Procurement of Goods and Works

Chandra M Arora
Sr. Procurement Officer, INRM
GL 1
 Presentation Outline
Session I
• Drivers and Expected Benefits of Procurement Reform
• Major Changes and Implementation Plan
Session II
• Introduction to New Policy and Regulations
• Procurement Methods and Particular Types of Procurement Arrangements
Session III
• Procurement Planning
• Procurement Review and Monitoring
Session IV
• Bidding Related Complaints
• Contract Management
GL 2
 Drivers of ADB Procurement Reforms
1. Increased lending operations
❖ ADF-OCR merger
2. Evolving needs of DMCs
❖ Differentiated procurement approaches
3. Harmonization with MDBs
❖ New procurement frameworks of AfDB, AIIB
and WB
4. Need to improve procurement delivery systems
❖ Decentralization and delegation of authorities
❖ More dedicated end to end support
❖ Market and industry assessments
GL 3
 Decentralization and Delegation of Authority
GL 4
 End-to-End Procurement Support
GL 5
 Expected Benefits
1.Faster implementation of ADB-financed projects:
❖Increased procurement readiness
❖Improved efficiency
Lower ADB internal delays
•

Less back and forth with EAs

•

2. Greater engagement with DMCs:

❖Improved procurement decision making and support
❖Enhanced ADB efficiency for project implementation
GL 6
 Expected Benefits
3.Lower transaction costs in co-financing:
❖Mutual reliance with procurement arrangements
of
lead development partners
4.Fiduciary comfort throughout the project cycle:
❖Risk based approach
❖Ensures all fiduciary, governance, and
anticorruption
requirements are fulfilled
GL 7
 Rollout of the New Framework
GL 8
 Document Types-Major Changes
GL 9
 Core Procurement Principles
GL 10
 Core Procurement Principles
1. Economy – taking into account factors such as price, quality, and any
other nonprice attributes without adversely affecting the viability of the
project
2. Efficiency – procurement process is proportional to the value and
risks of the required outcome, taking into account the implementation
capacity, time constraints and cost-effectiveness
3. Fairness – ensuring equal opportunity and treatment for eligible
bidders; equal distribution of rights and obligations between borrowers
and providers of goods, works and services; credible mechanisms for
addressing procurement related complaints and providing recourse
GL 11
 Core Procurement Principles
4. Transparency – relevant procurement information is publicly
available to all interested parties, a consistent and timely manner;
procurement activity reporting established; and justified use of
confidentiality provisions in contracts
5. Quality – procurement of inputs and delivery of outputs of
appropriate standard in a timely and effective manner to achieve the
project outcomes and development objectives
6. Value for money – effective, efficient and economic use of resources
based on cost-benefit analysis, along with assessment of risks and
nonprice attributes and life cycle costs. Price alone may not sufficiently
represent value for money
GL 12
 Risk-Based Procurement
GL 13
 Fitness for Purpose Approach
• Procurement activities to be tailored to fit the intended
purpose and requirements of projects, reflect the strategic
needs and circumstances of the country, environment and
situation
• Adoption of a customized approach, in case a standardized
approach cannot effectively and efficiently meet project
outcomes and development objectives
• Open Competitive Bidding (OCB), properly administered
and open equally to national and international bidders, is
the most appropriate method that is likely to result in
value for money in most cases
GL 14
 Use of Open Competitive Bidding
GL 15
 Alternative Procurement Arrangements
GL 16
 Alternative Procurement Arrangements
Depending on the circumstances, ADB may:
A. Agree to arrangements relying on the procurement procedures of the borrower’s
agency accredited by ADB, if such arrangements are:
(i) compatible with the value, risk or complexity of the procurement;
(ii) consistent with the Core Procurement Principles;
(iii) ADB’s member country eligibility restrictions continue to apply;
(iv) ADB’s Anticorruption Policy and Integrity Principles and Guidelines and contractual
remedies continue to apply
B. Apply procurement procedures of another multilateral or bilateral agency or
organization involved in the project, and that:
such a party takes a leading role in providing implementation support and monitoring
project procurement activities;
GL 17
Applicability of ADB Procurement Guidelines
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 so that viability of project not affected
 Roles of ADB and Executing Agency
PROJECT
▪ The Borrower (Executing Agency) is Executing Agency
responsible for procurement of goods
and works, and selection of consultants.
▪ Project implementation follows terms in
the Agreement, including the use of ADB
procurement principles and procedures
▪ ADB reviews procurement process to
ensure compliance of the above

Technical Assistance (TA)

▪ ADB (under TA) or Borrower is ADB Contractor,
Consultant, Supplier
responsible to select TA consultants.

