The two most commonly used options are “Fixed-quantity, scheduled delivery purchasing contract” and “Estimated quantity, periodic-order contract.”

A. Fixed-quantity, scheduled delivery purchasing contract

This type of contract specifies fixed quantities (allowing for small variations from time to time) and delivery is either in one shipment or several smaller shipments over the life of the contract. The purchaser accepts the risk of overstocking if the quantity far exceeds actual requirements. If the quantity ordered is less than the actual need, the purchaser risks paying higher prices for additional orders. In some developing countries where access to funds and foreign exchange is sporadic and uncertain, it may be necessary to tender periodically as funds become available. This requires a fixed quantity, scheduled delivery tender contract. This will also apply if products imported have a long lead-time.

B. Estimated quantity, periodic-order contract

The tender quantity is based on an estimate and the contract price is negotiated for each drug. Orders are then placed periodically. In this method, the supplier faces the risk that the amount actually purchased may differ from the estimate.