Transcript Document
VOCATIONAL TRAINING IMPROVEMENT PROJECT PROCUREMENT TRAINING
HYDERABAD
The World Bank January 11 & 12, 2008
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PROCUREMENT
Procurement is an important aspects of Banks operation.
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Bank loans/credits are normally disbursed as expenditures are incurred. Since delays in procurement delays disbursements, every effort should be made to ensure prompt handling of procurement.
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Good procurement practices alone cannot assure that the Bank assisted projects will achieve their development goals; but it will definitely enhance the development effectiveness. But poor procurement practices virtually guarantee that these goals will not be fully achieved. It will leads to project delays, cost overruns, complaints by bidders.
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Who is Responsible for Procurement
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The responsibility for execution of the project, and therefore, award and administration of the contracts under the project rests with the Borrower [RE : Paragraph 1.2 of the Procurement Guidelines] 3
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FOUR CONSIDERATIONS GENERALLY GUIDE PROCUREMENT IN BANK FINANCED PROJECTS
Need for economy and efficiency in the execution of the project Banks interest as a co-operative institution in giving all eligible bidders from developed and developing countries an opportunity to compete Banks interest as a development institution in encouraging the development of domestic contracting and manufacturing industries The importance of transparency in procurement process [RE : Paragraph 1.2 of the Procurement Guidelines] 4
PROCUREMENT - Specific Concerns in India
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Delays in finalization of bid documents
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Delays in bid evaluation and award of contracts
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Frequent requests for rejection of bids outside a predetermined margin and negotiations
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Delays in signing of contracts after obtaining no objection from the Bank
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Delays in releasing of advances due to procedural formalities
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Inadequate engineering leading to wide variations at the time of implementation and consequent disputes 5
Bank Guidelines
• Guidelines: Procurement under IBRD Loans and IDA Credits May 2004 as revised October 2006 for Works and Goods.
• Guidelines: Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency May 2004 as revised October 2006 for Consultancy Services.
Detailed instruction on procedures to be followed along with the suggested formats for preparation of evaluation reports, and other procurement documentation are given in the following brochures: Procurement of Civil Works and Goods under NCB procedures in Bank financed Projects – P-3 Procurement of Goods and Works under Shopping Procedures – P-4
LEGAL AGREEMENTS PROCUREMENT RELATED
• Annexure 8 of PAD • Procurement Plan • SECTION III OF IDA Credit Agreement • Procurement Manual • Minutes of Negotiations
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Procurement Provisions in Legal Agreements [Contd…..]
Category Works
(Section III Para 3.3 and 3.4 of Guidelines)
Procedure to be followed
2. National Competitive Bidding: Works estimated to cost More than US$ 100,000 and less than US$ 1 million. {INR Equivalent More than Rs.4 lakhs and less than Rs.4 Crores}
[Document W-2, and W-2 LS]
Procurement Provisions in Legal Agreements [Contd…..]
Category Procedure to be followed
3.
Small Works
(Section III Para 3.3 and 3.4 of Guidelines) 3.
4.Force Account 4.
Civil Works costing less than or equivalent of US$ 100,000 per contract [Shopping (at least three quotations from qualified contractors)] Civil works estimated to cost equivalent of US$ 20,000 or less (<= INR 8,00,000)
Procurement Provisions in Legal Agreements [Contd…..]
Category Procedure to be followed
[a] Lump Sum, Fixed Price Contracts awarded on the basis of 3 quotations from qualified bidders Document W-5
or W-9]
[b] By force account as a last resort as
per Para 3.8 of Guidelines.
Procurement Provisions in Legal Agreements [Contd…..]
Category
6.G
oods/Equipment /Machines
III, Para 3.3 and 3.4 of Guidelines) (Section
Procedure to be followed
2. National Competitive Bidding: Goods, Machines and Equipment estimated to cost more than or equivalent to US$ 100,000 and <= USD 1,000,000 per contract (>INR 40 lakhs but <= Rs.4. crores) [Document – E-1, E-4].
Procurement Provisions in Legal Agreements [Contd…..]
