Welcome

to

Best Procurement Practices

Workshop

3-7 March 2008, Istanbul

1
Project Procurement Management:
Best Practices

Krishan Batra
Principal Advisor
UNDP/PSO
2
 Learning Objectives
3-4 March 2008
• Overview of Procurement Facts
• Understanding Procurement Chain
• Procurement Plan
• Supply Positioning/ LTAs
• Risk Management
• Procurement Oversight
• Ethics, Probity and Accountability
• Contract Management
• Engaging and Managing Consultants.
• Procurement and Law
“ We will walk you through simple and exciting journey
of procurement management”

3
 Learning Objectives:
5-7 March 2008
• Developing Specifications/SOW/TOR
• Supplier Sourcing
• Procurement Methodology
• Tendering Process
• Selection of Consultants: SSA
• Shipping, Insurance & Shipping Terms
• Contract Types
• Strategic Sourcing (e-tendering)
• e-Procurement

4
 BEST PRACTICES
• Best Practices are defined as techniques
that business units may use to help detect
and avoid problems in the acquisition,
management, and administration of
contracts. Best practices are practical
techniques gained from practical
experience that may be used to improve
the procurement process

5
 Procurement Defined
The term “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.[1]

[1]
UNDP Fin. Reg. 21.01(a) (March 2005).

6
 Changing Business Scene
• Purchasing is a professional activity in transition.
• The function that used to be called purchasing
or procurement has expanded to become Supply
Management.
• Pivotal role brings procurement closer to
strategic planning.
• Emerging role is proactive and more
strategically oriented.
• Move from reactive procurement to Strategic
Supply Management
• From a tactical focus to strategic focus.

7
 Strategic Plans & Procurement
• Strategic Plans sets the overall direction for support to
programme countries to achieve national development
objectives.
• UNDP mission is to help countries accelerate progress
on human development. Hence aim of UNDP advocacy,
policy advice and technical support should be real
improvements in people’s lives.
• Dual Roles of UNDP: First pillar upholds the UNDP Role
to coordinate and enhance efficiency and second pillar to
provide advocacy, policy and technical support in poverty
reduction, democratic governance, crisis prevention and
recovery, and environment and sustainable
development.
8
 BUSINESS MODEL
• There will be stronger emphasis on
providing knowledge, policy advisory.
• Focus efforts on areas where it has
mandate and comparative advantage.
• Will seek to build more extensive
partnerships with CSOs to scale up the
scope and impact of its work.
• Bring advisory support closer to ground.
• Expand Knowledge networks
9
 Guiding Criteria
• Contribution to acceleration of MDG
• Creation of effective institutions.
• Expansion of national and local capacities
• Promotion of sustainable development
• Support to UN partnerships
• Provision of ‘last resort” in case of national
capacity or crisis.
• Withdrawal from specialized sectoral activity,
infrastructure with no capacity building, stand-
alone procurement, small-scale projects without
country wide impact.
10
 Integrating Procurement Strategy
(Into Corporate Strategic Plan)
• What to procure?
• Promoting transparent & competitive
procurement.
• Substantial reduction in frequency of audit
observations on procurement
transparency
• Professional Development.
• Regionalization
11
UNDP Global Procurement
Trends (million USD)

12 12
 Procurement & Delivery:
• Delivery comprises mainly of following components:
Goods, Services, Individual Consultants, Travel, etc.
These fall under procurement.
• Procurement is the key pillar of delivery.
• Procurement is presently treated as a mechanical
process.
• One needs different type of skill sets to manage different
type of goods and services.
• One need market and product knowledge. It is not about
3 quotations.
• It is about partnering with supply sources
• Move from tactical to strategic mode ( Presently we 13
spend 100% of our time on fire fighting)
 UNDP Procurement Trends
(million USD)
3000
RBEC
2500 2431
Total 2359
2168
2000 Prog. Delivery
1755
1500
1000
866 826
500 541 431
377 379 309 331
0
2002 2003 2004 2005 2006 2007

14 14
 Procurement Breakdown

Goods
----------- 76 % 85%
Service

Consultants (SSA) ----- 9%

Travel ------ 7%
UNV ------- less than 1%
Fellowships ------- less than 1%
Project Personnel (SC) – 8%

15 15
 Average Contract Amount
(1000 USD)
$2,000 $1,894
$1,800 $1,563 1,894
$1,600 1,563
$1,400
$1,200
$1,000 $814
$800
$549
$600 $463
$380
$400 $249
$200
$0
HQ RBA RBAP RBAS RBEC RBLAC OTHER
(PAPP)

* Overall $672,000 16
 0 - 2.5 k 2.5 k -30 k 30 k -100 k 100 k -1 m >1 m Total
PO Amount (million USD) 89 526 271 435 205 1,526
PO Count 98,509 64,475 5,186 1,738 87 169,995 17
17
Average Contract Amount
(1000 USD)

18 18
* Includes PAPP data
 ACP Review Cycle
Requestor submits the case to ACP
ACP Secretary prepares the review notes (case
summary) and sends it to the ACP Members by
Monday

Secretariat by Friday, 3pm EST

1 Day

1 Day
SECRETARIAT ACP Members review the notes
and prepare for the ACP Meeting
on Wednesday.
CPO reviews the ACP ACP Meeting takes place every
recommendations and REQUESTOR ACP Wednesday at 1pm.
Approves/Withholds/ Rejects the MEMBERS
case. 2 Days 1 Day
The CPO action is done by
Wednesday.

CPO
ACP MEETING

1 Day
Based on the ACP recommendations, the
Chair forwards the case to the CPO for
Approval/ Withholding/ Rejection. 1 Day
The Chair forwards the case to the CPO by
Monday.

ACP CHAIR
ACP MEMBERS ACP Secretary uploads the ACP
recommendations on ACP online
by Thursday.
Notification sent to ACP Members.
1 Day

ACP Review Cycle = 8 Working Days

* Based on the assumption that the Requestor has
provided all the relevant information to facilitate
ACP Review
ACP Members review the 19 19
recommendations and they
can add their comments by
Friday.
Regional Bureau for Europe and CIS

20 20
 Procurement Fact Sheet: RBEC (‘000s
USD)

Goods S e rvic e s Tot a l De live r y P roc ure me nt a s %of De live#ryof P O' s >#100k
of ACP S ubmis
Tot a l Goods S e r vic e s
Albania 520 5,767 6,287 8,248 76% 6% 70% 4 8
Armenia 882 3,492 4,374 5,955 73% 15% 59% 2 5
Azer baijan 6,259 5,296 11,555 13,209 87% 47% 40% 0 0
Belarus 9,515 4,212 13,727 17,336 79% 55% 24% 11 21
Bosnia 3,162 11,932 15,094 19,893 76% 16% 60% 33 34
Bulgaria 799 7,561 8,360 10,681 78% 7% 71% 6 7
Croat ia 978 6,697 7,675 9,427 81% 10% 71% 3 14
Cypr us 179 3,169 3,348 17,498 19% 1% 18% 9 5
Geor gia 1,991 4,631 6,622 8,822 75% 23% 52% 1 3
Kazakhst an 966 3,190 4,156 6,527 64% 15% 49% 0 3
Kosovo 744 12,874 13,618 14,894 91% 5% 86% 12 5
Kyrgyst an 4,550 6,302 10,852 16,322 66% 28% 39% 16 8

