Procurement Overview and Tender Process Pre Tender Meeting UNICEF Supply Division Copenhagen 11th December 2008 Katinka Rosenbom

Procurement Overview and Tender ProcessPre Tender MeetingUNICEF Supply DivisionCopenhagen 11th December 2008Katinka Rosenbom

UNICEF

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Consultations with Industry2000-2001: First industry-wide consultation on UNICEF approach to procurement

Feedback received was a major contributor to UNICEF’s change in procurement strategy from obtaining short term best value for money to ensuring Vaccine Security for children

Result: Major changes to procurement approach

• Move to 3-year global (OPV on own schedule)

• Move to RFP from ITB for multi-year

• Move to multiple awards per vaccine

• Establishment of vaccine procurement principles

Continued dialogue with industry through dialogue with current and potential suppliers, invitation to formal updates (April), participation in meetings with industry

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Findings

Overall there tends to be similar opinions between manufacturers.Multi-year (normally 3-year is considered best)Multiple vaccines procured in one tenderVaccine should not be procured as a commodity

However, there are variances on specific issues.Public opening (ITB) vs. public posting of awards

Our procurement process is also informed by inputs from other stakeholders:Benchmarks with other buyersReview with WHOProcurement Reference Groupsetc..

Our donors’ commitments and funding also influence the horizon and types of procurement we can consider embarking on

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UNICEF experienced vaccine shortages and developed strategy to address them:

VACCINE SECURITY: Ensuring an uninterrupted sustainable supply of affordable vaccines of assured quality

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CONTRACTING OF AFFORDABLE VACCINES• Forward commitments• Healthy vaccine industry - variety of manufacturers from both industrialized and developing countries

Elements of Vaccine Security

SURE FUTURE FUNDING• Donors, Countries• Working with Finance Ministries

ACCURATE, LONG-TERM FORECASTING OF DEMAND• Improve accuracy and length of forecasting (1-3 year plans at country level)• Manufacturers need to give accurate forecasts as well• Include buffer stocks

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Availability development of the 4 basic vaccines to UNICEF

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Implementation of the Vaccine Security principles helps vaccine availability

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Foundations to UNICEF Vaccine Procurement

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UNICEF Vaccine Procurement PrinciplesA healthy industry is vital to ensure uninterrupted and sustainable

supply of vaccines

Procurement from multiple suppliers for each vaccine presentation

Procurement from manufacturers in developing countries and industrialized countries

Paying a price that is affordable to Governments and Donors and a price that reasonably covers manufacturers minimum requirements

UNICEF should provide manufacturers with accurate and long-term forecasts; Manufactures should provide UNICEF with accurate and long-term production plans

As a public buyer, providing grants to manufacturers is not the most effective method of obtaining capacity increases

The option to quote tiered pricing should be given to manufacturers—in accordance with the World Bank classification.

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UNICEF Vaccine Procurement Objectives

• Vaccine Security: Ensure an uninterrupted, sustainable supply of affordable, quality vaccine

• Compliance to UNICEF Vaccine Procurement Principles• Compliance to UNICEF Financial Rules and Regulations• Compliance to Public Procurement Principles

• Integrity• Competition• Client Service• Equal Treatment• Organizational Objectives

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Additional specific GAVI tender objectives

1. A healthy market: ensuring the sustainable quantity of supply through a diverse supplier base

2. Select products and presentations that best meet the need of client countries

3. Achieving a long-term affordable price that countries can eventually finance in a sustainable manner

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GAVI Vaccine procurement Principles

In 2005 the GAVI Board updated the vaccine procurement principles applicable for GAVI.

• incorporate and expand on the UNICEF’s principles• Are not conflicting

As a procurement agency on GAVI’s behalf for a number of vaccines, UNICEF is guided by the GAVI principles for the GAVI funded vaccines.

UNICEF


GAVI Vaccine Procurement PrinciplesGAVI recognizes immunization as an important and potentially cost-effective

intervention that can enhance the right of all children to a healthy life, that has positive effects in combating poverty and that is a critical contribution to the achievement of public health gains and to the attainment of the Millennium Development Goals (MDGs) for Health.

