procurement in projects financed by islamic development bank

Procurement in Projects Financed by Islamic Development BankCountry Procurement WorkshopSeptember 2015, Jakarta, Republic of Indonesia

Project Procurement (PPR) DivisionOperations Policy And Services Department (OPSD)

04. Procurement of Goods, Works, Services

Project Start-up Workshop

04.1 PrequalificationProject Start-up Workshop

Prequalification Process

4Republic of Indonesia, September 2015

Qualification and Experience

Requirement

Draft Prequalification Document sent to

IsDB

IsDB NOL Advertisement – SPN for Prequalification

Preparation and Submission of

Application Document

Prequalification Report sent to IsDB IsDB NOL

2 No Objection Letters (NOLs) required± 4months after advertisement

Project Procurement Division, OPSD


Prequalification

• Large or complex contracts, supply contracts of specialized equipment and machinery or turnkey contracts

Application

• To ensure that the bids are submitted by the firms who have relevant expertise and adequate resources

Purpose

• Eligibility• Experience and past performance (overall & on similar scope)• Capabilities• Current commitment of works in progress• Financial position during the past 3 to 5 years

Evaluation Criteria



Prequalification

• Saves cost of tendering for unqualified bidders• Improves participation by qualified firms• Identifies possible conflict of interest• Encourages joint ventures and pooling of resources

Advantages

• Increases procurement lead time • Requires reviewing all prequalification applications vs to only

one or two at post-qualification• Collusion/Price rigging easier with limited number of identified

tenderers

Possible disadvantages



Prequalification

• Description of Works, Size (Cost), Quantities• Type of Contract• Implementation Schedule• Prequalification requirements• Criteria for evaluation of applicants

Information Provided to Applicants

• Eligibility (Applicants’ Legal status, Form of JV) • Historical Non-Performance (litigations if any)• Financial Capability • Relevant experience

Information Requested from Applicants



Prequalification

• Use IDB Standard Pre-Q Documents/Forms• The time allowed for preparation and submission of PQ

applications — preferably eight weeks, • Public Opening is not necessary • Late submission (within reasonable time) not automatically

rejected• Evaluation is based on pre-set Pass/Fail standards; no scoring

system! • All firms who meet the criteria prequalified (No maximum or

limitation)

Submission and Evaluation of Applications



Notification and Advertisement in Prequalification

Specific Procurement Notice (SPN)• Advertised in the same manner as GPN, including in

terms of type of media and distribution channel• Choice of media in all working languages of IsDB (Arabic,

English & French)• At least in one local newspaper as well, twice on two

nonconsecutive days within a span of ten (10) days



Prequalification Document

PART 1 – Prequalification Procedures• Section I. Instructions to Applicants• Section II. Prequalification Data Sheet• Section III. Qualification Criteria and Requirements• Section IV. Application Forms• Section V. Eligible Countries• Section VI. Bank Policy - Corrupt and Fraudulent PracticesPART 2 – Works Requirements• Section VII. Scope of Works

Section I, V, VI shall not be changed or revised,

Sections II, III, IV VII shall be customized as per the

assignment,



Evaluation

Administrative & Legal Information

Legal status, registration, principal place of business,

ownership

Power of attorney of signatory of the

application/bid

Litigation record in the past # years

Criteria

Bidder shall be eligible to participate

Authorized person signs the bid

No consistent history of litigation or arbitration



Evaluation

TechnicalInformation

Works of “similar” nature & size (last # years or ongoing)

Major construction equipment proposed

Key site management & technical personnel

Proposals for subcontracting (≥ # percent)

Criteria

≥ # similar works.

Acquisition plan (own, lease, hire, etc.)

Contract Manager ≥ # years, Managers ≥ # years

As per requirement in the future bidding



Evaluation

Financial Information

Audited financial standings (past n years)

Value of construction works in each of last n years

Net liquid assets or credit facilities

Bank’s reference

Criteria

Valid financial information

≥ # x annual average of contract value

≥ # months of average contract cash-flow

Availability of working capital confirmed



Evaluation

Joint Venture Association

All information provided for each partner

Signed and legally binding on all partners

All partners are eligible (excludes MC requirement)

All partners are jointly and severally liable

One partner in charge & fully meets MC requirement

Partner in charge meets 40% technical and financial requirement

Other partners meets 25% technical and financial requirement

Combined JV meets 100% technical and financial requirement



Issues with Prequalification• Discouraging otherwise prospective firms to participate– Extra application forms which ask for excessively detail information– Requirement relevant only to local firms

• Discarding otherwise fully qualified firms– Ignoring permissible clarifications due to incomplete application– Over-emphasize on administrative aspects– Scoring instead of pass/fail with assessment on responsiveness

• Inclusion of otherwise non-qualified firms– Claiming experience of joint-venture partner(s) or parent company’s– Claiming incomplete/ongoing works– Low qualification threshold

• Reducing overall competition– Excessively high requirement



Key Success Factors in Prequalification

Wider advertisement.

