Procurement Manual - Unrwa

Chapter 10 Contracting 9210.1 Contract Preparation 9210.1.1 Contract Negotiations with Suppliers 9210.1.2 Policy on Advance Payments 9310.2 Contract Documents 9410.2.1 Contract Requirements 9410.2.2 UNRWA General Conditions of Contract (GCC) 9510.2.3 Technical Specifications, TOR, SOW, BOQ and/or drawings 9510.3 Signature, Issuance and Documentation 9610.4 Types of Contractual Instruments 9610.4.1 Purchase Order (PO) 9710.4.2 Service Contracts 9710.4.3 Construction Contracts 9710.4.4 Memorandum of Understanding 9710.4.5 Long Term Agreement 9810.4.6 Project Cooperation Agreement 9810.4.7 Other Contracts 9810.4.8 Amendment to Contract 9910.5 Protest Procedures 9910.6 Posting of Contracts issued 99Chapter 11 Logistics and Procurement 10011.1 The Logistics Planning Process 10011.2 Logistics Requirement for Goods 10211.2.1 Packing 10211.2.2 UNRWA Packing and Shipping Instructions 10311.2.3 Labelling and Shipping Marks 10311.2.4 Modes of Transport 10411.2.5 Forwarding Agents 10411.2.6 INCOTERMS 10511.2.6.1 The Use of INCOTERMS in UNRWA 10511.2.7 Insurance during Transportation 10611.2.8 Shipping Documents 10611.2.9 Receipt of Consignments 10711.2.10 Restrictions on the Export and Import of Goods 108Chapter 12 Contract Administration 10912.1 Monitoring and Control of Contract Performance 11112.1.1 Goods 11112.1.2 Services 11212.1.3 Construction 11212.2 Inspections 11312.3 Acceptance of the Final Product 11312.3.1 Acceptance of Goods 11312.3.2 Acceptance of Services 11312.3.3 Acceptance of Construction 11312.4 Evaluation of Supplier Performance 11312.5 Contract Filing and Documentation 11412.6 Recording of Data 11412.7 Changes to Contract 11512.8 Remedies 11512.8.1 Termination 115PROCUREMENT MANUAL 5/127 VERSION 2

12.8.2 Liquidated Damages 11512.8.3 Specific Performance 11612.9 Dispute Resolution 11612.10 Financial Management and Payments 11712.10.1 Payments 11712.10.1.1 Advance Payments 11712.10.1.2 Third Party Payments 11812.10.2 Taxes 11812.10.3 Performance Securities 11812.11 Contract Completion and Close Out 11812.12 Contract Reporting Requirements 119Chapter 13 Emergencies and Urgencies 120Glossary 121List of Annexes 127PROCUREMENT MANUAL 6/127 VERSION 2

List of TablesTable ‎2-1: Indicative Levels of Delegable Authority and Thresholds for LCP and theDAS/ACP Review 17Table ‎8-1: Evaluation Methodologies 69Table 10-1: Dimensions of Contract Administration and Management 110Comments and QuestionsIt is envisaged that the Procurement Manual will be updated regularly, to ensure that itremains relevant to UNRWA business and in line with good practice in public procurement.Please notify the Head Quarters Chief, Procurement and Logistics Division (CPLD)(cpld@unrwa.org) if you find any errors or omissions and to provide suggestions forimprovement and feedback.PROCUREMENT MANUAL 7/127 VERSION 2

CHAPTER 1INTRODUCTION1. The Procurement Framework is grounded in article 5.2 (d) of the FinancialRegulations of the United Nations Relief and Works Agency for Palestine Refugeesin the Near East (“UNRWA” or “the Agency”) which states that:The Commissioner-General shall:(d)Establish procedures for the awarding of contracts for construction,supplies and other requirements (including services) which willensure that:(i) All applicable rules and regulations of the Agency have beencomplied with;(ii) The contract is based on sound commercial, technical, and legalpractice; and(iii) Adequate tenders have been requested and that, all otherconditions being equal, the lowest price or offer has beenaccepted and represents the best value for money.2. Further to the Commissioner-General‟s powers under the Financial Regulations,Organization Directive No. 10 (OD10) of UNRWA was issued which states, „TheDirector of Administrative Support (DAS) shall ensure that all procurement functionsin the Agency are carried out in accordance with the applicable regulations, rules,directives, instructions and other policies and procedures. To this end, the DAS shallhave the authority to establish the necessary controls and monitoring system andissue and amend from time to time a procurement manual and other administrativeinstructions, in each case consistent with and implementing the applicableregulations, rules, directives and other policies and procedures‟.3. This is the Procurement Manual, issued under the above authority.4. The UNRWA Procurement Manual sets forth the procurement regulatory frameworkfor UNRWA. The Procurement Manual aims to update UNRWA procedures to bettersuit the UNRWA of today and the context in which the Agency is operating, while atthe same time incorporating current best practices in public procurement. Theprovisions of the Procurement Manual aim to be an essential reference andguidance tool for UNRWA and its staff in its operations.5. The Procurement Manual shall guide all UNRWA procurement activities to beconducted according to UNRWA procurement policies and procedures, regardless oflocation and nature of the procurement. Only where clearly stated in the legalagreement with a donor can UNRWA procurement activities be guided by otherprocedures (ref. Chapter 5 d).PROCUREMENT MANUAL 8/127 VERSION 2

6. The Procurement Manual is made up of 13 Chapters and it is organizedchronologically in line with the procurement process, starting with procurementplanning and ending with contract administration. UNRWA procurement is carriedout in compliance with policies outlined in a number of relevant documents, which, inthe case of inconsistency or ambiguity between them, shall prevail in the followingorder:a. The UNRWA Financial Regulationsb. UNRWA Organizational Directives and Administrative Instructionsc. UNRWA Procurement Manuald. UNRWA Property Management Manuale. Manual of Supply Procedures, Supply Division Technical Instructions,Technical Services Instructions7. This UNRWA Procurement Manual covers policies and procedures related to theProcurement Management processes found at UNRWA. The Procurement Manualdoes not include the content of The Manual of Supply Procedures (with theexception of MSP 3, which is superseded by this Manual), nor does it include theProperty Management Manual (PMM).PROCUREMENT MANUAL 9/127 VERSION 2

CHAPTER 2CHAPTER 2UNRWA PROCUREMENT POLICY1. UNRWA, in its management of public funds, is expected to comply with allapplicable regulations, rules and procurement principles. UNRWA donors expect thesame level of fairness, transparency, integrity, economy and effectiveness for allprocurement activities.2. This chapter presents the principles of the UNRWA procurement policies andprocedures. It outlines the applicable policies and procedures, and explains theresponsibility and accountability of those involved in the procurement process inrelation to the overall procurement principles.2.1 Procurement Overview2.1.1 Definition of Procurement1. This Manual shall apply to all procurement carried out in the Agency except as setforth at 7a-7d in this sub-Section.2. “Procurement,” as used in this Manual, means all actions necessary for theacquisition, by purchase, lease or otherwise, of:a. Goodsb. Servicesc. Constructiond. Real Property3. “Goods” means objects of every kind and description including raw materials,products and equipment and objects in solid, liquid or gaseous form, and electricity,as well as services incidental to the supply of the goods if the value of thoseincidental services does not exceed that of the goods themselves.4. “Services” means any object of procurement other than goods or construction.5. “Construction” means all work associated with the construction, reconstruction,demolition, repair, renovation or maintenance of a building, structure, infrastructureor works, such as site preparation, excavation, erection, building, installation ofequipment or materials, decoration and finishing, as well as services incidental toconstruction such as drilling, mapping, satellite photography, seismic investigationsand similar services provided pursuant to the procurement contract, if the value ofthose services does not exceed that of the construction itself.6. “Real Property” means land or any improvement thereon.7. Pursuant to paragraph 3.3 of OD10, this Procurement Manual shall not apply to thefollowing:PROCUREMENT MANUAL 10/127 VERSION 2

a. Contracts with individuals for employment or for personal consultancy orother professional services, which are within the purview of OrganizationDirective No. 29.b. Agreements with public international organizations, governments or nongovernmentalorganizations which do not involve expending funds of theAgency, including funds entrusted to the Agency by its donors and for whichit is accountable.c. Agreements relating to the Provident Fund, including without limitation thoserelating to the management of the funds therein, which are within the purviewof Organization Directive No. 28.d. Arrangements with banks and other financial institutions with regard to theAgency‟s bank accounts.8. UNRWA has committed to decentralized decision-making, robust individualaccountability, streamlined and flexible processes and measured management ofrisk. This Manual reflects those commitments.9. Procurement staff and any other Sponsoring Officer in the Fields and at HQ(A) (ref2.4) shall be responsible for the acquisition of goods, services and construction incoordination with internal customers and in accordance with this Manual.Sponsoring Officer is defined in 2.3, article 4.10. This Procurement Manual, in conjunction with OD10, sets forth the principalpractical guidance to procurement, the policies and procedures of which aremaintained centrally by the HQ in Amman.2.2 Procurement Principles1. UNRWA‟s general policy on procurement is set out in OD10, section 4. Allprocurement carried out by UNRWA shall be guided by the following principles:a. Best value for moneyb. Fairness, integrity and transparencyc. Effective competitiond. The interest of UNRWA and the Palestine RefugeesDisaggregation of requisitions shall not be allowed if such disaggregation serves novalid purpose and is made for the sole purpose of circumventing the reviewrequirements set forth in this Directive or the Procurement Manual.2. The purpose of these principles is to establish a common framework and commonvalues to be applied throughout the procurement process. In applying theseprinciples in the procurement process, UNRWA supports the activities of the Agencyby avoiding waste of resources, producing the most appropriate solution at all times,and strengthening the interest of the Agency and its clients.PROCUREMENT MANUAL 11/127 VERSION 2

2.2.1 Best Value for Money1. The procurement principle of best value for money is identified a(s) (the) guidingprinciple in OD10 section 4, while best value for money may be considered thetrade-off between price and performance that provides the greatest overall benefitunder the specified selection criteria 1 .2. Application of the best value for money principle in the procurement process meansthe selection of the offer which presents the optimum combination of factors such asappropriate quality, total cost of ownership, availability, mobilization and deliverytime and other parameters to best meet defined needs. It is not necessarily thesame as selecting the lowest initial price option, but requires an integratedassessment of technical, organizational, and pricing factors in light of their relativeimportance.3. Social, environmental, and strategic objectives defined in the legal agreement withthe donor shall also be taken into account. The principle of best value for money isapplied throughout the procurement process in order to select the offer that mosteffectively meets the stated requirements of the end user.4. In order to obtain best value for money, one shall:a. Maximize competition;b. Minimize the complexity of the tender process;c. Carefully establish the evaluation criteria (in order to select the offer with thehighest expectation to meet user needs, in accordance with the evaluationparameters set in the tender documents); andd. Ensure impartial and comprehensive evaluation of offers in a timely manner.2.2.2 Fairness, Integrity, and Transparency1. FAIRNESS - UNRWA fosters competition in all procurement processes, as a meansof ensuring fairness, integrity and transparency. However, there may be exceptionalcircumstances when competition is not feasible as described in 5.4.2. Ascompetition is the basis for fair and transparent procurement, no restrictions shall beplaced on the competitive processes by limiting the pool of potential suppliers unlessit is deemed to be in the best interest of UNRWA.2. INTEGRITY - In order for competition to lead to fair and transparent procurement, itmust be carried out on the basis of clear and appropriate rules and procedures thatare applied consistently to all potential bidders. Fairness implies being reasonableas well as impartial and treating all suppliers in the same way. Integrity relates toaspects of personal and institutional behavior including qualities such as honesty,truthfulness, impartiality, and incorruptibility.3. TRANSPARENCY - The unimpeded visibility and openness in all transactions –ensures that all information on procurement policies, procedures, opportunities andprocesses are clearly defined and made widely known and available. A transparent1 As defined in the Regulations of the United Nations Office for Project Services (UNOPS).PROCUREMENT MANUAL 12/127 VERSION 2

system increases the possibility of detecting any deviations from fair and equaltreatment, and therefore makes such deviations less likely to occur. Transparencythus protects the integrity of the process and the interest of UNRWA. A transparentsystem has records open for inspection by internal auditors and the UN‟s ExternalAuditor, The UN Board of Auditors. In addition, some information about the tenderprocess is always available to suppliers if requested, while still protecting tradesecrets and pricing of all competitors (except the winning offer, if priced at more thanOne hundred thousand US dollars – see Section 10.6 „Posting of Contracts Issued‟)from being released publicly.2.2.3 Effective Competition1. Subject to certain exceptions, all procurement actions at UNRWA must be carriedout through effective competition. This is the key mechanism to help achieve bestvalue for money and transparency as outlined above. It is for this reason that thereare minimum requirements for the number of bidders to be invited under the variousprocurement procedures outlined later in this Manual.2. Consistent with the provisions contained in Financial Regulation 5.2 and in Section4.2 of OD10 and except as provided in Section 8.3 of OD10 or as may be allowedpursuant to Section 13 of OD10 and this Manual, procurement contracts shall beawarded on the basis of effective competition, and to this end, the competitiveprocess shall, as necessary, include:a. Acquisition planning for developing an overall procurement strategy andprocurement methodologies;b. Market research to identify potential suppliers;c. Competition on as wide a geographical basis as practicable and suited tomarket circumstances;d. Consideration of prudent commercial practice; ande. Formal methods of solicitation: invitations to bid or requests for proposals onthe basis of advertisements or direct solicitation of invited suppliers; orinformal methods of solicitation, such as requests for quotations.2.2.4 The Interest of UNRWA and the Palestine Refugees1. Undertaking procurement in the interest of UNRWA, means carrying outprocurement operations in the manner that best enables UNRWA to provide goodsand services to the refugees, without compromising the procurement principles andthe Financial Regulations and Rules applicable to UNRWA.2. The former principles mentioned; Best value for money, fairness, integrity,transparency and effective competition all contribute to achieving this fourthprinciple, but it also includes concepts such as maintaining the highest personaland institutional integrity, furthering the mandate of UNRWA to promote thewellbeing, human development and protection of Palestine Refugees, upholding theimage and reputation of UNRWA, and promoting the public good as specified in theCharter of the United Nations in every aspect of UNRWA‟s procurement operations.PROCUREMENT MANUAL 13/127 VERSION 2

2.3 Procurement Authority1. In UNRWA, OD10 establishes the procurement policy of the Agency in accordancewith its Financial Regulations, while Section 5 of OD10 deals specifically with theProcurement Authority.2. Therein, the Agency‟s overall Procurement Authority is vested in the CommissionerGeneral who, in accordance with OD10, delegates his/her Procurement Authority tothe Directors of Field Office (FODs) and the CPLD.3. As defined in OD10 Section 5.2, the term "Awarding Authority" shall meanCPLD (or in his/her absence, as designated by the Director of AdministrativeSupport (DAS), each FOD (or in his/her absence, the officer-in-charge of the FieldOffice concerned) and those to whom they have delegated their respectiveprocurement authority. Consequently, each of the FODs, the CPLD and those towhom they may have delegated their own Procurement Authority in whole or in partshall be as Awarding Authorities (AA).4. The term Sponsoring Officer in this Manual shall refer to any UNRWA staff memberwho is authorized to conduct a procurement exercise in the following cases:a. As representative of PLD at the FOs and HQ(A), irrespective whether theyare Awarding Authorities or not.b. As AA outside PLD at the FOs and HQ(A) to whom Procurement Authorityhas been delegated.5. As described earlier in this Manual, the Agency‟s primary policy on award ofcontracts is to obtain best value for money. This requires that:a. The Sponsoring Officer of the contract provide to the contract AA sufficientinformation to enable the latter to satisfy him/herself that applicable AgencyRules and Regulations have been complied with;b. The contract proposal has been cleared, as applicable, as follows:i. by Finance for certification of funds;ii. by technical departments in respect of technical specifications andstandards;iii. by the Department of Legal Affairs whenever any contract is proposed ofwhich either no standard form exists or the terms of which vary insubstance from the prescribed standard form. The Sponsoring Officermust ensure that such contract is approved by the Department of LegalAffairs prior to execution. In accordance with OD10 section 11.3, allprocurement contracts shall follow the standard forms (including theapplicable General conditions of Contract), where available, prescribedby the Department of Legal Affairs;iv by the LCP, as applicable; andv. by the DAS, as applicable.c. The required number of offers has been requested;PROCUREMENT MANUAL 14/127 VERSION 2

d. All relevant factors such as price, quality, transparency, adherence toAgency specifications and the Agency‟s administrative costs have beenconsidered; ande. The contract proposed is overall in accordance with the Agency‟sprocurement framework and principles and the Agency‟s best interests.2.3.1 Delegation of Procurement Authority (DOA)1. As defined in OD10 section 5.1, the Commissioner-General delegates his/herprocurement authority to:a. The Chief, Procurement and Logistics Division (CPLD) with respect toAgency-wide and Headquarters procurement.b. Each Field Office Director (FOD) with respect to procurement within his/herField Office.The Commissioner-General will confirm this delegation of authority through a letteraddressed to CPLD and each FOD. The Commissioner-General may modify suchdelegation of authority to CPLD or any FOD at any time by issuing a letteraddressed to the relevant delegatee.2. Accordingly,a. No Agency-wide or Headquarters procurement contract shall be entered intoon behalf of the Agency except by CPLD (or those acting under his/herdelegated authority).b. No procurement contract at any Field Office shall be entered into on behalf ofthe Agency except by the FOD of such Field Office (or those acting underhis/her delegated authority).c. CPLD and each FOD are accountable to the Commissioner-General for allprocurement functions within their respective jurisdictions.3. If appointed new FOD / CPLD or those appointed in an acting capacity may confirmexisting sub-delegations or amend according to his/her overall managementstrategy.4. If a post is vacant, with no FOD / CPLD in place, any acting appointee shall requirean individual DOA issued by the Commissioner-General.5. Each FOD and each CPLD may further delegate his/her procurement authority inaccordance with and subject to the terms and conditions set forth in this Directiveand the letter given to him/her by the Commissioner-General. Such furtherdelegation of authority shall be set forth in a letter of delegation from CPLD or anyFOD, as applicable, substantially in the form set forth as Annex 1.6. DOAs may be issued in accordance with financial thresholds and may be subject totype of procurement and/or commodity.PROCUREMENT MANUAL 15/127 VERSION 2

7. As defined in OD10, copies of all letters of delegation of authority, whether issued bythe Commissioner-General, CPLD or any FOD, shall be provided to DAS promptlyafter issuance thereof.In addition to that:a. Further delegations by the CPLD shall be notified to the Chief, AccountsDivision and the DAS.b. Further delegations by the FOD shall be notified to the Field Finance Officerconcerned and the DAS and the CPLD.c. Copies of all DOA notifications and of amendments thereto shall further besent to the Secretary of the Advisory Committee on Procurement (ACP) andto the Director of Internal Oversight Services.8. As per OD10 section 5.2, the indicative levels of delegable authority for differenttypes of procurement activities in the Agency are set forth below in Table 2-1. Thelevel of delegated authority from the Commissioner-General to the CPLD and eachFOD may be higher or lower than the indicative levels set forth in the table. Thespecific monetary threshold of delegated authority for each and the terms andconditions relating thereto are set forth in the letter of delegation given to such AA.Such monetary thresholds may vary for each delegate as determined by thedelegating authority. The delegating Authority may withdraw the delegation at anytime based on his/her discretion.9. The procurement needs of HQ offices in Jerusalem and Gaza will be attended to bythe hosting Field Office. Additional procurement support may be requested from theHeadquarters Amman Procurement and Logistics Division (HQ(A) PLD). The FODof the hosting Field Office shall be the AA for such procurement.10. The procurement needs of HQ Amman for common supply items, services andconstruction may be assigned to Jordan Field Office as agreed by the FOD andCPLD. The FOD shall be the AA for procurement assigned to JFO.11. While under the DOA letter, any procurement activity may be conducted outsidePLD in accordance with the stipulated thresholds and other caveats. DOA shall benon-obligatory, meaning that any AA and/or Sponsoring Officer outside PLD mayrefer any procurement exercise he/she is not comfortable with to the PLD office athis/her location for advice and/or with the request to PLD to conduct theprocurement exercise on his/her behalf.Annex 1 – Form of Letter of DelegationPROCUREMENT MANUAL 16/127 VERSION 2

TABLE 2-: INDICATIVE LEVELS OF DELEGABLE AUTHORITY AND THRESHOLDS FOR LCP AND DAS/ACPREVIEWType ofProcurementLevel of Delegable Authority Review Requirement Awarding Authority andSignatoryHeadquarters and Agency-Wide ContractsServiceContractsLess than US$100,000 None CPLD, who may delegateauthority (including to otherDepartment Heads) up tocertain levels up to thisamountEqual to or greater thanUS$100,000DAS upon advice, ifrequested, from AdvisoryCommittee on Procurement(ACP)CPLDAll Contractsother thanServiceContractsLess than US$200,000 None CPLD, who may delegateauthority up to certain levelsup to this amountEqual to or greater thanUS$200,000DAS upon advice, ifrequested, from ACPCPLDField Office ContractsLess than US$100,000 None FOD who may delegateauthority up to certain levelsup to this amountConstructionContractsEqual to or greater thanUS$100,000 but less thanUS$500,000*Local Committee onProcurement (LCP)FODEqual to or greater thanUS$500,000LCP, then DAS/ACPFODLess than US$100,000 None FOD, who may delegateauthority up to certain levelsup to this amountAll Contractsother thanConstructionContractsEqual to or greater thanUS$100,000 but less thanUS$200,000LCPFODEqual to or greater thanUS$200,000LCP, then DAS/ACPFODPROCUREMENT MANUAL 17/127 VERSION 2

2.3.2 Awarding Authority (AA)1. The term “Awarding Authority” (AA) shall mean:a. CPLD, or in his/her absence as designated by the DAS;b. Each FOD (or in his/her absence, the officer-in-charge of the Field Officeconcerned); andc. Those to whom they have sub-delegated their respective procurementauthority.2. Copies of all letters of delegation of authority, whether issued by the Commissioner-General, the CPLD or any FOD, shall be distributed in accordance with 2.3.1 article7 of this Manual, promptly after issuance.2.3.3 Duties of the Awarding Authority1. The AA shall:a. Ensure that the procurement action strictly complies with applicableregulations, rules, directives, instructions and other policies and procedures.b. Ensure that all delegations and/or sub-delegations he/she issues are dulysigned and dated by him/her and the delegate and that all concerned partiesin accordance with 2.3.1 article 7 of this Manual are notified immediately ofany DOA granted / amended / revoked, as the case may be, and providedwith the relevant documentation.c. Ensure that copies of all letters of delegation of authority, whether issued bythe Commissioner-General, CPLD or any FOD, and any sub-delegationsthereto, shall be provided to the DAS and all other required parties promptlyafter issuance, in accordance with 2.3.1 article 7.d. Ensure that sufficient funds are available for the commitment.e. OD10 section 4.3 states that disaggregation of requisitions shall not beallowed if such disaggregation serves no valid purpose and is made for thesole purpose of circumventing the review requirements set forth in OD10 orthe Procurement Manual. Consequently, the AA shall not disaggregate anyprocurement requisition in order to circumvent the proper clearanceprocedures.f. Ensure that the terms and conditions of the funding for such procurementaction, including donor requirements, if any, are complied with.g. Comply with all reporting requirements relating to his/her use of delegatedauthority.h. As defined in OD10 section 5.5, each AA may be personally accountableand may be held financially liable as a result of any non-compliance withapplicable regulations, rules, directives, instructions and other policies andprocedures.PROCUREMENT MANUAL 18/127 VERSION 2

i. Shall record all procurement related transactions in the relevant UNRWAelectronic Procurement and Inventory Management Systems.2. Notwithstanding anything herein to the contrary, no Field Office shall have theauthority to procure any item which, in the judgment of the DAS,a. is not within the Field Office‟s capacity to procure, orb. is in the best interest of the Agency to be procured at Headquarters orAgency-wide.3. In accordance with OD10 section 5.6, such items shall be set forth on a list preparedand circulated among the Fields by the DAS from time to time.Annex 2 - Local Procurement Authority (LPA) instructions2.3.4 The Roles of the Director of Administrative Support (the DAS)2.3.4.1 Control1. Control is a clearance function by the Commissioner-General‟s designatedrepresentative, which for procurement is the DAS, in his/her capacity as the Directoroverseeing procurement.2. The DAS is required to scrutinize the proposed award of high-risk contracts by theAA and assure himself/herself essentially that due process has been followed. Incarrying out this scrutiny, the DAS may seek the advice of the ACP.3. If the DAS is satisfied, s/he clears the proposed procurement award, and the AAawards the contract. The responsibilities of the AA have not been changed becauseof this clearance. S/he remains fully accountable for the process, the quality of thedecision, and the implementation of the decision.4. If the DAS is not satisfied, s/he can block the proposed award of contract. S/hecannot overturn the proposal of the AA, s/he cannot impose a different decision, buts/he can stop the proposed procurement award from being implemented.5. In such cases, for Field-based procurement the DAS and the FOD talk informally,they agree on some remedial action and the issue is quickly resolved. In extremecases, if the FOD refuses to accept the DAS‟s position, s/he can appeal to theCommissioner-General. But this would normally not happen.6. By carrying out this “control” function, the DAS does not become the AA and s/he isnot accountable to the Commissioner-General for the procurement award. Thatremains within the accountability of the relevant AA. The DAS is merely accountablefor the exercise of the control function i.e. did s/he carry out the scrutiny andclearance process in the defined and appropriate way.In his/her oversight role, the DAS monitors and oversees all procurement in theAgency by:PROCUREMENT MANUAL 19/127 VERSION 2

a. Requiring all AAs to submit the defined reports on their procurementactivities.b. Reviewing, consolidating and drawing lessons from the reports.c. Alerting the Commissioner-General and relevant senior managers whenthere are systemic issues.d. Commissioning evaluations of the exercise of procurement, in liaison withDirector of Internal Oversight Services (DIOS).e. Working closely with the DIOS on issues relating to audits, inspections andinvestigations.f. Review/monitoring of exercise of authority by the FOD / the CPLD to waivenormal tendering procedures.g. Noting of post facto/retroactive of contract awards.h. Review/monitoring of exercise of Emergency and Urgency Powers.2.3.4.3 The DAS’ Authority to Require Submission of ReportsThe DAS shall have the authority to require submission of reports, including thosedescribed in sub-section 12.11 of this Manual, on all procurement activities atHeadquarters and in the Fields in order to fulfill his/her mandate as set forth in Section14 of OD10.2.4 Accountability1. All officials of UNRWA are accountable to the Commissioner-General for theregularity of actions undertaken by them in the course of official duties. Staffmembers involved in any action that is contrary to UNRWA directives, financial andadministrative instructions or policies may be held personally responsible andfinancially liable for the consequences of such actions.2. UNRWA, through its operations and projects, is using public funds in theprocurement process and due care must be taken to ensure funds are only appliedaccording to the intended use. Individuals holding a Delegation of Authority must beparticularly careful to ensure actions undertaken by them or persons under theirsupervision are in compliance with all applicable regulations, rules, directives,instructions and other policies and procedures.2.5 Segregation of Duties1. Segregation of duties is an important basic principle of internal control and must beobserved in all UNRWA procurement processes. The procurement structure withinthe Agency shall be organized based on the segregation of duties related to thevarious steps of the procurement process in order to safeguard the integrity of theprocess and that appropriate checks and balances are safeguarded. The respectiveprocuring entity within UNRWA shall be organized according to an administrativestructure based on the segregation of responsibilities for the various steps of theprocurement process.PROCUREMENT MANUAL 20/127 VERSION 2

2. Such a structure typically separates the functions of the requisitioned, the budgetowner or expending officer, the buyer and the approver and payer of invoices, inorder to provide appropriate organizational checks and balances, but also in order topermit specialization. These various phases of the procurement process shall becarried out by separate functions:a. Formulation of the procurement requirement/request, including certification offunds.b. Processing of the request.c. Solicitation of offers from potential suppliers.d. Receipt of offers.e. Opening of offers.f. Evaluation of offers and identification of the winning offer.g. Review and recommendation for award.h. Award of purchase contract.i. Contract management and monitoring throughout life cycle.j. Acceptance of milestone deliverables.k. Certification of milestone payments.l. Processing of milestone payments.m. Final acceptance of goods, services or construction.n. Certification of final invoice.o. Disbursement of funds.3. At a minimum, three individuals must be involved in carrying out the procurementprocess. Under no circumstance shall one person be responsible for all of theabove-mentioned functions. The functions of the buyer and the payer must alwaysbe completely separated, and carried out by separate individuals. The receiptfunction, if applicable, shall be undertaken by a third person.4. For some procuring units it might not be possible to establish a complete separationof all the functions mentioned above, for example in very small offices. Any deviationshall be properly documented on file. In such cases, as a minimum, a segregation ofthe functions mentioned must be established, by ensuring that even though carriedout by the same individual, the individual is performing the tasks in the capacity ofvarious functions. Nevertheless, the separation between the buyer and the payercan never be waived.2.6 The Role of the Procurement and Logistics Division (PLD)1. The Procurement and Logistics Division (PLD) at UNRWA HQ(A) under the Chief,Procurement and Logistics Division (CPLD), with all Field Procurement andPROCUREMENT MANUAL 21/127 VERSION 2

