ECP-DIJ-M-002 V5 Manual Contratacion ECP (Ingles)

LEGAL VICE-PRESIDENCY
LEGAL ADVISORY UNIT IN SUPPLYING, SERVICES AND TECHNOLOGY
ECP-DIJ-M-002 July 01, 2009
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CONTRACTING MANUAL
THE HEREIN ENGLISH VERSION OF THE CONTRACTING MANUAL HAS BEEN DISCLOSED FOR INFORMATION PURPOSES ONLY. IN CASE OF ANY DISCREPANCY BETWEEN THE SPANISH VERSION AND THE ENGLISH VERSION OF THIS DOCUMENT, THE SPANISH VERSION SHALL PREVAIL FOR ALL THE LEGAL EFFECTS.
LIST OF VERSIONS
VERSIN 04
MADE BY: Contracting Unit Legal Vicepresidency VERSIN 03 MADE BY: Contracting Unit Legal Direction
CONTROL OF CHANGES Contracting Manual ECOPETROL S.A. Mixed Economy Company. REVISED BY: JAIME A. PINEDA DURAN Head of the Contracting Unit
DATE December 7, 2007 APROVED BY: Board of Directors Meeting Act 078
CONTROL OF CHANGES Contracting Manual REVISED BY: JAIME A. PINEDA DURAN Head of the Contracting Unit
DATE APROVED BY: Board of Directors Meeting Acts 045 y 053
VERSIN 02 MADE BY:
CONTROL OF CHANGES Contracting Manual REVISED BY:
DATE December 12, 2003 APROVED BY:
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CONTRACTING MANUAL Legal Direction JAIME A. PINEDA DURAN Legal Director (In Charge) Board of Directors Meeting Act 008
VERSIN 01 MADE BY: Legal Direction
CONTROL OF CHANGES Contracting Manual REVISED BY: MAURICIO ECHEVERRY Legal Director
DATE April 29, 2002 APROVED BY: Board of Directors Meeting Act 2270
VERSION 00 MADE BY: Legal Direction
CONTROL OF CHANGES Contracting Manual REVISED BY: ALVARO MENESES MENA Legal Director
DATE April 29, 2002 APROVED BY: Directive Comitee Act 1112
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CONTRACTING MANUAL
CONTENT 1. 2. 3. 4. 5. 6. 7. PURPOSE......................................................................................................................... 5 SCOPE ............................................................................................................................. 5 GLOSARY ........................................................................................................................ 6 DEROGATED DOCUMENTS ............................................................................................ 6 NORMATIVE REFERENCES............................................................................................ 6 GENERAL CONDITIONS ................................................................................................. 6 DEVELOPMENT ............................................................................................................... 7 7.1. Legal Capacity to contract on behalf of ECOPETROL S.A. .............................................. 7 7.2. Contracting Process .......................................................................................................... 7 7.2.1. Planning ...................................................................................................................... 7 7.2.2. Selection Processes .................................................................................................... 8 7.3 Contract Execution, Performance and Liquidation ............................................................ 16 7.3.1. Execution .................................................................................................................. 16 7.3.2. Requeriments for Performance.................................................................................. 17 7.3.3. Performance of Contract ........................................................................................... 17 7.3.4. Liquidation of Contract .............................................................................................. 18 7.4. Miscellaneous Provisions ................................................................................................ 19 7.4.1 Formalities of Contractual Acts ................................................................................... 19 7.4.2 Use of Electronic Means............................................................................................. 19 7.4.3 Additional Regulations and Procedures ...................................................................... 19 7.4.4 Applicable Legislation ................................................................................................. 19 7.4.5 Term........................................................................................................................... 20 7.4.6 Revision and Updating ............................................................................................... 20 7.4.7 Approval ..................................................................................................................... 20 8. 9. REGISTERS. DOES NOT APPLY .................................................................................. 20 CONTINGENCIES. DOES NOT APPLY ......................................................................... 20
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CONTRACTING MANUAL 10. 11. BIBLIOGRAPHY. DOES NOT APPLY ............................................................................ 20 ANNEXES ....................................................................................................................... 20
ANNEX 1. GLOSSARY ........................................................................................................... 21 ANNEX 2. CONTRACTUAL PLANNING .................................................................................. 26 1. PRECISIONS ON CONTRACTING ...................................................................................... 26 1.1. Determination of the Purpose, Scope, Type of Contract and Special Issues ..................... 26 1.2. Definition of the Type of Salary................................................................................. 26 1.3. Determining outlook of risks in terms of Industrial Safety and Occupational Health ............ 26 1.4. Identification and distribution of other risks ............................................................... 26 1.5. Determination of Guarantees and insurances........................................................... 28 1.6. Determination of Permits, Licences and Authorizations required ........................................ 28 1.7. Determination of the Social-Environmental impact ................................................... 29 1.8. Tax determination..................................................................................................... 29 2. BUDGETING ........................................................................................................................ 29 2.1. Determination of the Price System ........................................................................... 29 2.2. Selection of the Terms of Payment ........................................................................... 29 2.3. Cost estimation for adjustments and unforeseen ...................................................... 30 2.4. Budget elaboration for contracting ............................................................................ 30 3. DETERMINATION OF THE AUTHORIZED OFFICER .......................................................... 30 4. ELABORATION OF BIDDING CONDITIONS AND/OR TERMS OF REFERENCE .............. 30 4.1. Requeriments for Participation .................................................................................. 31 4.2. Evaluation of Proposals ............................................................................................. 32 4.2.1. Factors for the Evaluation .................................................................................... 32 4.2.2. Weighing and Evaluation Procedure .................................................................... 32 ANNEX 3. SUPPLIES MANAGEMENT MATRIX ...................................................................... 34
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CONTRACTING MANUAL
1. PURPOSE This Contracting Manual contains the rules and procedures whereby selection processes of contractors and contracts, as required by ECOPETROL in furtherance of its corporate purpose, shall be processed and executed. 2. SCOPE The herein Manual shall apply to any event in which ECOPETROL acts as contracting party, and shall not apply in the following cases: 2.1. Collaboration, Association or Participation Contracts 1, strategic alliances 2 or creation of companies of any type that are needed, which purpose is the conduction of activities that correspond to the corporate purpose of ECOPETROL. When referring to contracts executed in furtherance of acts indicated under section 2.1 above.
2.2.
Such contracting will be submitted to the Business Committee or its equivalent instance, supporting the business opportunities with a technical, economic, financial and legal analysis as appropriate, additional such other analysis as indicated by the Committee. The terms of the agreement will be defined as a function of the results of the negotiation carried out to such effect, which will be submitted to the consideration of the above-mentioned Committee. This kind of negotiations will not require Bidding Conditions or Terms of Reference, invitations to bid , or guarantees, and restrictions and/or limitations shall not be applied in matters of Advanced Payments and Payments in Advance, and pre-contractual or contractual terms, which are regulated by this Manual.
2
ECOPETROL may enter into alliances with persons having common interests (i.e. persons of the power mining sector with whom Collaboration, Association or Participation Contracts have been entered into, intended to take effect on joint contracting processes (case in which contracting may be subject to the legal regime applicable to any allied party) or to adhere to standing contracting, with the purpose of obtaining economic benefits or better conditions in the provision of goods and services. This shall be preceded by technical and market analysis that warrant the favourability of such alliances, which must be stated in writing and be motivated. This kind of alliance shall be carried out by the Administrative Management or the Authorized Officer of higher level when referring to specific purpose delegations. Likewise, ECOPETROL shall conduct alliances with selected contractors through any selection processes regulated by this Manual and in connection with the respective contracts, while they are standing. Alliances made under this modality shall be intended to reach certain objectives of a technical or operational nature that imply continuity in the execution of the contracted purpose, and economic benefits for ECOPETROL, which shall be valued on the basis of a technical and economic study that motivates the decision. The possibility of establishing this type of alliances shall be foreseen in the Bidding Conditions or Terms of Reference regulating the contractors selection process
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CONTRACTING MANUAL 2.3. When referring to collaboration agreements3, special agreements of technological co operation4, and those contracts to which Article 355 of the Political Constitution refers. When ECOPETROL acts as Operator or Mandatary or any other similar type, in which case contracting processes shall abide by the rules established with occa sion of the Collaboration Contract, the respective operation or mandate. When it is determined that adherence to contracting processes underway or standing contracts entered into with ECOPETROL -as Operator or Mandatary or a similar type - is the best option to attend the respective contracting needs of the Company. When ECOPETROL acts as contractor or supplier of a good or service or as executor of a work in favor of a third party, or when acting as contractor subcontracts the purpose of the contract in order to fulfill its obligations.
