Project Procurement Guidelines

PROJECT PROCUREMENT GUIDELINES

These Procurement Guidelines were adopted by the Executive Board of IFAD at its 100th Session in September 2010.

Table of contents
Definitions I. Introduction 3

A.Background B.Purpose C.Contents D.Applicability

3 4 5 5

II.

Procurement Principles

A.Ethics B.Accountability C.Competition D.Fairness E.Transparency F.Efficiency,Effectiveness,Economy G.Valueformoney

5 6 6 7 8 8 9

III.

Procurement Arrangements

A.Borrower/Recipientobligations B.GeneralConditionsforAgriculturalDevelopmentFinancing C.UseofNationalProcurementSystems D.ProcurementPlanning E.Eligibility F.DomesticPreferences G.Procurementinvolvingcommunityparticipations H.IFADmonitoringandreview I.Misprocurement J.FraudandCorruption K.Disputeresolutions L.ReferencestoIFAD

9 10 10 12 12 13 13 15 15 15 16 17

ANNEX Methods of procurement in the event that national systems are not suitable

PROJECT PROCUREMENT GUIDELINES

Definitions

ThefollowingtermshavethefollowingmeaningswheneverusedintheseGuidelines:

Borrower/Recipientmeansthepartydesignatedassuchinthefinancingagreementorotheragreement. Communityreferstoindividualsorgroupsofprojectbeneficiaries,communitygroupswithnolegal status, associations or groups with legal status but with or without separate legal personality as a group,small-scaleartisansandothersmallcommercialorganizationsandguilds,andsmalllocal-level organizations that support and facilitate rural agricultural and social activities. The community in suchcasesmayparticipateasprocurementagent,implementingagency,orcontractorandsupplier ofgoods,worksandrelatedservicesforprojectactivities. Procurement process is the entire procurement cycle starting from the identification of need throughtothecompletionofthecontract. Project management means the party designated as such in the financing agreement by the Borrower/Recipientandresponsibleforimplementingandmanagingtheproject.Itrefersequallyto theleadproject/programmeagencyandprojectcoordinationunitsandprojectimplementationunits. Servicesisageneraltermreferringtobothconsultancyandnon-consultancyservices.

I. Introduction
A. Background

1. Article7,section2(j)oftheAgreementEstablishingIFADprovidesthattheExecutiveBoardwill adoptsuitableregulationsforprocuringgoodsandservicestobefinancedfromtheresourcesof the Fund. These revised Procurement Guidelines will apply to all projects and programmes financed from IFADs resources, and to financing provided from supplementary funds unless otherwiseagreed.TheyreplacetheProcurementGuidelinesadoptedbytheExecutiveBoardin 1 December2004. 2. IFADs revised General Conditions for Agricultural Development Financing (April 2009) (hereafter:theGeneralConditions)adoptanewapproachtoprocurementthatisfinancedbyIFAD loans and grants, stating that: Procurement of goods, works and services financed by [IFAD] shallbecarriedoutinaccordancewiththeprovisionsoftheBorrower/Recipientsprocurement regulations, to the extent such are consistent with the IFAD Procurement Guidelines. Each Procurement Plan shall identify procedures which must be implemented by the Borrower/RecipientinordertoensureconsistencywiththeIFADProcurementGuidelines. 3. Inadoptingthisapproach,IFADisfollowingtheprinciplessetoutintheParisDeclarationonAid EffectivenessandtheAccraAgendaforActioninrespectoftheuseofexistingnationalprocurementsystems.

The IFAD Procurement Guidelines adopted in December 2004 will continue to apply to agreements approved or entered into before the adoption of these revised Guidelines.

PROJECT PROCUREMENT GUIDELINES

4. TheuseofaBorrowers/RecipientsregulationsforprocurementwillalwaysbesubjecttoverificationbyIFADthat: (a) Thoseregulationsareinlinewithinternationallyacceptedpractices forpublicprocurement; (b) Those regulations also encompass the basic principles of procurement and support the developmentofnationalprocurementcapacityintheprocess;and (c) Practicalimplementationcomplieswiththoseprinciplesandwithnationallegalandregulatoryrequirements. 5. Asaresult,theserevisedProcurementGuidelinesfocuslessonthedetailsofprocurementmethodsandmoreonthegeneralprinciples,standardsandpoliciesthatBorrowers/Recipientsmust adheretoinimplementingIFAD-financedprojects. 6. IFAD will therefore take a more active role in assessing and monitoring national procurement regulationsandprocedurestoensurethattheyareconsistentwiththeserevisedGuidelines.In supervisingprojectprocurementandprovidingimplementationsupport,theFundwillensure thattheprocurementprocessconformstoagreednationalrules. 7. In cases where IFAD deems that a Borrowers/Recipients system for procurement, either in wholeorinpart,isnotinlinewiththeseGuidelines,thenalternativeprovisionsforprocurement willapply,asprovidedforinSectionIIIandintheAnnexoftheseGuidelines. 8. Theonlyexceptionwillbeinthecaseofinternationalcompetitivebidding,where,regardlessof theresultsofanyassessmentofnationalprocurementregulationsorprocedures,theprocedures oftheWorldBankassetforthinitsprocurementguidelineswillalwaysapply.
B. Purpose
2

9. This document sets out the policies, principles and standards that IFAD requires Borrowers/Recipientstoadheretowhenundertakingtheprocurementofgoods,worksorser2 vicesneededunderdevelopmentprojectsorprogrammesgovernedbyafinancingagreement (SectionI.DoftheseGuidelines). 10. Forpurposesofharmonization,theseGuidelineshavebeencloselyalignedtogenerallyacceptedinternationalprocurementprinciplesandoperatingprocedures,andtotheprocurementpoliciesandstandardsofotherdevelopmentfundinginstitutions.Theyhavealso,wherepracticable, 4 takenintoaccountthesizeandspecializednatureofIFADsoperationsandmandate. 11. TherightsandobligationsoftheBorrower/Recipientandallprovidersofgoods,worksandservices are governed by the conditions of the bidding   documents and contracts signed by the Borrower/Recipientandsuchproviders,andnotbytheseGuidelinesorthefinancingagreement. Nopartyotherthanthepartiestothefinancingagreementwillderiveanyrightsfromtheagreementorhaveanyclaimtofinancingproceeds.
2 3 4 Both consultancy and non-consultancy services. As defined by the General Conditions. For the purposes of these Guidelines, bid/bidding and tender/tendering have the same meaning.

