Purchasing will be carried out in an open, fair environment based on price competitiveness and the overall benefits of the products and services offered.

Depending on price thresholds, the Purchasing and Procurement Department will choose one of the procedures, set out below, to select a supplier to provide the goods and services required.

1. Direct purchasing (for contracts worth more than 1 million MNT and less than 3 million MNT) is done when a purchase contract is made directly with one supplier, without any competition, and is applicable in the following situation:

– The purchase is of the lowest possible competitive market price from a trusted supplier. The quote and the invoice must be cross-checked for consistency.

2. Comparison method (for contracts worth more than 3 million MNT and less than 100 million MNT) is used to request price and technical proposals from a minimum of 3 authorized suppliers that meet the product/service requirements from the procurement database. A purchasing decision will be made after comparing the price and technical proposals from these suppliers. The contract is awarded to the supplier that meets the stated quality requirements at the minimum possible market price. In the supplier selection and comparison process, the procurement department takes the following factors into consideration:

2.1 Products and services must meet relevant requirements (technical specs, standards, quality);

2.2 Associated expenses (price comparisons are to be made taking into consideration relevant taxes, logistical expenses, additional expenses incurred);

2.3 Operational costs associated with products/services;

2.4 Installation/setup cost of products/services;

2.5 Warranty period, conditions;

2.6 Repair and maintenance terms, costs;

2.7 Cost/availability of spares and replacement;

2.8 Terms and conditions of delivery (lead-time, location, packaging etc.)

2.9 Insurance terms;

2.10 Payment terms;

2.11 Supplier’s track record; previous contracts completed for the company;

2.12 Quality and duration of products/services.

3. Selection method (for contracts worth more than 100 million MNT) is applied when a Selection committee is formed by the management and carries out the purchasing decisions based on the Supplier Selection Criteria.

 4. Special-case purchases are (not subject to price thresholds) made from one supplier due to special circumstances as described in the purchasing procedures. The purchasing agent must provide a detailed explanation in the “Special Circumstances Purchase Form”