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TRANSCRIPT
Central Asia Regional Economic Cooperation Corridors 1 and 6 Connector Road (Aktobe–Kandyagash)
Reconstruction Project (RRP KAZ 52286)
Project Procurement Risk Assessment and
Management Plan (P-RAMP)
Country: Kazakhstan
Project: CAREC Corridors 1 and 6 Connector Road (Aktobe–
Kandyagash) Reconstruction Project Project Number: 52286-001
Sector: Transport
Source of Funding: TA 9134-KAZ
Date: October 2018
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Contents
Abbreviations and Acronyms ....................................................................................................................................... 3
I. Executive Summary ......................................................................................................................................... 4
II. Introduction ..................................................................................................................................................... 6
III. Project Procurement Risk Assessment ...................................................................................................... 11
A. Overview ........................................................................................................................................................ 11
B. Strengths ........................................................................................................................................................ 16
C. Weaknesses ................................................................................................................................................... 16
D. Procurement Risk Assessment and Management Plan (P-RAMP) ................................................................ 17
IV. Project Specific Procurement Thresholds .................................................................................................. 31
V. Procurement Plan .......................................................................................................................................... 31
VI. Conclusion .................................................................................................................................................. 31
Annex 1 – Procurement Questionnaire ..................................................................................................................... 32
Annex 2 – Draft Procurement Plan ............................................................................................................................ 45
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Abbreviations and Acronyms
ADB ............................................................................ (Asian Development Bank)
Agency ....................................................................... (KazAvtoZhol)
CE ............................................................................... (Cost Estimate)
CS ............................................................................... (Consultancy Services)
CSPRA ......................................................................... (Country and Sector/Agency Procurement Risk Assessment)
CW .............................................................................. (Civil Works)
EA ............................................................................... (Executing Agency)
EBRD .......................................................................... (European Bank for Reconstruction and Development)
GRM ........................................................................... (Grievance Redress Mechanism)
PMU ........................................................................... (Project Management Unit)
PP ............................................................................... (Procurement Plan)
PPL ............................................................................. (Public Procurement Law)
P-RAMP ...................................................................... (Project Procurement Risk Assessment and Management Plan)
ToR ............................................................................. (Terms of Reference)
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I. Executive Summary
1. Overall Assessment of Project Procurement Risk
ADB requires that project and agency procurement risks be assessed and mitigated at
the project level as part of project preparation. The project/agency procurement risk
assessment is intended to (i) identify risks in agency procurement systems and/or
practices that could result in sub-optimal use of national and/or ADB resources; (ii)
assess the severity of the risk; and (iii) develop a practical risk management plan to
address high or significant procurement risks at the project level which could adversely
impact project implementation and/or achievement of project outcomes.
A project procurement risk assessment was conducted based on the following
assumptions:
• Standard bidding documents to be used under the main CW Contract(s) will be
based on ADB SBDs – Large works, 1 Stage 2 Envelope;
• The role of Executing Agency will be taken by government Joint Stock
Company KazAvtoZhol;
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• ADB procurement policy1 and ADB regulation2 will be applied to the proposed
project.
To identify and mitigate possible risks, the present Project Procurement Risk
assessment was launched in December 2017 and finalized in September 2018. It aims
at scrutinizing in detail current procurement practices and capacity of the EA,
determining its capability in handling the upcoming challenges and proposing capacity
building activities.
As a result of this study, the overall procurement risk of the project was identified as
“Extreme” on the scale of Extreme, High, Medium and Low. A summary of main
weaknesses of the EA are described in the following paragraph.
2. Summary of Weaknesses and Risks Identified at Project Level
I. Low level of English proficiency in the procurement unit, as well as the agency
overall;
II. Overcommitted procurement staff not having enough capacity to undertake
procurement under proposed project;
III. Limited knowledge, experience and trainings in IFI procurement rules –
absence of knowledge, experience and trainings in ADB procurement rules and
procedures;
IV. Lack of knowledge, experience and trainings in FIDIC contract modality;
V. Absence of PMU for the proposed project;
VI. No complaints resolution / grievance redress mechanism in the agency or in the
Contracts signed under agency’s proprietary procurement rules;
Above is the summary of main procurement risks identified during the assessment and the
detailed list of all risks is provided in main body of the report.
3. Summary of Recommendations and Proposed Mitigation Measures
I. The EA must be supported by a Procurement Consultant to assist them in
development of the procurement documents and in the evaluation procedures,
to guide them up to the point of signing the Contract(s);
II. It is recommended that the ruling language for bidding documents be English,
while the IA may issue unofficial Russian translations in order to facilitate
preparation of bids by local bidders. In addition, requesting the bidders to
submit bids in English accompanied with Russian Translation will also support
the evaluation process, as the members of tender committee do not speak
English, but in any case English should remain as a ruling language throughout
the procurement process.
1 ABD Procurement Policy – Goods, Works, Nonconsulting and Consulting Services (2017, as amended from
time to time) 2 Procurement Regulations for ADB Borrowers - Goods, Works, Nonconsulting and Consulting Services (2017,
as amended from time to time)
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III. It is recommended to compose two groups from the key staff of EA to undergo
capacity building trainings. Group 1 – (Procurement) composed of at least head
of procurement unit and at least one specialist – to undergo preferably 2 weeks
training in ADB procurement guidelines; Group 2 – (Contract Management)
composed of at least 1 person from procurement unit, 1 from legal unit, 1 from
financial unit and preferably 2 persons from road maintenance unit – to undergo
preferably 10 days / 2 weeks training in FIDIC Contract management.
