Alessandro Amadio UNIDO Representative in Iran

1. Understanding Public Procurement at UNIDO Business Opportunities for Iranian Entrepreneurs Alessandro Amadio UNIDO Representative in Iran

2. Contents • UNIDO Procurement at a Glance • Procurement Defined • UNIDO and its Role in the Marketplace • Procurement provided by UNIDO • Year Over Year Comparison • Distribution by type of procurement and by type of procurement requirement (year 2014) • Czech Republic and UNIDO procurement: some figures • UNIDO’s Procurement Principles • Most Frequently Procured Goods and Services • eProcurement at UNIDO • UNIDO’s New eProcurement Platform • UNIDO procurement procedures • UNIDO Sourcing Channels • eProcurement Portal • Average Procurement Timelines • Benefits to UNIDO • Forms of Collaboration with UNIDO • Subcontracting • Consortia • Procurement Tips • Procurement and Innovative Solutions • UNIDO’s Levels of Intervention: An example from environmental sector

3. UNIDO Procurement at a Glance • Procurement Defined • “the overall process of acquiring goods, works, and services” • UNIDO Procurement Manual (July 2013)

4. UNIDO Partnerships with the Private Sector UNIDO At A Glance AGRO-INDUSTRIES, BUSINESS INVESTMENT & TECHNOLOGY PARTNERSHIPS ENVIRONMENTAL MANAGEMENT PARTNERSHIPS ENERGY & CLIMATE CHANGE PARTNERSHIPS

5. UNIDO and its Role in the Marketplace UNIDO Procurement at a Glance • Two types of Procurement: • Procurement for Technical Cooperation Programmes- variety of technically complex products and services required for implementing UNIDO's Programmes (TC Procurement). • Procurement for Non-Technical Cooperation Programmes - maintenance and functioning of the Vienna International Centre including UNIDO Headquarters (Non-TC Procurement) • Total UNIDO Procurement Volume: • 2014: € 105,279,491; • 2015 (up until 10/2015): € 103,460,435

6. UNIDO Procurement at a Glance Procurement Provided by UNIDO • Machinery and equipment for ODS phase out programmes/projects; agro Industries; general and special purpose (LAB, Metrology); computer software and hardware; motor vehicles; parts and accessories GOODS Environmental protection services (ODS, POPS); standardization of labs; conversion of production lines; office automation services; energy policy and management (electricity & alternative systems); trade promotion and SPX SERVICES Computer hardware and software, office furniture, machines and supplies, documents reproduction equipment and supplies, stationery; security and safety equipment; kitchen and cafeteria furniture equipment and supplies UNIDO HQ & VIC

7. UNIDO Procurement at a Glance Year Over Year Comparison

8. UNIDO Procurement at a glance UNIDO Procurement Principles lowest cost, technically acceptable offer Meeting organizational objectives and goals Best interest of UNIDO Best value for money Fairness, integrity and transparency Effective competition Market research, planning, equal opportunity for potential bidders Neutrality, same treatment, clear and appropriate rules and procedures

9. Most Frequently Procured Goods UNIDO Procurement at a glance

10. Most Frequently Procured Services UNIDO Procurement at a glance • Phase-out ozone depletion in refrigeration, foam, aerosols and solvents sector (ODS, POPS) • Phase-out of methyl bromide • Trade promotion and technology information exchange • Standardization and laboratory accreditation • Energy Policy and management (electricity and alternative systems) • Advisory services for environmental protection • Water management services • Training • Engineering design, research and development; • Agro related services (textile, leather, fisheries, food…) • Revolving credit support facilities; • Office leases, maintenance and repair services; • Construction works and site management; • Technical assistance and advisory services; • Air conditioning work and maintenance; • Environmental engineering and science; • Thematic mapping and evaluation services; • Trade and business related services; • Maintenance and repair services; • Design, publication and advertising services; • Telecommunications services; • Financial advisory services and insurance; • Freight, transportation, storage and logistics services; • Audit and accounting services; • Laboratory testing and calibration services; • Translation services;

