45275 54934 ECP-DIJ-M-002 V5 Manual Contratacion ECP(Ingles)

7/30/2019 45275 54934 ECP-DIJ-M-002 V5 Manual Contratacion ECP(Ingles)

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LEGAL VICE-PRESIDENCYLEGAL ADVISORY UNIT IN SUPPLYING,

SERVICES AND TECHNOLOGYECP-DIJ-M-002

LEGAL MANAGEMENT

July 01, 2009

Version: 05 Page: 1 of 34

CONTRACTING MANUAL

THE HEREIN ENGLISH VERSION OF THE CONTRACTING MANUAL HAS BEEN DISCLOSEDFOR INFORMATION PURPOSES ONLY. IN CASE OF ANY DISCREPANCY BETWEEN THESPANISH VERSION AND THE ENGLISH VERSION OF THIS DOCUMENT, THE SPANISH

VERSION SHALL PREVAIL FOR ALL THE LEGAL EFFECTS.

LIST OF VERSIONS

VERSIN CONTROL OF CHANGES DATE

04 Contracting ManualECOPETROL S.A.

Mixed Economy Company.

December 7, 2007

MADE BY: REVISED BY: APROVED BY:Contracting Unit

LegalVicepresidency

JAIME A. PINEDA DURANHead of the Contracting Unit

Board of Directors MeetingAct 078

VERSIN CONTROL OF CHANGES DATE03 Contracting Manual

MADE BY: REVISED BY: APROVED BY:

Contracting UnitLegal Direction JAIME A. PINEDA DURANHead of the Contracting Unit Board of Directors MeetingActs 045 y 053

VERSIN CONTROL OF CHANGES DATE02 Contracting Manual

December 12, 2003

MADE BY: REVISED BY: APROVED BY:


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Legal Direction JAIME A. PINEDA DURANLegal Director (In Charge)

Board of Directors MeetingAct 008

VERSIN CONTROL OF CHANGES DATE01 Contracting Manual April 29, 2002

MADE BY: REVISED BY: APROVED BY:Legal Direction MAURICIO ECHEVERRY

Legal DirectorBoard of Directors Meeting

Act 2270

VERSION CONTROL OF CHANGES DATE00 Contracting Manual April 29, 2002

MADE BY: REVISED BY: APROVED BY:Legal Direction ALVARO MENESES MENA

Legal DirectorDirective Comitee

Act 1112


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CONTENT

1. PURPOSE ......................................................................................................................... 5

2. SCOPE ............................................................................................................................. 5

3. GLOSARY ........................................................................................................................ 6

4. DEROGATED DOCUMENTS ............................................................................................ 6

5. NORMATIVE REFERENCES ............................................................................................ 6

6. GENERAL CONDITIONS ................................................................................................. 6

7. 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. REGISTERS. DOES NOT APPLY .................................................................................. 20

9. CONTINGENCIES. DOES NOT APPLY ......................................................................... 20


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10. BIBLIOGRAPHY. DOES NOT APPLY ............................................................................ 20

11. 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 ............ 261.4. 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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1. PURPOSE

This Contracting Manual contains the rules and procedures whereby selection processes ofcontractors 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, andshall not apply in the following cases:

2.1. Collaboration, Association or Participation Contracts1, strategic alliances2 or creationof companies of any type that are needed, which purpose is the conduction of activities thatcorrespond to the corporate purpose of ECOPETROL.

2.2. When referring to contracts executed in furtherance of acts indicated under section2.1 above.

1Such 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.

2ECOPETROL 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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2.3. When referring to collaboration agreements3, special agreements of technological cooperation4, and those contracts to which Article 355 of the Political Constitutionrefers.

2.4. When ECOPETROL acts as Operator or Mandatary or any other similar type, inwhich case contracting processes shall abide by the rules established with occasionof the Collaboration Contract, the respective operation or mandate.

2.5. When it is determined that adherence to contracting processes underway or standingcontracts 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.

2.6. When ECOPETROL acts as contractor or supplier of a good or service or asexecutor of a work in favor of a third party, or when acting as contractorsubcontracts the purpose of the contract in order to fulfill its obligations.

3. GLOSARY

In order to give the necessary precision to the expressions employed in this Manual, set forth inAnnex 1 hereto are established.

4. DEROGATED DOCUMENTS

Contractting Manual ECOPETROL S.A., Version 03, aproved by Acts No. 045 and No. 053 of theBoard of Directors Meeting in 2006.

5. NORMATIVE REFERENCES

The herein Contracting Manual complies with the principles of the Administrative Function andFiscal Performance as per indicated in Articles 209 and 267 of the Political Constitution ofColombia, 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 CorporateGovernance Code.

6. GENERAL CONDITIONS

In furtherance of its corporate governance policies, ECOPETROL is committed to establishtrustworthy relationships with its stakeholders. Thus, it will implement timely and accurate

3Agreements entered into pursuant to Articles 113 of the Political Constitution and 6th of Law 489, 1998.

4Agreements 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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information disclosure practices regarding contracting processes, where clear rules andobjective procedures shall be applied in order to guarantee both the quality in the supply ofgoods and services to fulfill its corporate purpose, as well as to respect equal opportunities ofparticipation 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 ofethical principles and corporate responsibility in contracting.

