hard and softcopy requirements) Confirmed software compatibility Scope of Work Confirmed the scope of work as per contract. Identified the project deliverables, both interim and final, and established milestones Made work assignments to internal team members including IE staff Reached consensus among team members on the scope and associated budget and schedule management roles
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Contractor Name: Date: Supervising Engineer :

Project Schedule Agreed on the project calendar Confirmed key milestones and reinforced the importance of keeping intermediate and final deadlines Discussed the interdependencies of certain tasks and identified critical path tasks where necessary. Project Reviews Communicated to the team the critical metrics and targets for tracking project performance Environmental and Social Requirements Received Contractor Environmental Protection Plan (including anti-trafficking strategy) Contractor Environmental Protection Plan approved Received Contractor H&S Plan (compatible with Compact wide H&S guidelines) Contractor H&S Plan approved Received Contractor HIV/AIDS Awareness Plan Contractor HIV/AIDS Awareness Plan approved Received RAP implementation report RAP implantation report reviewed and submitted to MCC for clearance Received RAP implementation clearance from MCC Received written confirmation that contractor has conducted induction training Quality Assurance / Quality Control Completed a Quality Control and Quality Assurance Plan Identified reviewers and asked them to provide input to the draft Project Monitoring Plan Established key review checkpoints and integrated them into the schedule Project Administrative Systems Established project records management and retention procedures Defined procedures for project filing and drawing maintenance Change Management Established the procedures by which project changes will be identified, managed, and tracked (change management plan) Reviewed change management procedures with the team, as well as relevant contract terms and conditions
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Risk Management Project team collectively identified potential risks associated with the project Developed action plans to mitigate those potential risks Claims Avoidance Project team has established, assessed and agreed on the Claims avoidance plan for the project Your Expectations As Project Manager Defined your expectations of the team regarding quality, commitment, cooperation, communications, etc. Project Team’s Expectations Encouraged the team to share their expectations regarding communication, cooperation, recognition, etc. Additional Issues for Discussion

Key Follow-Up Actions

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3.4

Tracking Contracts The status of the contract, contract activities, and contractor performance, including any deficiencies or corrective actions, is monitored by the Engineer. The contract schedule and management plan as well as the CAF are used to monitor the contract’s progress on a regular basis. The activities for contract tracking include the following: § § § § § § § § § Commencement records and follow up; Management of contract maintenance (filing system) and contract status (process information); Monitoring of compliance with work plans and deadlines, any deficiencies, concerns or issues with the work plan or its associated deliverable should be reported early for a prompt resolution; Deliverable management, acceptance or rejection of a deliverable; Contract histories (contract payments, penalties, etc); Monitoring of the warranties, insurances, and bonds; Recording of contract modifications and variations; Management and support resolution of contract disputes or contract termination; and Contract close out. Progress Monitoring and Performance Reporting

3.5

Performance reporting management relies on information about how effectively the contractor is achieving the contractual objectives. Notifications and warnings of non-performance have to be issued in accordance with the contract. Such correspondence may need to be handled in specific ways in order to comply with the specific contract. The notifications and warnings shall be drafted by Project Management Consultant and the IE in consultation with the PM, PROC M before they are signed by the MCA-M ED. In specific cases, such as works contracts under FIDIC, delivery of such notices have to follow very specific procedures. The Engineers have the obligation to report on progress of projects which they are managing on a periodic basis. The Project Management Consultant in coordination with the IE, need to provide the monthly progress report to help PM to finalize his report on progress. It is generally advisable that these be prepared on quarterly basis for project duration of more than six months, otherwise monthly progress reports are standard. In this case, a comprehensive report shall cover all contracts which the PMs are managing. The report shall consist of separate sections for each individual contract. Sample Progress Reporting and Monitoring Contents are presented in the Table below. Basic contents of progress report shall be as follows:

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Table 3.5: Contract Administration for Works
Progress Monitoring and Performance Report (to be completed by the PM) a) Project Information

i.
ii.

Project Name (or Title) Description of Works

iii. iv.

Project Description Contract Reference No Implementing Entity Sector Contractor Date of Contract Signature Contract Effective Date Date of Mobilization Timelines agreed and milestones Project Deliverables and Key Dates Total Contract Cost and Currency, Insurances Raised etc. Duration of the Contract Date of Completion

v. vi. vii.
viii.

ix. x.
xi.

xii. xiii. xiv. xv.

b) Project Progress and Performance Analysis

i. o

Scope Performance Requested changes and reasons Approved changes and justifications
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o

Contract Administration Guidelines

o o

Implications on time and cost Proposed measures to reduce adverse impacts Schedule Performance

ii. o o

Actual progress vs baseline plan Actual delay and responsibility for delays Requested changes and reasons Approved changes, justifications and new milestones Projected completion date Reasons for delay, if any Proposed measures to get back on track; Deliverables and its time; List of Work executive and planned for next month; and Physical Progress Cost Performance Actual vs baseline budget; Actual cost overrun; Requested changes and reasons; Approved changes and justifications; Estimate to complete; Reasons for additional cost; Financial Progress; Proposed measured to reduce costs; Warranty / Commissioning related cost releases etc.; and Other matters. Quality Performance

o o o o o o o o iii. o o o o o o o o o o iv. o o

Quality assurance measures Any deviations from originally planned quality

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o o

Requested quality changes and reasons Approved changes and justifications Reasons for deviations, if any Recommended measures for quality improvement Other matters Contract Performance and Risk Assessment

o o

o v. o o o o o vi. o o o o

Comments on contractual relations Contractual claims and/or variations Disputes or potential disputes Termination issues, if any Other matters Other Matters Project Staff Matters Community related issues Political issues Miscellaneous issues

Summary of Site Visits and Meetings

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3.6

Contract Files

The Engineer in coordination with the IE shall be responsible for maintaining a working file for each contract that shall constitute at a minimum the following documents: o copy of the contract and all amendments/variations, reason behind and its approval; o copies of invoices and their approvals; o copy of any guarantees provided by the contractor; o all backup details of any employer claims for liquidated damages; o all backup details of all disputes with the contractor; o copies of all key emails and other communications relating to the contract; and o All such documents shall be kept secure by each PM or appointed CA, in readiness for safety and reference at time determined and agreed at contract close. The Legal Council should keep the original of the following documents: contract and all amendments/variations; and any guarantees provided by the Contractor. The Fiscal Agent should keep the original of the invoices and the Engineer the original of the remaining contract documents. The Engineer and the IE need to provide assistance in providing required information to PM. The PM and the Engineer need to ensure that the information in the files enables a reply to questions that may be raised by the MCC auditor, such as: § § § § For any contract amendment or change order, was proper approval requested and granted? Was there a reasonable justification in accordance with the Procurement Guidelines? Did the actual contract payments correspond to the amount(s) in the signed contract? Were any vouchers rejected? (Check with Fiscal Agent) Were there any advance payments? The securities used (for Bid, Performance, Advances, Insurance, Liability, etc.), were they in accordance with the Guidelines? Were there any damages or penalties for delays, non-compliance with functional guarantees, etc? If there were delays and LD (“Liquidated Damages”) was not applied, then the reason for not applying LD and approval of the delay. What were the Reasons for Slow Progress of Completion, if applicable? Were there any delays in Payments, Imports, Customs, etc? List of deliverables and completion (date, description, quantity, location of goods or works) Were there any contractual disputes? How were they resolved? How was the contract file closed out – what was required for this final step?

§ § § § §

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3.7 Communication with MCA-M Contractors The authority to formally communicate with all contractors is the MCA-M ED or his/her designate. It follows therefore that no formal communication shall be sent to any MCA-M contractor without the relevant authority. Whenever there is need to communicate formally to external contractors, then that communication shall be deemed to have been made by the MCA-M ED. 3.8 Deliverable Management Process This is the process for receiving the works generated by the Contractor and ensuring that contract requirements are met. The Project Management Consultant and IE of respective project activity need to provide updated information to PM. The record of performance will be kept by Engineer and copy of it should be provided to PM and PA for filling purpose. Information on all Asset deliveries shall also be forwarded to the office of the Chief Financial officer for registry and inventory management purposes. This process involves several parties and the activities include: a) Logging the receipt of the deliverable; b) Resolving problems related to the date delivery of deliverables; c) Managing and administering the process for review of deliverables; d) Overseeing the control of quality and acceptance or rejection of deliverables; e) Establishing inventories for non-expendable equipment including information on depreciation and disposal; f) Establishing maintenance plans, if warranty so requires; and g) Invoice Processing.

3.8.1 Managing Contract Deliverables 3.8.1.1 Introduction These Guidelines set forth procedures pertaining to duties and responsibilities of representatives of MCA-M involved with the administration of contracts for Works. The Contract Administration requirements for receiving and accepting Works are different from Goods or Services. Works constitute a production process using basic materials and components that may need testing before being built in and labour that needs supervision to ensure proper workmanship. Whilst receiving goods or services is of the type “event”, the receiving and accepting Works is a process that accompanies the contractor from the beginning of his activities. Close control must be maintained over: § § § Safety at work during construction; Safety/integrity of the Works after construction; Quantity and Quality of the Works;
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§ §

The expenditure of funds, thus achieving savings and assuring that a reliable audit trail is maintained for contract expenditures resulting from procurement actions; and Compliance with environmental and social requirements as contained in relevant Environmental Management Plan (EMP)- where applicable.

This procedure aims to explain who is responsible for ensuring; (i) (ii) (iii) (iv) how a contract for Works is administered; how Work in Progress is inspected, measured and validated; how Works are received, inspected, tested, and accepted prior to issuing the certificates of provisional and final acceptance, the release of the performance guarantee and the retention guarantee; and who is involved, what physical aspects are to be taken into account and the documentation involved.

The Table 3.5 above is a key document that defines the tasks to be carried out, the persons responsible for each task and the documents to be completed or obtained. The list of tasks in the Table has to be followed by all concerned.

3.8.1.2 Contract Administration and Supervision 3.8.1.2.1 The Project Manager (PM) The PM is designated by MCA-M to be its representative, responsible for managing the contract assigned to him/her. In case there is a delegation of power or the PM is assigned as contract administrator, this will be described in an official document signed by both the MCA ED and the relevant PM. The PM will hold a responsible position and will be one of the most knowledgeable employees on the nature of the Contract. This duty may be performed by an employee designated in addition to other duties and responsibilities within the organization. It is expected that the PM is entrusted with appropriate responsibility and accountability in view of the fact that they have adequately skilled or trained so that he/she can perform and exercise the responsibility. In this case, they should act with due care and diligence and observe all accounting and legal requirements, during the course of the contract; and meets the obligations of his/her position including monitoring compliance with Work in Progress, and obtaining remedies when performance delays and/or breaches of contract occur. The above is based on the assumption that the Contract has clearly defined deliverables and performance measures and benchmarks against which the PM can measure and report. The PM takes care to protect the rights of MCA- M. To do this, s/he shall ensure that the Contractor fulfills its obligations and accepts its liabilities under the Contract. There is also a responsibility to ensure that the Contractor is treated fairly and honestly. Adherence by both parties to the agreed terms of the Contract will result in: o good contractor performance; o value for money; o timeliness;
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o cost effectiveness; and o environmentally and socially acceptable project. 3.8.1.2.2 Roles and Implementation The Project Manager: 1. Establishes and maintains, on the premises of MCA-M, an efficient Contract Administration environment including a proper filing system to ensure quick retrieval of contract information by Project staff, auditors, PROC M, PA, CFO, etc.; 2. Maintains regular communication with Project Management staff and with financial/accounting staff to ensure that contract tracking information is well coordinated with other planning, budgeting and financial reporting information; 3. Provides contract information to the financial/accounting staff; 4. Keeps accurate and up-to-date files and records of contract activities to serve as a basis for audit and Financial Management Reporting; 5. Carries out day-to-day Contract Administration duties related to the contract between the Contractor and MCA-M and between the Engineer and MCA-M; 6. Liaises with MCA-M and the Engineer on matters related to the execution of the Works including the reception process; 7. Supervises, jointly with other sector staff and the Engineer, all administrative aspects of the implementation of the Works Contract; 8. Reports regularly on the implementation of the Contract; and 9. Obtains payment clearance and follows up the payment process within MCA-M of Work in Progress, final payment, devolution of the performance security and retention guarantee and completion of the Goods/Works/Services Receipt Note. 10. The PM can delegate powers to the IE on technical matters (specs and drawings) but not on matters which have a financial or procurement impact. 3.8.1.2.3 The Engineer 1. Before the beginning of the activities under the Works contract, MCA-M may contract expertise to supervise the Contractor’s activities on site. This function is called “the Engineer” in FIDIC-based contracts or “The Project Manager” in MCC Small Works Contracts. The Engineer represents MCA-M on site. He must be duly authorized to monitor and be empowered to instruct the Contractor on behalf of MCA-M. The Engineer will not be able to act without the express approval or delegation of authority required for such decisionmaking. His identity and authority should be stated in any Works Bidding documents and must be stated in the Works Contract. For all works contracts MCA-M will have a Project Manager, a Project Coordinator and the Engineer. 2. The Engineer is the legal person (the Firm) appointed by MCA-M, through a consultant selection process in accordance with MCC’s procurement guidelines, to manage and to supervise the execution of the Works and to propose their taking over and payment of the Works. The Engineer appoints a natural person (an individual) as its only representative who is familiar with
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Responsibilities

of

the

PM

During

Contract

the project, the design, the Works Contract and the technical aspects of the Works. 3. The Engineer has the overall responsibility for on-site monitoring, supervision and approval of works as deliverables on behalf of MCA-M. 4. The Engineer shall act only as provided for in the Works Contract when dealing with the Contractor otherwise his other obligations are reflected in his Supervision Contract. 3.8.1.2.4 Roles and Responsibilities of the Engineer during Contract Implementation The expert appointed by the Engineer: 1. shall immediately familiarize himself with the terms and conditions of the contract; 2. ensures that the notice of possession of the site to commence the Works is issued on a timely basis; 3. ensures that prior to commencement of the Works, a kick-off meeting/conference with the Contractor is conducted promptly after contract signing to discuss issues related to the Works, such as quality plans, schedule, drawings, etc. and to clarify issues of concern raised by the Contractor; 4. carries out “on-site” regular monitoring of the activities undertaken under the respective contract as is the case with the quality of the physical work in progress to verify that it corresponds to drawings and technical specifications, bill of quantities; 5. verifies if Work in Progress complies to planned physical work, etc. as stipulated in the Contract; 6. conducts regular project on-site inspections on: (i) progress of design and all submittals and approvals to allow effective mobilization of operations; (ii) whether planned physical work meets the necessary design requirements imposed by the enforcing legal authorities; (iii) whether appropriate safety procedures are followed and (iv) that the necessary insurances are in place; 7. prepares reports on Work in Progress, delivery status, output achieved under the performance of the Contract; 8. monitors and updates project schedules and project budgets, in consultation with the IE and the PM, as appropriate; 9. prepares interim payment certificates and submits for IE and MCA-M for payment; 10. authorize variation orders as is the case with additional works identified during the construction process as per provisions in the respective Works Contract; 11. is responsible for changes to specifications and drawings and will seek approval of MCA PM for any change; 12. liaises, with other sections in MCA-M, e.g. Procurement Agent, Fiscal Agent, as required; 13. notifies the Contractor of any defects that are found. Such checking and notification does not affect the Contractor’s responsibilities; 14. as appropriate, attends meetings with the Contractor throughout the period in which the contract runs, without the right to issue any verbal instructions directly to any contractors unless there is a clear and obvious risk of compromise to immediate safety of people or the building. This ensures that
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the Contractor receives only authorized written instructions, which may alter the scope and cost of work; 15. keeps a copy of the contract along with all changes and modifications readily available and record of all variation, reasons behind it and its approval; 16. maintains a record of inspections, informs the Contractor when unsatisfactory performance is noted and performs follow up to have deficient work corrected; 17. makes certain that all emergency situations are attended to and resolved as quickly as possible; 18. informs the PM when differences of opinion or interpretation of contract requirements exist between the Engineer and the Contractor which cannot be mutually resolved at this instance; 19. reports to the IE and PM any problems which has the potential of causing delay or increasing the cost of the project; 20. obtains drawings, technical bulletins, operational and maintenance manuals, warranties, keys, other related data prior to making final payment to the Contractor and makes appropriate distribution of these documents; 21. prepares final deficiency lists; 22. ensures that the contractor rectify deficiencies; 23. verifies completeness of manuals & operating instructions; 24. verifies correctness of guarantees and Final Account; 25. communicates on all contractual matters with the PM and PC and on site related matters will correspond with the ESR; and 26. exercise all roles and responsibilities attributed to the Contract Administrator (CA) as described under this CAG.

