Copy of procurement guidelines may-2004


Published on

1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Copy of procurement guidelines may-2004

  1. 1. ProGuideCvr.qxd 5/7/04 3:34 PM Page 1 GUIDELINES PROCUREMENT UNDER IBRD LOANS AND IDA CREDITS May 2004
  3. 3. Copyright © 2004The International Bank for Reconstructionand Development / THE WORLD BANK1818 H Street, N.W.Washington D.C. 20433, U.S.A.First Printing April 2004All rights reservedISBN 0-8213-5829-4 ii
  4. 4. I. Introduction ......................................11.1 Purpose ....................................................11.2 General Considerations ..........................21.5 Applicability of Guidelines ....................31.6 Eligibility ..................................................41.9 Advance Contracting and Retroactive Financing ............................61.10 Joint Ventures ..........................................61.11 Bank Review ............................................61.12 Misprocurement ......................................71.13 References to Bank ..................................71.14 Fraud and Corruption ............................81.16 Procurement Plan ....................................10II. International Competitive Bidding ....11A. General ....................................................112.1 Introduction ..............................................112.2 Type and Size of Contracts ....................112.6 Two-Stage Bidding ..................................122.7 Notification and Advertising ................132.9 Prequalification of Bidders ....................14B. Bidding Documents ..............................152.11 General ......................................................152.13 Validity of Bids and Bid Security ..........162.15 Language ..................................................172.16 Clarity of Bidding Documents ..............172.19 Standards ..................................................192.20 Use of Brand Names ..............................192.21 Pricing ......................................................202.24 Price Adjustment ....................................212.26 Transportation and Insurance ................222.28 Currency Provisions ................................232.29 Currency of Bid ........................................232.31 Currency Conversion for Bid Comparison ................................242.32 Currency of Payment ..............................242.34 Terms and Methods of Payment ..........242.37 Alternative Bids ......................................252.38 Conditions of Contract ..........................26 iii
  5. 5. 2.39 Performance Security ..............................262.41 Liquidated Damages and Bonus Clauses ..................................272.42 Force Majeure ..........................................272.43 Applicable Law and Settlement of Disputes ....................27C. Bid Opening, Evaluation, and Award of Contract ....................................................282.44 Time for Preparation of Bids ..................282.45 Bid Opening Procedures ........................292.46 Clarifications or Alterations of Bids ....292.47 Confidentiality ........................................292.48 Examination of Bids ................................302.49 Evaluation and Comparison of Bids ....302.55 Domestic Preferences ..............................322.57 Extension of Validity of Bids ................322.58 Postqualification of Bidders ..................332.59 Award of Contract ..................................332.60 Publication of the Award of Contract ..342.61 Rejection of All Bids ................................342.65 Debriefing ................................................35D. Modified ICB ..........................................352.66 Operations Involving a Program of Imports ................................352.68 Procurement of Commodities ................36III. Other Methods of Procurement ........373.1 General ......................................................373.2 Limited International Bidding ..............373.3 National Competitive Bidding ..............373.5 Shopping ..................................................393.6 Direct Contracting ..................................393.8 Force Account ..........................................403.9 Procurement from United Nations Agencies ........................413.10 Procurement Agents ................................413.11 Inspection Agents ....................................423.12 Procurement in Loans to Financial Intermediaries ..........................................42 iv
  6. 6. 3.13 Procurement under BOO/BOT/BOOT, Concessions and Similar Private Sector Arrangements ..........................................433.14 Performance-Based Procurement ..........443.16 Procurement under Loans Guaranteed by the Bank ........................453.17 Community Participation in Procurement ........................................45 Appendix 1: Review by the Bank of Procurement Decisions ......................461. Scheduling of Procurement ....................462. Prior Review ............................................465. Post Review ..............................................50 Appendix 2: Domestic Preferences ....511. Preference for Domestically Manufactured Goods ..............................512. Preference for Domestic Contractors ....53 Appendix 3: Guidance to Bidders ......551. Purpose ....................................................552. Responsibility for Procurement ............553. Bank’s Role ..............................................554. Information on Bidding ..........................565. Bidder’s Role ............................................576. Confidentiality ........................................587. Action by the Bank ..................................588. Debriefing ................................................59 v
  7. 7. AcronymsBOO Build, own, operateBOOT Build, own, operate, transferBOT Build, operate, transferCIF Cost, Insurance, and FreightCIP Carriage and Insurance Paid (place of destination)CPT Carriage Paid To (named place of destination)DDP Delivered Duty PaidEXW Ex works, Ex factory, or Off the ShelfFCA Free Carrier (named place)GNP Gross National ProductIBRD International Bank for Reconstruction and Development (World Bank)ICB International Competitive BiddingIDA International Development AgencyLIB Limited International BiddingNCB National Competitive BiddingNGO Nongovernmental organizationPAD Project Appraisal DocumentSA Special AccountSBDs Standard Bidding DocumentsUN United NationsUNDB United Nations Development Business vi
  8. 8. I. INTRODUCTIONPurpose1.1 The purpose of these Guidelines is toinform those carrying out a project that isfinanced in whole or in part by a loan from theInternational Bank for Reconstruction andDevelopment (IBRD) or a credit or grant fromthe International Development Association(IDA),1 of the policies that govern theprocurement of goods, works, and services(other than consultant services) 2 required forthe project. The Loan Agreement governs thelegal relationships between the Borrower andthe Bank, and the Guidelines are madeapplicable to procurement of goods and worksfor the project, as provided in the agreement.The rights and obligations of the Borrower andthe providers of goods and works for theproject are governed by the bidding3documents, and by the contracts signed by theBorrower with the providers of goods andworks, and not by these Guidelines or the LoanAgreements. No party other than the parties tothe Loan Agreement shall derive any rightstherefrom or have any claim to loan proceeds.1 Procurement requirements of IBRD and IDA are identical,and references in these Guidelines to the Bank include bothIBRD and IDA, and references to loans include IBRD Loansas well as IDA credits or grants and project preparationadvances (PPAs). References to Loan Agreement includesDevelopment Credit Agreement, Development FinancingAgreement, Development Grant Agreement, and ProjectAgreement. References to “Borrower” include the recipientof an IDA Grant.2 References to “goods” and “works” in these Guidelinesinclude related services such as transportation, insurance,installation, commissioning, training, and initialmaintenance. “Goods” includes commodities, raw material,machinery, equipment, and industrial plant. The provisionsof these Guidelines also apply to services which are bid andcontracted on the basis of performance of a measurablephysical output, such as drilling, mapping, and similaroperations. These Guidelines do not refer to Consultants’services, to which the current Guidelines: Selection andEmployment of Consultants by World Bank Borrowers apply(referred to herein as Consultant Guidelines).3 For the purposes of these Guidelines, the words “bid” and“tender” shall have the same meaning. 1
  9. 9. General Considerations1.2 The responsibility for theimplementation of the project, and therefore forthe award and administration of contractsunder the project, rests with the Borrower.4 TheBank, for its part, is required by its Articles ofAgreement to “…ensure that the proceeds ofany loan are used only for the purposes forwhich the loan was granted, with due attentionto considerations of economy and efficiencyand without regard to political or other non-economic influences or considerations,”5 and ithas established detailed procedures for thispurpose. While in practice the specificprocurement rules and procedures to befollowed in the implementation of a projectdepend on the circumstances of the particularcase, four considerations generally guide theBank’s requirements:(a) the need for economy and efficiency in the implementation of the project, including the procurement of the goods and works involved;(b) the Bank’s interest in giving all eligible bidders from developed and developing countries6 the same information and equal opportunity to compete in providing goods and works financed by the Bank;(c) the Bank’s interest in encouraging the development of domestic contracting and manufacturing industries in the borrowing country; and(d) the importance of transparency in the procurement process.4 In some cases, the Borrower acts only as an intermediary,and the project is carried out by another agency or entity.References in these Guidelines to the Borrower include suchagencies and entities, as well as Sub-Borrowers under on-lending arrangements.5 The Bank’s Articles of Agreement; Article III, Section 5(b)and IDA’s Articles of Agreement; Article V, Section 1(g).6 See para. 1.6, 1.7, and 1.8. 2