Logistics Sections at the five UNRWA Field Offices headed by the respective FieldProcurement and Logistics Officers (FPLOs) and the Field Procurement OfficerGaza (FPO) shall provide the Agency and its staff with the required procurementservices, expertise and support to fulfill its mandate towards its beneficiaries. Tomaintain the highest possible service level and to ensure the UNRWA procurementprocess is in full compliance with the principles, the CPLD and each FOD shallensure that an environment conducive to best practice procurement is created andmaintained and continually improved, including, inter alia:Headquarters PLDa. Provision of PLD resources (staff, funding, premises, equipment) by theAgency.b. Efficient and effective use of any such resource.c. Development and maintenance of Agency Procurement strategy.d. Provision, regular updates and improvement of procurement policies andframework. Analyze and recommend to the DAS improvements to theProcurement Framework.e. Provision and maintenance of all required procurement systems, electronicor other.f. Design and provision of training to staff (PLD and stakeholders) in therespective procurement and logistics policies and systems.g. Provision of continued support and advice in the respective procurementpolicies and systems to PLD stakeholders and staff, on strategic andtechnical level.h. Strategic assignment of procurement cases to specialized staff.i. Maintenance and regular update of list of approved Suppliers.j. Pre-qualification of Suppliers in coordination with Legal, Finance and otherrelevant Departments.k. Contribution to development of manuals and other documents andinstructions involving procurement and logistics aspect/s.l. Engagement with DLA whenever advice or support is necessary ordesirable.m. Intervention and mediation in case of disagreement/dispute with contactorsand other third parties.n. Awareness of customs and other regulations related to logistics.o. Coordination of related logistics matters.Field Office PLDa. Efficient and effective use of assigned resources.b. Development and maintenance of Field Office Procurement strategy in linewith the Agency‟s Procurement Strategy.PROCUREMENT MANUAL 22/127 VERSION 2

c. Analyze and recommend to the CPLD improvements to the ProcurementFramework.d. Provision of continued support and advice in the respective procurementpolicies to Field Office stakeholders and staff, on strategic and technicallevel.e. Strategic assignment of procurement cases to specialized staff.f. Engagement with Field Legal Office and/or DLA whenever advice or supportis necessary or desirable.g. Intervention and mediation in case of disagreement/dispute with contactorsand other third parties.h. Determination of necessity to involve Head Quarters PLD in any such case.i. Awareness of customs and other regulations related to logistics.j. Coordination of related logistics matters.2. In the procurement of goods, services and construction PLD, or the SponsoringOfficer if the requirement falls under DOA, at a minimum, shall be responsible for:a. Identification of invitees for a specific procurement (if tender is by directinvitation) (normally based on pre-qualification process).b. Finalization / checking of requirements document received from stakeholder.c. Finalization / checking of tender package.d. Solicitation of offers from potential suppliers.e. Responding to queries from potential suppliers.f. Evaluation of financial aspects of offers.g. Assessing received offers with the requisitioner.h. Preparation of contract award documents for clearance.i. Negotiating contracts with suppliers.j. Issuing contract documents.k. Administering contracts throughout their life cycle.l. Closing out contracts and appraising Suppliers.m. With regard to the details of the procurement process for goods, servicesand construction, the segregation of duties and cross-cutting areas ofcooperation, please see Annex 3 to this Manual.Annex 3 – Process Flows and Assigned Duties for the Procurement of Goods,Services and Constructions2.7 Procurement Ethics1. Ethics is the discipline relating to right and wrong, moral duty and obligation, moralprinciples and values, and to moral character.PROCUREMENT MANUAL 23/127 VERSION 2

2. Most procurement-related principles, such as fairness, integrity, and transparencyare based on ethics. Since funds handled by UNRWA are public funds, entrusted tothe organization by a funding source or beneficiary, it is imperative that alltransactions conform to the highest standard of ethical conduct. Every part of theorganization as well as all individuals acting on behalf of UNRWA must observe thehighest standard of ethics throughout the procurement process.3. Corruption and fraud in the operations of international organizations deplete theirfunds intended for the accomplishment of defined goals and can undermine theireffective functioning and jeopardize their existence. All procurement officials shallmaintain an unimpeachable standard of integrity in all business relationships, bothinside and outside UNRWA. Ethical conduct shall apply in all dealings with UNRWAclients, donors, Governments, partners and the general public.4. Procurement personnel shall never use their authority or office for personal gain andwill seek to uphold and enhance the standing of UNRWA. Professional standards ofethical conduct of UNRWA officials are stated in:a. Article 100 of the Charter of the United Nationsb. Standards of Conduct for the International Civil Servicec. Chapter 1 of the International Staff Rules and Regulationsd. Area Staff Rules and Regulations5. All individuals are responsible for the regularity of actions taken by them in thecourse of their official duties, and any staff member that takes action contrary to theStaff Regulations and Rules of UNRWA or the United Nations may be heldpersonally responsible and financially liable for the consequences of such action.6. The United Nations has adopted a policy on financial disclosure and declaration ofinterest applicable to all United Nations staff members including UNRWA, withspecific requirements of disclosure for staff involved in procurement actions. Anystaff member who believes he/she may have a conflict of interest should report thisimmediately to his/her line manager, in writing.7. Related documentation is listed below:a. UNRWA Area Staff Rulesb. UNRWA International Staff Rulesc. Charter of the United Nations, Article 100d. Standards of Conduct for the International Civil Servicee. United Nations Staff Rules and Regulationsf. Secretary-General‟s Bulletin ST/SGB/2006/6 Financial disclosure anddeclaration of interest statementPROCUREMENT MANUAL 24/127 VERSION 2

2.7.1 Ethics in Dealing with Suppliers1. UNRWA shall seek to treat all suppliers in a fair and equal manner in line with theprinciples of fairness, integrity, and transparency in the procurement process.Nothing should prevent suppliers from competing for UNRWA business on a fair,equal and transparent basis. Staffs associated with the procurement function,therefore, are responsible for protecting the integrity of the procurement process andmaintaining fairness in UNRWA‟s treatment of all suppliers.2. All UNRWA personnel, and others, involved in the procurement process on behalf ofthe organization shall abide by the following standard of conduct:a. During the pre-solicitation phase, no one shall allow suppliers‟ access tospecific, privileged information on a particular acquisition before suchinformation is available to the business community at large.b. During the solicitation phase, all potential bidders must receive identicalinformation. Any clarifications to the solicitation documents must be providedat the same time, in writing, to all suppliers.c. Specifications should be linked to functionality. They should not includeconditions limiting competition (e.g. branding), nor be unnecessarilyrestrictive, as this may discourage competition.d. Individuals having a personal or financial interest in a supplier responding toa solicitation are prohibited from any involvement in the procurementprocess.e. During the evaluation, the evaluation criteria specified in the solicitationdocuments must be applied in the same manner for each evaluated offer.2.7.2 Gifts and Hospitality1. Gifts from suppliers should not be accepted. However, gifts of essentially nominalvalue may be accepted, and handled as described below. Gifts of high value mustbe immediately returned to the supplier accompanied by a letter advising thatUNRWA personnel are not allowed to accept high value gifts. Any gift (includingcalendars, pens, stationery, etc., as well as personalized and monogrammed gifts)received from suppliers, individual consultants or other professional contacts shallimmediately be handed over to the CPLD for disposal.2. In order to reduce administrative costs, it is not advisable to return gifts of a valueless than US $100. It is therefore recommended that all gifts of a value below US$100 should be registered and kept by the CPLD office, either for distribution amongstaff (e.g. through a lottery), for use in the office, or for donation to a charity.3. Invitations to lunches and dinners may be accepted if the intention is to discussUNRWA business, and this is in the interest of the organization. However, UNRWApersonnel shall make sure to inform all parties that no extravagant lunches ordinners can be accepted. A central record of gifts received and hospitality acceptedshall be maintained at each HQ and Field location.PROCUREMENT MANUAL 25/127 VERSION 2

4. Invitations of a social kind, such as extravagant lunches or dinners, sporting eventsor cultural events shall always be declined, and offers of holidays or othersubstantial hospitality must always be refused. Invitations offered by governments toattend lunches, dinners, receptions, etc. may be accepted as part of the staffmembers‟ official function.5. In the event that there is any doubt on the propriety of acceptance of gifts andhospitality, the matter shall be brought to the attention of the CPLD.2.7.3 Ethical Behavior of Suppliers1. Suppliers shall adhere to the highest ethical standards, both during the biddingprocess and throughout the execution of a contract. The extreme case of unethicalbehavior is when there is engagement in corrupt practices.2. The list of definitions set forth below indicates the most common types of corruptpractices among suppliers:a. Bribery: The act of unduly offering, giving, receiving or soliciting anything ofvalue to influence the procurement process.b. Extortion: The act of attempting to influence the process of procuring goodsor services, or executing contracts by means of threats of injury to person,property or reputation.c. Fraud: The misrepresentation of information or facts for the purpose ofinfluencing the procurement process.d. Collusion: An agreement among bidders to submit bids at artificially-highprices that are not truly competitive.2.7.4 Anti-Terrorism, Environmental Considerations and Social Responsibility1. Suppliers have the obligation to comply with the applicable UNRWA GeneralConditions of Contract, which contain specific provisions on anti-terrorism, mines,child labour, and the fundamental rights of workers. Since the UNRWA GeneralConditions form an integral part of every contract between UNRWA and a supplier,the supplier, by signing the contract with UNRWA, confirms that he adheres to theprovisions in the General Conditions. Moreover, the United Nations is committed todoing business only with those suppliers sharing its values of respect forfundamental human rights, social justice, and human dignity, and respect for theequal rights of men and women, enshrined in the Charter of the United Nations.2. This demand for ethical behavior applies to all suppliers providing goods, services orworks to the United Nations around the world. Suppliers have the duty to respectkey obligations on anti-terrorism, child labour, mines, health and safety, workingconditions, freedom of association, environment, non-discrimination, human rights,and anti-corruption measures.3. UNRWA participates in the Global Compact, and encourages suppliers to participatealso. The Global Compact is a voluntary initiative covering human rights, labourrights, and the environment. More information can be found onwww.unglobalcompact.orgPROCUREMENT MANUAL 26/127 VERSION 2

4. In order for environmental aspects and social responsibility aspects to have animpact on the selection of UNRWA suppliers, these aspects need to be designedinto the requirement definition of the product to be purchased or quantitativelydefined and stated in the solicitation documents as a mandatory requirement to thesuppliers.5. UNRWA adheres and expects its suppliers to adhere to the United Nations SupplierCode of Conduct.2.8 Documentation of the Procurement Process1. In line with the procurement principles of transparency and accountability, and inorder to enable internal and external audits of UNRWA operations, every step in theprocurement process shall be documented and kept on file (hard copy or electronicand in accordance with applicable office policy and as advised by the FOD / CPLD).A standard filing system, as well as a numbering system to enable tracking of files,must be established in every operational unit in order to create an audit trail and tofacilitate the management of the procurement activities.2. A procurement file shall be opened by the Sponsoring Officer. Procurement files areto be kept for 5 years after the completion of the last transaction of a procurementactivity.3. At a minimum, for all procurement contracts, files shall include the followinginformation and documentation, in original format and signed by the appropriateparties, all if and when relevant:a. Requisitionb. Requirement definitionc. Sourcing information including justification of procurement method/type ofcompetition / Local Procurement Authority (LPA) requested.d. Signed short liste. Signed procurement solicitation document, including attachments such asspecifications/TOR/SOW, and proof of issuance.f. Amendments to solicitation documents, other clarifications andcorrespondence.g. Copy of offer receipt reporth. Tender Opening reporti. All offers received (technical and financial)j. Evaluation reportk. Minutes of clarifications and relevant communication with suppliersl. Request for award, or submission to committee on procurementm. Minutes of the advisory/local committee on procurement, if applicablen. Original contract/POo. Bid protestsPROCUREMENT MANUAL 27/127 VERSION 2

p. Correspondence with contractorq. Notes from meetings, phone calls etc.r. Amendments to contracts/POss. Any required progress reports and/or other proof of delivery of milestones asprovided for in the contract.t. Proof of receipt of goods or servicesu. Receipt and inspection reportv. Acceptance report from requisitioner/end userw. Certificate of substantial completionx. Certificate of final completiony. Insurance claimsz. Proof of payment, andaa. Supplier evaluation reportsThe establishment of proper routines for documentation of the procurement processshall be the responsibility of the FODs and the CPLD.Annex 4 - Check List for Petty Cash, RFQ, ITB or RFP.PROCUREMENT MANUAL 28/127 VERSION 2

CHAPTER 3DEPARTMENT AND FIELD OFFICE PROCUREMENT PLANNING1. It is a good procurement practice to conduct regular procurement planning sessionsinvolving all project and procurement personnel in each Department and FieldOffice. The result of the Department or Field Office procurement planning willgenerate the information required for the Agency‟s procurement plan as well as theplan for items to be procured locally or for items that do not require acquisitionthrough the formal procurement process.2. In UNRWA, Departmental procurement planning shall be the responsibility of theDepartment Director who may delegate the functions to Division Chiefs and SectionHeads. Field Office procurement planning shall be the responsibility of the FPLOworking in conjunction with the Field Office Director and the Field Office Team.3.1 Project Level Procurement Planning1. The Project Manager or the individual managing the project is responsible foranalyzing the procurement needs of the project, presenting a procurement plandefining the procurement needs, suggesting the procurement methods, andstipulating the timing of the procurement under the project. The project levelprocurement planning will generate information for the Departmental or Field Officeprocurement plans.2. Project level procurement planning should start already during the projectacceptance stage, in order to be able to include any specific requirements resultingfrom the procurement planning analysis in the legal agreement with the donor (e.g.pre-selection of suppliers, special situations requiring deviations from the UNRWAprocurement procedures, etc.).3.2 Planning of Procurement Activities within PLD1. Procurement planning at both the HQ PLD and in the Field involves the process ofassessing identified procurement requirements, determining the ultimate goal of theprocurement activity, and establishing a timeline and a strategy for achievement ofthe goal. In other words, planning of a procurement activity requires beginning withthe end in mind, and defining how to approach every step of the procurementprocess in order to achieve the required result, on time, and as cost effectively aspossible.2. Planning the procurement process ahead increases the chances of successfullyconducting every required step of the process in the best possible manner byallowing sufficient time to execute each step of the process according to the definedprocedures and good procurement practice.3. In the end, procurement planning leads to:a. Better requirements definition, increasing the probability of receiving strongoffers, thus, facilitating the evaluation process, leading to appropriateproducts fulfilling the needs of the client, and easier contract management;PROCUREMENT MANUAL 29/127 VERSION 2

. Improved sourcing, ensuring the right suppliers, and the right number ofsuppliers, thus increasing competition, potentially leading to stronger offersat lower prices;c. Less waste of resources on last minute actions;d. Less repetitive, labour intensive procurement activities, due to the earlyassessment and use of Long Term Agreements, joint procurement initiativeswith other divisions or United Nations organizations, etc.; ande. Reduction of delays and lead times due to the ability to perform in advanceand proactively conduct a number of procurement tasks.4. The Procurement Process Checklist can facilitate procurement planning of aprocurement activity.5. It is also recommended at the planning stage to take into account Chapter 11“Logistics and Procurement” which provides an overview of logistics aspects to beconsidered in advance, in particular for procurement of goods and equipment.3.3 Needs AssessmentNeeds assessment is a systematic approach in order to define the procurement need tobe covered, and specifying this need in the requirements to the product. Needsassessment is the first step in the implementation of a procurement process, and anintegrated step in the planning of the process. However, often the needs assessment isdone in parallel with the sourcing and market research in order to let information fromthe market research influence the requirement specification.3.3.1 Receipt of Requisitions1. An UNRWA procurement process usually begins with a requisition for the purchaseof a particular product or service. The requisition will come from end users to theProcurement and Logistics Division whether at Headquarters or in the Field Offices,in the form of a document called a List of Requirements (LR). This LR is processedvia the electronic procurement and inventory system (PIMS) which can be handledat the Field Office level or may be passed on to the HQ procurement staff based onthe size and nature of the item. The requirements documents for construction andservices contracts will continue to be received in hard copy.2. The LR includes a complete description of what is to be purchased. The LRscreens in the system contain the following information for the procurement staffto utilize:a. A detailed description of goods, works or services sought, United NationsCCS coded;b. Quantity to be procured;c. Required delivery date or start up/completion date or multiple dates asrequired;d. Delivery location or location of works/services to be performed;PROCUREMENT MANUAL 30/127 VERSION 2

e. Estimated price; andf. Any additional information (e.g. standardization, preferred method ofshipment, etc.).3.3.2 Requirements Definition1. Requirement definition is a systematic approach in order to clearly define the needto be covered by the product to be procured.2. The requisitioner or user originator is responsible for defining the requirements,however, the procurement individual responsible for the process in question shallevaluate the requirement received from the requisitioner, and identify any issuesthat do not seem advisable from a procurement point of view (e.g. branding withoutjustification, over specification, unrealistic required delivery dates, etc.).3. The procurement staff member responsible for the process and the requisitionershall then jointly finalize the requirement definition. It is the responsibility ofprocurement personnel to ensure that the finalized requirements comply withregulations, as well as good practice for requirement specification. These actionstake place outside of the electronic procurement system and may involve a varietyof communication techniques including telephonic, email or meetings.3.3.2.1 The Purpose of Requirements Definition1. The general purpose of all requirement definition is to identify the actual needs ofthe requisitioner, and to search for a solution to meet those needs. The needsshould be described in the requirement definition in a way that will facilitate theprocurement process. Clear requirement definition is crucial in every procurementoperation.2. First of all, the requirement definition forms the basis for the solicitation, and sets thegoals of the procurement action. The requirement definition informs the potentialsuppliers of the requirements the offered product must have in order to fulfill theneeds of UNRWA.3. Secondly, the requirement definition forms the basis of the evaluation of offers whendetermining which offer provides the best overall solution to UNRWA. A clearrequirement definition will reduce the likelihood of ambiguous decisions at the timeof evaluating offers. Technical as well as other requirements (financial, legal,administrative, etc.) are set out in the solicitation documents and no parametersother than those specified in these documents ex ante can be considered during theevaluation.4. Finally, the requirement definition forms a critical part of the contract, and becomesimportant when administering the contract to ensure the timely performance by thesupplier.5. The requirement definition has an effect on the procurement that lasts throughoutthe entire procurement process – from solicitation, through evaluation and award ofcontract, through receiving and inspection, to completion of the activity andevaluation of suppliers.PROCUREMENT MANUAL 31/127 VERSION 2

3.3.2.2 Characteristics of Well-Defined Requirements1. In order to define requirements, there should be an analysis of the product(goods/services/works) to be procured and its functions, performance requirements,characteristics, objectives, and/or expected output, depending on the nature of theproduct. Information on the products available in the market should be gathered.2. All requirement definitions should specify the exact needs without over-specification.3. Over-specification may increase prices or decrease the number of offers, because itleads to offers for more sophisticated products than the ones needed. On the otherhand, under-specification will lead to offers for products that do not meet the definedneeds.4. Thus, it is essential to the cost-effective use of funds that the requirements definethe exact needs. If requirements of the product concerning environmental and socialresponsibility aspects (e.g. environmentally friendly production methods) are to beconsidered in the evaluation, they must be included in the requirement definition.5. Requirements should be generic and defined with the aim of opening upcompetition, thus, no specific brands or other unnecessary restrictions should berequested. However, if brand names are used to define functional, performanceand/or technical requirements they should only be used to define the requiredproduct standard. Further, brand names should never be used without alsospecifying the minimum requirements that are considered essential. Finally, thespecification should clearly invite offers of equivalent products, i.e. products meetingsimilar functional, performance and/or technical standards.6. All requirements, which are to be a determining factor in the evaluation of offersshould be considered at this stage, since they must be clearly stated in thesolicitation documents.3.3.2.3 Types of Requirement SpecificationsRequirements are specified as one of:a. Technical Specifications;b. Terms of Reference (TOR); orc. Statement of Works (SOW) / Bill of Quantities (BoQ).The various types of documents defining the requirements for a product are described inmore detail below.3.3.2.3.1 Technical Specifications1. Technical Specifications are used for the procurement of goods.2. The specification is a description of what the purchaser wants to buy andconsequently what the supplier is required to provide. Specifications can be simplePROCUREMENT MANUAL 32/127 VERSION 2

or complex depending on the need. The specification forms part of the invitation tobid, request for proposal, or request for quotation.3. Three types of defining needs (or a combination of the three) can be included in thespecification:a. Functional specifications, defining what the goods are required to do.b. Performance specifications, defining what we want to achieve / what theoutputs will be.c. Technical specifications, defining the physical characteristics anddimensions of the goods.3.3.2.3.2 Terms of Reference (TOR)1. Terms of Reference (TOR) are mainly used for contracting of services. TOR shoulddefine the work required of a supplier to provide the solicited services.2. However, they can be used for goods and works when the requirement cannot bequantitatively defined. The TOR is often the supplier‟s first and main introduction tothe assignment.3. Clear and unambiguous TOR will encourage the supplier to prepare clear anddetailed proposals, more likely to lead to successfully-implemented projects andreducing the likelihood of disputes and claims.4. The TOR usually includes information about:a. Background for requesting the serviceb. Objective of the service and overall impactc. Expected output from the servicesd. Activities required to reach this outpute. Input required to perform activitiesf. Deliverablesg. Timing3.3.2.3.3 Statement of Works (SOW)1. Statement of Works (SOW) provides background and detailed information forconstruction works. It must provide all general information necessary in order to beable to bid for and execute the works on site, such as location, timeline for executionof the works, information to the extent that they are available about the constructionsite such as ground conditions and survey plans, technical requirements, etc.2. The SOW shall provide contract data that are to be included as an Appendix toLetter/Form of tender. Contract data must include but is not limited to Time forCompletion of Works, Delay Damages, Defects Notification Period, any AdjustmentsPROCUREMENT MANUAL 33/127 VERSION 2

allowed in the contract for changes in Cost, Advance Payments if any, Repaymentamortization rate of advance payment, Minimum Amount of Interim PaymentCertificates, Minimum amount of Third Party Insurance. A Statement of Work isusually accompanied by Conditions of Contract for Construction, a set of Workingdrawings, BoQ and Technical Specifications.3. The SOW may be accompanied by the requirements that should be fulfilled by thesuppliers or contractors with regard to professional and technical qualifications,professional and technical competence, financial resources, equipment, experience,managerial capability, legal status and other facilities that are required to fulfill theobligations of the supplier/contractor.PROCUREMENT MANUAL 34/127 VERSION 2

CHAPTER 4SOURCING OF SUPPLIERSThe sourcing process enables identification of suitable suppliers, and can also providevaluable information about products and specifications, and contribute to the determinationof method of solicitation and type of competition.4.1 Market research1. Market research is the first step in the sourcing process, particularly if the product orservice has not been procured previously. Knowledge about the market is afundamental step in a successful procurement process.2. The following tools are available to assist in market research:a. United Nations Global Marketplace (UNGM), www.ungm.org.b. Advertisement of business opportunities:i. Call for Expressions of Interestii. Open Competitive Processesc. Pre-qualificationd. External sourcese. Internal sources3. Market research should not rely solely on one of the above tools. Several of thetools should be applied before deciding the method of solicitation and type ofcompetition.4. It is important that the result of the market research is documented in theprocurement process file and made available Agency wide through registering ofsuppliers into our supplier database.4.1.1 United Nations Global Marketplace (UNGM)1. UNRWA is using the UNGM as a corporate roster of suppliers. UNGM(www.ungm.org) is the main supplier database of a number of United Nationsorganizations including UNRWA and is available to all United Nations and WorldBank procurement personnel.2. UNGM offers updated supplier information including contact and company details,financial information, export volume, previous United Nations experience andregistered products/services. Queries to identify suppliers can be run by products,United Nations CCS codes, supplier information and geographical area.3. All supplier information from firms expressing a specific interest in doing businesswith UNRWA when registering with UNGM has been reviewed for completeness andrelevance by a supplier management committee established by Global ServiceCentre (GSC). However, it still remains the responsibility of the procurement officerPROCUREMENT MANUAL 35/127 VERSION 2

to do a proper background check and analysis of the supplier suitability for specificUNRWA procurement opportunities.4.1.2 Advertisement of Business OpportunitiesAdvertisement refers to one of the dissemination of upcoming solicitation informationthrough a call for Expressions of Interest (EOI) or notice of pre-qualification inappropriate media, or to an advertisement of the procurement opportunity with theobjective of conducting an open tender. In UNRWA, due to the nature of most of ourprocurements, we use Pre-Qualification of suppliers for almost all of our procurements.4.1.2.1 Call for Expression of Interest (EOI)1. The call for EOI is a notice that provides general information on the requirements forgoods, works, or services of upcoming solicitations. Suppliers are requested toexpress interest before a fixed deadline by submitting detailed informationdemonstrating experience and qualifications in provision of the relevantgoods/services/works. The information provided by interested suppliers is assessed,and suppliers will be considered for inclusion on the short list of companies to beinvited to submit detailed offers/proposals.2. A call for EOI is a cost-effective method to search for and identify suitable suppliers.3. However, it requires allocation of additional time to conduct the sourcing process, assuppliers should have sufficient time to respond to the call for EOI. Depending onthe complexity and nature of the goods/services/works to be procured, at least 2weeks should be provided for responses.4. In order to support UNRWA‟ principles of transparency, fair competition and integrityof the sourcing process, it is recommended to undertake a call for EOI for allforthcoming solicitations above USD 100,000, unless an open competitive processis being carried out.5. When it is not possible to place a call for an EOI, the reasons should be properlyexplained and documented in the procurement file.6. The call for EOI shall be advertised on the UNRWA website. In addition, it shall beadvertised or distributed in a manner that according to the nature and complexity ofthe required product would lead to the most beneficial responses, e.g.advertisement on websites of other organizations or clients, in local newspapers orspecialized magazines.Annex 5 - Expression of Interest (EOI) Template4.1.2.2 Advertisements: Open Competitive Processes1. Open international or national tender is the sourcing method which best satisfies theprinciples of transparency, fair competition and integrity of the sourcing process as itis open to all interested suppliers. This method entails advertisement in appropriatemedia, depending on the nature of the procurement activity.PROCUREMENT MANUAL 36/127 VERSION 2

2. The procurement opportunity shall be advertised on the UNRWA website. Inaddition, it shall be advertised or distributed in a manner that, according to thenature and circumstances of the required product, would lead to the most beneficialresponses, e.g. advertisement on websites of other organizations or clients, in localnewspapers or specialized magazines. When using an open tender, no short list isestablished.3. Advertisements often result in more extensive evaluation processes, due to thelarge number of offers received, However, the benefits of a broader competitionoften outweighs the additional burden of an increased number of offer reviews.4.1.3 Pre-Qualification1. Pre-qualification is a formal method of assessing suppliers against pre-determinedcriteria and only suppliers who meet established criteria are invited to tender. Theprocess ensures that solicitation documents are sent only to suppliers with adequatecapabilities and resources. Adequate time must be allowed for potential suppliers toprepare responsive applications. The period between the notice of invitation to prequalificationand the deadline for submission of applications should be no less than3 weeks.2. Compared to the other market research tools, pre-qualification is a formal processwhere supplier appraisal and background checks are done prior to issuing thesolicitation documents. If pre-qualification is done for a specific procurement activity,all suppliers meeting the pre-qualification criteria shall be invited to tender. Prequalificationdoes not guarantee that a contract will subsequently be issued.3. Pre-qualification is recommended when:a. Complex or specialized goods or services (e.g. civil engineering or complexIT system integration) are being procured.b. A particular type of good or service is procured on a regular basis.c. A high degree of risk is involved in the procurement (e.g. security and safetyequipment and services).d. The high costs of preparing detailed bids could discourage competition (suchas custom-designed equipment, design and build projects or specializedservices).e. The importance of the goods or services for the project is high (e.g. latedelivery or the delivery of a wrong product or service would have costlyimplications).4. Pre-qualification may help reduce the risk of contract failure. In cases where thereare many qualified and eligible suppliers, pre-qualifications may reduce procurementcosts because it reduces the need for constant market research in order to identifysuppliers. On the other hand, pre-qualification can be a costly and complexexercise, which requires specific skills and a good understanding of financialparameters. A careful assessment of the advantages and disadvantages ofconducting a pre-qualification should therefore be undertaken.PROCUREMENT MANUAL 37/127 VERSION 2

5. The pre-qualification should be repeated regularly for frequently procured products(e.g. every two years), due to changing market conditions. In cases where theprequalification process and the solicitation process are substantially apart in time(i.e. more than 3 months for civil works contractors and suppliers of services, ormore than 6 months for suppliers of goods), procurement staff may require updateson critical prequalification information to be submitted alongside the actual offer.4.1.4 External SourcesThe following external sources are valuable sources of information in the search forpotential suppliers:1. Internet references such as Kompass, the DACON (Data on Consultants –maintained jointly by the World Bank and other Regional Development Banks),regional trade directories and country and product specific directories. Consult thelist of recommended internet references on the UNRWA intranet.2. Other United Nations organizations/lead agencies specialized in the procurement ofgoods or services within a particular field (e.g. United Nations HCR for refugeesupplies, United Nations ICEF for vaccines, WHO for medical products, etc.)3. Commercial/specialized journals and magazines4. Chambers of Commerce, United Nations Missions, Trade Delegations, Embassies5. Beneficiary governments, end users, clients, funding sources6. Business seminars, supplier catalogues, professional journals, trade publications,etc.4.1.5 Internal SourcesThe following internal sources can also be a good starting point in search for potentialsuppliers:1. Established supplier Lists and Supplier rosters (e.g. Field Office Vendor Lists localrosters, product specific rosters, UNGM)2. Former contracts3. Previous short lists within same Field4. Consultation with colleagues4.2 Principles for Supplier Selection for the Short List1. When market research has been undertaken, an unduly long list of potentialsuppliers might have been identified. Often there is a need to limit the number ofsuppliers to be invited (short-listed) to tender. The objective of establishing a shortlist of invited suppliers is to ensure cost effective competition between qualifiedsuppliers.PROCUREMENT MANUAL 38/127 VERSION 2