GAVI commits itself to the immediate and long-term aim of vaccine security – the sustained supply of affordable quality vaccines designed to meet the needs of developing countries for sustainable use.

GAVI, based on the work of national partners, commits itself to enhancing reliability and predictability in vaccine demand and supply, strengthening the planning and forecasting of vaccine needs in the immunization programs it supports, and ensuring that updated information is readily available to industry - thereby enabling the efficiency of vaccine supply for greatest affordability of vaccines.

GAVI recognizes the importance of innovation in the vaccine sector and commits itself to working with industry and national partners to ensure increased use of appropriate under-used vaccines relevant to benefit children most in need, recognizing that success in this will greatly motivate increased research and development of new vaccines including those of relevance to children in developing countries.

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GAVI commits itself to working with national partners and with all industry to ensure increased use of appropriate under-used vaccines to benefit children most in need, recognizing that this in turn will have a positive effect on innovation and development of new products of importance to the developing world.

GAVI commits itself to develop effective procurement strategies based upon the type of vaccines, level of maturity and market conditions of the product in question. These strategies will be based on recognition of competition as critical to achieving long-term sustainability, but may also include longer-term contracting arrangements or guaranteeing of minimum volumes with a single supplier.

GAVI recognizes the vital role of the vaccine industry in world health improvements and establishes strategies that ensure the participation of both industrialized and developing country manufacturers in providing vaccines for developing countries.

GAVI Vaccine Procurement Principles

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Establishment of 3 year Supply Arrangements for vaccines included in this tender• Current Arrangements cover supply through 2009• Next Arrangements will cover 2010-2012

UNICEF establishes “framework arrangements” called Long Term Arrangements (LTA’s)• Purpose: To establish forecasts between manufacturer and

UNICEF on quantities to be produced and quantities to be bought over the time period;

• Defines Technical, Quality and Commercial requirements

The Expected Tender Outcome:

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UNICEF is fully funded by voluntary contributions• Roughly 2/3 Governments and 1/3 Private

UN Financial Rules and Regulations• UNICEF to fiscal policy to be zero risk• UNICEF cannot make external financial commitment without having internal

committed commensurate funding

Funding and Budgetary Cycles of vaccines• Over 500 funding streams for vaccine procurement each year

• Normally arrives 4-12 weeks prior to delivery• Funding changes from year-to-year (one donor is not• Government budgets are annual and subject to their release cycles• Working on behalf of the poorest countries

Why are they arrangements for what is forecasted and not more firm?

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LTA Management

• UNICEF issues monthly forecast updates / Manufacturer provides monthly production schedule (12 month period…)

• UNICEF places Purchase orders upon receipt of funding for Countries (from 1 week to 6 mo. in advance)

• UNICEF / Manufacturer hold regular meetings

• During early 4Q, UNICEF confirms next year’s annual forecast projection / Manufacturer confirms production

• Vaccine is shipped direct to Countries• via UNICEF Contracted Freight Forwarder• via Manufacturer

• Vaccine is inspected upon receipt in country

Goal is forward funding so that we can place firm commitments with manufacturer’s earlier

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Procurement OverviewUNICEF Issues Formal Tender

and Evaluates Offers

Establishment of Long Term Arrangements for supply of vaccines for 3 years

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The continuous changes in both supply and demand creates a dynamic market that requires continuous monitoring and management

Systems are in place to monitor demand against supply and to report regularly both to manufacturers, countries and partners

Supply Management

~ 40 Vaccines from ~ 16 Suppliers~ 14 Immunization devices from ~ 8 Suppliers

80-100 countries

UNICEF has the capacity to reallocate demand and supply between Countries and Suppliers, to avert crisis and reduce the impact of demand or supply fluctuations

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Vaccine Procurement Process and Methodology

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The tender process (develop, issue, receipt)