21 21
 Procurement Fact Sheet: RBEC (‘000s
USD)
# of
P r o c u r eme n t a s P O' s # of AC P
G oods S er vi c es T ot al D el i ver y % o f D e l i v er y > 100k S u b mi s s i o ns
Tot a l Goods S e rvic e s
Lat via- Republic of 43 1,101 1,144 1,398 82% 3% 79% 0 1
Lit huania- Republic of 87 850 937 1,108 85% 8% 77% 0 0
Macedonia 482 3,616 4,098 5,321 77% 9% 68% 8 4
Moldova 3,422 4,254 7,676 11,647 66% 29% 37% 9 17
Poland 235 5,604 5,839 10,650 55% 2% 53% 16 0
Romania 341 2,502 2,843 6,257 45% 5% 40% 2 6
Russian Federat ion 2,220 9,596 11,816 13,270 89% 17% 72% 1 6
Serbia and Mont enegro 335 1,496 1,831 24,875 7% 1% 6% 0 15
Tajikist an 4,298 9,738 14,036 18,796 75% 23% 52% 0 22
Turkey 1,223 11,589 12,812 21,138 61% 6% 55% 0 6
Turkmenist an 899 892 1,791 2,689 67% 33% 33% 0 1
Ukraine 7,467 11,331 18,798 25,788 73% 29% 44% 0 17
Uzbekist an 3,506 9,174 12,680 15,309 83% 23% 60% 3 6

22 22
 Atlas Transaction Statistics
2007
Requsition HQ RBA RBAP RBAS RBEC RBLAC Grand Total
Total Count 1,933 19,259 21,671 6,777 11,996 6,485 68,121
Percentage 3% 28% 32% 10% 18% 10% 110%
PO HQ RBA RBAP RBAS RBEC RBLAC Grand Total
Total Count 7,630 42,324 36,652 15,319 36,454 31,600 169,979
Percentage 4% 25% 22% 9% 21% 19% 100%
# of Req /# of PO ( %) 25% 46% 59% 44% 33% 21% 40%
Voucher HQ RBA RBAP RBAS RBEC RBLAC Grand Total
Total Count 26,183 243,149 189,562 95,676 182,782 302,202 1,039,554
Percentage 3% 23% 18% 9% 18% 29% 100%
Vendor HQ RBA RBAP RBAS RBEC RBLAC Grand Total
Total Count 13,783 139,700 88,708 51,270 106,804 248,036 648,301
Percentage 2% 22% 14% 8% 16% 38% 100%
Active Vendors 4,907 32,795 15,543 12,861 27,162 45,739 139,007
Active Vendor % 36% 23% 18% 25% 25% 18% 21%
Buyers HQ RBA RBAP RBAS RBEC RBLAC Grand Total
Total Count 370 394 260 192 322 306 1,844
Percentage 20% 21% 14% 10% 17% 17% 100%
23 23
 AUDIT ISSUES
• Delegation framework
• List of all contracts that required a waiver of the competition process.
• Procurement plan.
• Procedures in place for those country offices that did not submit plans. How many
of them submitted these plans?
• Code of conduct for all staff in the procurement office.
• Evidence of supplier review to prevent trade with terrorist suppliers.
• Minutes of meetings of ACP.
• Records of all fraud reported on the fraud system as well as processes in place to
address fraud.
• Procedures in place to address green procurement.
• Controls implemented to prevent splitting of orders.
• Post Facto contracts – goods purchased without orders and delivered, Retroactive
– purchases without orders of contracts and the supplier has not delivered the
goods/services.
• Results of training of program staff/statistics.
• Expenditure reports for HQ (excluding personnel expenses).
• Access to ATLAS.

24
 Certified Procurement Staff

160 144
RBLAC HQ 130
15% 140
18% 116 114
HQ120
95
RBA
100
RBAP
80
RBEC RBA RBAS
60 43
18% 22% RBEC
40
RBLAC
RBAS
RBAP 20
7%
20%
0
HQ RBA RBAP RBAS RBEC RBLAC

25
 Confusion of Buying vs. Contracting
• What is “Buying”? What is Purchasing? What is
Procurement? What is Contracting?
• When one party is prepared to pay another party
for supply of goods or services, then subject to
conditions, the party enter into a “contract”.
• If the risks involved are low, then contract can be
in the form of PO. However in case of complex
or high value contract, one require detailed
documentation covering rights and obligations of
both parties of the contract.
• Thought procedure for both purchasing and
contracting is same.
26
 Procurement Authority:
• The Administrator has delegated oversight and
approval authority to CPO
• The CPO delegates the authority to RR,
Directors and Heads of Bureaus for award of
contract valued at less than $100,000
• Increase of procurement authority can be
delegated by the CPO based on needs and
capacity.
• RR and Directors can sub-delegate the authority
in writing.
• Oversight mechanism is CAP and ACP. 27
• Accountability
 Procurement Dashboard

http://dashboards.undp.org/procurement_dashboard/index.cfm?cur_group_id=1&cur_cty_id=AFG
28 28
 Procurement Certification
CO/ Offices Certified Buyers
•PAPP 42
•Bolivia 24
•Panama 22
•PSO 9
•Liberia 9
•Turkmenistan 8
•UNV 8
•BDP 7
•Iran 7
•Mali 7
•Rwanda 7
29 29
Total - 937
 Indicators for Delegation:
• Procurement Volume
• Procurement Capacity
– Number of certified procurement persons
– Head of Procurement
– Roving Procurement Officers
• Quality of Submissions to CAP/ACP
• Effective use of Atlas
• Procurement Plan
• Audit Rating (Procurement)
30
 Procurement Chain
Write Prepare
Specifications Solicitation
TOR and SOW Documents

Identify Needs Choose a

Procurement Method

Seek, Clarify
Award Contract and Close
Offers

Evaluate Offers

Manage the
Contract

Negotiate the Evaluate the 31

Contract Procurement
 Procurement Chain:

Sourcing
REQ Receipt and Opening
(Potential Suppliers)

Bidding

Review By Contracts
Evaluation of Offers Committee

Approval by CPO Create Vendor Award Contract/PO Vendor

32
ICF Control Points

33
 Requisition Process Flow
Requisition creation:
- In UNDP any Atlas user can
create an approved
requisition. Therefore, the
documentation of the project
manager’s approval must
take place outside Atlas. This
documentation could take
different forms depending on
the circumstances – for
example, the procurement
plan attached to the project
document or a signed copy of
the purchase requisition.
Budget check: Buyers receives duly
- In UNDP, commitment approved and budget
control is implemented checked requisition
in the PO level. Hence through workflow and
although a pre- proceeds with the
encumbrance is created procurement activities.
once the budget check is
performed, the actual
budget line will not be
impacted.
34
 PO Process Flow

PO creation:
-Once all procurement and PO approval: Budget check:
Dispatch PO
contracting process are completed in - once the PO is
- once the PO is
accordance with UNDP regulations approved by the
completed, it would
and rules buyers will then create a budget owner, Buyer
be routed for the
PO in Atlas. would need to
budget owner’s
-Enter AM profile information for approval perform budget
procurement of goods check to create
encumbrance in the
-If the vendor does not already exist system before
in the system, users would have to dispatching to
enter the vendor information and vendor.
submit for approval before creating
a PO

35
 Payment Process Flow
Receipt creation:
-Once the goods or
services is received, the
requisitioner will then
create a receipt in the
system.
-Asset Creation:
-Once the receipt is
created back ground
processes will then pick up
any transaction which has
an AM profile and bring it
over to the AM module.
Voucher Budget check: Matching:
creation: -In UNDP no
-The matching process is
- Once an invoice is additional approval is
scheduled and performed
received, the finance need for PO-vouchers.
automatically in the backend.
users will then create -Users need to -The matching process validates
a voucher to process perform budget information between PO, receipt
the payment checks to liquidate the and voucher.
encumbrance and
create an expense in
the commitment
control.
36
Payment
 Specifications for Goods:
• Functional Specification: What?
• Performance Specification: How much?
• Reference to product standards
• Inspection and testing: Pre-shipment
testing
• Incidental Services: Supervision during
installation, Training, Operation Manual
• Final Acceptance: Criteria for final
acceptance
37
 Terms of Reference (TOR)
• TOR may be compared to technical specifications for the
purchase of goods or works.
• Areas to be covered are:
• Objective: What is the anticipated result of services.
• Background: What is the history of assignment. Any
constraints.
• Scope of Work: What is the consultant expected to do?
Degree of details. Are there any specific decision points
during the performance of work?
• Purchases: Are any hardware requirements connected
with the assignment? When should such deliveries to the
client be made and on what terms?
• Reports: How and when will the report be presented?
• Contributions: What is the client going to provide in the
way of facilities, professional support and physical 38
facilities?
 Specifications for Civil Works:
• Introduction: General Description
• Scope of Works: List of activities to be performed.
• Time Schedule: Starting date and completion date
• Detailed Design and Drawing:
• Bill of Quantity: Estimated quantity of each item
• Site investigation report: Soil conditions, Ground
Conditions.
• Specifications and Standards: Set of instructions
• Inspection and Testing: Specification of tests.
• Commissioning: Final Inspection.

