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Contracting Individuals: Best Practices

Krishan BatraPrincipal Advisor

UNDP/PSO

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Individual Contractors: Overview

• When to use? (It is not a stop-gap measure)• Who can authorize the hiring? Rate, Oversight• What is the legal Status? Experts on Mission• How will individual contractor be selected?• Engagement of Former and Retired Staff.• What is the maximum duration?• How do we pay? Currency, Taxes• Medical Standards and Insurance?• What are the standards for air travel &DSA?• What is the applicable law?• Issuing Business Cards• Use of Atlas

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Contracting Modality:

• 100, 200 and 300 series Contracts• Service Contracts (SC)• SSA• Reimbursable Loan Agreement (RLA)• Non-Reimbursable Loan Agreement• Professional Services Contract• Institutional Services Contract• Long Term Arrangement (LTA)

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Individual Contractors:

• When to Hire: Assignments that don’t require teams of personnel and no professional support of the office is required. In addition the experience and qualifications of the individual are of paramount importance.

• When coordination, administration or collective responsibility become difficult due to high number, it is advisable to go for contracting the firm.

• The overall responsibility is with the hiring organization i.e.UNDP.

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Individual Contractor vs. Staff

• Who is an Independent Contractor?– The general rule is that UNDP has the right to control only the

result of the service not the manner of the performance. Work is result oriented.

– Safety and health at work is our obligation

• Staff: In this case UNDP has the right to control what will be done and how it will be done.

• Local vs. International Contractor: A local individual contractor is a local specialist or authority in a special field who is retained by UNDP. In case he/she is required to travel for more than 50% of the service period, then he/she may be retained as international contractor.

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Differences & similarities

• RLA - Where the identified individual is an

employee of a company, institution, or other legal entity, and not a self-employed or “independent” consultant.

- Under the RLA, the company/institution makes the services of the named consultant available to the operational unit for a specified period.

- special skills/expertise - The company/institution remains responsible

for the actual payment of salary, taxes and other administrative charges.UNDP reimburses the Company/institution for payments to the identified individual.

- selection, engagement, payment and termination are similar as under the SSA modality

• SSA- Where the identified individual is not an employee of a company, institution, or other legal entity, but rather a self-employed or “independent”

- special skills/expertise

- The individual is hired directly by UNDP, the SSA is issued and payments are made to the consultant.

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Key Facts

• The SSA modality is a procurement instrument• The selection of an individual contractor under SSA is

based on a competitive process• Maximum duration under the new SSA is 3 years versus

11 months under the previous version.• The new SSA guidelines does not apply retroactively• The original threshold of 30,000 USD is increased to

100,000 USD for review by CAP/ACP• Individual contractors hired under the old SSA Guidelines

will be allowed to carry on based on existing contract modality.Any extension should be based on the new SSA Guidelines

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Incorrect use of SSA

• Should not be used as a stop-gap measure, such as filling post vacated by staff.

• As a cost saving measure

• As a means to re-instate a staff whose previous post has been abolished.

• As a means of placing a staff on a short-time probationary period.

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Rights & Obligations

• Status of SSA holder is “Expert on Mission”• The contractor is responsible for paying any tax

derived from their earnings with the UNDP in their home country.

• The contractor is not entitled to any annual leave or sick leave

• Payment is based on deliverables or hrs worked.• Can’t participate in the UNJSPF.• Individual contractor are not staff member

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Selection and engagement of an SSA

• Overall Authority

Chief Procurement Officer

Resident Representative Bureau Directors Head of various UNDP units

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Limits of Delegated authority

• Any SSA with effective daily rate exceeding 750 USD requires prior approval from OLPS

• Request for waivers to issue SSA to ex-Government officials either on leave form their jobs or those who have left service during the last three months or less, when this is the interest of the Organization, should be established and justified.

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Procurement Chain:

REQSourcing

(Potential Suppliers)Receipt and Opening

VendorAward Contract/POApproval by CPO Create Vendor

Evaluation of OffersReview By Contracts

Committee

Bidding

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Selection Process

• Preparation of TOR• Preparation of cost estimate and budget.• Advertising (Job Shop, Website)• Short listing• Prepare and issue RFQ or RFP• Receipt of proposals/ CV• Evaluation of technical proposal/ CV +Interview• Financial Evaluation• Final Evaluation of Quality and cost.• Negotiation and award of the contract.

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Outline of SOW/TOR:

• Background

• Outputs/ deliverables desired

• Inputs to be provided

• Schedule of completion

• Standards by which to measure performanceOther Issues:

1) Use active Verbs (2) Avoid “Should” or”May

(3) Use “Shall” for contractor and “will” for UNDP

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Terms of Reference (TOR)• TOR may be compared to technical specifications for the

purchase of goods or works.• Areas to be covered are:• Objective: What is the anticipated result of services.• Background: What is the history of assignment. Any

constraints.• Scope of Work: What is the consultant expected to do?

Degree of details. Are there any specific decision points during the performance of work?

• Purchases: Are any hardware requirements connected with the assignment? When should such deliveries to the client be made and on what terms?