  10. 10. 1.3 Open competition is the basis forefficient public procurement. Borrowers shallselect the most appropriate method for thespecific procurement. In most cases,International Competitive Bidding (ICB),properly administered, and with the allowancefor preferences for domestically manufacturedgoods and, where appropriate, for domesticcontractors7 for works under prescribedconditions is the most appropriate method. Inmost cases, therefore, the Bank requires itsBorrowers to obtain goods, works and servicesthrough ICB open to eligible suppliers andcontractors.8 Section II of these Guidelinesdescribes the procedures for ICB.1.4 Where ICB is not the most appropriatemethod of procurement, other methods ofprocurement may be used. Section III describesthese other methods of procurement and thecircumstances under which their applicationwould be more appropriate. The particularmethods that may be followed for procurementunder a given project are provided for in theLoan Agreement. The specific contracts to befinanced under the project, and their method ofprocurement, consistent with the LoanAgreement, are specified in the ProcurementPlan as indicated in paragraph 1.16 of theseGuidelines.Applicability of Guidelines1.5 The procedures outlined in theseGuidelines apply to all contracts for goods andworks financed in whole or in part from Bankloans.9 For the procurement of those contractsfor goods and works not financed from a Bankloan, the Borrower may adopt otherprocedures. In such cases the Bank shall besatisfied that the procedures to be used willfulfill the Borrower’s obligations to cause theproject to be carried out diligently and7 For purposes of these Guidelines, “Contractor” refers onlyto a firm providing construction services.8 See para. 1.6, 1.7, and 1.8.9 This includes those cases where the Borrower employs aprocurement agent under para. 3.10. 3
  11. 11. efficiently, and that the goods and works to beprocured:(a) are of satisfactory quality and are compatible with the balance of the project;(b) will be delivered or completed in timely fashion; and(c) are priced so as not to affect adversely the economic and financial viability of the project.Eligibility1.6 To foster competition the Bank permitsfirms and individuals from all countries to offergoods, works, and services for Bank-financedprojects. Any conditions for participation shallbe limited to those that are essential to ensurethe firm’s capability to fulfill the contract inquestion.101.7 In connection with any contract to befinanced in whole or in part from a Bank loan,the Bank does not permit a Borrower to denypre- or post-qualification to a firm for reasonsunrelated to its capability and resources tosuccessfully perform the contract; nor does itpermit a Borrower to disqualify any bidder forsuch reasons. Consequently, Borrowers shouldcarry out due diligence on the technical andfinancial qualifications of bidders to be assuredof their capabilities in relation to the specificcontract.1.8 As exceptions to the foregoing:(a) Firms of a country or goods manufactured in a country may be excluded if, (i) as a matter of law or official regulation, the Borrower’s country prohibits commercial relations with that country, provided that the10The Bank permits firms and individuals from Taiwan,China, to offer goods, works, and services for Bank-financedprojects. 4
  12. 12. Bank is satisfied that such exclusion does not preclude effective competition for the supply of goods or works required, or (ii) by an act of compliance with a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations, the Borrower’s country prohibits any import of goods from, or payments to, a particular country, person, or entity. Where the Borrowers country prohibits payments to a particular firm or for particular goods by such an act of compliance, that firm may be excluded.(b) A firm which has been engaged by the Borrower to provide consulting services for the preparation or implementation of a project, and any of its affiliates, shall be disqualified from subsequently providing goods, works, or services resulting from or directly related to the firm’s consulting services for such preparation or implementation. This provision does not apply to the various firms (consultants, contractors, or suppliers) which together are performing the contractor’s obligations under a turnkey or design and build contract.11(c) Government-owned enterprises in the Borrower’s country may participate only if they can establish that they (i) are legally and financially autonomous, (ii) operate under commercial law, and (iii) are not dependent agencies of the Borrower or Sub-Borrower.12(d) A firm declared ineligible by the Bank in accordance with subparagraph (d) of paragraph 1.14 of these Guidelines shall be ineligible to be awarded a11See para. 2.5.12 Other than Force Account units, as permitted under para.3.8. 5
  13. 13. Bank-financed contract during the period of time determined by the Bank.Advance Contracting and RetroactiveFinancing1.9 The Borrower may wish to proceedwith the initial steps of procurement beforesigning the related Bank loan. In such cases, theprocurement procedures, including advertising,shall be in accordance with the Guidelines inorder for the eventual contracts to be eligiblefor Bank financing, and the Bank shall reviewthe process used by the Borrower. A Borrowerundertakes such advance contracting at its ownrisk, and any concurrence by the Bank with theprocedures, documentation, or proposal foraward does not commit the Bank to make aloan for the project in question. If the contract issigned, reimbursement by the Bank of anypayments made by the Borrower under thecontract prior to loan signing is referred to asretroactive financing and is only permittedwithin the limits specified in the LoanAgreement.Joint Ventures1.10 Any firm may bid independently or injoint venture confirming joint and severalliability, either with domestic firms and/or withforeign firms, but the Bank does not acceptconditions of bidding which require mandatoryjoint ventures or other forms of mandatoryassociation between firms.Bank Review1.11 The Bank reviews the Borrower’sprocurement procedures, documents, bidevaluations, award recommendations, andcontracts to ensure that the procurementprocess is carried out in accordance with theagreed procedures. These review proceduresare described in Appendix 1. The ProcurementPlan approved by the Bank13 shall specify theextent to which these review procedures shall13 See paragraphs 1.16. 6
  14. 14. apply in respect of the different categories ofgoods and works to be financed, in whole or inpart, from the Bank loan.Misprocurement1.12 The Bank does not finance expendituresfor goods and works which have not beenprocured in accordance with the agreedprovisions in the Loan Agreement and asfurther elaborated in the Procurement Plan.14 Insuch cases, the Bank will declaremisprocurement, and it is the policy of the Bankto cancel that portion of the loan allocated tothe goods and works that have beenmisprocured. The Bank may, in addition,exercise other remedies provided for under theLoan Agreement. Even once the contract isawarded after obtaining a “no objection” fromthe Bank, the Bank may still declaremisprocurement if it concludes that the “noobjection” was issued on the basis ofincomplete, inaccurate, or misleadinginformation furnished by the Borrower or theterms and conditions of the contract had beenmodified without Bank’s approval.References to Bank1.13 If the Borrower wishes to refer to theBank in procurement documents, the followinglanguage shall be used:“(name of Borrower) has received (or inappropriate cases ‘has applied for’) a [loan]from the [International Bank for Reconstructionand Development] (the “Bank”) in an amountequivalent to USD toward the cost of (name ofproject), and intends to apply a portion of theproceeds of this [loan] to eligible paymentsunder this contract. Payment by the Bank willbe made only at the request of (name ofBorrower or designate) and upon approval bythe Bank, and will be subject, in all respects, tothe terms and conditions of the [Loan]Agreement. The [Loan] Agreement prohibits a14 See paragraph 1.16. 7
  15. 15. withdrawal from the [Loan] Account for thepurpose of any payment to persons or entities,or for any import of goods, if such payment orimport, to the knowledge of the Bank, isprohibited by a decision of the United NationsSecurity Council taken under Chapter VII of theCharter of the United Nations.15 No party otherthan (name of Borrower) shall derive any rightsfrom the Loan Agreement or have any claim tothe proceeds of the [loan].”16Fraud and Corruption1.14 It is the Bank’s policy to require thatBorrowers (including beneficiaries of Bankloans), as well as bidders, suppliers, andcontractors under Bank-financed contracts,observe the highest standard of ethics duringthe procurement and execution of suchcontracts. In pursuance of this policy, the Bank:(a) defines, for the purposes of this provision, the terms set forth below as follows: (i) “corrupt practice” means the offering, giving, receiving, or soliciting, directly or indirectly, of any thing of value to influence the action of a public official17 in the procurement process or in contract execution; (ii) “fraudulent practice” means a misrepresentation or omission of facts in order to influence a procurement process or the execution of a contract; (iii) “collusive practices” means a scheme or arrangement15 IBRD’s General Conditions Applicable to Loans andGuarantee Agreements; Article V; Section 5.01 and IDA’sGeneral Conditions Applicable to Development CreditAgreements; Article V; Section 5.0116 Substitute “credit,” “International DevelopmentAssociation,” and “Credit Agreement,” as appropriate.17 Includes World Bank staff and employees of otherorganizations taking or reviewing procurement decisions. 8
  16. 16. between two or more bidders, with or without the knowledge of the Borrower, designed to establish bid prices at artificial, non-competitive levels; (iv) “coercive practices” means harming or threatening to harm, directly or indirectly, persons, or their property to influence their participation in a procurement process, or affect the execution of a contract.(b) will reject a proposal for award if it determines that the bidder recommended for award has, directly or through an agent, engaged in corrupt, fraudulent, collusive, or coercive practices in competing for the contract in question;(c) will cancel the portion of the loan allocated to a contract if it determines at any time that representatives of the Borrower or of a beneficiary of the loan engaged in corrupt, fraudulent, collusive, or coercive practices during the procurement or the execution of that contract, without the Borrower having taken timely and appropriate action satisfactory to the Bank to remedy the situation;(d) will sanction a firm or individual, including declaring ineligible, either indefinitely or for a stated period of time, to be awarded a Bank-financed contract if it at any time determines that the firm has, directly or through an agent, engaged in corrupt, fraudulent, collusive, or coercive practices in competing for, or in executing, a Bank- financed contract; and(e) will have the right to require that a provision be included in bidding documents and in contracts financed by a Bank loan, a provision be included 9