PROJECT PROCUREMENT GUIDELINES

12. TheseGuidelinesarenotdesignedtoprovidethedetailedoperationalproceduresforundertakingproject-relatedprocurement.ThatinformationiscontainedintheProcurementHandbook for use by IFAD staff and borrowers/recipients, which is available on the IFAD website (www.ifad.org).
C. Contents

13. TheseGuidelinesareinthreeSections: (a) SectionIcoverstheguidelinesbackground,purpose,contentsandapplicability; (b) SectionIIoutlinestheprocurementprinciplesthatapplytoIFAD-fundedprojectsorprogrammes;and (c) SectionIIIprovidesinformationaboutprocurementarrangements,outliningthebasicstandardsexpectedduringimplementation.

D. Applicability

14. TheseGuidelinesapplytoanyprocurementactivityundertakenbyaBorrower/Recipientwhen procuringgoods,worksorservicesunderanydevelopmentprojectorprogrammegovernedby anIFADfinancingagreementwhereIFADisthesolefundingsource. 15. SomeIFADprojectsmayinvolvecofinancingwithcooperatinginstitutions,someofwhichhave theirownprocurementguidelines.Whereacooperatinginstitutionwithestablishedguidelines assumesresponsibilityforprojectadministrationandsupervisiononbehalfofIFAD,thenthat institutionsownprocurementguidelineswillnormallybefollowedunlessotherwiseagreedwith IFAD.TheIFADGuidelinesshouldbefollowedforallprojectsadministeredbycooperatinginstitutionsthatdonothavetheirownprocurementguidelinesandforallprojectsdirectlysupervisedbyIFAD. 16. Where these Guidelines apply, deviations are permitted only where expressly stated in the financingagreement.

II. Principles
A. Ethics

17. Theguidingprinciplesofethicalbehaviourareimpartiality,independenceandintegrity. 18. Nopersonorentityshallusehis/her/itsauthority,positionorofficeforpersonalgain,whichwill bedefinedassoliciting,acceptingorotherwisebenefitingfromanythingofmaterialvalue,inany 5 form,eitherinpersonorindirectlythroughcloserelativesorassociates,as aresultofprocurementfinancedbyIFAD. 19. Borrower/Recipientofficialsengagedinprocurementactivityhaveadutyto: (a) MaintainandenhancethereputationoftheBorrower/Recipientcountryby:
5 Including, but not restricted to, gifts, services, favours or hospitality.

PROJECT PROCUREMENT GUIDELINES

(i)Maintainingthehigheststandardsofhonesty andintegrityinallprofessional relationships; (ii)Developingthehighestpossiblestandardsofprofessionalcompetence; (iii)MaximizingtheuseofIFADfundsandotherresourcesforwhichtheyareresponsible for the purposes for which these funds and resources were provided to the Borrower/Recipientcountry;and (iv)Complyingwithboththeletterandthespiritof: Thefinancingagreement; ThelawsandregulationsoftheBorrower/Recipientcountry; Acceptedprofessionalethics;and Contractualobligations;

(b) Declareanypersonalinterestthatmayaffect,ormightreasonablybedeemedbyothersto affect,impartialityinanymatterrelevanttotheirduties(conflictofinterest).Inasituation ofthisnature,theofficialconcernedshouldnotparticipateinanywayintheprocurement process,toavoidmisprocurement;and (c) Respecttheconfidentialityofinformationgainedinthecourseofdutyandnotusesuch informationforpersonalgainorfortheunfairbenefitofanybidder,supplierorcontractor. Informationgiveninthecourseoftheirdutiesshallbetrue,fairandnotdesignedtomislead.

B. Accountability

20. TheBorrower/RecipientisaccountabletoIFADforallactionsanddecisionsinrelationtoproject-fundedprocurement. 21. Thisincludes,butisnotlimitedto: (a) Ensuringthatthefundsareusedsolelyforthepurposeforwhichtheywereprovided;and (b) EnsuringthatprocurementisundertakeninaccordancewiththeseGuidelines. 22. Borrowers/Recipients are further directed to the provisions of Section 4.09 Refund of Withdrawals of the General Conditions and Section III.A of these Guidelines, Borrower/Recipientobligations.
C. Competition
6 23. Full,fairandlegitimatecompetitionamongeligiblesuppliersandcontractorsisthefoundation onwhichproject-fundedprocurementactivitiesshouldbebased.

As defined in Section III.

PROJECT PROCUREMENT GUIDELINES

24. The most common method of seeking competition is through a competitive bidding process, and,inthisregard,IFADspecifiesthatallgoods,worksandservicesshouldbeobtainedthrough 8 7 anagreedprocurementprocessinvolvingatleastthreeseparatesuppliersorcontractorswhose businessisdirectlyrelatedtotheprocurementbeingundertaken. 25. Itisrecognizedthatitisneitherpracticalnorefficienttoadvertiseinternationallyforlow-value contractsforgoods,worksorservices,andthedegreetowhichtheprincipleofcompetitionis requiredforeachprocurementactivitywillbeoutlinedintheprocurementmethodapprovedby IFADwithintheprocurementplan. 26. Borrowers/Recipients will be expected to promote genuine competition at every opportunity andmayberequiredtoprovideevidenceof: (a) Fairandgenuinecompetitioninthecompilationofshortlistsandinthesolicitationofbids; and (b) Theeffectivenessofcompetitionduringthebiddingprocess. 27. Singlesourcinganddirectcontractingdonotprovidetheelementsofcompetitionrequiredby 9 IFAD.Onlyinexceptionalcircumstanceswilltheseapproachesbeconsideredandapprovedin procurementplansagreedwithIFAD.
D. Fairness

