Procurement Policies and Procedures

Basic Procurement Policy

Our Procurement Policy follows these basic objectives:

  1. Comply with the law and industry regulations, respect human rights and have minimum impact on the environment.
  2. Equal opportunities for our suppliers.
  3. Establish profitable and beneficial partnership with suppliers, based on trust.
  4. Contribute to the country’s development and economic growth.
  5. Prioritize local interests wherever we work.

Supplier Selection Policy

We expect our suppliers to comply with the UN Global Compact ‘10 principles’

  1. Businesses should support and respect the protection of internationally proclaimed human rights; and
  2. Make sure that they are not complicit in human rights abuses.
  3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining
  4. The elimination of all forms of forced and compulsory labour
  5. The effective abolition of child labour
  6. The elimination of discrimination in respect of employment and occupation.
  7. Businesses should support a precautionary approach to environmental challenges
  8. Undertake initiatives to promote greater environmental responsibility
  9. Encourage the development and diffusion of environmentally friendly technologies.
  10. Businesses should work against corruption in all its forms, including extortion and bribery.

Supplier Requirement

  1. The supplier and its subcontractors must agree to and comply with MCS Group’s purchasing policy requirements and principles.
  2. Full compliance with legal and ethical requirements:
    1. The supplier must strictly comply with the laws and regulations of Mongolia, regional regulations and by-laws as well as regulations imposed by government bodies
    2. The supplier must respect codes of conduct in the region where it is operating
  3. The supplier must respect human rights in every area of its work and must provide a safe, healthy working environment for employees:
    1. Must not engage in or be complicit in forced or compulsory labour
    2. Must not allow child labour
    3. Eliminate discrimination on the grounds of race, age, gender, ethnicity, religion and social background
    4. Provide fair wages and benefits to employees
    5. Adhere to working hours set out in the Labour Law
    6. Provide a safe, healthy and hygienic working environment.
  4. The supplier must respect and protect the environment:
    1. Suppliers’ goods and services should not have a negative impact on the environment and they must always seek to minimize their environmental impact
    2. Must anticipate any negative environmental impacts that may surface during their work and take precautions to reduce any such impact
    3. The supplier must be committed to environmental protection and must have established environmentally sound policies that they put into practice.
  5. The supplier must operate in an open and transparent manner:
    1. The supplier must provide access to its financial statements and other policies that prove its ethical business conduct
    2. The supplier must not attempt to bribe or provide kickbacks of any kind (money, gifts, free services, promises of free services and/or valuable items and products) to an employee of MCS Holding LLC or its subsidiaries in order to attempt to gain competitive advantage and influence the decision-making process.
  6. The supplier must ensure compliance to quality standards:
    1. The supplier must have the technical and technological capacity and capability to provide products and services that comply with international standards and government requirements
    2. Must have the capacity and capability to provide products and services that comply with MCS Group’s requirements.
  7. The supplier must provide products and services at competitive prices:
    1. To allow for the Company to reduce and/or keep its operational costs down, the supplier must ensure that its products and services are provided at competitive market prices.

1.1.4.Purchasing Procedure

Purchasing will be carried out in an open, fair environment based on price competitiveness and the overall benefits of the products and services offered. Depending on price thresholds, the Purchasing and Procurement Department will choose one of the procedures, set out below, to select a supplier to provide the goods and services required.

  1. Direct purchasing (for contracts worth more than 1 million MNT and less than 3 million MNT) is done when a purchase contract is made directly with one supplier, without any competition, and is applicable in the following situation:
    1. The purchase is of the lowest possible competitive market price from a trusted supplier. The quote and the invoice must be cross-checked for consistency.
  2. Comparison method (for contracts worth more than 3 million MNT and less than 100 million MNT) is used to request price and technical proposals from a minimum of 3 authorized suppliers that meet the product/service requirements from the procurement database. A purchasing decision will be made after comparing the price and technical proposals from these suppliers. The contract is awarded to the supplier that meets the stated quality requirements at the minimum possible market price. In the supplier selection and comparison process, the procurement department takes the following factors into consideration:
    1. Products and services must meet relevant requirements (technical specs, standards, quality)
    2. Associated expenses (price comparisons are to be made taking into consideration relevant taxes, logistical expenses, additional expenses incurred)
    3. Operational costs associated with products/services
    4. Installation/setup cost of products/services
    5. Warranty period, conditions
    6. Repair and maintenance terms, costs
    7. Cost/availability of spares and replacement
    8. Terms and conditions of delivery (lead-time, location, packaging etc.)
    9. Insurance terms
    10. Payment terms
    11. Supplier’s track record; previous contracts completed for the company
    12. Quality and duration of products/services.
  3. Biding method (for contracts worth more than 100 million MNT) is applied when a Selection committee is formed by the management and carries out the purchasing decisions based on the Supplier Selection Criteria.
  4. Special-case purchases are (not subject to price thresholds) made from one supplier due to special circumstances as described in the purchasing procedures. The purchasing agent must provide a detailed explanation in the “Special Circumstances Purchase Form”