Well-defined & sufficient evaluation criteria and its consistent application

Thorough and consistent evaluation

Rectify non-material deficiencies, avoid premature ‘disqualification’


04.2 BiddingProject Start-up Workshop

ICB or ICB/MC Single-Stage One-Envelope with Prequalification


Draft BiddingDocument

IDB NOL

Bid document sent to prequalified

firms

Bid Preparation (≥60-90 days) &Bid Submission

Bid Opening

Bid Evaluation

Bid Evaluation Report &

Recommendation

IDB NOLContract

negotiation, draft negotiated

contract

IDB NOL

Contract Award

3 No Objection Letters (NOLs) required± 5 months bid documents issuance



Bidding Process

• Tender submission, evaluation and contract award recommendation in one-stage

• Administrative, technical and financial bids are all submitted at one time and opened simultaneously for evaluation

• All opened bids are evaluated

Single-Stage One-Envelope Bidding



Documents Comprising a Bid

Bidder shall submit:

The Bid, following the format given in the bid document

Bid Security

Priced Bill of Quantity (BOQ)

Updated qualification Information forms and documents

Alternative offers (if allowed)



Bidding DocumentSpecifications and Standards• Shall be based on relevant characteristics, performance, capability, and quality, and

shall not prescribe brand names, catalogue numbers, or products of a specific manufacturer. If there is a need to quote then the words “or equivalent” shall be added after such reference. As far as possible, internationally accepted standards shall be specified.

Bid Validity Period (BVP)• Normally from 60 to 120 days and may be up to 180 days for large and complex bids. Bid Security • In the form and amount specified in the Bidding documents, generally 2% is considered

fair and reasonable. Shall remain valid for a period of 4 weeks beyond the BVP, and will be returned to unsuccessful bidders within 10 days after notification of contract award.

Alternative bids• Shall clearly be stated in the Bidding documents. The bidder shall first quote the price

for the method and specifications indicated in the bidding documents and secondly indicate the price for deviation or alternative solution. Only the alternative bid submitted by the substantially responsive lowest evaluated bid shall be considered.



Bids Submission & Opening

• Bids preparation shall not be less than 60 days for ICB or ICB/MC, and 90 days for large and complex contract.

• Invitation specifies date, time and place for bids submission & opening.

Bid Submission

• Time for bid opening shall be the same as for the deadline for bid submission.

• Bids received after deadline are returned unopened• Bids opened publicly and bidders’ attendance is encouraged and should

be facilitated.

Bids Opening

• Name of the bidder, total bid price, price of alternative bids - if any, any unconditional discounts

• Bid security amount and validity• Minutes of the meeting shall be recorded and kept, and a copy of this

record shall promptly be sent to all bidders and to IDB.

Read out Information



Bids Examination & Evaluation

• To verify substantially responsive bids: whether the bidding document has been signed, valid bid security provided, prices for all items have been quoted, if required, eligibility criteria is met. If the bids is not substantially responsive to the bidding document it shall be rejected and not be considered further.

• Complete basic data sheet Prepare record of bid opening Prepare table of bid price Examine bids for responsiveness

Preliminary

• Used to determine the cost of each responsive bid in a manner that permits a comparison on the basis of their evaluated cost in order to select the technically acceptable lowest evaluated bid price.

• Identify bids for detailed evaluation Evaluate bids in detail Apply corrections and errors Apply other adjustments (discount)

Evaluation



• Use single currency specified in the bidding documents

• The Rates to be used are the selling rates quoted by and official source (Central bank, Commercial bank or internationally circulated newspaper)

• The date shall not be earlier thank 4 weeks prior to deadline for bid-submission and not later than the original expiry date of the bids.

Exchange Rate



Bids Evaluation – Works

Review of BoQ & Correction of arithmetical Errors

• Correction of errors• Correction of Provisional Sum• Modification and Discount• Evaluation of Currency• Additions and Adjustment

Alternatives time

• Alternative times for completion can be permitted when the Employer sees potential net benefits in different times for completion.

• If permitted under ITB 13.2 of the Bidding documents, the method for evaluating the differences offered by bidders should be specified as a specific amount for each week of delay from a specified “standard” or minimum completion date related to the loss of benefits to the Employer.