28. IFADsexpectationisthatproject-fundedprocurementwillbeopentoasmanyeligiblebidders from IFADs developed and developing Member States as is practicable in order to meet the requirementsofcompetition. 29. IFADexpectsBorrowers/Recipientstoensurethatallprospectivebiddersare: (a) Managedwithaconsistentapproachandapplicationoflaws,regulationsandrequirements inrespectoftheprocurementprocess; (b) Offeredalevelplayingfieldonwhichtogenuinelycompete;and (c) Treated in a fair, impartial and unbiased way, so that principles of impartiality and equal opportunitycanbedemonstratedinallprocurementactivities. 30. Instrivingforfairnessinitsprocurementoperations,IFAD: (a) Will not tolerate exclusion of, discrimination, bias or prejudice against, or favouritism or inequalitytowardsanypotentialsupplierorcontractor,eitherdirectlyorindirectlythrough manipulation of any part of the procurement process, including, but not limited to, the preparationoftechnicalspecifications,evaluationcriteriaorbiddingrequirements.Where anysuchactivityissuspectedorproven,IFADreservestherighttotakeanypreventative, correctiveorpunitiveactionitconsidersappropriate;and
7 8 Agreed refers to the use of a recognized procurement method approved in the procurement plan. In this context, separate means that the suppliers or contractors must (i) all have separate ownership, (ii) not have any affiliation, connection, association or attachment with each other that may be deemed to compromise the principle of competition, and (iii) have no common shareholders or directors. Conditions for applying single source/direct contracting are defined in the Procurement Handbook.

PROJECT PROCUREMENT GUIDELINES

(b) Willseektoaddress,inconsultationwiththeBorrower/Recipient,anyimpositionsthatmay deterorimpingeontheattainmentoffairnesswithintheprocurementprocess.

E. Transparency

31. IFADexpectsthehighestdegreeoftransparencyandopennesswithintheprocurementprocessesundertakenunderitsprojects.Alackoftransparencycanbeperceivedasanattempttowithholdinformation,whichinturnmaymakethefairnessandintegrityoftheprocurementprocess suspect.

10 32. Transparency within procurement relates to disclosing,  in the public domain, information for partiesinvolved,interestedinoraffectedbytheprocess,includingbutnotlimitedtoinformationon:

(a) Theavailabilityofpotentialandexistingprocurementopportunities; (b) Wheretoaccessrelevantdata; (c) Theprocessesbywhichtheprocurementisbeingundertaken; (d) Themechanismsbywhichcontractswillbeawarded; (e) Contractawarddata;and (f) Appealprocedures. 33. Modesofcommunication/publicationofsuchinformationwillvarydependingonthenatureof the data but will generally be through existing means of public information (e.g. government websites,publicnoticeboardsormedia)orintheprocurementdocumentationrelevanttoan individualprocurementactivity(e.g.bidnoticesandbiddingdocuments). 34. Borrowers/Recipientsarerequiredatalltimestoactopenly,predictablyandinaccordancewith theinformationprovided.
F. Efciency, Effectiveness and Economy

35. IFADrequiresBorrowers/Recipientstodemonstrateefficiencyandeconomyinundertakingproject-relatedprocurement,toavoidundueimplementationdelaysandtoachievevalueformoney. 36. Procurementmustbewellorganized,carriedoutcorrectlywithregardtoquantity,qualityand timeliness,andattheoptimumprice,inaccordancewiththeappropriateguidelines,principles andregulations. 37. Processesmustbeproportionatetotheprocurementactivity,sothattheoverallcostofconductingtheprocurementprocessisminimizedandtailoredtothesizeofthebudgetfortheactivity beingundertaken,whileupholdingtheguidingprinciples.

10 IFAD recognizes that some countries have national legislation governing the disclosure of information, and in such circumstances specific provision will be made during negotiations to ensure that the principle of transparency is maintained.

PROJECT PROCUREMENT GUIDELINES

38. Efficiencies can be obtained through a combination of methods. For instance, a strategic approachcanbetakentoplanning,combiningandconductingprocurementactivitiessoasto minimizelossoftimeandresources.Forthisreason,thedesignofallIFAD-fundedprojectsmust nowincludeaprocurementplanasperSectionIII.DoftheseGuidelinesandasdefinedin,and requiredby,theGeneralConditions.
G. Value for money

39. Underpinningalloftheaboveistheneedtoobtainvalueformoneyforallprojectprocurement activitiesthroughtheoptimumcombinationofseveralfactors,including: (a) Applyingsound,internationallyrecognizedprocurementprinciples; (b) Ensuringthatthegoods,worksorservicesprocuredmeettherequirementsforthetaskand arenotoverspecified; (c) Ensuringthatthegoods,worksorservicesarecontractedonthebestpossibleterms,taking intoaccounttheirexpectedlifecycle;and (d) Ensuringthattheprovider/supplierofthegoods,works orservicesisqualified,legallyentitled andcompetenttoexecutethecontract. 40. Bestvaluedoesnotnecessarilymeanthelowestinitialpriceoption,butratherrepresentsthe best return on investment, taking into consideration the unique and specific circumstances of each procurement activity; the balance of time, cost and quality required; and the successful overalloutcomeofthecontractinmeetingitsoriginalobjectives.

III. Arrangements
A. Borrower/Recipient obligations

41. Borrowers/Recipientsmust: (a) Actatalltimesinaccordancewiththelegalrelationshipgovernedbythefinancingagreement; (b) Takefullresponsibilityforprojectimplementation,planning,andtheawardandadministrationofcontractsundertheproject;and (c) Undertakeallproject-relatedprocurementinaccordancewiththepolicies,principlesand standardssetoutintheseGuidelines. 42. IFADsreviewofprocurementprocedures,documents,evaluationsandawardrecommendations aspartofitssupervisionfunctionsdoesnotinanywayabsolveBorrowers/Recipientsfromanyof theirobligationsasspecifiedabove.