  17. 17. requiring bidders, suppliers and contractors to permit the Bank to inspect their accounts and records and other documents relating to the bid submission and contract performance and to have them audited by auditors appointed by the Bank.1.15 With the specific agreement of theBank, a Borrower may introduce, into bid formsfor large contracts financed by the Bank, anundertaking of the bidder to observe, incompeting for and executing a contract, thecountry’s laws against fraud and corruption(including bribery), as listed in the biddingdocuments.18 The Bank will accept theintroduction of such undertaking at the requestof the Borrowing country, provided thearrangements governing such undertaking aresatisfactory to the Bank.Procurement Plan1.16 As part of the preparation of the projectthe Borrower shall prepare and, before loannegotiations, furnish to the Bank for itsapproval, a Procurement Plan19 acceptable tothe Bank setting forth: (a) the particularcontracts for the goods, works, and/or servicesrequired to carry out the project during theinitial period of at least 18 months; (b) theproposed methods for procurement of suchcontracts that are permitted under the LoanAgreement, and (c) the related Bank reviewprocedures.20 The Borrower shall update the18 As an example, such an undertaking might read asfollows: “We undertake that, in competing for (and, if theaward is made to us, in executing) the above contract, wewill strictly observe the laws against fraud and corruptionin force in the country of the [Purchaser] [Employer], assuch laws have been listed by the [Purchaser] [Employer] inthe bidding documents for this contract.”19 If the Project includes the selection of consulting services,the Procurement Plan should also include the methods forselection of consulting services in accordance with theGuidelines: Selection and Employment of Consultants byWorld Bank Borrowers. The Bank will disclose the initialProcurement Plan to the public after the related loan hasbeen approved; additional updates will be disclosed afterthe Bank has approved them.20 See Appendix 1 10
  18. 18. Procurement Plan annually or as neededthroughout the duration of the project. TheBorrower shall implement the ProcurementPlan in the manner in which it has beenapproved by the Bank. II. INTERNATIONAL COMPETITIVE BIDDING A. GeneralIntroduction2.1 The objective of InternationalCompetitive Bidding (ICB), as described inthese Guidelines, is to provide all eligibleprospective bidders21 with timely and adequatenotification of a Borrower’s requirements andan equal opportunity to bid for the requiredgoods and works.Type and Size of Contracts2.2 The bidding documents shall clearlystate the type of contract to be entered into andcontain the proposed contract provisionsappropriate therefor. The most common typesof contracts provide for payments on the basisof a lump sum, unit prices, reimbursable costplus fees, or combinations thereof.Reimbursable cost contracts are acceptable tothe Bank only in exceptional circumstancessuch as conditions of high risk or where costscannot be determined in advance withsufficient accuracy. Such contracts shall includeappropriate incentives to limit costs.2.3 The size and scope of individualcontracts will depend on the magnitude,nature, and location of the project. For projectsrequiring a variety of goods and works,separate contracts generally are awarded for thesupply and/or installation of different items ofequipment and plant22 and for the works.21See para. 1.6, 1.7 and 1.8.22For purposes of these Guidelines, “plant” refers toinstalled equipment, as in a production facility. 11
  19. 19. 2.4 For a project requiring similar butseparate items of equipment or works, bidsmay be invited under alternative contractoptions that would attract the interest of bothsmall and large firms, which could be allowed,at their option, to bid for individual contracts(slices) or for a group of similar contracts(package). All bids and combinations of bidsshall be received by the same deadline andopened and evaluated simultaneously so as todetermine the bid or combination of bidsoffering the lowest evaluated cost to theBorrower.232.5 In certain cases the Bank may accept orrequire a turnkey contract under which thedesign and engineering, the supply andinstallation of equipment, and the constructionof a complete facility or works are providedunder one contract. Alternatively, the Borrowermay remain responsible for the design andengineering, and invite bids for a singleresponsibility contract for the supply andinstallation of all goods and works required forthe project component. Design and build, andmanagement contracting24 contracts are alsoacceptable where appropriate.25Two-Stage Bidding2.6 In the case of turnkey contracts orcontracts for large complex facilities or works ofa special nature or complex information andcommunication technology, it may beundesirable or impractical to prepare completetechnical specifications in advance. In such acase, a two-stage bidding procedure may beused, under which first unpriced technical23 See paras. 2.49-2.54 for the bid evaluation procedures.24 In construction, a management contractor usually doesnot perform the work directly but contracts out andmanages the work of other contractors, taking on the fullresponsibility and risk for price, quality, and timelyperformance. Conversely, a construction manager is aconsultant for, or agent of, the Borrower, but does not takeon such risks. (If financed by the Bank, the services of theconstruction manager should be procured under theConsultant Guidelines. See footnote 2.)25 Also see paras. 3.14 and 3.15 for performance-basedcontracting. 12
  20. 20. proposals on the basis of a conceptual design orperformance specifications are invited, subjectto technical as well as commercial clarificationsand adjustments, to be followed by amendedbidding documents26 and the submission offinal technical proposals and priced bids in thesecond stage.Notification and Advertising2.7 Timely notification of biddingopportunities is essential in competitivebidding. For projects that include ICB theBorrower is required to prepare and submit tothe Bank a draft General Procurement Notice.The Bank will arrange for its publication in UNDevelopment Business online (UNDB online) andin the Development Gateway’s dgMarket).27 TheNotice shall contain information concerning theBorrower (or prospective Borrower), amountand purpose of the loan, scope of procurementunder ICB, and the name, telephone (or fax)number, and address of the Borrower’s agencyresponsible for procurement and the address ofthe Website where specific procurement noticeswill be posted. If known, the scheduled date foravailability of prequalification or biddingdocuments should be indicated. The relatedprequalification or bidding documents, as thecase may be, shall not be released to the publicearlier than the date of publication of theGeneral Procurement Notice.2.8 Invitations to prequalify or to bid, asthe case may be, shall be advertised as SpecificProcurement Notices in at least one newspaperof national circulation in the Borrower’s26 In revising the bidding documents in the second stage theBorrower should respect the confidentiality of the bidders’technical proposals used in the first stage, consistent withrequirements of transparency and intellectual propertyrights.27 UNDB is a publication of the United Nations.Subscription information is available from: DevelopmentBusiness, United Nations, GCPO Box 5850, New York, NY10163-5850, USA (Website:;; Development Gateway Market is anelectronic portal of Development Gateway Foundation, 1889F Street, N.W. Washington, DC 20006, USA ( 13
  21. 21. country (or in the official gazette, or in anelectronic portal with free access). Suchinvitations shall also be published in UNDBonline and in dgMarket. Notification shall begiven in sufficient time to enable prospectivebidders to obtain prequalification or biddingdocuments and prepare and submit theirresponses.28Prequalification of Bidders2.9 Prequalification is usually necessary forlarge or complex works, or in any othercircumstances in which the high costs ofpreparing detailed bids could discouragecompetition, such as custom-designedequipment, industrial plant, specializedservices, some complex information andtechnology and contracts to be let underturnkey, design and build, or managementcontracting. This also ensures that invitations tobid are extended only to those who haveadequate capabilities and resources.Prequalification shall be based entirely uponthe capability and resources of prospectivebidders to perform the particular contractsatisfactorily, taking into account their (a)experience and past performance on similarcontracts, (b) capabilities with respect topersonnel, equipment, and construction ormanufacturing facilities, and (c) financialposition.292.10 The invitation to prequalify for biddingon specific contracts or groups of similarcontracts shall be advertised and notified asdescribed in paragraphs 2.7 and 2.8 above. Thescope of the contract and a clear statement ofthe requirements for qualification shall be sentto those who responded to the invitation. Allsuch applicants that meet the specified criteriashall be allowed to bid. Borrowers shall informall applicants of the results of prequalification.As soon as prequalification is completed, thebidding documents shall be made available to See para. 2.44.28 The Bank has prepared a Standard Prequalification29Document for use by its Borrowers, where appropriate. 14
  22. 22. the qualified prospective bidders. Forprequalification for groups of contracts to beawarded over a period of time, a limit for thenumber or total value of awards to any onebidder may be made on the basis of thebidder’s resources. The list of prequalified firmsin such instances shall be updated periodically.Verification of the information provided in thesubmission for prequalification shall beconfirmed at the time of award of contract, andaward may be denied to a bidder that is judgedto no longer have the capability or resources tosuccessfully perform the contract. B. Bidding DocumentsGeneral2.11 The bidding documents shall furnishall information necessary for a prospectivebidder to prepare a bid for the goods andworks to be provided. While the detail andcomplexity of these documents may vary withthe size and nature of the proposed bid packageand contract, they generally include: invitationto bid; instructions to bidders; form of bid; formof contract; conditions of contract, both generaland special; specifications and drawings;relevant technical data (including of geologicaland environmental nature); list of goods or billof quantities; delivery time or schedule ofcompletion; and necessary appendices, such asformats for various securities. The basis for bidevaluation and selection of the lowestevaluated bid shall be clearly outlined in theinstructions to bidders and/or thespecifications. If a fee is charged for the biddingdocuments, it shall be reasonable and reflectonly the cost of their printing and delivery toprospective bidders, and shall not be so high asto discourage qualified bidders. The Borrowermay use an electronic system to distributebidding documents, provided that the Bank issatisfied with the adequacy of such system. Ifbidding documents are distributedelectronically, the electronic system shall besecure to avoid modifications to the biddingdocuments and shall not restrict the access ofBidders to the bidding documents. Guidance on 15
