Chapter 05. Sourcing
Table of Contents
Sourcing is the process of identifying suitable suppliers, including vendors, that could provide the required goods or services. The sourcing process also provides valuable information about products and specifications.
Sourcing is carried out using several main methodologies, as described below.
- Supply market research and analysis, including through internal and external sources;
- Advertisement of business opportunities through sourcing methods, such as Request for Information (RFI), REOI, and pre-qualification.
Vendors Recommended by Requisitioners:
- As a general rule, Requisitioners, substantive offices, and consultants engaged by Requisitioners or substantive offices may not recommend vendors for inclusion on the List of Invitees, as such practice may be perceived as undermining the principle of segregation of responsibilities between requisitioning and procurement entities. However, it is recommended that staff involved in procurement activities encourage vendors to register with the UNGM;
- If vendor recommendations are received, Procurement Officials shall carefully evaluate the desirability and propriety of including the recommended vendor on the invitee list. However, unless the Procurement Official is fully satisfied that the recommended vendor will bring special knowledge or expertise that will be beneficial to the proposed procurement, the recommended vendor should be excluded but may be encouraged to register for future or other solicitations;
- If the Procurement Official believes that a vendor should be invited to tender, then the concurrence of the Director, PD or CPO must first be obtained, and the individual recommending the vendor will have to ensure and declare that there is no potential conflict of interest between the vendor and him/herself;
- A consultant engaged to prepare or review technical specifications, TOR, or SOW and/or to assist in the evaluation of Bids or Proposals concerning a requirement shall not be allowed to submit a Bid or a Proposal for the same requirement;
- If a Vendor approaches the Requisitioner for inclusion on the List of Invitees, the Requisitioner shall direct the Vendor to the Procurement Official concerned.
Market research is the process of collecting and analyzing information about industry sector capabilities and overall market supply. It helps to identify goods, services, and vendors, assists in the development of technical specifications, TORs, SOWs and allows the collection of product and pricing information on available technology, solutions, etc. Market research is an essential exercise conducted by the Procurement Official in the quest to satisfy the Organization’s needs and is instrumental for any successful sourcing process, particularly if the goods or services have not been procured previously. When done through means such as seminars or events, market research may also be considered an outreach activity which assists the UN in disseminating information about its requirements and identifying new sources of supply.
Market research can be done through the use of external and/or internal sources. Market research should not rely solely on any one of the below sources, as several can be used in conjunction before deciding on the solicitation approach. The outcome of the market research, i.e. a list of suitable vendors, types of products available, etc. should be documented in the procurement case file and shared with the Requisitioner.
The following external sources are valuable sources of information in the search for potential vendors:
- Other UN organizations/lead agencies specialized in the procurement of goods or services within a particular field if this constitutes Best Value for Money and more efficient use of resources (e.g. UNHCR for refugee supplies, UNICEF for vaccines, UNFPA for contraceptives, WHO for pharmaceuticals and medical equipment, UNEP for environmental technologies and services);
- Commercial/specialized journals and magazines;
- Chambers of commerce, trade delegations, embassies;
- End-users, clients;
- Business seminars, vendor catalogs, professional journals, trade publications, or the Internet. The following internal sources can also be a good starting point in the search for potential vendors:
- Existing LTAs, BPO and, if existing for a certain need, pre-qualified lists of vendors;
- Vendors who have had prior contracts with the UN;
- Previous lists of invitees within the same field;
- Consultation with other Procurement Officials;
- Available communication platforms and other mailing lists.
Furthermore, care should be taken to ensure that small- and medium-sized enterprises (SMEs), not-for- profit, minority-, women-owned businesses, and/or disability-inclusive suppliers are not excluded from the market research. Due consideration should be given to communication channels in the local language(s) to reach this specific audience and ensure effective international competition.
It is important to periodically reassess the market, particularly for products and services that are rapidly evolving in certain geographical areas and industries. During the development of Category Strategies as part of Category Management, extensive market research is conducted which can be drawn upon for individual solicitations where relevant.
