Individual Contract Policy

Determining the individual contractor’s fee

49. 
    Individual candidates are required to submit a financial proposal with a lump sum or daily fee (see Section Selection Process on the solicitation process). This indicates prevailing market prices as part of determining the most competitively priced offer.
    
50. 
    Depending on the nature and complexity of the assignment, all Offerors shall be requested to submit their Financial Proposals based on a lump sum or daily fee approach.  
    
51. 
    The terms of reference should be very clear on what cost components must go into the financial proposal. Regardless of the approach, whether lump sum or daily fee, the financial proposal must cover all financial costs. A template Offerors Letter to UNDP Confirming Interest and Availability has been provided for this purpose.
    

Lump sum contracts

52. 
    Under the lump sum approach, the financial proposal identifies a total lump sum amount, and specifies payment terms according to specific and measurable deliverables, including whether payments are made in installments or upon completion of the entire assignment. Payments are based on delivery of services specified in the terms of reference. The candidate should provide a breakdown of a proposed lump sum, including travel, per diems, personal security needs and number of anticipated working days. This shall be used as the basis for determining best-value-for money and as a reference for any contract amendments or extensions that may entail additional payments.
    
53. 
    When the lump sum approach is used for an assignment that requires repatriation and/or duty travel, the following actions must be considered:
    

1. 
   Individual contractors are not UN/UNDP staff.  Therefore, they are not entitled to daily subsistence allowances.  For purposes of making the distinction between staff and non-staff entitlements, it is best that the term “DSA” be avoided when dealing with ICs. In financial proposals, candidates may allocate living allowances for themselves when an assignment requires travel. These may be lower or equal to UN daily subsistence allowances, but under no circumstance should they be higher.
   
2. 
   If necessary, business units may inform candidates of the prevailing UN’s Daily Subsistence Allowance (DSA) rates for the duty station and all other cities indicated in the TOR as part of duty travel destinations, to aid the determination of an all-inclusive fee.
   
3. 
   The business unit may include in its initial payment (i.e., payment without output) to the contractor the actual cost of travel to the duty station, even if this exceeds 20 percent of the total contract value. Such a cost should be specified as an exact amount in the breakdown of the financial proposal submitted, and the payment should be in that exact amount.
   

54. 
    Taking into consideration the purpose and principles behind the lump sum contract approach, the contract amount will remain fixed regardless of the following:
    

1. 
   Airfare price differentials between the time of the submission of the financial proposal and the actual journey
   
2. 
   Additional days that need to be spent at the duty station due to delays in the completion of outputs if such delays are solely attributable to the contractor
   
3. 
   Any other factors driving an increase in any of the cost components that are not directly attributable to UNDP
   

55. 
    The lump sum contract is the preferred approach for formulating financial proposals, as it clearly links deliverables and payments, transferring any unforeseen risks for completion of the deliverable to the individual contractor, while minimizing transaction costs for UNDP. It is particularly preferred for assignments that are travel intensive, since it relieves UNDP of administrative and transaction costs from managing the travel.
    

Contracts based on a daily fee

56. 
    Under the daily fee approach, the financial proposal specifies a single daily fee. UNDP makes payments based on the actual number of days worked. Payments must be supported by a duly completed time sheet.
    
57. 
    The daily fee in the financial proposal must be all-inclusive and take into account various expenses the candidate expects to incur during the contract, including: 
    

1. 
   The daily professional fee
   
2. 
   The cost of travel from the home base to the duty station and vice versa, where required
   
3. 
   Living allowances needed at the duty station
   
4. 
   Communications, utilities and consumables
   
5. 
   Life, health and any other insurance
   
6. 
   Risks and inconveniences related to work under hardship and hazardous conditions (e.g., personal security needs, etc.), when applicable
   
7. 
   Any other relevant expenses related to the performance of services under the contract
   

58. 
    The daily fee approach should only be used when clear, quantifiable deliverables are difficult to articulate prior to commencement of the assignment. The duration of engagement using daily fees must be definitive. The possibility of any extension should be either unlikely or within manageable periods.
    

Determining payment rates

59. 
    The main consideration when determining rates shall be the nature of the assignment, including its complexity, difficulty, the operating environment and scope of work, the skills and expertise required to undertake it, the supply or availability of such experts in the market, and the prevailing market for the expertise required.
    
60. 
    As a guiding principle, fees must reflect fair market prices and optimize savings for UNDP, while still securing high-quality services.
    
61. 
    Regardless of the nationality or citizenship of individuals being engaged, the determination of rates and currency of the payment shall be based on the following guidance: 
    

1. 
   When terms of reference do not require global knowledge or internationally acquired experience and expertise, and when the skills needed for the work or assignment are readily available in the local market, regardless of his/her personal experience, country of residence or designations under past contracts, the individual contractor’s fee may be expressed in local currency and must be based on standard/prevailing local rates.
   
2. 
   When the terms of reference require global expertise and/or internationally acquired years of experience, and when the individual must have skills and abilities obtained through a successful international track record in order to qualify for the assignment, international consulting rates and currency may be used. 
   

62. 
    Since this determination will have a significant impact on fees, business units must make these determinations judiciously and with due deference to their consequences.
    
63. 
    Fees for individual contractors who do not need internationally acquired expertise shall be based on the financial proposal benchmarked against local market rates for similar work of comparable quality, complexity and difficulty.
    
64. 
    Business units may create and establish a table of consulting fees to be used as a benchmark for Individual Contractors based on rates prevailing within their respective country and/or region. The table should be built on an actual market survey and analysis of results conducted by a knowledgeable independent external expert or institution and should be used as benchmark to help establish value-for-money of the financial proposals that will be received from the candidates.
    
65. 
    In country offices, this exercise can be undertaken with other resident UN agencies or international organizations also engaging individual consultants through existing inter-agency coordination mechanisms in place (e.g., UNCT, OMT, etc.).   
    
66. 
    Where a business unit has not created its own fee scale, the table below may be used:  
     
    

Level	Complexity, degree of expertise, availability	RANGE OF DAILY RATE IN USD
A	Junior specialist	$200-350
B	Specialist	$350-650
C	Senior specialist	$650-1,350