Ethics outstands among the principles guiding contracting by ECOPETROL. Notwithstandingcertain contracting modalities are excepted of the application of the herein provisions, wereiterate that the ethical rules adopted by the Company shall apply to any negotiation on itsbehalf, regardless the application or not of the herein rules, thus, an eventual disregard forthe 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 thosecontained in Article 22 of the corporate Bylaws.

On the other hand, any selection process conducted on the basis of this Manual shall beintended towards the selection of a suitable contractor or collaborator and the most favorableproposal, so that the successful performance of the contract will contribute to the effectivefulfillment 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 personsauthorized in the Delegations Manual (Manual de Delegaciones, MDE), applying the limitsestablished in the respective authorizations. For the effects of this Manual it shall be understoodthat such contracting capacity is vested in the Authorized Officer.

Pursuant to the established in Articles 13 and 14 of Law 1150, 2007, contracting processesconducted by ECOPETROL shall apply the regime of disqualifications, incompatibilities andconflicts of interest referred to in Decree Law 128, 1976, Article 8, Law 80, 1993, Articles 79, 89and 102 of Law 489, 1998 and other regulations amending or adding thereto. Likewise, theprovisions 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 willcomprise, when applicable, the activities listed in Annex 2.


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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 thevarious aspects in a contracting and not only the financial, as long as the satisfaction of theneed in the conditions as required by ECOPETROL is ensured.

b. Closed Call: means the process whereby previously determined persons may submitbids, applying criteria of Market Intelligence, and a selection is made among thembased on objective factors, previously defined by ECOPETROL.

c. Open Call: means the process whereby any person complying with the conditions of therespective call may present an offer, and a selection among them is made on the basis ofobjective factors, previously defined by ECOPETROL.

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 Matrixonly when there is no pre-determined event on which to base the choice between one proccess oranother, and when referring to the contracting of drilling equipment of wells and the servicesassociated to such drilling.

When the respective event refers to the amount, its determination shall consider the officialbudget excluding VAT.

Bid requests made by ECOPETROL do not represent a commercial offer and do not bind theCompany to enter into the corresponding contract, being free to declare it failled, or unilaterallydesist 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. Thecauses for such situation shall be stated in writing.

In these cases, if the nature of the emergency situation would not allow for the executionof a document containing the contract, the same shall be omitted, but a written


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authorization shall be issued to contractor directing the performing of the works, servicesor activities as required. If previous to the initiation of the execution of the activity inquestion an agreement on the economic consideration is not achieved, the same maybe subsequently agreed; if even then an agreement is not reached, such considerationshall be determined by an expert designated by parties, by common agreement, fromthe available listing at the Chamber of Commerce of Bogot, considering the type ofgood and/or service which consideration is to be assessed, and in case reaching anagreement on the designation of the expert were not possible, the latter shall bedesignated 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 purposeis the goods or services (methodologies, procedures, among others) vested withcopyrights or industrial property rights, which contract execution with titleholdersthereof has been decided; and contracts which purpose is a complementary activitysubsequent to another previously developed, that for technical or legal reasonsmust be performed by the same Contractor.

III. When only one person results pre-selected, upon completion of the pre-qualificationprocedure.

IV. When referring to:

o Purchase from manufacturers, dealers or vendors of materials, equipment, spare

parts or inputs, obeying to a need for specific brands.o 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 hasentered into Collaboration, Association or Participation Contracts, or any type ofpartnership. This event does not include transactions related with thehydrocarbon exploration and exploitation rights, which, pursuant to section 1.1 ofthis Manual, shall not be subject to the same.

o Acquisition of strategic inputs indispensable for the operation of facilities and otherindustrial premises. The grading of an input as "strategic"shall be made in writingby the corresponding Vice-president.

o Contracting where the value of the purpose of the contract does not exceed one

hundred monthly legal minimum salaries (100 S.M.L.M.).

o Contracting subject to Unit Price Lists adopted by ECOPETROL, or subject toUnit rates regulated by the National Government.

o Services, Purchase-sales or Supply of movable property contratacting, subject toPrice Agreements.

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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suitable to perform the contract, are the most favorable to ECOPETROL.Valuation of these conditions implies the conduction of a market studysupporting the decision.

o Easement, leasing, commodatum or acquisition of movable goods

o For the direct development of scientific or technological activities.

o Of the following contracts in connection with oil derivatives and products,conventional and alternative energy sources, oxidizers and biofuels: marketing ordistribution, as well as marketing campaigns associated therewith; affreightmentand 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.

o Those needed in order to support the participation of ECOPETROL inselection processes, or contracting, carried out by third parties.

o For the testing or trial of goods and services, in order to evaluate theintroduction of new technologies, possible changes in the same or search forbetter alternatives.

VI. As a consequence of the statement of a failed Call. In this case the Direct Selectionshall 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 inwriting by the Authorized Officer with occasion of the Market Intelligence practices andrelated 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 suchsuppliers. 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 bejustified in writing by the respective Manager, Vice-President or Director.

