Operational Procurement and Business Opportunities

in Bank-Funded Operations

Gurcharan SinghThe World Bank Group, Washington DC

Kenya, April 29, 2014

HISTORY OF WORLD BANK GROUP

LENDING TRENDS AND PROJECT CYCLE

BANK PROCUREMENT OF GOOD,WORKS AND CONSULTING SERVICES

COMMON PROCUREMENT ISSUES INCLUDING FRAMEWORK AGGREMENT

HOW TO PREPARE A WINNING BID OR RFP.

The World Bank Group

IBRDIFC

IDA

MIGA

19451956

19601988

Six Regional Vice Presidents• Africa

• East Asia & Pacific

• South Asia

• Latin America & Caribbean

• Middle East & North Africa • Europe & Central Asia

World Bank Governing Structure

O ffice o f the P res ident

Executive D irectors

Board of Governors

6

Lending, Trends&

Project Development Cycle

World Bank Lending

7

Investment Lending For goods, works and services Predefined specific project Long-term focus (5 to 10 years) broad range of sectors Procurement and implementation schedule defined 75 - 85 percent of all Bank lending

Development Policy Lending Support countries’ policy and institutional reforms in a sector or the economy as a whole Short-term focus (1 to 3 years) Provide quick-disbursing financing 15 - 25 percent of total Bank lending

Basic Lending Instrument

8

IBRD/IDA FY2013 Lending by Lending Instrument

Total Operations Lending$46.4 billions

Investment lending $28 billion 60% of the total

Development Policy $18.4 billion 40% of the total

9

301 operations IBRD 125 (42%) IDA 176 (58%)

$46.4 billion IBRD $32.8 billion (71%) IDA $13.6 billion (29%)

IBRD/IDA Lending in FY2013

10

FY13 Top Ten IBRD / IDA Borrowers

CountryIDA / IBRD

Commitment Amount ($M)

Total Share of IDA / IBRD

CommitmentIndonesia 4,225.0 9.1%Brazil 3,604.2 7.8%Mexico 3,422.8 7.4%Poland 2,550.2 5.5%China 2,360.0 5.1%India 2,242.4 4.8%Kazakhstan 2,125.0 4.6%Turkey 2,075.1 4.5%Argentina 1,840.0 4.0%Pakistan 1,609.7 3.5%Total 26,054.40 56.3%

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Top sectors by loan amount in FY2013Trends

Economic Policy 8,939.2Social Protection 6,202.3Transport 5,711.3Energy and Mining 4,646.7Environment 3,829.0Agriculture and Rural Development 3,570.6Financial and Private Sector Development 2,924.0Public Sector Governance 2,357.3Education 2,353.1Urban Development 2,053.1

12

Trends – FY13 Lending by Major Sector

Economic Policy19%

Social Protection13%

Transport12%

Energy and Mining10%

Environment8%

Agriculture and Rural Devel-

opment8%

Financial and Private Sector Development

6%

Public Sector Governance

5%

Education5%

Urban Devel-opment

4%

Health, Nutrition and Population

3%Water

3%Social Development

1%

Global Information/Communications Technology

1%Poverty Reduction

1%Financial Management

0%

13

IBRD/IDA FY13 Lending Project by Operations Region

# Proj % Amount %

AFR 99 33% 7,802.9 17%

EAP 40 13% 8,152.7 18%

SAR 36 12% 5,433.6 12%

ECA 48 16% 9,284.8 20%

MNA 14 5% 1,723.0 4%

LCR 64 21% 14,031.0 30%

301 46,428.02

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Top Ten Borrower Countries by Major Bank-financed Contracts*

* Contracts prior-reviewed by the World Bank. The rank is by contract amount.

FY / Rank 2007 2008 2009 2010 20111 China India China China Indonesia2 India China India Brazil Brazil3 Argentina Brazil Romania India Mexico4 Egypt Russia Egypt Argentina Poland5 Congo Ethiopia Vietnam Vietnam China6 Russia Congo Argentina Russia India7 Pakistan Vietnam Russia Romania Kazakhstan8 Bangladesh Kenya Uganda Indonesia Turkey9 Mexico Iran Afghanistan Turkey Argentina

10 Vietnam Pakistan Ethiopia Bangladesh PakistanPercentage of Portfolio 60% 54% 54% 64% 56%

15

Top Ten Supplier Countries* by Major Bank-financed Contracts

* Countries where suppliers/contractors registered.