IV. It is a strong recommendation that ADB procurement regulations and standard
procurement documents be applied to all procurement transactions under the
proposed project through relevant indications in the Loan/Financing
Agreement. ADB procurement rules must obtain legal force and prevailing
power over local legislation, in order to avoid any cases of conflicting
regulations. Such approach is necessary because (together with all other
reasons) the project is targeting international bidders as well as local and if the
project will employ EA’s procurement rules, there is a very high risk that
international bidders will not be able/interested to prepare bids under such
procurement rules which may result in very low or no competition at all.
V. It is recommended that ADB provides increased oversight on all procurement
activities under the proposed project and also on the contract management part
at least in the first years (as it is also required by the new procurement
regulations for ADB borrowers (2017)).
The detailed list of risks and respective mitigation measures is provided in the P-RAMP, in the
main body of the report.
II. Introduction
1. Methodology of Procurement Risk Assessment
Current assessment under PPTA (Project Preparatory Technical Assistance) TA-9134
KAZ was prepared in accordance with the ADB (Asian Development Bank) Guide on
Assessing Procurement Risks and Determining Project Procurement Classification
dated August 2015.
The CSPRA (Country and Sector/Agency Procurement Risk Assessment) was
undertaken from December 4 to December 8 (inclusive) 2017. Preparation activities
included reviewing documents, ADB’s ongoing procurement experience, and
interviews with counterpart and discussions with stakeholders.
2. Background and Objectives: ADB requires that project and agency procurement risks
be assessed and mitigated at the project level as part of project preparation. The
project/agency procurement risk assessment is intended to (i) identify risks in agency
procurement systems and/or practices that could result in sub-optimal use of national
and/or ADB resources; (ii) assess the severity of the risk; and (iii) develop a practical
risk management plan to address high or significant procurement risks at the project
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level which could adversely impact project implementation and/or achievement of
project outcomes.
Key objective is to improve procurement performance, reduce procurement time,
increase administrative efficiency, improve procurement harmonization in the country
with financing from different IFIs and improve project delivery while maintaining
sound fiduciary oversight.
3. Scope of the task3: The scope includes the following tasks: a) Carry out an assessment
of the EA (Executing Agency) to conduct procurement of Goods, Works and Services
in terms of staffing capacity, equipment, existing procurement operations, procedures,
oversight and control; b) Undertake project procurement risk assessment and prepare
P-RAMP (Project Procurement Risk Assessment and Management Plan) for the
proposed loan; c) based on P-RAMP, suggest a suitable capacity building program to
strengthen institution’s capacity, mitigate weaknesses and address constraints; d)
prepare a draft PP (Procurement Plan) with appropriate procurement methods and
bidding procedures assigned to each package under the proposed loan.
4. Overall Country Context and Governance Environment4: In 2012, Kazakhstan has
adopted “Kazakhstan-2050” Strategy: new political course of the established state”
which was announced by President of Kazakhstan in his annual Address to the People
of Kazakhstan, endorsed by Presidential Decree No. 449 dated 18 December 2012. This
strategy inter alia focusses on need for investment in infrastructure including in road
and energy sectors.
Country Partnership Strategy (CPS) (2012-2016) of August 2012 built on ADB’s
experience to support rehabilitation and development of infrastructure and utilities,
with a focus on transport, energy and municipal services sectors. A new CPS (2017-
2021) of September 2017 identifies future priorities in development partnership
between ADB and Government of Kazakhstan, where transport sector represents 28%
of the resource package (out of 6 sectors).
5. Brief description of the proposed project: The proposed project consists of the
Reconstruction of Aktobe–Kandyagash Road. The total length of the Aktobe–
Kandyagash Road is 150 km to be divided to three lots. The lot 3 with a length of 60
km will be financed by the government, and the procurement is ongoing aiming at
starting construction in late 2018. The remaining two lots are proposed to be financed
by ADB.
The project starts from 11 km south of the City Aktobe, and it aims at reconstructing
and upgrading about 93 km of a deteriorated section from Aktobe to Kandyagash from
the existing Category II or III to Category I (dualizing the existing 2-lane to 4-lane).
6. Project Rationale and Linkage to Country/Regional Strategy5: Kazakhstan is a
landlocked country with predominant dependence on roads for trade and movement.
Recognizing this, the Government of Kazakhstan adopted several strategic policies and
plans identifying strong transportation services as one of the key elements for
promoting national security, political stability, economic growth and diversification,
3 ToR (Terms of Reference) TA-9134 KAZ: Procurement Specialist (International) (48399-003) 4 Kazakhstan: COUNTRY/Sector PROCUREMENT RISK ASSESSMENT REPORT (2017) (September 2017) 5 Kazakhstan: Road Maintenance Sustainability Project – Project Data Sheet (https://www.adb.org/projects/48399-003/main#project-pds)
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and social development. In November 2014, the President of Kazakhstan introduced a
new economic policy, Nurly Zhol, which includes development of the transport
infrastructure as one of the first priorities for the government. Subsequently, the
government adopted a Strategic Plan 2014-2018, which identifies maintenance
backlog, high capital cost of road rehabilitation, and other shortfalls amongst the main
bottlenecks to be addressed in the road maintenance sector. The State Program for the
Transport Infrastructure Development of Kazakhstan 2020, which has been prepared
based on the Strategy Kazakhstan 2050, necessitates introduction of performance-based
and defect-free road maintenance contracting arrangements in the road maintenance
sector by 2017. The Government of Kazakhstan is strongly committed to the
development of the road transportation services through a combination of institutional
and regulatory reforms and further liberalization of the sector.
