United Nations Association of the United States of America

How to Do Business With the UN: A 5-Step Approach:

Potential suppliers should approach the United Nations procurement market as they would any other business venture. They should thoroughly research the market and develop relationships with potential United Nations partners prior to committing to a contract. They should also understand the bidding process for obtaining a contract and be prepared to undertake any after- sale requirements that may be part of their contract obligations. A company or individual consultant that is prepared to approach the United Nations market in a methodical, committed fashion will reap many of the benefits that the United Nations has to offer, including the opportunity to obtain a foothold in developing countries and emerging markets that might otherwise be inaccessible or present too great a risk to a company on its own.

Market Research

Because of the diversified nature of the United Nations market, potential suppliers must first understand the United Nations system and how it operates. Each of the more than 30 agencies, programs, and funds has its own mandate, projects, and purchasing requirements. At the same time, however, these entities all function within a larger organizational structure. The actions or policy decisions of one agency may affect another, and the actions and recommendations of the United Nations Secretary-General will have an impact, to varying degrees, on each agency within the U.N. system. Each of these decisions and actions will in turn have some effect on procurement opportunities.

One option is for the supplier to the United Nations to appoint a company representative to its United Nations account, with the responsibility for researching the United Nations market and maintaining relationships with U.N. officials and procurement officers. The various United Nations websites provide some of the best sources of information about U.N. activities. Several U.N. publications provide useful information on the United Nations and its procurement opportunities. These include the Inter-Agency Procurement Services Office publication, Procurement Update, and the United Nations Development Programme publication, Development Business. Both of these publications are available online. The mainstream media and technical trade publications also offer relevant, timely information about the U.N.

Other useful sources of information about the United Nations are trade representatives and departments of commerce in a supplier's home country, their country's mission to the United Nations, and consulates and embassies in countries with United Nations headquarters offices and field projects. These representatives and offices are able to highlight upcoming contracts and projects and indicate what a supplier's comparative advantage may be in relation to the marketplace and other suppliers.

Establishing Relationships

Once a supplier has researched the United Nations market and has identified the agency or agencies with which it wishes to conduct business, it must commit itself to establishing long-term relationships with U.N. officials and procurement officers at an agency's headquarters and field offices. Frequently, these relationships provide valuable additional information to suppliers about upcoming contracts, technical specifications for these contracts, and existing competition for a contract award that would not otherwise be available.

While there does not yet exist a public advertising system that notifies suppliers of all or most upcoming contracts throughout the U.N. system, individual agencies increasingly rely on their websites to publicize contracts. Nevertheless, there is no substitute for personal relationships with procurement officers, who can provide added insight to the procurement process.

Registration Requirements

Most U.N. agencies select suppliers for larger contracts from supplier rosters. Companies and individual consultants must register to be placed on these rosters. Registration forms are available from procurement offices and from many agency websites. Registration is typically used to pre-qualify potential suppliers. Applications are generally evaluated on the basis of past experience, a supplier's ability to perform, the relevance of the goods or services to the agency's requirements, and the financial solvency of the supplier. Once accepted, suppliers are placed on the roster. Inclusion on a roster does not, however, ensure that a company will be included in all supplier solicitations. It means only that a registered company will be given equal consideration in the selection process. Several agencies update their supplier rosters every few years and remove from those rosters suppliers that do not respond to solicitations for offers on two or more occasions.

Because supplier rosters often contain thousands of names, personal relationships with procurement officers will significantly increase a company's chances of being placed on a short list. These relationships will also facilitate negotiations with procurement officers at the bidding stage. Furthermore, many field offices do not rely on supplier rosters, but select bidders based solely on personal relationships.