11. Most Frequently Procured Services UNIDO Procurement at a glance • Electrical /mechanical installation works; • Consulting/advisory services on environmentally sound technology and practices; • Technology assessments and information exchanges; • Repair and maintenance services; • Consulting/advisory services on agriculture produce; • Consulting/advisory services related to renewable energy and environmental systems and infrastructures; • Technology conversion, retrofit and rehabilitation projects; • Energy policy and management; • Environmental management related advice and consulting services; • Consulting/advisory services related to environmental protection; • Waste disposal related advice and services; • Cleaner technology promotion services; • Water pollution related services; • Industrial surveys and consulting services; • Management advice and consultancy services; • Training and development services; • Consulting/advisory services related to nanotechnology; • Security services; • Catering services; • Conference services; • Business seminars and conferences; • Professional & vocational training and workshops • IT SW and internet related services.

12. eProcurement at UNIDO UNIDO’s New eProcurement Platform • Seamless and fully integrated eProcurement functionality • Four procurement methods / sourcing channels for UNIDO • Roll-out of Long Term Agreements (LTAs) for a maximum period of 3 years, extendable by two one-year periods • Increase of the following procurement thresholds: • Decentralized procurement: From previously €20,000 to €40,000 • Centralized procurement: Above €40,000 • Increase of procurement threshold in respect of case submissions to the Procurement Committee: From previously €70,000 to €200,000 • Introduction of best practice supply chain management and risk management in procurement • Sustainable procurement • Main revisions of UNIDO’s Procurement Manual, model bidding and contract documents • Change in the mandate and work of UNIDO’s Procurement Services

13. eProcurement at UNIDO UNIDO Procurement Procedures • UNIDO PROCUREMENT: a combination of: CENTRALIZED PROCUREMENT DECENTRALIZED PROCUREMENT • Intended commitment > € 40,000 • High value procurement requirements (complex, multi-phase goods, services and civil works) • Also to be applied for setting up LTAs • Procurement carried out by Procurement Official (Procurement Services). • Performance Evaluation / Lessons Learned • Intended commitment < € 40,000 • Medium value procurement requirements (goods, services and civil works) • No existing LTA • Procurement carried out by UNIDO Project Managers/Allotment Holders at HQ and in Field Offices. • Performance Evaluation / Lessons Learned

14. eProcurement at UNIDO eProcurement Workflow (Shopping Cart) Contract/Purchase Order Management (TO BE) Records of previous procurements in SRM should allow easier planning of costs and list of items to create Shopping Cart (“what to buy”) Fast Track (Procurement < €5,000) and LTA Call Offs System supported creation of Contract/PO documents; System generated reports on deliverables, reports, outstanding payments; Planned freight forwarding services LTA to reduce shipment costs and allow for monitoring and tracking of shipments; TC cargo insurance LTA to insure all equipment transportation world-wide to final project site; System embedded goods/service receipt, invoice receipt and payment; Electronic banking services LTA (covering approximately 60 developing countries); Contract terms and conditions toolbox; Deliverable monitoring. For procurements > € 5,000 For procurements <€ 200,000 Purchase Order Approval Bidding(RFx Event) Fast Track (up to € 5,000): SAP SRM automatically generates Purchase Order (PO) from the Shopping Cart; Data from RFx Event will be used to populate PO in PDF flexi-field format. Some of the fields will be editable while the majority will be standard. Created from details of Shopping Cart; Bidding process (“how to buy”). Evaluation (RFxEvent) To the extent possible, to be carried out within the RFxEvent; Clarification notes, responses, etc interactive with all potential bidders; Based on system input, reports on comparison and evaluation (vendor comparisons) are generated out of system and can be exported to excel. For procurements > € 200,000 Award Procurement case submitted to UNIDO Procurement Committee for recommendation and Managing Director, PSM, for approval.