1. Development of procurement strategy and objectives

2. Demand / Forecast development

3. Development of draft tender document with PRG*

4. Pre-tender meeting with industry

5. Feedback from industry and finalization of tender document

6. Issuance of tender

7. Clarifications

8. Receipt of proposals (Validity)

*PRG: Procurement Reference Group established for some GAVI supported vaccines

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The tender process (evaluation and award)

9. Technical review (by WHO) 10. Quantitative and Qualitative review11. Clarification meetings with suppliers12. Evaluation of proposals per Evaluation Criteria & Procurement Objectives13. Consultation with PRG14. Recommendation of awards based on evaluation15. UNICEF internal award approval process16. GAVI approval, and provision, of any financial requirements17. Information of outcome to PRG18. Notification of awards to proposers19. Public posting of awards (www.unicef.org)20. Debriefing21. Establishment of Arrangements

*PRG: Procurement Reference Group established for some GAVI supported vaccines

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October – December 2008: Review and Development• Strategy• Quantities / Forecast• Commercial and Technical Terms and Conditions• Feedback and input received from partners

December 2008: Pre-tender meeting with manufacturers (10th-11th)• Provide programmatic update• Present tender process, terms, quantities, to manufacturers• Manufacturers provide feedback • Adjustments are made as necessary

Mid January 2009: Tender IssuanceEnd February 2009: Closing of Tender; target 6 weeks response timeMarch - May, 2009: Evaluation and NegotiationJune 2009: Recommendation, issuance of awards July-august 2009: DebriefingsJanuary 2010: Deliveries commence

2010-2012 Tender Timelines

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Tender Methodology – Request for Proposal

Request for Proposal (RFP) vs. Invitation to Bid (ITB)• Tendering for products that are not simple commodities; various

factors will be considered in evaluation• RFP Provides manufacturers the opportunity to develop a proposal

of what is needed for their vaccines to be produced and sold• RFP Allows for discussion on different presentation options,

production volumes, timing of production for linked and competing vaccines

• Public opening vs. public posting of awards

In general, UNICEF has opted for: Multi-year tenders: RFP Single-year tenders: ITB

UNICEF


Tender Duration Single-year vs. Multiple-year• Single year: demand is more ad hoc and changing; but not very

responsive to manufacture production planning

• Multi-year: more appropriate for production planning cycles • But how long? 2, 3, 5, 10 years• Based on feedback from manufacturers

• Balance between bringing stability to the market and keeping the market active

• UNICEF opted for 5-year for OPV (2000-2004), but this had varying results

• Manufacturer had difficult time offering prices over 5-year period• Demand changed significantly during that period

• Current OPV tender 2 year (2009-2010) programme characteristics

In general, UNICEF has opted for: 1-year tender: ad hoc needs 3-year tenders: EPI vaccines introduced in routine programmes

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Invitee List

Only WHO PQ manufacturers vs. All manufacturers• UNICEF buys from WHO PQ manufacturers• UNICEF used to only invite WHO PQ manufacturers• Optimal duration – procurement agreements for 1yr, 3yr, 5yr?• But as we move to multi-year procurement, we don’t want to cut

out a potential mfr that becomes WHO PQ during multi-year period

• We also want ‘new’ manufacturers to become familiar with UNICEF procurement process

In general, UNICEF has opted to invite: Multi-year tenders: All manufacturers Single-year or single delivery tenders: WHO PQ mfrs

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Product RangeMany vaccines in one tender vs. Separate tender for each vaccine

• Many products have linkages- in forecast (eg, DTP and combos with DTP; lyopholized products)

• Vaccine procurement has large number of terms and conditions- lengthy document

• Lengthy tender process when establishing 3-year arrangements

• Specific tender objectives and processes for some vaccines

In general, UNICEF has opted for:Separate tender for OPV: Large volumes, changing demandSeparate tender ‘specials’: eg, Rabies, IPV, etc.01-06 Combined tender: for all vaccines (except OPV, specials) 07-09: Separate tender: EPI Vaccines07-09: Separate tender: GAVI funded HepB and Hib vaccines07-09: Separate tender: Yellow Fever10-12: Separate tender: EPI Vaccines10-12: Separate tender: GAVI funded HepB/Hib

10-12: Separate tender: YF vaccines

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Evaluation Criteria Options

Various options to evaluation criteria:

Option a) Lowest price is awarded full offered quantity, then second lowest, etc, until required quantity is fulfilled.

