Procurement operation delivery optimization

Procurement

1. BOS
1
Procurement of
Goods and Works
Asian Development Bank
Business Opportunities

2. BOS
2
Asian Development Bank
Procurement System –Principles
Key Principles
Source of Procurement
Economy and Efficiency
Fairness
Transparency
Promotion of Domestic Industries

3. BOS
3
ADB
Board Policy
Commercial
Practices
Other
MDBs
ADB
Experience
ADB
Charter
Asian Development Bank
Procurement System -Guidelines
PROCUREMENT
GUIDELINES

4. BOS
4
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

5. BOS
5
Responsibilities
The Borrower (Executing Agency) is responsible
for all procurement activities
ADB will review the procurement activities to
ensure that the ADB’s Guidelines for
Procurement are followed
Asian Development Bank
Procurement System -Responsibilities

6. BOS
6
Asian Development Bank
Procurement System -Anticorruption
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
Definitions

7. BOS
7
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
Asian Development Bank
Procurement System –Anticorruption
Actions

8. BOS
8
Asian Development Bank
Procurement 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

9. BOS
9
International Competitive Bidding (ICB)
For supply contracts valued at US$1.0 million or more
For works contracts valued at US$10.0 million or more
Value for money
Provides for adequate, fair and equal opportunities
Asian Development Bank
Procurement System –Procurement Methods

10. BOS
10
Preparation of Bids
Bid Opening
Bid Evaluation
Award of Contract
Prequalification
ICB Activities
Asian Development Bank
Procurement System –Procurement Methods

11. BOS
11
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
Key Provisions of ICB
Asian Development Bank
Procurement System –Procurement Methods

12. BOS
12
Time for Preparation of
Bids
Bid Opening Procedures
Clarification or Alteration
of Bids
Confidentiality
Examination of Bids
Evaluation and
Comparison of Bids
Key Provisions of ICB
Domestic Preference
Extension of Bid Validity
Postqualification of Bidders
Award of Contract
Publication of the Award of
Contract
Rejection of all Bids
Debriefing
Asian Development Bank
Procurement System –Procurement Methods

13. BOS
13
Two Stage
Two-Stage: Two-Envelope
Single-Stage: Two-Envelope
Single-Stage: One-Envelope
Asian Development Bank
Procurement System –Bidding Procedures

14. BOS
14
ADB
ApprovalDeadline
STOP
Preparation
Technical
Proposal
Financial
Proposal
Evaluation
Technical
Financial
Technical
Proposal
Financial
Proposal
Bidding Procedures
Single-Stage: One-Envelope

15. BOS
15
Deadline
ADB
Approval
ADB
Approval
Preparation Evaluation 1Evaluation 2
Technical
Proposal
Financial
Proposal
Financial
Financial
Technical
Proposal
Financial
Proposal
Technical
STOP
Bidding Procedures
Single-Stage: Two-Envelope

16. BOS
16
ADB
ApprovalDeadline
Technical
Proposal
Technical
Technical
Proposal
Revised Techn.
Proposal
Suppl. Financial
Proposal
Financial
Proposal
Financial
Financial
Proposal
Evaluation 2Preparation 2Evaluation 1Preparation 1
ADB
ApprovalDeadline
Revised Technical
Suppl. Financial
Revised Techn.
Proposal
Suppl. Financial
Proposal
Financial Financial
STOP STOP
Bidding Procedures
Two-Stage: Two-Envelope

17. BOS
17
ADB
ApprovalDeadline
ADB
ApprovalDeadline
Evaluation 2Preparation 2Evaluation 1Preparation 1
Technical
Proposal
Technical
Proposal
Technical
Revised Technical
Financial
Revised
Technical Proposal
Financial
Proposal
Revised
Technical Proposal
Financial
Proposal
STOP STOP
Bidding Procedures
Two-Stage

18. BOS
18
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
EA
Procurement Plan
•Contracts (Goods, Works, Services)
•Procurement Mode
•Procurement Timing
•ADB review (post/prior)
Asian Development Bank
Procurement System –ADB Prior Review

19. BOS
19
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%
Asian Development Bank
Procurement System –ADB Prior Review

20. BOS
20
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 -Misprocurement cancellation of funds
Asian Development Bank
Procurement System –ADB Post Review

21. BOS
21
Award of contracts for values of$10.0mill.and above
must be approved by the Bank’s
—Procurement Committee —
Chairman :Principal Director, COSO
Members :Assistant General Counsel
Director, Sector Division
Secretary :Senior Procurement Specialist
(Non-Voting)
Asian Development Bank
Procurement System –ADB Review

22. BOS
22
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
Asian Development Bank
Procurement System –ADB Review

23. BOS
23
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.
Asian Development Bank
Procurement System –Prequalification

24. BOS
24
Used for
Large complex works contracts
Turnkey contracts
Contracts for fabrication of custom designed plant
and equipment
Specialized service contracts
Complex IT contracts
Asian Development Bank
Procurement System –Prequalification

25. BOS
25
Asian Development Bank
Business Opportunities
Preparing responsive bids
Avoiding common pitfalls

26. BOS
26
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
Asian Development Bank
Preparing Responsive Bids

27. BOS
27
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
Don’t 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
Asian Development Bank
Preparing Responsive Bids

28. BOS
28
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.
Asian Development Bank
Preparing Responsive Bids

29. BOS
29
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
Asian Development Bank
Preparing Responsive Bids

30. BOS
30
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.
Asian Development Bank
Preparing Responsive Bids

31. BOS
31
Asian Development Bank
Business Opportunities
How your bid is evaluated
Determining the winning bid

32. BOS
32
Determination of the
lowest evaluated and
substantially responsive bid
Asian Development Bank
Bid Evaluation –Purpose