  23. 23. critical components of the bidding documentsare given in the following paragraphs.2.12 Borrowers shall use the appropriateStandard Bidding Documents (SBDs) issued bythe Bank with minimum changes, acceptable tothe Bank, as necessary to address project-specific conditions. Any such changes shall beintroduced only through bid or contract datasheets, or through special conditions ofcontract, and not by introducing changes in thestandard wording of the Bank’s SBDs. Whereno relevant standard bidding documents havebeen issued, the Borrower shall use otherinternationally recognized standard conditionsof contract and contract forms acceptable to theBank.Validity of Bids and Bid Security2.13 Bidders shall be required to submit bidsvalid for a period specified in the biddingdocuments which shall be sufficient to enablethe Borrower to complete the comparison andevaluation of bids, review the recommendationof award with the Bank (if required in theProcurement Plan), and obtain all the necessaryapprovals so that the contract can be awardedwithin that period.2.14 Borrowers have the option of requiringa bid security. When used, the bid security shallbe in the amount and form specified in thebidding documents30 and shall remain valid fora period of four weeks beyond the validityperiod for the bids, in order to providereasonable time for the Borrower to act if thesecurity is to be called. Bid security shall bereleased to unsuccessful bidders once thecontract has been signed with the winningbidder. In place of a bid security, the Borrowermay require bidders to sign a declaration30 The format of the bid security shall be in accordance withthe standard bidding documents and shall be issued by areputable bank or financial institution selected by thebidder. If the institution issuing the security is locatedoutside the country of the Borrower, it shall have acorrespondent financial institution located in the country ofBorrower to make it enforceable. 16
  24. 24. accepting that if they withdraw or modify theirbids during the period of validity or they areawarded the contract and they fail to sign thecontract or to submit a performance securitybefore the deadline defined in the biddingdocuments, the bidder will be suspended for aperiod of time from being eligible for biddingin any contract with the Borrower.Language2.15 Prequalification and biddingdocuments and the bids shall be prepared inone of the following languages, selected by theBorrower: English, French, or Spanish. Thecontract signed with the winning bidder shallbe written in the language so selected for thebidding documents, and this language shall bethe one that governs the contractual relationsbetween the Borrower and the winning bidder.In addition to being prepared in English,French, or Spanish, the prequalification andbidding documents may, at the Borrower’soption, also be prepared in the nationallanguage of the Borrower’s country (or thelanguage used nation-wide in the borrower’scountry for commercial transactions).31 If theprequalification and bidding documents areprepared in two languages, bidders shall bepermitted to submit their bids in either of thesetwo languages. In such case, the contract signedwith the winning bidder shall be written in thelanguage in which its bid was submitted, inwhich case this language shall be the one thatgoverns the contractual relations between theBorrower and the winning bidder. If thecontract is signed in a language other thanEnglish, French, or Spanish, and the contract issubject to Bank’s prior review, the Borrowershall provide the Bank with a translation of thecontract in the internationally used language inwhich the bidding documents were prepared.Bidders shall not be required nor permitted tosign contracts in two languages.31 The Bank shall be satisfied with the language to be used. 17
  25. 25. Clarity of Bidding Documents2.16 Bidding documents shall be so wordedas to permit and encourage internationalcompetition and shall set forth clearly andprecisely the work to be carried out, thelocation of the work, the goods to be supplied,the place of delivery or installation, theschedule for delivery or completion, minimumperformance requirements, and the warrantyand maintenance requirements, as well as anyother pertinent terms and conditions. Inaddition, the bidding documents, whereappropriate, shall define the tests, standards,and methods that will be employed to judge theconformity of equipment as delivered, or worksas performed, with the specifications. Drawingsshall be consistent with the text of thespecifications, and an order of precedencebetween the two shall be specified.2.17 The bidding documents shall specifyany factors, in addition to price, which will betaken into account in evaluating bids, and howsuch factors will be quantified or otherwiseevaluated. If bids based on alternative designs,materials, completion schedules, paymentterms, etc., are permitted, conditions for theiracceptability and the method of their evaluationshall be expressly stated.2.18 All prospective bidders shall beprovided the same information, and shall beassured of equal opportunities to obtainadditional information on a timely basis.Borrowers shall provide reasonable access toproject sites for visits by prospective bidders.For works or complex supply contracts,particularly for those requiring refurbishingexisting works or equipment, a pre-bidconference may be arranged whereby potentialbidders may meet with the Borrowerrepresentatives to seek clarifications (in personor online). Minutes of the conference shall be 18
  26. 26. provided to all prospective bidders with a copyto the Bank (in hard copy or sent electronically).Any additional information, clarification,correction of errors, or modifications of biddingdocuments shall be sent to each recipient of theoriginal bidding documents in sufficient timebefore the deadline for receipt of bids to enablebidders to take appropriate actions. Ifnecessary, the deadline shall be extended. TheBank shall receive a copy (in hard copy formator sent electronically) and be consulted forissuing a “no objection” when the contract issubject to prior review.Standards2.19 Standards and technical specificationsquoted in bidding documents shall promote thebroadest possible competition, while assuringthe critical performance or other requirementsfor the goods and/or works underprocurement. As far as possible, the Borrowershall specify internationally accepted standardssuch as those issued by the InternationalStandards Organization with which theequipment or materials or workmanship shallcomply. Where such international standards areunavailable or are inappropriate, nationalstandards may be specified. In all cases, thebidding documents shall state that equipment,material, or workmanship meeting otherstandards, which promise at least substantialequivalence, will also be accepted.Use of Brand Names2.20 Specifications shall be based onrelevant characteristics and/or performancerequirements. References to brand names,catalog numbers, or similar classifications shallbe avoided. If it is necessary to quote a brandname or catalog number of a particularmanufacturer to clarify an otherwiseincomplete specification, the words “or 19
  27. 27. equivalent” shall be added after such reference.The specification shall permit the acceptance ofoffers for goods which have similarcharacteristics and which provide performanceat least substantially equivalent to thosespecified.Pricing2.21 Bids for goods shall be invited on thebasis of CIP32 (place of destination) for allgoods manufactured abroad, including thosepreviously imported, and EXW33 (ex works, exfactory, or off-the-shelf) plus cost of inlandtransportation and insurance to the place ofdestination for goods manufactured orassembled in the country of the Borrower.Bidders shall be allowed to arrange for oceanand other transportation and related insurancefrom any eligible source.34 Where installation,commissioning, or other similar services arerequired to be performed by the bidder, as inthe case of “supply and installation” contracts,the bidder shall be required to quote for theseservices, in addition.2.22 In the case of turnkey contracts, thebidder shall be required to quote the price ofthe installed plant at site, including all costs forsupply of equipment, marine and local32 Refer to INCOTERMS 2000 for further definitions.Published by the International Chamber of Commerce, 38Cours Albert 1er, 75008 Paris, France. CIP is carriage andinsurance paid to (named place of destination). This termmay be used irrespective of the mode of transport, includingmultimodal transport. CIP term is for custom duties andother import taxes unpaid, payment for which is theresponsibility of the Borrower, either for goods previouslyimported or that will be imported. For previously importedgoods, the quoted CIP price shall be distinguishable fromthe original import value of these goods declared to customsand shall include any rebate or mark-up of the local agent orrepresentative and all local costs except import duties andtaxes, which will be paid by the purchaser.33 The EXW price shall include all duties, sales, and othertaxes already paid or payable for the components and rawmaterials used in the manufacture or assembly of theequipment, offered in the bid.34 See para. 1.6, 1.7 and 1.8. 20
  28. 28. transportation and insurance, installation, andcommissioning, as well as associated works andall other services included in the scope ofcontract such as design, maintenance,operation, etc. Unless otherwise specified in thebidding documents, the turnkey price shallinclude all duties, taxes, and other levies.352.23 Bidders for works contracts shall berequired to quote unit prices or lump sumprices for the performance of the works, andsuch prices shall include all duties, taxes, andother levies. Bidders shall be allowed to obtainall inputs (except for unskilled labor) from anyeligible source so that they may offer their mostcompetitive bids.Price Adjustment2.24 Bidding documents shall state eitherthat (a) bid prices will be fixed or (b) that priceadjustments will be made to reflect any changes(upwards or downwards) in major costcomponents of the contract, such as labor,equipment, materials, and fuel. Priceadjustment provisions are usually not necessaryin simple contracts involving delivery of goodsor completion of works within eighteenmonths, but shall be included in contractswhich extend beyond eighteen months.However, it is normal commercial practice toobtain firm prices for some types of equipmentregardless of the delivery time and, in suchcases, price adjustment provisions are notneeded.2.25 Prices may be adjusted by the use of aprescribed formula (or formulae) which breaksdown the total price into components that areadjusted by price indices specified for eachcomponent or, alternatively, on the basis ofdocumentary evidence (including actualinvoices) provided by the supplier orcontractor. The use of the formula method of35Goods in bids for turnkey contracts may be invited on thebasis of DDP (named place of destination) and Biddersshould be free to choose the best arrangement betweenimported goods or goods manufactured in the country ofthe Borrower, in the preparation of their bids. 21