2. The following principles shall be used for the selection of suppliers for the short list:a. Entities included on the short list should to the extent possible represent afair share of potential markets and equitable geographic distribution. Dueconsideration is to be given to the inclusion of suppliers from developingcountries and new emerging markets.b. For repetitive requirements, the short list should be updated each time toconsider potential new actors in the market and allow potential new suppliersto participate.c. If a pre-qualification process has been undertaken for a specific procurementactivity, all suppliers meeting the pre-qualification criteria shall be shortlisted.d. There is no obligation for UNRWA to invite all companies having expressedinterest through a call for an EOI. Likewise, there is no obligation for UNRWAto limit the short list to the companies having expressed interest.e. For procurement activities with estimated value at USD 60,000 or more andless than USD 200,000 a minimum of 5 entities should be short-listed. Forprocurement, actions with estimated value at USD 200,000 or more aminimum of 8 entities should be short-listed. However, more than theseminimum numbers of entities should be short-listed if required to achievecompetition. These numbers are a guideline, in the event there is a lack ofsuitable entities available for short-listing, public advertisement should beundertaken.f. If suppliers must meet specific eligibility requirements for the procurementaction in question e.g. specific product requirements such as ISO certificationor quality standards, then only suppliers that meet these requirements shouldbe selected for the short list.g. As a general rule, the supplier‟s technical and financial capacity shall beappropriate compared with the value of the contract and the nature of therequested needs.h. The capacity of the suppliers should be taken into account. In particular, ifmultiple tenders are undertaken simultaneously or with a risk of awardingmultiple contracts to the same suppliers within the timeframe required forexecution of the contracts, this should be taken into account.i. The assessment criteria mentioned in the United Nations „Guideline for prequalification‟might be applicable also in a more informal assessment ofsuppliers for short-listing.j. Suppliers under United Nations embargo or otherwise sanctioned by theUnited Nations must not be short-listed. The United Nations PSS office inNew York sends out notifications and can be contacted regarding suppliersthat are sanctioned.PROCUREMENT MANUAL 39/127 VERSION 2

3. The establishment of a short list requires a preliminary assessment of the suppliersin order to determine their suitability for the procurement to be undertaken. All shortlistedsuppliers should have the potential of being a successful bidder.4.3 Approval of the Short ListWhen entities to be invited have been selected, the short list must be approved by theappropriate authority in the Buying Section in HQ Amman or by the FPLO in the Fieldbefore procurement documents can be issued.4.4 Vendor Management1. In order to maximize economy and efficiency, UNRWA shall continually strive toidentify new technically and financially sound suppliers. In particular, UNRWA shallactively work to increase its sources of supply from developing countries, especiallywithin the UNRWA areas of operations and from rapidly growing new markets.2. In order to enhance the efficiency and transparency of UNRWA procurementactions, a roster of potential suppliers shall be kept by procurement personnel inorder to facilitate the identification of qualified suppliers to be invited to compete.Both UNGM and local supplier lists shall be used to capture data on local andcorporate suppliers. Continual efforts shall be made to broaden the supplier rostersby identifying new suppliers of goods and/or services of interest to UNRWA.3. To promote economical and efficient procurement, the performance of existingsuppliers should be evaluated on an ongoing basis. Data should be recorded locallyby the UNRWA procurement staff at HQ Amman and in the Field Office PLD offices.Under-performers should be flagged, and information regarding the nature of theunder-performance should be discussed with the CPLD.4.4.1 Vendor Striking Off1. UNRWA shall reject requests for supplier registration as well as offers fromsuppliers, and may declare as ineligible any registered supplier (including its boardof directors, principals and/or personnel individually) or remove or suspend anyregistered supplier (including its board of directors, principals and/or personnelindividually) from its Vendor list, indefinitely or for a stated period of time, based onone or more of the following grounds:a. Failure to perform in accordance with the terms and conditions of one ormore contracts;b. Abusive, unethical or unprofessional conduct, including collusive bidding andanti-competitive conduct, corrupt practices and submission of falseinformation;c. The supplier is believed to have engaged in criminal or fraudulent activity;d. Genuine concern about the supplier‟s ability to perform its contractualobligations, e.g., filing for bankruptcy;e. Any documented or compelling proof of misconduct which can negativelyaffect the interests of the United Nations and which would reasonable impairthe supplier‟s ability to perform a contract;PROCUREMENT MANUAL 40/127 VERSION 2

f. Lack of response or acknowledgment to three prior invitations to bid;g. Removal or suspension from another UN agency‟s supplier list or declaredineligible by such agency, orh. Other grounds identified by CPLD in consultation with DAS.2. The CPLD together with the Section Head and Field Procurement and LogisticsOfficer (FPLO) concerned will determine if a supplier should be declared ineligible orremoved or suspended from the UNRWA Vendor list when the supplier supportsmore than one Field Office. The FPLO may declare as ineligible or remove orsuspend a local supplier from the local supplier list by coordinating with the PIMSdatabase administrators to ensure the supplier is flagged within the system. Therecommendation to declare as ineligible or remove or suspend a supplier from theUNRWA Vendor list will be coordinated with the Legal Adviser/General Counsel andthe DAS prior to being communicated to the supplier.4.4.2 Vendor Re-InstatementIn order to be re-instated as an approved supplier to UNRWA, firms should undergo thesame application process as any new potential supplier. This process can only becommenced at the end of any stated period of ineligibility, or in the case of firmsrendered ineligible indefinitely; at least three years must have passed since the originaldeclaration of ineligibility before a fresh application can be considered.PROCUREMENT MANUAL 41/127 VERSION 2

CHAPTER 5SOLICITATION METHODS AND COMPETITION1. The choice of the procurement solicitation method and competition is influenced bya number of factors, such as market conditions, complexity of the requirement,monetary value of the procurement, and whether goods, works, or services areprocured. Location and urgency may also have an effect on the choice of solicitationmethod and competition, and the procedures applied.2. Defining the solicitation method and competition entails selecting the most suitablesupply method in the given situation:a. First of all, it should be determined whether to conduct a competitive tenderprocess or whether the needs are met through the use of an existing LongTerm Agreement (LTA), redeployment of assets, or supply already stocked inUNRWA sources. A justification should be recorded explaining the chosenstrategy, (e.g. why an LTA is not used, or why existing assets currentlyowned by UNRWA cannot be redeployed, etc.).b. If the need for a competitive tender process is established, a procurementmethod (i.e. the method of soliciting offers) must be selected. Depending oncomplexity and value, the appropriate and prudent procurement method ischosen. The various procurement methods are described below.c. Finally, the type of competition must be selected. UNRWA will useinternational, regional and local competition as appropriate for the type ofcommodity. UNRWA may use any of the competitive methods describedbelow. It is essential to ensure that the selected type of competition is botheconomic and efficient and results in UNRWA obtaining „best value formoney‟.5.1 Selection of Solicitation Method1. Procurement is undertaken on the basis of competitive bidding with a minimum ofthree suppliers invited to bid, unless a waiver of competition is justified (see sub-Section 5.4.1).2. Depending on the complexity of a requirement and the value of thegoods/works/services to be procured, the following procurement methods shall beused:a. Low Value Purchasingb. Request for Quotationc. Invitation to Bidd. Request for ProposalPROCUREMENT MANUAL 42/127 VERSION 2

5.1.1 Low Value Purchasing (Requirements below USD $10,000)5.1.1.1 Less Than USD $500Low Value Purchasing is a solicitation method based on the comparison of pricesobtained from potential suppliers received orally or in writing. All purchases and servicescosting less than USD $500 may be obtained through an imprest fund voucher withoutthe need for a formal written contract. Whilst best value for money should always besought, there is a reduced need for competition at this spend level.5.1.1.2 Between USD $500 and USD $10,0001. Contracts costing more than USD $500 but less than USD $10,000 may be letwithout competitive quotations. Oral or written Request for Quotation (RFQ) shouldbe addressed to at least one approved supplier. Quotations must be in writing. Proforma invoices may suffice. If received orally, a written note justifying the selection ofsuppliers as well as the price should be included in the file. Where time and marketconditions allow, 3 or more approved suppliers should be asked to quote. Increasingthe number of quotations received beyond one is highly desirable.2. It is an appropriate method for the procurement of readily available off-the shelfgoods or standard specification commodities valued less than USD $10,000, orsimple works or services valued less than USD $10,000.3. Excluded from this method of purchase are:a. Procurement of inventory items;b. Items procured under Long-term Agreements; andc. Items which are classified as major equipment / fixed assets.5.1.2 Request for Quotation (RFQ)1. A written Request for Quotation or Request for Proposal will be addressed to atleast three approved and potential suppliers.2. A two-envelope system is used for the pre-qualification of potential suppliers at thetime of the RFQ/RFP. In this method of using a two-envelope system, the firstenvelope shall contain a completed pre-qualification form, along with supportingevidence such as headed notepaper, company accounts if requested, etc. Thesecond envelope which contains the financial quotation should only be opened if thepotential supplier is successful in pre-qualifying, following analysis of the contents ofthe first envelope. Second envelopes from potential suppliers who did not qualify willbe returned unopened to their respective addresses, or will have the contentsshredded, unopened if possible.3. The approved suppliers that submitted the best three acceptable quotations orproposals from the last RFQ/RFP must be invited to participate, provided that theyhave maintained their approved status.PROCUREMENT MANUAL 43/127 VERSION 2

4. For contracts costing not more than USD $60,000, no formal Tender OpeningCommittee is required, and bids may be opened by an internal Quotation OpeningCommittee comprised of the relevant Section Head and a procurement staffmember at Headquarters and the FPLO and a procurement staff member in theField Offices.5. Quotations/proposals can be received via a designated fax number or byconventional mail. Once received, the quotations/proposals are placed in a closedbox until the RFQ/RFP opening date.6. For guidance on opening of RFQs, see „Tendering Receipt and Opening Guidelines‟of 19 January 2009.5.1.3 Invitation to Bid (ITB) / Request for Proposals (RFP)1. Any procurement action with an estimated value exceeding USD $60,000 shall betendered using an ITB or RFP.2. Written Invitations to Bid (ITB) or Requests for Proposal (RFP) shall be addressed toat least five approved and potential suppliers.3. A two-envelope system is used for the pre-qualification of potential suppliers at thetime of the ITB/RFP. In this method of using a two-envelope system, the firstenvelope shall contain a completed pre-qualification form, along with supportingevidence such as headed notepaper, company accounts if requested, etc. Thesecond envelope which contains the financial quotation should only be opened if thepotential supplier is successful in pre-qualifying, following analysis of the contents ofthe first envelope. Second envelopes from potential suppliers who did not qualify willbe returned unopened to their respective addresses, or will have the contentsshredded, unopened if possible.4. The approved suppliers that submitted the three most acceptable quotations orproposals from the last ITB/RFP must be invited to participate, provided that theyhave maintained their approved status.5. Bids/proposals have to be sent in closed envelopes to be placed in a closed tenderbox.6. For guidance on opening of ITBs and RFPs, see „Tendering Receipt and OpeningGuidelines‟ of 19 January 2009.7. With due consideration for the economic use of Agency Resources, contracts shallbe let on a competitive basis.8. The transparent tendering system used by UNRWA requires that the marketavailable to the Agency is reasonably and adequately investigated by, inter alia,prequalification of suppliers and by providing opportunities for new potentialcontractors to participate over a reasonable period of time.9. The number of potential and approved suppliers on the Agency‟s List of ApprovedVendors shall be kept at a practicable level, taking into account the administrativecost involved, the effectiveness of responses and the quality of suppliers.PROCUREMENT MANUAL 44/127 VERSION 2

10. Competition shall be solicited either by public advertisement or by direct invitationaddressed to potential and qualified approved suppliers for the List of ApprovedVendors, or a combination of both; the method chosen should satisfy theconsiderations outlined in the paragraphs immediately preceding this one.11. Copies of the list of invited suppliers as well as the list of Approved Vendors relatedto an RFQ / RFP / ITB shall be made available to the applicable Agency‟s AdvisoryCommittees or AA together with the pertaining contract proposal.5.1.3.1 Invitations to Bid (ITB)1. An Invitation to Bid (ITB) is used for procurement of goods, services or works withstandard and firm specifications. All ITBs require an absolute receipt deadline. AnITB defines absolute requirements in terms of minimum requirements or a range ofacceptable requirements. Evaluation is done by verifying that an offer is compliant inall respects. Contracts are awarded on the basis of the „lowest priced technicallycompliant offer‟ evaluation methodology, including delivery terms, and any otherrequirements stated in the ITB. For further details of evaluation, see Chapter 8.2. If necessary, a two-envelope system, where suppliers are requested to submit theirtechnical and financial offers separately in two sealed envelopes, can be used. Thepurpose of the two-envelope system is to ensure that the technical evaluation canbe undertaken focusing solely on the contents of the technical proposal without biasfrom the financial aspects of the proposals. The two-envelope system is most oftenused if compliance is determined according to a points system.3. In order to ensure fairness and transparency it is important that all criteria to beconsidered in the evaluation are clearly defined in the solicitation documents.5.1.3.2 Request for Proposal (RFP)1. A Request for Proposal (RFP) is used for procurement of services, works and goodswhen there is difficulty expressing requirements (e.g. consulting or similar services,purchase of complex goods where requirements may be met in a variety of ways).2. An RFP requests a technical proposal offering a solution to the requirementsspecified in the solicitation document, as well as a separate financial proposalindicating all costs associated with carrying out the technical proposal.3. The RFP requires suppliers to submit the technical and financial proposals sealedseparately (a two-envelope system).4. See „Tender Receipt and Opening Guidelines‟ of 19 January 2009 for details oftender opening procedures.5. Proposals are evaluated, ranked and awarded according to the „cumulative analysis‟methodology: see Chapter 8 for details of evaluation methodology6. The evaluation criteria are established in the RFP by identifying the technical andprice evaluation factors, stressing the key areas of importance that will beconsidered in the source selection. The ratio between technical and price factorsPROCUREMENT MANUAL 45/127 VERSION 2

may differ from one RFP to another. In most RFPs, technical quality is weightedmore heavily than price considerations. The right balance between the variousevaluation criteria must be established before the RFP is issued7. In order to ensure fairness and transparency, it is important that the method ofevaluation and the evaluation criteria be clearly defined in the RFP documents.Annex 6 - Tendering Receipt and Opening Guidelines of 19 January 2009 for RFQITBs and RFPs5.2 Long Term Agreements (LTAs)1. A Long Term Agreement (LTA) is a supply option and contractual instrumentwhereby UNRWA, based on projected needs, agrees with a selected supplierbeforehand on the terms of supply of a given product in order to allow streamlinedprocurement as and when needed.2. LTAs are typically valid for a period of to five years, cover a product or productsfrequently requested, and define the terms of supply for that product (e.g. pricing,delivery terms, ordering method, etc.).3. LTAs are entered into on a non exclusive basis and are not a mandatory source ofpurchase. However all procurement staff must adhere to the use of existing LTAs,and assess whether or not they can be used for a specific procurement activity.LTAs can represent the most cost efficient method of procurement. In the event thatan LTA is not the best procurement option, coordination shall be made with theCPLD to discuss the justification for using an alternative source.4. UNRWA has established a number of Long Term Agreements from local, regionaland international sources. An overview of existing LTAs, together with Guidelinesfor use of the LTAs, will at some future date be found on the Intranet. If these arenot available on the intranet, contact CPLD for guidance. Particular care must betaken to comply with the requirements of the Guidelines for each LTA, since thebasis for establishment of LTAs can vary.5.2.1 The Objective of Establishing LTAs1. The establishment of LTAs is performed in order to ensure a reliable source ofsupply for goods and services at the lowest possible price. The method is a costefficient way for UNRWA to procure goods and services requested on a regularbasis, since the competitive tender process is only carried out once, and the orderprocess is streamlined. This leads to reduced transaction costs as well as deliverytime. Orders can be placed directly against the Long Term Agreement, and productscan be purchased at a set price and quality.2. Further, an LTA is an excellent method of providing immediate stock availability, forinstance during emergencies, since stock availability may be specified as one of theconditions in the agreement between UNRWA and the supplier.3. Finally, LTAs enable UNRWA to fully leverage its market position taking advantageof its size, procurement volume and geographical presence in order to obtain bestvalue for money.PROCUREMENT MANUAL 46/127 VERSION 2

5.2.2 Establishment of a New LTA1. The possible need for an LTA should be considered during the procurementplanning stage. If an operational unit within UNRWA experiences or foresees arepetitive need for standard services or products, or requires emergency supplies, itmay consider establishing an LTA (local or international) with a supplier.Procurement staff may establish an LTA based on the needs Agency wide.2. Prior to any formalized arrangement, and in order to select the supplier offering themost appropriate product at the most competitive price, a competitive procurementprocess should be undertaken (by UNRWA or based on the competitive processundertaken by another United Nations organization which already has establishedan LTA with the supplier.) CPLD should be contacted to provide assistance insetting up the agreement, or set up the agreement upon request of an operationalunit.5.2.3 Use of Existing LTAs1. If an LTA exists for the type of goods or service required in a specific case, orderscan be placed against the agreements without further competitive bidding. An orderagainst an existing LTA is generally called a call-off order. At UNRWA, we establishLTAs into the electronic PIMS system as Blanket Purchase Orders and processRelease Orders against that agreement. UNRWA may choose to establish multipleLTAs with different suppliers for the same product/service, in order to ensure steadysupply or offer a broader range of supply options.2. Since an LTA provides an established and approved framework for provision ofgoods and services to UNRWA, no tender process or award of contract is requiredwhen placing a call-off order against an LTA. The order must, however, be approvedby the level of delegated authority that covers the value of the order.3. In instances of multiple LTAs being available to satisfy UNRWA needs, the criteriafor selecting the LTA for call-off orders shall be documented in the procurement file.4. Finally, an LTA can be used to provide a benchmark when procuring comparablegoods and services on a competitive or waiver basis. The benchmarking can bedone in order to:a. Assist in determining product specificationsb. Establish quality criteriac. Compare prices5.2.4 The Use of LTAs of Other United Nations Organizations1. Subject to permission by the respective organization, UNRWA encourages the useof suitable LTAs established by other United Nations organizations, on the conditionthat the LTA is established on the basis of a competitive tender process, or ajustified waiver process according to the regulations and rules of that particularorganization, and which would also be acceptable to UNRWA.PROCUREMENT MANUAL 47/127 VERSION 2

2. If UNRWA is satisfied that the LTA has been through procurement review accordingto the procedures established in the respective United Nations organization it shouldnot require a separate committee on procurement/DAS review of the LTA. However,CPLD is responsible to ensure that a copy of the minutes from the committee reviewof the other United Nations organization is available on file.3. For LTAs established on the basis of a waiver of competitive bidding, the CPLDmust ensure that the waiver justification is applicable for the purpose of the call-offorder.4. When using LTAs from other United Nations organizations, procurement personnelshould be aware of the potential differences in the General Conditions of Contractused by various United Nations organizations, and care must be taken to ensureUNRWA General Conditions of Contract apply.5. The use of LTAs established by other United Nations organizations must becoordinated with CPLD and established into the PIMS system prior to its use.5.3 Selecting the Type of CompetitionIn addition to selecting the solicitation method to be used (described above), selectingthe type of competition for a procurement activity is an important step. Depending on thevalue of the procurement, the market conditions as well as UNRWA knowledge of themarket, various types of competition shall be used.5.3.1 International Competition1. International competition intends to provide all potential suppliers adequate andtimely notification of UNRWA‟s requirements and to provide them equal access andfair opportunity to compete for contracts of required goods, services or construction.2. International tender is a very transparent method of conducting competitive tenderprocesses, however, may not be appropriate for UNRWA in most cases based onthe nature of the products and the areas of operations in which we serve.5.3.2 National and Regional Competition1. UNRWA seeks to foster the development of local markets. If procurementrequirements can be satisfactorily met within a local context, a national or regionalcompetitive bidding exercise can be undertaken. Well-qualified internationalsuppliers expressing interest in a national or regional tender shall not automaticallybe excluded from participating in the tender on the same terms as national orregional suppliers. National or regional competition can be open to all local suppliersor limited to a selected number of local suppliers.2. National or regional tenders are typically conducted in the following cases:a. When services or construction requirements are scattered geographically orspread over time and the work would therefore typically not be of interest tointernational companies,PROCUREMENT MANUAL 48/127 VERSION 2

. When goods are available locally at prices equivalent to or lower than theglobal market price when all factors are considerd, orc. If knowledge of the local or national system is a requirement.d. If a donor agreement provides for procurement from a limited geographicalarea.3. It is, however, essential to ensure competitiveness in the process, thus, national orregional competition shall only be used if there are enough suppliers of the goods,services or construction in the area to ensure competition.5.4 Exceptions to CompetitionThe UNRWA procurement procedures and principles, such as competitive bidding, formthe basis of procurement in UNRWA. They represent transparent, fair and cost effectivemethods to procure goods, services and construction at the most advantageous costand terms. However, there might be circumstances in which adherence to the UNRWAprocedures and principles are not possible or practicable.5.4.1 Waivers1. The AA may determine for a particular procurement action that using formalmethods of solicitation is not in the best interest of the Agency when:a. The value of the procurement is below the monetary threshold for formalmethods of solicitation;b. There is no competitive market-place for the requirement, such as where amonopoly exists, where prices are fixed by legislation or governmentregulation, or where the requirement involves a proprietary product orservice;c. There has been a previous determination with an Agency policy in place tostandardize the requirement;d. The proposed procurement contract is the result of cooperation with otherorganizations of the United Nations system;e. Offers for identical requirements have been obtained competitively within areasonable period but no longer than six months from the closing date of theprevious bidding process while the prices and conditions offered remaincompetitive;f. A formal solicitation has not produced satisfactory results within a reasonableprior period with no less than one completed solicitation exercise while thereasons for the tender failure must be known and be part of the Request forWaiver;g. The proposed procurement contract is to purchase or lease real property in asituation where there is no competitive market;PROCUREMENT MANUAL 49/127 VERSION 2

h. There is a genuine exigency for the requirement;i. The proposed procurement contract relates to obtaining services that cannotbe objectively evaluated; ori. The AA otherwise determines that a formal solicitation will not givesatisfactory results.2. Pursuant to the exception set forth under (a) above, it shall be ensured thatFinancial Technical Instruction 19 is complied with.3. When a determination is made by the AA pursuant to any of the exceptions set forthunder (b) – (f) above, the AA shall record the reasons in writing in the form of aRequest for Waiver of Competition (Annex 7). In accordance with the letter ofdelegation in chapter 2.3.1 herein, the AA shall submit the Request for Waiver formto the FOD / CPLD or his/her designated OiC in accordance with 2.3.2 (a) and (b)above, for approval. Upon approval by the FOD / CPLD, the AA may then award aprocurement contract within his/her AA, either on the basis of an informal method ofsolicitation, or on the basis of a directly negotiated contract, to a qualified Supplierwhose offer substantially conforms to the requirements at an acceptable price.Annex 7 - Request for Waiver of Competition4. In respect of the tendering procedures as set forth, inter alia, in chapters 3, 4, 5.1,5.2, 5.3, 6 and 7 herein, the FOD / CPLD may authorize non-compliance with suchtendering procedures by approving a Request for Waiver (Annex 7).5. Upon approval by the FOD / CPLD, the AA may then proceed with competitivebidding in accordance with this Manual and award a procurement contract withinhis/her AA accordingly.6. Examples of exceptions to the tendering procedures that commonly occur and areconsidered for approval may be, but shall not be limited to, any of the below or acombination thereof:a. Limited International Competition:i. The circumstances are of immediate importance (e.g. the delay or costincurred by conducting an open international competitive bidding mayharm the UNRWA operation);ii. The global market retains a limited availability of the requiredgoods/works/services, and the market is known to UNRWA;iii. A pre-qualification exercise or a call for EOI has been undertaken, oriv. UNRWA knows the market and which suppliers to short-list in order toobtain best value for money, and therefore conducting open competitivebidding cannot be justified in terms of efficiency, because it is unlikely that„better value-offers‟ would result from it.b. Shortened tender duration;c. No bid bond in case of construction procurement; andPROCUREMENT MANUAL 50/127 VERSION 2

d. Negotiation on technical aspects and/or price with lowest bidder in case ofRFQ or ITB (for details check Procurement Manual 8.4.7 on Negotiations).5.4.2 Co-operation1. CPLD or any Field Office Director may cooperate with any other organizations of theUnited Nations system to meet the procurement requirements of the Agency,provided that the regulations and rules of those organizations are consistent withthose of the Agency. CPLD or any Field Office Director may, as appropriate, enterinto agreements for such purposes. Such cooperation may include carrying outcommon procurement actions together, or the Agency may enter into a contractrelying on a procurement decision of another organization, or may request anotherorganization to carry out procurement activities on behalf of the Agency.2. CPLD or any Field Office Director may, to the extent authorized by theCommissioner-General, cooperate with a government, non-governmentalorganization, or other public international organization, in respect of procurementactivities, and enter into agreements for such purposes.3. See sub-Sections 10.4.6 „Project Co-operation Agreement‟ and 10.4.4 of thisManual „Memorandum of Understanding‟.PROCUREMENT MANUAL 51/127 VERSION 2

CHAPTER 6SOLICITATION PROCESS1. After the requirements have been defined in a complete, clear and unambiguousmanner, the sourcing has been undertaken, and the solicitation method has beenselected, the next step in the procurement process is the solicitation of offers.2. The method used to communicate a procurement requirement and request an offerfrom potential suppliers is referred to as the solicitation process. Depending uponthe type of procurement (goods, services or construction), the complexity or natureof a requirement, and the value of the commodity to be procured, a Request forQuotation (RFQ), an Invitation to Bid (ITB) or a Request for Proposal (RFP) may beused.3. The solicitation process is divided into the following four steps:a. Preparation of solicitation documentsb. Approval and issuance of solicitation documentsc. Tender periodd. Submission, receipt, and opening of offers4. The four steps in the solicitation process are described below.6.1 Preparation of Procurement Solicitation Documents1. UNRWA standard documents must be used when soliciting offers from suppliersfollowing a formal method of solicitation (ITB/RFP). The standard documents aretemplates, which contain UNRWA mandatory terms and conditions customized to fitthe specific procurement process being undertaken. The templates are to becompleted with the specific details applicable to each solicitation.2. No changes in the standard paragraphs of the solicitation documents, including theannexes, shall be made without prior clearance by the CPLD. Care must be takennot to include any requirements or conditions in the documents that contradict theUNRWA General Conditions for Contracts (GCC), or the standard text of any of thedocuments.6.1.1 Contents of the Procurement Solicitation Documents1. Solicitations are written documents consisting of the following components:a. Letter of invitation and instruction to bidders;b. Definition of requirements (specifications/TOR/SOW etc.);c. Contractual information; andd. Offer submission form.PROCUREMENT MANUAL 52/127 VERSION 2