Category
7.E
quipment/Materi als/Tools
(Section III, Para 3.5 and 3.6 of Guidelines)
Procedure to be followed
3.
Shopping: Goods and Equipment estimated to cost less than or equivalent to US$ 100,000 equivalent per contract (includes issue of supply orders under DGS&D rate contracts) [Document – E-5, E-11].
Procurement Provisions in Legal Agreements [Contd…..]
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Category Procedure to be followed Review by the Bank
Procurement Plan should be compiled and got approved by Bank in accordance with provisions of Paragraph 1 of Appendix I of Guidelines in the prescribed format.
[This is to be updated regularly and forwarded.]
Procurement Provisions in Legal Agreements [Contd…..]
Category Review by the Bank:
Prior Review of invitation to bid, bidding documents, decision on award and final contract in accordance with procedures set forth in Paragraphs 2 and 3 of Appendix 2 of Guidelines
Procedure to be followed
First works/goods contract from any one of the state under NCB regardless of the value and all contracts in respect of works and goods estimated to cost equivalent of US$ 500,000 or more. (Rs. equivalent 2,00,00,000)
Procurement Provisions in Legal Agreements [Contd…..]
Category Review by the Bank: Post Review
in accordance with procedures set forth in Paragraph 4 of Appendix 1 of Guidelines.
Procedure to be followed
Rest Post Review
Procurement Provisions in Legal Agreements [Contd…..]
Category
8. Equipment & Tools
: Procedure to be followed
Direct Contracting Proprietary items estimated to cost less than or equivalent to USD 20,000(INR Equivalent <=INR 8,00,000)
Procurement Provisions in Legal Agreements [Contd…..]
Category
9.Furniture:
Procedure to be followed
Shopping (includes issue of supply orders under DGS&D rate contract) Contracts estimated to cost less than or equal to USD 50,000 [INR 20 lakhs]
Procurement Provisions in Legal Agreements [Contd…..]
Category
10.Books & Learning Resources : Books, Periodicals, Proprietary Software, Learning Resources and Educational Materials
Procedure to be followed
Direct Contracting Contracts estimated to cost less than USD 20,000 or equivalent. [INR <=Rs.8,00,000].
Procurement Provisions in Legal Agreements [Contd…..]
Category 11.Vehicles: Procedure to be followed
Shopping: [ includes issue of supply orders under DGS&D rate contracts] Contracts estimated to cost USD 50,000 equivalent or less [INR<= 2,00,000 ]
Procurement Provisions in Legal Agreements [Contd…..]
Category
12.Small Items: [Hand tools, Measuring equipment etc]
Procedure to be followed
Direct Contracting: Contracts estimated to cost USD 500(INR 20,000equiv.) But up to an aggregate cost of USD 100,000 per institute. [<= INR 20,000 per contract and up to an aggregate cost of INR 40,00,000].
Procurement Provisions in Legal Agreements [Contd…..]
Category Procedure to be followed
1. Consultancies: Procurement Agent, research contracts, professional services, training, workshop & fellowships etc.
1.1Quality and Cost Based Selection In accordance with Section II, Paragraphs 3 of Appendix 1 and 2 and Provisions of Para 3.13 to 3.18 of Consultancy Guidelines.
More than USD 500,000 or equiv. [Rs.>2,05,00,000] International Shortlist
Procurement Provisions in Legal Agreements [Contd…..]
Category Procedure to be followed
1. Consultancies: Procurement Agent, research contracts, professional services, training, workshop & fellowships etc.
1.1Quality and Cost Based Selection In accordance with Section II, Paragraphs 3 of Appendix 1 and 2 and Provisions of Para 3.13 to 3.18 of Consultancy Guidelines.
Less than USD 500,000 or equiv.[Rs.=2,00,00,000] Shortlist may comprise entirely of national consultants.
Procurement Provisions in Legal Agreements [Contd…..]
Category
4.Consultancies: 4.2
Quality Based Selection
Consultancy Guidelines.
Para 3.1 and 3.5 of
Procedure to be followed
Contract estimated to cost USD 200,000 less than or equiv. INR <=80,00,000.