19
GL 19
 Procurement Guidelines

Eligibility of Goods/Services/Works
▪ Goods/works/services to be supplied under the ADB-
financed contract should have originated and
produced in ADB member countries
GL 20
 Eligibility of Bidders
Contractors/Suppliers/ Subcontractors/JV Partners
must
▪ be nationals of eligible source countries
▪ not have a conflict of interest
▪ not be under declaration of ineligibility by ADB
▪ not be ineligible based on a UN Security Counsel
resolution
▪ be, in case of a GOE, legally and financially
autonomous, operate under commercial law and be
independent of the Employer
GL 21
 Conflict of Interest?
Bidders may be considered to have conflict of interest with
one or more parties, if they
▪ Participated as consultant for design/technical
specification/project mgmt/supervision of bid package
▪ have common controlling shareholders (sister concerns)
▪ Have same legal representative for their bids
▪ Submit more than one bid in the bidding process
▪ Have relationship with each other, directly or through
common third parties, that puts them in a position to
have access to information about another bidder or
influence the decision of the purchaser
GL 22
 Procurement Guidelines
Advance Action & Retroactive Financing
Advance Procurement Action
▪ Procurement process can start prior to loan signing
▪ Encouraged by ADB for enhanced Project Readiness
▪ Process must follow ADB Procurement Procedures
▪ ADB to review process
▪ Advance procurement is at borrower’s own risk,
ADB not committed to finance
Retroactive Financing
▪ Reimbursement of eligible payments by ADB within
limits specified in loan agreement
▪ Generally 12 months before loan signing, up to
20% of loan amount, specific arrangements in loan
GL 23
 Use of Electronic Procurement is permitted
. . . To issue bid documents (freely downloadable w/o charge)
… To issue addendum/corrigendum/notification to bidders
. . . To receive and evaluate bids
Provided that ADB is satisfied with the
. . . Easy accessibility of the system (no barriers)
… Adequacy and Security of the system
E-Procurement System should
… maintain confidentiality and integrity of the bids
… Employ acceptable procedures to establish date/time
… Facilitate withdrawal /modification before deadline
ADB would assess the e-Procurement System before its use
GL 24
 Post Tender Negotiations
- When all bid prices substantially exceed the cost
estimates, the borrower may, instead of calling
for new bids, after consultation with ADB,
negotiate with the lowest evaluated bidders.
- Deletion of items or splitting of quantities among
bidders is unacceptable
- ADB’s prior approval shall be obtained for price
negotiations/ rejection of bids/rebidding.
GL 25
 Single Bid /Single Tender
- If a single bid is received after advertisement
(ICB/NCB), it needs to be evaluated.
- Lack of competition shall not be determined solely
on the basis of no. of bidders.
- Even when only one bid is received, the bidding
process may be considered valid, if the bid was
satisfactorily advertised and prices are reasonable
in comparison to market values.
- Single tender by invitation (Single source) is
unacceptable
GL 26
 Misprocurement
If Procurement is not carried out as agreed
ADB shall
. . . declare misprocurement
. . . cancel corresponding portion of ADB financing
…... ADB may permit rebidding in certain cases
GL 27
 Procurement Guidelines
Fraud and Corruption
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
➔ 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 the Bank
GL 28
 Procurement Guidelines
Fraud and Corruption
ADB’s Anticorruption Policy defines these terms:

▪ Corrupt Practice
▪ Fraudulent Practice
▪ Coercive Practice
▪ Collusive Practice
GL 29
 Procurement Guidelines
Procurement Plan
Identification

1
Preparation
Evaluation 6 2
Appraisal
Implementation 5 3
4 • Procurement Plan-1.pdf
- Type of contract
Loan Negotiation - Method of procurement
- Procurement Timing
& Board Approval - ADB review (post/prior)
GL 30
 Procurement Plan
▪ A single point reference for the procurement oversight
and supervision by ADB and the EA
▪ EA to firm up procurement plan before loan negotiation
▪ Covers packages to bid out in first 18 months, to be
updated annually and posted on ADB’s web site
Content
▪ Type of Contract (Goods, Works, Services)
▪ Timing ( Advertisement, Closing Date, Contract Award)
▪ Procurement Method (ICB, LIB, NCB, Shopping, etc.)
▪ ADB Review Procedures (Post or Prior review)
 GUIDELINES FOR PROCUREMENT
Procurement Flow Diagram