39
 Tips on writing an effective SOW
• Be clear-use simple, direct language.
• Use active, not passive tenses ( The seller shall
conduct the test as opposed to a test should be
conducted---, language is the dress of thoughts)
• Spell the buyer’s obligation carefully
• Provide a ceiling on the extent of services
• Identify all constraints and limitations
• Include standards that will make performance
measurement possible and meaningful
• In case of goods, focus should be in providing 40
functional and performance specifications
 Supply Market Analysis
• This is technique used to identify market characteristics
for specific goods and services that assist in planning.
• It assists the unit to understand as to how the market
operates and where it is heading.
• Is advertising for information good enough?
• Market Structure: How many suppliers? How are they
geographically placed?
• Horizontal and vertical integration.
• Monopoly (cartel like), Oligopoly (2-10), monopolistic
competition and perfect competition.

41
 Quality Assurance Systems
• Quality System Standards.
• Product Certification Programme
• Industry Association standards.
• Professional Association Accredidation
• GMP, GDP
• CE/ISO/DIN/BS/ASTM
• Building Code of Construction

42
 Engaging and Managing
Consultants
• Consultant may be individual or an organization to
provide expert advise.
• Characteristics of a Consultant:
– Engagement for a fixed period at agreed rate
– Does not require day to day supervision.
• Consultancy services, operational consultants-
professional or non-professional services
• When a consultant is not a consultant?
• Steps: Identify the need, what is required from them?
Select the consultant, Engage and manage the
consultant, evaluate the result and record and report

43
 Procurement Strategy

This is the way forward to implement an

overall change programme designed to
place procurement process at the heart
of UNDP activities so that it is able to
contribute effectively to the UNDP’s
mission.
This is the foundation stone of strategic
procurement.
44
 Procurement Strategy: Objectives
 To ensure that procurement supports UNDP’s principles.
 To achieve best value for money on all procured goods,
works and services.
 To provide a corporate focus to procurement.
 To detail the way forward on reforming and improving the
procurement function.
 To encourage long-term thinking and a commitment to
strategic procurement.
 To reduce the cost of the procurement process and ensure
continuous improvement
 To give due consideration to environmental concerns
(Green Procurement). 45
 Objectives
 To ensure that risk is appropriately managed.
 To promote cooperative arrangements.
 To promote the development and use of performance
measures.
 To ensure that procurement is undertaken in accordance
with high professional standards and probity.
 To develop the scope for doing business electronically (e-
Procurement)
 To develop management information system
 To ensure a structured approach to procurement training
and development for staff.
46
 Organization
A Center-Led Action Network (CLAN) approach is
suited for an organization with widespread activities
taking place with a high level of local autonomy. In
CLAN, purchasing action stays at the local level but
buyers do not act in isolation.
Center

Connection
Local

47
 Procurement Blueprint: Building Blocks
The key factors which form a procurement strategy
include

Contribution and Influence High Performance Standards

Promote best
Oversight Tools and Policy procurement
practices/mitigate
risks

Organization CLAN approach; High

level of networking

Vendor management
Relationships (LTAs, UNGM, Supply
Positioning)

Promote e-
Systems procurement

High Quality
Staffing and Training Professionals 48
 Relationships
• Procurement can no longer be considered
an isolated function, working at arm’s
length
• it focuses on:
- the relationship with suppliers
- developing Long Term Agreements
- the United Nations Global Market
(UNGM)
- Procurement Marketing (presenting
UNDP as preferred customer) 49
Project Procurement: Key Activities

Project Procurement
Activities

Performance
Planning Procurement
(Contract Administration)

50
Public Procurement Life Cycle

Procurement Plan

Procurement Procurement
Evaluation Formalization

Procurement
Implementation

51
 Procurement Plan
• Gateway to strategic approach
• Two levels of Procurement Plan
– Annual Procurement Plan
– Planning for Significant Purchases
• Addresses all key aspects of the function
• Align the outcomes with strategic plans
• Steps required for developing procurement plan
– Procurement profile (Past & Projected Procurement)
– Supply positioning (Level of Risk Associated with each category)
– Key supply markets (Market Research)
– Impact of Purchasing activities on its key supply markets
– Assessment of Procurement structure & capacity
• Procurement Plans are mandatory for Country Offices seeking higher
delegation of Procurement Authority
In short, procurement planning is about getting smart about procurement 52 52
by focusing on strategic management
 Procurement Planning:
• This should take place well before taking any purchasing
action.
• It should not be limited to specific requisition but part of
positioning the procurement unit to best advantage
• The first task is to establish the significance to the buying
organization of the purchased items and then to gain an
understanding of the market conditions.
• This require the use of following three techniques
– Supply Positioning
– Supplier Preferences
– Vulnerability management
53
 Procurement Plan:
• A procurement plan describes which product will be
acquired from vendor as well as when and how they will
be acquired. What, When, How
• Template
– Items to be procured
– Evaluation criteria
– Procurement Method
– Schedule/ Date of delivery
– Ownership rights of the source code
– Ownership rights of the production
• One of the major initiative to improve procurement
system 54
 Procurement Planning
Procurement planning, prior to any action taken in Atlas, is essential
for the timely solicitation of quotations, bids or proposals; the
award of contracts; and the delivery of inputs. Procurement
planning entails more than the selection of a procurement method
for various goods, works and services and when to schedule
activities, but combines the legal and institutional frameworks in
which procurement must be carried out. Business Units should
consider the following:
Requisitions;

Types of goods, works or 
Delivery time and place;
services required; 
Evaluation criteria;

Method of procurement; Justification for non-
potential sources;
competitive procurement;
Estimated costs;
and
Source of funds; Review of CAP and ACP.
55
Procurement Planning

WHAT?
WHEN
?

56
HOW?
 False Assumptions
• Any one can Buy
• Price is always related to cost
• Price is always related to volume
• Buyer power increases with the size of the
organization
• Price list are set in stone
• Negotiations downwards endangers service and
quality
• Sealed bidding is the most secure method
57
 Supply Positioning (Portfolio Analysis):

Supply Positioning provides a mechanism for

discriminating between the components of the total
purchasing requirements whether goods, works or
services, and a tool for developing specific
strategies to meet the needs of the organization
with respect to each group of purchases.