In February 2013, the government established a national road operator, Joint Stock
Company KazAvtoZhol, which is responsible for the procurement and supervision of
mid-term and capital repair works funded by the government. Republican State
Enterprise Kazakhavtodor is responsible for routine maintenance. In 2014, the Ministry
of Investment and Development (MoID) was created as the successor of the Ministry
of Transport and Communications. Under the MID, the road sector is managed by the
Committee of Roads (CoR). Both KazAvtoZhol and Kazakhavtodor report to the CoR.
The proposed Reconstruction of Aktobe–Kandyagash Road Project and Atyrau–
Astrakhan Road Project were initially intended to be financed by the Islamic
Development Bank (IsDB). Due to disagreement between the government and IsDB on
the lending terms, the government informed IsDB of its decision to withdraw request
on the two loans from IsDB. ADB received a letter from CoR on 20 July 2018 declaring
that the government is working on defining a funding source for both projects and that
ADB is being considered as one of candidate financiers for the projects, the final
decision being to be made during the Coordination Council meeting conducted under
the Partnership Framework Agreements (PFA) signed by Government with ADB,
EBRD, IsDB and World Bank for joint implementation of priority projects. The letter
also suggested ADB to start preparation work in advance and define the scope of
required due diligence.
The project will connect the CAREC corridors 1b and 6a, as well as administrative
centers of the oil- and mineral-rich provinces of Aktobe and Atyrau. The project will
help establish efficient transport links by reducing transport time and costs. It will (i)
improve in-country transport services, particularly linking Astana and Aktobe with the
major oil city of Atyrau and the country’s only international port of Aktau; (ii) facilitate
regional trade and link the growing markets of the East Asia countries with Caspian
Sea countries further to Europe; and (iii) open new trade and business opportunities and
support poverty reduction by raising the living standard of the local population.
The existing 2-lane highway has been badly deteriorated with high safety risk. Most of
pavement was damaged with various distress and defects. The initial pavement design
was envisaged with design axle load 6 tons but has now been redesigned with the axle
load of 12 tons to respond to an increasing traffic volume of about 12,000 vehicles per
day and high percentage of heavy trucks. There are significant potential safety hazards,
most due to unsafe overtaking. About 40% of traffic accidents in the region incurred in
this road, according to officials from KazAvtoZhol Aktobe Oblast branch.
7. Financing Strategy of the Project: The government proposes that KazAvtoZhol, a
state-owned joint stock company, will be the borrower and executing agency, with
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sovereign guarantee by the Ministry of Finance taking into account (i) the government's
sovereign debt constraints; (ii) loan agreement will not require ratification by the
Parliament for effectiveness, which will expedite beginning of project implementation;
and (iii) EBRD had succeeded two sovereign guarantee road projects with
KazAvtoZhol. The repayment of loan will be made by KazAvtoZhol from the state
budget allocation.
8. Executing Agency6: KazAvtoZhol will be executing agency (EA) for these proposed
projects. ADB has conducted a due diligence of KazAvtoZhol in previous projects, and
is generally satisfied to its capacity to deliver the projects as an EA, although there are
some areas to be strengthened, such as procurement, social safeguards, financial
management, and project management. The project implementation will be conducted
by a separate department of KazAvtoZhol called Road Construction Directorate, after
procurement is concluded. The Directorate is headed by a director with total 30 staff in
its headquarters in Astana including a deputy director, a chief engineer, 10 executive
engineers, and 2 environment and social specialists. The remaining staff about 60 are
posted in 5 project offices in different regions.
The Road Construction Directorate was established in 2017 with the mandate to
manage implementation of IFI funded projects as representative of the Employer. It has
been engaged in five projects financed by China Exim Bank and EBRD and as a project
management consultant for one ADB funded project. The staff obtained some project
management experience such as FIDIC contract management skills. The Directorate
will establish office on both project sites, Aktobe and Atyrau Oblasts respectively, with
a team of road engineers, bridge engineer, quantity surveyor, materials engineer,
environment and social specialist, and contract management specialist. The number of
staff in each office will depend on the length and cost of the project road. The Mission
suggests adding a project management support component in the project to further
strengthen the capacity of the Road Directorate. The details will be discussed during
the fact-finding mission scheduled in early September 2018.
9. Market assessment: In line with recommendations set out in ADB Guidance Notes
(GN) on Procurement Risk Framework (PRF) and Strategic Procurement Planning
(SPP), and in order to bring current paper in line with the New Procurement Framework
(NPF), a brief market assessment has been carried out. The information provided in this
topic is based on consultations and interviews with the procurement staff of
KazAvtoZhol, “REVIEW OF THE ROAD CONSTRUCTION SECTOR IN
KAZAKHSTAN - ADB Consultants’ Report (dated 31 May 2018)” and Consultant’s
general knowledge and understanding of the local conditions.