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B. General Conditions for Agricultural Development Financing

43. AsstatedinSectionI.AoftheseGuidelines,theGeneralConditionswererevisedinApril2009 takingintoaccountIFADsnewapproachtoprocurementfinancedbyitsloansandgrants.These Guidelinesarealsoinlinewiththevariouscommitmentsoftheinternationaldonorcommunity 11 toworktowardsincreasingtheuseofnationalsystems. 44. The revised General Conditions are designed to be clearer and less complex for IFAD and Borrower/Recipientstaff.Theyapplytoallfinancingagreementsforprojectsapprovedafterthe ninety-sixthsessionoftheIFADExecutiveBoard. 45. Specificallyinrelationtoprocurement,theGeneralConditionsfocuson: (a) TheemphasisplacedonusingtheBorrowers/Recipientsprocurementregulations,providedtheyaredeemedtobeconsistentwithIFADsGuidelines;and (b) TheincreasedimportanceoftheprojectprocurementplaninidentifyingprocurementprocedurestobefollowedbytheBorrower/Recipienttoensureconsistencyduringimplementation. 46. BothoftheseaspectsarediscussedinmoredetailinSectionsIII.CandD.
C. Use of national procurement systems

47. InlinewiththeprovisionsoftheGeneralConditions,procurementofgoods,worksandservices financed by IFAD shall be carried out in accordance with the provisions of the Borrowers/Recipients procurement regulations, to the extent such are consistent with these Guidelines.Eachprocurementplanshallidentifyproceduresthatmustbeimplementedbythe Borrower/RecipientinordertoensureconsistencywiththeseGuidelines. 48. ThisSectionthereforeelaboratestheprocessthatIFADwillusetoassesswhetheracountrys nationalprocurementsystemandregulationsareconsistentwiththeprocurementpolicies,principlesandstandardslaiddownintheseGuidelines.
Stage 1: Overarching country assessment

49. Duringpreparationofacountrystrategicopportunitiesprogramme(COSOP),orintheabsence of a COSOP process, when deemed appropriate, IFAD in conjunction with the Borrower/Recipient,willundertakeadeskreviewofexistingavailabledatatoascertainthestatus oftwoaspects: (a) Theoveralllegislativeandregulatoryframework;and (b) Thenationalstructureforpublicprocurement. 50. Sourcesofsuchdataforthiskindofassessmentwillvaryaccordingtotheavailabilityandcompletenessofinformationandthesizeoftheoverallcountryportfolio,butwillusuallyinclude:
11 For example, the Paris Declaration on Aid Effectiveness, to which IFAD is a signatory, affirmed the commitment for increasing alignment of aid with partner countries priorities, systems and procedures and helping to strengthen theit capacities (paragraph 3 (ii)). The Accra Agenda for Action reaffirmed this by committing to strengthen and use developing country systems to the maximum extent possible (paragraph 15).

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(a) Results from assessments of national procurement systems made by the Organisation for EconomicCo-operationandDevelopmentsDevelopmentAssistanceCommittee; (b) Recentfindingsfromothergovernmentalimplementingagencies,donorsanddevelopment partners;and (c) PreviousworkingexperiencefromIFADprojects. 51. Asaresultofthisreview,IFADwillinclude,forgeneraloverviewpurposes,somehigh-levelstatementswithintheCOSOPregardingitsfindings.Thesestatementswillnotbeabsolutedecisions but will merely serve as the starting point for more detailed assessment at the project design stage. 52. ShouldIFADconclude,asaconsequenceofthisreview,thattherearenumerousand/orfundamentalconcernsinrelationtotheissuesassessed,thentheoverarchingcountryassessmentwill statethattheprocurementsystemcannotbeadoptedatthepresenttime.
Stage 2: Specific project assessment
12

53. Carryingoutprocurementefficientlyiscriticaltogoodprojectimplementation,totheattainment ofaprojectsobjectives,andtoitssustainability.Duringprojectdesign,IFADwillundertake,in 13 conjunctionwiththeBorrower/Recipient,amorecomprehensiveassessmentoftheagencyor agenciesdesignatedtoundertakeprojectprocurement.Thiswillinclude,butnotberestricted to,issuessuchas: (a) The level of practical application of any existing laws, decrees, regulations or procedures coveringprocurementandtheextenttowhichtheymeettherequirementsofSectionIIof theseGuidelines; (b) Theleveloftheexistinghumancapacitytoundertakeprojectprocurement; (c) Organizationandfunctions; (d) Thesupportandcontrolsystemsrelatingtoprocurement; (e) Recordkeeping;and (f) Theoverallprocurementenvironmentwithintheagencyoragencies. 54. AchecklistoftheissuestobereviewedisincludedintheProcurementHandbook. 55. As a result of this stage-2 assessment, IFAD will classify these aspects individually into one of threecategories: (a) Fullyinlinewithrequirementsandconsideredsuitableforuseforprojectprocurement; (b) Generally in accordance with requirements and possibly suitable for use for project procurementwithsomemodifications;and
12 To be conducted at project design. 13 IFAD will depend on relevant assessments carried out by other regional development banks and partners where available.