Bid Packaging

Prequalification

Bidding Documents

Bid Opening

Bid Evaluation

Award of Contract
GL 32
 Type and Size of Contracts
Nature: Supply of Goods, Civil Works, Services,
Design-Supply-Install (Turnkey), etc.
Size: Dependent on magnitude, nature and location of
project; and market practices
Type: Unit Price, Lump Sum, Combination
Slicing: A bid package may consist of multiple lots
Procurement Method: ICB/NCB/LIB/Shopping etc.
Qualification: Post qualification or pre-qualification
Bidding Procedures:
Single Stage: One-Envelope, Single Stage: Two-Envelope
Two Stage: Two-Envelope, Two Stage
GL 33
 International Competitive Bidding
Bidding Procedures

Single-Stage: One-Envelope
Single-Stage: Two-Envelope
GL 34
 Bidding Procedures
Single-Stage: One-Envelope
ADB
Deadline Approval

STOP
Technical
Proposal Technical
Proposal

Technical
Financial Financial
Proposal Financial
Proposal

Preparation Evaluation
GL 35
 Bidding Procedures
Single-Stage: Two-Envelope
ADB ADB
Deadline Approval Approval
Technical
STOP Proposal

Financial
Technical Proposal
Proposal
Technical

Financial
Proposal
Financial
Financial

Preparation Evaluation 1 Evaluation 2

GL 36
 Procurement Methods
▪ Open Competitive Bidding (National /International
Advertisement)
▪ Limited International Bidding (LIB)
▪ Shopping
▪ Direct Contracting (Single Source)
▪ Force Account
▪ Performance-based procurement
GL 37
 Procurement Methods
Open Competitive Bidding (OCB)
- Preferred method of procurement for goods, works and services;
- All eligible prospective bidders, meeting the quality and technical requirements of the
borrower, have the equal opportunity to bid;
- Objective is to achieve value for money;
- Advertise nationally or internationally providing bidders with sufficient time to prepare
their bids
Limited Competitive Bidding (LCB)
- Direct invitation to potential bidders without open advertisement;
- Appropriate method where, (a) there is only a limited number of potential bidders, (b)
contract amount is not large enough to attract sufficient bidders though OCB, (c) other
exceptional reasons justifying departure from open advertisement
- OCB procedures apply except advertisement and preferences
GL 38
 Procurement Methods
Framework Agreements
- contract awarded between one or more contracting authorities, contractors, suppliers,
or services providers using one of the procurement methods provided in the
Regulations;
- purpose is to establish the terms governing contracts to be awarded during a given
period, with regard to price and quantity;
- set out terms and conditions under which “call-offs” can be made throughout the
agreement period
Request for Quotations (RFQ)
- comparison of price quotations obtained from several suppliers, services providers or
contractors based on procurement subject;
- appropriate method for procuring readily available goods, small value standard
commodities, standard or routine services, or simple works
GL 39
 Procurement Methods
Electronic Reverse Auction
- scheduled online event in which prequalified bidders bid against each other through
presentation of new prices revised downwards;
- used for procurement of standardized products or services with precise technical
specifications or requirements.
Direct Contracting (single source selection)
Contracting without competition under special circumstances, such as following:
- repeat order for additional items under an existing contract within 18 months of the
original order and additional quantities not exceeding 30% of the original quantities,
provided no increase of original price;
- additional purchases from the original supplier justifying standardization of
equipment or spare parts compatible with existing equipment;
GL 40
 Open Competitive Bidding (Intl Advertisement)
▪ Threshold: Works contracts > US$ 40 million (250 Rs. Cr)
DBO / Turnkey > US$ 40 million (250 Rs. Cr)
Goods Contract > US$ 1 million (6.4 Rs. Cr)
▪ Value for Money, as International Bidders are expected to
participate
▪ Bidding Period: At least 42 days (6 weeks) from NIT
▪ Bid Document: to be prepared based on ADB-approved
SBD for the project
▪ Advertisement
EA: local English newspapers of national circulation or
freely accessible website in English
ADB: Procurement Notice on ADB’s web site at
www.adb.org under Business Opportunities Section
GL 41
 Open Competitive Bidding (Natioanl Adv)
▪ Threshold: Works Contracts < US$ 40 million (Rs 250 cr)
DBO / Turnkey > US$ 40 million (250 Rs. Cr)
Goods Contract < US$ 1 million (6 Rs. Cr)
 Procurement within the borrowing member country
 NCB is used when :
▪ Domestic suppliers or construction contractors are
able to supply/construct works
▪ Foreign contractors and suppliers are unlikely to be
interested due to size/location of contract
 SBD for NCB to be agreed between ADB and EA during
ADB Fact Finding Mission.
 Caution: EA should not try to reduce the package size just
to bring them under ICB threshold.
 Choice between ICB & NCB should be need-based
depending on the nature of works/goods.
 Open Competitive Bidding (National Adv)
Eligibility All local and foreign bidders are eligible

