Capacity Building and Training on Procurement Training the Trainers Workshop

1. Capacity Building and Training on Procurement Training the Trainers Workshop Transparency International-National Accountability Bureau-World Bank September 19-21, 2005 Karachi By Uzma Sadaf

2. Objectives • Economy, efficiency, and quality of services. • Giving equal opportunity to all eligible bidders to compete in providing goods, works, and services financed by the Bank. • Encouraging domestic contracting and manufacturing industry, and consultancy services. • Transparency in the selection process.

3. Functions of World Bank • To provide funds for development projects • To provide policy advice and technical assistance • To promote investment in developing countries

4. while implementing a project . . . a) Responsibility of implementation rests with the Borrower. b) The Bank has to ensure that Loan/Credit are used for • the purposes intended • with • Economy • Efficiency • Transparency

5. …. while implementing projects… c) Accordingly, Bank has developed Guidelines for procurement of Goods, Works, and Consultancy Services d) Bank Guidelines explain the various procedures acceptable for procurements as given in the Legal Agreement.

6. …. while implementing projects… e) Role of Procurement • Ensuring satisfactory implementation; • Ensuring speedy transfer of resources by way of disbursement; • Achieving economy and efficiency; and • Ensuring success of the Project. • Developing Capacity of Sound Public Procurement

7. …. while implementing projects… g Bank’s Considerations for Procurement • Need for economy and efficiency in the execution of the project • giving all eligible bidders from developed and developing countries equal opportunity to compete • encouraging the development of domestic contracting and manufacturing industries • transparency in the procurement process.

8. Processing for Procurement • Legal Agreement • Provides guidelines to Adopt the Procurement Procedure (cost, complexity, frequency) • Provides Bank’s Prior and Post Review thresholds • Guidelines for Selection of Goods & Works and Consultants • Provides Steps Required for Implementing various procurement procedures. • World Bank Standard Documents • Pre-qualification, bidding, contracts, RFP etc.

9. Legal agreement • This Agreement is between the Islamic Republic of Pakistan and IDA/IBRD – is a treaty subject to International Law. As a treaty the Legal Agreement takes precedence over local law. • The Agreement governs the legal relationship between the borrower and the Bank. • Guidelines are applicable to the extent provided in the Legal Agreements.

10. Procurementguidelines • Works and Goods: Procurement under IBRD Loans and IDA Credits May 2004 • Consultancy: Selection and Employment of Consultants by World Bank Borrowers May 2004

11. World Bank Standard Documents • Works and Goods: Prequalification documents, Bidding documents, Bid evaluation report, Contract • Consultancy: Expression of interest (for short-listing), Request for proposals, Evaluation report, Contract 

12. Procurement of Goods Methods Defined under the World Bank Guidelines

13. Methods of procurement • International Competitive Bidding (ICB) • National Competitive Bidding (NCB) • Shopping

14. Steps of a procurement process • Notification and advertising • Pre-qualification of bidders (for health sector goods) • Issuance of bidding documents to (pre-qualified) firms • Bid opening • Bid Evaluation • Selection of lowest evaluated responsive bidder • Signing of Contract

15. Notification and Advertising • Draft General Procurement Notice (all planned projects) is published in UNDB. • Specific Procurement Notice for bidding is published for a specific project in • Atleast one nationally circulated newspaper, or • Official gazette, or • Electronic portal with free access, and • UNDB online and in dgMarket. • Minimum response time is 6 weeks for ICB and 4 weeks for NCB.

