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COMPARISON OF ASIAN DEVELOPMENT BANK PROCUREMENT GUIDELINES

AND WORLD BANK GUIDELINES
A.

Introduction

1.
Since 1998 heads of procurement (HOP) of multilateral development banks (MDBs)
have pursued a harmonization process. It began with developing common standard bidding
documents and anticorruption provisions, and developing common strategies on other
procurement-related issues such as electronic procurement and environmentally responsible
procurement. Recently, HOP directed its attention to harmonization of policies and exchange of
best practices. Recent revisions to the Asian Development Banks (ADB) procurement
guidelines extend the harmonization work by more closely aligning with the guidelines of other
MDBs. The main comparator is the World Bank, whose guidelines have also been substantially
adopted by the Inter-American Development Bank. This paper describes the differences
between ADB and World Bank guidelines.
B.

Policy-Related Provisions

2.
The guidelines of ADB and the World Bank differ in six ways as a result of ADB policies
that include provisions related to procurement.

(i)

Country eligibility. Article 14(ix) of the Charter provides that ADB will only finance
goods and services produced in and supplied from a member country. This
requirement for source-country eligibility is reflected in the guidelines. The World
Bank does not have a comparable restriction in its constitutive documents, or (since
2004) as a matter of policy.

(ii)

Program lending. ADBs policy on program lending states that international

competitive bidding (ICB) is not required. Specific procurement procedures are set
out in the loan documentation and must follow normal commercial procedures
appropriate to the trade.1 The World Bank, on the other hand, applies a modified
version of ICB with reduced advertising requirements, shortened bidding periods,
and simplified bid currency provisions.

(iii)

Private sector lending. ADB does not require ICB for private sector lending, while
the World Bank requires it specifically for build-operate-transfer arrangements (and
variations) and concession contracts. ADBs approach is similar to that of the
International Finance Corporation, the private sector arm of the World Bank Group.

(iv)

Fraud and corruption. ADB guidelines benefited from a recent updating of the
anticorruption policy.2 The policy lays out specific wording for the guidelines with
respect to fraud and corruption. The wording includes a provision on conflict of

Under the policy, the borrower must comply with other requirements related to importation and disbursement. For
example, economy-wide imports may be made on the basis of negative lists, while sector-wide imports are made
on the basis of positive lists. When a withdrawal from the loan proceeds is made, the value of imports must be
certified (in the case of negative lists) or documented (in the case of positive lists) over the period covered by the
withdrawal. Compliance with eligibility requirements (including source country and negative list requirements) are
only checked by macro calculations to ensure the level of funding support does not exceed the value of importation
of eligible goods.
ADB. 2004. Anticorruption PolicyProposed Clarifications and Related Changes to Consulting and Procurement
Guidelines. Manila.

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interest, which the World Bank has not yet incorporated in its policies. ADB states
any party in the procurement process is covered by corrupt practice provisions,
while the World Bank guidelines limit coverage to public officials with a footnote to
include World Bank staff and employees of organizations making or reviewing
procurement decisions. As the wording in ADB guidelines is more current, it is
retained. Similarly, the World Bank prohibits discussions between its staff and
bidders during bid evaluation. ADB does not include a similar prohibition, believing
that discussions with bidders can be important for fraud investigation. ADB is
currently discussing with the World Bank (and other MDBs) harmonizing the wording
of anticorruption policies. The discussion may result in further modification to these
provisions.
(v)

Boycotts. The World Bank allows countries to boycott suppliers based on their
nationality, where the boycott is provided for in the laws of the borrowers country.
This has never been an ADB practice. The guidelines continue that practice, and
include a clause that allows borrowers to sanction firms or goods of a particular
country when complying with a United Nations (UN) Security Council resolution.

(vi)

Emergency lending. In compliance with ADBs emergency lending policy, the

guidelines include a procedure called procurement under disaster and emergency
assistance.3 It encourages local bidding with abbreviated bidding periods and allows
direct contracting in emergency situations. World Bank guidelines do not have a
similar provision.

C.

Operational Differences and Preferences

3.
Bidding Procedures. ADB guidelines have adopted all World Bank terminology for
procurement modes: national competitive bidding, limited international bidding, and
shopping. These and other changes eliminate most procedural differences. However, four
practices have been retained due to operational differences between the two organizations and,
in a few areas, preference of approach.

(i)

ADB permits two-envelope bidding whereas the World Bank does not. Two-envelope
bidding is an accepted international practice and is widely applied in many ADB
member countries. It allows borrowers the option to evaluate the technical aspects of
bids in the absence of price information. In some circumstances, this reduces
political pressures that can result when price information is public and allows
borrowers to evaluate technical proposals in an impartial setting.

(ii)

ADB allows a procedure called repeat order bidding, which is not found in the
World Bank guidelines. It is a modified form of ICB used in rebidding or to obtain
additional quantities of a good procured through a previous bidding. Bids are invited
only from bidders who participated in the first bidding. Experience with repeat order
bidding is that it is an effective and quick procedure, although it is applied
infrequently. Similarly, under the direct contracting mode of procurement, ADB
guidelines impose time and volume limits for a repeat order, and specify conditions
for extending works contracts. Although the World Bank guidelines provide for direct
contracting, they do not include similar limits and conditions.

ADB. 2004. Disaster and Emergency Assistance Policy. Manila.

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(iii)

The World Bank and ADB both specify a minimum bid preparation period of 42 days
(6 weeks) for ICB. The World Bank, however, also specifies a maximum of 12
weeks, while ADB does not. ADB leaves the maximum period unspecified, preferring
to make it dependent on the complexity of the contract being bid.

