The document provides guidelines for procurement of goods, works and consulting services for projects financed by IFAD. It outlines the key responsibilities and principles of procurement which emphasize economy, efficiency, fairness and transparency. It describes the different methods of procurement for goods, works and consulting services and the processes that should be followed, including eligibility rules, advertising of bids, evaluation criteria, and contracting.

1. IFAD Procurement Guidelines (as amended by EB in December 2004) Dec 2010

2. General

3. Purpose of the Guidelines Provide guidance to entities implementing projects financed by IFAD about policies & procedures governing procurement of goods, works & consulting services The Financing agreement and/ or LTB govern the legal relationships between the Borrower & IFAD The r ights & obligations between the Borrower & its providers are governed by the bidding documents & signed contracts and not by the Financing Agreement or Guidelines

4. Contents of IFAD Procurement Guidelines Part A Part B Applicable procurement principles Procurement of Goods & Works (includes related services) : Part C Selection of Consulting Services Methods, policies & procedures for selection of Consultants Methods of procurement Procedures for competitive bidding PARTS: APPENDICES: Procurement Review by IFAD for Goods, Works & Services Procurement arrangements under IFAD- funded projects with community participation Domestic preference for Goods under ICB

5. Responsibilities under the Agreement establishing IFAD Art 7.1(c) Use of funds for the purposes intended with due attention to economy, efficiency & social equity Art 7.2(j) Appropriate preference to experts, technicians & supplies from developing countries Borrower is responsible for Project implementation; IFAD must ensure:

6. Overall considerations Economy & efficiency Equal opportunity to all eligible bidders Fairness, integrity, transparency & good governance Development of domestic capacity as well as appropriate preference to experts, technicians & supplies from developing countries Competition as per procurement methods prescribed in Guidelines & specified in Project’s approved procurement plan

7. Project specific considerations In accordance with Financing Agreement (FA) Executed within project implementation period Within budget allocations of FA Consistent with Project’s approved AWPB & Procurement plan Conducive to achieve Best value for money Procurement of Goods, Works & Consulting services shall be:

8. Applicability of the Guidelines Apply to all contracts for goods, works & services financed in whole or in part by IFAD For procurement of contracts not financed by IFAD: Quality and compatibility with rest of project Timely execution Priced at economic level that does not affect financial viability of project

9. Eligibility Rules Change from September 2010: Goods, works & services provided by firms & individuals no longer have to be from IFAD member countries Pre – or post – qualification not to be denied for reasons other than capability and resources

10. Eligibility Rules – Exceptions Primary boycott UN s ecurity council resolution Conflict of interest Government owned enterprises have to prove that they are: Legally & financially autonomous Operating under commercial law Independent agencies of the Borrower Declaration of ineligibility due to fraud & corruption

11. Advance Contracting & Retroactive Financing When borrowers wish to start procurement before loan signing Procurement to follow IFAD guidelines (reviews by IFAD) Reimbursement only upon signature of Financing agreement (limits set in agreement)

12. Joint ventures Encouraged IFAD does not accept joint ventures to be made mandatory

13. Joint ventures Procedures detailed in Annex I To ensure that procurement process is carried out in accordance with the guidelines, IFAD reviews: Procurement procedures Bidding documents Composition of bid evaluation committees Bid evaluations Award recommendations Contracts

14. Misprocurement IFAD does not finance expenditures for contracts procured not in accordance with provisions in the Financing agreement and in the Procurement plan Respective portion of financing allocated to such contracts is cancelled Misprocurement can be declared also after IFAD’s no objection

15. Fraud & corruption IFAD’s policy to ensure observation of highest standards of ethics Corrupt practice = offering, giving, receiving, soliciting (directly or indirectly) anything of value to influence action of public official during procurement process Fraudulent practice = misrepresentation or omission of fact (prior to or after submission of proposal) to influence the process Collusive practices = scheme or arrangement between two or more bidders to establish bid prices at a non-competitive level Coercive practice = harming persons – or their property – to influence their participation in the process In case of fraud and corruption, IFAD will: Reject award recommendations Cancel relevant portion of loan if borrower fails to take action Sanction firms or individuals involved and declare ineligible for stated or indefinite period of time IFAD has the right to require a provision in the bidding documents / RFP enabling IFAD’s inspection & audit of accounts related to contract