The main scope of subject project is Reconstruction of Aktobe–Kandyagash (Two lots:
Lot 1 – km11-52 & Lot 2 – km 52-100). The type of contract will be FIDIC MDB
Harmonized 2010 edition (the Pink Book) which is relatively standard and well known
to both local and international contractors operating on the local market. Therefore,
there are no major risks expected with regard to innovative approaches of the project.
Generally, of 1,921 construction-related companies registered in Kazakhstan, 94
companies specialized in road-related construction work (4.8% of the total) were
analyzed as a sample for this assessment. After taking into account the established
6 ADB Aide Memoire Jul-Aug 2018
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activities of companies in the construction sector, about 26% or 500 companies can still
be considered active.7
Average annual turnover according to the size of the company: The average annual
turnover is biggest among large companies (11 companies) with USD 12.2 Million,
followed by medium sized companies (31 companies) with USD 9.9 million, and small
enterprises (52 companies) 2.5 million.8
The above figures demonstrate, that there is a relatively low capacity in the local road
construction industry, since the minimum average annual construction turnover requirement
was estimated as approximately $90mln for Lot 1 and $50mln for Lot 2 (based on estimates
dated September, 2018).
According to information received from procurement staff of KazAvtoZhol, there are several
local companies which can be considered as potential bidders for the subject project, based on
their size, experience and current contract commitments. These are (the list is indicative and
not exhaustive):
1. LLP Kazakhdorstroy;
2. JSC K-Dorstroy;
3. Todini Costruzioni Generali S.p.A.9
4. SINE MIDAS STORY
7 REVIEW OF THE ROAD CONSTRUCTION SECTOR IN KAZAKHSTAN - ADB Consultants’ Report (dated 31 May 2018) 8 REVIEW OF THE ROAD CONSTRUCTION SECTOR IN KAZAKHSTAN - ADB Consultants’ Report (dated 31 May 2018) 9 Milan, 2016 January 15th - Salini Impregilo (MTA: SAL) announces the signing of the contract for the disposal of Todini Costruzioni Generali S.p.A. (“TCG”) to Prime System Kz Ltd., a company incorporated and organized under the laws of Kazakhstan - https://www.salini-impregilo.com/en/press/press-releases/salini-impregilo-disposal-of-todini-costruzioni-generali.html
12.2
9.2
2.5
0
2
4
6
8
10
12
14
Large Medium Small
Figure 1. Average Annual Turnover in USD Million
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Generally, according to the information received from KazAvtoZhol, for procurements of road
construction/reconstruction with approximately $50mln cost estimate, there are usually around
10 bidders participating in the process. Apart from local companies, the main players on local
road construction market are Chinese and Turkish construction companies.
Finding: Taking the abovementioned into consideration, it can be deduced that subject project
will be equally attractive for local and international contractors, (more so for lot 2). Therefore,
the procurement should target both of these groups of contractors equally. What this means
from the procurement point of view is that attention should be given to advertisement of
bidding locally, as it generally serves the Client’s goals better if the works are executed by
local companies (provided that they are qualified) since the costs are usually on the low side
and it helps in development of local contracting industry which is further useful for overall
development of local economy.
III. Project Procurement Risk Assessment
A. Overview i. Organization and Staff Capacity:
The Ministry of Investments and Development (MoID) is responsible for the management of
the state (main) roads. The Committee for Roads (CoR) reports to the MoID and is responsible
for policy formulation and management and implementation of national policy for the road
sector and the interface with the public. At the implementation level, Kazakhavtodor has a
monopoly in carrying out routine maintenance works in the ten oblasts of the country. The
government is in process to restructure Kazakhavtodor to make it autonomous. Once
restructuring is completed, Kazakhavtodor and its subsidiaries will be able to compete with
other private contractors for road construction projects.
From organizational point of view, KazAvtoZhol is organized in a traditional vertical
structure.
Chairman is the ultimate decision maker, supported by 4 deputy chairmen, 2 advisors, and a
main engineer (except of support staff such as assistants and secretaries).
Such structure is not very efficient in terms of decision making, since it inevitably leads to
delays in decision-making process, since most important decisions must go up all the way
through the vertical, but on the other hand such arrangement, if organized properly, can
minimize the number of mistakes, since important documents require review/approvals from
several persons.
Procurement: From procurement point of view, the assessment reviewed legal aspects, staff
capacity and minimal required office equipment.
Legal aspects: According to information received from Managing Director on Procurement
Issues, KazAvtoZhol is implementing procurement using three different legal systems as
described below:
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▪ PPL (Public Procurement Law) is used in case where procurement is financed from
State Budget Funds, but PPL is only used for procurement of works and services
required to ensure functioning and implementation of State functions. It however
excludes national holdings or national companies, SOEs (approximately 75% of public
procurement expenditure is executed outside of PPL framework due to these
exemptions);
▪ Rules of procurement of goods, works and services – is the “internal” set of
procurement rules and procedures of JSC KazAvtoZhol approved by the decision of the
Board of Directors of April 26, 2017 No. 36/17. Most procurement, including the ones
financed its own funds, undertaken by KazAvtoZhol follows these set of rules and
procedures;
▪ Procurement rules of IFIs – are employed in case where the procurement is conducted
for the purposes of a project financed by IFI, in accordance with the relevant
Loan/Financing Agreement.