58
 Supply Positioning
STRATEGIC SECURITY STRATEGIC CRITICAL
Few major sources Few sources/monopoly
Few alternatives High cost
Q/S/R critical Q/S/R critical
Low value No alternatives

TACTICAL ACQUISITION TACTICAL PROFIT

Many sources Many sources

Many alternatives Many alternatives
Low value High cost

59
 Purchasing Goals
STRATEGIC SECURITY STRATEGIC CRITICAL

Ensure supplies Ensure supplies

Cost insensitivity Close price
Frequent review management
Continuous review
TACTICAL ACQUISITION TACTICAL PROFIT

Automate Profit contribution

Delegate Take risks
Seek opportunities
Give low attention
Wheel & deal
60
Purchasing Action Scenarios
STRATEGIC SECURITY STRATEGIC CRITICAL

Long term contracts Medium or long-term contract

Buffer stocks Supplier information
Price indexation Supplier development
Find alternatives Price management
Contingency planning Continuous review

TACTICAL ACQUISITION TACTICAL PROFIT

Simple purchasing Short-term contracts

procedures Active sourcing
Systems contracting Market knowledge
Stockless purchase Price determination
Cash purchases

61
 Long Term Arrangement:
– LTA offer a number of advantages:
– they offer the value for money advantages of
centralized procurement without the commonly
associated level of bureaucracy
– a single tendering exercise over the life of the
arrangement reduces administrative effort and cost
for the Department
– the initial tendering process will have identified
competitive suppliers, who should then offer more
competitive prices on the basis of the expected value
of business
– quality assurance and legal requirements will have
been dealt with at the outset 62
– Completion Report
 Long Term Arrangements:
– call-offs are covered by UNDP Standard Terms and Conditions
combined with special terms and conditions appropriate to the
items being procured and will, in general, provide better
protection than individual small purchases under the supplier's
standard conditions
– the agreed range of items or services should be at short notice
thus reducing or avoiding stock holding for goods and reducing
down-time on equipment maintenance and repairs
– the supplier benefits in terms of planning stock levels and
continuity of supply
– a mutually beneficial longer-term working relationship can be
established with suppliers
– Call-off create legal obligation and not LTA

63
 Scope of ACP Review
Objective: Mitigate Risk
•Procurement Process: Transparency, Method
•Specification/TOR/Quality
•Availability of Funds
•Value for Money/Cost Details/Consulting Fee
•Evaluation Modality
•Performance Security/Warranty
•Shipping/Insurance
•Licensing/Copyrights
•Use of LTA
•Type of Contract
•Payment Terms 64

•Environmental Impact
 Regional Distribution of ACP
Cases
(By Number)
HQ
RBLAC
12%
22%

RBA
20%

RBEC
21% RBAP
RBAS 15%
10%

* Total 1052 cases

65
 Regional Distribution of ACP
Cases (By Amount)

RBLAC HQ
17% 21%
RBEC
10%

RBAS
9% RBA
28%
RBAP
15%

66
 % of Cases Approved after First
Round of Review
100%
87%
90% 78% 78% 80%
80%
67% 66%
70%
57%
60%
50%
40%
30%
20%
10%
0%
HQ RBA RBAP RBAS RBEC RBLAC OTHER
(PAPP)

* Overall 73 %
67
ACP Reports - summary

68
* http:// acp-reports.undp.org
Common Reasons for Rejection
 Failure to undertake a competitive exercise
 TOR or Statement of Works or Specifications
incomplete
 TOR or Statement of Works or Specifications
too restrictive or biased
 Incorrect evaluation methodology or criteria
 Failure to submit requested documentation for
ACP review
 Conflict of interest
 Value for money not obtained
 Incorrect procurement method used
 Incorrect shipping terms cited
 Cost Matrix not provided
 No information about the software, as to 69
number of licenses, who will maintain etc.
 Action Plan
• Translation of all documents to Spanish
• Implementation of e-Procurement
• Use of Reverse Auction
• Ensure the implementation of Specification Templates
• Implementation of CAP Online
• More interaction among procurement practitioners on the region
• Training of CAP and RACP members
• Increased certification
• Develop Long Term Arrangements
• Work closely with Government to develop LTAs.
• Use each other country office if others are better in some field of
procurement.
• Strengthen Contract management
• Profiling of office in line with practice areas
• Requisition is a must.

70
 Oversight Tools:
• Review by CAP & ACP
• Review of CAP reports
• Procurement Audit
• Documentation submitted for increased
procurement authority
• Roving Procurement Officers

71
 Procurement Oversight:
• Key purpose is to mitigate risks
• Compliance with FRR and Procurement Manual
• Scope of oversight covers mainly following
– Requirements/SOW/TOR/Specifications
– Quality Requirements
– Procurement Process: Transparency, Method,
Evaluation Criteria, Conflict of interest if any
– Payment Schedules
– Shipping Terms and insurance
– IP, Type of Contract, Availability of funds, CAP report

72
 Scope of ACP Review
Objective: Mitigate Risk
•Procurement Process: Transparency, Method
•Specification/TOR/Quality
•Availability of Funds
•Value for Money/Cost Details/Consulting Fee
•Evaluation Modality
•Performance Security/Warranty
•Shipping/Insurance
•Licensing/Copyrights
•Use of LTA
•Type of Contract
•Payment Terms 73

•Environmental Impact
 Scope of ACP Review
Objective: Mitigate Risk
•Procurement Process: Transparency, Method
•Specification/TOR/Quality
•Availability of Funds
•Value for Money/Cost Details/Consulting Fee
•Evaluation Modality
•Performance Security/Warranty
•Shipping/Insurance
•Licensing/Copyrights
•Use of LTA
•Type of Contract
•Payment Terms 74

•Environmental Impact
Common Reasons for Rejection
 Failure to undertake a competitive exercise
 TOR or Statement of Works or Specifications
incomplete
 TOR or Statement of Works or Specifications
too restrictive or biased
 Incorrect evaluation methodology or criteria
 Failure to submit requested documentation for
ACP review
 Conflict of interest
 Value for money not obtained
 Incorrect procurement method used
 Incorrect shipping terms cited
 Cost Matrix not provided
 No information about the software, as to 75
number of licenses, who will maintain etc.
 Supplier Sourcing: Best Practice
• Decide:
• Select:
• Monitor:
• Supply Intelligence: Researching suppliers
is time consuming job. D&B has largest
database. It has 100 millions suppliers of
the world. D&B rating

76
 Procurement Methods

• Request for Quotation (RFQ)

 most flexible and least formal
 contract amount exceeds USD $2,500 but less than USD $100,000.
• Invitation to Bid (ITB)
 normally used when entity is not required to propose technical approaches to a
project activity (i.e., goods and civil works)
 contract amount is USD $100,000 or more.
• Request for Proposal (RFP)
 used in the procurement of complex goods (e.g., functional specifications cannot
be expressed) and services
 recommended for all contracts exceeding USD $100,000.
• Direct Contracting
 value of procurement is less than USD $2,500
 there is no competitive marketplace for the requirement
 There is a Long Term Agreement (LTA)
 there is genuine exigency for the requirement. 77

Purchasing Card
 Ten Commandments of Bidding
• Suitable Package
• Early Warning
• Non-discrimination
• Accessibility
• Neutrality
• Formality
• Confidentiality
• Consistency
• Objectivity
• No Negotiation before award

78
 Purchasing a service:
• Services are more difficult to evaluate than goods.
Goods have objective standards
• Supplier of services are often reluctant to provide
benchmark
• Excellent services are easy to monitor but mediocre or
poor services are difficult to evaluate.
• Goods can be returned whereas services cannot
• Poor quality services may continue undetected and
cause greater problems
• Because of above differences the reputation and the
experience of supplier is more important
• Key purchasing criteria: Reputation, References, 79
Experience, Current Clients, Equipment, price etc.
 Purchasing Services:
• Many services such as secretarial and cleaning are often
bought as generics. Other services such as application
software development , advertising are bought as
professional.
• Purchasing is not involved fully in procurement of
services
• Word of mouth is the one of the key ways in which
buyers of services exchange information.
• There are five roles, Users, Buyers, Influencers,
Deciders, gatekeepers
• Market Research, pre-qualification of suppliers
• Interviewing the companies and asking them to make
presentation for better clarification before technical 80

evaluation.
 Why an RFP?
• In competitive contracting, there are two
methods : ITB or a RFP.
• ITB is used when goods or service is well
defined and can be specified in detail.
Selection solely on the basis of cost.
• RFP is a negotiated procurement process
and provides flexibility to the contractor
and the company.
81
 Designing an Effective RFP:

“Never tell people how to do

things. Tell them what you want
to achieve and they will surprise
you with their Ingenuity”
82
 RFP: Introduction
• Tool to promote competition for procurement of services.
• A vehicle that allows both buyer and supplier to establish
a dialogue and to work from same set of rules.
• RFP should encourage creative thinking by suppliers
• A successful RFP process require that it has clear
technical requirements, project budget, implementation
and project management details.
• Use RFI if you wish to validate technology and
requirements.
• If you don’t know where you are going, any road will get
you there.
• Allow time for an independent review of the RFP.
• Only qualified suppliers should participate in the RFP
83
 Basic Elements of an RFP:
• Statement of Purpose: the nature of the
services to be provided and the overall
objectives of the contract.
• Background Information: Overview of the
program, statistics, existing facilities, an
honest accounting of current problems
and strengths.
• Service Specification: Sets out in specific
and measurable terms the services
required, 84
 Basic Elements of an RFP:
How they are to be delivered and the
duration they are required.
• Performance Standards: Minimum
performance standards and method of
monitoring
• Instructions to the Offerors
• General Terms and Conditions
• Special Terms and Conditions
• Evaluation and award process 85
 Basic Elements of an RFP:
How they are to be delivered and the
duration they are required.
• Performance Standards: Minimum
performance standards and method of
monitoring
• Instructions to the Offerors
• General Terms and Conditions
• Special Terms and Conditions
• Evaluation and award process 86
 Anatomy of an RFP:
• Project overview and administrative information
• Technical Requirements (Requirements are the
heart of this)
• Management Requirements.(Project Plan)
• Supplier Qualifications and references
• Pricing Section
• Contracts and licenses
• Appendices

87
 Value Tree:
• Overall Value
– Technical Factors
• Reliability
• Quality
– Management Factors
• Personnel (Education, Performance, Exp.)
– Price Factors
• Cost and Fee
• Realism
• Reasonableness
88
 Evaluation Factors:
• Key Considerations: Management,
Technical and Financial
• Analysis:
– What things should be evaluated
– What are their attributes
– Which attributes are relevent
– What is their relative importance
Best Value: Value of a proposal is the sum of
the weighted values of the applicable
evaluation factors for award. 89
 BEST PRACTICES: RFP
• Pre-proposal conference.
• RFI (If technical requirements are not
clear)
• Product Demonstration particularly for
software
• References and site visits
• Word “must” is used to designate the
mandatory requirements.
• Debriefing the unsuccessful suppliers
90
 Best Practices: RFP
• A Requirement states a need and is measurable.
• Requirements must be meaningful
• Requirements must not include the solution
• Requirements shall not be combined that may restrict
competition.
• Pricing should be broken down into individual
components and tasks.
• “ Shall” indicates a requirement and hence no exception.
“Will” is used to denote the statements of intent. “Should”
is used to describe project goals

91
 Best Value for Money:
To get the best value for money, you must
consider costs that the buyer will incur in
addition to the Offeror’s price, including:
• Cost to administer the contract
• Life-cycle cost of the product
• Quality of the product
• Past performance of the supplier

92
 Evaluation Team: RFP
• Evaluation team shall be of 3-5 persons
and a Chairperson
• Evaluation team is normally the one who
wrote RFP. The specialists may be used
to evaluate particular section.
• Attention to details to grasp the difference
between proposals
• Should not be handled as a consensus
method.
93
 RFP: Decisional Rules
• Lowest Priced technically acceptable
– Technical factors are used to qualify offerors
– An offer is either acceptable or not
– Price is the only factor for decision
• Best Value:
– Define the factors that contribute to value
– Relative Importance of each
– How to measure the value of individual factor
performances
94
 Contracting Do’s & Don’ts
• SOW
– Incorporate the SOW as an addendum
– It should state expectation in terms of quality,
performance, delivery and so on
– This is accurate representation of deliverables
• Keep it Simple: Should stay away from attempts to draft
legalese. Leave it to legal department
• Post Contract Processes
• Online Contracting
– Take advantage of online contracting for low value
procurement
– Don’t forget to check T&C 95
 Global Fund Procurement:
• Procurement forms nearly 80% of the project amount.
• Focus is on HIV/AIDS, Malaria and TB
• UNDP is involved in 28 countries as PR and for support services in
5 countries
• Total project amount is nearly $650 m but annual delivery is nearly
$200 m.
• OLPS has one full time Procurement Advisor working very closely
with the country offices and major suppliers.
• Major suppliers are IDA, Mission Pharma, CIPLA, UNICEF, UNFPA,
IAPSO etc. UNDP has LTA with them.
• OLPS Procurement Advisor is focusing on assisting the country
office to improve delivery, help them in transferring knowledge to the
counterpart, help them build supply chain.

96
 Purchasing Card:
• Tool for procurement of low value
contracts i.e. less than $2,500.
• Aims to reduce petty cash and number of
payment transactions.
• Monthly limit set at $10,000
• Can’t be used for procurement of assets.
• Facilitate P2P.
• No transaction fee
• Payment cycle 30 days. 97
 Execution Modality:
• DEX: Under this we treat all vendors and
NGOS as contractors
• NEX: Ensure that procurement rules
complies with the best international
practices.
• Country Office Support to NEX. (Follow
UNDP Guidelines)
• NGO Execution
• UN Agency Execution 98
 Asset Management:
• What is asset?
• Types of assets: Capital and non-capital
• Profiles of assets
• Who can add/ retire assets?
• Theft and loss of assets
• Tracking of assets
• Assets for management and development
project
• Major concerns of external auditors
• Disposal: Clearance by CAP/ACP 99
 Contracting Do’s & Don’ts:
• Risk Assessment
– Be aware that each contract has a finite amount of
risks that is acceptable
– Focus should be shift as much risk to supplier
– Don’t use the supplier terms and conditions
• Contract Methodology
– Determine the contract type that mitigates risks
– Don’t overlook the importance of TOR
• Contract Execution
– Include your T&C in RFQ, ITB & RFP
– Have the supplier sign and return the RFP as a pre-
100
requisite for being awarded business.
 Practical Tips:
• Procurement must be framed with clear and accurate
clients requirements and appropriate evaluation process.
• If there is one thing you have to get right, it is evaluation
methodology. Once its is put out, you have crossed the
rubicon.
• Purchasers must be scrupulous in ensuring fairness of
the process, even if it means issuing an addendum or
clarification to all vendors.
• Bid closing time is the closing time-being late means
automatic disqualification.
• Vendor must be legal and viable business entity
• Evaluation team should comprise of multidepartment 101
team –no conflict of interest
 Practical Tips:
• Hard work at the start pays off for both buyer and seller
• While developing specifications, determine if the requirement is a
mandatory requirement i.e. must meet for consideration of offer.
• Benchmark the each specific requirement. Suppose you give 10
marks to a point, what benchmark the vendor will have to meet.
• Purchaser should act as a non-voting member to give guidance on
procedural matters.
• Purchaser will invite end users and other knowledgeable persons to
participate
• Evaluation panel should comprise of either 3 or 5 members.
• Best value concept (Combined Scoring Concept)

102
 Contracting Modality:
• 100, 200 and 300 series Contracts
• Service Contracts (SC)
• SSA
• Reimbursable Loan Agreement (RLA)
• Non-Reimbursable Loan Agreement
• Professional Services Contract
• Institutional Services Contract
•
103
Long Term Arrangement (LTA)
 Contract Types:
• Fixed Price Contract (Lump Sum)
– Requirements are well defined
• Time and Materials Contract ( Fixed Unit Price)
– Major cost elements are known but quantities not
defined, Ceiling Price, per-hour labor rate, terms for
reimbursing direct material costs
• Percentage Contract
• Cost Reimbursement
– Requirements are too vague
– Ceiling Price