Advertising National press, or freely accessible web site

Bidding Period 30 days is acceptable

Bid Document ADB reviews and approves the OCB bid document for first
contract, then EA uses the same for the subsequent NCB
contracts without any deviation.

Language The use of local language, local banks

Bid Securities for bid securities, and local currency for
Currency bidding and payment is acceptable
GL 43
 Other Forms of Procurement
Limited International Bidding (<$1 Million)
▪ ICB by Invitation
▪ Appropriate for
. . . if there is only a limited number of suppliers
. . . other exceptional reasons like emergency
relief and natural disaster
GL 44
 Other Forms of Procurement
Shopping (up to $100,000)
Method Comparing price quotations (minimum 3)
Used for - Readily available of the shelf goods
- Standard specification commodities of small value
- Simple works of small value
Requests Request for quotation (RFQ) to include:
- Description, specifications
- Quantity
- Delivery / completion time and place
Contract Accepted offer to be incorporated in brief contract
GL 45
 ADB Prior Review
▪ Draft Bid Documents (based on ADB approved SBDs)
▪ ‘Advertisement’ and ‘Invitation for Bids’
▪ Technical Bid Evaluation Report
▪ Price Bid Evaluation Report & Proposal of Award at
least 4 weeks before expiry of bid validity
▪ ADB’s no objection for extension of bid validity if it is
longer than 4 weeks
▪ EA to furnish 3 copies of the signed contract to ADB
▪ Risk of Misprocurement is reduced
GL 46
 ADB Post Review
▪ Prior review of set of procurement documents once
▪ No intermittent reviews by ADB during the process
▪ Advertisement provided after posting
▪ ADB reviews contract award decisions post facto based
on supporting documents
Timing
▪ BER and contract documents to be submitted as soon
as completed
▪ ADB must respond within 6 months
▪ EA to keep files up to 2 years after project completion
Risk: If Misprocurement → cancellation of funds
GL 47
 Assess whether bids to be invited following
Post qualification or Prequalification ?
▪ Prequalification process generally used only for
▪ Large /technically complex works contracts
▪ Turnkey contracts
▪ Custom designed plant and equipment
▪ Specialized service contracts/ complex IT contracts
▪ Prequalification process usually takes about 4-5
months. So, EA should take a judicious decision
based on its requirement.
GL 48
 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
GL 49
 Bidding Documents
Evaluation & Qualification Criteria
Qualification Criteria
▪ Size of Bidder’s Operations (average annual turnover)
▪ Similar Works Experience (number of contracts completed)
▪ Financial Position (audited annual financial statements)
▪ Cash flow Capacity (access to liquid assets)
▪ Litigation History (current or past litigation)
GL 50
 Bid Evaluation
Lowest Evaluated and Substantially Responsive Bidder
▪ Time Frame
The bid evaluation and the award of contract should be
completed before the expiry of the bid validity.

▪ Confidentiality of Procedure
After opening of bids no information to non-authorized
persons on :
▪ Substance of bid
▪ Evaluation results and status
▪ Recommendation of award
GL 51
 Bid Evaluation Procedure
Major Deviations
▪ Have an effect on the validity of the bid; or
▪ Have been specified in the bid documents as grounds
for rejection of the bid; or
▪ Have an effect on the bid price, but cannot be given a
monetary value; or
▪ Are deviations from the minimum experience
qualifications /technical specifications specified in the
bidding documents;
GL 52
 Bid Evaluation Procedure
Minor Deviations
▪ Have no effect on the validity of the bid; or
▪ Have no effect on the price, quality or delivery of the
goods; or
▪ Have such effect, but it can be given a monetary value; or
▪ Have not been specified in the bid documents as grounds
for rejection,
GL 53
 Recommendation for Award
▪ Determine lowest evaluated substantially responsive
bid and
▪ Check whether the lowest evaluated substantially
responsive bidder has the financial and technical
capability to execute the contract
▪ Submit 3 copies of bid evaluation report to the Bank
at least 30 days prior to expiration of bid validity
▪ Bank reserves the right to reject financing of contract
if the contract deviates from the approved conditions
of the bidding documents and the evaluation report
GL 54
 AWARD OF CONTRACT
Publication of Award of Contract
What Information
▪ Name of each bidder
▪ Bid prices
▪ Name of winning bidder and contract price
▪ Name of bidders whose bid was rejected and reasons
▪ Duration and summary scope of contract awarded
Where
▪ English language newspaper or freely accessible web site
When
▪ Prior Review: Within 2 weeks after ADBs approval
▪ Post Review : No later than date of contract award
GL 55
 AWARD OF CONTRACT
Debriefing
▪ Any bidder can request an explanation from the EA
as to why its bid was not selected