Advertisement for business opportunities can be done by either one of the below methods:
- RFI – see Chapter 5.4 Request for Information
- REOI – see Chapter 5.5 Request for Expression of Interest (REOI), which may entail pre- qualification of vendors, if applicable and suitable (see Chapter 5.6 Pre-Qualification of Vendors)
Business opportunities over US$ 150,000, must be advertised on UNGM and PD’s website unless a waiver is granted by the corresponding Procurement Approving Authority for reasons of, for example, maintaining the confidentiality of information concerning sensitive requirements or security concerns. They should be advertised or distributed as appropriate, in a manner that would lead to the most beneficial responses according to the nature and circumstances of the required product, such as announcements on local or regional radio, advertisement on websites of other organizations, in local or regional newspapers, or in specialized journals.
The RFI is an instrument to conduct a market survey to obtain information that can be used to identify available or potential solutions/suppliers to fulfill identified needs. RFIs may include information on cost and delivery times and are generally executed prior to finalizing the Statement of Works, Terms of Reference, or technical specifications.
The information received in response to an RFI is not used for the purpose of qualifying vendors. Primarily, it helps identify generic descriptions of available or potential alternatives for fulfilling a defined requirement or outcome, as well as the possible costs and delivery time. The RFI is oriented toward seeking a technical alternative, option, solution, or cost estimate, rather than a direct response in the form of an offer from the market or industry.
An RFI is an effective and efficient tool to help identify a possible solution for a specific requirement and to gauge the commercial environment for the requirement. RFIs are also used to identify potential vendors.
Annex 6 - Request for Information - HQ template
Annex 7 - Request for Information - Mission Template
A Request for EOI is an advertisement prepared by the Procurement Official, in consultation with the Requisitioner, to identify vendors that wish to participate in a solicitation. Vendors are requested to express interest by a specified deadline by submitting the detailed information requested in the REOI, for example, to demonstrate experience and qualifications in provision of the relevant goods/services. The information provided by interested vendors is assessed, and vendors are considered for inclusion on the List of Invitees.
An REOI is a cost-effective method to identify suitable vendors. However, it requires the allocation of additional time, as vendors should be given a sufficient interval to respond to the REOI. Depending on the complexity and nature of the goods or services being procured, a recommended minimum of ten working days should be granted for responses. When shorter deadlines are specified, or when the Procurement Approving Authority waives the posting of an REOI for Request for Proposals (RFPs) and Invitations to Bid (ITBs), the reasons must be properly explained and documented in the case file.
Evaluation of REOI responses must be performed by the Requisitioner and/or a Procurement Official. As appropriate. In addition, the Procurement Official may actively approach potential vendors, identified through analysis of the supply market or registered in the UNGM database, to seek their interest to participate in the forthcoming solicitation.
Annex 8— Request for Expression of Interest and Vendor Response - UN HQ
Annex 9— Request for Expression of Interest and Vendor Response – Missions
Pre-qualification is a formal method of assessing vendors against pre-determined criteria, and only vendors that meet established criteria are invited to a tender (shortlist). Therefore, pre-qualification exercises should be applied only in such instances where the need to limit the List of Invitees has been clearly determined and the Procurement Approving Authority has authorized the pre-qualification exercise. This is done through the REOI process. The use of a pre-qualification exercise should be noted in the Source Selection Plan of the relevant solicitation, including the rationale for using the pre-qualification exercise.
The process guarantees that solicitation documents are issued only to vendors with adequate capabilities and resources. Adequate time must be allowed for potential vendors to prepare responsive applications. The period between the invitation for pre-qualification and the deadline for submission of a response shall be no less than ten working days unless a written justification has been provided and approved by the Director, PD or the Chief Procurement Officer. Such approval shall be kept in the procurement case file. Invitations for pre-qualification must be advertised on the UNGM and PD website and any other relevant media. Pre-qualification is a formal process where vendor appraisal is done prior to issuing the solicitation documents. If prequalification is done for a specific procurement activity, all vendors submitting applications and meeting the prequalification criteria shall be invited to tender. Pre-qualification does not preordain a contract award.