104
Selection of Contract Types
(Implementation) Project Life Cycle (Conceptual)

(High) Cost (Low)

Technological Challenge
Procurement Risks

Time & Materials

(Low) (High)
Fixed Price

(Specific) (Vague) 105

Requirements
 Performance Security
• Required to ensure compliance with contract requirements
• Buyer require some form of performance guarantee
• Performance Bond: Irrevocable and unconditional type. A
performance bond is issued by a surety or bonding company. Legal
terms of bond are more complicated but have the same effect as a
bank guarantee.
• Letter of Credit: A confirmed, Irrevocable standby letter of credit may
be used as an alternative.
• Performance security are limited to percentage of the value of the
contract.
• Performance Security should not be the only remedies for breach
• The remedies may be cancellation, Liquidated Damages ( To cover
late delivery)
• Retention Clause

106
 Shipping Terms: INCOTERMS
• “ E” Term: EXW
• “F” Terms: FCA, FAS (Free alongside
Ship), FOB
• “C” Terms: CIF, CFR, CIP (Carriage and
insurance Paid To), CPT
• “D” Terms: DAF (Delivered at Frontier),
DEF (Delivered Ex Ship), DEQ (Delivered
Ex Quay, DDU, DDP
107
 Bill of Lading:
• This can be likened to transferable cloakroom tickets
• They acknowledge receipt of goods in a certain conditions
• This is a document of title
• A clean bill of lading states that goods are received in good
conditions
• The document covering the carriage of goods by sea is called B/L
• It covers:
– Beneficiary
– Port of shipment and destination
– Marking and number of boxes
– Weight and dimensions
– Whether freight is pre-paid
“Receiving of Goods-Received but contents unchecked”

108
 Third Party Inspection
• Carried out to ensure that goods conform to standards
and specifications of the purchase contract.
• Inspection can be carried out during manufacture, at the
pre-shipment and post shipment stage and/or after
arrival/installation at the site.
• Cost of inspection varies from 1-2% depending on scope
• Legal liability is very limited
• Inspection before shipment is suitable for
– Where goods are procured from a distant source
– Where transportation costs are significant factor
– Where the return of rejected goods would be impracticable.
– Where inspection at the point of destination would be
unsatisfactory.

109
 Freight Forwarding
• Shipping term determine the involvement of buyer in
arranging transportation, and their port and custom
clearance.
• To arrange transportation, it is necessary to know:
– What modes of transport techniques are available
– What services are available and are appropriate
– What are the current and prospective freight rates
– What documentation is involved
– What are the risks and to what extent carriers will
indemnify for loss and under what circumstances.
• Buyers often this knowledge and turn to freight
forwarders
• They have knowledge of port, custom rules
• They work on commission basis. They also receive 110
commission from the carrier.
 Cargo Insurance:
• Protection against financial losses resulting from
damages, fire, war, strikes, pilferage and theft, breakage,
non-receipt of entire or part of consignment and damage
suffered by goods during transit and declared general
average.
• Coverage should cover cost of goods+ Freight+ 10% to
cover admin cost.
• Duration of coverage (Pre-shipment and post shipment)
• Insurance during storage
• Blanket Policy of UNDP ( Rate 0.24%)
• Claim Procedure
• Does it cover when goods are in transit over land or on
its own wheel

111
 Cargo Insurance:
• Institute Cargo Clauses: A, B and C Type
• CIF/CIP only require C cover without war and
strikes
• C Type does not cover Drop Damage, Loss
Overboard.
• A Type covers all risks except war and strikes
• C Type cover GA, Fire, Explosion, Perils of the
sea, overturning
• Damage due to Improper packing and Delay are
not covered by any type.

112
 Risk Management
• Risk is part of the procurement environment
• It involves systematic identification,
analysis, treatment and where appropriate
accepting the risks
• Agreements to limit a supplier’s liability to
UNDP and third party (Indemnity.
Guarantee, warranty)

113
 Risk Management
Write Prepare
Specifications Solicitation
TOR and SOW Documents
Identify Needs Choose a Procurement
Method

Seek, Clarify
Award Contract and Close
Offers

Evaluate Offers

Manage the
Contract

Negotiate the Contract 114

Evaluate the Procurement
 Risk Management:
• Key to effective and efficient delivery
• This should be integrated in day to day management
• More important when we are moving from “arms length”
to “partnering”
• Typical Risk factors: Buyer risk factors, Supplier Risk
Factors, Contractual relationship risk factors, External
risk factors
• Tools and techniques for managing risks: (Risks, Likely
consequences, what to do)
– Identifying the need
– Developing the specifications
– Contract documents 115
 Risk Management:
• Selecting a procurement method
• Seeking, clarifying and closing offers
• Identifying the preferred supplier
• Evaluating Offers
• Negotiating the contract
• Managing the contract
• Evaluating the procurement process
• Disposals
• Impact of each of the above on cost, timetable,
user acceptability, integrity and competence 116
Risk: Identifying Needs
Risk Cost Delivery Ethics
Overstatement of V V N
Needs.
Understatement of V V N
Needs.
Insufficient Funding. V V N
Impractical V V N
Timeframe for
Supply.
No Available V V N
Solution.
Fraud. V V M

117
 Risk: Writing Requisitions
Areas of Consequence
Risk Cost Delivery Ethics
Narrow/ Biased V V M
Specifications

Definition of Inappropriate V V N
Product.

118
Risk: Solicitation Documents
Risk Cost Delivery Ethics

Terms and Conditions V V V

Unacceptable to Suppliers.

Uncertainty amongst V V V
Contracts due to Conditions
of Contract.

Provision of Inadequate V V V
Information.
Biased Requirements. V V V

Inadequate Requirements. V V V
119
Risk: Procurement Method
Risk Cost Delivery Ethics
Failure to Identify M V V
Potential Sources.
Lack of Market M V V
Research.

Supplier Monopoly. M V V

Selection of M V V
Inappropriate
Method.
120
Risk: Seek, Clarify and Close
Offers
Risk Cost Delivery Ethics
Failure to N M V
Adequately Address
Suppliers’ Inquiries.
Actual or Perceived N M V
Favoritism in
Providing
Information.
Breach of N M V
Confidentiality.
121
Risk: Evaluation of Offers
Risk Cost Delivery Ethics
Failure to Observe V V V
Effective Evaluation
Procedures.
Breach of V V V
Confidentiality.

Failure of Offers to V V V
meet Needs.
Failure of Evaluation V V V
to Identify a Clear
Winner. 122
Risk: Award of Contract
Risk Cost Delivery Ethics
Selection of V V V
Inappropriate
Supplier.
Selection on V V V
Inappropriate
Product.
Insufficient Number V V V
of Responses.
No Response from V V V
Known High-Quality
Suppliers. 123
Risk: Negotiate the Contract
Risk Cost Delivery Ethics
Unmatched Expectations of V V V
Buyer and Supplier.
Deadlock on Agreement. V V V
Undue Concession to Suppliers. V V V
Failure to Accommodate V V V
Standard Conditions.
Grossly Unfair or Onerous V V V
Requirements.
Failure to Reflect the Terms V V V
Offered and Agreed in the
Contract.
Inadvertently Creating a V V V
Contract without Proper
Approvals. 124
Risk: Evaluate the Procurement
Risk Cost Delivery Ethics
Failure to Assess N N V
Supplier’s Performance.
Failure to Assess the N N V
Process.
Loss or Damage of Goods N N V
in Transit.
Fraud. N N V

125
Risk: Managing the Contract
Risk Cost Delivery Ethics
Variations in Price and Currency V V V
Fluctuation.
Unwillingness of Supplier to V V V
Accept the Contract.
Failure of Either Party to Fulfill V V V
the Contract.
Inadequate Administration of V V V
Contract.
Acceptance Before Completion. V V V
Increase in Scope of Work. V V V

