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22 February 2023 ·

Community Procurement for governance practices – still relevant for developing countries!



According to the International Monetary Fund (IMF),1152 developing countries with a population of around 6.74 billion represent 85.43 percent of the world’s population.  A significant part of that region includes Central and South America, Africa, most Asian countries and many island states. This region needs help with institutional development for adopting framework processes for development. The regional culture reflects inadequate infrastructure, few resources for improvement, a poor governance system and poverty distributed within the economy.

But recently we’ve seen evidence of encouraging change.  Community procurement is now available to local communities to enable them to cultivate what is now called the “Micro to Nation” Building Project, if it is consistently worked out.2  What happened?  What is the status today?

The push toward change began October 2, 1952, when the Community Development Program (CDP) 3  in India took the initial step of researching the financial status in India and discovered that India’s initial capital outlay (budgeted cost of investments) was 460 million Indian rupees (5,566,676.20 US dollars) affecting 77 million people throughout India.  At that time one US dollar equaled 4.5 rupees.  Today one US dollar equals about 81Indian rupees.  

So, over time, many organizations and their beneficiaries began reporting transforming successes involving their launching of more than 100 Community Driven Development (CDD)4 projects which still exist today.  These include the Government funded entities along with the World Bank Group5 and many other multilateral-funded programs.

So, the question remains -- why is this trend still so strong and relevant for today’s governance practices in developing countries including Indian sub-continent?  Many answers have been emerging from early the adoption of what became known as, Community Based Procurement (CBP)6 which is now being proactively practiced within many Community Based Organizations (CBO) for micro level (local community) development.7

To be clear, a CBO can be a team formed by any legal association of members, ranging from services such as a welfare society, a non-profit organization (NGO), a water users association (WUA), a self-help group (SHG), a fishery interest group (FIG), a farmers’ group or any other local entity including all subcommunities. 

This means that within CBO organizations, CBP can allow cash flows locally for privileging (self-insuring) extra earnings wherever community contributions open doors to feasible buying and spending.  Therefore, to make use of these financial contributions, community members can identify, plan, and implement or monitor subprojects.  Labor or cash sources (such as bank withdrawals) can finance the subprojects to supply contingency, reimbursement, or materials they need to support the subprojects and sustain them throughout their lifetimes.

Community Based Procurement (CBP) – three major benefits

First, CBP is one of the enablers of community development that lies at the root of the  society for any sovereign, developing country.  By using applicable CBP guidelines, practitioners can now measure the growth of a CBO by following procurement practices at the community (local) level to measure the micro-development for a Nation-Building Project.  They can then also determine how such practices should be performed in a fiduciary management system such as finance or accounting procurement  for reconciliation and reviews for effective expenditure monitoring. 

Second, because CBO also acts as a legal entity having obtained  registration of enlistment,8 the local community is empowered to carry out any type of commercial activity once all relevant project guidelines are being followed.  Successful results enlarge the region’s socio-economic growth which uplifts the community’s livelihood and adds to nation growth.

Third, a community is in the best position to identify their priority actions for focusing on the local issues.  This promotes ownership in the subproject and its sustainability in the entire project lifecycle.

Moving forward – what’s the criteria for procurement?

To perform community procurement efficiently as a larger part of fiduciary management, practitioners need to establish criteria for how the procurement community should function and then define how to respond to the stated criteria. Once this is done, practitioners can identify the detailed procurement methodologies and processes that any legal community can pull into their own standard practices. 

A CBO’s effective participation is the key to successfully developing local leadership and self-governing institutions.  This requires transforming socio-economic village life and local community thinking to promote more vigorous practices. 

To help achieve that goal, two generic CBP steps forward reveal how a community can build CBP initiatives by using robust and holistic CBO processes for both the buyers (purchasing or procuring entities) and sellers. (See also Community based contracting – CBC 2001, Samantha de silva)9

  1. As the buyer, the CBO can issue a request for proposal (RFP) or quotation (RFQ) or use a similar bid tendering or quotation-cycle process to evaluate the lowest bidder.
  • Depending on the project model selected, the CBO will forward the evaluation to the project authority to issue the work order or purchase order and release payment accordingly.
  • The project authority should issue a work order or a purchase order only after receiving the evaluation certificate from the CBO. However, the CBO may also use their corpus money (fixed loan, investment) for a self-funding project per their resolution.
  1. As the supplier, the CBO responds when the project authority issues a direct work or supply order to the CBO as a single source in accordance with project guidelines.  At that point, the CBO is obligated to perform the service or supply the products and invoice for reimbursement for the same.

