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KUWAIT OIL COMPANY

POLICIES AND REGULATIONS
OF PURCHASING

Issued by:
PURCHASING TEAMS
COMMERCIAL AFFAIRS GROUP
KUWAIT OIL COMPANY (K.S.C.)

Issue No. 3
December 2008

KOC POLICIES AND REGULATIONS FOR PURCHASING
C & MD’s Letter
Issue No. 3

Page 1 of 1
Date : December 2008

CHAIRMAN AND MANAGING DIRECTOR’S LETTER
Enclosed is a document of Kuwait Oil Company Policies & Regulations of
Purchasing. All activities undertaken should be clearly aligned with the
organization’s mission.
To explore, develop and produce, marketable quality of hydrocarbon resources, of
the State of Kuwait in accordance with the government policy, good reservoir
management practice and by using the most effective, efficient and economical
means available.
All dealings and relationships with vendors/suppliers and officials shall be
conducted in an ethical manner, meeting all relevant Kuwait Petroleum
Corporation’s Policies, Legal and State Regulative requirements. Our dealings and
relationships should always be such that Kuwait Oil Company’s high standards and
good reputation is maintained, employing high-tech means, wherever possible.
You have a duty to both, yourself and the Company, to ensure that the Kuwait Oil
Company’s Policies & Regulations of Purchasing are followed. Any matter related
thereto, which causes concern or uncertainty should be raised with Purchasing
Team, who is responsible for implementing the Company’s policy in this regard.
Communications between Kuwait Oil Company and vendors/suppliers during the
period of contractual negotiation must always be handled objectively. Unless
otherwise clearly specified, all communications on purchases should always be
conducted through Purchasing Team.
Please ensure that this statement along with the Kuwait Oil Company’s Policies &
Regulations of Purchasing is brought to the attention of all employees and other
relevant personnel involved in the handling and administration of Kuwait Oil
Company’s Procurement.

________________________

Sami Fahed Al-Rushaid
Chairman & Managing Director
Kuwait Oil Company (K.S.C.)

KOC POLICIES AND REGULATIONS FOR PURCHASING
Contents
Issue No. 3

Page 1 of 1
Date : December 2008

CONTENTS
•THE PURPOSE OF THIS DOCUMENT
•STANDING INSTRUCTIONS
•SECTION 1:

DEFINITIONS

•SECTION 2:

MATERIAL REQUEST & TERMINATION

•SECTION 3:

COMPETITIVE PROCUREMENT

•SECTION 4:

BLANKET PURCHASE ORDER

•SECTION 5:

SINGLE SOURCE PROCUREMENT

•SECTION 6:

REPAIR ORDER

•SECTION 7:

EMERGENCY/MAJOR INCIDENT PROCUREMENT

•SECTION 8:

VITAL PROCUREMENT

•SECTION 9:

PURCHASE ORDER REVISION

•SECTION 10:

CANCELING PURCHASE ORDER

•SECTION 11:

LIQUIDATED DAMAGES

•SECTION 12:

CLAIMS

•SECTION 13:

INVOICE

KOC POLICIES AND REGULATIONS FOR PURCHASING
The Purpose of This Document
Issue No. 3

Page 1 of 1
Date : December 2008

THE PURPOSE OF THIS DOCUMENT
1.

This document details Kuwait Oil Company’s Policies and Regulations
for procurement of materials.

2.

The Policies and Regulations are defined to ensure a professional
approach to procurement process.

3.

A summary of the main activities involved in the Kuwait Oil Company
procurement process is specified in this document. Should further
clarification be required, details may be sought from Purchasing Teams
who are responsible for implementation of the Kuwait Oil Company
Policies and Regulations of Purchasing.

KOC POLICIES AND REGULATIONS FOR PURCHASING
Standing Instructions
Issue No. 3

Page 1 of 9
Date : December 2008

STANDING INSTRUCTIONS
1.

Introduction
1.1

This document shall be the only valid set of directives and
procedures for purchasing activities. Any other previous
documents shall be treated as null and void.

1.2

Regulations specified are mandatory. Should there be a need to
deviate from any specific directives; prior authority must be
obtained from the Chairman & Managing Director.

1.3

Amendments to Policies and Regulations shall be processed
through Manager (Commercial Affairs).

1.4

This document is designed to ensure that:
1.4.1

1.4.2

Kuwait Oil Company’s Procurement Policies and
Regulations are clearly stated and applied. Best interests
of Kuwait Oil Company and its personnel are served and
protected.
Administration of procurement activity is as simple and
cost-effective as possible.

1.5

Level of authorities contained in this document is governed by
Kuwait Oil Company (KSC) “Executive Delegation of Authority”
effective and any subsequent amendment thereto.

1.6

Policies and Regulations shall be implemented in conformity with
the Public Tenders Law No. 37/1964, Resolution No. 5/79 of the
Council of Ministers (Supreme Council for Petroleum), and as
amended by Resolution No. 1/2005, the KPC Higher Tender
Committee’s Terms of Reference, the K-Companies Tendering
Regulations and Terms of Reference and KOC’s Executive
Delegation of Authority and shall not be implemented in isolation
therefrom.

KOC POLICIES AND REGULATIONS FOR PURCHASING
Standing Instructions
Issue No. 3

2.

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Date : December 2008

Purchasing Objective
The objective is to procure the required material with the desired quality
and delivery date at most favourable terms, whilst observing the State
Laws and Company Regulations.

3.

Material Requirement
3.1 Controlling Team is responsible for requesting the material.
3.2 The value of the materials being purchased, shall determine the level
of authorization required, and the procedures to be followed.
3.3 Catalog ID shall be described fully and clearly, with out any
ambiguity. Under no circumstances the material may be described in
a manner, which may lead to splitting into smaller quantities to bypass, the approvals procedures depicted within this document or to
circumvent Executive Financial Delegation Authority.
3.4 No request for procurement shall be issued unless there is a clear
intent to procure the material specified.

4

Purchasing Technical Responsibility
Purchasing Teams, wherever applicable in liaison with the Controlling
Teams, shall be responsible for the following technical aspects concerning
procurement of materials.
4.1 Review of specifications prior to RFQ processing.
4.2 Handle prospective Bidder’s technical queries (if any) raised before the
closing dates of RFQs.
4.3 Technically evaluate the Bids for Store Stock materials and vet the
Controlling Team’s evaluation for direct Charge materials.
4.4 Handle supplier’s post PO award technical queries, if any and review
technical documents (like data sheets, drawings etc) as and when
required.

KOC POLICIES AND REGULATIONS FOR PURCHASING
Standing Instructions
Issue No. 3

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Date : December 2008

4.5 In agreement with Controlling Team and supplier amend item
description or cancel item as and when required.
4.6 As and when required to review and comment on Material Inspection
Report (MIR) issued by Warehouse Team.
4.7 Prepare / amend Scope of Inspection (SOI) as and when required.
4.8 Nominate Third Party Inspection (TPI) & review interim & final
inspection reports; and handle any technical question raised by the
TPIA.
5

Competitive Procurement
5.1 The Company’s policy is to seek competitive bids from suitable,
competent and independent vendors, unless a clear and acceptable
justification can be made for single source procurement or for direct
negotiation with a single vendor.
5.2 Normal competitive procurement methods shall be applied for the
selection of vendors, except where single source procurement has
been approved. However, for those items where a list of approved
manufacturers is available, the vendors shall be restricted to submit
their quotations accordingly.
5.3 Bidders must be legal entity, trader whether a person or a company
and be fulfilling the stipulated Kuwaiti Labour Ratio at the time of
submitting the bid with regard to local companies and corporations as
well as the registered agents of foreign companies in case of
performing such works in Kuwait.
5.4 Where the bids are received by KOC, it is permissible that a foreign
corporation or company submit a bid in tender provided that it shall
be registered in the Chamber of Commerce & Industry in the country
it belongs to and perform the required tasks.

The following factors are to be judged adequately for the materials/services to be undertaken: .1 Relevant vendors should only be given the opportunity to tender if there is intent to award Purchase Order to them.Quality . in the event that their offer is most advantages.Safety . 7.KOC POLICIES AND REGULATIONS FOR PURCHASING Standing Instructions Issue No. 7.Management Competence . Vital or Emergency/Major Incident material requirement may be processed on fast track basis.Financial Standing .3 Purchasing Teams shall abide by the above directives when initiating the procedures for sourcing or selecting potential vendors. Selection of vendors shall be made from: .4 The number of vendors invited to tender shall be in accordance with the number specified in the internal manual of Purchasing.Technical Capability .5 It is the Company’s policy to obtain quotations from a number of suitable and experienced vendors. where some of the normal internal procedures may be bypassed.Environmental Management Capability. shall be carried out in conjunction with Purchasing Teams who are responsible for ensuring that selection of vendors is carried out objectively. Page 4 of 9 Date : December 2008 Emergency/Major Incident and Vital Procurement Under special circumstances and subject to appropriate approval. 7. 7. 3 6. if required.2 Pre-selection exercise. Selecting Potential Vendors 7. 7.

8. Copies of all such information shall be forwarded to the Purchase Order file.2 The “product list” categorizing vendors for the required commodity. where number of listed vendors exceeds the invitees categorized under the commodity. Records of Meetings Kuwait Oil Company representatives shall produce minutes of all formal meetings with vendors before and after the award of any Purchase Order. except for “Cash Purchases” and Budgetary Quotations.3 Due consideration shall be given for maintaining invitation by rotation.5. 3 Page 5 of 9 Date : December 2008 7. 9 Contact with Vendors 8. Generally all responses to pretender queries of whatever nature from and to any vendor should be sent to all vendors. . Controlling Teams are strictly forbidden from obtaining verbal or written quotations or clarifications related to RFQs / POs directly from the vendors under any circumstances.1 All correspondence and communication related to procurement with vendors shall be directed through Purchasing Teams. It is also essential that minutes of important formal meetings where any specific agreements of authorized personnel are reached. records of all informal meetings shall also be kept in the form of a file note.5. During the operation of a Purchase Order. 8. 7. instructions or clarifications given or important technical/commercial issues discussed.5.2 Under no circumstances must a vendor be given information that would favour or handicap him in relation to other vendors for the Request for Quotation/Purchase Order. shall be agreed or amended as required at subsequent meetings.1 Those vendors with valid registrations with Kuwait Oil Company for the current year.KOC POLICIES AND REGULATIONS FOR PURCHASING Standing Instructions Issue No. 7.

Adjustments or any other Revisions.1 Information about vendors.2 Supply of material should not commence until a formal Purchase Order has been issued. internal financial estimates and intentions to and reasons for award of a Purchase Order are STRICTLY CONFIDENTIAL and shall only be disclosed on a “need to know” basis. This includes compliance to specification.KOC POLICIES AND REGULATIONS FOR PURCHASING Standing Instructions Issue No. except in case of Emergency/Major incidence as described in Section 7. the lowest bid. Blanket Purchase Order Control & Administration 12. which meets the commercial and technical specification requirements. 12. 3 10. 11.2 The Controlling Team shall be responsible either directly or through its nominated and authorized representative. Page 6 of 9 Date : December 2008 Confidentiality 10. the Controlling Team shall ensure that such changes are clearly defined and that Purchasing Teams are promptly informed for necessary processing. It is also responsible for ensuring that adequate records are maintained of Blanket Purchase Order usage & cost and its progress.2 No information about any vendor shall be disclosed to other vendors. quotations received. to ensure that the scope of work of the Blanket Purchase Order is carried out in accordance with the contractual requirements. shall always be accepted. schedules and other aspects such as site safety and security. 11. Where Blanket Purchase Order requires.1 For competitive procurement. the Controlling Team shall be responsible for applying adequate controls in accordance with sound commercial practice and the procedures outlined in this document.1 Following an award of Blanket Purchase Order. . 10. 12. Purchase Order Award 11.

Where the Controlling Team is able to resolve such difficulties. 12. Controlling Team shall have regular meetings with the supplier in order to ensure that all activities are planned and that progress is being effectively monitored and recorded. at all times accurately reflect. 12. prior to approval for settlement. 13 Claims In the event of a supplier claim. 3 Page 7 of 9 Date : December 2008 12. properly describe and promptly record the contractual transactions undertaken. 12.5 In the event of serious misconduct by the supplier.3 Where appropriate. . as per Executive Delegation of Authority. the Superintendent of the Blanket Purchase Order shall be responsible for ensuring that a thorough and fair evaluation is carried out prior to seeking any necessary approvals. adequate records must be kept to justify all transactions that take place with the supplier. All claims shall be forwarded to Purchasing Teams for further review and consultation. In particular. Compliance with prescribed accounting systems and rules is required to ensure that all accounts. who will take appropriate action and advise the Controlling Team accordingly.6 All personnel responsible for the handling and administration of contractual relationships of whatever value must ensure that there is an adequate system of internal control in place and that measures are instituted to ensure compliance with Company’s policies and regulations. the Controlling Team shall advise Purchasing Teams without delay and provide evidence.4 In cases of supplier’s poor performance. or breach of contract terms and conditions or failure to resolve any other difficulties. 12.KOC POLICIES AND REGULATIONS FOR PURCHASING Standing Instructions Issue No.7 No agreement shall be let or scope changed without confirmation of the availability of funds in accordance with company procedure. Controlling Team shall promptly inform Purchasing Teams. the Purchasing Teams should be advised of actions taken to remedy the situation.

shall be referred to Legal Affairs for review and concurrence. 15. 16. parent company guarantees.. 15. . 16. Page 8 of 9 Date : December 2008 Contract Closure Every contract shall be closed only with sufficient documentary evidence indicating that all work has been carried out and that financial settlements have been made upon completion of the work and rectification of any defects. including documents concerning appraisal of quotations received.3 All documentations related to disputes shall be maintained until respective disputes are resolved. shall be kept in safe storage and shall be made available for reference as and when required. 15.2 All Requests for Quotation documentation. entity. 3 14. Such documents. all contracts shall be made under the current version of the relevant Kuwait Oil Company published General Conditions of Contract for Procurement. shall be retained by Purchasing Teams for a period of 10 years from the date of completion of the Purchase Order. amendments etc. Forms of Contracts/Purchase Order 16.1 Purchasing Teams shall be responsible for the storage of all original Purchase Order documents. including original of Purchase Order. Storage and Retention of Documents 15. amalgamation etc.1 In general. due to change of status.2 Purchasing Teams shall be responsible for the updating of the General Conditions of Contracts for Procurement. 16.3 Any proposed new agreement between Kuwait Oil Company and the supplier.KOC POLICIES AND REGULATIONS FOR PURCHASING Standing Instructions Issue No.

Page 9 of 9 Date : December 2008 Responsibilities 17. The Superintendent of the Blanket Purchase Order shall ensure that all necessary advise and approvals are obtained as appropriate. In this case each one shall be responsible for the part under its control. Custodian of Policies & Regulations Manager (CA) is the custodian of the electronic copy and responsible for implementing the approved amendments.1 The nominated Superintendent of Blanket Purchase Order and Purchasing Teams shall be responsible for ensuring that the contract is strictly administered in accordance with Kuwait Oil Company’s Policies and Regulations.KOC POLICIES AND REGULATIONS FOR PURCHASING Standing Instructions Issue No. Nothing in this document shall imply that this responsibility is shared with or partially held by any other person or Group unless the contract has more than one Superintendent. 19.2 Delegation of Financial Authorities for all aspects of agreement administration shall be strictly in accordance with Kuwait Oil Company Executive Delegation of Authority. 3 17. . 17. Communication with State Authorities All relevant communications with external authorities such as Kuwait Petroleum Corporation and Central Tenders Committee relating to tender and contract administration shall be carried out through Commercial Affairs Group. 18.

Legal Affairs Group Rep.000/2.Sister K Company Rep.000/-. (Two) . 1. KOCTC Secretary – DMD – Manager (Commercial Affairs) . Kuwait Oil Company .KOC POLICIES AND REGULATIONS FOR PURCHASING Section 1: Definitions Issue No. as applicable to issue and award tenders and Agreements (including those exempted from KPCHTC and/or CTC). Approval of Purchase Order Amendments and Adjustment Orders and other related issues.000.30.1 KOCTC convenes once a week to review and endorse submissions.Team Leader Contracts Services 4.000/-. from Purchasing Teams for procurements in excess of KD.000. (Two) . Kuwait Petroleum Corporation Higher Tenders Committee (KPCHTC) KPCHTC reviews and approves all procurement in excess of KD. Also reviews and approves adjustment orders with variation of more than 5% for purchase orders in excess of KD.5. (One) . 4. 5. 3. 3 Page 1 of 8 Date : December 2008 SECTION 1: DEFINITIONS 1. 30.000.3 KOCTC Terms of Reference:4. which reviews all documents related to procurement of material with estimated value in excess of KD. Central Tenders Committee (CTC) CTC reviews and approves all procurement of value in excess of KD. State Legal Department State Legal Department is the Department of Legal Advice and Legislation of the Council of Ministers.000/-.Tenders Committee (KOCTC) 4. .000/-.2 KOCTC shall comprise of seven members as follows: Chairman Deputy Chairman Members (five) should include.3.1 Ensure sound implementation of Kuwait Oil Company’s Policies and Procedures for Contracts and Purchasing. 4.others as designated.

Request for Quotations or Purchase Orders. then the Chairman of the Committee’s meeting will have the casting vote. 5. Kuwaitization requirements of contractor’s manpower and the like.3. 4. The Committee shall record the bids in the . endorse the Controlling Team’s recommendations for issue of tenders including approval of bidders’ list.6 Handle any other issues related to tendering as requested by C&MD. 4. 7. Kuwait Oil Company Tenders Committee Secretary Appointed by KOCTC to execute functions as delegated.3. 6.1 The Bids Opening Committee is delegated by KOCTC and shall convene weekly to open bids received in sealed envelopes.000/-. 4. Bids Opening Committee 7.000/and KD. for Requests For Quotations (RFQ) with estimates between KD1.5 In the event the Committee is divided on particular issue/subject. 3 Page 2 of 8 Date : December 2008 4.3.5 Arbitrate on any complaints received from any tenderers/suppliers related to Tenders.000. 4. and if in agreement.3 Review and.4 Review. if in agreement. 5. copied to the concerned DMD.3.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 1: Definitions Issue No. 4.3. the case together with the Committee’s remarks shall be referred by the Chairman of the Committee to the C&MD for ruling.2 Monitor and ensure that the technical and commercial evaluation of tenders is adequate and is in the best interest of the Company. approve confiscating of bid bonds 4. estimated cost. method of tendering.4 In the event the Committee is unable to agree with the Controlling Team’s recommendations. Company’s Appointed Representative The Company’s Appointed Representative shall be any person delegated by the Company to represent it at the KPCHTC/CTC.

9 Catalogue ID A number automatically generated by the System. . to assist in processing and monitoring all aspects of the material cycle in the Company.Member 8 System: Computerized material management system used by the Company. 11 Re-Order Notice A notice that is generated by the System indicating that the quantity in Stores for a store stock item has fallen below a specified limit (Re-Order Point) and may require replenishment action.Chairman Team Leader Contracts Services .Deputy Chairman Financial Group Representative . This is a message that appears in System indicating that a specific action is required with regard to the procurement cycle. 3 Page 3 of 8 Date : December 2008 Schedule of Bids and forward the same to Team Leader concerned for necessary action. which identifies a particular material. Re-order is also generated for direct charge items.2 The Bids Opening Committee comprises of the following members: Team Leader Warehouse . 10 AAA message AAA stands for Action/Awareness/Alert. 7. the material is required to be received by Kuwait Oil Company.Member Contract Team’s Representative .Member Purchasing Teams’ Representative . 12 Need Date The date.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 1: Definitions Issue No.

to commit and incur expenditure on behalf of the company. 14 Supply Agreement Suprintendent The person nominated by the Company as being responsible for all contractual matters relating to the supply agreement (BPO). Under normal circumstances this will be a member of Purchasing Teams during the pre-award stage and a member of the Controlling Team after award. . prior to the procurement of Direct Charge Material for projects.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 1: Definitions Issue No. as applicable. 17 Surplus Materials considered having no immediate or foreseeable future use in Kuwait Oil Company. These items are regularly replenished to ensure continuous availability. 3 Page 4 of 8 Date : December 2008 13 Controlling Team Team administrating a project and initiating Material Request (MR) for the same. 19 Financial Approval Approval obtained by the controlling Team from Cost and Management Accounting Team to ensure the availability of funds. 15 Stores Stock Items Items of material stocked for normal maintenance of equipment / facility. 16 Direct Charge Material Materials required for specific job and not subject to replenishment. The cost of which is charged to the concerned Team at the time of withdrawal from the Stores. 18 Company’s Executive Delegation of Authority The Executive Delegation of Authority is level of authority approved by the Company Board of Directors and issued by the Chairman and Managing Director. This team is also responsible for the technical evaluations of offers received.

supplier’s address. by the Controlling Team where the material requirement is specified. 25 Purchase Order Document authorizing the supplier to supply the items listed therein. 24 Request For Quotation (RFQ) Document issued to the vendors requesting them to quote their best prices. 3 Page 5 of 8 Date : December 2008 20 Vendor Company/Establishment/Manufacturer participating in Request for Quotations. payment terms. .KOC POLICIES AND REGULATIONS FOR PURCHASING Section 1: Definitions Issue No. against the specified material and the conditions for the supply. RFQ and subsequent Purchase Orders shall be governed by relevant Terms & Conditions included in the RFQs. price. delivery. 26 Purchase Order Revision A revised Purchase Order issued to the supplier to record any changes to quantity. 21 Supplier A Vendor who has been awarded a Purchase Order for supply of material. 23 Purchase Requisitions Purchase Requisitions are generated by the System for further procurement action. etc. description. terms and conditions of the relevant Request for Quotation. Purchase Order shall generally be issued to the successful vendor meeting the specification. 22 Material Requests Material Requests are generated in the System.

KOC POLICIES AND REGULATIONS FOR PURCHASING
Section 1: Definitions
Issue No. 3

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Date : December 2008

27 Cash Purchases
These are items valued as per delegation of authority procured from the local
market. These items are neither stores stock items nor items which are covered
by Supply Agreement. Teams may procure such items directly without the
normal documentation and without involving Purchasing Teams.

28 Repair Order
A Purchase Order to cover activity and cost related to repairing an
equipment/material.

29 Competitive Procurement
Competitive Procurement is to obtain quotations from a number of potential
vendors.

30 Single Source Procurement
Single Source Procurement arises when the Controlling Team nominates a
specific source/manufacturer for the material, justifying this requirement on
financial or compatibility grounds. Purchasing Teams shall vet justifications for
single source procurement prior to procurement action.

31 Emergency/Major Incident Procurement
Emergency Procurement is defined as procurement required immediately when
a major catastrophe has occurred, seriously effecting the Company’s operations,
i.e. blowouts, major oil spillage, structural failure and major damage
to installations. Such procurements are intended to cover the initial requirements
at the onset of the catastrophe, and shall require the prior approval of the
Chairman and Managing Director. Once the situations are contained, further
procurement action would be classified as “Vital Procurement”.

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Section 1: Definitions
Issue No. 3

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32 Vital Procurement
Vital procurement process is to cover Health, Safety & Environment related
items. Other materials where the time scale involved in the normal procurement
procedures would cause expense or loss to the Company or would impair its
operating efficiency or for projects, where accelerated completion thereof,
would result in achieving significant financial advantages/high revenue. Vital
procurement, with appropriate authorization, entails a fast track process
circumventing normal tendering process.

33 Supply Agreement (Blanket Purchase Order)
Blanket Purchase Orders are long-term agreements with suppliers/manufacturers
to provide specific material or materials at agreed prices, over a specified period
of time, with a not to exceed value stipulated in the Agreement. Blanket
Purchase Orders can either be for supply as and when required or for consigned
(Imprest) items or any other form.
34 Schedule of Tenders/Bids
A schedule prepared by Central Tenders Committee or Bids Opening
Committee, after the receipt of Bids. This schedule shall outline the names of
vendors who have participated, and the amount of each bid.
35 Commercial Affairs Internal Purchasing Manual
Manual, which states in detail the procurement processes to be followed by
Purchasing Teams; who shall be responsible for meeting the requirements of the
user by procuring the right material with the right quantity at the right time and
right price.

KOC POLICIES AND REGULATIONS FOR PURCHASING
Section 1: Definitions
Issue No. 3

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36 Vendors Evaluation Committee (VEC)
36.1 VEC comprises of the following:
Team Leader Purchasing (II)
Team Leader Insp. & Corr. (N&W)
Team Leader Projects Control
Team Leader Drilling & Work Over Svcs.
Team Leader Accounts Payable
Team Leader Maintenance (SK)
Team Leader Maintenance (WK)
Team Leader Maintenance (NK)

- Chairman
- Member
- Member
- Member
- Member
- Member
- Member
- Member

36.2 Responsibilities and Functions
36.2.1 To review/approve the procedure, questionnaires and evaluation
criteria for the Pre-Qualification of Vendors/Manufacturers.
36.2.2 To review the recommendations from various Teams and to PreQualify/ not qualify the Vendors/manufacturers for inclusion
in the Approved lists.
36.2.3 To provide technical and commercial advice to various Teams
on Pre-Qualification of manufacturers.
36.2.4 To review the recommendations in respect of poor performance
of already approved manufacturers and to black list/ omit
them from the KOC approved lists of manufacturers.
36.2.5 To regularly update the approved lists of manufacturers with
respect to change in address, name change/merger/take over
etc., update the product range, changes in contact details,
local agent and others.
36.3 The VEC will meet every month to review any related business
requests received from Teams or evaluation of Manufacturer’s
application.

KOC POLICIES AND REGULATIONS FOR PURCHASING
Section 2: Material Request & Termination
Issue No. 3

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Date : December 2008

SECTION 2: MATERIAL REQUESTS & TERMINATION
1. Material Requests (MR)
1.1 The controlling Team shall take a stock decision based on structural
methodology and Company stocking policy. There are two distinct
stock decision processes namely;
1.1.1. The initial decision to stock and how much when a new plant or
equipment is completed or commissioned while taking into
account of what is already stocked.
1.1.2. An ongoing assessment of stock requirements for an existing
plant and equipment by taking into account the rate of
consumption.
1.2 The Controlling Team shall identify their requirements of materials
whether Stores Stock or Direct Charge Material.
1.3 The Controlling Team shall raise separate Material Request (MR) in the
System for Stock Items and Direct Charge Items.
1.4 The Material Request shall indicate MR Priority and material need date
should be directly related to MR priority. Material request created with
new Cat. IDs or where procurement becomes necessary, the Need Date
should be sufficient for procurement action considering Administrative
and Vendor Lead Time. In general Administrative Lead Time required
for preparation, issuance and evaluation of Request For Quotation
(RFQ) and award of Purchase Order (PO) is as follows:1.4.1. With estimates up to KD 30,000/ - 10 weeks.
1.4.2. With estimates from KD 30,000 to KD 5,000,000/ - 18 weeks.
1.4.3. With estimates above KD 5,000,000/ - 26 weeks.
1.5 The Material Request shall also include the following information:
1.5.1 Accounting details.
1.5.2 Delivery requirements – to be advised as Notes.
1.5.3 Project number/Work Order if applicable.
1.5.4 Justification for single source, if applicable.
1.5.5 Detailed technical specifications.

KOC POLICIES AND REGULATIONS FOR PURCHASING
Section 2: Material Request & Termination
Issue No. 3

1.5.6

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Estimated price – basis of estimations such as manufacturers’
spares list, budgetary quotations.

1.6 Prior to initiating a new item, the Controlling Team shall ensure that a
similar item/Cat ID is not available in stock. A search of the inventory
may be carried out by using any of the parameters available in the
System, particularly the following
1.6.1 Category name / type.
1.6.2 Description
1.6.3 Manufacturer, Part No. / Model No.
1.7 Controlling Team shall obtain financial approvals for Direct Charge
Materials (items for a project) by routing the Material Requests through
Cost and Management Accounting Team.
1.8 Controlling Team shall provide a realistic estimate price for all new
items to be purchased whether Direct Charge or Store Stock items. In
case of Direct Charge items, when the actual award price exceeds the
original approved price, the Controlling Team shall obtain Cost and
Management Accounting Team’s re-validation in order to proceed with
further procurement action.
1.9 On receipt of Material Request, Purchasing Teams shall process the
same in adequate manner, to meet the Controlling Team’s & the
Company’s requirement.

2. Termination
2.1 Whenever a Material Request is to be terminated, the Controlling Team
shall set the status to cancel or complete. Additionally, Controlling
Team shall
2.1.1 Review the overdue material request with work Order/project
and set status as complete or cancel from the System
periodically.
2.1.2 Reserve the right to cancel all Material requests for Direct
charge items and Purchasing Team shall review the Non Work
Order and non project overdue material request with stock item
and set Status as complete or cancel from the System
periodically.

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Section 2: Material Request & Termination
Issue No. 3

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2.2

If the request is still in Re-order notice stage, the System will adjust
quantities. If Purchase Requisition is generated, a AAA message of
Material Request Cancellation/Termination shall be forwarded to
Purchasing Teams for review and appropriate action.

2.3

On receipt of Material Termination Request, Purchasing Teams shall
cancel the Request For Quotations / Purchase Order, where applicable
or negotiate with the supplier for any cancellation charges to be
incurred.

2.4

Where cancellation is possible, the System will process the Material
Termination Request. Purchasing Teams shall revert any reserved
items to free stock.

2.5

Material which cannot be cancelled from Purchase Order may be
transferred, upon receipt, to surplus account under advise to
Warehouse Team.

KOC POLICIES AND REGULATIONS FOR PURCHASING
Section 3: Competitive Procurement
Issue No. 3

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Date : December 2008

SECTION 3: COMPETITIVE PROCUREMENT
1.

PROCESSING OF REQUEST FOR QUOTATION (RFQ)
1.1 Purchasing Teams shall review the items on Purchase Requisition
backlog for item description, quantity and need date. For costeffectiveness similar items shall be grouped together in a single RFQ.
1.2 The tender documents must include the elements and basis of
technical and commercial evaluation.
1.3 Selection of potential vendors for participation in RFQ shall be based
on the following criteria:
1.3.1 Vendor is registered with Kuwait Oil Company for the current
year.
1.3.2 From the Product List, depicting vendors for the required
commodity. Due consideration should be given for maintaining
invitation by rotation, where number of listed vendors exceeds
the invitees categorized under the commodity.
1.3.3 Vendors with good performance and experience.
1.3.4 The number of vendors invited to participate shall be as
detailed in the Commercial Affairs Internal Purchasing
Manual.
1.3.5 For procurements below KD.5,000/-, requests from other
interested and registered vendors may be considered after
issuance of the RFQ.
1.3.6 For procurements with estimate between KD5,000/- and
KD5,000,000/-, the RFQ shall be advertised in Kuwait Al
Youm to facilitate registered vendor’s participation.
1.3.7 For procurements with estimate higher than KD5,000,000/-,
Central Tenders Committee shall issue the RFQ to facilitate the
registered vendor’s participation.

2.

APPROVALS PRIOR TO ISSUE OF REQUEST FOR QUOTATIONS
2.1

Approvals
2.1.1 Prior to issue of the competitive RFQ, approvals shall be
obtained, as per Executive Delegation of Authority.

KOC POLICIES AND REGULATIONS FOR PURCHASING Section 3: Competitive Procurement Issue No. 2.1. approval is to be obtained from the appropriate delegated authority / committee.000/-.000.1. 2.5 State Legal department: Where the estimated value of the RFQ is greater than KD. which has been approved by them for issuance.4 Central Tenders Committee (CTC): CTC’s approval shall be obtained for all RFQs where the estimated value is above KD5. 2.000. 2. Procurements of materials in excess of KD5.000/-.4 In case an RFQ is to be re-issued.for the projects stated under Emergency/Major Incident and Vital Procurement are exempted from CTC approvals (Only KPCHTC approval is sufficient). 2.000/-.1. .5 Issuance of a supplementary to the RFQ shall be approved by the appropriate delegated authority. 3 Page 2 of 8 Date : December 2008 2.2 RFQ / Tender cancellation request from the Controlling Teams shall be routed through the appropriate delegated authority.2 Kuwait Oil Company Tenders Committee (KOCTC): KOCTC’s approval shall be obtained for all RFQs where the estimated value is greater than KD30.3 Kuwait Petroleum Corporation Higher Tenders Committee (KPCHTC): KPCHTC’s approval shall be obtained for all RFQs where the estimated value is greater than KD1.3 KOCTC approval must be obtained to cancel an RFQ. 2.000.000/.000/-. Tender document fee shall not be charged from those vendors who had previously bought the original RFQ. 2.1.000. the documents shall have to be reviewed by the State Legal department.5.

1.000/. issuing/closing date. in sealed envelopes to be deposited in the tender box located at a designated area. valid for 90 days. valid up to delivery date plus 12 or 18 months as specified in the RFQ .000.1 RFQs with estimate of KD. Page 3 of 8 Date : December 2008 ISSUE OF REQUEST FOR QUOTATION (RFQ) 3. In this case.000. Vendors shall submit their bids.1.000/-. by the stipulated closing date.2 RFQs with estimate from KD.the vendor shall include with its offer a 2. fax or e-mail. The selected vendors shall be invited by fax / e-mail to collect the RFQ.000/-).1. 3. potential vendors may be invited directly.3 RFQs with an estimated value above KD5.to KD. performance bond in a form of a Letter of Guarantee. As deemed necessary.5% bid bond or as specified. Vendors may submit their bids by hand.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 3: Competitive Procurement Issue No. by the closing date.000/RFQ shall be signed by Purchasing Teams in accordance with Delegation of Authority and issued to the vendors. 3 3. the vendor shall be required to submit 10% deposit or as specified. requesting them to collect and submit their quotations as follows. . 3. .in case of an award. Purchasing Teams shall request KOCTC Secretary to place an advertisement in Kuwait Al Youm detailing RFQ requirements. The selected vendors shall be invited by fax / e-mail to collect the RFQ.1. 1. the following conditions shall be included in the RFQ. 5.1 Procurements Below KD5.1. 3.000/-. 3.001/. Subsequent to approvals as per Executive Delegation of Authority or KOCTC (for estimates above KD30.4 If the estimated value is greater than KD5. Team Leaders Purchasing may approve exemption from advertising in the Kuwait Al Youm.and below.

5 Purchasing Teams shall forward sufficient sets of the RFQ documents.1. 4. 3. issued by Purchasing Teams.000/-.2.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 3: Competitive Procurement Issue No. potential vendors are to be informed directly.2. to CTC for issuance. 4. and shall record them in the “Schedule of Tenders” Form. 4.5 The CTC shall open all Bids that were received by CTC Tender box. In this case. Team Leaders Purchasing may approve exemption from advertising in the Kuwait Al Youm.and all Single Source offers.2 Procurements Above KD5. 3 Page 4 of 8 Date : December 2008 3. 4. to KOCTC’s Secretary for sale to the vendors. 4.3 All the received bids shall be listed on the “Schedule of Tender”. one day prior to issuing date. with an estimate value above KD1.1 Purchasing Teams shall receive and open offers for RFQ with an estimate less than KD1. shall advertise in Kuwait Al Youm and issue RFQ documents to vendors. in sealed envelopes to be deposited in the tender box located at a designated area.000/.000/3. OPENING OF BIDS 4. .2 Bids Opening Committee shall open the Tender box for the sealed bids for RFQ. As deemed necessary.000.2 The CTC on receipt of the copies of the RFQ and the Advertisement Form from Kuwait Oil Company.6 Subsequent to the delegated authority approvals. supplementary issuance (including change of closing date) must be advertised in Kuwait Al-Youm. 3. by the closing date. Vendors shall submit their bids.1.1 Purchasing Teams shall arrange for forwarding sufficient sets of the RFQ documents one week prior to issuing date. 3.4 Late bids shall be marked as “Received Late” and shall not be considered.

