MONTHLY BUSINESS BRIEFING

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Procurement Procedures and Guidelines for World
Bank Financed Projects
JUNE 2006
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FROM PROJECTS TO CONTRACTS

• Procurement opportunites on WB financed projects
  trade and business opportunities for companies.
• 15 to 20 billion WB lending 25 billion
  procurement contracts/year.
• 40,000 contracts/ year 90 lt 1Million
• 60 lt0,5 Million
• Contracts 63 Goods Equipment
• 20 Civil Works
• 17 Consultants
• Open bidding procedures supervised by the World
  Bank Efficiency, Economy, Fairness of
  Competition

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PROCUREMENT RELATIONSHIPS
LOAN AGREEMENTS/PROJECTS
WORLD BANK
15 B 223 PROJECTS
BORROWER ? GOVERNMENT ? IMPLEMENTING
AGENCY
SUPPLIER CONTRACTOR CONSULTANT
CONTRACTS
25 B 40 000 CONTRACTS
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COUNTRY ASSISTANCE STRATEGY (CAS)
PROJECT IDENTIFICATION
IMPLEMENTATION COMPLETION REPORT
PROJECT PREPARATION
PROJECT SUPERVISION
IMPLEMENTATION
PROJECT APPRAISAL
LOAN APPROVAL, SIGNING AND EFFECTIVENESS
LOAN NEGOTIATIONS
Joint activity
Client activity
Bank activity
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Considerations guiding WB procurement policies

• Ensure economy and efficiency
• Provide equal opportunity to compete for
  qualified bidders/consultants
• Encourage development of local industries in
  borrowing countries
• Transparency in the selection process

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TWO TYPES OF PROCUREMENT
Goods and Works
Consulting Services

• Product based
• Open competition
• Price is the major criteria
• Public opening of bids
• Detailed specifications
• Single stage procedure
• Negociations only exceptionnaly

• Knowledge based
• Shortlist
• Price plays a minor role
• Public opening of technical proposals
• Public opening of financial proposals
• Terms of reference
• Two-stage procedure
• Negociations normally

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THE BANKS ROLE

• Lend for Specific Projects
• Appraise Projects and Assess Risk
• Assist the Borrower
• Provide Information on Projects
• Monitor Compliance with Agreements

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THE BORROWERS ROLE

• RESPONSIBLE FOR PROCUREMENT
• Prepares Procurement Plan
• Prepares and issues Bidding Documents
• Invites Bids
• Receives and Evaluates bids/proposals
• Awards Contracts
• Implements

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FRAUD AND CORRUPTION

• Parties expected to observe highest ethical
  standards.
• Bank reserves the right to audit firms accounts
  and records of the contract.
• Sanctions by the Bank

• Reject proposal for award
• Cancel the portion of the loan
• Declare firm ineligible for a limited period of
  time or indefinitely
• List of debarred firms on the website

The World Banks hotline number 1 800 831 0463
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SOURCES OF INFORMATION
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2 KEY DOCUMENTS

• CAS Country Assistance Strategy
• -Long-term view
• -WBGs strategy based on priority assessment in
  the country
• -Indicates the level and composition of assistance

PRSP- Poverty Reduction Strategy Paper -Country's
macroeconomic and social policies and programs to
promote growth and reduce poverty. -Financing
needs. -Prepared by governments with involvement
of development agencies, NGOs, Civil Society.
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SOURCES OF INFORMATION

• UN DEVELOPMENT BUSINESS
• Annual fee of US 550 for unlimited access.
• www.devbusiness.com

• DEVELOPMENT GATEWAY
• Portal for information and knowledge sharing on
  sustainable development and poverty reduction.
• www.developmentgateway.org

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KNOW THE PROJECT !

• Monthly Operational Summary (MOS)
• -Basic project information and key contact
  details.
• -Prior to initiation of preparation phase.
• -Updated every month.

Project Information Document (PID) -Extensive
project detail (5-8 pages), incl. key contacts
-Updated once, after the appraisal phase
Project Appraisal Document (PAD) Project
objectives, description, financing plan, method
of procurement
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SELECTION OF CONSULTANTS
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OBJECTIVES OF SELECTION

• Obtain high quality service
• Ensure economy and efficiency
• Provide equal opportunity for qualified
  consultants
• Encourage development of local consulting
  capabilities
• Transparency in the selection process

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SELECTION OF CONSULTANTS 6 METHODS

• Quality and Cost Based Selection (QCBS)
• Quality Based Selection (QBS)
• Selection under Fixed Budget (SFB)
• Least Cost Selection (LCS)
• Selection based on Consultants Qualifications
  (SBCQ)
• Single Source Selection (SSS)

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QUALITY- AND COST-BASED SELECTION (QCBS)
1

