Assume you are a procurement officer of UNCHR, discuss the sourcing process you would

undertake to procure goods from the US.

Discuss the requirement description process for this procurement

Policy Elements, Procedures and Practices Standards of Conduct

These standards of conduct should address:

• Conflict of Interest—Employees should not be involved in selecting, awarding and/or

overseeing procurements if there is a real or perceived conflict of interest. This includes
situations where the employee, any member of the employee’s immediate family or the
employee’s partner has a financial or other interest in the business being considered or selected
for an award. This includes any organization that employs or is about to employ the employee,
family member or the employee’s partner.

• Gratuities—Employees must not request or accept gratuities, gifts, favors or anything of

monetary value from subagreement contractors or vendors. However, you may set standards for
situations in which the financial interest is not substantial or the gift is an unsolicited item of
nominal value.

• Disciplinary Actions—The standards of conduct must outline the disciplinary actions to be

applied to employees who violate these rules.

Free and Open Competition

To encourage free and open competition to the maximum extent possible, be sure to take into
account the following:

• Unfair Competitive Advantage—Vendors that help you develop statements of work should
be barred from bidding on that work. Furthermore, noncompetitive contracts to consultants who
are on retainer contracts should be avoided.

• Unreasonable or unnecessary requirements—placing unnecessary requirements on firms in

order for them to qualify to do business should be avoided because it limits free and open
competition.
• Clear Evaluation Criteria—Solicitations should be clear about what criteria your organization
will use to evaluate bids. Be wary of specifying only a “brand name” product; always allow “an
equal” product to be offered.

General Procurement Procedures

To help assure that you are managing your money well, include the following in your
procurement policy: • Consider both lease and purchase alternatives, and select the most
appropriate for your situation.

• Include in all solicitations:

 eligibility to participate in the procurement process;

 description of technical requirements;

 criteria to be used in evaluating bids;

 minimum acceptable performance standards;

 specific features of required items; and

 preference for energy-efficient items and products that conserve natural resources.

Procurement Instruments

Specify when to use various procurement instruments, such as fixedprice contracts, cost-
reimbursable contracts and purchase orders. Your policies should prohibit the use of “cost-plus-
a-percentage-ofcost” or “percentage-of-construction-cost” methods of contracting. A time and
materials (T&M) contract may only be used after a determination that no other contract is
suitable and if the contract includes a ceiling price that the contractor exceeds at its own risk.

Contractor Evaluation

Clearly state that you will only enter into contracts with vendors that you believe can
successfully complete the work required. Your policy should consider contractor integrity,
record of past performance, financial and technical resources or accessibility to other necessary
resources. Your policy should also include a process for ensuring suppliers are not listed on
System for Award Management (SAM) (www.sam.gov)

Documentation Procedure

Include a process that records some form of price or cost analysis with every procurement
action. The cost analysis should include the allowability test, which is covered in Implementation
Tips issue Compliance 2: Procurement Processes and Allowability
Global sourcing refers to a procurement strategy through which an enterprise works to identify
the most cost-effective location for product manufacturing, even if that location may be in a
foreign country.

For instance, a cement manufacturing company may find that the costs of raw materials and
manufacturing are lower in some foreign country because manpower is cheaper there. The
company would therefore opt to shut down its domestic operations and set up a plant in that
foreign country.

The general sourcing process can be divided into the following 5 stages, explained below.

Stage 1: Preliminary Research – Investigation and Tendering

At this stage, the enterprise identifies the core and non-core operational activities, analyzes
customer and market requirements and identifies competitors. The idea is to develop the firm’s
business objectives, prospective markets and brand positioning.

The strategic sourcing scope is also outlined through a business plan developed by the executive
and the sourcing specialist, and the preliminary work strategy and baseline for measuring
performance is established and documented as a procurement process plan.

Stage 2: Market and Supplier Evaluation

At this stage, the enterprise develops a detailed list of supplier selection benchmarks, which is
used to select the most appropriate suppliers that fit the requirements. Based on the findings of
the process, the sourcing strategy may be tweaked further and a final costing model is released.
The operational and economic benefits of the project will then be estimated. RFIs will then be
sent out to the shortlisted suppliers.

Stage 3: Selection of the Supplier (Sourcing Event)

Based on the results of the RFI dispatch, a final list of suppliers is selected and negotiation for
products is carried out, culminating in a supply agreement. Technical assessment of final supply
candidates is conducted to come up with the savings estimates for each. Finally, an
implementation schedule outlining timelines for various suppliers is developed.
Stage 4: Implementation

A performance analysis schedule should be developed, outlining all activities in the

implementation process. The implementation team should be constituted by the procurement
agent and the schedule and strategy should be published. Agreements related to shared supply,
resources and logistical arrangements are developed.

At this stage, expected internal and external results from the suppliers should be documented.
Periodic measurement and reporting of actual performance should be carried out.

Stage 5: Performance Monitoring

Performance of suppliers is measured, both independently and in relation to the resources and
processes applied by supply partners. This should be carried out routinely and reported
accordingly. In-depth evaluation of the efficacy of collaborative efforts with each supplier is
obtained, and the partners involved continuously isolate problems and find out ways these can be
solved for improved performance.

The objective of performance monitoring is to maintain the most efficient procurement process,
one that is flexible and dynamic, easily adapting to a changing market environment.

A Good Global Sourcing Strategy Addresses

Cost – the main purpose of product sourcing strategy is to take advantage of lower labor costs in
foreign countries. However, the procuring organization will face additional costs that don’t factor
into domestic transactional costs. These include broker fees, freight charges, taxes called,
insurance, duties and bank fees.

Laws – the sourcing specialist together with the supplier should consider what body of law shall
be applied to their contractual agreement, i.e., the buyer’s country’s law, the supplier’s country’s
law or the law applicable through a signed treaty between the 2 countries.

Currency – some buyers may insist on transactions in their own currency for the sake of
simplicity. However, a prudent buyer will consider the possibility of using the supplier’s
currency where the buying country’s currency may become stronger in the period between
agreement and supply and eventual payment.
Lead time – global purchases have a significantly longer lead time than domestic sources. The
reason is that overseas travel is slower, unless air travel is used. In addition, there is time taken in
the custom clearance process, which does not apply for domestic sources.

Culture and language – where the procurement agent is unfamiliar with the culture and
language of the supplier, the risks of misunderstanding, miscommunication and
offensive/awkward encounters significantly increases.

Transportation – whereas domestic sourcing necessitates the use of a single mode of

transportation, global sourcing frequently includes multiple modes of transport, e.g., combining
air or water transportation with road transport to bring goods from the supplier to the supplier’s
port, to your own port and finally to your place of business.

Methods of payment – in global sourcing, a letter of credit is used for payment, which
necessitates the cooperation of the banks of the supplier and buyer.