6 The CTC shall forward all bids to the Company (Purchasing Teams) for evaluation. EVALUATION OF BIDS 5. Unless otherwise stated. Controlling Teams may delegate such an activity to Purchasing Team based on mutual agreement. the received bids shall include a 2.5% bid bond or as specified. Technical Evaluation of Direct Charge items with estimates over KD 5.000/-. .000/. Request for extension shall be approved by Team Leader Purchasing concerned and copied to Manager Commercial Affairs for second and subsequent extensions. it shall be responsible for reviewing the technical information provided by the vendor.000/-.4 In the event it is necessary to extend the Price Validity of the received bids. 5. where information such as all required prices or required documents have not been provided. if necessary.shall be the sole responsibility of Controlling Teams.1 Purchasing Teams shall review the “schedule of Tender” and rank the bids according to price. if required. 5. Whereas.2 Purchasing Teams shall carry out Technical Evaluation for all Store Stock items and for Direct Charge items with estimates below KD 5. Bids received without the stipulated bid bond may be disqualified. 3 5. They shall then evaluate commercially all received bids and may disqualify bids. 4. Purchasing Teams shall obtain additional information/clarification from the vendor.7 If the estimated value is greater than KD5. 5. Purchasing Teams sha1l ensure that appropriate action is taken directly with bidders or through CTC (for those bids received through CTC).KOC POLICIES AND REGULATIONS FOR PURCHASING Section 3: Competitive Procurement Issue No. Page 5 of 8 Date : December 2008 4.3 Where the Controlling Team carries out the technical evaluation.

000/-. then financial approval for the additional cost shall be sought by the Controlling Team. the award recommendation to be approved as per Executive Delegation of Authority for Purchasing Teams.5 When the award value is above KD1. without referring to KOCTC. the case together with Team Leader Purchasing’s remarks shall be referred by Team Leader Purchasing to KOC Tenders Committee for their ruling. Obtain approvals through appropriate committees and as per the Executive Delegation of Authority.000/-.shall be forwarded to the CTC for approval.000/-. 3 6. 6. the CTC shall inform the Company through a letter addressed to Chairman & Managing Director.where the initial estimate was over KD1. 6. the recommendation shall be forwarded to KPCHTC for their approval. where the initial estimate was over to KD5.000/. In case the award value is less than KD1.1 Upon completion of the commercial and technical evaluation of RFQ. through KOCTC Secretary.000. In case the award value is less than KD30. 6. the recommendation shall be forwarded to the Kuwait Oil Company Tenders Committee for their approval/ruling.000. 6.6 All award recommendations above KD. the award recommendation to be approved by KPCHTC and notified to CTC.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 3: Competitive Procurement Issue No. Purchasing Teams shall prepare Award Recommendation.5. If in agreement.000/. copied to Group Manager concerned.3 In the event Team Leader Purchasing is unable to agree with the Controlling Team’s recommendation for awards below KD30.000/. 6.000.000/-.000/-. and if the bid is for direct charge items. where the initial estimate was over KD30.000.000. . In case the award value is less than KD5.000/-.the award recommendation to be approved by KOCTC and notified to KPCHTC.4 When the award is above KD30. Page 6 of 8 Date : December 2008 AWARD OF PURCHASE ORDER 6.000/-. through KOCTC Secretary.000.2 If the recommended bid for award is greater than the estimated amount.

10 Subsequent to receipt/verification of all required documents. The invitation fax shall include the total award value and delivery date of the material. Purchasing Teams or Controlling teams shall request Accounts Payable Team to obtain extensions of letters of guarantee from the supplier. must clearly state the delivery date. 6. 3 Page 7 of 8 Date : December 2008 6. Purchasing Teams shall nominate a Third Party Inspection Agency. 6. if the RFQ was issued by KOC. 6. after signing of the Purchase Order. as specified in the Tender. and forward to them all the required information. If required. 6. Purchasing Teams shall generate Purchase Order (PO). they shall inform the successful vendor that he has been awarded the Tender and forward a copy of the notification letter to Kuwait Oil Company.12 In case. Purchasing Team shall invite the successful vendor to submit the required documents.13 After signing of the Purchase Order the original 10% Guarantee (or as specified) shall be forwarded to Accounts Payable Team for follow up of the performance bond.9 For awards above KD 5. the first day of delivery shall be considered as actual delivery date. 6. Where bulk material is being delivered continuously (without interruption) over a reasonable period of time. Third Party Inspection is required.8 Where the CTC issued the RFQ. 6.11 Purchasing Team shall arrange for the supplier and the delegated authority in Kuwait Oil Company to sign the Purchase Order.7 Purchasing Teams shall notify the successful vendor that he has been awarded the Purchase Order. including performance bond in a form of a Letter of Guarantee from a bank authorized to operate in Kuwait.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 3: Competitive Procurement Issue No. Third Party Inspection nomination will be notified to the supplier accordingly. based on quotation or subsequent negotiation. .000/-. All POs with Liquidated Damages.Upon receipt of approval of Award Recommendation as per Executive Delegation of Authority or the concerned Committee.

Chairman & Managing Director 6.000. 3 Page 8 of 8 Date : December 2008 6.000.2 Bid value exceeds estimate more than 10%.14.15 Purchasing Teams shall ensure that vendors submit Declaration Form in accordance with Articles 2 & 3 of Law No.1 Bid value exceeds estimate more than 5%. . .KOC POLICIES AND REGULATIONS FOR PURCHASING Section 3: Competitive Procurement Issue No. 6. 25/1996 relating to the declaration of commission with State contracts for offers above KD100.000 and exceed the Controlling Team’s estimate.14 Should the value of the recommended bid be greater than KD1. Managements approval shall be obtained by Purchasing Teams as follows. 6.14. up to 10% Respective DMD.

whereas against consigned items. The Controlling Team shall advise the contract commencement date to the supplier and notify to the Purchasing Teams. 2. Insurance Team and Accounts Payable Team for comments. Controlling Team / Purchasing Teams shall select and identify items that are required to be procured under BPO. These shall be signed in accordance with Executive Delegation of Authority. The Controlling Team shall follow up and expedite the delivery of items. up to signing the Memorandum of Agreement. Against supply. 6. the invoice is processed only when the material is withdrawn from the Stores. BPOs can either be for supply as and when required or for consigned (Imprest) items or any other form. 4. 3 Page 1 of 3 Date : December 2008 SECTION 4: BLANKET PURCHASE ORDER (BPO) Blanket Purchase Orders (BPOs) are long-term agreements with suppliers/manufacturers to provide specific material or materials at agreed prices. 2. the supplier shall submit the Invoice to Accounts Payable Team for payment. . 3.4). Upon identifying the requirement or on receipt of the request from Controlling Team. with a not to exceed value stipulated in the Agreement. 5.1 Prepare the Tender incorporating all the relevant procurement conditions and circulate the document to Controlling Team (if applicable).2 Review and incorporate the comments in the documents and process as detailed in Section 3. Original BPO to be signed in accordance with Executive Delegation of Authority (Chapter 9. who shall input the details in the System and activate the BPO. the invoice is processed for payments as and when the material is delivered and accepted. Purchasing Teams shall. 1.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 4: Blanket Purchase Order (BPO) Issue No. The Controlling Team shall issue BPO Releases as when required. as the case may be. Controlling Team shall forward the request to Purchasing Teams along with the relevant information. 2. over a specified period of time. Legal Group. Upon accepting the delivered material or issuance of the consigned items by stores.

8.3 Bids Opening Committee shall open the received offers and record the prices on the Schedule of Bids and forward the bids to Purchasing Teams for further handling with the Controlling Team. To initiate request for renewal or issue of new Tender. 8. Adjustment Orders concerning Original BPO 8.2 7.2 9. To ensure that the value (not to exceed value) of the BPO is not exceeded.4 8 Page 2 of 3 Date : December 2008 To ensure the annual price change. with a specified closing date. Adjustment Orders concerning BPO Releases (BPO Release Revisions). and submit an Adjustment Order with their recommendations to Purchasing Teams for review and obtaining KOCTC approval.1.1. the controlling Team shall submit an Adjustment Order with their recommendations/justifications to Purchasing Teams for review and obtaining KOCTC approval. negotiate wherever possible. 3 7 Controlling Team shall monitor the BPO to ensure the following 7. (See Section 7 – Purchase Order Revision). For extension of BPO additional period or to amend Not To Exceed Value (NTEV).2 Controlling Team shall notify.3 7. 8. Secretary of KOCTC of the closing date in order to arrange receipt of such quotations. if applicable. To initiate Adjustment Order as and when required. The Controlling Team shall issue Adjustment Orders as and when required in accordance with Executive Delegation of Authority. upon issuance of the request for quotation.1.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 4: Blanket Purchase Order (BPO) Issue No. 8.1. The offers are to be deposited in tender box at a designated location in (KOCTC) Secretary’s office.4 The controlling Team shall evaluate the received offers. .1 Incase new items are to be added to the original BPO 8.1 The Controlling Team shall invite at least three potential vendors to submit their offers in a sealed envelope.1 7.

. 3 Page 3 of 3 Date : December 2008 10. 11. liquidated damages. Controlling Team shall ensure that all the Terms and Conditions of the BPO are adhered to i. insurance. Purchasing Teams shall notify Controlling Team one year prior to expiry of BPO for necessary renewal or issue of new Tender. Purchasing Teams shall notify Controlling Team when the maximum value of BPO (not to exceed value) reaches 80% of the Blanket Purchase Order value.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 4: Blanket Purchase Order (BPO) Issue No. etc.e. 12.

where possible.3 2.2 1. Operational technical compatibility reasons.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 5: Single Source Procurement Process Issue No. provided that the additional source invited is capable of supplying materials in full conformity with specified specifications. economic viewpoint considering its reasonableness. 3 Page 1 of 2 Date : December 2008 SECTION 5: SINGLE SOURCE PROCUREMENT PROCESS 1.2 Review the justification from a commercial. 6 Award recommendation (including Plan approval form) shall be approved in accordance with the Executive Delegation of Authority. If deemed necessary eg. Purchasing Teams shall obtain a quotation from the Single Source specified in the item description. as per Executive Delegation of Authority. Purchasing Teams may liaise with the Controlling Team for further technical evaluation. Controlling Team / Purchasing Teams shall be responsible for reviewing the information provided by each vendor for technical evaluation. Purchasing Teams shall evaluate commercially and technically the bid package. 4. Irrespective of the value. Controlling Team shall then recommend a vendor and forward the package back to Purchasing Teams. Purchasing Teams may also obtain quotation from other source of supply. If additional information is required. Single source procurements for stores stock (non spares) or Direct Charge Material. 2. vendors of the original equipment. shall require a written valid justification from the Controlling Team and approval. where applicable. Purchasing Teams shall obtain clarification from the vendor. deviation. 5. Additionally:- . Consider alternative sources of supply for the material particularly.1 1. Upon receipt of the Single Source justification and the relevant initial request documentation. The detailed justification for Single Source Procurement should include: 1.1 2. 3. Economic benefits. Purchasing Teams shall. The estimate price of the material. obtained either through a budgetary quotation or a price list.

000. Kuwait Oil Company Tenders Committee (KOCTC) shall review and approve the single source recommended procurement.2 Bid value exceeds estimate by more than 10%.000/-.000/-.Respective DMD. etc.000. 7. 9. freight/shipping. to establish the reasonableness of the prices/charges. Managements approval shall be obtained by Purchasing Teams as follows. 6.e.000/-.1 Bid value exceeds estimate by more than 5%. .000 and exceed the Controlling Team’s estimate.Chairman & Managing Director 8. Purchasing Teams shall be responsible for checking prices and other related costs. the case together with Team Leader Purchasing’s remarks shall be referred by Team Leader Purchasing to KOC Tenders Committee for their ruling. 11.4 If the actual award is above KD5. KPCHTC shall review and approve the single source recommended procurement. Should the value of the recommended bid be greater than KD1. where applicable and expediting all Purchase Orders placed. Purchasing Teams shall ensure that local vendors submit Declaration Form in accordance with Articles 2 & 3 of Law No. 6. up to 10% .KOC POLICIES AND REGULATIONS FOR PURCHASING Section 5: Single Source Procurement Process Issue No.000. i.000/-. before submission to the appropriate Committee. .1 In the event Team Leader Purchasing is unable to agree with the Controlling Team’s recommendation for awards below KD30.2 If the actual award is above KD30.3 If the actual award is above KD1. Purchasing Teams shall be responsible for arranging Third Party Inspection. 7. 6.000. 25/1996 relating to the declaration of commission with State contracts for offers above KD100. 3 7 Page 2 of 2 Date : December 2008 6. 10. copied to Group Manager concerned. CTC shall review and approve the single source recommended procurement. The Purchase Order shall be signed as per Executive Delegation of Authority.

if required. To cover this activity a Repair Purchase Order is issued.000/-. approval from CTC. 3. Once an agreement has been reached and the final repair charges are within the approved cumulative value. 6.3 If repair estimate value exceeds KD1.2 If repair estimate value exceeds KD30. 2. approval from KPCHTC. After receipt of material. 4. The controlling Team shall prepare Material Request with detailed scope of work and accordingly System will automatically generate a Purchase Requisition.000.4 If repair estimate value exceeds KD5.1 If repair estimate value is below KD30. Whilst the supplier/manufacturer is being contacted for shipping instructions. Purchasing Teams shall coordinate negotiations between the Manufacturer/Supplier and Controlling Team.000/-. approvals as per Executive Delegation of Authority or appropriate Committees shall be obtained for the actual repair cost and issue Purchase Order Revision. 5. 4.000. . 4. Purchasing Teams shall review the Purchase Requisition and create RFQ.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 6: Repair Order Issue No.000/-. 7. 4. 3 Page 1 of 1 Date : December 2008 SECTION 6: REPAIR ORDER 1. After obtaining appropriate approval.000/-. approval from KOCTC. Purchasing Teams shall generate a Purchase Order as per the Executive Delegation of Authority. 4. approvals shall be obtained as follows. Local facilities or overseas manufacturers may perform repairs to an equipment/material. as per Executive Delegation of Authority. Purchasing Teams shall arrange the shipment of the equipment for repairs through Warehouse Team or through the local supplier.

structural failure. to Manager (Financial Services) and to Purchasing Team Leaders. approval shall be obtained from KPC Board of Directors for exemption from normal tendering. - Repair works to oil/gas spillage. who shall obtain the verbal approval of the Chairman & Managing Director. and blowout. The incidents considered of emergency nature. major oil spillage. which have not been planned before hand and would reflect on the timely completion/operation of installation as per schedule. - Rehabilitation of damaged installations due to major incident. 3. as identified by KPC. but must be followed up by comprehensive Material Requests with justifications.000/-. 1. In the event of an Emergency/Major Incident. explosion. The Group Manager shall advise his/her Deputy Managing Director of the situation. are as follows: - Emergency Shutdown - Repair of damages discovered during annual overhauls. 2. for the necessary expenditure.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 7: Emergency/Major Incident Procurement Issue No.000. the Group Manager responsible shall evaluate the situation to ascertain if the materials are required immediately. 3 Page 1 of 2 Date : December 2008 SECTION 7: EMERGENCY/MAJOR INCIDENT PROCUREMENTS This special classification of procurement shall only be used for materials required for works or services necessary for expeditiously dealing with declared emergencies such as blow-out. Verbal authorization shall be sufficient to initiate action. Should the estimate value of the materials exceed KD5. . or similar incidents and/or prevent the occurrence of possible imminent loss or damage. major damage to an installation.

000/. .KOC POLICIES AND REGULATIONS FOR PURCHASING Section 7: Emergency/Major Incident Procurement Issue No. KPCHTC for expenditure exceeding KD1. 7.000/-.000. Formalities will be completed later on.000/-. Once an Emergency/Major Incident is declared Purchasing Teams shall order material on a vital basis without using the normal procedures. 5. After the emergency situation has been contained.000. 3 Page 2 of 2 Date : December 2008 4. 6.and to CTC for expenditure exceeding KD5. Commercial Affairs Group shall provide information to KOCTC for expenditures exceeding KD30. Purchasing Teams shall complete procurement formalities and generate a report referencing Purchase Order. Controlling Team shall enter the details of the items procured in the System to raise a Material Request. Once an Emergency/Major Incident is contained. 8. the Group Manager shall summarize all the expenditure incurred and submit it through his/her Deputy Managing Director for Chairman & Managing Director’s approval. Materials and Prices.

if applicable. Purchasing Teams shall be responsible for preparation of RFQ documents and for processing the RFQ with appropriate level of urgency. Forward a detailed technical/operational/commercial justification for vital procurement. 5. Purchasing Teams shall obtain KOCTC/KPCHTC/CTC approvals and procure the materials on fast track basis. 2. Urgent projects related to production. 6. through the concerned Group Manager to Manager (Commercial Affairs). 3 Page 1 of 2 Date : December 2008 SECTION 8: VITAL PROCUREMENT This special classification of procurement shall only be used for materials required in circumstances where the urgent repair or reinstatement of an installation or facility is vital to the Company’s interests and the works have to be executed within a time scale. with a copy to Purchasing Teams. The Material Request shall cover the full list of items required.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 8: Vital Procurement Issue No. Forward to Purchasing Teams copies of budgetary quotations and list of potential vendors. subject to obtaining prior approval from KPC Board of Directors for exemption from CTC: - Projects. Controlling Team shall raise a Material Request in the System. where accelerated completion thereof. 1. Following are the circumstances which are considered vitally urgent works and procurement of material may be processed without CTC involvement irrespective whether their value is in excess of KD5. 4.000.000/-. . which prevents the use of normal tendering procedure. Projects associated with other urgent ones having specified tight time schedule. would result in achieving significant financial advantages/high revenue. together with full technical details. estimated value and the NEED Date. Projects involving direct potential HSE hazards to installations/individuals. 3. 7.

KOC POLICIES AND REGULATIONS FOR PURCHASING Section 8: Vital Procurement Issue No. . They shall also be subject to the required endorsement / approval in accordance with the Company's Delegation of Authority prior to any commitment with a Contractor. 3 Page 2 of 2 Date : December 2008 8. All contractual arrangements authorised on the above described basis shall remain subject to KOC Tender Committee review and endorsement at all appropriate stages.

000/-. price. the Purchase Order shall be presented to KOCTC for their approvals. the original/previous purchase order revision is superseded.000/-. etc.000/. 30. supplier address. Purchase Order Value Exceeding KD.but after revision the value exceeds KD.000. payment terms. and the value of the Purchase Order Revision or the cumulative value of all Revisions would increase the original Purchase Order Value by 10% or KD.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 9: Purchase Order Revision Issue No. 1. (or) within the Kuwait Oil Company.000/-.000. 3 Page 1 of 2 Date : December 2008 SECTION 9: PURCHASE ORDER REVISION (Includes BPO Release Revision) Purchase Order Revisions are required when there are changes to the quantity. the original Purchase Order Value exceeds KD.3 KPCHTC approval is required for Purchase Order Revisions where.1 Purchase Order Revision shall be submitted for approval in accordance with the Executive Delegation of Authority. 1. 1.and below: 1. 2. copied to Group Manager concerned. the original Purchase Order Value exceeds KD. 30.30. This information may come to Purchasing Teams from the supplier. 2. .30.000/-. Purchase Order Value of KD. and the value of the Purchase Order Revision or the cumulative value of all Revisions would increase the original Purchase Order Value by 5%. whichever is less.1 KOCTC approval is required for Purchase Order Revisions where.000/2. the case together with Team Leader Purchasing’s remarks shall be referred by Team Leader Purchasing to KOC Tenders Committee for their ruling. When the revision is approved. 2.000/.2 In the event Team Leader Purchasing is unable to agree with the Controlling Team’s recommendation for Purchase Order Revision below KD30.2 When a Purchase Order Revision to a Purchase Order whose value originally was below KD.000/-. description.5. 30.

2. the value exceeds KD5. the original Purchase Order Value exceeds KD5.000/. 2.000.000.000/. .5 For Purchase Orders of value more than KD.7 When the Revision to a Purchase Order whose value originally was below KD5.000 then CTC approval shall be obtained.000.4 When the Revision to a Purchase Order whose value originally was below KD.000/-.000. Extension of Period Purchase Order Revision for extension of delivery period shall be issued after obtaining approval as described under Liquidated Damages. 2. where Purchase Order Revision exceed 20% of the total Purchase Order Value Price.up to KD. 250.000/-.but after the revision.000/.and the value of the Purchase Order Revision or the cumulative value of all Revisions would increase or decrease the original Purchase Order Value by 10% or KD5.6 CTC approval is required for Purchase Order Revisions where.1. Purchasing Teams shall only prepare and provide a breakdown of all such Purchase Order Revisions to KPC HTC in the form of a monthly report. then KPCHTC approval shall be obtained.000.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 9: Purchase Order Revision Issue No.1. 3 Page 2 of 2 Date : December 2008 2.000/-. Section 11. the value exceeds KD.000/.but after the revision.000.000. 3. whichever is less.1.

from within Kuwait Oil Company or the Supplier. Cancellation could also be decided within Purchasing Teams based on specific circumstances or other reasons. The defaulted supplier/manufacturer shall be reported to appropriate committees for further necessary action.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 10: Cancelling Purchase Order Issue No. 3 Page 1 of 1 Date : December 2008 SECTION 10: CANCELLING PURCHASE ORDER 1. Purchasing Teams shall arrange to forward the cancelled Purchase Order to the supplier and obtain acknowledgement. Purchase Orders cancellation shall be subject to approvals in accordance with the Executive Delegation of Authority. appropriate . 3. Purchasing Teams shall receive the cancellation request of the Purchase Order. 2. 5. 4. Purchasing Teams shall be responsible for obtaining Committee’s approval for cancellation of the Purchase Order.

along with invoice to be forwarded to Accounts Payable Team for necessary action. Verify if liquidated damages conditions apply or not. a Purchase Order Revision shall be issued and approved in accordance with Executive Delegation of Authority for waiving liquidated damages . Purchasing Teams shall forward a letter to the supplier notifying the liquidated damages. in accordance with the Executive Delegation of Authority. Purchasing Teams shall assess the case and determine if liquidated damages is applied or waived. and obtain appropriate approvals for application or waiving. A copy of the letter. 3 Page 1 of 1 Date : December 2008 SECTION 11: LIQUIDATED DAMAGES & EXTENSION PERIOD Liquidated Damages 1. 2. Accounts Payable Team shall receive the Supplier’s invoice. 5. If Liquidated Damages is to be applied. Extension of Period Where it is agreed to extend delivery period of an already signed and issued Purchase Order or Blanket Purchase Order Release. 4. 3. Purchasing Teams shall calculate the liquidated damages. if liquidated damages is applicable. Depending on the agreement with the supplier Purchasing Teams shall specify in the Purchase Order special instructions.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 11: Liquidated Damages Issue No. If liquidated damages clause is applicable they shall forward the invoice to Purchasing Teams for review and approval.

Recommendation shall be approved as per Executive Delegation of Authority and respective committee. 3 Page 1 of 1 Date : December 2008 SECTION 12: CLAIMS All claims from the suppliers shall be processed promptly. The Superintendent of the Blanket Purchase Order and/or Purchasing Teams. . wherever the case is. shall be responsible for full evaluation of the claim.KOC POLICIES AND REGULATIONS FOR PURCHASING Section 12: Claims Issue No.

KOC POLICIES AND REGULATIONS FOR PURCHASING Section 13: Invoice Processing Issue No. per Executive Delegation of Authority should be obtained. Approval of partial payment. . for material received by company with minor discrepancies and require long procedures for rectification. Approval against shipping document per Executive Delegation of Authority should be obtained. 2. 3 Page 1 of 1 Date : December 2008 SECTION 13: INVOICE PROCESSING 1.

contracting. entrusting services. consultancy services and sale of surplus material items I .Kuwait National Petroleum Company A subsidiary of Kuwait Petroleum Corporation Resolution No. 7 of 2009 Of the Board of Directors On material purchase.

2. 7/2009 of the Board of Directors Adopted in the meeting No. entrusting services. 1/2005 on regulating the tenders of oil companies. most compassionate.The resolution of the Chairman and Managing Director No. 24/2007 and No. 5.The financial regulations of Kuwait Petroleum Corporation and affiliates already adopted on 5/9/2005. 3. 5/79 already amended as per resolution No. 6. most merciful Resolution No.By-law of HTC. 520 (3/2009) Having perused: 1.The resolution of the Supreme Petroleum Council No.The resolution of the Board of Directors No. 35 of 2005 on material purchases. contracting. Kuwait Petroleum Corporation and affiliates.The regulatory by-law for oil companies tenders of Kuwait Petroleum Corporation. 25/2007 dated 20/11/2007 on the proposed amendments to Financial Authorities regulation. 1/1998 and No. 37/1964 on public tenders. 14/2006 issued on 7/8/2006 on the regulations amending the Financial Authorities of the Company and both resolutions of the Board of Directors No. It is hereby resolved: II . and 7. Consultancy services and sale of surplus items of the Company.Law No. 4.In the name of God.

35 of 2005 and all previous resolutions already published and contradicting with this Resolution are hereby cancelled. Article 3 (Execution and initiation) This Resolution is effective from 1st June 2009. each within his field of concern. contracting. provisions and amendments thereto are hereby applicable as procedural and regulatory provisions for all affairs of material purchases. Furthermore. entrusting services. Article 2 (Commitment and restrictions) Those persons undertaking the affairs of material purchases. department managers must implement this Resolution.Article 1 (Regulations for Implementing and executing purchases and entrusting works) The purchases and entrusting works regulations attached herewith and all its contents. (Signature) Farooq Hussain Al Zanki Chairman and Managing Director III . Consultancy services and sale of surplus items of Kuwait National Petroleum Company. entrusting services. Further. the resolution of the Chairman and Managing Director No. works and contracts in all departments of the Company must strictly observe the provisions of the Regulations referred to under Article (1) of this resolution. including its Articles.

Kuwait National Petroleum Company (KSC) Purchases and Entrusting Works Regulation (PEWR) IV .

Articles and Provisions of the Regulation V .

and pursuant to Article 41 of the financial regulations already adopted by Petroleum Supreme Council in the Minutes of the Meeting Number 3/76 (4/2005) dated 5/9/2005.Chapter I (Regulatory Provisions) Article 1 (Commitment to execute and implement the regulatory and supplementary regulations) Purchases and Entrusting Works Regulation (PEWR) have been issued under Article 2 of the regulatory by-law applied to oil companies affiliated to Kuwait Petroleum Corporation already implemented on 1/10/2005. In addition. Further. Article 2 (Definitions) In addition to the definitions already described under Article 4 of the aforesaid regulatory by-law. these provisions are considered supplementary to the provisions of the regulatory by-law that applied to oil companies affiliated to Kuwait Petroleum Corporation. The provisions of the Articles stipulated in PEWR are applicable to all departments of Kuwait National Petroleum Company. Kuwait National Petroleum Company hereby abides by the regulations of the Higher Tendering Committee (HTC) of Kuwait Petroleum Corporation and Petroleum Companies and all other related regulations and laws. the following definitions are applicable: Company : Kuwait National Petroleum Company 1 .

contracting. Consultancy companies and offices approved by the Company through CEC/VEC according to its business process. Approved List : A record containing the names of suppliers. Concerned Party : The concerned section of the Commercial Department. limited list may be prepared pursuant to the Approved Lists. However. Purchases. Commercial Support. Pre-qualification : The acts and procedures of evaluating and prequalifying companies qualification committee via special regarding preworks. contractors. purchases and projects of specialist nature. Consultancy services. Limited : Tender/momarasah/auction restricted to specific tender/momarasah tenderers/bidders/auction participants. External Co-ordination) Requesting Party : Different departments of the Company or affiliated sections that request materials or services. each according to its function (Contracts. Limited list (Short list) : A list contains names of companies or establishments to whom the tender/offer is restricted. whether /auction this restriction is based on pre-qualification (for 2 .Regulatory by-law : The regulations organizing the tenders of the oil companies of Kuwait Petroleum Corporation HTC by-law : Business regulations of the higher tendering committee of Kuwait Petroleum Corporation tenders.

It is an integral part of the required documents for preparing purchase or service requests. administrative. Model documents : Documents used to prepare Contracts with third parties. compiling and analysing data and information or preparing statistics. Further. organizational or legal studies or preparing software programs along with its different applications or laying out designs. economic. Consultancy services include provision of advices. MAXIMO : The integrated system for managing Company’s internal business process electronically by the computer.the three types) or limited lists/approved lists (with regard to tenders and momarasah only) Public : Tender/momarasah/auction that is not restricted tender/momarasah to /auction participants. 3 . Consultancy works/services : Preliminary or preparatory services or activities that do not include execution of works. proposals and/or recommendations. Material/Purchase Service Request : A request raised by the Requesting Party (according to the applicable business process) To the Concerned Party to procure materials or services. rather it is offered to all those who specific tenderers/bidders/auction would like to take part in the process. rather its scope of activity is restricted to undertaking technical.

Contractor : The organization or firm with whom the Company signs a contract to provide services or undertake works. Cancellation of : Complete tender issuance RE-float refloat) and final cancellation. Prohibited list : List maintained and updated by CEC/VEC. It contains the names of manufacturers. suppliers and/or contractors with whom business is prohibited due to faulty performance or lack of cooperation with the Company. CEC/VEC : Vendors. Service Contract : A contract signed by the Company with a contractor entrusting him to provide services or to undertake works. Material Purchase : An order issued by the Concerned Party to the Order supplier to supply material. according to the applicable business process and within the scope of the financial approvals of ITC.Bid : A Committee formed and authorized by ITC to Opening Committee prepare opening bid statements of bids (sealed envelopes) received via tender box of ITC. manufacturers and contractors evaluation (pre-qualification) committee in the Company. Supplier : The party. firm or factory that will supply material to the Company. including Service Request within MAXIMO system. (partial : Soliciting bids once again at a new closing date without cancellation of Service Request within 4 .

to consider different subjects such as issuing. 5 . each according to its field of concern. awarding tender. Approved bidders : The bidders that are already approved in the VEC/CEC lists or in limited lists. HTC : Higher Tendering Committee of Kuwait Petroleum Corporation and its subsidiaries. Single source : The party which is considered as a sole party in providing the required materials or services (works). It may be a contractor. consultant. CTC or Legal Advice and Legislation department. negotiation or other procedures/actions related to material or service tenders and contracts.MAXIMO system or changing tender/offer number or title. Service and entrusting works Requests at an estimated value of more than KD 5 Millions. The Committee considers and decides on Purchase.: Complete cancellation of Service Request within tender) MAXIMO system and issuing new Service Request at a new tendering cycle. manufacturer or material supplier etc. HTC. Necessary approvals : The approvals required from ITC. Service and entrusting works Requests at an estimated value of more than KD 1 Million. Re-tender (total re. via ITC Secretariat or External Coordination section. The Committee considers and decides on Purchase. CTC : Central Tendering Committee.

it is not used unless signature of contract is anticipated to be delayed. Chairman : Chairman and Managing Director of Kuwait National Petroleum Company. Legal advice and : The Legal Department of the Council of Legislation Ministers that reviews tender documents of department purchase and service requests of an estimated value of more than KD 5 Millions. Electronic Tendering : A system that interacts with MAXIMO business System (ETS) process in launching tenders via internet. considers Service and and decides entrusting works Requests at an estimated value of more than KD 30. DMD (VEC/CEC) : Deputy Managing Director presiding over CEC/VEC.ITC : Internal Tenders Committee of the Company.000. KD Letter : Kuwaiti Dinars Of (LOI) Intent : An official letter disclosing the Company’s intent to contract with the successful contractor. In this respect. In this way bidders can download tender documents and upload their bids via a special website. The Committee Purchase. 6 . However. Financial Authority : The authorized person according to the Financial Authorities’ regulation of the Company. it serves as an introduction for signing the contract.

It is provided. follow and execute the resolutions and/or recommendations issued by ITC. however. The Committee’s Secretary (a person other than the members) shall be appointed by the Chairman in accordance with Article 8 of the regulatory by-law. All departments of the Company are required to observe. Article 4 (Additional functions of ITC) In addition to the contents of Article 9 of the regulatory by-law. - Three specialized members from the Company. including ITC Chairman’s deputy. that the Committee must be formed comprising of 7 members as hereunder described and each principal member will have an alternative member: - Committee Chairman: any deputy of the Managing Director. 7 . is formed as per a resolution issued by the Chairman.Considering and deciding on auctions pertaining to the sale of surplus materials. - One member representing Legal Department. ITC is concerned with the following: 1. - Two members from subsidiary oil companies.Chapter II ITC formation and functions Article 3 (ITC formation) A Company Internal Tendering Committee called ITC.

obtaining the necessary approvals and other issues related to ITC with respect to tenders and momarasahs of values up to KD 5 Millions as well as auctions. opening envelopes. one at a time) provided the decision is unanimous. Article 5 (Presenting tendering requests to ITC) The Concerned Party shall submit requests accompanied with all required data and documents to the Secretariat General before ITC meeting in sufficient time. call for an urgent meeting or may request the members to approve separately and individually (i. the resolution of ITC after reconsideration shall be considered final and enforceable against all parties. awarding. procedures and issues supporting all ITC works.Considering and deciding on issuing/soliciting Pre-qualification applications and approving its results.2. The Secretariat General will facilitate and follow up the administrative works pertaining to the functions of issuing tenders. in coordination with the Concerned Party shall provide all information and data that enables ITC to conclude appropriate resolutions. however.The Secretariat General is responsible for all administrative arrangements. forwarding bids to the concerned authorities. advertising via different means. after clarifying the justifying reasons. Article 6 (Functions of the Secretariat General) 1.e. The Requesting Party. However. momarasahs. auctions. 8 . soliciting bids. In case of urgent requests. the Chairman of ITC may. Any party within the Company may ask ITC to reconsider its resolutions.

4. even if they differ with ITC resolutions. follow up of initial bank guarantees (bid bonds) of all types of tenders. addition or contradiction with its contents.The Secretariat General will be responsible for documentation of all activities carried out by ITC. momarasahs or auctions along with extending the validity hereof as deemed necessary. all procedures already referred to under this Article will be made by the Concerned Party that will coordinate with the Secretariat General matters relate to the role of ITC in this system already referred to under Article 13 of this regulation.In case of applying electronic tendering system (ETS) for issuing and collecting bids etc. keeping all ITC files and documents as well as carrying out other functions that ITC may assign to it. Article 8 (Interpreting or amending the provisions of this regulation) ITC can interpret the contents of this regulation without amendment. Article 7 (External Committee Resolutions) All resolutions or recommendations issued by CTC or HTC regarding the tenders that fall within their jurisdiction are applicable and have the precedence over ITC resolutions.The Secretariat General is entrusted with the authentication.2. 3. If necessary ITC may submit recommendation to the Company’s Board of Directors to amend the provisions of this regulation in the light of any resolutions that may be 9 . after coordination (by the concerned party) with the authority concerned with bid evaluation until the Concerned Party receives final guarantee from the successful bidder.

Article 9 (Acting contrary to regulations) ITC Chairman will advise the Chairman of the violations that may be committed against the provisions of this regulation. provided they fulfil all conditions in the related regulating laws and by-laws. he/she shall advise the Chairman of the Party responsible for these violations along with the necessary supporting documents and information. all companies are allowed to take part in the public tenders or momarasahs. However. 10 . Article 10 (Bidders Participation Conditions) Without prejudice to Articles 13. limited tenders or momarasahs are restricted to approved bidders or those that are pre-qualified via pre-qualification procedures or mentioned in limited lists. Further.subsequently issued or that may be required by actual practice of this regulation without contradicting the laws or regulations issued by higher external authorities. 14 and 15 of the regulatory by-law. they may submit their bids. Further.

Its procedure shall be in the manner set forth in this regulation and the regulatory by-law. However. However if the single source is the original manufacturer (only in case of spare part or repair services) then it will be approved by the department manager of the Requesting Party. it must be observed that it must have accurate 11 . 2. momarasah or direct order principles (single source) may be adopted.Tendering is the rule for procurement of material and services/works. services. limited lists or single source. 3.If the tender or momarasah are required to be issued at an estimated value of more than KD 30.Chapter III Provisions related to purchases.000 based on pre-qualification lists. the time period between two successive requests shall be at least one month (30 calendar days).While preparing the requests for Internal or External Concerned Committees. The approval of ITC on the momarasah principle shall be obtained.The material/service request may not be divided into sub-requests that the estimated value of each is about KD 30. If a need is repeated for the materials or services. the Requesting Party shall include in the request for procurement of material or services the justifications for the same approved by DMD (VEC/CEC). auctions and prequalification procedures as well as sale of surplus material Article 11 (Preparing the documents and requests of Material and service procurement and forwarding the same to the Concerned Party by the Requesting Party) 1.000. 4.