II. As a result of a pre-qualification.

III. In objective application of the RFI instrument.

IV. 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 theircomplexity may only be commended to specific persons and a plural number ofthem would exist, which must result from the development of Market Intelligence


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practices.

V. For the provision of health services.

VI. 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 pluraland identified number of persons with whom contracting is possible; The MarketIntelligence shall be conducted according to the internal rules applicable to that effect andit 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, theAuthorized Off icer 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 withrespect to bidders:

a. Direct Selection: The invitee shall be objectively determined by the titleholder of thedepartment requesting the Contracting and the Authorized Officer, subject to the MarkeIntelligence procedures.

b. Closed Call: The number of invitees shall depend on the event that justifies the performance othis kind of call, and its selection shall be at the objective discretion of titleholder of thedepartment requesting the Contracting and the Authorized Officer, subject to the MarkeIntelligence 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 amoun(section VI), with the exclusive participation of department, regional and/or local Mipyme(Micro, Small and Medium size companies), which main domicile corresponds to the place o

performance of the contract, provided the satisfaction of the economical and technicaconditions required in contracting is guaranteed.

c. Open Call: Indeterminate persons are publicly called to participate, at an internationalregional or local level, through the use of suitable means such as Internet, the publishing ofnotices in nationwide or regionwide circulation newspapers, the fixing of notices in visible andaccessible places of the respective section, or through such channels as chambers ocommerce, mayors offices, police inspections, among others.


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The Bidding Conditions or Terms of Reference shall establish the admission of the participationof all persons accepting the call. The description of goods and services to contract in theBidding Conditions or Terms of Reference, shall not make reference to brands or commercianames, patents, designs, manufacturers, or any description that guides the contractingtowards a specific brand, manufacturer or type of product, except when the Management, therespective Vice-presidency or the Direction so authorizes it, or when referring to theacquisition of goods and services which is necessary to maintain or optimize the existinginfrastructure, 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, aminimum 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 personsbelonging to the following categories:

Boards of communit-based action, cooperatives, foundations or departmental, regional andlocal 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 tothe same activities in favor of ECOPETROL satisfactorily.

These persons shall be invited directly by ECOPETROL and shall submit the respective proposalalong 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 contractingas well as the contents of the supporting documents, and to resolve any applicable querieswherefrom an act shall be raised by the Authorized Officer of the contracting or by a personappointed 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 doubtfuambiguous or imprecise aspect of the Bidding conditions or Terms of Reference. The maximum termto request clarifictions shall be therein defined.

Requests for clarification shall be answered in writing and its contents shall be made known to alinterested persons.

Any modifications to the documents which are the base for contracting, shall be made through aAddendum 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 respectiveBidding Conditions and/or the Terms of Reference. These documents may authorize thesubmission of alternative proposals, indicating clearly and precisely the conditions for their evaluatioand acceptance.


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The submission of proposals may be authorized by chartered mail, fax, data message or electronicmeans, provided they comply with the requirements established in the respective BiddingConditions and/or the Terms of Reference, in Law 527, 1999 and other rules on electronidocuments.

In any event, as a condition for its validity, the submission of any proposal to ECOPETROL shall beaccompanied by a statement by the respective bidder stating that he is fully acquainted with thisContracting Manual and its express acceptance of all the conditions and regulations thereinstipulated. When the proposal is to be submitted in writing, the statement to which this paragraphrefers shall be also delivered in writing to ECOPETROL along with the proposal, while if theproposal is made known to ECOPETROL orally, a formula will be agreed between the bidder andECOPETROL so as to leave evidence of the same. It is made clear that, despite this expression o

acceptance constitutes a requisite for the validity of the proposals received by the CompanyECOPETROL may, if deemed convenient, request bidders to send it even after the reception oa proposal, but always before the respective awarding.

In processes conducted within the context of a negotiation proposals may be received orally, or bytelephone or in writing, considering the following:

- Telephone conversations in the negotiation process or precontractual phase shall brecorded, all bids submitted or answers of no participation being registered through thesemeans, ECOPETROL shall communicate bidders that all conversations will be recorded.

- The use of electronic systems for telephone recording may validate as formal bids thosecarried 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, thfinal proposal, for its ratification in writing. Furthermore, evidence shall remain in a documenwith the background of the negotiation, the market situation, acceptable price marginsfeatures of the conduction of the negotiation, the knowledge by bidder of the entireContracting Manual, the express acceptance by bidder of the application of the rulesestablished 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 nohaving 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 scoreor percentage attributed thereto, may submit successive economic bids, to the extent ECOPETROLso 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 ocomplexity, it shall be possible to implement, by regulating the appropriate in the respective BiddingConditions and/or the Terms of Reference, leveling procedures for the technical proposals, in sucha way that, under equal conditions, previous to the submission of the economical bid and at requesof ECOPETROL, bidders adjust, make precise and/or modify technical aspects of their bidsensuring their conformity with the technical specifications required by ECOPETROL. In case thi


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procedure is carried out, the submission of economic bids shall be admitted only from thosebidders which technical proposals, after and with occasion of the leveling process, adjust in alrespects 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 oproposals received. In furtherance of this stage, ECOPETROL shall verify the fulfillment of thparticipation requirements demanded in the Bidding Conditions and/or Terms of Reference, shamake 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 deemedconvenient 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 ECOPETROLas designated by the Authorized Officer; the above, notwithstanding the possibility of contracting thiactivity with a third party.