2.4.
2.5.
2.6.
3. GLOSARY In order to give the necessary precision to the expressions employed in this Manual, set forth in Annex 1 hereto are established. 4. DEROGATED DOCUMENTS Contractting Manual ECOPETROL S.A., Version 03, aproved by Acts No. 045 and No. 053 of the Board of Directors Meeting in 2006. 5. NORMATIVE REFERENCES The herein Contracting Manual complies with the principles of the Administrative Function and Fiscal Performance as per indicated in Articles 209 and 267 of the Political Constitution of Colombia, the Article 3 of the Law 489 of 1998, the Article 6 of the Law 1118 of 2006, and the Article 13 of the Law 1150 of 2007, as well as with its Code of Ethics and the Corporate Governance Code. 6. GENERAL CONDITIONS In furtherance of its corporate governance policies, ECOPETROL is committed to establish trustworthy relationships with its stakeholders. Thus, it will implement timely and accurate
3
Agreements entered into pursuant to Articles 113 of the Political Constitution and 6th of Law 489, 1998.
Agreements entered into pursuant to Law 29, 1990 and Decrees 393 and 591, 1991 (Articles 69 and 71) regarding to Constitutional principles relatives to promotion and development of Technology.
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CONTRACTING MANUAL information disclosure practices regarding contracting processes, where clear rules and objective procedures shall be applied in order to guarantee both the quality in the supply of goods and services to fulfill its corporate purpose, as well as to respect equal opportunities of participation to bidders and the correct and well intentioned analysis of the technical, commercial and value added conditions and, in general, to guarantee the full enforcement of ethical principles and corporate responsibility in contracting. Ethics outstands among the principles guiding contracting by ECOPETROL. Notwithstanding certain contracting modalities are excepted of the application of the herein provisions, we reiterate that the ethical rules adopted by the Company shall apply to any negotiation on its behalf, regardless the application or not of the herein rules, thus, an eventual disregard for the such ethical rules shall mean a breach of the herein Manual. These ethical rules are contained in the Code of Ethics and the Corporate Governance Code of ECOPETROL, particularly, Chapter VII on Conflicts of Interest faced by officers or representatives and those contained in Article 22 of the corporate Bylaws. On the other hand, any selection process conducted on the basis of this Manual shall be intended towards the selection of a suitable contractor or collaborator and the most favorable proposal, so that the successful performance of the contract will contribute to the effective fulfillment of the corporate purposes concerning ECOPETROL. 7. DEVELOPMENT 7.1. Legal Capacity to Contract on behalf of ECOPETROL S.A. Contracting on behalf of the Company shall be conducted only and exclusively by the persons authorized in the Delegations Manual (Manual de Delegaciones, MDE ), applying the limits established in the respective authorizations. For the effects of this Manual it shall be understood that such contracting capacity is vested in the Authorized Officer. Pursuant to the established in Articles 13 and 14 of Law 1150, 2007, contracting processes conducted by ECOPETROL shall apply the regime of disqualifications, incompatibilities and conflicts of interest referred to in Decree Law 128, 1976, Article 8, Law 80, 1993, Articles 79, 89 and 102 of Law 489, 1998 and other regulations amending or adding thereto. Likewise, the provisions contained in the Corporate Governance Code, shall be taken into account, specifically, Chapter VII. 7.2. Contracting Process 7.2.1. Planning Before initiating the contractors selection process, an adequate planning shall be made that will comprise, when applicable, the activities listed in Annex 2.
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CONTRACTING MANUAL 7.2.2. Selection Processes Selection processes of contractors are: a. Direct Selection: means the process whereby a particular person is contracted directly, attending Market Prices and subject to a comprehensive negotiation, or that which involves the various aspects in a contracting and not only the financial, as long as the satisfaction of the need in the conditions as required by ECOPETROL is ensured. Closed Call: means the process whereby previously determined persons may submit bids, applying criteria of Market Intelligence, and a selection is made among them based on objective factors, previously defined by ECOPETROL. Open Call: means the process whereby any person complying with the conditions of the respective call may present an offer, and a selection among them is made on the basis of objective factors, previously defined by ECOPETROL.
b.
c.
The selection process to be used in each case shall be determined on the basis of: Events herein provided , or The Management of Supplies Matrix (Annex 3).
The selection process shall be determined on the basis of the Management of Supplies Matrix only when there is no pre-determined event on which to base the choice between one proccess or another, and when referring to the contracting of drilling equipment of wells and the services associated to such drilling. When the respective event refers to the amount, its determination shall consider the official budget excluding VAT. Bid requests made by ECOPETROL do not represent a commercial offer and do not bind the Company to enter into the corresponding contract, being free to declare it failled, or unilaterally desist from the contracting process when justified events appear motivating such act. 7.2.2.1. Causals The appropriateness of each selection process shall be determined on the basis of the criteria or events as listed herein below: a. Direct selection: It shall apply upon occurrence of any one of the situations below: I. Upon a situation considered an Emergency or Compelling by an employee who, according to the Management of Supplies Matrix is authorized to assess the risk. The causes for such situation shall be stated in writing. In these cases, if the nature of the emergency situation would not allow for the execution of a document containing the contract, the same shall be omitted, but a written
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CONTRACTING MANUAL authorization shall be issued to contractor directing the performing of the works, services or activities as required. If previous to the initiation of the execution of the activity in question an agreement on the economic consideration is not achieved, the same may be subsequently agreed; if even then an agreement is not reached, such consideration shall be determined by an expert designated by parties, by common agreement, from the available listing at the Chamber of Commerce of Bogot, considering the type of good and/or service which consideration is to be assessed, and in case reaching an agreement on the designation of the expert were not possible, the latter shall be designated by the Chamber of Commerce. II. When referring to contracts entered into considering special qualities ( knowledge, experience, acknowledgement, safety, trust ) of the person to be retained (intuito personae contracts), which include, without limiting to them, any contracts which purpose is the goods or services (methodologies, procedures, among others) vested with copyrights or industrial property rights, which contract execution with titleholders thereof has been decided; and contracts which purpose is a complementary activity subsequent to another previously developed, that for technical or legal reasons must be performed by the same Contractor.
III. When only one person results pre-selected, upon completion of the pre-qualification procedure. IV. When referring to: o o Purchase from manufacturers, dealers or vendors of materials, equipment, spare parts or inputs, obeying to a need for specific brands. Purchase of quota part of goods of which ECOPETROL is a co-owner or joint tenant, or alienation of movable goods to persons with whom ECOPETROL has entered into Collaboration, Association or Participation Contracts, or any type of partnership. This event does not include transactions related with the hydrocarbon exploration and exploitation rights, which, pursuant to section 1.1 of this Manual, shall not be subject to the same. Acquisition of strategic inputs indispensable for the operation of facilities and other industrial premises. The grading of an input as "strategic" shall be made in writing by the corresponding Vice-president. Contracting where the value of the purpose of the contract does not exceed one hundred monthly legal minimum salaries (100 S.M.L.M.). Contracting subject to Unit Price Lists adopted by ECOPETROL, or subject to Unit rates regulated by the National Government. Services, Purchase-sales or Supply of movable property contratacting, subject to Price Agreements.
o o o V.
For the execution of the following types of contracts: o Inter-administrative, as long as the conditions offered by the statal entity which is
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CONTRACTING MANUAL suitable to perform the contract, are the most favorable to ECOPETROL. Valuation of these conditions implies the conduction of a market study supporting the decision. o o o Easement, leasing, commodatum or acquisition of movable goods For the direct development of scientific or technological activities. Of the following contracts in connection with oil derivatives and products, conventional and alternative energy sources, oxidizers and biofuels: marketing or distribution, as well as marketing campaigns associated therewith; affreightment and leasing of crafts; maritime and fluvial transportation; transportation brokerage; gas transportation and compression; storage and delivery at warehouse; packing; product transfer certificates; quality and quantity inspections and risk hedging. Those needed in order to support the participation of ECOPETROL in selection processes, or contracting, carried out by third parties. For the testing or trial of goods and services, in order to evaluate the introduction of new technologies, possible changes in the same or search for better alternatives.
o o
VI. As a consequence of the statement of a failed Call. In this case the Direct Selection shall be processed within the four (4) months following the statement of the failed call.. VII. Upon circumstances imposing the need for conducting this selection process, justified in writing by the Authorized Officer with occasion of the Market Intelligence practices and related with: Knowledge of the market and the suppliers. Knowledge of the market prices. Lack of competitiveness among suppliers in providing the service or supplying the goods that are required, or the unavailability of such suppliers. The conditions of opportunity
b.
Closed Call: It shall apply upon occurrence of any of the following situations: I. When technical, technological, security or confidentiality reasons exist, which shall be justified in writing by the respective Manager, Vice-President or Director. II. As a result of a pre-qualification. III. IV. In objective application of the RFI instrument. When, according to written justification issued by the respective Manager, Vice President or Director, the need relates to activities that by nature or due to their complexity may only be commended to specific persons and a plural number of them would exist, which must result from the development of Market Intelligence