Procurement Provisions in Legal Agreements [Contd…..]
Category Procedure to be followed
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Consultancies:
4.3 Single Source/Least Cost Selection of Firm.
Contract estimated to cost less than or equivalent to USD 100,000 [INR <= 40,00,000]
Procurement Provisions in Legal Agreements [Contd…..]
Category Procedure to be followed
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Consultancies:
4.4 Hiring of individual Consultant.
Contract estimated to cost less than or equivalent to USD 50,000 [INR <= 20,05,000]
Procurement Provisions in Legal Agreements [Contd…..]
Category
5. Review: 5.1
Prior
Review of all contracts estimated to cost equivalent of US$ 100,000 or more as per Para 1, 2, and 5 of Appendix 1 of Consultancy Guidelines .
Procedure to be followed
[i] Expression of interest [ii}Terms of Reference and shortlist for all contracts; [iii]Any Single Source Selection of consulting firm/individuals; [iv]Any assignment of critical nature as reasonably determined by Association; [v] Contracts for the employment of consulting firm estimated to cost equivalent of US$ 100,000 or above; [vi]Amendments to contracts for the employment of consulting firms raising the contract value to US$ 100,000 or above; and
Procurement Provisions in Legal Agreements [Contd…..]
Category
5.Review: 5.2
Post Review Procedure to be followed
Rest.
IMPORTANT POINTS TO BE NOTED IN BANK FINANCED CONTRACTS
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Principal criteria followed in bank procurement procedures
Transparency, Economy and efficiency;
Opportunity to all eligible bidders of member countries
Encouraging development of domestic contracting and manufacturing industries Bank approved model bidding documents for procurement of Works and Equipment (NCB) should be used; 2 9
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Before invitation of bids to complete:
Detailed design and engineering, including soil investigation
Acquisition of land for works
Preparation of technical specification for equipment Bank would normally not finance additional floors in existing buildings. However, as an exception, where the initial design of a building contemplated additional floors, which were not built due to budgetary constraints, and the TTL is fully satisfied of the design, then only the Bank will agree for financing those additional floors under the Credit/Loan 3 0
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Schedule of Rates [based on which estimates are prepared] should be updated regularly taking into account realistic data based on the construction methodology to be used, current market prices for materials and labour, and reasonable contractor’s profit.
Bill of Quantities [BOQ] should have a separate schedule for those general items which are not covered in analysis of rates adopted for estimation.
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BID SECURITY
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2 to 5 % for Goods, and 1 to 3 % for Works
[For small value purchases and in specific cases, where bid security is considered not essential (for example, Vehicles), it could be dispensed with]
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PERFORMANCE SECURITY
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WORKS 5 % of contract price [Valid till 28 days from the date of issue of certificate of completion]
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GOODS 5 to 10 % of contract price [Performance security could be reduced to 2 % after delivery and acceptance of goods to cover suppliers’ obligations during the period of warranty] 3 3
RETENTION MONEY
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WORKS 5 % of the contract price
[50 % to be retained till completion of the entire work, and 50 % to be retained until the end of the defects liability period]
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GOODS Nil 3 4
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No filtration in the sale of bidding document. It should be sold to all, whosoever requests for it, and made available by mail as well.
Where bidders are not pre-qualified, minimum post-qualification criteria are to be clearly specified in the bidding document, and enforced.
Samples Bidding documents should generally avoid submission of samples along with bids by bidders as this requirement discourages competition and increases the bid prices. Alternatively, bidders should be requested to confirm that their product meets with the required specifications and in support attach appropriate test certificates from recognized testing laboratories.
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Contractors should be made responsible to provide all materials, including cement and steel, etc.
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Minimum Bidding Period from the date of publication of IFB in For NCB – 4 weeks For ICB – 6 weeks press/UNDB, or, the date the documents are made ready for sale, whichever is later 3 6
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Bidding documents should be made available for sale till a day prior to the last date of receipt of bids.