This approval shall be valid for one time only. then the tender/momarasah will be re-floated to all approved bidders.In case of addition/deletion/amendment/amalgamation exercise done to approved bidders list. 5. If a genuine justifying need arises. Approved supplier/contractor lists that are based on pre-qualification shall be considered as limited lists that may be amended either by addition or deletion after the elapse of suitable period (determined by ITC) from being approved. taking into account the requirements of these Committees including confirmation of the necessity of the required material or service to avoid any amendments after obtaining approvals in a way it enables these committees to consider the presented subjects. If the number of the local suppliers or contractors in the approved lists is reasonable (not less than 8 suppliers/contractors). Requests shall be prepared through MAXIMO system after being approved in accordance with the Financial Authorities of the Requesting Party. 6.Suppliers and contractors registered under the Company’s list of prohibited suppliers/contractors shall be excluded. No recommendation shall be made to approve a limited list except for the provisions under this Article. The resultant list is considered as a limited list.information. then the tender will be restricted to them unless the same results in a monopoly conduct. the Requesting Party must obtain the approval of DMD (VEC/CEC) before obtaining necessary approvals to issue the tender (or) the like. the request will be offered to DMD (VEC/CEC) to consider the justifications before approving the list. 12 .

7- In case of requests, either for addition or deletion from an approved list
during tendering, the approval of DMD (VEC/CEC) is sufficient if the
estimated value is more than KD 30,000 and up to KD 1 Million without
obtaining the approval of ITC. However, greater value should be
presented to ITC to decide either addition or rejection. Consequently
the approval of HTC and CTC shall be obtained, as the case might be.
8- Documents shall be made, according to the practical execution
mechanism proposed by the legal department of Kuwait Petroleum
Corporation to deal with the Ministerial Resolution No. 2 of 2004
issued on 24/2/2004 pertinent to making texts of contracts in Arabic.

Article 12
(Special Evaluation criteria of Requests of estimated values of more
than KD 30,000)
1- The approval of ITC shall be obtained should the tender or
momarasah documents (including consultancy services) include
additional or special evaluation criteria or requirements that have not
been mentioned in the model documents of the tender or momarasah.
2- If a need arises to adopt special evaluation criteria and not to include
the same in the tendering documents mentioned under item 1, the
consent of DMD of the Requesting Party shall be obtained as well as
the consent of ITC before receipt of bids.

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Article 13
(Tendering procedures of Requests having estimated value of more
than KD 30,000) (Issuing/bid evaluation/awarding)
1- The Requesting Party shall prepare purchase or service/request in
accordance with Article 11 of this regulation and send the same to the
Concerned Party that will prepare tender documents after checking its
remarks with the Requesting Party. In this respect, Finance and Legal
Departments must be consulted in case of any amendment to the
model tender documents. Subsequently, the Concerned Party shall
send final documents to ITC Secretariat General.
2- ITC Secretariat and then External Coordination division shall obtain
the necessary approvals to issue the tender. Moreover External
Coordination division shall present tendering documents to Legal
Advice and Legislation Department of Council of Ministers, for
requests of estimated values of more than KD 5 Millions.
3- ITC (via the secretariat) shall solicit bids accompanied with initial
guarantees, provided that final guarantees must be provided as
stipulated in the tendering documents.
4- In case of electronic tendering system, the Concerned Party shall
undertake all procedures, including extending both the closing and
pre-tender meeting dates, electronic publishing and awarding after
obtaining the necessary approvals. However, issuing requests or
subjects concerning reply to bidders that may influence the
competitive situation of bidders or any act/procedure that may
constitute a change in the original tender (or momarasah), its
conditions or number of bidders, must be presented to ITC for

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approval. Further, ITC can form a committee to open and prepare bids
opening statements of the electronic offers (or those submitted in
sealed envelopes as the case might be and according to the
applicable business process) and review the required bank guarantees
and prepare a report on submitted bids.
5- Replies to clarifications from bidders shall be made according to the
provisions of the tender documents. Further, applications for ITC
tender participation shall be only entertained from willing companies if
received within two weeks from the date of issuing, (i.e. to enable
enough time) to consider the possibility of deciding the same (i.e.
accepting or rejecting) according to procedures, conditions and
regulations.
6- Bids and offers shall be evaluated as follows:
A- The Requesting Party shall study and evaluate bids technically and
submit recommendation to the Concerned Party which in turn shall
check the recommendation from the commercial aspect (financial
and contractual), then it shall submit final recommendation to the
Secretariat General of ITC or External Coordination division for all
tender/requests, including single source material purchase request.
B- The Concerned Party for tenders related to the stock shall evaluate
the bids technically and commercially and submit recommendation
to the Secretariat General of ITC or External Coordination division.
C- The Concerned Party may obtain explanations from bidders directly
without making any amendments to bids as to conditions,
specifications, total prices or competitive situation of bidders.

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7- The Secretariat General of ITC or External Coordination division shall
obtain necessary approvals to award.
8- In accordance with para B of article 10 of HTC by-law:
A- HTC shall have the authority for approving issuing of purchase of
material, work and consultancy service requests, either by means
of tenders, momarasahs or direct order (single source) for
estimated value of more than KD 1 Million. Further, it will have the
authority for approving recommendations for award for values more
than KD 1 Million even though the estimated value upon issuing
was KD 1 Million or less.
B- HTC has the authority to decide and award tenders, momarasahs
and direct order (single source) of estimated values of more than
KD 1 Million and up to KD 5 Millions even though the awarded
value exceeds KD 5 Million.
C- HTC will have the same authorities already mentioned under para
B above, with regard however to the estimated values of more than
KD 5 Millions only if an authorization is issued from the Board of
Directors of Kuwait Petroleum Corporation in this respect,
otherwise, the authority of issuing and awarding the tender will be
by CTC unless a resolution is issued by the latter that it does not
have a jurisdiction over the subject matter.
The Concerned Party shall request the successful bidder to provide
the final guarantee (performance guarantee) and insurance policies for
review by the Finance Department. However, the Concerned Party
may undertake the review itself if prior agreement is made in this
regard with the Finance Department. The only requirement for signing

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the contract is the acceptance of the final guarantee (performance
guarantee) by the Company. Under all circumstances the Requesting
Party shall not issue the Commencement letter unless the final
acceptance of Company’s Finance department regarding insurance
policies is obtained.
9- The Concerned Party will present tender documents (for material or
service procurement requests) to the Legal and Finance Departments
for approval before awarding the tender if any amendment is made in
any form that may change the conditions of contract from those set
forth in the Model tender documents unless similar previous approval
was obtained.
10- The Concerned Party may present any disagreement between them,
the Requesting Party, the Finance or Legal Departments with respect
to tender document to ITC whose decision shall be final and
enforceable.
11- The Concerned Party will advise the Secretariat General of
ITC/External Coordination section to release initial guarantees via
ECS systems, MAXIMO systems or any other agreed upon
mechanism or system.

Article 14
(Momarasah Procedures for tenders of estimated value of more than
KD 30,000)
1- All procedures provided under Articles 11, 12 and 13 of this Regulation
are applicable except those provided under the following sub-articles.

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2- Without prejudice to the contents of Article 63 of the regulatory by-law,
a tender may be issued as a Momarasah due to the following reasons:
A- If materials, works or services cannot be determined under
acceptable relative quantities or standard specification, such as
new works or materials that the Company had not obtained
anything similar to before.
B- These works or materials are urgently required.
C- The

reasonable

estimated

value

of

works,

materials

or

specifications is not clear.
D- In case of consultancy services.
E- To obtain reasonable prices if overestimated quotations are
received (when works/materials procurement requests were issued
as a tender).
3- The Secretariat General of ITC or External Coordination division shall
obtain necessary approvals to issue the momarasah, initial offers of
which will be received in sealed envelopes or via ETS. Further, the
approval of ITC will be obtained to select a negotiation approach.
However, ITC may give its consent to convene more than one meeting
for negotiation at specific time and as the need arises. Further
negotiation meeting may be convened, after obtaining ITC consent, via
modern means of communication (audio & video) as the need arises
and according to the circumstances.
4- Negotiations shall be made by one of the following approaches:
A- Public negotiations or momarasah:
All bidders (all of them or those who submitted the three lowest
priced bids) will be invited to the meeting publicly with the special
negotiation committee to conclude the best bid.

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As an alternative (or to obtain final bids) bidders may be requested
to resubmit their bids subsequently in sealed envelopes or via ETS.
B- Negotiation/momarasah individually:
All bidders (all of them or those who submitted the three lowest
priced bids) will be invited to the meeting one at a time with the
special negotiation committee to conclude the best bid. As an
alternative (or to obtain final bids) bidders with whom negotiations
are

concluded

may

be

requested

to

resubmit

their

bids

subsequently in sealed envelopes or via ETS.
C- To negotiate with the bidder that submitted the lowest priced bid
(and conforming to specifications) to reduce the price if ITC
considers that the same is for the best interest of the Company.

Special committee for negotiation:
A special committee shall be formed (from the Requesting and
Concerned Parties) as per a request by Requesting Party to negotiate
with bidders, the same shall be approved by ITC. Further, the
Requesting Party will preside this committee. Negotiations will be
mainly conducted regarding prices, specifications or both.
5- Awarding tender shall be made to the successful bidder as a result of
the negotiations, provided that his bid has the lowest price and
conforms to the specifications.
6- Award may be directly made to the lowest priced bid (conforming to
the specifications) if the necessity to activate the momarasah does not
exist. The consent of ITC on the same shall be obtained.

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All procedures provided under Articles 11. However. quotations to ensure obtaining competitive bids unless the original Manufacturer insists on 20 . 4. all conditions related to this mechanism must be mentioned in the tender documents. the Concerned Party shall solicit single source offers from the original Manufacturer or its representative. carry out an electronic momarasah) until the closing date. and as deemed appropriate.The Concerned Party may negotiate with the single source directly after coordination with the Requesting Party. the Company may request from the following authorities (via the Concerned Party). so that bidders can observe least prices already quoted anonymously in order to facilitate the bidders to compete over the price (i. ITC may allow for soliciting bids (to purchase materials only) via the Company’s special website and by means of competitive quotations.e. 3. 2. Article 15 (Single source procedures of the estimated values of more than KD 30.000) 1.Necessary approvals shall be obtained before awarding the tender to the single source.Reverse auction In the best interest of the Company. Further. 12 and 13 of this regulation are applicable in the manner that suit the nature of contracting with the single source except those already stipulated under the following items.7.With respect to the supply of materials and spare parts.

soliciting prices from it directly or from its local agent. In this case, the
Company may provide in the tender documents that the price list of the
original Manufacturer must be attached:
A- The original Manufacturer of materials and spare parts.
B- Consolidated suppliers of materials and spare parts with which the
Company has a business.
C- Local Agent (if any).
5- If no quotation is received from the single source, the tender shall be
issued under public (or limited) tender in accordance with the
procedures to obtain the required materials. In this respect, tender
documents must include the specifications of the material or
equipment of the single source or alternative acceptable specifications
without affecting the quality and performance of the subject materials
or equipment.
6- Based upon a recommendation by the Requesting Party, the
Concerned Party shall submit final recommendation to the Secretariat
General of ITC/External Coordination division to obtain the necessary
approvals.

Article 16
(Contracting procedure of the consultancy services having
estimated value of more than KD 30,000)
1- The tender related to consultancy services shall be issued as a
momarasah in accordance with the procedures set forth in the Article
14 or as single source contracting in accordance with Article 15 of this
regulation.

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2- The Requesting Party, under a resolution from its DMD, may form a
special committee, if the need arises, such as urgency related to
specific time table interrelated with external authority, etc. This
committee will undertake all procedural activities entrusted to the
Concerned Party. The committee’s assignment will be automatically
terminated after signing the contract by the Financial Authority.

Article 17
(Procedures for tendering services and materials purchase having
an estimated value of not more than KD 30,000)
Section 1: Up to KD 5,000
A- Preparing documents and requests:
The Requesting Party shall prepare materials or service procurement
requests in accordance with Article 11 of this regulation and send the
same to the Concerned Party who shall prepare tender documents via
MAXIMO system after finalizing its remarks, if any, with the
Requesting Party. Further, it will obtain the opinion/approval of the
Finance and Legal Departments if the request includes deviation from
model documents.

B- Issue of Tender documents:
1- The Concerned Party shall undertake all necessary actions to issue
tenders, fix closing date and solicit offers from the approved
bidders via ETS (or as sealed envelopes via closed box through
special committee to be formed by Commercial Department
Manager should ETS fail).

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2- The Concerned Party has the right to directly solicit offers from
three companies up to KD 500 by fax or E-mail.

C- Awarding and contracting:
No initial or final bank guarantees are required and it is sufficient to
intimate the award decision to the successful bidder by a written
notification (letter).
Section 2: More than KD 5,000 and up to KD 30,000
A- Preparing documents and requests:
In this respect, Section 1 – Part A of this Article is applicable.
B- Issuing of tender documents:
1- The Concerned Party shall fix issuing and closing date of the
tender.
2- The Concerned Party shall complete all necessary procedures to
issue these tenders and solicit bids via ETS (or by sealed
envelopes through closed box, should electronic system fail)
3- Should ETS fail, Commercial Department Manager may form a
committee to open bids, prepare bids opening statement and send
them (bids and statement) to the Concerned Party.
C- Bid evaluation:
1- The Concerned Party shall send the bids to the Requesting Party
for

evaluation.

Requesting

Party

shall

provide

technical

recommendation to the Concerned Party to issue the final
recommendation.
2- Tendering procedures may be continued until issuing final
recommendation by ITC without the need to refloat the tender

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(either partially or totally) if bids are received of values of KD
30,000 or more, provided that it is technically and commercially (i.e.
financially and contractually) acceptable.
D- Awarding and contracting:
1- The Concerned Party shall request the successful bidder to submit
final guarantee and insurance policies in accordance with para 8 of
Article 13 of this regulation.
2- The Concerned Party shall present tender documents to Legal and
Finance Departments in accordance with para 9 of Article 13 of this
regulation.
3- Initial guarantees shall be released (in case it was stipulated in the
tender documents) in accordance with para 11 of Article 13 of this
regulation.
Section 3: Momarasah
A- Preparing documents and requests:
In this respect, Section 1 – Part A of this Article is applicable.
B- Issuing of Tender Documents, evaluating bids, awarding and
contracting:
1- The Concerned Party shall obtain the consent of the Commercial
Department Manager to solicit bids due to any reason already
mentioned under Article 14 of this regulation.
2- The same procedures of momarasah already explained under
Article 14 of this regulation are applicable except that Commercial
Department Manager will replace ITC with respect to obtaining all
types of approvals already required under Article 14.

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Section 4: Single Source
All procedures of the single source are applicable in accordance with
Article 15 of this regulation except those already provided under item 4 of
that Article.
Required approvals for single source pertaining to Article 17:
1- The approval of the department manager of the Requesting Party shall
be obtained to procure from a single source up to KD 5,000 of an
estimated value.
2- The approval of the respective Deputy Managing Director of the
Requesting Party shall be obtained to purchase from the single source
with respect to procurement requests of estimated value of more than
KD 5,000 up to KD 30,000.
Section 5: General Procedures related to Article 17:
1- The approval of the authority authorized to sign the contract
(according to the Financial Authorities) shall be obtained regarding
Recommendation to Award tender.
2- The Concerned Party shall present the differences of points of view
with the Finance or Legal departments regarding the procedures or
conditions of concluding a contract to DMD (who presides the
Concerned Party) whose decision shall be final.

Article 18
(Material quotations on the websites for materials having estimated
value up to KD one million)
1- Without prejudice to Article 11 on obtaining the approval of DMD–
MAA, the Concerned Party shall obtain the consent of ITC on the lists

25

of the single suppliers/manufacturers to deal with them in the manner
already stated under that Article if ITC approves the same.
2- The Concerned Party shall prepare supply agreement that will be
reviewed by Finance and Legal Departments and signed by the
supplier/manufacturer and the Financial Authority of the Company.
The agreement provides that the supplier/manufacturer is committed
to the prices and supply periods declared on the website as of the time
of issuing purchase order, provided that material must be supplied
pursuant to receipt of purchase order by the supplier without necessity
to sign the same by the latter.
3- The supplier/manufacturer will have the right to update the prices,
supply periods of materials and to advise the Company (via the
Concerned Party) of the justifications for increasing prices should the
Company request so. However, the Concerned Party may select the
suitable quotation (the least price that conforms to whole conditions,
particularly technical conditions) from the lists published on the
websites of the above approved suppliers and manufacturers.
4- The Concerned Party will issue recommendation for awarding the
order to the bidder who offered the lowest price that is technically and
commercially acceptable (enclosing complete bidders’ list and
justifications for awarding), or the offer made by the single source
(enclosing the justifications). The Secretariat General of ITC/External
Coordination division shall obtain the necessary approvals.

Article 19

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(Variation Orders)
1- The Requesting Party shall send a request for issuing variation order
(via MAXIMO system) to the Concerned Party for review, who will then
send the same to the Secretariat General of ITC/External Coordination
division to obtain the necessary approvals.
2- Requests for variation orders (approved by the Financial Authority)
that will result in changing the value of contract, either with increase or
decrease, shall only be presented to ITC. Signing the variation order
with the contractor at a value less than that previously approved by
ITC will not need new approval from ITC.
1- Approval levels:
A- ITC approvals:
1- Variation Orders that render contract value to be more than KD
30,000 at reasonable percentages that are subject to the
estimation and approval of ITC.
2- All variation orders to contracts/purchase orders of a value of
more than KD 30,000 and up to KD 1 Million, provided that the
value of the contract/purchase order after adding the variation
order shall not be more than KD 1 Million.
3- Variation orders of total value of not more than 10% of original
contract/purchase order value and not more than KD 5 Millions
for the contracts/purchase orders of a value more than 1 Million
and up to KD 5 millions.
4- Variation orders that require obtaining approvals from External
Committees/Authorities.

27

whichever is less with respect to contracts/purchase orders of a value more than KD 5 Millions. net arithmetical result is to be considered as a final variation value.000 or more and up to KD 1 Million as subsequent control measure. regardless of the reduced impact of value resulting from the deletion. whichever is less with respect to contracts/purchase orders of a value more than KD 1 Million and up to KD 5 Millions.Variation orders of total value more than 10% of original contract/purchase order value or more than KD 5 Millions.To determine the level of Approving Authority (i.Variation orders that render contract/purchase order value to be more than KD 1 Million with regard to contracts/purchase order of a value up to KD 1 Million. upon calculating contract/purchase order value after variation order. with monthly report regarding variation orders that exceed 20% or more of contracts of value of KD 250. 2. C. Furthermore.HTC approvals: 1.The Concerned Party shall provide HTC. However. internal/external committee) for the variation order. the calculation of all added or deleted works as well as the compensation for extension of contract period must be done as if all were in excess of the original contract/purchase order value. based on the fact that each deletion or addition is considered as a variation. the 28 .e. 3. via external coordination division. 4.B.CTC approvals: Variation orders of total value more than 10% of original contract/purchase order value or up to KD 5 Millions.

it will be presented to the concerned committees to obtain necessary approvals according to the level of approvals already explained under Article 19. particularly the opinion of the Concerned Party and Legal department. the DMD may decide to obtain the opinion of the concerned departments rather than forming a committee. Further. the Requesting Party will submit an application for settlement supported by documents and approved by the Financial Authority to the Concerned Party who will review and send the same to the Secretariat/External Coordination division to obtain the necessary approvals according to the contents of para 2 of this Article.Upon acceptance of the claim.e.rules pertaining to prohibiting the division of the variation orders must be observed. to study the claim. subject to split mode) that leads to concluding more than one contract. 5.Upon issuing a tender in sets form (i. Article 20 (Supplier/contractor claims) The Requesting Party will review the claim and report to its DMD who may form a committee representing the concerned departments. 2. as the case may be. 1. Alternatively. each contract (for one set) will be considered as sole independent contract along with its variation orders. 29 .Settlement of the claims of contractors/suppliers/consultants that result in amending contract value will be treated as variation orders until completion of contract works.

telephone or ordinary method (i.  Commercial Department Manager: Approves issuing and awarding a tender of more than KD 1 Million and up to KD 5 Millions. pursuant to the request of the Requesting Party and in case of emergency declared and approved by the respective DMD according to the procedures of the Company. shall expedite obtaining the necessary approval (from the Board of Kuwait Petroleum Corporation) to obtain an exemption from ordinary contracting procedures.Article 21 (Contracting procedures in case of emergency) 1. 2.  Team Leader: Approves issuing and awarding tender more than KD 30. Further. e-mail. it will advise Internal and External Committees thereof. 4. 3.000 and up to KD 1 Million. These cases include urgent projects that can be exempted from CTC procedures already stated in the resolution of Kuwait Petroleum Corporation No. 61/2005 dated 17/10/2005. 30 .The Concerned Party (External Coordination section).The Concerned Party may issue the tender to an approved list of contractors/suppliers or single source without obtaining ordinary approvals (for such a procedural activity).Supply/delivery period is the most essential criteria for evaluating bids and approving award of tender.Contract signatory from the Company will be the same authority according to the Financial Authorities.e.000. it may solicit offers by fax. sealed envelope) as follows:  Cell Leader: Approves issuing and awarding tender up to Kuwaiti Dinars 30. Further.

B. including the following: A.The reasons that resulted in not signing the contract. D. The LOI is primarily intended to expedite the kick off meeting with the contractor and the subsequent preliminary activities.The Concerned Party will review the request and obtain the opinion of the Legal department if necessary. 31 .The reasons that render commencement of the preliminary activities necessary before signing the contract.The authority entrusted signing the LOI in the Company is the same Financial Authority of the original contract.The Requesting Party in co-ordination with the Concerned Party should indicate in the request the reasons for issuing the LOI.The steps already concluded to prepare the contract for signature. such as planning for material and equipment procurement and planning for personnel and equipment mobilization. C. ITC shall be intimated with signed copy of the LOI.To what extent the Requesting Party is satisfied that signing the contract is a matter of time only. 3. 4. before it obtains the signature of the contractor/supplier on the letter of intent.Article 22 [Letter of Intent (LOI)] 1.LOI will be issued after obtaining the approval of the Chairman on the Requesting Party’s request for urgent cases where the signature of contract may be delayed due to procedural formalities. 2.

B.Any requirements or conditions pertaining to health.Article 23 (Procedures of selling surplus items) 1.Presenting the documents to the Finance and Legal Departments for review if it is different from the standard documents used in previous cases. The authority responsible for the material stock will be considered as the Requesting Party. the application must be accompanied with a written confirmation from all relevant User’s Departments that these materials are no more needed. 2.e. 32 .The quantity of each item.The Requesting Party will prepare a request for sale of surplus material to be dispensed with.Inspecting all surplus materials and estimating their prices. C. C. provided that the request includes: A. (approving material write-off request). D. B.Commercial Manager shall form an appraisal committee from all concerned departments that will be entrusted the following duties: A. It shall obtain an approval from the Financial Authority and then send it to the Concerned Party.Approval according to the Financial Authority with respect to having these items/materials surplus i.Justifications and reasons for the sale. safety and environment or any technical specifications that must be included within documents of the auction. If the materials under question are non moving store items.Preparing all technical and commercial conditions and specifications pertinent to the auction (sale) and preparing all its documents in coordination with the Concerned Party.

cancelling or refloating (partially or totally) to ITC. pursuant to a recommendation by the appraisal committee. may refloat the tender (totally or partially) or it may approve the sale to the highest price conforming to the specifications.If no participant comes forward with an offer or the highest price offered did not reach the approved estimated amount.D. 5.The Concerned Party shall send final auction documents accompanied with the proposed time table to ITC for the approval of issuing of the same. 4. it will contact the Secretariat General of ITC to release the initial guarantees submitted by unsuccessful auction participants. 3. In this respect. the appraisal committee shall study bids and make recommendation for awarding. 7. 6. insurance policies and signing the sale agreement by the Financial Authority.The Concerned Party shall advise the successful auction winner and complete all procedures for signing the sale agreement. even though it is less than the approved estimated amount.The auction shall be awarded to the auction participant who conforms to auction conditions and who offered the highest price (and conforming to the conditions stipulated in auction documents) that is more than or at least equivalent to the approved estimated amount.The Concerned Party (Commercial Support division) will send the sale agreement to the Requesting Party that shall supervise all executive and administrative works related to the agreement. Further. ITC.Subsequently at a later stage. the 33 . including coordination with the Finance department to review final guarantees.

In due consideration of item 6 of Article 11 on Pre-qualification. that this should be made via special committee called ‘Pre-qualification Committee’ for which the request for formation shall be approved by DMD (VEC/CEC).Upon the formation of Pre-qualification Committee.  Justifications for resorting to pre-qualification.The sale (auction) of surplus items (material) shall be approved in accordance with the Financial Authority and shall be made public with sealed envelopes. However. sale may be done by direct contracting or offering the auction to a limited list of parties after obtaining the consent of the Chairman pursuant to a recommendation by the appraisal committee and explaining the reasons justifying the same. provided that the request must include:  Description of the works for which pre-qualification is required. however. it is to be observed that the number of its members must not be less than four members from the relevant parties.  Estimated value of these special works.Requesting Party may coordinate with the appraisal committee if necessary. 8. It is provided. such as Commercial and Finance 34 . 2.  Recommendations or remarks of CEC/VEC. the Requesting Party shall obtain the go ahead approval of ITC regarding conducting pre-qualification for contractors that provide consultancy services or projects that are of a special nature or which are not available in approved lists as well as in the case of comprehensive maintenance services. Article 24 (Pre-qualification procedures) 1.

Determining the mechanism and criteria of Pre-qualification and evaluation process (it is necessary to coordinate with CEC/VEC to ensure the conformity of criteria.To open and evaluate Pre-qualification applications. 4. D.Duties of the Pre-qualification Committee: A. 3. Pre-qualification applicants’ filled in questionnaire/formats etc. In this respect.To issue detailed final report on the results of Pre-qualification process.Present Pre-qualification subjects to ITC and obtain necessary approvals in accordance with the functions already explained under the provisions of this Article.Sending final documents to Secretariat General of ITC accompanied with the proposed time schedule. if a need arises.departments or from other authorities inside the Company.Preparing all Pre-qualification documents. F.Secretariat General of ITC will undertake the following: A. It will present this report in writing to DMD (VEC/CEC) for his sanction.To send the sanctioned results of Pre-qualification to ITC for approval. B. it has the right to directly contact the companies seeking Prequalification to verify and review the information submitted in the manner it deems appropriate including site visits.e. C. 35 .) by ITC. E. Copy of the mechanism and criteria is to be sent to ITC in a sealed envelope before collecting applications (i. particularly financial criteria) and obtaining the approval of the DMD (VEC/CEC) on the same.

36 .To declare the results of Pre-qualification approved by ITC.B. C. 5. D.To forward all complaints received from the companies to Prequalification Committee for review.Further. provided that it must be approved by ITC ultimately.To send Pre-qualification applications to Pre-qualification Committee after registration in special log book. External Coordination division shall coordinate to publish necessary notices in the official gazette (Kuwait Al Youm) or in other newspapers or magazines in accordance with the generally applicable procedures. Any resolution regarding these complaints shall be sanctioned by DMD (VEC/CEC).

so that tendering procedures may be continued till issuing the final approval to award without necessity to re-float the tender (totally or partially) as follows: A.Chapter IV (General Provisions) Article 25 1. B.The limits of the financial levels should be observed while obtaining necessary approvals with respect to the difference between the awarding and estimated values. DMD of the Requesting Party will 37 .000.Final approval from ITC: Upon receipt of bids of more than KD 30.000. either with increase or decrease. CEC/VEC will be entrusted with preparation of the said record (based on its approved business process) and to make amendments thereto in the electronic filing system (or other standing systems) and MAXIMO system periodically to enable all departments to review and peruse the same. 2. Provided however.000.Final approval from HTC: Upon receipt of bids of more than KD 1. that all above mentioned bids must be technically and commercially (financially and contractually) compliant.The Company will maintain unified record of approved contractors and suppliers.No effecting amendments may be made to tenders (after issuance) that may result in an unacceptable change of the estimated value.000.000 and as well as for more than KD 5. 3.

have the authority to assess the situation in general and approve making such amendments. the Requesting Party must due to reasons of cancellation attributed to it obtain the approval of its DMD. 5.Any bid containing essential differences of the scope of work. specifications.In case of final cancellation of the tender. 4. financial conditions or legal conditions that affect the competitive positions of the remaining bids should not be considered. 38 . then it will obtain the approval of the Financial Authorities and advise ITC thereof. 7. it should obtain its DMD’s approval after obtaining the opinion of the Requesting Party. However. if necessary).The Requesting Party must submit detailed explanation of its recommendations for termination of contract to obtain the opinion of the Concerned Party and Legal Department (and Finance Department. 6.ITC may decide (it may seek the opinion of the Requesting Party) finalize or re-float the tender (totally or partially) in case of sole bid or in case no bids are received.The materials purchased under necessity will be exempted from all procedures already mentioned in this regulation in accordance with the rules and expenditure procedures of the cash deposits (petty cash) of the departments. 8. if the reasons of cancellation are related to the Concerned Party. before obtaining the necessary approvals.

All letters and requests must be addressed to the Chairman of the Committee. the HTC regulatory by-law. 39 . etc in case of any contradiction between its provisions and those of this regulation shall be maintained.The regulations and procedures of the Commercial Department related to electronic tendering must be observed. such as General Tendering Law. related texts of laws.Tender or tenderers wherever they are mentioned shall include Momarasah and Momaraseen and not the vice versa.9. provided that Secretary of the committee will have an assistant coordinating role. 10. regulations and rules issued by senior authorities. Article (26) (Precedence of applying the provisions) Precedence of applying the provisions. 11.

Chapter 10 Article (1) The Committee’s Headquarters The Committee Head Office is in The Company's Headquarters in the south of Soubahya. Article (2) Date and Time of the Committee Meeting The Committee shall hold its regular meeting on (Wednesday) each week at 09:00 am at the Committee’s Head Office. Article (4) Requests for presentation to the Committee The Company's concerned departments and divisions shall send the topics desirous to be presented to the Committee at least two days prior to the Committee’s session in the name of the Secretary. Article (5) The Representative of the Department Relevant to the Request . each member shall notify his substitute in case of his absence and to notify the Secretary in writing sufficiently in advance in case of their absence. Article (3) Minutes The Committee meetings shall be recorded in minutes to be approved in the first following meeting. and shall be sent to the members of the Committee with the agenda of the next meeting.

Article (6) Tender Box 1– A box holding all bids and practices shall be kept at the Campany's main office southern Soubahya. also the box shall be moved to the Committee Head Office and be kept until the seal is broken by the Tendering Committee during the next meeting.The Committee shall be entitled to invite any experienced personal from the Company's staff to express his opinion. Article (8) Launching and Closing Times . the keys of the locks shall be handed over to their substitutes. Article (7) Announcement of the Tender Results and Awarding The place for making the invitation for the tender. announcing the tender’s results and awarding shall be at the entrance of the Company's Headquarters. 2- Bids. tender envelops or practices shall only be entertained within the tender box within the set time. also the Committee shall be entitled to invite the representative of the requesting party or the concerned party to provide clarifications or documents to meet the purposes of the Committee. the Chairman of the Committee or his Deputy shall keep the key of the second lock. 4- The tender box shall have two locks and the key of the first lock shall be kept by the Secretary. 3- The box shall be sealed wax following the specified time for closing the tender by the Secretary. in the event of the absence of the Secretary or the Chairman or his Deputy.

they are presented to the Committee with full details. upon completion of the procedures of the requesting committee that raised objection. or their durations have been extended so that lead to increasing their total value to the limit of the Committee's competences. and objection by the Corporation's Committee or by the Central Tenders Committee emerge. consequently. commissioning to provide services.m. Article (11) Issues approved by the Committee and objected to by the Committee of the Corporation or the Central Tenders Committee In the event of approval of the Committee on any of the topics presented to it. then.Launching the Company's tenders shall be on " Sunday " in the Official Gazette " Kuwait Today " and Closing shall be on " Tuesday " at one o'clock p. resulting in a change to the Committee's decision. Article (10) Increases occurring on Operations making them subject to the Committee's competences Purchase operations. they shall have to be represented to the . work contracting and consultancy services originally less than the limit of the Committee's competences. and amendments or changing orders or claims of the other party to the contract occur therein. Article (9) Validity of Prices Submitted in Bids The requesting party shall take into account the validity of prices presented in the tenders or consider the time required for presenting to the Committee without affecting the validity of the presented prices.

Article (13) Methods of Presenting Details The required details shall be presented to the Committee as per the attached Forms for requesting issue presentation.Committee prior returning to the Corporation's Committee or the Central Tenders Committee. . Article (12) Irregularities The Chairman of the Committee shall have to notify the Chairman and Managing Director in the event of non-observance of the provisions of this regulation by the relevant authorities.

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l A S 7 7 ..L j i ~ L W I ~ l Y**A/t/YY :&jWI -:tW\ C U N l l d i aG.i .j.*- 4 1 1. C n v r o * 1 7 n l ! l r A r c . + l l .T F I F Y ' A A R 7 A ..O. A 4 1 7 1 D C T r n D D .gll .i. .~tyl& 4 1 it(9 5>byl& %fll 1 3 1 2 6 i U l T I 0 1 0 : u...@ L ~ A V A .. J g ..AAU72 . ~ y y ~ ~ .I i' .t t ~ v a -f f ~ v .&I?-+.11lg 5.I ~ A W f-f ~ v .9 $1 wjllJ&l aGa$ ADADAD : LaVI u s 9Al : . BOX : 26565 SAFAT 13126 -KUWAIT CABLE ADDRESS : PETCORP -TELEPHONE : 858585 C R ..+-rtonr: f - &> &> a . I/ . A A P 7 C .lI+lLI\TVIY/~/L/O: . 3 A S R 3 . . P.gel &&c@idgWth* K u y i t Petroleum Corporation - .

Provisions of this Regulations shall be complied with by Kuwait Petroleum Corporation ("KPC") and its owned companies which are registered and operating in the State of Kuwait ("Companies" or in singular "Company"). No exemption from these provisions shall be effected unless upon a decision taken by KPC's Board of . .Regulation of the Higher Tenders Committee of the Kuwait Petroleum Corporation and Petroleum Companies (Chapter 1) General Provisions Article (1) This regulation has been issued in implementation of Resolution number (5) for the year 1979 issued by the Supreme Petroleum Council as amended by Resolution number (1) of the year 1998 and . and without prejudice to the powers delegated to State bodies charged with purchasing and contracting activities.- Resolution number 1 of 2005. This regulation shall be implemented in conformity with the provisions of Laws and Regulations in force. and in compliance with Article 40 of the Kuwait Petroleum Corporation's Financial Regulation.

in addition to the aforementioned. KPC shall. Article (2) KPC and Companies shall issue executive resolutions for implementation of this Regulation within two months from its issuance. In the event of conflict. Article (3) The Chief Executive Officer ("CEO") of KPC is authorized to amend this Regulation through issuing an ordinance pursuant to . the application of this Regulation shall prevail. In the event of conflict. the application of this Regulation shall prevail. 1). K-Companies shall.Directors and provided that such exemption does not conflict with the Resolutions of the Supreme Petroleum Council. comply with the provisions of the Unified Companies Tendering Regulations attached herewith (Appendix No. . contracting and auctions. in addition to the afore-mentioned. comply with the provisions of the Regulation governing contracting for provision of consultancy services for KPC as well as the Regulation governing KPC's purchasing.

