Best practices for sharing Long Term Agreements (LTAs) among UN Agencies
Best practices for sharing Long Term Agreements among UN Agencies
Contents
1.Background, Objectives and Scope
2.Best Practices for sharing LTAs among UN agencies
2.1General use of LTAs
2.2Sharing LTA information
2.3Adopting LTAs established by other individual UN agencies
2.4LTAs established jointly by several UN agencies
3.Implementation
Annexes
Annex 1: LTA Information Summary Form
Annex 2: Sharing LTA Information – sample print screens from UNGM
1.Background, Objectives and Scope
Establishing Long Term Agreements (LTAs) and making them available to other UN agencies enhances efficiency in the procurement process and takes advantage of the benefits of economies of scale. Use of LTAs is encouraged to capture many strategic benefits, which include: (i) simplified business processes leading to reduced transactional costs, (ii) competitive prices based on volume discounts, (iii) consistency in quality, (iv) standardization of requirements, and (v) reduced delivery lead times. However there are also some associated risks such as:(a) dependency on vendors, (b) price hedging by vendor, and (c) opportunity losses for larger volumes than those originally foreseen or market fluctuations.The objective of this document is to share best practices on how benefits can be achieved while mitigating some of the risks.
An LTA is a written agreement between a UN organization and a supplier setting outall thecommercial terms applicable to the orders that may be issued against the LTA for pre-selected goodsor services i.e., pricing, discounts, payment, delivery and packaging and any other relevant specialas well as the general terms and conditions.LTAs exist in many forms and have various names in the differentUN organizations, including: framework agreements, systems contracts, requirements contracts, and possibly others. Depending on the nature of the purchase requirement and the policies of the organization concerned, LTAs aretypically established on a non-exclusive basis, without mandatory minimum purchases, for a specified period of time (e.g. two or three years, sometimes with possibility of extensions) andfor a maximum amount corresponding to a ceiling of aggregate demand volume. LTAs are usuallybased on the result of a competitive tender process and may be established witha single supplier or several suppliers. LTAs established with multiple suppliers should be established with clear objective parameters for determining the appropriate LTA to use for each single procurement action to avoid introducing inappropriate discretion at the time of placing orders pursuant to the LTAs.
UN agencies are encouraged to share information with other agencies about goods andservices covered by an existing LTA that will allow them to procure on the basis of the same prices and conditions established in that LTA.
UN agency cooperation in relation to LTAs may take three main forms, namely: (i) sharing LTA information; (ii) adopting existing LTAs established by other UN agencies (‘piggy backing’); and (iii) establishing LTAs jointly.
Some LTAs can only be used by the organization which established them, while others have been developed as collaborative procurement arrangements whereby more than one UN organization can benefit from pricing arrangements for goods and services established with a single supplier.
This document will focus on LTAs suitable to be shared with or used by other UN agencies, or established through the joint efforts of a number of agencies.
2.Best Practices for sharing LTAs among UN agencies
2.1General use of LTAs
While the applicable Financial Regulations and Rules and procedures vary, most UN organizations make use of LTAs to stabilise supply andcosts, achieve economies of scale and avoid duplication of procurement processes for those goods and services that are required on a regular basis but have uncertain quantity and delivery requirements.
LTAs are developed through a complex solicitation process, which must consider not only thequality of the goods/services under consideration, but also the capability of the selected supplierto fulfil orders during the full period of coverage. In addition, establishment of global or regional LTAs may need to take into account differences in cost structures in different locations and markets as well as time for delivery.Due to the added complexity, such solicitationprocesses are normally conducted from the headquarters of the organization concerned, and thenorders may be placed by its various offices around the world. Some organizations allowdecentralized offices to establish LTAs as well, in particular for goods and services required and availablelocally or regionally.
Where the specific requirementsset out in a purchase requisition fit within the frameworkcovered by an existing LTA of the organization, the procedure for procurement underthe LTA maybe followed. Each UN organization and LTA has its own specific procedures, andthe order should be placed with any necessary reporting according to the applicable procedures.