16. Procurement of Goods & Works

17. Part B – Procurement of Goods & Works Selection of appropriate procurement method critical for meeting project’s needs ICB incorporates all the guiding principles of procurement & should be selected, where appropriate, with suitable allowance for domestic preference for goods &, under prescribed conditions, for works Where ICB is clearly not most economic & efficient method , such as: Project sites located in remote & scattered areas Project implementation undertaken with community participation Values too low to attract foreign bidders other methods may be selected by Borrower

18. Part B – Procurement of Goods & Works Suited to high-value requirements International business community are interested in participation Provides all eligible bidders timely & equal opportunity to compete

19. Other Methods of Procurement Must satisfy economy & efficiency requirement Provide competition to the extent possible Get the best value for money (prices reasonable ?) Provide transparency to the extent possible

20. LIB – Limited International Bidding Amounts are small, or There are only a few suppliers, or Other exceptional reasons that justify departure from full ICB Appropriate when : No public advertising Solicit bids from all suppliers when there are only a limited number Procedures otherwise identical to ICB No domestic preference Publication of Contract Award Procedure :

21. NCB – National Competitive Bidding Governed by National Law & Procedures & is appropriate when : Foreign bidders are not interested Amounts are small & local prices are below international market levels Nature of goods & works – dispersed geographically and/or over time Works are labour-intensive Advertising limited to national press , official gazette & free open-access website Bidding documents in national language National Procedures must provide for adequate competition , access, objective evaluation, transparency & provisions for bidders’ protests Payment in local currency

22. International or National Shopping Appropriate for : Low Value goods & works Off-the-shelf goods or simple works Standard specification commodities No formal bidding documents Requests for quotations to provide description and quantity of goods, delivery time and place Written quotations Quotations by telex, facsimile or e-mail acceptable At least three quotations (to ensure competitive prices) International shopping Solicit quotations from at least three suppliers in two countries National shopping Goods available from more than one source No public bid opening of quotations Brief contract or Purchase order

23. Direct Contracting (Single or Sole-source Selection) Accepted by IFAD for: Extension of existing & usually competitively-awarded contract Rationale: Standardisation Proprietary items Process design requires critical items from specific supplier as condition of contractor providing performance guarantee In exceptional cases such as response to natural disaster

24. Procurement from Commodity Markets Prices of commodities fluctuate based on demand and supply & are quoted in established markets at any given time Multiple awards for partial deliveries over a given period to ensure security of supply/adequate inventory & to capture favorable market conditions Contract forms c onsistent with market practices List of pre-qualified bidders to be invited Price quotation linked to market price at the time or prior to shipment Bid v alidity as short as possible Quotation may be telexed or faxed (if no bid security is required or if a standing one is prescribed) and payment in a single currency (as specified in the bidding documents)

25. Force account : (Borrower’s Own Personnel & Equipment) Quantities cannot be defined in advance Works are small & scattered or in remote areas where qualified bidders are unlikely to offer reasonable prices Works to be carried out without disrupting ongoing operations Risks of unavoidable work interruption better borne by borrower than contractor Emergencies needing prompt action Appropriate for works, when:

26. Procurement from UN Agencies Procurement from specialized UN agencies , acting as suppliers pursuant to own procedures, may be most economical & efficient way to procure small quantities of off-the-shelf goods Use of such agencies as suppliers shall be specified in Financing agreement

27. Procurement Agents & Management Contractors When borrowers lack the necessary experience to deal with international procurement Agents shall follow procurement procedures stipulated in the Financing agreement Management contractors may also be similarly hired, against a fee, for works

28. Inspection Agents For pre-shipment inspection & certification of imports (quality , quantity & verification of price) Safeguards borrower’s interest in imports procured under ICB Costs are ordinarily paid on a fee basis calculated as a % of the value of imported goods (inspection costs are not considered in bid evaluation)

