(Last updated: 16 Mar 2011)

Trends and opportunities

The market

The United Nations (UN), including its many affiliated agencies represents a vast global market in excess of US$13.6 billion from US$10 billion in 2007, a gain of 34 per cent. The total procurement of goods by UN agencies went up by US$1.5 billion an increase of 18.1 per cent while procurement of services grew by US$2 billion, an increase of 43 per cent. During 2004-2008, UN procurement more than doubled in volume from US$6.5 billion to US$13.6 billion, which can be attributed to the growth of the procurement of services, which accounted for US$4.1 billion for the same period.

The UN is made up of a variety of organisational entities (agencies, organisations, commissions, programs, funds etc). Member organisations of the UN reporting annually to the General Assembly and as appropriate through the Security Council or the Economic and Social Council include:

Specialised agencies work in the economic, social and technical fields and possess their own legislative and executive bodies, their own secretariats and budgets. They include:

Australia

In 2008, Australia accounted for US$39.2 million, comprising only 0.3 per cent for that year.

The procurement of goods was approximately US$27.2 million and services accounted for US$12 million. Procurement of goods and services by agency was:

• United Nations Procurement Services – 16.59 million
• United Nations Development Project Fund – 14.52 million
• World Food Program – 2.67 million
• United Nations Children’s Fund – 1.49 million
• Other – 3.93 million

(Please note: Latest available UN figures at time of publication)

Goods and services procured by the above agencies were in the following areas:

Products: Telecommunications equipment, electric motors, medical equipment, pharmaceuticals, scientific instruments, vaccines.

Services: Feasibility studies, energy planning, a range of consultancy services, environment planning, power transmission and distribution, education/training, logistics support.

UN procurement processes

In line with General Assembly resolutions and decisions by other UN Agency Executive Boards, all organisations in the UN system are actively seeking to identify new sources of supply particularly from developing and under-utilised donor countries (such as Australia) in order to create an expanded and more equitable geographical distribution of procurement.

All potential and prospective suppliers to the UN are required to register with the United Nations Global Marketplace (UNGM) and Inter Agency Procurement Services Office (IAPSO). This supplier database is available to all UN agencies and the World Bank procurement personnel to shortlist suppliers for competitive bidding.

UNGM acts as a single window, through which the international business community may register, thus providing an excellent springboard to introduce their goods and services to the UN Agencies. For further details please refer to www.ungm.org or www.iapso.org

However, it is important to note that many agencies within the United Nations have their own databases of suppliers (eg. UNOPS, UNDP, UNICEF, UNESCO and UNFPA) and it is advisable that Australian companies register with those organisations as potential suppliers to receive invitations to tender. The most obvious opportunities are in large centres of UN activity:

• Peacekeeping
• United Nations Procurement Division
• UN Development Programme
• UN Children's Fund
• World Food Programme
• UN High Commissioner For Refugees
• United Nations Office for Project Services

The United Nations Procurement Division (UNPD), United Nations Office for Project Services (provides project management to major UN projects) and the United Nations Development Program (UNDP) account for over 50 per cent of total UN procurement.

Opportunities

The UN presents opportunities for Australian exporters in the following niche areas:

Tariffs, regulations and customs

Goods supplied to United Nations agencies are generally exempt from taxes and duties, with quotes typically made on a free on board or cost and freight basis, although there are exceptions to these rules. A performance bond will occasionally be required, and final settlement is generally at 30 days from the receipt or certified consignment of the goods.

Industry standards

The UN attempts to provide reasonable lead times for procurement, however, operational requirements may drive procurement timeframes.

The normal procedures followed by the UN system for the various levels of individual contracts are as follows (with minor variations among agencies):

• Values of purchase orders up to US$30,000
  A direct selection of possible suppliers is done by the procurement office concerned; normally three suppliers are identified. Based on analysis of the quotations received the order is awarded to the supplier that meets the specifications and delivery times at the lowest price.
• Value of purchase orders from US$30,000-US$100,000
  Limited competitive bidding is done by inviting a pre-selected shortlist of suppliers to respond through sealed bids. The shortlist consists of suppliers from developing countries including the recipient country, under-utilised donor countries and other donor countries. The order is awarded to the most qualified and responsive contractor submitting the lowest bid.
• Value of purchase orders from US$100,000+
  International competitive bidding is the rule. If exigencies of a project so allow, suppliers are invited to bid by advertisements in the UN Publication, ‘Development Business’, IAPSO’s ‘Business Opportunities’ on www.iapso.org or other trade publications. When requests for proposals have been issued, contracts are awarded to the best-evaluated responsive offer.