• Reports: How and when will the report be presented?• Contributions: What is the client going to provide in the way

of facilities, professional support and physical facilities?

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Selection of Individual Contractor

• Roster of consultants: Candidates shall be screened for qualifications, references and prior experience.

• Competitive Process: Desk review, interview panels, reference checks. – Ensure open, transparent and objective assessment– Minimum 3 qualified candidates that meets the

requirements.– Selection based on competency and cost involved.

• Single Source selection: Need to be justified.

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Selection of Individual Contractor

• Gender Balance• Review Commitees: CAP/ACP• Offer of SSA: Offer should include TOR and Terms and

Conditions. Contractor should not start work until the contract has been signed by both the parties.

• Retroactive SSA: Not allowed• Duration: Maximum 3 years• Former and retired staff:

– Minimum 3 months gap– 36 months for those who have taken early retirement.– Maximum earning should not exceed $22,000.– Fees paid should not be based on level of the retired staff but on

the nature and complexity of assignments performed.

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Rate and currency of Payment

• A benchmark has been provided for different levels of tasks

• Payment can be based on hours/days worked.• Before payment the hours of work performed

shall be certified by the supervisor• For local consultants, it shall be in local currency• Performance evaluation shall be monitored by

the requesting manager• Increase of pay rate

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Payment of SSA The consulting rate is based on a competitive process, using present

comparative indicators with our regular staff functions

Consultant’s level

Complexity Degree of Expertise

Availability Candidate’s

Equivalent level Qualifications and

Experience

RANGE OF DAILY RATE UN US$

A

Junior Specialist ICSC-8 to ICSC-9 P/L-1 to P/L-2 200-300

B

Junior Specialist ICSC-10 to ICSC-12 P/L-3 to P/L-5 300-550

C

Junior Specialist ICSC-13 to ICSC-15 D-1/L-6 to ASG 550-750

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Selection of Contract Types

Time & Materials

Project Life Cycle

RequirementsPro

cure

men

t R

isks

Tech

nolo

gica

l C

halle

ng

e

Fixed Price

Cost

(Implementation)

(Conceptual)

(Specific) (Vague)

(High)

(Low)

(Low)

(High)

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Contract Types:

• Fixed Price Contract (Lump Sum)– Requirements are well defined

• Time and Materials Contract ( Fixed Unit Price)– Major cost elements are known but quantities not

defined, Ceiling Price, per-hour labor rate, terms for reimbursing direct material costs

• Percentage Contract• Cost Reimbursement

– Requirements are too vague – Ceiling Price

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Termination of the Contract

• By mutual consent.

• 5 days notice in case the contract is for less than 2 months period.

• 14 days notice in case contract is for longer duration.

• Misconduct.

• Amicable settlement

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Travel Arrangements

• The standard for air travel is economy class.

• Lump-sum option

• Visa and travel documents

• Security Clearance

• Unforeseen Travel Expenses.

• Issue of G4 visa for international consultants.

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Service Incurred Liability

• Statement of medical fitness for work• In case of experts exceeding the age of 65

years, full medical examination is required including x-rays.

• Inoculations/ vaccinations before travel• Service incurred Medical and Life Insurance • Service incurred Death, Injury or illness• Malicious Acts Insurance Policy• No Appendix D coverage.

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Insurance coverage

• The insurance part is different than in the previous SSA Guidelines, under which an individual contractor engaged under a SSA shall be entitled in the event of death, injury or illness attributed to the performance of services on behalf of UNDP the compensation which would be payable under Appendix D to the Staff Rules of the UN.

• Under this new SSA Guidelines, the OLPS applies a new defined insurance benefit.

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SSA insurance coverage

Active International contractor

Active Local contractor

Retired International contractor

Retired Local contractor

Maximum Benefit any one Insured

Person

USD 280000 USD 160000 USD 40000 USD 20000

INJURY Death: USD 180000 Permanent total disablement: USD 180000Permanent Disablement: % of USD 180000

Death: USD 80000 Permanent total disablement: USD 80000Permanent Disablement: % of USD 80000

Medical Expenses Extension: USD 80000

Death: USD 20000 Permanent total disablement: USD 20000Permanent Disablement: % of USD 20000

Death: USD 20000 Permanent total disablement: USD 20000Permanent Disablement: % of USD 20000

Medical Expenses Extension: USD 20000

ILLNESS Death: USD 180000Permanent total disablement: USD 180000

Death: USD 20000

Permanent total disablement: USD 20000

MEDICAL EXPENSES

Medical Expenses: USD 100000

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Key procedure for processing SSAs

• Submission of requests for SSA contract• Requesting Officer should prepare

detailed TOR for each contract (objectives, outputs, deadlines,…).

• Ensure availability of funds• Duration of assignment• Fulfillment of medical clearance

requirement• Competitive selection process

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Top 10 Mistakes in hiring Consultants

• Not having a contractual agreement• Not checking the consultant background• Failing to check if some one in house can do job.• Not checking the compensation scale.• Who pays for expenses• Not checking Consultant availability• Not conducting a thorough interview.• Letter of confidentiality• Describing the project• Introducing to the staff

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Thank you!