The evaluation of bids shall consider the requisites, factors, weight and the procedure established inthe Bidding Conditions and/or the Terms of Reference, and within the term as indicated, which maybe extended for the time deemed necessary by ECOPETROL, while bids remain standing.

During the evaluation period, ECOPETROL may request the documents, certificates and/oclarification as deemed convenient in order to remedy those requirements relative to bidder, asdeemed necessary upon the corresponding verification. The identity of bidder shall therefore not bealtered.

Shall be remediable, previous the decision of entering into a contract with a specific bidder, anyaspects in shape of the bid (such as attestations,apostille, language, errors in the bid bond oflaws in the same in respect of the required, among others) or the omission therein of theaccreditation of preexisting conditions at the time of submission of the bid and which, therefore maybe object of verification (such as certificates, capacities of personnel offered, among others), angenerally all such aspects that permit the conduction of an objective comparison of bids receivedwithout 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 oTerms of Reference, with due respect given to the principles of efficiency, economy, swiftnessimpartiality and publicity.


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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 (3business days, for Bidders within such term to submit any comments deemed appropriate, in respecof the evaluation conducted by ECOPETROL and/or the bids submitted. In dealing with otheselection processes, the evaluation report of the bids may be published with the same purpose, fothe 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 documencontaining 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 beextended while bids remain standing, a decision of contracting or issuing a desertion statement shabe made.

In all contracts to be executed, and specially purchasing agreements of movable goods, coastingand commercialization agreements (oil derivatives and products, conventional and alternativenergy sources, oxidizers and biofuels), and those of international trade, the acceptance of the bidand the consequent decision to contract, may be made via data message, fax or any othecommercial procedure accepted in this type of contracting.

If bidder with whom contracting has been decided does not accept such decision and/or does noexecute the contract within the term as foreseen to the effect in the Bidding Conditions and/or Termof Reference, ECOPETROL may contract, within the fifteen (15) days following, with bidderanking second, provided his bid were favorable to the Company and standing as of such dateIf the latter refuses to execute the contract, within the term foreseen in the respectivecommunication, the same rules shall apply with the following bidders in the order of elegibilityas long as more favorable bids exist and notwithstanding the liability of indemnifying anypossible harm acquired by bidder at the time of submitting its offer and making effective the bidbond thereon.

- Failed Call Statement.

ECOPETROL shall declare the selection process as failed when in conformity with the requirementand factors established in the Bidding Conditions and/or the Terms of Reference, no bid isadmissible and/or favorable. The corresponding decision shall be communicated in writing tobidders, 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 otechnical, operational, economic, market, force majeure, compulsory mandate of authority, thirdparty irresistible act or for reasons of utility or convenience that may justify such decision. The


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decision of suspending the process shall be motivated and communicated to interested partiesand/or bidders.

If any reasons so justify it, the selection process may even be cancelled. This decision requires therespective justification and approval by the Authorized Officer of the high level, and shall becommunicated 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 contracis understood as executed when an agreement is reached upon the purpose and theconsideration.

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 the1000 SMLM the Work Order or Service Order format shall be used.

In contracts different from purchase contracts which amount exceeds 1.000 SMLMthe 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 (oderivatives and products, conventional and alternative energy sources, oxidizers and biofuels), thacceptance of the bid may be communicated via data message, fax or any other commerciallyaccepted means. The contract shall be deemed as contained in the respective proposal and thecommunication of its acceptance.

As to contracting referring to goods or services offered to the public in general under conditioncommon to those requesting them, formats pre-established by suppliers of these goods and/oservices may be used.

In referring to purchases and services in general, of amounts until one hundred Monthly LegaMinimum Salaries (100 S.M.L.M.), the respective contract shall be understood as contained in thewritten authorization issued by the Authorized Officer (request to contractor duly signed, or releasof order in the system), and the invoice submitted by contractor.


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The Legal Vice-presidency shall be in charge of the standarization and updating of models anddrafts.

7.3.2. Requeriments for Performance

To initiate the performance of the contract, of which an act shall be raised when appropriate, thefollowing shall be complied with:

a. Acceptance of insurances and guarantees

Fulfillment of requirements on insurances and guarantees shall be verified as required in theBidding Conditions and/or the Terms of Reference or in the contract, for performance. Sucrequirements shall be revised by the contract Inspector in order to verify its conformity with thereinagreed; 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 givevia 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 itscharge as agreed upon execution of the document containing the contract, save in cases wherein conformity with standing legal provisions and the concepts of DIAN (Tax Authority), it is agreedthe tax shall be borne by ECOPETROL entirely. In acts of unspecified amounts, the payment of thetax shall be done as per the applicable regulations.

c. PublicationContracts which amount equals or exceeds 50 S.M.L.M. shall be published in the Diario nico deContratacin Pblica (Single Journal of Public Contracting). Exceptions are any contracts nosubject to the rules herein provided and those which the Board of Directors of the Companydetermines that should not be published for strategic or confidentiality reasons. Save for the case ocontracts exempted by the Board of Directors from the requirement of publication due to strategicaor confidentiality reasons, all contracts for amounts equal to, or exceeding 50 S.M.L.M. entered intoby 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 theexecution of its purpose, such performance shall begin. Written evidence of the initiation of thcontract performance may be stated in an Inititation Act, if parties so deem appropriate.

a. Extension of the term

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or when, at discretion of ECOPETROL, such amendment is required to comply with the ends of thecontracting, 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 mayextend the term of performance of the purpose of the contract for the term deemed reasonablenotwithstanding the application of any sanctions contractually agreed. In any event, contractor shaassume the higher costs caused by the extension and indemnify any damage caused toECOPETROL.

