SEVENTH REGIONAL PUBLIC PROCUREMENT FORUM Tbilisi, Georgia, 16-19 May 2011 IDB’s Experience with...

SEVENTH REGIONAL PUBLICPROCUREMENT FORUM

Tbilisi, Georgia, 16-19 May 2011

IDB’s Experience with Procurement

in Central Asian Countries

Sami FaruqiDivision Manager

Operations Policy & Project Procurement Islamic Development Bank

2

IDB Group

Islamic Development Bank

(IDB)(1975)

Islamic Research & Training Institute

(IRTI)(1981)

International Islamic Trade Financing

Corporation (ITFC)(2008)

Islamic Corporation for the Development of the Private Sector

(ICD)(1999)

Islamic Corporation for Insurance of Investment & Export Credit

(ICIEC)(1994)

IDB Group Members

3

Mission Statement

“We are committed to

alleviating poverty, promoting

human development, science &

technology, and Islamic

banking & finance, and

enhancing cooperation among

member countries, in

collaboration with

development partners”

4

IDB: Six Priority Areas

Human Development

Agriculture Development and Food Security

Infrastructure Development

Intra-trade Among Member Countries

Private Sector Development

Research and Development in Islamic Economics, Banking and Finance

5

Net Approved Financing of IDB Group(Since inception to December 2010)

Type of Operation US$ billion

1- Projects Financing 32.3

2- Technical Assistance 0.34

3- Trade Operations 36.96

4- Special Assistance 0.70

Total 70.32

6

Cumulative Approvals by Sector

Agriculture; 10.9%Education;

8.6%

Energy; 22.8%

Finance; 4.4%

Health; 5.0%

Industries & Mining; 9.6%

Other; 1.6%

Transport; 24.9%

Urban Services; 12.2%

7

Key Elements of New Strategy

Results Oriented

Focused

Leveraging Partnership

s

Knowledge-

Oriented

Responsive to Clients

A New IDB Group

Scaled up

8

Key Elements of IDB Group 2020 Vision

Improving the Image of the Muslim World

Integration of IDB MCs Economies

A Vision for Comprehensive Human Development

Alleviating Poverty Prospering the People

Universalizing Education Promoting Health

Expanding Islamic Financial Services Industry Empowering Women

Key Strategic Thrusts

9

Membership & Characteristics of IDB

•A Unique Model of South-South Cooperation•All Member Countries can benefit form IDB Financing•Global MDB: Membership 56 Countries spreading over 4 continents•Membership Increased: 22 countries in 1975 → 56 countries in 2010

Africa: 27

Asia: 26Europe: 2

Latin America: 1

IDB MEMBER COUNTRIES

Albania Azerbaijan Kazakhstan Kyrgyzstan Tajikistan Turkey Turkmenistan Uzbekistan

10Islamic Development Bank

Islamic Development Bank 11

Coordination Group activities in Central Asian Countries mln, USD

Country Project IDB KFAED ADFD SFD OFID TOTAL

Azerbaijan

Reconstruction of Yevlakh to Ganja road √ 10.4 13 23.4

Samur-Absheron Irrigation Velvelichay-Takhtakopru Canal √ 10.1 18 8 36.1

Janub Power Plant Project √ 201.5 60.7 26 288.2

Reconstrcution of Ujar-Yevlakh Road 22 6 28

Baku Ring Road 13 10 23

Kazakhstan Reconstruction of Astana - Karaganda road √ 20 22 12 54

Kyrgyz Republic Reconstruction of Bishkek-Torugart Road √ 16.95 11.86 15 15 7.4 66.21

Tajikistan

Dangara Irrigation project, Phase II √ 13.17 13.8 13.8 40.77

Reconstruction of Kulyab-Khalaikum road √ 20 15 15 20 13 83

Reconstruction of Zhigar-Shkev road 10 10 10 30

Cardio Vascular Center 3 5 8

Turkmenistan Construction of three Diagnostic Centers √ 10 10 5 25

Uzbekistan

Reconstruction of Irrigation&drainage system in Djizzak and Syrdarya provinces √ 52.65 14.63 12.7 79.98