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(c) Notinlinewithrequirementsandconsideredunsuitableforuse.
Findings and results

56. Basedontheresultofthefindingsoftheindividualassessments,IFADwilldecidetowhatextent thenationalsystemforprocurementcanbeusedinwhole,inpart,ornotatall.Thisdecision willbesharedwiththeBorrower/Recipientandbereflectedintheprojectdesign. 57. Whereprocurementmethodsorpracticeswithinthelegalandregulatoryframeworkareclassed asnotinlinewithrequirementsandconsideredunsuitableforuse,IFADwillusetheprocurementmethodsattachedasanAnnextotheseGuidelines.Theseprocurementmethodsareconsistentwiththoseofotherimplementingagencies,donorsanddevelopmentpartners. 58. Whereanyotheraspectsofnationalsystemsarefoundtobenotinlinewithrequirementsand considered unsuitable for use for project procurement, then IFAD, in conjunction with Borrowers/Recipients,willseektoidentifymeasurestobeintroducedthatwillapplytoitsprojects and support Borrowers/Recipients in meeting their own development goals through the managementoftheirownresources.
D. Procurement planning

59. Accurateandrealisticplanningandprioritizationofneedsisanessentialprerequisitetoeffective procurementandakeytoolformonitoringprojectimplementation. 60. Atthetimeofnegotiationofeachproject,theBorrower/Recipient,inconsultationwithIFAD, mustestablishan18-monthprocurementplan,whichmustinclude,asaminimum: (a) Abriefdescriptionofeachprocurementactivitytobeundertakenduringthatperiod; (b) Theestimatedvalueofeachactivity; (c) Themethodofprocurementtobeadoptedforeachactivity;and (d) The method of review IFAD will undertake for each activity (Section III.H of these Guidelines); 61. WherenationalprocurementplantemplatesexistandareagreedbyIFADassuitable,thensuch templatesshouldbeused.Ifnosuchtemplatesexist,IFADwilladoptthosefromotherinternationalfinancinginstitutionswithwhichtheBorrower/Recipientisfamiliarandwhichareinuse forotherprojects. 62. Borrowers/Recipients are required to keep plans updated frequently to reflect changes to the projectortimescales. 63. IFADsreviewofandnoobjectiontoprocurementplansiscompulsoryunderallfinancingagreementsdirectlysupervisedbyIFAD.
E. Eligibility

64. IFAD financing proceeds are disbursed exclusively for expenditures for goods, works and ser-

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vicesproducedinorsuppliedfromtheterritoryofanycountry.
F. Domestic preferences

65. TheBorrower/Recipientmay,withtheagreementofIFAD,grantamarginofpreferenceinthe evaluation of bids conducted under the international competitive bidding method of procurementto: (a) GoodsmanufacturedintheBorrowers/Recipientscountry,whencomparingagainstbids offeringgoodsmanufacturedfromabroad;and (b) WorksinMemberStatesthatareBorrower/RecipientsunderIFADfinancingonhighlyconcessionalterms,whencomparingbidsfromeligibledomesticcontractorswiththosefrom foreignfirms. 66. The conditions for the application of any such preference will be stipulated in the financing agreement.
G. Procurement involving community participation

67. GiventhesizeandnatureofIFADprojects,thereisahighdegreeofinvolvementwithcommunity-basedprocurementactivities. 68. It needs to be underscored that procurement with community participation is not a distinct methodofprocurementanditthereforerequiresthesameadherencetoallprinciplesandstandardssetoutintheseGuidelines.Projectdesignersaretoensurethatsimpleyetreliablearrangements,whichadheretotheseGuidelines,areinplacewithintheprojectto: (a) FacilitatetranslationofdocumentsandrecordsfromtheBorrowers/Recipientsofficiallanguage(s)tooneoftheIFADofficiallanguagesasmayberequiredforpurposesofauditand review; (b) Provide appropriate procedures for regular monitoring and audit of community procurementactivities,includingtheretentionofrelevantrecordsbytheprojectmanagementstaff and/ortheintermediaryagency; (c) Definetherelationships,rolesandresponsibilitiesbetweenintermediariesandthecommunity,includingaclearexitstrategyforthecompletionoftheintermediaryassistance;and (d) Ensureproperhandoverofassets. 69. Underthetermcommunityparticipation,itisunderstoodthatthecommunitymayplayoneor moreofthefollowingrolesduringprojectimplementation. 70. Asaproviderofgoods,worksorservicesdirectlytotheproject, communitiesarepermittedto undertakeworksorprovidegoodsorservicestotheprojectwhere: (a) Itisanimplementationmodalitywithintheprojectdesigndocument;or (b) ItisnotanimplementationmodalitybutitisagreedwithIFADthatthisrepresentsacosteffective and practical alternative to procuring externally. IFAD will also consider factors

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suchasfosteringownership,thesustainabilityofprojectactivities,effectiveoperationand maintenanceofaprojectfacility,andtheoverallrisk/rewardequation. 71. Generally,agreementwillonlybegrantedwhereitcanbedemonstratedthatsuchgoods,works orserviceshavebeenorcouldbesuccessfullyprovidedorproducedbythecommunity. 72. Asaprovider,acommunitymayacteither: (a) Onacommercialbasisundercontract;or (b) Aspartorallofthebeneficiarycommunityscontributiontotheproject; 73. Ineithercase,theestimatedfinancialvalueofthecommunitycontributionandthemodalities forsupervisionmustbequantifiedandagreedwithIFAD. 74. Astheimplementingagencyundertakingprocurementfortheproject,communitiesorinformal groupsmaybebroughttogethertoactasimplementingagenciestoundertake project procurement. 75. Wherethisisthecase,theirrolewillinclude: (a) Competitivecontractingusinganyoftheagreedprocurementmethods;and (b) Supervisionofacontractedproviderofworks,goodsorservices. 76. Theextenttowhichthisispermittedwillbedeterminedonaproject-by-projectbasis,identified intheprojectdesignand/orintheimplementationmanual,andclearlydefinedintheapproved procurement plan. Factors to be considered as part of the assessment are defined in the ProcurementHandbook. 77. Where the projects beneficiary community does not have adequate institutional capacity to receiveandaccountforfundsoradministerprocurementreliably,itmaybenecessarytointroduceintermediariestoactonbehalfofthecommunity.Suchintermediariescouldbecivilsociety organizations,cooperativesocieties,privateentitiesorothers. 78. Theprojectmanagementwillensurethatsuchintermediarieshaveadequatecapacitytoperform suchduties. 79. When civil society organizations or other entities are included as implementing agencies for weakcommunitygroups,thefollowingaspectswillbeaddressedduringprojectdesign: (a) Legal status of intermediary. Thiswillincluderegulationsgoverningregistration(with thegovernmentorlocalauthority),functioninginspecificsectors,authoritytoreceiveand accountforpublicfunds,andabilitytoparticipateintheproject; (b) Selection of intermediary. Intermediaries can be hired either through a transparent competitive process (if more than one intermediary is available) or through sole-source directcontracting(ifonlyonefunctioningintermediaryexistsinthetargetedcommunity); and