The extension of the term shall give rise to the amendment of the term of the insurance and/oguarantees 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 forcemajeure circumstances, Acts of God, or irresistible acts from third parties; or unilaterally byECOPETROL 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 thecontract being added, and requires for its delivery the same conditions listed in this Manual focontracts, that is, it shall be stated in writing, the respective guarantee shall be modified and/oadjusted, the stamp tax accrued shall be paid, and its publication in conformity with the foreseen inthis Manual shall be made.

In Contracts stating unit prices or rates, the larger quantities of work, services or supplies that ariseand/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 itemnotwithstanding any limits in the resources assigned by ECOPETROL for the development of thecontract. The performance of a larger quantity of work, services and/or supplies shall have to beeconomically reasonable and favorable for ECOPETROL, and does not require any previousexecution 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 withcontractor. Agreements, reconcilements and transactions agreed to settle any divergenceoccurring shall be stated in the act, so as to make a statement of clearance from any obligationsassumed in the respective contract.

Parties may agree that if contractor is not present at the liquidation or if no agreement is reached othe contents of the same, it may be practiced directly and unilaterally by ECOPETROL through awritten document.


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Evidence of the contract liquidation must be contained in the respective Liquidation Act. 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 BiddingConditions and/or Terms of Reference, or by default, within the four (4) months following thefinalization of the performance of the contract, at the unilaterlal or early termination, or at the dateprovided for the same in the agreement. The unilateral liquidation shall be carried out within thterm as agreed by Parties, counted as from the expiry of the term to liquidate the contract bycommon agreement; the above does not prevent parties from reaching an agreement on theliquidation 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 besubject 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 ocomplementing 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 containein this Manual. To the above effects authorization is required from the President of the Company foeach particular case.

7.4.4 Applicable Legislation

Contracts entered into by ECOPETROL shall be ruled by any applicable special legislation, iconformity with the commercial and civil provisions as appropriate.

Performance of contracts entered into abroad may abide by the rules of the country of executionunless they must be fulfilled in Colombia. When contracts are to be performed ouside Colombia andthis circumstance indicates the conveniency of using a negotiation procedure or a Contracting Manuaother than the herein foreseen, contracting parties may apply a negotiation procedure or a ContractingManual other than the herein foreseen, notwithstanding the obligation by ECOPETROL of applyingrules that ensure transparency, objectivity, suitability, experience and best selection.

As to matters not herein addressed, and notwithstanding the need to attend the constitutionaprovisions, commercial and civil regulations shall apply.


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In case of conflict or doubt over the application of this Contracting Manual or other regulating speciacontractings 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 processunderway as of the date of entering in force of this Manual shall culminate in conformity with theManual standing as of the date of opening of the respective process. The above, notwithstandinthat for the execution, performance and liquidation of the contract, the rules herein contained areto be followed.

7.4.6 Revision and Updating

The Board of Directors of ECOPETROL authorizes the President so that, when deemed necessaryhe 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 oDecember 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 Ttle

1 GLOSSARY

2 CONTRACTUAL PLANNING

3 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 asassigned, except as otherwise specified in Manual provisions.

Terms denoting singular shall also include plural and vice versa, provided the context so requiresit.

Price Agreement: Means an agreement which, previous Market Analysis, ECOPETROL enters intowith the supplier of goods and services on the prices of the same, under specified transfer oexecution conditions.

In such agreement the following conditions shall be stated: (i) the term, which may exceed the fiscaterm where agreement is reached; (ii) the fact that ECOPETROL does not undertake to acquireand/or execute minimum or specific quantities, even though it shall resort-when deemed convenienand adjusted to its own needs-as a first option to the Price Agreement, in case the need for goodsand/or services appears to which the same refers; (iii) the commitment by supplier to deliver thegood and/or provide the service, at prices as agreed, if ECOPETROL so requests it; and (iv) thefaculty by ECOPETROL of terminating the Price Agreement, when the existence of better markecommercial conditions is verified and/or when ECOPETROL decides to modify its contracting policand 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 obligationbetween Parties, other than as foreseen in the paragraph above. The price agreement shall bdeveloped through purchase or service orders, which ECOPETROL shall make, considering its needfor the development of its corporate purpose.

Addition: Means the bilateral legal act whereby the value of a contract is increased, among othecauses, due to the inclusion of activities that are related with its purpose and that are needed fothe satisfaction or termination of the same; the inclusion of new activities related with such objectwhich although not essential for the satisfaction or termination of the same, its execution throughthe contract does represents the best business for the Company; the conduction of benefits othe same nature as those which are purpose of the contract, in a new term, while it represents thebest business for ECOPETROL (extension).