LTAs should be made widely known and/or accessible within the respective organization.Organizations should decide whether LTAs are to be used as a matter of normal procedurewhenever they apply, or if this is an option to be decided in each case by the relevant procurementofficer. The decision not to use an LTA is a decision to expend more staff timeon the individual requirement and should be justified in the procurement file. Furthermore, even though there are no mandatory minimum purchase requirements, suppliers submit their offers on the assumption that similar requirements will generally be procured through the LTA. In fairness to these suppliers, organizations should encourage the use of the LTAs that are awarded, recognizing that there may occasionally be circumstances where buying outside the LTA (i.e. ‘Maverick buying’) is less expensive but that the benefits of the LTA over the long run are still valid. On the other hand,there are circumstances where it may be appropriate to procure outside the LTA , e.g., when purchasing a large quantityin comparison to that provided for by the LTA, or when substantially lower unit prices can be obtained due tochanges in the supply market since the conclusion of the LTA.In the first case it may be possible to obtain additional volume discounts if the significantly larger volumes are tendered separately. In the second case, the LTA should be reviewed to determine whether it may require adjustment or re-tender to reflect the new market conditions. These complexities highlight the need for attentive LTA management and systematic review. It is good practice for eachorganization to have guidelines forensuring such attention and makingnecessary determinations.
When tendering to establish an LTA, the lead UN agency concerned is encouraged to include clauses in the solicitation documents that will allow other agencies to “adopt” the same terms and conditions.
Examples:
- The selected Proposer may be required to make the benefits of any contract/s resulting from this solicitation available to other UN Entities, subject to any interested Entity signing the attached "Form for Participation in the Contract by the UN Entity". The list of UN Entities eligible to place orders can be found at .
- The LTA that results from this tender may be shared with other UN organizations. The successful bidder(s) is requested to offer the same terms and conditions to any other organization within the United Nations System that wishes to procure goods and/or services under this LTA in accordance with those terms and conditions.
If the LTA is not open to be adopted orutilized byother agencies, then such language will not be included in the solicitation documents.
2.2Sharing LTA information
UN agencies are encouraged to publish general informationabout their LTAs on the UN Global Market Place (UNGM) website(
In accordance with the LTA Information Form as endorsed by the HLCM Procurement Network (Annex 1), the information collected by UNGM includes:
- The Supplier’s name and contact details;
- Brief description of the goods and/or services covered under the LTA;
- The LTA duration (start and end dates);
- Confirmationthat the LTA may be relied on for purchasing by other agencies;
- The UNSPSC code(s)related tothe goods and/or services covered under the LTA;
- The LTA reference number;
- Contact information about the UN lead agency and theLTA focal point in the Procurement division/unit;
- A copy of the signed LTA Information Form, including thedate of the relevant Procurement/Contracts Review Committee approval and reference number (optional);
- A copy of the signed LTA might be provided, as well as relevant instructions and conditions regarding its use (optional);
- Any other relevant information about the LTA.
See samples of UNGM pages related to sharing of LTA information in Annex 2.
The LTA Information Form provides summary information on the procurement process which may be sufficient for some Agencies to proceed with use of the LTA. If an Agency requires more information about a specific award process, it should contact the issuing Agency to request additional background.Individual agencies may determine that a specific LTA is not open to be used by other UN entities. Nevertheless, information about the existence of the LTA may be useful for other UN entities to be aware of and accordingly may be published on UNGM indicating the specific nature of the LTA.
2.3Adopting LTAs established by other individual UN agencies
A determination by a UN Agency to use an LTA established by another UN Agency (“originating UN Agency”) will consider whether the LTA satisfies the UN Agency’s requirements, specifically in terms of value for money and fit-for-purpose as determined by:
- The value of the UN Agency’s call-off is less than or equal to the intended single call-off (if) indicated in the LTA or in any case not more than the total value of LTA . As noted above an LTA should not be used to order disproportionately higher volumes than that intended, especially for goods/services that attract volume discounts that may not be included under the terms of LTA (see 2.1);
- The LTA vendor offers goods or services to the UN Agency at the same (or lower) price in the LTA and with the same terms and conditions;
- Specifications for the Goods, or Terms of Reference for the services required by UN Agency is substantially equal to those included in the LTA;
- The LTA set-up in terms of type and configuration, especially in respect of geographical coverage and use of multiple LTAs meet the UN Agency’s requirements.