16. Standard Bidding Documents • Fair (terms and conditions should be balanced) • Non-restrictive (local registrations, response time) • Clear and comprehensive (adequate information, requirements, evaluation criteria)

17. Standard Bidding Documents • (ICB) • Bidding Procedures • Instructions to bidders (ITB) • Bid data sheet (BDS) • Evaluation and qualification criteria • Bidding Forms • Eligible countries • Supply Requirements • Schedule of Requirements • Contract • General Conditions of Contract • Special Conditions of Contract • Contract Forms

18. Standard Bidding Documents • (NCB) • Part I (fixed) • Instructions to bidders (ITB) • General Conditions of Contract • Part II (Procurement Specific Provisions) • Invitation for Bids (IFB) • Bid data sheet (BDS) • Special Conditions of Contract • Schedule of Requirements • Technical Specifications • Bidding Forms • Eligibility

19. Standard Bidding Documents • Instructions to Bidders (fixed) • General (Scope of Bid, source of funds, eligibility) • Contents of Bidding Documents (list of documents, clarifications, amendments) • Preparation of Bids (cost, currency, documents, period of bid validity, format of signing) • Submission and Opening of Bids (sealing & marking, deadline, late bid, withdrawal, opening) • Evaluation & Comparison of Bids (responsiveness, evaluation criteria and procedure, ) • Award of Contract (award criteria, notification, signing of contract, securities)

20. Standard Bidding Documents • Bids Data Sheet (BDS) (Procurement Specific) • General (name of purchaser, project etc.) • Contents of Bidding Documents (list of documents) Preparation of Bids (cost, currency, documents, period of bid validity, format of signing) • Submission and Opening of Bids (address of submission, last date ) • Evaluation & Comparison of Bids (currency conversion, domestic preference, evaluation criteria and procedure ) • Award of Contract (variation in quantities)

21. Standard Bidding Documents • Evaluation and Qualification Criteria • Post-Qualification Criteria • Manufacturing or supply experience, financial, technical and production capabilities, authorization from a manufacturer). • Evaluation Criteria • domestic preference (ICB) • Quoted Cost (DDP, EXW, CIP, CIF, etc.) plus incidental costs, delivery schedule, deviation in payment schedule • spare parts, O&M cost, performance and productivity, • technical specifications

22. Standard Bidding Documents • Bidding Forms • Bid Forms • Price Schedule Form • Bid Security Form • Manufacturer’s Authorization Form

23. Standard Bidding Documents • Schedule of Requirements • List of goods and delivery schedule • List of related services and completion schedule • Technical specifications • Drawings • Inspection and tests

24. Standard Bidding Documents • General Conditions of Contract (FIXED) • Clauses • Operational Clauses • Definitions • Rights and obligations • Delivery and risk transfers • Terms and currencies of payment • Mode & form of dispute settlement • Governing language • Applicable law

25. Standard Bidding Documents • General Conditions of Contract (FIXED) • Protective Clauses • Performance Security • Retention of Payments • Insurance • Inspection and tests • Warranty • Protection against third party infringement suits • Force Majure

26. Standard Bidding Documents • General Conditions of Contract (FIXED) • Variations • Quantity changes • Adverse physical conditions • Price adjustments • Remedies • Forefeiture of Performance Security • Damages, penalties for delays • Suspension and termination • Non-payments/delays in approvals

27. Standard Bidding Documents • Special Conditions of Contract (VARIABLE) • Performance Security • Inspection and tests • Delivery and documentation • Payment Schedule • Insurance • Liquidated Damages • Warranties • Applicable Law

28. Standard Bidding Documents • Contract Forms • Form of Contract • Performance Security • Advance Payment Security Form

29. BID OPENING • Public Opening • Announce the requisites (bid security, modification, withdrawal etc.) • Announce the price • Record the requisites • Only bids announced in public opening shall be further considered for evaluation • Late Bids are not Considered

30. Bid Evaluation • Selection of the lowest evaluated responsive bidder • Evaluation is to be based upon the contents of the bid itself. • Evaluation is to be based only upon the criteria clearly stated in the Bidding Documents. • Ideally all factors of evaluation criteria should be quantifiable in monetary terms.

