1 2008 procurement performance rbec october 2008

1

2008 Procurement Performance

RBEC

October 2008

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January – September 2008 Executive Stats:

• Procurement oversight covered $ 54.82 million (17% of the total procurement of around 307 million. The latter includes the NEX advance clearances i.e. procurement conducted by the Government)

• Number of POs over 100K is 161 and number of ACP approved cases is 141 (overview of individual cases by the COs is due )

• Number of approved cases = 141(out of 182) marking the pass rate of 77%. Good 12% increase

• POs ratio of the total procurement = 57%

• 92% of submissions - Competitive Process and • 8% - Direct Contracting (3 qrtr 2008).

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Executive summary

• The earlier started inter office cooperation has increased and this became a positive trend for RBEC. Colleagues from the Central Asian countries as well as from Balkans were proactively assisting each other and the Corporate UNDP on several procurement initiatives.

• More offices have reinitiated the business processes review.

RCPO assisted Kazakhstan, Romania & Turkmenistan offices in this initiative. Macedonia is in the process

• On the job training in Bratislava has continued and RCPO hosted colleagues from Albania; Georgia and Latvia. Overall 10 colleagues benefited during 12 months. This exercise will continue as long as the demand exists.

• There are several projects that plan to reconstruct or

rehabilitate prisons or prison hospitals. It is therefore absolutely important to identify and consult specialist/s that have experience in the design of the specifications for the areas where there will be inmates.

• UNDP Plans establishment of LTAs with several engineers. The list will include but will not be limited to construction, water supply, sewage, prison safety, etc.

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Executive summary cont.

• Some offices issue try partite contracts & non standard cost sharing arrangements. This practice must be discontinued and the standard procedure applied.

• UNDP COs may need to be alert for the possible collusion when one company provides bids as two or even more; or if the companies coordinate the bids

• Evaluation Panel composition needs to be reiterated

• There was one case of the contract award before or against the ACP recommendations

• Financial and technical bid opening records need to be followed carefully. Special attention to be paid to the electronic receipt as well as bid opening records when both bids are opened the same day

• Electronic bid opening is not properly elaborated and at times it is not transparent. For instance bids are sent to a mail box that is not protected. Possible options: file protection with a password for the document or special mailbox password distributed to several staff

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Executive summary cont.

• Several countries in our region need to sign local language non UNDP standard contracts with non UNDP standard terms and conditions. Therefore, it is important to conduct local research in order to identify if indeed UNDP format cannot be used and to list all non standard contracts and reasons for their use. UNDP Legal must be consulted for such contracts use.

• There have been several unclearities in terms of the applicable rules when identifying NGOs for contracting. Procurement rules apply when we seek assistance from the NGOs for the UNDP and or Government implemented projects.

• UNDP must be in a leading role during the evaluation and UNDP staff should chair the panel. At times the evaluation panel consisted of military officers of the ministry of defense and or interior. Obviously such a panel cannot be considered as UNDP evaluation panel that is appointed by the Resident Representative.

• E-procurement has been successfully implemented in many offices. However, several of our good offices are still working on the implementation and we are ready to assist each of them. Assistance could be provided by RCPO as well as by the help desk.

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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.

Purchasing Card

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Evaluation Committee

• Chair= UNDP Staff – no vote but Veto rights

• 3-5 voting members

• Secretary no vote

• Invited or in-house expert when required

• Beneficiary to observe when required

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Evaluation Committee Cont.

• Chair – could be Programme Officer/OM/CTA, etc.

• Voting members could include Project Manager

• EP is officially appointed by the RR

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Civil Works check list• CAP Minutes• Independent International Civil Engineer certification of

the BOQ and Unit Rates• Evaluation Report and detailed comparative matrix• Internal estimate• Received Bids with BOQs• Bid Opening Record• Solicitation Document

(RFQ/ITB)BoQ/Specifications/DrawingsBidding advertisements (websites, newspapers, emails)

• Declarations of Impartiality • Pre-qualification docs• Communications with bidders, if any• Any other related to the procurement process

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Civil Works Cont. How the process may look like:

• UNDP either gets an approved design or advertises RFP for it

• Design, depending on the complexity may be prepared by one, group of designers or by a design company

• After the design approval offices seek site construction permission (often includes a complex exercise for soil checking; clearance from police, fire brigade, sanitation, nature protection , etc). This varies country by country and may be part of the design itself

• Design is supplemented with BOQ and an estimate. Again either the design company does it or UNDP engages expert/s to prepare one

• Offices either advertise a prequalification or ITB directly• Lowest bid is chosen.

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Civil Works Cont. How the process may look like cont.:

• Now, one must be careful to see why a company quoted 20 or 40% lower or even higher then our internal estimate. At times companies do have stocks of gravel, cement bricks or other materials or they produce them or have a whole sale stores. At times our specs were very broad so the company offered sophisticated equipment instead of a simple one that were planned .

• So bottom line is that proper analysis must be carried out before we disqualify anyone for a low price. Site visit and a pre bidding conference often help in narrowing the gaps or misunderstandings

• The best option is when the ITB has clear requirements on the documentation as well as the specs.