1.Preliminary Examination• Verification• Eligibility• Bid Security• Completeness of Bid• Substantial Responsiveness

2. Detailed Examination• Correction of Errors• Correction of Provisional sum• Modifications & Discounts• Evaluation Currency• Additions• Adjustments• Priced Deviations

3. Determination of Award• Qualification (Post)• Alternative Bids• Proposed Award

Evaluation of the Bids – Evaluation Steps



Bids Evaluation – Goods

• delivery schedule;• the projected operating and maintenance costs during the life of the

equipment;• the cost of components, mandatory spare parts, and service;• the performance and productivity of the goods/equipment offered; • the availability in the Purchaser’s country of spare parts and after-sales

services; and/or• other specific criteria indicated in the Bidding Documents and/or in the

Technical Specifications.

Factors



Bids Evaluation – “Plants”

• Example approach: Life-cycle Cost Evaluation (LCC)

“Total Cost of Ownership”

• Evaluate and compare alternative products/equipment• Assess economic viability of projects or products/equipment

LCC Benefits

• Acquisition (design, investment, installation & commissioning), operation, maintenance

LCC Elements

• Determine time-frame for each element and guaranteed value of each element• NPV of total of all elements to be considered for recommending the winner

LCC Steps

• The evaluation period, guaranteed parameter within evaluation period but post defect liabilities period

Issues with LCC



Update of Qualification• The Bidder shall continue to meet the

criteria used at the time of prequalification.

• Updating and reassessment of the qualification information which was previously considered during prequalification will be required:– Eligibility, pending litigation, financial

situation– Specialized subcontractors– Financial resources– Personnel– Equipment



• The award of contract is subject to IDB’s prior approval.

• Upon receipt of IDB’s “no-objection”, the Beneficiary shall promptly inform the successful bidder.

• The Beneficiary shall furnish to IDB a copy of signed contract, together with first request for disbursement and the performance guarantee.

• Contracts awarded under ICB, ICB/MC and NCB must be published in an appropriate newspaper.

• A Contract which is awarded without IDB’s “no-objection” shall not be eligible for IDB financing.

Contract Award



Review by IDB of Procurement Decisions• Prior Review is carried out for all contracts

unless a specific threshold amount is indicated in the Financing Agreement

• Before bids are invited, the Beneficiary shall furnish to IDB for its comments:– Advertising procedure;– Draft bidding documents, including the invitation to

bid;– Instructions to bidders, including the basis of bid

evaluation and contract award; – Conditions of contract and specifications for supply

of goods, or installation of equipment, or the civil works.

• After bids have been received and evaluated, the Beneficiary shall, before a final decision on the award is made, furnish to IDB in sufficient time for its review, a detailed report on evaluation and comparison of the bids.



Review by IDB of Procurement Decisions• Post Review (for contracts below a

monetary threshold if specified in the Financing Agreement)

• The Beneficiary shall furnish to IDB, promptly after its preparation, the bid evaluation report and recommendation for contract award, for IDB’s comments and “no-objection”.

• IDB shall, if it determines that the award of a contract or the contract itself is not in consistent with the Financing Agreement, promptly inform the Beneficiary that paragraph 1.12 of the Guidelines on Misprocurement shall apply and state the reasons for such determination.



• National (small works or goods) or International (goods)• Comparing written price quotations• obtained from several suppliers (off-the-shelf goods or standard specification

commodities) • or from several domestic contractors (small works)

National Shopping



• Reputable suppliers or contractors: provide the intended goods or construction works as part of its core business activities

• A minimum of three fully qualified quotations are compared, for international shopping of goods – at least from 2 MCs

• Reasonable time to submit quotation (10-30 days).• Goods: description, technical specifications, quantity and cost of the goods,

including the cost of inland transportation and insurance if applicable, estimated delivery time if not immediately available.

• Works: necessary drawings, estimated quantities, and completion time.• Shall be given in writing and may be submitted by electronic transmission

(e.g. telex or facsimile).• Opened at the same time, read out in public before the solicited suppliers or

contractors or their representatives, evaluated and compared at the same time.

• Brief report prepared• Post-review applicable below agreed threshold

National Shopping - Requirement



Key Success Factors in Tender for Goods and Works

Wider advertisement.

Well-defined & sufficient evaluation criteria and its consistent application

Thorough and consistent evaluation

Rectify non-material deficiencies, avoid premature ‘disqualification’



Question and Answer


Republic of Indonesia, September 2015

Thank YouProject Procurement Division

Operation Policy and Services Departmentwww.isdb.org, [email protected]

prepared by Amirmehdi AsghariSenior Project Procurement Specialist

[email protected]

أفضل مستقبالً نبني معاً Together we build a better future

Ensemble nous construisons un avenir meilleur

10Project Procurement Division, OPSD

http://www.isdb.org/

mailto:[email protected]