Chapter 08. Evaluation of Submissions

8. Evaluation of Submissions

8.1 Overview

Evaluation is the process of assessing and comparing Submissions in accordance with the evaluation methodology and criteria in the solicitation documents and in the SSP. The aim is to determine the offer that best fits the evaluation criteria and thus represents the best value for the UN. An objective, fair, and well-executed evaluation process is critical, as it results in a recommendation and a request for an award of contract.

In general, the UN evaluates all offers based on the principles enshrined in Financial regulation 5.12 including the principle of Best Value for Money, i.e., the ideal combination of technical and financial factors.

Upon receipt and opening of offers, the evaluation of offers must be conducted according to the evaluation criteria and method defined in the SSP and clearly established in the solicitation documents. New or revised evaluation criteria cannot be introduced during the evaluation of offers nor can the method of evaluation be changed.

The evaluation process comprises the following main steps (described later in this chapter):

1. 1. 1. Preliminary screening (see 6.4.6.1);
      2. Technical evaluation;
      3. For RFPs: completion of the technical evaluation report and opening of financial proposals;
      4. Financial evaluation, including justification of reasonableness of price (if applicable);
      5. Clarifications, if required;
      6. Finalization of the evaluation report.

As offers must be valid at the time of contract issuance, evaluation of offers must be completed before the validity of the offers expire. Procurement Officials should also take into account the time required for obtaining approval and for issuing the contract. In the event that these conditions are unlikely to be met, Procurement Officials may request bidders in writing to extend the validity of their bid or proposal.

8.2 Evaluation Committees

The purpose of the Evaluation Committees is to verify that vendors and their offers satisfy the requirements of the solicitation documents and to evaluate offers according to the evaluation criteria predefined in the SSP. The SSP describes critical components of the Sourcing process and provides justification for Sourcing decisions in order to achieve Best Value for Money. It provides an objective approach to the methodology of selecting the best source to fulfil the established need.

The Evaluation Committees are divided into a Technical Evaluation Committee, responsible for the technical evaluation, and a Financial Evaluation Committee (or Procurement Official), responsible for the financial evaluation. The decision of who participates as a member of the technical and financial evaluation committees rests with the requisitioning and the procurement functions, respectively; this decision is to be documented in the SSP.

The Evaluation Committees are responsible for assessing the ability of the potential vendors to meet the UN’s stated minimum requirements and provides a basis for determining the relative merits of competing bids and proposals based on predetermined evaluation criteria.

To conduct a fair and unbiased evaluation of Submissions, the SSP shall include the formation of the Technical Evaluation Committee consisting of at least two (2) members (i.e., at least one of whom shall be from the Requisitioner's office, and the other(s) shall be qualified UN staff members). A superior and subordinate may not serve together on the Technical Evaluation Committee. To ensure a clear segregation of duties, Procurement Officials cannot serve as members of a Technical Evaluation Committee, unless, exceptionally, they are acting as Requisitioners for a specific case, in which case they cannot act as Procurement Officials for that solicitation. The actual number of people on the evaluation team will depend on the nature, complexity, and value of the procurement activity, but should normally not exceed five (5) members.

The Technical Evaluation Committee is a collegial body that shall always endeavor to achieve a consensus in their final decision. Where a consensus cannot be achieved despite all efforts, the chairperson may call a simple majority vote to settle an issue or disagreement. Should the votes be equally divided, the average of the scores will be applied. Once a final decision is achieved, the members shall uphold the final decision achieved by the team.

In particularly complicated procurement processes (e.g. complex specifications, high value bids, complex pre-qualification criteria, etc.), external subject-matter experts may be contracted onto the evaluation committee as observers in an ex-officio non-scoring advisory capacity. If deemed appropriate, members of the oversight bodies (OIOS, Board of Auditors, Joint Inspection Unit) external to the procurement process may participate as independent observers in technical evaluations and record their observations in writing. Committee members and observers must immediately indicate if they are in a potential conflict of interest situation with any of the vendor (e.g. owning shares in the company, family relationship with vendors, etc.), in which case they shall be replaced.

Main Tasks of the Chairperson During the Technical Evaluation:

1. 1. 1. Perform a facilitative role in the technical evaluation committee, strive for consensus, and settle any issues or disagreements (if applicable), and
      2. Remind the Technical Evaluation Committee that its deliberations are strictly confidential. Information about the content of the Submissions or the evaluation process is not to be revealed outside the evaluation committee. In particular, (i) during the evaluation, access to offers is restricted to the evaluation committee and to observers, and (ii) correspondence with bidders must be through the Procurement Official and must not be shared outside the evaluation committee.

Main Tasks of the Technical Evaluation Committee:

1. Conduct the technical evaluation and prepare a written report thereof, describing the score of the competing Submissions and ranking the Submissions from best to worst, in order to establish a competitive range of most responsive Submissions
2. The report shall also set forth:
   
   1. The basis of evaluation (i.e., the SSP as applied to the evaluation criteria and their relative weight);
   2. An analysis of whether Submissions are technically acceptable and, if unacceptable, the reasons thereof, including an assessment of each vendor’s ability to satisfy the technical requirement(s) and a description of each Submission’s strengths and weaknesses;
   3. A summary of the findings, matrix, or quantitative ranking of each technical proposal relative to the best rating possible;
   4. Observations made by independent observers, if applicable.