  29. 29. price adjustment is preferable to that ofdocumentary evidence. The method to be used,the formula (if applicable), and the base datefor application shall be clearly defined in thebidding documents. If the payment currency isdifferent from the source of the input andcorresponding index, a correction factor shallbe applied in the formula, to avoid incorrectadjustment.Transportation and Insurance2.26 Bidding documents shall permitsuppliers and contractors to arrangetransportation and insurance from any eligiblesource. Bidding documents shall state the typesand terms of insurance to be provided by thebidder. The indemnity payable undertransportation insurance shall be at least 110percent of the contract amount in the currencyof the contract or in a freely convertiblecurrency to enable prompt replacement of lostor damaged goods. For works, a contractor’sAll Risk form of policy usually shall bespecified. For large projects with severalcontractors on a site, a “wrap-up” or totalproject insurance arrangement may be obtainedby the Borrower, in which case the Borrowershall seek competition for such insurance.2.27 As an exception, if a Borrower wishesto reserve transportation and insurance for theimport of goods to national companies or otherdesignated sources, bidders shall be asked toquote FCA (named place) or CPT (named placeof destination)36 prices in addition to the CIP(place of destination) price specified inparagraph 2.21. Selection of the lowestevaluated bid shall be on the basis of the CIP(place of destination) price, but the Borrowermay sign the contract on FCA or CPT terms andmake its own arrangement for transportationand/or insurance. Under such circumstances,the contract shall be limited to the FCA or CPTcost. If the Borrower does not wish to obtain36 INCOTERMS 2000 for free carrier (named place) and forcarriage paid to (named place of destination), respectively. 22
  30. 30. insurance coverage in the market, evidenceshall be provided to the Bank that resources arereadily available for prompt payment in afreely convertible currency of the indemnitiesrequired to replace lost or damaged goods.Currency Provisions2.28 Bidding documents shall state thecurrency or currencies in which bidders are tostate their prices, the procedure for conversionof prices expressed in different currencies into asingle currency for the purpose of comparingbids, and the currencies in which the contractprice will be paid. The following provisions(paragraphs 2.29-2.33) are intended to (a)ensure that bidders have the opportunity tominimize any exchange risk with regard to thecurrency of bid and of payment, and hence mayoffer their best prices; (b) give bidders incountries with weak currencies the option touse a stronger currency and thus provide afirmer basis for their bid price; and (c) ensurefairness and transparency in the evaluationprocess.Currency of Bid2.29 Bidding documents shall state that thebidder may express the bid price in anycurrency. If the bidder wishes to express the bidprice as a sum of amounts in different foreigncurrencies, they may do so, provided the priceincludes no more than three foreign currencies.Furthermore, the Borrower may require biddersto state the portion of the bid price representinglocal costs incurred in the currency37 of thecountry of the Borrower.2.30 In bidding documents for works, theBorrower may require bidders to state the bidprice entirely in the local currency, along withthe requirements for payments in up to threeforeign currencies of their choice for expectedinputs from outside the Borrower’s country,expressed as a percentage of the bid price,37 Referred to hereafter as local currency. 23
  31. 31. together with the exchange rates used in suchcalculations.Currency Conversion for Bid Comparison2.31 The bid price is the sum of allpayments in various currencies required by thebidder. For the purpose of comparing prices,bid prices shall be converted to a singlecurrency selected by the Borrower (localcurrency or fully convertible foreign currency)and stated in the bidding documents. TheBorrower shall make this conversion by usingthe selling (exchange) rates for those currenciesquoted by an official source (such as the CentralBank) or by a commercial bank or by aninternationally circulated newspaper for similartransactions on a date selected in advance, suchsource and date to be specified in the biddingdocuments, provided that the date shall not beearlier than four weeks prior to the deadline forthe receipt of bids, nor later than the originaldate for the expiry of the period of bid validity.Currency of Payment2.32 Payment of the contract price shall bemade in the currency or currencies in which thebid price is expressed in the bid of thesuccessful bidder.2.33 When the bid price is required to bestated in the local currency but the bidder hasrequested payment in foreign currenciesexpressed as a percentage of the bid price, theexchange rates to be used for purposes ofpayments shall be those specified by the bidderin the bid, so as to ensure that the value of theforeign currency portions of the bid ismaintained without any loss or gain.Terms and Methods of Payment2.34 Payment terms shall be in accordancewith the international commercial practicesapplicable to the specific goods and works.(a) Contracts for supply of goods shall provide for full payment on the delivery and inspection, if so required, of the contracted goods except for 24
  32. 32. contracts involving installation and commissioning, in which case a portion of the payment may be made after the Supplier has complied with all its obligations under the contract. The use of letters of credit is encouraged so as to assure prompt payment to the supplier. In major contracts for equipment and plant, provision shall be made for suitable advances and, in contracts of long duration, for progress payments during the period of manufacture or assembly.(b) Contracts for works shall provide in appropriate cases for mobilization advances, advances on contractor’s equipment and materials, regular progress payments, and reasonable retention amounts to be released upon compliance with the Contractor’s obligations under contract.2.35 Any advance payment for mobilizationand similar expenses, made upon signature of acontract for goods or works, shall be related tothe estimated amount of these expenses and bespecified in the bidding documents. Amountsand timing of other advances to be made, suchas for materials delivered to the site forincorporation in the works, shall also bespecified. The bidding documents shall specifythe arrangements for any security required foradvance payments.2.36 Bidding documents shall specify thepayment method and terms offered, whetheralternative payment methods and terms will beallowed and, if so, how the terms will affect bidevaluation.Alternative Bids2.37 The bidding documents shall clearlyindicate when bidders are allowed to submitalternative bids, how alternative bids should besubmitted, how bid prices should be offeredand the basis on which alternative bids shall beevaluated. 25
  33. 33. Conditions of Contract2.38 The contract documents shall clearlydefine the scope of work to be performed, thegoods to be supplied, the rights and obligationsof the Borrower and of the supplier orcontractor, and the functions and authority ofthe engineer, architect, or construction manager,if one is employed by the Borrower, in thesupervision and administration of the contract.In addition to the general conditions ofcontract, any special conditions particular to thespecific goods or works to be procured and thelocation of the project shall be included. Theconditions of contract shall provide a balancedallocation of risks and liabilities.Performance Security2.39 Bidding documents for works shallrequire security in an amount sufficient toprotect the Borrower in case of breach ofcontract by the Contractor. This security shallbe provided in an appropriate form andamount, as specified by the Borrower in thebidding document.38 The amount of thesecurity may vary, depending on the type ofsecurity furnished and on the nature andmagnitude of the works. A portion of thissecurity shall extend sufficiently beyond thedate of completion of the works to cover thedefects liability or maintenance period up tofinal acceptance by the Borrower; alternatively,contracts may provide for a percentage of eachperiodic payment to be held as retention moneyuntil final acceptance. Contractors may beallowed to replace retention money with anequivalent security after provisional acceptance.2.40 In contracts for the supply of goods, theneed for performance security depends on themarket conditions and commercial practice forthe particular kind of goods. Suppliers or38 The format of the performance security shall be inaccordance with the standard bidding documents and shallbe issued by a reputable bank or financial institutionselected by the bidder. If the institution issuing the securityis located outside the country of the Borrower, it shall havea correspondent financial institution located in the countryof Borrower to make it enforceable. 26
  34. 34. manufacturers may be required to provide aguarantee to protect against nonperformance ofthe contract. Such security in an appropriateamount may also cover warranty obligations or,alternatively, a percentage of the payments maybe held as retention money to cover warrantyobligations, and any installation orcommissioning requirements. The security orretention money shall be reasonable in amount.Liquidated Damages and Bonus Clauses2.41 Provisions for liquidated damages orsimilar provisions in an appropriate amountshall be included in the conditions of contractwhen delays in the delivery of goods,completion of works or failure of the goods orworks to meet performance requirementswould result in extra cost, or loss of revenue orloss of other benefits to the Borrower. Provisionmay also be made for a bonus to be paid tosuppliers or contractors for completion ofworks or delivery of goods ahead of the timesspecified in the contract when such earliercompletion or delivery would be of benefit tothe Borrower.Force Majeure2.42 The conditions of contract shallstipulate that failure on the part of the partiesto perform their obligations under the contractwill not be considered a default if such failureis the result of an event of force majeure asdefined in the conditions of contract.Applicable Law and Settlement ofDisputes2.43 The conditions of contract shall includeprovisions dealing with the applicable law andthe forum for the settlement of disputes.International commercial arbitration haspractical advantages over other methods for thesettlement of disputes. Therefore, the Bank 27
