Procurement of

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Asian Development BankBusiness Opportunities

• Procurement of
• Goods and Works

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Asian Development Bank Procurement System
Principles

• Key Principles
• Source of Procurement
• Economy and Efficiency
• Fairness
• Transparency
• Promotion of Domestic Industries

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Asian Development Bank Procurement System -
Guidelines
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Asian Development Bank Procurement System -
Eligibility

• Eligibility
• Goods
• must be produced in a member country
• Bidders
• must be nationals of eligible source countries
• must not have a conflict of interest
• must not be under declaration of ineligibility by
  ADB
• must not be ineligible due to an UN Security
  Counsel resolution
• must be, in case of a GOE, legally and
  financially autonomous, operate under commercial
  law and be independent of the Employer

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Asian Development Bank Procurement System -
Responsibilities

• Responsibilities
• The Borrower (Executing Agency) is responsible
  for all procurement activities
• ADB will review the procurement activities to
  ensure that the ADBs Guidelines for Procurement
  are followed

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Asian Development Bank Procurement System -
Anticorruption
Definitions

• Corrupt Practice
• offering, giving, receiving, or soliciting,
  directly or indirectly, anything of value to
  influence improperly the actions of another party
• Fraudulent Practice
• any 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
• Coercive Practices
• 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
• Collusive Practice
• an arrangement between two or more parties
  designed to achieve an improper purpose,
  including influencing improperly the actions of
  another party

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Asian Development Bank Procurement System
Anticorruption
Actions

• ADB will if it determines at any time that any
  party has engaged in corrupt, fraudulent,
  coercive, or collusive practices
• reject a proposal to award contract
• cancel the 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 the Bank

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Asian Development BankProcurement System
Procurement Methods

• 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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Asian Development BankProcurement System
Procurement Methods

• International Competitive Bidding (ICB)
• For supply contracts valued at US1.0 million or
  more
• For works contracts valued at US10.0 million or
  more
• Value for money
• Provides for adequate, fair and equal
  opportunities

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Asian Development BankProcurement System
Procurement Methods
ICB Activities
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Asian Development BankProcurement System
Procurement Methods
Key Provisions of ICB

• Source of Procurement
• Use of SBDs
• Reference to ADB
• Bid Validity Bid Security
• Language
• Clarity
• Standards
• Use of Brand Names
• Pricing
• Price Adjustment
• Transportation and Insurance

• Currency of Bid
• Currency of Bid Comparison
• Currency of Payment
• Terms of Payments
• Alternative Bids
• Conditions of Contract
• Performance Security
• Liquidated Damages Bonus
• Force Majeure
• Settlement of Dispute

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Asian Development BankProcurement System
Procurement Methods
Key Provisions of ICB

• Time for Preparation of Bids
• Bid Opening Procedures
• Clarification or Alteration of Bids
• Confidentiality
• Examination of Bids
• Evaluation and Comparison of Bids

• Domestic Preference
• Extension of Bid Validity
• Postqualification of Bidders
• Award of Contract
• Publication of the Award of Contract
• Rejection of all Bids
• Debriefing

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Asian Development BankProcurement System
Procurement Methods

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

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Asian Development BankProcurement System
Procurement Methods

• National Competitive Bidding
• Procurement is done domestically, within the
  borrowing DMC
• 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

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Asian Development BankProcurement System
Bidding Procedures
Single-Stage One-Envelope
Single-Stage Two-Envelope
Two-Stage Two-Envelope

• Two Stage

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Bidding ProceduresSingle-Stage One-Envelope
ADB Approval
Deadline
Preparation
Evaluation
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Bidding ProceduresSingle-Stage Two-Envelope
ADB Approval
ADB Approval
Deadline
Preparation
Evaluation 1
Evaluation 2
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Bidding ProceduresTwo-Stage Two-Envelope
ADB Approval
ADB Approval
Deadline
Deadline
Evaluation 2
Preparation 2
Evaluation 1
Preparation 1
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Bidding ProceduresTwo-Stage
ADB Approval
ADB Approval
Deadline
Deadline
Evaluation 2
Preparation 2
Evaluation 1
Preparation 1
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Asian Development BankProcurement System ADB
Prior Review
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Asian Development BankProcurement System ADB
Prior Review

• Additional ADB Approval Requirements
• Extension of bid validity
• Complaints from bidders after contract award
• Change in contract award recommendation
• Change in the terms and conditions of contract
• Time extensions, modifications of conditions,
  change orders increasing in aggregate the
  original contract amount by more than 15