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Civil Works Cont. How the process may look like cont.:

• After this offices do request an independent international engineer opinion on the design, BOQ and unit rates. The idea is to get an independent expert opinion and advise. The international may mean different things but indeed what UNDP is looking at is the understanding of the best international standards as well as the transparency and acceptability of the costs. Depending the complexity one may even recruit an engineering company. Some offices do recruit such upfront.

• However ACP is always looking for a final reports well. • RBEC have some list of engineers that have assisted our good

offices.• At this point ACP asks for an independent international

engineer report for any civil works contract above USD 100K. • ACP also looks at the contract management procedures i.e.

who is in charge, who checks the quality, what are the risk management mechanisms; who clears the invoices; how big is the risk of fraud, collusion; what are the nature protection issues, etc.

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NGOs• There are three below options:• • 1 Implementation either:• A Government• B UN Agency• C NGO• D UNDP• All above are subject to the programme decision• • • 2 Responsible Party is any organization that we contract for the

provision of services and therefore procurement rules apply in general (these are contractors)

• • • 3 Programming decision (selection) applies when R.P. is a

Government institution, UN agency, CO, or NGO which will receive a small grant for non-credit activities (the maximum amount is 150K for each project).

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Recent Q&A• Can we use RFQ with closed envelopes and cumulative analysis for the

contracts below 100K? The issue is that some offices modify the RFQ and its kind of a hybrid between RFP and RFQ (has parts of both).

• Here one may split into two options: 1 SSA ; 2 Services or goods. • RFQ is an informal method. We could use it for the Services but the best

way may be to first ask for the technical proposal; evaluate it and only then ask for the financial in case we do not want to go for the lowest bid. This is relevant for the SSAs as well

• The best and the cleanest way is the lowest or RFP

• Can we change the weights in the evaluation criteria of the RFP, say decrease the overall expertise as well as the work methodology and increase the personnel? At times the evaluation of the CVs do need more weight.

• OK case by case . Change depending on the requirements and need to justify and advertise upfront

• When awarding an SSA to individuals do we need to check if they work

somewhere else on a full time bases (not in the Governments)? • We can be flexible for short, single time, deliverable based SSAs:

translation; technician, similar. The rest not possible

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Vendor management

• To safeguard UNDP against the illicit use of publicly entrusted funds in terrorist financing, the Country Offices should assess all individual and legal entities with whom business is conducted, to ensure that funds are used for their intended purposes. To sustain financial control of such public funds and compliance with the UN's regulations and guidelines regarding anti-terrorist financing practices, organizational due diligence requires Business Units to:

• (a) review each Supplier's profile; • (b) confirm the Supplier's business registration with government

authorities; and • (c) cross-check against the UN Security Council 1267 Committee's

Consolidated List of Individuals and Entities with Associations to http://www.un.org/sc/committees/1267/consolist.shtmlerro

ist Organizations. • The UN also makes continuing efforts to ensure that the organization conducts

business with vendors who adhere to the highest ethical standards. The UN Procurement Division maintains the List of vendors Suspended or Removed from the UN Procurement Division Vendor. The Country Offices should also cross-check against this list before entering into contract with any legal entity

• http://europeandcis.undp.org/intra

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RBEC: Distribution of ACP cases by category by amount

3rd qrtr 2008

Goods$4,362,997.07

28%

Professional services$5,078,102.97

33% Civil works$5,325,553.79

35%

Service Contract$361,640.92

2%

SSA$271,150.00

2%

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RBEC: Distribution of ACP cases by category by number of cases

3 qrtr 2008

Goods20%

Professional services40%

SSA2%

Service Contract5%

Civil works33%

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Regional Distribution of ACP Cases (By Number)

105122

154

98

182

240

170

50

100

150

200

250

HQ RBA RBAP RBAS RBEC RBLAC OTHER(PAPP)

January - September 2008

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Regional Distribution of procurement including NEX (By Amount, in thousand)

$212,778

$738,644

$87,749 $75,664 $54,820$121,852

$10,169

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000



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Average Contract Amount

$2,026,464

$6,054,460

$569,805

$772,086

$301,210 $507,717 $598,233

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000



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% of Cases Approved after First Round of Review

* Overall 73 %

78%

63%72%

66%60%

90%

53%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%



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Certified Procurement Staff

147

172

144

68

114

182

0

20

40

60

80

100

120

140

160

180

200

HQ RBA RBAP RBAS RBEC RBLAC

HQ18%

RBA21%

RBAP17%

RBAS8%

RBEC14%

RBLAC22%

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Scope of ACP ReviewObjective: 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 and Credibility of vendor

• Payment Terms

• Environmental Impact

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Common Reasons for Rejection

Failure to undertake a competitive exercise Failure to follow UNDP rules and regulations TOR or Statement of Works or Specifications

incomplete or vague TOR or Statement of Works or Specifications too

broad and containing several components that could have been separate processes

Incorrect evaluation methodology or criteria Incorrect evaluation panel composition Conflict of interest Value for money not obtained Cost Matrix not provided Incorrect procurement method used Incorrect contract type issued

1 2008 procurement performance rbec october 2008

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