FY / Rank 2007 2008 2009 2010 20111 China China China China China2 India India India India India3 Argentina Brazil Germany Spain Argentina4 Egypt Russia United Kingdom Brazil Vietnam5 UN Agency France Italy Argentina Italy6 France Germany Argentina Russia Brazil7 Russia Denmark Russia Vietnam Turkey8 Germany UN Agency Vietnam Italy Iran R9 Brazil Pakistan Turkey France Nigeria

10 United Kingdom United States Indonesia Indonesia IndonesiaPercentage of Portfolio 60% 54% 58% 65% 59%

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Top major Sectors in FY11 by Contract Amount

Transportation: 42%Energy and mining: 18%

Water and sanitation: 15%

Major Contracts* Financed by the World Bank

0.00

1,000,000,000.00

2,000,000,000.00

3,000,000,000.00

4,000,000,000.00

5,000,000,000.00

6,000,000,000.00

Trends by Major Sector

Transportation Energy & miningWater/sanit/fld prot Health & social servPublic admin, Law AgricultureEducation FinanceIndustry and trade Info & communi-

cationNot assigned

Transportation42%

Energy & mining18%

Water/sanit/fld

prot15%

Health & social serv10%

Public admin,

Law5%

Agricul-ture4%

Education3%

Finance2%

Industry and trade1%

Info & communication1%Not assigned

0%

FY11

17

Country Assistance Strategy

Project Identification

Project Preparation

Project Appraisal

Loan NegotiationsLoan Approval and Signing

Project Supervision

Implementation

Evaluation

Investment Project Cycle

World Bank activityJoint activity Borrower activity

Bank-Financed Procurement

19

Identify project/program Appraise project/program and assess risk Share knowledge and information Supervise project/program Monitor Compliance with Agreements

The Bank’s Role

20

Identify project/program Design, prepare and plan the

project/program Apply for the loan/credit Implement project/program Monitor Compliance with Agreements

The Borrower’s Role

21

Assess country system, project’s procurement capacity and potential risks

Assist borrower in procurement planning Provide procurement training/ knowledge

sharing Monitor compliance with loan/credit

agreement and procurement plan Prior review, Post review, Independent review

Translations

The Bank’s Role in Procurement

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Design procurement plans Prepare and issue bidding documentsInvite bidsReceive and evaluate bids/proposalsAward contractsImplement/ contract payment Monitor compliance with loan/credit agreement

and procurement plan- Audit

The Borrower’s Role in Procurement

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LOAN/CREDIT AGREEMENT

WORLD BANK

IMPLEMENTING AGENCY (Borrowing Country

Government)

SUPPLIER/CONTRACTOR/CONSULTANT

BIDDING DOCUMENTS/ CONTRACTS

Contractual Relationships

24

Corrupt PracticeOffering, giving, receiving or soliciting, directly

or indirectly, of anything of value to influence improperly the actions of another party

Fraudulent PracticeAny 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

Fraud & Corruption Provisions - Definitions

25

Collusive PracticeAn arrangement between two or more parties

designed to achieve an improper purpose, including to influence improperly the actions of another party

Coercive PracticeImpairing 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

Fraud & Corruption Provisions - Definitions

26

Obstructive practice (aa) deliberately destroying, falsifying, altering or

concealing of evidence material to the investigation or making false statements to investigators in order to materially impede a Bank investigation into allegations of a corrupt, fraudulent, coercive or collusive practice; and/or threatening, harassing or intimidating any party to prevent it from disclosing its knowledge of matters relevant to the investigation or from pursuing the investigation; or

(bb) acts intended to materially impede the exercise of the Bank’s inspection and audit rights provided for under par. 1.14 (e) below.

Fraud & Corruption Provisions - Definitions

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Parties expected to observe highest ethical standards

Bank reserves the right to audit firm’s accounts and records of the contract

Sanctions by Bank: Will 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 will be posted on the World Bank

website:http://www.worldbank.org/debarr

Fraud and Corruption

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Department of Institutional Integrity (INT) Toll-free: 1-800-831-0463 (24 hours/day) Collect call: 704-556-7046

By mail: PMB 376713950 Ballantyne Corporate PlaceCharlotte, NC 28277, USA

Phone: 202-458-7677 Fax: 202-522-7140 E-mail: investigations_hotline@worldbank.org

Website: www.worldbank.org/integrity Click on "Online Complaint Form" Anonymous calls are accepted.

Please be as specific as possible.