Buyer’s Workflow

Accordingly, within the above response, the CBP will follow a buyer’s workflow method as described below. This response, which is not necessarily limited to the buyer’s workflow, is attached to the following and described in detail below:

(A) power of attorney resolution

(B) recordkeeping & file management

(C) tender processing

A.  Power of attorney - resolution: Whoever has the power to execute the register), issue or accept the tender.  The community needs to have a written (or jointly written) resolution to include all necessary stakeholders of the CBO.

This resolution shall:

  • clearly indicate the power of attorney holder’s name;
  • be signed by all executive bodies; and
  • may have any combination of signatory power (i.e., secretary, treasurer, president) of the community who can issue and can accept the quotation or tender and authenticate the official register.

B. Recordkeeping & file management is critical!  Neglect either and your authentication disappears. Maintaining different registers for recordkeeping and file management is your most important step.  The type of register might be a memo register, bid issue register, agreement register, stock register, measurement book, cash book, security register and so on. 

Clearly label the top cover of register and file with a distinctly recognizable name of your organization and the financial year for identification. A register stores the entire project’s procurement data, including proprietary data for internal inspection and uses.  The register can also be used to protect all records of goods and services purchased from suppliers throughout a project’s lifecycle and financial management relating to cash-in and cash-out10 practices.

Memo registers  It is crucial to authenticate (docket, identify or briefly summarize) all documentation and applicable index records properly. So, before launching any official documentation with an external body, authenticate the document with a memo number and its date of issue.

Bid issue registers  Most likely you will want to use a columnar format for marking bid or quotation reference number serially.  Column headings for a bid issue should include:

  • serial number;
  • bid, quotation, or tender reference number (this generated number uses in the bid document);
  • name or title of work(s);
  • estimated amount of bid; and
  • any other information by practitioners (signature of official and remarks, etc.)

Agreement register also must have columns from bid issue register as well, but must include an additional column such as:  

  • agreement number;
  • name of contracting agency;
  • contract amount;
  • remarks (include name of funding agency or self-funded or supply agent); and
  • sign of official

Stock registers generally apply to stock in the same single open register page.  This refers to stock listed IN the left hand side (LHS) of an open register and stock listed OUT on the right hand side (RHS).

Measurement Book (MB) – captures the actual work progress and calculates a bill to be paid for work completed. This type of register becomes relevant when a work purchase order is issued by any CBO.

Cash Book – To maintain your fiscal budget, the receipt of payments and expenses incurred needs to be captured and documented for all financial transactions in any fiscal year. 

Security register – As applicable, either a refundable (or non-refundable)  , earnest money deposits, bid performances, security or deduction details, statutory deduction details, bank guarantees, etc., may require separate registers for updating and monitoring monetary processes and releasing them accordingly .

File management - As a standard practice, keep and store all papers, office correspondence, detailed project reports, administrative-financial sanctions, etc., for each activity, in a single file management system. Tender activity should also be kept in the same file viz quotation paper, evaluation report, newspaper publication, work order, signed contract documents, payment details, etc. At the outset, identify all filenames logically so they can easily be traced.

C. Tender processing – Prepare a model tender document, a format or sample of a bid document and update the following:

  • letter-head name of community;
  • address or location of office;
  • blank space to enter name or title of work extracted from the bill of quantity, estimated amount, completion period, bid security, as  applicable, etc.;
  • blank space to document memo and date, bid or tender reference number to be extracted from respective register.

The model tender document also relates to general information and condition of contracts and evaluation criteria including:

  • statutory compliances viz trade license other mandatory regulation;
  • work credentials of similar nature;
  • finance credentials of suitable values; and
  • bank updates.

This sample copy of model documents may be kept in a master file so that its model format can be used for the next assignment.

The Bill of Quantity (BOQ) or Bill of Material (BOM) is a list of all items, specifications, and quantities to be signed by the treasurer, secretary and president responding to either a current or earlier resolution.  The same signed BOQ/BOM list may be used to retrieve data to record in the bid document respectively.

Issue Bid/Tender is a bid document that includes the updated BOQ, the memo’s bid reference number, and dated updates that can be issued to an all applicable agencies.

Receive & Accept Tender - The CBO can receive or collect a valid tender from a minimum of three agencies for competitive bidding before the deadline of submission date.  When using a paper filing method, the agency can enclose the document in a sealed envelope and address it to the CBO, citing the name and bid reference number on top of envelope.