Special mention should be made on the procurement requirements of the United Nations Procurement Division (UNPD) which is responsible for the procurement of goods & services to the UN Secretariat and the Department of Peace Keeping Operations (DPKO) in New York.

There are three types of solicitation documents issued by the UNPD to fulfil a procurement requirement:

• Request for Quotation (RFQ)
  An RFQ is an informal invitation to submit a quotation, usually associated with requirements having an estimated procurement value of under US$30,000. Prices and other commercial terms and conditions are requested and the award is made to the lowest priced technically acceptable offer.
• Request for Proposal (RFP)
  An RFP is a formal request to submit a proposal usually associated with requirements for services, which cannot be clearly or concisely defined, with an estimated procurement value of over US$30,000. Price is only one of several factors comprising the evaluation criteria. Award is made to the qualified bidder whose bid substantially conforms to the requirement set forth on the solicitation documentation and is evaluated to be the lowest cost to the UN.
• Invitation to Bid (ITB)
  An ITB is a formal invitation to submit a bid, usually associated with requirements that are clearly and concisely defined, with an estimated procurement value of over US$30,000. Normally price is the sole determinant in making an award. Where all technical criteria are met, award is made to the lowest bidder.

Market entry strategies

To be successful in the UN market, Australian companies should take a proactive role in marketing their services to the headquarters of the UN or the relevant UN agency, as well as to the developing country resident mission or agency implementing the project.

Registering on the UN Supplier database does not guarantee that exporters win contracts.

It is also important to monitor the US websites continually for new opportunities and tenders.

Australian exporters registering with the UN should:

• Be a provider or an exporter of quality goods and services and have been in business for a minimum period of three years.
• Have a strong track record in successfully implementing projects in developing countries and specific regions in the world.
• Have demonstrated capability and experience in working with multilateral aid agencies, foreign governments and in country government organisations including aid agencies.
• Have quality promotional material and/or detailed capability statements. A good website is also extremely advantageous.
• Be able to provide testimonials/references from three clients with whom they have done business in the past 12 months.

UN projects also provide a more secure business environment in countries in which the legal and financial frameworks are developing or less mature. However, there can be risks in doing business on UN projects in developing country markets, as companies can incur expenses identifying and pursuing business opportunities – similar to any other business. Delays can occur in project development and contract procurement processes due to economic and political conditions in the developing country, and there may be payment delays due to slow processing by developing country.

You may wish to refer to the UN General Business Guide to learn which UN organisations purchase the goods or services your company supplies. The guide describes the procurement needs, procedures and contact details for all UN organisations. Also, the Inter-Agency Procurement Service Office (IAPSO) has developed a booklet with practical tips on how to do business with the UN. They can both be downloaded from www.iapso.org/information/publications.asp.

Austrade’s representatives in the New York office can assist Australian companies in doing business with UN. Services provided could include:

• Identifying niche business opportunities
• Obtaining project intelligence
• Arranging appointments and visit programs with senior decision makers
• Advising on processes and procedures
• Pro-actively marketing your company to key UN agencies in New York and at the regional level

Links and industry contacts

UN News Centre – www.un.org/News/
UN Newslinks – www.un.org/News/dh/pages/newslinks.html
Asian Development Bank – www.adb.org
European Bank for Reconstruction and Development – www.ebrd.org
World Bank Group – www.worldbank.org

Contact details

The Australian Trade Commission – Austrade – is the Australian Government’s trade and investment development agency.

Through Austrade’s network of offices in over 50 countries, we assist Australian companies to succeed in international business, attract productive foreign direct investment into Australia and promote Australia's education sector internationally.

For more information on how Austrade can assist you, contact us on:

Australia ph: 13 28 78 | Email: info@austrade.gov.au

A list of Austrade offices (in alphabetical order of country) is also available.