(iv)

Both ADB and the World Bank have domestic preference provisions that are now
almost fully aligned but one minor difference remains. ADB permits applying
domestic preferences to turnkey contracts, while the World Bank does not.

4.
Advertising. The World Bank requires advertising in its website (dgMarket) and UNDB
online. ADB specifies its web site (adb.org). Although ADB shares information with dgMarket
and UNDB, it does not take responsibility for their actions as does the World Bank. Other
requirements for advertising by the borrower, such as use of newspaper, website advertising,
and publication of the general procurement notice are the same.
5.
Reference to ADB. ADB requires that bidding documents (and prequalification
documents) clearly state that ADB is financing the contract. The World Bank does not have this
requirement. This is a desirable feature of ADB guidelines as it assures bidders that funding is
secure and that ADB procurement procedures are to be followed, thus encouraging greater
international participation in the bidding.
6.
Pricing and Treatment of Taxes and Duties. The World Bank and ADB require that
taxes and duties on goods be removed for the purpose of bid evaluation, except in the case of
works contracts where taxes are considered as part of the bid price. Bidders are asked to quote
imported goods, exclusive of import duties, and locally manufactured goods exclusive of
domestic sales tax. However, the World Bank differs from ADB in requiring bidders to quote
previously imported goods as though they were domestically produced. Also, in the case of
turnkey contracts, the World Bank treats the entire contract as a works contract, requiring
bidders to include duties and taxes on both works and goods parts. ADB, on the other hand,
requires bidders to segregate the turnkey components, including taxes in the works part, but
quoting imported goods exclusive of duties, and locally manufactured goods exclusive of tax.
ADBs procedure is fairer to bidders and more consistent with the principle (accepted by both
the World Bank and ADB) of how duties and taxes are to be treated. An area for future HOP
discussion is to develop a common approach acceptable to all MDBs.
7.
Language. The World Bank allows procurement documents in English, French,
Spanish, and the local language for ICB. It also allows contracts to be in the local language with
a certified translation into any one of its three official languages. ADBs official language is
English and requires ICB documents and contracts to be written in English. (National
competitive bidding documents can be in the local language with an English translation provided
for review purposes.)
8.
Rebidding, Extensions, and Negotiation. Both organizations provide for the
exceptional incidence of procedures not properly followed, or for requiring rebidding or
extension of bid validity. However, how these occurrences are treated differs:
(i)

If the guidelines have not been adhered to, ADB and the World Bank both may
declare misprocurement and refuse to finance the procurement. The World Bank
requires that the funds associated with the contract be canceled from the loan.
Rather than requiring cancellation of funding, ADB in certain cases allows rebidding,
especially where misprocurement is not the fault of the borrower.

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(ii)

In the case of bid failure because bid prices are higher than budgeted prices, the
World Bank requires the borrower to reduce the scope of the contract and rebid, all
in an attempt to achieve a contract within the budgeted amount. In exceptional
cases, ADB allows the borrower, instead of rebidding, to negotiate with the lowest
evaluated bidder to reduce its price. Negotiation is allowed only where bid prices
substantially exceed the estimates. Negotiation is done under carefully controlled
conditions (the bidder must have offered the lowest evaluated price, ADB must give
prior approval, the negotiated contract terms must be approved, etc.). If negotiations
are unsuccessful, then the contract scope is adjusted and it is rebid.

(iii)

Where bid validity periods are to be extended, both organizations prescribe similar
procedures; however World Bank guidelines say that a mechanism must be in place
to adjust prices for second and subsequent extensions. ADB guidelines state that
bidders may not adjust the price or substance of their bids.

9.
Bid Security. Bid security is optional under both World Bank and ADB procedures.
Where used, ADB requires bid security to be issued by a reputable bank. The World Bank
allows security from insurance companies and includes a further difference that requires the
issuer of the security to have a correspondent in the borrowers country.
10.
Conditions of Contract. ADB and the World Bank use the same or similar conditions of
contract, based on documents developed by the International Federation of Consulting
Engineers for works and turnkey contracts, and on jointly developed standard bidding
documents for goods. However, some minor differences exist:
(i)

ADB allows withholding of performance security and retention money. The World
Bank specifies one or the other, not both.

(ii)

World Bank guidelines say that price adjustment provisions in the contract can be
based on documentary evidence supplied by the contractor. ADB does not allow this
practice.

(iii)

Further to (ii), ADB requires that the contract include a price adjustment provision if it
has high commodity content, or is a contract for procurement of commodities.

(iv)

ADB does not allow the reimbursable cost plus fee contracts provided for in World
Bank guidelines. It is a method of contracting where a contractor is selected on the
basis of its fees, but is paid its fees plus costs it incurs in doing the work. The World
Bank only allows such contracts in exceptional circumstances.

11.
Documentation and Review Requirements. ADB and the World Bank both provide for
prior review and postreview options involving bidding documents (and prequalification
documents), bid evaluation reports, and contracts. Some minor procedural differences exist:
(i)

Where postreview of the contract award is used, ADB imposes a time limit of 6
months on the time it takes to conduct the review (after which the borrowers action
is deemed approved). The World Bank does not specify a time limit in its guidelines.

(ii)

The World Bank requires that bid evaluation reports be submitted 13 weeks (exact
time depends on approving authority) before bid expiration. ADBs more centralized

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approach currently makes this unworkableoften more than 1 week is required for
transmission of documents from resident missions, and the review requires
additional time beyond that. Accordingly, ADB specifies 28 days prior to bid
expiration as the minimum allowable time.