3.8.1.2.5 The Implementing Entity The IE is formed by a group of qualified, experienced and reliable staff and performed under the supervision of the IE. These technical experts are dedicated to the performance of responsibilities outlined in their contract and the IEA. The IE will work under the supervision of a coordinator who will coordinate and supervise the activities of the team under the Defined Project as defined in the Agreement (IEA). This coordinator will manage the resources under the IEA to ensure the proper coordination of the team and the project stakeholders to achieve a successful provision of the services, works and provision of goods under the contract and to produce reports and documents needed by the IE and MCA-M PM. In case there is a delegation of power or an IE representative is assigned as contract administrator, this will be described in an official document signed by both the MCA ED and the relevant individual; however, the delegation of power will be limited to technical matters only which have no financial or procurement repercussions. 1. The IE will work close with the Engineer and the PM and will be responsible for the direct supervision of the project activities and coordination with all the stakeholders of every contract. 2. The IE is responsible for the production of project documents, reports and others requested by the MCA-M PM.
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3. Responsible for the production and follow up of the project implementation plan, works plans and financial plans. 4. Monitor progress on deliverables, works performance and report regularly (monthly) on all contracts to the IE and to MCA-M. Alert MCA-M PM of budget and schedule problems under a specific contract. 5. Ensure that payments under every contract accurately reflect the works contracted and that invoices for payment accurately reflect the cost of goods supplied. 6. Manage construction change orders within allowed maximum threshold. 7. Work with periodic financial and technical auditors. 8. Review and comment on construction program, plans and methods for construction works submitted by contractors and supervisors. 9. Manage construction permits, process and verify drawings, review reports from construction supervisors, inspect project sites and manage allconstruction related files. 10. Implements the powers delegated to them by the PM on technical matters (specs and drawings) but not on matters which have a financial or procurement impact. 11. Manage and supervises the Environmental and Social Impacts Issues reporting directly to the PM. In any case, the specific provisions of the Works and Supervision Contracts take precedence over the provisions in these Guidelines. The guiding framework for works contract administration system involves the following: P = Primary Responsibility: means that one needs initiate and lead this activity to and bears responsibility for this activity. S= Secondary Responsibility: means that one is involved, has to undertake certain actions or has a controlling role. Activities Developing, in an Excel sheet or any other form, a clear statement of the key contract details in the Contract Administration Form (CAF) detailing key dates and deliverables. Ensure and keep track of supplier and contractor compliance with terms and conditions of contracts, addressing delays in delivery or performance, troubleshooting problems, and certifying performance of services, completion of works and delivery of goods. Alert Employer for budget and schedule problems under a specific contract.
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Employer

Engineer P

IEs S

P

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Activities Employer Ensure that there is a proper system in place for review, or testing and inspection before acceptance of goods, works or service deliverables. Ensure that there is a proper system for oversight and review to address the quality of the performance of services and acceptance of deliverables. Ensure that payments due to consultants, suppliers and contractors pursuant to procurement contracts are made P within 30 days in accordance with the Fiscal Accountability Plan (FAP). Manage and administer the processes for acceptance and rejection of goods, works or service deliverables, curing of defects, enforcing warranties and addressing delays in delivery and performance. Ensure the integrity and transparency of the process, with properly filed back-up documentation to comply with the standard procurement and contract administration procedures, and in compliance with procurement and contract audit standards. Manage and administer any change orders that modify the original contract. It is to be noted that change orders have to S be approved by the specified officers for them to take effect. Maintain close communication and coordination to ensure a timely and effective exchange of information, goods requirements and technical specifications, design drawings, P terms of reference, prior no-objections, and supervision of contracts to assure efficient, transparent and timely procurement processes. Manage and support resolution of contract disputes in S accordance with the contractual provisions. Manage and administer termination of contracts. S Ensure smooth contract closure. S Manage construction permits, process and verify drawings, review reports from Contractor, inspect project sites and S manage all-construction related files. Review reports from Engineer S Review and comment on construction program, plans and S methods for construction works submitted by contractors. Work with periodic financial and technical auditors. P Manage and supervise the Environmental and Social Impacts Issues and report to the IEs and Employer.

Engineer P P

IEs

S

P

P

P

S

S

S

P P P P

S S S S P

P S P

S S

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During the construction phase, the role and responsibilities of the Implementing Entities would be as follows: Activities Site Handover Implementing Entity Agreements(IEAs) Onsite Method of Contract Management by Implementing Entities. Employer Site Representatives (ESRs), Project Coordinators (PCs) and Project Managers (PMs) will participate in the site handover with Engineer and Contractor. · ESRs and PCs will assist the Contractor onsite in obtaining authorizations/clearances from the local authorities, institutions and utilities service providers such as Municipality, ANE, TDM, EDM, CFM, Water companies, etc. to expedite the works and improve the performance. · ESRs will review and comment construction program, plans and methods submitted by the Contractors and submit to the PCs. · ESRs will verify drawings, inspect project sites and manage all construction related files. · ESRs will verify the actual progress of the works against onsite and compare with the Contractor original construction schedule. · ESRs will verify the actual progress of works onsite and compare with the quantities and unit prices of the BoQs of the Contractor in the original budget proposal. · ESRs will prepare and submit Weekly Memos (WMs) summarizing the main activities completed during the week and the activities planned for the following week. Also, the WPRs will include problems encountered by
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Schedule and Budget

Monitor progress on deliverables of the feasibility studies, design and construction works and report regularly (monthly) on budget and schedule performance of all contracts to MCA - Mozambique. Alert MCA - Mozambique when schedule or budget problems occur. Review and comment on construction program, plans and methods for construction works submitted by contractors and supervisors Manage construction permits, inspect project sites, manage all construction related files and review reports from construction supervisors

Activities

Implementing Entity Agreements(IEAs)

Onsite Method of Contract Management by Implementing Entities. the Contractor, Engineers, and ESRs will report to the PCs the actual status of the construction progress. The PCs will send the WMs to the PMs. · Engineer Monthly Progress Reports (MPRs) will be verified against the actual Contractor construction progress onsite by ESRs and submit a site memorandum to the PCs. · Engineer MPRs will be reviewed by ESRs in parallel with MCA Mozambique and ESRs will send the comments and recommendations to the PCs. The PCs will send the comments and recommendations to the MCA - Mozambique. · ESRs will alert the actual situation and cause of the problems onsite pertain to budget and schedule if any with recommendations to the PCs.

Alert MCA - Mozambique about ESRs will alert the actual situation and cause of the problems onsite pertain contractor performance and Engineers to performance if any with recommendations to the PCs. The PCs will send supervision the alerts to the PMs. Quality and Performance Quality Assurance activities: · Ensure that the quality of the construction works meets the required · standard, and provide quality assurance on quality control tests performed by the contractors. · · ESRs will confirm actual contractor construction quality, materials, specifications and standards onsite against the proposed in the BoQs. ESRs will alert the actual situation and cause of the problems onsite pertain to quality if any with recommendations to the PCs. The PCs will send the alerts to the PMs. ESRs will confirm and witness if possible the testing of materials to be applied onsite. ESRs will verify QA/QC reports submitted by the Engineer and provide recommendation to PCs.
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Activities

Implementing Entity Agreements(IEAs) · ·

Payments Certificates

Ensure that monthly certificates for · payment from construction contractors accurately reflect the cost of the works completed and that invoices for · payment from goods suppliers accurately reflect the cost of the goods · supplied Work with periodic technical auditors. financial and

Onsite Method of Contract Management by Implementing Entities. ESRs will suggest the Engineer key staff replacement to the PCs if they are not performing the duties as described in the FIDIC and site conditions. The PCs will submit the recommendations to the MCA for the replacement of the Engineer Key staff. ESRs will regularly witness the measurements of the works by the Engineer and Contractor in order to provide approval opinion to the Interim Payment Certificates (IPCs). IPCs from the Engineer should be verified against the contract BOQ and physical construction quantities through measurement book., ESRs and PCs will keep records of the statement of works, IPCs and invoices.

Variation orders

Manage construction change orders · within allowed maximum thresholds. · · · Damage Delay · ·

Claims Penalties

Violation of Working Law/or the ·
Contract Administration Guidelines

ESRs will provide opinion on new works/activities/quantities and prices proposed by the Contractor through the Engineers and formulate an approval/rejection assessment and submit to the PCs. PCs will prepare and IEs will submit to MCA - Mozambique for the new unit prices to be proposed along with the new works/activities and quantities above referred. ESRs and PCs will keep records of the contract variation orders. ESRs will assess the claims for the extra payment and extension of time and issue recommendations to the PCs; PCs will assess and IEs will submit to the MCA - Mozambique. ESRs will assess the delays on the schedule to determine the delay damage compensation and will recommend to the PCs. PCs will assess and IEs will submit to the MCA - Mozambique.
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Activities

Implementing Entity Agreements(IEAs) Occupational Health and Safety · Regulation. · The construction contingency is a · set percentage of the construction contract amount budgeted for unforeseen emergencies or design shortfalls identified after a construction project commences. · ·

Contingency

Onsite Method of Contract Management by Implementing Entities. ESRs will review and provide comments to the PCs on the maximum amount of delay damages those are determined by the Engineer. ESRs will assess that administrative penalties and fines are imposed on Contractors for health and safety violations of the Workers Compensation Act and/or the Occupational Health and Safety Regulation. ESRs will review and provide an opinion to the PCs for the Engineer proposal requesting the use of contingency budget for the augmentation or a scope change of unforeseen works.

Site Meetings

Weekly site meetings will be held with Engineer, Contractor and ESRs. Monthly Site Meetings will be held with Engineer, Contractor ESRs and PCs to ensure that the projects are being implemented properly i.e. on time, within Budget, compliance to the contract drawings, specifications, and most importantly, to avoid disputes and future problems and issues. ESRs will assist the preparation of Stop work order with the Engineer. ESRs will cross check the written site instructions issued by the Engineer. ESRs will assist the PMs and PCs to evaluate the Contractors and Engineers and complete the Contractor Past Performance Reporting System (CPPRS) forms as required.

Stop work Order Site Instructions CPPRS Evaluation Forms Environmental, health and safety ·

· · · Responsibilities Related to Environmental and Social Impact Issues: Provide guidance to Contractors

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Activities

·

· ·

Implementing Entity Agreements(IEAs) developing Environmental Impact Assessments, Environmental Management Plans (EMPs), Resettlement Action Plans (RAPs) and other related studies and conduct technical reviews of these deliverables to ensure that all project activities are carried out in compliance with applicable MCC policies and GoM laws and regulations Review project designs, construction timelines, work plans, and budgets to ensure that environmental/social impact issues are adequately addressed and that adequate time and resources are allotted for implementation of these activities Participate in the implementation of RAPs Verify that all the Contractors have obtained all necessary environmental permits including, but not limited to permits required for work camps, quarry operations, waste disposal sites, borrow pits,

Onsite Method of Contract Management by Implementing Entities.

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Activities

·

·

·

·

Implementing Entity Agreements(IEAs) and blasting activities Review reports, studies, work plans, and execution schedules submitted by the Works and Supervisory Contractors with regard to implementation of implementation of environmental/social mitigation measures Participate in technical reviews and audits of the implementation of environmental/social mitigation activities and incorporate findings into implementation plans Ensure that all Contractors adequately address worker and public safety and health concerns during construction Ensure that progress and completion reports include information on outcomes of implementing environmental/social mitigation measures and current/future impediments of measureS and recommendations to overcome impediments

Onsite Method of Contract Management by Implementing Entities.

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SECTION III: CONTRACT ADMINISTRATION PROCEDURES FOR GOODS

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SECTION III: CONTRACT ADMINISTRATION PROCEDURES FOR GOODS

4.0

Contract Administration Process
The following section provides guidance on general contract administration matters and those that relate to specific issues in a chronological order of key stages in a typical contract. The different tools are intended to enable timely tracking of contractual events and provide feedback on performance. This will enable MCA-M to take appropriate and timely action when necessary. The Contract Administration function consists of eight (8) major areas which commence immediately after contract award: 1. 2. 3. 4. 5. 6. 7. 8. Contract Commencement Tracking Contracts Following and Checking Deliverables Contract Modification procedures Dispute Management Closing a Contract Contractor Past Performance Reporting Archiving Contract Records

These are discussed in detail in the following sections. 4.1 Contract Administration System (CAS)

Following contract signature, the designated CAs are primarily responsible for administering the contract The PM will provide contract administration oversight. These Guidelines outline the responsibilities of the Contract Administration activities. The objective of the Contract Administration System (CAS) is to ensure and keep track of contractor compliance with terms and conditions of contracts, addressing delays in delivery or performance, troubleshooting problems, and certifying performance of delivery of goods. This will be addressed by the use of the Contract Administration Forms (CAF) which will be first prepared by the PA and later updated by the designated CAs. The Contract Administration Form (CAF) shall provide the current status of performance of the respective contract. Essentially, the CAF is a checklist and a tool against which all essential features of the contract are tracked. The CAF shall be as presented in the format in Annex 3. The CAF is prepared by the PA immediately a contract has been signed and passed on to the designated CA. The CAF is used by the CA to track contract performance. The PA, PROC M and LC will remain available for any advice in contract administration as requested by the CA. In any case, it is the primary obligation of the CA to track performance and act in regard to a contract under his/her directorate.

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4.2

Contract Commencement Procedure

4.2.1 Purpose: To outline the process for commencement of contracts and conducting post award kick-off meetings; to provide guidelines for conducting performance meetings with contractors after the award of a contract to ensure that there is a mutual understanding of the terms, conditions, and requirements among all parties who are responsible for the management and performance of the contract. 4.2.2 Planning Meeting for the Kick-off Meeting Once an award has been made an internal MCA-M meeting should be held involving all key stakeholders. These shall include the relevant Project Staff, Procurement Staff, Finance and Administration staff, Implementing Entity, Fiscal and Procurement Agents. The meeting, chaired by the relevant Project Manager shall deliberate on issues that will be covered in the kick-off meeting to ensure that there is a common understanding of the issues and also to ensure that all the information and documentation necessary for the commencement of the contract is in place. Sufficient time should be allowed between the Contract kick-off planning meeting and the actual kick-off meeting to ensure MCA-M is well prepared to address all issues that may come up in the meeting. 4.2.3 Kick-off Meeting Once an award has been made, a meeting is necessary with selected supplier, to make preparations for the start of the contract. Such a kick-off meeting will normally be attended by the respective Project Manager (PM) or his representative, who shall also chair the meeting, contractor (or representative). The meeting should also be attended by the PA in view of their role with regard to contract administration. The main objective of the meeting is to effect introductions of key staff from both sides as well as exchanging information about and agreeing on principal initial matters concerning each party. Items to be covered in the kick-off meeting include: (i) (ii) Confirmation of addresses, telephone numbers and lines of communications; Clarifying roles and powers (especially where MCA-M will be represented by an agent such a supervising consultant), if any; (iii) Arrangement for provision of sets of contract documents to the contractor, if necessary; (iv) Confirming proposed staffing and organizational arrangements; (v) Arrangements for mobilization (staff, plant, etc) and progress reviews made by the supplier or non-consultant service provider; (vi) Presentation of proposed approach and methodology; (vii) Agree on the program of implementation, where applicable; (viii) Confirm the procedures for provision and access to information, where this is applicable. A sample agenda for the kick-off meeting is included in Table 3.1.

