Working with UNDP / Procurement / How we operate
• Procurement methods
Procurement refers to the process of acquiring goods, works and services. The process spans the whole cycle from identification of needs through to the end of a services contract or the useful life of an asset.
Procurement in UNDP is based on competitive bidding. Key determinants in the procurement process include the type, complexity, size, and value of a project. Commonly used methods of solicitation include the following:
1- Request for Quotation (RFQ)
An RFQ is an informal invitation to submit a quotation, usually for goods/services/civil works of a value between US$2,500 and $100,000.
Prices and other commercial terms and conditions are requested, the award is made to the lowest-priced and technically acceptable offer.
2-
Invitation to Bid (ITB)
An ITB is a formal invitation to submit a bid, usually associated with requirements that are clearly and concisely defined, with an estimated procurement value of US$100,000 or more. Normally price is the sole determinant in making an award. Where all technical criteria are met, the award is made to the lowest bidder.
3- Request for Proposal (RFP)
An RFP is a formal request to submit a proposal, usually associated with requirements for services, which can not be clearly or concisely defined, with an estimated procurement value of US$ 100,000 or more. Price is only one of several factors comprising the evaluation criteria. The award is made to the qualified bidder whose bid substantially conforms to the requirement set forth on the solicitation documents and is evaluated to be the lowest cost to UNDP.
In some cases, exceptions to competition are being made and direct contracting is used. This usually happens when a Long-Term Agreement (LTA) is in place, either globally (IAPSO or HQ) or locally (at country office level).
For requirements of less than US$2,500, UNDP Country Office may engage in local identification of suppliers and purchases directly.
• Evaluation of offers
Depending on the procurement method, different factors take play a key role in the evaluation process.
When evaluating RFQs and ITBs, the price is the most important element. In contrast to this, an RFP requires a technical evaluation. The technical component primarily determines whether the proposal will be accepted or declined. Additionally, UNDP evaluates its products and services based on the following criteria:
Goods:
- Must meet technical specifications
- Delivery and Timeliness
- Environmental soundness
- Quality Assurance
- Accuracy of documentation
- Speed of response and timely submission of bid
- Quality of customer service
Services:
- Provides Technical Solutions
- Competency
• Contract modalities/Types of contracts
A selection of contract types is available to UNDP to provide needed flexibility in acquiring the variety and volume of goods, civil works or services required. Contract types vary according to the degree and timing of the costs of performance, and the amount and nature of achieving specified standards or objectives.
More specifically:
- In fixed price (lump-sum) contracts UNDP shall pay the contractor a fixed contract price for the complete and satisfactory performance of the requirements under the contract. The price of this contract is not subject to any adjustment or revision because of price or currency fluctuations or the actual costs incurred by the contractor in the performance of the contract;
- Time and materials-based contracts (cost reimbursement), is generally used when hiring the services of individual consultants from an agency. The final price of the contract will be determined on the basis of the actual quantities of works/services and materials utilized in the completion of the works/services as certified by UNDP according to the unit prices contained in the Contractor's financial proposal. Such unit prices are fixed and are not subject to any variation;
- Percentage contracts, which measure consultancy costs as a percentage of total construction costs, generally for architectural services. However, this contract type should be discouraged; or
- Long term agreements. Long-term agreements (LTA) reduce administrative efforts by a single tendering exercise over the life of the arrangement. They are awarded on a 1-year renewable basis and exist on the country level as well as globally, administered by headquarters. These exist on an exceptional basis and are the developed when necessary so as to be able to provide goods and services at short notice or at discounted rates offered specially by that provider in the interest of the beneficiary, and are the result of a partnership with a provider for reasons of being able to provide specific services faster and at a lower cost.
Advantages of a LTA include:
- quality assurance and legal requirements will have been dealt with at the outset
- the supplier benefits in terms of planning stock levels and continuity of supply
- a mutually beneficial longer-term working relationship can be established
• Conditions of Contract
In order to be a future supplier for the United Nations Development Programme, bidders must accept our General Terms and Conditions. Depending on your deliverables, the following apply:
• Hiring consultants
70% of UNDP's procurement expenditures are spent on services, delivered by either companies or individuals. At the level of the UNDP Country Office, the first step in selecting Suppliers is often market research, particularly if the product or service has not previously been procured. UNDP may source Suppliers through an expression of interest for commonly procured goods, registration of prospective Suppliers at UNGM and/or business seminars, where applicable.
• UNDP Office Supplier Database
Every UNDP office establishes and manages its own supplier database. Once a roster of potential qualified Suppliers has been generated, the Supplier's capabilities and resources to successfully deliver a contract are evaluated once a UNDP contract is awarded to the Supplier. The key parameters, which guide Supplier appraisal, include:
- Technical capacity to deliver the goods and/or services as per schedule;
- Financial strength, where the "Quick Ratio" is the most widely used test of a company's financial strength and liquidity.
- The commitment of management to comply with UNDP General Terms and Conditions; and
- Evidence of meeting national or international quality standards for the product offered; or evidence of national and international acceptance of its services;
- Production capacity to provide after-sales-service for the goods or services provided;
- Environmental compliance (i.e. ISO 14000 Certification); and
- Participation in the UN Global Compact
For more information on UNDP procurement, please visit: http://www.undp.org/procurement/
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