Main Tasks of the Financial Evaluation Committee/Procurement Official During the Evaluation Process:

1. Obtain signatures of affidavits of confidentiality and no conflict of interest from the technical evaluation committee;
2. Brief the Technical Evaluation Committee  about  its role and ensure  its familiarity with the solicitation process and evaluation criteria;
3. Prepare financial evaluation matrix;
4. Manage requests for clarifications with bidders, if applicable;
5. Upon receipt of the technical evaluation report, the Procurement Official or the Financial Evaluation Committee shall conduct and review the financial evaluation, make a final comparison of the competing proposals in accordance with the terms of the solicitation documents and the SSP, record its findings, and advise the Evaluation Committee of the recommendation of award.

8.3 Evaluation Criteria

Evaluation criteria are divided into the following categories, which are explained in Chapter 6 Solicitation and which are assessed during the evaluation process:

1. 1. 1. Formal criteria (see Chapter 6.4.6.1 Evaluation Criteria) – assessed during preliminary screening (see Chapter 8.5 Preliminary Screening)
      2. Mandatory and Technical Criteria (see  Chapter 6.4.6.2 Mandatory and Technical Criteria) – assessed during technical evaluation (see Chapter 8.6 Technical Evaluation), and
2. 1. 3. Financial Criteria (see Chapter 6.4.6.3 Financial Criteria) – assessed during financial evaluation (see Chapter 8.7 Financial Evaluation)

8.4 Evaluation Methodologies

There are three (3) different evaluation methodologies that can be utilized depending on the solicitation method selected, as summarized in the below Table.

TABLE 6: SOLICITATION METHODS AND CORRESPONDING

VALUATION METHODS

8.4.1 Lowest Priced, Technically Acceptable Offer

This method of evaluation is used when the solicitation is made through informal methods: LVA or RFQ (see Chapter 4.5 Shopping Cart and Chapter 6.3.3 Request for Quotation).

To provide a more flexible method for selecting vendors for procurement of relatively low value (equal to or below US$ 150,000), the evaluation methodology allows various considerations to be taken into account. The lowest-priced, technically acceptable offer methodology consists of the following steps (These apply mostly to RFQ. As for LVA, all these steps are compressed):

1. 1. 1. 1. Preliminary screening of quotations, including an assessment of whether quotations comply with the formal and eligibility criteria stated in the solicitation document;
         2. Technical evaluation of quotations, determining which are compliant to the mandatory criteria (if included in the solicitation document), and substantially compliant to the technical criteria;
         3. For financial evaluation, quotations that are found to be technically compliant shall be evaluated based on the lowest price;
         4. The selection of a vendor other than the one offering the lowest priced option requires proper justification. This must be documented and attached in UMOJA for monitoring and audit purposes, and reasons for not choosing the lowest pricing option must be included in the request for award signed by the appropriate Procurement Official (or CO, in the case of LVA).

8.4.2 Lowest Priced, Substantially Conforming Bid

This method of evaluation is used when the solicitation is conducted through an ITB (see Chapter 6.3.4 Invitation to Bid), and price serves as the overriding evaluation criterion upon which to award a contract. The lowest-priced, substantially conforming bid methodology consists of the following steps:

1. 1. 1. 1. Preliminary screening of bids, including an assessment of whether bids comply with the formal and eligibility criteria stated in the solicitation document. All bids substantially compliant at this stage will go through the evaluation of technical and financial aspects;
         2. Technical evaluation of bids, determining which are compliant with the mandatory criteria (if included in the solicitation document) and substantially conforming with the technical criteria, and rejecting non-compliant bids. Only bids meeting or exceeding the criteria shall be considered substantially conforming;
         3. Financial evaluation of bids, by selecting for award the lowest priced bid among the substantially compliant bids, as per financial criteria in the solicitation document. Nevertheless, since an ITB is a one-envelope procedure, the financial evaluation shall include all prices of both compliant and non-compliant bids to be presented to the Procurement Approving Authority.

8.4.3 Cumulative/Weighted Analysis

This method of evaluation is used when the solicitation is made through an RFP (see Chapter 6.3.5 Request for Proposal) and the evaluation is based on criteria other than price in order to ensure Best Value for Money. The combined analysis methodology consists of the following steps:

1. 1. 1. 1. Preliminary screening of proposals, including an assessment of whether proposals comply with the formal and eligibility criteria stated in the solicitation documents. All proposals deemed compliant at this stage will go through the technical evaluation step;
         2. Technical evaluation (mandatory criteria), determining which proposals are compliant with the mandatory criteria (if included in the solicitation document) and rejecting non-compliant proposals. Only proposals meeting or exceeding the mandatory criteria shall be considered compliant;
         3. Technical evaluation (technical criteria) determining the technical points achieved by each proposal as per the maximum points assigned per criterion included in the solicitation document and in the SSP. Only proposals that meet the minimum technical threshold indicated in the solicitation document (normally 60% or 70%) shall be deemed compliant;
         4. The Financial Evaluation Committee/Procurement Official shall review the technical evaluation report for accuracy and ensure it was conducted in line with the pre-established criteria and complies with procurement principles under Financial Regulation 5.12. Any discrepancies shall be communicated to the Technical Evaluation Committee for amendment of the report (see Chapter 8.7 Financial Evaluation);

1. 1. 1. 5. Upon acceptance of the technical evaluation report, the Procurement Official shall request the TOC to open the financial proposals of the offers that achieved the minimum technical threshold. The maximum number of points for the financial proposals, as stated in the solicitation document and the SSP, will be allocated to the lowest price financial proposal;
         6. Combined analysis, whereby the proposal obtaining the overall highest score after combining the scores of the technical and the financial proposals may be considered to constitute Best Value for Money. However, the recommendation for the award shall not be solely dependent on the total number of points, but also consider risk factors, quality considerations, and other suitable factors.

