Understanding Procurement
With Hamat B. Bah
In today’s article we intend to give more guidance on the different steps to follow in becoming a successful government Supplier, Consultant or Contractor.
- Register Your Business Properly
Following the successful registration of your business with both the Ministry of Justice and The Gambia Public Procurement Authority (GPPA), you need to do the following:
- Introduce your business to government entities. Write and submit introductory letters with your business profile to as many institutions/offices as possible. This will inform government buyers of the packages and customer care services you are offering.
- Build relationship with other businesses that have been in the industry before you. Being new in a business sector could be challenging. The wise would start small and grow big. You can accept sub-contracts or Joint Ventures to gain experience and build relationships.
- Join industry Associations. This can help your business gain recognition and access support meant for businesses which fall under categories like Small and Medium Enterprises, Women Owned Business, Minority Groups Owned Businesses etc.
- Monitor Procurement Notices on the media. Usually, these notices are published on the print media. However, many government buyers have started using online platforms such as Facebook, Gamjobs, WhatsApp etc advertisements to reach the general population.
To avoid losing business opportunities, you are advised and encouraged to actively monitor all media platforms i.e. print and electronic.
- Familiarize yourself with the role of The Gambia Public Procurement Authority (GPPA) as the oversight government institution responsible for regulating public procurement. The GPPA offers a lot of opportunities to vendors, consultant and contractors ranging from training, advisory to arbitration in case of dispute.
How Are Procurement Opportunities Advertised?
It is important for every prospective Vendor, Consultant and Contractor to know how each Procurement opportunity will be advertised. This is helpful in the sense that it guides businesses on how to respond to any procurement opportunity advertisement.
Other than the Single Source Procurement Method which requires only one submission. All other Procurement opportunities may require advertisement. However, The Gambia Public Procurement Act and Regulations gives the permission to go ahead without advertising under certain conditions.
Procurement opportunities are advertised using the following:
- Request For Quotations (RFQ). In this type of advertisement, the buyer would request interested businesses to submit quotations for a certain quantity of items with their specifications. Or the advertisement may contain a statement that would instruct potential bidders to obtain the specifications from a particular address. Every Request For Quotations has a deadline for which all quotations must be received. The deadline would have a clear and explicit stipulated date and time. Being conscious about deadlines is very significant when participating in a procurement process. Late submissions will be rejected after a lot of resources, time and effort has been invested.
Once your quotation is approved to be the most responsive and you sign the contract, you will be given a contract to sign. The contract may be a detailed contract document or a Purchase Order. The signing of this document is an acceptance and commitment to the attached terms and conditions. The signed contract becomes legally binding to you and the buyer. Therefore, a failure to fulfil your obligations can result to a legal action. If goods are delivered and accepted, then the next step is to get your Delivery Note signed by the buyer. The signed delivery note would then be attached to the invoice and submitted for payment.
Often, suppliers find it difficult to differentiate a quotation from an invoice. Most would assume that the quotation/ proforma they submitted is enough to make payment. The result of such misconception would result in the delay of the payment.
What is the Difference between a quotation/ pro-forma and an invoice?
A quotation and an invoice are both business documents, but they are used at different stages of a transaction and serve different purposes.
🔹 Quotation (Quote)/ Pro-forma
A quotation is a price offer given before a sale happens.
- It tells a potential buyer how much goods or services will cost
- It usually includes item details, prices, taxes, validity period, and terms
- It is not a demand for payment. It cannot be used for payment
- It helps the buyer to decide whether to proceed or not.
- A quotation is not legally binding.
- It can be negotiated
🔹 Invoice
An invoice is a bill issued after a sale or service is completed and approved to have complied with the requirement and terms in the contract.
- It requests payment from the buyer. Unlike the quotation, the invoice is used to process the payment for the goods or services received.
- The invoice would Include: final amount due, payment terms, due date, invoice number
- The invoice is a legal document for accounting and payment tracking
- It is often used for record-keeping and tax purposes by the supplier and the buyer.
- It is a legally recognised document used to demand for payment.
As was stated earlier, many people would after the fulfilment of their contract obligations do not submit their invoices. They would think that the quotation they submitted will be used to make the payment. This can result in delay in the payment. Another important thing is the date of the invoice. Your invoice should be dated on or after the date of the delivery.
Quotation validity: This refers to the period within which the prices on the quotations are acceptable. The validity should be written on the quotation to indicate that after the validity period if decision is not made, the prices may change due to market conditions.
Taxes: Tax payment compliance is mandatory. There are difference type of tax that would be paid during a business transaction. The most applicable ones in The Gambia are Value Added Tax(VAT) and Withholding Tax.
Value Added Tax ( VAT). A 15% VAT has to be charged by all VAT registered businesses on every transaction except where a buyer is exempted from paying tax. Buyers like Diplomatic Missions and Donor Agencies are usually exempted from paying tax. Where that is case, you may request for their tax exemption letters. For some instances, a tax exempted buyer may pay the VAT and later claim for reimbursement from The Gambia Revenue Authority- GRA.
Withholding Tax: it is a tax that is deducted at the source of income before the money is paid to you. It is mandatory on al government buyers to deduct withholding tax from invoice payments. The amount deducted which shall be a percentage set by GRA will be paid to the Revenue Authority on behalf of the business entity. In return, a Withholding Certificate is given to the business to present to the Revenue Authority. This is a system of making sure taxes are collected in advance to minimise tax evasion.
Always capture taxes in your prices to avoid running into losses after tax deductions
Receipt: A receipt is a legally accepted document that business entities issue after receiving a payment. The receipt is a proof that the payment has been paid and received. The amount on the receipt should be exact amount received not the amount on the invoice. The two amount would not be the same because of the withholding tax deduction.