It should be noted here that within last 36 months the agency has implemented one
project funded by EBRD (European Bank for Reconstruction and Development) with
4 different procurement transactions, 2 CW (Civil Works), 1 CS (Consultancy Services)
and 1 CS (ongoing). In addition, the Road Construction Directorate of KazAvtoZhol
has been engaged in five projects financed by China Exim Bank and EBRD and as a
project management consultant for one ADB funded project.
Staffing: KazAvtoZhol has a dedicated department called “Office of Coordination and
Monitoring of Procurement” (hereinafter, the “Procurement Unit”) which is staffed by 5
persons and led by Managing Director on Procurement Issues. Since most procurement that is
conducted by the agency is falling under their own procurement rules and procedures, the staff
of procurement unit is well acquainted and proficient with these rules, but they do not have
qualifications in procurement procedures of IFIs. In addition, all procurement in KazAvtoZhol
is conducted in Russian language and these specialists have very little knowledge of English
language.
One more challenge is that due to increasing number of internal projects, the procurement
specialists are already overcommitted and there is no capacity left within this unit to tackle
challenges associated with the proposed project.
The office facilities of procurement unit are sufficient and in good order.
Project Management Unit: There is no separate PMU (Project Management Unit) within the
Agency (KazAvtoZhol), but rather each contract is managed by the respective department who
was initiator of the procurement (discussed below in “iii. Procurement Practices”). Although
most contracts are managed by the branch offices in the regions.
In addition, there is a division under KazAvtoZhol called Road Construction Directorate, who
is responsible for contract management of IFI funded projects, but its staff is split among
Astana office and several branch offices in the regions. Contract management responsibility
for each specific contract is assigned to the relevant branch office based on geographical
location of the project site.
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ii. Information Management:
Information Management system can be divided in two periods, prior to January 2017 and
after January 2017. Prior to January 2017, the procurement was paper-based, and all
procurement related documents are currently stored in the archive of KazAvtoZhol, but
according to information received from the interviewees, there are some issues with
systematization of the archive, making it challenging to find relatively old documents.
There was a significant change as from after January 2017 when this problem has mostly been
solved by adoption of the e-procurement system, under which the whole procurement process
is conducted electronically, and the e-procurement portal creates its archive saving all
procurement related documents. Only the winning bidder is requested to submit their bid in
original/hardcopy format which is then stored in the archive.
There is a specific document retention policy in place, according to which all bids are stored
for 5 years, bids of winning bidders are stored for 10 years and protocols of results (minutes of
tender committee) are stored with indefinite time of storage.
Agency’s record keeping function is not yet supported by IT systems (except of e-
procurement), and therefore all other files, letters etc. are still circulated and saved in the
hardcopy format.
iii. Procurement Practices:
Currently the Agency conducts most of its procurement activities in accordance with its own
procurement rules and procedures. These rules encompass procurement of Works, Goods and
Consultancy Services all under the same arrangements. Basically, there is only one set of rules,
one manual, one set of standard bidding documents (templates) which is applied for all kinds
of procurement activities.
The Agency’s own procurement rules dated April 26, 2017 envisages following methods of
procurement:
1. Tender (Open, Closed, Two-Stage);
2. Request for price quotations;
3. On organized electronic trading;
4. Through commodity exchanges;
5. Single source;
6. Guaranteed order;
In accordance with the explanations received during the interview, the general outline of
procurement steps under the agency’s own rules, in case of open electronic tender, is the
following:
1. Any of agency’s units, who has a need of a specific contract, prepares technical
documents (i.e. technical specifications, ToR etc.) and addresses the procurement unit
and sends them these documents. This first unit therefore acts as an “initiator” of the
procurement;
2. The procurement unit, based on technical documents received from the initiator,
prepares specific biding documents (based on existing template where they need to
introduce only very minor changes, such as date, time etc.);
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3. The procurement is advertised giving bidders 20 calendar days for submission of bids
(this period is fixed for every type of procurement and there is not option for its
extension);
4. An ad-hoc tender committee (bid evaluation group) is formed by an internal decree,
normally comprised from 5 persons – at least one person from procurement unit, at least
one lawyer, specialists of the field from the “initiator” unit;
5. Bids are submitted electronically, but technical bid is separate from the financial bid
(although both are submitted simultaneously);
6. The tender committee reviews technical bids, and prepares a list of defects/non-
compliances of each bid. After this process is finished, each bidder is given a clear
instruction on what needs to be improved in their bid to make it compliant with
requirements, and the bidders have 3 business days to improve their bids;
7. After expiration of this period the tender committee starts detailed evaluation of bids.
They have 10 business days for evaluation and this period is also fixed, disregarding
the number of bids received;
8. After the evaluation is finished the price bids of compliant bidders are opened by e-
procurement system automatically awards the contract to the lowest bidder.
It also must be noted, that the decision of tender committee (bid evaluation group) is final and
is not subject to any further approvals. This decision is based on majority of voices, but in case
if any member does not agree with the majority he has the right to write a dissenting
opinion/minority report.
IFI funded procurement: the interviewees stated that during last 36 months they were two
IFI funded projects funding - Kurty-Buribaytal Road Project, both financed by EBRD.
Currently there are two more ongoing projects under EBRD funding:
1. Kapshagai-Kurty 0-67 km bid opening 22 October;
2. Atyrau-Astrakhan 217 km General procurement notice issued;
The project covers full reconstruction of roads within the transport corridor connecting Astana
and Almaty (“Center-South Corridor”) is part of the Kazakhstan Strategic Plan 2020. The
Kazakh Government is very close to completing the implementation of this strategic plan, with
the major part or roads within the Center-South Corridor already having been rehabilitated.