Bidding Process

Most United Nations agencies use competitive bidding procedures to procure goods and services. They typically award contracts through three types of solicitation documents:

  • Invitation to Bid: Invitations to bid are typically issued for high-value contracts that require formal competitive bidding procedures. Invitations to bid may be open or limited. Open international competitive bids are advertised and invitations to bid are issued to registered suppliers and suppliers that have expressed interest in the contract. Limited international competitive bids typically are not advertised and these invitations to bid are issued only to registered suppliers that have been placed on a short list of suppliers. This method of bidding is best suited to respond to the short lead times required for peacekeeping and emergency operations. Potential suppliers submit bids on the same basis as one another and an award is made to the lowest priced, technically acceptable bidder or best value bidder.
  • Request for Proposal: Requests for proposals are generally issued for high-value service contracts that require services to be customized to fit unique circumstances. Specifications can be so complex that evaluations of proposals take significantly longer than evaluations of bids, and criteria other than price are likely to be the determining factors. Such criteria may include delivery speed, availability and quality of on-site support services, clarity of technical manuals, ability to understand local languages and culture, and ability to dispatch troubleshooters to a field mission as required. Contracts are typically awarded to the offer that presents the best value in accordance with the evaluation criteria.
  • Request for Quotation: Requests for quotations are informal solicitation documents that are normally used for low-value procurement requirements. These documents request prices and commercial terms for goods, works, or services that meet standard specifications and are readily available on the market. Such informal quotations are typically requested from local suppliers, although several agencies accept international quotations as well.

Depending on the type of offer requested - a bid, proposal, or quotation - an agency may advertise a request for offers or it may select potential suppliers from a short list of qualified suppliers or from expressions of interest. Invitations for open international competitive bids are generally advertised in U.N. publications and in publications of wide international circulation. Increasingly, agencies also publicize these requests on their websites. Complex or specialized goods or services may require pre-qualification, which is also conducted through advertising.

Some agencies restrict the number of suppliers who may submit offers, particularly when the values of contracts are small. Offers that comply with the submission procedures and the technical requirements included in the requests for offers are accepted for evaluation. Bids and proposals may be opened publicly or privately. The purpose of the opening is to verify that all formalities indicated in the request for offers have been met, including the timeliness of the receipt of the offer and, where required, their sealed condition.

Offers are evaluated in accordance with the evaluation criteria specified in the solicitation documents. All contracts above a specific threshold are reviewed and approved by a local or headquarters Committee on Contracts. The threshold for review by a local Committee on Contracts is generally $20,000 to $25,000 and the threshold for review by a headquarters Committee on Contracts is typically $100,000 to $200,000. Committees on Contracts seek to ensure that contracts have been awarded in accordance with an agency's financial regulations and rules.

The Inter-Agency Procurement Services Office publishes Common Guidelines for Procurement by Organizations in the United Nations System, which is intended to serve as a guide to procurement by United Nations agencies and to harmonize procurement procedures within the United Nations system. United Nations agencies, however, rely on their own financial regulations and rules.

Performing the Contract

Once a contract has been awarded, a supplier must ensure timely delivery of the goods or services. This is especially important when supplying for peacekeeping and humanitarian missions. Slight delays can have a profound impact on an agency's ability to implement its project requirements. While economic development projects also have short delivery time requirements, they frequently do not operate under similar time constraints.

A key requirement for companies doing business with the United Nations is the ability to provide after-sale support. This is especially true for businesses providing goods or services to field missions or development projects. Businesses must be ready to maintain personnel in the field or dispatch troubleshooters to the field as required.

The Financial Regulations and Rules of the United Nations stipulate that all suppliers must be paid within 30 days of delivery and inspection of goods or completion of services, unless a contract states otherwise. Because of the ongoing financial problems at the United Nations, payments by the United Nations Secretariat have frequently been extended to a 60 or 90-day cycle. Most U.N. specialized agencies are able to pay on time because they have separate budgets and have not experienced the same cash flow problems as the U.N. Secretariat.

The United Nations tries to resolve payment disputes in the first instance by negotiation with the assistance of third party mediators. These are typically the United Nations mission, commerce department, or trade ministry of the supplier's home country. Because the United Nations is protected by sovereign immunity, it cannot be sued in a court of law. Accordingly, failing a settlement in mediation, disputes are settled in accordance with the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules.

The United Nations seeks in all instances to establish mutually beneficial, long-term relationships with its suppliers, ensuring reliable, competitive sources of supply. For those who do business with the United Nations, the relationship provides a unique, cost-effective way to learn about investment opportunities in developing countries and emerging markets, to enter these markets with the support of the United Nations, and to contribute to sustainable growth and development and the integration of developing countries into the global economy.

(Excerpt from How to Do Business With the United Nations, published by UNA-USA)

Prepared for posting by the UN Website Section- Department of Public Information © United Nations 2003