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Table 4.1: Sample Agenda for the Kick-off Meeting – Contract for Goods
Agenda for Kick-off Meeting Date: ……………………….................................................. Location…………………………………………….

Item 1: Introduction of MCA-M and IE Staff; Item 2: Adoption of the Agenda Item 3: Introduction of the Professional Team/Key Personnel including field staff; Item 4: Introduction of Suppliers Management and Site Team (where applicable); Item 5: MCC Program Particularities with impact on the Contract; Item 6: Inspection and formal handover of contract documents; Item 7: Presentation of the Master Programme and Other Programming Documents; Item 8: Information Release schedule and responsibilities; Item 9: Environmental, Health and Safety Arrangements, where applicable; Item 10: Permits and Other Statutory Compliance Needs; Item 12: Dates for Progress Meetings and Reports; Item 13: Next Steps; and Item 14: Any Other Business.

4.3

Tracking Contracts The status of the contract, contract activities, and supplier performance, including any deficiencies or corrective actions, is monitored by the CA. The contract schedule and management plan as well as the CAF are used to monitor the contract’s progress on a regular basis. The activities for contract tracking include the following: § § § § § § § § § Commencement records and follow up; Management of contract maintenance (filing system) and contract status (process information); Monitoring of compliance with work plans and deadlines, any deficiencies, concerns or issues with the work plan or its associated deliverable should be reported early for a prompt resolution; Deliverable management, acceptance or rejection of a deliverable; Contract histories (contract payments, penalties, etc); Monitoring of the warranties, insurances, and bonds; Recording of contract modifications and variations; Management and support resolution of contract disputes or contract termination; and Contract close out.

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4.4

Progress Monitoring and Performance Reporting

Performance reporting management relies on information about how effectively the supplier is achieving the contractual objectives. Notifications and warnings of nonperformance have to be issued in accordance with the contract. Such correspondence may need to be handled in specific ways in order to comply with the specific contract. The notifications and warnings shall be drafted by CA and the IE in consultation with the PM, PROC M before they are signed by the MCA-M ED. The CAs have the obligation to report on progress of projects which they are managing on a periodic basis. It is generally advisable that these be prepared on quarterly basis for project duration of more than six months, otherwise monthly progress reports are standard. Sample Progress Reporting and Monitoring Contents is presented in Table 1 below. Basic contents of progress report shall be as follows:

Progress Monitoring and Performance Report (to be completed by the PM) c) Project Information

i.
ii.

Project Name (or Title) Description of Works

iii. iv.

Project Description Contract Reference No Implementing Entity Sector Supplier Date of Contract Signature Contract Effective Date Date of Commencement Timelines agreed and milestones Project Deliverables and Key Dates

v. vi. vii.
viii.

ix. x.
xi.

xii.

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xiii. xiv. xv.

Total Contract Cost and Currency, Insurances Raised etc. Duration of the Contract Date of Completion

d) Project Progress and Performance Analysis

vii. o o

Scope Performance Requested changes and reasons Approved changes and justifications Implications on time and cost Proposed measures to reduce adverse impacts Schedule Performance Actual progress vs baseline plan Actual delay and responsibility for delays Requested changes and reasons Approved changes, justifications and new milestones Projected completion date Reasons for delay, if any Proposed measures to get back on track; Deliverables and its time; List of Work executive and planned for next month; and Physical Progress Cost Performance Actual vs baseline budget; Actual cost overrun; Requested changes and reasons; Approved changes and
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o o

viii. o o

o o o o o o o ix. o o o o o

Contract Administration Guidelines

o o o o o o x. o o o o

justifications; Estimate to complete; Reasons for additional cost; Financial Progress; Proposed measured to reduce costs; Warranty / Commissioning related cost releases etc.; and Other matters. Quality Performance Quality assurance measures Any deviations from originally planned quality Requested quality changes and reasons Approved changes and justifications Reasons for deviations, if any Recommended measures for quality improvement Other matters Contract Performance and Risk Assessment

o o

o xi. o o o o o xii. o

Comments on contractual relations Contractual claims and/or variations Disputes or potential disputes Termination issues, if any Other matters Other Matters Project Staff Matters

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o o o

Community related issues Political issues; and Miscellaneous issues

Summary of Site Visits and Meetings

4.5

Contract Files

The CA in coordination with the IE shall be responsible for maintaining a working file for each contract that shall constitute at a minimum the following documents: o o o o o o o copy of the contract and all amendments, reason behind and its approval; copies of invoices and their approvals; copy of any guarantees provided by the supplier; all backup details of any claims for liquidated damages; all backup details of all disputes with the supplier; and copies of all key emails and other communications relating to the contract. All such documents shall be kept secure by each PM or appointed CA, in readiness for safety and reference at time determined and agreed at contract close.

The Legal Council should keep the original of the following documents: contract and all amendments/variations; and any guarantees provided by the Supplier. The Fiscal Agent should keep the original of the invoices and the CA the original of the remaining contract documents. The PM and the CA need to ensure that the information in the files enables a reply to questions that may be raised by the MCC auditor, such as: § § § § For any contract amendment, was proper approval requested and granted? Was there a reasonable justification in accordance with the Procurement Guidelines? Did the actual contract payments correspond to the amount(s) in the signed contract? Were any vouchers rejected? (Check with Fiscal Agent) Were there any advance payments? The securities used (for Bid, Performance, Advances, Insurance, Liability, etc.), were they in accordance with the Guidelines? Were there any damages or penalties for delays, non-compliance with functional guarantees, etc? If there were delays and LD (“Liquidated Damages”) was not applied, then the reason for not applying LD and approval of the delay. What were the Reasons for Slow Progress of Completion, if applicable? Were there any delays in Payments, Imports, Customs, etc? List of deliverables and completion (date, description, quantity, location of goods or works)
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§ § §

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§ §

Were there any contractual disputes? How were they resolved? How was the contract file closed out – what was required for this final step?

4.6 Communication with MCA-M Suppliers The authority to formally communicate with all suppliers is the MCA-M ED or his/her designate. It follows therefore that no formal communication shall be sent to any MCA-M contractor without the relevant authority. Whenever there is need to communicate formally to external contractors, then that communication shall be deemed to have been made by the MCA-M ED. 4.7 Deliverable Management Process This is the process for receiving the goods by the Supplier and ensuring that contract requirements are met. The record of performance will be kept by the CA and copy of it should be provided to PM and PA for filling purpose. Information on all Asset deliveries shall also be forwarded to the office of the Chief Financial officer for registry and inventory management purposes. This process involves several parties and the activities include: a) Logging the receipt of the deliverable; b) Resolving problems related to the date delivery of deliverables; c) Managing and administering the process for review of deliverables; d) Overseeing the control of quality and acceptance or rejection of deliverables; e) Establishing inventories for non-expendable equipment including information on depreciation and disposal; f) Establishing maintenance plans, if warranty so requires; and g) Invoice Processing.

4.7.1 Managing Contract Deliverables 4.7.1.1 Introduction

This section of the process outlines who is responsible for monitoring that deliveries of goods are made according to contracted delivery schedules, how the goods are received, inspected, tested, and accepted prior to payment being made, who is implicated, what physical aspects are to be taken into account and the documentation involved. Contracts for non-intellectual services are generally treated in the same manner as contracts for goods. In case there is a delegation of power or the PM is assigned as contract administrator, this will be described in an official document signed by both the MCA ED and the relevant PM. The relevant PM in consultation with the PROC M shall determine whether or not the goods and related services received are acceptable and conform to all of the terms and conditions of the supply Contract. To achieve this, they shall follow the tasks listed in Table 3.4. This list is a key document that defines the tasks to be carried out, the persons responsible for each task and the documents to be

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completed or obtained. A copy of this list should be provided to the CA of the contract.

4.7.1.2

Segregation of Duties to Eliminate the Risk of Errors

MCA-M should maintain sufficient separation of duties in order to reduce the risk of error or fraud in its overall procurement program. The Contract Administration Process is a critical component of this overarching process. No one (1) person shall control all key aspects of the entire acceptance process. 4.7.1.3 Packing and Shipping Standards

The Contract shall describe how the goods will be packaged and shipped to their final destination. Any special packaging and shipping requirements and/or instructions over and above the standard provisions must be documented in detail within the Technical Specifications and the Contract administrator’s duty is to ensure that the standards are applied and compliant with the contract. 4.7.1.4 Expediting of Deliveries

The PM in coordination with the IE is responsible for maintaining communication with the supplier to ensure agreement on the dates of deliveries and that the delivery schedule in the Contract is maintained. The PROC M at the specific request of the PM, may assist in the expediting of supplier deliveries, especially in cases in which deliveries are very late or non-existent (See “Liquidated Damages”). Expediting will normally be carried out using e-mail and telephone contact and by writing formal letters in cases where the supplier is in default, copy of which should be provided to the CA. 4.7.1.5 Aspects to Consider When Receiving Goods

The respective PM and receiving staff should always consider the following questions when taking receipt of any delivery of goods based upon the deliverables stated in the signed contract: · · · · · · · · Is the delivery destined for MCA-M or for a beneficiary at one of its project sites? Are the Goods damaged on arrival? Is the piece count correct? Is delivery on time, significantly late, incomplete or otherwise unsatisfactory? Do the items comply with the specifications and packaging requirements as defined by the Contract, General Conditions or Special Conditions? Does the delivery require further inspection or testing by another more specialized person? Have all terms listed on the Contract been met? Have all operating manuals, guarantee certificates, service books, licenses, or other documents been received with the Goods and handed over to the person responsible for the equipment.
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4.7.1.6

Preparing the Goods Received Report Based on the Supplier’s Delivery Documents

Before shipping all or part of the Goods, the supplier must provide to his respective PM, as designated in the Contract, the delivery documents as required by the Contract. The PM must verify that each required document has been submitted and validate its compliance with the provisions in the Contract. These delivery documents include the Invoice and the Delivery Note (an itemized list of goods to be delivered / received). The PM makes timely provision for the receipt of each shipment: She/he: § § § § § assigns the staff authorized to receive the shipment; establishes, in cooperation with the supplier or his forwarder the exact date, time and place for the receipt; liaises with supplier to request necessary document for custom clearance; organizes, if necessary, lifting equipment and/or additional manpower for unloading; and organizes testing (if testing the equipment is foreseen in the Contract).

Based on the Invoice and the Delivery Note, the PM establishes, if necessary, with the assistance of IE, PROC M, MCA-M’s IT experts, or other competent technical experts as necessary, the Goods Receipt Note (GRN) for the delivery or shipment in questions. If the Contract provides for testing, or a guarantee period, the Goods Receipt Note (GRN) shall be entitled Provisional Goods Receipt Note. In this case PM confirms receipt (not acceptance) of the Goods, with copy to the CA. 4.7.1.7 Unloading, Unpacking and Assembly of Goods

In general, the supplier is responsible for delivering the Goods to the final destination specified in the Contract and for unloading them so that the PM is able to carry them away and store them. The PM in coordination with the IE is responsible to ensure that the unloading “environment” is suitable and that appropriate lifting equipment and manpower is available, if required. At this stage the PM should ensure that the packages unloaded are correct in quantity and undamaged. If assembly of the Goods is required, this is normally the responsibility of the supplier, however PM will prepare the place for assembly and installation of the goods. In such cases the supplier must unpack the Goods, remove any packaging and assemble the Goods ready for inspection and testing. Where assembly is not required it is the responsibility of the PM to receive the Goods in packaged form ready for storage, and inform the CA of this reception. 4.7.1.8 Inspection

Inspection is the act of examining goods that have been delivered to determine conformance to what was ordered via the contract. The authorized receiving staff person appointed by the respective PM at the place of final destination (MCA-M Headquarters or the project site) verifies non-technical aspects of the delivery, such as contents, according to the marking on the parcels, correct quantity, obvious damage). Damaged, “wrong”, unidentifiable or surplus items shall be rejected immediately. Any discrepancy/objection shall be
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documented in the GRN. The responsible person for receiving the Goods shall stamp and sign the GRN and have it countersigned by the supplier or his forwarder to acknowledge that the Goods were delivered, not that they were "accepted.” The authorized person responsible for receiving the Goods shall send the completed GRN, without delay, to the PM for further action. The properly stamped and signed GRN is an indispensable document to authorize payment. Missing or faulty GRN’s with payment invoice will delay payment. Based on the findings of the GRN the PM, if necessary after consultation with the PROC M, authorizes payment (if satisfied) or, if not satisfied, contacts the supplier to remedy a faulty delivery. The CA should be informed. 4.7.1.9 Testing - Test Report (if Applicable)

If appropriate, the Technical Specifications should provide for the type and the duration of the tests. In some cases, the testing may require specialized skills or expertise in examining the Goods to determine conformance. The PM appoints the person who will carry out the testing. Testing can be carried out on the first item delivered or by random sampling of some or all items delivered. Testing determines whether the Goods are in substantial accord with the supplier’s and/or the manufacturer’s technical specifications, meets the minimum specification as indicated in the Contract and performs at a satisfactory level. The technician/engineer appointed by MCA-M and/or a responsible person at the site tests the equipment. For example, MCA-M has purchased a printer. The Technical Specifications identified a 30-day acceptance testing period, during which the printer would be required to run error-free from the first day of installation. The technician/engineer tests the performance of the printer during 30 days. At the end of the testing period the technician compiles the Test Report (either certifying error-free functioning or listing deficiencies found with recommendations on remedy change/repair/service by the supplier) and sends it to the PM. This Report complements the Provisional GRN and attests whether or not the Goods are in conformity with the Technical Specifications required in the Contract. The PM recommends authorization for payment, if satisfied, or, if not satisfied, contacts the supplier to remedy a faulty delivery based on the findings of the Provisional GRN and the Test Report. The CFO authorizes the payment to the supplier and the CA is informed. 4.7.1.10 Action to be Taken at the End of the Warranty Period (if Applicable) In Goods Contracts with items under warranty, warranty claims are protected either by retaining the final payment or by a Performance Guarantee. At a reasonable date before the expiry of the warranty period the users of the Goods shall report to the PM any deficiencies that may be covered by the warranty. The PM shall check the reports and shall file all justified warranty claims with the supplier. If at the end of the warranty period no warranty claim has to be filed, the PM shall authorize the final payment or return the Performance Guarantee, as appropriate. If warrantee claims are being made, the PM shall call on the supplier to extend the validity of his Performance Guarantee. If the PM does not receive such extension

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before the expiry of the original Performance Guarantee, he shall, without delay, draw down on the Guarantee. Only when all warranty claims are settled shall the PM either authorize Final Payment or return the Performance Guarantee, with copy to the CA.

