Business Opportunity Seminar

Procurement
July, 2011 Tokyo
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Procurement Guidelines Sources

ADB Charter Commercia l Practices

Other MDBs

PROCURE MENT GUIDELINE S

ADB Board Policy

ADB Experience

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 Article 14 (ix) : "The proceeds of any loan, investment

or other financing undertaken in the ordinary operations of the Bank or with Special Funds shall be used only for procurement in member countries of goods and services produced in member countries, except in any case in which the Board of Directors by a vote of the Directors representing not less than two-thirds of the total voting power of the members, determines to permit procurement in a non-member country

ADB Charter

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Afghanistan Armenia Australia Austria Azerbaijan Bangladesh Belgium Bhutan Brunei Darussalam Cambodia Canada China, Peoples Republic of Cook Islands Denmark Fiji Islands, Republic of Finland France Georgia Germany Hong Kong, China India Indonesia Ireland Italy Japan Kazakhstan Kiribati Korea Kyrgyz Lao Peoples Democratic Rep. Luxembourg Malaysia Maldives Marshall Islands Micronesia, Federal States of Mongolia Myanmar Nauru, Republic of Nepal Netherlands New Zealand Norway Pakistan Palau Papua New Guinea Philippines Portugal Samoa Singapore Solomon Islands Spain Sri Lanka Sweden Switzerland Taipei, China Tajikistan Thailand Timor-Leste, Democratic Tonga Turkey Republic of Turkmenistan Tuvalu United Kingdom United States of America Uzbekistan Vanuatu Viet Nam

Member Countries: 67

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 Article 14 (xi): "The Bank shall take the

ADB Charter

necessary measures to ensure that the proceeds of any loan made, guaranteed or participated in by the Bank are used only for the purposes for which the loan was granted and with due attention to considerations of economy and efficiency"

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Procurement Guidelines Purpose

To inform Borrowers as well as

Suppliers, Manufacturers, Contractors of the general principles and procedures to be observed in carrying out procurement under ADB financing in the Loan Agreement

Additional arrangements may be set out

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Procurement Guidelines Responsibilities

The Borrower (Executing Agency) is responsible for all procurement activities ADB has the obligation to review the procurement activities to ensure that the proceeds of its finance are used with due attention to considerations of economy and

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Procurement Guidelines Documents Governing Procurement

Documents Governing Procurement Actions

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Loan Agreement (Schedule 4) Procurement Guidelines Standard Bidding Documents (SBDs) Internal Instructions (PAI) Handbooks and Guides

Procurement Guidelines Procurement Principles

Economy and Efficiency Fairness Transparency Promotion of Domestic

Industries
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Procurement Guidelines Applicability

Contracts financed by ADB entirely or partly Procurement Guidelines must be followed Contracts not financed by ADB but part of Project Borrower may adopt its own procurement procedures Works/goods to be procured must be . . .
... ... ... of satisfactory and compatible quality completed and/or delivered in timely fashion priced not to affect adversely viability of project

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Procurement Guidelines Eligibility

Limitation for Participation

Ideally only by bidders' nationality Compliance with UN Security

and capability to fulfill the contract

Exceptions

Council decision Conflict of Interest Government owned enterprises Declaration of ineligibility by ADB

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Procurement Guidelines

Advance Action & Retroactive Financing

Advance Procurement Action

Initial steps of procurement prior to loan

signing Procedures must follow Procurement Guidelines Borrowers own risk ADB to review process ADB not committed to finance

Retroactive Financing

Reimbursement of eligible payments by

ADB within limits specified in loan agreement

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Procurement Guidelines Misprocurement

If Procurement is not carried out as agreed ADB will
... declare misprocurement ... cancel corresponding portion of financing ... exercise other remedies