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Asian Development BankProcurement System ADB
Post Review
Prerequisite - EA capacity assessment Procedure -
Prior review of 1st set of procurement
documents in project only - Advertisement
provided after posting - ADB reviews contract
award decisions post facto Timing - BER and
contract documents to be submitted as soon as
completed - ADB must respond in 6 months - EA
required to keep files for 2 years Risk - Misprocu
rement ? cancellation of funds
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Asian Development BankProcurement System ADB
Review

• Award of contracts for values of 10.0mill. and
  above must be approved by the Banks
• Procurement Committee
• Chairman Principal Director, COSO
• Members Assistant General Counsel
  Director, Sector Division
• Secretary Senior Procurement Specialist
  (Non-Voting)

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Asian Development BankProcurement System ADB
Review

• 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 the ADB requirements
• Proposal to vary previous PC decisions
• Any matters designated by management

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Asian Development BankProcurement System
Prequalification

• Purpose
• to ensure that bids are submitted only by firms
  that have the necessary qualifications in terms
  of
• Eligibility
• Experience
• Financial Capacity
• Pending Litigation
• to undertake the work for which bids are to be
  invited.

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Asian Development BankProcurement System
Prequalification

• 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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Asian Development BankBusiness Opportunities

• Preparing responsive bids
• Avoiding common pitfalls

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Asian Development BankPreparing Responsive Bids

• Joint Venture Requirements
• All partners must be eligible
• J.V. agreement must contain provision for joint
  and several liability
• One of the partners must be authorized to be in
  charge
• Copy of Joint Venture agreement must be included
  in the bid

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Asian Development BankPreparing Responsive Bids

• Be compliant !
• Submit a basic offer that complies with all
  terms and conditions of the bidding document,
  even if some of these conditions appear
  irrelevant
• Dont qualify !
• Do not add any conditions. Conditionalities or
  qualifications will lead to rejection
• Get official clarification !
• Submit an official inquiry to the EA if any
  provisions of the bidding document are unclear or
  unacceptable before the bid closing date or such
  date as may be specified. A copy may also be
  submitted to the bank if appropriate

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Asian Development BankPreparing Responsive Bids

• Be aware of bid evaluation criteria !
• Check if other factors besides price, such as
  delivery periods, efficiency, operating
  maintenance costs, will be considered in the bid
  evaluation. These factors must be specified in
  the bidding document to be applied.
• Be clear with alternatives !
• Submit alternatives only if explicitly allowed
  in the bidding document. Alternative proposal, if
  allowed, should be submitted in addition to the
  compliant proposal. The proposed alternatives and
  corresponding changes in bid price should be
  clearly indicated. Only the alternative proposal
  submitted by the bidder with the lowest evaluated
  and substantially responsive compliant bid can be
  considered, unless otherwise provided in the
  bidding documents.

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Asian Development BankPreparing Responsive Bids

• Ensure bid is complete !
• Check if the bid complies with all the
  requirements of the bidding document such as bid
  security, power of attorney, additional documents
  such as test certificates and technical
  brochures. Incomplete Bids may be rejected.
• Make final check of bid !
• Amount, validity and text of Bid Security
• Signatures and power of attorney
• Joint venture agreement enclosed
• References enclosed
• Discounts in covering letter or appropraiate
  place as specified in the bidding document
• Marking of envelopes

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Asian Development BankPreparing Responsive Bids

• Be on time !
• Submit bid within the stipulated deadline. Late
  bids will not be accepted.
• During opening ensure !
• All relevant prices are read out
• All discounts are read out
• Presence and amount of bid security is read out
• No envelope remains unopened
• All the above is recorded correctly
• The record is signed by all bidders present and
  by the buyer
• Be Aware of Possible Extension !
• There may be a request to extend the bid
  validity period by several months, as in certain
  cases the evaluation of bids requires more time
  than originally expected.