4.7.1.11 Certification of Acceptance of Goods Acceptance is the legal act of documenting that all the Goods have been delivered and conform to the requirements of the Contract terms and conditions. For whatever reason, delivery under one contract may entail one or several shipments. For each shipment there will be the corresponding GRN and, if applicable, a Test Report. The PM will collect and hold all Reports until all items have been received and, if applicable, tested to his satisfaction. If satisfied, the PM will, by means of a covering note on the GRN, certify the Acceptance (for deliveries without warranty) or the Provisional Acceptance (for deliveries under warranty). The PM shall send the covering note with the attached GRN to the CFO including in it the statement “all Goods delivered and accepted; payment authorized as per payment conditions”. After paying the invoice the CFO will, based on the GRN, update the inventories. If a final payment is due at the end of the warranty period, the PM shall issue the Final GRN after the expiry of the warranty and settlement of all warranty claims. A copy of the Provisional and the Final GRN shall be distributed within the Project, to PROC M and to the CA. 4.7.1.12 Procedure for the Rejection of Non-Conforming Goods The following procedure should be followed if any of the Goods are not in conformance with the requirements of the Contract: 1. The authorized receiving staff member (who will be authorized by PM /IE before goods arrival) that is rejecting goods must sufficiently document the reasons for the rejection in the GRN. She/he shall stamp and sign the GRN, have it countersigned by the representative of the supplier or his forwarder and shall immediately report the problem(s) in writing to the PM. 2. The PM shall without delay contact the supplier when goods have been rejected that are over-shipments, defective or otherwise non-conformant to the Contract. 3. The PM in coordination with the PROC M, is responsible for notifying the supplier, making arrangements to hold the rejected goods somewhere protected from damage, and taking care of rejected goods until the supplier can take possession of the goods and remove them from the site. 4 The PM in coordination with the PROC M and the CA provides a notice of rejection letter to the supplier describing the defect(s) that renders the delivery as nonconforming with contractual requirements, what the delivery and inspection criterion was, and how the delivered product does not conform. 5. MCA-M can accept any quantity of the Goods and reject the rest. Example: The contract is for 500 cases of bond paper. The receiving staff person accepts 300
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cases and rejects 200 cases that were damaged in transit and returns these to the supplier. 6. If the supplier, within a reasonable time period, does not remove rejected goods, the MCA-M may ship rejected items back to the supplier at the supplier's expense as per contract or after agreement with the Supplier. The PM with copy to the CA will inform the supplier of the return of the goods and will send an appropriate instruction to the CFO/FA on how any deductions against the supplier’s account should be made for the storage and return shipping costs. 4.7.1.13 Liquidated Damages In the event that Liquidated Damages are foreseen in the Contract, when approving the supplier’s invoice for payment the PM will mark on each invoice “Liquidated Damages Not Applicable” in all those cases in which the supplier has delivered the goods in accordance with the contract timescales. The CA should have copy of the invoices. On the other hand, if the supplier has exceeded the dates for the delivery of the Goods, and the delay is such that Liquidated Damages may be applied, the PM in consultation with CA will recommend to the CFO/FA for applicable damages to be applied, in accordance with the Contract. CFO will also inform the supplier of the application of the Liquidated Damages, with copy to the CA.
a)

the letter should state the length of the notice period;

This Final Notice will be deliver to the Supplier strictly in accordance with the provisions of the contract, if any. .The Notice shall be copied to the MCA-M ED, PM, PROC M; CFO, PA, the respective CA and IE and to the issuing bank of the Performance Guarantee;

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Table 4.7 Contract Administration for Goods
Documents/Forms Input Contract Contract data recorded Delivery documents Contract specifications Purchase Order Purchase Order Contract specifications Purchase Order Delivery Order Output Contract data recorded Updated Contract data recorded Draft version of Acceptance Record Authorized person designated Materials delivered (and installed, if applicable) Acceptance Record completed Delivery Order and Acceptance Record signed by both parties (Supplier/Carrier and On-Site In-Charge Person or authorized by MCA-M); in the event of noncompliance w/ corrections. Detailed Complaint Report

Step IIIIIIIVV-

Duties Entering Contract details into CAF Monitoring Delivery in accordance to Contract Preparing Acceptance Documentation Organizing Acceptance Delivering (and installing) materials on site Checking of good condition, quantities and/or non technical aspects In the event of compliance: Signing of Delivery Order and Acceptance Record In the event of noncompliance: Returning materials Signing of corrected Delivery Order and of completed and corrected Acceptance Record

Responsible PA PM/IE PM/IE Supplier PM or authorized person PM IE/Beneficiary

VI-

Writing of Noncompliance Report Checking of technical compliance/good condition

On-Site In-Charge Person or authorized by MCA-M and/or Technician/ Engineer

Technical specifications

Compliance/Good Condition Report

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Step VII-

Duties In the event of partial delivery after the last delivery to MCA-M’s or authorized person’s satisfaction Submitting to FA invoices and Acceptance Records entitling to certified “Good for Payment” intermediate payments (in accordance to Contract) Payment Encoding of goods, if applicable Liquidated Damages Non applicable Applicable

Responsible PM/IE Contract

Documents/Forms Input Output All Invoices and Acceptance Records signed by person(s) in charge of acceptance - PM “Full Delivery” Report

Purchase Order

VIIIIX-

CFO PM Advice from PM PM

Invoices Listings of accepted materials Invoice to be approved Invoice to be approved Non-approved Invoice Advice from PROC M /PA on Modalities Final Invoice Contract Documentation to be reviewed CPPRS Form to be completed Documents

Updated inventory (materials with codes) Invoice to be approved indicating “Liquidated Damages not applicable” Non-approved Invoice sent to PA Compute penalties Notify supplier Deduction of amount from Supplier Account Final Invoice approved Contract Termination Letter sent to Supplier Contract Documentation reviewed

XXI-

Authorization to Pay Final Invoice Terminating Contract

PM IE, PM , LC, PROC M, PA

XII

Archiving documents

FA and CFO PM PA / PROC M

Keep one copy of all documents related to payment Keep one copy of all Project documents Keep one copy of all deliverable documents Keep one copy of all procurement related documents

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PART IV: CONTRACT ADMINISTRATION PROCEDURES FOR INTELLECTUAL SERVICES

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SECTION IV: CONTRACT ADMINISTRATION PROCEDURES FOR INTELLECTUAL SERVICES

5.0

Contract Administration Process
The following section provides guidance on general contract administration matters and those that relate to specific issues in a chronological order of key stages in a typical contract. The different tools are intended to enable timely tracking of contractual events and provide feedback on poor performance. This will enable MCA-M to take appropriate and timely action when necessary. The Contract Administration function consists of eight (8) major areas which commence immediately after contract award: 1. 2. 3. 4. 5. 6. 7. 8. Contract Commencement Tracking Contracts Following and Checking Deliverables Contract Modification procedures Dispute Management Closing a Contract Contractor Past Performance Reporting Archiving Contract Records

These are discussed in detail in the following sections. 5.1 Contract Administration System (CAS)

Following contract signature, the designated CAs are primarily responsible for administering the contract The PM will provide contract administration oversight. These Guidelines outline the responsibilities of the Contract Administration activities. The objective of the Contract Administration System (CAS) is to ensure and keep track of contractor compliance with terms and conditions of contracts, addressing delays in delivery or performance, troubleshooting problems, and certifying performance of delivery of goods. This will be addressed by the use of the Contract Administration Forms (CAF) which will be first prepared by the PA and later updated by the designated CAs. The Contract Administration Form (CAF) shall provide the current status of performance of the respective contract. Essentially, the CAF is a checklist and a tool against which all essential features of the contract are tracked. The CAF shall be as presented in the format in Annex 3. The CAF is prepared by the PA immediately a contract has been signed and passed on to the designated CA. The CAF is used by the CA to track contract performance. The PA, PROC M and LC will remain available for any advice in contract administration as requested by the CA. In any case, it is the primary obligation of
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the CA to track performance and act in regard to a contract under his/her directorate.

5.2

Contract Commencement Procedure

5.2.1 Purpose: To outline the process for commencement of contracts and conducting post award kick-off meetings; to provide guidelines for conducting performance meetings with contractors after the award of a contract to ensure that there is a mutual understanding of the terms, conditions, and requirements among all parties who are responsible for the management and performance of the contract. 5.2.2 Planning Meeting for the Kick-off Meeting Once an award has been made an internal MCA-M meeting should be held involving all key stakeholders. These shall include the relevant Project Staff, Procurement Staff, Finance and Administration staff, Implementing Entity, Fiscal and Procurement Agents. The meeting, chaired by the relevant Project Manager shall deliberate on issues that will be covered in the kick-off meeting to ensure that there is a common understanding of the issues and also to ensure that all the information and documentation necessary for the commencement of the contract is in place. Sufficient time should be allowed between the Contract kick-off planning meeting and the actual kick-off meeting to ensure MCA-M is well prepared to address all issues that may come up in the meeting. 5.2.3 Kick-off Meeting Once an award has been made, a meeting is necessary with selected supplier, to make preparations for the start of the contract. Such a kick-off meeting will normally be attended by the respective Project Manager (PM) or his representative, who shall also chair the meeting, contractor (or representative). The meeting should also be attended by the PA in view of their role with regard to contract administration. The main objective of the meeting is to effect introductions of key staff from both sides as well as exchanging information about and agreeing on principal initial matters concerning each party. Items to be covered in the kick-off meeting include: (i) (ii) (iii) (iv) (v) (vi) (vii) Confirmation of addresses, telephone numbers and lines of communications; Clarifying roles and powers (especially where MCA-M will be represented by an agent such a supervising consultant), if any; Arrangement for provision of sets of contract documents to the contractor, if necessary; Confirming proposed staffing and organizational arrangements; Arrangements for mobilization (staff, etc) and progress reviews made by the supplier or non-consultant service provider; Presentation of proposed approach and methodology; Agree on the program of implementation, where applicable; and

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(viii) Confirm the procedures for provision and access to information, where this is applicable. A sample agenda for the kick-off meeting is included in Table 3.1. Table 5.1: Sample Agenda for the Kick-off Meeting
Agenda for Kick-off Meeting Date:……………………….................................................. Location…………………………………………….

Item 1: Introduction of MCA-M and IE Staff; Item 2: Adoption of the Agenda Item 3: Introduction of the Professional Team/Key Personnel including field staff; Item 4: Introduction of Suppliers Management and Site Team (where applicable); Item 5: MCC Program Particularities with impact on the Contract; Item 6: Inspection and formal handover of contract documents; Item 7: Presentation of the Master Program and Other Programming Documents; Item 8: Information Release schedule and responsibilities; Item 9: Environmental, Health and Safety Arrangements, where applicable; Item 10: Permits and Other Statutory Compliance Needs; Item 12: Dates for Progress Meetings and Reports; Item 13: Next Steps; and Item 14: Any Other Business.

5.3

Tracking Contracts The status of the contract, contract activities, and supplier performance, including any deficiencies or corrective actions, is monitored by the CA. The contract schedule and management plan as well as the CAF are used to monitor the contract’s progress on a regular basis. The activities for contract tracking include the following: § § § Commencement records and follow up; Management of contract maintenance (filing system) and contract status (process information); Monitoring of compliance with work plans and deadlines, any deficiencies, concerns or issues with the work plan or its associated deliverable should be reported early for a prompt resolution;

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§ § § § § § 5.4

Deliverable management, acceptance or rejection of a deliverable; Contract histories (contract payments, penalties, etc); Monitoring of the warranties, insurances, and bonds; Recording of contract modifications and variations; Management and support resolution of contract disputes or contract termination; and Contract close out. Progress Monitoring and Performance Reporting

Performance reporting management relies on information about how effectively the supplier is achieving the contractual objectives. Notifications and warnings of nonperformance have to be issued in accordance with the contract. Such correspondence may need to be handled in specific ways in order to comply with the specific contract. The notifications and warnings shall be drafted by CA and the IE in consultation with the PM, PROC M before they are signed by the MCA-M ED. The CAs have the obligation to report on progress of projects which they are managing on a periodic basis. It is generally advisable that these be prepared on quarterly basis for project duration of more than six months, otherwise monthly progress reports are standard. Sample Progress Reporting and Monitoring Contents is presented in Table 1 below. Basic contents of progress report shall be as follows:

Progress Monitoring and Performance Report (to be completed by the PM) e) Project Information

i.
ii.

Project Name (or Title) Description of Works

iii. iv.

Project Description Contract Reference No Implementing Entity Sector Consultant :

v. vi. vii.

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viii.

Date of Contract Signature Contract Effective Date Date of Mobilization Timelines agreed and milestones Project Deliverables and Key Dates Total Contract Cost and Currency, Insurances Raised etc. Duration of the Contract Date of Completion

ix. x.
xi.

xii. xiii. xiv. xv.
f)

Project Progress and Performance Analysis xiii. o o Scope Performance Requested changes and reasons Approved changes and justifications Implications on time and cost Proposed measures to reduce adverse impacts. Schedule Performance: Actual progress vs baseline plan Actual delay and responsibility for delays Requested changes and reasons Approved changes, justifications and new milestones

o o

xiv. o o

o o

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o o o o o o xv. o o o o o o o o o o xvi. o o o o

Projected completion date Reasons for delay, if any Proposed measures to get back on track; Deliverables and its time; List of Work executive and planned for next month; and Physical Progress Cost Performance Actual vs baseline budget; Actual cost overrun; Requested changes and reasons; Approved changes and justifications; Estimate to complete; Reasons for additional cost; Financial Progress; Proposed measured to reduce costs; Warranty / Commissioning related cost releases etc.; and Other matters. Quality Performance Quality assurance measures Any deviations from originally planned quality Requested quality changes and reasons Approved changes and justifications Reasons for deviations, if any Recommended measures for quality improvement Other matters

o o

o

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xvii. o o o o o xviii. o o o o

Contract Performance and Risk Assessment Comments on contractual relations Contractual claims and/or variations Disputes or potential disputes Termination issues, if any Other matters Other Matters Project Staff Matters Community related issues Political issues Miscellaneous issues

Summary of Meetings

5.5

Contract Files

The CA in coordination with the IE shall be responsible for maintaining a working file for each contract that shall constitute at a minimum the following documents: o o o o o o o copy of the contract and all amendments, reason behind and its approval; copies of invoices and their approvals; copy of any guarantees provided by the supplier; all backup details of any claims for liquidated damages; all backup details of all disputes with the supplier; and copies of all key emails and other communications relating to the contract. All such documents shall be kept secure by each PM or appointed CA, in readiness for safety and reference at time determined and agreed at contract close.

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The Legal Council should keep the original of the following documents: contract and all amendments/variations; and any guarantees provided by the Consultant. The Fiscal Agent should keep the original of the invoices and the CA the original of the remaining contract documents. The PM and the CA need to ensure that the information in the files enables a reply to questions that may be raised by the MCC auditor, such as: § § § § For any contract amendment, was proper approval requested and granted? Was there a reasonable justification in accordance with the Procurement Guidelines? Did the actual contract payments correspond to the amount(s) in the signed contract? Were any vouchers rejected? (Check with Fiscal Agent) Were there any advance payments? The securities used (for Advances), were they in accordance with the Guidelines? Were there any damages or penalties for delays, non-compliance with functional guarantees, etc? If there were delays and LD (“Liquidated Damages”) was not applied, then the reason for not applying LD and approval of the delay. What were the Reasons for Slow Progress of Completion, if applicable? Were there any delays in Payments, Imports, Customs, etc? List of deliverables and completion (date, description, quantity, location) Were there any contractual disputes? How were they resolved? How was the contract file closed out – what was required for this final step?

§ § § § §

5.6 Communication with MCA-M Suppliers The authority to formally communicate with all suppliers is the MCA-M ED or his/her designate. It follows therefore that no formal communication shall be sent to any MCA-M contractor without the relevant authority. Whenever there is need to communicate formally to external contractors, then that communication shall be deemed to have been made by the MCA-M ED. 5.7 Deliverable Management Process This is the process for receiving the goods by the Supplier and ensuring that contract requirements are met. The record of performance will be kept by the CA and copy of it should be provided to PM and PA for filling purpose. Information on all Asset deliveries shall also be forwarded to the office of the Chief Financial officer for registry and inventory management purposes. This process involves several parties and the activities include: a) Logging the receipt of the deliverable; b) Resolving problems related to the date delivery of deliverables; c) Managing and administering the process for review of deliverables; d) Overseeing the control of quality and acceptance or rejection of deliverables;
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e) Establishing inventories for non-expendable equipment including information on depreciation and disposal; f) Establishing maintenance plans, if warranty so requires; and g) Invoice Processing.