Reconstruction of Guzar-Chim-Kukdala road √ 21 19.1 30 20 90.1

Construction of secondary schools √ 10 10

Reconstruction of road in Surkhandarya M39 √ 167.2 167.2

Construction of Cardio Center √ 10 10

547 109.3 141.8 138 126.9 1063

Capacity ChallengesInstitutional ChallengesGovernance ChallengesService Provider

ChallengesProcurement Process


CAPACITY CHALLENGES

Inadequate awareness of the practices of MDBs in terms of procurement

Weak preparation of new projects and little attention paid to procurement aspects during this phase


CAPACITY CHALLENGES (2)

Difficulty of some implementing agencies to acknowledge precedence of the Bank’s procedures over national procedures

Example: Country X “failed” to use Standard Evaluation Report for the selection of a consultant firm


INSTITUTIONAL CHALLENGES

Difficulties in recruiting qualified procurement specialists

Salaries of Project Management Unit (including procurement) staff capped

Wage differentials with local staff 15Islamic Development Bank

INSTITUTIONAL CHALLENGES (2)

Insufficient authority at the level of the implementing agency

Limited independence in making procurement related-decisions

Replacement of staff not conducive to an efficient procurement process


INSTITUTIONAL CHALLENGES (3)

Institutional set up for procurement related decisions complex and highly centralized

Award decisions made through executive orders or decrees: difficult to challenge in case of difference of opinion


GOVERNANCE CHALLENGES

Two evaluation reports with conflicting recommendations received within an interval of one week

Insistence to award contract to preferred bidder

Bank declined to finance the contract


SERVICE PROVIDER CHALLENGES

Role of consultant: instrumental in procurement and project management

Limited number of consultancy firms

“Small” size of these firms and lack of experience with large scale projects


SERVICE PROVIDER CHALLENGES (2)

Fragmented industry, i.e. heavy reliance on so-called research & design institutes

Hyper specialization in specific sectors

Limited number of private sector firms

Issue of eligibility & COI 20Islamic Development Bank

SERVICE PROVIDER CHALLENGES (3)

Little familiarity with international engineering design standards

Limited knowledge of international procurement procedures 21Islamic Development Bank

PROCUREMENT PROCESS

Confidentiality of procurement/ evaluation process

Example: Complaint received by the Bank before evaluation report

Contract negotiations: bidder “requested” to reduce its bid amount to be within the allocated budget


PROCUREMENT PROCESS (2)

Contractors & Consultants directly “complain” to the Bank during contract implementation

Bank is not party to the contract

Interpretation of tax clauses in the contract; different between the Ministry of Finance and the Implementing Agencies 23Islamic Development Bank


Low number of turnout for Bank’s financed contracts

Bidders not having the required experience or capacity for awarded contracts

Perfect recipe for contract failure



Bidding documents: mandatory associations with local contractors/firms

Not the appropriate way of building capacity (use preferences/local participation)



Foreign partner for window dressing

Actual work/services undertaken by the local partner

Consequence: risks for contract delivery


BANK’S ACTIONS TO ADDRESS THESE CHALLENGES

Capacity: Project inception, country and regional

workshops Familiarization visits to HQs

Institutional: Stepped up high level dialogue with

beneficiary countries Emphasis on competent and relevant

PMU team 27Islamic Development Bank

BANK’S ACTIONS TO ADDRESS THESE CHALLENGES (2)

Governance & Anti-Corruption Firm enforcement of procurement

policies Group integrity policy approved Integrity Office, established (resources

provision underway) Steps under way to join the Cross-

Debarment Agreement by MDBs Harmonized anti-corruption clauses to

be part of the revised GL and financing agreements


BANK’S RECOMMENDATION

e – GP (System, Process, Tool) Specific policy needed to ensure its

proper design and implementation Harmonize standards among pioneers Common platform to share knowledge,

experiences and to discuss issues/problems

Well designed Safeguards that are continuously updated are needed to ensure Procurement without Corruption


Thank You for your attention

“Together We Build a Better Future”

SEVENTH REGIONAL PUBLIC PROCUREMENT FORUM Tbilisi, Georgia, 16-19 May 2011 IDB’s Experience with...

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