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CONTRACTING MANUAL practices. V. VI. For the provision of health services. When the amount of the contracting oscillates between 100 and 1000 S.M.L.M.
VII. When as a result of the Market Intelligence practices it is concluded that there is a plural and identified number of persons with whom contracting is possible; The Market Intelligence shall be conducted according to the internal rules applicable to that effect and it could be national, regional or local. c. Open Call: It shall apply upon any of the following situations: I. When direct Selection or Closed Call would not be appropriate, II. When even though another type of selection process were appropriate, the Authorized Officer would decide to conduct an Open Call. 7.2.2.2. Aplicable Rules 7.2.2.2.1. Selection Process Invitees Upon determination of an appropriate selection process, the following rules shall apply with respect to bidders: a. Direct Selection: The invitee shall be objectively determined by the titleholder of the department requesting the Contracting and the Authorized Officer, subject to the Market Intelligence procedures. Closed Call: The number of invitees shall depend on the event that justifies the performance of this kind of call, and its selection shall be at the objective discretion of titleholder of the department requesting the Contracting and the Authorized Officer, subject to the Market Intelligence procedures. However, the number of invitees shall not be less than two (2). ECOPETROL shall proceed with the Closed Call based on the event relative to the amount (section VI), with the exclusive participation of department, regional and/or local Mipymes (Micro, Small and Medium size companies), which main domicile corresponds to the place of performance of the contract, provided the satisfaction of the economical and technical conditions required in contracting is guaranteed. c. Open Call: Indeterminate persons are publicly called to participate, at an international, regional or local level, through the use of suitable means such as Internet, the publishing of notices in nationwide or regionwide circulation newspapers, the fixing of notices in visible and accessible places of the respective section, or through such channels as chambers of commerce, mayors offices, police inspections, among others.
b.
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CONTRACTING MANUAL The Bidding Conditions or Terms of Reference shall establish the admission of the participation of all persons accepting the call. The description of goods and services to contract in the Bidding Conditions or Terms of Reference, shall not make reference to brands or commercial names, patents, designs, manufacturers, or any description that guides the contracting towards a specific brand, manufacturer or type of product, except when the Management, the respective Vice-presidency or the Direction so authorizes it, or when referring to the acquisition of goods and services which is necessary to maintain or optimize the existing infrastructure, a circumstance that will be stated in the respective market study. In referring to an Open or Close Call, when the number of invitees identified exceeds five (5), ECOPETROL may conduct a public hearing so as to choose among them, through drawing lot, a minimum of five (5), who may submit proposals for the selection process underway. To the effects of limitation of invitees in Open Calls, the drawing lot shall not include persons belonging to the following categories: Boards of communit-based action, cooperatives, foundations or departmental, regional and local Mipymes, which main domicile corresponds to the place of performance of the contract.
Persons who have entered into, and have performed, or are performing contracts referring to the same activities in favor of ECOPETROL satisfactorily. These persons shall be invited directly by ECOPETROL and shall submit the respective proposal, along with the pre-selected persons through drawing lot at the public hearing. 7.2.2.2.2. Extension of the Information ECOPETROL may conduct a hearing aiming at achieving a more precise scope of the contracting, as well as the contents of the supporting documents, and to resolve any applicable queries, wherefrom an act shall be raised by the Authorized Officer of the contracting or by a person appointed to attend the diligence, which be made known by all interested persons. Additionally, interested persons shall request any clarifications in order to clear up any doubtful, ambiguous or imprecise aspect of the Bidding conditions or Terms of Reference. The maximum term to request clarifictions shall be therein defined. Requests for clarification shall be answered in writing and its contents shall be made known to all interested persons. Any modifications to the documents which are the base for contracting, shall be made through an Addendum signed by the Authorized Officer. 7.2.2.2.3. Submission of Proposals Proposals shall be submitted in writing, in the manner and time as indicated in the respective Bidding Conditions and/or the Terms of Reference. These documents may authorize the submission of alternative proposals, indicating clearly and precisely the conditions for their evaluation and acceptance.
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CONTRACTING MANUAL The submission of proposals may be authorized by chartered mail, fax, data message or electronic means, provided they comply with the requirements established in the respective Bidding Conditions and/or the Terms of Reference, in Law 527, 1999 and other rules on electronic documents. In any event, as a condition for its validity, the submission of any proposal to ECOPETROL shall be accompanied by a statement by the respective bidder stating that he is fully acquainted with this Contracting Manual and its express acceptance of all the conditions and regulations therein stipulated. When the proposal is to be submitted in writing, the statement to which this paragraph refers shall be also delivered in writing to ECOPETROL along with the proposal, while if the proposal is made known to ECOPETROL orally, a formula will be agreed between the bidder and ECOPETROL so as to leave evidence of the same. It is made clear that, despite this expression of acceptance constitutes a requisite for the validity of the proposals received by the Company, ECOPETROL may, if deemed convenient, request bidders to send it even after the reception of a proposal, but always before the respective awarding. In processes conducted within the context of a negotiation proposals may be received orally, or by telephone or in writing, considering the following: Telephone conversations in the negotiation process or precontractual phase shall be recorded, all bids submitted or answers of no participation being registered through these means, ECOPETROL shall communicate bidders that all conversations will be recorded. The use of electronic systems for telephone recording may validate as formal bids those carried out through this means, considering that under such modality, the respective conversations shall be recorded and, therefore, offers made by bidders shall be final. Upon concretion of the negotiation, the Authorized Officer shall send bidder, in writing, the final proposal, for its ratification in writing. Furthermore, evidence shall remain in a document with the background of the negotiation, the market situation, acceptable price margins, features of the conduction of the negotiation, the knowledge by bidder of the entire Contracting Manual, the express acceptance by bidder of the application of the rules established in the Contracting Manual and other aspects related with the award.
Bids may be submitted under the modality of auction or the interactive modality, such modalities not having to be exclusive, their mutual complementarity being possible. Under the interactive modality, successive awards may occur, to the effect, those complying with the participation requirements and the minimum technical aspects and/or exceeding the minimum score or percentage attributed thereto, may submit successive economic bids, to the extent ECOPETROL so requires them, each of which may give rise to a different award. During the stage of bid submission and referring to work contracts entailing a high degree of complexity, it shall be possible to implement, by regulating the appropriate in the respective Bidding Conditions and/or the Terms of Reference, leveling procedures for the technical proposals, in such a way that, under equal conditions, previous to the submission of the economical bid and at request of ECOPETROL, bidders adjust, make precise and/or modify technical aspects of their bids ensuring their conformity with the technical specifications required by ECOPETROL. In case this
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CONTRACTING MANUAL procedure is carried out, the submission of economic bids shall be admitted only from those bidders which technical proposals, after and with occasion of the leveling process, adjust in all respects to the technical requirements of ECOPETROL. 7.2.2.2.4. Bid Evaluation The selection process shall continue with the evaluation stage, whichever the number of proposals received. In furtherance of this stage, ECOPETROL shall verify the fulfillment of the participation requirements demanded in the Bidding Conditions and/or Terms of Reference, shall make any comparisons via matching of the offers received and the price and market conditions consultation; besides, it shall consider the results of any internal or external advice as deemed convenient to request, and finally it shall apply the evaluation factors as previously established. a) General Issues
Evaluation of bids shall be made by an Evaluating Committee or by the employee of ECOPETROL as designated by the Authorized Officer; the above, notwithstanding the possibility of contracting this activity with a third party. The evaluation of bids shall consider the requisites, factors, weight and the procedure established in the Bidding Conditions and/or the Terms of Reference, and within the term as indicated, which may be extended for the time deemed necessary by ECOPETROL, while bids remain standing. During the evaluation period, ECOPETROL may request the documents, certificates and/or clarification as deemed convenient in order to remedy those requirements relative to bidder, as deemed necessary upon the corresponding verification. The identity of bidder shall therefore not be altered. Shall be remediable, previous the decision of entering into a contract with a specific bidder, any aspects in shape of the bid (such as attestations,apostille, language, errors in the bid bond or flaws in the same in respect of the required, among others) or the omission therein of the accreditation of preexisting conditions at the time of submission of the bid and which, therefore may be object of verification (such as certificates, capacities of personnel offered, among others), and generally all such aspects that permit the conduction of an objective comparison of bids received, without the assigning of a score being affected in conformity with the Bidding conditions and/or the Terms of Reference. b) Provisons Common to the Evaluation - Negotiation
ECOPETROL may negotiate the economic component of the proposal. The faculty of negotiation shall be stated and shall regulate the corresponding Bidding Conditions or Terms of Reference, with due respect given to the principles of efficiency, economy, swiftness, impartiality and publicity.
