Contracting for Services

Krishan Batra
Senior Advisor
UNDP, New York
Learning Objectives
Procurement Principles
Methods of Contracting
How to write SOW/TOR
Writing an effective RFP
Evaluation of Proposals
Types of Contracts
Contract Management
Procurement Facts: Year 2004
Total Procurement by HQ : $ 112 m
Total Procurement by UNDP: $ 1120 m
Contracting for Services: Nearly 80% of total
procurement.
Type of Services*: IT, Feasibility Studies, Experts,
Building Management, Printing, Design, etc.

* does not include Employment Contracts for individuals

Contracting Principles:
Best Value for Money
Fairness, Integrity and Transparency
Effective International Competition
The Interest of UNDP

Procurement Authority:
Contracting authority delegated to the CPO.
CPO delegates to RRs and Unit Heads.
CPO establishes necessary controls.
Purchase Order vs. Contract:
Why a Purchase Order or Contract Order or
Purchase Agreement or Supplies Order or
sometimes just plain a Contract?
Why does the paperwork vary depending on the
type of agreement I engage in?
When purchasing of an off the shelf item or
where risks are low use a PO.
Where complex services or goods with high risk
are sought use a Contract.
Contracting Strategy:
Contract amount less than $2,500:
assess the price
Purchasing Card (however, not for assets)
Contract amount between $2,500 and
$30,000:
obtain a minimum of three offers
informal process
award contract to the lowest evaluated bidder
Contracting Strategy:
Contract amount between $30,000 and
$100,000:
obtain a minimum of three international offers
informal process
award contract to the lowest evaluated bidder
Contract amount exceeds $100,000:
informal process: Request for Proposal (RFP)
evaluate the technical proposals
evaluate the financial proposals
award as per instruction
Single Source Selection:
Does not provide the benefits of competition
in regard to quality and cost
Lacks transparency
Encourages unacceptable practices
Justification should address economy
Continuity downstream
Justified in the case of low value
Single Source Selection:
No competitive market-place: Monopoly
Standardization
Result of a cooperation with others
Offers have been obtained for identical
Solicitation outcome not satisfactory
Purchase or lease of real property
Genuine exigency
Can not be objectively evaluated
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
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 is made solely on the basis of cost.
RFP is a negotiated procurement process and
provides flexibility to the contractor and the
company.
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.
Basic Elements of an RFP:
How they are to be delivered and the duration
they are required.
Performance Standards: minimum standards and
method of monitoring
Instructions to the Offerors
General Terms and Conditions
Special Terms and Conditions
Evaluation and award process
Instructions to Offerors:
Purpose: establish the parameters of the contest
When and where offers should be made
The form and language to be used
Deadline date of receipt
Validity period of offer
Currency
Criteria for evaluation
Contact person(s)
Outline of SOW/TOR
Background
Outputs/ deliverables desired
Inputs to be provided
Schedule of completion
Standards by which to measure performance
Other Issues:
Use active verbs (i.e., avoid should or may).
Use shall for the Contractor and will for UNDP.
Checklist for IT Contracts:
Rights granted under Payment Provision
license Acceptance Procedure
Terms of License Training
Scope of License Warranties
Right to source code Maintenance
Ownership of the Termination
software Governing Law
Evaluating Proposals
The Written Proposal
Is the proposal easily understood?
Is it relevant to your project?
Are the consultant deliverables stated?
Have you checked any of the references listed?
The Consulting Firm
How long has the firm been in business?
How many professional consultants on staff ?
Obtain CVs of the consultants assigned to your
project
Evaluating Proposals
The Fee Structure
Is the fee structure specified?
Is the stated fee fair?
Are the payment terms fair?
Evaluating Proposals
Ground Rules
Offerors identities, proposal contents shall be treated
with discretion Is the stated fee fair?
Technical evaluators shall not discuss any aspects of the
proceedings with anyone not designated a technical
evaluator
Do not discuss any details regarding the number of
proposals, their ranking etc.
Refer any attempted communication by the Offerors to
the Contracting Officer.
If additional information is needed, the question shall be
submitted to the Contracting Officer.
Tendering:Ten Commandments
Suitable Package
Early Warning
Non-Discrimination
Accessibility
Neutrality
Formality
Confidentiality
Consistency
Objectivity
No negotiations prior to award
Best Value:
Tradeoffs are necessary when no single
option is best on all evaluation factors- e.g
best technically and also lowest priced. The
need to have tradeoffs is a consequence of
having multiple evaluation factors.
Life cycle cost
Conducting Negotiations:
Satisfy each others needs
Identify differences
Conceal ones own position
Discover the opponents position
Generate multiple options
Understand the bottom line
Dont try to go it alone
Formality
Types of Contracts:
Fixed Price Contract: used if it is possible to
determine the quantity of services
Unit Price Contract (T&M): used if it is difficult
to determine with accuracy the requirements. In this
case the contract sets an amount not to exceed
Reimbursable Loan Agreement
Other Issues
In case of joint proposal, contract with lead entity
Rates over long period
Completion date
Currency
Contract Management:
Monitoring the Contract: Delivery
Making Payments
Certification
Payment unit for processing
Contract Amendments: 20% or up to
$100,000, whichever is less
Disputes and Claims: forward to OLPS
Termination of the Contracts
ACP: Scope of Review
1. Procurement Process: Transparency, Method
2. Specifications/TOR/ Quality
3. Availability of Funds
4. Value for Money/ cost details/ consulting Fee
5. Evaluation Modality
6. Performance Security/ Warranty
7. Shipping/ Insurance
8. Licensing/copyrights
9. Use of LTA
10. Type of Contracts
Thank You