5.7.1 Managing Contract Deliverables – Intellectual Services 5.7.1.1 Introduction This procedure aims to explain who is responsible for ensuring how the reports and deliverables of consulting services are received, reviewed and accepted, who is implicated, and the documentation involved. In case there is a delegation of power or the PM is assigned as contract administrator, this will be described in an official document signed by both the MCA ED and the relevant PM. The PM in coordination with the IE determines whether or not the consulting services received are acceptable and conform to all of the terms and conditions of the contract. To achieve this they follow the tasks listed in Table 3.5 at the end of this section. Table 3.5 defines the tasks to be carried out, the persons responsible for each task and the documents to be completed or obtained. The CA should be informed on the acceptance/rejection of the reports. For consulting services that are intellectual services the deliverable is typically in the form of a report on, for example, training activities, promotional action, monitoring/auditing or professional advice. Deliverables also take the form of physical products as is the case with software development, for instance: (i) software with practicable source codes for users; (ii) technical documentation on the system to be installed; (iii) system user guide for users, and administration handbook for the IT team; (iv) detailed training plan; (v) design and preparation of bidding documents. 5.7.1.2 Segregation of Duties to Eliminate the Risk of Errors MCA-M should maintain sufficient separation of duties in order to reduce the risk of error or fraud in its procurement program. No one person should control all key aspects of the entire receipt and validation process. 5.7.1.3 Contract Administration and Supervision The PM in coordination with the IE is responsible for maintaining communication with the Consultant to ensure that the reporting schedule in the contract is maintained. This follow-up with the Consultant will normally be done using e-mail and telephone contact with the writing of formal letters in cases where the Consultant is in default. Formal letters should be signed by MCA-M ED. The PM assigns one or several experts amongst the IE to be responsible for review and validation of the quality and timeliness of the reports and deliverables. Upon
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completion of the review/validation the responsible experts compile a Review Report assessing whether or not the quality of the report / the deliverable is acceptable taking into account the Description of Services. The CA should be informed on the acceptance/rejection of the reports. 5.7.1.4 Aspects to Consider When Receiving Consultant’s Deliverables The IE should always consider the following questions when reviewing Consultant’s reports and deliverables: Is the report or deliverable in compliance with the Contract, and the Description of Services? Has the report or deliverable been submitted in time and in accordance with the work schedule in the Description of Services? Is the report or deliverable of good quality in line with the Contract or of unsatisfactory quality or incomplete? Have all the conditions listed in the Contract been met? 5.7.1.5 Procedure for the Approval of Reports and Deliverables The approval of reports and deliverables is the process of documenting that the reports and deliverables conform to the contract conditions. The DT (project technical experts) appointed to perform the review/validation of the report or deliverable will compile a Review Report including the date when the report/the deliverable was received, the description of the report or deliverable received, the extent of the review/validation performed to validate the quality of the report and an assessment of the compliance with the requirements in the Description of Services. The DT will send the Review Report to the PM. If the Review Report confirms that the report or deliverable fully complies with the requirements of the Description of Services, the Project staffs informs the respective PM in writing, and sends the invoice to the CFO with the remark “Good for payment”. The CA should be informed. The Goods/Works/Services Receipt Note (GRN) shall also be completed as appropriate and submitted in accordance with the FAP. 5.7.1.6 Procedure for the Deliverables Rejection of Non-Conforming Reports and

Where the report or deliverable is not in conformity with the expected quality as required by the Description of Services then the DT performing the review and validation must record and describe, in the Review Report, the scope and coverage of the work performed by the Consultants, the contribution of the report to the objective of the Description of Services and the lack of compliance or any nonconformity in the quality of the report. The following steps should be followed when the report or deliverable is not in conformance with the requirements of the contract:

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1.

The authorized DTC that is rejecting the report or deliverable must immediately communicate the problem(s) that led to the rejection to the PM supported by the (written) Review Report. The PM shall contact the Consultant when rejecting reports or deliverables that are in non-conformance to the Contract. The PM provides a notice-of-rejection letter to the Consultant describing the defect(s) that renders the report as non-conforming with contractual requirements, what the review and validation criterion were, how the submitted report does not conform and proposes a deadline for correction of defects and resubmission of the report. If an invoice has been submitted that will be rejected due to the rejection of the report or deliverable, the PM shall submit an appropriate GRN in accordance with the FAP. Once the report is resubmitted the review and validation process repeats as described above. The CA should always be informed though over the process.

2. 3.

4.

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Table 5.5 Contract Administration for Intellectual Services
Duties IIIIIIEntering contract details into CAF Monitoring Delivery in accordance to Contract Reviewing and validating technical compliance In the event of noncompliance: Writing Acceptance Report In the event of noncompliance: Writing Rejection Letter Executing payment including Compliance Check Paying Final Invoice Terminating Contract PA PM/DT DT In Charge Contract Contract data recorded Reports received TOR Specifications, Work Plan in TOR, Copy of Contract Review Report Rejection Letter CFO/FA PM PM/PROC M/LC PM PM/DT CFO PM/DT PA/ PROC M Acceptance Report Final Invoice Contract Documentation to be reviewed CPPRS Form to be completed Documents Payment made Final Invoice approved Contract Termination Letter sent to Consultant Contract Documentation reviewed Input Documents/Forms Output Contract data recorded Updated delivery data recorded Review Report for report or deliverables Acceptance Report PM

IVVVIIVI-

VIII-

Archiving contractual documents

Keep one copy of all Project documents Keep one copy of all documents related to payment Keep one copy of all deliverable and procurement documents Keep one copy of all contractual documents

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SECTION V: CONTRACT MODIFICATION PROCEDURES

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SECTION V: CONTRACT MODIFICATION PROCEDURES

6.0

Contract Modifications and Change Orders, Variation Orders and Approval Process

6.1 Contract Modification 6.1.1 Rationale After a contract has been signed, there may have justifiable reasons to want to modify, or change, the contract. In general, contract modifications necessarily require the agreement of all parties to the contract. A contract therefore cannot be amended or modified unilaterally. 6.1.2 Definition – Contract Modification A contract modification may introduce or existing contract, while leaving intact Modifications are issued usually bilateral These are also referred to as contract contract. cancel specifications or terms of an its overall purpose and effect. through a supplemental agreement. amendment or modification of a

Examples of Contract Modification may include: • A change in the duration of the contract – say in a contract, goods were to be delivered within 45 days but due to urgency of the need for the goods, a delivery period of say 30 days is agreed. In this case, the supplier may agree to deliver at a shorter period without any additional cost. Modifications to the description of the material products, goods or service to be provided it meets the same technical performance requirements. For example, a PVC pipe that was previously specified may be replaced by a steel pipe than can perform the same purpose. A consultant contract involved ten major deliverables but for some reason, three are considered no longer necessary and therefore the need to modify the contract. For road works contract, the original scope of work did not include a major bridge, but the Employer now requires the Contractor to also construct the bridge. The Contractor and Employer may agree a modification to the contract. The parties may agree to a different payment terms without any other change in the contract performance, say change in contractor bank details.









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All changes to the contract values or payment schedules shall be made after verification are with FA on already paid up deliverables.

Even when there is no express provision for contract modification in the contract, parties can agree to a modification. 6.2 Objectives of Contracts Modification System A contract modification system defines the process by which the contract term or condition may be modified, deleted or inserted. In effect, it is a change to the contract itself. In principle, a change to a term in the contract can be agreed upon by the parties to the contract. It requires that the contracting authority within MCA-M has to consent to the change and vice versa. A change to a contract is for example, when for some reason, MCA-M wishes to expedite completion of a consultancy assignment earlier than is included in the contract or a term of the contract has to be deleted, for example when there is a requirement include a submission of a performance guarantee in the contract, although this considered unnecessary at the time of the execution of the contract. As a principle, contract modifications are undesirable and should be avoided as far as possible mainly by ensuring that the contract terms and conditions are clear, accurate and complete before entering into the contract. In this regard, clear justification is necessary before a modification is authorized. 6.3 Procedure for Modification of Contracts A change to the contract includes the paperwork, with all the supporting and approval levels necessary for authorizing changes. In any case, the authorization to the change itself will depend on the size of the contract and the implications to the contract – financial, schedule, scope and quality. Whenever such situation arises, extensive consultations will be required involving the relevant IE, PM, PROC M, CA, CFO, and in some cases MCA-M Management and MCC. The system for modification of contracts shall be as follows: i. The request for contract modification can emanate from any section from within MCA-M and IEs. Variations (change orders) can be initiated by the Engineer or the Contractor; The Engineer in coordination with the IE shall compile a complete submission for Contract Modification/Change Order Authorization Form attaching supporting documents and justifications. These shall include justification for the modification, additional cost, time and where necessary quality implications. This documents will be submitted to the PM; The PM, with copy to the CA, shall forward the same to the CFO who shall confirm that there is sufficient budgetary allowance to cater for the additional costs, if any. In the case of no cost modification, the submission to CFO is not necessary; The CFO shall sign to confirm that there is sufficient budgetary allowance or otherwise. The CFO shall forward the Contract Modification/Change
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ii.

iii.

iv.

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Order Authorization Form to the PROC M for onward processing or reject if no funds are available; v. The PROC M shall scrutinize the request, in consultation with PA and the MCA-M Legal Counsel, referring to the terms of the relevant contract a clear statement of the implications shall be provided; The PROC M shall either recommend approval or rejection by MCA-M ED, of the request if within the PROC M s mandate; If recommended for rejection, the PROC M shall forward the same to the MCA-M ED and copy to the relevant PM with clear explanations for reasons for recommendation for rejection; If recommended for approval, the PROC M shall forward the approval to the Legal Counsel (LC) for legal clearance and formalizing the contract modifications request, otherwise the LC shall prepare the necessary transmittal letters for MCA-M ED’s signature; When the request is outside the PROC M´s mandate and the request is plausible, the PROC M shall still sign the Form and forward the same to MCA-M ED in accordance with relevant procedures; The MCA-M ED may, if required, forward to MCA-M Board of Directors (BD) or MCC for consideration or approval; The MCA-M BD or MCC or both shall consider, reject or sanction subject to approval of MCC; The Secretary of the Board shall inform the PM and PROC M and the CA promptly on the outcome of this submission; The LC shall then prepare the necessary transmittal letters for MCA-M ED’s signature; In any case, no such change shall be effected to an existing contract unless the other party agrees to the change; and The CA should have a copy of the final document signed by the contractual parties.

vi. vii.

viii.

ix.

x. xi. xii. xiii. xiv. xv.

Only when it is absolutely necessary would there be any change to the contract terms. For changes in the conditions of contract based on MCC standard contracts, waivers have to be sought in accordance with the PPG. A Standard Format for Contract Modification / Change Order Form (Table 4.1) has been designed for use in effecting contract modifications.

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Table 6.1: Standard Format for Contract Modification / Change Order Form

REPUBLIC OF MOÇAMBIQUE MILLENIUM CHALLENGE ACCOUNT – MOZAMBIQUE
Contract Modification/Change Order Authorization Form
Note: This form is to be used when changes in the scope of work, goods or services are required after the award of contract. After obtaining the required approvals, the original shall be kept in the Contracts File with copies to the relevant IE, PM, PROC M, CFO, FA and PA.

Contract Title:................................................................................................................................ Contract Modification No: ................................ [insert No. 1, 2, etc]
IMPLEM. ENTITY: SECTOR: Contract Number Original Contract Amount US$/MT............................................... Contract Dates: Start Date: ....................................................... Current Contract Price: US$/MT...................... Completion Due Date: ................................................. Extended Contract Completion Date:............................. Name of Consultant/ Contractor/Supplier/Service Provider:.............................................................................................. FUNDING:

PROPOSED AMENDMENT AND REASONS FOR THE CHANGE: (attach the proposed amendment):

Additional Cost Estimate: .US$......................................Percentage change on original contract amount: ..............% Proposed Revised Contract Amount: US$...................................[attach details of the source of cost] Contract change requested by: [insert name and title of the person requesting change] Name: ........................................................................................................Title...........................................................................

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Signature of the Requesting Person................................................................ Signature of the Project Manager1:…………………………..... Signature of the Chief Financial Officer:2................................. AUTHORIZATION BY PROCUREMENT MANAGER The Proposed Contract Modification / Change Order is (tick):

Date: .......................................................

Date:………………………………… Date:..............................................

ÿ ÿ ÿ

a) within the limit of the PROC M mandate and is hereby recommended for approval. b) Within the limit of the PROC M and is hereby NOT recommended for approval (see reasons attached). c) Outside the limit of PROC M mandate and is endorsed for consideration by ………….............… (insert MCA-M ED, BD or MCC)

Signature of Procurement Manager............................................. Date:............................................... AUTHORIZATION BY MCA-M BOARD OF DIRECTORS3 OR MCC (where necessary) The Proposed Contract Modification /Change Order is (tick):

ÿ ÿ

a) within the limit of the MCC/MCA-M BD mandate and has been authorized (attach supporting documents). b) Within the mandate of MCC/MCA-M BD and has NOT been authorized (attached supporting documents/reasons).

Signature of Procurement Manager:........................................................................................... Date:........................................................................................................................ (attach relevant copy of decision by MCC/MCA-M BD). The PROC M shall forward the Original to LC for legal Clearance. Modification Notification to Contractor/Supplier/Service Provider/Consultant. Distribution: Original: Contract File (with copy of transmittal letter to Contractor/Supplier/Service Provider/Consultant)Copy: MCA-M ED, PM, PROC M, CFO; LC, IE, FA, SE/ PROC M and PA;

1 2 3

Project Coordinator is required to confirm with the CFO that there is budgetary allowance. CFO signs ONLY if there is budgetary allowance and forwards to PM MCA-L BD and MCC approvals in accordance with current PPG. Page 75

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6.4

Replacing a Key Staff in Consultant Services Contracts

Contracts for consulting services provide for replacement of key staff where agreed in accordance with the provisions of the contract. MCA-M has to have an internal procedure for effecting the replacement. The following procedure shall guide this process: i. Either the IE, MCA-M or the Consultant may propose a change to Consultant Key Staff in accordance with the provisions of the Contract. To initiate a change, the party initiating the change – either the IE, PM or the Consultant must send a written request with explanation duly justifying the replacement to the other party, copies of the request should be sent to the PROC M and CA. The party receiving the request should review the request and determine if the proposed changes are warranted. The PM shall scrutinize the submission and advise the PROC M accordingly in the case where it originated with the Consultant. If the requested is considered plausible, the Consultant shall submit new staff curriculum vitae as provided for in the contract otherwise to the PROC M. The PROC M with the assistance of PA shall then convene with the PM and appoint three members among MCA-M and/or IE to constitute an evaluation panel. The members shall evaluate the CVs and ensure that the new staff meets or exceeds the minimum requirements of the originally proposed staff member. Approval of replacement staff shall be made by the authority that made the initial approval for the award of the Contract, with copy to the CA.

ii.

iii. iv.

v. 6.5

Claims Administration System

6.5.1 Basic Principles Claims are contested changes, mostly arising out of disagreement on a compensation for a change or if a change has even occurred. These claims have to be documented, monitored and managed throughout the life cycle of the contract in accordance with the terms and conditions of the contract. If MCA-M or the contractor, consultant, supplier or non-consultant service providers cannot agree on a claim, it may have to be handled through the dispute resolution procedures established in the contract. In some cases, this may lead to arbitration or even litigation. Success in claims depends largely on the quality and quality of information kept by the Claimant. Conversely, successful defense of claims is also dependent on the same on the part of the MCA-M. It is therefore important that IE, PMs manage the contracts such that at any time, relevant, information, data and any correspondence are well documented on file (in hard copy). As such, any correspondence with a contractor, consultant, supplier or service provider which has contractual implications should be done within and in reference to the relevant contract. PMs should always be conscious of the fact that any such documentation can be called upon when claims are
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submitted, or in case of a dispute or even during litigation. Claims are more common in construction contracts. These may include: i. ii. iii. iv. v. vi. vii. 6.5.2 Scope Change Claims; Differing Site Conditions Claims; Construction Delay Claims; Force Majeure Claims; Acceleration Claims; Design and Construction Defect Claims; and Suspension and Termination Claims.