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CONTRACTING MANUAL 7.2.2.2.5. Comments on Bid Evaluations In Open and Closed Call which amount exceed one thousand Monthly Legal Minimum Salaries (1000 S.M.L.M.), the evaluation report of the bids shall be published for a term up to three (3) business days, for Bidders within such term to submit any comments deemed appropriate, in respect of the evaluation conducted by ECOPETROL and/or the bids submitted. In dealing with other selection processes, the evaluation report of the bids may be published with the same purpose, for the term as established in the respective Bidding Conditions and/or Terms of Reference. In exercise of this faculty, bidders shall not complete, add, modify and/or improve their bids. The Authorized Officer shall pronounce himself on comments made by bidders before making any decision of entering into a contract with a specific bidder, or state them in document containing such decision. 7.2.2.2.6. Decision of entering into the Agreement or Failed Call Statement in Selection Process Within the term foreseen in the Bidding Conditions and/or Terms of Reference, which may be extended while bids remain standing, a decision of contracting or issuing a desertion statement shall be made. In all contracts to be executed, and specially purchasing agreements of movable goods, coasting and commercialization agreements (oil derivatives and products, conventional and alternative energy sources, oxidizers and biofuels), and those of international trade, the acceptance of the bid and the consequent decision to contract, may be made via data message, fax or any other commercial procedure accepted in this type of contracting. If bidder with whom contracting has been decided does not accept such decision and/or does not execute the contract within the term as foreseen to the effect in the Bidding Conditions and/or Terms of Reference, ECOPETROL may contract, within the fifteen (15) days following, with bidder ranking second, provided his bid were favorable to the Company and standing as of such date. If the latter refuses to execute the contract, within the term foreseen in the respective communication, the same rules shall apply with the following bidders in the order of elegibility, as long as more favorable bids exist and notwithstanding the liability of indemnifying any possible harm acquired by bidder at the time of submitting its offer and making effective the bid bond thereon. - Failed Call Statement. ECOPETROL shall declare the selection process as failed when in conformity with the requirements and factors established in the Bidding Conditions and/or the Terms of Reference, no bid is admissible and/or favorable. The corresponding decision shall be communicated in writing to bidders, stating expressly the reasons motivating it. 7.2.2.2.7. Suspension and Cancellation of Selection Process The Authorized Officer may suspend the selection process at any stage, upon occurrence of technical, operational, economic, market, force majeure, compulsory mandate of authority, third party irresistible act or for reasons of utility or convenience that may justify such decision. The
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CONTRACTING MANUAL decision of suspending the process shall be motivated and communicated to interested parties and/or bidders. If any reasons so justify it, the selection process may even be cancelled. This decision requires the respective justification and approval by the Authorized Officer of the high level, and shall be communicated to interested parties and/or bidders. 7.3 Contract Execution, Performance and Liquidation 7.3.1. Execution Unless the law expressly requires to comply with a specified formality to these effects, the contract is understood as executed when an agreement is reached upon the purpose and the consideration. For evidence purposes, all contracts of ECOPETROL shall be stated in written document Contract Documentation
Contracts of ECOPETROL shall be documented as follows: In Purchase Contracts of movable goods In contracts different from purchase contracts which amount does not exceed the 1000 SMLM the Work Order or Service Order format shall be used. In contracts different from purchase contracts which amount exceeds 1.000 SMLM the Formal Contract Format shall be used, which shall be signed by the parties.
In contracts related with coasting operations and international trade, and generally, with marketing (oil derivatives and products, conventional and alternative energy sources, oxidizers and biofuels), the acceptance of the bid may be communicated via data message, fax or any other commercially accepted means. The contract shall be deemed as contained in the respective proposal and the communication of its acceptance. As to contracting referring to goods or services offered to the public in general under conditions common to those requesting them, formats pre-established by suppliers of these goods and/or services may be used. In referring to purchases and services in general, of amounts until one hundred Monthly Legal Minimum Salaries (100 S.M.L.M.), the respective contract shall be understood as contained in the written authorization issued by the Authorized Officer (request to contractor duly signed, or release of order in the system), and the invoice submitted by contractor.
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CONTRACTING MANUAL The Legal Vice-presidency shall be in charge of the standarization and updating of models and drafts. 7.3.2. Requeriments for Performance To initiate the performance of the contract, of which an act shall be raised when appropriate, the following shall be complied with: a. Acceptance of insurances and guarantees Fulfillment of requirements on insurances and guarantees shall be verified as required in the Bidding Conditions and/or the Terms of Reference or in the contract, for performance. Such requirements shall be revised by the contract Inspector in order to verify its conformity with therein agreed; upon absence of surveyor, revision shall be made by Administrator of contract. Acceptance of insurances and guarantees does not require any special formality and may be given via mail, fax or any other electronic means acceptable by the standing legislation. b. Payment of stamp tax at the national level.
When applicable, contractor shall pay the sum corresponding to the national stamp tax at its charge as agreed upon execution of the document containing the contract, save in cases where, in conformity with standing legal provisions and the concepts of DIAN (Tax Authority), it is agreed the tax shall be borne by ECOPETROL entirely. In acts of unspecified amounts, the payment of the tax shall be done as per the applicable regulations. c. Publication Contracts which amount equals or exceeds 50 S.M.L.M. shall be published in the Diario nico de Contratacin Pblica (Single Journal of Public Contracting). Exceptions are any contracts not subject to the rules herein provided and those which the Board of Directors of the Company determines that should not be published for strategic or confidentiality reasons. Save for the case of contracts exempted by the Board of Directors from the requirement of publication due to strategical or confidentiality reasons, all contracts for amounts equal to, or exceeding 50 S.M.L.M. entered into by ECOPETROL, shall be published in the Web page of the Company. 7.3.3. Performance of Contract Upon execution of the contract and having complied with the requirements foreseen for the execution of its purpose, such performance shall begin. Written evidence of the initiation of the contract performance may be stated in an Inititation Act, if parties so deem appropriate. a. Extension of the term The term for the performance of the contract may only be modified if during its development circumstances appear which constitute force majeure, Act of God or irresistible acts by third parties,
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CONTRACTING MANUAL or when, at discretion of ECOPETROL, such amendment is required to comply with the ends of the contracting, case in which the motives for the decision of ECOPETROL shall be given. If contractor is delayed in the programming due to causes attributable thereto, ECOPETROL may extend the term of performance of the purpose of the contract for the term deemed reasonable, notwithstanding the application of any sanctions contractually agreed. In any event, contractor shall assume the higher costs caused by the extension and indemnify any damage caused to ECOPETROL. The extension of the term shall give rise to the amendment of the term of the insurance and/or guarantees established by contractor for the contract performance. b. Suspension of the Contract Performance.
Contract performance may be suspended totally or partially by mutual agreement; due to force majeure circumstances, Acts of God, or irresistible acts from third parties; or unilaterally by ECOPETROL if so agreed between parties. c. Addition of Contract
Any addition agreed to a contract, must be carried out by the Authorized Officer who executed the contract being added, and requires for its delivery the same conditions listed in this Manual for contracts, that is, it shall be stated in writing, the respective guarantee shall be modified and/or adjusted, the stamp tax accrued shall be paid, and its publication in conformity with the foreseen in this Manual shall be made. In Contracts stating unit prices or rates, the larger quantities of work, services or supplies that arise and/or which are necessary to conduct during the term foreseen for its performance, do not entail an Addition and it shall be paid at the prices agreed in the contract for the respective item, notwithstanding any limits in the resources assigned by ECOPETROL for the development of the contract. The performance of a larger quantity of work, services and/or supplies shall have to be economically reasonable and favorable for ECOPETROL, and does not require any previous execution of any document with contractor. 7.3.4. Liquidation of Contract Successive performance contracts to which this Manual refers shall be purpose of liquidation by mutual agreement with contractor. At this stage, any adjustments, revisions and acknowldgements as appropriate may be agreed with contractor. Agreements, reconcilements and transactions agreed to settle any divergences occurring shall be stated in the act, so as to make a statement of clearance from any obligations assumed in the respective contract. Parties may agree that if contractor is not present at the liquidation or if no agreement is reached on the contents of the same, it may be practiced directly and unilaterally by ECOPETROL through a written document.