29. Procurement in Loans to Financial Intermediaries Where loan proceeds are used by an intermediary institution to on-lending to beneficiaries (individual farmers , farmer groups/ associations, private sector micro-enterprises, etc…), procurement method may be: Established l ocal private sector or commercial practices ICB for large single items or bulk purchasing of common-use goods

30. Procurement with Community Participation Community participation in procurement (to achieve specific social objectives or project sustainability) may be desirable for selected project components, whereby : Call for participation restricted to local community, community groups OR local institutions, CSOs & NGOs Increased utilisation of local know-how & materials Employ labour-intensive or other technologies Procurement procedures, tech. specifications and contract packaging simplified (respecting economy, efficiency & social equity) . These are considered at appraisal & reflected in FA & procurement plan

31. Procedures for Competitive Bidding Timely notification Publication following IFAD’s review in UNDB or dgMarket . Contains info on Loan, Borrower, scope of ICB & expected dates for release of bid/prequalification documents Borrower to maintain record of bidders interest Specific Procurement Notice One newspaper of national circulation & official gazette (if any) as well as regional & international newspapers UNDB &/or dgMarket Also forwarded to bidders who responded to GPN Borrowers encouraged to submit to embassies, trade representatives & electronic bulletins & project website

32. Bidding Documents Invitation to bid Instructions to bidders Form of bid Form of contract Conditions of contract (general/special) Specifications & drawings Relevant technical data List of goods/ bill of quantities Delivery time/ schedule of completion Appendices (formats for securities) Bidding document shall furnish all information necessary for a prospective bidder. They generally include:

33. Specifications & Standards Drafted to encourage competition & define precisely the works to be carried out or the goods to be supplied. Standards & technical specifications quoted in bidding documents shall promote the broadest possible competition . In indicating specifications, reference to brand names, catalogue numbers or similar classifications shall be avoided if it is necessary to quote a brand name to clarify an otherwise unclear specification, the words “or equivalent” shall be added. As far as possible, borrowers shall indicate internationally accepted standard s such as those issued by the international standards organization.

34. Bid Opening Same as deadline for bid submission or promptly thereafter Public opening Date and hour specified in invitation to bid Bids not opened in public session are not to be considered

35. Extension of Validity of Bids Requested in writing, if justified in exceptional circumstances IFAD to be notified Minimum period required to complete evaluation & award

36. Pre & Post – Qualification For large or complex works, custom designed equipments, industrial plants, turnkey contracts or – in general – for complex assignments Criteria: Experience and past performance in similar contracts Capabilities to perform Financial position All participating firms to be informed of result of pre-qualification Only prequalified bidders are invited to participate in bid To determine whether bidder with lowest evaluated cost has capability and resources to carry out contract Pre-qualification Post-qualification

37. Examination & Evaluation of Bids Borrowers should ascertain that bids: Meet eligibility requirements Have been duly signed Contain the required securities Are substantially responsive & generally in order GPN published following IFAD’s review in UNDB or dgMarket. Contains info on Loan, Borrower, scope of ICB & expected dates for release of bid/prequalification documents Bids which are not substantially responsive shall not be considered further

38. Confidentiality Evaluation is to be conducted confidentially No information relating to the evaluation, clarifications & recommendations is to be released to bidders or other persons not officially concerned until publication of contract award

39. Domestic Preference Borrowers may - with the agreement of IFAD - grant a margin of preference of 15% in the evaluation of domestic bids in ICB to those bids offering goods with more than 30% labour , raw material and components added in borrower’s country Eligible borrowers may, with the agreement of IFAD, grant a margin of preference of 7.5% to domestic contractors, in case of contracts for works to be awarded on ICB basis

40. Rejection of All Bids Lack of competition No responsive bids Prices substantially higher than forecasted In such case, Borrowers shall review bidding documents before re-tendering Justified in case of:

41. Currency of Bid & Payments Bidding documents shall state: Currency(ies) applicable for bid prices Conversion procedure into single currency for bid evaluation purposes Currency(ies) applicable for contract price payments Payment terms to be in accordance with Commercial practice Disbursement provisions established in LA Payments may be made As a reimbursement to Borrower Directly to suppliers/ contractors (as per Borrower’s request) By means of a special commitment to L/C By the Borrower out of special account

