UNICEF Procurement Strategy for Safe Injection Equipment for 2016 - 2017

Safe Injection EquipmentIndustry Consultation21st – 22nd April 2015

Rob Matthews, HTC

Objective of Session

• Provide an overview of the planned

procurement strategy for Safe Injection

Equipment for 2016 – 2017

• Obtain Industry feedback prior to finalization of

the approach

Safe Injection Equipment Supply Overview

What’s Good What’s Challenging

• Positive Market developments

• Supply base for InjectionDevices is good*

• 5 year shelf life• Comparative cost (to

vaccines)• 0.5ml AD syringe used for

multiple vaccines• Opportunities to improve

delivery efficiency• Engaged Partners and

established partner forums

• Geographically spread supply base• Sea Shipment lead times (2-4 months) • Timely Funds Availability• Poor Forecast Accuracy*, particularly for

supplementary activities• Focus on Vaccines, not Injection Devices• Large storage capacity required• Demand driven by multiple vaccines &

programmes• Technically acceptable supplier base for Safety

Boxes• Price levels for RUP and SIP featured Syringes• Bundled deliveries of all safe injection materials• Effective Waste Management remains an

unsolved issue

Development Approach for the Procurement

Strategy and Proposed Changes

In determining the appropriate approach and identification of proposed changes for the upcoming tender the following activities were undertaken:

• Reviewed current policy changes impacting injection safety

• Assessed the success of current procurement strategy

• Reviewed quality assurance and technical requirements

• Assessed identified risks

• Reviewed the strengths and challenges currently faced within Safe Injection Equipment supply

• Consulted with stakeholders on opportunities to improve the overall performance of the supply chain and to understand the risk and cost drivers, and

• Identified opportunities for improved efficiency.

Procurement Strategy 2016 - 2017 Objectives

1. To ensure an uninterrupted sustainable supply of affordable quality products.

This is the overarching objective.

2. To strengthen injection safety by reducing the risk of re-use, having a

preference for products with early activation of the disabling mechanism.

3. Maintain a healthy market with multiple suppliers in the markets where this has

been achieved and further improve the healthy market status where this is

required, keeping focus on the weighted average price (WAP).

4. Engage Industry to address programmatic and supply challenges to achieve

improved supply and programmatic outcomes

5. Reduce the overall cost to programs through the continued application of a landed

cost evaluation criteria to better assess the full cost to programs.

6. Move towards a more sustainable procurement approach encouraging product

innovations that support sustainable procurement and reduce the waste disposal

requirement.

7. Support Bundling of vaccines and injection devices and that the delivery of such

is done in an efficient manner.

8. Improve the efficiency of the tendering and procurement processes.

1. To ensure an uninterrupted sustainable supply

of affordable quality products.

• This is the overarching objective.

• SIE products are strategic commodities, key to immunization and emergency response.

• Award multiple suppliers of Quality and technically assured products to provide a diverse supply base.

• Preposition safety stocks both at the UNICEF Warehouse as well as with suppliers who will be required to keep a 10% rolling buffer stock based on their award at all times during the LTA period.

• A multi-pronged quality assurance strategy to ensure quality

• Encourage competition, leverage competitive advantages, to obtain affordable products

2. To strengthen injection safety by reducing

the risk of re-use.

• Tender strategy continues to supporting a preference for devices that have an early activation of the auto-disabling feature.

• Objective to establish contracts offering a complete portfolio of products - suitable for the different medical interventions (immunization and therapeutics), in line with the WHO injection safety updated strategies (of 1999 and 2015).

• Encourage the transition from disposable syringes to RUP syringes.

• Changes to the technical and quality requirements will be addressed on 22nd April

3. Maintain a healthy market with multiple

suppliers, focusing on further reducing the weighted

average price (WAP).

• Affordable pricing is key in these markets as funding is one of the key

constraints in many EPI programs in countries where UNICEF is present.

• The WAPs have reduced over time based on the increased demand,

competition, product innovation and a shift in the supplier base.

• The evaluation criteria and tender approach have evolved over prior tender

rounds where these objectives have been achieved.

• The tender approach has been developed to encourage a healthy market

and stimulate competition to support the objective of further reducing the

WAP.

• The inclusion of all SIEs in one tender and options for industry to submit

alternative pricing options within this tender round are included to support

affordable pricing with the objective of further declines in the WAP.

• While seeking alternative pricing options, all bidders will be obliged to

submit prices for individual products under the standard commercial terms

and conditions (as per prior tender round), alongside alternatives.

4. Engage Industry to address programmatic

and supply challenges

• Through their own established infrastructure and resources, Industry may be able to provide more effective solutions to the programmatic challenges faced by UNICEF:

– Bundling deliveries where industry has or gains access to the full range of SIE products required

– Industry potentially offering solutions to address long shipment lead times

– Improvements in production lead times

– Leveraging their competitive advantage

• Facilitated by merging individual product tenders into one SIE tender and switching from an ITB to RFP modality.

5. Landed Cost Price Evaluation Criteria - to

better assess the full cost to programs.

• Implemented in the last tender round for AD and Safety box tenders

• Factored the geographic spread of demand and supply into the price evaluation criteria

• The estimated freight cost to the different destinations will be provided by Supply Division Freight Forwarders.

• The freight cost will be added to the FCA prices offered by the suppliers.

• The landed cost per piece, assessed on full container loads (FCL) for both 20’ and 40’ containers, will give a clearer picture of the most effective and lowest offered prices looking at the total cost of acquisition of the product.