Intellectual Property. V V V
Third Party Liability. 126
 Ethics, Probity & Accountability
• Public funds and hence require more than usual public
scrutiny.
• Probity means integrity, uprightness and honesty.
• Transparency and accountability gives confidence to
suppliers to participate.
• Ethics are moral values that guide the procurement
persons in their tasks.
• Ethical behavior cover the concept of honesty, integrity,
probity, fairness. Avoiding conflict of interest etc.
• Check list:
– Is the action legal?
– Can I justify it?
– What would happen if action is publicly scrutinized?
– Do I think that it is right thing to do? 127
 Procurement Accountability:
• Definition: The accountability in procurement
means that staff is responsible for actions and
decisions that they take in relation to
procurement and for the resulting outcomes.
The staff is accountable through established
lines of accountability.
• How does accountability help? The
accountability encourages the efficient, effective
and ethical use of the organizational resources.
This is the main watchword for UNDP
procurement process.
• Fundamental elements of Accountability: 128
 Accountability:
– Procurement Policy:
– Documentation: It is important and provides record
of procurement activities. This need to be
strengthened.
– Disclosure: Annual procurement plan must be
published to provide confidence.
– Notification: The revised procurement plan calls for
publishing all major procurement notices and award
of the contract. This is being followed to a limited
scale.
– Dealing with complaints: The procurement protest
procedures
129
 Why focus on Ethics?
• Increased business volume=>higher
pressure
• Added Scrutiny (Due to recent cases of
misconduct)
• A breach of ethics affects credibility, which
is difficult to recuperate.
• Impropriety can harm the reputation of the
organization
130
 Definition of Ethics
• Ethics is the discipline related to the issue
of right and wrong, moral duty and
obligation, moral principles and values,
and to moral character.
• Ethics: Greek word “ethos’…implies
character and customary behaviour.
• Morality: Latin word “mores’…refers to
social customs.
131
 Common Ethical Risks
• Conflict of interest
• Fraud
• Corruption
• Coercion
• Collusion
– Ethics encourages responsible conduct, while
compliance prevent misconduct.
– Ethics is self imposed while compliance is externally
imposed
– Ethics is personal responsibility while moral
compliance is legally driven

132
 Procurement Ethics:
• Conflict of interest: A conflict of interest may exist when a staff is
involved in an activity or has a personal interest that might interfere
the objectivity in performing the function. (Code to guide
relationship) It can arise:
– When an staff takes outside employment or has financial interest
– When personal relationship with staff of other business entity
could influence the decision.
• Gifts and Gratuities:
– May not accept gifts or gratuities from any supplier for
themselves or for their family
– May not take advantage of their position to seek discounts on
procurement for personal use. This is construed as a gratuity
– May accept advertising novelties.

133
 Procurement Ethics:
• Integrity:
– Open and effective competition
– Environmental sustainability
• Ethics vs. Compliance ( Ethics encourages responsible
conduct and compliance prevent misconduct; Ethics is
self imposed)
• Code of conduct (Established in the new CAP User
Guidelines)
• Ethical belief is a personal choice, however ethical
conduct can be mandated by an organization.
• Ethics are moral boundary or values within we work
134
 Procurement Ethics:
• Integrity:
– Open and effective competition
– Environmental sustainability
• Ethics vs. Compliance ( Ethics encourages responsible
conduct and compliance prevent misconduct; Ethics is
self imposed)
• Code of conduct (Established in the new CAP User
Guidelines)
• Ethical belief is a personal choice, however ethical
conduct can be mandated by an organization.
• Ethics are moral boundary or values within we work
135
 Fraud vs. Corruption
• Fraud is defined as “dishonestly obtaining a
benefit by deception or other means” and
includes both tangible and intangible benefits.
• Fraud means the intentional , false
representation or concealment of facts for the
purpose of inducing another.
• Corruption means the practice of offering, giving,
receiving directly or indirectly of value to
influence the action of procurement staff.

136
 Contract Management
• It is post-award phase
– Compliance with contract requirements
• Time and quality control
• Dealing with performance problems
• Management of bid/performance security
– Measurement of performance and reporting
• Certification of reporting
• Contract Close –out
– Management of contract changes
• Variation orders
• Contract amendments
– Resolution of claims and disputes
• Settlement of claims
• Contract termination

137
 Contract Administration:
• Def.: Those activities and actions taken by the buyer and
supplier during the time from contract award to contract
closeout. They may include follow up, expediting and
supplier management function.
• Issues to be addressed: Inspection procedures,
penalties for non-conformance, Payments, rejection,
termination, debriefing, procurement protests, PO
closing in Atlas, claims for losses, consultants charging
billable hours without measurement of progress, new
person being assigned, substitution of products etc.
• Step One: Ensure that there is a designated contract
administrator
• Step 2: Define the duties of the contract administrator 138
and assist in developing contract administration plan
 Contract Administration:
• Step 3: Perform random checks. Non-
compliant situations must be identified.
• Step 4: Ensure good communication
• Step5: Participate in the contract renewal
or rebid decision. Enter the vendor rating
and close the PO in Atlas.

139
 Scope of ACP Review
Objective: Mitigate Risk
•Procurement Process: Transparency, Method
•Specification/TOR/Quality
•Availability of Funds
•Value for Money/Cost Details/Consulting Fee
•Evaluation Modality
•Performance Security/Warranty
•Shipping/Insurance
•Licensing/Copyrights
•Use of LTA
•Type of Contracts
•Payment Terms 140
 Advisory Committee on Procurement
• Established by CPO to oversee major contracts
• Review contracts which involve commitments to a
supplier with respect to a single requisition or series of
req in a calendar year valued at $100,000 or more
• Proposed contracts which generate income of $10,000
• Any amendment of a contract previously reviewed by
ACP where the contract amendment or a series of
amendments either increases the total amount by 20%
or $100,000 whichever is less.
• Any amendment not previously submitted to the ACP
where the revised total contract amount exceeds
$100,000.
141
 ACP:
• Proposed contract that leads to series of
contracts amounting more than $100,000.
• Disposal, Write-off or transfer of goods
with asset value $30,000 or more
• All vehicle accidents or losses when gross
negligence is the cause.
• Procurement of services related to
individual consultants with contract
amount exceeding $100,000.
142
 ACP Submissions 05

22% 11%

20%
HQ
A
15% AP
AS
12% 20%
EC
HQ A AP AS EC LAC Total LAC
99 175 181 107 132 198 892
40 m 154 m 158 m 119 m 32 m 96 m 599 m

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Common Reasons for Rejection
 Failure to undertake a competitive exercise
 Impermissible justification for waiver
 TOR or Statement of Works or Specifications
incomplete
 TOR or Statement of Works or Specifications too
restrictive or biased
 Incorrect evaluation methodology or criteria
 Failure to submit requested documentation for ACP
review
 Conflict of interest
 Value for money not obtained
 Incorrect procurement method used
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 Incorrect shipping terms cited
 Key Observations:
• SOW/TOR not clear, Biased/ Inadequate specification or
specific requirements or brand names
• Evaluation Criteria does not cover all the deliverables
and do not provide sufficient weight as per their
importance
• Wrong Procurement Methodology
• Use of NGOs for procurement
• Advance Payment on the very high side
• Process too mechanical, Market research missing
• Insufficient number of responses
• Evaluation of Offers not done well
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 Oversight at a Glance:
• Number of cases from RBLAC: 265
• Number of cases from RBAP: 236
• Number of cases from RBA: 205
• Number of cases from RBEC: 75
• Number of cases from RBAS: 89
• Number of cases from HQ units: 138
• Number of cases withheld for approval: 31%
• Number of cases if “subject to” is included:
Nearly 55%
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 Procurement certification
• Course has been designed in-house by OLPS
• Addresses basic procurement policy and standard Atlas
Procedures.
• Objective: 1.Enhance learners’ comprehension of UNDP
procurement policy and processes 2. Increase the level of
competence utilizing the Atlas Applications.
• Target group is “Buyer”
• Online programme ( 6 hrs for online course and 2 hours for the
exam.)
• Course managed by LRC
• Status:
– Number of people enrolled:731
– Number of people who have passed simulated assessment: 345
– Number who took official assessment: 321
– Number who passed: 220