Advanced payment: Means the monies delivered by ECOPETROL to contractor, for theiadministration and investment by the latter in conformity with the conditions established in theBidding Condit ions and/or the Terms of Reference and/or the contract. Such monies shall onlbe turned into part of payment, and therefore, will enter the equity of contractor to the extent theyare amortized. Considering the nature of this payment, ECOPETROL shall request contractor guarantee for the adequate handling of these resources.

Risk Management Cycle: Means the component of the Risk Management, comprised by fivesequential stages: identification, analysis, valuation, treatment, monitoring and, a transversacommunication. Having the risks a dynamic character, the Cycle is based on the principles ocontinuous improvement.


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Collaboration, Association or Participation Contracts: Means the contracts related with administration of the supply, commercialization and marketing chain of the goods inherent to corporate purpose of ECOPETROL (includes agreements for the determination of conditions under wECOPETROL and other persons will access to exploration and/or exploitation areas of such goodColombia or abroad; joint negotiation agreements in areas of exploration and/or production in Colomand/or abroad; joint venture agreements in bidding processes in exploration and/or exploitation areasfor operation of refineries or petrochemical plants, in Colombia and/or abroad; agreements for the japplication of exploration and/or exploitation areas in Colombia o abroad; agreements on areas of muinterest in Colombia and/or abroad; joint operation agreements in Colombia and/or abroad; aexchange agreements, purchase and/or sale of assets or any similar figure in Colombia and/or abragreements of acquisition of reserves in Colombia and/or abroad; and generally, agreements which nee

be executed in furtherance of a negotiation, its purpose being the participation of ECOPETROL jointly other persons in exploration, exploitation, production, refining, processing, commercialization antransport activities in Colombia and/or abroad).

ECOPETROL: Means ECOPETROL S.A., decentralized entity by services, at the national level, linto the Ministry of Mines and Energy, organized as a Mixed Economy Company according to Article 1the 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 seraffectation of the fuel production or supply, or the continuity of the operation or the normal operatiofacilities, plants or equipments require the immediate disposal of goods and/or services, executioworks and/or generally conduction of works; when operational and/or environmental emergencies ocwhen exceptional situations appear derived from force majeure, Act of God and/or irresistible third pa

acts, such as strike, sabotage, terrorism, coup attempt, flood, earthquake, product spilling, fire, amothers; and when prevention and/or aversion of any such situation is intended.

Authorized Officer: Means the employee of ECOPETROL who, by legal provision or delegatioempowered to contract in representation of the Company, and, consequently, is authorized to isall acts as required by the selection of contractor and the execution, performance and terminatiothe respective contract. Notwithstanding the responsibility corresponding to interveners in planning stage of the contracting and those performing advise activities, the Authorized Officer sbe accountable for the direction of the selection process and for the execution and performance ofcontract and shall not subdelegate or transfer such responsibility to other employees and/orContracting and Purchases Advisor Committee. Faculties exclusive and/of proper of the Authorized Ofare the acceptance of mercantile offers, the initiation of selection processes, the elaboration of the BidConditions and/or the Terms of Reference and its Addenda, the designation of evaluators and the decof 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 AuthorOfficer to process the selection process.

Risk Management: Means an organized and structured way to evaluate the positive and negative effof 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 segmentsrepresenting the best opportunity and/or the lowest risk are identified. Such process involvesgetting to know new products and/or services and understanding the different conditions and/orlimitations related with the provision of goods and/or services; it includes price analysis and/ortrends of the same in the market and an evaluation of the condition of capacity of eventualsuppliers.

The Market Intelligence process may be conducted among others, orally or in writing, expresslyestablishing that no commitment or obligation arises therefrom by ECOPETROL, as it is not aselection process; and, in furtherance of such process, principles guiding contracting byECOPETROL shall be considered.

Unit-based Price List: Means a document made and approved by ECOPETROL, where the unit-based value of each item is stated (units of resource, works, labor, goods) in connection with anactivity, applying to a specific period.

A Unit-based Price List shall be made for repeating activities and/or of successive execution whichdealing under one sole contract is not convenient, and that may be carried out by several personsunder similar conditions of quality and timing. Its elaboration must be preceeded by the verificationof updated prices, which may be done through Market Analysis involving the obtention of severalquotations in writing and/or consultation to a plurality of sources.

The Unit-based Price List shall be approved by the Administrative Management and/or theAuthorized 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 therespective contracting.

Paragraph: The Unit-based Price List shall be made specifically for the type of activity that will bethe purpose of contracting, and considering the terms and conditions subject to which it will beexecuted; the same shall provide for and implement tools to ensure prices therein containedcorrespond to market prices. The term of the List shall correspond to the market dynamics forgoods, works and/or services to which it refers.

Upon elaboration and approval the Unit-based Price List shall be submitted, during a term notshorter than five (5) business days, to the consideration of persons having the capacity andsuitability 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 aspre-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 personswhen contracting on the basis of the Price List (the fulfillment of such conditions shall be subject toverification by ECOPETROL) or when a previous pre-qualification is needed of the persons towhom the List will be offered.