Nondisclosure is strictly confidential.  It is prohibited to open any bid tenders (formal offers) to see rates or disclose any rates obtained from others before the opening date.

Opening Start the bid tender opening at the time stipulated for analyzing and comparing rates between bidding agencies.

Evaluation - Format the evaluation document according to the model documents format and evaluation criteria described above.   Update this evaluation with the information available from the bid documents issued and the rates available from the entire agency. Highlight the lowest rates and recommend these rates for the work order or award of contracts to lowest bidder (agency).

Project financed work order - In accordance with the criteria and conditions specified by the project guidelines, follow the full process in accordance with applicable guidelines of the bid process.  Then send a signed copy of the evaluation to the project authority to issue the work order for the specified goods or services cited therein. Quality assurance and quality control accountability remains the responsibility of both parties involved (the community and the project authority).

Community self-financed work order - The community can assume the tender process as a part of their procurement process.  In accordance with their funding availability, they can follow all stages of the procurement process, evaluate the lowest bid, and issue the work order according to those criteria.

To achieve quality assurance, quality control and records’ accuracy, make sure the stated purposes remain the responsibility of the registered community and are enforced as stated. Maintain the measurement book entries and ensure they are precisely followed if the community’s self-finance policy applies.

Supplier Workflow

CBO acting as Supplier (supply agents) pertains to how the community can also function as a supplier to the open market against any orders. Any supply of materials, livestock, agricultural inputs, and processes -- including labor support and services -- can be delivered when communities function as procuring suppliers to generate the community corpus.

Supply related correspondence – To carry out any supply activities, it is equally important to keep and track all records of the correspondences in the file management.  For instance, if you receive correspondence -- like a letter of intent, a work order, a copy of a signed agreement, maintain these in a file management system.

Authenticate supplier process – It is always wise to carry out supplier duties only after receiving a work order from an authentic organization. In fact, any type of buyer and supplier agreement requires investment.  So, in return, you should always expect to receive your cost incurred for all charges. In adverse situations, the community can also take enforceable action for costs incurred and for other non-cost services rendered with the authorizing organization.

Contract agreement as supplier – The CBO, acting as supplier, can be updated with separate agreements by the employer’s post letter of intent.  The supplier is expected to update the same agreement register with commentary.

Delivery of materials and services shall comply with the same stock maintenance process. A printed challan11 book or invoice can be used as part of the process.

Payments received against the work order shall be recorded in the cash book on a regular basis; a copy for the payment details shall also be kept in the same corresponding file.

Support team – here’s the who does what:

  • The project authority may engage the support organization (SO) or service provider (SP) to assist the community with the procurement tender process and recordkeeping and train the trainer (ToT) for the community. 
  • The procurement specialist shall support the SO/SP by providing a capacity-building program pertaining to the institutional development  in agreement with procurement, if required.
  • The project management unit (PMU) shall evaluate how the community has adopted the ongoing procurement process.

To avoid any conflict of interest, neither the community executive body nor a member belonging to that body can participate in any active bid or quotation filed in the same CBO. However, such members are free to participate with other communities and institutions.

Yes, the above is a mouthful!  So, maybe you wonder why the development and trend just described remains strong and relevant for today’s governance practices in the developing countries especially the third world countries.  This article locks arms with what the facts tell us.  Specifically, communities in need can identify priorities and address local development challenges by working “with support from local governments and other institutions to build small-scale infrastructure, deliver basic services and enhance livelihoods…The World Bank recognizes that CDD approaches and actions are important elements of an effective poverty-reduction and sustainable development strategy”  To learn more, click on Community-Driven Development.


  1. International Monetary Fund (IMF)
  2. Nation-building project -- structuring a national identity --
  3. Community Development Program (CDP) definition (Wikipedia); 
  4. Community Driven Development (CDD)
  5. World Bank Group
  6. Third World Countries - Community Based Procurement (CBP) -- delivers improved services resulting from communities planning and implementing those services.
  7. Community Based Organization (CBO) -- a nonprofit/profit community providing educational or welfare & related services to people in the community it represents.
  8. registration of enlistment - see article titled, CPWD Contractor’s Enlistment Rules 2021 (public works, India) – source: Corpseed
  9. Community based contracting – CBC 2001 Samantha de silva
  10. Manage Cash in Cash Out - article by Revenue, 2023 
  11. A delivery challan is a document that contains details of the products in a shipment that may or may not result in a sale.



Amit Kumar Gupta - Procurement Professional: expertise in public procurement & government advisory; email contact+91 9883721299 (India)

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