8.5 Preliminary Screening

To avoid spending further resources on the evaluation of invalid offers, offers containing material deviation may be rejected at an early stage of the evaluation process by performing a preliminary examination of offers against the formal criteria stipulated in the solicitation document.

Examples of formal compliance criteria are included in Chapter 6.4.6.1.

Offers may be rejected in the following situations (see Chapters 8.8.1 Clarifications from Vendors and Chapter 8.8.2 Material Deviations: Material Deviations, in particular regarding the types of missing information that the bidder could be given the opportunity to provide):

1. 1. 1. Absence of required bid/proposal security when applicable, or if it has been determined it is not compliant in terms of amount or validity period. A change in wording that is consistent with the prescribed format is not a material deviation. If there are concerns about the authenticity of the bid/proposal security, the Procurement Official should contact the issuing bank directly. If the issuing bank is unable to confirm the validity and/or authenticity of the document submitted as security, the chairperson of the evaluation committee must immediately report it to the Procurement Official, who shall in turn report to the VRC;
      2. Absence of bid or proposal submission form or lack of signature of the bid or proposal when this is clearly specified in the tender document as a requirement. Change in the wording that is consistent with the prescribed format is not a material deviation. A duly authorized signatory must sign the vendor’s offer for it to be legally binding. If the bid or proposal do not contain the required signature, and provided that the signature of an authorized representative appears on a letter of transmittal or on another document attached thereto, and in the case of ITBs, the signature appears on the document where the total price of bid is stipulated, the UN shall assume that the omission was unintentional. However, the Procurement Official shall ask the duly authorized signatory to immediately confirm that the offer is legally binding and obtain the required signature. If the confirmation and signature is provided as requested, the UN may then accept the offer;
      3. Substantial financial information is included in the technical proposal envelope when conducting an RFP, and such information is related to the financial proposal unless approval from Director, PD or CPO has been obtained to accept the proposal.

Bidders can be held ineligible further to the provisions in Chapter 3.

8.6 Technical Evaluation

All Submissions found compliant with the formal and eligibility criteria under Chapter 8.5 Preliminary Screening will go through to technical evaluation, which consists of two sub-steps: (i) evaluation of mandatory criteria (if included in the solicitation document) and (ii) evaluation of technical criteria.

Evaluation of Mandatory Criteria:

If the solicitation included mandatory criteria, they must be evaluated at this stage. This is to ensure that the bidder is qualified and capable of successfully completing the contract, i.e., the entity meets legal and regulatory requirements, has the required minimum technical capability and experience, and is financially capable. Mandatory criteria, when included in a solicitation document, are evaluated on a pass/fail basis, regardless of whether these are included in an RFQ, ITB, or RFP.

Technical Evaluation of Bids:

Bids received in response to an ITB must be assessed against the technical criteria specified in the solicitation document (specifications, TOR, SOW, and other requirements) on a pass/fail basis and must be rejected when they contain material deviation, i.e., when the specifications of the items quoted vary in one or more significant aspect(s) from the minimum required technical specifications and other requirements.

Technical Evaluation of Proposals:

Proposals received in response to an RFP must be rated as per the criteria specified in the SSP and solicitation document. The technical proposal submitted by any bidder will be disqualified if the proposal does not obtain the minimum required number of points to qualify, as per the threshold stated in the solicitation document and the SSP. The corresponding financial proposal shall be retained unopened in the procurement file. However, any bid security or guarantee must be returned. The Procurement Official in charge of the solicitation exercise should ensure that the bid security contained in any unsuccessful submission is returned to the bidder promptly, following a contract award to the selected bidder.

8.7 Financial Evaluation

All proposals deemed technically compliant with the mandatory and technical criteria will go through to financial evaluation. Financial evaluation is the process of comparing the offers with the financial criteria stipulated in the solicitation document and determining the price upon which to base the evaluation.

Price is an important financial evaluation criterion, but the weight of the price depends on the evaluation methodology and financial criteria stated in the solicitation document, which may include life-cycle-cost analysis.

Taxes and duties should not be taken into account for the purpose of financial evaluation, unless included in the solicitation documents.

The Procurement Official, prior to financial evaluation, shall correct mathematical errors with the intent to arrive at the most accurate and reasonable interpretation through, e.g., professional judgment, correction of typographical errors and omissions, and through clarifications from the vendor. Such errors should be clarified with the bidder through official written communications authorized by the Procurement Approving Authority. While the correction of errors may lead to revised totals, the vendor may not use the opportunity to increase or lower prices, but rather to reflect the correct prices and totals as intended in the initial submission. Bidders shall be given a reasonable amount of time to respond to such clarifications.