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CONTRACTING MANUAL Evidence of the contract liquidation must be contained in the respective Liquidation Act. If appropriate and possible, liquidation shall be included in the Termination and/or Final Receipt Act. The bilateral liquidation of the contract shall take place in the term therein fixed or in Bidding Conditions and/or Terms of Reference, or by default, within the four (4) months following the finalization of the performance of the contract, at the unilaterlal or early termination, or at the date provided for the same in the agreement. The unilateral liquidation shall be carried out within the term as agreed by Parties, counted as from the expiry of the term to liquidate the contract by common agreement; the above does not prevent parties from reaching an agreement on the liquidation within this term. 7.4 Miscellaneous Provisions 7.4.1 Formalities of Contractual Acts Acts issued or entered into with occasion of the contractual activity of ECOPETROL shall not be subject to special formalities, notwithstanding those required by the law for its execution . 7.4.2 Use of Electronic Means In all processes regulated by this Manual, electronic means may be used, with the fulfillment of the requisites contained in the e-commerce law and in any regulations, regulating, modifying or complementing it and in conformity with the internal guidelines of ECOPETROL. 7.4.3 Additional Regulations and Procedures No employee of ECOPETROL shall issue regulations, controls, or modify the procedures contained in this Manual. To the above effects authorization is required from the President of the Company for each particular case. 7.4.4 Applicable Legislation Contracts entered into by ECOPETROL shall be ruled by any applicable special legislation, in conformity with the commercial and civil provisions as appropriate. Performance of contracts entered into abroad may abide by the rules of the country of execution, unless they must be fulfilled in Colombia. When contracts are to be performed ouside Colombia and this circumstance indicates the conveniency of using a negotiation procedure or a Contracting Manual other than the herein foreseen, contracting parties may apply a negotiation procedure or a Contracting Manual other than the herein foreseen, notwithstanding the obligation by ECOPETROL of applying rules that ensure transparency, objectivity, suitability, experience and best selection. As to matters not herein addressed, and notwithstanding the need to attend the constitutional provisions, commercial and civil regulations shall apply.
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CONTRACTING MANUAL In case of conflict or doubt over the application of this Contracting Manual or other regulating special contractings of ECOPETROL, this Contracting Manual shall apply. 7.4.5 Term This Contracting Manual shall be in force as from January 1 st, 2008. Any contracting process underway as of the date of entering in force of this Manual shall culminate in conformity with the Manual standing as of the date of opening of the respective process. The above, notwithstanding that for the execution, performance and liquidation of the contract, the rules herein contained are to be followed. 7.4.6 Revision and Updating The Board of Directors of ECOPETROL authorizes the President so that, when deemed necessary, he shall order the revision and updating of this Manual, which shall be processed by the Legal Vicepresidency. 7.4.7 Approval The Contracting Manual was approved by the Board of Directors of ECOPETROL, in its session of December 7, 2007, as stated in Act N078. 8. REGISTERS. DOES NOT APPLY 9. CONTINGENCIES. DOES NOT APPLY 10. BIBLIOGRAPHY. DOES NOT APPLY 11. ANNEXES Number 1 2 3 Ttle GLOSSARY CONTRACTUAL PLANNING MANAGEMENT OF SUPPLIES MATRIX
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ANNEX 1. GLOSSARY To all effects of the Contracting Manual, terms listed herein below shall have the meaning as assigned, except as otherwise specified in Manual provisions. Terms denoting singular shall also include plural and vice versa, provided the context so requires it. Price Agreement: Means an agreement which, previous Market Analysis, ECOPETROL enters into with the supplier of goods and services on the prices of the same, under specified transfer or execution conditions. In such agreement the following conditions shall be stated: (i) the term, which may exceed the fiscal term where agreement is reached; (ii) the fact that ECOPETROL does not undertake to acquire and/or execute minimum or specific quantities, even though it shall resort-when deemed convenient and adjusted to its own needs-as a first option to the Price Agreement, in case the need for goods and/or services appears to which the same refers; (iii) the commitment by supplier to deliver the good and/or provide the service, at prices as agreed, if ECOPETROL so requests it; and (iv) the faculty by ECOPETROL of terminating the Price Agreement, when the existence of better market commercial conditions is verified and/or when ECOPETROL decides to modify its contracting policy and purchases in a way that it is incompatible with the Price Agreement. The price agreement does not constitute a contract, therefore, it does not give rise to obligation between Parties, other than as foreseen in the paragraph above. The price agreement shall be developed through purchase or service orders, which ECOPETROL shall make, considering its needs for the development of its corporate purpose. Addition: Means the bilateral legal act whereby the value of a contract is increased, among other causes, due to the inclusion of activities that are related with its purpose and that are needed for the satisfaction or termination of the same; the inclusion of new activities related with such object, which although not essential for the satisfaction or termination of the same, its execution through the contract does represents the best business for the Company; the conduction of benefits of the same nature as those which are purpose of the contract, in a new term, while it represents the best business for ECOPETROL (extension). Advanced payment: Means the monies delivered by ECOPETROL to contractor, for their administration and investment by the latter in conformity with the conditions established in the Bidding Conditions and/or the Terms of Reference and/or the contract. Such monies shall only be turned into part of payment, and therefore, will enter the equity of contractor to the extent they are amortized. Considering the nature of this payment, ECOPETROL shall request contractor a guarantee for the adequate handling of these resources. Risk Management Cycle: Means the component of the Risk Management, comprised by five sequential stages: identification, analysis, valuation, treatment, monitoring and, a transversal communication. Having the risks a dynamic character, the Cycle is based on the principles of continuous improvement.
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Collaboration, Association or Participation Contracts: Means the contracts related with the administration of the supply, commercialization and marketing chain of the goods inherent to the corporate purpose of ECOPETROL (includes agreements for the determination of conditions under which ECOPETROL and other persons will access to exploration and/or exploitation areas of such goods in Colombia or abroad; joint negotiation agreements in areas of exploration and/or production in Colombia and/or abroad; joint venture agreements in bidding processes in exploration and/or exploitation areas, or for operation of refineries or petrochemical plants, in Colombia and/or abroad; agreements for the joint application of exploration and/or exploitation areas in Colombia o abroad; agreements on areas of mutual interest in Colombia and/or abroad; joint operation agreements in Colombia and/or abroad; asset exchange agreements, purchase and/or sale of assets or any similar figure in Colombia and/or abroad; agreements of acquisition of reserves in Colombia and/or abroad; and generally, agreements which need to be executed in furtherance of a negotiation, its purpose being the participation of ECOPETROL jointly with other persons in exploration, exploitation, production, refining, processing, commercialization and/or transport activities in Colombia and/or abroad). ECOPETROL: Means ECOPETROL S.A., decentralized entity by services, at the national level, linked to the Ministry of Mines and Energy, organized as a Mixed Economy Company according to Article 1 of the Law 1118, 2006, acting subject to its Bylaws and with main domicile in Bogot, D.C. Emergency or Compelling Situation: Means an extraordinary situation that comes about when a serious affectation of the fuel production or supply, or the continuity of the operation or the normal operation of facilities, plants or equipments require the immediate disposal of goods and/or services, execution of works and/or generally conduction of works; when operational and/or environmental emergencies occur; when exceptional situations appear derived from force majeure, Act of God and/or irresistible third parties acts, such as strike, sabotage, terrorism, coup attempt, flood, earthquake, product spilling, fire, among others; and when prevention and/or aversion of any such situation is intended. Authorized Officer: Means the employee of ECOPETROL who, by legal provision or delegation, is empowered to contract in representation of the Company, and, consequently, is authorized to issue all acts as required by the selection of contractor and the execution, performance and termination of the respective contract. Notwithstanding the responsibility corresponding to interveners in the planning stage of the contracting and those performing advise activities, the Authorized Officer shall be accountable for the direction of the selection process and for the execution and performance of the contract and shall not subdelegate or transfer such responsibility to other employees and/or the Contracting and Purchases Advisor Committee. Faculties exclusive and/of proper of the Authorized Officer are the acceptance of mercantile offers, the initiation of selection processes, the elaboration of the Bidding Conditions and/or the Terms of Reference and its Addenda, the designation of evaluators and the decision of entering into contracts, as well as its effective execution, performance and/or termination. The Contracting Executive Officer or Manager: Means the person designated by the Authorized Officer to process the selection process. Risk Management: Means an organized and structured way to evaluate the positive and negative effects of decision-making.
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Market Intelligence (or Market Analysis): Means the process and/or acting whereby the structure, characteristics and market trends of the goods and/or services are revised, and the segments representing the best opportunity and/or the lowest risk are identified. Such process involves getting to know new products and/or services and understanding the different conditions and/or limitations related with the provision of goods and/or services; it includes price analysis and/or trends of the same in the market and an evaluation of the condition of capacity of eventual suppliers. The Market Intelligence process may be conducted among others, orally or in writing, expressly establishing that no commitment or obligation arises therefrom by ECOPETROL, as it is not a selection process; and, in furtherance of such process, principles guiding contracting by ECOPETROL shall be considered. Unit-based Price List: Means a document made and approved by ECOPETROL, where the unitbased value of each item is stated (units of resource, works, labor, goods) in connection with an activity, applying to a specific period. A Unit-based Price List shall be made for repeating activities and/or of successive execution which dealing under one sole contract is not convenient, and that may be carried out by several persons under similar conditions of quality and timing. Its elaboration must be preceeded by the verification of updated prices, which may be done through Market Analysis involving the obtention of several quotations in writing and/or consultation to a plurality of sources. The Unit-based Price List shall be approved by the Administrative Management and/or the Authorized Officer of the highest level in the areas that would have specific