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Business Opportunities Seminar

Procurement of Goods and Works

New Zealand October 2013

Presented By: Amr J. Qari, Procurement Specialist

Asian Development Bank

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Agenda

ADB Business Opportunities

ADB’s Procurement Policy Framework

Bidding Dos and Don’ts

Bid Evaluation Fundamentals

ADB Disbursement Procedures

Q&A

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ADB Business Opportunities

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Country Strategy and Business Plans Early notices General Procurement Notice Procurement Plan

Specific Procurement notices Invitation for Prequalification Invitation for Bids

Hop-on Opportunities Prequalified Contractors Contracts Awarded

Identifying Opportunities for

Goods and Works

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Country Strategy and Business Plans

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Adb.org Business Opportunities Portal

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Early Notices: Procurement Plans

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Early Notices: Procurement Plans

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Early Notices: Procurement Plans

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Early Notices: Procurement Plans

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Specific Procurement Notices

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Hop-on Opportunities

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Customized E-mail Alert Sign-up

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ADB’s Procurement Policy Framework

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Documents Governing

Procurement

Loan Agreement (Schedule 4)

Procurement Guidelines

Standard Bidding Documents

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Procurement Guidelines

Purpose

To inform Borrowers as well as Suppliers,

Manufacturers and Contractors of the

general principles and procedures to be

observed in carrying out procurement

under ADB finance

Additional arrangements may be set out in

the Loan Agreement

PROCUREMENT

GUIDELINES

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Procurement Guidelines

Responsibilities

The Borrower (Executing Agency) is

responsible for all procurement activities

ADB has the obligation ensure compliance with

key principles

Goods/Woks from ADB member countries

Economy and Efficiency

Fairness

Transparency

Promotion of Domestic Industries

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Procurement Guidelines

Applicability

Contracts financed by ADB entirely or partly

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' capability to fulfill the contract

Exceptions Compliance with UN Security Council decision

Conflict of interest (i.e., party has interests that could

improperly influence that party’s performance of official duties or

responsibilities, contractual obligations, or compliance with law)

Government owned enterprises (unless they are legally and

financially autonomous, operate under principles of commercial law

and not dependent on executing agency)

Declaration of ineligibility by ADB

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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 Corrupt Practice the offering, giving, receiving, or soliciting, directly or indirectly, anything of value to influence improperly the actions of another party (e.g. bribery, kickbacks, extortion, bid manipulation)

Fraudulent Practice action 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 (e.g., false bid security/bank guarantees, work certificates, financial statements)

Collusive Practice an arrangement between two or more parties designed to achieve an improper purpose, including influencing improperly the actions of another party (e.g. leaking of bid information, rigged specifications)

Coercive Practice impairing or harming, or threatening to impair or harm, directly or indirectly, any party or its property to influence improperly the actions of a party

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ADB’s 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

Procurement Guidelines

Fraud and Corruption

Declare a firm ineligible either indefinitely or for a stated period of time

Cancel the corresponding portion of a loan

Inspect accounts and records of suppliers and contractors and have them audited by auditors appointed by the Bank

Reject a proposal to award contract

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Procurement Guidelines

Procurement Plan

Executing Agency shall provide ADB its Procurement Plan for approval before loan negotiations

Procurement Plan should specify:

Number and size of packages for Supply, Works, Design-Supply-Install (Turnkey), Consulting Services

Timing (Advertisement, Closing Date, Contract Award)

Procurement Method (ICB, LIB, NCB, Shopping, etc.)

ICB Bidding Procedures

ADB Review Procedures (Post or Prior review)

Modifications to National Competitive Bidding Procedures

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Procurement Guidelines

Procurement Plan

Contract Purpose

Works Contract for construction of engineering structures

such as roads, bridges and dams. Unit price or lump

sum contract may be used depending on whether

input requirements are known with precision.

Supply Contract for supply and delivery of equipment or

materials to specified location. Scope may include

provision of related services such as installation,

testing, commissioning and training.

Design-Supply-

Install (Turnkey)

Single contract provides engineering design, supply

of equipment, construction, testing and

commissioning of complete facility to meet specified

performance targets.

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Two Stage Two-Stage: Two-Envelope

Single-Stage: Two-Envelope

Single-Stage: One-Envelope

Procurement Guidelines

ICB Bidding Procedures

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ADB Approval Deadline

STOP

Preparation

Technical Proposal

Financial Proposal

Evaluation

Technical

Financial

Technical Proposal

Financial Proposal

Procurement Guidelines Single-Stage: One-Envelope

Bidding Procedure (Default)

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Speed

Transparency

Technical non-conformities weighed against potential cost savings before bid rejection

PROS

Risk that bid evaluation will be less objective and ignore significant technical deviations

Risk that lowest bidder will initiate complaints/litigation if declared non-responsive

CONS

Procurement Guidelines Single-Stage: One-Envelope

Bidding Procedure (Default)

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Procurement Guidelines

Forms of Procurement International Competitive Bidding

Limited International Bidding

National Competitive Bidding

Shopping

Direct Contracting

Force Account

Procurement from Specialized Agencies

Procurement Agents

Inspection Agents

Procurement in Loans to Financial Intermediaries

Procurement under BOO / BOT / BOOT, Concessions and Similar Private Sector Arrangements

Performance Based Procurement

Procurement under Loans Guaranteed by ADB

Community Participation in Procurement

Procurement under Disaster and Emergency Assistance

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Procurement Guidelines

International Competitive Bidding

Fairness, Transparency For prospective bidders from eligible source

countries, adequate, fair and equal opportunities

ICB is the default procurement method

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

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Procurement Guidelines

Sequence of ICB Activities

Bid Opening

Bidding Documents

Prequalification

Advertising

Award of Contract

Bid Evaluation

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Procurement Guidelines

Typical Time Line For ICB Activities

-4 -3 -2 -1 1 2 3 4 5 6 7 8 9 10 11

Bid Packaging

Preparation of PQ Document

Prequalification

Preparation of Bidding Document

Bidding

Award

Month

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Prequalification

•Advertisement and Invitation to Prequalify •Evaluation Criteria •Evaluation of Applications

Preparation of Bid Documents

•Invitation to Bid •Advertisement •Bid Documents

Bid Evaluation

•Evaluation Report •Proposal of Award

Award of Contract

•Certified Contract

Procurement Guidelines

ADB Prior Review

EA

Procurement Plan

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

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Standard Bidding Documents –

Outline and Components

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

Part II: Requirements Section 6. Supply or Works Requirements

Part III: Contract Section 7. General Conditions of Contract Section 8. Particular Conditions of Contract Section 9. Contract Forms

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Standard Bidding Documents –

Evaluation Criteria

Scope

Multiple Contracts

Technical Criteria

Economic Criteria Deviations from Terms of Payment

Deviations from Delivery and Completion Schedule

O&M Costs

Spare Parts

Performance and Productivity

Margin of Preference

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Standard Bidding Documents –

Qualification Criteria

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)

Cash flow Capacity (access to liquid assets)

Litigation History (current or past litigation)