General Procedures A claim should normally constitute a detailed submission by a contractor with the following information: i. ii. iii. iv. v. The basis for the claim including reference to contract clause(s) which provides the basis of the claim; Relevant facts of the claim justification of the claim; Verifiable cost and other data supporting the claim; Description of any additional compensation requested and justification; and Documents supporting the claim.

Once a claim has been received by MCA-M, it has to be scrutinized and an appropriate decision reached. The procedure for general claims administration shall be as follows, unless otherwise stated in the respective Conditions of Contract: i. Claims shall first be considered by the IE and PM who shall forward his/her opinion to the PROC M, LC and to the CA for consideration. The PM shall consider the following in submitting his/her opinion: a) That the relevant contract provides for submission of claims and that the submission is in accordance with the procedures stated or implied in the Contract; b) The Claimant must demonstrate that he has suffered loss, incurred additional costs or has been delayed due to occurrence of events specified or implied in the provisions of Contract; c) He/she must also demonstrate that the additional costs are sufficiently linked to the events set out in the Contract; d) The required compensation must be actual financial and not merely notional loss. The onus for the establishing grounds, completeness and providing supporting information rests with the claimant. MCA-M has no obligation to seek for additional information if that what is provided in the submission is considered insufficient. The Claimant must be able to provide evidence that additional costs were actually incurred or real loss has been incurred and not merely inferred; and e) The contractor must therefore attach supporting documents and justifications to the claim.

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ii.

Unless otherwise provided in the specific contract, such FIDIC contracts for works, the PROC M in consultation with the PA and CA shall scrutinize the claim for: a) Admissibility – that the claim has been submitted in accordance with the Contract and in reference to a clause in the Contract; b) Validity – it is genuine (it is not a fabrication) in that in implementing the contract, the consultant, supplier, service provider or contractor encountered a situation for which he is not responsible, and could not have been foreseen at the time of submission of his bid by a reasonable contractor and that this has led to additional costs and or delays to him; and c) Quantification (quantum of the claim) - That the claim has the necessary supporting documents for its quantification and that these documents can be considered genuine. The PROC M, after satisfying him/herself of the legitimacy and validity of the claim, shall consider the claim as a contract modification. The claim shall then be handled in accordance with the provisions of the contract.

iii. iv.

Claims for Works Contracts Claims are likely to arise mainly in works contracts. Modified FIDIC Conditions of Contract for Works which apply for MCC funded projects provide for specific procedure for handling claims as provided for under Clause 20.1. Claims shall require approval of the Employer. However, the Engineer will have determined the matter before seeking a specific approval. It should only be noted that the FIDIC conditions provide for a specific time frame within which the Engineer has to make a decisions, outside which the other party may refer the matter to the Dispute Adjudication Board. Under Clause 20 FIDIC requires that: a) A Contractor submits a notification of a potential claim to the engineer as soon as possible but not later than 28 days of becoming aware of the circumstances or event; b) Within 42 days of becoming aware of the event or circumstances, the Contractor shall submit a fully detailed claim; c) The Engineer shall respond with approval or disapproval of the claim within 42 days of receiving a full submission from the Contractor; and d) However, under Conditions of Particular Application (COPA) Sub-Clause 3.1 require that any approval that will lead to extension of time or additional costs need specific approval of MCA-M4. In some cases, it may be necessary to refer a claim to MCC or/and MCA-M BD for approval. Making decisions within the specified time frame is likely to be a major challenge, especially if the matter has to be referred to the MCA-M BD and MCC.

4

It is noted that Sub-Clause 3.1 of COPA does specify Sub-Clauses under which specific MCA-M approval shall be required. It is not clear as to what will be the case in the event that a claim is submitted under a clause other than those stated under Sub-Clause 3.1. The COPA´s need to be reviewed for every contract. Contract Administration Guidelines Page 78

6.6

Resolution of Disputes

Contractual disputes occur when a party to the contract does not agree with an action of the other party on the claim that the action is not in accordance with the contract. However, in most contracts, the specific situation that will be interpreted as constituting a dispute would be stated. For example, in the MCC standard conditions of contract for works modified from FIDIC Red Book state that: “If the Engineer does not respond within the timeframe defined in this Sub-Clause, either Party may consider that the claim is rejected by the Engineer and either Party may refer such claim to the DAB in accordance with Sub-Clause 20.4” DAB is the Dispute Adjudication Board appointed by both parties, in accordance with the procedures set out in the contract, to resolve disputes that arise in the course of the execution of the contract. In most contracts however, there are no clearly stated procedures for resolving disputes. For example, in a typical consultant service contract, the Disputes Resolution Clause requires that parties resolve their disputes amicably failing which the dispute may be referred to arbitration. There are no clear procedures prescribed for amicable settlement. In any case, such amicable settlement shall give priority to the primary project objectives as well as MCA-M interest. As guidance to resolving disputes, it is important to realize and acknowledge the fact that: · · · · Bidding and contract documents are not perfect and can be subject to interpretation; Keeping the larger objective in mind; Focusing on the facts and depersonalizing issues; and There must be willingness to make reasonable compromises within the provisions of the contract.

For larger contracts, a detailed description of dispute resolution procedures has been described. Under the MCC modified FIDIC Conditions of Contract (Red or Yellow Books) the procedure for appointing DAB within MCA-M in general shall be as follows: i. The IE and Project Manager shall identify three names of persons to be considered for the role. These names shall be submitted to the Project Manager. Such names could include adjudicators recognized by FIDIC as listed in the FIDIC President’s list of Adjudicators, in case of Contracts that use the FIDIC Conditions of Contract (see http://www1.fidic.org/resources/contracts/adjudicators/adjudicators.ht ml). The PM shall request CVs from the persons proposed as well as request for their willingness to be in the DAB without being committal. The IE and PM shall scrutinize the CVs in consultation with the PROC M, LC, PA and MCC as necessary to ensure that the persons proposed are:
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ii. iii.

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· · ·

professionals in the relevant area. i.e. health, water, etc. and are professionally registered as such; have played a similar role in the past for at least two projects of similar nature and size; and have no conflict of interest in the project as defined in the current Millennium Challenge Compact Program Procurement Guidelines.

The PM may require the IE to submit additional names as he considers necessary. iv. Once satisfied, the PM shall forward the names of the proposed DAB members to the MCA-M ED with his evaluation for approval and appointment, copy to PROC M and the CA. The PROC M shall receive an instruction from the MCA-M ED to write to the proposed member of DAB informing him/her of the appointment as well as forwarding the standard agreement for the Dispute Adjudication or Dispute Adjudication Board, as per provision of the Contract. The PROC M shall inform MCC of the proposal for their comments if any. It should be noted that in view of the fact once the DAB member has been appointed, there shall be a contract signed between MCA-M, Contractor and the Member. Necessary internal MCA-M contractual and financial arrangements need to be made The CA should be kept informed.

v.

vi.

6.7

Contract Termination

6.7.1 Definition Contract termination takes place when the parties to the contract are released from their contractual obligations. Contract termination may be effected in a number of ways which include by termination by breach of contract, by agreement between the parties by performance of the party’s contractual obligations and by frustration. In this section, procedures for contract termination arising out of breach of contract are presented. Termination clauses are usually inserted in contracts to give the right to any of the parties to terminate the contract provided sufficient notice of impending termination is given to the other party depending on specific provisions in the contract. 6.7.2 Reasons for Termination If the performance of the contractor is very poor, and all reasonable attempts to rectify the poor performance have failed, MCA-M may decide to terminate the contract in accordance with its provisions for such termination, after having received approval from MCC. Termination of the contract should be considered as a final recourse. To start the procurement process afresh can take considerable time and cause delays for the project and may result in higher costs. Efforts should be made therefore to communicate with the other party and to reach an agreement to resolve any
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situation of poor performance in accordance with the provisions of the contract. In any case, contractual loopholes that the contractor can take advantage of subsequent to the termination or process of avoiding termination have to be plugged. As soon as the contractor’s performance starts to deteriorate (delay in planned delivery dates or poor quality of deliverables), the PM and the IE, should act swiftly to remedy the problem. This may include calling, writing to or visiting the other party to ascertain the reasons for the delay or poor quality and then discussing the details to see what improvements can be made. If such agreement is not possible, or if the agreement is not respected, MCA-M may decide, as a last resort, to opt for termination of the contract. The CA should be informed of this decision. 6.7.3 Procedures for Termination 6.7.3.1 Procedures for Termination of Works Contracts

The steps for terminating a contract due to poor performance are as follows unless otherwise stated in the specific contract: a) The PM, in coordination with the IE and the CA, shall prepare a note to the MCA-M ED recommending termination and giving the contract history to justify the decision. The PM shall include necessary supporting documents including previous records of correspondence. A copy shall be made to the PROC M and to the CA. b) The PROC M shall consider and endorse the note (referring for advice first to PA and then to MCC where appropriate) and send it to the MCA-M ED for her/his endorsement. c) The MCA-M ED shall pass the note to the LC who, if in agreement with the note, prepares a Final Notice that informs the contractor that unless the matters relating to poor performance are resolved within the given notice period, then MCA-M intends to terminate the contract as stated in the contract. The notice period for the termination shall have been stated in the contract otherwise the letter should state the length of the notice period. For works contract the notice will be prepared by the Engineer for Large Works and by the MCA Project Manager for Small Works and certified by the IE. d) This Final Notice will be issued by the Employer and delivered to the Contractor strictly in accordance with the provisions of the contract, if any5. MCA will consult with MCC prior to the issuance of the Notice. The Notice shall be copied to the MCA-M ED, PM, PROC M; CFO, PA, the respective CA and IE and to the issuing bank of the Performance Guarantee. e) The PM in consultation with the IE and the Engineer shall continue to monitor the contractor’s performance during the Notice Period. If the matters relating to poor performance are not resolved, the PM shall write a note to the MCA-M ED, copy to the PROC M confirming that termination

5

FIDIC for example has very specific provisions for delivery of such notices. Page 81

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should take place. Where the contract allows and the situation warrants, a letter of suspension may be issued prior to the termination letter. f) The PROC M shall endorse the note and send it to LC who shall prepare a termination letter that shall be approved by MCA-M ED with copies to MCA-M ED, PM, PROC M; CFO, PA, FA, the respective CA and IE and will be issued by the Engineer. MCC should be consulted prior to the issuance of the termination notice. g) The termination letter shall be delivered using registered mail or any other similar method as provided for in the contract with a copy to the issuing bank of the Performance Guarantee. h) LC must begin legal procedures to enforce the performance security and to collect the sum of the guarantee declaring to the bank that the Supplier is in default under the Contract. i) The PM and the PROC M shall liaise in order to decide what action to take after the termination – e.g.; whether to re-launch the procurement or to find another contractor for the task. Throughout this process, care should be taken to ensure that there is a minimal contractual implication for which MCA-M is responsible. 6.7.3.2 Procedure for Termination for Goods Contracts

The steps for terminating a contract due to failure to perform its obligations on delivery of the goods are as follows unless otherwise stated in the specific contract: b) The PM in coordination with the IE and CA, shall prepare a note to the MCA-M ED recommending termination and giving the contract history to justify the decision. The PM shall include necessary supporting documents including previous records of correspondence. A copy shall be made to the PROC M and to the CA; c) The PROC M shall consider and endorse the note (referring for advice first to PA and then to MCC where appropriate) and send it to the MCA-M ED for her/his endorsement; d) The MCA-M ED shall pass the note to the LC who, if in agreement with the note, prepares a Final Notice that informs the Supplier that unless the matters relating to the performance of the Delivery of Goods and Completion of obligations are resolved within the given notice period, then MCA-M intends to terminate the contract as stated in the contract. The notice period for the termination shall have been stated in the contract otherwise e) The PM in consultation with the IE shall continue to monitor the supplier’s performance to remedy any failure during the Notice Period. If the matters relating to poor performance or delayed goods are not resolved, the PM shall write a note to the MCA-M ED, copy to the PROC M confirming that termination should take place. After the period for remediation stated in the note, the termination shall become effective immediately;
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f) The PROC M shall endorse the note and send it to LC who shall prepare a termination letter that shall be approved by MCA-M ED with copies to MCA-M ED, PM, PROC M; CFO, PA, FA, the respective CA and IE; g) The termination letter shall be delivered using registered mail or any other similar method as provided for in the contract with a copy to the issuing bank of the Performance Guarantee; h) LC must begin legal procedures to enforce the performance security and to collect the sum of the guarantee declaring to the bank that the Supplier is in default under the Contract; and i) The PM and the PROC M shall liaise in order to decide what action to take after the termination – e.g.; whether to re-launch the procurement or to find another provider for the goods. Throughout this process, care should be taken to ensure that there is a minimal contractual implication for which MCA-M is responsible. 6.7.3.3 Procedure for Termination for Services Contracts The steps for terminating a contract due to failure or poor performance are as follows unless otherwise stated in the specific contract: a) The PM in coordination with the IE and the CA, shall prepare a note to the MCA-M ED recommending termination and giving the contract history to justify the decision. The PM shall include necessary supporting documents including previous records of correspondence. A copy shall be made to the PROC M and to the CA. b) The PROC M shall consider and endorse the note (referring for advice first to PA and then to MCC where appropriate) and send it to the MCA-M ED for her/his endorsement.
c) The MCA-M ED shall pass the note to the LC who, if in agreement with the note, prepares a Final Notice that informs the Consultant that unless the matters relating to poor performance/or delayed deliveries are resolved within the given notice period, then MCA-M intends to terminate the contract as stated in the contract. The notice period for the termination shall have been stated in the contract otherwise the letter should state the length of the notice period. d) This Final Notice will be delivered to the Consultant strictly in accordance with the provisions of the contract, if any. .The Notice shall be copied to the MCA-M ED, PM, PROC M; CFO, PA, the respective CA and IE.

e) The PM in consultation with the IE shall continue to monitor the consultant’s performance during the Notice Period. If the matters relating to poor performance or delayed deliveries are not resolved, the PM shall write a note to the MCA-M ED, copy to the PROC M confirming that termination should take place. After the period for remediation stated in the note, the termination shall become effective immediately. f) The PROC M shall endorse the note and send it to LC who shall prepare a termination letter that shall be approved by MCA-M ED with copies to MCA-M ED, PM, PROC M; CFO, PA, FA, the respective CA and IE.
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g) The termination letter shall be delivered using registered mail or any other similar method as provided for in the contract. h) The PM and the PROC M shall liaise in order to decide what action to take after the termination – e.g.; whether to re-launch the procurement or to find another consultant for the task. Throughout this process, care should be taken to ensure that there is a minimal contractual implication for which MCA-M is responsible.