2. While the details and complexity of solicitation documents will vary according to thenature and value of the requirements, each solicitation must contain all data andappropriate provisions that are necessary for bidders to understand UNRWA‟sneeds and to prepare a suitable offer. Thus, the solicitation documents must includeall information concerning the specific procurement.3. It is crucial that all relevant data concerning the requirements and demands to thesuppliers is presented at this stage, and included in the solicitation documents, asno additional requirements may be introduced after the solicitation process has beencompleted.4. Below is a presentation of what type of information the various components of thesolicitation documents shall include. The information is either already included in theUNRWA standard templates, or to be filled in before issuance of the solicitationdocuments.Annex 8 - Tender Templates – RFQ (Goods and Services), ITB (General Stores,Medical Supplies and Works) and RFP6.1.1.1 Letter of Invitation1. An invitation to offer, including reference to the specific procurement (title andtracking number), and a list of supporting documents issued.2. Deadline for submission of offers. The date, time and place for submission shall beclearly stated, together with the location, date and time for the opening of offers (ifpublic). The deadline for submission shall allow the supplier a sufficient number ofdays in order to prepare and submit an offer. The following minimum number ofdays is given:a. RFQ: No specific deadline required, but at least 12 calendar days isrecommendedb. ITB: 20 calendar daysc. RFP: 30 calendar days3. If, in the opinion of the FOD / CPLD, due cause exists, shorter time could be given,however, never less than the following number of minimum days:a. RFQ: No specific deadline required, but at least 3 business days isrecommendedb. ITB: 7 business daysc. RFP: 10 business days4. Instruction for preparation and submission in order to convey all relevantguidelines governing the preparation and submission of offers. The instruction shallalso include a list of documents required to form a complete offer, as well as noticeto suppliers that offers may be rejected unless compliant. A compliant offer is onePROCUREMENT MANUAL 53/127 VERSION 2

that conforms to all the terms, conditions and specifications included in thesolicitation documents. Further, the instruction shall always include:a. Mode of submission (electronic, hand-delivered, mail, fax);b. Address/fax number/email, andc. Instructions on how the offers shall be packaged (e.g. sealed, number ofcopies, two-envelope system etc.)5. Description of the procurement need including information necessary to preparea responsive and meaningful offer:a. The context of the procurement.b. The intended purpose of the procurement.6. Pre-bid conference and site visit Information about the location, date and time ofany pre-bid conference or site visits to be conducted in relation to the tender.7. Currency of offer and payment, and statement on exchange rate used forevaluation purposes:a. The instructions shall indicate that the prices of the offer may be quoted inUSD, Euro or the currency of the supplier‟s country. Further, the instructionsshall state that the contract shall be issued in the currency of the offer, andthe payment will be effected in the currency of the contract.b. For purposes of comparing prices of offers received, UNRWA shall convertprices to a single currency using the United Nations operational rate ofexchange on the deadline for receipt of offers.8. Language At UNRWA, the solicitation documents as well as the offers shall beprepared in English. The contract signed with the selected supplier shall be writtenin English and this language shall be the one that governs the contractual relationsbetween UNRWA and the supplier.9. Instructions on offer validity, requesting the suppliers to keep their offers valid fora specific number of days, (typically a period of 60 or 90 days, but less if the price ofthe procured product fluctuates rapidly (e.g. raw materials, petroleum products, etc.)allowing time for evaluation of offers, and award of contract.10. The method of evaluation and the evaluation criteria including the weight ofeach major criterion and how it will be applied shall be clearly specified in thesolicitation documents. There shall be no deviation later in the evaluation process.The evaluation must be carried out pursuant to the criteria specified.11. Discrepancies and errors in the price component The solicitation documentsshall define how discrepancies and errors in the price component would be handled.12. Payment terms The solicitation documents shall specify the payment terms. Thepayment terms shall be as shown in General Conditions of Contract applicable tothe transaction. This is normally either 30 days or 45 days upon receipt of invoice asPROCUREMENT MANUAL 54/127 VERSION 2

well as receipt and acceptance of goods or services or upon receipt of requiredshipping documentation, depending on the INCOTERM used. No advancepayments shall be made, but where deemed regular practice in the industry theymay be considered. Advance payments may only be considered in accordance withUNRWA policy on advance payments. Progress payments occur often for someservices and construction. See relevant Section of this Manual on advancepayments.13. Modifications The solicitation documents shall stipulate that any additionalinformation, clarification, correction of errors or modifications of bidding documentsshall be distributed to all bidders prior to the deadline for receipt in order to enablesuppliers to take appropriate actions. Similarly, all bidders shall also be informed ofthe right to modify or make corrections to bids or proposals, provided that any suchmodification or corrections are received by UNRWA in writing prior to the timespecified for submission of offers.14. Information about bid security and bid security form Except with respect toconstruction procurement, it is the Agency‟s policy not to require security depositsunless the AA considers that the Agency‟s interests require particular protection.15. Information about performance security It is the Agency‟s policy not to require aperformance security deposit unless either a construction contract where thestandard form „Building Contract (with Security Deposit, 1968) is used; or, the AAconsiders that the Agency‟s interests require particular protection. If a performancesecurity is to be requested, the solicitation document shall specify the requirementsincluding the deadline for provision of the security.16. Bid security and performance security, if sought, shall be made in a form inaccordance with Finance Technical Instruction 36 on Payment Procedures, or asotherwise prescribed by the Comptroller. UNRWA shall ensure that all bid securities/ performance securities are returned to unsuccessful bidders upon award andsignature of the respective contract to the most competitive bidder whosebid/performance security shall be retained as stipulated in the contract.Annex 9 - Bid Bond Template17. Alternative offers are offers that do not comply with the exact requirements of thetender, or which may represent an improvement over the original offer in terms ofexceeding the minimum performance parameters of the request, and are proposedby suppliers as an optional way of fulfilling the needs of the end user. There can bedifferent policies with regard to dealing with alternative offers:a. Alternative offers are not accepted.b. Alternative offers can be considered only if they are alternative offers to thelowest compliant offer, as long as the offer price does not exceed that of thesecond lowest.c. Alternative offers can be considered only if they are alternative offers to thelowest compliant offer, irrespective of cost considerations.PROCUREMENT MANUAL 55/127 VERSION 2

d. Alternative offers are evaluated simultaneously with other original offers (i.e.bidders are allowed to present more than one technical solution to therequirement, which will be individually assessed). The solicitation documentshall specify which policy is applicable for the specific tender.e. Alternative offers not complying with the mandatory criteria shall not beconsidered.f. For the procurement of services undertaken through RFP processes,alternative offers are commonly acceptable.18. Partial Offers Information about whether or not partial offers are acceptable andwhether split orders may be placed shall be included in the solicitation document.19. Contact information for queries.20. Other information shall be provided such as the need for samples or certificationdocumentation.6.1.1.2 Requirements Definition1. Technical specifications, Terms of Reference (TOR), or Statement of Works(SOW) and Bills of Quantities (BOQ)a. A clear and detailed description of the performance expected is important inorder to prevent misunderstandings and disagreements with suppliers at thetime of contract execution.b. Ambiguous performance requirements may also lead to increased costs asbidders may have to factor into their Offer a contingency or risk bufferreflected in the price. Depending on the nature of the procurement, therequirements are stated in the form of Technical Specifications, TOR, orSOW / BOQ.2. Delivery date for goods or starting/completion dates for deliveries and/or provisionof services/ construction, in the case firm requirements exist or time is of essence.3. When procuring goods, the destination(s), and mode(s) of transport, shall beincluded. For services and construction, destination shall be specified.4. Delivery terms INCOTERMS 2010 shall be used to specify the delivery of goodsprocured by UNRWA. Procurement personnel may request suppliers to quotesupply under more than one INCOTERM (typically FCA and CPT) and then considerwhether to contract freight through the supplier or separately depending on what isin the best interest of UNRWA (for more details see Chapter 11 „Logistics andProcurement‟).6.1.1.3 Contractual Terms1. A copy of the relevant UNRWA General Conditions of Contract must either beincluded with the solicitation documents, or a reference to the General Conditionsavailable on the UNRWA website must be made. The UNRWA General ConditionsPROCUREMENT MANUAL 56/127 VERSION 2

clarify which conditions the suppliers are expected to accept if signing a contractwith UNRWA.2. Information about any special terms and conditions. Special terms and conditionsare often exceptions to particular contractual requirements related to the specificsolicitation. All special terms and conditions must be cleared by the Field LegalOfficer or the Field Legal Consultant (if any) for field procurement, and the ChiefGeneral Legal Division at the Department of Legal Affairs for all contracts (includingthose relating to field procurement) prior to issuance of the solicitation documents.3. For contracting of services and construction, a copy of the relevant UNRWAContract Templates (e.g. Service Contract, Contract for Engineering andMaintenance (as per Annex 10) shall always be included with the solicitationdocuments. The standard contract allows suppliers to know before tendering theterms and conditions of the specific agreement, and understands the type ofcontract they would be expected to sign if selected as a supplier to UNRWA.4. When purchasing goods, a copy of the relevant Packing and Shipping Instructionmust be included with the solicitation documents. The packing and shippinginstructions are essential to the supplier when bidding, as they include instructionsto the supplier about packaging, marking and numbering of the shipment,notification of shipment, documentation required for custom clearance and paymentpurposes, and invoicing.5. The packing and shipping instructions for the various UNRWA locations shall beposted and updated by the respective HQ PLD Sections on the UNRWA intranet(http://intranet1.unrwa.org/ASD/PLD/Pages/InstructionsConditionsOfContract.aspx).6. Price and payment Information as to whether a contract will be signed based onfixed price/lump-sum or cost reimbursement.Annex 10 – UNRWA Contract Templates6.1.1.4 Submission Form1. The supplier‟s offer must be signed by a duly authorized signatory, in order for theoffer to be legally binding.2. Unsigned offers shall be rejected.3. RFQ documents shall contain a standard bid submission form to be signed andreturned with the supplier‟s offer (Annex 8).4. In the case of ITBs and RFPs, the bidder‟s signature is an integral part of thestandard bidding document itself.6.1.2 Types of Solicitation DocumentsThere are four main types of solicitation documents:a. Request for Quotation (RFQ)b. Invitation to Bid for Goods (ITB for goods)PROCUREMENT MANUAL 57/127 VERSION 2

6.1.2.1 RFQc. Invitation to Bid for Works (ITB for works)d. Request for Proposals (RFP)1. A Request for Quotation (RFQ) is a method of solicitation commonly used for lowvalueprocurements. RFQs can be used for the competitive purchase of goods andservices, and is suitable when the requirement is specific and clearly defined.2. Although recommended, no specific deadline for quotations is required, and nomandatory form exists, as there are no exact demands as to the contents of theRFQ other than communicating clearly the requirements to all suppliers, as well asthe basic quotation conditions.3. Offers for award with respect to procurement estimated not to exceed USD 60,000do not need to be sent to the Tender Opening Committee, and can be received byCPLD or FPLOs/FPO directly.6.1.2.2 ITB1. An Invitation to Bid (ITB) is a formal solicitation document used for competitivepurchases. An ITB is used when the requirements can be specified quantitativelyand qualitatively.2. The ITB for goods contains information about the type of goods to be procured. Therequirement definition forms an integral part of an ITB. An ITB for the construction ofworks is a solicitation method used for the procurement of constructionrequirements. The requirements of the works are specified in the Statement ofWorks (SOW), in the Bill of Quantities and/or the Technical specifications, andsometimes in designs and drawings included in the solicitation material. Onlyexceptionally is an ITB used for the procurement of services, and in such cases onlyif the service is simple enough to be specified quantitatively. Please check Annex 4Check List for details.3. ITBs require exact deadlines for submission of bids, and strict adherence to modesof submission and formats of the bid. One of the ITB templates shall always be usedwhen issuing ITBs. When a formal invitation to bid has been issued, theprocurement contract shall be awarded to the qualified bidder whose bidsubstantially conforms to requirements set forth in the solicitation documentationand offers the lowest cost to the Agency.6.1.2.3 RFP1. A Request for Proposal (RFP) is a method of solicitation used in competitiveprocurement of complex goods, design or other services or construction where theinputs and/or outputs cannot be quantitatively and qualitatively determined. Arequest is therefore made for a solution to a defined problem rather than specifyingthe solution to it.2. An RFP is normally used for contracting of services, but may also be used for theprocurement of goods and construction, if requirements cannot be described in aPROCUREMENT MANUAL 58/127 VERSION 2

quantitative and qualitative manner. In a competitive procurement of services, a setof Terms of Reference (TOR) shall usually form an integral part of the RFPdescribing in detail the services/equipment to be provided, and the expected results.In order to further assist suppliers in determining the appropriate quality of goods,services and construction UNRWA may choose to include estimates of manpowerand other input required in order to reach the expected results.3. Exceptionally it can be envisaged to include an indication of the available budget;however, the drawback is that information about the available budget may leadbidders to align their financial proposals. CPLD does not recommend includingbudgetary figures in the RFP documents.4. Distinct, separately sealed, technical and financial proposals are requested from thesuppliers in order to evaluate them separately. The evaluation criteria, including theweighting between the technical and financial proposals, shall be clearly specified inthe RFP and not deviated from during the evaluation process.5. When a formal request for proposals have been issued, the procurement contractshall be awarded to the qualified bidder whose proposal, all factors considered, isthe most responsive to the requirements set forth in the solicitation documentation.6.1.2.4 Solicitation of Offers - Waiver of Competitive BiddingWhen a waiver of a competitive bidding is justified, an offer is requested from onesupplier, only. Nevertheless the appropriate standard solicitation documents shall besent to the supplier in order to ensure inclusion of all details and awareness ofUNRWA‟s expectations and requirements.PROCUREMENT MANUAL 59/127 VERSION 2

CHAPTER 7APPROVAL AND ISSUANCE OF SOLICITATION DOCUMENTSWhen the solicitation documents are completed, the below-mentioned points must becomplied with before distributing the documents.7.1 Approval of Solicitation DocumentsThe solicitation documents must be signed by the respective AAs (FOD / CPLD) andtheir designate.7.2 Distribution of Solicitation Documents1. The solicitation documents shall be issued and distributed simultaneously to allsuppliers, whether by mail, courier, fax, or email, or be made available electronicallyon the Internet, with a view to giving all bidders the same opportunity to respond. Ina limited competitive process, where only selected suppliers may participate in thesolicitation, the solicitation documents shall solely be made available to the supplierson the short list. The short list must be approved by the FPLO/FPO or CPLD prior toissuance of solicitation documents. Under open international competition, thesolicitation documents must be made available to all interested suppliers uponrequest.2. If the solicitation documents are issued electronically, UNRWA must ensure thesolicitation documents include a clause stating that if suppliers modify or alter thesolicitation documents their offer will be rejected. In addition, the solicitationdocument shall include a clause stating that UNRWA takes no responsibility foreffective delivery of the electronic document. In local/national competitive bidding,the documents can be made available to the suppliers for collection at a UNRWAlocation during business hours, and the suppliers informed thereof.3. A signed copy of the solicitation documents must be kept on file by UNRWAtogether with documentation on how and to whom it was issued (e.g. fax receipts,copy of emails, courier receipts, etc.) in order to facilitate an audit of the process.7.3 Confidentiality of the Short ListIn the case of a limited competitive bidding exercise, where the solicitation documentsare only being made available to a short list of selected suppliers, UNRWA shall notdisclose the names of any short-listed firm, in order to safeguard the principle ofcompetition that the tender process is aimed at achieving. The number of short-listedfirms, however, may be disclosed to the suppliers on the short list.7.4 Electronic Tendering (e-tendering)1. The process of inviting offers from suppliers and receiving their responseselectronically is often referred to as e-tendering. This method of solicitation can bean effective tool to improve procurement efficiency and effectiveness. UNRWA hasconducted some limited e-tendering and in the future, many business opportunitiesand upcoming tenders will be advertised on the UNRWA webpage, either as aPROCUREMENT MANUAL 60/127 VERSION 2

supplement to other types of advertising and market research, or replacing the moretraditional ways of reaching suppliers. Through electronic advertisement, informationabout the solicitation is being made available to a broader segment of suppliers,potentially leading to increased competition.2. Distribution of solicitation documents may also be performed electronically. Theguiding principle remains the same: the fair treatment of all suppliers, thus, theinvitees must receive the same information at the same time.3. If solicitation documents are issued electronically in a limited competitive process,due diligence shall be exercised to ensure that the names of short-listed suppliersare not disclosed to the other invitees (e.g. send individual emails to each and everysupplier on the list, and not one stating the email addresses of all invitees.Alternatively, address the email to yourself and blind copy all invited suppliers).4. Where the solicitation documents state that bids/proposals are accepted by email,UNRWA must create a dedicated email address for receipt of offers. The emailaddress must be specified in the solicitation documents, and it must be made clearthat only offers sent to the dedicated email address will be accepted. An individualnot directly involved in the procurement process, and duly authorized by theUNRWA Chief/Head of Division, shall have the sole access (through passwordprotection) to the dedicated email. When an offer is received, the duly authorizedperson shall immediately print out the offer, place each offer in a sealed envelope,marking the envelope appropriately with all necessary information, and placing theoffer in a locked and secure place. If the solicitation documents do not allowelectronic submissions, any submission received by electronic means shall berejected.7.5 Tender PeriodThe period from the issuance of solicitation documents to the deadline for submittingoffers is referred to as the tender period when a formal method of solicitation is used.7.5.1 Queries from Suppliers, Pre-bid Conference and Pre-bid Site Inspection1. During the tender period, no communication regarding the contents of thesolicitation documents or the proposals shall take place between the potentialsuppliers and UNRWA, except through the methods of handling queries describedbelow. Queries from suppliers shall be handled by correspondence and/or by a prebidconference.2. Any supplier requiring clarifications to the tender documents shall submit theirqueries in writing to UNRWA. UNRWA shall prepare and dispatch written replies tosuch queries, and make all replies known, together with the text of the queries, to allsuppliers, without referencing the source of the queries.3. For technically complex acquisitions, a pre-bid conference between UNRWA andthe suppliers could be held in addition to, or instead of, issuance of writtenclarifications.4. Such a conference may be in the form of a meeting or a pre-bid site inspection.When conducting a pre-bid conference or pre-bid site inspection, the followinginstructions must be adhered to:PROCUREMENT MANUAL 61/127 VERSION 2

a. A time for the conference and/or inspection shall be stated in the solicitationdocument, allowing sufficient time for all suppliers to plan attendance of theconference and/or inspection.b. Pre-bid conferences or pre-bid site inspections shall not be mandatory. Ifparticipation in the pre-bid conference or pre-bid site inspection neverthelessis made mandatory, care must be taken to require participation in the pre-bidconference or pre-bid site inspection in a manner that is non-discriminatory.Suppliers must be informed of any mandatory participation in the pre-bidconference or pre-bid site inspection in the solicitation documents.c. Written queries from suppliers may be forwarded to UNRWA prior to theconference or inspection. Responses to the written questions shall be givenorally during the conference or inspection.d. Within a reasonable time after the conference or inspection, UNRWA mustsend all suppliers, whether present at the conference/inspection or not, a fullset of minutes, recording all queries and formal replies. The minutes shallprevail over any oral responses provided during the conference orinspection.e. If, due to geographical considerations, it is necessary to hold pre-bidconferences in more than one location, such meetings shall take placesimultaneously (or at least within the same day) and the same informationshall be provided to all suppliers. Minutes of the meetings must be sharedwith all suppliers.f. If the clarifications given in the meeting alter the requirements, amendmentof the submission deadline shall be considered, and a formal amendment tothe tender document shall be issued reflecting the change.g. Certain types of information, such as for instance UNRWA cost estimates orproprietary data, shall never be released. Requests for such information shallbe rejected.7.5.2 Amendments to Tender Documents1. At any time before the deadline for submission of offers, UNRWA may, for anyreason, whether on its own initiative or following a request for clarification by asupplier, modify the solicitation document. Amendments to tender documents mustbe made in good time before the deadline for submission of offers in order forsuppliers to address changes in their offers. In certain cases, amendments shalljustify an extension of the submission deadline. This shall be assessed on a caseby-casebasis.2. Amendments of solicitation documents containing changes or giving clarifications oradditional information, must be sent simultaneously in writing to all potentialsuppliers, and/or uploaded to the UNRWA web page in the case of an open tender,to provide all suppliers with the same fact base. Substantial changes in therequirements may call for re-tendering.PROCUREMENT MANUAL 62/127 VERSION 2

7.6 Receipt and Opening of Offers7.6.1 Receipt of Offers1. A tender opening committee shall be constituted at Headquarters and each FieldOffice which will be tasked to open tenders for contracts of a value exceeding USD$60,000.2. For guidance on the receipt of offers, see UNRWA Tender Receipt and OpeningGuidelines in Annex 6.7.6.2 Unsolicited Offers1. The concept of unsolicited offers applies only in limited tender processes. In thecase of open competition, all offers received are considered solicited.2. For guidance on how to handle unsolicited submissions in a limited tender situation,see UNRWA Tender Receipt and Opening Guidelines.7.6.3 Opening of Offers1. Offers shall be opened immediately after the deadline for submission, or shortlythereafter (ideally within the same day or on the morning of the next working day).Hence, it is recommended that the address for submission and opening of offers bethe same or at least very close to each other.2. Rejected offers shall be eliminated from further and more detailed consideration.3. See UNRWA Tender Receipt and Opening Guidelines in Annex 6 for guidance onthe composition of the Tender Opening Committee and the procedures to befollowed for RFQs, ITBs and RFPs.4. Handling of offers is confidential, and it is essential that any information gained inthe process be kept confidential.7.6.3.1 Opening of Quotations (RFQ)The opening of RFQs with an expected contract value of USD 60,000 and below is astraight-forward and simple procedure which has been described in Annex 6 hereto.7.6.3.2 Opening of Bids (ITB)1. If bids have been obtained pursuant to an ITB, the bids shall be opened at the timeand place specified in the ITB and an immediate record made thereof.2. A Tender Opening Report shall record the following information for each of thereceived bids:a. Bidders name and country;b. Currency of bid, total bid price, and basis for quotation. When a tendercomprises several lots, total prices for individual lots shall be recorded‟;PROCUREMENT MANUAL 63/127 VERSION 2

c. Price of alternative bids, if applicable;d. Discounts, if any proposed by the supplier;e. Comments on incomplete bids or other matters observed by the TenderOpening panel;f. The date and time of the opening; andg. The names of the UNRWA individuals present.3. The Tender Opening Report template, if applicable, shall be used for the TenderOpening report. The Tender Opening Report must be signed by each member of thebid-opening panel, and kept on file for future reference. The report shall be availablefor viewing, for a period of thirty days from the date of the opening, by suppliers whosubmitted offers.7.6.3.3 Opening of Proposals (RFP)1. In the two-envelope system, financial proposals are not to be opened without thecompletion of a technical evaluation.2. The opening of technical proposals shall be recorded in a report containing thefollowing information:a. Bidder‟s name and country;b. Comments on incomplete proposals or other matters observed by theproposal opening panel;c. The date and time of the opening; andd. The names of the UNRWA individuals present.3. The proposal opening report must be signed by each member of the opening panel,and kept on file for future reference. After the completion of the technical evaluation,the financial proposals meeting or exceeding the set threshold are opened inseparate opening session. The exchange rate used for the conversion of offers isalways the official United Nations exchange rate at the date of the deadline forsubmission.7.6.3.4 Alternative Offers1. Alternative offers shall be treated as per the procedures defined in the solicitationdocuments. For the procurement of services, alternative offers are commonlyacceptable.2. See paragraph 1.7.3 of the UNRWA Tender Receipt and Opening Guidelines,Annex 6.7.6.3.5 Rejection of OffersSee UNRWA Tender Receipt and Opening Guidelines in Annex 6 hereto.PROCUREMENT MANUAL 64/127 VERSION 2

7.6.3.6 Withdrawal of Submissions1. Withdrawal of submissions by the suppliers can only be accepted if UNRWA isnotified in writing prior to the deadline for submission of offers. The withdrawn offershall be removed from the other bids/proposals prior to Tender Opening, and shallnot be opened.2. For more details see paragraph 1.2.1 of UNRWA Tender Receipt and OpeningGuidelines, Annex 6.7.6.3.7 Modification of Submissions1. Suppliers may modify their offers in writing prior to the submission deadline.2. For more details see paragraph 1.3.1 of UNRWA Tender Receipt and OpeningGuidelines, Annex 6.PROCUREMENT MANUAL 65/127 VERSION 2

CHAPTER 8EVALUATION1. Evaluation is the process of assessing and comparing offers in accordance with theevaluation methodology stated in the UNRWA procurement solicitation documentsin order to determine which offer best complies with the defined evaluation criteria,and thus, represents the best value for UNRWA. Regardless of how effectively theother steps of the procurement process are conducted, the overall process shall notbe successful without a correct, objective and fair evaluation process. Theevaluation process is critical, since it culminates in a recommendation and a requestfor an award of a contract.2. In general, UNRWA evaluates all offers according to the principle of best value formoney. The offer presenting the „best value for money‟ is the offer, which presentsan optimal combination of technical and financial attributes, as per the requirementsstipulated in the procurement solicitation documents. Best value for money caninclude non-cost factors such as fitness for purpose, quality, service and support, aswell as cost related factors such as price, life-cycle costs, and transaction costsassociated with acquiring, using, holding, maintaining and disposing of the goods orservices.3. The essential principle to keep in mind throughout the solicitation process iscoherence between the evaluation criteria specified in the solicitation documents,and the method of evaluation used in the end to select a supplier. It is thereforecrucial to begin the procurement process with the end in mind, in order to includethe appropriate evaluation criteria with sufficient detail in the solicitation documents,to ensure that UNRWA achieves best value for money.4. Evaluation criteria can under no circumstances be altered during the evaluationprocess.5. A change of evaluation criteria during evaluation would jeopardize the transparencyof the procurement process and conflict with the principles of fair and equaltreatment of suppliers.8.1 Evaluation CriteriaEvaluation criteria are normally divided into the following categories:a. Formal/Compliance criteriab. Technical criteriac. Financial criteria8.1.1 Formal/Compliance Criteria1. Offers are checked for their compliance with any formal criteria stated in thesolicitation documents. Examples of formal criteria are:a. Offers have been properly signedb. Offers are accompanied by the required securities, if applicablePROCUREMENT MANUAL 66/127 VERSION 2

c. Bidder is eligible, e.g. duly registered if pre-registration is a requirementd. Offers are accompanied by the required documentatione. Offers are complete, unless the solicitation documents clearly state thatpartial bids for a given component or lot are acceptedf. Bidder is not listed on the United Nations excluded list („the blacklist‟)2. Offers not meeting the formal criteria are rejected. It is therefore important tocarefully consider the formal criteria before issuing the tender documents, as it isundesirable to conduct a solicitation process in which no supplier can meet theformal criteria.8.1.2 Technical criteria1. Technical evaluation criteria are derived from the specifications, TOR or SOW.Depending on the nature and complexity of the procurement to be undertaken,technical evaluation criteria may be summarized in a few lines or consist of a longand precise description.2. Depending on how clearly the requirements are defined, evaluation criteria aredeveloped for evaluation according to compliance / non-compliance or a weightedscoring (see also Chapter 5). When using the weighted scoring methodologytechnical evaluation criteria are related to the approach and methodology proposedto reach the expected results or solve the identified problem as described in therequirement definition (TOR or SOW).3. Technical criteria can also include requirements of the supplier, such as:a. Previous experience in similar field and with same type of requirementsb. Experience from the regionc. Available capacity and equipment to undertake the assignmentd. Availability of after sales services or agents in the country of deliverye. Qualification and experience of proposed personnel8.1.3 Financial Criteria1. Price is an important evaluation criterion but the weight of the price depends on thechosen evaluation methodology.2. It is important to clearly state in the procurement solicitation documents which pricefactors shall be included in the price used for evaluation.3. Various factors such as freight cost, operational cost, incidental or start-up costs, aswell as total cost of ownership could be taken into consideration.4. For services and construction a template for breakdown of cost shall be providede.g. in Bill of Quantities in accordance with this Manual.PROCUREMENT MANUAL 67/127 VERSION 2

5. In all cases, required breakdown as well as evaluation criteria must be clearly statedin the solicitation documents.8.2 Selection and Award1. It must be clearly stated in the UNRWA procurement solicitation documents howcontracts will be awarded (e.g. to the lowest priced compliant offer or to the overallhighest score), and which criteria will be applied in the evaluation to determinecompliance or technical rating.2. When using a weighted scoring, a breakdown of percentage or points allocated toeach overall criterion must be clearly stated in the solicitation documents (e.g. firmsexperience xx points, approach and methodology yy points, qualifications andcompetence of proposed personnel zz points – for a more detailed explanation ofevaluation methodologies, see next section).3. If the requirements are divided into components or lots, it is imperative that thesolicitation documents state whether the contract will be awarded to the supplieroffering the best offer for all components or lots, or whether contracts may beawarded per component or lot. If split orders (awarding an order for part of the itemsto one supplier and the rest of the items to another supplier) are foreseen,UNRWA‟s right to split the contract between several suppliers shall also be specifiedin the solicitation documents.4. When determining whether or not to split the contract, possible savings frompurchasing items at a lower price shall be compared with the transaction cost toUNRWA of placing several contracts as well as with supply chain, logistical andwarranty issues related to the contract. In general, it is recommended not to splitorders if the saving is minimal. However, the operational unit conducting theprocurement may determine a different threshold based on the local cost level. Incertain of UNRWA‟s more restrictive operating environments, for market reasons itmay be appropriate to split awards to retain more than one supplier as viablecompetitors operating in such restrictive marketplaces.8.3 Evaluation Methodologies1. Depending on the chosen mode of solicitation, different evaluation methodologiesemphasizing different criteria in the evaluation of the submitted offers may bechosen.2. The evaluation methodology must be clear from the outset, and where an evaluationtemplate is to be used, this template, including evaluation methodology andweightings, must be drawn up and formally submitted to the PLD case officer inadvance of tender opening.3. The evaluation methodologies used for the respective methods of solicitation are asfollows:a. RFQ: Lowest priced, most technically acceptable offer methodologyb. ITB: Lowest priced compliant offer methodologyc. RFP: Cumulative analysis methodologyPROCUREMENT MANUAL 68/127 VERSION 2

The table below gives further details on when to use which evaluation methodology. Itshall be noted that value for money for the Agency as defined in this chapter shallequally apply to all methodologies as the underlying principle.TABLE 8-: EVALUATION METHODOLOGIESREQUIREMENTSOLICITATIONDOCUMENTEVALUATION METHODONE / TWO –ENVELOPE SYSTEMRequirements below where therequirement is clear andspecific.RFQLowest priced most technicallyacceptableNo requirement forsealed offersGoods, services, construction,with standard or firmspecifications which can beITBLowest priced technicallycompliant.Compliance defined ascompliant/not compliant for allissues.One envelopeexpressed qualitatively andquantitativelyLowest priced technicallycompliant.A point system with a minimumthreshold defining complianceTwo envelopeGoods, services, construction,with requirements thatcannot be quantitativelyRFP Cumulative analysis Two envelopeand qualitatively expressed.KKFDGDFGFGD8.3.1 Lowest Priced, Most Technically Acceptable Offer Methodology (RFQ)1. This method of evaluation is used when solicitation is made by a Request forQuotation.2. When using this methodology, price serves as the overriding evaluation criterionupon which to award a contract.3. However, in order to provide a more flexible method for selecting suppliers forprocurement of a relatively low value (< USD 60,000), the evaluation methodologyallows various considerations to be taken into account. The technical advantagesoffered by a higher priced quotation may in certain cases justify selection of anotheroffer than the lowest priced.4. Further, the RFQ modality allows selection of the most technically acceptable offerin cases where none of the offers received fully meets the requirement specification(where under an ITB the option would be re-tendering). The selection of a supplierother than the one offering the lowest priced option requires proper justificationdocumented on file.PROCUREMENT MANUAL 69/127 VERSION 2