▪ The EA shall provide an explanation, either

➢ 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
GL 56
 Post-Bidding Phase : After Contract Award

▪ Covers all activities that occurs after the contract

award during implementation

▪ Covers management of all actions that must be taken

to assure compliance with the signed contract

▪ Ensures fulfillment of contractual obligations by both

the parties
57
GL 57
 Bidding Related Complaints Management
Any complaints relating to fraud, corruption, and/or any other prohibited
practice in the bidding process are handled under the ADB Anticorruption
Guidelines. ADB will forward all other complaints received to the
borrower for review and resolution.

For duly consideration, effective and expeditious resolution, a complaint

should provide the following:
- Basic information (name, contact details, address of interested party,
specific project, prior correspondence and other related information);
- Stage of bidding process;
- Alleged inconsistency or violation.
GL 58
 Bidding Related Complaints Management
Borrower's responsibilities for addressing all complaints:
- Provide timely and sufficient information to bidders on the bidding
process, and other applicable decisions, to allow the interested party
to make an informed decision about filing a complaint;
- Acknowledge receipt, and undertake timely review of any complaint,
including providing the interested party concerned with due
opportunity to explain or clarify any unresolved issues arising out of
such complaint;
- Resolve complaints fairly, impartially, and promptly, with ADB
consultation if under prior review transactions;
GL 59
 Bidding Related Complaints Management
Borrower's responsibilities for addressing all complaints:
- Preserve the confidentiality of the procurement and any related
complaint process, including any proprietary commercial or financial
information and/or trade secrets so identified in the bidding or
proposal documentation;
- Maintain complete records of all complaints and their resolution;
- Provide timely and complete information and documentation of any
complaint submitted as and when requested by ADB.
GL 60
 Bidding Related Complaints Management
GL 61
 Contract Management
Effective contract management requires systematic and efficient planning,
execution, monitoring, and evaluation to optimize performance while
managing risks to ensure that both parties fulfill their contractual
obligations with the ultimate goal of achieving value for money and
results.

Contract management plan, with key performance indicators and

milestone events, is a key instrument in monitoring the performance and
progress of contracts and provide timely reports to ADB and other
stakeholders.
GL 62
 Contract Management
Contract management plan shall at least include:
(a) For simple and low-value contracts:
• key roles and responsibilities, contractual dates and delivery milestones;
• budget and payment milestones, record-keeping requirements
(b) For high-value, high-risk or complex contracts:
• identified potential risks (such as delays in the contractor’s right of access to
site, payment delays, and other borrower’s contractual obligations defaults
leading to contractual disputes) and their mitigation;
• key contacts, roles, and responsibilities of the parties;
GL 63
 Contract Management
continued…
• communication and reporting procedures;
• key contractual terms and conditions;
• contractual milestones including critical path and payment procedures
consistent with contractual provisions;
• key contract deliverables, for monitoring and updating to account for change
orders during the execution of the contract;
• key performance indicators and measurement process;
• contract variation control mechanisms and record-keeping requirements.
GL 64
 Dispute and Conflict Resolution
Contract Dispute:
▪ A disagreement between the employer and the contractor
regarding the rights of the parties under a contract
▪ Stage-I: Negotiate and mutually resolve the issue
▪ Stage-II: Adjudication
▪ Stage-III: Dispute Review Board
▪ Stage-IV: Arbitration- binding /non binding
▪ Litigation- Judge and jury

65
 Thank you and Good Luck !

Hope you have found this program useful.

Tel: 011-24107200
E-mail: [email protected]
GL 66