  35. 35. recommends that Borrowers use this type ofarbitration in contracts for the procurement ofgoods and works. The Bank shall not be namedarbitrator or be asked to name an arbitrator.39In case of works contracts, supply andinstallation contracts, and turnkey contracts, thedispute settlement provision shall also includemechanisms such as dispute review boards oradjudicators, which are designed to permit aspeedier dispute settlement. C. Bid Opening, Evaluation, and Award of ContractTime for Preparation of Bids2.44 The time allowed for the preparationand submission of bids shall be determinedwith due consideration of the particularcircumstances of the project and the magnitudeand complexity of the contract. Generally, notless than six weeks from the date of theinvitation to bid or the date of availability ofbidding documents, whichever is later, shall beallowed for ICB. Where large works or complexitems of equipment are involved, this periodshall generally be not less than twelve weeks toenable prospective bidders to conductinvestigations before submitting their bids. Insuch cases, the Borrower is encouraged toconvene pre-bid conferences and arrange sitevisits. Bidders shall be permitted to submit bidsby mail or by hand. Borrowers may also useelectronic systems permitting bidders to submitbids by electronic means, provided the Bank issatisfied with the adequacy of the system,including, inter alia, that the system is secure,maintains the confidentiality and authenticityof bids submitted, uses an electronic signaturesystem or equivalent to keep bidders bound totheir bids, and only allows bids to be openedwith due simultaneous electronic authorizationof the bidder and the Borrower. In this case,39 It is understood, however, that officials of theInternational Centre for Settlement of Investment Disputes(ICSID) shall remain free to name arbitrators in theircapacity as ICSID officials. 28
  36. 36. bidders shall continue to have the option tosubmit their bids in hard copy. The deadlineand place for receipt of bids shall be specifiedin the invitation to bid.Bid Opening Procedures2.45 The time for the bid opening shall bethe same as for the deadline for receipt of bidsor promptly40 thereafter, and shall beannounced, together with the place for bidopening, in the invitation to bid. The Borrowershall open all bids at the stipulated time andplace. Bids shall be opened in public; bidders ortheir representatives shall be allowed to bepresent (in person or online, when electronicbidding is used). The name of the bidder andtotal amount of each bid, and of any alternativebids if they have been requested or permitted,shall be read aloud (and posted online whenelectronic bidding is used) and recorded whenopened and a copy of this record shall bepromptly sent to the Bank and to all bidderswho submitted bids in time. Bids received afterthe time stipulated, as well as those not openedand read out at bid opening, shall not beconsidered.Clarifications or Alterations of Bids2.46 Except as otherwise provided inparagraphs 2.63 and 2.64 of these Guidelines,bidders shall not be requested or permitted toalter their bids after the deadline for receipt ofbids. The Borrower shall ask bidders forclarification needed to evaluate their bids butshall not ask or permit bidders to change thesubstance or price of their bids after the bidopening. Requests for clarification and thebidders’ responses shall be made in writing, inhard copy or by an electronic systemsatisfactory to the Bank.41Confidentiality2.47 After the public opening of bids,information relating to the examination,40 To allow sufficient time to take the bids to the placeannounced for public bid opening.41 See paragraph 2.44 29
  37. 37. clarification, and evaluation of bids andrecommendations concerning awards shall notbe disclosed to bidders or other persons notofficially concerned with this process until thepublication of contract award.Examination of Bids2.48 The Borrower shall ascertain whetherthe bids (a) meet the eligibility requirementsspecified in paragraph 1.6, 1.7 and 1.8 of theseGuidelines, (b) have been properly signed, (c)are accompanied by the required securities orrequired declaration signed as specified inparagraph 2.14 of the Guidelines, (d) aresubstantially responsive to the biddingdocuments, and (v) are otherwise generally inorder. If a bid is not substantially responsive,that is, it contains material deviations from orreservations to the terms, conditions, andspecifications in the bidding documents, it shallnot be considered further. The bidder shall notbe permitted to correct or withdraw materialdeviations or reservations once bids have beenopened.42Evaluation and Comparison of Bids2.49 The purpose of bid evaluation is todetermine the cost to the Borrower of each bidin a manner that permits a comparison on thebasis of their evaluated cost. Subject toparagraph 2.58, the bid with the lowestevaluated cost,43 but not necessarily the lowestsubmitted price, shall be selected for award.2.50 The bid price read out at the bidopening shall be adjusted to correct anyarithmetical errors. Also, for the purpose ofevaluation, adjustments shall be made for anyquantifiable nonmaterial deviations orreservations. Price adjustment provisionsapplying to the period of implementation of thecontract shall not be taken into account in theevaluation.2.51 The evaluation and comparison of bidsshall be on CIP (place of destination) prices for42 See para. 2.50 regarding corrections.43 See para. 2.52. 30
  38. 38. the supply of imported goods44 and EXWprices, plus cost of inland transportation andinsurance to the place of destination, for goodsmanufactured within the Borrower’s country,together with prices for any requiredinstallation, training, commissioning, and othersimilar services.452.52 Bidding documents shall also specifythe relevant factors in addition to price to beconsidered in bid evaluation and the manner inwhich they will be applied for the purpose ofdetermining the lowest evaluated bid. Forgoods and equipment, other factors may betaken into consideration including, amongothers, payment schedule, delivery time,operating costs, efficiency and compatibility ofthe equipment, availability of service and spareparts, and related training, safety, andenvironmental benefits. The factors other thanprice to be used for determining the lowestevaluated bid shall, to the extent practicable, beexpressed in monetary terms, or given arelative weight in the evaluation provisions inthe bidding documents.2.53 Under works and turnkey contracts,contractors are responsible for all duties, taxes,and other levies,46 and bidders shall take thesefactors into account in preparing their bids. Theevaluation and comparison of bids shall be onthis basis. Bid evaluation for works shall bestrictly in monetary terms. Any procedureunder which bids above or below apredetermined assessment of bid values are44 Borrowers may ask for prices on a CIF basis (and bidscompared on that same basis) only when the goods arecarried by sea and the goods are not containerized. CIF shallnot be used for anything other than sea transport. In thecase of manufactured goods, it is unlikely that the choice ofCIF will be appropriate, because these goods are usuallycontainerized. CIP can be used for any mode of transport,including sea and multimodal transport.45 The evaluation of bids shall not take into account: (a)customs duties and other taxes levied on imported goodsquoted CIP (which are excluded of custom duties); (b) salesand similar taxes levied in connection with the sale ordelivery of the goods46 Unless bidding documents specify otherwise for someturnkey contracts (see para. 2.22 ). 31
  39. 39. automatically disqualified is not acceptable. Iftime is a critical factor, the value of earlycompletion to the Borrower may be taken intoaccount according to criteria presented in thebidding documents, only if the conditions ofcontract provide for commensurate penaltiesfor noncompliance.2.54 The Borrower shall prepare a detailedreport on the evaluation and comparison ofbids setting forth the specific reasons on whichthe recommendation is based for the award ofthe contract.Domestic Preferences2.55 At the request of the Borrower, andunder conditions to be agreed under the LoanAgreement and set forth in the biddingdocuments, a margin of preference may beprovided in the evaluation of bids for:(a) goods manufactured in the country of the Borrower when comparing bids offering such goods with those offering goods manufactured abroad; and(b) works in member countries below a specified threshold of GNP47 per capita, when comparing bids from eligible domestic Contractors with those from foreign firms.2.56 Where preference for domesticallymanufactured goods or for domesticContractors is allowed, the methods and stagesset forth in Appendix 2 to these Guidelinesshall be followed in the evaluation andcomparison of bids.Extension of Validity of Bids2.57 Borrowers shall complete evaluation ofbids and award of contract within the initialperiod of bid validity so that extensions are notnecessary. An extension of bid validity, ifjustified by exceptional circumstances, shall berequested in writing from all bidders before theexpiration date. The extension shall be for the47 Gross national product as defined annually by the Bank. 32
  40. 40. minimum period required to complete theevaluation, obtain the necessary approvals, andaward the contract. In the case of fixed pricecontracts, requests for second and subsequentextensions will be permissible only if therequest for extension provides for anappropriate adjustment mechanism of thequoted price to reflect changes in the cost ofinputs for the contract over the period ofextension. Whenever an extension of bidvalidity period is requested, bidders shall notbe requested or be permitted to change thequoted (base) price or other conditions of theirbid. Bidders shall have the right to refuse togrant such an extension. If the biddingdocuments require a bid security, bidders mayexercise their right to refuse to grant such anextension without forfeiting their bid security,but those who are willing to extend the validityof their bid shall be required to provide asuitable extension of bid security.Postqualification of Bidders2.58 If bidders have not been prequalified,the Borrower shall determine whether thebidder whose bid has been determined to offerthe lowest evaluated cost has the capability andresources to effectively carry out the contract asoffered in the bid. The criteria to be met shall beset out in the bidding documents, and if thebidder does not meet them, the bid shall berejected. In such an event, the Borrower shallmake a similar determination for the next-lowest evaluated bidder.Award of Contract2.59 The Borrower shall award the contract,within the period of the validity of bids, to thebidder who meets the appropriate standards ofcapability and resources and whose bid hasbeen determined (i) to be substantiallyresponsive to the bidding documents and (ii) tooffer the lowest evaluated cost.48 A bidder shallnot be required, as a condition of award, toundertake responsibilities for work not48 Referredto as “lowest evaluated bidder” and “lowestevaluated bid,” respectively. 33