The remaining 228 km long section between the villages Kurty and Buribaytal (the “Road”),
which remains in poor condition, restrains the transit of goods and passengers between the two
main cities of Kazakhstan.
Up to the date of interview 3 procurement transactions have already been conducted, 2 CW
and 1 CS (Supervision), and 1 procurement of CS (institutional strengthening component) is
ongoing.
In terms of main challenges faced, the interviewees declared that the procurement process itself
was difficult for them because of big differences in the procedures/rules between procurement
guide of EBRD and the agency’s own procurement rules (which is normally used). Difficulties
were caused during evaluation of Consultancy Services, because the evaluation criteria and
methodology were not very clear and allowed some flexibility which was challenging.
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One case of procurement of Consulting Services (CS) under the same loan needed to be
cancelled and re-advertised, because of lack of interest/competition, most probably caused by
the relatively low budget of the assignment as the representatives of KazAvtoZhol have stated.
iv. Performance of e-procurement system:
Current assessment does not focus on performance of e-procurement system since it will not
be applicable under the proposed project.
v. Effectiveness:
The effectiveness must be described in the light of a) contractual performance monitoring
system; b) payment track record; and c) complaints resolution mechanism.
a) Contractual performance monitoring system: does not exist as such. Since most
contracts signed by the agency are connected to the Civil Works to be undertaken in
the regions of the country, the Contract management itself is also done by the regional
branch offices of KazAvtoZhol. Although the procurement is centralized, there is no
central system which would track and monitor contract implementation under a pre-
defined system. Such approach may lead to inconsistencies in decisions and
approaches, but this will be further discussed in the strengths and weaknesses chapter
below;
b) Payment track record: based on information received from the interviewees, all
Contracts signed by Agency under their own procurement rules provide for 30 days for
payment purposes and there are no issues with factual payments in this regard, since
the agency’s main performance indicators are tied to disbursements;
c) Complaints resolution mechanism: there is no complaints review/resolution
mechanism set-up within the agency. Legally, the only way for the Contractors to
resolve the complaints are through applying to court. De-facto, most of the complaints
are first addressed to KazAvtoZhol in a form of a standard letter, which is then reviewed
by the legal department with assistance of respective specialists, mostly from the
“initiator” department. The response is communicated to the complainant through a
letter. If the issue is not resolved at this stage, the case may only be referred to the
national court.
vi. Accountability measures:
Ethics and Conflict of Interest: There is no statement of ethics provided in the Agency’s own
procurement rules, but it has a provision regarding conflict of interest, according to which, in
case if any member of the tender committee finds out that he/she has a conflict of interest,
meaning that his/her personal interests might influence their decision, he/she should
immediately declare about this condition to the head of the tender committee. After such
declaration, person having a conflict of interest will be substituted and he/she will not
participate in decision making regarding that procurement process anymore.
16
Internal and external approvals: In terms of approvals, according to information received
from the representatives of the KazAvtoZhol, there are no external (out of the organization)
approvals required for any step of their activity, except of the allocation of annual budget.
In terms of procurement related issues, the decisions of tender committee are final and are not
subject to any approvals, even internal. Also, the key decisions such as i) procurement related
(authorizing procurement transactions, evaluation and contract awards); ii) authorizing
payments and iii) custody of assets are well segregated and all three fall under responsibilities
of different officials within the organization, thus reducing the risk of biased decisions.
B. Strengths
I. Fully staffed procurement unit with an experienced Head of Procurement unit (5
persons plus head);
II. Adequate office facilities for procurement unit;
III. Adequately organized internal structure;
IV. 14 regional branches which can assist in on-site supervision and solving of minor issues
on the field;
V. Since 2017, the agency started using e-procurement system which should drastically
increase transparency and improve overall quality of the process;
VI. Good record producing practices (i.e. minutes of bid opening, decisions of tender
evaluation committee etc.) which are generally mostly in line with ADB’s practices;
VII. Tender committee (bid evaluation group) is independent and their decision is final (not
subject to further approvals);
VIII. There is a written auditable trail of procurement decisions attributable to individuals
and committees, thus lowering the risk of questionable decisions being made;
C. Weaknesses
I. Low level of English proficiency in the procurement unit, as well as the agency overall;
II. Overcommitted procurement staff not having enough capacity to undertake
procurement under proposed project;
III. Very limited knowledge, experience and trainings in IFI procurement rules – absence
of knowledge, experience and trainings in ADB procurement rules and procedures;
IV. Agency mainly employs its own procurement rules which do not cover and do not
correspond to ADB procurement rules;
V. Lack of standard procurement practices and standard documents which would either fit
or correspond to ADB procurement rules;
VI. Absence of PMU for the proposed project;
VII. ToRs and Technical Specifications are prepared by different units of the agency ad-
hoc, without following a standard format/template, thus increasing the risk of producing
documents of varying quality;
17
VIII. One set of bidding documents is being used for procurement of Civil Works, Goods
and Consultancy Services;
IX. Weak archiving system without IT support might create problems when trying to
review relatively old documents for audit purposes;
X. There is no single contract file which would hold all related documents, but rather these
documents might be spread among different units of the agency, and in some cases even
among different regional branches of the agency;
XI. Timeframes allowed for bid submission, evaluation etc. are very strict and rigid, not
allowing flexibility to accommodate different conditions (i.e. complexity of the
procurement, number of bids received etc.);
XII. Practically non-existent procedures for selection of consultants that would be at least
partially similar to ADB’s methodology – rather agency uses one set of procurement
rules and documents for all types of procurement activities;
XIII. Financial evaluation is always completed based on lowest submitted price, even in case
of selection of consultants;
XIV. There is no system for tracking and monitoring of contractual performance, but rather
contract management activities are spread among the central office of agency and its
14 regional branches (based on geographical location of the work site);
XV. There is no complaints management / grievance redress mechanism in the agency (or
in the Contracts signed under agency’s proprietary procurement rules), but rather all
claims need to be resolved only through national court procedures;
XVI. There is no standard statement on ethics in the agency’s own procurement rules (which
is the most common set of rules used by the agency);
D. Procurement Risk Assessment and Management Plan (P-RAMP)
Based on the information gathered from the interview, as well as some external sources and
legal documents, the following procurement risks were identified when analyzing
KazAvtoZhol’s capacity to implement the proposed project as an EA. The mitigation measures
are also presented in the rightmost column of the chart below.