15. eProcurement at UNIDO Centralized Procurement: PRS manages RFx event: Generally > € 40,000 (All values also) eProcurement Workflow Decentralized Procurement: Project Team creates RFx Event ≤€ 40,000 or Waiver @ Decentralized Procurement: Line Manager of AH 2nd approver of SC ≤€ 40,000 or Allotment Holder (AH) will review the SC and either approve or reject it. In case of rejection, the SC is returned to the creator with comments Project Team (Assistant, field staff, etc) create the Shopping Cart (SC) RFx Event Waiver @ Centralized Procurement: Chief, PRS 2ndapprover of SC Generally > € 40,000 (All values also) or Fast Track/ Call Off Orders Against LTAs ≤ € 5,000 and unlimited respectively Payment is released only if GR approved and 3-way matched [PO value = GR value = invoice value] Certified Invoice is sent directly to FIN Reports/ Deliverables are checked and if everything is OK, Goods/Service Receipt created and approved by AH Purchase Order is created out of RFx Event and approved either by Line Manager of AH or PRS

16. eProcurement at UNIDO UNIDO’s eProcurement Portal Please visit: https://procurement.unido.org/.

17. eProcurement at UNIDO UNIDO’s eProcurement Portal: Procurement Notices Current RFx Events (i.e. Procurement Notices) as of 28 October 2015:

18. eProcurement at UNIDO UNIDO’s eProcurement Portal: Bidder Registration 1. Click on “Request Bidder Account” 2. The bidder registration form will pop up. Fill out all information and submit.

19. eProcurement at UNIDO ERP Supported Communications with Bidders

20. eProcurement at UNIDO Average Procurement Timelines Example: Integrated Food Security Project in Kassala State, Sudan • Shopping Cart review and approval => • RFx Event publication (3 days) • Bidding period (18 days) • 7 offers received and evaluated (5 days) • Lowest cost, technically acceptable offer • => € 21,500 awarded to • Earthmoving Services Limited, Great Britain • Acceptance of offer => Approval and signing of Purchase Order(3 days) • Purchase Order approval => Confirmation approval (34 days) • Total time from requirement to PO confirmation: 63 days

21. eProcurement at UNIDO Benefits to UNIDO • Organizational process setup, i.e. no differentiation between Field and Headquarters procurement requirements • Global procurement from anywhere to anywhere • Reduction of procurement cost • Global freight forwarding and TC cargo insurance solution • Enhanced collaboration between Project Managers and procurement staff (risk management) • Increased transparency • Strengthened internal controls • Reduction of risks and bottlenecks • Roll-out of Long-Term Agreements (LTAs) • Simplification/standardization of procurement documents • Integration of procurement and risk management • Global vendors • For decentralized procurement, no/less reliance on UNDP support • Increased efficiency and effectiveness • Higher transparency • Enhanced focus on quality • Improved risk management • Improved monitoring and reporting • Greater flexibility

22. Forms of Collaboration with UNIDO Forms of Collaboration with UNIDO • Partnerships: • Which Type of Organization should Companies Normally Adopt? • Sub-Contracting or Consortia • What are UNIDO’s Rules on Collaborations With Local Business Partners? • Please refer to the Instructions to Bidders section in the RFx Event, requiring bidders to specify in their Offers: • the names and qualifications (including description of activities, number of personnel employed, references to the clients and completed projects) of the proposed sub-contractor(s) and/or equipment manufacturers, if any, and the extent and nature of such sub-contracting and/or equipment

23. Forms of Collaboration with UNIDO Sub-Contracting Most common form of collaboration among companies dealing with UNIDO: UNIDO concludes contract with one company (“the Contractor”) Contractor concludes individual contracts with sub-contractors • Sub-contractors need to be indicated in the Technical Bid which will become part of the Contract under consideration; • In case of non-performance, UNIDO only deals with the Contractor, not with sub-contractors.