Generally a UN Agencymay use an LTA established by another UN Agency outside the context of a joint procurement activity when the following conditions are met:
- The LTA is still valid and has not been cancelled or terminated;
- The originating UN Agency that set-up the LTA permits its use by UN Agency (see discussion below);
- The proposed LTA vendor is not ineligible in accordance with UN Agency’s policy on vendor eligibility;
- The vendor accepts the UN Agency’s General Terms and Conditions; and
- The vendor has demonstrated performance under the LTA as advised by the originating UN Agency
UN organizations have varying policies for accepting the LTAs of others, and in accepting the use of their LTAs by others, also referred to as ‘piggy backing’. Specific procedures may apply to the use of the LTA of another organization and theseshould be fully complied with.
If the original LTA does not include a ‘piggy backing’ clause, the lead agency may, where the supplier agrees, amend the LTA to incorporate such a clause. Alternatively, authorization in writing from the lead agency and supplier is sufficient to allow another agency to utilize the LTA. The LTA information form shall also indicate whether the LTA can be used only by the agency which established or whether it allows other agencies to utilize the LTA.
On the first occasion that an agency seeks to adopt an LTA established by another organization, the agency may have to sign an agreement with the supplier, authorizing the agency toprocure under the terms and conditions of that specific LTA. It is considered good practice to include a short form document in either the solicitation documents and/or the LTA itself that can be used for this purpose by those agencies wishing to rely on the LTA.Agencies adopting the LTAs of other UN agencies are encouraged, as far as possible, to follow the Terms and Conditions set in the LTA by the lead agency.The agency may further inform the lead agency of the establishment of the ‘piggy-back’ agreement to make them aware of utilization/adoption of the LTA.
Agencies adopting the LTAs of other UN Agencies shall follow the instructions for vendor performance evaluation established by the lead agency and submit a consolidated annual performance report to the lead agency, including the volume purchased by them under their contract. The cumulative annual purchase volume of the lead agency and ‘piggy-backing’ agencies under the same LTA, together with consolidated performance indicators, should be taken into account when negotiating with the LTA supplier, amending the current LTA and/or establishing a future contract and LTA.
UNGM offers a space where agencies adopting the LTA can provide feedback on their piggy-back agreement (duration of contract, amount, actual utilization, etc.). Providing feedback on the utilization of LTAs established by other Agencies is important in order to (i) collect useful statistics on LTA usage and UN collaboration for various stakeholders; (ii) negotiate volume discounts and rebates by the lead agency; and (iii) assess potential volume and collect suggestions and requirements for future collaborative procurement on similar goods/services.
It is recommended that anagency using the LTA at a duty station records the business volume, savings and supplier performance in the ‘Feedback on LTA Use’ tab under the UNGM LTA module on a semi-annual or annual basis. Such feedback will facilitate lead agency and participating agency to negotiate the best contract conditions with the supplier during the LTA period.
2.4LTAs established jointly by several UN agencies
There may be situations where one or more UN agencies consider that the supply of a certain good orservice would benefit from being organised through a joint LTA. UN agencies are encouraged to combine their efforts and establish joint LTAs for products/services that serve common purposes. It is recommended that only one agency, also referred to as the ‘lead-agency’ signs the LTA concluded from the joint procurement process. Depending on the terms of the LTA, other agencies involved mayrely on the LTA directly or through signing separate agreements with the supplier referring to the LTA.
3.Implementation
It is recommended that UN agencies apply the above mentioned ‘Best practices’in their respective organizations, to the extent applicable. To implement these‘Best Practices’, UN agencies may need tomake available resources forthe following activities:
- Publication of LTA information on UNGM (if not already doneby lead agency, a “one time effort”);
- Design of a common supplier performance evaluation template (if not already preparedby lead agency, a “one time effort”);
- Report to the lead agency (in the template provided)on LTA spend and supplier performance (by each participating agency, on an annual or semi-annual basis);
- Consolidation of an annual report on LTA usage and supplier performance: (by lead agency, on an annual or semi-annual basis).