The chart analyzes those risks, which were assessed as “Extreme” or “High” in the project
procurement risk assessment questionnaire, and they are grouped into four distinct sections,
namely: a) Organizational and Staff Capacity; b) Information Management; c) Procurement
Practices; and d) Effectiveness.
The overall risks are rated as:
o Extreme;
o High;
o Medium;
o Low;
based on the following risk rating matrix as provided in Table A1.3 below:
18
Note: Many of the risks identified below are in varying degrees caused by the fact that the
agency uses proprietary procurement rules which are not in line with ADB’s procurement
guidelines, and therefore many of the described risks will be mitigated by simply applying
ADB’s procurement regulations to the procurements under the proposed project.
19
Table 1 – Risk Matrix
No
.
Risk Consequence Likelihood Overall
A. ORGANIZATIONAL AND STAFF CAPACITY
1
The procurement unit staff’s
level of English does not let
them to work in English
language
Severe Almost Certain Extreme
Comment
In order to develop the
procurement
documents and conduct
evaluation procedures
knowledge of the
English language is
essential. Lack of
language skills will
make the process
impossible and
jeopardize the project
implementation.
Unless International
Consultant is hired to
assist the staff in
procurement issues or
capacity of the staff is
increased, the risk is
in place.
N/A
2
Number and qualifications of
the staff are insufficient to
undertake the additional
procurement that will be
required under the proposed
project because due to
increasing number of internal
projects, the procurement unit
is already overcommitted,
and they do not have enough
free capacity to undertake
additional procurement under
the proposed project.
In addition, the staff does not
possess sufficient
qualifications for the
procurement in subject,
which is reflected in the lack
knowledge, experience and
trainings both in ADB
procurement rules and in
Performance Based
Contracting modality.
Major Likely High
20
Comment
Without sufficient
number and
qualification of the
staff the procurement
process will not be
undertaken on a level
acceptable to ADB.
Unless International
Consultant is hired to
assist the staff in
procurement issues or
capacity of the
existing staff is
increased by means
of the trainings, the
risk is likely to occur.
N/A
3
The agency does not have
(neither has access to) a
procurement training
program in ADB
procurement guidelines
Major Almost Certain Extreme
Comment
Without a procurement
training program in
ADB procurement
regulations, it is likely
that the procurement
proces will have
substantial
shortcomings.
Without a
procurement training
program in ADB
procurement
regulations, it is
likely that the
procurement process
will have substantial
shortcomings. The
risk is currently in
place.
N/A
4
Agency has its own
procurement process rules
and a respective manual, but
it does not cover foreign-
assisted projects.
Severe Almost Certain Extreme
Comment
Agency procurement
rules are not in line
with ADB procurement
regulations and best
international practices,
therefore application of
IA's proprietary
procurement rules will
lead to reduced
competition.
Unless the
procurement
regulations are
specified as
applicable
procurement rules in
the relevant
loan/financing
agreement, the risk is
in place.
N/A
5
There is no separate
procurement process manual
for Consultancy Services, but
rather one set of rules and
standard documents is used
for procurement of CW,
Goods, and CS.
Severe Almost Certain Extreme
21
Comment
Agency procurement
rules are not in line
with ADB procurement
regulations and best
international practices,
therefore application of
IA's proprietary
procurement rules will
lead to reduced
competition.
Unless the
procurement
regulations are
specified as
applicable
procurement rules in
the relevant
loan/financing
agreement, the risk is
in place.
N/A
6
There is no PMU in place for
the proposed project Major Likely High
Comment
PMU in charge of the
project implementation
process is essential.
The process must be
handled by a dedicated
unit in charge in order
to organize and manage
the process in an
acceptable manner.
Absence of such unit
implies risks for the
procurement process.
Unless a specific unit
will not be assigned as
a responsible focal
point, the risk is in
place.
N/A
7
There is only one set of
standard procurement
documents which are used by
the agency for procurement
of CW, Goods and CS, but
they are not in line with
ADB procurement
guidelines.
Severe Unlikely High
Comment
Unless the ADB
procurement
regulations are applied
to the proposed project
the procurement
procedure will not be
conducted in a way
acceptable for ADB,
since the local
procurement legislation
is not in line with ADB
procurement policy.