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 General Rating
Procurement Volume
Procurement Volume 30,000,000
Purchase Order Raised Count 1345
Total value 20,000,000
non-PO Vouchers above 2,500 (USD) Count 400

Procurement
Total value 980,000
NEX Procurement 20,000,000
DEX Procurement 10,000,000
Agency Procurement 0

Dashboard High value transactions (PO)

30,000 ~100,000 Count
Total value
6
180,000

Indicators
> 100,000 Count 3
Total value 300,000
Low value transactions (PO)
+ Overall 35%
Process Time
+ Management of Direct Payment (non-PO) 6 days
+ Management of Payment (PO) 14 days
+ Lead Time 10/7
Procurement Plan
Submission of Plan Yes
Approval of Plan Yes
Advisory Committee on Procurement
Quality of Submissions + Total 6
Delegated Procurement authority 50,000 (USD)
POs issues between 100,000 and Delegated Count 3
Authority
Total value 170,000
POs issued above delegated authority Count 6
Total value 600,000
Procurement Capacity
Number of staff with buyer profile 8 148
Number of staff Certified 5
 Procurement Process:
• Planning is not an analysis but identifying the activities
and direction of activities
• Formalization phase determine the sourcing approach,
evaluation criteria and solicitation documents. It
formalizes the requirement based on budget
• Implementation covers all functions that pertain to the
acquisition, including description of requirements,
selection and solicitation of sources, preparation and
award of contracts, and all phases of contract
administration. It may also include logistics.
• Final phase consists of audit, evaluation and feedback

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 Outline of SOW/TOR:
• Background
• Outputs/ deliverables desired
• Inputs to be provided
• Schedule of completion
• Standards by which to measure
performance
Other Issues:
1) Use active Verbs (2) Avoid “Should” or”May
(3) Use “Shall” for contractor and “will” for UNDP 150
 Procurement and the Law:
• Why Have conditions of contract: Goodwill
• Formation of Contract
– Offer, Acceptance and Consideration ( battle of
Forms)
– Oral Contract
• Contract Performance ( Fulfillment of according to its
terms)
– Delay in supplier’s performance
– Liquidated Damages
– Termination of Contract
– Force Majeure (French Term: Unexpected event) 151
• Rights and Obligations of buyer and seller
 Procurement & the Law:
• Securing Contract Performance
– Warranties
– Performance Guarantees
– Inspection
• Termination and Remedies:
• Settlement of Disputes;
– Negotiation
– Arbitration (UNCITRAL)
– Litigation (Judicial Contest) 152
 Procurement & Law:
• How is contract discharged?
– By performance, Substituted contract, Time,
Termination, Bankrupcy
• Intellectual Property
• Letter of Intent;
• Payment Terms; Performance Security
• Remedies for lateness or failure to perform to
specification
– Liquidated Damages
– Time is of the Essence( Time of performance shall be
essence of this contract) Any delay converts into
breach of contract 153
– Force Majeure
 Procurement Certification:
• The course entails 6 hours of learning
• Passing marks: 80% Minimum
• Test comprises of 100 questions
• Programme will be managed by LRC
through LMS
• Site is http://learning.undp.org

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 E-Procurement Solution Overview:
• Electronic Attachment (TOR, Specifications, Evaluation
Matrix etc.)
• Catalogue Procurement (Direct Connect and local
Catalogue): B2B
• Access to external users (NEX and NGOs)
• Cover procurement through Purchasing Card: P2P
• Link to UN WEBBUY as a Direct Connect vendor
• Business Services Procurement ( Concept of
Commoditizing services- It was alien to many)
• Move from tactical to strategic function
• We live in “e” world
• Track the procurement cycle 155
156
157
 SSA Guidelines
• Tool to hire individual contractors
• SSA shall not be used for staff function.
• As for LTA with companies, individual contractor can be
hired up to 3 years( Max.)
• Sourcing of individual contractor will be based on
competitive process.
• Selection is based on firstly evaluating technically and
then financially.
• Payment is based on number of days/ hours worked.
• Procurement process and not a HR process.
• SSA contractor is covered for Appendix D in defined
terms
• There are indicators to decide the consulting fee.
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 Procuring Services:
• Contract Companies:
– When companies are contracted, they provide
individuals as agreed.
– The company is responsible fpr performance
– There are defined deliverables and the time frame
– There is defined price
• Contract Individuals:
– UNDP takes the responsibility of completion.
– There are defined deliverables.
– Contractor is paid based on T&M basis.
– Should not be used for staff functions
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 Individual Contractors:
• When to Hire: Assignments that don’t require
teams of personnel and no professional support
of the office is required. In addition the
experience and qualifications of the individual
are of paramount importance.
• When coordination, administration or collective
responsibility become difficult due to high
number, it is advisable to go for contracting the
firm.
• The overall responsibility is with the hiring
organization i.e.UNDP.
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 Typical Country Office:
• Maldives
• Initial Scenario:
– Number of staff: 11
– Annual Programme Delivery : $2.5 Millions
• Scenario after Tsunami:
– Programme Delivery: $50 millions (Time Bound)
– Types of programmes (Livelihoods, Port
reconstruction, environment, Malaria eradication..)
• Types of Contracts to be used:
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 What is e-Procurement?
• e-Procurement is trade of goods and
services through the internet using a
secured ecommerce platform. It brings
together buyers and suppliers
electronically, enabling both parties to
reduce costs through improved processes.

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ATLAS eProcurement Module

Current Procurement Process

Requisition Purchase Accounts
Order Payable

Number of Vendors – 406,065

Number of Requisitions – 34,907
Number of Purchase Orders – 135,000
Total Procurement – 1,350 million (USD)
Total Expenses – 2.8 billion (USD)
Total PO Expense – 950 million (USD)
Procurement Analysis by Category – 25% could
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 Existing Limitation:
• Requisition is not very intuitive and user friendly.
• Detailed specifications and TOR can’t be
attached at the REQ level.
• It does not encourage the use of catalogues
developed based on competitive process.
• Procurement through purchasing card is not part
of the existing PO module.
• It is difficult to assess the status of the REQ.

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 How will I purchase?
• After being given access to the e-procurement module, you will
create online requisition
• You will be directed to approved supplier catalogue if available. If
not you will still complete online request as a special request.
• After you enter and submit a REQ, you can route it for approval via
workflow
• Approved REQ are then sourced to a PO and dispatched
electronically to the vendor.
• Vendor fulfills the order by shipping the requested items to the
delivery address.
• The requester will verify the receipt of goods and services
• Vendor electronically forwards the invoice including the GRN which
is validated within the system.
• Once matched, payment will be automatically made.

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ATLAS eProcurement Module

Procurement Process with eProcurement

eProcurement Purchase Accounts

(Requisition) Payable
Order

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ATLAS eProcurement Module
Objectives:

• Strategic procurement through Long Term

Arrangements (LTA)
• Single Point for entering all requisitions & ease of
use
• Electronic Attachments (Specifications, TOR,
etc.)
• Access to external users (NEX and NGO
execution)
• Global Fund Procurement
• Ability to Share catalogs with Country Offices
• Procurement through Purchasing Cards
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ATLAS eProcurement Module

Requisition Cycle

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Thank you!

171