42. Price Adjustment Bid prices will be fixed Price adjustment is applicable to reflect changes in major cost components such as Labor Equipment Material Fuel Price adjustment is generally applied in contracts involving delivery of goods or completion of works which duration exceeds 18 months Bidding documents shall indicate if:

43. Validity of Bids & Bid Security Bidders shall submit bids valid for a period specified in bidding documents , in order to enable the borrower to compare and evaluate all received bids. Borrowers may require a bid security to protect themselves against irresponsible bids. The amount of bid security should not be set so high as to discourage bidders. Bid security to r emain valid for 4 weeks beyond validity period

44. Performance Security & Retention Money For works contracts Performance security (bond or bank guarantee): protects borrower in case of breach of contract To be of adequate duration to cover: Defects liability period Maintenance period up to final acceptance Alternatively, specific % can be foreseen as retention money in periodic payments

45. Insurance To be provided from any eligible source Bidding docs to reflect national rules with respect to types & terms of insurance policies to be provided

46. Liquidated Damages & Bonus Provisions for liquidated damages when delays in delivery of goods or completion of works would result in extra costs should be included in conditions of contract Provision & c onditions for bonus may be made

47. Force Majeure Failure to perform is not considered a default If it is due to an unforeseeable event (force majeure)

48. Language of Bid Documents Bidding & Prequalification documents in Arabic English French Spanish Contracts with local bidders may be drafted in national language

49. Applicable Law & Settlement of Disputes Specified in the contract IFAD or Cooperating institution shall not be named or asked to name the arbitrators

50. Procurement of Consultancy Services

51. Differences Between Procurement of Goods & Works Selection of Consulting Services product based knowledge based open competition (advertise) expression of interest followed by selective competition (short list) price is major factor price is one of the factors detailed specifications (bid documents) general work program (term of reference) single envelope procedure two envelope procedure negotiations rare negotiation usual invitation for bids (IFB) request for proposals (RFP) bid and performance securities no securities recommended

52. Selection of Consulting Services Define policies and procedures for selecting, contracting and monitoring consultants in project financed by IFAD in whole or in part The variety of consultants is described in following slides

53. Conflict of Interest Conflict between consultants activities & procurement of goods, works or services Conflict among consulting assignments Consultants shall provide their advice holding the clients’ interest paramount and avoid conflicts with other assignments/interests. Therefore, consultants shall not be hired under the following circumstances:

54. Terms of Reference (TOR) Background information Review of previous work Statement of objectives Scope of work needed Scheduling & relationship to other work Data & reports available Inputs provided by client Expected outputs by consultant TOR not to be too detailed or inflexible thereby allowing consultants to propose own methodology & staffing Contents

55. Cost Estimate (Budget) To be based on borrower’s assessment of the resources needed: Staff time Logistical support Physical inputs To be divided in 2 categories Fee or remuneration Reimbursable

56. Short List of Consultants Borrower’s responsibility First consideration to firms expressing interest & possessing relevant qualification Comprise 3 to 6 firms No more than 2 firms from same country At least 1 firm from a developing country I FAD may ask to expand or reduce short list

57. Types of Consultants Individual Partnership Limited liability (corporation) Joint venture Private sector Other Universities Research institutes Un agencies Non-government organizations Divisions of manufacturers/ contractors Government owned Government subsidized Public sector

58. Types of Consulting Services Detailed studies Design & specifications Preparation of bidding documents Pre investment Sector studies Feasibility studies Project preparation Advisory services , studies, training Institution & management analysis Capacity building Implementation Procurement Project management Construction supervision & inspection Information systems Accounting & auditing Technical assistance

59. QCBS Selection Steps Prepare term of reference (TOR) Cost estimate (budget) Prepare expression of interest notice Prepare short-list Prepare & issue request for proposals (RFP): letter of invitation - information to consultant (ITC) - proposed contract Receipt of proposals Evaluate technical proposal Evaluate financial proposals Final evaluation of combined quality and cost Negotiation and contract signature

60. Evaluation of Proposals: Consideration of Quality & Cost The evaluation of proposals to be carried out in two stages: first quality & then cost Evaluators of technical proposals should not have access to financial proposals until the technical evaluation, including any review & no objection, is concluded The evaluation to be carried out in full conformity with provisions of RFP