8.3.2 Lowest Priced Compliant Offer Methodology (ITB)1. This method of evaluation is used in UNRWA for the evaluation of goods and simpleservices or construction, where bids are solicited using an ITB and where:a. requirements are clear;b. compliance is easy to determine; andc. price/cost is the overriding evaluation criterion.2. Examples are standard goods such as commodities, cars, office equipment,communication equipment, chemicals, simple machinery or raw materials or for theprocurement of services and construction when the requirements can bequantitatively and qualitatively defined.3. The lowest priced compliant offer methodology consists of the following steps:a. Determining which offers are compliant, and rejecting non-compliant offers.Only bids offering goods, services or construction meeting or exceeding therequirements in the specifications shall be considered compliant.b. Choosing the lowest cost offer among the compliant offers. Normally, a oneenvelopesystem where suppliers submit one offer including all technical andfinancial information is used when applying this method of evaluation.However, a two-envelope method where technical and financial offers aresealed separately may also be used if it is deemed necessary to completethe technical evaluation without knowing the price of the respective offers,typically when compliance is determined by a minimum threshold (pointsystem).8.3.2.1 Determination of Compliance1. Compliance in this context refers to whether or not the offer fully meets thequantitatively and qualitatively defined criteria as per the requirements(specifications/TOR/SOW etc.) and other criteria as stated in the solicitationdocuments.2. If the offer complies with all the criteria specified in the solicitation documents(yes/no), the offer is compliant, and a comparison of prices of all compliant offerscan be conducted. In the case of more complex requirements, the „lowest pricedcompliant offer‟ methodology is only suitable if compliance of an offer is defined asan offer scoring above a stated threshold of technical points established in thesolicitation documents.3. Thus, to be able to use this method for more complex purchases, a point systemmust be established prior to the issuance of the solicitation documents, and thesolicitation documents must include information about the evaluation criteria, thepoint system, and the number of points allocated to the various evaluation criteria.Further, the solicitation documents must establish a threshold of points forcompliance. Offers scoring below the stated threshold in the evaluation, aredetermined to be non-compliant, and shall be eliminated from further evaluation.PROCUREMENT MANUAL 70/127 VERSION 2

4. A two-envelope system where suppliers are requested to submit their technical andfinancial offers separately in two sealed envelopes shall be used when a threshold isused to determine compliance. The envelope containing financial information is notto be opened for those offers that do not meet or exceed the threshold.8.3.2.2 Selection of the lowest cost offer1. When compliance has been determined, and non-compliant offers have beeneliminated from further evaluation, UNRWA must select the lowest priced compliantoffer.2. All pricing details requested from the supplier are taken into account to determinethe correct price to evaluate.3. Various factors such as the price of the goods combined with the freight cost up tothe final destination, and the full life-cycle cost could be taken into account (ifspecified as an evaluation criteria). The item price stated in the offer is notnecessarily the price to base the evaluation upon. It shall be clearly stated in thesolicitation documents which price factors will be included in the price used for theevaluation. Various price factors to be considered:a. FreightWhen including freight as part of the requirement, evaluations must be madeon the total cost, delivered to final destination, taking into consideration thepossibility of UNRWA purchasing FOB / FCA and contracting separately forthe freight.For more information on INCOTERMS, refer to Chapter 11 „Logistics andProcurement‟.b. Total Cost of OwnershipTotal cost of Ownership or full life-cycle cost of a product as part of the valuefor money principle typically takes into account costs associated with thepurchase and use of the product:i. Product costii. Freight costiii. Operational cost (e.g. electricity, fuel, consumables)iv. Installation and training costv. Maintenance cost (e.g. after sales services, repair, spare parts)vi. The life-time of a productvii. Disposal cost etc.PROCUREMENT MANUAL 71/127 VERSION 2

8.3.3 Cumulative Analysis Methodology (RFP)1. Under the cumulative analysis method, a total score is obtained upon thecombination of weighted technical and financial attributes of proposals. Thesuppliers‟ offers are evaluated and points granted based on how well the offers meetthe criteria defined in the solicitation documents.2. This method of evaluation is used when offers have been solicited on the basis of anRFP, and it is necessary to undertake a more complex evaluation based on anumber of variables of differing importance. The method is typically used for theprocurement of services, where the relative importance of each evaluation criterionneeds to be weighted. It can also be used for the evaluation of offers for complexgoods and construction requiring the evaluation to be based on a number of criteriaother than price in order to ensure best value for money, and where it is difficult toevaluate an offer on the compliant/non-compliant scale only.3. The method requires a two-envelope procedure where suppliers are requested tosubmit their technical and financial offers separately in two sealed envelopes. Theevaluation of the technical offers shall be completed prior to the opening andevaluation of the financial offer.4. The solicitation documents shall state the number of points available for thetechnical proposal and the financial proposal respectively. The technical proposal isto be evaluated using predefined evaluation criteria. The evaluation criteria are to bedefined in the solicitation documents together with information about the number ofpoints assigned to each of these criteria5. Under this method of analysis price is rendered as one of the evaluation criteria. Ingeneral, the more complex the assignment, the more significant the end product,and the less comparable the proposals, the less influence price shall have on theselection, and the points allocated to the financial proposal would be lower. Fortasks of a more straightforward nature, price can play a significant part in theselection process, provided that the other criteria are also met.6. The total number of points available for the technical proposal is normally higherthan the total number of points available for the financial proposal. This way the riskof selecting a non-performing supplier is reduced, and the saving achieved byselecting the lower priced offer is not outweighed by the implications caused by anon-performing supplier. Thus, the financial proposal is typically given between 15and 50 percent importance.7. The financial offer shall be opened only for those offers where the scores in thetechnical evaluation meet or exceed the stated threshold, usually 60 percent of thepoints available to the technical proposal. For those offers where the technicalproposal does not reach the minimum specified score, the corresponding financialoffer is not eligible for further consideration, and the financial proposal shall bereturned to the supplier unopened, accompanied by a letter notifying the bidder.8. The maximum number of points assigned to the financial proposal is allocated to thelowest priced proposal. All other price proposals receive points in inverse proportionaccording to the following formula: p = y x μ/z where:p = points for the financial proposal being evaluatedPROCUREMENT MANUAL 72/127 VERSION 2

y = maximum number of points for the financial proposalμ = price of the lowest priced proposalz = price of the proposal being evaluated9. This formula for point allocation is incorporated into the „Total Evaluation ofProposals‟ template, which will be produced following publication of this Manual.The proposal obtaining the overall highest score after adding the score of thetechnical proposal and the financial proposal is the proposal that offers best valuefor money.8.4 Evaluation Process1. Upon receipt and opening of offers, the evaluation of offers must be conductedaccording to the evaluation criteria and method defined during the preparation of thesolicitation documents and clearly established in these documents.2. Under no circumstances can new or revised evaluation criteria be introduced duringthe evaluation of offers nor can the method of evaluation be changed. This providesthe basis for an objective and transparent evaluation process. The evaluationprocess comprises the following steps:a. Establishment of evaluation teamb. Receipt of opening reportc. Preliminary evaluationd. Technical evaluatione. For two-envelope evaluations: Completion of technical evaluation report andopening of financial offersf. Financial evaluationg. Clarifications, if requiredh. Identification of the winning offeri. Evaluation reportj. Negotiation, if applicablek. Background check8.4.1 Establishment of the Evaluation Team1. In order to conduct a fair and unbiased evaluation, evaluation of offers at UNRWAshall be undertaken by an evaluation team consisting of 2 to 5 members, dependingon the nature, complexity and value of the procurement activity.2. The purpose of the evaluation team is to verify that the suppliers and their offerssatisfy the requirements of the solicitation documents, and to evaluate the offersaccording to the predefined evaluation criteria. The team members shall beappointed by CPLD at HQ (A), or FPLO/FPO in the Field. The team members shallprovide objective and independent advice and knowledge of the specific subjectmatter. The evaluation team shall be chaired by an experienced individual,appointed by CPLD at HQ (A) or FPLO/FPO in the Field.PROCUREMENT MANUAL 73/127 VERSION 2

3. The procurement personnel responsible for carrying out the respective procurementprocess shall prepare evaluation documents in accordance with the evaluationcriteria stated in the procurement solicitation documents, and brief the evaluationteam members about their role ensuring their familiarity with the applicableevaluation criteria.4. The team members shall understand that the deliberations of the evaluationcommittee are strictly confidential, and that information about the content of thesubmissions or the evaluation process is not to be revealed outside the group ofUNRWA personnel.5. Finally, team members must be instructed to immediately indicate if they are in apotential conflict of interest situation with one of the suppliers (e.g. owning shares insupplier company, familiar relationship with suppliers, etc.), and that they in suchcase shall ask to be replaced.6. In particularly complex procurement processes, external subject matter experts maybe contracted to assist in the evaluation process as one of the team members.8.4.2 Preliminary Evaluation1. In order to avoid spending further resources on the evaluation of invalid offers, theevaluation team shall eliminate invalid offers at an early stage of the evaluationprocess by performing a preliminary evaluation of offers against the formal criteria.2. The evaluation team shall eliminate offers in cases where:a. The offer is incomplete (i.e. does not contain mandatory information as perthe solicitation documents – signatures, securities, documentation, etc.) orineligible (e.g. if the supplier is not registered as per the requirements in thesolicitation document),b. Financial information is included in the technical proposal when using thetwo-envelope method, orc. The offer in other ways does not conform to the submission instructionsspecified in the solicitation document.8.4.3 Technical Evaluation1. Technical Evaluation involves detailed analysis of each offer against the evaluationcriteria in order to determine if the offer is compliant / non-compliant or to allocate ascore for each criterion to each offer based on assessment of the extent to whichthe offer satisfies the criteria. Results of the technical evaluation shall besummarized in the evaluation report.2. If a two envelope system is used, the technical evaluation shall be completed beforethe eligible financial proposals are opened.PROCUREMENT MANUAL 74/127 VERSION 2

8.4.4 Financial Evaluation1. The next step is the financial evaluation of the offers. This is the process ofcomparing the offers with the financial criteria stipulated in the UNRWA procurementsolicitation document and determines the price to base the evaluation upon. Duringthis step, prices shall be reviewed as to whether they are correct, realisticconsidering prevailing market conditions, and whether they are reasonable in viewof the requirements.2. When using the cumulative analysis evaluation method, the score of the financialproposal is calculated based on the formula for point allocation.3. Discounts If the supplier offers early order-placement discounts, or early paymentdiscounts, this is not taken into account in the evaluation. However, the discountscan be taken advantage of if offered by the selected supplier (i.e. the supplier isselected based on the regular price without taking discounts into account, but whenplacing the order, any available order placement discounts are taken advantage of,if possible). Quantity discounts are taken into account in the evaluation, and shall beevaluated as an alternate offer.8.4.5 Clarifications from Suppliers1. In principle, offers shall be evaluated based upon the information provided in theoffer. However, after the submission of offers, clarifications to the offers aresometimes required from suppliers in order to be able to conduct a properevaluation process. The purpose of such clarifications is to clarify any aspects of theoffer, not to add to or delete aspects of the offer, or otherwise modify any portions ofthe offer.2. Clarifications to the contents of the offer may be sought, taking into considerationthe principle of equal and fair treatment of the suppliers. The supplier(s) shall not beallowed to change the contents of their offer, but merely provide minor clarificationsenabling the evaluation team to fully understand the offer in order to carry out a fairevaluation. No change in the price or substance of the offer can be sought, offeredor permitted, except as required in order to allow for correction of arithmetic errorsdiscovered by UNRWA.3. During the clarification discussions, no information about other offers shall bedivulged to the supplier. Clarifications shall normally be sought and received inwritten form, but if necessary can be obtained in a meeting. A minimum of 2UNRWA personnel shall attend such a meeting. Regardless of how the discussionsare being conducted, all discussions shall be summarized in writing, along withclarifications provided, and kept on file for future reference.8.4.6 Identification of the winning offer1. When using the „lowest priced, most technically acceptable‟ methodology the lowestpriced offer determined to be compliant is generally selected as the winning offer.However, this methodology offers the flexibility of selecting the most complianttechnical offer shall none of the offers be fully technically compliant. Exceptionally,selection of a higher priced offer can be justified if the difference in price is smallwhile the technical qualities of the selected offer by far surpass those of the lowestPROCUREMENT MANUAL 75/127 VERSION 2

priced offer. Selection of another offer than the lowest priced one requires welldocumentedjustification. When using the „lowest priced compliant offer‟methodology, the winning offer is the lowest priced offer determined to be compliant.2. When using the „cumulative analysis‟ evaluation methodology, the total scoreobtained including both technical and financial proposals is calculated for each offer.The offer obtaining the overall highest score is the winning offer.8.4.7 Negotiations1. Negotiations are discussions with a potential supplier after selection of the supplier,but prior to award of contract, with the purpose of ensuring best value for money forUNRWA in the procurement process without compromising the principle of fair andequal treatment of all suppliers.2. In principle, negotiations are usually not undertaken after a competitive selectionprocess. However, negotiations may still be necessary after a competitive tender inorder to ensure best value for money for UNRWA. Negotiations can prove veryeffective in situations of waiver of competitive bidding in order to ensure competitiveprices and products.3. Negotiations are confidential between UNRWA and the supplier, and no informationrelating to the negotiations must be revealed by any party. For complex negotiationsconducted with suppliers, a minimum of two UNRWA staff members shall beinvolved in the negotiations. Negotiations with suppliers are carried out according tocertain procedures, depending on the chosen method of solicitation:8.4.7.1 Negotiations of proposals selected based on the ‘Cumulative AnalysisMethodology’ (RFP)1. The purpose of negotiations of offers selected based on the „cumulative analysismethodology‟ is to ensure that the technical proposal is in line with requirements andthat the financial proposal is competitive on all aspects of the price. Negotiationswith the supplier regarding the contents of their offer can only be conducted:a. if provided for in the solicitation documents, andb. with the supplier presenting the winning proposal.2. In the negotiation, the deficiencies in the offer shall be pointed out to the supplier.The supplier shall be allowed to make adjustments in the proposal in order toimprove and more clearly specify the contents of the offer. However, under nocircumstances shall the requirements (Terms of Reference / specifications / SOW)be changed. If the requirements are changed, the competitive process shall becancelled, and a new tender process be initiated on the basis of the revisedrequirements.3. The financial proposal of the selected supplier may be negotiated to ensure that allaspects of the price are competitive. For example could DSA rates, travel cost etc.be negotiated if necessary in order to ensure justifiable prices.PROCUREMENT MANUAL 76/127 VERSION 2

4. Best and Final Offer (BAFO) – RFPa. The „Best and Final Offer‟ is an optional step in the selection of offers withthe objective of enhancing competition, and thus ensuring best value formoney for UNRWA. It can only be used when offers have been solicitedbased on an RFP. BAFO shall only be used if due cause exists, e.g. offersreceived barely meet the minimum threshold and no clear winner isidentified.b. BAFO is a complex and high-risk tool, and shall only be used in specialcases and by staff with extensive experience in evaluation and negotiation.Upon completion of the overall evaluation, the evaluation team may decideto engage in competitive negotiations with all suppliers passing the thresholdof the technical evaluation, to ensure effective competition. The purpose withBAFO is to clarify ambiguities, correct obvious mistakes, point outweaknesses and deficiencies, and generally seek improvements in both thetechnical and financial offer.c. Suppliers are informed of the deficiencies of their offer and are requested inwriting to submit a best and final offer as a follow up to their proposal within aspecific date. The suppliers shall be given a reasonable period of time tosubmit their BAFO, taking into account the complexity of the procurementaction. The suppliers shall be informed that price increases shall not beaccepted, however, they may decline to alter the terms of their originalproposal, and that such decision shall not render them unacceptable.d. The request to submit a BAFO shall not contain any information regardingthe evaluation, or any information on the chances for contract award. Uponreceipt of the BAFOs from the suppliers, the evaluation committee shallreconvene and update the technical and financial evaluation, as necessary,and shall make a final comparison of the competing offers.8.4.7.2 Negotiations of bids selected based on the ‘Lowest Priced CompliantOffer’ Methodology (ITB)1. When the selection is based on the lowest priced compliant offer methodology,negotiations are generally not permitted. If due cause exists, negotiations may bepermitted with the supplier presenting the lowest priced compliant offer. Negotiationswith the other bidders are not permitted. Proper justification shall be providedexplaining the reason why negotiations are conducted in the particular case. Underno circumstance shall negotiations take place purely for the sake of reducing prices,as this would contravene the principle of equal and fair treatment of suppliers.2. Due cause for conducting negotiations after a competitive bidding based on the„lowest price compliant offer‟ methodology, would for instance be:a. Budget constraints, where the available budget is genuinely not sufficient topurchase the requested item(s) and the supplier agrees to reduce theirprices;PROCUREMENT MANUAL 77/127 VERSION 2

. The lowest compliant bid is offering additional services or equipments whichwere not required in the solicitation document; orc. Marginal quantity increases leading to quantity discounts (i.e. the tenderedquantity can be increased) shall lead to negotiations with the selectedsupplier.3. However, in cases where the quantity is substantially increased, or if the marketprice of goods may have dropped substantially between the deadline for thesubmission of bids and the date for selection of the supplier, re-tendering shall beconsidered.8.4.8 Evaluation Reports1. An evaluation report documenting the evaluation process shall be signed by all themembers of the evaluation panel, and kept on file for future reference. Theevaluation report will later be used as the basis for the recommendation of award.An evaluation report typically contains a summary of the evaluation process and itsindividual steps as outlined above including the point allocation to each offer, ifapplicable. Any rejection, non-compliance, and clarifications of offers shall be stated,including a list with the final ranking of the offers and the reasoning on how the bestoffer was selected. Particular attention must be given to ensure that the reasons fordisqualifying offers with prices lower than the selected offer are clearly stated in thereport.2. The evaluation report is an internal UNRWA document and shall not be distributedto individuals other than those involved in the relevant procurement process.8.4.9 Background Check of the Supplier1. After selection of the best offer, and prior to award, UNRWA shall carefully checkthe background of the selected supplier. Background checks are the responsibility ofthe person in charge of the procurement process in question, and shall becompleted prior to recommendation for award. However, in most cases at UNRWAwe are using only suppliers who have applied to be on our supplier list and havebeen vetted prior to competing for an award of a contract.2. The background check is conducted in order to ensure that the selected supplier isqualified (e.g., the entity is legally established, financially solvent and has goodstanding in the business community), and not only „technically responsive‟ (asdetermined by the technical evaluation). The extent of the background check shallbe reasonable related to the value of the contract and the complexity of the specificcase.3. The following aspects shall be considered in a background check:a. Legal and regulatory requirementsb. Technical capability and experiencec. Financial capabilityPROCUREMENT MANUAL 78/127 VERSION 2

4. In general, UNRWA shall verify that the supplier has a good reputation, is capable ofsupplying the goods, services or construction offered, has a sound financialcapability, and the required resources available.8.4.9.1 Unsatisfactory Suppliers1. If the procurement Section staff are not satisfied with the legal and/or financial statusof the supplier, they shall seek legal advice from the Legal Adviser/General Counselwhen considering how to proceed in the matter.2. In general, if the legal and/or financial status of the supplier is so poor that it mayaffect the supplier‟s ability to fulfill its obligations according to the contract inquestion, and thereby jeopardize the success of the project and the reputation ofUNRWA, the offer shall be rejected and the next best supplier shall berecommended for award. This could for instance be in a case where the financialstatements show that the supplier is insolvent, and therefore is unlikely to be able tofulfill its obligations.3. If UNRWA is not satisfied with the legal and/or financial status of the supplier, but itis likely that the supplier still can fulfill its obligations under the contract, specialmeasures could be taken, and particular clauses built into the contract in order toensure the performance of the supplier. However, legal advice shall always besought in such matters.8.4.9.2 Suppliers with pending claims, disputes and contentious issues1. In the event that UNRWA has a dispute, claim or other contentious issue pendingwith a supplier, that either compromises or calls into question the ability of thatsupplier to perform or where performance would be inconsistent with the effectiveresolution of any dispute, the CPLD after consultation with The Legal Adviser mayinstruct UNRWA personnel to refrain from procurement actions with such supplier,until the matter has been resolved or otherwise considered to be no longercontentious.2. It is the responsibility of CPLD to ensure that such a supplier is not included inUNRWA procurement actions in the future and that no awards of contracts to thesupplier are made. It is the responsibility of CPLD via the database administratorsfor The UNRWA System and the CPLD HQ Analyst responsible for the MasterSupplier List to make known to all of UNRWA procurement the names of supplierswith which UNRWA shall not engage in business.3. Likewise, it is the responsibility of each FPLO/FPO in the Field / Head of Section atHQ to inform the CPLD of any disputes, claims or other contentious issues betweena supplier and the respective UNRWA division.4. CPLD shall take the necessary actions to resolve the issue. Once a dispute, claim orcontentious issue has been resolved, the CPLD shall notify UNRWA personnel, aswell as the supplier in question as to the timing and extent to which the supplier maybe considered for future UNRWA procurement action.5. CPLD shall also alert the UNGM using their reporting procedures regarding theactions taken by UNRWA towards the supplier.PROCUREMENT MANUAL 79/127 VERSION 2

8.5 Withdrawal after the Submission Deadline1. Withdrawal of submissions after the announced deadline shall in principle not behonored, and in such cases, UNRWA shall open and evaluate the withdrawn offertogether with the other offers. If the supplier has furnished a bid security, UNRWAshall withhold it. If the offer is selected after an evaluation, the bid security shall becashed, unless the supplier is willing to provide the goods, services or constructionoffered in their original submission. If no bid security was requested, the issue willhave to be solved through negotiations. Legal advice shall be sought from The LegalAdvisor.2. However, in certain cases where the supplier is able to justify the withdrawal of itssubmission, UNRWA may accept withdrawal after the submission deadline. Anacceptable justification could be the lack of capacity to undertake the UNRWAassignment due to having been selected for other assignments in the same time. Ifthe supplier could not have foreseen this, UNRWA could accept the supplier‟swithdrawal of submission, as it might be seen as a responsible action by the supplierto notify UNRWA of its capacity problem.3. Further, it shall be considered whether it is in the interest of UNRWA to keep thesupplier to its offer after the supplier has withdrawn it, as he might perform poorly,for instance due to lack of capacity to undertake the assignment.4. Regardless of whether or not the withdrawal is justified, withdrawal of submissionafter the announced deadline for submission is a serious matter. If not acted uponby UNRWA, suppliers may speculate by submitting favourable offers in the tenderprocess, and then withdraw them if the market conditions have changed to thesupplier‟s disadvantage (e.g. the market prices of the product has increased fromthe time of the submission deadline). Therefore, in cases where offers arewithdrawn after deadline, suppliers shall always be given a warning that this is notacceptable to UNRWA, and that it may exclude the supplier from future UNRWAtenders. A second warning to a supplier shall result in exclusion from UNRWAtenders in the future.8.6 Modification of Offers1. Suppliers may modify their offers in writing prior to the submission deadline. Themodification shall be submitted as per the submission instructions, and shall betreated like any other offer by UNRWA.2. Any alteration of the offer after the deadline for submission of offers shall not beaccepted, unless such modification is due to obvious errors or omissions like theones mentioned below. Here is a list of the most common errors and omissions andhow they shall be treated:a. Errors in total prices: The unit prices shall govern, when math errors havebeen made in summarizing prices.b. Where there is discrepancy between the amounts in figures and in words,the amount in words shall govern.PROCUREMENT MANUAL 80/127 VERSION 2

c. Apparent errors in price: UNRWA shall not be responsible for errors in pricemade by suppliers. However, UNRWA shall verify prices in cases wherethere is reason to believe there are errors (prices too low, too high etc.). Thesupplier shall then be informed that revision of the original price is prohibited,and that non-compliance shall result in rejection of the submission. If thesupplier confirms that the original price is correct, the evaluation can proceedwithout further question. However, shall the supplier acknowledge that theprice is incorrect; the submission will have to be rejected, in order to adhereto the principles of fair and equal treatment of all suppliers. Thecommunication with the supplier shall be in writing and kept on file for therecord in order to facilitate audits.d. Failure of suppliers to provide a piece of information: This shall normally notrequire immediate rejection of the offer as long as it does not affect thestated price or the specifications of the solicitation document. If the supplierdoes not provide the information upon request, within a stated time limit, theoffer shall be rejected. The supplier shall be notified accordingly in writingand all communication on the matter be kept on file.e. Errors in affixing signature: If an offer lacks the signature of an authorizedrepresentative, but the signature of such authorized representative appearson a letter of transmittal or on another document attached thereto, or a bidsecurity is attached to the offer, UNRWA shall assume that the omission wasunintentional, and accept the offer. However, UNRWA shall follow up andobtain a signature on the relevant page or obtain written confirmation by wayof letter that lack of signature was unintentional. Any unsigned offersubmitted without accompanying evidence that the offer is authentic, shall berejected. The supplier shall be notified accordingly in writing and allcorrespondence on the matter be kept on file. A signature evidently executedby someone other than the typed name of the authorized representative onhis/her behalf, shall be verified.PROCUREMENT MANUAL 81/127 VERSION 2

CHAPTER 9PROCUREMENT REVIEW AND AWARD OF CONTRACT1. All procurement activities are subject to a review process prior to award in order toensure compliance with applicable regulations, rules, directives, instructions andother policies and procedures. The review shall establish whether appropriateprocedures have been followed, provide justifications whenever procedures havenot been followed, provide a summary of the procurement activity, and ensure thatthe FOD or CPLD is provided with all material information required in order to awarda contract or recommend award to the appropriate awarding authority.2. Award is the decision and approval to establish a contract with a selected supplier.3. The FOD or the CPLD may delegate this review process to the Heads of BuyingSections. Review and award include the following steps:a. Preparation of submission for review and awardb. Review and recommendation to the FOD or CPLDc. Award by the appropriate level of awarding authority9.1 Preparation of Submission for Review and Award1. In order to facilitate the review process and subsequent award by the appropriateawarding authority, documentation must be prepared summarizing the procurementactivity including all actions taken, providing a justification whenever standardprocedures have not been followed, and establish how the procurement activity hascomplied with procurement principles and all applicable regulations, rules,directives, instructions and other policies and procedures.2. The documentation shall be prepared by the Sponsoring Officer with respect tosuch procurement contract. The documentation is an important part of theprocurement file, and care shall be taken to ensure that the documentation providesa complete and exact picture of the actual process.3. All submissions for review by the DAS (and the ACP) or the LCP shall be made onthe appropriate form; specimens of the available forms are attached. These formsmust be completed in every detail required. It shall be the responsibility of theofficer sponsoring a contract to obtain a certification that budget or other funds areavailable singed by the officer authorized in accordance with the Finance Manual, orFinance Technical Instruction No. 16 or as otherwise authorized by the Comptroller.4. The original tender documents, as submitted by the recommended contractor, shallalso be forwarded with the contract proposal, upon request by the DAS (or the ACP)or the LCP.5. Contract proposals shall be supported by relevant documentation, in particular ananalysis of all offers received brought to a comparable basis in a common currency.6. When proposals are made to award contracts to other than the lowest bidder, thereasons must be stated in writing and in respect of each lower quotation rejected.PROCUREMENT MANUAL 82/127 VERSION 2