The committee shall be called the Higher Tenders Committee for the Kuwait Petroleum Corporation and the Petroleum Companies (hereinafter referred to as "the Committee" and shall comprise seven (7) original members representing the following entities: Kuwait Petroleum Corporation - Kuwait Petroleum Corporation .any resolution taken in future by either the Supreme Petroleum Council or KPC's Board of Directors. KPC's CEO is also authorized to issue a binding ruling on interpretation of any provision of this Regulation should there be different opinions concerning its interpretation.Deputy Chairman Chairman Kuwait National Petroleum Company - Member Member Kuwait Oil Tankers Company - Ministry of Oil - Member Kuwait Oil Company Petrochemical Industries Company Member Member . A committee shall be established to supervise KPC and Companies' purchasing and contracting for provision of services and constructions. Article (4) a.

client. In application of the provision of this Article. The CEO of KPC shall determine their remuneration. In any event. The Committee members shall be selected from among employees of respective bodies they represent. b. the term "tenderer" shall include the partner. or from other non-employee personnel who have special expertise. both of them shall be from amongst the original members. an alternate representative of each of the abovementioned entities shall be appointed and shall attend during absence of the original member. for a period to be specified in the resolution. The CEO of KPC shall issue a resolution appointing the Committee members (both original and alternate) in liaison and agreement with the respective chairmen of the above mentioned Companies and the Undersecretary of Ministry of Oil.With the exception of Kuwait Petroleum Corporation. the member shall not be a potential tenderer. the respective alternate . However. agent. and the employee. or the board member of a company or establishment who may submit a bid in whatever form falling within the Committee's jurisdiction. The appointment resolution shall include the nomination of the Committee chairman and a deputy who will preside the meetings during chairman's absence.

The . in liaison with their respective employers. appoint a secretary who shall attend and record minutes of its meetings with no right to vote. The Committee shall. KPC shall provide quarters for the Committee comprising furnished office and a conference room and shall attach to the Committee staff suitable for the nature and volume of the Committee's activities. pursuant to a proposal by its Chairman. The Committee may seek legal opinion of the KPC General Counse! on legal matters encountered by the Committee. d. The Committee Chairman shall set out the secretary's duties and functions. The Committee may seek assistance from technical experts or others as necessary from employees of KPC and Companies. c. without participation in voting. Article ( 5 ) a.members for chairman and deputy chairman shall not acquire this capacity. The Committee shall submit recommendation in this respect to the CEO for endorsement of appointment and determination of remuneration of the secretary. b.

so as to contract him and determine his remuneration.Committee Chairman may request his attendance at a defined session. the CEO may appoint a Chairman and a Deputy Chairman to preside the Committee on temporary basis throughout the absence period of the original Committee Chairman and his deputy. b. In the event of absence of both the Chairman and his deputy. he may delegate another person whom he deems suitable to attend the meeting so as to produce a legal opinion on the presented matter. To constitute a quorum. . In the event the Gen. the present Committee members shall elect a chairman from amongst them provided that the number of attendees shall not be less than four (4) members. In case of absence of both the Chairman and his deputy for two (2) consecutive meetings for whatever reason. the Committee session shall be attended by the Chairman or his deputy in addition to three (3) other members. Counsel is unable to attend. In the event the Cclmmittee requires assistance of an expert other than employees of KPC or Companies. the Chairman of the Committee shall take the matter with the DMD Financial Affairs of KPC. Article (6) a.

then he may attend the Committee meetings during the absence period in the capacity of an alternate member. In case of equal voting. d. as and when the need arises.c. A meeting may comprise more than one session. then the side including the Chairman is considered majority. In case the CEO does not object to the nomination of that representative. In the event that both the original and substitute members representing an entity of those represented in the Committee for two (2) consecutive meetings. All decisions and recommendations of the Committee can be taken with the simple majority of the votes cast. The Committee may hold additional extraordinary meetings or hold a meeting outside the Committee's headquarters by invitation of the Committee Chairman or his deputy (in the event the Chairman is absent). such entity shall have to appoint a temporary representative throughout their absence period and shall notify the same to the CEO and the Committee Chairman well in advance of the meeting following these two (2) meetings. . Article (7) The Committee shall hold its regular meeting once a week during the official working hours at the Committee's headquarters.

A copy of the ratified minutes signed by the Committee Chairman shall be sent to the Committee members within one week of the ratification date.Article (8) a..<.-. b. :*.. The Secretary shall be responsible for the Committee's records ensuring that they contain correct information on whatever deliberations and decisions made by the Committee.-! . The Committee shall record each meeting in a minutes which shall be ratified by the Committee in the first following meeting vide a Committee decision.bvlllpcullba ileuu +ul q ~ u uv y v ~ u r ~ wuuu ~ ~ ~a I W ~!? . +! -. The Committee shall have the competence as regards all purchasing and works/services contracting activities as well as provision of consultancy services which KPC and " .J U U L ~ +L-.<+:-<---4 -<--. .:. L . The Committee shall maintain regular records of all subjects presented to it as well as the originals of all minutes of its meetings and decisions issued thereby. .-.&. ~ ~ L ~ L L Y I . -:?:+I?. (Chapter 3) Committee's Scope of Work and Functions Article (9) a.-. ---- .

or advertising or seeking permission for the same from the Central Tenders Committee. c. and also to specify the nature. The Committee shall have the right to introduce amendments or additions to such forms. type and extent of detail of information required for each type of subjects falling within its scope of authority. It shall also include issuance of variation orders which may be necessary including those which contain amicable settlements. all of which shall be as detailed hereunder in the following Articles. and also to decide upon award of such tenders.State of Kuwait. all as detailed and within limits prescribed in the following Articles. The new or revised form shall be . Issuance of any new data form or amendment to an existing data form shall be made vide a decision by the Committee. in addition to variation orders which are issued on any of such Contracts. b. KPC and the Companies shall comply with the data forms contained in Chapter 5 hereof with respect to subjects and requests submitted to the Committee. The Committee's scope of authority shall include review of the procedures of tenders launching to supplierslcontractors so as to verify their veracity and appropriateness. for purchasing materials or contracting on workslservices. The KPCICompany shall not proceed with any procedures. except after obtaining the Committee's approval.

No procedures shall be processed unless the Committee's prior approval is obtained. the Committee shall be assigned with approval of procedures for all purchasing and works1 services contracting activities of estimated value exceeding K.D. . For consultancy contracts of value less than the above limit.0001-. In respect of KPC. issuance of respective request for proposals documents and award.0001-. all if the Contract value exceeds KD. The Committee shall also be charged with approval of procedures for tenders which exceed this value limit upon award as a condition precedent to submission to the CTC for tenders that should be processed through CTC in accordance with the provisions of Public Tenders Law No. Article (lo) a.considered as integral part to Chapter 5 of this regulation and shall be circulated as such to all concerned for compliance therewith. 3711937 and Amendments thereof including prequalification of vendors and contractors. ~ ~ . the concerned party inKPC ~. The Committee shall also be solely assigned with settlement of disputes and Claims submitted by consultants. 250.~ . The Committee shall solely be assigned with all contracting procedures related to provision of Consultancy Services including prequalification of consultants.~ ~ . 250. .

with notification of the same to the Committee. In specifying this amount. together with a copy of the signed contract. the Committee shall have the competence to approve prequalified Contractors lists produced by concerned party vide a prequalification exercise. whether by way of tender. The Committee shall also be competent with reviewing and endorsing all launch of tender procedures for purchasing. and consultancy services activities. auction or direct contract shall be considered. The Committee shall have the authority to decide the award of tenders. b. the total value of items or works or services included in the tender. auction and direct -contracts which have been .may proceed with the necessary procedures. auction or direct contracting which the Companies need for their operations and projects within the State of Kuwait and which have an estimated value in excess of KD one (1) million. In respect of purchasing and contracting activities for the Companies addressed by the Supreme Petroleum Council Resolutions as stated in Article (1) of this regulation. works/services. whether general or specified for a certain type of works. The Committee shall further be competent with approval of procedures for award of tenders at a value in excess of this limit.

even if the award value would exceed this amount. d.000. The Committee's authority for issuance and award of tenders for other companies which are not addressed in the Supreme Petroleum Council Resolutions as stated in Article (1) hereof.000/-) each. The following activities shall be exempted from the Committee's scope of functions. If no such assignment has been issued by the KPC Board to the Committee. and direct contracts of estimated value of more than five million Kuwaiti Dinar (K.000. 5. shall be as determined by the KPC Board of Directors. Such recommendation or preliminary approval shall become a final decision in the event the Central Tenders Committee decides that a certain issue being presented to it by one of the Companies is outside its jurisdiction.independently by the Company concerned. or if it abstains from issuing a decision thereon.brovided that the . c. then the role of the Committee shall be confined to issuing a recommendation or preliminary approval therefore.000/-) if so assigned by the KPC Board of Directors.~ . and may be processed :. auctions. 5. It shall also have the same competence for tenders.D. while the decision for issuance and award shall rest with the Central Tenders Committee.issued with estimated value not exceeding five million Kuwaiti Dinar (K.D.

oil and gas spill. and provided that it shall not assign or transfer the contract to a third party in whole or in part or to conclude a subcontract in this respect.Committee is notified as soon as possible of what had taken place concerning these operations). provided that such Authority has the qualification and specialization to enter into contract. the Committee may opine on the same or may take the matter up to the CEO of KPC. explosions. (2) Operations which the Company need to carry out as part of dealing with cases of emergency such as fire. (1) Operations which have been exempted with prior approval from the KPC Board of Directors or from a person authorized by KPC Board of Directors to do so. No subsequent notification is required to be served to the Committee for such contracts as stated at the beginning of this clause (d). - . (4) Contracts entered into between KPC or the Company and any other State Body or Authority owned entirely by the Government. (3) Direct contracting entered between any two parties from KPC and its subsidiary companies.

000. or accept clairns from the other party of the contract or extend the contract period resulting in an increase by a cumulative amount of ratio of 10% of the original contract value or five million Kuwaiti Dinar (K.Article (1 1) a.0001.D. 250.and provided that the variation order value is in excess of KD. 5. and for all purchasing and workslservices contracting activities of value in excess of one million Kuwaiti Dinar (K.D.or 5% of the contract value. the Committee shall have the competence to review and approve variations orders on Contracts which it had previously approved. the Company or entity concerned shall not effect any amendments or variation orders on contracts related to these activities.0001-). unless submitted to the . 1. It shall also be assigned with variation orders on contracts which have not previously been processed through the Committee if the sum of values of both the original contract and the variation order becomes in excess of KD.000. 50. b.0001.0001-). In respect of KPC. whichever is less. In respect of the K-Companies addressed in the Supreme Petroleum Council Resolutions as stated in Article (1) hereof.

000/-).D.. 1. if the value of the variation order does not exceed 10% of the original contract value or five million Kuwaiti Dinar (K.Committee with relevant justifications for the proposed amendments and its approval obtained therefore. The Company may also issue variation orders on contracts of value in excess of one million Kuwaiti Dinar (K.000/- I 1 From -KD.I -. after adding the variation order. - ~ . 250. does not exceed one million Kuwaiti Dinar (K.000. The company may issue variation orders without prior approval from the Committee if the revised contract value.000.000/-). 5. .000.D. the Company shall submit a monthly report of all variation orders of value in excess of 20% of the respective contract values.-~ 250.000/-) whichever is less. one (1) million.000 to KD. 30. provided that.000 reaches the amount of 1 KD. 250.D. I . Such report shall be considered as subsequent audit as per the details set forth in the following schedule table:- Limit of Company's ~ u t h o r i 6 Contract Value before for Variation Order Issuance Variation Order I From KD.000 and KD. Until the revised value of-the . 1.900 t o KD:*-. for contracts of value ranging between KD. Until the revised value of the 1 contract 250.

5 Up to 10% of the original million contract value (cumulative) More than KD. 5 million Up to 10% of the original contract value (cumulative) or KD. provided that the company shall submit to the Committee a monthly report of all variation orders of value in excess of 20% From KD. 1 million to KD. 5 million whichever is less. one (1) million. Settlement of claims by contractors/vendors/consultants resulting in a revision to the contract value shall be considered as a variation order and shall be dealt with in the same manner as indicated above until conclusion of the works under the Contract. c. . In the event the variation order exceeds the limits stated in the above table.million contract reaches KD. it shall be subject to the Committee's prior approval without prejudice to the Central Tenders Committee's authority for approving variation orders on contracts originally processed through it and are of ratio of more than 10% of original contract value or KD 5 million. d. whichever is less.

whereas in calculation of the contract value consequent to the variation order. f. Consideration shall also be given to the rules prohibiting division of a single transaction. it shall perform whatever it deems appropriate to verify the following: . then the concerned entity shall have to present the proposed change to the Committee for approval. along with whatever contract information required. considering that every addition or deletion is construed as an occurring change. would make it fall within the Committee's jurisdiction. in such manner that such change would increase the total value of the contract to a limit which. after the increase. the net product of the variation order shall be considered.-. -- . In calculating the value of variation order so as to determine the Committee's involvement. the deleted works and the compensation for extension shall be added altogether numerically regardless of the fmancial impact. amendment or settlement is issued on a contract originally processed independently by KPC or the Company pursuant to the rules of authorities stated in the preceding paragraphs. If a variation order. the value of additional works.e. Article (12) Upon reviewing the subjects submitted to the Committee for consideration.

methodology of inspection and commissioning. that the evaluation of bids and the submitted recommendation for award have been conducted in a sound manner and in accordance with the established rules and regulations adopted by KPCICompany concerned. supply. that there is an adequate number of prequalified suppliers or contractors to ensure a good competitive environment for each tender or auction subject to launching. and that the contractual.a. c. discuss whether there are other alternative means for obtaining the required services. standards and conditions have been set out to obtain most favorable bids. and penalty terms and conditions are appropriate. materials or works at a lesser cost. and evaluating their prequalification submittals. d. that the technical specifications. in addition to reviewing and verifying their contents. b. . and that the prequalification has been conducted according to procedures which would guarantee addressing potential supplierslcontractors.

- In the event the variation order is required at an early stage of contract's validity. that the laws. resolutions and bylaws in force have been complied vvith. That the scope of work of a variation order:- - Is not part of the original scope of work of the contract. the ranking of the tenderers for award would then remain the same without change. and had that the scope of work of the contract been inclusive of the proposed works under the variation order. transparency and equality in dealing with the competing bidders.e. protection of local industry and supporting local contractors. 6 - . - pricing of the variation order has been calculated in accordance with the provisions of the original contract. that the objective and procedural rules for purchasing and contracting have generally been implemented with perfection. g. f. - there is an actual and serious need for issuing the variation order. in particular those related to employment of Kuwaiti nationals.