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Asian Development BankBusiness Opportunities

• How your bid is evaluated
• Determining the winning bid

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Asian Development BankBid Evaluation Purpose
Determination of the lowest evaluated
and substantially responsive bid
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Asian Development BankOpening of Bids

• Public Opening of Bids
• Bids received are opened publicly by the EA at
  the time and place indicated in the bidding
  documents
• Required for the sake of Fairness and
  Transparency
• Gives bidders assurance that all bids will be
  treated fairly and impartially
• Bidders attendance is encouraged
• Record of the items read out is to be kept by the
  EA
• Record is initialed by the representatives of
  bidders present

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Asian Development BankOpening of Bids

• Information read out
• Bidders name
• Total bid price
• Price of alternative bids, if any
• Amount or percentage of any discounts offered and
  the conditions under which the discounts are
  applicable
• Bid security - amount and validity
• Any other information which is deemed necessary
  to be announced by the Tender Committee.

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Asian Development BankBid Evaluation Typical
Sequence
Complete Basic Data Sheet
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Asian Development BankBid Evaluation Basics

• Time Frame
• The bid evaluation of bids and the award of
  contract should be completed before the
  expiration of the bid validity as stipulated in
  the bid documents
• Confidentiality of Procedure
• After opening of bids no information to
  non-authorized persons on
• Substance of bid
• Preliminary examination results and status
• Evaluation results and status
• Recommendation of award

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Asian Development BankBid Evaluation Basics

• Clarification and Alteration of Bids
• Only clarifications not changing the substance
  or the price of the bid may be requested or
  accepted by the Borrower
• Arithmetical Errors
• No cause for bid rejection. Can be corrected
• Discrepancy between Unit Price and Total Price
• Unit Price will prevail
• Discrepancy between Total Bid Amount and Sum of
  Total Prices
• Total Prices will prevail

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Asian Development BankBid Evaluation Basics

• Postqualification
• Purpose
• Identifies qualified bidders during initial
  examination of opened bids
• Spares borrowers/EA from detailed evaluation of
  bids of unqualified bidders
• Typical Criteria
• Experience
• Financial position
• Staff Qualifications
• Technical capability
• After sales service
• Past performance

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Asian Development BankBid Evaluation Basics

• Major Deviations
• Has an effect on the validity of the bid or
• Has been specified in the bid documents as
  grounds for rejection of the bid or
• Is a deviation from the provisions of the bidding
  documents with effect on the bid price, but
  cannot be given a monetary value or
• Is a deviation from the minimum experience
  qualifications specified in the bidding
  documents or
• Is an unacceptable deviation from the
  specifications
• Conditional bid

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Asian Development BankBid Evaluation Basics

• Minor Deviations
• Has no effect on the validity of the bid or
• Has no effect on the price, quality or delivery
  of the goods or services offered or
• Has such effect, but the difference from
  commercial terms and technical specifications can
  be given a monetary value or
• Has not been specified in the bid documents as
  grounds for rejection, provided total amount of
  deviations does not exceed a previous determined
  percentage of the bid price (usually 15 per cent)

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Asian Development BankBid Evaluation Basics

• Extension of Bid Validity
• Considered in exceptional cases
• When considered, all bidders should be asked
• Bidders willing to extend bid validity
• cannot modify substance of bid
• must extend validity of bid security
• Commercial Aspects
• Exercise flexibility in evaluating commercial
  aspects such as
• Delivery Schedule
• Terms of Payment
• Mode of Payments

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Asian Development BankBid Evaluation Basics

• Price Adjustment Provision
• In evaluating bids do not take into account
  price adjustment provisions. Use base price for
  comparison. All bids are subject to same degree
  of adjustment.
• Alternative Bids
• When acceptable, specify
• Conditions in Invitation to Bid and Instructions
  to Bidders
• Method of evaluation and comparison

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Asian Development BankBid Evaluation Basics

• Basis for Price Comparison
• Goods
• for Goods from outside
• Includes cost of insurance and freight (CIF or
  CIP)
• Excludes custom duties or other taxes levied on
  goods
• for Goods from inside
• Includes ex-factory price (EXW)
• Excludes any sales or similar taxes levied on
  goods
• Related Services including all taxes and duties
• Works
• Includes all taxes, duties and other levies

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Asian Development BankBid Evaluation Basics

• Exchange Rates
• For bid comparison use single currency as
  specified in bid documents (usually local
  currency or US)
• The rates to be used are the selling rates quoted
  by an official source (central bank, commercial
  bank, or internationally circulated newspaper)
• Date of exchange rate to be specified in bidding
  documents shall be
• Not earlier than 28 days prior to the deadline
  for submission of bids
• Not later than the original date for the expiry
  of bid validity

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Asian Development BankBid Evaluation Basics