7. In the case of submissions for approval by an LCP, the decision of the LCPapproving the proposal shall be endorsed on the proposal form and signed by theChairman. The Secretary shall then forward properly signed copies without delay tothe officer sponsoring the proposal and to the Field Finance Officer.8. Contract proposals by a Field Office which require clearance by the DAS shall besubmitted to the LCP and the FOD. They shall then be forwarded, properlyendorsed and signed, to the DAS and the Secretary of the ACP together with copiesof the minutes of the meeting of the LCP and any further explanations by the FODwhich may be necessary.9. In the case of submissions to the DAS which are referred to the ACP by the DAS foradvice, the decision of the ACP shall be notified to the DAS in a memorandumsigned by the Secretary. The decision of the DAS shall be endorsed on the proposalform signed by the DAS and forwarded to the Sponsoring Officer and Chief,Accounts Division at Headquarters, or the Chairman of the respective LCP and theappropriate Field Finance Officer, as the case may be. The Finance copies shall berouted through Chief, Budget Division (for allotment of funds if applicable).10. Standard submission formats shall be used: these may vary depending on whethersubmission is direct to the awarding authority or whether the review goes through aLocal Committee on Procurement (LCP) and/or the DAS/ACP. The documentationshall be prepared by the individual responsible for the procurement process. Thesame person is responsible for ensuring that the information is correct.Annex 11 - Checklist for Submissions to the LCPAnnex 12 - Checklist for Submissions to the DAS/ACP9.2 Review and Recommendation to the Awarding AuthorityAny procurement commitment with a value below the threshold of either the LocalCommittee on Procurement or the DAS review is submitted directly to the appropriateawarding authority for award. When a Committee review is not mandatory, eachawarding authority i.e.; the FODs or the CPLD shall review the package submission forclarity of purpose, procedures followed and reasonableness of pricing and deliveryterms.9.2.1 Committees on Procurement and the DAS1. The UNRWA committees on procurement (ACP / LCP) shall where appropriateensure that the proposed procurement action is in accordance with all financial andprocurement policies, procedures, and instructions. Further, the committees shallreview the procurement process to ensure that it is fair, competitive, andtransparent, and that the process provides best value for money, represents bestpractices and commonly accepted practices of United Nations procurement. Finally,the committee on procurement/DAS shall verify that the submitter confirms thatappropriate funds are available to cover the cost of the proposed contract.2. All procurement activities are subject to a review process prior to award in order toensure compliance with applicable regulations, rules, directives, instructions andother policies and procedures.PROCUREMENT MANUAL 83/127 VERSION 2

a. Subject to paragraph j below, any procurement commitment with value belowthe review threshold of a Local Committee on Procurement or the DAS maybe submitted directly to the appropriate awarding authority for award. Theindicative levels of such review thresholds are specified in Table 2-1.However, the Commissioner-General has the discretion to depart from suchindicative levels and prescribe a higher or lower level of review thresholds forCPLD and for each Field which shall be specified in his/her letter ofdelegation to each relevant officer.b. There shall be established at the Headquarters an Advisory Committee onProcurement (ACP). The members of the ACP shall be:iii.i. The Chief, General Law Division who shall act as Chairperson;ii. A Division Chief from the Finance Department designated by the Directorof Finance;A Deputy Field Office Director (whose membership shall be on a yearlyrotating basis among the five Field Offices, such rotation to bedetermined by the ACP Chairperson);iv.A Deputy Director or senior staff equivalent from one of the Program orSupport Departments other than the Administrative Support Departmentand the Department of Internal Oversight Services (whose membershipshall be on a yearly rotating basis among the different Departments, suchrotation to be determined by the ACP Chairperson);v. The secretary of the ACP shall be the Legal Officer (Contracts); andvi. The ACP Chairperson may request the presence of representatives ofthe sponsoring Department and the Procurement and Logistics Divisionin order to clarify matters relating to any submission.c. The DAS shall, with the assistance of the ACP, if deemed necessary by theDAS, clear all procurement actions leading to the award or amendment ofprocurement contracts with value within his/her review threshold as set forthin the letter of delegation from the Commissioner-General to the DAS, in theabsence of which the threshold shall be as set forth in Table 2-1. Inperforming this clearance function, the DAS shall ensure that the proposedprocurement action is in accordance with applicable regulations, rules,directives, instructions and other policies and procedures. The DAS and theACP shall not be responsible for reviewing or providing advice on theadequacy or necessity of the requirement being met under the proposedprocurement action.d. There shall be established at each Field Office a Local Committee onProcurement. The LCP shall have no less than three members (includingthe chairperson) each of whom shall be designated by the Field OfficeDirector, provided that:i. no member shall come from Procurement and Logistics Division;ii. no two members shall come from the same department or division; andiii. the Deputy Field Office Director, unless there is more than one, shall notPROCUREMENT MANUAL 84/127 VERSION 2

normally be a member of the LCP.e. The chairperson and secretary of the LCP shall be designated by the FOD.The Field Legal Officer (if not already designated as a member) or FieldLegal Consultant (if any) shall attend meetings of the LCP at the request ofthe LCP Chairperson. Each FOD shall notify the DAS and the ACPSecretary of the composition of his/her Field Office‟s LCP and any changesthereto.f. Within each Field Office, the LCP shall render written advice to theappropriate awarding authority on all procurement actions leading to theaward or amendment of procurement contracts with value within its reviewthreshold as set forth in the letter of delegation from the Commissioner-General to the relevant FOD, in the absence of which the threshold shall beas set forth in Table 2-1. In performing its review function, the LCP shallensure that the proposed procurement action is in accordance withapplicable regulations, rules, directives, instructions and other policies andprocedures. The LCP shall also verify that the Sponsoring Officer confirmsthat appropriate funds are available to cover the cost of the proposedcontract by way of submission of the Contract Proposal Document to theLCP wherein availability of funds has been certified by the Field FinanceOffice. The LCP shall not be responsible for reviewing or providing advice onthe adequacy or necessity of the requirement being met under the proposedprocurement action.g. The ACP and each LCP shall meet as often as is deemed necessary. In theabsence of any permanent member of the ACP or LCP, the officer acting forsuch member during his/her absence shall serve as a member of the ACP orLCP, as applicable, and shall be considered as a permanent member forpurposes of determining whether or not a quorum exists. If the chairpersonof a committee cannot attend a meeting, the members of the committeepresent during the meeting shall elect a chairperson from amongthemselves. If a member of the committee is unable to attend a meetinghis/her alternate shall attend in his/her stead. Each alternate shall be a staffmember holding a senior post designated in writing by the Director of theDepartment concerned or the FOD, as applicable. Should the Director of theDepartment or the FOD concerned fail to designate an alternate, thechairperson of the committee may do so. A quorum shall consist of threemembers or their alternates, provided that at least two members are present.In the event of a tied vote the chairperson shall have a deciding vote. In nocase shall a member have power to vote on a proposal originating fromhis/her Field or Department. In such a case, such member may be requiredto recuse himself/herself from the deliberations with respect to suchproposal. Minutes shall be drawn up of the meetings of the ACP and LCP, inwhich the salient points discussed and the decisions taken shall be recorded.The minutes shall be signed by the chairperson and the secretary afterapproval by the committee. The ACP and each LCP may consider anyprocurement action by email circulation and shall establish its own procedure(including criteria) for decisions made by circulation.h. For any contract awarded pursuant to OD10 Section 13 („EmergencyProcurement‟) whose value is within the review threshold of the DAS or theLCP; the DAS or the LCP, as applicable, shall perform the same reviewPROCUREMENT MANUAL 85/127 VERSION 2

function as set forth in Section 9.2.2 and 9.2.3 of OD10, respectively, withrespect to such contract on an ex post facto basis.i. Contracts (other than leases of real property) concluded for an indefiniteperiod, or which are automatically renewable, shall be submitted annuallyprior to the expiration of the then current term to the appropriate awardingauthority for review. One copy of all signed leases irrespective of value is tobe sent to the Secretary, ACP.j. The Sponsoring Officer shall ensure that the relevant ProgrammeDepartments at Headquarters are consulted prior to submission of anycontract proposal to the LCP, ACP or awarding authority, as applicable, withrespect to the technical aspects of any procurement regardless of value andshall submit to the LCP, the DAS or awarding authority, as applicable, writtenevidence of such consultation and of each such Department‟srecommendation or comment. This requirement includes, without limitation,consultation with the Department of Health with respect to procurement offood commodities or medical supplies and equipment and consultation withthe Infrastructure and Camp Improvement Department with respect tocontracts involving any construction, engineering or structural design aspect.9.2.2 Scope of Review by Committees on Procurement and the DAS1. Within each Field Office, the LCP shall render written advice to the appropriateawarding authority on all procurement actions leading to the award or amendment ofprocurement contracts with value within its review threshold as set forth in the letterof delegation from the Commissioner-General to the relevant FOD, in the absenceof which the threshold shall be as set forth in Table 2-1. The scope of the LCPreview shall include the following:a. Proposed contracts which involve commitments to a single contractor inrespect of a single request for a specific project or purpose, or a series ofrequests relating to the same specific project or purpose, in a total amount ina calendar year equal to or greater than the dollar amount set forth in theletter of delegation from the Commissioner-General to the relevant FOD inthe absence of which the threshold shall be as set forth in Table 2-1 (“LCPThreshold”);b. Proposed material amendments or series of material amendments toawarded contracts:i. which in aggregate would increase the contractual amount by more thantwenty percent (20%), i.e., any changes, which individually or, as a seriesof changes, would increase the contractual amount by more than 20% ofthe previously awarded maximum contract amount, which are, bydefinition, material orii. which, when effected, will take the contract beyond the LCP/DAS reviewthreshold oriii. where amendment, in the judgment of the Sponsoring Officer may, inrelation to the criteria on which the original award was made, significantlyPROCUREMENT MANUAL 86/127 VERSION 2

affect the procurement process or the original contractual terms, e.g.,changes in specifications or other criteria.c. Any changes that result in the contract value exceeding the authority of theoriginal awarding authority shall be dealt with in accordance with article 9.3herein;d. Proposed amendment, modification or renewal of a contract not previouslysubmitted to the LCP where, during the calendar year, the aggregate amountnow equals or is greater than the LCP Threshold;e. Proposed contracts of any value which could reasonably lead to a series ofrelated contracts, the total of which may be equal to or greater than the LCPThreshold, including Long Term Agreements and other indefinite quantitycontracts;f. Review of post-facto and retroactive situations with total value equal to orgreater than the LCP Threshold, in order to provide advice to the awardingauthority on ratification of actions not conforming to established review andaward processes, and/or acceptance of such charges against appropriatebudgets; andg. Such other matters relating to procurement, including policy issues, as maybe referred to the LCP by the FOD or other awarding authority.2. The DAS shall, with the assistance of the ACP, clear all procurement actions(irrespective of whether the action originated at Headquarters or any Field Office)leading to the award or amendment of procurement contracts with value withinhis/her review threshold as set forth in the letter of delegation from theCommissioner-General to the DAS, in the absence of which the threshold shall beas set forth in Table 2-1. The ACP shall only assist and render written advice to theDAS if requested by the DAS. The scope of the DAS (and the ACP) review shallinclude the following:a. Proposed contracts which involve commitments to a single contractor inrespect of a single request for a specific project or purpose, or a series ofrequests relating to the same specific project or purpose, in a total amount ina calendar year equal to or greater than the dollar amount set forth in theletter of delegation from the Commissioner-General to the DAS in theabsence of which the threshold shall be as set forth in Table 2-1 (“DASThreshold”);b. Proposed material amendments or series of material amendments toawarded contracts:i. which in aggregate would increase the contractual amount by more thantwenty percent (20%), i.e., any changes, which individually or, as a seriesof changes, would increase the contractual amount by more than 20% ofthe previously awarded maximum contract amount, which are, bydefinition, material orPROCUREMENT MANUAL 87/127 VERSION 2

ii. which, when effected, will take the contract beyond the LCP/DAS reviewthreshold oriii. where amendment, in the judgment of the Sponsoring Officer may, inrelation to the criteria on which the original award was made, significantlyaffect the procurement process or the original contractual terms, e.g.,changes in specifications or other criteria.c. Proposed amendment, modification or renewal of a contract not previouslysubmitted to the DAS where, during the calendar year, the aggregateamount now equals or is greater than the DAS Threshold;d. Proposed contracts of any value which could reasonably lead to a series ofrelated contracts, the total of which may be equal to or greater than the DASThreshold, including Long Term Agreements and other indefinite quantitycontracts;e. Review of post-facto and retroactive situations, including but not limited tothe use Urgency / Emergency Powers, with total value equal to or greaterthan the DAS Threshold, in order to provide advice to the AA on ratificationof actions not conforming to established review and award processes, and/oracceptance of such charges against appropriate budgets; andf. Such other matters relating to procurement, including policy issues, as maybe referred to the DAS by the Commissioner-General.3. With respect to any procurement action, disaggregation of requisitions shall not beallowed if such disaggregation serves no valid purpose and is made for the solepurpose of circumventing the review requirements set forth in OD 10 or this Manual.9.2.3 Post Facto / Retroactive Review1. Notwithstanding the above, the LCP and the DAS shall review on an ex post factobasis those contracts which would otherwise have been submitted ex anteaccording to the above cited provisions, where the entity being awarded the contractwas selected on the basis of evaluation of at least three technically qualified offers,and:a. In the case of offers evaluated according to the „lowest priced compliantoffer‟ methodology, the entity‟s offer was lowest, orb. In the case of offers evaluated according to the cumulative analysismethodology, the entity‟s technical proposal scored the highest, and itsfinancial proposal was lowest.c. In any case where Emergency – Urgency powers were used in accordancewith this section 13.2 of OD 10 and this Manual and as justified by therespective FOD (FOs) or the CPLD (HQ Amman).2. In any such cases, award by the appropriate level of awarding authority mustnevertheless be accomplished prior to entering into any commitments (i.e., FOD orPROCUREMENT MANUAL 88/127 VERSION 2

CPLD) while the CPLD or each, or, in his or her absence, OiC of the Department ofField Office shall be responsible for promptly bringing contracts falling under a) – c)to the attention of the LCP and/or DAS for ex post facto / retroactive proceduralreview.3. All post facto – retroactive procurement cases shall be subject to article 9.4 below.9.3 Award1. Contracts are awarded by the relevant AA based upon recommendations from acommittee on procurement and/or the DAS, when applicable. The AA shall eitheraward or not award a contract to the selected supplier based on therecommendations received. In cases where the AA chooses to not follow the adviceof the committee and/or the DAS, the AA shall record the reason for such a decisionin a written statement to be kept on file together with the minutes of the committeemeeting for audit purposes.2. The award of a contract shall be made after due consideration has been given to thegeneral principles described in Financial Regulation 5.2, in OD 10 Section 4.2 and inaccordance with the following:a. When a formal invitation to bid has been issued, the procurement contractshall be awarded to the qualified bidder whose offer substantially conforms torequirements set forth in the solicitation documentation and offers the lowestcost to the Agency;b. When a formal request for proposals has been issued, the procurementcontract shall be awarded to the qualified bidder whose proposal, all factorsconsidered, is the most responsive to the requirements set forth in thesolicitation documentation.3. The AA may, in the interests of the Agency, reject bids or proposals for a particularprocurement action, recording the reasons for rejection in writing. The AA shall thendetermine whether to undertake a new solicitation or to negotiate a procurementcontract directly or to terminate or to suspend the procurement action.4. If the clearance of the DAS or the advice of the LCP is required, no procurementcontract may be awarded before such written clearance or advice is received by theappropriate AA. In cases where the DAS does not provide clearance for aprocurement action and the AA disagrees with the decision of the DAS, the AA mayelevate the matter to the Office of the Commissioner-General whose decision on thematter shall be final. In cases where a FOD decides not to accept the advice of theLCP, s/he shall record the reasons for such decision. No AA in the Field Officesother than the FOD (or in his/her absence, the officer–in-charge of the Field Office)has the authority to award a contract contrary to the advice of the LCP.Notwithstanding that any procurement action is not required to be cleared by theDAS or reviewed by the LCP, CPLD or FOD (or in his/her absence, the officer-inchargeof the Division or the Field Office) may, in his/her discretion, still seek theadvice of the LCP and/or the DAS, as applicable.5. Only after official award of contract by the relevant AA, may a contractual obligationbe entered into by UNRWA.PROCUREMENT MANUAL 89/127 VERSION 2

6. Material amendments (pls. see OD10 article 12 and article 9.2 of this Manual)proposed to any approved contract shall require the approval of the AA authorizingthe original contract.7. Where the material amendment results in the value of the amended contractexceeding the limit of the awarding authority which approved it, the amendmentmust be authorized by the respective higher level AA having power to approve thecontract and the total contractual amount as so amended9.3.1 Feedback to Unsuccessful Suppliers1. After selection of a supplier, award of contract, and contract signature, UNRWAshall inform the unsuccessful suppliers in writing by email or facsimile or forcontracts above the value of one hundred thousand US dollars (USD 100,000) byuploading the award information to the UNRWA website.2. Upon request from a supplier, UNRWA may provide information to the supplierregarding the perceived strengths and weaknesses of the supplier‟s offer. Theinformation shall be limited to identifying technical deficiencies or weaknesses in thesupplier‟s offer, and shall not disclose financial or cost information of other offers,nor evaluation scores or other details.9.4 Post facto / Retroactive Noting of Award1. Post facto / retroactive noting of contract awards is not a procurement process, butan administrative procedure, which allows for review and ratification of actions whichwere undertaken in accordance with 9.2.3 above and not in conformity with theregular ex ante review and award processes.2. Due to the fact that any such submission is made on a post facto basis, therespective reviewing authorities (LCP, the DAS/ACP) can only note any suchsubmission but not clear it for award.3. OD10, article 9 requires that award take place prior to any commitment beingentered into by UNRWA, e.g. prior to signing a contract for services, placing anorder for equipment, etc. A post facto or retroactive situation occurs when acommitment has been made by UNRWA, or existed de facto, before an award ofcontract has been made.4. A post facto case is a situation where the services have been rendered and goodshave been received, and, in some cases, one or more payments have already beenmade, however, no contract has been issued.5. A retroactive case is a situation where the goods have been ordered or the serviceshave commenced, but the goods have not been delivered, nor have the servicesbeen completed. In some cases, invoices have already been submitted, but nocontract has been issued by UNRWA.6. In UNRWA, services or construction are not to commence, and goods are not to beordered, until a contractual obligation between UNRWA and the supplying entity hasbeen established by signature of both parties to the contract. With the exception ofPROCUREMENT MANUAL 90/127 VERSION 2

procurement activities below USD $500 (five hundred US dollars), where no formalwritten contract is required, every effort must be made to avoid a situation wherebyservices or construction commence and goods are ordered prior to theestablishment of a contract.7. If a post facto / retroactive situation nevertheless occurs, approval of payments and /or a contract must be obtained from the awarding authority whose authority for postfacto and retroactive cases covers the monetary value involved (see Chapter 2Section 3), with prior review and noting by a committee on procurement and/or theDAS if required as per the monetary value.8. Two different scenarios exist depending on whether the procurement activity inquestion has been provided for in an existing budget or not:a. The procurement activity under review has been adequately provided for inthe budget, but due process for reserving the funds and establishing theappropriate contract has not been adhered to.b. Expenditures related to the procurement activity under review exceed theamount provided for in the approved budget. In this case, consultations withthe funding source and the position of same on the funding issue are to berecorded prior to any proceedings / decision on the matter.9. All UNRWA staff members are expected to make every effort to avoid post facto orretroactive cases. When they nevertheless do occur, special approval of the AA, isrequired before related payments are made or, if already made, for suchexpenditures to be accepted by UNRWA as legitimate charges against theappropriate budget lines(s).10. It must also be understood that the approval of the AA and, as the case may be,noting by the LCP, the DAS/ACP, if indeed given, does not constitute, and must notbe taken as, the establishment of a precedent or justification for not taking timelyand appropriate action in compliance with UNRWA financial guidelines andestablished procurement procedures. Auditors shall be asked to pay particularattention to post facto and retroactive cases.PROCUREMENT MANUAL 91/127 VERSION 2

CHAPTER 10CONTRACTING1. A contract is a legally binding document between UNRWA and the supplier, and isdefining, at a minimum, the nature of the product being procured, the quantity beingprocured, the contract or unit price, the period covered, conditions to be fulfilled,including the UNRWA General Conditions of Contract, terms of delivery andpayment, and the name and address of the supplier.2. A written contract shall always be issued by UNRWA for all procurement actionsvalued at USD $500 or above. Contracts shall be issued prior to any delivery ofgoods taking place, and/or the start-up of services or construction. The AA maychoose to issue written contracts also for purchases below the value of USD $500.3. All procurement contracts shall follow the standard forms (including the applicableUNRWA General Conditions of Contract), where available, prescribed by theDepartment of Legal Affairs. Whenever any contract is proposed,a. of which no standard form exists, orb. the terms of which vary in substance from the prescribed standard form, theSponsoring Officer must ensure that such a contract is approved by TheLegal Adviser prior to execution.4. Modifications and/or additions to the UNRWA standard contract formats includingannexes shall not be made without prior consultation with the CPLD or The LegalAdvisor. Care must be taken not to include any requirements or conditions in thedocuments that contradict the UNRWA General Conditions, or the standard text ofany of the documents.5. With respect to procurement not required to be formalized in a written procurementcontract, a written record of such procurement shall be kept by the SponsoringOfficer containing as much of the information described in sub-Section 10.4 (a) to(g) of this Manual below as available.10.1 Contract Preparation1. After a procurement solicitation process, in which UNRWA has defined therequirements, a supplier is selected based on a bid or proposal, and offered acontract by UNRWA. Upon signature of the contractual document by both parties,the contract is made legally binding for both parties.2. Contracts shall be awarded within the designated period of offer validity. If it is notpossible to award the contract within the original period of offer validity, an extensionof the period shall be requested from the bidder(s).10.1.1 Contract Negotiations with Suppliers1. The purpose of contract negotiations at this stage is to clarify any issues remainingunclear and not defined by the requirements in the solicitation documents, or by thesupplier‟s offer, but which are essential for proper implementation of the agreement(e.g. defining milestone payments against deliverables). Negotiations should resultPROCUREMENT MANUAL 92/127 VERSION 2

in a clear understanding of terms and conditions agreed upon by the parties andtheir respective responsibilities under the contract.2. There are no strict rules as to how to negotiate clauses to be included in thecontracts. However, it is of the utmost importance that the negotiations result inclear understanding by both parties on the joint and several responsibilities in thecontract. Moreover, certain key areas, such as detailed delivery plan, milestones, apayment schedule, and in certain cases, special terms and conditions, are likely toform part of every contract negotiation.10.1.2 Policy on Advance Payments1. Except where normal commercial practice or the interests of the Agency so require,no contract or other form of undertaking shall be made on behalf of the Agencywhich requires a payment or payments on account in advance of the delivery ofproducts or the performance of contractual services. Whenever an advancepayment is agreed to, the reasons therefore shall be recorded. In addition, the DASor any FOD may, where necessary, authorize progress payments.2. In certain cases, exceptions can be made if required to comply with normalcommercial practice or deemed to be in the interest of UNRWA. If a commonpractice of advance payments exists in the industry sector, which is often the casefor Construction, or if an excessive financial hardship on the contractor shall beavoided, an advance payment may be justified. Examples of activities that mayjustify an advance payment are:a. Mobilization costs (mainly for construction), such as purchase / lease ofequipment / materials / machines and / or transfer of same to the project site,establishment of base camps, and transport of personnel to the project site.b. Start-up costs (mainly for services), such as purchase of airline tickets, downpayments for rental / purchase of office premises / equipment on project site.c. Design costs or design adaptation costs, related to goods / machines thatrequire design and ex-novo manufacturing.3. Any request for advance payment from the supplier shall be justified in writing by thesupplier and documented in the procurement file. The request shall be submittedwith the financial bid/proposal. This justification shall explain the need for theadvance payment, itemize the amount requested, and provide a time-schedule forutilization of said amount.4. If the supplier‟s proposal is being presented for recommendation for contract award,the assessment of the request for advance payment shall be summarized, indicatingwhether an advance payment is justified. In the event that a supplier requests anadvance payment, UNRWA shall request the contractor to submit documentationregarding its financial status (e.g. audited financial statements). Requests for downpayments in excess of 20% of the contract value are extraordinary and are to becarefully evaluated. For this purpose, previous experience of UNRWA with thesupplier shall be investigated.5. In the case that an advance payment for USD 50,000 or more is requested andsubsequently granted, UNRWA must require a bank guarantee or other suitablePROCUREMENT MANUAL 93/127 VERSION 2

security from the supplier. A bank guarantee may also be requested for smalleramounts.6. Advance payments (with or without a bank guarantee) shall be approved by the AAwhose authority covers the value of the contract. The AA shall subsequently ensurethat the procedures set forth above are complied with and that the properdocumentation (as specified above) is kept on record.7. Advance payments refer to payments effected prior to receipt of goods orperformance of any contractual service. Such advance payments are distinguishedfrom the case of contracts for services and construction, where the contractualarrangements generally foresee performance of a series of services scheduled to becompleted / delivered at subsequent times within the time frame of the contract.These established delivery times for partial services (often referred to as„milestones‟) constitute the basis for partial payments to the contractor, i.e. progresspayments, which are intended as reimbursements of expenditures incurred andpartial payments of contractor‟s fees already earned.8. However, should any of such payments be requested in advance of delivery of anitem or service specified in the contract they correspond to, they would be referred toas „advance payments‟.10.2 Contract DocumentsAt a minimum, a contract between UNRWA and a supplier shall include the following:1. The main body of the Contract that indicates the type of contract, period ofperformance, contract value, points of contacts, specific dates and noticeaddresses.2. UNRWA General Conditions for goods, services or construction, depending on thetype of product being purchased (as an annex, but an integral part of the contract)3. Technical specifications, TOR, SOW/BOQ and/or drawings, budget (for costreimbursable contracts), template for performance securities.10.2.1 Contract RequirementsThe contractual agreement must contain the following elements:1. Identification of the parties contracted as well as the person authorized to act onbehalf of the contracted party including: name, address and contact details. In theevent that the contract is the result of a joint offer, UNRWA will usually contract withone entity, which should always be the lead entity.2. A reference to all relevant documents (i.e. UNRWA solicitation documents, thesupplier‟s offer, and clarifications (in the form of written communication or minutes ofmeeting from the clarification meeting with the supplier).3. Nature of the goods/works/services being procured and the quantity that is beingprovided, as well as the terms of delivery.PROCUREMENT MANUAL 94/127 VERSION 2

4. Contract and/or unit price and terms of payment. Contracts should be denominatedin the currency of the supplier‟s offer or that which has been mutually agreed to. It isimportant to establish tangible indicators for payments, linked to milestones indelivery of services or completion of works. Final payment must always be basedupon acceptance of documentation for completion of services or works, or deliveryof goods.5. Contracts valid over a longer period of time (over 12 months) might contain priceadjustments linked to officially published price indexes to cover changes in workrates, however, it might be better to estimate the increase or decrease anticipatedand incorporate this amount into a fixed rate over the entire life of the contract.6. Duration of the contract. Start and completion dates, as well as milestones forsuccessful performance, must be precisely defined.7. Contracts for works and service contracts should specify the name of key personnel,and their input in terms of estimated man-days/weeks/months.8. As for any litigious matters arising out of a contract execution, the parties shallproceed in accordance with the relevant rules of the Permanent Court of Arbitration,thus, no choice of law-clause should be included in the contract documents.10.2.2 UNRWA General Conditions of Contract (GCC)1. UNRWA has developed General Conditions for goods, services and construction(depending on the nature of the procurement) establishing a legal framework whichforms part of every contract. UNRWA General Conditions apply to all UNRWAcontracts, and thereby form part of the contractual agreement between UNRWA andthe supplier. Either they are enclosed as an annex to the contract, or suppliers arereferred to the UNRWA website where the UNRWA General Conditions can beaccessed.2. Modifications and/or additions to the UNRWA General Conditions are prohibited.However, in exceptional circumstances and if expressly approved by The LegalAdviser, special conditions appropriate to the nature and location of the project maybe included in the main body of the contract, modifying the General Conditions.UNRWA generally does not agree to the use of the general terms and conditions ofthe other party. If UNRWA is requested to do so, the CPLD and The Legal Advisermust always be consulted.Annex 13 - General Conditions of Contract for Procurement of GoodsAnnex 14 - General Conditions of Contract for Procurement of ServicesAnnex 15 - General Conditions of Contract for Procurement of Goods and Services10.2.3 Technical Specifications, TOR, SOW, BOQ and/or drawingsTechnical specifications, Terms of reference, Statement of Works including drawingsand other technical specifications shall always be attached as an annex to thecontract, or their contents included in the contractual documents.PROCUREMENT MANUAL 95/127 VERSION 2

10.3 Signature, Issuance and Documentation1. All procurement contracts shall be signed by the appropriate AA or his/herdelegatee, provided that the authority to sign on behalf of such AA is made inwriting. Contracts should also be signed by a duly authorized individual on behalf ofthe supplier.2. The contract should be issued in two original copies, one for the supplier and one forthe UNRWA case file. Both copies should be signed and distributed to the supplierfor countersignature, requesting return of one countersigned original. The signedcontract must be kept on record for future reference.10.4 Types of Contractual Instruments1. Written procurement contracts shall be used to formalize every procurement actionwith a value above specific monetary thresholds established by the DAS. Sucharrangements shall, as appropriate, specify in detail:a. the nature of the products or services being procured;b. the quantity being provided;c. the contract or unit price;d. the period covered;e. conditions to be fulfilled, including the Agency‟s general conditions ofcontract;f. terms of delivery and payment; andg. name and address of supplier.2. The requirement for written procurement contracts shall not be interpreted to restrictthe use of any electronic means of data interchange. Before using any electronicmeans of data interchange, the DAS shall ensure that the electronic datainterchange system is capable of ensuring authentication and confidentiality of theinformation.3. All procurement contracts shall follow the standard forms (including the applicableGeneral Conditions of Contract), where available, prescribed by the Department ofLegal Affairs.4. Whenever any contract is proposed:a. of which no standard form exists, orb. the terms of which vary in substance from the prescribed standard form.5. the Sponsoring Officer must ensure that such a contract is approved by The LegalAdviser or, with respect to field contracts, the Field Legal Officer (if any) prior toexecution.6. UNRWA has developed standard contracts to be used for each circumstance. Whenusing the standard contracts, a payment modality must be chosen. UNRWAgenerally uses a form of „lump sum‟ or „unit price‟ contract:PROCUREMENT MANUAL 96/127 VERSION 2

a. A „lump sum‟ formula contract is used whenever it is possible to determinewith sufficient precision the quantity of services required from the supplyingentity.b. The „unit price‟ formula contract shall be used only when it is impossible, dueto the nature of the services/work/goods, to determine with sufficientprecision the quantity of goods, services or construction required from theentity. In this case the contract sets a maximum amount not to be exceeded,both for the total amount and for the provision of each component of theservices (e.g. rate per work day, cost of each round-trip etc.), and establishthe applicable unit price.7. Percentage based contracts measuring consultancy costs as a percentage of totalconstruction costs are discouraged.10.4.1 Purchase Order (PO)1. Purchase Orders (POs) are generally used for acquisitions of goods. In the UNRWAProcurement and Inventory System, a Release Order, which is a form of PO, canalso be used to place orders against an existing Long Term Agreement.2. A PO created in the UNRWA Procurement and Inventory System shall haveattachments to the main order that include information regarding the relevantPacking and Shipping Instructions, as well as UNRWA General Conditions forGoods (or reference is made to the UNRWA web site where the General Conditionscan be found).10.4.2 Service ContractsService Contracts are used in order to contract entities to perform professional services.These Service Contracts are used for a variety of services that UNRWA neither has theexpertise or the resources required, including without limitation IT services andhospitalization and out-patient services.10.4.3 Construction Contracts1. Contracts for construction are used to contract entities to perform civil engineeringand construction works assignments. The model generally requires the contractingof a consulting engineer using the UNRWA professional services contract.2. A contract for construction is comprised of the main body of the contract, UNRWAGeneral Conditions for Construction as an annex, and any other relevant annexes(SOW, BOQ, etc.).10.4.4 Memorandum of Understanding1. A Memorandum of Understanding (MoU) is an institutional contractual form usedwith governmental entities, for example, sub-units of Government Ministries andmunicipalities, research institutes or universities, with UNRWA General Conditionsintegrated in the text of the MoU.2. The MoU is generally used in non-competitive situations in order to coverincremental costs that an entity would incur to provide services to UNRWA. ThePROCUREMENT MANUAL 97/127 VERSION 2