The foregoing shall not restrain the Committee from requesting any further information or additional documentation from the Company upon discussing certain subject. all in accordance with his assessment of the situation as explained by the concerned entity. The Chairman may also include the request in the agenda of an ad-hoc meeting. . and review of a variation order. as a minimum. all the basic information arid relevant . . review and endorsement of award. The request shall contain.this regulation which are requirements indicated in Chapter ( 5 ) of required to be submitted by KPCICompany in connection with its request. The request shall be scheduled in the agenda of the first regular meeting of the Committee to be held at least five ( 5 ) days after receipt of the request. The Chairman may include the request in the agenda under "Additional Business" item of the first Committee meeting if the request is delivered four (4) days before the meeting.(Chapter 4) Procedures for Presentation of Submissions to the Committee The concerned entity shall submit a request to the Chairman of the Committee for review of launching documentation.

~~~ ~. Article (14) The Chairman of the Committee shall notify the entity concerned at KPCICompany with details related to the timings and method for receipt of requests. ~ ~~ ~ ~. Article (15) Personnel concerned from KPCICompany presenting a request. shall attend the Committee meeting during discussion of such request without any right to vote. Upon obtaining Committee's approval the concerned entity shall proceed with the normal procedures for such activities. Any other amendments which may take place on any of these details in future shall also be notified by the Committee Chairman. ~~ ~~ - ~ ~~ . and shall be confined to the period . the place for delivery of same to the Committee as well as the means of communication with the Chairman and the Secretary of the Committee.For requests submitted f o r ' review and consideration by the Committee. Their attendance shall only be for the purpose of providing clarifications andlor additional information to the Committee as necessary in order to facilitate its -business and-decision making. the concerned entity shall ensure renewal of validity of bids and bid bonds of the tenderers prior to their expiry.

regarding its submission The Secretary shall edit the . The Committee shall also refer to the Public Tenders Law No. Article (16) a. the Committee may seek legal opinion on such case or a specified related to that case. Such request shall be made by way of a letter directed from the Committee Chairman to KPC's General Counsel.of discussion of the concerned party's subjects only. The person concerned shall be considered as present if arrangements can be made to hear his views through using communication devices as agreed with the Committee. The Committee shall decide upon the submitted subjects submitted during its meetings. Before deciding upon a presented case. The Committee shall notify by fax the KPCICompany concerned of its decisions immediately after issuance. Such attendance shall be recorded as well as their statements in the minutes of the meeting. taking into consideration the provisions of the law pertaining to public funds as well as the general procurement rules ensuring competitiveness. transparency and equality in dealing with all bidders. 37 for the year 1964 and amendments thereto as well as its previous decisions for guidance.

however. For subjects which the Committee has no final authority to decide upon. or decide otherwise. it is empowered to endorse as is.decisions which shall be approved by the person chairing the respective Committee meeting. and also to request certain clarifications from the entity concerned in order to assist the Committee in taking a decision. and clarifications on its impact. - . and provided that acceptance of such minor technical deviations will not lead to any change whatsoever in the bidders' competitive legal -- rackings. It may also issue articles of views or research as necessary or as assigned. The Committee shall ensure that submitted bids are in compliance with tender documents. the Committee may consider a bid containing minor technical deviations if the concerned entity submits a recommendation for award on same. amend. the Committee issues its respective ruling in the form of a recommendation or a preliminary approval. provided that the rest of terms and conditions and specifications of the bid are in conformity with those of the tender. giving a list of such deviations with justifications for each one. b. As regards recommendations submitted to the Committee. c. It is also empowered to request hrther information it may deem necessary for its purposes.

KPC or the Company concerned may request reconsideration of a subject through submitting a memorandum to the Committee Chairman stating the reasons and justifications warranting reconsideration by the Committee. After re- discussion.d. . the Committee shall have the right to uphold its -. This entails that it is permissible to award to a bidder submitting an alternative offer. No award shall be made to an alternative offer unless the entity concerned submits a comparative study between what has been tendered in comparison with the alternative offer indicating the financial and technical deviations. . together with the feasibility and advantage in awarding the alternative bid. and that it is less costly andlor of higher competence technically. The Committee shall take into consideration that the alternative offer shall meet the requirements contained in the tender.. The Committee may permit incorporation of necessary provisions in the tender documents allowing alternative bids upon submission of a recommendation for the same by the entity concerned. Article (17) a.

or to issue a further decision. Where the Committee has agreed upon any subject while thereafter objected thereto by the Central Tenders Committee. Such complaint shall be referred to the Committee which shall convene urgently to discuss the complaint.previous stand point. to amend its ruling. KPC or Company concerned shall in such event provide its complete response to whatever objections made by CTC and shall notify the Committee of the outcome in this respect. The Committee shall take its final decision on the subject and shall convey such decision to the concerned parties. Any other concerned third party may complain against a Committee's decision. as it deems appropriate. . c. KPC or the Company concerned may object to a Committee's decision. The Committee Chairman will invite the KPC's General Counsel to attend the meeting so as to opine on the matter. d. b. The objecting entity shall notify the Committee of the objection made and of the ruling issued in this respect. in which case it shall take the matter up to the CEO of KPC for an irrevocable ruling on the subject matter.

KPC or the Company concerned shall refrain from notifying the concerned parties of any recommendation issued by it or by the Committee until the award is approved by the concerned authority.Article (18) a. In all cases. the Committee Chairman shall notify the CEO of KPC of such violation in order to take the necessary action as he deems appropriate. . provided that such communication shall have no impact whatsoever on the competitive ranking positions of the bidders. Submission of a purchasing or contracting subject to the Committee shall not prevent the Company from communicating with the bidders directly without the Committee's involvement for the purpose of requesting further additional information or clarifications which the Company concerned deems necessary for proper evaluation of bids. b. Article (19) In the event of violation of the provisions of this regulation by KPC or the Company concerned.

27 (Chapter 5) Information to b e provided by KPC and Subsidiary Companies in respect of their Submissions to the Committee Article (20) Model Data Form . a-4 Suppliers LisWendor's Names a-5 Brief details on last similar purchasing transaction (A list showing Supplier's name. Item price) .Auction) - Provide justification for the selected method of tendering if other than a public Tender. date of purchase. Tender Issue a.Restricted Tender .1 Required items of products and their resl~ectiveUsage a-2 Technical Specifications.Purchasing a. Standards and Technical Terms a-3 Method of Tendering - (Public Tender .

Award Data Schedule of Bids' Prices Expiry Date of Bids Justifications for Award Availability of Adequate Funds Direct Contracting Data Scope of Work Justification for Direct ContractingISingle Source Approach Actual Award Value .a-6 Tender Estimate a-7 Availability of allocated h n d s in the budget.

Prequalification Information (if any) a.1 Type of ServiceIServices Required b-2 Scope of Work b-3 Required Plant b-4 Manpower Required b-5 Method of Tendering: (Public Tender .Auction) . Tender Issue b.Service Contracts a.Restricted Tender .29 Article (21) Data Form .1 Prequalification Terms and Criteria a-2 Prospective Contractor's Evaluation Report a-3 Justifications and Recommendations b.

Award Data c-1 Schedule of Bids' Prices c-2 Expiry Date of Bids c-3 Justification for Award Recommendation c-4 Availability of Adequate Funds for Payment . contract value and contract period) b-8 Contract Period b-9 Tender Estimated Value b-10 Availability of Financial Allocation in the budget c. scope of work.- Provide justification for the selected method of tendering if not a public tender. plant and manpower. type of service. b-6 Bidders List1 Names b-7 Brief historical information on previous Service Contract (A list showing contractor's name.

3l d. Direct Contractine Data d-1 Scope of Work d-2 Justifications for Single SourceDirect Contracting Approach d-3 Actual Award Value Article (22) Data Form a. Tender Issue b-l Scope of Work b-2 Contract Type (e.g. - Works1 Construction Contracts Prequalification Information (if any) a-1 Prequalification Terms and Criteria a-2 Contractors Evaluation Report a-3 Justifications and Recommendations b. Lump SumlCost-Plus) .

List1 Names b-5 Completion Period b-6 Tender Estimated Value b-7 Availability of Financial Allocation in Budget c.Auction) - Provide justification for the selected method of tendering if not a public tender. b-4 Bidders.b-3 Method of Tendering (Public Tender .Restricted Tender . Award Data c-1 Schedule of Bids' Prices c-2 Expiry Date of Bids c-3 Justification for Award c-4 Availability of Adequate Funds for Payment .

Variation Order 1) Name of Contractor 2) Contract Value 3) Contract's Commencement Date 4) Contract's Expiry Date 5) Value of Previous Variation Orders 6) Value of Required Variation Order 7) Percentage of VOs to original Contract Value including value of required Variation Order 8) Works/Semices Required under the Required VO 9) Whether required commenced/perform-ed Urorks/Semices - have been .33 d. Direct Order Contracting Data d-I Scope of Work d-2 Justification for Single SourceDirect Order Contracting Approach d-3 Actual Award Value Article (23) Data Form .

10) Duration 11) Justification for Variation Order Issuance 12) Justification for not issuing the Works under the required Variation order in a separate tender. 13) Expenditure Amount so far under the Contract 14) Value of Remaining Balance 15) Details of Required Amount for VO 16) Availability of Allocated Funds in the Budget .

APPENDIX No.1 KPC 's Subsidiary Con~panies Tendering Regulations .

Table of Contents Chapter Topic 1 General Provisions 2 Committee Formation and Scope 3 Bidders Provisions 4 Launching Procedure 5 Bid Submission Procedure 6 Bid Opening Procedure 7 Award of Tender Procedure 8 Contract Signature Procedure 9 Auction and Direct Order Procedure 10 Variation Orders 11 Concluding Provisions .

Article (2) The board of directors of the Company shall issue the supplementary rules and executive directives for implementation of this Regulation in the Company or shall arnend the existing ones so ~ ~ . by-laws and resolutions applicable to such operations of the Company. Such provisions should be complied with and implemented by KPC's subsidiary companies that are operational and registered in Kuwait. . 111993 concerning safeguarding public funds. in accordance with the Supreme Petroleum Council's Resolution No.Chapter 1 General Provisions Article (1) This document sets forth the general provisions pertaining to purchasing and contracting which. . ~ e . 111998 and 11741 (212005). including the consideration that the Company's funds are public funds pursuant to Law No. Individuals assigned with purchasing and contracting activities shall comply with all the enforceable laws. 511979 as amended by Resolution Nos. . wholly owned by KPC and are specified in the above-mentioned Resolutions.

as to conform to this Regulation within a maximum period of three months from the date of its issuance. . and shall not be in contradiction with the provisions of the KPC Higher Tender Committee's Regulation or these Regulations. Recommended amendment shall be subject to the approval of KPC's CEO. Resolutions of the Supreme Petroleum Council. The Company shall set out the procedures and shall take the actions which would enable it to monitor implementation of these Regulations. or Resolutions of KPC Board of Directors. The details of the supplementary rules and executive directives issued by the Company must be consistent with the type and nature of Company's activities. Article (3) The KPC Higher Tender Committee may recommend amendment to this Regulation in view of any legislation or resolution that be issued subsequently as well as with what may be required in view of implementation practices. They shall stipulate the mandatory consideration of the same. Such amendment shall not be in contradiction with the Law.

specifications and procedures set by the Company. provided that the same shall include negotiations with suppliers/contractors as may be decided by the Company with the aim of revising prices or technical specifications or withdrawing/amending qualifications embedded in the bid. .The KPC Higher Tenders Committee shall also be assigned with interpretation of the Articles of this Regulation whenever required. specifications and procedures set by the Company. Article 4 The following definitions shall have the meanings set-forth in this Regulation unless the context requires otherwise :- Tendering/ Bidding Tendering is defined as purchasing or assigning execution of work or services issued nn competitive basis through invitation to participate and advertised in media in accordance with the terms and conditions. The Auction may be pen or restricted. The tender may be open or restricted. Auction An Auction is defined as purchasing or assigning execution of works or services issued on competitive basis through invitation to participate and advertised in media in accordance with the terms and conditions.. - .

which are governed by this Regulation. KPC Committee (KPC HTC): It is the KPC Higher Tenders Committee. Central Tenders Committee. Company: it is one of the Kuwait Petroleum Corporation's subsidiary companies. (CTC): It is the Committee established by the Public Tenders Law No.Direct Order Contracting Means purchasing or assigning execution of works or services (including consultancy services) to one supplier/contractor only and directly without tendering or auction to more than one Supplier/Contractor. Company Committee: It is the Internal Tender Committee formed by the Company under the provisions of this Regulation to perform the duties assigned to it in accordance with the authorities and powers stipulated herein. 3411964. This includes contracting with single source that is classified by the Company as a sole prequalified provider for the required material or services being the sole manufacturer or sole contractor for required goods/services. .

transparency. it shall stipulate proper controls to ensure soundness of procedures including the prohibition of dividing the single transaction into two or more .Concerned Body: It is the company's group or department responsible for contracts and purchasing activities within the Company which is assigned the responsibilities of tender issuance quotation seeking. as well as compliance with confidentiality practices in its internal procedures. competitiveness. the Company shall take into consideration the principles of equality. non-discrimination and respecting the legal status of those dealing with it.. as well as other related duties. - . Requesting Body: It is the company's group or department which requests the goods. 30. fairness. Article (5) In all its purchasing and contracting . In such procedures. services or works to be provided. Article (6) The Company shall lay out in its supplementary rules suitable procedures for the nature of the Company's activities as related to contracting for works and purchasing goods which are of value less than KD.000/-.activities.

0001-. Other methods of solicitation such as Auction and Direct Order Contracting may be pursued only after obtaining approval from the Company's Committee. 30.transactions. services. 30.as required by the Company. conduct consultancy studies or for purchasing goods of value exceeding KD. Article (7) Tendering shall be the general rule in all purchasing or assigning works or services activities.0001. in a manner that each of them becomes less than the value of KD. Its procedures shall be as stipulated in this Regulation. The Company Committee shall solely be responsible for all procedures related to commissioning contractors with works. .

. Members from outside the Company may be included. The Secretary shall be responsible for recording all proceedings performed by the Committee as well as maintaining its files.. . documents and correspondence and any other duties assigned to him by the Committee. ... and comprising seven (7) members who are a Deputy Managing Director as Chairman. The Secretary shall be appointed by the Company's Chairman & Managing Director.Formation & Authority Article (8) A Tender Committee for the Company shall be formed by way of a decision issued by the Chairman of the Company called "The Company's Internal Tenders Committee". .... . . . . .Chapter 2 Company Tenders Committee . The Company Committee shall have a Secretary or more who are non Committee members. a Deputy Chairman and five other members to be selected mostly from among the managers of Company's departments representing various activities of the Company.. The formation decision shall include the appointment of an alternate member for each original permanent member of the Company Committee so as to replace him during his absence.

One (1) million. Purchase Orders. the Company Committee role shall be limited to submission of its recommendation to the KPC HTC. - Opening bid envelopes.Article (9) The Company Committee shall be assigned with the following: - Reviewing.000/. and Direct Order Contracting which are of value exceeding KD. For Variation orders requiring approval of KPC HTC and CTC as the case may be.but less than KD. . 30. - Reviewing.000/-. Auctions. approving award of Tenders. . Purchase Orders. Where such limit is reached. the Company Committee shall submit a recommendation for award. approving tender documents for issuance and following up relevant procedures for all purchasing and contracting Tenders. Auctions and Direct Order Contracting which are of value exceeding KD. 30. - Approving issuance of variation orders on contracts which are the sole discretion of the Company.

- Approval of liquidation of a bid bonds in cases warranting such action. - Implementing any other directives related to contracts and purchasing as assigned by the Company Chairman at any point in time. Article (10) The Committee may delegate part of its authorities to a subcommittee which it may form from among its members or from others. The Committee may assign the Concerned Body to carry out certain specified tasks within the scope of implementing the provisions of this Regulation. . as well as approval of any amendment thereto.- Cancellation of tenders together with related procedures and actions that may arise therefrom. - Investigate bidders' complaints received by the Company. - Approval of the list of bidders to be invited for participation.

H e shall not participate in the discussions and shall have no voting right.Article (11) The quorum for the Company Committee meeting shall be four members present from original and alternate members. Adhoc meetings may be called upon by the Committee Chairman or his Deputy. the members present at the meeting shall elect one of them to chair the meeting until the Chairman or his Deputy becomes available. one of whom shall be the Chairman or his Deputy. The Chairman may cancel the ordinary meeting in the: event there is no adequate business on the agenda warranting holding the meeting. in the event there is a reason leading to non-attendance of both of them at the same time. . Article (12) The Company Committee shall hold a weekly ordinary meeting depending on the volume of its business and as decided by its chairman. The meetings shall be attended by the Secretary who shall record all the minutes of the meeting and shall draft its decisions. However.

In case of equal'voting.and to fulfill the stipulated Kuwaiti Labor ratio at the time of submitting its bid.The Committee may invite any Company employee of expertise to opine on a certain matter. registered in the Chamber of Commerce of its home . This shall be applicable to local companies. can be taken with the simple majority of the votes cast. then the side including the Chairman is considered majority. It may also invite a representative from the Requesting Body or the Concerned Body to submit clarifications or documentation that may serve the Company Committee's purposes without any voting rights. All decisions and recommendations of the Committee . unless stated otherwise in this regulation. Chapter (3) Bidders' Provisions Article (13) A tenderer participating in a tender shall have to be a merchant whether an individual or a firm. A Foreign company or establishment may submit a bid provided that it is. establishments and registered local agents in the event the works shall be carried out within the State of Kuwait.

All correspondence and notices addressed to that address shall be considered as true and legally effective. a bidder shall show its address in its bid. . the Company Committee may permit more than one legal entity to submit a joint bid. shall be permitted to submit more than one bid per tender. Article (14) Not one person. or a joint group of persons.country and shall have the capability and resources to cany out the required works. In a high value tender. The bidder shall notify the Company of any address change. and the same shall be stated in the tender documents. provided that the obligations and liabilities of each of them shall be clearly defined or that the bid submission includes their acceptance of responsibility jointly and severally. except in case of alternative bids where the tender conditions so permit. In all cases.

Article (15) A tenderer shall neither be a member of the Company's Board of Directors. the Company Committee nor an employee of the Company. the employee and the member of the board of directors of the tendering company. the agent. Chapter 4 Tender Launching Procedures Article (16) Prior to launching a tender for goods purchase or for works. drawings. and the liquidated damages which may be applied in the event of breach or delays in execution of the Contract. the representative. bill of quantities. as well as the contract's general and . the Requesting Body concerned shall prepare the specifications of each item of purchase or works giving due consideration that such specifications provide for competitiveness and allow for obtaining most favorable alternatives at the least cost. It shall also draft the necessary instructions to bidders. in addition to the form of tender and attachments thereto. In applying the provisions of this Article the term "tenderer" shall include the partner. the procedure to be followed in executing the Contract.

in addition to all other terms that safeguard the Company's interests. and shall comply with whatever relevant directives or procedures which KPC HTC may decide. together with stipulations representing the minimum standards for bid acceptance.particular conditions. All these shall be prepared in full so as to acquaint the bidders with the works or goods in a manner that negates ignorance of the same. the Company shall obtain the KPC Higher Tender Committee's approval prior to issuance. One (1) million. Article (17) The tender documents must include the elements and criteria for technical and commercial evaluation of bids. Article (18) For a tender of estimated value exceeding KD. as appropriate. Article (19) Issuance of tenders of an estimated value exceeding KD Five (5) million shall be subject to the Central Tenders Committee's procedures. except those which have been exempted by W C ' s - - .

including a suitable bidding period from the date of advertisement. . Article (21) The tender documents should be prepared well in advance to publication of the tender advertisement. the goods/works required. . bill of quantities with respective appendices. the fee amount for tender document copy collection and the partyllocation where the bids shall be submitted thereto. Advertisements shall be placed at the Company's premises. as well as other details.Board of Directors as well as those which are exempted by the Central Tender Committee. The advert shall show the issuance and closing dates of the tender. Article (20) The Company shall advertise the tender in the Official Gazette or through other suitable means of publication. in such a manner that it shall be issued upon request after payment of the - - . specifications. the bid validity period (as specified in the tender document). It may only notify the invited bidders of tender issuance in case of a restricted tender. including all relevant general and particular conditions.

together with stipulations representing the minimum standards for bid acceptance. Article (19) Issuance of tenders of an estimated value exceeding KD Five (5) million shall be subject to the Central Tenders Committee's procedures. except those which have been exempted by KPC's . Article (18) For a tender of estimated value exceeding KD. in addition to all other terms that safeguard the Company's interests. as appropriate.particular conditions. and shall comply with whatever relevant directives or procedures which KF'C HTC may decide. Article (17) The tender docun~entsmust include the elements and criteria for technical and commercial evaluation of bids. One (1) million. the Company shall obtain the KPC Higher Tender Committee's approval prior to issuance. All these shall be prepared in full so as to acquaint the bidders with the works or goods in a manner that negates ignorance of the same.

including a suitable bidding period from the date of advertisement.Board of Directors as well as those which are exempted by the Central Tender Committee.tion. the goods/works required. Advertisements shall be placed at the Company's premises. the bid validity period (as specified in the tender document). bill of quantities with respective appendices. Article (21) The tender documents should be prepared well in advance to publication of the tender advertisement. as well as other details. the fee amount for tender document copy collection and the party/location where the bids shall be submitted thereto. in such a manner that it shall be issued upon request after payment of the . spec:ifications. The advert shall show the issuance and closing dates of the tender. Article (20) The Company shall advertise the tender in the Official Gazette or through other suitable means of publica. including all relevant general and particular conditions. It may only notify the invited bidders of tender issuance in case of a restricted tender.

Any addition to this list shall also be submitted to the Committee for approval. lists matching their respective business activities or who are registered on suitable approved lists of other entity . the Concerned Body shall consider inviting suppliers and contractors who are registered in the Company's prequalification. Article (22) In a restricted tender. the Requesting Body shall submit to the Company Committee a list of the bidders whom the tender shall be launched thereto for approval.specified collection fees to the Company specified office as determined by the Company. . In case of an activity that no list of prequalified contrac-tors or suppliers can serve purpose.

The same shall be stated in the tender documents. completed in all aspects.Chapter 5 Bid Submission Procedures Article (23) Bids shall be submitted in the official tender documents issued to the bidders. - . Article (24) It shall be stated in the tender documents that bids must be returned. Article (25) Any bid violating these provisions shall be rejected unless the Company Committee decides to accept it for considerations related to the Company's interests. duly filled-in in accordance with the terms and conditions stated in the tender documents. and in exact conformity with the tender provisions. A bidder shall not effect any alteration in the tender documents. All tender documents shall be considered personal by the tenderers who obtained them and shall not be transferred to others.

An alternative bid means any offer that includes certain technical aspects meeting the required objective in the tender without restraining to the technical specifications of the tender. The supplementary rules shall regulate the bid evaluation criteria for such cases.Article (26) Should the tender documents permit submitting alternative offers and should the tenderer be desirous of submitting one or more alternative bids. Article (27) Bids may be submitted in two separate envelopes upon the Concerned Body's request: one for the technical offer and the other for the commercial offer. and the same shall be highlighted in the tender documents. and shall have to legibly insert on each set of documents to the effect that the said represents an alternative offer. . then he shall have to obtain a further set of official tender documents for each alternative offer. The bid bond submitted for the alternative bids shall be one only provided that its value shall be sufficient for the highest bid price.

Article (30) The bidder shall have to deposit with his bid (attached tothe Form of Tender) the initial guarantee (Bid Bond) in the form of a certified cheque or a letter of guarantee -from a bank licensed by the Central Bank of Kuwait. Neither cash deposits nor uncertified cheques shall be entertained. . A bidder shall not be permitted to introduce any change in such bid price after submission. Article (29) Bidders shall return the tender documents on the closing date and time specified therefore and in the manner prescribed therein. unless it is otherwise specified in the tender documents.Article (28) Pricing of all bids shall be in the official currency as per the tender terms and conditions as well the Form of Tender and attachments thereto.in a form acceptable to the Company. The bid bond shall remain valid throughout the duration of bid validity.

Article (33) If stipulated that the bids shall be submitted in the Company Comittee's tender box. Article (32) The bid shall remain valid and irrevocable from the date of its submission until the expiry of its validity. Any change in the rates or prices after bid submission shall not be considered. the tender box opening shall be closed on the day and hour specified for the same in the tender documents.Article (31) In cases where the tender documents specify the submission of samples of the goods or products. the bid must be accompanied by the samples as per the tender terms and conditions or by a receipt against delivery of the samples to the authority specified in the tender conditions. . Any bid submitted after the time specified for closing the tender shall be disregarded.

.. .. the box shall not be opened unless the Committee is in session. ... .1 . .. . Article (37) Any bid unaccompanied by the initial guarantee (Bid Bond) shall -!'. Article (35) The Company Committee or the assigned subsidiary Committee shall open the bids when in session.2 .. . ~ . . L J uljt ~ i5cu uvu. --. . and shall record in its minutes of meeting the bidders' names and their respective bid prices.. the Company Committee shall publish the bids' prices schedule on the designated notice board. . .. ?.. Article (36) After opening bid envelopes.57 Chapter ( 6 ) Bid Opening Procedures Article (34) If the tender conditions stipulate that bids shall be submitted in the Company Committee's tender box. .

the bid shall be disqualified. . Article (39) The Company Committee shall refer the submitted bids to the Concerned Body for evaluation and submission of recommendations in respect thereof within the period specified by the Committee.Article (38) If the bid shows any anomaly or discrepancy. unless the Company's Committee decides to accept it for considerations related to the Company's interests. the Company Committee shall decide on whether to accept or reject it. if the bidder has committed an arithmetical error exceeding 5% of the total bid price. Chapter (7) Tender Award Procedures Article (40) On scrutiny of the bid.

Article (41) Without prejudice to the provisions of Article (40) hereof. unless it is erroneously calculated in excess of the total of individual rates and details. provided that such adjustment shall not lead to a change in the bidders' ranking. . the Company Committee or other technical personnel as delegated by it shall adjust such rates with the successful bidder before the tender award is made within the total price of the tender. in which case the correct total shall prevail. if it is revealed upon scrutiny of the bid that individual item prices and details do not tally with the total bid price. - Article (43) Where there is a discrepancy between the numerical amount and the amount in words the Company Committee shall consider the least of the two amounts. the latter shall always prevail. Article (42) If it is revealed upon scrutiny of the bid that some of the individual rates are unreasonable.

the award shall then be made to the bidder who offered the lowest price provided that his offer conforms to the requirements of the tender documents. In the event no award criteria are mentioned. Article (45) The Company Committee will award the tender to the bidder who submits a bid most complying with the award criteria. if the provisions of the preceding article are not applicable. provided that such clarification shall not lead to any change in the bid prices.Article (44) The Concerned Body may communicate with a bidder directly for clarification of certain matters related to its bid without referring to the Company Committee. Article (46) If the Company Committee establishes that there is a strong justification for preferring a bidder with higher bid price. the decision of award of tender shall be made by majority of two thirds of the votes cast provided that the Chairman or his deputy votes in favor of such award. . or.

the Committee shall give priority for award to the bid offering local products provided that such goods/materials are in conformity with the tender requirements and are not higher in price than similar products imported from abroad by more than 10%. Article (48) As regards tenders for procurement of goods/materials.Article (47) The Committee may award the tender to a bidder who submitted a higher price if the lowest price is unreasonably low to the extent that it does not provide assurance that works/services would run as required. This right shall be clearly highlighted in the tender documents.. Article (49) The Company shall have the right to cancel the tender at any time prior to signing the Contract with the successful bidder.. the bidder shall not be entitled to claim any damages or compensation of whatever kind. Preference limit shall be calculated in light of the material quantities included in the tender and their respective prices. In the event of exercising such right. . .

Chapter (8) Contract Si~natureProcedures Article (52) . otherwise. and provided that such procedure is not detrimental to the Company interest.Article (50) In the event there is one single submitted bid which meets the tender requirements for part or all of the goods/works. the Committee may split the award by quantity among the equal-price bidders. the Company Committee shall have the option to accept the bid and award to the single bidder or to reject it and cancel the tender. A bid shall be considered as "single bid" even if received along with other bids containing deviations from the tender conditions or are incomplete to the extent making them unsuitable for consideration. Article (51) In the event the order of two or more bids is equal in price or in terms of award criteria (as the case may be). lots shall be drawn among them. subject to their consent.

Article (54) The Company shall obtain the approval of the Central Tenders Committee if the award value of the tender exceeds KD five (5) million unless the tender had been exempted from CTC by the KPC Board of Directors or by the Central Tenders Committee. to any rights against the Company . Prior to notifying the successful bidder. Article (56) Awarding the tender and notifying the successful bidder of tender award shall not entitle the bidder. Article (55) The Concerneti Body shall ensure the availability of funds for the tender prior to notifying the successful bidder of the tender award. the Company shall obtain the approval for award from the KPC Higher Tenders Committee for tenders of value exceeding the amount of KD One (1) million.The Company shall notify the successful bidder in writing of its bid acceptance and that he is awarded the tender.

Article (58) Prior to signing the Contract. the successful bidder shall be requested to provide the Company with the final guarantee (Performance Bond). If it fails to provide such guarantee within the specified period. Article (57) The Concerned Body shall invite th. The bidder shall not be considered under Contract except after signing the Contract by both parties. the value and period of validity of which shall be as per the tender documents. it shall then be considered as withdrawing. In the event the successful bidder does not report to sign the Contract within the specified period. it shall then be considered as withdrawing.e successful bidder to sign the Contract at its offices within the spr:cifiedperiod.in the event of retracting the award of the tender. Article (59) In cases where the bidder is considered as withdrawing during the period of bid validity without giving an excuse acceptable to the Company Committee. the bid bond previously deposited by the .

The bidder shall also be liable to any other actions as may be determined by the Company such as deleting its name from the lists of prequalified contractors or vendors either permanently or for a certain period of time. Article (60) In the event of withdrawal by the successful bidder. the Company Committee shall at the request of the Concerned Body. The bidder may appeal to the Company Committee to reconsider any decisiodaction that it has taken against the bidder. consider cancellation and re-issuance of the tender or awarding it to the next lowest bidder meeting the tender requirements. If the Cf~airman & . Article (61) In the event of retraction of award of the tender by the: Company Committee prior to Contract signature. all in accordance with the provisions of this Regulation.bidder shall become a Company's right without the need for consent.val. the matter must be referred to the Chairman & Managing Director of the Company along with justification of such action for a?pro. notification. The same shall be highlighted in the tender documents. declaration or judicial proceedings.

. The same shall be highlighted in the tender documents. or they are urgently needed or otherwise as determined by the Committee. the initial guarantees shall be returned to the unsuccessful bidders upon their request during the period of their validity.Managing Director disapproves such retraction. then the Committee's original decision shall prevail. Chapter (9) Auction & Direct Order contract in^ Procedures Article (63) The Company Committee may give permission to the Concerned Body to purchase goods or assign works by way of a auction if the subject goods or works cannot be specified with exact specifications. Article (62) Upon submission of the final guarantee (Performance Bond) by the successful bidder and after Contract signature.

and also provided that the Company shall furnish the KPC Higher Tenders Committee O(PC HTC) with a monthly report of all variation orders of values exceeding 20% of contract value for - rnntr~rtc nf ~ r a l i ~i ~P n n P miarter ~ A I P P ~ A millinn Dinar3 and Kn nne . Article (64) The Concerned Body shall obtain the Company Committee's approval prior to initiating procedures for direct contracting with any party and within the authorities granted to the Committee.All procedures/actions taken for issuance as well as award of the auction shall be made through the Company Committee and shall be handled in the same manner followed in tenders. provided that the contract value after amendment shall not exceed the amount of KD one (1) million. Procedures/actions taken for direct contracting shall be referred to the Company Committee.. Chapter (10) Variation Orders Article (65) The Company may issue variation orders on contracts that it concluded independently.

(1) million. Article (66) For contracts which the Company has concluded through the Central Tenders Committee (CTC). the Company shall then obtain prior approval from the KPC Higher Tenders Committee. Five (5) million. the Contract value exceeds KD one (1) million. For contracts which the Company has concluded through KF'C HTC. prior approval shall also be obtained from KPC HTC if the value of variations on the contract exceed 10% of the original contract value or the amount of KD five (5) million whichever is less. If after amendments. Chapter (11) Concluding Provisions Article (67) . approval shall be obtained from CTC for variations to contracts exceeding the lesser of 10% of contract value or an amount KD.

or replacement of. Contractor/Supplier's failure to attend shall not prevent issuance of the decision. the Company's rights under the laws and the contract. Article (68) The Company Committee shall issue its decision on the appropriate accion to take against the contractor or supplier after calling it and hearing its statements. These actions shall be taken without prejudice to. . unserious and withdrawing Contractor or vendor shall include the following: a) Warning b) Recommendation to lower its prequalification classification c) Recommendation to delete it from the prequalification register for a certain period or permanently.The procedures/actions taken by the Company Committee against a violating. d) Banning it from further participation in the Company's tenders temporarily or permanently e) Notifying concerned bodies of the Contractor1s/vendor1s deeds and alerting them of the same.

The Committee shall have the right to call upon the complainant to hear his statements. Article (71) OperationsIWorks needed by various Company sectors in cases of emergency such as fire. as well as to investigate any presented documents. 511979 and amendments thereto shall be applied in regulating processing of tenders and contracts of value in excess of KD five (5) million except for contracting works which are exempted from the procedures of the Central Tenders Committee including those pertaining to urgent capital projects.Article (69) In the event there is a complaint received from a concerned party regarding purchasing and contracting activities of the Company. explosions or gasloil leakage. shall be excluded from the provisions of this Regulation. Such exemption may be granted by virtue of a decision by the KPC's Board of Directors or by arrangement with the Central Tenders Committee. the same shall be referred to the Committee for consideration and ruling. Article (70) The Resolution of the Supreme Petroleum Council No. .

COMMERCIAL AFFAIRS GROUP CONTRACTS TEAMS ISSUE : 4 February. 2006 .

KOC POLICIES AND REGULATIONS FOR CONTRACTS INDEX CHAIRMAN AND MANAGING DIRECTOR’S LETTER PURPOSE OF THIS DOCUMENT STANDING INSTRUCTIONS SECTION 1 - DEFINITIONS SECTION 2 - CONTRACT REQUISITION SECTION 3 - PREPARATION OF REQUEST FOR PROPOSAL (RFP) DOCUMENTS SECTION 4 - APPROVALS AND REVIEWS PRIOR TO ISSUE SECTION 5 - ISSUE OF REQUEST FOR PROPOSAL SECTION 6 - COMMUNICATIONS SECTION 7 - PRE-TENDER MEETING SECTION 8 - EVALUATION OF BIDS AND AWARD OF CONTRACTS SECTION 9 - LETTER OF INTENT SECTION 10 - FORMALISATION OF CONTRACT DOCUMENT SECTION 11 - ADVANCE PAYMENTS SECTION 11A - REIMBURSEMENT OF BIDDING COSTS FOR UNSUCCESSFUL BIDDERS SECTION 12 - COMMENCEMENT SECTION 13 - CONTRACT HISTORY FILE SECTION 14 - EXECUTION OF CONTRACT WORKS OR SERVICES SECTION 15 - CONTRACT PAYMENTS SECTION 16 - AMENDMENTS TO THE CONTRACT SECTION 17 - CONTRACTORS CLAIMS (REV) SECTION 18 - LIQUIDATED DAMAGES SECTION 19 - TERMINATION OF CONTRACT SECTION 20 – SERVICE/BLANKET CONTRACT EXPIRY NOTICE SECTION 21 - MULTI-SUPERINTENDENT CONTRACTS SECTION 22 - LOW VALUE CONTRACTS SECTION 23 - REMEDIAL WORKS OF AN EMERGENCY NATURE SECTION 24 - VITALLY URGENT WORKS SECTION 25 – INVITATIONS FOR PROPOSALS (IFPS) SECTION 26 – PREQUALIFICATION OF CONTRACTORS .

there must be a single point of contact for contractual communications with contractors. You have a duty to both yourself and the Company to ensure that the following KOC Policies and Regulations for Contracts are followed. All activities undertaken should be clearly aligned with the organisation’s mission and strategic objectives.KOC POLICIES AND REGULATIONS FOR CONTRACTS C & MD’s Letter Issue No. As such. _____________________________ FAROUK HUSSAIN AL-ZANKI Chairman & Managing Director Kuwait Oil Company (K. Please ensure that this statement along with the following KOC Policies and Regulations are brought to the attention of all employees.S. employing hi-tech means wherever possible. 4 Page 1 of 1 Date: February. and to raise any matter related thereto which causes concern or uncertainty with your management or Contracts Teams who are responsible for implementing the Company’s policy on my behalf. Communications between KOC and a contractor during periods of contractual negotiation must always be handled objectively.) . contractor staff and other relevant personnel involved in the handling and administration of KOC’s Contracts. 2006 CHAIRMAN AND MANAGING DIRECTOR’S LETTER KOC’s policy for the handling and administration of contracts must be complied with at all times by all those employed by or acting on behalf of KOC. Our dealings and relationships should always be such that KOC’s high standards and good reputation are maintained. All dealings and relationships with contractors and officials shall be conducted in an ethical manner and meet all relevant Legal and State Regulative requirements.C. unless otherwise specified.

. 2006 PURPOSE OF THIS DOCUMENT (1) This document sets forth the KOC Policies and Regulations for the handling and administration of KOC’s contracts. 4 Page 1 of 1 Date: February. (5) This document does not apply to Contract requirements for Wafra Joint Operations. 5/79 of the Council of Ministers (Supreme Council for Petroleum). 37/1964. (3) This document represents a summary of the main activities involved in the KOC contracting process. (2) This document represents the policy of the Company in the area of Contracts and are intended to ensure a professional approach to their processing and expedition. Should further clarification be required. the KPC Higher Tender Committee’s Terms of Reference. details and advice may be sought from the Contracts Teams who are responsible for the implementation of the KOC Policies and Regulations for Contracts. (4) These Regulations have been prepared in conformity with the Public Tenders Law No.KOC POLICIES AND REGULATIONS FOR CONTRACTS Purpose Issue No. the K-Companies Tendering Regulations and Terms of Reference and KOC’s Executive Delegation of Authority and shall not be implemented in isolation therefrom. and as amended by Resolution No. 1/2005. Resolution No.

Administration of contract activity is as simple and cost-effective as possible. prior authority must be obtained from the C & MD. 2. protected and safeguarded. COMPETITIVE TENDERING 3.KOC POLICIES AND REGULATIONS FOR CONTRACTS Standing Instructions Issue No.6 Manager (Commercial Affairs) shall be the custodian of this Document.1 This document applies to all contracting activities of KOC. Contracts Teams should always be contacted where further information is required in order to satisfy this requirement.1 KOC’s policy is to seek competitive tenders from suitable. 3. 1.3 These Regulations are designed to ensure that: - KOC’s contracting policies and procedures are clearly stated and applied. 3. The best interests of KOC served. 1. This is referred to as the “Controlling Team” throughout this Document. In all cases before issue of tenders. CONTRACTING OBJECTIVE 2.1 KOC’s aim is to ensure that works. the Controlling Team must satisfy itself that all tenderers have the technical capabilities to undertake the works.4 The responsibility for selecting works or services to be performed by contractors lies with the team normally undertaking or performing similar activities.5 All contracts should be written in such a way as to reflect the full scope of work required and should in no way be split into smaller packages in order to by-pass the approvals procedures described within this Document or circumvent Financial Delegated Authorities. 1. 4 Page 1 of 6 Date: February. INTRODUCTION 1. competent and independent contractors unless clear and acceptable justification can be made for single tender action or for direct negotiation with a single contractor. goods.2 Regulations specified in this document are mandatory. 2006 STANDING INSTRUCTIONS 1. 1.2 No tender shall be issued unless there is clear intent to carry out the works specified. . 1. services and the use of third parties’ facilities are performed or acquired at the most favourable terms compatible with the desired quality and delivery requirements within State and Company regulations. Should there be a need to deviate from any specific requirement.