31. Bid Evaluation • Clarification • Permissible and warranted • Should be in writing • - Should not Change Substance of Bid or Price • Preliminary Examination (Substantial Responsiveness) • Eligibility requirements • Bid is signed • Bid Security • Required authorization • Major Deviations from Bid Conditions • Computational Errors

32. Major Deviations • - Scope, Quality and Performance Affected • - Employer’s rights or supplier’s obligations limited in substantial way • - Rectification would unfairly affect ranking of other substantially responsive bids

33. Examples of Major Deviations • Late Bid Submission • Ineligible Bidder • Unsigned Bid • Unacceptable Bid Security • Lesser bid validity period • Price Adjustment Vs Fixed Price • Non Conforming delivery schedule • Unacceptable Subcontracting • Deviations from critical provisions • - Applicable Law • - Taxes and Duties • - Defect Liability • - Functional Guarantees • - Patent and Indemnity • - Limitation of liability

34. Debatable Deviations • Information given on different format • Different Payment Terms • Non Compliance with Local Regulations • - Labour, Import, Duties, Taxes, etc. • Completion/Maintenance Periods • Omission of (Minor) Items • Different Codes/Standards • - Materials, Workmanship, Design, etc.

35. Bids with Deviations • May be considered substantially responsive if deviations can be assigned monetary value to be added as penalty for evaluation purposes • and if such deviations otherwise acceptable

36. Detailed Bid Evaluation • (Only for Substantially Responsive Bids) • Arithmetic Errors (If discrepancy between words and figures, words would prevail) • Currency Conversion (date as given in the Bid Docs.) • Evaluation shall exclude • Sales & other taxes payable if contract signed (local goods) • Customs and import taxes payable if contract signed (goods imported or to be imported)

37. Detailed Bid Evaluation • (Only for Substantially Responsive Bids) • Correction of Price (As given in the Evaluation criteria) • - incidental cost added • - addition to cost for delayed delivery • - adjustment for alternate payment schedule • - addition of cost of spare parts • - operating & maintenance cost • - adjustment for performance and efficiency • - adjustment for any specific additional criteria as given in the bid documents.

38. Award of Contract • Lowest evaluated responsive bidder • Notification of award (notify successful bidder , publish results of evaluation, NOA is binding until contract is signed) • Signing of Contract (within 28 days of notification of award) • Performance Security (28 days of notification of award) • Return Bid Security of all Bidders • If lowest evaluated responsive bidder fails to sign contract/submit performance Security, invite the 2nd lowest evaluated responsive bidder.

39. ISSUES • Validity of Bids and Bid Securities • Extended Delivery Period • Bid Forms not completely filled • Authorization letter not signed • Experience Certificate not included • Delayed Decision of award • Specifications & Experience Requirements

40. ISSUES • Validity of Bids and Bid Securities • - Must be valid for the period given in the BDS • - Extension may be requested; bidder has a right to refuse. • Extended Delivery Period • - Acceptable if BDS gives the option to evaluate delayed delivery. • - If BDS mentions a fixed delivery period, it is a major deviation.

41. ISSUES • Bid Forms not completely filled • - May be acceptable if ALL information is given in a signed letter • Authorization letter not signed • - A certificate may be acceptable • Experience Certificate not included • - Bidder maybe asked to submit later

42. ISSUES • Delayed Decision of award • - Award should be made within the bid validity period • - Incase of delay, ALL bidders should be requested to extend their bid validity. • - Unreasonable extension is not a good practice. • - Delays may entail increase in cost.

43. ISSUES • Specifications & Experience Requirements • Specifications should be clear and suiting the requirement. • - A market survey prior to drafting specifications is always helpful • - Qualification requirement of suppliers should be realistic

44. A Good Practice • Assess capacity of prospective bidders and disseminate information • Pre-bid Meetings • Addendum • Prompt evaluation and decision

45. Procurement of Goods SHOPPING

46. Shopping • Three Quotations are required for comparison • Advertisement not necessary. Written request may be made. • Good practice is to approach more than three suppliers • Conditions (delivery schedule, Specifications etc.) given • If three responses are not received an extension may be given.

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