Overview - Selling to United Nations Agencies: A Guide for Canadian Businesses
In its 2014 fiscal year (July 1-June 30), the United Nations procured more than $17.2 billion1 in goods and services that covered almost everything from vaccines to air freight. According to the 2014 Annual Statistical Report on United Nations Procurement, Canadian businesses accounted for $180.5 million of this total, with sales of $120.1 million in services (primarily in transportation, environmental management and construction) and $60.4 million in goods (including food, pharmaceuticals, election equipment, computer equipment and nuclear research equipment).
Identifying opportunities with UN agencies
It's clear from the above statistics that UN agencies can be good sales prospects for Canadian businesses whose products match their needs. To determine whether your company falls into this category, you can begin with the UN's statistical procurement reports, such as the one above. These will give you information about the top 10 items procured annually by various UN agencies.
You should also check the Procurement Notice Search section of the United Nations Global Marketplace (UNGM) website. UNGM is the procurement portal for registered UN vendors, but you don't have to register in order to search the data in the Notices section. This information can be very useful in determining current agency needs.
You might also be able to supply UN agencies indirectly by subcontracting with companies that have already secured agency contracts. You can find information about these contracts in UNGM's Contract Award Search section. You don't have to be a registered UN vendor to access the data, and examining the award details may reveal opportunities for selling your products to the company that landed the contract.
Although there are many agencies under the UN umbrella, eight of them account for more than 90 percent of all UN procurement. Consequently, although reviewing the annual statistical reports and the UNGM databases is certainly important, you should also be sure to check the online supply catalogues of these agencies (where applicable) for more detail about their procurement needs. The eight agencies are:
- UN Procurement Division (UNPD)
- UN Development Programme (UNDP)
- World Food Programme (WFP)
- UN International Children's Emergency Fund (UNICEF)
- UN Office for Project Services (UNOPS)
- UN High Commissioner for Refugees (UNHCR)
- Pan American Health Organization (PAHO)
- UN Population Fund (UNFPA)
Different agencies may also have different procurement rules, so you'll need to verify that your products2 and your company meet the eligibility requirements of a particular organization. Many UN agencies use their websites to publish lists of the products they procure, as well as their procurement policies and guidelines. Procurement details for the eight agencies listed in the previous section can be found at:
- UNPD Supplier Resources
- Procurement at UNDP
- WFP Procurement
- UNICEF Supplies and Logistics
- UNOPS What we need
- Doing business with UNHCR
- PAHO Procurement
- UNFPA Procurement
Numerous other UN organizations also purchase goods and services. You can find information about them on their websites or through the Canadian Trade Commissioners' Development and Humanitarian Aid Markets website.
UN agencies have strict regulations on the capabilities of their suppliers. A supplier, for example, is required to have at least three years of export experience in order to do business with a UN agency, unless the UN operation is in Canada. Other ability-related questions include:
- Does your company have the production capacity, personnel and financial resources to deliver the contracted products?
- Can your company comply with the UN Supplier Code of Conduct? (PDF* 109 Kb).
- Can your company comply with the quality control standards the UN requires for your types of product, such as ISO certification?
- Is your business able to provide staff members who speak the local language, if this is required for a contract?
- Having a partner or a network in a specific country or region could be important if you want to become a UN supplier. Do you have access to such networks or partners, or could you develop them quickly if you secured a contract?
- Would you be able to deliver emergency-related goods on very short notice if required?
- The evaluation of UN procurement bids can take up 12 months. Are you willing and able to wait that long to find out if you have secured a contract?
Registering as a vendor with the UN
Assuming your company is capable of furnishing products to the UN, the next step is to register as a vendor. You do this through the UNGM website, which is the procurement portal for 20 major UN agencies. You'll find detailed registration instructions in the UNGM Interactive Guide found on the Vendor Registration page, but the basic procedure is as follows.