Option b) Pre-defined weightings of each factor (past on-time delivery performance, price, delivery schedule, future production plans, VVM, shelf-life, ability to maintain buffer stock, timeline for emergency response (packaging), shipping performance, etc.)

Option c) Quantitative and Qualitative review (of above factors) against Pre-defined procurement objectives and principles.

In general, UNICEF has opted for: Multi-year tenders: option (c) Single-year or single-delivery tenders: option (a)

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UNICEF attempted this in 2001-2003 period

Experience:• We were not good at ‘picking winner’• None of conditional award timelines were met (projected time for

WHO PQ and production start-up)• Several were not met even during the 3-year period

Change in approach:• We no longer issue conditional awards• When a manufacturer product becomes WHO PQ, then award

process is initiated (if applicable)• Let competitive process determine the ‘winner’ (in terms of timing)

Why not ‘conditional awards’ for non-WHO PQ products?

UNICEF


1. In order to allow for the entrance of new manufacturers in the market UNICEF includes a set of conditions under which award(s) would be considered after the initial award(s).

2. If the supplier was not WHO pre-qualified for the product offered at time of tender, their proposal must have included a detailed plan on the timeline to obtain WHO pre-qualification, including:

• Product Development • Clinical Trials • National Regulatory Licensing • File submission to WHO

3. If the manufacturer’s proposal was deemed of commercial interest to UNICEF, UNICEF and WHO should be kept informed about the progress of the submitted timeline.

What happens when manufacturer gets WHO PQ in the middle of a UNICEF multi-year tender?

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4. If the proposed vaccine obtained WHO pre-qualification and upon confirmation that the mandatory requirements of the RFP are met, UNICEF considers establishing an awarded/re-allocated quantity to the manufacturer under one or more of the following conditions:

• UNICEF is facing a monopoly situation or a near-monopoly situation;

• Lack of performance of current manufacturer(s); or • Insufficient supply from current manufacturer(s)

5. The quantities considered for award would be those not met under established contracts or quantities that could be reallocated from existing arrangements after negotiation with the corresponding suppliers.

What happens when manufacturer gets WHO PQ in the middle of a UNICEF multi-year tender?

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Context of UNICEF global vaccine supply and funding availability.

95% of funding (non GAVI funding) for over 2 billion doses of vaccines arrives 1-3 months prior to delivery.

UNICEF procures for 80-100 countries; each country has 3-7 funding sources

UNICEF is cautious to make major changes with industry that will set precedent or expectations that cannot be applied to all vaccines, or may not be sustainable

In any case, UNICEF has issued firm contracts;• Vaccine in scarce supply and quantity needs to be assured• Secure a more favourable commercial offer

When to firm contract?

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There are many reasons to firm contract:• Avert risk• Obtain more favourable commercial conditions• Provide assurance to manufacturer(s)

And many reasons not to firm contract:• Manufacturer not willing to offer reciprocal terms (mfr does not want to

accept penalty if production is not available- due to cGMP or batch failure, etc.)

• May prevent other manufacturer from entering market (either because it is exclusive, or it is perceived as exclusive)

• Precedent, and unable to sustain, etc. (as mentioned earlier)

Therefore, each case needs specific review.

UNICEF is dependent on firm funding to firm contract, hence not possible in all markets.

When to firm contract?

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Post-award Debriefings “What can we know about our competitor’s offer?”