purpose delegation. The elaboration of a Price List shall not be necessary when, previous consultation with the Administrative Management, the pre-existence of a Price List is verified that may apply to the respective contracting. Paragraph: The Unit-based Price List shall be made specifically for the type of activity that will be the purpose of contracting, and considering the terms and conditions subject to which it will be executed; the same shall provide for and implement tools to ensure prices therein contained correspond to market prices. The term of the List shall correspond to the market dynamics for goods, works and/or services to which it refers. Upon elaboration and approval the Unit-based Price List shall be submitted, during a term not shorter than five (5) business days, to the consideration of persons having the capacity and suitability to carry out the activity to which it refers, for them to express their acceptance, in writing, stating whether they would be willing to enter into a contract on such basis and in the conditions as pre-defined by ECOPETROL. To such effect, the List must be published through any suitable means, along with the conditions of capacity and suitability to be fulfilled by interested persons when contracting on the basis of the Price List (the fulfillment of such conditions shall be subject to verification by ECOPETROL) or when a previous pre-qualification is needed of the persons to whom the List will be offered. Upon acceptance of the Price List by several persons having the capacity and suitability to conduct the activity to which the same refers, the Authorized Officer shall implement mechanisms guaranteeing the awarding under objective conditions considering all those who accepted it. Manual of Administrative Control: Means the document that serves as instrument for the development of the self-control culture, established as a corporate policy, that regulates
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CONTRACTING MANUAL delegations conferred in matters of contracting with third parties (Authorizations) and administrative performance (Approvals) by the President of the Company to the officers at the directive and executive levels of ECOPETROL, under the constitutional principles of equality, morality, efficacy, economy, swiftness, impartiality and publicity. Resolutions of delegation of authorizations, duties or approvals for special projects and programs are integral part of the same. Management of Supplies Matrix: Tool adopted by ECOPETROL, which depending on the impact on the operation, the complexity of the market and the risk associated with the need to be satisfied through the contracting, determines the selection process to be followed. Such tool involves the analysis of the following elements: a critical factor for the acquisition, commercial strategy, objective selection of bidders, strategy for the administration of inventories, and elements to obtain the best business for ECOPETROL. Payment in Advance: Means the acknowledgement by ECOPETROL of its obligation of advancing part of the value agreed, which shall occur before the obligations incurred by contractor have been performed. Such monies are the property of contractor as from the time ECOPETROL makes the transfer, for which the contractor shall have the entire administration and/or handling of the same unless otherwise agreed in the respective contract. Prequalification: Processing intended, mainly but not excusively, to pre-select the persons that will participate in Close Call processes, and that takes place through the formulation of a public or private invitation, considering the characteristics of the good and/or service required. The pre-qualification shall be conducted through the analysis and verification, among others, of the legal, technical, operative capacities, as well as of organization and financial of the interested persons, and the aspects of HSEQ (health, safety, environment and quality) of the same, but shall not be used to obtain economic proposals. To the effects of such analysis and verification, the requirements and formalities that will be satisfied during the selection process may be omitted. In the selection processes, ECOPETROL shall abstain from requesting documents and requirements that would have been contributed or satisfied in furtherance of the pre-qualification process unless they are required to verify the updated information of the pre-selected person. Market Price: Price at which a good or input is quoted in the market or respective economic geographic zone. It is determined by the supply and demand of the good or input and depends on the way market agents evaluate the performance of the manufacturer or producer and on the environment. RFI (Request For Information): International acronym denoting the tool of Market Intelligence applied through public call, whereby knowledge of the national or foreign market is obtained on the capacity of suppliers to satisfy specific needs of supply. Risk: Means anything that may occur which causes an impact on the achievement of, or compliance with objectives of the process/activity/task/function/project. It is measured in terms of the probability of occurrence of the event by the impact/severity of the consequences. Monthly Legal Minimum Salaries (Salarios Mnimos Legales Mensuales, S.M.L.M.): Means the monthly, legal minimum salary standing in the Republic of Colombia in a specific period. Unless, otherwise expressly stated, when refering in this Manual to a quantity expressed in S.M.L.M., the determination of the latter shall not include VAT.
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ANNEX 2. CONTRACTUAL PLANNING
1. PRECISIONS ON CONTRACTING 1.1. Determination of the Purpose, Scope, Ty of Contract and Special Issues. Based on the respective need precision shall be made of the purpose and scope of the contracting, evaluating its feasibility, convenience and timing and defining the kind of contract to be entered into. ECOPETROL may enter into acts or agreements that permit the freedom of will and as required for the fulfillment of the ends or objectives mentioned in its Bylaws; accordingly, it may agree on clauses regarding fines, penalties, and early termination of contract. Additionally, the pact of the option as regulated in Law 51, 1918, may b e foreseen through stipulation in the Bidding Conditions or Terms of Reference of the rules as appropriate. 1.2. Definition of the type of salary If the performance of the contract entails the retaining of personnel, the type of salary and fringe benefits to be taken into account shall be defined, for which, upon doubt, advice shall be obtained from the respective department with duties of labor advice and/or audit.
1.3. Determining outlook of risks in terms of industrial safety and occupational health The elaboration or validation of the study regarding any real or potential risks that may exist in the health of workers in the activity to be contracted shall be provided for.
1.4. Identification and distribution of other risks Contracts of successive performance shall be subject to adequate Risk Management, in conformity with the Risk Management Cycle; consequently, foreseeable risk factors that may occur during its term shall be analysed, identified and quantified, risks to be assumed by each party shall be determined, controls as necessary shall be designed in order to foresee the materialization of risks to be assumed by ECOPETROL and identify the needed protection for events of occurrence.
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The Risk Management Cycle is the following:
Identify (Indentificacin -1-): Ask yourself: What may happen? (event), Why could it happen? (Causes) and, How would this event affect the fulfillment of the objectives ? (Consequences). Events must be determined whether or not they are under the control of the organization. Analyze (Anlisis -2-): Define the causes, consequences and any existing mitigation measures of the risks identified. Evaluate (Evaluacin -3-): According to RAM matrix, using the columns assigned to consequences, determine the impact of risk materialization on the resources: persons, economic, environment, image and client, and determine the probability of occurrence. The final grading fot the risk shall be the highest value obtained from the five impacts and the resulting probability. The party who will assume the identified risk shall be determined and the distribution of the same shall be defined considering, to such effect, the party that better controls the occurrence of each risk (ECOPETROL or the contractor). Treatment (Tratamiento -4-): Select the option of risk treatment (to assume, eliminate or mitigate the risk) and structure the adequate actions to reduce the level of risk, establishing the target expected risk level. Here, the protection to be established in order to minimize the consequences of the risk shall be identified. Monitoring (Monitoreo -5-): Carry out a follow-up to the fulfillment of the plans of action. Verify if dates of initiation and finalizing of the actions were fulfilled, as well as the fulfillment of the expected risk level (target). Communicate risks (Comunicacin): Make sure to communicate the interested parties on the results obtained at each previous stage of the cycle. The distribution of the risks involved in contracting shall be precisely stated in the corresponding Bidding Conditions and/or Terms of Reference, or in the hearing for the precision thereof, if scheduled, and in the respective contract.
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1.5. Determination of guarantees and insurances The kind of warranty, covers, indemnity value and period of warranty and/or insurance policies for entering into a contract shall be determined considering, in each case, the nature of the contract, its purpose, the risks to be covered and/or the form of performance of the services to be charged to each party. The following guarantees shall be accepted, considering the nature of the contract and the market conditions: Warranties and/or insurance policies issued by insurances companies legally authorized to operate in Colombia; Bank Guarantees; Stand-by Letters of Credit; Trust ; Mortgage; Pledges in various modalities, including, among others, rent pignoration, pledges on commercial premises, and pledges on securities (term deposits and shares); Bonds; Single Bid Bond in the terms of Law 80, 1993 and its regulatory decrees; Irrevocable guarantee of first option, issued by the parent company of contractor or by titleholder of rights over the goods or services purpose of contracting when the latter is entered into with a vendor or dealer.
The acceptance of another type of guarantees shall be authorized by the Finance Vice-Presidency and the Legal Vice-Presidency of the Company. The guarantee shall be standing until the liquidation of contract and during any prolongation of its effects. Guarantees may be omitted if concluded with grounds that risk is low for ECOPETROL, or when referring to loan, inter-administrative, insurance, coastal, brokerage, partnership agreements of any type and international trade agreements. 1.6. Determination of permits, licenses and authorizations required Based on the purpose and scope of the contract as projected, a list of permits, licenses and authorizations required shall be made, and the party that will conduct each process in order to obtain them shall be established. Furthermore, any provisions shall be made as required for the obtention of permits, licenses, sanitary authorizations, calculation of rewarding rates and other requirements contained in the environmental legislation, which shall obey the respective legal timing. If the contract features requires the formalizing of negotiations referring to easements, payment of damages, purchases among others, the corresponding list shall be made and costs shall be assessed.