In the case of an ITB, if there is a discrepancy between the unit price and the line item total that is obtained by multiplying the unit price by the quantity, the unit price shall prevail and the line item total shall be corrected, unless, in the opinion of the UN there, is an obvious misplacement of the decimal point in the unit price. In such a case, the line item total as quoted shall govern, and the unit price shall be corrected.

After price correction has been completed, discounts, when applicable, should be evaluated; currency conversion into one base currency (as specified in the solicitation document) should also be completed. 

Quantity discounts may be considered in the evaluation where quantities can be estimated with reasonable reliability in advance. The final price comparison, in one single currency, must consider corrected errors, quantity discounts, and any required adjustments.

For the procurement of goods, if offers were received under both FCA and other Incoterms, the evaluation report should explain how the evaluation team established that the selected Incoterm for the award is the most advantageous for the UN.

During the financial evaluation, a deviation would be considered material in any of the following situations:

1. 1. 1. The bidder, during requests for clarifications by the Procurement Official, does not accept the required price correction, as per the condition of the solicitation document;
      2. The bidder offers less quantity than is required unless the tender allows for split awards and allows quotations in lots.

In the case of an RFP, generally the proposal with the lowest overall price receives the maximum score allocated to the financial evaluation. Other proposals receive a financial score that is pro-rated, in comparison with the lowest cost proposal.

Assessment of the Reasonableness of Quoted Prices:

In general, an assessment of the reasonableness of quoted prices is always recommended to establish Best Value for Money. However, it is mandatory when the response rate or rate of technical compliance is abnormally low. This is to ensure the price comparison is done between adequate comparators; for example, prices would tend to be lower from bidders that are not compliant (i.e., lower quality goods or services, longer delivery times than requested, etc.).

Several comparators can be used to determine whether the price is fair and reasonable, such as:

1. Comparison with market price (i.e., prices offered by other vendors of the same or similar product or service);
2. Comparison with valid LTA prices;
3. Historical price (i.e., compare the current price to a price paid in the past for the same or a similar product, taking market trends into consideration);
4. If the offer is custom-built, whether the cost breakdown of the offer shows that the price is fair and reasonable.

If, after price/cost analysis, the evaluation team does not consider the price to be fair and reasonable, the UN may seek to re-solicit the requirement or negotiate with the vendor(s) in an attempt to lower the price.

Generally, if a Submission is found to be technically non-compliant, the financial proposal is neither opened nor evaluated. However, in some circumstances, in order to ensure that the Organization is obtaining Best Value for Money, it may be prudent to open the financial proposal of a non-compliant Submission to undertake further due diligence and mitigate risk. For example, if only a low number of Submissions have been found to be technically compliant, then the Procurement Official may open one or more financial proposals of non-compliant Submissions in order to establish pricing benchmarks and verify that the pricing offered by the technically compliant Submission is fair and reasonable and provides Best Value for Money. The results of such a benchmark can be used in making a decision to cancel and rebid the solicitation or seeking negotiations with the bidders with technically compliant bids. In this situation, the Procurement Official should also consider whether to review the technical specifications with the Requisitioner and other sources of technical expertise to ascertain whether the technical specifications are excessive or otherwise unnecessarily stringent. Opening of a technically non-compliant Submission’s financial proposal may only be done on an exceptional basis, after obtaining authorization, in writing, to do so from the Director, PD or the CPO and providing an explanation of the reasons for requesting the exemption. If such authorization is granted, the opening should also be disclosed to the Contracts Committee, together with documented rationale.

8.8 Further Aspects of Evaluation

Only the Procurement Official shall be authorized to seek clarifications from bidders during evaluation. Direct contact between Requisitioners and bidders is prohibited and may give cause to cancel the solicitation process or reject the related bids.

8.8.1 Clarifications from Vendors

Offers shall be evaluated based upon the information provided in the offer. However, after the Submission of offers and upon preliminary examination, clarifications to the offers are sometimes required from bidders to conduct a proper evaluation process.

The Procurement Official shall apply professional judgment as to when clarification is warranted and when it is not. On the one hand, it is in the interest of the Organization to ensure that as many offers as possible are compliant with the needs of the UN for effective competition. On the other hand, the principle of fairness to bidders that presented good and timely offers must be observed.

Clarification requests should aim to:

1. 1. 1. 1. Clarify ambiguous aspects of an offer;
         2. Modify minor mistakes or oversights in offers;
         3. Ensure that administrative errors do not cause the disqualification of an otherwise potentially good offer;
         4. Rectify statements made in the offer that do not reflect the spirit of the solicitation documents;
         5. Request missing information.