If appropriate, ADB may permit rebidding

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Procurement Guidelines Fraud and Corruption

offering, giving, receiving, or soliciting, directly or indirectly, anything of value to influence improperly the actions of another party act or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to avoid an obligation impairing or harming, or threatening to impair or harm, directly or indirectly, any party or the property of the party to influence improperly the actions of a party arrangement between two or more parties achieve an improper purpose, including improperly the actions of another party

Corrupt Practice

Fraudulent Practice

Coercive Practice

Collusive Practice

designed to influencing

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Procurement Guidelines Fraud and Corruption

ADBs Anticorruption Policy requires all parties to observe the highest standard of ethics during the procurement and execution of such contracts. In pursuance of this policy, ADB will

Reject a proposal to award contract

Cancel the corresponding portion of a loan Declare a firm ineligible either indefinitely or for a stated period of time Inspect accounts and records of suppliers and contractors and have them audited by auditors appointed by ADB

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Procurement Guidelines Procurement Plan

Identificati on 1

Evaluati on

6 5

2 3

Preparatio n

4 Implementa tion Loan Negotiation & Board

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Apprai Procurement sal Plan

- Type of contract - Method of procurement

Procurement Guidelines

Procurement Plan
Competitiv e Aspects Content of Bid Package

Timing of Delivery

Bid Package
Location
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Institutional Capability

Market Practices

Procurement Guidelines EA Capacity Assessment

Objective Determination of EAs capability to handle ADB procurement Action Plan Who - Project departments in cooperation with COSO Timing - During project processing (ideally as part of PPTA) or as separate exercise Scope - Legal and regulatory regime - Organizational and functional structure - Operational management and controls

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Procurement Guidelines Procurement Method

International Competitive Bidding (ICB) is the default method under ADB Procurement Guidelines
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Procurement Guidelines International Competitive Bidding

Essentials of ICB
Threshold contract values (US$): Goods 500,000 to 1,000,000 Works 1,000,000 to 10,000,000 Value for Money For Borrower, wide range of choices in bid selection from among competing suppliers / contractors Fairness, Transparency
For prospective bidders from eligible source countries, adequate, fair and equal opportunities
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International Competitive Bidding Type and Size of Contracts

Type: Supply (Goods), Works, Design-Supply-Install (Turnkey) Dependent on magnitude, nature and location of project

Size:

Payment: Unit Price, Lump Sum, Combination Slicing: A bid may consist of multiple contracts (slices) Procedure: Single/Two-Stage, One/TwoEnvelope
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Procurement plan

Bidding Typical Time Requirements

Preparation of PQ Document Prequalification
Deadline bid Submission

Planning/Bid Packaging

eparation of Bidding Document Bidding

Contract signed

Award
-4 -3 -2 -1 1 2 3 4 5 6 7 8 9 10 11
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Bidding Advertisement and Notification

Invitation for Prequalification or for Bids to be published
. . . by ADB on ADBs web site, and . . . by EA in English language newspapers, or . . . internationally known and freely accessible website

In case of Prequalification
Invitation for Bids will be sent to prequalified bidders only
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International Competitive Bidding Prequalification

Purpose
to ensure that bids are submitted only by firms that have the necessary qualifications in terms of

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Eligibility Experience Financial Capacity Pending Litigation

to undertake the work for which bids are to be invited

International Competitive Bidding Prequalification

Prequalification process usually used for
Large complex works contracts Turnkey contracts Contracts for fabrication of custom designed plant and equipment Specialized service contracts Complex IT contracts
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International Competitive Bidding Bidding Documents

Bidding Documents shall :

Comply with requirements of the ADBs Procurement Guidelines Comply with agreed modifications or departures from the Guidelines Comply with the format of the ADBs appropriate Standard Bidding Documents (SBDs)

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International Competitive Bidding Bidding Procedures

Single-Stage: OneEnvelope Single-Stage: TwoEnvelope

Two Stage

Two-Stage: Two-Envelope
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Bidding Procedures Single-Stage: One-Envelope

Deadline ADB Appro val

STOP
Technical Proposal Technical Financial Proposal Financial Financial Proposal Technical Proposal