CONSORTIA. 5.1 No such bodies will be eligible to participate in the Company’s tenders unless a single Corporate Entity is nominated as representing all parties involved in such an undertaking. 4.KOC POLICIES AND REGULATIONS FOR CONTRACTS Standing Instructions Issue No.3 A contractor must not be invited to tender unless there is intent to award the contract to the contractor in the event that the evaluation of tenderers indicates that his tender is most advantageous. This single entity must take responsibility for keeping a full set of consolidated accounts on behalf of such joint venture.3 Exceptions to the rule stated in 5. . However.1 Subsidiary companies shall be eligible to participate in the Company’s tenders only where they maintain a separate and acceptable set of consolidated accounts or with a Parent Company Guarantee where the parent is a properly constituted Corporate Entity.2 Where pre-selection exercises are required these should be carried out in conjunction with Contracts Team concerned who is responsible for ensuring that selection of contractors is carried out and that a data-base of information about contractors is kept up to date. 5.1 above may be effected after obtaining C & MD’s approval. JOINT VENTURES. 2006 3. 6. SUBSIDIARY COMPANIES 6. consortia etc. 4 Page 2 of 6 Date: February. ASSOCIATIONS AND PARTNERSHIPS 5. 3.4 The number of tenderers invited to tender must be sufficient to maintain competitiveness but where possible numbers should be restricted to a manageable number in order to minimize costs incurred by both KOC and the contractors.1 Where relevant. any agreements between joint ventures. 4. association or partnership. consortium. CONTRACTOR PRE-SELECTION 4.2 Where such an association cannot independently demonstrate sufficient and acceptable financial status to undertake the works tendered for. Parent Company Guarantees may be required as for subsidiary companies described in Paragraph 6. contractors should only be given the opportunity to tender if they are adequately capable to undertake works/services. 5. shall be forwarded to Legal Affairs Group for review prior to Contract award.

During operation of a contract. Under very exceptional circumstances a Letter of Intent may be issued prior to the contract being signed. 9. Only if authorized. Copies of all such information should be forwarded to the Contracts Team. the respective Contracts Team is responsible for drawing up the necessary document and obtaining approval in accordance with these KOC Policies and Regulations for Contracts .1 Contract works shall not commence until a clear “Instruction to Commence” is issued unless otherwise specified in the Contract.KOC POLICIES AND REGULATIONS FOR CONTRACTS Standing Instructions Issue No. Generally all responses to pre-tender queries of whatever nature from and to any tenderer should be sent to all tenderers. shall be agreed or amended as required at subsequent meetings. 7.2 Under no circumstances must a tenderer be given information that would favour or handicap him in relation to other tenderers for the contract. CONTACT WITH TENDERERS 7.2 No information about any tenderer will be disclosed to other tenderers. 9. internal financial estimates and intentions to and reasons for award of a contract are STRICTLY CONFIDENTIAL and shall only be disclosed on a “need to know” basis. instructions or clarifications given or important technical/commercial issues discussed. 8. 10.1 All communications with tenderers whether they be single tenderers or in competition must be recorded in writing. it is also essential that minutes of important formal meetings where any specific agreements are reached. 4 Page 3 of 6 Date: February. tenders received. Under these circumstances.1 Information about tenderers. Such communications should always be handled by a member of the Contracts Teams who shall be delegated by the Team Leader Contracts concerned and shall act as the Company’s representative throughout the Tendering process. CONTRACT AWARD 10. CONFIDENTIALITY 9. 2006 7. records of all informal meetings shall also be kept in the form of a file note and/or diary statement. RECORDS OF MEETINGS KOC representatives shall produce minutes of all meetings with tenderers/contractors both before and after the award of any contract.

programme and progress. or breach of Contract terms and conditions. the Controlling Team should ensure that the Specification and Scope of Work are accurately defined and monitored. adequate records must be kept to justify all transactions that take place with a contractor. 4 Page 4 of 6 Date: February. Compliance with prescribed accounting systems and rules is required to ensure that all accounts at all times accurately reflect. Contracts Teams shall be advised of actions taken or to be taken (depending on the Controlling Team’s ability to resolve such difficulties) to remedy the situation. 11. for receipt and approval of the contractor’s time sheet. the Controlling Team shall ensure that such changes are clearly defined and that Contracts Team is promptly informed for all necessary processing. In particular. 11. and. 12. etc. The Controlling Team is responsible for ensuring that adequate records are maintained of contract cost. In particular. it is the responsibility of the Controlling Team to ensure that adequate control is in place in accordance with sound commercial practice and in line with the policies and procedures outlined in this document. where work is executed on a daywork basis. 2006 11. POST CONTRACT AWARD CONTROL AND ADMINISTRATION 11. Quality Assurance.3 Regular meetings should take place with the contractor in order to ensure that all activities are planned and that progress is being effectively monitored and recorded. to ensure that the contract works are carried out in accordance with the requirements of the contract. . 11.1 Following award of the contract.2 It is the Controlling Team’s responsibility either directly or through its nominated and authorized representative. Adjustment or any other amendments. the Controlling Team shall communicate with the Contractor in writing with supporting evidence. programme and other aspects such as HSE of the Site. PROPER ACCOUNTING AND CONTROL 12.KOC POLICIES AND REGULATIONS FOR CONTRACTS Standing Instructions Issue No.1 All personnel responsible for the handling and administration of contractual relationships of whatever value must ensure that there is an adequate system of internal control in place and that measures are instituted to ensure compliance with Company policy. misconduct. Where a contract requires Work Orders.. properly describe and promptly record the contractual transactions undertaken.2 No contract shall be let or scope changed without confirmation of the availability of funds in accordance with Company procedure. 12. Compliance includes compliance with the specification.4 In the event of poor performance..

2006 CLAIMS In the event of a contractor’s claim. parent company guarantees.2 All pre-contract documentation including documents concerning appraisal of tenders received as well as contract documentation shall also be retained by Contracts Teams for a period of 15 years from the date of completion of the contract. 4 13. entity. all contracts shall be made under the current version of the relevant KOC published General Conditions of Contract.3 All documentations related to disputes shall be maintained until respective disputes are resolved. 16. Such documents including original of contracts. Page 5 of 6 Date: February. amalgamation etc. shall be referred to Legal Affairs Group for review and advice prior to effecting such Agreement. STORAGE AND RETENTION OF DOCUMENTS 15. 16. shall be kept in safe storage and will be made available for reference purpose. these will be checked by Contracts Teams who shall ensure such clauses are reviewed by other appropriate areas of expertise such as the Legal Affairs Group prior to issue. 16.3 Where an amendment to contract terms is necessary. 15.4 Any new agreement entered between KOC and the Contractor due to change of status. . the Superintendent of the Contract is responsible for ensuring that a thorough and fair evaluation is carried out prior to seeking any necessary approvals.2 Contracts Teams shall be responsible for the updating of these General Conditions and in addition shall maintain a data-base of model clauses and forms of contract for reference. amendments etc.KOC POLICIES AND REGULATIONS FOR CONTRACTS Standing Instructions Issue No. 15. CONTRACT CLOSURE Every contract should be closed only with sufficient documentary evidence indicating that all work has been carried out and that financial settlements have been made upon completion of the work and rectification of any defects. 14. 15. Such updated models shall be made available through the Company’s Intranet pages for guidance. 16. FORMS OF CONTRACT 16.1 In general.1 Contract Teams are responsible for the storage of all original contract documents. All claims shall be forwarded to Contracts Services Team for further handling in accordance with the provisions set out in Section 17 hereof.

17.KOC POLICIES AND REGULATIONS FOR CONTRACTS Standing Instructions Issue No. 2006 17. In particular. RESPONSIBILITIES 17.2 Delegation of Financial Authorities for all aspects of contracts administration shall be strictly in accordance with the KOC’s Executive Delegation of Authority . . 4 Page 6 of 6 Date: February. 18. the Superintendent of the Contract shall ensure that all necessary advice and approvals are obtained as appropriate. COMMUNICATIONS WITH STATE AUTHORITIES All relevant communications with external authorities such as KPC and CTC relating to tender and contract administration shall be issued by the Commercial Affairs Group.1 The nominated Superintendent of a Contract is responsible for ensuring that the contract is administered strictly in accordance with KOC’s policies and procedures and nothing in this document shall imply that this responsibility is shared with or partially held by any other person or Group unless the Contract has more than one Superintendent where each one is responsible for the part under his Team’s control.

RFP.000 : KPC Board of Directors 1. due to their nature. 2006 SECTION 1 .30.2.2 Type B (1) Normal competitive terms and Bid prices NOT negotiable.2 Type "B" Contracts 1.000 – KD. 4 Page 1 of 7 Date: February. 5. with the authorisation as follows: Estimated Contract Value KD. as applicable. received and awarded by the Company. Estimated Contract value greater than KD.5 Type B (4) B(4) Contracts for "Vitally Urgent Works". KPC HTC.1.000 which involve competitive bidding without having to go through the normal tendering procedures.000 : DMD concerned Estimated Contract Value greater than KD.1. lease agreements. including HSE related Works of estimated value greater than KD. 1.2.3 Type B (2) Normal competitive Terms and Bid prices negotiable (Mumarasa).1 Type "A" Contracts Type "A" Contracts are defined as contract agreements which are normally negotiated and signed on a "Direct Contracting"/"single source" basis for specialist services or works such as specialised services related to Drilling and Production Operations.2. subject to the prior approval of the KOC Tender Committee. specialist computer equipment and software.2. maintenance of medical equipment.1.1. 30.DEFINITION 1.1.1 Type "B" Contracts are defined as those Contracts for which Request for Proposals (RFPs) are issued. 1. KPC Board of Directors.250.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 1 Issue No.000 and up to KD. 5 million.4 Type B (3) B(3) Contracts for Remedial Works or Specialized Services of an Emergency Nature which may be issued as Type "B3" Contracts. 1. 30. .1. RFP estimated Contract value greater than KD. 250.000.1 Contract Classifications The main types of Contracts are:- 1.000 Unlimited : C & MD Estimated Contract Value greater than KD. are only available through direct negotiation/contracting. 30.1.2. or agreements for services which. 1.000 upto KD 5 million.

2 Central Tenders Committee (CTC) The Central Tenders Committee is the official body established under Law to control the issue and award of public tenders of estimated value greater than KD.5 Minor Works Works and/or Services not exceeding KD.2. which reviews all RFPs issued thru’ CTC.1 Type "C" Contracts are defined as those contracts for which the authority to issue and receive RFPs and award of contract remains with the Central Tenders Committee. 1. 1.1. 1.e.1.2. 4 Page 2 of 7 Date: February. 1. 1.000. not processed thru’ Contracts Teams or KOC Tender Committee.5. 1.in value are classified as Minor Works and are not handled on a Contracts basis i.3 Type "C" Contract 1.000 are termed as "Low Value Contracts" (Type "L" Contracts).2 General The following terms shall have the meanings assigned to them:- 1. 1.2.000.1. 30.1. 1.each. 1.1.4 Low Value Contracts (Type "L" Contracts) Contracts for Works or Services of estimated value greater than KD. 2006 1.3 KPC Higher Tenders Committee (HTC) The Kuwait Petroleum Corporation Higher Tenders Committee (KPC HTC) is the committee appointed by the Chairman of KPC to review and approve all purchasing and contracting activities for tenders of value exceeding KD.000/-.2.6 Type B (5) B(5) Contracts for Consultancy Services and Specialised Services which involve competitive bidding.000.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 1 Issue No.000 but not exceeding KD. 1.000/-. .000/.2 Normally Type "C" Contracts are those for which the estimated value at RFP stage exceeds KD.000/.1 State Legal Department State Legal Department is the Department of Legal Advice and Legislation of the Council of Ministers.3. 5.1.3.

& Fin.4 Review.4. method of tendering. . endorse the Controlling Team’s recommendations for issue of tenders including approval of bidders’ list.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 1 Issue No.2. approve confiscation of bid bonds. Requests for Quotation or purchase orders. as applicable to issue and award tenders and Agreements (including those exempted from KPC HTC and/or CTC).4.4.2.5 Bids Opening Committee Bids Opening Committee is delegated by KOC Tender Committee and shall convene weekly to open bids received in sealed envelopes.3 Review and. 2006 KOC Tender Committee KOC Tender Committee shall comprise the following: DMD (TS) Manager (Commercial Affairs) Admin.1 Ensure sound implementation of KOC’s Policies and Regulations for Contracts and Purchasing. Kuwaitization requirements of Contractor’s manpower and the like. Approval of Purchase Order Amendments and Adjustment Orders and other related issues. 1.2. if in agreement. and if in agreement.4. 1. 1.2.4.000 and KD 5 Million. 4 1. 1. publish the same on the designated Notice Board and forward the bids to Purchasing/Contracts Teams concerned for necessary action. Directorate Representative North Kuwait Directorate Representative South & East Directorate Representative West Directorate Representative Oil Services Directorate Representative Team Leader Contracts Services – - Chairman Member & Deputy Chairman Member Member Member Member Member Secretary The Terms of Reference of KOCTC shall be as follows:.2. for tenders with estimates between KD. 1. 1.4.6 Handle any other issues related to tendering as requested by C & MD.2. 1. estimated cost.5 Arbitrate on any complaints received from any tenderer/supplier related to tenders.4 Page 3 of 7 Date: February.2 Monitor and ensure that the technical and commercial evaluation of tenders is adequate and is in the best interest of the Company.2.2. 1. The Committee shall record the bids in the Schedule of Bids.

2. Under normal circumstances this will be a member of Contracts Teams during the pre-award phase and a member of the Controlling Team after award. .11 Contract Superintendent The person nominated by the Company as being responsible for all contractual matters relating to the contract. for initiating a contract action is defined as a Contract Requisition (CR).2.2. 4 1.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 1 Issue No. 1. 2006 Bids Opening Committee (Cont’d) The Bids Opening Committee comprises the following members: Team Leader Warehouse Team Leader Contracts Services Financial Group Representative Purchasing Teams I & II Representative Contracts Teams I & II Representative 1.2.2.8 Request for Amendment The duly approved request from a Controlling Team to Contracts Team for initiating any form of amendment to a contract.5 Page 4 of 7 Date: February. with respect to the level of authority within the Company to commit and incur expenditure on behalf of the Company. 1.7 Contract Requisition (CR) The duly approved request from a Controlling Team to Contracts Team.9 Company’s Executive Delegation of Authority The Executive Delegation of Authority shall be that approved by the Board of Directors and issued by the Chairman & Managing Director.2.6 - Chairman Deputy Chairman Member Member Member Controlling Teams The Controlling Team is the Company Team responsible for initiating the Contract Requisition (CR) and for the technical aspects of a Request for Proposal (RFP)/ contract. 1. 1. 1.10 Company’s Appointed Representative The Company’s Appointed Representative shall be any person delegated by the Company to represent it at the KPC HTC/CTC.2.

17 Schedule of Bids The Schedule of Bids shall be as follows:- 1.2.13 Re-tendering Re-tendering shall mean the re-issue of a RFP due to its cancellation for any reason. a Committee comprising representatives nominated by the Teams of all Controlling Teams shall be formed. 1. 1.2.2. . 4 1. 1.12 Page 5 of 7 Date: February. the Chairman of such committee shall act as the nominated contract Superintendent. 1. 1.17. indicating the closing date and the amount of each accepted bid.14 Notice of Expiry A Notice of Expiry shall be the notice issued by Contracts Teams to Controlling Teams sufficiently in advance of the expiry date of a Service Contract seeking their intention subsequent to the said expiry.16 Contract Financial Approval (CFA) A CFA is a statement issued by Budget & Cost Team with respect to a Contract which confirms the availability of funds to cover the specified Works. evaluation of bids and for the joint recommendation for award.1 For Type `C' Requests for Proposals (RFPs) The Schedule of Bids shall be as prepared by CTC recording the names of all Tenderers who submitted their bids to the CTC.2. It shall be responsible for preparation and review of RFP requirements.2.2. Where such committee is required.2. This committee shall be the Ad Hoc Committee for the RFP and shall be chaired by the representative of the Controlling Team having the greatest utilization of the Contract on a monetary basis and shall be named in the RFP as the leading Superintendent. 2006 Ad Hoc Committee For Requests for Proposal (RFP) having more than one Superintendent.15 Authorisation for Financial Expenditure (AFE) An AFE is a statement issued by Budget & Cost Team to a Controlling Team confirming the authorisation of the allocation of funds for expenditure on a particular project.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 1 Issue No.

19 Live Contracts This expression is intended to indicate that a Contract remains in force until the issue of a Final Statement of Account for Construction Contracts or signature of the designated Disclaimer Form by the Contractor for Service type Contracts.2. 1.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 1 Issue No. names and ranking of the Tenderers and the commercial evaluation. the names of Tenderers.2.20 Dead Contracts This expression indicates that a Contract is termed as closed following the issue of a Final Statement of Account for Construction type Contracts or signing the designated Disclaimer Form by the Contractor for Service type Contracts. 1. 4 1. the amount of each bid and the closing date.17. 1. after receipt of bids and the Schedule of Bids. 1. West.2 Page 6 of 7 Date: February.2. 2006 For Type `B' RFPs The Schedule of Bids shall be as prepared by Bids Opening Committee recording accepted bids.21.2. Contracts Officer Prequalification Unit) Members: one (1) Representative from each of the following: Industrial Services Group Support Services Groups (North.21 Local Contractor’s Evaluation Committee (LCEC) 1.2.18 Bid Summary Sheet The schedule prepared by Contracts Teams.1 Membership The Local Contractor’s Evaluation Committee comprises the following permanent members: Chairman:- Team Leader Contracts Services (Deputy Chairman – Snr.2. expiry date of Bid Bond. South & East Kuwait) Engineering Group Financial Services Group HSE Group . stating details of closing date.

2.2 Page 7 of 7 Date: February. 1. LCEC Meetings The LCEC Chairman will call for meetings as and when required to review any business related to consideration of minimum requirements or evaluation of Contractor’s applications. following which any recommendations for changes shall be submitted with the necessary justifications by the LCEC Chairman to Manager (Commercial Affairs) approval.21.3 • Review of the minimum requirements for each Category of Work. 2006 Responsibilities and Functions The LCEC shall be responsible for the following:- 1.2. in accordance with the procedure set out in Section 26 hereof. . In the event the LCEC is divided on a particular issue. • Evaluation of Local Contractor’s applications for inclusion in the various lists of Approved Contractors.21.21.2.4 The LCEC’s Committee overall recommendations shall be based on the majority of votes.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 1 Issue No. then the LCEC Chairman will have the casting vote. 4 1.

2. Note: Liquidated damages are a contractually agreed sum which shall be paid by the contractor in the event of delay in providing work / services specified within the contract. 4 Page 1 of 2 Date: February.3 detailed specifications for the Works or Services. if different from that stated in the General Conditions of Contract.1 Controlling Teams shall initiate formal tender and contract action by preparing and submitting to Contracts Team concerned a Contract Requisition (hereinafter "CR"). as a minimum.2. in hard copy or electronic:- 2.2.6 proposed target date for release of the signed Contract. together with one updated copy of each drawing in hard copy or electronic.2.5 a list of the drawings.2.4 detailed HSE requirements for Works or Services to be executed. 2. 2.1 brief title of the Works or Services to be executed.2.9 proposed Defects Liability Period. This preestimate should be passed to Contracts Team for safe keeping in case of dispute. 2.2 number of the AFE(s) / Oracle No. .8 proposed reasonable and realistic level of Liquidated Damages./Top Task in the case of Capital work (if already available) 2. 2. Any such sum should be derived from a genuine pre-estimate of such delay. and shall include.2. and any specific requirements for inclusion in the Contract Agreement.2.2 The CR shall be comprehensive. Contracts Teams shall be consulted in order to concur with this proposal. 2.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 2 Issue No.10 any specific requirements for the pre-tender meeting and/or site visit where appropriate. 2. 2. Contracts Team shall be consulted in order to concur with this proposal. the following information. 2. as applicable.2. 2.7 proposed reasonable and realistic completion period for the Contract or required duration of Service Contract.2. 2006 SECTION 2 – CONTRACT REQUISITION 2.

2006 2.e. .) 2. in addition to proposed list of Approved Manufacturers and/or subcontractors. B. documents or other requirements related to the Works or Services. C. etc. 4 Page 2 of 2 Date: February.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 2 Issue No. as appropriate.3 Although not included in the CR due to its confidentiality.12 any other special instructions.2.2. the estimated cost of the Contract (on the basis of the AFE) shall be relayed to Contracts Team Leader concerned. Type (A. 2.2.13 the proposed classification of the Request for Proposal (RFP) i. or submission of bids.11 proposed list of tenderers/vendors or the proposed applicable CTC/ Company Category of Work. 2.

1.1 Review CR 3. . shall be reviewed by Contracts Team and.1 Controlling Team/s 3. as contained in the CR is not feasible.2. 3.1 Contracts Team shall review the CR.1 Contracts Team shall prepare the draft Request for Proposal (RFP) document based upon the content of the CR.4 The RFP and final draft list of Tenderers/Vendors and any comments thereon shall be approved by the Controlling Team’s Group Manager or his delegate prior to return to Contracts Team.1 All proposed amendments and comments raised as a result of circulation.2. 3.2.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 3 Issue No.1. 4 Page 1 of 2 Date: February.2. 3.2.2 Legal Affairs Group (as appropriate).2. the Controlling Team and Contracts Team shall work together to develop an optimised schedule on the basis of the programme specified in the CR.2 The draft RFP document and the proposed Time Schedule shall then be circulated for review. 3.2.2 Preparation and Circulation 3.2 In the event the proposed target date for release of the signed Contract. to the extent considered appropriate.2.3 The proposed list of Tenderers/Vendors shall be confirmed by the Controlling Team during final review and approval.3 Updating and Final Preparation 3. 3.2.1. to:- 3.3 Controlling Team shall remain responsible for collection of all required information and liaison with any other Company Team. If it is incomplete or if Contracts Team considers that further information is needed then they shall issue an appropriate written request to the Controlling Team. together with an approximate Time Schedule indicating the time cycle of the RFP. 3. 2006 SECTION 3 – PREPARATION OF REQUEST FOR PROPOSAL (RFP) DOCUMENT 3. comments and return directly to Contracts Team prior to a stipulated date.3 Accounts Payable Team and Cost Management Team (as appropriate).2. 3. 3. incorporated into the final RFP documents.3.

1 Minor changes which do not significantly affect the scope of work or anticipated RFP prices shall be forwarded by user/controlling team in writing to Contracts Team with details of the reasons for such changes.3.3.3.3.2 Major changes to scope of work shall be forwarded to Contracts Team in writing complete with full justification through the Group Manager of the Controlling Team.4 All changes must reach Contracts Team at least two (2) clear working days prior to the date of the pre-tender meeting.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 3 Issue No. 3. 3.3. no further changes/amendments shall be permitted except as follows:- 3. 3.3. it shall take the matter up with the Team concerned in writing. .2 Where Contracts Team considers that certain comments and proposed amendments are inappropriate for incorporation in the final RFP documents in the form proposed. 4 Page 2 of 2 Date: February. 2006 3.3 Following incorporation of the agreed amendments and comments as described above.3.

3 Central Tender’s Committee (CTC) Approval This shall be obtained where the estimated value is greater than KD. Specialised Service Agreements. etc.2 hereof. 10 million.1. 5.2 Type B(3) RFPs The issue of RFPs for "Remedial Works of an Emergency Nature" (See Section 23 hereof). RFP documents shall have to be reviewed by the State Legal Department. Consultancy. 2006 SECTION 4 – APPROVALS AND REVIEWS PRIOR TO ISSUE Prior to issue of final Request for Proposal (RFP) documents the following approvals shall be obtained by Contracts Team: 4.1 hereof. 4. shall only be subject to prior approval of the Chairman and Managing Director/DMD concerned and KPC Board of Directors.). as applicable. the Contracts Team shall obtain a written approval for renewal from the Minister of Energy at least one month prior to the expiry date of the running Agreement.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 4 Issue No.1.4 Type A RFPs In addition to the approvals specified in Item 4.1 All Request for Proposals (RFPs) Except as stated in clause 4.1 KOC Tender Committee Approval This shall be obtained for all RFPs where the estimated value is greater than KD.000.3 Type C RFPs In addition to the approvals specified in Item 4. 30. where the estimated value of the RFP is greater than KD.except those originally exempted from CTC (Emergency and Vitally Urgent Works. Specialized Service Agreements.1.000/. . 4. all RFPs shall be subject to the following:- 4. 4 Page 1 of 2 Date: February. 4. 1 million.1 hereof for renewal of Agreements with foreign companies for provision of specialized services on continuous basis. and where the estimated Not-to-Exceed Value of such Agreements is greater than KD.000/- 4. 5 Million except those exempted from CTC (Consultancy Services. Vitally Urgent Works as exempted by KPC Board of Directors).2 KPC Higher Tenders Committee Approval This shall be obtained for all RFPs where the estimated value is greater than KD. 4.

Under no circumstances should a contractor be reimbursed in excess of the "not to exceed value" without a formal amendment to the contract being issued in accordance with the procedures specified within this document. 2006 Service Contracts / Contracts based on Rates/Blanket Contracts For all contracts where a fully built up lump sum cannot be derived.5 Page 2 of 2 Date: February. 4 4.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 4 Issue No. . a " not to exceed" value must be clearly specified within the contract document. This value may be based on either estimated requirements or an amount budgeted for expenditure during the Contract Period and shall form the basis for all necessary approvals in accordance with KOC's Executive Financial Delegation of Authorities.

4 Page 1 of 1 Date: February.3 For Type C RFPs.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 5 Issue No. . project’s specifications. 5.) to be incorporated into the RFP documents in hard copy or electronically.1 Contracts Teams shall prepare the final Request for Proposal (RFP) documents for advertisement and issuance to the tenderers either directly by the KOC Tender Committee (thru’ its Secretariat) or thru CTC as applicable. 5.2 The Controlling Team shall be responsible for the timely supply of sufficient sets of clear copies of the RFP Drawings and other special documents (standards. 2006 SECTION 5 – ISSUE OF REQUEST FOR PROPOSAL 5. Contracts Teams shall forward copies of RFP documents to the Ministry of Energy. etc.

all communications with the Tenderers/Vendors must be made through Contracts Teams.2. Such Teams must redirect to Contracts Team concerned any approaches made to them by Tenderers. 6.1 Prior to award of a Contract. any of the Tenderers/Vendors either formally or informally. 4 Page 1 of 1 Date: February.2 Neither the Controlling Team nor any other involved Team. 2006 SECTION 6 – COMMUNICATIONS 6. Ministry of Energy and the CTC on matters relating to Request for Proposals (RFPs) shall be through the Company's Appointed Representative. KPC HTC. shall in any circumstances contact.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 6 Issue No.2.2 Communications with Tenderers 6. . verbally or otherwise. 6.1 Communications with State Authorities All communications between the Company and State Legal Department.

7. unless otherwise agreed with Contracts Teams. 7. 7. 7.2 Contracts Team shall arrange and chair the Pre-Tender Meeting and.4 Contracts Services Team shall obtain all necessary restricted area passes for Bidders/Vendors personnel for site visit(s).3 Contracts Services Team shall arrange all necessary transportation for site visit(s). in liaison with Controlling Team.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 7 Issue No. shall provide the Contracts Team thru’ its Group Manager with relevant details.5 Controlling Team. 7.7 Where a postponement of closing date is necessary. should such visit(s) be appropriate. Contracts Team concerned shall accordingly arrange for the finalisation and issuance of the necessary Supplementary Letter to the Bidders/Vendors.1 A Pre-Tender Meeting shall be held for every Company Request for Proposal (RFP). 7. the Contracts Team shall obtain the Controlling Team’s consent for the same. except as may be otherwise agreed in writing between Controlling and Contracts Teams. . 4 Page 1 of 1 Date: February. Contracts Teams shall issue the Supplementary Letter not later than two weeks prior to the tender’s Closing Date.6 Supplementary Letters must be issued in sufficient time to enable tenderers to submit proper bids. where the Supplementary Letter involves revision to the Scope of Work and/or technical specifications. sufficient sets of drawings and other special documents to be incorporated in the Supplementary Letter. 2006 SECTION 7 – PRE-TENDER MEETING 7. make the required provisions for any related site visit(s). depending on the merit of each case taking into consideration the size and complexity of each Supplementary Letter.

8. 8. covered by the Contract.1 In the case of bids delivered directly at KOC premises.5 Final Recommendations for award from Controlling Team. 2006 SECTION 8 – EVALUATION OF BIDS AND AWARD OF CONTRACTS 8. shall be accompanied by full justifications for the rejection of lower bids.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 8 Issue No. and shall record the bids in the designated Schedule of Bids and forward them to Contracts Team concerned for necessary action. for B(2) Type RFPs. Such meetings with tenderers shall also be documented.3 The Controlling Team/Adhoc Committee (for RFPs having more than one superintendent) shall carry out detailed technical and commercial evaluation with the assistance of Contracts Team as appropriate and shall make the formal recommendation for award. . which shall be forwarded to Contracts Team as soon as practicable. 4 Page 1 of 2 Date: February. depending on the merit of each case taking into consideration the size and complexity of each RFP. shall be submitted to the KOC Tender Committee for its review and approval. 8. the Bids Opening Committee (as delegated by the KOC Tender Committee) shall open bids received in sealed envelopes. following review and endorsement by Contracts Team. The Recommendation for award shall specifically state that:- 8. Note: This period shall be no longer than two weeks unless otherwise agreed with Contracts Team.2 Contracts Team shall be responsible for review of the bids and shall check for full compliance with the Instructions to Bidders and shall obtain CFA from Budget & Cost Team based on the first lowest bid received.5.1 the recommended bid meets the Company's technical requirements. and. 8.4 Clarifications which do not in any way alter the RFP price or its original specifications may be obtained from bidders through Contracts Team. should any discussions/negotiations with tenderers be deemed necessary. 8. 8. However.6 Recommendations for award to other than the lowest bidder.5. shall be endorsed by the Group Manager of the Controlling Team and shall be submitted to Contracts Team for review/vetting and endorsement. Initial evaluation of Request for Proposal (RFP) and submission of queries/clarification required (if any) shall be completed within the shortest possible period by the parties concerned within Company Organisation. 8.7 All recommendations for award.2 the cost has been examined and is commercially acceptable and justifiable for the works/services/ materials etc. prior approval from the KOC Tender Committee through Manager (Commercial Affairs) must be obtained and Contracts Team shall be represented at all such discussions/negotiations.

9 Should the tender be awarded to other than the lowest bidder.000 and exceed the Controlling Team’s estimate. the approval of: i) the KOC Tender Committee.11 For bids of value exceeding KD. Contracts Services Team shall prepare a monthly return of all Contracts let directly by the Company i. 8. 4 Page 2 of 2 Date: February.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 8 Issue No. upto KD. 1 Million the approval by KPC HTC of the Company's recommendation for award shall be obtained by Contracts Services Team. for all specialized Service Agreements related to KOC’s core business. Drilling and Production. 1 Million (including Low Value Contracts) and shall submit this to the Minister of Energy.e. and notwithstanding the approvals required under clauses (i) and (ii) (as applicable). Requests for Extension shall be approved by Team Leader Contracts concerned and shall be copied to Manager (Commercial Affairs) for 2nd and subsequent extensions.13 In the event it is necessary to extend the price validity of bids.2 Bid value exceeds estimate by more than 10% - C & MD 8.1 Bid value exceeds estimate by more than 5% - Respective DMD 8.000.14 The successful Bidder shall be notified by the KOC Tender Committee’s Secretary except for Type C RFPs where the successful Bidder is notified by CTC.000. 8. the C & MD’s approval shall be required.8.10 For Specialised Service Agreements negotiated on a single source basis where the Contract value is based on agreed rates with no commitment to expenditure.000/- Further. 8. irrespective of value. Contracts Services Team shall obtain revised CFA from Budget & Cost Team. . 5.8. 2006 8. which are negotiated on single source basis for the first time.8 Should the value of the recommended bid be greater than KD. 8. 8.e. and ii) the C & MD for Agreements of Not-to-Exceed Value in excess of KD. Contracts Teams shall ensure that appropriate action is taken either directly with bidders or through CTC in the case of Type C RFPs. 1/2005 of the Supreme Council for Petroleum. Management’s approval shall be obtained by Contracts Team as follows. 8. 8. Exploration. i.15 In accordance with the provisions of Resolution No. the Company's recommendation shall then be forwarded by Contracts Services Team to the CTC for approval of award. These approvals shall be obtained as appropriate prior to signature of the Agreement. 3.12 For all RFPs for which prior CTC approval was obtained before issue.

2 Together with the request for the issue of a Letter of Intent.2. endorse the request. In cases where a Letter of Intent is authorised. 2006 SECTION 9 – LETTER OF INTENT 9. 9. 4 Page 1 of 1 Date: February.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 9 Issue No.4 Approval to issue a Letter of Intent shall be obtained from the C&MD by Contracts Team through M (CA) and DMD (TS).2. where appropriate. Letters of Intent shall not be issued until all material matters relating to the subject Contract have been agreed with the Contractor and the Letter of Intent must contain reference to all such matters.1 steps taken in preparation of the Contract for signature.3 Contracts Team shall review and. 9.5 Proposed Letters of Intent will be circulated by Contracts Team to Legal Affairs Group.3 reasons why commencement of the Works or Services cannot be delayed pending final preparation of the Contract for signature. the Manager of the Controlling Team shall forward to Contracts Team a report which must detail:- 9. 9.2. 9. and 9. . a formal Contract must be concluded soonest possible. 9.1 Letters of Intent will only be issued upon C&MD approval and only in cases where it is imperative that mobilisation for the Works or Services commences immediately. Controlling and Accounts Payable Teams for comments before being passed to the C&MD for signature.2 reasons why the Contract cannot be immediately finalised and prepared for signature.

2006 SECTION 10 – FORMALIZATION OF CONTRACT DOCUMENT 10.1 Contracts Team shall prepare two originals of the formal Contract Document for signature.2 Subject to submission of the necessary Performance Bond as applicable. 10.6 The Contract documents may be released by Contracts Services Team after signature by both parties. however. works under the Contract shall not be commenced until the appropriate insurance policies have been approved by Team Leader Insurance .5 The Performance Bond shall be held by Accounts Payable Team 10. 4 Page 1 of 1 Date: February. 10. Insurance policies and certificates shall be held in the Contract File in Contracts Teams premises.3 The Company's signatory representative shall be decided in accordance with the Company's Executive Delegation of Authority.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 10 Issue No. 10. . the Contractor shall be invited to sign both Contract Documents.4 Contracts Services Team shall hold the Company's original copy of all signed Contracts and other related documents. Both originals shall be initialed on each page thereof by representatives from Contracts and Controlling Teams 10.

Once the C&MD's approval is obtained for such Advance Payments. 4 Page 1 of 1 Date: February. Advance payment shall be only effected against submission by the Contractor of an irrevocable unconditional payable on sight bank guarantee issued or endorsed by a bank operative in the State of Kuwait.2 Mobilisation Payments must be paid after the relevant mobilisation.2.1 Advance Payments No forms of advance.2 Mobilisation Payments Payments for mobilisation shall not be permissible except in the case of certain specialised Contracts where payments may be made for mobilisation of heavy equipment such as drilling rigs. consultant's fee.2.1 Such mobilisation payments must have been incorporated into the original RFP Documents and the payments must be commensurate with actual mobilisation costs incurred. 11. 11.3 Mobilisation Payments must be invoiced for and certified in accordance with Section 15 hereof (Contract Payments). 11. it must be clearly incorporated into the relevant Contract. 2006 SECTION 11 – ADVANCE PAYMENT 11. floating plant and the like.2.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 11 Issue No. 11. . retainer or similar payments shall be made without the prior approval of the C&MD.

shall be made without the prior approval of C&MD / DMD(TS) as follows. number and ranking of entitled unsuccessful bidders Reimbursement of bidding costs to entitled unsuccessful bidders shall be effected only after contract signature with the successful bidder. 11A.7 Contracts Team shall advise unsuccessful bidders to submit their invoices to Accounts Payable Team for further processing in accordance with Section 15 hereof (Contract Payments). whether in full or part.5 : : Upto KD 100. bidding fees will be reimbursed to the lowest bidder in addition to other unsuccessful bidders subject to meeting criteria for selection specified in the tender.6 Controlling Team through its group Manager shall advise Contracts Teams of recommendation for reimbursement of bidding fees to unsuccessful bidders who are compliant with the criteria for selection as per tender specification and requirements.11. .g.000/- Upon obtaining management approvals.3 Controlling Team shall confirm availability of funds within AFE to cover such bidding fees.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 11A Issue No.5 of the Executive Delegation of Authorities:DMD (Technical Services) C&MD 11A. In the event of tender cancellation. 4 Page 1 of 1 Date: Sept. 11A. 11A.000/Over KD 100.4 No forms of reimbursement of bidding costs. in accordance with Clause 9. 11A.1 Reimbursement of bidding costs shall not be permissible except in certain tenders where bidders incur considerable costs in preparing their bid submissions (e. 11A.2 Controlling Teams shall provide contracts team with basis and justification for reimbursement of bidding fees through their respective Group Manager. 2007 SECTION 11A – REIMBURSEMENT OF BIDDING COSTS FOR UNSUCCESSFUL BIDDERS 11A. the following shall be incorporated in the tender document prior to bid closing a) b) c) necessary provisions covering criteria for selection. with the objective of enhancing participation and achieving competitive bidding. major Lump Sum Turnkey projects).

.3. 12. the Controlling Team shall be responsible for:- 12. The Controlling Team shall also be responsible for ensuring that all existing services within the site area have been re-routed as necessary.2 The notice specifying the date for commencement as issued by the Superintendent of the Contract shall be copied to both Contracts and Financial Accounts Payable Teams. 12.3. 12. 12. 4 Page 1 of 1 Date: February. and that there is no impediment which may prevent the Contractor from commencing work on the date specified.4 The inspection of Contractor's equipment.1 Ensuring the availability in KOC's Stores of materials to be supplied by the Company. 12. ensuring compliance with HSE regulations and requirements.1 Where it is stated in the Contract that the Commencement Date shall be notified in writing to the Contractor.3. 2006 SECTION 12 – COMMENCEMENT 12.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 12 Issue No.5.3. the Superintendent of the Contract shall not instruct the Contractor to commence the Works until an original Contract Document has been released to the Contractor and a notification is issued by Contracts Team that the Contractor has fulfilled all insurance requirements 12.3 Prior to commencement of the Works. Assisting the Contractor in obtaining access passes.2 The delineation of the site and any associated working area.3 The approval of Contractor's personnel.3.

details of periodic progress reviews of the Works. minutes of meetings. e-mails. all letters. .KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 13 Issue No. 4 Page 1 of 1 Date: February. records of materials delivered to site. Site notes. telexes. faxes. whether typed or handwritten. memos. The Contract History File shall include. and all other documents relevant to the Contract and/or the implementation of the Works. Contractor's daily reports. The Controlling Team shall retain the Contract History File for a period of 10 years from the Date for Completion of each contract. 2006 SECTION 13 – CONTRACT HISTORY FILE The Controlling Team shall maintain a full and comprehensive Contract History File for each contract under its control.

Minutes of Meetings shall be signed by the Contractor and the Superintendent's Representative. Such responsibility shall be extended until after the Defects Liability Period.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 14 Issue No. 4 Page 1 of 1 Date: February. The day-to-day supervision of the Works may be delegated to a Superintendent's Representative whose name and/or designation. . 2006 SECTION 14 – EXECUTION OF CONTRACT WORKS OR SERVICES 14.3.2 All formal meetings with the Contractor. shall be chaired and minuted by the Superintendent's Representative. Copies of all such minutes shall be placed in the Contract file and copied to the Contracts Team. 14. shall be notified to the Contractor in writing by the Superintendent if not already specified in the Contract. 14.2 Expiry and extension of Performance Bonds and Insurance Policies. together with the extent of the delegation of such authority. in particular Contractor’s compliance with HSE regulations and requirements.1 Signature and issue of Amendments to the Contract.3.1 The Superintendent of the Contract shall be responsible for ensuring the proper implementation of the Works/Services and for ensuring the Contractor's compliance with all the terms and conditions of the Contract.3 Contracts Team shall remain responsible for and shall communicate directly with the Contractor in the event of:- 14. 14.

2.1. the Superintendent of the Contract shall ensure that the Works are fully inspected and all items requiring rectification by the contractor are made good in accordance with the Contract and to his satisfaction. 15.1. 15. 15. Such items must be notified to the Contractor in writing as soon as they are identified.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 15 Issue No. 2006 SECTION 15 – CONTRACT PAYMENTS 15. which must represent a genuine assessment of the value of the Works executed up to the date of such certificate.1 The Superintendent of the Contract shall be responsible for the expeditious verification of Contractor’s invoices and the certification of all payments made under the Contract.1 The Superintendent of the Contract shall be solely responsible for the expeditious verification of Contractor’s invoices and raising of all Certified Payments Authorisation (CPA) made under the Contract.1.1. with a copy forwarded to Contracts Team.1 The following shall apply for all Contracts:- 15. . unless otherwise specified in the Contract. Note: Only when all items have been rectified and the Contractor has fulfilled all his obligations under the Contract shall the Superintendent issue a final Acceptance Certificate and prepare the final CPA releasing all retention monies held.3 Prior to completion of the Defects Liability Period. The percentage completion shall also be checked against the Programme to ascertain the Contractor's progress and a record maintained in the Contract History File accordingly.2 Accounts Payable Team shall receive Contractor’s invoices. 15. and subject to any pre-conditions (such as Tax Clearance and Labour Release) stated in the Contract. must represent a genuine assessment of the value of the Services provided up to the date of the Contractor's invoice. which shall be based on the Final CPA. unless otherwise specified.4 The Final Statement of Account. shall be prepared by Contracts Team and shall be signed by Contractor prior to release of the final CPA to Accounts Payable Team for further processing.2 In respect of Service/Blanket Contracts the following shall apply:- 15. Contracts Services Team shall prepare the Final Statement of Account to be signed by both the Contract Team Leader and the Contractor stating that the final amount payable is in full and final settlement of the Contract. Payments. 4 Page 1 of 2 Date: February. matching them with CPAs and making all certified payments available to the Contractor within the period specified in the Contract. On receipt of the Final CPA accompanied by the Final Acceptance Certificate.

KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 15 Issue No. 2006 15. Final Disclaimer. Accounts Payable Team shall obtain the following from the Contractor in accordance with the conditions of the Contract:a) b) c) Tax clearance certificate.2. 4 Page 2 of 2 Date: February. Labour release certificate. where appropriate.2. .2 Accounts Payable Team shall be responsible for making all certified payments within the period specified in the Contract. 15.3 Prior to release of the Final Payment. .

the Controlling Teams shall ensure that all relevant requirements from the old Contract are incorporated in the replacement Contract. b) Subject to DMD’s approval as stated in (a) above .KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 16 Issue No. . 2007 SECTION 16 – AMENDMENTS TO THE CONTRACT 16. and shall be subject to endorsement of the KOC Tender Committee. and only when the issuance of Contract Amendment is the sole or best option. For Service Contracts.3 Controlling Teams shall make every endeavour to restrict the number of Amendments to the bare minimum. for processing through the KOC Tender Committee. 16. in which case the following shall apply: a) The Controlling Team shall obtain a written approval from the DMD concerned before commitment whatsoever. 5 Page 1 of 3 Date: May. so as to avoid raising Amendment Requests for the same requirements under the replacement Contract.1 No variation shall be made to the Amendment.2 Under no circumstances shall a Request for Amendment be processed: Contract.2 above.4 All Amendment Requests shall be prepared and completed by the Controlling Team and endorsed by the Group Manager. ii) on retroactive basis. CFA from Cost & Management Accounting Team shall also be obtained by the Controlling Team prior to submission to Contracts Team. Amendment Requests must be timely planned. as well as any period required by Contractor for mobilisation under the terms of the Contract. prepared and submitted to Contracts Teams well in advance of the proposed commencement date giving due allowance for processing same by Contracts Team. 16. or in extraordinary situations when works/services under the Amendment need to be carried out promptly to avoid incurring substantial additional costs by the Company and/or claims by respective contractors. the Controlling Team shall immediately proceed with the preparation of the necessary Request for Amendment for submission simultaneously while proceeding with the works/services covered thereunder. 16. without the issue of a formal i) on expired Contracts. All Amendments on retroactive basis shall be subject to verification by Contracts Team and shall be processed as Amendment with subsequent reporting to C&MD copied to DMDs. Except as stated in 16. except only for emergencies or as outlined in clause 23 hereof.