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(c) Financial viability and administrative capacity. Theintermediarysprimarysourceof funding,staffing,management,administrativecapacityandaccountabilityviaindependent audits,etc.,shouldbeexaminedtoensuresafetyandsecurityinhandlingpublicfundson behalfoftheprojectmanagementandthecommunity.
H. IFAD monitoring and review

80. ToensurethattheprocurementprocessiscarriedoutinconformitywiththeseGuidelinesand with the agreed procurement plan, IFAD will review arrangements for procurement of goods, worksandservicesproposedbytheBorrower/Recipient,including: (a) Contractpackaging; (b) Applicableproceduresandprocurementmethods; (c) Biddingdocumentation; (d) Compositionofbidevaluationcommittees; (e) Bidevaluationsandawardrecommendations;and (f) Draftcontractsandcontractamendments. 81. Theextenttowhichthesereviewprocedureswillbeappliedtoeachprojectorprogrammewill becontainedinthelettertotheBorrower/Recipientandtheprocurementplan. 82. Forfulldetailsonthereviewprocesses,refertotheProcurementHandbook.
I. Misprocurement

83. IFADwillnotfinanceexpendituresforgoods,worksorconsultingservicesthathavenotbeen procuredinaccordancewiththeseGuidelinesandthefinancingagreement.Insuchcases,IFAD may,inaddition,takeotherremedialactionunderthefinancingagreement,includingcancellationoftheamountinquestionfromtheloanand/orgrantaccountbydeclaringitineligible.Even ifthecontractwasawardedfollowingIFADsnoobjectionstatement,theFundmaystilldeclare misprocurementifitconcludesthatthisstatementwasissuedonthebasisofincomplete,inaccurateormisleadinginformationfurnishedbytheBorrower/Recipient,orthatthetermsandconditionsofthecontracthadbeenmodifiedwithoutIFADsapproval.

J. Fraud and corruption

84. IFADrequiresthatitsownstaffandthestaffofBorrowers/Recipients(includingbeneficiariesof IFAD financing), and all bidders, suppliers, contractors and consultants under IFAD-financed contracts,observethehigheststandardofethicsandintegrityduringtheexecutionofandprocurementundersuchcontracts.ThispositionisclearlystatedintheIFADPolicyonPreventing 14 Fraud and Corruption in its Activities and Operations  (hereafter: the anticorruption policy), whichappliestotheseguidelines.Inlinewiththispolicy,IFADwillhavetherightto:
14 The IFAD Policy on Preventing Fraud and Corruption in its Activities and Operations (EB 2005/85/R.5/Rev.1) is available on the IFAD website at www.ifad.org.

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(a) Rejectaproposalforawardifitdeterminesthatthebidder,supplier,contractororconsultantrecommendedforawardhas,directlyorthroughanagent,engagedincoercive,collu15 sive,corruptorfraudulentpracticesincompetingforthecontractinquestion; (b) SuspendorcancelallorpartofthefinancinginaccordancewiththeGeneralConditionsifit determinesatanytimethatrepresentativesoftheBorrower/Recipientorofabeneficiaryof thefinancingengagedincoercive,collusive,corruptorfraudulentpracticesduringtheprocurementortheexecutionofthatcontract,withouttheBorrower/Recipienthavingtaken timelyandappropriateactionsatisfactorytoIFADtoremedythesituation; (c) SanctionanindividualorfirmwhichmayincludedeclaringtheindividualorfirmineligibletobeawardedanIFAD-financedcontractindefinitelyorforastatedperiodoftimeif at any time it determines that the individual or firm has, directly or through an agent, engagedincoercive,collusive,corruptorfraudulentpracticesincompetingfor,orinexecuting,anIFAD-financedcontract; (d) Require that bidding documents and the contracts that it finances include a provision requiringsuppliers,contractorsandconsultantstopermitIFADtoinspecttheiraccounts, recordsandotherdocumentsrelatingtothebidsubmissionandcontractperformance,and tohavethemauditedbyIFAD-appointedauditors; (e) Referanycasesofirregularpracticesthatinclude,butarenotlimitedto,fraudandcorrup16 tiontotherelevantnationalauthoritiesforfurtherinvestigation;and (f) Apply,intheeventofcasesinwhichirregularpracticeshavebeendetermined,thesanctionsitdeemsnecessaryandappropriate. 85. WiththespecificagreementofIFAD,aBorrower/Recipientmayinclude,inbidformsforIFADfinancedcontracts,anundertakingofthebidderorconsultanttoobserve,whencompetingfor andexecutingacontract,thecountryslawsagainstfraudandcorruption(includingbribery),as 17 listed in the bidding documents or requests for proposals.   IFAD will accept the inclusion of sucharequirement,attherequestoftheBorrowers/Recipientscountry,providedthearrangementsgoverningsuchanundertakingaresatisfactorytoIFAD.
K. Dispute resolutions

86. In the event of a dispute between IFAD and its Borrower/Recipient, the provisions of Section 14.04oftheGeneralConditionswillapply. 87. WherethereisadisputebetweentheBorrower/Recipientandabidderorcontractor,thenthe process for dealing with this dispute will be as outlined in the bidding documents, contract and/or national laws of the country, as applicable. In these circumstances, IFAD will not be namedasanarbitratororbeaskedtonameanarbitrator.

15 As defined in the General Conditions. 16 As defined in IFADs anticorruption policy as may be amended from time to time. 17 An example might be: We undertake that, in competing for (executing) the contract, we will strictly observe the laws against fraud and corruption in force in the country of the (purchaser) (employer), as such laws have been listed by the (purchaser) (employer) in the bidding documents for this contract.