61. Evaluation of the Quality Relevant experience of firms Relevant assignment, similar size, complexity, technology, environment Methodology Schedules, responsiveness to TOR, logistics, backstopping, innovativeness, level of detail Qualification of key staff Team composition, professional qualifications/experience, suitability, local knowledge, language, training, permanent staff Transfer of knowledge Extent of participation by nationals amongst key staff (up to 10 points) Reject non-responsive proposals or those scoring below quality threshold established in RFP Evaluation report of quality of proposals: establishes relative ranking of proposals & explains weaknesses/strengths (relative marks sheets to be kept until project completion & its audit) By committee of 3 or more specialists

62. Evaluation of Cost Return unopened financial envelopes of non-responsive consultants & those scoring below threshold Notify consultants that scored above threshold of date & time set for opening of financial envelopes Announce name of consultant, quality score & offered price & prepare minutes of public opening Correct arithmetic errors, convert to single currency as per RFP For evaluation purposes cost excludes local taxes but includes reimbursable , etc. A direct proportional or other methodology (as established by RFP) may be followed to allocate marks for the cost element Proposal with highest total score is selected & invited for negotiations Upon receipt of IFAD’s no-objection to quality evaluation : The weight for cost is allocated depending on complexity of assignment but normally 20 percent

63. Other Method of Selection To be used when QCBS is not appropriate or In case of highly specialized assignments when quality is most important factor Methods to apply to be specified in Financing agreement

64. Quality-based Selection Complex or highly specialized assignments : no precise TOR, innovation needed (e.g., economic or sector studies, etc.) High downstream impact (e.g., feasibility studies, dams, policy studies, etc.) Non-comparable outputs (e.g., management advice, policy studies, etc.) Appropriate for:

65. Selection under a Fixed Budget For simple and well-defined assignments where the budget is fixed. RFP indicates available budget. Technical evaluation first followed by public bid opening of financial envelopes Award to highest ranked technical proposal within budget

66. Least-cost Selection Appropriate only for assignments of a standard or routine nature Minimum qualifying mark for quality stated in RFP Competition only on cost

67. Selection based on Consultant’s Qualifications Prepares TOR Requests expression of interest with information on consultant’s experience & competence Selects most appropriately qualified firm Firm then presents combined technical & financial proposal for negotiations For “very small” assignments :

68. Single Source Selection Exceptionally used since: No competition No transparency Encourages unacceptable practices IFAD can consider this method for: Continuation of previous work awarded in a competition (envisaged by original RFP, necessary for continued same consultant liability) Rapid selection in emergency situations Very small assignments Exception experience

69. Types of Consultants Teams are not required No outside support (backstopping needed) Individual experience & qualifications paramount Terms of Reference Qualification of Consultant (CV) Conditions of Employment (remuneration & benefits, simple contract, work environment) Less formal than hiring firms Advertisement not required Short List mandatory (at least 3 candidates) Use When: Review Selection

70. Selection of Particular Types of Consultants Selection of UN agencies as consultants Advantages neutralized for evaluation/ comparison (borrower may accept granting immunities/privileges, tax exemption, special payment terms provided these are neutralized in competitive selection) Use of Civil society organizations (CSOs) Non-profit organizations. For community participation projects, with special local knowledge requirements, short-list may be all CSOs Procurement agents (PAS) To be selected using QCBS procedures with cost being given a weight up to 50%. Usually paid a % of value of procurement handled, or combination of % and fixed fee. When PAS provides advisory services/ acts as “agents” for a whole project, payment made on a time basis Inspection agents To be selected using QCBS procedures with cost being given a weight up to 50% & using a contract format with payments based on a percentage of the value of goods inspected and certified Auditors To be selected according QCBS with cost as a substantial selection factor (40 - 50 points), or by “least-cost selection”; LCS may be used for very small assignment Service delivery contractors Frame work contracts. (For hiring large numbers of social workers with defined qualifications & employment terms)