  41. 41. stipulated in the bidding documents orotherwise to modify the bid as originallysubmitted.Publication of the Award of Contract2.60 Within two weeks of receiving theBank’s “no objection” to the recommendation ofcontract award, the Borrower shall publish inUNDB online and in dgMarket the resultsidentifying the bid and lot numbers and thefollowing information: (a) name of each bidderwho submitted a bid; (b) bid prices as read outat bid opening; (c) name and evaluated pricesof each bid that was evaluated; (d) name ofbidders whose bids were rejected and thereasons for their rejection; and (e) name of thewinning bidder, and the price it offered, as wellas the duration and summary scope of thecontract awarded.Rejection of All Bids2.61 Bidding documents usually providethat Borrowers may reject all bids. Rejection ofall bids is justified when there is lack ofeffective competition, or bids are notsubstantially responsive or when bid prices aresubstantially higher than existing budget. Lackof competition shall not be determined solelyon the basis of the number of bidders. Evenwhen only one bid is submitted, the biddingprocess may be considered valid, if the bid wassatisfactorily advertised and prices arereasonable in comparison to market values.Borrowers may, after the Bank’s prior approval,reject all bids. If all bids are rejected, theBorrower shall review the causes justifying therejection and consider making revisions to theconditions of contract, design andspecifications, scope of the contract, or acombination of these, before inviting new bids.2.62 If the rejection of all bids is due to lackof competition, wider advertising shall beconsidered. If the rejection is due to most or allof the bids being nonresponsive, new bids maybe invited from the initially prequalified firms,or with the agreement of the Bank from onlythose that submitted bids in the first instance. 34
  42. 42. 2.63 All bids shall not be rejected and newbids invited on the same bidding and contractdocuments solely for the purpose of obtaininglower prices. If the lowest evaluated responsivebid exceeds the Borrower’s pre-bid costestimates by a substantial margin, the Borrowershall investigate causes for the excessive costand consider requesting new bids as describedin the previous paragraphs. Alternatively, theBorrower may negotiate with the lowestevaluated bidder to try to obtain a satisfactorycontract through a reduction in the scopeand/or a reallocation of risk and responsibilitywhich can be reflected in a reduction of thecontract price. However, substantial reductionin the scope or modification to the contractdocuments may require rebidding.2.64 The Bank’s prior approval shall beobtained before rejecting all bids, soliciting newbids, or entering into negotiations with thelowest evaluated bidder.Debriefing2.65 In the publication of Contract Awardreferred to in paragraph 2.60 the Borrower shallspecify that any bidder who wishes to ascertainthe grounds on which its bid was not selected,should request an explanation from theBorrower. The Borrower shall promptly providean explanation of why such bid was notselected, either in writing and/or in adebriefing meeting, at the option of theBorrower. The requesting bidder shall bear allthe costs of attending such a debriefing. D. Modified ICBOperations Involving a Program ofImports492.66 Where the loan provides financing for aprogram of imports, ICB with simplifiedadvertising and currency provisions may be49 Also see para. 3.11. 35
  43. 43. used for large-value contracts, as defined in theLoan Agreement.502.67 The simplified provisions fornotification of ICB procurement do not requirea General Procurement Notice. SpecificProcurement Notices shall be inserted in at leastone newspaper of national circulation in theBorrower’s country (or in the official gazette, ifany, or in an electronic portal with free access)in addition to UNDB online and dgMarket. Theperiod allowed for submission of bids may bereduced to four weeks. Bidding and paymentmay be limited to one currency widely used ininternational trade.Procurement of Commodities2.68 Market prices of commodities, such asgrain, animal feed, cooking oil, fuel, fertilizer,and metals, fluctuate, depending upon thedemand and supply at any particular time.Many are quoted in established commoditymarkets. Procurement often involves multipleawards for partial quantities to assure securityof supply and multiple purchases over a periodof time to take advantage of favorable marketconditions and to keep inventories low. A list ofprequalified bidders may be drawn up towhom periodic invitations are issued. Biddersmay be invited to quote prices linked to themarket price at the time of or prior to theshipments. Bid validities shall be as short aspossible. A single currency in which thecommodity is usually priced in the market, maybe used for bidding and payment. The currencyshall be specified in the bidding document.Bidding documents may permit telexed orfaxed bids or bids submitted by electronicmeans, and in such cases either no bid securityis required, or standing bid securities valid overa specified period of time have been submittedby prequalified bidders. Standard contractconditions and forms consistent with marketpractices shall be used.50 Procurement of smaller contracts is normally carried outin accordance with procedures followed by the private orpublic entity handling the imports, or other establishedcommercial practices acceptable to the Bank, as described inpara. 3.12. 36
  44. 44. III. OTHER METHODS OF PROCUREMENTGeneral3.1 This Section describes the methods ofprocurement that can be used where ICB wouldnot be the most economic and efficient methodof procurement, and where other methods aredeemed more appropriate.51 The Bank’spolicies with respect to margins of preferencefor domestically manufactured goods andworks contracts do not apply to methods ofprocurement other than ICB. Paragraphs 3.2 to3.7 describe the generally used methods indescending order of preference and theremaining paragraphs the methods used inspecific circumstances.Limited International Bidding3.2 Limited International Bidding (LIB) isessentially ICB by direct invitation withoutopen advertisement. It may be an appropriatemethod of procurement where (a) there is onlya limited number of suppliers, or (b) otherexceptional reasons may justify departure fromfull ICB procedures. Under LIB, Borrowers shallseek bids from a list of potential suppliersbroad enough to assure competitive prices,such list to include all suppliers when there areonly a limited number. Domestic preferencesare not applicable in the evaluation of bidsunder LIB. In all respects other thanadvertisement and preferences, ICB proceduresshall apply, including the publication of theAward of Contract as indicated in paragraph2.60.National Competitive Bidding3.3 National Competitive Bidding (NCB) isthe competitive bidding procedure normallyused for public procurement in the country of51 Contracts shall not be divided into smaller units in orderto make them less attractive for ICB procedures; anyproposal to divide a contract into smaller packages shallrequire the prior approval of the Bank. 37
  45. 45. the Borrower, and may be the most appropriateway of procuring goods or works which, bytheir nature or scope, are unlikely to attractforeign competition. To be acceptable for use inBank-financed procurement, these proceduresshall be reviewed and modified52 as necessaryto assure economy, efficiency, transparency, andbroad consistency with the provisions includedin Section I of these Guidelines. NCB may bethe most appropriate method of procurementwhere foreign bidders are not expected to beinterested because (a) the contract values aresmall, (b) works are scattered geographically orspread over time, (c) works are labor intensive,or (d) the goods or works are available locallyat prices below the international market. NCBprocedures may also be used where theadvantages of ICB are clearly outweighed bythe administrative or financial burden involved.3.4 Advertising may be limited to thenational press or official gazette, or a free andopen access website. Bidding documents maybe only in a national language of theborrower’s country (or the language usednation-wide in the borrower’s country forcommercial transactions), and the currency ofthe country of the Borrower is generally usedfor the purposes of bidding and payment. Inaddition, the bidding documents shall provideclear instructions on how bids should besubmitted, how prices should be offered, andthe place and time for submission of bids.Adequate response time for preparation andsubmission of bids shall be provided. Theprocedures shall provide for adequatecompetition in order to ensure reasonableprices, and methods used in the evaluation ofbids and the award of contracts shall beobjective and made known to all bidders in thebidding documents and not be appliedarbitrarily. The procedures shall also includepublic opening of bids, publication of results ofevaluation and of the award of contract and52 Any such modification shall be reflected in the LoanAgreement. 38
  46. 46. provisions for bidders to protest. If foreignfirms wish to participate under thesecircumstances, they shall be allowed to do so.Shopping3.5 Shopping is a procurement methodbased on comparing price quotations obtainedfrom several suppliers (in the case of goods) orfrom several contractors (in the case of civilworks), with a minimum of three, to assurecompetitive prices, and is an appropriatemethod for procuring readily available off-the-shelf goods or standard specificationcommodities of small value, or simple civilworks of small value. Requests for quotationsshall indicate the description and quantity ofthe goods or specifications of works, as well asdesired delivery (or completion) time andplace. Quotations may be submitted by letter,facsimile or by electronic means. The evaluationof quotations shall follow the same principlesas of open bidding. The terms of the acceptedoffer shall be incorporated in a purchase orderor brief contract.Direct Contracting3.6 Direct contracting is contractingwithout competition (single source) and may bean appropriate method under the followingcircumstances:(a) An existing contract for goods or works, awarded in accordance with procedures acceptable to the Bank, may be extended for additional goods or works of a similar nature. The Bank shall be satisfied in such cases that no advantage could be obtained by further competition and that the prices on the extended contract are reasonable. Provisions for such an extension, if considered likely in advance, shall be included in the original contract.(b) Standardization of equipment or spare parts, to be compatible with existing equipment, may justify additional purchases from the original Supplier. 39
  47. 47. For such purchases to be justified, the original equipment shall be suitable, the number of new items shall generally be less than the existing number, the price shall be reasonable, and the advantages of another make or source of equipment shall have been considered and rejected on grounds acceptable to the Bank.(c) The required equipment is proprietary and obtainable only from one source.(d) The Contractor responsible for a process design requires the purchase of critical items from a particular Supplier as a condition of a performance guarantee.(e) In exceptional cases, such as in response to natural disasters.3.7 After the contract signature, theBorrower shall publish in UNDB online and indgMarket the name of the contractor, price,duration, and summary scope of the contract.This publication may be done quarterly and inthe format of a summarized table covering theprevious period.Force Account3.8 Force account, that is, construction bythe use of the Borrower’s own personnel andequipment,53 may be the only practical methodfor constructing some kinds of works. The useof force account may be justified where:(a) quantities of work involved cannot be defined in advance;(b) works are small and scattered or in remote locations for which qualified construction firms are unlikely to bid at reasonable prices;53A government-owned construction unit that is notmanagerially and financially autonomous shall beconsidered a force account unit. “Force account” isotherwise known as “direct labor,” “departmental forces,”or “direct work.” 40