33. BOS
33
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
Asian Development Bank
Opening of Bids

34. BOS
34
Information read out
Bidder’s 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.
Asian Development Bank
Opening of Bids

35. BOS
35
Complete Basic Data Sheet
Prepare Record of Bid Opening
Prepare Table of Bid Prices
Examine Bids for Responsiveness
Identify Bids for Detailed Evaluation
Evaluate Bids in Detail
Adjust Bid Prices
Apply Other Adjustments
Asian Development Bank
Bid Evaluation –Typical Sequence

36. BOS
36
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
Asian Development Bank
Bid Evaluation –Basics

37. BOS
37
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
Asian Development Bank
Bid Evaluation –Basics

38. BOS
38
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
Asian Development Bank
Bid Evaluation –Basics

39. BOS
39
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
Asian Development Bank
Bid Evaluation –Basics

40. BOS
40
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)
Asian Development Bank
Bid Evaluation –Basics

41. BOS
41
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
Asian Development Bank
Bid Evaluation –Basics

42. BOS
42
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
Asian Development Bank
Bid Evaluation –Basics

43. BOS
43
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
Asian Development Bank
Bid Evaluation –Basics

44. BOS
44
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
Asian Development Bank
Bid Evaluation –Basics

45. BOS
45
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
Asian Development Bank
Bid Evaluation –Basics

46. BOS
46
4. Performance 2,488,614 232,000
BIDDER ABIDDER B
3. Technical Compliance 477,000 723,017
B. Evaluated Bid Price 37,785,33935,396,322
A. Bid Price (adjusted for Scope)33,456,72534,213,305
240,0002 Adjustment for Scope 2,053,000
33,973,3051. Bid Price (arithmatically corrected)31,403,725
6. Delivery 1,023,000 123,000
105,000340,0005. Terms of Payment
Example
Supply Contracts
Asian Development Bank
Bid Evaluation –Domestic Preference

47. BOS
47
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
Asian Development Bank
Bid Evaluation –Domestic Preference

48. BOS
48
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
Supply Contracts
Asian Development Bank
Bid Evaluation –Domestic Preference

49. BOS
49
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
Supply Contracts
Asian Development Bank
Bid Evaluation –Domestic Preference

50. BOS
50
C. Evaluated Bid Price (w. Dom .Pref.)37,785,33940,528,318
BIDDER XBIDDER Y
Group A BidGroup C Bid
ExampleSupply Contract
4. Performance 2,488,614 232,000
3. Technical Compliance 477,000 723,017
5,131,996---------7. Domestic Preference (15% of A.)
B. Evaluated Bid Price 37,785,33935,396,322
A. Bid Price (adjusted for Scope)33,456,72534,213,305
240,0002. Adjustment for Scope 2,053,000
33,973,3051. Bid Price (arithmetically corrected)31,403,725
6. Delivery 1,023,000 123,000
105,000340,0005. Terms of Payment
Asian Development Bank
Bid Evaluation –Domestic Preference

51. BOS
51
9,900BID PRICE
COMPARE 9,900
10,000
10,000
9,000
9,000
9,000BID PRICE
COMPARE
10,000
10,000
9,900
9,900 9,000
AWARD
Examples
Group A Group B Group C
Supply Contracts
AWARD
9,900BID PRICE
COMPARE
9,000
9,000 x 1.15 =10,350
10,000
10,000
AWARD
Asian Development Bank
Bid Evaluation –Domestic Preference

52. BOS
52
Procedure
Goods offered from outside the Borrower’s 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
Turnkey / Supply & Installation
Asian Development Bank
Bid Evaluation –Domestic Preference

53. BOS
53
Turnkey / Supply & Installation
SERVICES
WORKS
SUPPLY
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
AWARD
BID PRICE
Bidder ABidder B
Asian Development Bank
Bid Evaluation –Domestic Preference

54. BOS
54
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
Civil Works
Asian Development Bank
Bid Evaluation –Domestic Preference

55. BOS
55
Eligibility Criteria for Domestic Contractors
Incorporated in the borrower’s country
Majority ownership by nationals of borrowing
country
Will not subcontract to foreign contractors more than
50% of the total value of their work
Civil Works
Asian Development Bank
Bid Evaluation –Domestic Preference

56. BOS
56
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
Civil Works
Asian Development Bank
Bid Evaluation –Domestic Preference

57. BOS
57
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
Civil Works
Asian Development Bank
Bid Evaluation –Domestic Preference

58. BOS
58
Category I Category II
BID PRICE 10,0009,900
COMPARE 10,0009,900
COMPARE 9,000 x 1.075 = 9,6759,500
AWARD
BID PRICE 9,0009,500
Example Civil Works
AWARD
Asian Development Bank
Bid Evaluation –Domestic Preference

59. BOS
59
Asian Development Bank
Business Opportunities
Getting Paid
ADB Disbursement Procedures

60. BOS
60
Direct Payment Procedure
used for payment of large civil works progress payments,
consultant’s 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
Asian Development Bank
Disbursement Procedures

61. BOS
61
1 -Application for LC
1
Supplier’s
Bank
Executing
Agency
Borrower’s
Bank
2
2 -LC Opened
3
3 -Application for CL
4
4 -CL Approval
5
5 -Issue of CL
Asian Development Bank
Disbursement Procedures

62. BOS
62
Asian Development Bank
Business Opportunities
Questions, Clarifications, Debriefing, etc