The time for the bid opening should be the same as that for deadline for receipt of bids, or promptly thereafter [to allow only sufficient time to take the bids to the place announced for public bid opening]
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PUBLICITY OF BID NOTICES
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ICB UNDB insertion [mandatory for all cases over US $10 Million, and encouraged for others] [Bank will arrange this] Copies to local representatives of eligible countries [encouraged]
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NCB ---- ---- 3 8
PUBLICITY OF BID NOTICES [Contd.]
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ICB Copies to bidders who have expressed interest in response to the General Procurement Notice [GPN] Publicity in national press having a wide circulation in all regions of the country
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NCB Copies to bidders who have expressed interest
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Publicity in national press having a wide circulation in the country 3 9
PUBLICITY OF BID NOTICES [Contd.]
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ICB For large specialized, or important contracts, publicity in well-known technical magazines, newspapers and trade publications of wide international circulation
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NCB ---- 4 0
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No preference to any bidder of class of bidders, either or price, or for other terms and conditions.
Two- or Three-Envelope system in unacceptable All bids received should be opened and read out at the time of bid opening No bid should be rejected at bid opening, except for late bids, which shall be returned un-opened to the bidder Minutes of bid opening must be prepared and one copy forwarded to the Bank for information No negotiations are permissible 4 1
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Evaluation of bids should be made strictly in terms of the provisions in the bidding document Evaluation report should be drafted in the prescribed format Single bids should also be considered for award, if it is determined that publicity was adequate, bid specifications/conditions were not restrictive or unclear, and bid prices are considered reasonable Award should be in favour of the lowest evaluated responsive bidder, who is determined to be qualified to perform the contract satisfactorily [meeting specified criteria and having good performance record] 4 2
EVALUATION AND AWARD DECISION
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Evaluation and award decision of bids including Bank review should be completed within the initial period of bid validity An extension of bid validity, if justified by exceptional circumstances, shall be requested in writing from all bidders [of valid bids only], before the expiration date The extension shall be for the minimum period required to complete evaluation, obtain necessary approvals, and award of contract 4 3
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EVALUATION AND AWARD DECISION [Contd].
The bid validity period may be extended a second time, only if the bidding documents or the request for extension shall provide for appropriate adjustment of the bid price to reflect changes in the cost of inputs for the contract, over the period of extension Such an increase in the bid price shall not be taken into account in the bid evaluation In the case of prior review contracts, Bank’s prior approval will be required : - a first extension of bid validity period, if the - period exceeds 60 days; and any subsequent extension of bid validity period 4 4
EVALUATION AND AWARD DECISION [Contd].
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If there is undue delay in awarding the contract, Bank may consider declaring the same as misprocurement
[To ensure the above, the necessary streamlining of the systems and procedures should be discussed and agreed during appraisal]
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The system of rejection of bids outside a pre-determined margin or bracket should not be used.
Rejection of all bids, irrespective of value, is to be referred to the Bank for review, and issue of no objection in the prescribed format.
Rejection of bids due to submission of collusive (unreasonably high) prices will attract provisions of Para 1.15 of Procurement Guidelines. In such cases bidders must be requested to furnish breakdown of unit rates in terms of Clause 25.1 of ITB (NCB works) providing justification for higher bid prices. If this justification, after review, is determined rational, contract should be awarded to the lowest evaluated responsive bidder. If not, these bidders must be declared as ineligible in the rebid for that contract as specified in Clause 4.8 of ITB (NCB works).
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In the case of civil works splitting in award of contracts shall not be carried out. When two or more bidders quote the same lowest price, an investigation should be made to determine any evidence of collusion, following which: If collusion is determined, the parties involved should be disqualified and the award should then be made to the next lowest evaluated and qualified bidder; and If no evidence of collusion can be confirmed, then fresh bids should be invited after receiving the concurrence of the Bank.
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Under NCB bids should not be invited on the basis of bidders quoting a percentage premium or discount over the estimated cost of the Employer.
During execution of contracts, all material modifications or waiver of the terms and conditions of contract or material extension of stipulated time or change order which would increase the contract price by over 15% should be reported to the Bank in the prescribed format, as per Paragraph 3, appendix I of the Procurement Guidelines.
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