the Contracts Services Team shall obtain the approvals as appropriate in accordance with the K-Companies Tendering Regulations as follows:- 16. . Controlling Team shall. the Controlling Team shall.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 16 Issue No.upto KD 1 Million. the cumulative value of the Amendment requiring KPC HTC’s approval shall be calculated by way of adding numerically the two values of the additional and the deleted items of work together. 5 Page 2 of 3 Date: May. in the event of any addition to a Contract’s Scope of Work involving additional cost. 5 million whichever is less. where the original Contract Price exceeds KD. Regulations prohibiting splitting the transaction shall be taken into consideration in such cases. iii) For Contract Amendments. 16.6 Contracts Team shall be responsible for preparation and handling of all Amendments.1 KOC Tender Committee’s approval is required for all Contract amendments. ii) For Contracts of value more than KD. arrange for obtaining at least 3 quotations from Contractors by sealed envelope delivered to the KOC’s Tenders Box by the closing date stated in the invitation for quotation. 250. The revised total Contract value shall however be calculated on the basis of the net product of the Amendment . 16.000/.8. where Amendments exceed 20% of the total Contract Price. Where there is an Amendment involving increase and decrease of the Contract value resulting from additions and deletions of items of work at the same time. prior to raising an Amendment Request. and the cumulative value of Amendments increase the original Contract Price by 10% or KD.value.7 Contracts Team shall obtain the approval of the Controlling Team on the text of the draft Amendment.2 KPC HTC approval is required for i) Contract Amendment of any value where it raises the total Contract Price to more than KD. 16. upon issuance of the Request for Quotation notify the Secretary of KOC Tenders Committee of the closing date in order to arrange for receipt of such quotations. the Contracts Services Team shall only prepare and provide a breakdown of all such Amendments to KPC HTC in the form of a monthly report. 16.5 Whenever applicable. Bids Opening Committee shall be responsible for opening quotation envelopes and forwarding them to Contracts Services Team for further handling by the Controlling Team. irrespective of the financial impact on the overall Contract value. 1 million. 1 million.8. 2007 16.8 Upon receiving Controlling Team’s approval on the text of the draft Amendment.

8.3 CTC approval is required for Amendments. 16. where the Contract was originally awarded thru’ CTC and the cumulative value of Amendments increases or decreases the original Contract Price by 10% or KD 5 million (whichever is less).11 Issue of the signed Amendment shall be on the same basis as for the original Contract and Contracts Team shall retain the Company's original of the Amendments for safekeeping. 16. 5 Page 3 of 3 Date: May.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 16 Issue No.9 Contracts Services Team shall ensure that all necessary comments and approvals have been obtained prior to signature by the Contractor and the Company’s delegated signatory and issue of the Amendment. 2007 16.10 The Company's signatory shall be selected in accordance with the Company's Executive Delegation of Authority. along with the original Contract. . 16.

17.4. 17.2 for Dead Contracts.3 Correspondence with Contractor At all stages of the Claim processing. through Team Leader Contracts Services. 17.4.3.4 Forward Claim File to Team Leader Contracts Services through the Group Manager concerned upon completion of Evaluation & Recommendation Report. Contracts Services Team shall forward Claim File to the respective Contracts Teams for review and further handling. 17. 17. as appropriate. time. . 5 Page 1 of 4 Date: December 2008 SECTION 17 – CONTRACTOR’S CLAIMS 17.1 “Claim” is a written demand submitted to the Company by the Contractor seeking additional payment.4.5 Contracts Services Team shall keep custody of the Claim File and keep record of all correspondence related to the Claim. the entitlement or impact of which is disputed by the Company.4.1 Complete the Claim File including a description of the Claim.4 Claims Evaluation and Settlements Upon receipt of the Claim. 17.2 Produce Evaluation and Recommendation Report in a tabular format containing as a minimum the requirements stated in the detailed Procedure for Contracts Claims.1 for Live Contracts. All Claims from the Contractor shall be processed promptly in accordance with this document and in compliance with the Standard Procedure for Handling. 17.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 17 Issue No. all correspondence with the Contractor must be: 17. collect facts and all other information and records as necessary for evaluation of the Claim. through the Contract Superintendent. the Controlling Team shall:- 17.4. a reference to pertinent contract provisions. 17.2 Upon receipt of a notice of Claim from Contractor.3 Under no circumstances shall the Contract Superintendent make an offer for settlement of a Claim directly to the Contractor unless prior approval is obtained from KOC Management. or other adjustment to the Contract.3. the Contract Superintendent shall inform the Contracts Services Team of the notice and shall gather necessary documentations. a statement of factual areas of agreement or disagreement and a statement of his opinion and evaluation with supporting rationale. Processing and Settling of Contractor’s Claims contained herein.

viii) Recording consensus of all .4.4. Those meetings shall be chaired by .4.on the recommendations prior to submission to the Manager (Commercial Affairs) for onward processing. iii) Obtain review and opinion in respect of legal aspects underlying the Claim iv) Convene clarification and review meetings between the Contracts Team. vii) Seek further review/ evaluation from the Controlling Team if considered necessary due to above review meetings. value of the Claim and the Contract provisions in this context. Such period shall be agreed on case to case basis with the other teams participating in the process and shall depend on the complexities. Controlling Team and Projects & Claims Team .6 17. Contracts Team.to discuss and reach v) Chair and head any joint reviews and evaluation meetings involving other teams.Controlling Team. ii) Obtain any clarifications and supporting documents from the Controlling Team or in respect of Dead Contracts directly from the Contractor. vi) Fix up a Claim review and conclusion schedule after the Claim Evaluation and Recommendation Report is received from the Controlling Team.7 Page 2 of 4 Date: December 2008 The Contracts Team shall:i) Review the Contractor’s Claim vis a vis evaluation and recommendation from the Contract Superintendent from contractual/commercial perspectives. 5 17. 17.8 The Reviewing Team comprising Controlling Team. ii) Assess whether the recommendation from the Contract Superintendent conforms to the Contract provision or otherwise. Contracts Team and Team Leader & Senior Counsel (Projects & Claims) .KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 17 Issue No. Contracts Services Team and Legal Affairs Group shall:i) Hold periodical meetings among themselves and agree on the regularity of those meetings as to the time and venue. iii) Obtain clarifications from the Contract Superintendent if recommendation is not adequately supported by evidence or documentation or valid reasons. The Contracts Services Team shall:i) Cooperate with Contracts Teams in reviewing the Claim and putting their views along with the Controlling Team’s views in the form of tabulation.

with their signatures. 17.5. Failing which the Contracts Services Team shall refer the matter to the DMD heading the Commercial Affairs (Group) for an appropriate directive.1 for rejected Claims by DMD heading the Commercial Affairs Group.the Contracts Services Team shall refer the disagreement to the Manager (Commercial Affairs).4.12 The scope of evaluation and review by Projects & Claims Team is for review legality and compliance with laws and resolutions. 17.4. conciliate and submit recommendations to the Company’s Management. who in consultation with the Group Manager of the dissenting team. Contracts Services Team. as appropriate. iv) Upon review of Claim. Contracts Team. 17. seek cost justifications. shall attempt to reconcile the difference.11 The scope of evaluation and review by the Controlling Team shall pertain to all technical issues. put recommendations in the form of Evaluation & Recommendation Summary Sheet.5 The Manager (Commercial Affairs) shall then obtain endorsement and approval to the Settlement Sum from the Company’s Management as follows: 17.10 The scope of the review of Evaluation & Review Report by the Contracts Team shall be essentially to review the Claim from commercial aspects of the Contract and to make random qualitative checks to identify any discrepancy and further reviews and evaluation by the Controlling Team. Team Leader Contracts concerned. iii) Hold meetings with claimant Contractor to discuss. debate.4. Where a unanimous agreement is not reached on the recommendations between Controlling Team. and Team Leader & Senior Counsel (Projects & Claims) .by DMD heading the Commercial Affairs Group . estimation and analysis of cost and schedule. 17. In the event the disagreement on recommendation emanates from an observation or comment by any team on the aspects outside its area of responsibilities as described in the Responsibility Matrix in the Procedure for Handling Claims. 5 ii) 17.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 17 Issue No. 17.2 for admissible Claims as follows: up to KD 100. such disagreement may be superseded by the views of the team who is responsible to have a final decision on the issue. Agree on the procedure and process for handling Claims.9 Page 3 of 4 Date: December 2008 the representative of the Commercial Affairs Group.5. gather all relevant facts with respect to the Claim and evidences to support the recommendation. namely.4.000/.

000/. in writing. 17. .2 For Dead Contracts. .by Company’s Board On receipt of such approval from the line Management.1 For Live Contracts.6 Page 4 of 4 Date: December 2008 up to KD 500.6. 17.9 Requests submitted by Contractor for waiver to part or all of deducted liquidated damages.by C & MD over KD 500. concluded and under review claims.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 17 Issue No. to effect the payment of the Contractor. 5 17. advise the Contract Superintendent of outcome and request him to notify the Contractor of rejection of the Claim or the proposed settlement as the case may be. or. after the expiry date. 17. no matter its value. 17.6.000/. If Contractor confirms.8 The claim settlement shall be incorporated into the Contract and paid to Contractor either by an Amendment when the Contract is still valid in accordance with the procedures as outlined in Section 16 hereof. the Team Leader Contracts Services shall:17. acceptance of the proposed settlement the Contract Superintendent shall raise a request for an Amendment to the Contract for processing in accordance with Section 16 of KOC Policies and Regulations for Contracts. by a Deed of Settlement prepared by Contracts Services Team.7 Team Leader Contracts Services shall furnish to reviewing teams a monthly report illustrating outstanding. prepare a Deed of Settlement to be signed by the Contractor for processing for payment through Accounts Payable Team. shall not be entertained as Claim and such requests shall be evaluated by the Controlling Team and the recommendations with adequate justifications may only be submitted to C&MD for approval directly by the Controlling Team in accordance with the Delegation of Authority.

18. and to make proper adjustments to Certified Payments Authorisation (CPA) as appropriate.3 In the event that Liquidated Damages are applied.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 18 Issue No. . 2006 SECTION 18 – LIQUIDATED DAMAGES 18. 18. 18.1 The Superintendent of the Contract shall be responsible for application of Liquidated Damages in accordance with the terms of the Contract.2 It is the responsibility of the Controlling Team to inform the Contractor accordingly. the Superintendent of the Contract shall ensure that Contracts Team is informed.4 Any objections by the Contractor to such application shall be handled on the basis of a Contractor's claim. 4 Page 1 of 1 Date: February.

5 Preparation in due course of the Final Statement of Account and Contract closure.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 19 Issue No. 19.7. 2006 SECTION 19 – TERMINATION OF CONTRACT 19. 19.7 Contracts Team shall be responsible for:- 19. 19. 19. Such complete proposal shall be approved by Group Manager prior to forwarding to Contracts Teams. 19.7. its terms and.7. 19. 19. drawing down on the Performance Bond shall be obtained from the appropriate authority in accordance with the Delegation of Authorities prior to issue of any termination notice. 19. 19.3.3. if appropriate.8 hereof.1 The merits/necessity of the proposed termination including the method (Optional or Default).3 Issue of the appropriate notice to Accounts Payable Team for action under Item 19.5 All communications with the Contractor relating to termination shall be through the Superintendent of the Contract. who shall be responsible for preparation of a proposal which shall comprise the recommended method of termination (Optional or Default).3. .7.7.3 The opinion of Legal Affairs Group shall be obtained by Contracts Team concerning:- 19. 4 Page 1 of 2 Date: February.1 Terminations of Contracts shall be initiated by the Superintendent of the Contract.3 The necessity or otherwise of drawing down the Performance Bond. 19.4 The specific approval to the proposed termination. and 19. The method of achieving completion of outstanding work must also be attached to the proposal.4 Advise Controlling Team regarding dispatch and/or delivery of the Termination Notice.2 Contracts Team shall be responsible for preparation of all termination notices. and all necessary supporting documentation including full justifications and financial and background information.1 Ensuring that all terminations are fully in accordance with the terms and conditions of the Contract.2 Ascertaining the extent of damages to be recovered.6 Termination Letters shall be signed by the original signatory of the Contract. and 19.2 The text of all notices.

be responsible for drawing down the Performance Bond. 2006 19.9.1 Delivery of Termination Notice.9. . 4 Page 2 of 2 Date: February.9 The Superintendent of the Contract shall be responsible for:- 19. when necessary.2 Preparation of Final Accounts in accordance with the terms of termination.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 19 Issue No. 19.8 Accounts Payable Team shall. 19.

1 In the case of current Service Contracts. . Contracts Team shall notify the Controlling Team that in the event of a continuous service being required a Contract Requisition (CR) must be prepared and submitted to Contracts Team.2 The Controlling Team shall forward to Contracts Team the fully detailed CR including the scope and any proposed amendments to the conditions of the current Contract within one month of the date of receipt of the Notice of Expiry from Contracts Team. 4 Page 1 of 1 Date: February. 2006 SECTION 20 – SERVICE/BLANKET CONTRACT EXPIRY NOTICE 20. 20. Such notification shall be made at least twelve (12) months prior to the expiry date of Single Source Agreements and eighteen (18) months prior to the expiry date of all other Service Contracts.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 20 Issue No.

5 of Section 8 hereof. 21. evaluation of bids and recommendation for award shall rest with an Ad Hoc Committee set up for this purpose. . the responsibility for preparation of the CR. 4 Page 1 of 1 Date: February. clear coordination procedures must be developed to ensure overall control and consistency.3 Recommendations for award must be endorsed by the head of each Controlling Team prior to processing in accordance with Item 8.2 Each Controlling Team shall nominate a representative and the Chairman shall be the representative of the Controlling Team which has the greatest utilisation (on a monetary basis).KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 21 Issue No. 2006 SECTION 21 – MULTI-SUPERINTENDENT CONTRACTS 21.4 Where there is more than one Superintendent specified in the contract. 21. 21.1 For Request for Proposals (RFPs) having more than one Superintendent.

Contracts Services Team shall prepare a monthly return of all Contracts let directly by the Company i. Controlling Team therefore has a responsibility to ensure that such regulation is complied with at all times. 22. 2006 SECTION 22 – LOW VALUE CONTRACTS 22. .6 The Controlling Team shall ensure that all Low Value Contracts are handled in accordance with the following procedures: 22. which are of a non-recurring nature. Under no circumstances shall major works be carried out using a series of Low Value Contracts.e. or the provision of services.3 Low Value Contracts (L Type) shall not exceed KD.9.6.5 The Team Leader of the Controlling Team shall have the authority to invite quotations for and to award Low Value Contracts.2005 prohibits the making of contractual arrangements for the execution of low value works of a similar nature more than once in a period of one month.2 The provision of Article 1 of the Supreme Council for Petroleum No. the originator of a Low Value Contract shall act in such a way as to give potential contractors/vendors fair and equal opportunity to compete for works/services required by the Company.000/. Any works or services performed whose value does not exceed KD. It should be noted that past performance or Company experience with a particular contractor/vendor should not be considered as the sole criteria for selection. 22.1 Low Value Contracts may only be used for the implementation of works. Unless there is specific justification for limiting the number. In accordance with the provisions of Resolution No.may be handled on an “approved invoice” basis with no formal contract for such works/services being required.1 All Invitations to RFP for Low Value Contracts must contain a statement that it is a “minor work/material contract. 1000/.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 22 Issue No. subject to Team Leader Contracts’ endorsement. this should not normally be less than five (5). 1/2005 dated 7.6. 4 Page 1 of 3 Date: February. In all cases.4 The Controlling Team shall be responsible for the preparation of Request for Proposal (RFP) documents.in value. 22. 22. 1 Million (including Low Value Contracts) and shall submit this to the Minister of Energy. 30. bidders’ list and invitation to bid. 1/2005 of the Supreme Council for Petroleum. upto KD. 22. 22. in line with the Company’s Executive Delegation of Authority.2 The Controlling Team shall ensure that a reasonable number of registered contractors/ vendors are given the opportunity to compete.

The Controlling Team shall forward the LVC documents to the Contracts Team as soon as practicable. 22. 22.3 The Controlling Team shall forward the LVC draft. 22. 22.6.6. the proposed bidder’s list and the Invitation to Tender to the Contracts Team for vetting and shall incorporate the Contracts Team’s comments.9 Following the Team Leader Contracts endorsement.7 The Controlling Team shall carry out a complete and comprehensive technical and commercial evaluation of all bids received as appropriate. In any event.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 22 Issue No.6. 22. 2006 22.6.8 Following the evaluation and its approval by the Team Leader of the Controlling Team. Received bids shall be recorded in the “Schedule of Bids” and forwarded to the Controlling Team for necessary action.6. 22.5 Other than in emergency circumstances. In this regard. all bids should be received in sealed envelopes and not opened until the designated time of opening. he shall present the recommendation for award of the Contract to his Group Manager for approval prior to forwarding the same to Team Leader Contracts for review and endorsement. the Controlling Team shall prepare the Contract together with any other documents that may be appropriate. these shall be brought to the Controlling Team’s attention without delay. If the Contracts Team has any comments. . faxed bids shall not be acceptable other than where specifically approved by the Team Leader concerned. 4 Page 2 of 3 Date: February. the tenderer shall furnish a hard copy of the bid as soon as possible thereafter.10 The Company’s signatory shall be the Controlling Team Leader.6.6.4 Tenderers/vendors shall submit their bids by the closing date and time specified in the RFP through sealed envelopes to be deposited in the tender box located in Commercial Affairs Group’s premises.6.6 Bids Opening Committee shall open the Tender box for the sealed bids for the RFP. 22.

In particular. together with the Team Leader Contracts’ remarks shall be referred by Team Leader Contracts to the KOC Tender Committee for ruling. 2006 22. the case. 22. 22. Progress reports must also be maintained in order to monitor completion of the Works and. the Controlling Team shall ensure that all necessary insurance coverage is in place for the duration of the contract and any extension thereto. . records shall contain clear justification for award.15 KOC Tender Committee approval is required if the cumulative value of Amendments raises the total Contract Price to more than KD. 30.6. .6.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 22 Issue No. in particular to justify any extension or variations that may be necessary during the term of the Contract. copied to the Group Manager concerned.13 All Amendments to Low Value Contract shall be handled by the Controlling Team subject to approval by its Group Manager and agreement by Team Leader Contracts.6.11 Where appropriate.6.6. especially where a Contract has been let to a contractor other than the lowest bidder.000/-.12 The Controlling Team shall maintain detailed records of all Low Value Contracts including the tendering details. 22. 22.14 In the event Team Leader Contracts is unable to agree with the Controlling Team’s recommendation for awards and Amendments to Low Value Contracts. 4 Page 3 of 3 Date: February.

3 The Group Manager. structural failure.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 23 Issue No. - Rehabilitation of damaged installations due to major incident. 5 Million.2 Obtaining Management approval as appropriate for the necessary expenditure in accordance with the following: Value KD.3. approval shall be obtained from KPC Board of Directors for exemption from normal tendering procedures. under whose sphere of responsibility the emergency has arisen shall be responsible for:- 23. shall only be used for Works or Services necessary for expeditiously dealing with declared emergencies such as a blow-out. 23. 30. explosion.000 : DMD concerned Value more than above C & MD : Although initially such requests and approval may be verbal.000/. 250. 4 Page 1 of 2 Date: February.3. they shall be confirmed in writing and copied to Manager (Financial Services) and Contracts Team as soon as possible.1 This special classification of Contracts. and Should the estimated value of the works/services involved be in excess of KD. or similar incident where immediate contract action is necessary to contain the situation and/or prevent the occurrence of possible imminent loss or damage.1 Initiation of necessary Contract Requisition either verbally or by e-mail and confirmed later in writing. major oil spillage.– KD. - Repair works to oil/gas spillage 23. major damage to an installation .2 Projects which are considered of emergency nature as identified by KPC are as follows: - Emergency Shutdown - Repair of damages discovered during annual overhauls which have not been planned before-hand and would reflect on the timely completion/operation of installation as per schedule. 2006 SECTION 23 – REMEDIAL WORKS OF AN EMERGENCY NATURE 23. . 23. or blowout.

3 Preparation of Scope of Work and other appropriate documents for any proposed RFP/Contract. 2006 23. .3. through his DMD. 23. should the value of works/services involved be in excess of KD 1 Million. a consolidated return detailing all expenditure.8 The Group Manager shall maintain fully documented records of all expenditure.3.5 The Contracts Team shall co-operate with the Controlling Team to produce a Contract for execution at the earliest practicable time.4 Consultation with Contracts Team as to the most appropriate method of contracting out the work/service. which in such circumstances may be issued without the formal procedures.9 Contracts Team shall obtain all necessary formal approvals based on and subject to the consolidated return. 23.4 In many instances a "Low Value Contract" format may be used. This return.2 above without the formal procedures). 23. shall include a brief description of the Works or Services provided by the Contractor and the type of contractual arrangements made in each case.2. he shall forward to the C&MD. the Work or Services may commence on the basis of a Letter of Intent (issued on the basis of the C&MD's approval as in 23. however. 4 Page 2 of 2 Date: February. 23. which shall be copied to Manager (Financial Services) and Contracts Team. Upon completion of the Works or Services. the Contracts Teams shall at a later stage notify KPC HTC of all related contracting actions taken in this respect.6 While this special classification of Contracts is exempted from the use of normal tendering procedure in view of their nature.7 Pending the availability of such Contract. as approved by the C&MD.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 23 Issue No. 23. 23. 23.

.2. 24.2. 24. Urgent projects related to production.2 Controlling Team shall forward to Contracts Team the following:- 24. 24.2.1 This special classification of Contracts.1 A detailed technical/operational/commercial justification for the course of action requested.2.3 An estimate of the costs involved.3. 24. Projects associated with other urgent ones having specified tight time schedule. and may be processed without CTC involvement irrespective whether their value is in excess of KD.2.1 KOC Tender Committee/KPC HTC/CTC approvals as appropriate 24.5 The anticipated Date for Commencement and Date for Completion.4 The proposed bidder’s list endorsed by the concerned Group Manager. 4 Page 1 of 2 Date: February.4 Following are the categories of projects which are considered vitally Urgent Works. shall only be used in circumstances where the urgent repair or reinstatement of an installation or facility is vital to the Company's interests and the Works have to be executed within a time scale which prevents the use of normal tendering procedures.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 24 Issue No. Projects involving direct potential HSE hazards to installations/individuals. subject to obtaining prior approval from the KPC Board of Directors for exemption from CTC:- Projects which accelerated completion thereof would result in achieving significant financial advantages/high revenues. 5 Million. 24.3 Contracts Team shall obtain:- 24. 24.2 The Scope of the Works or Services contemplated. 2006 SECTION 24 – VITALLY URGENT WORKS 24.

KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 24 Issue No. .7 All contractual arrangements authorised on the above described basis shall remain subject to KOC Tender Committee review and endorsement at all appropriate stages. 2006 24. They shall also be subject to the required endorsement / approval in accordance with the Company's Delegation of Authority prior to any commitment with a Contractor.6 Generally. Urgent Works RFPs shall be treated as Type “B (4)” 24.5 Contracts Team shall be responsible for preparation of RFP Documents and for processing the RFP with the appropriate level of urgency. subject to the appropriate approvals. 4 Page 2 of 2 Date: February. 24.

an Invitation for Proposal (IFP). that it is not a request for offers to perform work or services and it does not bind the companies concerned to do work or enter into a contract based on their budgetary proposals. shall initiate action by preparing and submitting to Contracts Team. 25. and shall return it to the Controlling Team for review and comments prior to issue to the selected companies/vendors 25. 2006 SECTION 25 – INVITATION FOR PROPOSAL (IFPs) 25.3 IFPs shall be issued through Contracts Team without Management or other approvals. 4 Page 1 of 1 Date: February.1 An Invitation for Proposal (IFP) is issued to either single source or selected companies to assess the technical feasibility and the estimated cost based on the information contained in the document.2 Such a request shall state that it is not an Invitation to Tender.7 Submittals by companies invited to submit an Invitation for Proposal (IFPs) shall be forwarded to Controlling Teams as they are received for handling.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 25 Issue No. 25.4 Controlling Team through their Group Manager. 25.6 The Controlling Team shall prepare the AFE based on the received IFP responses 25. 25. . It is issued to enable the Company to determine whether or not it is reasonable to proceed with a project when the nature of the work is different from the Company's usual work such that it is not possible to prepare an estimate with any accuracy.5 Contracts Team shall prepare a simplified document for issue similar in format to a RFP document. This document shall be comprehensive and similar to the (CR) (Section 2 of this document) excluding only the AFE information.

however the application indicates that the Contractor may have the resources to meet the minimum requirements.1 Contractors will obtain a copy of the Pre-qualification application & minimum requirements either in hard copy from the KOC Contracts Services Team or electronically through the Company’s web site. 26A. . 26A. 4 Page 1 of 3 Date: February. Prequalification of Local Contractors for Inclusion in the KOC Lists of Approved Contractors 26A.3 When reviewing a Contractor’s application for inclusion in the List of Approved Contractors for a particular Category of Work. the LCEC will study the details submitted. If.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 26 Issue No. the LCEC Chairman will arrange an inspection visit to the Contractor’s workshop and offices. compare them with the minimum requirements and arrange to visit the Contractor’s offices and Facilities and interview his personnel. 26A. 26A. equipment and documentation.2 Contractors will submit applications addressed to Team Leader Contracts Services. Inspection shall include Contractor’s records. adequacy of facilities and equipment and qualifications and experience of personnel.6 When assessing Contractor’s experience it is important to confirm that he actually did carry out the work on a contract awarded to him while disregarding any works that had been sub-contracted by him to others.7.4 During the evaluation it may become clear that a Contractor cannot meet the minimum requirements.7 Procedure 26A. 2006 SECTION 26 – PREQUALIFICATION OF CONTRACTORS 26A.7.2 Contractors already included in the various lists of approved Contractors may also be subject to re-evaluation as and when needed.5 The Contractor’s most recent annual audited financial statements duly certified by a recognized auditing firm shall also be checked. 26A. 26A.1 All new applicants shall be evaluated. In such event there would be no point in carrying out an inspection of his premises. 26A.

1 The Controlling Team and/or the Contract(s) Team will prepare a request to initiate pre-qualification for international/specialised contractors. . the Applicant will be notified by fax regarding the status of his application.5 LCEC will prepare a report that includes the technical capabilities.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 26 Issue No.7 The LCEC Chairman will forward the final report to Manager (Commercial Affairs) for approval. Internal Audit.8 Upon receiving Manager Commercial Affairs’ approval.2 Team Leader Contracts Services will obtain DMD (TS)’s approval thru’ Manager Commercial Affairs to initiate pre-qualification exercise and formation of an Adhoc Evaluation Committee. Financial Services Group. the Team Leader Contracts Services will communicate with the appropriate Teams requesting them to designate a representative for the Adhoc Evaluation Committee. Depending on the adequacy/completeness of the application submission of the Contractor.3 Following receipt of approval/s. The Adhoc Evaluation Committee will consist of representatives from the Contracts Team (Chairman). 26A. 2006 LCEC will scrutinize the application(s).7. 4 26A.7.4 LCEC will inspect Contractor’s premises as per Items 26A.7. financial status and organization structure of the applicant. Controlling Team and others as appropriate. who is rejected. Members of the Adhoc Evaluation Committee shall be no less than of a Team Leader level or equivalent. CTC approval shall also be obtained as applicable.7.3 Page 2 of 3 Date: February. 26B. b.7.5 above.6 The report shall also contain a recommendation for acceptance or rejection of the applicant(s).7. 26B. An applicant. may however re-apply for pre-qualification after a lapse of minimum six months period. 26A. In such event the same procedure for evaluation shall apply. endorsed by each member of the LCEC members. or Rejection of his application. the Applicant will be notified by fax of either: a. 26A. 26B Prequalification of International/ Specialised Contractors 26B. 26A.7. 26A.4 & 26A. The scheduled date of the Site visit to his premises. 26A.9 Approved applicant(s) will be included in the KOC List of Approved Contractors.

However.8 If a Site visit outside Kuwait is deemed required as approved by DMD (TS).10 Following receipt of Deputy Managing Director Technical Services’ approval.5 Contracts Services Team will prepare the content of the advertisement to be placed in the local newspapers and the official gazette and will arrange for publishing the same through Team Leader Information.6 Applicants will purchase the questionnaire from Contracts Services Team or CTC as the case may be. the Team will prepare a Site visit report. and will forward their submissions on or before the closing date. 26B. 2006 26B.7 Submissions received from the applicants will be forwarded to the Adhoc Evaluation Committee for evaluation and recommendation. Applicants may only be notified of the results after obtaining CTC’s approval based on KOC’s recommendations. through Manager Commercial Affairs. 26B. 26B.KOC POLICIES AND REGULATIONS FOR CONTRACTS Section : 26 Issue No.9 The Adhoc Evaluation Committee will prepare a final recommendation report regarding the Contractors submission to Deputy Managing Director (Technical Services) for approval. After each visit. 26B.11 Approved applicant(s) will be included in the KOC List of Approved Contractors for the Works/Services concerned. . should the prequalification exercise be conducted through CTC. 4 Page 3 of 3 Date: February. the Applicants will be notified by fax regarding the status of their submissions.4 The Adhoc Evaluation Committee will finalize the Pre-Qualification document upon receipt of approval to proceed. 26B. 26B. Contracts and Controlling Teams will send representatives to conduct the site visits. 26B.

With our best regards. and to the Letter of Central Tenders Committee. Departments Managers and Heads of Staffs From : Internal Tenders Committee's Secretary Date: 13/07/2009 Our Ref: KS/335/2009 Subject: Identification of the Estimated Budget of Tenders and Bids In reference to the abovementioned subject. which indicates that there is a default in preparing the tender documents and conditions and assessment of the actual costs. resulting in the tender cancellation for unavailability of sufficient financial budget. (Signature) Salem Ali Al-Kandari .S. it has been noted lately that there is a big variation between the winning bid value and the estimated budget for the tender prepared by the concerned authority.) A Subsidiary of Kuwait Petroleum Corporation Internal Memorandum To : Messrs. the Committee calls upon all Departments to carefully study the tenders required for being invited for before submission to the Committee to start the tendering procedures to avoid the State's projects delay and excessively charging companies participating in the tender.C.Petrochemical Industries Company (K. Therefore.

Petrochemical Industries Company (K. Setting clear criteria that determine the qualification coping with the targeted project and works nature and achieve the desired goal. factories and suppliers to participate. factories and suppliers to participate in the tenders shall be updated as per the following regulations: 1.) A Subsidiary of Kuwait Petroleum Corporation Internal Memorandum To : Messrs.S. 4.C. With our best regards. Performing the qualification process periodically in a sufficient time to enable companies. Therefore. 2. and referring to the Letter of Central Tenders Committee regarding expanding the range of participation in tenders and avoidance of monopolization. the lists of the qualified companies. (Signature) Salem Ali Al-Kandari . 3. in addition to limiting the qualification requests during tendering and for avoidance of any delay that may result therefrom and influence the tenders program and utilization thereof. as possible. factories and suppliers' names and data complying with their status before tendering to avoid the subsequent modification requests. Checking and updating the local and foreign qualified companies. which affects positively on having competitive prices from one hand and from the other hand developing the services. the manufacturers' lists with the standard specifications and quality control criteria to be the evaluation standards. Replacement. Departments Managers From : Internal Tenders Secretary Date: 25/5/2009 Our Ref: KS/250/2009 Subject: Updating the Tenders Companies. Factories and Suppliers Lists In reference to the above mentioned Subject.

Factories and Suppliers Qualified for Tenders In reference to the above mentioned subject. Setting clear criteria that determine the qualification coping with the targeted project and works nature and achieve the desired goal. 4. the lists of the qualified companies. factories and suppliers complying with their status before tendering to avoid the subsequent modification requests. as possible. factories and suppliers to participate. Replacement. Chairman and Managing Director of Petrochemical Industries Company Best regards. Performing the qualification process periodically in a sufficient time to enable companies. which affects positively on having competitive prices on one hand and developing the services on the other hand.Central Tenders Committee Date: 14/4/2009 Ref: CTC/5/5825 Mr. and stemming from expanding the range of participation in tenders and avoidance of monopolization. Therefore. Checking and updating the names and data of the local and foreign qualified companies. Subject: Updating the Lists of Companies. factories and suppliers to participate in the tenders shall be updated in accordance with the following regulations: 1. the manufacturers' lists with the standard specifications and quality control criteria to be the evaluation standards. . 2. 3. With our best regards. in addition to limiting the qualification requests during tendering and for avoidance of any delay that may result thereof and influence the tenders program and utilization thereof.

Signature and Seal Ahmed Khalid Al-Kulaib President of Central Tenders Committee Copy to:  Secretary's Office.  General File. .  Preparation and Auditing Department.  Tenders Department.  Legal Affairs.

(Signature) Salem Ali Al-Kandari . 2. With our best regards.Petrochemical Industries Company (K. Departments Managers and Heads of Staffs From : Internal Tenders Secretary Our Ref: KS/79/2009 Date: 22/02/2009 Subject: Alternatives of Direct Contracting on Purchasing Materials or Commissioning Works or Services In reference to our Letter No KS680/2008 dated 26/10/2008 regarding the aforesaid.C. Taking into consideration the possibility of companies manufacturing materials / equipment through providing alternative samples. you are kindly requested to answer and clarify compliance with the following regulations: 1. Assurance of the lack of any other alternative resources through which materials can be supplied / works or services can be commissioned. 3.) A Subsidiary of Kuwait Petroleum Corporation Internal Memorandum To : Messrs. 4. Contacting the associate petroleum companies in Kuwait / Gulf countries for the possibility of any similar activity and a number of companies performing such activity.S. on requesting any works to be reviewed by the Committee. Exhaustion of all attempts and means to attain several offers from various resources instead of one source by the direct order. we would like to note that due to the multiplication of direct commissioning works applications.

(Signature) Salem Ali Al-Kandari . Departments Managers and Heads of Staffs From: Internal Tenders Secretary Date: 22/06/2009 Our Ref: KS/315/2009 Subject: In Case of Requesting Any Subject to be Reviewed by the Internal Tenders Committee In reference to the abovementioned subject. noting filling in the form concerning reviewing any subjects to the Internal Tenders Committee (attached) when requesting the Internal Tenders Committee to review any subject. and when requesting inviting for any tender / bid or by the direct order commissioning.) A Subsidiary of Kuwait Petroleum Corporation Internal Memorandum Messrs.S.Petrochemical Industries Company (K. With our best regards.C.

3. .Petrochemical Industries Company – Contracts Staff Internal Tenders Committee Form of Requesting the Internal Tenders Committee to Review any Subjects (Tender / Bid / Direct Order Commissioning) Date: ---/----/------From: ---------------To: Mr. Current Contract Completion Date: ………………………….Amount:………………. Internal Tenders Committee' Secretary 1. Date set for commencing works: …………………………….Unit Price:…………Quantity: ………… ..Current Contractor's Performance: Excellent Very Good Good Weak . Estimated value for the approved budget: KD --------. 7.(In Letters: Only …………………. Kuwaiti Dinars). Works / Supplies Completion Period: ………………………… . Budget Financial Provision: Operational Capital Payment Item: ………. Brief of the last purchase / similar works: ………………. Specifications and technical standards of the requested materials / Works: ………………………………………………………… 4.Valuation applied during the duration of the contract:…………… . Subject and type of requested materials / works: -----------------Supplying supply and Installing Services Spare Parts equipment Others Consultant 2. Number of Financial Provision: ………… 6.Company's Name:…………(Purchase/Contracting) Date:………… ..Violations Type: Delay in Works Completion Delay of his Staff behind the Schedule Violations of the Requested Work Quality Other 5.

11. Supplying through: and Number of Kuwaiti labor: …. Validity Date: …………………… 10. C. Divisibility: Divisible Indivisible 11. Manufacturing Company/Country: …. A valid certificate shall be attached regarding supporting the national manpower for . C. A. For Usage for Tendering / Bidding For Usage for Direct Order Commissioning 9. Departments shall provide a statement regarding the availability approved financial funds. Bidding: …………… 12. and in doing so the concerned authority shall apply for the Committee Secretary to show at least the aforesaid particulars. Required Equipment Statement: …… Manufacturer and Agent General Provisions: No purchase with direct order or commissioning providing services or contracting works from one source are allowed. Preliminary Meeting: Necessary -Sole Resource Unnecessary 16. Local Agent: …………. Manufacturer Agent 17. Supplier/Contractor: ………. Concerned Department Manager / Concerned Deputy Managing Director / Managing Director Approval of the Internal Tenders Committee: …………… Notes: A. Number of Labor and their positions 12.. of which value exceeds KD 5000 or announcing it or even asking the approval thereon unless approved by the Internal Tenders Committee.Alternative Offers: Justifications: -urgent Accepted -Inability to Determine the Specifications Unaccepted 15.. Justifications of Limited Tendering / B. Number of Companies: ……….8. Custom Duties: Exempt Nonexempt 13. B.. Concerned Division / Employee / Phone No: ………………….. A. 10. All data shall be completed in full. Current Value for the Offer: ……… B. Tendering Method: Limited Public 9. Signature: ………………………………. Name: ………………………………. Direct Order Commissioning 14.

the following particulars shall be attached: - Companies updated list. - Bills of quantities. In case of tendering / bidding.000 up to KD 1.000. D. - All stipulations. .000. - Special terms and specifications.000. Attaining the approval of the Managing Director for the subjects exceeding KD 1.000.purchasing / direct commissioning issued by the National Manpower Development Office at the Ministry of Social Affairs. Attaining the approval of the concerned Deputy Managing Director for the subjects exceeding KD 50. . E.Attendance of the concerned Department Manager or his representative. F.

and no multiplied quotations are requested in case the materials supplying or providing the services are not stipulated unless done by sole agent or supplier / contractor. Application hereof necessitates taking the following into consideration: . works or services more than once monthly and the transaction shall not be divided into monthly deals each shall be approximately KD 5000. provided such quotations shall be in sealed envelopes.Petrochemical Industries Company (K.) A Subsidiary of Kuwait Petroleum Corporation Internal Memorandum To: Messrs. take into consideration the attached Tenders Regulations on inviting for any tender relating to your department: 1.000 (Only Five Thousand Kuwaiti Dinars) can be done provided no contracting shall be done for the same materials. works or services conditions and specifications fully and accurately as per the required form. except in certain cases identified by the requesting party’s manager.000 (Only Five Thousand Kuwaiti Dinars). 3. The application shall include the required materials.000 (Only Five Thousand Kuwaiti Dinars) In reference to our Memorandum No KS/619/2008 dated 15/09/2008. Departments Managers and Heads of Staffs From: Internal Tenders Committee's Secretary Date: 26/10/2008 Our Ref: KS/679/2008 Regulations of the Tenders Required for Materials Purchasing or Commissioning Works or Services Exceeding the estimated Value of KD 5000. Attaining at least three quotations from different suppliers / contractors.C. Purchasing materials or commissioning works or services which estimated value exceeds KD 5000.S. 2.

one amongst them shall be the Staff Leader at the concerned Department or his deputy.2. thereafter the requested service or purchase order shall be issued.3. Observing the Financial Authorities Regulation. 3. On receiving the bids. The box slot shall be sealed in wax after the time of closing the tender by the concerned Department. Uniting the day and hour for all companies and institutions to return offers and they shall be in sealed envelopes. The statement shall be approved by three employees at least. 6. 5.3.1. 3. (Signature) Salem Ali Al-Kandari .4. the concerned Department will recommend the awarding for the Internal Tenders Committee under a statement showing the prices and violations gradation accurately. one of them with the Department's Manager and the other with the concerned Staff Leader.5. With our best regards. Approval of the Committee prior to inviting for offers. Both keys shall be delivered to their deputies in case of their absence. A special box shall be assigned for tenders in which all tenders shall be deposited on a timely basis and it shall have two keys. After studying the submitted offers by the companies and institutions. while emphasizing the existence of funds covering the bid. the requesting party shall unseal them in a special statement showing the supplier's / contractor's name and the price and shall be approved as per the Financial Authorities Regulations. 3. Inviting the institutions and companies for offers. 4. 7. 3.

Departments Managers From : Contract Staff Leader Date: 17/05/2009 Our Ref: KS/236/2009 Subject: Central Tenders Committee's Resolution In reference to the abovementioned subject and the Central Tenders Committee’s Letter regarding the Council of Ministers' Resolution No (910/2006) regarding compliance with the Resolution provisions.C." Kindly provide us with any observations on the companies and contractors in case of any violation for the contracts or failure in performing their works in preparation for reporting the subject to the Internal Tenders Committee.Petrochemical Industries Company (K. including "All Ministries and Governmental Departments and the authorities of dependent and independent balances shall notify the Central Tenders Committee and the Committee of Consultant Houses at the Ministry of Planning regarding the companies.) A Subsidiary of Kuwait Petroleum Corporation Internal Memorandum To : Messrs.S. (Signature) Salem Ali Al-Kandari . contractors and consultant offices in case of noncompliance with their contracts or failure in performing their works with the concerned authority. With our best regards.

you are kindly requested to fill in the attached Checklist Form on presenting the subject to the Internal Tenders Committee. and on purchasing materials or commissioning works or services. With our best regards.S. including the consultancy works.Petrochemical Industries Company (K. (Signature) Salem Ali Al-Kandari .C. Departments Managers and Staffs Leaders From : Internal Tenders Committee Secretary Date: 22/06/2009 Our Ref: KS/314/2009 Subject: Purchasing Materials or Commissioning Works or Services by Direct Order In reference to the above mentioned subject. by the direct order.) A Subsidiary of Kuwait Petroleum Corporation Internal Memorandum To : Messrs.