First, complete and submit the UNGM registration form. You'll receive an email in response, with a link for activating your UNGM account. After you activate, you'll receive another email with a username and password for the account.
Log onto the account, complete the application using the instructions in the Interactive Guide, and submit it. UNMG staff will evaluate your application and email you their decision, which may take up to 10 weeks. You can check your application's progress via your account profile.
Once you've activated your account, you can subscribe to the UNGM Tender Alert Service, which automatically emails you notifications of UN tenders that match your company's products. Alerts are sent as soon as tenders are published, allowing you to act quickly on bidding opportunities. The subscription fee is $250 annually.
Note that some UN agencies have their own procurement mechanisms and do not use UNGM. You'll have to register directly with these organizations if you wish to become one of their vendors.
Marketing to UN agencies
Marketing to UN agencies is not unlike marketing to other businesses, government organizations or multilateral development banks. The key difference is that the UN is a political organization with almost 200 member states and often deals with projects and requirements in very difficult regions and situations.
Once you've registered with the UN organizations that are most likely to become your customers, you should meet with the procurement officers who are in charge of acquiring your specific types of product. During your discussions, keep in mind that the UN procurement officers who are responsible for contracting suppliers are not necessarily experts on the products they need to acquire. To provide this expertise, they usually work with requisition staff, who are responsible for the technical specifications and the evaluation of the product. When arranging a meeting, try to set it up so you can present your products to the procurement officers and the requisition staff at the same time.
Another option is to attend UN-sponsored business seminars. Various UN bodies organize these seminars and you can often find information about them on the agency websites.
If you can't meet with UN procurement staff or attend a UN business seminar, you should send your company's promotional materials to the appropriate procurement contacts. Note, however, that UN staff normally won't visit companies to attend product presentations.
The headquarters office of a given UN agency is not your only business prospect. Many of these headquarters give their country or regional offices the authority to buy products up to a certain financial limit, which can be as low as $5,000 or as high as $200,000. As a result, any of these sub-offices might be a business prospect for your sales team.
While these offices often publish tenders on their own websites and on UNGM, they also work with their own supplier databases and may not publicize their tender notices globally. You should therefore contact the country and regional offices of any agencies that may be sales prospects and arrange to have your company added to their databases.
Procurement documents and competitions
UN agencies use solicitation documents to request "offers" - which can be bids, proposals or quotations - from their suppliers. There are different types of solicitation documents, depending on what is required and the total contract value, but all include all the information you'll need to prepare an offer.
As well as solicitation documents, UN agencies also issue “expressions of interest” (EOIs) to invite suppliers to provide information about products, resources, qualifications and experience related to a possible contract opportunity. An EOI may outline a solicitation process for the contract, but it is not in itself a solicitation document and can be modified or withdrawn at any time.
UN agencies often use EOIs to create short lists of pre-qualified companies for a potential contract opportunity. If you're interested in participating in the planned solicitation process described in the EOI, you should respond by briefly outlining your company's expertise and experience as they relate to the upcoming contract requirements.
The UN uses standard types of solicitation documents, as described below.
- Request for Quotation (RFQ): An informal solicitation, usually issued in order to acquire standard, readily available products. Awards are made to the lowest-priced, technically acceptable bidder.
- Invitation to Bid (ITB): A formal solicitation that specifies the quantitative and qualitative requirements of the products as a basis for formal competitive bidding. Awards are made to the lowest-priced, technically acceptable bidder.
- Request for Proposal (RFP): A formal solicitation inviting proposals for a requirement that cannot be clearly or concisely defined. Price is only one of several factors that determine which bidder receives the contract.
UN agencies normally use competitions to procure goods and services, as follows:
- Open International Competition (OIC): A competition publicized by an advertisement on UNGM and elsewhere. It invites all eligible and qualified suppliers to request the bidding documents and is intended to provide all bidders with an equal opportunity to compete. OICs are often used to procure high-value products. If you ask to participate, the agency will send you pre-qualification documents and, if you meet their criteria, you'll be able to bid.