• Assessed based on delivered cost to 7 ports reflective of the UNICEF demand profile

• Dar Es Salaam, Djibouti, Matadi, Apapa, Douala, Karachi and Bandar Abbas

6. Move towards a more sustainable procurement

approach encouraging product innovations that reduce the

overall carbon footprint and waste disposal requirement.

• The environmental impact in terms of emissions and the generation of waste requires greater focus.

• Individual suppliers have taken various measures to be more environmentally friendly in terms of both their production processes as well as the volume of materials used, reducing the volume of waste.

• Product volume is one measure of sustainability considered for evaluation.

• Request Industry feedback for additional suitable metrics for sustainable procurement

7. Support bundling of vaccines and safe

injection materials

Objective: For each vaccine dose delivered, there are a sufficient number of AD syringes, reconstitution syringes (where applicable) and safety boxes accompanying such.

• The actual bundling with the vaccine is done at the country level. The supply arrangements must be based on forecast demand that has been reviewed to ensure the bundling of vaccines and devices is possible at country level.

• Bundling (or consolidation) of the required SIE at the time of order placement increases transactional efficiency, potentially reducing freight costs, clearance and handling issues by reducing the number of shipments and eases consolidation at country level for onward distribution.

• This tender strategy is seeking Industry engagement in supporting the bundling of SIEs.

Determining Bundling Ratios

Formulas used in the forecast exercise

For AD Syringes for Administration of the Vaccine

For Syringes for the reconstitution of the Vaccine

For Safety Boxes

Considering Bundling Awards

• Requirements dependent on Vaccine formulation (liquid or lyophilized, vaccine dosage, funding source and availability, country delivery schedules

• Country forecasts and requests historically cover multiple products

• Review based on offers received

• Consider making awards supporting bundling for a portion of the total demand

8. Improve the efficiency of the tendering and

procurement process

• To improve operational efficiency, opportunities have been identified within the review of the prior tender round across all safe injection equipment products.

• These include– The issuance of one RFP to cover all SIEs in place of 4

separate ITBs,

– A shift in the tender timelines providing for longer planning lead times for industry and a more balanced workload, and

– The inclusion of a template for bid submission to standardize the format of response and to function as a check list for bid submission requirements to improve the acceptable bid submission rate.

Evaluation Considerations

• The overall programmatic objective is to improve injection safety.

• Ensuring an uninterrupted sustainable supply of affordable quality and technically approved products is the overarching procurement objective.

• Acknowledge the tension between the different strategic objectives.

• Proposed approach is to build on the prior approach, maintaining gains achieved

• The final award recommendation will be based upon how the combination of offers received can best meet the procurement objectives.

Resultant proposed contracts

• Establishment of Value bound LTAs for AD syringes, Safety Boxes and RUP syringes

• Time bound LTAs for Disposable syringes and Needles.

• Historically all awards have been for value bound LTAs, however with the high variability in the demand for the low volume commodities (Disposable syringes and Needles) it is proposed for these to be based on Time bound LTAs.

• The remaining commodities are to continue on Target bound LTAs.

Planned Tender Timelines and Duration

ACTIVITY TIMELINE

Draft procurement strategy Mid Feb-Mid April 2015

Industry consultation (incl. updated forecast) 21-22 April 2015

Issuance of Tender 15 May 2015

Closing of tender 30 June 2015

Clarifications and evaluation July – August 2015

CRC approval CRC Submission 9 Sep 2015

Announcement of awards End Sep 2015

Commencement of LTAs 1st January 2016

• The two year duration provides a balance of providing supply security, allowing new suppliers to enter.

• By accepting market pegged pricing this may reduce the risk levy of raw material price fluctuation levy on the offered price, opening up the opportunity for potentially extending the awards for a further 12 months if this is deemed in the interests of UNICEF.

WHO 2015 Safe Injection Policy

• Focused on the Therapeutic / Curative Sector demand

• UNICEF’s role in SIE procurement has been within Immunization historically, with a key role in AD Syringe and Safety Box procurement

• Scale up of volumes dependent on adoption of WHO Policy by countries, affordable quality assured availability and procurement channel

• UNICEF will support requests received from Countries looking to introduce the Policy

• Demand will be monitored closely and the approach reviewed if we see a shift in procurement volumes for the therapeutic sector.

Proposed Shifts in Strategy Summary

• Issuance of One RFP to cover all Safe injection Equipment products, switching from an ITB to RFP modality, providing Industry with the opportunity to leverage their comparative advantage to achieve better results for children.

• Opening up for alternative proposals - consideration of options for Industry to quote pricing pegged to raw material markets, consideration of Firm Commitments, explore Advanced Funding options, alternative freight proposals should this be found to be in the interests of UNICEF

• Establishment of Value bound LTAs for AD syringes, Safety Boxes and RUP syringes; Time bound LTAs for Disposable syringes and Needles.

• Tender Timeline Cycle and Tender duration

• Sustainable Procurement and Environmental Impact assessment

• Changes to the Technical Criteria

• Implementation of WHO New Safe Injection Policy

• Adjustments to the Format of submission

Discussion

Thank you!

Procurement Strategy Development

Building on the current procurement strategy (2014-2015) for AD syringes, including refinements and additional elements to:

• Achieve a healthier and sustainable supply base of affordable, quality assured safe injection supplies,

• Leverage the procurement function and partners along the supply chain to address supply and delivery challenges to achieve improved supply and programmatic outcomes,

• Improve efficiency in the process,

• Address identified risks in a more effective manner,

• Prepare for the impact of policy changes on supply.