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1.7. Determination of the social-environmental impact According to the standing legislation, the physical, biotical and socio-economical impact shall be foreseen that the activity intended to be contracted may cause on the environment, aiming at a more efficient environmental management, adjusted to the needs and characteristics of each contract. Notwithstanding the above-mentioned, in cases where required by law, environmental impact studies shall be conducted and contingency plans, which shall be completed previous the initiation of the selection process of contractor, provided such studies do not constitute part of the purpose or scope of the respective contracting. 1.8. Tax determination The Unit of Accounting and Tax Information shall make a list of the taxes (type and amount) of a national, department and municipal origin that ECOPETROL or contractors will accrue with occasion of the contract execution and performance. Such list shall be updated annually or upon any amendments to the various tax regimes. The person in charge of the contracting budget shall consult the list, and in case of doubt, shall obtain the opinion from the corresponding department. 2. BUDGETING With the information obtained as above-mentioned, the steps below shall be followed: 2.1. Determination of the Price System Depending on the class, magnitude and features of the contract, it should be selected the Price System(s) that is more convenient to ECOPETROL, where the pricing feature, whether as fixed or adjustable, shall be defined.
2.2. Selection of the Terms of Payment According to the characteristics of the contract the terms and timing of the payments to contractor shall be selected, as well as the type of currency to use. Attending, among other applicable aspects, to the nature and complexity of the contracting, and to the conditions for the execution thereof, an analysis of the convenience shall be made for the granting of an Advanced Payment or Payment in Advance, which percentage shall be determined by the Authorized Officer. The Advanced Payment and the Payment in Advance shall not be granted to favor or to improve the financial capacity conditions of bidders or contractors. The Payment in Advance may only be granted when deemed strictly necessary considering the contracting conditions, and shall be justified in writing.
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CONTRACTING MANUAL The Advanced Payment shall be administered through a suitable financial instrument to be specified by the Finance Vice-Presidency and the Legal Vice-Presidency.
2.3. Cost Estimation for Adjustments and Unforeseen A cost estimate shall be made of the application of the readjustment clause agreed, and appropriation for the costs produced by the possible price revision due to changes and/or amendments to the initial conditions when referring to risks to be assumed expressly by ECOPETROL.
2.4. Budget Elaboration for Contracting Based on all the information compiled in furtherance of the above numerals, the budget of ECOPETROL will be made, which shall comprise any direct and indirect costs, excluding VAT. This budget shall be projected to the submission date of bids, and shall consider the term for the contract performance if no readjustments were envisaged. The furnishing of a budget for ECOPETROL, for each selection process, is the competence and responsibility of the head of the area or department interested in the contracting. The budget of ECOPETROL may be disclosed to the interested persons; in which case, it shall be guaranteed its disclosure to all of them. In the event the budget of ECOPETROL is disclosed, any consequences derived from the fact that bids do not adjust to the same shall also be communicated. If quantities of works, goods or services may not be precisely defined, the cost projection shall be made according to the background, so as to determine the selection process, the competent Authorized Officer and to verify the existence of a sufficient budget allocation.
3. DETERMINATION OF THE AUTHORIZED OFFICER Based on the amount of the official budget plus the corresponding VAT, the person to be performing as Authorized Officer of the contracting shall be determined. His/her competence thereby determined, shall not vary if third parties or ECOPETROL in the capacity as operator or mandatary adhere to the process, or if the most favorable proposal would exceed the limit of competence required from such officer. 4. ELABORATION OF BIDDING CONDITIONS AND/OR TERMS OF REFERENCE
The Bidding Conditions and/or Terms of Reference shall contain the rules that will constitute the particular contracting law, and, therefore, shall be complete, clear, pre cise and coherent. A project of such documents may be published before the initiation of the corresponding selection process, expressly stating that such documents are preliminary and that its release does not
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CONTRACTING MANUAL bind ECOPETROL in any way to initiate the selection process. ECOPETROL shall analyze any comments received from interested persons and shall incorporate any amendments where applicable into the final documents. Notwithstanding the faculty to contract the elaboration of the Bidding Conditions and/or and the Terms of Reference for specific selection processes, the Legal Vice-Presidency shall be in charge of the standardization and updating of the same. The Authorized Officers and the Executive or Performing Contracting Officers shall inform the Legal Vice-Presidency on the practical result from the application of the standarization, and this department, on a timely basis, shall make any adjustments as appropriate. The Bidding Conditions and/or the Terms of Reference which are the basis to a Tender sha ll contain, among others, rules relative to: 4.1. Requirements for participation
Refers to the requirements set forth by ECOPETROL in order to participate, such as: legal, technical, and financial capacity, financing, HSEQ aspects, timely statement of the intention to participate or choice through public drawing lots (in the event of an Open Call or processes involving public calls) or invitation to bid (in the case of a Closed Call), bid bond when deemed convenient, visit to the place where contract will be performed and submission of bid, among other aspects considered appropriate in contract performance. Legal entities shall demonstrate their legal existence and representation, according to the standing legal provisions. In international trade contracts of successive performance, the crediting of legal existence and representation of the foreign legal persons shall be requested on a semi-annual basis or when amendments occur to their existence and/or representation. The respective certificates shall be valid for all contracts to be entered to within such term. Contracts referring to goods or services where copyrights apply, entered into with the titleholder of such copyrights, and in subscription contracts, the accrediting of the legal existence and representation of the author shall be required to the effects of the completion of the first contractual relation, and subsequently, upon any amendments to such existence and/or representation. Foreign legal entities without a branch in Colombia- shall credit, at the time of submitting the bid, a duly established attorney, with domicile in Colombia and widely empowered to execute the contract, and to represent them judicially or extrajudicially. Such attorney may, if so empowered, submit the proposal in the name and representation of the foreign legal entities without a branch in Colombia. Foreign legal entities are excepted from this requirement at the time of entering into purchase agreements of movable goods; commercialization (oil derivatives and products, conventional and alternative energy sources, oxidizers and biofuels); agreements involving coasting operations and international trade; collaboration, association or participation agreements; consultancy or service agreements when not entailing the retaining of local personnel; as well as contracts performed abroad.
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JURIDIC MANAGEMENT
CONTRACTING MANUAL When deemed convenient participants will be allowed to credit the technical experience and financial capacity of their Parent Company and/or affiliates 100% controlled thereby in the Bidding Conditions and/or the Terms of Reference, provided the Parent Company grants an irrevocable guarantee in favor of ECOPETROL and of first option, and executes with ECOPETROL a commitment of support and technical supervision to the affiliate submitting the bid. 4.2. Evaluation of proposals Refers to the specification of the conditions under which the evaluation will be made, such as: bid opening, events of inadmissibility and/or rejection, possibility of remedying defects or omissions, determination of the objective evaluation factors, weighing of such factors, procedure and term for the evaluation, negotiation, among others.
4.2.1. Factors for the evaluation To the effect of establishing the factors to be used in each contracting process, at the time of identifying the most favorable bid to the interests of ECOPETROL, and the weights that will be assigned to the same, a previous evaluation shall be made of a selected factor combination that satisfies the respective needs with the best feasible result in cost-benefit terms; based on this analysis factors shall be identified and weighted that will be contained in the Bidding Conditions or Terms of Reference for the corresponding evaluation and identification of the most favorable proposal (best business) to ECOPETROL. The following factors may be considered among others: Experience of bidder (in contracting such as professional services provision, consultancies) Equipment offered Technical personnel proposed Technology offered Post-contractual service quality Quality ensuring or performance Compliance with Technical rules Transfer of technology and technological updating Revised value of proposal
In addition to the above factors, the national/foreign participation shall always be taken into account (the origin of goods and services) pursuant to the foreseen in Law 816, 2003, and previous contract fulfillment, evaluation of performance of suppliers and contractors.
4.2.2. Weighing and evaluation procedure System of valuation or mathematical estimation for each factor selected, which will be distributed preferably among a total of one thousand (1000) points.
ECP-DTI-F-004/V5
JURIDIC MANAGEMENT
CONTRACTING MANUAL The Authorized Officer will establish the factors to be evaluated, the scores for each and the procedure for their distribution or assigning. The above does not apply when referring to purchase-sale of goods, when the technical part will be graded through a methodology of the type pass/does not pass; when negotiation mechanisms are implemented, of negotiation or auction, with persons fulfilling minimum requirements; and when referring to Closed Call preceded by a pre-qualification, as in these cases, the economic factor may be the only factor considered. Neither shall it apply when referring to the Direct Selection process, given the nature of the same.
ECP-DTI-F-004/V5
JURIDIC MANAGEMENT
CONTRACTING MANUAL
ANNEX 3. SUPPLIES MANAGEMENT MATRIX
SUPPLIES MANAGEMENT MATRIX