• Preferred method, similar to ICB for goods and
  works
• Technical and financial proposals in separate
  envelopes
• Financial proposals shall remain sealed with
  independent authority
• Technical evaluation (quality) first. WB no
  objection mandatory.
• Public opening of official proposals
• Combined evaluation based on weighted formula

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QUALITY BASED SELECTION (QBS)
2

• Technical proposal only or both in separate
  envelopes
• Technical evaluation (quality) first
• Financial evaluation only of firm with highest
  technical score

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SELECTION UNDER FIXED BUDGET (SFB)
3

• Financial proposals to be within specified budget
• Technical and financial proposals in two separate
  envelopes
• Technical evaluation (quality) first
• Public opening of financial proposals
• Rejection of proposals exceeding fixed budget
• Highest rated technical proposal selected

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LEAST COST SELECTION (LCS)
4

• Small assignments only (lt200,000)
• Technical and financial proposals in two separate
  envelopes
• Technical proposals must achieve specific minimum
  score or they are rejected.
• Financial proposals of successful firms opened in
  public
• Lowest price proposal selected

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SELECTION BASED ON CONSULTANTS QUALIFICATIONS
(SBCQ)

• Very small assignments only (lt100,000)
• Request for expressions of interest
• Evaluation of each firms experience and
  competence
• Selection of the most appropriate firm
• Selected firm to submit technical and financial
  proposal

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SINGLE SOURCE SELECTION (SSS)
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• Natural continuation of previous work by firm
• Rapid selection essential
• Very small assignment (lt100,000)
• Firm has unique qualifications or experience of
  exceptional worth
• Bank reviews / approves sole source request
• Borrower solicits technical / financial proposal

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SELECTION STEPS

• Prepare TOR
• Estimate budget
• Advertize for expressions of interest (gt200,000)
• Prepare shortlist
• Determine selection procedure
• Prepare and issue request for proposals
• Letter of invitation (LOI)
• Evaluation criteria
• Proposed agreement

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• Evaluate technical proposals
• Obtain Banks no objection if required (prior
  review)
• Open and evaluate financial proposals
• Obtain Banks no objection to combined evaluation
• Negotiate and sign contract
• Notify unsuccessful firms

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REQUESTS FOR EXPRESSIONS OF INTEREST

• Advertised in UN Development Business and
  dgMarket for assignments with an estimated value
  over US 200,000.
• Helps borrower in preparation of short list.
• Request for proposals, only issued to
  short-listed firms.

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SHORTLIST PREPARATION

• SOURCES
• Expressions of interest
• Borrowers knowledge and experience
• Trade representatives and professional
  associations
• DACON system
• Exceptionally, the Bank will provide shortlist or
  long list

• MANDATORY REQUIREMENTS
• 6 firms
• No more than 2 firms from a country
• At least 1 firm from a developing country (if
  available)
• May comprise only national consultants (small
  assignments)

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TECHNICAL EVALUATION

• General and specific experience of firm (5-10)
• Methodology and approach (20-50)
• Qualifications of key staff (30-60)
• Transfer of knowledge (0-10)
• Participation by Nationals (0-10)
• Total of points must equal 100

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FINANCIAL EVALUATION

• Notify unsuccessful firms.
• Public opening of financial proposals of
  successful firms.
• Exclude local taxes, if applicable, but include
  reimbursable expenses.
• Lowest price scores 100, Others inversely
  proportional to their prices.
• Combine techn. and fin. evaluation 10 to 20
  weight to price.

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DACON REGISTRATION(DAta on CONsultants)

• Online at www.dgmarket.com
• Shared by WB and IADB
• 5 or more full-time professional staff
• No individuals
• Registration is not mandatory, but recommended.
  Will not help you win contracts. You must market
  your firm.

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WORKS GOODS
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PROCUREMENT METHODS

• ICB - International Competitive Bidding
• LIB - Limited International Bidding
• NCB - National Competitive Bidding
• Shopping
• Direct Contracting
• Force Account

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ICB

• Notification Advertising
• Prequalification if required
• Official Languages English, French, Spanish
• Use of Standard Bidding Documents SPD, SBEF,
  SBD. All available on WB website.
• Bid Prices
• Fair allocation of risk between parties in the
  contract
• Public bid opening
• Contract award

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ICB - PREQUALIFICATION
-Required for large and complex
works. -Invitations to bids only to those who
have adequate capabilities and resources.

• Prequalification based on
• Experience and past performance,
• Capabilities for staff, equipment, construction,
  manufacturing facilities,
• Financial position.