Anti-corruption Hotline

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Procurement of

Consulting Services

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Scope of Business Opportunities for

Consultants in World Bank Projects Study, Design, Supervision of

Projects Technical assistance and

Institutional strengthening

Basic Principles of Consultant Selection

Economy and Efficiency Fair Selection Process Role of National Consultants Transparency

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Public notification for large assignmentsRestricted competitionStandard Request for ProposalsDifferent selection methods are specified in

the loan agreement

Bank Guidelines For - Consultant Selection

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Quality- and Cost-Based Selection (QCBS)Quality-Based Selection (QBS)Fixed Budget (FBS)Least Cost Selection (LCS)Consultants’ Qualifications (CQS)Single Source Selection (SSS)

Selection Methods

34

Borrower’s Role

Short lists, invites and selectsNegotiates and contractsSupervises, and makes payments

35

Short List Six firms with a wide geographic spreadNo more than two from any one country Shortlist may comprise all national firms for

smaller contracts.All short listed firms must be qualifiedParticipation of national consultants

encouraged

36

Target assignments based on regional experience and technical qualifications

Obtain background information on project: Country Assistance Strategy (CAS) Sector Strategies Project Information Document (PID) Project Appraisal Document (PAD)

Understand Roles of Borrower and Bank

Target marketing at appropriate time

Consultants’ Strategy

37

Contact, visit client before short listing. Identify national partner firm, consultants Monitor advertisements systematically Express interest promptly, selectively Expression of Interest (EOI):

Brief information on firm’s qualifications Relevant technical and regional experience

Making the Shortlist

38

Pre-proposal visit Address the Terms of Reference (TOR)

clearly, comprehensively Emphasize innovative technical solutions Qualified Consultants in Key Staff positions Firm Provides Strong Technical Leadership

Preparing the Proposal

39

Cite directly relevant technical and regional experience

Involve national partner consulting firm or individual consultants

Do not vary from standard RFP forms Make sure that your proposal is carefully

prepared and easy to evaluate: use charts, diagrams, color

Submit a professional and polished proposal

Preparing the Proposal

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Procurement OfGoods, Works and

Services

41

International advertising UNDB online and Development Gateway’s

dgMarketStandard Bidding Documents

Website: www.worldbank.orgPublic bid openingEvaluation and comparison of bids

International Competitive Bidding (ICB)

42

Contract awarded to lowest evaluated “responsive bid”

Publication of the award of contract

Domestic Preferences under ICBAppendix 2

International competitive bidding (ICB)

43

Exchange rate fixed Price adjustment No financing requirement Advance payments Letters of Credit Direct payment

ICB - Payment Conditions

44

Other Methods LIB - Limited International Bidding

• Direct invitation to suppliers NCB - National Competitive Bidding

• Country’s rules with some modifications if necessary

Shopping• Price quotations from at least three

suppliers Direct Contracting

• Reconstruction, spare parts, etc.

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Other Methods Force Account

• use of the borrower’s own personnel and equipment

Performance-Based Procurement• Payments made for measured

outputs Community Participation in

Procurement• For project sustainability or specific

social objectives

Common Issues: GoodsResponsive Bids Procurement Guidelines and SBD require

that bids containing material deviation or reservations to the terms and conditions and specifications of the bidding document be not considered for evaluation and award

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Common Issues - Bidding Document: GoodsNeed to study carefully: Raise issue of ambiguity, contradiction , omission etc, prior to

submission of bids/proposal. In case o f consultancy assess if requirements of TOR and commercial and contractual condition be met

Restrictive, or tailored technical specifications: limit the competition resulting in significant differences in the qualities

of the offered goods and hence significant differences in bid

Unrealistic requirements regarding the performance of the equipment and the respective warranties:

Bidders should carefully review the BD's and if there are such requirements to ask for clarification within the period indicated in the ITB.

Common Issues: Goods Joint Ventures - ICB Goods

A consortium is not the same as a Joint Venture. JV's should be jointly and severally liable for the contract implementation. In this regard and given the nature of the procurement of goods, the establishment of JV's is not too appropriate for supply of goods. The suppliers should carefully review the qualification requirements before the bids preparation and bidding and if they have some questions to ask the purchaser for clarifications.

Qualification requirements and post-qualification If the qualification requirements are not clear, this may result in

misunderstandings and problems in the process of post qualification and may affect the final contract award. Therefore, any ambiguities should be clarified through clarifications within the period indicated in the ITB.

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Common Issues: Goods Alternative solutions and their evaluation - if

alternative solutions are allowed, the bidders should carefully examine the methodology for their evaluation before making a decision to propose (or not) an alternative.

Bank guarantees: bid validity: performance securities, terms, amounts, omissions of important provisions The format of the bid security shall be in accordance with the standard bidding documents

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Common Issues: Works 1. Eligibility and COI issues; State-owned enterprises

participating in tenders, confirming they operate under commercial law, yet are dependent of the Borrower or agencies of Borrowers participate in tenders which is not in compliance with eligibility provisions. Bidders are related to designer, bidder participates in a design.