M, H
O P E R A T I O N A L I M P A C T H I G H
FCA MN EC SO EI L, N FCA MN EC SO EI
Frequent High High Cost consumpt Volume Essentials Competitive Price $, Rules, after sale service Suppliers close to operation, locals, nationals Direct / Closed / Pre-qualification Level of Service 85-90% Frequent High Low Cost consump Volume Support Administrative Efficiency Opportunity supply, cost High volume, one single negotiation Regional-local Dealers Open / pre-qualification / Rates and price agreements Minimizing inventories
LOW
H, VH FCA MN EC SO EI H, VH FCA MN EC SO EI
Critical Strategic
High Cost
Low Volume
Life cycle, technical rules Technology Long term Agreements, final result, value added Direct / Closed / manufacturers, exclusive dealers, specialists Level of Service 95-100% Special High Cost Low Volume
L O W
Fulfillment of specifications and rules Technology, market prices Joint design with technology suppliers and specifications Direct / Closed / manufacturers / Exclusive Dealers Level of Service 95-100%
HIGH
MARKET COMPLEXITY DEFINICIONES FCA: Critical Factor of Acquisition MN: Better Business EC: Commercial Strategy SO: Selection Bidders EI: Inventory Strategy
M: H: VH: L: N:
Medium Risk High Risk Very High Risk Low Risk Very Low Risk
For further information about this document, please contact the person that elaborated it, on behalf of the responsible dependence of Ecopetrol S.A: Name: Jaime A. Pineda Extension: 44044 Dependence: Legal Vicepresidency.
ECP-DTI-F-004/V5

ECP-DIJ-M-002 V5 Manual Contratacion ECP (Ingles)

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LEGAL VICE-PRESIDENCY

LEGAL ADVISORY UNIT IN SUPPLYING, SERVICES AND TECHNOLOGY

ECP-DIJ-M-002 July 01, 2009

DATE APROVED BY: Board of Directors Meeting Acts 045 y 053

VERSIN 02 MADE BY:

CONTROL OF CHANGES Contracting Manual REVISED BY:

DATE December 12, 2003 APROVED BY:

ECP-DIJ-M-002 July 01, 2009

VERSIN 01 MADE BY: Legal Direction

VERSION 00 MADE BY: Legal Direction

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

ECP-DIJ-M-002 July 01, 2009

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CONTRACTING MANUAL Company (Firm): ECOPETROL S.A.

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ANNEX 2. CONTRACTUAL PLANNING

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The Risk Management Cycle is the following:

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ANNEX 3. SUPPLIES MANAGEMENT MATRIX

SUPPLIES MANAGEMENT MATRIX

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