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SECTION VI: CONTRACT CLOSURE AND CONTRACTOR PAST PERFORMANCE SYSTEM

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7.0

Contract Closure and Contractor Past Performance System

7.1.1 Definition Contract closure involves both product verification (was all work completed correctly and satisfactorily in accordance with the contract) and administrative closeout (updating of records to reflect final results and archiving of such information for future). The contract terms and conditions may prescribe specific procedures for contract closeout. Early termination of a contract is a special case of contract closeout. 7.1.2 Procedure The following are key considerations for Contract Closure: i) MCA-M contracts will consider to have been completed when: · · · · All services have been rendered; All articles, material, and reports have been delivered and accepted; All administrative actions have been accomplished; and Final payment has been made to the contractor.

ii) Contract closeout actions are primarily the responsibility of the CA who has to certify that all services have been rendered satisfactorily and that all deliverables are acceptable. This certification is issued when inspection and acceptance has been performed by the IE. PM, PROC M and CFO also play important roles in confirming clearances of what is in their jurisdiction. LC also has to certify that all contractual matters have all been addressed. iii) Upon completion of the contract, the PROC M will initiate the contract closure process. The IE, the CA and PM must ensure that: a) All services have been rendered; all articles have been delivered and accepted. The contract file must include all inspection and acceptance documents or a statement from the IE and PM that accordance with the terms of the contract and are acceptable to MCA-M. Any discrepancies between performance or delivery and contractual requirements must be reconciled before the contract file is closed. b) All payments and collections have been made. The PROC M requests a confirmation of payments on listed contracts from FA through the Chief Finance Officer (CFO), identifying the total amount invoiced and paid. c) Release from liabilities, obligations, and claims have been obtained from the contractor. The file must also include documentation settling questions of disallowed or suspended costs or discrepancies between payments, deliveries, and billings. d) All administrative actions have been accomplished and documented
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-

If there was a subcontract, the file must contain the letter or document of approval and the subcontract review modification. Contract modifications resulting from additions or changes to contract terms and conditions must be included in the contract file. Records relating to MCA-M owned property, documentation regarding inventories, patents, royalties, copyrights, publications, and tax exemptions; and correspondence with other agencies must also be included in the contact file.

7.1.3 Contract Closure Documentation: Contract documentation includes, but is not limited to, the contract itself along with all supporting schedules, requested and approved contract changes, any contractor, consultant, supplier or nonconsultant service provider’s developed technical documentation, performance reports, financial documents such as invoices and payments records, and the results of any contract-related inspections and acceptance letters, claims if any, records of disputes, if any and outcomes of their resolution. A complete set of indexed records should be prepared for inclusion with the final project records. (contract closure form be attached-Annex 2). 7.1.4 Formal acceptance and closure: The IE, CA and PM responsible for contract administration should provide the contractor, consultant, supplier or nonconsultant service provider’s with formal written notice that the contract has been completed. However for works contract the Engineer or project Manager will issue the Performance Certificate or Completion Certificate. If the Engineer/Project Manager is not available, in that case the IE and PM may issue the Performance Certificate or Completion Certificate. Requirements for formal acceptance and closure will have been defined in the contract. 7.2 Contractor Past Performance Reporting System (CPPRS) MCC Contractor Past Performance Reporting System (CPPRS) in accordance with MCC Guidance on Reporting and Considering Past Performance by Contractors in MCA-M Program Procurements
(http://www.mcc.gov/documents/mcc-ppg-reportingandconsideringpastperf.PHf, April, 2008) requires that MCA-M provides periodic and regular reports on the

performance of contractors (works contractors, suppliers, consultants and nonconsultant service providers) who have been awarded contracts valued or estimated to be valued in excess of USD $100,0006 a past performance report on the contractor’s performance is prepared. A CPPR shall be prepared at the end of each contract irrespective of the duration of the contract provided its value is in excess of US$ 100,000, otherwise these shall be prepared on annual basis. CPPR shall be prepared quarterly if one or more aspects of performance are problematic during the period of contract performance. The implementation of the CPPRS, as a performance improvement tool, shall be performed as per the following guidelines, in order to serve as feedback tool. At least annually and as often as may be required: i.
6

PROC M will initiate and monitor the CPP process. The relevant PM within

Total value or estimated total value should be based on the base period of performance together with any option periods of performance. Contract Administration Guidelines Page 87

MCA-M shall accurately fill out a past performance report form for each eligible contractor (contract value > US$100,000) using the CPPRS Evaluation Form set forth herein (the “CPPRS Evaluation Form” – See Annex 4). ii. iii. iv. The PM shall submit the duly completed CPPRS Evaluation Form to the MCAM PROC M for review. The PROC M shall then review the report to ensure completeness and clarity, including placement of appropriate signatures on the CPPRS Evaluation Form. The PROC M shall forward the CPPRS Evaluation Form to the evaluated contractor for comments, if any. Notice will be deemed given when transmitted in accordance with the notice provisions in the evaluated contractor’s contract, which binds the contractor to being evaluated. From the time notice is given, the evaluated contractor is given up to 15 calendar days to provide comments, if any, and/or signatures. The CPPRS must be signed by the Contractor to complete the process. In case the contractor does not agree with the evaluation, the PROC M shall require the relevant PM to attempt to reach an acceptable consensus amicably, failing which the Contractor shall have the right to put in writing any contrasting comments with supporting evidence. Upon receipt of any comments and/or signature on the CPPRS Evaluation Form from the evaluated contractor, or if the time lapses for an evaluated contractor’s response without any such response, the PROC M shall forward the CPPRS Evaluation Form to the MCA-M ED, or whoever is acting in his or her capacity for review and final action. The MCA-M ED or the person acting in his/her capacity shall provide final disposition of the contractor’s evaluated performance, including any adjustments to the overall rating, he or she, in his or her discretion, deems appropriate. The MCA-M ED’s role here cannot be delegated. All CPPRS Evaluation Forms must be endorsed by the MCA-M ED or his or her designee prior to being forwarded to the Contracts and Grants Management Division at MCC Headquarters. The MCA-M then forwards a completed past performance record (“CPPRS Evaluation Report.”), via e-mail, to the Managing Director of the Contracts and Grants Management Division ([email protected] ) at MCC to be incorporated into the CPPRS database. The e-mail shall be copied to the CA and MCC Country Director for information.

v.

vi.

vii.

viii.

ix.

x.

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ANNEX 1: ORGANIZATIONAL CHART FOR PROJECT IMPLEMENTATION

MILLENNIUM CHALLENGE CORPORATION

MCA Mozambique MCC Mission Board Executive Committee Management Unit

FISCAL AGENT/ FUNDS CONTROL PROCUREMENT AGENT

Engine er Technical Issues

Implementing Entities

Vendors / Contractors

Technical Issues

LEGEND Engineers involved for Large Works Contracts only
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ANNEX 2

MOZAMBIQUE MILLENNIUM CHALLENGE ACCOUNT PERFORMANCE CERTIFICATION & RECORD OF NO-OBJECTIONS

CONTRACT CLOSE OUT FORM
Each no-objection/certification step is subject to proper certification of each previous step. Please complete your part ASAP and forward to next step.

Contract Identification

number: Name:

date:

amount: MCA-M project: Contract Modification/VO amount: Contract Modification/VO amount: Contract Modification/VO amount: Contract Dispute summary of dispute: summary of dispute resolution: amount: Final Contract Amount

MT/US$

Vendor

number: MT /US$ number: MT /US$ number: MT /US$ number:

date:

date:

date:

MT /US$ MT /US$

A - PERFORMANCE / DELIVERY If "No", short mention of unperformed or undelivered items:

COMPLETE

Yes

No

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Basis for closing-out if not completely performed/delivered:

(contract clause - obvious - verbal agreement - written correspondence - …) Other comments:

No-objection of Project Manager /Contract Manager for contract close-out:

name:
B - REQUEST FOR VERIFICATIONS FOR CONTRACT CLOSE OUT Comments if any:

signature:

date:

Name of Procurement Team Member:

signature:

date:

Procurement Manager:
C - LEGAL COUNSEL ENDORSEMENT THAT DISPUTES ARE SETTLED Comments if any:

signature:

date:

name:

signature:

date:

D - FISCAL AGENT CERTIFICATION Total amount paid:

Last payment:

date: MT/US$

MT/US$

Balance if any:
Comments if any:

MT/US$

reference:

FA's name:
no-objection:

signature:

date:

CFO's name:

signature:

date:

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E - PROPOSED RETURN OF PERFORMANCE SECURITY TO VENDOR (if applicable)

Proposed by Contract Manager: Project Manager's approval:

signature:

date:

signature:

date:

F - FINAL APPROVAL OF CONTRACT CLOSE-OUT

Contract Managers approval: Project Manager´s approval:

signature: signature:

date: date:

MCA-M ED's approval:

signature:

date:

G - ACTUAL RETURN OF PERFORMANCE SECURITY TO VENDOR

Project Manager/Contract Manager's approval: Legal Counsel Release:
H - PAYMENT OF RETENTION

signature: signature:

date: date:

Done by FA:

signature:

date:

I - DECOMMITMENT OF BALANCE OF FUNDS

Recorded by CFO:

signature:

date:

Recorded by FA:
J - ACTUAL DOCUMENT MOVEMENT

signature:

date:

PA/Team Member's approval: Procurement Team Member: Document Controller's /Archive Receipt:

signature: signature: signature:

date: date: date:

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ANNEX 3

MILLENNIUM CHALLENGE ACCOUNT MOZAMBIQUE CONTRACT ADMINISTRATION FORM (CAF) Sample Format for Contract Administration Form (Excel format shall be used)
PROJECT

IMPLEMENTING ENTITY: PROCUREMENT REQUISITION NO. CONSULTANCY SERVICES Contract Ref:

FUNDING:

TITLE: Consultant: Base Period Forecast Actual

Forecast

Option Year 1 Actual

Option Year 2 Actual Forecast

Option Year 3 Forecast Actual

Option Year 4 Forecast Actual

Date of Contract Signature Effective Date Factor7 Expected Effective Date Date of Mobilization Currency Total Contract Cost Duration Completion Date Contractor Performance Report Due Contractor Performance Report Issued Date of Completion
7

Contractual event that signifies effective date. Page 94

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Deliverables Deliverable 1: (Insert description) Deliverable 2: (Insert description) Deliverable 3: (Insert description) Deliverable 4: (Insert description) Deliverable 5: (Insert description)

Forecast Value Due date Value Due date Value Due date Value Due date Value Due date Date of MCC Approval Contract Modifications Date of Modification9 Revised Cost Revised Duration

Actual

Modifications8 Modification 1 Modification 2 Modification 3 Modification 4 Modification 5 Modification 6 Modification 7 Modification 8

Revised Completion Date

NOTES TO THE CONTRACT ADMINISTRATION FORM 1. The draft version of this template must accompany the Contract Cover Sheet. 2. Once the contract is signed this form must be updated with actual signature dates and revised deliverable dates. 3. The form should then be emailed to: the Project Manager, Procurement Manager and Fiscal Agent. 4. Diarise all key dates.
8 9

Contractual modifications or variations approved by relevant authority – either ED, MCA-M BD or MCC. Date of the approval of the modification or variation. Page 95

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5. 6. 7. 8.

From the contract, identify the period of notice required to exercise the Option Period and diarise at least 1 month in advance. Indicate in the PA's monthly report, the key deliverables/activities expected the next month for each contract. Monitor the diary entries on a monthly basis and advise the PM, by email, of each contract deliverable due the forthcoming month. Ensure the Contractor Performance Report is undertaken and submitted to the PROC M on time where applicable.

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ANNEX 4

MILLENNIUM CHALLENGE ACCOUNT MOZAMBIQUE CONTRACT ADMINISTRATION FORM (CAF) Sample Format for Contract Administration Form (Excel format shall be used)
IMPLEMENTING ENTITY: PROCUREMENT REQUISITION NO. WORKS Contract Ref: Contractor:
PROJECT FUNDING:

TITLE:

Modifications [2]
Actual

Date of MCC Approval

Date of BOD Approval

Modifications Date of Revised Cost Modification[3]

Revised duration

Revised Completion Date

Forecast

Date of Contract Signature

Effective Date Factor[1]
Expected Effective Date Date of Mobilization Currency Total Contract Cost Duration Completion Date Performance Security date Advance Payment Security date Insurance submission date

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Insurance due date Contractor Performance Report Due Contractor Performance Report Issued Date of Completion Invoices (BOQ measures and cost) Month 1: (Insert description) Due Date Value Due Date Value Due Date Value Due Date Value Due Date Value Due Date Value Due Date Value Due Date Value Contract Administration Guidelines Page 98 Forecast Actual Invoices (BOQ measures and cost) Month 14: (Insert description) Month 15: (Insert description) Month 16: (Insert description) Month 17: (Insert description) Month 18: (Insert description) Month 19: (Insert description) Month 20: (Insert description) Month 21: (Insert description) Forecast Actual

Due Date Value Due Date Value Due Date Value Due Date Value Due Date Value Due Date Value Due Date Value Due Date Value

Month 2: (Insert description)

Month 3: (Insert description)

Month 4: (Insert description)

Month 5: (Insert description)

Month 6: (Insert description)

Month 7: (Insert description)

Month 8: (Insert description)

Month 9: (Insert description)

Due Date Value Due Date Value Due Date Value Due Date Value Due Date Value

Month 22: (Insert description) Month 23: (Insert description) Month 24: (Insert description) Month 25: (Insert description) Month 26: (Insert description)

Due Date Value Due Date Value Due Date Value Due Date Value Due Date Value

Month 10: (Insert description)

Month 11: (Insert description)

Month 12: (Insert description)

Month 13: (Insert description)

NOTES TO THE CONTRACT ADMINISTRATION FORM 1. The draft version of this template must accompany the Contract Cover Sheet. 2. Once the contract is signed this form must be updated with actual signature dates and revised deliverable dates. 3. The form should then be emailed to: the Project Manager, Procurement Manager and Fiscal Agent. 4. Diarise all key dates. 5. From the contract, identify the period of notice required to exercise the Option Period and diarise at least 1 month in advance. 6. Indicate in the PA's monthly report, the key deliverables/activities expected the next month for each contract. 7. Monitor the diary entries on a monthly basis and advise the PM, by email, of each contract deliverable due the forthcoming month. 8. Ensure the Contractor Performance Report is undertaken and submitted to the PROC M on time where applicable.

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ANNEX 5

MILLENNIUM CHALLENGE ACCOUNT MOZAMBIQUE THE REPUBLIC OF MOZAMBIQUE

Contractor Past Performance Reporting System (CPPRS)
CPPRS EVALUATION FORM

CPPRS EVALUATION FORM [ ] Final [ ] Interim – Period Report: From _______________________ to ____________________________-Note: CONTINUATION SHEETS MAY BE USED IF MORE SPACE IS REQUIRED (See Rating Guidelines & Block-by-block Instructions below) 1. Contractor Name and Address: 2. Contract Number: _______________________________________________ _________________________ _______________________________________________ 3. Contract Value (Base _______________________________________________ plus Options): _______________________________________________ _________________________ 4. Contract Award Date: 1a. Country Location _________________________ _______________________________________________ 5. Contract Completion Date: __________________________ 6. Category of Procurement (Check all that apply) Goods [ ] Works [ ]Consulting Services [ ] Non-Consulting Services [ ] 6a. Subcontract (s)? yes [ ] no [ ] 6b. Consortium? Yes [ ] no. [ ] If yes, name of 1st Tier Sub If yes, name of other members: 7. Description and Location of Requirement:

8. Ratings. Summarize contractor performance and circle in the column on the right the number which corresponds to the performance rating for each rating category. Please see below for an explanation of rating scale. 0 A. Quality of the Product or Service Comments: 1 2 3 4 5

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B. Cost Control (Cost Reimbursement only)

Comments:

0 1 2 3 4 5 0 1 2 3 4 5 0 1 2 3 4 5 0 1 2 3 4 5 0 1 2 3 4 5

C. Timeliness of Performance

Comments:

D. Business Relations

Comments:

E.