71. Procurement of Services Long-Term and Large Assignment Example: One NGO to perform a full component or sub-component of the project over several years RFPQ CBS EVALUATION TWO STAGES : Technical Evaluation (70 or 100 points) Financial Evaluation (30 points) Letter of invitation (LOI) with conditions of bidding and evaluation system and negotiations process; Background of the Project (Appraisal Report); Scope of services + specific TORs for experts; Forms for Technical Proposal (previous experience, CVs, comments on assignment, planning M & E, reporting …); Forms for Financial Proposal (management fees, AWPB….) CONTRACTS Contract Complex Time Based on AWPB Contract Complex Time Based If EOI before may be RFP under fixed budget, least-Cost selection

72. Procurement of Services Medium Short Term Assignment Example: One consultancy firm to undertake a baseline survey lasting several months RFPQ CBS EVALUATION TWO STAGES : Technical Evaluation (70 or 100 points) Financial Evaluation (30 points) Letter of invitation (LOI) Background of the Project Scope of services + specific TORs for experts + outputs Forms for Technical Proposal (previous experience, CVs, comments on assignment, planning M & E, reporting …); Forms for Financial Proposal (management fees, AWPB….) CONTRACTS Contract Complex Time Based Contract Lump Sum Remuneration Also RFP based on consultants qualification, least cost selection, fixed budget

73. Review by IFAD

74. Appendix 1: Review by IFAD Contract packaging Applicable procedures Scheduling of procurement process IFAD reviews the procurement arrangements proposed in the procurement plan for its conformity to Financing agreement, including:

75. Procurement Plan Procurement plan of first 18 months to be agreed during project preparation Procurement plan shall include: All major procurements Proposed methods of procurement Related IFAD review procedures Procurement plan to be updated after loan effectiveness

76. Prior Review – Goods & Works Prequalification documents Bidding documents (before bids are invited) Evaluation report & contract award Change in contract further complaints from bidders Contract modifications Borrowers should request IFAD’s no-objection for:

77. Post Review – Goods & Works Borrower shall retain procurement documentation up to 2 years after project closing date Documentation shall be furnished to IFAD upon request Mis-procurement if inconsistency between contract & Procurement plan/ Financing agreement

78. Prior Review - Consultants Proposed cost estimate & RFP (including short-list) before inviting proposals Technical evaluation report (consistent with provisions of RFP); if price is a factor, Borrower can open financial envelope after receipt of no-objection For info: Final Evaluation Report (combined technical + financial) with proposed award for winner Copy of complaints – if any – should be sent to IFAD If the result of a complaint brings the Borrower to change contract award recommendation, this should be sent to IFAD for NO No-obj. based on copy of initialed negotiated contrac t with explanation of any changes in TOR, staff etc., Copy of final contract prior to first disbursement Borrowers should request IFAD’s no-objection for:

79. Procurement of Goods & Works with Community Participation

80. Introduction Community participation in design & implementation is highly desirable Procurement with community participation consists of a simplification of existing methods & shall be outlined in the Financing agreement

81. Benefits of Community Participation I ncreased relevance of project assistance Enhanced community ownership Contribution to a reduction in poverty Increased economy & efficiency Enhanced capacity & skills within the community & consequent generation of employment

82. Considerations during Project Design Borrower’s regulatory framework Organizational capacity Existence or lack of formal community organization Institutional capacity to undertake resource management responsibilities Homogeneity with the beneficiary community group Existence of methods to ensure accountability Capacity and technical skills Administrative & accounting skills Intermediaries Cost-benefit analysis Beneficiary community’s contribution Checklist to be followed/modified by project designers to determine whether & how the community will play a constructive & beneficial role

83. Quantity and Value of Procurement Once the goods, works & related services to be procured are identified, estimation of quantity of goods & amount of works & services is critical for procurement planning & preparation When quantities to be procured are undetermined until project implementation (demand-driven), it may be permissible to allocate funds out of the loan as “undetermined procurement”

84. When community groups are supposed to act as implementing agencies and carry out project implementation, the following factors are to be considered: Community Groups as Implementing Agencies Organizational capacity Rules of operation Accountability of group leaders Ability to receive public funds Ability to contract Dispute resolution Financial status

85. Thank you