Examples of when the Procurement Official may consider that a request for clarification is warranted are:

1. When the bid bond was not found in the offer;
2. When the bid bond contains language that deviates from the standard bid bond language required in the solicitation;
3. When the technical proposal contains financial information, however, such information does not seem likely to be part of the financial proposal (e.g. pricing of ancillary equipment is mentioned in the technical proposal; however, it is not clear that it is the price offered to the UN as part of the financial proposal);
4. When a bidder does not include proof of some important elements (e.g. a quality standard), while it is stated in their proposal that they are in the possession of such element;
5. When a bidder does not include some specific self-contained piece of information that makes them miss a mandatory requirement or lose a significant number of points in the technical evaluation, and it could be easily obtained (e.g., within five (5) business days). Examples of this could be a missing CV of the project manager, a missing reference of a client, etc.;
6. When a bidder does not “check a box” or omits to provide a confirmation statement;
7. When a bidder includes statements in the financial proposal that go against the spirit of the solicitation and it would cause the disqualification of its proposal. For example, the solicitation may require fixed prices, and the bidder may state in their financial proposals that prices will depend on the cost of raw materials. To make a comparison to other offers, the bidder may be requested to clarify whether the offer is in compliance with the instructions in the solicitation;
8. When it is in the UN’s interest to eliminate minor irregularities, informalities, or apparent clerical mistakes in the Submission.

However, clarification requests should not be aimed at allowing bidders a second chance to resubmit significant parts of their offer after the submission deadline, since this would not be fair to bidders that submitted a complete proposal in time.

Examples of when a Procurement Officer should not request clarification from a bidder:

1. When a significant part of the bidder’s offer is missing, the bidder should not be given the chance

to supplement such significant part after the closing time;

2. When the offer is manifestly lacking in many aspects, it should be avoided to send multiple clarification requests covering a multitude of aspects.

To ensure that clarifications remain focused on specific aspects and do not become overly general, a limited time to respond should be given to the bidder. In no case should the bidder be allowed more than five (5) business days to respond to the request for clarification. Should the bidder respond after the deadline set by the Procurement Official, their response should generally not be taken into consideration unless exceptional circumstances apply.

Clarifications should be sought and preferably received via formal communication since they will become part of the bidder’s offer. Any communications with bidders during the solicitation process must be kept in the case file. All correspondence with vendors will be in writing (email is acceptable but should be authorized by the Procurement Approving Authority that signed the solicitation documents or by his/her authorized designee) and must form part of the procurement record.

8.8.2 Material Deviations

The UN must maintain fairness and transparency and ensure that offers are rejected only when a deviation from the requirements is material. In some cases, a substantially conforming or technically compliant offer could contain non-material deviations. To achieve Best Value for Money, it is important not to disqualify offers solely for non-material (minor) deviation(s). A material deviation is one that:

1. 1. 1. 1. Would affect in any substantial way the scope, quality, or performance of the goods and related services specified in the contract;
         2. Would limit in any substantial way, by contradicting the bidding documents, the UN’s rights or the bidder’s obligations under the contract;
2. 1. 1. 3. If rectified, would unfairly affect the competitive position of other bidders presenting substantially responsive bids.

To this end, the Technical Evaluation Committee chairperson and the Procurement Official responsible for the respective procurement exercise must have a clear understanding of what represents a material deviation. During the evaluation of the offers, consistency must be applied when determining whether a deviation is a material. The evaluation report must identify any deviations encountered during each step of the evaluation process.

8.8.3 Apparent Errors in Price

The UN is not responsible for errors in price made by bidders. However, the UN shall verify prices in cases where it believes there is an error (e.g. a specific item price that is very high or very low). The vendor shall then be informed that revision of the original price is prohibited, and that non-compliance shall result in rejection of the offer. If the vendor confirms that the original price is correct, the evaluation can proceed. Should the vendor acknowledge that the price is incorrect and the price is material to the selection of the vendor, the offer may be rejected in order to adhere to the principle of fair and equal treatment of all vendors, unless the Procurement Approving Authority considers it in the best interest of the UN to accept such bid/proposal; otherwise, the offer shall be rejected. The communication with the vendor and any internal decisions must be in writing and kept on file for the record to facilitate audits.

8.8.4 Abnormally Low Offers or Submissions

An abnormally low offer or submission is one where the price, in relation to the scope, methodology, technical solution, and requirements, appears so unreasonably low that it raises concerns regarding the bidder’s ability to perform the contract successfully.

When an abnormally low offer or submission is identified, the Procurement Official shall seek written clarifications from the bidder, including detailed price analysis of how its financial offer or submission correlates with the scope, proposed methodology, schedule, and allocation of risks and responsibilities, without changing the original submission.

After the evaluation of the information and detailed price analyses presented by the bidder, the Procurement Official may:

1. 1. 1. 1. Accept the offer or submission;
         2. If appropriate, require that the amount of the performance security be increased at the expense of the bidder to a level sufficient to protect the UN against financial loss in the event of default of the successful bidder under the contract;
         3. Reject the offer or submission.

Where the solicitation document states in the Special instructions and evaluation criteria that evaluation will be done by lot, the evaluation must be done as per the provisions stated under the evaluation criteria section of the SSP and the solicitation document. The SSP and the special instructions and evaluation criteria shall include details on how the UN will award lots. Such criteria shall allow evaluation of each lot(s).

8.8.6 Review of Offers Received in Situations of Direct Contracting or Sole Sourcing

When direct contracting under sole sourcing is justified and an offer has been requested further to Chapter 6.9, such offer should be evaluated. In order to facilitate the evaluation process, Procurement Officials should request the vendor to provide information that would allow for a comprehensive assessment of its offer based on pre-established evaluation criteria and that would ensure it meets the needs of the UN.