  48. 48. (c) work is required to be carried out without disrupting ongoing operations;(d) risks of unavoidable work interruption are better borne by the Borrower than by a Contractor; and(e) there are emergencies needing prompt attention.Procurement from United NationsAgencies3.9 There may be situations in whichprocurement directly from specialized agenciesof the United Nations (UN), acting as suppliers,pursuant to their own procedures, may be themost appropriate way of procuring: (a) smallquantities of off-the-shelf goods, primarily inthe fields of education and health; and (b)specialized products where the number ofsuppliers is limited such as for vaccines ordrugs.Procurement Agents3.10 Where Borrowers lack the necessaryorganization, resources, and experience,Borrowers may wish (or be required by theBank) to employ, as their agent, a firmspecializing in handling procurement. Theagent shall follow all the procurementprocedures provided for in the Loan Agreementand as further elaborated in the ProcurementPlan approved by the Bank on behalf of theBorrower, including use of Bank SBDs, reviewprocedures, and documentation. This alsoapplies in cases where UN agencies act asprocurement agents.54 ManagementContractors may be employed in a similarmanner for a fee to contract for miscellaneousworks involving reconstruction, repairs,rehabilitation, and new construction in54 The Consultant Guidelines shall apply for the selection ofprocurement and inspection agents. The cost or fee of theprocurement or inspection agent is eligible for financingfrom the Bank loan, if so provided in the Loan Agreementand in the Procurement Plan , and provided the terms andconditions of selection and employment are acceptable tothe Bank. 41
  49. 49. emergency situations, or where large numbersof small contracts are involved.Inspection Agents3.11 Preshipment inspection andcertification of imports is one of the safeguardsfor the Borrower, particularly where thecountry has a large import program. Theinspection and certification usually coversquality, quantity, and reasonableness of price.Imports procured through ICB procedures shallnot be subject to price verification, but onlyverification for quality and quantity. However,imports not procured through ICB mayadditionally be subjected to price verification.The inspection agents are ordinarily paid for ona fee basis levied on the value of the goods.Costs for certification of imports shall not beconsidered in the evaluation of bids under ICB.Procurement in Loans to FinancialIntermediaries3.12 Where the loan provides funds to anintermediary institution such as an agriculturalcredit institution or a development financecompany, to be re-lent to beneficiaries such asindividuals, private sector enterprises, smalland medium enterprises, or autonomouscommercial enterprises in the public sector forthe partial financing of subprojects, theprocurement is usually undertaken by therespective beneficiaries in accordance withestablished private sector or commercialpractices, which are acceptable to the Bank.However, even in these situations, ICB may bethe most appropriate procurement method forthe purchase of large single items or in caseswhere large quantities of like goods can begrouped together for bulk purchasing. 42
  50. 50. Procurement under BOO/BOT/BOOT,Concessions and Similar Private SectorArrangements3.13 Where the Bank is participating infinancing the cost of a project procured under aBOO/BOT/ BOOT,55 concessions or similartype of private sector arrangement, either of thefollowing procurement procedures shall beused, as provided for in the Loan Agreementand further elaborated in the Procurement Planapproved by the Bank:(a) The concessionaire or entrepreneur under the BOO/BOT/ BOOT or similar type of contract56 shall be selected under ICB procedures acceptable to the Bank, which may include several stages in order to arrive at the optimal combination of evaluation criteria, such as the cost and magnitude of the financing offered, the performance specifications of the facilities offered, the cost charged to the user or purchaser, other income generated for the Borrower or purchaser by the facility, and the period of the facility’s depreciation. The said entrepreneur selected in this manner shall then be free to procure the goods, works, and services required for the facility from eligible sources, using its own procedures. In this case, the Project Appraisal Document, and the Loan Agreement shall specify the type of expenditures incurred by the said entrepreneur towards which Bank financing will apply. Or,(b) If the said concessionaire or entrepreneur has not been selected in the manner set forth in subparagraph55 BOO: Build, Own, Operate; BOT: Build, Operate, Transfer;BOOT: Build, Own, Operate, Transfer.56 For projects such as toll roads, tunnels, harbors, bridges,power stations, waste disposal plants, and waterdistribution systems. 43
  51. 51. (a) above, the goods, works, or services required for the facility and to be financed by the Bank shall be procured in accordance with ICB procedures defined in Section II.Performance-Based Procurement3.14 Performance Based Procurement,57 alsocalled Output-Based Procurement, refers tocompetitive procurement processes (ICB orNCB) resulting in a contractual relationshipwhere payments are made for measuredoutputs instead of the traditional way whereinputs are measured. The technicalspecifications define the desired result andwhich outputs will be measured including howthey will be measured. Those outputs aim atsatisfying a functional need both in terms ofquality, quantity and reliability. Payment ismade in accordance with the quantity ofoutputs delivered, subject to their delivery atthe level of quality required. Reductions frompayments (or retentions) may be made forlower-quality level of outputs and, in certaincases, premiums may be paid for higher qualitylevel of outputs. The bidding documents do notnormally prescribe the inputs, nor a workmethod for the contractor. The contractor is freeto propose the most appropriate solution, basedon mature and well proven experience andshall demonstrate that the level of qualityspecified in the bidding documents will beachieved.3.15 Performance Based Procurement (orOutput Based Procurement) can involve: (a) theprovision of services to be paid on the basis ofoutputs; (b) design, supply, construction (orrehabilitation) and commissioning of a facilityto be operated by the borrower; or (c) design,supply, construction (or rehabilitation) of a57 The use of Performance Based Procurement in Bankfinanced projects should be the result of the satisfactorytechnical analysis of the different options available andshould be either included in the PAD or subject to priorapproval by the Bank for incorporation into theprocurement plan. 44
  52. 52. facility and provision of services for itsoperation and maintenance for a defined periodof years after its commissioning.58 For the caseswhere design, supply and/or construction arerequired, prequalification is normally requiredand the use of Two-Stage Bidding as indicatedin paragraph 2.6 shall apply.Procurement under Loans Guaranteed bythe Bank3.16 If the Bank guarantees the repaymentof a loan made by another lender, the goodsand works financed by the said loan shall beprocured with due attention to economy andefficiency and in accordance with procedureswhich meet the requirements of paragraph 1.5.Community Participation in Procurement3.17 Where, in the interest of projectsustainability, or to achieve certain specificsocial objectives of the project, it is desirable inselected project components to (a) call for theparticipation of local communities and/ornongovernmental organizations (NGOs) in thedelivery of services, or (b) increase theutilization of local know-how and materials, or(c) employ labor-intensive and otherappropriate technologies, the procurementprocedures, specifications, and contractpackaging shall be suitably adapted to reflectthese considerations, provided these are efficientand are acceptable to the Bank. The proceduresproposed and the project components to becarried out by community participation shall beoutlined in Loan Agreement and furtherelaborated in the Procurement Plan or therelevant project implementation documentapproved by the Bank.58 Examples of such type of procurement are: (i) for the caseof procurement of services: provision of medical services,i.e. payments for specific services, like office visits, ordefined laboratory tests, etc. ; (ii) for the case ofprocurement of a facility: Design, Procurement,Construction, and Commissioning of a thermal power plantto be operated by the borrower; (iii) for the case ofprocurement of a facility and services: Design, Procurement,Construction (or Rehabilitation) of a road and operation andmaintenance of the road for 5 years after construction. 45
  53. 53. APPENDIX 1: REVIEW BY THE BANK OF PROCUREMENT DECISIONSScheduling of Procurement1. The Bank shall review the procurementarrangements proposed by the Borrower in theProcurement Plan for its conformity with theLoan Agreement and these Guidelines. TheProcurement Plan shall cover an initial periodof at least 18 months. The Borrower shallupdate the Procurement Plan on an annualbasis or as needed always covering the next 18months period of project implementation. Anyrevisions proposed to the Procurement Planshall be furnished to the Bank for its priorapproval.Prior Review2. With respect to all contracts59 which aresubject to the Bank’s prior review:(a) In cases where prequalification is used, the Borrower shall, before prequalification submissions are invited, furnish the Bank with the draft documents to be used, including the text of the invitation to prequalify, the prequalification questionnaire, and the evaluation methodology, together with a description of the advertising procedures to be followed, and shall introduce such modifications in said procedure and documents, as the Bank shall reasonably request. The report evaluating the applications received by the Borrower, the list of proposed prequalified bidders, together with a statement of their qualifications and of the reasons for the exclusion of any applicant for prequalification, shall be59For contracts procured on the basis of direct contractingunder paras. 3.6 and 3.7, the Borrower shall furnish to theBank for its approval, prior to contract execution, a copy ofthe specifications and the draft contract. The contract shallbe executed only after the Bank has given its approval, andthe provisions in (h) of this paragraph shall apply withrespect to the executed contract. 46