Contracting for Services Krishan Batra Senior Advisor UNDP

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 license Terms of License Scope of License Right to source code Ownership of the software § § § § Payment Provision Acceptance Procedure Training Warranties Maintenance Termination 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 other’s needs Identify differences Conceal one’s own position Discover the opponent’s position Generate multiple options Understand the bottom line Don’t 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. 2. 3. 4. 5. 6. 7. 8. 9. 10. Procurement Process: Transparency, Method Specifications/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

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