The purpose of such evaluation is to assess whether the offer is of acceptable quality at a justifiable price. To ensure the quality of the offer, it should be evaluated as compliant/non-compliant, and the offer should only be accepted if considered compliant. The evaluation must be carried out by technical and financial evaluation committees composed of technical experts and Procurement Officials, respectively.

Further to the evaluation process, negotiations are usually recommended in direct contracting situations to ensure Best Value for Money. See Chapter 8.9 Negotiations for details.

8.8.7 Complaints and Representations

Replies to representations and complaints made by bidders during (and after) the evaluation process must be in line with what may or may not be disclosed, as stated in the solicitation document. Depending on the nature of the complaints and representations received, the Procurement Official should consider seeking advice from OLA or a Legal Advisor before replying. Whenever a complaint warrants senior management’s attention, the Procurement Official should always send the complaints immediately to the procurement head of the relevant UN Secretariat entity, with a copy to Director, PD. These complaints and representations are to be distinguished from procurement challenges submitted following a solicitation process, in accordance with Chapter 10 on procurement challenges.

8.8.8 Indications of Potential Proscribed Practices

While conducting an evaluation of Submissions, the technical evaluation committee and the Procurement Official should satisfy itself that there is no indication of fraud, collusion, or suspicious actions by some bidders, including those that might point to the existence of a cartel.

The following are typical ‘red flags’ indicating risks of potential proscribed practices. Patterns of Potential Fraud:

1. 1. 1. 1. Bid/proposal securities submitted show apparent irregularities (e.g. logos or names or issuing banks);
         2. Registration certificates show inconsistencies, e.g. in terms of dates, registration institution, etc., or frequent changes of the company name;
         3. Quality certificates are issued by dubious providers;
         4. Bank account information provided on the vendor form is under the name of an individual and not a company;
         5. Staff members are involved in the bidder’s corporate structure or are named as beneficiaries of related bank accounts.

Patterns of collusion are hard to detect because agreements are secret in nature. These may include bid- rigging (competitors agree in advance who will submit the winning bid) and price-fixing (agreement by competitors to raise, fix, or maintain the price for goods or services), as detailed below.

Patterns of Potential Bid Rigging:

1. The same vendors submit bids and each company seems to take a turn being the successful bidder;
2. Some bids are much higher than published price lists, previous bids by the same firms, or cost estimates;
3. A company appears to be bidding substantially higher on some bids than on other bids, with no apparent cost differences to account for the disparity;
4. Bid prices drop whenever a new or infrequent bidder submits a bid;
5. A successful bidder subcontracts work to competitors that submitted unsuccessful bids for the same project;
6. A company withdraws its successful bid and subsequently is subcontracted work by the new winning contractor;
7. Schedules are split between bidders (i.e., one bidder is lowest for schedule one, the other for schedule two, or one bidder quoted for schedule one only, another bidder for schedule two only, etc.);
8. Bank guarantees submitted by different bidders have been issued by the same bank and have almost identical reference numbers (e.g. A-123 and A-124);
9. Details regarding ownership and management in respect of several bidders show that these bidders have the same key personnel, such as directors, partners, owners, etc.

Patterns of Potential Price Fixing:

1. Prices of multiple bidders are identical, especially when prices stay identical for long periods of time and prices were previously different;
2. Price increases do not appear to be supported by increased costs;
3. Discounts are eliminated, especially in a market where discounts historically were given;
4. The proposals or bid forms submitted by different bidders contain irregularities, such as identical calculations or spelling errors, similar handwriting, or similar stationery. This may indicate that the designated low bidder may have prepared all or part of the losing bidder’s offer;
5. Bid or price documents contain white-outs or other physical alterations indicating last-minute price changes;
6. A company submits a bid when it is incapable of successfully performing the contract (likely a complementary bid).

When there is an indication of potential proscribed practice, Procurement Officials must report this immediately to the Director, PD or the CPO with a copy to the VRC and OIOS. Unless the alleged proscribed practice is completely evident, the Procurement Official should not reject bids received until OIOS does a first assessment of the case. If OIOS decides to carry out a formal investigation (because there is sufficient evidence to substantiate the allegations), then the Procurement Official shall seek the decision of the Director, PD or the Chief Procurement Official whether to reject such bids, without waiting for the outcome of the full OIOS investigation and the VRC’s determination.

8.8.9 Best and Final Offer (BAFO)

The “Best and Final Offer” (BAFO) is an optional step in the selection of offers that has the objective of enhancing competition and thus ensuring Best Value for Money for the UN. BAFO shall be applied only once during the solicitation process.

Sound professional judgment should be applied when determining the circumstances in which the use of BAFO is justified. In such cases, approval must be sought from a Procurement Approving Authority. This will usually be the same authority that approved the issuance of the solicitation documents. The request for approval will specify the reasons why a BAFO is justified and will be kept on file.

Bidders are cautioned to propose their best possible offers at the outset of the original proposal process, as there is no guarantee that any offer will be allowed an opportunity to submit a Best and Final Offer. When submitting their offers in response to a solicitation, bidders should not rely on BAFO being requested by the UN at a later stage, as this may or may not happen for reasons that are outside of the bidders’ control. Procurement Officials should be aware that excessive use of BAFO might encourage bidders to regularly keep a margin of safety in their initial offers. A BAFO shall be used sparingly for the reasons indicated below.