• All manufacturers are advised of the outcome of their proposal

• Manufacturers receiving an award are invited to a formal debriefing

• Manufacturers not receiving an award may request a debriefing

• During a debriefing session, the strengths and weakness of the manufacturer’s proposal may be discussed. Details concerning the evaluation, results of a competitor will not be discussed, other than to indicate that which is publicly available.

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Public Notification of Awards

UNICEF has standard procedures for publication of awards on website:• Tender, duration, total value, material(s), supplier name• This is UNICEF standard procedure (not just immunization)

To meet request for information sharing, all Proposers will receive, after awards are made a letter including the following information:• Total vaccine quantity awarded per year per presentation at an

aggregate level• Number of suppliers awarded per year per vaccine presentation• Yearly awarded weighted average price (WAP) per vaccine

presentation• Total contract value awarded to each supplier, with listing of

included vaccines.

Annual awarded weighted average price for each vaccine presentation will be posted on the UNICEF web-site.

UNICEF


Examples of Controls and Oversight

Internal Oversight• UNICEF Financial Rules and Regulations• UNICEF Procurement Procedures• Ethical Code• Contracts Review Committee (independent from contracting staff)• Procurement Training and Certification of contracting staff

External Oversight• UN External Audit (French audit in mid-2004 focused on vaccine

procurement; no major findings)• UNICEF Internal Audit

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Ensuring equal treatment, no bias and ethics

• Contracting staff are government by Financial Rules and Regulation and procedures related to ethical behaviour

• During tender period- communication is more formal and written, in accordance with tender instructions

• Bids/proposals are received and validated by an independent ‘Bid Section’ (QA) and then transferred to Contracting staff

• UNICEF does not accept manufacturers to fund trips, hotels, etc. or gifts

• Business should be conducted during normal working hours

• Meetings should be with min. two UNICEF staff members

• Suppliers not invited to UNICEF staff offices

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Tender document and Proposals review:

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Overview of 2010-2012 Tender DocumentSome changes in the structure of the document, but any important content changes will be

highlighted in the background section

5 Main Sections:

1- Purpose• The objectives of the tender

2- Background• Procurement Principles• Forecasting Methodologies• Programmatic background relevant to understand the requirement• Information highlighting changes or specific points such as; scenarios for vaccines, and

USD/EURO description

3- Instruction to proposers• How to make and submit a proposal• Information on how UNICEF will handle proposals, incl definition of mandatory requirements• Information on how UNICEF will debrief and share result of tender outcome.

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Overview of 2010-2012 Tender Document

4- Terms and Conditions (list not exhaustive)• Mandatory technical requirements WHO Technical Requirements• Mandatory financial and commercial requirements, such as;

• UNGM registration• Financial Requirements / Approval by UNICEF Supplier Evaluation

Unit• VVM, Shipping and Packaging Instructions, ETTMD, Vaccine Arrival

Report, weight and volumes, samples• Commercial Requirements; currency, MFN, Incoterm• Account Management, past performance, affordable prices, monthly

Allocations, Emergency response preparedness • Special terms and conditions; ethical clauses• General Terms and Conditions• Evaluation of proposals and basis for awards

• Methodology, process and criteria

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5- Answering sheets• RFP Proposal form • Qualitative Proposal sheets – for guidance• Quantitative Proposal sheets – one for each vaccine, and

alternative offered• 2010-2012 Tender Quantities• Presentation specific• Requested information: Quantities, price, currency,

commercial factors, lead time, packaging/weight/volume, VVM

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Annexes• UNICEF General Terms and Conditions• Shipping Guidelines• VVM Specifications• WHO Model Inserts• UNICEF Supplier Financial Evaluation Form• Vaccine Arrival Report


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Proposals from Manufacturers

Manufacturers are invited to submit a comprehensive proposal

• Responsive to projected quantities for each product presentation

• The type of vaccine being proposed, and specifications• Unit price per vial and per dose • Annual and monthly production for first year• Alternative vaccine presentations/products• Comply with all MANDATORY REQUIREMENTS

• Comply with the INSTRUCTIONS TO PROPOSERS and information requested there within