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L. References to IFAD

88. IftheBorrower/RecipientwishestorefertoIFADinprocurementdocuments,thefollowinglanguageistobeused: (NameofBorrower/Recipientordesignate)hasreceived(orinappropriatecaseshasapplied for)afinancingfromtheInternationalFundforAgriculturalDevelopment(IFAD)invariouscurrencies equivalent to ___________ towards the cost of (name of project), and intends to applyaportionoftheproceedsofthisloadtoeligiblepaymentsunderthiscontract.Paymentby IFADwillbemadeonlyattherequestof(nameofBorrower/Recipientordesignate)andupon approvalbyIFAD,andwillbesubject,inallrespects,tothetermsandconditionsofthefinancing agreement.Thefinancingagreementprohibitsawithdrawalfromtheloanand/orgrantaccount forthepurposeofanypaymenttopersonsorentities,orforanyimportofgoods,ifsuchpayment or import, to the knowledge of IFAD, is prohibited by a decision of the United Nations SecurityCounciltakenunderchapterVIIoftheCharteroftheUnitedNations.Nopartiesother than(nameofborrower/recipient)shallderiveanyrightsfromthefinancingagreementorhave anyclaimtofinancingproceeds.

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Annex

Methods of procurement in the event that national systems are not suitable

1. ThisAnnexoutlinesthevariousmethodsofprocurementthatcanbeselectedwhenithasbeen decided by IFAD that the Borrowers/Recipients national procurement methods or practices within the legal and regulatory framework are not in line with requirements and considered unsuitableforuseinwholeorinpart. 2. Detailsoftheindividualstepstobetakenduringtheprocurementstagearefurtherelaboratedin thespecificmodulesoftheProcurementHandbook.
A. International competitive bidding

3. Internationalcompetitivebidding(ICB)isaprocurementmethodsuitedtohigh-valuerequirementsthatwouldbeofinteresttotheinternationalbusinesscommunity.TheobjectiveofICBis to provide all eligible prospective bidders located and operating both within the Borrowers/Recipients country and abroad with timely and adequate notification of the Borrowers/Recipientsrequirementsandanequalopportunitytobidfortherequiredgoodsand works. 4. Where ICB is the identified method of procurement within an approved procurement plan, WorldBankproceduresassetforthintheirguidelineswillapply.
B. Limited international bidding

5. Limitedinternationalbidding(LIB)isessentiallyICBbydirectinvitationwithoutopenadvertisement.Itmaybeanappropriatemethodofprocurementwhere: (a) Contractamountsaresmall; (b) Thereisonlyalimitednumberofsuppliersorcontractors;or (c) OtherexceptionalreasonsexistthatmayjustifydeparturefromfullICBprocedures. 6. UnderLIB,borrowers/recipientsshouldseekbidsfromalistofpotentialsuppliersorcontractors broadenoughtoensurecompetitiveprices.Thislistshouldincludeallsuppliersandcontractors whenthereareonlyalimitednumber.Domesticpreferencesarenotapplicableintheevaluation of bids under LIB. In all respects other than advertisement and preferences, ICB procedures applytoprocurementunderLIB,includingthepublicationofthecontractaward.

This applies equally to goods, works and services. For consultancy services, there are also methods of selection (e.g. quality and cost-based selection, selection based on consultants qualifications and least cost selection), which determine the process of evaluation and award. These are discussed further in the Procurement Handbook.

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C. National competitive bidding

7. Nationalcompetitivebidding(NCB)isthecompetitivebiddingprocedurenormallyusedforpublic procurement in the country of the Borrower/Recipient, and may be the most efficient and economical way of procuring goods or works that, by their nature or scope, are unlikely to attractforeigncompetition. 8. NCBmaybethepreferredmethodofprocurementwhereforeignbiddersarenotexpectedtobe interestedbecause: (a) Contractvaluesaresmall; (b) Worksarescatteredgeographicallyorspreadoutovertime; (c) Worksarelabour-intensive;or (d) Thegoodsorworksareavailablelocallyatpricesbelowthoseontheinternationalmarket. 9. NCBproceduresmayalsobeusedwheretheadvantagesofICBareclearlyoutweighedbythe administrativeorfinancialburdeninvolved. 10. AdvertisingforprocurementunderNCBmaybelimitedtothenationalpress,theofficialgazette of the Borrowers/Recipients government or, where possible, a free and open-access website. 2 Biddingdocumentsmaybeinanofficiallanguageofthecountry,andlocalcurrencyisgenerally usedforthepurposesofbiddingandpayment.Theproceduresaretoprovideforadequatecompetitioninordertoensurereasonableprices,andthemethodsusedintheevaluationofbids andtheawardofcontractsaretobeobjectiveandmadeknowntoallbidders,andarenottobe appliedarbitrarily.Theprocedureswillalsoincludepublicopeningofbids,publicationofresults ofevaluationandoftheawardofcontract,andprovisionsforbidderstoprotest.Inaddition,bidding documents will provide clear instructions on how bids should be submitted, how prices shouldbeoffered,andtheplaceandtimeforsubmissionofbids.Adequateresponsetimefor preparationandsubmissionofbidswillbeprovided.Ifeligibleforeignfirmswishtoparticipate underthesecircumstances,theyaretobeallowedtodoso.
D. International or national shopping

11. Internationalornationalshoppingisaprocurementmethodthatentailscomparingpricequotationsfromseveralsuppliersorcontractors(usuallyatleastthree)toensurecompetitiveprices.It isanappropriatemethodforprocuringreadilyavailable,off-the-shelfgoodsorstandardspecificationcommoditiesthataresmallinvalue,orsimplecivilworksofsmallvalue.Requestsforquotationsshouldindicatethedescriptionandquantityofthegoods,togetherwithdesireddelivery (orcompletion)timeandplace.Quotationsmaybesubmittedbymail,electronicmailorfacsimile. The evaluation of quotations will  follow the principles of competition. The terms of the acceptedofferaretobeincorporatedinapurchaseorderorbriefcontract.

Translation into one of IFADs or the cooperating institutions official languages is to be provided if required. Pursuant to article 15.02 (Language of reporting) of IFADs General Conditions, the agreed language will be specified in the financing agreement.