There are two scenarios in which BAFOs may be used:

Two or More Offers are “Commercially Tied”:

The Procurement Official will apply sound judgment to determine when two offers are commercially tied; such determination will greatly depend on the type of commodity/market for each requirement. Offers may be considered “commercially tied” when either (i) the financial evaluations or (ii) the Best Value for Money calculation (a reflection of the value of the offer) are within a very close range of 5%. Where industry characteristics, recent changes in the market or past experiences with solicitations in the same industry give reason to believe that a BAFO would meaningfully improve the outcome of the solicitation, a BAFO may also be considered in situations where the Best Value for Money calculation or price differentials exceed 5%.

In this scenario:

1. 1. 1. 1. Only bidders that are considered to be ‘commercially tied’ will be invited to participate in the BAFO;
         2. Bidders will be requested to submit only an updated financial proposal; the technical proposal will continue being valid;
         3. The BAFO shall state that Bidders may only decrease prices, increase discounts, or provide other benefits to the UN, or leave prices all unaltered;
         4. An extended bid validity may be requested.

There are changes in the conditions of the solicitation that require bidders to refine their offers:

Sometimes, in the course of a solicitation, the Procurement Official may be informed of changes in the underlying assumptions of the scope of requirements (e.g. a change in the estimated number of required units, of the required delivery terms, etc.). In rare circumstances, it may be required to request supplemental information from bidders to address some changes in the requirements that could not be contemplated at the time of issuance of the solicitation. In addition, there may be a need to correct factual errors in the solicitation documents or clarify the requirements.

Should those changes affect the scope of the requirements substantially, the solicitation should be cancelled and re-tendered. However, in the case that the changes do not substantially affect the scope of requirements, in the interest of time, the Procurement Official may consider the use of BAFO prior to finalizing the solicitation upon the approval of the Director, PD or CPO. The Procurement Official will be mindful, though, that this use of BAFO shall not be utilized to limit competition.

Prior to issuing a BAFO, the Procurement Official will determine how the offers will be assessed to determine Best Value for Money, in line with the methodology established in the SSP. As such, the Procurement Officer will determine if the Technical Evaluation Committee may need to reconvene in order to refine the Technical Evaluation Report in light of the newly provided information, or if this is not necessary. The method of evaluation, as stipulated in the SSP, will continue to apply.

The following principles apply:

1. All bidders that may have a reasonable chance of winning the award will be invited to participate in the BAFO. This may be limited to technically compliant bidders only or may be extended to all bidders that submitted offers at the judgment of the Procurement Official;
2. Bidders will be informed of the documents that they need to submit.

The BAFO request will establish a new closing date and time for the Best and Final Offers. The receipt of the Best and Final Offers will be done by the Tender Opening Committee, which will disclose all offers to the Procurement Official at the same time, after the closing time. BAFO openings are not public, and the UN may use electronic means to receive them in the interest of time (e.g. to a dedicated e-mail TOC address).

The Procurement Official may not receive the responses to BAFO on his or her personal e-mail. In case of receipt of a BAFO by a Procurement Official, it will be communicated promptly to the Procurement Approving Authority that approved the issuance of the solicitation. This may lead to disqualification of the bidder or the offer at the sole discretion of the UN.

Procurement Officials should take the following into account:

1. BAFO may only be used once for each competitive process to avoid the impression among bidders that the procedure is being used to favour any vendor. In the extremely rare circumstance that a second BAFO round may be strictly necessary, the Procurement Official may consider other options, such as initiating a rebid or requesting to enter into direct negotiations;
2. Bidders are not obligated to alter their proposals as a result of the request of BAFO;
3. The Procurement Official will not disclose the reasons why a BAFO is being requested, the number of bidders from which it is being requested, or any information about the technical or financial evaluation of each bid;
4. The Procurement Official will keep the results of the financial evaluation strictly confidential during the BAFO process;
5. Letters of regret for bidders that were not invited to the BAFO will be issued at the same time as all other letters of regret, following signature of the awarded contract.

8.9 Negotiations

Negotiations are discussions with a potential vendor after consideration for award recommendation, either:

1. 1. 1. Following HCC/LCC review leading to a rejection of bids under Financial Rule 105.15(c) by the Authorized Official;
      2. Following the rejection of bids by the Procurement Approving Authority under Financial Rule 105.15(c);
      3. In instances in which negotiations would be justified, such as sole source or Letters of Assist (see Chapter 6.8 and Chapter 14.3.1). Approval to enter into negotiations needs to be obtained from the appropriate Procurement Approving Authority as per FR 105.16(a) or Authorized Official;
      4. In case of a need to amend a contract, such as extensions or increase in NTE amount under Financial Rule 105.13(b);
      5. When following a recommendation for an award in the professional judgment of the Procurement Official, more advantageous terms to the United Nations could be achieved that are not material to the award decision. In such a case, the recommendation of the Review Committee or approval of the Authorized Official to negotiate is not necessary. The Financial Rule used for the award will, therefore, remain Financial Rules 105.15(a) or 105.15(b), as the case may be;
      6. Following HCC/LCC review leading to an award where there is an additional recommendation to conduct negotiations.