Bidders should consider the eligibility requirements in the BD’s and legal and financial status, and also previous activities (including those of the affiliates and other member of a JV).

2. Bank guarantees /discount issues: JV ( e.g. bidder X is not on the name of JV or only on the name of one member); less validity period than requested in the Bidding Documents. Treatment of discount given by one partner only.

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Common Issues: Consultants Services

Eligibility and COI issues; Unfair Competitive advantage, civil servants working for the implementing agency, conflict with previous assignments, state-owned enterprises .

Poorly prepared Terms of Reference (TOR) (unclear scope of services; terms for implementation, downstream works etc.) and significant differences in the prices.

52

Common Issues: Consultants Services

Negotiations in consulting services: Scope, deliverables, methodology, time, etc. tax obligations, responsibilities of the parties. No negotiation on rates, in general.

Failure of Negotiation: Instances where firm starts to question TOR or raise new deviations to contract conditions

Delays in Payments: Delays in the acceptance of the deliverables. Raise the issue with the Client and then with the Bank

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Common Issues Contract implementation: ( goods of lower

quality supplied than as required by the Bidding Documents, enforcement of liquidated damages, low quality of supervision)

Contract Implementation: Bidders quote low prices and undertake contract unrelated to their capacity. Several examples non-performance , project delays and disputes

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Common IssuesJoint Ventures between foreign firms and

local firms: Local firms establish JV’s with foreign firms just for the purposes of short-listing or passing the qualification or post-qualification requirements. After signing the contracts, foreign firms delegate most of the tasks (civil works or consultancy) to local contractors or consultants although they are members in charge. This results in delays and poor quality of the deliverables.

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Common Procurement IssuesContract Implementation: Bank is not a party to the contract. Contract

implementation is the responsibility of the Employer. Bank can use its best efforts to request the Employer to enforce the provisions of the contract, but can not act as mediator in case of dispute. Bidders and consultant to follow dispute resolution mechanism as provided in the contract

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Common Issues Confidentiality: The process of bid evaluation is confidential

until publication of award

Complaints Review: Bidder to contact the purchaser/client. If bidders wishes to ascertain the ground on which its bid was not selected for award, they may seek explanation from the purchaser

Debriefing: If bidder is not satisfied with the explanation given by the purchaser they seek meeting with the Bank. The purpose of such meeting is to only to discuss the bidder’s bid and neither to reverse the Bank’s position that has been conveyed to the Borrower nor to discuss the bids of competitors

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Business Opportunities

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DefinitionFramework is a general term for agreements with suppliers/ consultant/ pool of firm/academic institutions/civil society/NGOs which set out terms and conditions under which specific procurement can be made throughout the term of assignment

ObjectivesTo establish a streamlined approach for accessing high-quality global expertise in the area of ICT-enabled transformation and innovation for the World Bank’s analytical and operational work

Definition and Objectives

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65 firms/entities submitted EOIs

37 submitted technical and financial proposals

Evaluation committee members from WBI, TWICT, & ITS-IEG

Strengths and weaknesses of each five focus areas

Selected 14 firms

Selection Process

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Technology Enabled Transformation

Citizen Engagement

Asset Verification and Tracking

Open Data

IT Enabled Industry

Focus Areas

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World Bank website www.worldbank.org• Country Assistance Strategy• Sector Support Strategy• Monthly Operational Summary• Project Information Document• Project Appraisal Document

How to Track Opportunities

www.worldbank.org/procureProcurement & Consultants GuidelinesStandard Bidding and Proposal DocumentsGuide to Business Opportunities and more!

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Learn more

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Bidder’s role Address all queries or complaints to the

client - the borrower Send copies of communications to the Bank

or write to the Bank directly, when borrowers do not respond promptly, or the communication is a complaint against the borrower.

Address to World Bank Task Team Leader, copy to Country Director and Regional Procurement Manager

Bidders may request a debriefing

Guidance to Bidders Appendix 3 of the Guidelines

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Read everything you canMake contacts in the countryIdentify local partnersRespect local customsSolve the client’s problem. Don’t impose your

view.

How to win - briefly

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Respond precisely to technical specifications.

Unclear? Ask up front, do NOT guess or assume.

Submit bid/proposals in time. Bids that are even one minute late will be rejected.

Assess the competition. Compete where YOU are competitive.

How to win - briefly

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Thank You!

Questions and Answers