Upon acceptance of the Price List by several persons having the capacity and suitability to conductthe activity to which the same refers, the Authorized Officer shall implement mechanismsguaranteeing the awarding under objective conditions considering all those who accepted it.

Manual of Administrative Control: Means the document that serves as instrument for thedevelopment of the self-control culture, established as a corporate policy, that regulates


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delegations conferred in matters of contracting with third parties (Authorizations) and

administrative performance (Approvals) by the President of the Company to the officers at thedirective and executive levels of ECOPETROL, under the constitutional principles of equality,morality, efficacy, economy, swiftness, impartiality and publicity. Resolutions of delegation ofauthorizations, 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 impacton the operation, the complexity of the market and the risk associated with the need to be satisfiedthrough the contracting, determines the selection process to be followed. Such tool involves theanalysis of the following elements: a critical factor for the acquisition, commercial strategy, objectiveselection of bidders, strategy for the administration of inventories, and elements to obtain the bestbusiness 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 bycontractor have been performed. Such monies are the property of contractor as from the timeECOPETROL makes the transfer, for which the contractor shall have the entire administrationand/or handling of the same unless otherwise agreed in the respective contract.

Prequalification: Processing intended, mainly but not excusively, to pre-select the persons thatwill participate in Close Call processes, and that takes place through the formulation of a public orprivate 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 thelegal, technical, operative capacities, as well as of organization and financial of the interestedpersons, and the aspects of HSEQ (health, safety, environment and quality) of the same, butshall 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 processmay be omitted.

In the selection processes, ECOPETROL shall abstain from requesting documents andrequirements that would have been contributed or satisfied in furtherance of the pre-qualificationprocess 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 economicgeographic zone. It is determined by the supply and demand of the good or input and depends onthe way market agents evaluate the performance of the manufacturer or producer and on theenvironment.

RFI (Request For Information): International acronym denoting the tool of Market Intelligenceapplied 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, orcompliance with objectives of the process/activity/task/function/project. It is measured in terms ofthe probability of occurrence of the event by the impact/severity of the consequences.

Monthly Legal Minimum Salaries (Salarios Mnim os Legales Men suales, S.M.L.M.): Means themonthly, 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., thedetermination 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 onclauses regarding fines, penalties, and early termination of contract.

Additionally, the pact of the option as regulated in Law 51, 1918, may be foreseen throughstipulation 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 fringebenefits to be taken into account shall be defined, for which, upon doubt, advice shall be obtainedfrom 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 thehealth 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 conformitywith the Risk Management Cycle; consequently, foreseeable risk factors that may occur during itsterm shall be analysed, identified and quantified, risks to be assumed by each party shall bedetermined, controls as necessary shall be designed in order to foresee the materialization of risksto 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 toconsequences, determine the impact of risk materialization on the resources: persons,economic, environment, image and client, and determine the probability of occurrence. The finalgrading fot the risk shall be the highest value obtained from the five impacts and the resultingprobability. The party who will assume the identified risk shall be determined and the distributionof the same shall be defined considering, to such effect, the party that better controls theoccurrence of each risk (ECOPETROL or the contractor).

Treatment (Tratamiento -4-): Select the option of risk treatment (to assume, eliminate or mitigatethe risk) and structure the adequate actions to reduce the level of risk, establishing the targetexpected risk level. Here, the protection to be established in order to minimize the consequencesof the risk shall be identified.

Monitoring (Monitoreo -5-): Carry out a follow-up to the fulfillment of the plans of action. Verify ifdates of initiation and finalizing of the actions were fulfilled, as well as the fulfillment of theexpected risk level (target).

Communicate risks (Comunicacin): Make sure to communicate the interested parties on theresults obtained at each previous stage of the cycle.

The distribution of the risks involved in contracting shall be precisely stated in the correspondingBidding Conditions and/or Terms of Reference, or in the hearing for the precision thereof, ifscheduled, 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 forentering 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 toeach party.

The following guarantees shall be accepted, considering the nature of the contract and the marketconditions:

- 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 isentered into with a vendor or dealer.

The acceptance of another type of guarantees shall be authorized by the Finance Vice-Presidencyand the Legal Vice-Presidency of the Company.

The guarantee shall be standing until the liquidation of contract and during any prolongation of itseffects.

Guarantees may be omitted if concluded with grounds that risk is low for ECOPETROL, or whenreferring to loan, inter-administrative, insurance, coastal, brokerage, partnership agreements of anytype 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 andauthorizations required shall be made, and the party that will conduct each process in order toobtain them shall be established. Furthermore, any provisions shall be made as required for theobtention of permits, licenses, sanitary authorizations, calculation of rewarding rates and otherrequirements contained in the environmental legislation, which shall obey the respective legaltiming.

If the contract features requires the formalizing of negotiations referring to easements, payment ofdamages, purchases among others, the corresponding list shall be made and costs shall beassessed.


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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 beforeseen that the activity intended to be contracted may cause on the environment, aiming at amore efficient environmental management, adjusted to the needs and characteristics of eachcontract.