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Preparation

Evaluation

Bidding Procedures Single-Stage: Two-Envelope

Deadline

STOP
Technical Proposal Technical

ADB Appro Technical val Proposal

ADB Appro val Financial Proposal

Financial Proposal Financial Financial

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Preparation

Evaluation

Evaluation

Bidding Procedures Two Stage

Deadline STOP
Technical Proposal Technical Proposal

ADB Appro val

Deadline STOP

ADB Appro val

Revised Revised Technical Proposal Technical Proposal Financial Proposal Financial Proposal

Revised Technical Technical Financial

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Preparatio

Evaluation

Preparation

Evaluation

Bidding Procedures Two-Stage: Two-Envelope

Technical Proposal

Deadlin e

STOP

Technical Proposal

ADB Approv al

Revised Techn. Revised Techn. Proposal STOP Proposal Suppl. Financial Proposal

Deadlin e

ADB Approv al

Suppl. Financial Proposal

Technical Revised Technical Financial Proposal Suppl. Financial Financial Proposal Financial
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Financial

Financial

Preparatio

Evaluation

Preparation

Evaluation

International Competitive Bidding Bidding Documents

2.13 Validity of Bids 2.14 Bid Security : Bank guarantee, L/C, Certified check, or Declaration 2.15 Language : English 2.21 Pricing : Intercoms 2000 (CIF/CIP, EXW) 2.24 Price Adjustment : generally beyond 18 months

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International Competitive Bidding Bidding Documents

2.29 Currency of Bid: In any currency (Up to three foreign currencies) 2.31 Currency Conversion for Bid Comparison: Bid Price shall be converted to a single currency by the official rate on a date selected in advance 2.32 Currency of Payment: in the currency(ies) in which the bid price is expressed.

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International Competitive Bidding Bidding Documents

2.34 Terms and Methods of Payment 2.37 Alternative Bids 2.38 Conditions of Contract 2.39 Performance Security 2.41 Liquidated Damages and Bonus Clauses 2.42 Force Majeure 2.43 Applicable Law and Settlement of Disputes.

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International Competitive Bidding Bidding Documents

2.34 Terms and Methods of Payment 2.37 Alternative Bids 2.38 Conditions of Contract 2.39 Performance Security 2.41 Liquidated Damages and Bonus Clauses 2.42 Force Majeure 2.43 Applicable Law and Settlement of Disputes.

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International Competitive Bidding Bidding Documents

2.44 Time for Preparation of Bids: Generally six weeks from the date of invitation 2.45 Bid Opening 2.46 Clarifications 2.48 Examination of Bids 2.49 Evaluation and Comparison of Bids

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International Competitive Bidding Bidding Documents

2.55 Domestic Preferences:

Domestically Manufactured Goods 15% Domestic Civil Work Contractors 7.5%

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Countries Eligible for Domestic Preference

Afghanistan Bangladesh Bhutan Cambodia India Kyrgyz Republic Lao Peoples Democratic Republic Mongolia Myanmar Nepal Pakistan Papua New Guinea Solomon Islands Tajikistan Timor-Leste Uzbekistan Viet Nam

Based on per capita annual GNI limit of $875 as of January 2007.

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Procurement Guidelines Other Methods of Procurement

Limited International
Bidding Bidding

National Competitive Shopping Direct Contracting Force Account Procurement from

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Specialized Agencies

Procurement Agents

Procurement in Loans to Financial Intermediaries Procurement under BOO / BOT / BOOT, Concessions and Similar Private Sector Arrangements Community Participation in Procurement Procurement under Disaster and

Procurement Guidelines Other Methods of Procurement

Limited International Bidding

ICB by Invitation Appropriate for . . . if there is only a limited number of suppliers . . . other exceptional reasons

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National Competitive Bidding

Procurement is done domestically, within
the borrowing DMC

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Allowed when :
Domestic production or construction facilities are available Foreign contractors and suppliers are unlikely to be interested Procedures for domestic procurement are acceptable to ADB Borrower has requested for NCB