MoU is also used when engaging the services of local community-based not-forprofit organizations and associations (local non-governmental organizations(NGOs)).3. In cases where the funding source of a project requests UNRWA to provide grantfunds to local NGOs for micro-enterprise, capacity building, etc., UNRWA uses theMoU for the provision of grant funds. However, this agreement may only be used inexceptional cases, and legal advice on its applicability should be sought from TheLegal Adviser.4. The standard MoU will often require adaptations because of the legal nature of thelocal NGO or government entity, or the special characteristics of the project. Suchmodifications should always be made in consultation with The Legal Adviser.5. A standard UNRWA contract should be used by UNRWA instead of the MoU for allpublic entities and NGOs, which are competing with private entities for the particularservices.6. See also sub-Section 5.4.2 of this Manual.10.4.5 Long Term AgreementLong Term Agreements (LTA)s are mutual arrangements between UNRWA andsuppliers to provide goods or services as required, for the most frequently requesteditems or services, over a specific period of time. LTAs are used to ensure a reliablesource of supply for goods and services at the lowest price, in accordance with predefinedterms and conditions. They are often designed to provide immediate stockavailability for emergencies.10.4.6 Project Cooperation Agreement1. This template is to be used when the Agency is expending funds in respect of aproject to be implemented by (or through) another United Nations agency.2. See also sub-Section 5.4.2 of this ManualAnnex 16 - Project Cooperation Agreement Template10.4.7 Other ContractsThere are a number of contracts for which, by reason of such factors as their complexity,continuing term or legal implications, specially drafted forms, and not those describedabove, shall be used. Examples of these are:1. Policies of insurance2. Agreements for the charter or hire of ships or aircraft3. Leases of property and premises4. Transportation contracts (on a period basis)5. Provision of Public Utilities (Phone, Gas, Electricity, Water, etc.)PROCUREMENT MANUAL 98/127 VERSION 2

10.4.8 Amendment to Contract1. Once a contract has been awarded and signed, the contract may be amended onlyif the contract provisions call for modification, or if additional related goods, services,or and/or construction are to be rendered by the same supplier in furtherance to theexecution of an original contract. All other situations call for a new competitiveselection of a supplier and establishment of a new contract.2. Material amendments proposed to any approved contract shall require the approvalof the AA authorizing the original contract, provided that, if the amendment proposedwould bring the value of the amended contract above the limit of the AA whichapproved it, the amendment must be authorized by the AA having power to approvethe contract as so amended. For this purpose, an amendment shall be consideredmaterial if:a. such amendment increases the contractual amount more than twentypercent (20%) or the monetary threshold set forth in the applicable letter ofdelegation, whichever is lower, orb. such amendment, in the judgment of the Sponsoring Officer may, in relationto the criteria on which the original award was made, significantly affect theprocurement process or the original contractual terms.Annex 17 - Amendment to Contract Template10.5 Protest Procedures1. Suppliers perceiving that they have been unjustly treated in connection with thesolicitation or award of a contract may complain in writing to the AA responsible forthe process. Exceptionally, if the AA has been directly involved in the procurementactivity in question, suppliers may complain directly to the DAS.2. The AA responsible for the process shall immediately prepare a response to thecomplaint/request for clarification to the supplier. After receiving the response fromUNRWA, the supplier shall be asked to confirm or withdraw the complaint. Noadditional matters than those contained in the original protest may be included in asuccessive presentation.3. If the complaint is confirmed, as the clarifications issued by the AA are notsatisfactory to the supplier, the confirmed complaint - alongside all relevantbackground documents – shall be submitted to the attention of The Legal Adviser,who will issue a final response to the supplier. This final response will reflect theformal position of the Agency.10.6 Posting of Contracts issued1. In accordance with the principle of transparency, HQ PLD shall post informationabout all contracts awarded at a value of USD 100,000 or more on the UNRWAwebsite.2. The notice of contracts issued shall contain a brief description of the contract, areference to the contract number, the contract amount, the date of the contract, andthe name and country of the supplier.PROCUREMENT MANUAL 99/127 VERSION 2

CHAPTER 11LOGISTICS AND PROCUREMENT1. Logistics is defined as the process of planning, implementing and controlling theefficient and cost-effective flow and storage of raw materials, goods, equipment andpersonnel from the point of origin until the completion of an activity, in accordancewith the end user‟s requirements.2. In its broadest sense, logistics includes all the elements that constitute a deliveryinfrastructure, however, in this context, focus shall be on the aspects of logistics thatare relevant to the procurement process. A separate Logistics and InventoryManagement Manual is being prepared.11.1 The Logistics Planning Process1. Proper Logistics Planning entails considering logistical aspects throughout thevarious steps of the procurement process. It contributes to efficient procurementprocesses, and reduces the risk of incurring problems that may lead to additionalcosts and delay. Logistics planning starts at the needs assessment phase ofprocurement by considering the desired result of the requisitioner and the end userand from there working backwards in order to determine what may lead to asuccessful completion of the activity. Ideally, this process shall begin even beforethe requisition is placed, through a close cooperation and efficient communicationbetween the operational unit requesting the purchase and procurement staff.2. Steps in the logistics planning process to be considered in the various stages(planning, requirement definition, sourcing, and evaluation) of the procurementprocess:a. Understand the operational context of the required product, and, if possible,assist in developing specifications suitable to local conditions.b. Evaluate the procurement activity and the time and financial resourcesavailable in order to determine urgency of the requirement. Urgency maydetermine location of the purchase and thereby also the mode of transport.c. Determine the type of sourcing. Goods may be purchased locally/regionallyor internationally, or through established LTAs. However, goods may alsoalready be available in a UNRWA warehouse, as surplus stock from anotherUNRWA project, or in pipeline already purchased for another purpose, butavailable for diversion in order to cover a more urgent need. Goods may alsohave been pre-positioned as part of an emergency stockpile policy, eitherregionally or on a local level. These options shall be considered whendetermining whether to purchase, and how and where to purchase, therequired product, in order to meet end user‟s needs in a timely and costefficient manner.d. Determine which markets are best positioned to respond to the end user‟sdelivery requirements by evaluating on total delivered costs as well as leadtimes, in addition to conformity with the technical criteria. (e.g. tractors fromone region are not necessarily the most suitable for another region, even ifthey are very competitive and reasonably priced). There is usually a trade offPROCUREMENT MANUAL 100/127 VERSION 2

etween the purchase price of a product and their transport costs anddelivery lead-time. The relative importance of these factors shall determinewhere the goods are purchased and how they are transported. It shall benoted that geographic distance does not necessarily determine the cost anddelivery time. Accepting a more expensive offer in order to conform to therequested delivery date shall be carefully assessed and discussed with therequisitioner and end user in order to ensure the most effective use of funds.When the delivery date is the primary factor in awarding a contract, it shall beclearly stated in the solicitation document. In such case, where the deliverydate is stated as a mandatory requirement within the solicitation document,any offer that is not in compliance with the required delivery schedule mustbe rejected. It shall be noted that some suppliers speculate in requireddelivery dates, and offer delivery dates within the stated requirementsknowing that they will not be able to perform. Liquidated damages shalltherefore always be carefully applied when delivery date is a particularrequirement.e. Review the delivery and transport requirements, as well as the budget, andensure that they are complete and realistic. The cost of transportation is asignificant component in the cost of goods procured and delivered to thedesignated site. UNRWA procurement staff must therefore ensure properlogistics planning in making every effort to keep the transportation costsdown. However, in logistics planning, the cheapest alternative may notalways be the one that offers the lowest overall cost. A low cost, but poordelivery strategy may result in delays, damaged or stolen goods, excessiveport charges, etc. All factors shall therefore be assessed when choosing theappropriate logistical solution.f. Determine the most cost effective means of contracting transport, i.e. fromthe supplier named in the purchase order, or contracted to an independentfreight forwarder. In rare cases, UNRWA can also arrange transportation withits own resources (e.g. transportation of goods in project vehicles by projectpersonnel).g. Tender for freight services, if determined under f). Check the existence andcompetitiveness of an LTA for freight services. For large consignmentswhere more favorable rates can possibly be obtained, spot tenders areadvisable.h. Insurance of consignment in accordance with UNRWA guidelines.i. Ensure that shipping documents received from the supplier and freightforwarder are complete and accurate and that the consignee has receivedtheir set.j. Ensure that necessary arrangements are in place to clear cargo on arrival.Depending upon the procedures in the country, the consignee could beresponsible for custom clearance of the goods; however, customs clearanceis part of the procurement procedure, and thus the responsibility ofprocurement staff. Arrange for acceptance of goods on arrival by thereceiving unit. In the event of missing or damaged cargo, ensure that claimsare initiated within the timeframe stipulated by the cargo insurance in order tosecure the interests of UNRWA.PROCUREMENT MANUAL 101/127 VERSION 2

k. Obtain confirmation from consignee that the shipment has been received ingood order.l. Determine and compare total lead time, including logistics activities. Differentlogistics corridors incur different costs, but also have an impact on total leadtimes. One route may be cheaper but may experience many difficulties anddelays in clearing transit goods. An alternative, more costly, route may cuttransport time. In some source countries, export processing may take longer,or ports may experience much congestion. Total supply chain lead shall betaken into account. Throughout this process, the requisitioner and/ or enduser shall be kept informed of expected and actual delivery dates in order forthem to account for it in their local planning.11.2 Logistics Requirements for GoodsThe following logistical aspects shall be considered in order to avoid costly „urgent‟purchases as well as delays in the delivery of goods:a. Packingb. UNRWA Packing & Shipping Instructionsc. Labeling and shipping marksd. Modes of transportatione. Forwarding agentsf. INCOTERMSg. Insurance during transportationh. Shipping documentsi. Receipt of consignment11.2.1 Packing1. The nature of the goods together with the mode of shipment and the climaticconditions during transit and at the destination, determine the required packaging.The mode of distribution of the goods to the end users must also be taken intoconsideration. The durability, size and weight of the packages shall be considered inrelation to the planned means of transportation. It shall be ensured that theequipment, warehouse facilities, operators and laborers involved in the shipment ofthe goods have the capacity to handle the goods in the chosen packaging. Forinstance, some port facilities cannot even handle 20 ft. containers. Further, the axleweight road restrictions shall be considered for certain road shipments, themaximum vessel draught allowed for shallow ports, etc.2. Climatic conditions both at the end destination, but also in transit, shall beconsidered to ensure packaging that withstand heat, cold, rain, humidity, mould,dust, salt water spray, etc., if required. Certain types of goods require a constanttemperature and air shipment, cold chain equipment and monitors shall be used toensure this.PROCUREMENT MANUAL 102/127 VERSION 2

3. To be on the safe side, one shall always assume that shipments might be handledroughly and loaded and offloaded numerous times before reaching the finaldestination.4. Unless the goods are shipped in 20 ft./ 40 ft. containers (see below), UNRWA shallalways specify that they shall be shipped below deck in order to avoid damageduring transport (e.g. risks of rust, humidity, etc.). Containerization could beconsidered for extra protection and in order to be able to handle the shipment moreeffectively. This may, however, increase cost. If containers are used, UNRWA shallalways try to make full use of space and ship only full containers in order to savecosts, as the rate for shipment usually does not depend on weight. The use of LCL(less than container load) containers that consolidate consignments from differentclients exposes UNRWA to the risk of abuse and delay if one or severalconsignments experiences difficulties in clearing customs. Further, smallconsignments risk delay in waiting to make up a full container load. It is thereforerecommended, where possible, to plan loads that fill a container.11.2.2 UNRWA Packing and Shipping Instructions1. Standard UNRWA packing and shipping instructions are documents specifying howthe goods are to be packed and shipped, and who to notify upon shipment. They listall the documents required for customs clearance and for payment purposes.2. Packing and shipping instructions must form part of all purchase orders as anannex. Each UNRWA Field Office has their own set of instructions based on therequirements of their areas, and is responsible for creating and updating these. Thepacking and shipping instructions are linked to the INCOTERMS.3. The FPLOs/FPO Head Quarters Section Heads shall notify the CPLD immediatelyshould there be any changes to the shipping conditions related to UNRWA area ofoperation.4. HQ PLD shall post all UNRWA Shipping Instructions and amendments thereto asreceived under article 3 above on the UNRWA Intranet (http://intranet1.unrwa.org/ASD/PLD/Pages/InstructionsConditionsOfContract.aspx).11.2.3 Labelling and Shipping Marks1. To facilitate the identification of goods and handling whilst in transit, suppliers shallbe instructed to provide shipping marks on all packages. The marks shall include:a. Consigneeb. Destinationc. Port of unloadingd. Project identificatione. Purchase order numberf. Case number2. Contents of the packages shall not be included so as to discourage theft andpilferage.PROCUREMENT MANUAL 103/127 VERSION 2

11.2.4 Modes of Transport1. Four basic modes of freight transportation are used, either individually or incombination: sea, rail, road, and air. UNRWA shall always consider both economyand efficiency when choosing the mode of transport. In general, rail, road and airtransport costs are comparatively higher than freight by sea: thus in general seatransport is recommended. Maritime freight typically accounts for 15-20 percent ofthe costs of the goods, and airfreight may represent up to 100 percent.2. International shipments by sea average three to five weeks (but can be considerablylonger), while air shipments usually take less than a week. The balance ofoperational parameters such as time, financial resources and environmentalconsiderations shall determine the mode of transportation. Procurement personnelshall prioritize transport preferences in accordance with the following criteria:a. The cheapest means of transport that meets delivery requirements;b. Scheduling through the fewest number of trans-shipment points;c. Shipping via preferred trans-shipment points and customs;d. Using dedicated freight forwarders wherever possible;e. Applying a 1:4 ratio rule for air shipment (ship by air if less than 25 percent ofcost of goods);f. Shipping by air if weight is less than 200 kg.;g. Shipping by air when a cold chain is required; andh. Shipping by land or sea if dangerous goods are involved.3. Finally, procurement personnel shall make a prioritized list of all technically feasiblesolutions. If a priority solution falls within the pre-defined budgetary framework, theplan shall be executed.4. If the best solutions fall outside the framework or if no solution is feasible,procurement staff shall present the existing options to the requesting operationalunit and ask for a decision.11.2.5 Forwarding Agents1. Forwarding agents, also known as freight forwarders or freight brokers, arecontracted by UNRWA or the supplier to carry out the formalities and operations ofconsignment. The forwarding agent can also be employed by UNRWA to receivegoods in cases where UNRWA staff may not be physically present in order toengage in the prompt clearance and collection of goods vulnerable to loss orpilferage.2. The use of an appropriate freight forwarder reduces the risk of the procurementoperation, since part of the risk is transferred from UNRWA to the selectedforwarding agent. Further, the choice of an appropriate forwarder in itself reducesrisk due to the forwarder‟s experience and specialized knowledge. UNRWA shallensure that the respective forwarding agent has all necessary documents for therelease of goods in transit.PROCUREMENT MANUAL 104/127 VERSION 2

11.2.6 INCOTERMS1. INCOTERMS (International Commercial Terms) are standard terms defining theobligations of both the buyer and seller relating to the shipment of goods. They areused world wide in both international and local trading. INCOTERMS wereestablished by the International Chamber of Commerce (ICC).2. The scope of INCOTERMS is limited to matters relating to the rights and obligationsof the parties to the contract of sale with respect to the costs and risks related to thedelivery of goods sold. They specify where the seller delivers the goods, what coststhe seller pays, and when the seller passes the transit risk to the buyer.Procurement staff may request suppliers to quote supply under more than oneINCOTERM, for example when considering whether to contract freight through thesupplier or independently. The clear definition of trade terms reduces the risk ofmisunderstanding and, as the ICC offers an arbitration service, their interpretation iswidely accepted.3. The latest version of the INCOTERMS governs shipment terms of UNRWAcontracts so long as this requirement is stipulated in the general conditions ofcontract. Reference to an appropriate INCOTERM shall be made in all contractsrequiring shipment. The INCOTERM must always refer to a named place (city,country, etc.). For further information, please consult the ICC website atwww.iccwbo.org or the guidelines on the use of INCOTERMS.11.2.6.1 The Use of INCOTERMS in UNRWA1. Below is a list of the INCOTERMS most commonly used by UNRWA, and in whichsituations they shall be used:a. For local procurement use the term DAT (Delivered at Terminal), DAP(Delivered at Place) or CPT (Carriage Paid To) as appropriate. This shallapply as long as the goods are brought into the country from overseas whileFCA shall be used if the goods are already in the country at the time ofpurchase.b. For international procurement when the supplier of the goods does notarrange transportation, use the term FCA (Free Carrier – all modes) or FOB(Free on Board – for sea freight only) as appropriate.c. For international procurement when the supplier arranges transportation, theterm „CPT‟ (Carriage Paid To) should be used for all modes of shipping andfor containerized cargo. CFR (Cost and Freight) shall be used for sea freightonly unless the cargo is containerized.d. In addition, the terms DAT and DAP may be used for internationalprocurement where UNRWA elects the supplier to bear all risks and costsassociated with the transport of goods to the country of destination.However, considering the very good all-risk insurance coverage offeredunder the insurance program negotiated globally by various United NationsAgencies, including UNRWA, it is highly recommended to purchase CPT forall international procurement and have the goods insured under thisinsurance program.PROCUREMENT MANUAL 105/127 VERSION 2

Unlike DAT/DAP when using CFR/CPT, the supplier may submitinvoice/shipping documents for payment at the point the cargo is deliveredpast the FOB/FCA point. Therefore there is an obligation to pay net 30 daysupon receipt of documents, which may occur before the goods are receivedor before Receipt and Inspection is possible.2. The use of DAT and DAP for international procurement is justified in the very fewcountries where the insurance program does not provide full coverage (e.g., itexcludes war risk). In case of doubt as to whether or not all-risks insurancecoverage applies to a given area, it is recommended to contact the UNRWA HQ (A)PLD Insurance Specialists for advice.11.2.7 Insurance during Transportation1. During transportation and storage, all cargo is vulnerable to a range of risks.Examples of such risks would include damage, pilferage and theft, breakage, nonreceiptof part of or all of a consignment. Cargo insurance provides protectionagainst potential financial losses resulting from such risks. It is imperative to ensureprotection for goods subject to risks, including war, strikes, riots and civil commotion.Further, the duration of insurance coverage must be sufficient for the period oftransportation, from warehouse to warehouse, including storage at the destinationsite. Goods are insured for the cost, insurance and freight value plus an agreedpercentage to reflect the indirect cost of replacing goods.2. In view of the above, UNRWA has negotiated a global marine cargo insurancecontract. The insurance is all-risk insurance with worldwide coverage. However,special conditions can apply for certain countries (e.g. war risk). Procurementpersonnel shall contact the UNRWA CPLD insurance specialists for guidance.3. In the event of a claim, or an event likely to give rise to a claim, notice must be givendirectly to the insurance broker. For the reporting of concealed damages, noticemust be given in accordance with the shipping contract.4. For further guidance on insurance during transportation as well as relevant contactdetails for focal points in UNRWA, refer to the Guidelines on UNRWA Marine CargoInsurance.11.2.8 Shipping Documents1. Complete and appropriate shipping documents are of critical importance for thetimely delivery of goods. The supplier needs documents to move the ordered goodsfrom their premises, and to receive payment from the buyer. The freight forwarderrequires documents to contract carriage, the consignee requires documents to claimthe goods at arrival, and the consignee or notify party requires documents to handlecustoms clearance. Each stage of the shipment generates documents that mayeven be required once the equipment is in the country, for instance to register avehicle or radio equipment.2. The exact contents of a set of shipping documents depend on the type of goodsbeing shipped, the means of transport, who is shipping the goods (freight forwarder,supplier, etc.), and any special requirements of the receiving country. Please refer toPROCUREMENT MANUAL 106/127 VERSION 2

the relevant version of the UNRWA Packing and Shipping Instructions for furtherguidance. While the particular documents required vary from situation to situation,every shipment shall have documented evidence of:a. Contents of the shipment;b. Weight and volume of contents;c. Origin of goods (if required);d. Price of the goods, ande. Evidence of transport of the goods.3. The following shipping documents are common to all shipments:a. The Bill of Lading (B/L) (for sea shipment), or the waybills (for other modes oftransport) is the contract of carriage between the shipper and the carrier,indicating how goods are being shipped and when they will arrive. The B/Ladditionally evidences that the carrier has received the goods for shipment,and is conclusive evidence that the goods were shipped as stated. It alsopossesses the unique characteristic of documenting ownership to the goodsspecified (a document of title).b. Commercial Invoices and Pro Forma Invoices describe the goods andindicate their valuec. Packing lists are descriptions of content, total number of packing units,markings, weight and volume of each.d. Certificates of Origin indicate the country of origin or manufacture of thegoods and are always issued by a local Chamber of Commerce. A Certificateof Origin is usually required for importation and is also used for statisticalpurposes.e. Forwarder‟s Certificate of Receipt is a proof that the supplier has handedover goods to the freight forwarder.f. A Freight Invoice from carrier indicates shipping details and charges.4. In addition, a number of certificates certifying quality can be required. Thesecertificates are usually provided by the supplier. The supplier or the freight forwarder(depending on who is organizing the transport) is responsible for consolidating theshipping documents received, and shall be instructed to courier one original set ofdocuments to the consignee and the remaining two sets to the procuring unit withinUNRWA. Procurement personnel shall check the documents to ensure that allinformation is correct and the same in all the documents. Further, UNRWA mustensure that the documents have been received by the consignee.11.2.9 Receipt of Consignments1. When a consignment is delivered to the consignee, it is common practice for thecarrier to request a receipt. At the same time, the consignee shall perform a cursoryinspection of packages against all shipping documents.PROCUREMENT MANUAL 107/127 VERSION 2

2. If, in apparent good order, it is recommended that an endorsement be given (e.g.„received in good external condition – contents unchecked‟).3. If, however, signs of tampering are visible, the receipt shall state necessaryreservations (e.g. „cases broken‟, „contents lacking‟, „cartons opened with signs ofpilferage‟).4. Where possible, packages shall be weighed to determine differences betweendeclared and actual weights, documenting any discrepancies on the delivery notes.11.2.10 Restrictions on the Export and Import of Goods1. Exporting countries may restrict the shipment of certain classes of goods to certaincountries or ban their export altogether. Equipment that has a dual civilian / militaryuse or high-end computer and telecommunications technology are commonlysubject to restrictions. Procurement personnel shall be aware of these limitations sothat the delays required to obtain the necessary authorization can be calculated inthe estimated lead-time and the sourcing strategy modified in consequence.2. Likewise, importing countries may impose their own restrictions.Telecommunications equipment and pharmaceuticals typically require priorauthorization from the concerned ministry who will issue a license. Forpharmaceuticals specifically, some countries require registration of the products.Other equipment, such as used vehicles older than a certain age, may be bannedoutright. Some countries ban goods of certain origins for political reasons. Obtainingthe permit is generally a protracted exercise. The receiving office must confirm that itis in hand before the supplier is authorized to ship the goods. The likelyconsequence of shipping without the permit is that the receiver shall be required topay the cost of storage in the port and applicable liner charges until the authorizationis issued. There is also the considerable risk that the cargo will deteriorate or gomissing during this period.PROCUREMENT MANUAL 108/127 VERSION 2

CHAPTER 12CONTRACT ADMINISTRATION1. Contract Administration is the process, which ensures that both parties to thecontract fully meet their respective obligations as efficiently and effectively aspossible, delivering the business and operational outputs required from the contractand mitigating risk.2. There are five stages in the Contract Administration process:a. Monitoring and control of contract performanceb. Changes to contractc. Dispute resolutiond. Financial management/paymente. Contract completion3. Depending, e.g., on the level of technical complexity of the contract and the stage(a.-e. above) the contract is in, contract administration and might lean more towardsthe Operational Unit (Requisitioner/End User) or towards PLD.4. Contract Administration needs vary greatly from contract to contract and hugelydepend on many factors, inter alia, contractor performance, quality of requirementsdefinition and the stability of the overall situation in which the contract is beingperformed, e.g., shipping or operating modalities may change during the contractperiod due to political circumstances etc.5. Therefore, close cooperation between the Operational Unit as the technical owner ofthe contract and PLD is paramount to the successful completion of any UNRWAcontract. Below, based on items a - e above can be found an indicative distributionof tasks during the duration of a contract. Please consult this chapter for any detailsrequired.PROCUREMENT MANUAL 109/127 VERSION 2

TABLE 10-1 DIMENSIONS OF CONTRACT ADMINISTRATIONCompletion Stagea. Monitoring and control ofcontract performance.Contract AdministrationEmphasisOperational Unit for all technical aspects.PLD for all contract clauses such as timelines, milestonesand/or monetary changes.b. Changes to contract Operational Unit to identify/communicate to PLD.PLD to request advice from LCP and DAS/ACP, as the casemay, and effect contract change and solicit the requiredsignatures from the AA and the Contractor.c. Dispute resolution In case of disagreement or dispute between the OperationalUnit and the Contractor, as an initial stage, PLD shall be themediator/negotiator and shall, if necessary, consult Field LegalOffice/DLA as appropriate.d. FinancialManagement/PaymentOperational Unit shall be responsible for financial managementof contracts and ensure that payments due are in line with theterms of the contract.Operational Unit in case of services/construction shall certifyand process invoices for payment.PLD shall either process invoices received (goods or servicescontracted by it directly, as the case may be) or forward toOperational Unit.e. Contract completion Operational Unit for most service contracts and constructioncontracts shall ensure that all completion steps (below) of eachcontract it monitors have been met.PLD for goods and some service contracts shall ensure that allcompletion steps (below) of each contract it monitors have beenmet.PROCUREMENT MANUAL 110/127 VERSION 2

6. In case a contract has been awarded under DOA outside PLD, the entire contractadministration including all related duties and responsibilities described herein shallrest with the Sponsoring Officer of the Operational Unit.7. Each Sponsoring Officer of any Operational Unit is encouraged to consult the PLDand/or Legal Office in his/her location in case of any doubt in regards to contractadministration and management and/or should there be any situation which maylead to disagreement, dispute and/or breach/failure of contract.12.1 Monitoring and Control of Contract Performance1. In UNRWA, the overall contract monitoring is the responsibility of both theOperational Unit in charge of the operational activity and the Sponsoring Officerdepending on the nature of the contract.2. Various requirements are built into the standard contracts and the degrees to whichsuppliers fulfill these requirements are used as performance indicators to evaluatethe ongoing performance of the contract (e.g. quality standards, delivery times,inspections, milestone dates, etc.). Control of performance includes ensuring thatthe performance of the supplier is according to the contract that any variance can bejustified, and that contracts are amended to reflect agreed changes in the scope ofwork.12.1.1 Goods1. For the procurement of goods, procurement personnel must monitor shipment andreceipt of goods through the following actions:a. Follow up with the supplier a few days/weeks before the required ship bydate to ensure that goods will be ready for shipment by the agreed date.b. Inform suppliers, consignee, and requisitioner/end user of any change ofplans (e.g. shipping route, ship by date, etc.).c. Make sure that all relevant shipping documents are provided to the parties.d. If necessary, request an extension of the performance security if the activityis delayed.e. Obtain proof of receipt of consignment from the consignee. Upon receipt, theconsignee shall perform a cursory inspection of packages against allshipping documents, and report on the external condition of the goods. Ifsigns of tampering are visible, the receipt shall state necessaryreservations. Where possible, packages shall be weighed to determinedifference between declared and actual weight, documenting anydiscrepancies in the report. This data must be entered into the applicableUNRWA Electronic Procurement and Logistics System.f. Obtain proof of receipt of goods at final destination, if different from thedestination of the consignee.2. Typical performance indicators used for monitoring of contracts:a. Comparison of required delivery date v. actual delivery dateb. Comparison of quantity ordered vs. delivered quantityPROCUREMENT MANUAL 111/127 VERSION 2

c. Comparison of compliance between ordered specifications and deliveredspecifications Services3. These performance indicators are collectively referred to as DIFOTIS which is anacronym for Delivery In Full, On Time and (With)In Specification. HQ(A) PLDrecords DIFOTIS statistics and retains the information on each supplier.12.1.2 Services1. When contracting services, user department personnel must monitor theperformance of the contractor by ensuring timely receipt and acceptance of thedeliverables specified in the contract (e.g. inception reports, progress reports,reports from workshops or training sessions, video films etc.). The deliverablesunder the contract must be acknowledged and approved by therequisitioner/operational unit, and occasionally also by the end user.2. Further, suppliers, requisitioners, operational units, and end users must be keptinformed of changes or modifications to the contract (e.g. change of mission dates,start-up date, stakeholders‟ contact details, etc.).3. Typical performance indicators used for monitoring of service contracts:12.1.3 Constructiona. The timely delivery of outputs as per the contractb. Timely response to UNRWA requestsc. Quality of services rendered1. Construction shall be considered completed when the UNRWA engineer has issueda performance certificate / certificate of final completion stating that the constructionworks have been completed and that the contractor has fulfilled its obligations inaccordance with the contract. The taking-over certificate is issued when theconstruction works, or part of the works, have been completed to the satisfaction ofthe engineer. It states that the whole of the works have been completed inaccordance with the contract, and that any outstanding works as specified in thecertificate are to be completed within the defects liability period (generally twelvemonths following the date of substantial completion of the works as stated in thetaking-over certificate).2. The date of completion of the construction works (or designated portion of theworks) is defined as the date where construction is sufficiently complete inaccordance with the contract, so that the end user may occupy the works (ordesignated portion of the works) for the use for which it is intended.3. Typical performance indicators used for monitoring contracts for construction works:a. On time completion of the works or parts of the worksb. Compliance with statement of worksPROCUREMENT MANUAL 112/127 VERSION 2