Pre-qualification is recommended when:
- The high costs of preparing detailed bids could discourage competition (such as custom-designed equipment, design and build projects, or specialized services).
- The requirement involves complex technical components for which the vendor needs to have minimum technical capability and capacity to complete the works to the required quality standard such as construction works;
- As determined necessary to achieve the best outcome for the procurement process for highly complex or otherwise appropriate needs, subject to approval by the Director, PD or Chief Procurement Officer. The criteria for the prequalification, the process, and the staff involved in the prequalification evaluation shall be established before the REOI is advertised. It shall be outlined in a separate document, and signed and dated by the Requisitioner, and cleared and signed by the Procurement Official.
The identification of vendors using the tools described above enables the creation of the list of potential vendors eligible to receive the solicitation documents.
Generally, the Procurement Official should invite all vendors that expressed interest through an REOI, and that are registered at least at the basic level in UNGM at the time of issuance of the solicitation. The UN is under no obligation to invite all companies who expressed interest through a request for EOI or having replied to an RFI; such decision shall be documented in the SSP. Similarly, there is no obligation for the UN to limit the List of Invitees to companies that expressed interest or replied to an RFI. Where additional companies are added, the evaluation committee should assess the same information for each vendor as was requested in the EOI or RFI.
If there is only a limited number of vendors in the market (e.g. oligopoly market conditions) and/or the Procurement Official has not been able to otherwise identify the minimum required number of invitees specified below despite adequate market research, this should be clearly documented and explained to the Procurement Approving Authority not below the Chief of Section in a procurement office or to the CPO when requesting approval of the List of Invitees.
Otherwise, the List of Invitees for formal methods of solicitation should normally include (depending on the industry and nature of the requirement) a minimum required number of ten (10) invitees for tenders below US$ 1,000,000 and fifteen (15) invitees for tenders estimated at a value above US$ 1,000,000. For Request for Quotations (RFQs), a minimum of five invitees is required, however the Procurement Official shall ensure sufficient number of invitees to generate more than five quotations but no less than a minimum of three quotations (see Chapter 6.3.3).
If a pre-qualification stage has been undertaken, vendors that are ineligible must not be included in the List of Invitees. In such cases, the minimum recommended number of vendors do not apply.
|One of the core principles of procurement, international competition aims to solicit offers from a wide and diverse range of vendors and provides equal access and fair opportunity to compete for contracts for required goods or services.|
The List of Invitees must include all vendors who will be invited to tender. If the minimum recommended number of vendors, as per Chapter 5.7, cannot be achieved, the rationale should be justified in writing in the procurement file and must be authorized by the appropriate Procurement Approving Authority based on the value of the procurement exercise, up to the threshold of the Director, PD or Chief Procurement Official. This justification may be written in or attached to the List of Invitees. The solicitation document can be issued only after this justification has been provided.
Amendments to the List of Invitees may be made by removing or adding vendors who will be invited to tender. Vendors may be added to the List of Invitees upon approval of the Procurement Approving Authority. The decision is based on the professional judgment of the Procurement Official at the CPO level or Chief of Section as to whether the vendor may be reasonably expected to provide a competitive bid and is duly registered in UNGM. In the case of additions to correct omissions and errors in distribution by the UN, an extension to the bid submission deadline may be considered.
Requests from invited vendors to revise the entity included in the List of Invitees, to reflect such things as subsidiary structures or joint venture engagements, shall be considered on the basis of professional judgment of the Procurement Official at the CPO level or Chief of Section and subsequent approval by the Procurement Approving Authority (see also Chapter 126.96.36.199 (b) on joint ventures). In such cases, the Procurement Official shall ensure that such entities are registered at the basic level in UNGM at the time of invitation.