Procurement Guidelines National Competitive Bidding

Eligibility Advertising All local and foreign bidders are eligible National press or official gazette, or freely accessible website ADB website

Bidding 30 days is acceptable Period Prequalificatio Discouraged, but national n prequalification/registration system is acceptable Bidding The use of local language, local
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Procurement Guidelines Other Methods of Procurement

Shopping
Method Comparing price quotations (minimum 3) Used for - Readily available off-the-shelf goods - Standard specification commodities of small value - Simple works of small value Requests Requests for quotation to include: - Description, specifications - Quantity - Delivery / completion time and place By Letter, fax, email
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Procurement Guidelines Other Methods of Procurement

Direct Contracting Contracting without competition (Single Source) Appropriate for the procurement of
. . . additional items under existing ICB contracts . . . standardization of equipment . . . proprietary equipment . . . critical items required by process design

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Procurement Guidelines ADB Prior Review

Procurement Plan
Contracts (Goods, Works, Services) Procurement Mode Procurement Timing ADB review (post/prior)

Advertisement and Invitation to Prequalify Evaluation Criteria Prequalificatio Evaluation of Applications n Invitation to Bid Preparation of Advertisem ent Bid Bid Documents Documents Evaluation Report Proposal of Bid Evaluation Award

EA

Award of Contract

Certified Contract

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Procurement Guidelines ADB Prior Review

Additional ADB Approval Requirements
Extension of bid validity Change in contract award recommendation Change in the terms and conditions of contract Time extensions, modifications of conditions, change orders increasing in
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ADB Review Procurement Committee

Procurement of contracts with values of $10 million and above must be approved by

--- ADB Procurement Committee --Chairman : Principal Director, COSO Members : Assistant General Counsel Director, Sector Division Secretary : Senior Procurement Specialist (Non-Voting)

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ADB Review Procurement Committee

Matters for Consideration

For contracts estimated at $10.0 million or more

Prequalification Evaluation Technical Evaluation (2-stage/2-envelope bidding) Bid Evaluation Award Proposal for Rebidding Proposal for Cancellation

Actions in conflict with ADB requirements Proposal to vary previous PC decisions Any matter referred by management

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What

AWARD OF CONTRACT Publication of Award of Contract

Name of each bidder Bid prices as read out Evaluated bid prices Name of bidders whose bid was rejected and reasons Name of winning bidder and price offered Duration and summary scope of contract awarded English language newspaper or freely accessible web site Prior Review: Within 2 weeks after ADBs approval Post Review : By date of contract award

Where When

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AWARD OF CONTRACT Debriefing

Bidders may request an explanation from
the EA as to why its bid was not selected explanation, either

The EA shall promptly provide an in writing and/or in a debriefing meeting at the option of the EA

The requesting bidder shall bear all the

costs of attending such a debriefing

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Project Implementation and Administration Seminar

Standard Bidding Documents

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BIDDING DOCUMENTS Outline and Components

Part I: Bidding Procedures
Section 1. Section 2. Section 3. Section 4. Section 5. Instruction to Bidders Bid Data Sheet Evaluation and Qualification Criteria Bidding Forms Eligible Countries

Part II: Requirements Part III: Contract

Section 6. Supply or Works Requirements Section 7. General Conditions of Contract Section 8. Special/Particular Conditions of Contract Section 9. Contract Forms

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BIDDING DOCUMENTS 3. Evaluation & Qualification Criteria

Qualification Criteria (underlined for Works)

Size of Operation (average annual turnover) Contractual Experience (number of contracts completed) Technical Experience (years in production and units sold) Production Capacity (type, size, and quantity required) Financial Position (audited annual financial statements) Cashflow Capacity (access to liquid assets) Litigation History (current or past litigation)

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Business Opportunity Seminar

Questions/Answers
Taisuke Miyao tmiyao@adb.org
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