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BID OPENING

• PUBLIC OPENING
• MINUTES (to be recorded and signed)
• SINGLE STAGE (one envelope)
• Bid form
• Technical data
• Bid price schedule
• Bid security
• SINGLE STAGE (two envelopes)
• Not permitted in bank-financed procurement

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• TWO-STAGE BIDDING
• TYPES OF PROJECTS
• Industrial projects,
• Complex equipment,
• Projects with different technical solutions,
• Computer and communications systems.
• FIRST STAGE
• Invite technical proposals,
• Discuss and finalize technical specificities and
  commercial conditions.
• SECOND STAGE
• Invite priced bids on revised specificities.

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BID EXAMINATION

• CLARIFICATION
• Always in writing,
• Permissible and warranted,
• Clarification meetings not permitted,
• Cannot change substance of bid or price.
• CONFIDENTIALITY
• EXAMINATION OF BIDS
• Is bid complete? ... And signed?
• Is bid security attached if required?
• Technical scrutiny
• Detailed evaluation only for substantially
  responsive bids

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• MAJOR DEVIATION
• Scope, quality and performance affected.
• Employers rights or suppliers obligations
  limited in substantial way.
• Rectification would unfairly affect ranking of
  other substantially responsive bids.
• DEVIATIONS FROM CRITICAL PROVISIONS

• Applicable law,
• Bid security,
• Taxed and duties,
• Defect liability,
• Functional guarantees,
• Patent and indemnity.

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BID EVALUATION

• OBJECTIVE
• Secure goods/works/services at most economical
  cost,
• Price is only one factor.
• OTHER FACTORS
• Time of deliver/completion,
• Terms of payment,
• Terms of guarantee,
• Technical features,
• Efficiency.

• EVALUATION CRITERIA

• Shall be stated in bidding documents
• Ideally all factors quantified in monetary terms

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• TECHNICAL FEATURES
• Operating cost, Training, Maintenance cost,
  Standardization, Capacity, Productivity

• COMMERCIAL FEATURES
• PRICE. Convert and adjust basic price to make
  bid prices comparable.
• DELIVERY POINT. Add local transportation
• TIME OF DELIVERY. Evaluate loss caused by late
  delivery
• WARRANTY. Evaluate variation if acceptable
• PAYMENT TERMS. Evaluate variations at specified
  interest/discount rate

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• COMPARISON OF BID PRICES

• Goods offered from the Purchasers country

• Price quoted
• Including all duties and taxes already paid on
  (components and raw materials, previously
  imported foreign goods)

• Goods offered from abroad

• Prices quoted CIF (port of destination) or CIP
  (place of destination)

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DOMESTIC PREFERENCEfor domestically manufactured
goods competing against foreign manufactured
goods in ICB

• DOMESTICALLY MANUFACTURED GOODS
• 15 of CIF price or customs duties added to
  foreign bids.
• Only locally manufactured goods with domestic
  input (labor, raw material and components) of
  more than 30 of the EXW price.
• Factory in operation since bid submission.
• Available to all borrowers.

• DOMESTIC CONTRACTORS
• Margin of pref. of 7.5 of bid price to domestic
  contractors.
• Only domestic contractors majority-owned
  nationals.
• Only for borrowers below 755 per capita income
  in 1999.

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MERIT POINT SYSTEM

• Allocate weights to different technical features
• Establish relationship between quality and price
• Select bid with highest number of points
• Disadvantage Subjective assignments of points
• Bidding document Specifies point weightage

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MERIT POINT WEIGHTAGE

• EQUIPMENT PRICE
• SPARE PARTS
• TECHNICAL FEATURES
• AFTER SALES SERVICE
• STANDARDIZATION
• TOTAL

60-90 0-20 0-20 0-20 0-20
100
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BID EVALUATION - WORKS

• Clarification of bids if necessary
• Determination of responsiveness
• Substantial responsiveness
• No material deviations
• Correction of errors
• Figures / words
• Unit rate / total
• Misplacement of decimal point
• Conversion to single currency
• Specified in bidding document

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• Evaluation and Comparison of Bids
• Compare bids in single currency, after excluding
  provisional sums and contingencies.
• Add monetary cost of quantifiable variations with
  timing implications.
• Add value of benefits foregone for longer times
  of completion.
• Adjust for acceptable quantifiable variations
• Add 7.5 preference for domestic bidders. IDA
  only 1999 GNP per capita below US755.

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AWARD OF CONTRACT

• SELECTED BIDDER SHOULD NOT BE REQUIRED
• TO REDUCE PRICE
• TO UNDERTAKE WORK NOT SPECIFIED IN BIDDING
  DOCUMENT
• TO MODIFY THE BID

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MISPROCUREMENT

• WHEN
• PROCEDURES FOLLOWED AND/OR AWARD OF CONTRACT ARE
  INCONSISTENT WITH AGREED PROCEDURES
• RESULT
• CONTRACT NOT FINANCED
• AMOUNT CANCELLED FROM LOAN
• FOR REPEATED VIOLATIONS, SUSPENSION OF LOAN