- Limited International Competition (LIC): Available only to a short list of qualified suppliers that the agency selects according to a variety of criteria. It is used in special circumstances, such as a situation in which demand is urgent or the supply of the required products is limited.
- Local Competition: The procuring agency, for a variety of reasons, may require that bidders be located in the country or region where the products will be used.
Direct contracting and long-term agreements may occur as alternatives to competition. Direct contracting is used under exceptional circumstances, such as a low contract value, a requirement for standardization or urgent need.
Long-term agreements (LTAs) last for one to five years and are used to consolidate and accelerate the procurement of frequently purchased products. They are set up using an ITB or RFP process. An LTA never guarantees a minimum of orders during the period of the agreement, but it does contractually bind the supplier to deliver certain quantities if asked to do so.
Bidding, evaluation and contract execution
When a UN agency sends you a solicitation document, you should always return an acknowledgement letter. You should do this even if you don't bid, since the acknowledgement will keep your company on the active list.
If you decide to submit a bid, follow the bidding document instructions exactly or your bid will almost certainly be rejected. Other things to keep in mind:
- For many products, the company submitting the lowest-priced, technically acceptable offer will be awarded the contract.
- When you set your price, allow for costs such as a bid/performance bond, changes that might occur during the bid evaluation time, and logistics expenses.
- Separate your technical and financial proposals as instructed in the bid documents. This is critically important, as the technical proposal is the only document that the initial evaluators will see. Only when a technical proposal qualifies will the financial proposal be opened.
- Once the solicitation deadline has passed, you cannot adjust your bid.
The procuring agency will usually set a date for opening the bids. Try to attend, since you can often obtain valuable information about your competition during the opening of an RFQ or ITB. At the opening of an RFP, however, only the company names are read out.
If you are unable to attend, you are allowed to have someone else represent you at the opening. The Trade Commissioner Service may be able to assist you with this.
After the bids are opened, an agency evaluating committee reviews them to see which one best fulfills the requirements. Common evaluation criteria include price, cost of ownership, the bidder's capabilities and experience, compliance with technical requirements and delivery time.
For RFQs and ITBs, the contract is awarded to the bidder with the lowest-priced, technically acceptable offer. For an RFP, price is only one of several evaluation criteria. After the evaluation of the technical proposals, the bids that are technically compliant will be subject to a financial evaluation. The contract is awarded to the bidder with the highest combined scores from the technical and financial evaluations.
If you are the successful bidder,3 the UN agency will contact you to arrange the contract. There is usually little room for renegotiating the original offer, but if the agency requests better pricing or additional discounts, you may be able to get more favourable payment terms in exchange.
The procuring agency may require you to provide performance bonds to guarantee that you will fulfill all the contract terms. If so, you'll have to provide security in the form of a bank guarantee, a standby letter of credit or other financial instrument.
In the case of an LTA, the contract will state a not-to-exceed amount. However, this does not guarantee that the agency will spend up to the limit of that amount. In addition, the agency may allow other UN organizations to use the LTA for their own procurement. You should ask the procuring agency to list these organizations in the contract.
Note that if you have an LTA with a specific UN agency, you'll still need to market your products to its field and country offices, and to any other UN organizations listed in the contract. The existence of the LTA does not oblige these organizations to purchase the contracted goods from your company.
Executing a UN contract often involves complicated supply chains where things can go wrong. It is therefore important to maintain good communications with the UN agency staff until the contract is complete. Note also that agencies will not accept back orders, partial deliveries or partial invoices unless this is specified in the contract. Suppliers are expected to adhere strictly to the contracted delivery times and there are penalties for late delivery.
1 All currency figures are in USD unless otherwise indicated.
2 For brevity, we'll use "products" as shorthand for "goods and services" from here on.
3 Unsuccessful bidders normally receive a formal letter of regret. If you don't receive this letter or any feedback about your bid, contact the agency's procuring unit.
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