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12. Underinternationalshopping,thepurchaseristosolicitquotationsfromatleastthreesuppliers intwodifferentcountries.NationalshoppingmaybeusedwherethedesiredgoodsareordinarilyavailablefrommorethanonesourceinthecountryoftheBorrower/Recipientatcompetitive prices.

E. Direct contracting

13. Directcontractingwithoutcompetition(bysingleorsole-sourceselection)istheleastfavourable methodofselection.Duetoitsnon-competitivenature,itmayonlybeusedwiththeexpress agreementofIFADandisonlypermittedinthefollowingexceptionalcircumstances: (a) Anexistingcontractforgoodsorworks,awardedinaccordancewithproceduresacceptable toIFAD,maybeextendedforadditionalgoodsorworksofasimilarnaturetoamaximum of25percentoftheoriginalcontractvalue,withthepriorapprovalofIFAD,providedthat noadvantagecouldbeobtainedbyfurthercompetitionandthatthepricesontheextendedcontractarereasonable.Provisionforsuchanextension,ifconsideredlikelyinadvance, istobeincludedintheoriginalcontract; (b) Standardizationofvehicles,equipmentorsparepartstoensurecompatibilitywithexisting vehicles,equipmentormachinerymayjustifyadditionalpurchasesfromtheoriginalsupplier.Forsuchpurchasestobejustified,theoriginalvehicles,equipmentormachineryshould besuitable;thenumberofnewitemsshouldgenerallybelessthantheexistingnumber; thepriceshouldbereasonable;andtheadvantagesofanothermakeorsourceofequipmentaretohavebeenconsideredandrejectedongroundsacceptabletoIFAD; (c) Therequiredequipmentisproprietaryandobtainableonlyfromonesource; (d) Thecontractorresponsibleforaprocessdesignrequiresthepurchaseofcriticalitemsfrom aparticularsupplierasaconditionofaperformanceguarantee;and (e) Purchasesfromtheoriginalsuppliermayalsobejustifiedinexceptionalcasesandemergencies,suchasinresponsetoanaturaldisaster,conflictandpostconflict,orincountries wheretherearerestrictionstofreemarketsandenterprises. 14. Any request for direct contracting from a Borrower/Recipient must be accompanied by a detailedjustification,whichIFADwillexaminecarefullytoensurethatitissatisfiedthatnoother alternativeselectionmethodscanbeused.
F. Procurement from commodity markets

15. Marketpricesofcommodities,suchasgrain,animalfeed,cookingoil,fuel,fertilizer,pesticides andmetals,fluctuatedependingonthedemandandsupplyatanygiventime.Pricesofmany such commodities are quoted in established commodity markets. Procurement often involves multipleawardsforpartialquantitiestoensuresecurityofsupplyandmultiplepurchasesovera periodoftimetotakeadvantageoffavourablemarketconditionsandtokeepinventorieslow.A list of prequalified bidders may be drawn up to whom periodic invitations are issued. Bidders

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may be invited to quote prices linked to the market price at the time of or prior to the shipments.Bidvaliditiesaretobeasshortaspossible.Asinglecurrencyinwhichthecommodityis usuallypricedinthemarketmaybeusedforbiddingandpayment.Thecurrencyistobespecifiedinthebiddingdocument.Biddingdocumentsmaypermittelexedorfaxedbids,ifthereis norequirementforbidsecurityorifprequalifiedbiddershavesubmittedstandingbidsecurities validoveraspecifiedperiodoftime.Contractconditionsandformsconsistentwithmarketpracticesaretobeused.
G. Work by force account
3 16. ForceaccountistheuseoftheBorrowers/Recipientsownpersonnelandequipmenttoperformconstructionwork.Insomecircumstancesitmaybetheonlypractical,efficientandeconomicmethodforconstructingsomekindsofworks.Theuseofforceaccountmaybejustified, andonlyusedafterIFADsno-objectionstatement,where:

(a) Quantitiesofworkinvolvedcannotbedefinedinadvance; (b) Worksaresmallandscatteredorinremotelocationsforwhichqualifiedconstructionfirms areunlikelytobidatreasonableprices; (c) Workisrequiredtobecarriedoutwithoutdisruptingongoingoperations; (d) TheriskofunavoidableworkinterruptionisbetterbornebytheBorrower/Recipientthan byacontractor;or (e) There are emergencies needing prompt attention such as natural disasters, conflict and postconflict,orcountrieswheretherearerestrictionstofreemarketsandenterprises. 17. Whereforceaccountisused,IFADistobesatisfiedthatlocalforceaccountunitsarestaffed, equippedandorganizedtocarryouttheworksexpeditiouslyandatareasonablecost. 18. Maintenanceandminorimprovementsofroadsareatypicalexampleofforceaccountusage.A government-ownedconstructionunitthatisnotmanageriallyandfinanciallyautonomousisto beconsideredaforceaccountunit.Forceaccountmayalsobeusedforspecializednon-consultingserviceswhen,formattersofnationalsecurity,theBorrowers/Recipientslawonlypermits fortheseservicestobeprovidedbygovernmentagencies(i.e.aerialmapping).
H. Procurement from United Nations agencies

19. TheremaybesituationsinwhichprocurementfromspecializedagenciesoftheUnitedNations, actingassuppliersandpursuanttotheirownprocedures,maybethemosteconomicalandefficientwayofprocuringrelativelysmallquantitiesofoff-the-shelfgoods.Useofsuchagenciesas supplysources,togetherwiththeprojectcomponentandthetypeofgoodsorworkstobeprocured from such sources, are to be expressly and specifically agreed between the Borrower/Recipient andIFADbefore proceeding withtheapplication ofthismethod ofprocurement.

Force account is also known as direct labour, departmental force or direct work.

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December 2010

Via Paolo di Dono, 44 00142 Rome, Italy Tel. +39-06-54591 Fax +39-06-5043463 Telex 620330 IFAD-I E-mail IFAD@IFAD.ORG

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