After the relevant approvals have been obtained, the contract finalization process starts.
Contract finalization is the responsibility of the staff conducting procurement. Its purpose is to ensure the proper elements are in place to conclude a written agreement that protects the interests of UNAIDS and reflects the offer made by the supplier.
The contract finalization process steps are as follows:
- contract negotiation
- contract preparation
- contract legal review and clearance
- contract signature
- contract filing
- award notification and debriefing of unsuccessful bidders.
Contract negotiation
Negotiations with vendors are limited to justified cases and occur only after approval from the relevant awarding authority. When negotiations are authorized, the outcome of the negotiations will determine the final award decision. No negotiation must be conducted without prior approval.
For negotiations conducted with the selected supplier(s), a minimum of two UNAIDS individuals must be involved. To ensure optimum results, each individual should be given a specific role to play that is clearly defined before the start of the negotiation process.
Meetings must have an agenda, and minutes must be properly recorded.On rare occasions, price negotiations may take place after the award of contract.
In order to complete the records and ensure a proper audit trail, the awarding authority authorizing the negotiations must be kept informed of the outcome of the negotiations through the submission of minutes of the negotiations or through other forms of written documentation.
Negotiations with the vendor(s) are carried out according to certain procedures, depending on the chosen method of solicitation.
Proposals selected through an RFP (cumulative analysis methodology)
The purpose of negotiations is to ensure that the technical proposal is in line with requirements and that the financial proposal is competitive on all aspects of the price.
Negotiations with vendors regarding the content of their offer can be conducted only if a provision for negotiation was included in the solicitation documents, and only with the vendor that presented the winning proposal.
In the negotiations, any deficiency in the offer must be pointed out to the vendor. The vendor must be allowed to make adjustments to the proposal in order to improve and more clearly specify the contents of the offer. Under no circumstances, however, should the requirements of the solicitation (Terms of Reference, specifications or Statement of Works) be changed.
If the requirements are substantially changed, the competitive process must be cancelled and a new tender process initiated on the basis of the revised requirements.If due cause exists, negotiations of the financial proposal of the vendor presenting the best offer (i.e. the offer having received the highest number of points—technical plus financial), may be permitted.
Negotiations with the other bidders are not permitted, and proper justification must be provided explaining the reason why negotiations are conducted in the particular case.
Under no circumstances may negotiations take place for the sole purpose of reducing prices; this would contravene the principle of equal and fair treatment of all suppliers.Due cause for negotiation
Due cause for conducting negotiations, subsequent to the recommendation of the review authority and after a formal method of solicitation based on the cumulative analysis methodology (see above), would include the following:
- budget constraints, where the available budget is not sufficient to purchase the requested item(s); such negotiations should not significantly change the Terms of Reference, Statement of Works or specifications;
- additional services being offered by the highest-scoring bidder that were not required in the solicitation document;
- daily subsistence allowance (DSA) rates, travel costs, etc. that are not in line with UNAIDS established rates; and
- instances where there is only one compliant bid and—following analysis in accordance with the justification for reasonableness of price—the evaluation team has concluded that the offered price is not reasonable.
Proposals selected through an ITB (lowest-priced, substantially compliant offer methodology)
Negotiations are generally not permitted, but if due cause exists, negotiations may be permitted only with the supplier that presented the lowest-priced, substantially compliant offer.
Negotiations with the other bidders are not permitted, and proper justification must be provided explaining why negotiations are conducted in the particular case.
Under no circumstances may negotiations take place for the sole purpose of reducing prices; this would contravene the principle of equal and fair treatment of all suppliers.Due cause for conducting negotiations after a formal method of solicitation that was based on the lowest-priced, substantially compliant offer methodology would include the following:
- budget constraints, where the available budget is not sufficient to purchase the requested item(s) and the supplier agrees to reduce the prices;
- additional services being offered by the lowest substantially compliant bid that were not required in the solicitation document;
- marginal quantity increases leading to quantity discounts (i.e. the quantities specified in the tender documents can be increased); and
- instances where there is only one compliant bid and—following analysis in accordance with the justification for reasonableness of price—the evaluation team has concluded that the offered price is not reasonable.
In cases where the quantity is substantially increased, however, or if the market price of the goods is likely to drop substantially between the deadline for the submission of bids and the date of completion of the evaluation (or if it has already done so), re-tendering should be initiated.
Contract negotiations after signature of contract
Contract negotiations after signature of contract may be conducted to clarify:
- issues that remain unclear and are not defined by the requirements in the solicitation documents, but that are essential for proper implementation of the contract; and
- issues that remain unclear after the supplier’s offer, but that are essential to proper implementation of the contract.
Negotiations should result in a clear understanding of terms and conditions agreed upon by the parties and their respective responsibilities under the contract.
There are no strict rules as to how to negotiate clauses to be included in the contracts, but negotiations on pricing issues that may affect the outcome of the bidding process are not allowed.
Moreover, certain key areas (such as a detailed delivery plan, milestones, payment schedule, and in certain cases, special terms and conditions) form part of every contract negotiation.
Where the bidder has not recorded any reservations to UNAIDS conditions in their bid, UNAIDS may choose not to enter into negotiations on contract terms proposed by the bidder after selection of the offer.
Contract preparation
Contract preparation consists of the selection of the appropriate contractual instrument and the preparation of a contract to be signed by UNAIDS and countersigned by the supplier. This includes the drafting of all relevant annexes to the contract.
Contracts for services must be prepared in two originals, and they should clearly state:
- the name of the contractual partner;
- the purpose for which the funds are being provided;
- the time frame for the performance of the work;
- the total amount of the fees to be paid and the payment schedule (i.e. the number and amount of instalments linked to the technical and financial reports that are required for the release of these instalments);
- the general conditions referred to above, plus any other conditions agreed upon as appropriate; and
- in the form of an annex, a detailed Terms of Reference (TOR)/Statement of Works (SOW), along with a budget (the annexes will form an integral part of the contract).
Bank details should be requested so that payments can be made.
The contractual partner is required to indicate agreement by signing and returning one original of the contract to UNAIDS.
Contract legal review and clearance
Legal review of the contract may be requested by the awarding authority. In this case, it is the responsibility of the staff conducting procurement to submit the draft contract and annexes for legal review.
Clearance is the verification process conducted by the Financial Services, Risk Management and Compliance Division (FRC) to ensure the contract to be signed complies with all the requirements prior to contracting. The clearance is conducted during the Quality Compliance Check process.
Contract signature
The contract signature consists of two parts: the signature by UNAIDS staff with delegation of financial authority for the amount of the contract, and the countersignature by an authorized official representing the supplier. The staff conducting procurement are responsible for verifying the official signing on behalf of the supplier is indeed authorized to commit the organization to the contract being signed by requesting supporting documentation regarding his/her status within the contractual partner.