12.2 Inspections1. Monitoring of the contract and evaluation of the end product could be done throughinspections. Inspections involve examining or testing of a product to ensure that itconforms to contract requirements. Inspections may be performed by in-houseexperts or by inspection agents contracted on a one-time basis or through anestablished LTA.2. For the inspection of goods, data shall be entered into the inventory module of theUNRWA Electronic Procurement and Inventory Management System on theinspection process and the amount of accepted or rejected goods upon receipt.12.3 Acceptance of the Final ProductAcceptance of the final product is the responsibility of the requisitioner or the operationaldepartment end user. However, for goods PLD shall record and file this information inthe procurement files and use it for payment purposes and to take corrective actions, ifnecessary.12.3.1 Acceptance of GoodsUpon receipt of the procured goods, the requisitioner or department end user with theinput of the warehouse receiving personnel shall confirm receipt and inspection of allgoods as per the packing list and the Goods Receipt Note in the UNRWA ElectronicProcurement and Inventory Management System Inventory module. This GRN shallserve as documentation of the condition of the goods received, and their compliancewith the stated specifications. Depending on the nature of the Goods, this can beaccomplished by PLD staff alone in the warehouse at the time of receipt or together withthe user department in order to validate acceptance of the goods.12.3.2 Acceptance of ServicesIn order to remit payment for services, the requisitioning user department staff mustprovide written confirmation of services having been satisfactorily completed inaccordance with the terms specified in the contract. For some transportation and otherservices, this may be PLD staff. Essentially, the staff accepting the service delivery shallbe representing the originator of the contract. The requisitioner (with the input of the enduser, where relevant) must confirm receipt and acceptance of all deliverables specifiedin the contract.12.3.3 Acceptance of ConstructionWhen procuring construction works, the user department personnel must ensure thatthe works are proceeding in accordance with the agreed timeline in the contract. Thiscan be done through regular site visits or through progress or status reports from theengineer monitoring the progress of the works.12.4 Evaluation of Supplier Performance1. Procurement personnel, the user department staff, and the end user shall all beinvolved in the evaluation of the performance of the supplier. PLD has the mainresponsibility for supplier evaluation in the case of Goods; however, procurementPROCUREMENT MANUAL 113/127 VERSION 2

personnel depend upon input from the user department and the end user in order toconduct a thorough evaluation.2. The following issues shall be addressed:a. fulfillment of delivery schedule/timely delivery;b. compliance with contractual terms and conditions;c. adherence to warranty provisions;d. quality of goods or services provided in accordance with the contract;e. timely response to UNRWA‟s requests;f. undue delay of the performance under the contract;g. any frivolous claims against UNRWA; andh. Failure to disclose information relevant to performance (e.g. bankruptcy,defendant in litigation, etc.).3. The user department staff shall submit an evaluation report to the CPLD informingprocurement personnel of any relevant information regarding non-compliance andpoor-performance of the supplier. The standard form „Supplier PerformanceEvaluation‟ shall be used for this purpose.12.5 Contract Filing and Documentation1. A procurement contract file must be established by procurement personnel forgoods and some services and user department administrative staff for thoserequisitioned and administered by their offices. The user department projectmanagement staff shall normally have a file, with copy of the contract, as part of theproject management files, in order to provide their input throughout the contractadministration phase.2. It is important to carefully document contract performance in order to provideevidence of the performance of the supplier:a. in the event of disputes;b. in order to form an institutional memory, andc. for audit purposes.3. In addition to information documenting the procurement process, the file mustinclude all information required to successfully administer the contract. Any issues ofclarification or change of the contract shall be fully documented in this file. Allmemoranda between the contractor and UNRWA must be kept in this file.12.6 Recording of DataThe recording of all procurement-related data in the relevant UNRWA ElectronicProcurement and Inventory Management System (PIMS, VLS or other, as advised bythe CPLD from time to time) shall be the responsibility of the respective AA. He/shePROCUREMENT MANUAL 114/127 VERSION 2

shall ensure that all relevant information is entered into and maintained in any suchsystem as applicable and required.12.7 Changes to Contract1. Change management is the handling of changes that arise during contractexecution, typically involving variations in costs or requirements that were notoriginally anticipated, but are not in dispute. Change management includes bothavoiding unwanted changes as well as incorporating necessary changes into thecontract.2. It is the responsibility of procurement personnel to:a. Negotiate the appropriate contract changes regarding cost, schedule,, andquality and performance ensuring that the contract be amended so that it atall times defines the agreed expectations of both parties under the contract.The amendments must be documented to the contract file.b. Ensure that the change conditions are reasonable and justifiable in terms ofcost, time, and quality.3. See Chapter 10, Section 4 on material amendments.12.8 RemediesA breach of contract may entitle the non-breaching party to certain remedies. Suchremedies are addressed below.12.8.1 TerminationIn some cases, the failure of one party to perform may give rise to the other partycanceling the contract. Cancellation occurs when one party puts an end to the contractfor breach by the other. The remedies for that breach normally include damages thatindemnify the non-breaching party for any loss suffered due to breach and suchdamages generally are compensatory. In all cases of termination, prior consultationand advice must be sought from the UNRWA legal advisors through The Legal Adviser.12.8.2 Liquidated Damages1. In some particular service or construction contracts, the parties to a contract mayexpressly agree, in advance, to a sum that shall be payable as damages for anybreach. These liquidated damages are an estimate of actual loss that would beincurred and are not considered a penalty. Where provisions for liquidateddamages are included in the terms and conditions of an UNRWA contract; whendelays result in extra costs, or loss of revenue or loss of other benefits to UNRWA,liquidated damages are paid by the supplier to UNRWA to cover costs incurred bythe delay.2. Liquidated damages are provided for to cover late delivery and calculated as apercentage of the contract value up to a maximum amount. Liquidated damages forlate delivery normally accrue for each day, or other period of calculation, of latedelivery.PROCUREMENT MANUAL 115/127 VERSION 2

3. UNRWA can require that the liquidated damages clause be in addition to otherremedies. This can be achieved by expressly limiting the liquidated damages to latedelivery only. For example, once a deduction of, say, 10 percent has been obtainedunder an UNRWA contract for goods or construction, UNRWA reserves the right toterminate the contract.12.8.3 Specific Performance1. The non-breaching party is entitled to damages in most cases of breach of contract.2. Forced performance usually is not available to UNRWA in contracts for the sale ofgoods unless UNRWA is procuring specialty or unique goods. Where a contract forpersonal services is concerned, a breach of contract may give rise to the remedy ofspecific performance.3. If a breach of contract has occurred, or if a breach of contract may arise, the CPLDor FPLO/FPO shall be notified and at the same time the The Legal Adviser shall becontacted for legal advice on the way forward in order to preserve UNRWA‟s rightsunder the contract to the maximum extent possible.12.9 Dispute Resolution1. Ideally, contracts shall be clear and the responsibilities and obligations of both thesupplier and UNRWA shall be clearly defined in order to minimize the possibility ofdisputes and disagreements.2. However, no matter how well a contract is drafted and its performance managed,disputes can and do arise. As potential disputes must be considered throughout theprocess in order to resolve any dispute shall it ultimately arise, a goodunderstanding of how disputes are resolved is fundamental to effectiveprocurement.3. The preferred means of commercial dispute resolution is negotiation. Allnegotiations are based on an openness to compromise, which often is less costlythan alternative methods of dispute resolution. UNRWA must strive to always solvedisputes through negotiation.4. Where negotiation is not possible or fails, more formal means of dispute resolutionare available. Mediation is a private method of dispute resolution by submission toan agreed impartial third party that has a non-binding authority. Arbitration also is amutually agreed method of dispute resolution, but here the arbitrator(s) are givenauthority to render a binding judgment.5. Arbitration often is agreed to by contracting parties by including an arbitration clausein their contract. UNRWA contracts state that in the event of arbitration, thearbitration shall be conducted according to the relevant rules of the PermanentCourt of Arbitration. These rules cover procedural issues only related to how thearbitration shall proceed, including selection of the arbitrator(s).PROCUREMENT MANUAL 116/127 VERSION 2

12.10 Financial Management and PaymentsFinancial management and payment is referring to the timely processing of invoices forpayment, according to the terms of the contract as well as the review of financialimplications of contract changes, and the liquidation of financial securities (i.e. release ofperformance and advance payment securities) once the reason for requesting them nolonger exists.12.10.1 Payments1. UNRWA staff assigned to administer contracts shall ensure that the terms andconditions of payment are consistent with the ones specified in the contractdocument. The following examples contain typical payment terms for goods,services or construction:a. For the procurement of goods, the payment term is Net 45 days upon receiptof shipping documents and invoices. Alternatively, payment of 80 percentupon shipment of goods and 20 percent upon delivery and acceptance ofgoods at the end destination may be considered. In some cases, where thedelivery term DDU is used (or when using another INCOTERM where thesupplier, at its own risk / cost, is making the goods available upon arrival atthe agreed destination (D-group), payment is made within 30 days uponreceipt of goods.b. For the procurement of construction works, the payment term can be Net 30days upon receipt of invoice and the certificate of payment issued by theconsulting engineer approving payment of the amount of the invoice.c. For the procurement of services, the payment term is Net 45 days uponreceipt of invoice and delivery/acceptance of the milestone deliverableslinked to payment as per the contract.2. The payment is transferred to Finance, and finance personnel shall effect thepayment in order to uphold the separation of duties between procuring personnelconducting the procurement process, and finance personnel effecting the payment.This separation of the buying function and the payment function is a crucial factor inthe principle of segregation of duties.12.10.1.1 Advance PaymentsAccording to UNRWA financial rules and regulations, no contract shall be made onbehalf of UNRWA requiring payment in advance of delivery of goods or performance ofcontractual services. In certain exceptional cases or when it is common practice withinthe industry, advance payments may be made. Further, progress payments arecommonly used in the case of service and construction contracts. Refer to the relevantChapter of the Financial Regulations; as well as to sub-Section 10.1.2 of this Manual, forfurther guidance.PROCUREMENT MANUAL 117/127 VERSION 2

12.10.1.2 Third Party PaymentsUNRWA generally does not make any third-party payments, i.e. payment to others thanthe entity contracted. However, if the awarding authority in consultation with the userdepartment and procurement staff believes that circumstances warrant that UNRWA paya third party, then the contract originator must consult with the Head, Finance andAccounting and obtain approval prior to the contract or purchase order being signed.Once the third party payment has been approved, the name, address, and bankingdetails of the third party shall be included in the contract document.12.10.2 Taxes1. UNRWA, as a subsidiary organ of the United Nations, is exempt from direct taxessuch as income tax, and is entitled to exemption/reimbursement of indirect taxes,such as sales tax and VAT, on important purchases. This is derived from theConvention on the Privileges and Immunities of the United Nations (GeneralConvention), adopted by the General Assembly in 1946.2. While in some countries, governments have provided an outright exemption toindirect taxes, in most countries, UNRWA may be required to pay taxes and furtherseek reimbursement. The policy of the United Nations, including, UNRWA, is that allpurchases are „important‟, as they are recurring and necessary for UNRWA to carryout its official activities. UNRWA frequently liaises with the Ministries of ForeignAffairs in each area of operation where the reimbursement is required to ensurespeedy repayment of taxes imposed.12.10.3 Performance Securities1. If required, the supplier shall within a specified period of time of the notification ofcontract award, provide a security for performance of the contract, or an advancepayment security, in an amount determined by UNRWA. The proceeds of thesecurity (an established amount) shall become payable to UNRWA in the event ofthe supplier‟s failure to perform.2. The performance security shall be returned by UNRWA to the supplier no later thanthirty days following the date of completion of the supplier‟s performance obligationunder the contract, including any warranty obligations.12.10 Contract Completion and Close Out1. Contract completion entails the confirmation that all obligations have been met,identification of any residual obligations and how they shall be fulfilled, settlement offinal payments, assessment of contractor, and the administrative closing of files.2. Procurement personnel for contracts for goods and some services and userdepartment staff shall verify the following key steps in order to close a contract:a. All products and/or services required have been provided to UNRWA.b. Documentation in the contract file adequately shows receipt and formalacceptance of all contract items.c. No claims or investigations are pending on the contract.PROCUREMENT MANUAL 118/127 VERSION 2

d. Any UNRWA-furnished property has been returned to UNRWA anddiscrepancies in number and condition resolved.e. All actions related to contract price revisions and changes have beenconcluded.f. All outstanding subcontracting issues have been settled.g. If a partial or complete termination was involved, action is complete.h. Original copies of all warranty documentation, including expiration datesresponsibilities and procedures to follow are finalized.i. Any required contract audit has been completed.j. The final invoice has been submitted and paid.12.11 Contract Reporting RequirementsIn the second quarter of each calendar year, a report shall be provided to theCommissioner-General by the DAS evaluating the previous calendar year‟s contractawards in each Field and at Headquarters including analysis of the lists of qualifiedpotential contractors, criteria for selection and exclusion, and trends of awards. Thereport shall consider and comment on improvements that might be made to thecontracting and awarding procedures in the light of the experience of the previous year,taking into account the applicable regulations, rules, directives, instructions and otherpolicies and procedures. The information and analysis for this report shall be providedby each Field and by each Department to the DAS by the end of the first quarter of eachyear with such details as determined by the DAS.Every calendar quarter, a report shall be provided to the Commissioner-General by theDAS evaluating the use of delegated authority by each AA in the immediately precedingquarter. The report shall cover:a. the use of exceptions (including application of Section 8.3 and Section 13 ofOD 10);b. whether procurement procedures are being followed; andc. the use of pre-approved/pre-qualified supplier lists, use of contracts forindefinite periods, etc.The report shall contain recommendations to the Commissioner-General concerning thelevels of delegated procurement authority. The information and analysis for this reportshall be provided by each Field and by each Department to the DAS as soon aspracticable after the start of each calendar quarter with such details as determined bythe DAS.The DAS may require submission of reports by all procuring offices in addition to thoseset forth above in order to fulfill her mandate set forth in Section 14 of OD 10.PROCUREMENT MANUAL 119/127 VERSION 2

Chapter 13EMERGENCIES AND URGENCIES1. Notwithstanding anything herein to the contrary, in cases of emergency oroperational urgency as defined below, the procedures described in the lastparagraph below may be followed in lieu of the normal procurement procedures.2. “Emergency” means an abnormal situation in which there is clear evidence that:a. a sudden calamity such as earthquake, flood, hurricane, drought, cropfailure, pests, disease or other natural disaster, or a human-madeemergency such as war, hostilities (whether war is declared or not), civil war,rebellion or revolution or any similar event or events have occurred; andb. such event or events imminently threaten human life or livelihoods andcause disruption in the life of the community on an exceptional scale.3. “Operational urgency” means an exceptional compelling and urgent need, whichdoes not constitute an emergency as defined above and does not result from poorplanning or management or from concerns over the availability of funds, that willlead to serious damage, loss or injury to property or persons or undue hardship topersons if not addressed immediately.4. In an emergency or operational urgency situation, CPLD or any Field Office Director(or in his/her absence, the officer-in-charge of the department or field office) mayauthorize non-compliance with normal tendering procedures and/or award anycontract without the prior written advice of DAS or the LCP, as applicable. However,CPLD or such Field Office Director (or in his/her absence, the officer-in-charge ofthe department or field office) will endeavor to obtain the advice of the LCP and/orDAS, as applicable, prior to approving the contract and, as promptly as possibleafter approval of the contract, will submit full details of such contract to DAS or theLCP, as applicable, with documentation as though they were submissions prior toaward, and with a full explanation of the emergency or operational urgency justifyingnon-compliance with applicable procedures. Section 5.5 of OD10 will remainoperative in an emergency or operational urgency situation.5. The use of Emergency / Urgency Powers in respect to contract awards is distinctfrom a waiver of competition and/or procedure and may additionally require the useof Waiver as described in article 5.4.1 in this Manual.Annex 18 - Request for Award using Emergency / Urgency PowersPROCUREMENT MANUAL 120/127 VERSION 2

GlossaryAAACPArbitrationAudit trailAwardBAFO(Best) value formoneyBidBid BondBidderBid ProtestB/LBOQBrand NameCall-Off OrdersClientAwarding Authority - each of the FODs, the CPLD and those to whom they mayhave delegated their own Procurement Authority in whole or in part shall bereferred to as Awarding Authorities.(Headquarters) Advisory Committee on Procurement.Method to resolve a contract dispute by submission to one or more arbitrators for abinding judgment; arbitration is normally used to avoid litigation, i.e. courtprocedures (see also Litigation).Clear and concise documentation describing the history of a procurement action,enabling a future reviewer to establish that applicable regulations, rules andprocedures have been followed.Acceptance of an offer with the intention of contracting.Best and Final Offer - an optional step in the selection of bids with the objective ofenhancing competition to ensure best value for money.Lowest price is not necessarily the most important criterion in the procurement ofgoods, services and construction; the concept of best value takes a range of criteriainto account to select the optimal solution to a specific need and shall inter aliaconsider aspects like Total Cost of Ownership.Formal response from a bidder.A security from a Supplier protecting UNRWA against undesirable actions by thebidder after the deadline for submissions.Potential supplier submitting a bid.A complaint against the methods employed or decisions made by a contractingauthority in the administration of a process leading to the award of a contractBill of Lading - The document under which cargo is carried on board vessels; maybe defined as a receipt for goods, signed by a duly authorized person on behalf ofthe ship-owner. It constitutes a document of title to the goods specified therein.Bill of Quantities - list of priced items, usually accompanies a SOW as part of anRFP as one of the solicitation documents when contracting construction works.A name or trademark by which one producer distinguishes his/her product fromthose of similar products by other producers in the same industry. A brand nameidentifies both the product and the producer.Orders against an established LTA called release slip Orders in PIMS.1. Recipient of procurement services, normally the requisitioner of the goods andservices to be procured, orPROCUREMENT MANUAL 121/127 VERSION 2

2. In an UNRWA context, the „client‟ may refer to the organization or government towhich UNRWA is rendering servicesClosing DateCommittee onProcurementContractContract AddendumContractAmendmentCPLDCurrent UN CodingSystemDASDIOSDisaggregationDivisionDOAFODEnd UserEOIThe deadline for all offer/proposal submissions.Committee reviewing procurement processes verifying whether procurement hasbeen undertaken in accordance with established procedures and in line with theapplicable UNRWA Financial Regulations and Rules. Recommends award to theappropriate AA. In UNRWA this term may refer both to the Local Committee onProcurement (LCP) and the Advisory Committee on Procurement (ACP).Legally binding document/agreement, often between UNRWA and a supplier,irrespective of the nature of the product/service/construction type being procured. Acontract for purchase of goods is often referred to as a Purchase Order (PO).An agreed addition to an existing contract which does not represent any change tothe originally agreed terms and conditions.An agreed change to, deletion from, correction or modification of an existingcontract.Chief Procurement and Logistics Division at HQ(A)United Nations Common Coding System (UNCCS), coding system classifyingproducts (goods, services or construction); as advised by the CPLD.Director of Administrative Support.Director of Internal Oversight Services.Is the intentional or unintentional staggering of orders from the same supplier forthe same requirement throughout the calendar year which, independently fromeach other, may be of relatively low value, but in aggregate may require a higherAA, clearance procedure and/or procurement method.In the context of this Manual 'division' refers to any operational entity withinUNRWA (e.g. regional office, project office, corporate services division,implementation facility, etc.). A division may be subordinate to a department andmay be split into sections or units.Delegation of Procurement Authority - according to the method of definingDelegation of Procurement Authority described in this Manual the individual holdingthe respective DOA is denominated Awarding Authority (AA).Director of UNRWA Operations (= Field Office Director).The end user may either be the requisitioner or the group of people on behalf ofwhom a procurement exercise has been initiated by the requisitioner.Expressions of Interest - Suppliers express interest in supplying to UNRWA throughan Expression of Interest as initiated and solicited by UNRWA from time to time asa method to source potential suppliers.PROCUREMENT MANUAL 122/127 VERSION 2

ExigencyFOFPLOFPOGCCGlobal CompactGSCHQ(A)INCOTERMS 2010Inventory ItemIOSITBLCPLiabilityLiquidated damagesLitigationAn exceptional compelling and emergent need, not resulting from poor planning ormanagement, that shall lead to serious damage or loss to persons or property if notaddressed immediately.Field Office – any of UNRWA‟s Field Offices in Gaza, Jordan, Lebanon, Syria andthe West Bank.Field Procurement and Logistics Officer in Jordan, Lebanon, Syria and the WestBank.Field Procurement Officer in Gaza.General Conditions of Contract for Goods, Services or Goods and Services.Voluntary international corporate citizenship network initiated by the SecretaryGeneral to support the participation of both the private sector and other socialactors to advance responsible corporate citizenship and universal social andenvironmental principles to meet the challenges of Globalization. It is based on 10principles related to Human Rights, Labour, Environment and Anti-Corruption. Seewww.globalcompact.org for more informationUNGM Global Service CentreUNRWA Headquarters AmmanINCOTERMS are international, commercial trade terms defining the obligations ofthe buyer and the seller relating to the shipment of goods published by theInternational Chamber of Commerce (ICC).Unless advised otherwise by the Finance Department: UNRWA currently adoptsthe UN common coding system (UNCCS) for identification of items in the inventory.The inventory held by UNRWA is reported as a single line item under the head“Inventories”. UNRWA Production unit‟s inventory is classified as Raw material,Work in Process and Finished goods.Internal Oversight Services.Invitation to Bid, a method of solicitation of offers mainly for goods and simpleconstruction requirements.(Field Office) Local Committee on Procurement.The condition of being actually or potentially subject to an obligation, a condition ofbeing responsible for a possible or actual loss, penalty, evil, expense, or burden.Contract provision used when the time of delivery or performance is of suchimportance to the buyer that the buyer may expect to suffer damages for nonperformance.Under such provision the contractor may be required to paydamages, e.g. for each week of delayed delivery.Law suit, legal action, including all proceedings therein. UNRWA is immune fromlegal action in courts. Disputes with contractors are resolved by negotiation,conciliation or arbitration.PROCUREMENT MANUAL 123/127 VERSION 2

LORLPALTAMarket ResearchMSPNGOOD10OfferOICOrganizationalDirectiveOperational UnitPCSUPerformance BondPIMSPLDPOPMMList of Requirements in the current Electronic Procurement and InventoryManagement System PIMS.Local Procurement Authority – authority granted by the CPLD to any FO PLD toprocure a certain range of goods which are usually procured centrally via HQAmman PLD centrally.Long Term Agreement, agreement between UNRWA and a supplier valid for anindefinite quantity of products or services over a defined period of time. Orders areplaced by issuing call off orders/ release slip orders against the LTA.Collecting and analyzing information about capabilities within the market, in order toidentify potential Suppliers.UNRWA Manual of Supply Procedures.Non-governmental Organization.Organization Directive No 10 (on procurement)Reply (bid or proposal) received by UNRWA as a response to an invitation to offerpresented in the solicitation documents issued by UNRWA to the suppliers.Constitutes a firm offer from the potential supplier to furnish deliverables fulfillingthe requirements set forth in the solicitation documents. The offer can be in theform of a quotation, bid, or proposal, depending on the type of solicitation documentissued (RFQ, ITB or RFP)Officer in Charge – refers to the appointment of a replacement to assume the dutiesand responsibilities of a specific function/role on his/her behalf by way of officialwritten appointment.Administrative instrument used to establish organizational procedures, typicallyissued by the\Commissioner General.Requisitioner/End User of a specific requirement, usually the technical expert incharge of requirements definition and contract management/technical contractadministration.Program Coordination and Support UnitA written instrument issued by a bank or insurer, in favor of UNRWA, to secure theSupplier‟s performance of a contract.Current UNRWA Electronic Procurement and Inventory Management System.Procurement and Logistics Division, either at HQ(A) or any of the FOs.Purchase Order – contract for goods in UN RWA, issued via PIMS.Property Management Manual – the UNRWA manual governing the managementof Fixed Assets in the Agency in accordance with Organizational Directive No 12.PROCUREMENT MANUAL 124/127 VERSION 2

ProductProposalQuotationRemedyRequisitionRequisitionerRFPRFQSDTISegregation ofDutiesSolicitationSolicitationDocumentsSolicitation MethodSourcingSOWSpecificationsSponsoring OfficerSubmissionThe use of the word „product‟ in the context of this Manual is used to cover bothgoods, services or constructionFormal response from a bidder typically in response to an RFP, offering a solutionto the problem, requirement or objective in the requestThe offer submitted typically in response to an RFQ.The means by which a contractual right or obligation is enforced or the violation ofsuch a right is prevented, reduced or compensated.Formal request to initiate the procurement of goods, services or construction.Anyone initiating a request for goods, services or constructionRequest for Proposal - method of solicitation for services and construction.Request for Quotation, method of solicitation.Supply Division Technical Instructions.Internal control mechanism to ensure that one individual does not participate in alloperational steps in relation to a process, in this case, the procurement process(buyer ≠ payer is the minimum requirement).Process of inviting suppliers to submit offers.Package of documents used when soliciting offers from suppliers. ITB, RFP, andRFQ are types of solicitation documents.The method used to solicit offers from suppliers. ITB, RFP, RFQ, and the use ofimprest funds, depending on total value of the requirement, are methods ofsolicitation.The process of identification of suitable suppliers for a specific requirement.Statement of Works - Requirement specifications for works assignments. Usuallyaccompanied by a Bill of Quantities (BOQ), and/or drawings/designsRequirement definition to a product. Usually referring to the defined requirementsfor goods (technical, functional, performance-based), but can also relate to therequirements for services (TOR), or construction (SOW).Means the UNRWA staff member who called the tender (e.g. representative ofProcurement and Logistics Division or Field Procurement and Logistics Officer) orany Awarding Authority or his/her designate outside PLD to whom ProcurementAuthority has been delegated.Reply received by UNRWA as a response to an invitation to offer presented in thesolicitation documents issued by UNRWA to the suppliers. Constitutes a firm offerfrom the potential supplier to furnish deliverables fulfilling the requirements set forthin the solicitation documents. The submission can be in the form of a quotation, bid,or proposal, depending on the type of solicitation document issued (RFQ, ITB orPROCUREMENT MANUAL 125/127 VERSION 2

RFP).SupplierTotal Cost ofOwnershipTOCTORTSIUNUNGMUNCCSUNCITRAL ModelLawUnitUNRWAWaiver (ofprocurementprocess orcompetitive bidding)Any potential legal entity, commercial firm or non commercial (NGO, parastatal)provider of goods, services or construction to UNRWA. Shall include the termSupplier.Total Cost of Ownership is a methodology for calculating the total cost of a system /service over its entire lifespan.Tender Opening Committee.Terms of Reference. Requirement definition for services or complex goods(Engineering) Technical Services Instructions governing the technical aspects ofconstruction and maintenance tenders.United Nations.United Nations Global Marketplace. Internet portal used by 16 UN agencies,including UNRWA. Includes, among other types of information, an inter-agencySupplier roster. See www.ungm.org for more information.United Nations Common Coding SystemUnited Nations Commission in International Trade Law‟s Model Law onProcurement of Goods, Construction and Services with Guide to Enactment,adopted by UNCITRAL in 1994.Refers to any unit or entity within UNRWA (e.g. regional office, project office,corporate services division, implementation facility, etc.)United Nations Relief and Works Agency for Palestine Refugees in The Near EastIn a procurement context, a waiver refers to the process of selecting a supplierwithout conducting a competitive bidding exercise or to cutting short parts of theprocurement process. Often a waiver of competitive bidding will lead to negotiationsdirectly with one potential supplier.PROCUREMENT MANUAL 126/127 VERSION 2

List of AnnexesAnnex No Description of Annex Status1 Form of Letter of Delegation of Authority Available2 Local Procurement Authority (LPA) Instructions Available3Process flows and assigned duties for the procurement ofgoods, services and constructionAvailable4 File Check List / Cover Page for Petty Cash, RFQ, ITB or RFP Available5 Expression of Interest (EOI) Template Available6Tendering Receipt and Opening Guidelines of 19 January 2009 forRFQ, ITB and RFP.Available7 Request for Waiver of Normal Tendering Available8Tender Templates - RFQ (Goods and Services), ITB (General Stores,Medical Supplies and Works) and RFPAvailable9 Bid Bond Template Available10 UNRWA Contract Templates Available11 Checklist for Submissions to the LCP Available12 Checklist for Submissions to the DAS/ACP Available13 UNRWA General Conditions of Contract for Procurement of Goods Available14 UNRWA General Conditions of Contract for Procurement of Services Available15UNRWA General Conditions of Contract for Procurement of Goodsand ServicesAvailable16 Project Cooperation Template Available17 Amendment to Contract Template Available18 Request for Award using Emergency / Urgency Powers AvailableNote: All annexes are available on the intranet link:http://intranet1.unrwa.org/ASD/PLD/Manuals/Forms/AllItems.aspxPROCUREMENT MANUAL 127/127 VERSION 2