Looking for alternative sources: (Yes) …. General Provisions: 1. and in doing so the concerned authority shall apply for the Committee Secretary to show at least the aforesaid particulars. 2. 4. 2. works or services more than once monthly . Subject of the required (works / materials): ……………………. (No) …………… Concerned Department Manager: Name: ………………….. Purchasing materials or commissioning works or services which assessed value exceeds KD 5000. Justifications for commissioning by direct order (in details): ………………………………………………… 3.000 (Only Five Thousand Kuwaiti Dinars) can be done provided no contracting shall be done for the same materials.. No purchase by direct order or commissioning providing services or contracting works from one source are allowed. Date: ……………………… Note: This form shall be attached in case of reviewing the subject by the Committee for the direct order commission. Signature: ………………….Petrochemical Industries Company – Contracts Staff Internal Tenders Committee Purchasing Materials or Commissioning Works or Services by Direct Order Checklist 1. (No) …………… 5. of which value exceeds KD 5000 or announcing it or even asking the approval thereon unless approved by the Internal Tenders Committee. Coordination with Local / Gulf Associate Petroleum Companies: (Yes) …………. (No) …. Exerted attempts and efforts to attain various offers from various resources: (Yes) ………….

works or services conditions and specifications fully and accurately as per the required form.and the transaction shall not be divided into monthly transactions each shall be approximately KD 5000. 3. The application shall include the required materials. Observing the Financial Authorities Regulation. 4. .000 (Only Five Thousand Kuwaiti Dinars).

5. Dividing the transaction of quantity. Not negotiating with contractors and suppliers to reduce the prices. Reliance on previous companies list without updated qualification. 3. Following stipulations leading to monopoly of a contractor or supplier. Sunday March 25. 7. Noncompliance with the tenders regulations during tendering. 6. 4. 2007 Sunday March 29. 2009 © Petrochemical Industries Company 2005  Petrochemical Industries Company 2009 .Common Mistakes in Departments Applications 1. services or works for more than one monthly and dividing the transaction into monthly ones. Letting a tender through the concerned department before obtaining the Committee’s Approval. Not reviewing the contractors and suppliers’ list at the associate petroleum companies. 2.

Qualifying a contractor not fully skilled or qualified in services tenders. Requesting extending the contracts after expiry thereof. such as “Incomplete / Non-updated Subject Review Form”. 12. Cont’d 8. 10. 9. Identifying an operational budget for works on which the capital budget applies. Not attaining three offers from three different companies as per the regulations. 13. 2007 Sunday March 29. Sunday March 25. Clarifying from the bidders regarding a tender offered by the departments. 2009 © Petrochemical Industries Company 2005  Petrochemical Industries Company 2009 . Noncompliance with the supplementary rules for the Internal Tenders Committee works. 11.Common Mistakes in Departments Applications.

Common Mistakes in Departments Applications. 17. 15. Sunday March 25. 2007 © Petrochemical Industries Company 2005 . applying the penalty without coordination with the other authority. Cont’d 14. In case of two concerned authorities. Releasing the bank guarantees in the services contracts and periodical contracts for the former contractor before the new one’s receipt of the assigned required manpower. the initial bank guarantees percentage 2% and the final 10% are not identified of the contract total price. Requesting extending the closure period during the last week. 16. In bids offered by the concerned authorities.

Dividing the transaction of quantity. Reliance on previous companies list without updated qualification. Not negotiating with contractors and suppliers to reduce the prices. 5. services or works for more than one monthly and dividing the transaction into monthly ones. Your computer may not hav e enough memory to open the image. and then open the file again. The image cannot be display ed. If the red x still appears. and then open the file again. 3. Restart y our computer. If the red x still appears. 2. y ou may hav e to delete the image and then insert it again. or the image may hav e been corrupted. Following stipulations leading to monopoly of a contractor or supplier. 2007 Sunday March 29. 1. Noncompliance with the tenders regulations during tendering. 2009 © Petrochemical Industries Company 2005  Petrochemical Industries Company 2009 . Restart y our computer.Common Mistakes in Departments Applications The image cannot be display ed. Letting a tender through the concerned department before obtaining the Committee’s Approval. 6. y ou may hav e to delete the image and then insert it again. 7. Not reviewing the contractors and suppliers’ list at the associate petroleum companies. or the image may hav e been corrupted. 4. Sunday March 25. Your computer may not hav e enough memory to open the image.

Noncompliance with the supplementary rules for the Internal Tenders Committee works. 12. 13. Your computer may not hav e enough memory to open the image. Clarifying from the bidders regarding a tender offered by the departments. and then open the file again. 10. or the image may hav e been corrupted. Not attaining three offers from three different companies as per the regulations. such as “Incomplete / Non-updated Subject Review Form”. Sunday March 25. Qualifying a contractor not fully skilled or qualified in services tenders. 8. The image cannot be display ed. Restart y our computer. 2009 © Petrochemical Industries Company 2005  Petrochemical Industries Company 2009 . Requesting extending the contracts after expiry thereof. Cont’d The image cannot be display ed. If the red x still appears. 11. Identifying an operational budget for works on which the capital budget applies. If the red x still appears. y ou may hav e to delete the image and then insert it again. y ou may hav e to delete the image and then insert it again.Common Mistakes in Departments Applications. 2007 Sunday March 29. Your computer may not hav e enough memory to open the image. 9. and then open the file again. or the image may hav e been corrupted. Restart y our computer.

In case of two concerned authorities. Restart y our computer. 14. and then open the file again. and then open the file again. Releasing the bank guarantees in the services contracts and periodical contracts for the former contractor before the new one’s receipt of the assigned required manpower. Cont’d The image cannot be display ed. y ou may hav e to delete the image and then insert it again. If the red x still appears. 2007 © Petrochemical Industries Company 2005 . Your computer may not hav e enough memory to open the image. or the image may hav e been corrupted. The image cannot be display ed. 17. applying the penalty without coordination with the other authority. Sunday March 25. If the red x still appears. 15. the initial bank guarantees percentage 2% and the final 10% are not identified of the contract total price. Restart y our computer. 16.Common Mistakes in Departments Applications. Requesting extending the closure period during the last week. Your computer may not hav e enough memory to open the image. In bids offered by the concerned authorities. or the image may hav e been corrupted. y ou may hav e to delete the image and then insert it again.

Regulations Of Tenders. Practices. Contracts and Bids Internal Tendering Committee Date: 30/10/2005 1 .

INDEX CHAPTERS SUBJECT PAGE NO. Chapter 1  Definitions  Formation of the Internal Tendering Committee  Committee’s Competences  Committee’s Meetings Chapter 2  Tenders Chapter 3  Practices Chapter 4  Direct Order Chapter 5  Materials Purchase/ commissioning work or Services of estimated value not more than KD 5000 Chapter 6  Qualification and classification of Contractors and Suppliers Chapter 7  Contracts Chapter 8  Bids Chapter 9  General Provisions 2 .

Regulations of Tenders and Practices. 5/2005 dated 30/10/2005 approving the Regulations of Tenders. (5/97). The Resolution of Board of Directors No. Contracts. Regulations of the Higher Committee for Kuwaiti Petroleum Corporation and Oil Companies issued by the Chairman of Kuwaiti Petroleum Corporation dated 15 February 1984 and amendments thereto. and amendments adopted by the Board of Directors’ Resolution No. MR/11/80 dated 12/5/1980 and subsequent amendments. Practices. as amended by Resolution No. (37/1964) on Public Tenders and amendments thereto.Having perused the following: • • • • • • • • • The Public Tenders Law No. The Regulations of Internal Practices issued by the Top Management Circular No. Contracts and Biddings. The Supreme Petroleum Council Resolution No. 6/2005 held on 16/11/2005 approving the Supplementary Rules Regulating the works of the Internal Tendering Committee. The Regulations of the Finance Authorities approved by the Board of Directors Resolution No (6/2/97) dated 8/3/1997. (1/1998) and by Resolution No. Decided: 3 . Biddings issued by the Chairman and Managing Director. The Resolution of the Internal Tendering Committee adopted in its meeting No. 1/74 (2/2005) concerning Organizing the Tenders of the Petroleum Corporations. The regulations governing tenders of petroleum companies of Kuwaiti Petroleum Corporation issued by a memorandum of the CEO dated 25 July 2005. (13/2004) on 13/7/2004.

specifications and procedures established by the Company and the Tender may be general or limited. that includes in some cases what the Committee may decide to negotiate with suppliers / contractors in order to modify prices or technical specifications or waiver or modification of reservations associated with the tender and the practice may be general or limited. 4 . 1-1 Tender Means the purchase or commissioning services or consultancy studies or work assignment by invitation to participate through a means of publication in accordance with the conditions.CHAPTER 1 DEFINITIOS AND FORMATION OF THE COMPANY'S INTERNAL TENDERING COMMITTEE AND ITS COMPETENCES Article (1) Definitions These definitions apply as they are presented in the Regulations unless otherwise is required by the context. specifications and procedures established by the Company. 1-2 Practice Means the purchase or commissioning services or works assignment by invitation to participate through a means of publication in accordance with the conditions.

analyzing them and submitting proposals and recommendations. and the preparation of computer software. 5 . 1-5 Concerned Authority It is the authority concerned with contracts within the Company entrusted with launching tenders. administrative. as well as collecting data and information and making designs. development of statistics. economic. soliciting offers and other related duties. but their scope of work is limited to carrying out technical. without resort to tender or to practice for more than a bidder including contracting with a single source approved to the Company to be the only manufacturer or the contractor for materials or services required . 1-4 Advisory Work Means preliminary and preparatory activities. the duties of supervision. regulatory and legal studies. including consultancy services or work assignment to one supplier or contractor directly.1-3 Direct Order Means the purchase or commissioning services. that do not include in their scope the implementation of work by the entity that carries out these activities. as well as project management services and contracts for training courses and medical consultations.

1984 and subsequent amendments. 1-9 Central Tenders Committee Means the Committee formed under Law No. 1-10 Regulations The regulation issued by the Kuwait Petroleum Corporation to organize tenders for oil companies and the Kuwait Petroleum Corporation.1-6 Requesting Party It is the authority that requests materials. Materials Division is deemed to be the requesting party. 1-7 Committee Means the Company's Internal Tendering Committee formed by virtue of a decision by the Chairman and Managing Director to carry out the assigned duties in accordance with the competences stated in the Regulations for organizing the Tenders of Oil Companies and the Kuwait Petroleum Corporation. services and works within the Company. 6 .02. 1-8 Corporation's Committee Means the Higher Committee for Tenders of the Kuwait Petroleum Corporation and Oil Companies formed by virtue of a Resolution by the Chairman of the Kuwait Petroleum Corporation. and in case of purchases. 37 of 1964. dated 15.

(Kuwaiti Dinar Five thousand). appointed by the Chairman and Managing Director. practices. purchase orders. 2-2 The Committee shall have a secretary who is not a member of the Committee. practices and direct contracts exceeding KD 7 . edit decisions. but may not participate in deliberations and will not be counted in voting. The formation decision includes the appointment of a substitute for each original member of the Committee replacing him in case of absence and may include members from outside the Company.Article (2) Committee Formation 2-1 Tendering Committee is formed within the Company by a decision issued by the Chairman and Managing Director. Article (3) The Committee’s Competences: The Committee shall have the following competences: 3-1 Considering and deciding on launching and following-up tenders' procedures. In addition. It consists of seven members who are: A direct Executive Assistant to the Managing Director. 3-2 Considering and deciding on the awarding of tenders and purchase orders. and direct contracts exceeding KD 5000. he shall also attend the meetings and record all minutes of meetings. and other five members who are elected from the managers of departments representing the various activities of the Company. as President. that will be responsible for registering and recording all actions taken by the Committee as well as keeping files and documents and any other functions assigned to it by the Committee. a Vice-President. called (the Internal Tendering Committee).

the Chairman and Managing Director deem to assigns to the Committee at any time. 3-8 Deciding the liquefaction of primary insurance in appropriate cases. 3-6 Approving the list of companies invited to participate in the tender as well as modifying that list. 3-3 Approving the issuance of modification orders that occur on contracts and the Company shall be entitled to approve them. 3-7 Considering of tenderers' complaints received by the Company. and make recommendation to the Corporation's committee and the Central Tenders Committee to approve the orders of modification within the competences of any of them depending on the circumstances. while in case that the estimated value exceeds KD 5. 3-4 Opening Bids envelops 3-5 Cancelling Tenders and procedures and what result thereto. 3-10 Any matters related to contracts and purchases.000.000 (Kuwaiti Dinar Five million).5000 (Kuwaiti Dinar Five thousand) and in cases that the estimated value exceeds one million dinars. the recommendation is passed to the Central Tenders Committee. in addition to the Corporation's Committee. Article (4) Committee Meetings 4-1 The Committee holds its regular meeting weekly and during the days and working hours according to the workload and the decision of the Chairman and shall hold extraordinary meetings at 8 . the recommendation is passed to the Corporation's Committee. 3-9 Applying fines stated in Article (67) of the Regulations.

4-2 For the validity of holding the committee.the invitation of the Chairman or his Deputy. the Chairman may cancel the regular meeting if there is not work required. technical requirements. inspection and appropriate fines are properly carried out to obtain the best bids. and the decisions are issued by a majority of the present members and in case of even votes. methods of tests. methods of examination. when considering the furnished issues. 4-4-4 Verifying that the evaluation of bids and awarding recommendation are carried out properly and in accordance with the approved regulations and procedures applicable in each party. supply. provided the Chairman or his Deputy shall be amongst them. if the reason leads to the absence of both Chairman and his Deputy. what it deems appropriate to make sure of the following: 4-4-1That the procedures for determining the specifications. four genuine members or their substitutes are required to attend the meeting. Also. 4-3 The committee's meetings shall be recorded in minutes to be approved in the first following meeting. however. 4-4-2 That there is a sufficient number of suppliers or contractors to ensure a good competitive situation for each tender or practice on the table. and that the conditions of the contract. 4-4-3 Examining whether there are alternative ways for obtaining the required services. and sent to the members of the Committee for reviewing prior to the meeting. 4-4 The Committee shall decide. 9 . the Chairman's side is the winner. 4-4-5 Verifying the application of laws and policies related to national labor. supply. contract conditions. materials or construction at a lower cost. inspection and fines are appropriate. present members shall select one of them to head the meeting. standards.

5000 (Kuwaiti Dinar five thousand) except through a way of tender through the Committee. Also.4-4-6 Ensuring the availability of funds. one transaction shall not be parceled onto several monthly deals.    Chapter (2) Tenders Article (5) Public Tenders Provisions / limited 5-1 The Company's departments and divisions shall not purchase commodities or commission the execution of services or assign works in excess of KD. (Kuwaiti Dinar Five thousand). A foreign 10 . the value of each being within the limits of KD 5000. 5-3 The tenderer shall have to be a legal person a merchant or a professional individual or company and shall conform to the percentage of Kuwaiti labor established in the time of submission of tender in respect of companies and local institutions and authorized dealers of foreign companies in the event of the completion of this works within the State of Kuwait. 5-2 Such a contract shall not be concluded to cover the same commodities. and the method of direct order may be followed after obtaining the approval of the Committee. to facilitate its work and ensure the rapid completion of the work. services or work than once in one calendar month. 4-5 The requesting party's representative may attend in case of presenting a matter concerning it to the Committee in order to provide clarifications or additional data to the Committee when necessary.

at the demand of the requesting party.company could bid. provided it is registered in the Chamber of Commerce and Industry of the country to which it belongs and do the required works. the Committee shall consider. that shall have to be noted in the tender documents. it shall have to bring the matter before the Chairman and Managing Director along with a 11 . to present a joint bid on condition defining clearly the obligations and responsibilities of each of them or the bid shall include their acceptance of responsibility jointly and severally simultaneously . and may not be transferred to others. 5-4 In high value tenders. that shall have to be noted it in the tender documents. 5-6 The Committee shall be entitled to cancel the tender at any time prior signing a contract with the successful tenderer. cancelling the tender or re-launching it or the possibility of awarding the tender to the tenderer of the following rate. all bidding documents are deemed to be personal to tenderers who have obtained them. 5-8 In case of the withdrawal of the successful tenderer. 5-7 Awarding the tender and notifying the successful tenderer respectively shall not entitle the tenderer to any right from the Company in the event of retracting the awarding of the tender. 5-9 in case of renunciation of the Committee on its decision awarding the tender prior signing the contract. the Committee may authorize for more than a legal person. 5-5 Bids must be submitted in the tender documents issued to bidders. such cancellation shall not give the tenderer the right to claim compensation of any kind for any damage. the tenderer shall not be considered contractor except from the date on which signature is affixed on the contract by both parties.

5-10 The tender box shall not be opened except in case the Committee is in session. and less than KD 5.000. 5-15 In all cases of tenders whose estimated value is in excess of KD 1. 5-12 The Committee shall award the tenderer whose bid is most conforming with the awarding standards. the concerned authority. the award goes to the tender who presents the lowest rate if his bid is in line with the prerequisites of the tender documents. 5-13 If the Tendering Committee believes that there is a strong justification for preferring a tenderer who submitted a high price without the conditions in the preceding article being met.statement of reasons for such renunciation. after the 12 .00 (Kuwaiti Dinar five million). or decides to cancel the tender. the Committee shall decide awarding such tenderer with the approval of 2/3 of the present members provided the Chairman or his Deputy are amongst the said members. the Tendering Committee shall advertise the tender price on the Notice Board after opening bids envelopes. if the warding standards are not mentioned. the Committee is obliged to carry out its first decision. 5-11 The concerned authority shall be entitled to directly address the bidders to clarify some matters relating to their bids without reference to the Committee provided that shall not lead to a change in the prices submitted. if the Chairman and Managing Director does not approve on such retracting. and tenders and bidders shall be entered in a schedule prepared for this purpose.000 (Kuwaiti Dinar one million). 5-14 The Committee may award the tender to a tenderer who submitted a higher bid if the sum of the lowest tenderer was unreasonably low and does not import reassurance so far as the tender concerned.000.

000. the approval of the Committee and the prior Corporation's committee shall be obtained. the concerned authority. the contract value exceeded KD. if these modifications exceeded 10% .approval of the Committee. after modification. whichever is less for the modifications.000. shall submit its recommendation to the Central Tenders Committee with exception of the consultancy works done by the latter Committee. for the contracts approved by the Corporation's committee. and shall obtain approval from the authorized entity in accordance with the Regulations of the Finance Authorities of the Company and the order shall contain detailed description of materials.000 (Kuwaiti Dinar five million). 1. If. Article (6) Public Tenders Procedures / Limited 6-1 The requesting party shall prepare the purchase order or commissioning services or assignment of work. the Committee's approval shall be obtained.000. 1. services or 13 . and in case such value exceeds KD 5. 5-17 If the value of modifications exceeded 10% of the original value of the contract.000 (Kuwaiti Dinar five million). 5-16 Upon making amendments to the contracts not exceeding KD. shall submit the recommendation to the corporation's committee.000.000 (Kuwaiti Dinar five million) the approval of the Central Tenders Committee shall be obtained.000. or the amount of KD 5.000 (Kuwaiti Dinar one million).000 (Kuwaiti Dinar one million) the prior approved of the corporation's committee shall be obtained. for the contracts approved by the Central Tenders Committee. after the approval of both the Committee and the corporation's committee. or the amount of KD 5.

who the tender is limited to and present this list to the Committee for approval. drawings. and the requirements of the minimum limits for acceptance of bids. if any. services or works required. bills of quantities and prices. in cases where there is no list of qualified contractors or suppliers. the requesting party shall provide a list of tenderers. 6-3 In the limited tenders. also in each case of adding or cancelling a tenderer to or from this list. taking into account that these specifications allow competition and obtaining the best alternatives and the least cost. the concerned authority shall take into account inviting the suppliers and contractors registered in the qualification lists corresponding to their activity with the Company or qualification lists that would be appropriate to other entities. 6-4 The requesting party shall prepare the technical specifications and special conditions. it shall include as well whether it is required to invite for a limited tender and the justification for that instead of a public tender. it shall be submitted to the Committee for approval. in this case shall attach to the application a list of the names of suppliers / contractors that they will be limited to the invitation to the tender according to the procedures set forth in this regulation. and put in the tender documents the elements and bases of the technical and commercial evaluation. 6-2 The purchase order shall be within the limits of the actual requirements necessary for the workflow or production on the basis of realistic and objective studies prepared by the requesting party. while the concerned authority in coordination with Legal Department shall prepare the 14 . and shall include a statement of whether there is an approved budget covering the estimated value of materials.works required (technical specifications / special conditions).

the product to be supplied and the work to be executed. which in turn shall review the bids as a prelude to the adoption of the final recommendation. 6-7 Having received tenders and lists of tenderers from the Committee in case it is within the competences of the Committee or the competences of the Central Tenders Committee. the Secretary shall send the tenders to the requesting party.instructions to tenderers). the concerned authority shall take the appropriate actions necessary for the tender and advertise the tender in the Official Gazette and any other means if necessary. and determine the appropriate period for returning tenders from the date advertised provided that the advertisement shall show the date and time for the return of the tender . 6-5 The requesting party shall request launching services. analyze and study the bids received and submit its recommendations to the Secretary as he presents them to the Committee.   15  . contracting and supplies contracts (periodically) including all the required details and according to the models approved by the concerned authority in a period of not less than (8) months prior to expiration on the Committee to take the necessary approval. which in turn. 6-6 Following the Committee's approval for launching the tender. the cash fees per copy of the terms and conditions of tender.contract formula and the general conditions and other documentation for the tender (the tender form .

Article (8) Practices Procedures 8-1 The requesting party shall prepare the form in accordance with Article (6-1) hereof. tenders can be induced directly if the specifications of the materials or services or work required to be executed cannot be exactly determined. Article (5). 8-3 After the approval of the Committee on launching the practice. 16 . the requesting party shall take the procedures for the solicitation of bids. in consistence with the nature of the practice and shall approve it from the authorized entity in accordance with the Regulations of the Finance Authorities of the Company. or they are urgently required and delay may not in the interest of work. 8-2 The form of practice launching shall be referred to the secretary to take necessary actions to be presented to the Committee for obtaining the necessary approval.Chapter (3) Practices (Article 7) The Provisions of Practices With the exception of the provisions of Chapter Two. provided that the request shall include justification for purchase of materials or commissioning services or assignment of work directly instead of launching a tender.

material may be purchased and works and serviced. and the procedures shall be reviewed by the Committee as well as awarding the tender in the same manner followed in the tender. and when found to provide materials or services or 17 . it shall be taken into account using all attempts and ways to get several offers for the purchase of materials or commissioning services or assigning works from several sources rather than from a single source by direct order.Practices . to comply with the nature of the practice. 8-5 Without prejudice to the provisions of this Chapter .all the procedures stipulated in Article (6) hereof shall be followed in the request for purchase or commissioning of services or work assignments directly as well as the recommendation of award and in reviewing the terms and signing the contracts therewith. may be commissioned by direct order. including consultancy works.    Chapter (4) Direct Order Article (9) The Provisions of Direct Order 9-1 As exclusion to the provisions of Chapter 2. 9-2 Prior to contracting with the sole source.8-4 The Committee shall be entitled to ask the requesting party to provide practice bids by way of the Committee. Article (5). if such materials or works or services cannot be determined with accurate specifications or bear the urgency or otherwise deemed by the Committee.

9-3 The requesting party shall obtain the approval of the Committee prior to its procedures for contracting directly with any interested party provided that the procedures shall be reviewed by the Committee prior to actual contract. 10-2 The direct order application shall be transmitted directly to the Secretary in preparation for submission to the Committee to obtain approval.all the procedures stipulated in Article (6) of this Regulation shall be followed in the purchase orders or commissioning services or assigning works by direct order in accordance with the 18 . Article (10) Procedures of Direct Order 10-1 The requesting party shall prepare the application in accordance with Article (6-1) of the bidding procedures and obtain the approval from the authorized entity in accordance with the Regulations of the Financial Authorities provided that the application shall include the justifications for purchasing the materials or commissioning services or assigning works to a sole source by direct order. limited or bids.the works from several sources. the procedures set out in this Regulation apply regarding the purchase of materials or commissioning services or assigning works by way of a public tender. after being notified of approval. trying to reduce the cost. 10-3 Without prejudice to the provisions of this Chapter . then the requesting party. begin inviting bids quotations from the supplier / contractor with the need to negotiate with the supplier / contractor.Direct Order .

   Chapter (5) Purchasing materials / commissioning the work and services not exceeding an estimated value of KD 5000. Also. and the same applies in recommending awarding. (Only Kuwaiti Dinar five thousand) Article (11) As exclusion to the provisions of Chapter 2 Article (5) of this Regulation. services or works than once in one calendar month. works or services required fully and accurately 19 . reviewing the conditions and signing the contracts. and the application shall include the conditions and specifications of materials. the value of each being within the limits of KD 5000. one transaction shall not be parceled onto several monthly deals. (Kuwaiti dinar five thousand). The following procedures shall be followed after the approval of a purchase order or commissioning work or services from the authorized entity in accordance with the Financial Authorities Regulation.nature of the direct order. provided that such a contract shall not be concluded to cover the same commodities. purchasing materials or commissioning the work or services not exceeding an estimated value of KD5000 (Only Kuwaiti Dinar five thousand). Article (12) Procedures for purchasing materials / commissioning works or services not exceeding an estimated value of KD 5000 (Only Kuwaiti Dinar five thousand).

and no multiplied quotations are requested in case the materials supplying or providing the services are not stipulated unless done by sole agent or supplier / contractor with no prejudice to the provisions in Clause (5-2) hereof. the purchase of materials or commissioning services or assigning works of value less than KD 250 (Only Kuwaiti Dinar two hundred and fifty) and their approval shall be in accordance with the Financial Authorities Regulations in the Company. thereafter the requested service or purchase order shall be issued. 12-2 On receiving the bids. provided such quotations shall be sealed envelopes.   20  .Attaining at least three quotations from different suppliers / contractors. 12-3 As exclusion to the procedures set forth in Clauses (12-1) and (122). the requesting party shall unseal them in a special statement showing the supplier's / contractor's name and the price and will be approved as per the Financial Authorities Regulations. except in some cases identified by the requesting party’s manager.

21 . 14-2 The Committee shall classify contractors and suppliers to categories in lists according to specialization.. 14-4 The requesting party shall study the applications for qualification and express an opinion in preparation for presenting them to the Committee of qualification and classification for approval.Chapter (6) Qualification and classification of Contractors and Suppliers Article (13) The responsibility of qualification and classification A Committee for qualification and classification of contractors and suppliers shall be formed by a decision of Mr. / Chairman and Managing Director. 14-3 The Committee shall prepare in coordination with relevant departments a model of qualification. Article (14) The Procedures of Examining the applications for Qualification The following procedures shall be applied when considering the applications for qualification and classification: 14-1 The Committee shall establish principles and criteria of qualification.

may be announced. provided the announcement shall be done by the Central Tenders Committee if the estimated value in excess of KD 5. (2) for the year 2004.    Chapter (7) Contract Article (17) Contract Language All contracts concluded by the Company shall be written in Arabic and an additional copy may be written in a foreign language provided the exceptions to the Resolution No. 22 . shall be taken into account. dated 02.24.2004 of the Minister of Energy regarding editing all contracts in Arabic and the exceptions thereof.000 (Only Kuwaiti Dinar five million).Article (15) In some tenders. Article (16) Register of Contractors and Suppliers The Qualification and Classification Committee shall keep a consolidated register of the approved contractors and suppliers classified according to categories of specialization. prior to launching the tender. Qualification operation.000.

in the event of early cancellation Article (19) Payments Lists of payment by suppliers / contractors shall be provided under the conditions stipulated in the concluded contract to the requesting party for reviewing and ensuring conformity to the implementation of works. shall be forwarded to the Purchasing Department and following-up payments in preparation for submission to the Department of Finance. and then on approval. 23 . if necessary. Article (20) Violation of the Contract Provisions In the event of violation of the supplier / contractor for the provisions of the contract or failure in implementation as well as queries on the conditions of the contract.Article (18) Powers and Procedures for Concluding Contracts The Managing Director and his Executive Assistants shall have the power to conclude the contracts and modifications . extension. renewal or early cancellation thereto in accordance with the Financial Authorities and the concerned authority shall prepare all the related procedures provided there shall be coordination with the Legal Dept. the requesting party shall refer such violation to the concerned authority to approve the necessary action in coordination with the Legal Dept.

form a committee. provided the Committee shall issue a certificate of receipt of the work. exemption from tax. and in any case.in cases of projects and contracts.. 21-2 The last due payment for supplier / contractor shall be withheld.Article (21) Receiving the Work and Payment 21-1 At the end of the period of the contract. which provides for the issuance of the certificate of receipt of work . Article (22) Fines 22-1 The amount and cases of fines shall be determined in the contracts in coordination between the requesting party and the concerned authority 22-2 Application of fines shall be approved by the requesting party’s manager or his authorized representative. the extent of damage done to the Company as result of negligence on the part of suppliers / contractors shall be taken into account so 24 . as well as a representative for the requesting party shall be amongst its members to receive the work and ensure its compliance with the terms of the contract. the requesting party . 21-3 A portion of 5% of the total value of the contract shall be withheld till submission of a certificate approved from the Department of Inspection and Tax Claims of the Ministry of Finance. as well as the bank guarantee till the supplier / contractor’s signing of the final clearance attached to the contract and filed to the Purchasing Department and Payments Follow-up. a representative from the concerned authority and a member from the Financial Dept.

23-3 Purchasing and Payment follow-up Department shall be authorized to follow up the validity of the Insurance Policies and Bank Guarantees with the departments and sections of the Company. the level and degree of the penalty stated in the contract may be determined. in this case. Article (23) Insurance Policies and Bank Guarantees 23-1 Purchasing and Payment follow-up Department shall be authorized to receive and keep the origins of Insurance Policies and Letters of guarantee. 23-2 Purchasing and Payment follow-up Department shall be authorized to examine Insurance Policies and Letters of guarantee to ensure that they are containing necessary conditions as per the articles of the contract.that in its light. a prior recommendation from the requesting party. at the request of suppliers / contractors shall be presented to the concerned authority to be submitted to the Managing Director to decide on applying the exemption or not. 22-3 The Managing Director shall be entitled to have suppliers / contractors exempted from fines.   25  .

quantities and conditions of sale.05. and the application shall contain all the necessary details to conduct the bid sale such as technical specification of materials or equipment to be dispensed with. / Chairman and Managing Director Article (25) Bidding Procedures Following procedures shall apply in the sale of dispensed items: 25-1 The requesting party shall prepare an application for the sale of dispensed items. 24-2 The procedures described hereunder regarding Bids .1977 regarding the method of disposal of damaged assets.Chapter (8) Bids Article (24) Provisions of Bids 24-1 The principles set forth in the Circular of the Public Administration No: M t / 13 / 77 dated 11. as such factories are subject to special procedures to be determined at the time by Mr.Article (25) . and then shall be sorted into usable or not 26 . and the Department of Materials shall be responsible for all the contents of the Company’s warehouses. as well as residues of factories from scrap and other things determined to be dispensed with. accompanied by a statement of exclusion.shall not include the sale of the Company’s factories.

25-2 The usable dispensed material shall be offered to the oil companies before launching the bid. review the terms and signing contracts in accordance with the nature of the bid. it shall be constituted of the following departments’ / sections’ as representatives: -A representative of the concerned authority. 25-3 The concerned authority shall prepare the bidding documents. and the receipt of bids. unsealing bids and awarding shall be done in coordination between the concerned authority and the requesting party. and then sent to the concerned authority. 25-8 No bid envelops shall be entertained except in the bids box at the specified time deposited by the contractor or his subordinates. Inventory and Stores Control Department shall be the requesting party) . 25-5 Except as provided in this Chapter .A representative of the requesting party. all the procedures stipulated in Article (2) of this Regulation shall be followed in the processes of launching and awarding the bids.to be put up each group separately in a bid independently. 25-4 The procedure for launching and awarding the bid represented in advertising in local newspapers or the Official Gazette. (In case if the material is scrap. 27 . .Bids -. 25-7 A special box with two locks shall be assigned for putting all bids related to the tender.A representative of the Department of Finance. 25-6 A special committee shall be formed to open the bids box.

the requesting party shall send the awarding recommendation to the concerned authority and notify the successful bidder to pay the value of the bid prior to signing the contract. and the bids along with the list shall be referred of the requesting party for studying and Awarding.25-9 Members of the Committee (the concerned authority / the Financial Department) shall keep the keys of the bids box for opening the box at the closing time of bidding by the concerned authority. 25-11The prices shall be entered in a special list directly after opening the box and shall be forthwith approved by the formed committee. 25-14The members of the Committee shall never disclose or divulge any information or details regarding the bid to other parties. 25-13In the event of the loss of a one of the box keys. the members of the Committee shall recode that in a memorandum. 25-12After examining the bids submitted by bidders and selecting the tender offering the highest price. 25-10 The members of the Committee shall together open the special bids box shall never be open otherwise.    Chapter (9) General Provisions Article (26) The Provisions and Articles of the Regulations organizing the tenders of the oil companies of the Kuwait Petroleum Corporation always apply in the event of any conflict between the provisions or articles hereof with the provisions or articles of these Complementary Regulations 28 .

Article (30) The Committee shall issue supplementary rules regulating the work. and according to Ministerial Decree No. Article (29) Commitment to Law Decree No. also the subnational product (produced in the countries of the Gulf Cooperation Council) shall be given the priority than others of similar products from abroad by (5%) (Five Percent) Article (28) Commitment to Law Decree No. 29 .Article (27) In the event of purchase of materials. (8) of 2003 including the reservation of 5% of the total value of the contract or any insurance or financial guarantees reserved with the Company until to provide a Clearance Certificate issued by the Department of income tax control in the Ministry of Finance and any amendments thereto. and that in all supply. purchase and public works contracts and any other contracts not less than KD.000 (Kuwaiti Dinar one hundred thousand) and filling in forms of declarations issued by the Audit Office in this regard. the national product (locally produced in the State of Kuwait) shall be given the priority than others of similar products from abroad by (10%) (Ten Percent) . (3) of 1955 concerning the Kuwaiti income tax and its amendments and in accordance with Ministerial Decrees issued in this regard. (25) of 1996 concerning the disclosure of commissions that may be provided in contracts concluded by the State. 100.

Saad Ali Al-Shuaib. Chairman and Managing Director   30  .Article (31) These Regulations shall be applicable as of the date. and shall repeal any regulations or circulars opposed to the content thereof.

Supplementary Rules Regulating the work of the Internal Tendering Committee Article (1) The Committee’s Headquarters The Committee Head Office is in The Company's Headquarters in the south of Soubahya. Article (3) Minutes The Committee meetings shall be recorded in minutes to be approved in the first following meeting. Article (2) Date and Time of the Committee Meeting The Committee shall hold its regular meeting on (Wednesday) each week at 09:00 am at the Committee’s Head Office. each member shall notify his substitute in case of his absence and to notify the Secretary in writing sufficiently in advance in case of their absence. 31 . and shall be sent to the members of the Committee with the agenda of the next meeting. Article (4) Requests for presentation to the Committee The Company's concerned departments and divisions shall send the topics desirous to be presented to the Committee at least two days prior to the Committee’s session in the name of the Secretary.

2- Bids. 32 . also the Committee shall be entitled to invite the representative of the requesting party or the concerned party to provide clarifications or documents to meet the purposes of the Committee. 4- The tender box shall have two locks and the key of the first lock shall be kept by the Secretary. the keys of the locks shall be handed over to their substitutes. Article (6) Tender Box 1– A box holding all bids and practices shall be kept at the Campany's main office southern Soubahya.Article (5) The Representative of the Department Relevant to the Request The Committee shall be entitled to invite any experienced personal from the Company's staff to express his opinion. in the event of the absence of the Secretary or the Chairman or his Deputy. the Chairman of the Committee or his Deputy shall keep the key of the second lock. 3- The box shall be sealed wax following the specified time for closing the tender by the Secretary. tender envelops or practices shall only be entertained within the tender box within the set time. also the box shall be moved to the Committee Head Office and be kept until the seal is broken by the Tendering Committee during the next meeting.

consequently. Article (10) Increases occurring on Operations making them subject to the Committee's competences Purchase operations. they are presented to the Committee with full details. work contracting and consultancy services originally less than the limit of the Committee's competences. Article (9) Validity of Prices Submitted in Bids The requesting party shall take into account the validity of prices presented in the tenders or consider the time required for presenting to the Committee without affecting the validity of the presented prices.m. commissioning to provide services. Article (8) Launching and Closing Times Launching the Company's tenders shall be on " Sunday " in the Official Gazette " Kuwait Today " and Closing shall be on " Tuesday " at one o'clock p. or their durations have been extended so that lead to increasing their total value to the limit of the Committee's competences. announcing the tender’s results and awarding shall be at the entrance of the Company's Headquarters. and amendments or changing orders or claims of the other party to the contract occur therein. 33 .Article (7) Announcement of the Tender Results and Awarding The place for making the invitation for the tender.

  34  .Article (11) Issues approved by the Committee and objected to by the Committee of the Corporation or the Central Tenders Committee In the event of approval of the Committee on any of the topics presented to it. Article (12) Irregularities The Chairman of the Committee shall have to notify the Chairman and Managing Director in the event of non-observance of the provisions of this regulation by the relevant authorities. resulting in a change to the Committee's decision. upon completion of the procedures of the requesting committee that raised objection. Article (13) Methods of Presenting Details The required details shall be presented to the Committee as per the attached Forms for requesting issue presentation. they shall have to be represented to the Committee prior returning to the Corporation's Committee or the Central Tenders Committee. then. and objection by the Corporation's Committee or by the Central Tenders Committee emerge.

exercise . . date of purchase. Standards and Technical Requirements.The presence of a provision in the estimated budget.Purchase Method: • (Public Tender – Limited Tender . (1) Purchase Operation Details A – Tender Details The items required and utilization description. .Justification for the recommendation of award.List of suppliers / the name of supplier.Direct Order) • Statement of justification for preferring purchase method instead of a Public Tender. .Summary of historical details about the last similar purchase: (A list showing the name of the supplier. .The estimated value. .Specifications. 35 .The Details Required Relating to Issues Presented to The Committee Form No. B – Awarding Details: . price of items) .Price List. .

Direct Order) • Statement of justification for Preferring Contracting instead of a Public Tender. .Equipment required.The duration of the contract. B – Tender Details: .Scope of work.List of contractors / the name of the contractor. . (2) Details of Contracts of Services Commission a – Details of pre-qualification (if any): . labor. . the duration of the contract) . scope of work. type of service.The estimated value. . .Offer . .The type of services / services required. . 36 . equipment.List of Contractors Evaluation.Justifications and Recommendations.The workforce / Labor.Services Commission Methods • (Public Tender – Limited Tender .Summary of historical details about the last service contract: (A list showing the name of the contractor. .Form No. . the value of the contract.Qualification Conditions and Standards.

37 . . C – Awarding Details: .Justification for the recommendation of award.The presence of a provision in the estimated budget.Price list..

Qualification Conditions and Standards. (3) Details of contractors' contracts A.Summary of historical details about the last service contract: (A list showing the name of the contractor.The duration of the contract. type of service. equipment. .The scope of work. . . . scope of work.List of contractors / name of the contractor. the duration of the contract) . . the value of the contract.Type of contract: • (Cost Plus Contract .The presence of a provision in the estimated budget.Lump-Sum Contract) • Statement of justification for Preferring Contracting instead of a Public Tender.List of Contractors Evaluation.Form No. labor.Justifications and Recommendations B – Tender Details: .Details of pre-qualification (if any): . . . 38 .The estimated value.

C – Awarding Details: .Price list. 39 .Justification for the recommendation of award. .