24. Forms of Collaboration with UNIDO Consortia • In principle, permitted by UNIDO – and due to the complexity of procurement cases increasingly applied. • Requirements: • Bidders need to provide written declaration indicating: • - members of consortium • - nomination of the leading company with whom contract would be signed • - purpose of establishment of a consortium • - depending on the ‘form’ of a consortium attach all ‘legal’ documents • Once declaration has been received and accepted, separate bids by individual member(s) of the consortium are not permitted and may be disregarded.

25. Procurement Tips Procurement Tips • Make use of information/publications available on the procurement page of UNIDO’s web site www.unido.org/procurement; • Register on the UNIDO eProcurement portal and UN Global Marketplace (UNGM) at www.ungm.org; • Regularly monitor procurement opportunities published on UNIDO and UNGM web sites; • Always respond when invited to submit a bid, even if you should not be in a position to participate; • Read UNIDO‘s generic model contract and general conditions carefully; • Use your right to ask for clarification if anything in the bidding documents is unclear; • Ensure that your bid meets all requirements; if you cannot meet all requirements consider to sub-contract or form joint-venture/consortium; • Submit required certificates, financial statements, catalogues, reports, etc in the required format and language; • Ensure sufficient time to prepare offers carefully; • Prepare the offer to facilitate the work of UNIDO • Study bidding documents carefully; • Understand the ethics and confidentiality provisions; • Clearly mark and sign bids as required; • Meet deadline for submission of bids.

26. Procurement Tips Procurement and Innovative Solutions • Procurement at the right price; • Balance customer requirements with market readiness and value for money; • Open competition: Once size fits it all? • Beware of over-specified requirements; • Limit your terms and conditions to risks relevant to the type of procurement concerned [time of delivery, warranty, SLA, etc]; • Adapt, as far as you can, to vendor conditions; • Adapt, as far as possible, to market-ready products and services; • You get the right prices only when customers and providers understand each other; • Right size customer versus right size provider; • How important is it for the provider to have you as a customer? • Long term relationship; • Cultural affinities; • Seasonal trends; • Economic cycles.

27. Best Practice Supply Chain Management UNIDO Strategic Procurement Road Map High Critical Services/Goods Objective: Supply Risk Reduction Strategic Services/Goods Objective: Reduce Risk & Cost INCREASE SUPPLY ASSURANCE PRS to carry out more in-depth monitoring and apply adaptive risk reduction/mitigation techniques (KPIs, SLAs, risk registers, etc) STRATEGIC COLLABORATION PRS as strategic partner for Substantive Branches Procurement & Contracting Modalities: UNIDO Partner Organizations, Performance-Based Contracting, national execution, etc. Supply Risk High importance to UNIDO: Specialized and high risk services/equipment such as construction services, design & commissioning of machinery, plant and equipment, retrofitting/conversion of production lines, manufacturing processes, renewable energy systems Critical importance and high risk to UNIDO: Specialized services/equipment required for retrofitting/conversion of whole industries, such as GEF or MP projects, POPs decontamination projects, environmental impact projects (mini hydro power plants), revolving fund facilities, etc. Routine Services/Goods Objective: Transaction Cost Reduction Leverage Services/Goods Objective: Volume Discounts LEVERAGE Centralized Procurement, LTAs, procurement collaboration with other UN agencies/organizations PRS to focus high-risk procurement & contracting projects TRANSACTION COST REDUCTION Sourcing automation: Fast Track Procurement, Decentralized Procurement, LTAs, etc. Cost reductions and discounts: Established procurement transactions: BMS repair & maintenance contracts, vehicle supply contracts, lease agreements, IT, laboratory equipment, agribusiness equipment, etc. Easy to secure supply & low relative expenditure: Low value procurements: printing & design services, stationary, consumables (fuel etc), spare parts etc. Low High Low Relative Expenditure (USD/EUR)

28. Thank you!