• Factors to be considered
• payment schedule
• delivery time
• operating costs
• efficiency and compatibility of the equipment
• availability of service and spare parts, and
  related training
• safety, and environmental benefits
• The factors other than price to be used for
  determining the lowest evaluated bid shall, to
  the extent practicable, be expressed in monetary
  terms

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Asian Development BankBid Evaluation Domestic
Preference
Supply Contracts
Example
BIDDER A
BIDDER B
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Asian Development BankBid Evaluation Domestic
Preference

• Purpose
• To provide margin of preference to domestically
  manufactured goods or domestic contractors for
  ADB-financed projects
• To allow domestic firms to compete with foreign
  firms on more equal footing
• Conditions
• Granting of preference subject to conditions
• Applies only to ICB
• Needs to be applied for by Borrower
• To be specified in Loan Agreement if scheme is
  applied

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Asian Development BankBid Evaluation Domestic
Preference
Supply Contracts

• Responsive bids are to be classified into three
  groups
• Group A Goods manufactured locally with more
  than 30 domestic value added
• Group B Goods manufactured locally with less
  than 30 domestic value added
• Group C Imported goods

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Asian Development BankBid Evaluation Domestic
Preference
Supply Contracts

• Procedure
• Determine lowest bid in each group
• Compare lowest evaluated bids among the groups
• If lowest is from group A or B, select it for
  contract award
• If lowest is in Category III, compare
  1.15 x CIF price of Group C
  against EXW price of Group A

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Asian Development BankBid Evaluation Domestic
Preference
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Asian Development BankBid Evaluation Domestic
Preference
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Asian Development BankBid Evaluation Domestic
Preference
Turnkey / Supply Installation

• Procedure
• Goods offered from outside the Borrowers country
  are quoted CIF
• Locally manufactured goods are quoted EXW
• Other components such as design, installation,
  commissioning, testing and supervision are quoted
  separately
• For comparison of local goods with imported
  goods, add to the offered CIF price of the
  imported goods the lesser of either
• 15 , or
• applicable duties and taxes to be paid for each
  item

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Asian Development BankBid Evaluation Domestic
Preference
Turnkey / Supply Installation
Example
Design 2,000 2,500 Civil
works 23,000 27,500 Equipment EXW
10,000 60,000 Equipment CIF 100,000
50,000 Total 135,000 140,000 Domestic
Preference
loading 15 of CIF
15,000 7,500 COMPARE 150,000 147,500
SERVICES
WORKS
SUPPLY
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Asian Development BankBid Evaluation Domestic
Preference
Civil Works

• Responsive bids are to be classified into two
  categories
• Category I
• Bids offered by Domestic Contractors and Joint
  Ventures eligible for the Preference
• Category II
• Bids offered by other Contractors

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Asian Development BankBid Evaluation Domestic
Preference
Civil Works

• Eligibility Criteria for Domestic Contractors
• Incorporated in the borrowers country
• Majority ownership by nationals of borrowing
  country
• Will not subcontract to foreign contractors more
  than 50 of the total value of their work

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Asian Development BankBid Evaluation Domestic
Preference
Civil Works

• Eligibility Criteria for Joint Ventures between
  Domestic and Foreign Firms
• The domestic partner is individually eligible
  according to the criteria stated previously
• The domestic partner would not qualify for the
  works without the participation of the foreign
  partner
• The domestic partner will carry out at least 50
  of the works in terms of value

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Asian Development BankBid Evaluation Domestic
Preference
Civil Works

• Procedure
• Determine lowest evaluated bid from each category
• Compare lowest bids from each category
• If lowest bid is from category I, award contract
• If lowest bid is from category II add 7.5 and
  compare it with lowest bid from Category I, award
  contract to lowest

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Asian Development BankBid Evaluation Domestic
Preference
Example
Civil Works
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Asian Development BankBusiness Opportunities

• Getting Paid
• ADB Disbursement Procedures

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Asian Development BankDisbursement Procedures

• Direct Payment Procedure
• used for payment of large civil works progress
  payments, consultants fees, and importation of
  goods where not practical to open a letter of
  credit
• Reimbursement Procedure
• used for payment of local currency costs, petty
  purchases and small civil works payments
• Commitment Procedure
• used extensively for financing import of goods
• Imprest Fund Procedure
• used for payment of contractors bills and
  suppliers invoices in small amounts or numerous
  items of operating expenses

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Asian Development BankDisbursement Procedures
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Asian Development BankBusiness Opportunities

• Questions, Clarifications, Debriefing, etc