• Provide explanations to any request for exceptions or clarification on the RFP PROPOSAL FORM

UNICEF and WHO will review the proposal and hold discussions with manufacturers

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Proposal Evaluation Process

Review of Mandatory Requirements• WHO Pre-qualification• Financial Review by UNICEF Supplier Evaluation Unit

(SEU)• Compliance to UNICEF General Terms and Conditions

Quantitative Review of Proposal• Products offered, quantities, price, delivery schedule, lead-

times, ability to maintain buffer stock, shelf life, VVM

Qualitative Review of Proposal• Proven experience and past performance• Ability to perform account management / good

communication• On-time delivery performance

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Technical Review of Proposals

All proposals are reviewed by WHO

Key areas that WHO review are: • compliance to mandatory technical requirements• compliance to preferred technical requirements• for products not WHO pre-qualified at time of offer, WHO

conducted an assessment of timeline given for pre-qualification

• other technical issues (Regulatory oversight, etc..)

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Basis for Awards

The allocation of awards to each supplier will be made in accordance with the UNICEF Vaccine Procurement Principles

and with the objective of

Ensuring an uninterrupted sustainable supply of affordable, quality vaccine.

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Thank you !

UNICEF


Strategic tender issues pertaining to 2010-2012 tender:

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Overview of 2010-2012 Tenders

• 3-year Duration: 2010-2012• Request for Proposal

Traditional EPI: DTP, TT/DT/Td, HepB, Measles, MMR, MR, BCG

HepB/Hib in combination

Yellow Fever

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Middle Income countries (MICs)Some MIC quantities are included in the EPI tender

• Countries were UNICEF has a history of procuring on their behalf through VII (Morocco and Philippines)

Additional MIC forecasts received for combination vaccines.• Currently being assessed • Will be identified as MIC/non-GAVI eligible country demand or

tendered for separately

Feedback from industry on UNICEF’s role in supplying MICs is welcome.

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Country preference and interchangeabilityCountry preference:

For vaccines with two pharmaceutical forms available:

Vaccines covering the same diseases will be considered as one product for the purpose of the request;

however in the tender, we will also indicate the estimated number of doses required for each formulation based on country preferences.

Non-Interchangeability:

Restricts the short term supply management flexibility, but not the longer term security achieved by a healthy market with multiple suppliers.

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Demand

• The successful introduction of combination vaccines, needs careful transition management, and is impacting our forecast accuracy

• The tender aims at transparency on uncertainty by identifying known uncertain quantities due to product change (switchers)

Funding

When funding availability is a major determinant we share scenarios outlining the different demand profiles

Managing transition and uncertainty

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Currency of proposals – USD and EURO

Background:UN and UNICEF accounts in USD. With the large value, long durations and multiple

transactions associated with vaccine contracts (LTAs) UNICEF has required USD only in the past.

EURO contracts require higher degree of internal funds management, planning and coordination with countries to keep up with effect of currency changes.

Manufacturers have requested the possibility of quoting in EURO.

UNICEF In response to requests: • Proposers are required to quote in USD.

• If they wish Proposers may provide a quote in both USD and EURO.

• UNICEF will evaluate the USD FCA price or the EURO price, whatever is in the interest of UNICEF, but UNICEF reserves the right to award in USD only. For evaluation purposes the EURO offer will be converted to USD using the UN rate of exchange on the day of the closing of the bid.

• If a EURO offer is awarded, the resulting LTA will be in EURO throughout its duration.

• To be an attractive alternative for UNICEF a EURO offer must therefore be lower than the alternative USD offer

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Closed vs. public openingSome manufacturers have requested for additional

feedback or public opening to have better access to information.

Regularly RFP process is without a public opening

UNICEF have conducted RFPs with public opening for vaccines as exceptions, but assess that this is not an ideal process for ensuring transparency as the information shared is incomplete and may be misleading.

Documents

Procurement Overview and Tender Process Pre Tender Meeting UNICEF Supply Division Copenhagen 11th December 2008 Katinka Rosenbom