Annexes
Annex 1: LTA Information Summary Form (endorsed by 14th HLCMPN meeting)
Annex 2: Sharing LTA Information – sample print screens from UNGM
Annex 1: LTA Information Summary Form
Long Term Agreement Information Sheet
[to be completed by the UN Agency or Entity (the “Lead Agency”) that established the LTA]
Section I: General Information1 / Lead Agency / Enter UN Agency Name
2 / Purpose of LTA / ☐Goods / ☐Services
Enter Brief Description of the LTA
3 / Reference / Enter LTA Reference Number
4 / LTA Duration / From: / Select an LTA Start Date / To: / Select an LTA Expiration Date
5 / Lead Agency Focal Point / Name: / First Name & Last Name
Title: / Title
Telephone: / Telephone with Country Code
E-mail: / Email Address
Section II: Vendor Information
6 / Vendor name and UNGM Registration Number: / Enter Vendor Name and UNGM Registration Number
7 / Vendor Address and Website: / Enter Vendor Address
8 / Vendor Contact: / Name: / First Name & Last Name
Title: / Title
Telephone: / Telephone with Country Code
E-mail: / Email Address
9 / Country of Origin / Enter Vendor’s Country of Origin
Section III: Selection Process Information
10 / Bidding Process / ☐Competitive Process / ☐Direct Contracting
11 / Type of Competition / ☐Open International Competition
☐Limited International Competition based on prequalification
☐Open Competition within Enter Country/Region
☐N/A for Direct Contracting
Section IV: LTA Information Terms and Conditions
12 / Type of LTA / ☐Global LTA
☐Regional LTA – Enter Region name
☐Country Specific LTA – Enter Country name
☐Specialized LTA
13 / Configuration of LTA / ☐Single Vendor LTA
☐Multiple Vendor LTA without Secondary Competition (Fixed Price)
[If selected, please provide brief description of selection mechanism for each vendor]
Click here to enter text.
☐Multiple Vendor LTA with Secondary Competition (Ceiling Price)
[if selected, please provide provisions for secondary competition]
Click here to enter text.
☐Other
Enter Details
14 / If Multiple Vendor LTA, please list other LTA Vendors and attach similar sheets applicable to those vendors / 1. Enter Vendor Name
2. Enter Vendor Name
3. Enter Vendor Name
15 / Does the LTA have a ceiling amount? / ☐Yes
☐No / Enter Ceiling Amount
☐applies to Lead Agency only
16 / Is LTA scope sensitive to volume discounts / ☐Yes / ☐No
17 / LTA have provision for volume discounts / ☐No volume discount provision
☐Volume Discount applies only within single order/call-off
☐Volume Discount applies across orders during the life of LTA.
Please briefly describe how the volume discount operates.
Enter Volume Discount mechanism
18 / LTA usage Limitations or Special Conditions / Enter any Limitations or Special Conditions in the LTA, if any
19 / Reporting of LTA usage to the Lead Agency / ☐Annually
☐Semi-Annually
☐Quarterly / ☐No Reporting Required
20 / Attachments / ☐Signed copy of LTA with all Annexes and Amendments
☐Guidance Note for the use of the LTA, if available
☐Enter Other Document Name
The above LTA was established by the UN Lead Agency in accordance with its Financial Rules and Regulations and Procurement Policies and was reviewed by its Contracts/ProcurementReview Committee in accordance with its Procurement Policies and approved by the relevant Procurement Authority. Any UN Agency wishing to use the LTA should contact the Vendor to obtain confirmation of supply/delivery of goods/services as needed. The Lead Agency will neither be responsible for any deficiency of goods/services by the Vendor nor be a party to any resulting dispute.
Title: / Enter Title
Name: / Enter Name
Signature: / ______
Date: / Select a date
Note: This form should be signed by either the Chairperson of the Contracts/Procurement Review Committee or by Head/Director/Chief of Procurement of the Lead Agency