Notwithstanding the above-mentioned, in cases where required by law, environmental impact studiesshall be conducted and contingency plans, which shall be completed previous the initiation of theselection process of contractor, provided such studies do not constitute part of the purpose or scopeof 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 anational, department and municipal origin that ECOPETROL or contractors will accrue with occasionof the contract execution and performance. Such list shall be updated annually or upon anyamendments to the various tax regimes.

The person in charge of the contracting budget shall consult the list, and in case of doubt, shallobtain the opinion from the corresponding department.

2. BUDGETINGWith 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 PriceSystem(s) that is more convenient to ECOPETROL, where the pricing feature, whether as fixed oradjustable, 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 tocontractor 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 tothe conditions for the execution thereof, an analysis of the convenience shall be made for thegranting of an Advanced Payment or Payment in Advance, which percentage shall be determinedby the Authorized Officer. The Advanced Payment and the Payment in Advance shall not begranted 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 thecontracting conditions, and shall be justified in writing.


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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, andappropriation for the costs produced by the possible price revision due to changes and/oramendments to the initial conditions when referring to risks to be assumed expressly byECOPETROL.

2.4. Budget Elaboration for ContractingBased on all the information compiled in furtherance of the above numerals, the budget ofECOPETROL will be made, which shall comprise any direct and indirect costs, excluding VAT. Thisbudget shall be projected to the submission date of bids, and shall consider the term for the contractperformance if no readjustments were envisaged.

The furnishing of a budget for ECOPETROL, for each selection process, is the competence andresponsibility 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 beguaranteed its disclosure to all of them. In the event the budget of ECOPETROL is disclosed, anyconsequences 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 bemade 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 beperforming as Authorized Officer of the contracting shall be determined. His/her competencethereby 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 ofcompetence 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 theparticular contracting law, and, therefore, shall be complete, clear, precise and coherent. Aproject of such documents may be published before the initiation of the corresponding selectionprocess, expressly stating that such documents are preliminary and that its release does not


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CONTRACTING MANUAL

ECP-DTI-F-004/V5

bind ECOPETROL in any way to initiate the selection process. ECOPETROL shall analyze any

comments received from interested persons and shall incorporate any amendments whereapplicable into the final documents.

Notwithstanding the faculty to contract the elaboration of the Bidding Conditions and/or and theTerms of Reference for specific selection processes, the Legal Vice-Presidency shall be in chargeof the standardization and updating of the same. The Authorized Officers and the Executive orPerforming Contracting Officers shall inform the Legal Vice-Presidency on the practical result fromthe application of the standarization, and this department, on a timely basis, shall make anyadjustments as appropriate.

The Bidding Conditions and/or the Terms of Reference which are the basis to a Tender shallcontain, 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 toparticipate or choice through public drawing lots (in the event of an Open Call or processesinvolving public calls) or invitation to bid (in the case of a Closed Call), bid bond when deemedconvenient, visit to the place where contract will be performed and submission of bid, among otheraspects considered appropriate in contract performance.

Legal entities shall demonstrate their legal existence and representation, according to the standinglegal provisions.

In international trade contracts of successive performance, the crediting of legal existence andrepresentation of the foreign legal persons shall be requested on a semi-annual basis or whenamendments occur to their existence and/or representation. The respective certificates shall bevalid for all contracts to be entered to within such term.

Contracts referring to goods or services where copyrights apply, entered into with the titleholderof such copyrights, and in subscription contracts, the accrediting of the legal existence andrepresentation of the author shall be required to the effects of the completion of the firstcontractual relation, and subsequently, upon any amendments to such existence and/orrepresentation.

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 thecontract, 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 inColombia. Foreign legal entities are excepted from this requirement at the time of entering intopurchase agreements of movable goods; commercialization (oil derivatives and products,conventional and alternative energy sources, oxidizers and biofuels); agreements involving coastingoperations and international trade; collaboration, association or participation agreements;consultancy or service agreements when not entailing the retaining of local personnel; as well ascontracts performed abroad.


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CONTRACTING MANUAL

ECP-DTI-F-004/V5

When deemed convenient participants will be allowed to credit the technical experience andfinancial capacity of their Parent Company and/or affiliates 100% controlled thereby in the BiddingConditions and/or the Terms of Reference, provided the Parent Company grants an irrevocableguarantee in favor of ECOPETROL and of first option, and executes with ECOPETROL acommitment 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: bidopening, 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 forthe 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 ofidentifying the most favorable bid to the interests of ECOPETROL, and the weights that will beassigned to the same, a previous evaluation shall be made of a selected factor combination thatsatisfies the respective needs with the best feasible result in cost-benefit terms; based on thisanalysis factors shall be identified and weighted that will be contained in the Bidding Conditions orTerms of Reference for the corresponding evaluation and identification of the most favorableproposal (best business) to ECOPETROL.

The following factors may be considered among others:

- Experience of bidder (in contracting such as professional services provision, consultancies)

45275 54934 ECP-DIJ-M-002 V5 Manual Contratacion ECP(Ingles)

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Transcript of 45275 54934 ECP-DIJ-M-002 V5 Manual Contratacion ECP(Ingles)