Performance of Key Personnel: Name: ________________________ Employment Dates ____________________ Title: _________________________ Employment Dates ____________________ Comments/Rating: __________________________________________________________________________________________________ __________________________________________________________________________________________________ _______________________________________________________________________________________________ Name: ________________________ Employment Dates ____________________ Title: _________________________ Employment Dates ____________________ Comments/Rating: __________________________________________________________________________________________________ __________________________________________________________________________________________________ _______________________________________________________________________________________________ Name: ________________________ Employment Dates ____________________ Title: _________________________ Employment Dates ____________________ Comments/Rating: __________________________________________________________________________________________________ __________________________________________________________________________________________________ _______________________________________________________________________________________________ AVERAGE SCORE FOR 8E

0 1 2 3 4 5

9. VG. Score: (Add the ratings of 8A – 8E and divide by 5 or number of areas rated if less than 5)

10. Would you select this firm again? Please explain. 11. MCA-M Project Manager Name: ____________________________________________________
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Signature: _____________________________
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Phone/Fax/Internet Address: ____________________________________________________ 11A. Approval by the Procurement Manager: [ Signature ______________________________________________ _________________________________________ ] Yes Date:

Date: _____________________________ [ ] No

12. Contractor’s Review. Were comments or additional information provided? [ ] Yes [ ] No. If yes, please attach. Number of Pages of Attachment ____________________ 13. Contractor’s Name: _____________________________ Signature: Phone/Fax/Internet Address: _______________________________ ___________________________________________________ Date: _______________________________ 14. MCA-M Review. Were contractor’s comments reviewed by the Executive Director of the MCA-M?
[ ] Yes [ ] No. If yes, please attach comments of MCA Executive Director /ED. Number of Pages of Comments ______________________________

15. Final Ratings. Reassess the Block 8 ratings based on contractor’s comments and MCA Executive Director /ED review. Revise block 8 rating, if appropriate and indicate the new scores in areas A-E. B. Cost Control_________ C. Timeliness A. Quality ____________ _______________________ D. Business Relations ________________ E. Performance of Key Personnel___________ ________________ 16. Final AVG. Score (Add the ratings of 15A – 15E and divide by 5 or areas rated if less than 5). ___________ 17. MCA ED Name: ____________________________________________ Phone/ Fax/Internet Address: Signature: _____________________________ Date: _____________________________

Maputo: Av. Ahmed Sekou Touré nº2539, C.P. nº2038, Tel: (+258)21333920 Fax: (+258)21333921 Webside: http://www.mca.gov.mz | E-mail: [email protected]

END OF FORM

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Quality of Product or Service
0 = Unsatisfactory 1 = Poor 2 = Fair 3 = Good 4 = Excellent 5 = Outstanding Unsatisfactory Non-conformances are jeopardizing the achievement of contract requirements, despite use of MCA-M resources. Recovery is not likely. If performance cannot be substantially corrected, it constitutes a significant impediment in consideration for future awards containing similar requirements. Overall compliance requires significant MCA-M resources to ensure achievement of contract requirements. Overall compliance requires minor MCA-M resources to ensure achievement of contract requirements. There are no, or very minimal, quality problems, and the Contractor has met the contract requirements. There are no quality issues, and the Contractor has substantially exceeded the contract performance requirements without commensurate additional costs to the MCA-M. The contractor has demonstrated an outstanding performance level that was significantly in excess of anticipated achievements and is commendable as an example for others, so that it justifies adding a point to the score. It is expected that this rating will be used in those rare circumstances where contractor performance clearly exceeds the performance levels described as "Excellent".

Poor Fair Good Excellent

Outstanding

Cost Control (Cost Reimbursement only)
0 = Unsatisfactory 1 = Poor 2 = Fair 3 = Good 4 = Excellent 5 = Outstanding Unsatisfactory Ability to manage cost issues is jeopardizing performance of contract requirements, despite use of MCA-M resources. Recovery is not likely. If performance cannot be substantially corrected, this level of ability to manage cost issues constitutes a significant impediment in consideration for future awards. Ability to manage cost issues requires significant MCA-M resources to ensure achievement of contract requirements. Ability to control cost issues requires minor MCA-M resources to ensure achievement of contract requirements. There are no, or very minimal, cost management issues and the Contractor has met the contract requirements. There are no cost management issues and the Contractor has exceeded the contract requirements, achieving cost savings to the MCA-M. The contractor has demonstrated an outstanding performance level that justifies adding a point to the score. It is expected that this rating will be used in those rare circumstances where the contractor achieved cost savings and performance clearly exceeds the performance levels described as "Excellent".

Poor Fair Good Excellent Outstanding

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Timeliness of Performance
0 = Unsatisfactory 1 = Poor 2 = Fair 3 = Good 4 = Excellent 5 = Outstanding Unsatisfactory Delays are jeopardizing the achievement of contract requirements, despite use of MCA-M resources. Recovery is not likely. If performance cannot be substantially corrected, it constitutes a significant impediment in consideration for future awards. Delays require significant MCA-M resources to ensure achievement of contract requirements. Delays require minor MCA-M resources to ensure achievement of contract requirements. There are no, or minimal, delays that impact achievement of contract requirements. There are no delays and the contractor has exceeded the agreed upon time schedule. The contractor has demonstrated an outstanding performance level that justifies adding a point to the score. It is expected that this rating will be used in those rare circumstances where contractor performance clearly exceeds the performance levels described as "Excellent".

Poor Fair Good Excellent Outstanding

Business Relations
0 = Unsatisfactory 1 = Poor 2 = Fair 3 = Good 4 = Excellent 5 = Outstanding Unsatisfactory Response to inquiries and/or technical, service, administrative issues is not effective. If not substantially mitigated or corrected it should constitute a significant impediment in considerations for future awards. Response to inquiries and/or technical, service, administrative issues is marginally effective. Response to inquiries and/or technical, service, administrative issues is somewhat effective. Response to inquiries and/or technical, service, administrative issues is consistently effective. Response to inquiries and/or technical, service, administrative issues exceeds Government expectation. The contractor has demonstrated an outstanding performance level that justifies adding a point to the score. It is expected that this rating will be used in those rare circumstances where contractor performance clearly exceeds the performance levels described as "Excellent".

Poor Fair Good Excellent Outstanding

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Key Personnel
0 = Unsatisfactory 1 = Poor 2 = Fair 3 = Good 4 = Excellent 5 = Outstanding Unsatisfactory Personnel listed as Key were ineffective in the key position to which they were assigned. They were not effective or efficient in managing the project(s) under contract. Their qualifications were overstated for the effort we received in their critical area. They were consistently inaccessible to address critical issues. Deliverables were consistently late or unsatisfactory and did not meet the MCA-M needs. Personnel listed as Key were usually not effective in the key position to which they were assigned. There were many issues concerning the project(s) under their cognizance that were not addressed to the MCAM Entity’s satisfaction. They were often inaccessible to address critical issues in a timely manner. Deliverables were often late, of poor quality and/or not helpful towards the MCA-M’s needs. Personnel listed as Key were marginally effective in the key position to which they were assigned. They provided minimal effort required under the contract. They were inaccessible on occasion when critical issues arose and provided minimal support in addressing the issues. Deliverables were sometimes late or of mediocre quality and inconsistent in terms of whether they were helpful given the MCA-M’s needs. Personnel listed as Key were effective in the key position to which they were assigned. They were effective and efficient in managing the project(s) under contract as stated. They were accessible at key times to address critical issues. Deliverables were on-time, of adequate quality and met the MCA-M’s needs. Personnel listed as Key were highly effective and efficient in the key position to which they were assigned. They did an excellent job in managing the project(s) under contract. They were consistently inaccessible to address critical issues. Deliverables were consistently late, of poor quality and/or not helpful towards the MCA-M needs. Personnel listed as Key were extremely efficient and effective in the key position to which they were assigned and went over and above to help in other areas as well. They did an outstanding job in managing the project(s) under contract. They were always accessible to address and aid in solving critical issues that arose under the contract. Deliverables were consistently on time, of high quality and always met the MCA-M expectations.

Poor

Fair

Good

Excellent

Outstanding

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Key to filling the CPPRS
Block 1: Block 1a: Block 2: Block 3: Contractor name and address. Identify the specific division of the company being evaluated if there is more than one. Identify the country location where work is being performed. Contract number of contract being evaluated. Contract dollar value shall include base period plus all options. If funding is Increased, or decreased during the evaluation period, it should be reflected in the overall value. Contract award date. Contract completion date. Category of Procurement: Check all that apply. List the name of the 1st tier subcontractor, if applicable. List the members of the consortium, if applicable. Provide a brief description and location of the procurement. Circle rating in far right columns and provide a very brief narrative summarizing performance for the category being rated. Use the rating guidelines included herein. List the names and employment dates of the contractor’s key personnel. This provides a record of how long these managers worked on the contract. If there were many management changes, a second page may be necessary. On the comment/rating line, briefly describe and rate the overall performance of the Key personnel. Average the score for all key personnel and place in the space provided at 8E. Calculate the average score for 8A-E and enter under item 9. If given a choice, please explain why you would or would not select the contractor to perform work on behalf of the MCA-M again. Within the MC-T, it is intended that the Project Manager has completed blocks 1 through 10 and should sign this block. Within the MCA-M, it is intended that the Procurement Manager shall endorse this block, indicating that he/she has reviewed the initial report and rating and is in supports the report.

Block 4: Block 5: Block 6: Block 6a: Block 6b: Block 7: Block 8:

Block 9: Block 10: Block 11: Block 11A:

Block 12-13: Contractor’s Review: The contractor should be provided an opportunity to review and endorse the past performance report. Forward the completed report (through block 11A to the Contractor) and instruct them to review and sign the document on block 12 within not later than 15 calendar days of the date of your instruction to indicate receipt of the rating. If comments are unfavorable, the contractor must be afforded an opportunity to comment. More time may be granted, as reasonable, but should not extend beyond a maximum of 30 calendar days from the date of your instructions. Signature by the Contractor does not necessarily indicate agreement. If concern or disagreement is received from the contractor, additional MCA-M review at a level higher than the MCA Project Manager/Procurement Manager is required.

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Block 14:

MCA-M Review: This is the review by the ED of the MCA-M. Review cannot be delegated. Comments should be provided, as necessary. Attach additional pages as needed. After the MCA-M review, the ED computes a final rating, if necessary based on Contractor comments, and enters the final rating. The final rating may remain unchanged from the original rating of item 9, or it may be revised. Either way, a final rating is required to be entered here by the ED. Calculate the average score for 15A-15E and enter in this block. The MCA-M ED’s signature certifies that they have reviewed the entire file and have either concurred with the original rating or established a different final rating. Once complete with this process, the record contains the original report and rating signed by the Project Manager, endorsed by the Procurement Manager, with a signature reflecting review, and comment if necessary, by the contractor, as well as, a final rating and signature of a MCA-M ED with comments, as necessary. This entire package should be e-mailed to the Managing Director of the Contracts and Grants Management Division at MCC Headquarters (at the e-mail address found on the main www.MCC.gov website under the Procurement Link: http://www.mcc.gov/ procurement/index.sdp.

Block 15:

Block 16: Block 17:

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ANNEX 6GOODS RECEIPT FORM NAME OF THE ORGANIZATION: MCA - MOZAMBIQUE PURCHASE ORDER NR.: NAME OF THE PERSON RECEIVING THE GOODS: DESIGNATION OF THE PERSON RECEIVING GOODS: PHONE NUMBER OF PERSON RECEIVING GOODS: ARE ALL LINE ITEMS SUPPLIED AS PER PURCHASE ORDER CONDITIONS OR NOT IF NOT PROVIDE COMMENTS QUANTITY OF GOODS (AS PER PURCHASE ORDER OR NOT) COMPLIANCE WITH SPECIFICATION

ITEM NR.

ITEM DESCRIPTION

DELIVERY PLACE

STORAGE LOCATION

1

2 COMMENTS/RECEIPT:

RECEIVED BY (SIGNATURE)

DATE OF RECEIPT

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Annex 7. Contract Administration Information Flow Chart
Procurement Agent (PA) prepares the Contract Administration Form (CAF) immediately after Contract Signature and sends it to the Procurement Manager

PROC M Examines the submission – s/he may consult with other experts under her /his disposal.

Is the CAF complete and accurate?

PROC M returns the form to the relevant PA with relevant comments for amendment

PROC M submits CAF to relevant PM for use in tracking Contract Performance- PA

PA includes list of contract deliverables in the monthly reports to PROC M for information and action

PM uses the CAF to record and track contract performance

PROC M sends regular notifications to the relevant PM based on the basis of

Feedback Are contractors performing/adhering to the delivery schedule? Feedback PM takes appropriate contractual steps after consulting PROC M, Legal Counsel and MCC where necessary

PM keeps monitoring until the contract is successfully concluded.

PM ensure that the date of actual completion is indicated in the CAF and cc sent to PROC M after Contract Completion

PROC M Files a copy of the CAF in the relevant Procurement Files for Audit purposes.

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Annex 8. Contract Modification/Change Order Flow Chart
Variation process (1)
Day 1 Week 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Week 2 Day 8 Day 9 Day 10 Day 11 Day 12 Week 3 Day 13 Day 14 Day 15 Day 16 Day 17 Week 4 Day 18 Day 19 Day 20

Engineer finalises a VO with oversight from PA. VO

Engineer submits it to MCA

MCA forwards to PM and ED

ED passes VO to FA & PA & Eng. as Project Amdinistrator [2 days]

FA & PA each receive a copy

within limits of Engineer's authority
to instruct, or accept a proposal, for a Variation

PM reviews VO. If satisfied passes to ED for action [2 days]

Engineer sends copy to IE Engineer sends copy to ESR Engineer sends copy to ESR ESR recommends to accept or reject VO [2 days] ESR recommends to accept or reject VO [2 days]

IE finalises recommendation s & comments to accept or reject the VO and passes to PM [2 days]

Engineer sends copy to IE Engineer finalises a VO with oversight from PA. VO

IE finalises recommendation s & comments to accept or reject the VO and passes to PM [2 days] copied to MCC for early warning PM reviews VO. If satisfied passes to ED for action [2 days] copied to MCC for early warning ED approves for submission to MCC and Board [2 days] Board Approval when required in accordance to MCC Procurement Guidelines [3 working days] (2)

outwith limits of Engineer's authority

Engineer submits it to MCA

MCA forwards to PM and ED

Engineer sends copy to MCC

MCA start to consider the VO and prepare for approval process

MCC no objection when required in accordance to MCC Procurement Guidelines[5 working days] (3)

No Objection received by ED who passes to Engineer & FA & PA

FA & PA each receive a copy

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Key PM Project Manager ED Executive Director ESR Employer's Site Representative PA Procurement Agent FA Fiscal Agent VO Variation Order Days Working days Lightly shaded arrows represent early warning of impending need to take urgent action Notes 1 No loop back in the process has been considered for correction or modification to a previous stage. So, the above might be a best case scenario if an individual VO (i) raises a contract which did not require approval treshold, or (2) extends the original contract duration by 25% or more, or (iii) increases the original contract value by 10% or 2 1 million USD or more (whichever may apply) if an individual VO (i) raises a contract which did not require approval treshold, or (2) extends the original contract duration by 25% or more, or (iii) increases the original contract value by 10% or 3 1 million USD or more (whichever may apply). Once the 10% contract (or 1 million USD) treshold has been reached, any subsequent VO that individually or collectively exceeds 3% of the original contract value will also require MCC approval

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ANNEX 9: IPC PROCES

Inputs from MCA Independent Engineer Clea ranc e of Certi ficat ions

Millennium Challenge Account – Mozambique (MCA)

MCA Project

C o or di n at io

Copy of Certification

C e rt if ic a

R e vi si o n

Engineer
Su b mi ss io ns

Implementing Entities

R ev isi o n

Preparation of measurements by the Contractors for Certification
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ANNEX 10: MCA-M and IE RESPONSIBILITIES UNDER CONTRACT ADMINISTRATION – GOODS CONTRACTS

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ANNEX 11: MCA-M and IE RESPONSIBILITIES UNDER CONTRACT ADMINISTRATION – SERVICES CONTRACTS

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