The following procedures should be followed when conducting negotiations:

1. It is recommended that in complex cases, prior to the start of negotiations, the negotiation team prepares a strategy and plan with a brief outline of the expected negotiation outcomes (not to be shared with the bidder) and that each individual is given specific roles and responsibilities in the process (see Chapter 8.9.2);
2. While negotiations are usually conducted in person or telephonically, in some cases, the Procurement Official may determine that it is in the best interest of the United Nations to obtain written offers as the starting point of the negotiations. The Procurement Official may request vendors to follow certain formats to submit their offers;
3. In cases in which negotiations are conducted with more than one vendor, it is recommended that offers be received through the dedicated e-mail address of the Tender Opening Committee. The TOC will release all offers to the Procurement Official at the same time;
4. The Procurement Official may conduct as many rounds of negotiations as necessary until the efforts seem to be exhaustive;
5. UN staff members should treat all vendors involved in a negotiation process fairly and in an equitable manner;
6. Negotiations are confidential between the UN and the vendor, and neither party may reveal information relating to the negotiations. Vendors should be informed of the same upon initiating the negotiations;
7. When physical meetings or teleconferences are required, a minimum of two UN staff must be involved. Amongst the two personnel, one must be the Procurement Official;
8. The Procurement Official shall lead the negotiations. Other participants may be required to attend, depending on the envisaged character of the negotiations. Such participants may include technical experts, legal officers, etc.;
9. Meetings shall be recorded in writing; the minutes should be placed in the case file, and the results of the negotiations must be recorded in a note to the file or similar document.

8.9.1 Negotiations in Case of Sole Source

In instances where direct contracting is justified, negotiations are normally recommended in order to ensure Best Value for Money. Since no competitive solicitation process has been carried out, the UN has no immediate evidence that the product offers acceptable price and quality. Therefore, the UN needs to make every effort to justify the selection and ensure the reasonableness of price by attempting to obtain the most favourable terms and conditions for every aspect of the vendor’s offer. Proper costing studies, market research, expert consultations, and verification of client references are key activities to be performed prior to such negotiations. Please refer also to Chapter 6.8.

8.9.2 Negotiation Strategy

In complex cases, prior to negotiations, the Procurement Official may establish the negotiation strategy in a document, which should be marked “Commercially in Confidence” and must be restricted only to the Procurement Official, Requisitioner, and legal officer involved in the case, to ensure the integrity of the process. Such a document may include the following information:

1. 1. 1. 1. List of vendors invited to the negotiations;
         2. List of UN staff participating in the negotiations;
         3. The objectives of the negotiations, including the desired outcomes in order of importance;
         4. The scope of the negotiations (financial, technical, legal, etc.);
         5. The timelines for negotiations;
         6. The techniques that will be used to obtain the desired results;
         7. The Best Alternative to a Negotiated Agreement;
         8. The decision-making criteria that will be considered for the award, if negotiations are being conducted with more than one bidder;
         9. Other relevant information.

8.10 Final Evaluation and Recommendation for Award

The results of the technical evaluation shall be documented in a technical evaluation report. The level of detail of the technical evaluation report should be commensurate with the complexity of the process. Although the use of evaluation tables is best practice, it is not mandatory for informal methods of solicitation, such as LVA and RFQ. When evaluation tables are used, a signed copy of the filled in technical evaluation table must be submitted to the Procurement Official with the submission date and the tender number clearly identified. The submission must be signed by the Chairperson of the technical evaluation committee or the Section Chief or other official that signed the SSP.

The technical evaluation report must be dated, identify the tender number and description of the goods and/or services to which it relates, and the name of each technical evaluation member must be printed under the signature. It shall be signed by all the members of the technical evaluation committee, initialed on every page by at least two members of an evaluation team, and kept on file for future reference. The report shall describe the application of the technical evaluation criteria stipulated in the SSP in relation to each bidder’s submission. This should include narratives for each criterion evaluated, whether scored or assessed on a pass/fail basis. The narrative must sufficiently outline the rationale for the decision taken by the Technical Evaluation Committee.

Upon receipt of the technical evaluation report, the Procurement Official or the Financial Evaluation Committee shall perform the financial evaluation, make a final comparison of the competing proposals in accordance with the terms of the solicitation documents and the SSP, record its findings, and advise the Evaluation Committee of the recommendation of award.

The findings will later be used as the basis for the recommendation of award. The recommendation for the award shall contain a summary of the evaluation process, as well as details of the evaluation steps performed and key criteria therein (i.e., preliminary examination, technical and financial evaluation). When the solicitation method is an RFP, the technical evaluation section must include a clear narrative supporting the points allocated to each technical proposal. Any rejection, non-compliance, and clarifications of offers must be clearly stated, including a list with the final ranking of the offers and the reasoning behind the selection of the winning offer.

All unsuccessful bids should be retained in the procurement file. However, any bid security or guarantee must be returned. The Procurement Official in charge of the solicitation exercise must ensure that the bid security contained in any unsuccessful submission be returned to the bidder promptly following contract award to the selected bidder.

Unsuccessful bidders will be notified only after the contract is awarded and all contract documents are duly executed.

In the case when the evaluation methodology is “lowest-priced technically acceptable offer” or “lowest- priced substantially conforming offer,” attention should be given to ensure that the reasons for disqualifying offers with prices lower than the selected offer are clearly stated in the technical evaluation report and in the case presentation.