According to the most
recent Aide Memoire,
it was agreed that
ADB 2017
procurement policy
and regulations will
apply to the project.
N/A
D. EFFECTIVENESS
22
8
Procurement specifications
and ToRs are drafted ad-hoc
by different units of the
agency without following
any standard template or
rules, thus increasing the risk
of inconsistency and low
quality of the output.
Moderate Likely High
Comment
Without using standard
templates for
specifications and
ToRs and adhering to
the rules the risk of low
quality output and
inconsistencies is
substantial. It is
important that IA is
supported by
Consultants for drafting
of the Technical
Specifications and
TOR(s)
Unless the IA receives
support from the
Consultants in
drafting TORs and
Technical
Specifications, the
risk is likely to occur.
N/A
9
The need for consulting
services can be identified by
any unit of the agency and
each of them can act as an
“initiator” of a specific
procurement.
Major Likely High
Comment
Since there is no single
unit responsible for
initiating selection of
Consultants, there is a
risk that this process
will not be managed
properly. Therefore,
there is high risk of
delay in the process
that would impact the
commencement date of
CW contracts.
Risk is currently in
place, until a single
unit/focal point will
not be determined
who will take
responsibility over
the management of
proposed project.
N/A
B. INFORMATION MANAGEMENT
10
There were no Substantial or High risks identified in terms of information management. The
archiving system is relatively weak, but not enough so to trigger a substantial risk factor. Since
2017 the agency has switched to e-procurement system that should drastically improve their
information management system. The first results can already be seen by the fact that procurement
documents of recent tenders are saved in the e-procurement system.
C. PROCUREMENT PRACTICES
11 The agency has very limited
experience in Major Almost Certain Extreme
23
implementation of IFI
funded projects.
Comment
The lack of experience
in IFI project
procurement and
implementation is a
substantial risk to the
proposed project as it
can jeopardize the
whole implementation
process and lead to
substantial delays in the
process.
Unless the capacity
of the agency is
increased, the risk is
likely to take place.
N/A
12
Agency representatives
stated that IFI rules are
relatively difficult and very
different from their own
procurement rules. This has
caused some challenges
during evaluation of
Consultants’ proposals,
because the criteria were not
very well defined
(experience from previous
project).
Severe Likely Extreme
Comment
In case of the lack of
understanding of the
IFI procurement rules
the evaluation will not
be done in an
acceptable manner that
can cause serious
delays and mistakes in
the process.
Risk is likely to take
place unless some
capacity
strengthening
exercises are
implemented.
N/A
13
The agency is not familiar
with and does not use Letters
of Credit as a standard
practice.
Major Almost Certain Extreme
Comment
Letters of Credit are
approved and standard
international practice of
conducting business
when purchaser and
seller are in located in
different countries and
don't know/trust each
other. Therefore,
absence of this tool in
the project will have
Risk is almost certain
to take place unless
capacity
strengthening
exercises are
implemented and
procurement
consultant's support is
provided during the
procurement process.
N/A
24
high impact on the
procurement process
and might render it
impossible altogether.
14
Agency representatives
stated that they had one case
of failed procurement (that
caused re-advertisement) of
consultancy services,
because their original budget
was very low and did not
attract enough competition.
This risk can be extended to
CW also, since the CEs (cost
estimate) are being prepared
based on state standards,
which usually are lower than
international standards. As a
result, the cost estimates are
in some cases unrealistic
(low). Although in ADB
procurement bidders can
propose price above the cost
estimate, the evaluation
criteria are developed based
on the CE and therefore
having unrealistically low
estimate will lead to having
artificially lower
qualification criteria that
might lead to awarding a
contract to an unqualified
contractor.
Severe Likely Extreme
Comment
Unrealistically low CE
leads to weak
qualification criteria,
which can cause
awarding of Contract to
unqualified Contractor
who might not be
capable to perform.
Thus this risk can have
very high impact on the
project.
Risk is very likely to
materialize since
government agencies
usually are against
changing their
standard practices.
N/A
25
D. EFFECTIVENESS
15
There is no system of
monitoring and reporting of
contractual performance, but
rather most of the contracts
are managed by the regional
branches of the agency
depending on the
geographical location of
work site.
Major Likely High
Comment
Contract management
is a key step in project
implementation which
should be handled by
qualified personnel.
Poor contract
management could
potentially lead to
contractual claims,
delays and budget
overruns.
Risk is likely to
materialize, since the
decision on persons
responsible for
contract management
is based on work sites
geographical
location, where
relevant regional
branches might not
have enough
capacity.
N/A
16
There is no complaints
management mechanism in
the agency.
Major Unlikely Medium
Comment
Due to absence of
complaints resolution
mechanism, the only
possible way for the
bidders/contractors is to
apply to the local court,
in which case the
process might be
delayed for unidentified
period of time.
Taking into
consideration
previous experience
of the agency, as well
as Contractual
mechanisms in place,
it is unlikely that a
dispute will not be
resolved at the project
level, thus forcing the
complainant to
address local Court.
N/A
E. ACCOUNTABILITY MEASURES
17
There were no Substantial or High risks identified in terms of accountability
measures. The detailed Q&A is provided in Annex 1 – Procurement
Questionnaire. N/A
Table 2 – Risk Management Chart
No. Risk Description Risk
Assessment
Mitigation Measures or Risk
Management Plan
A. ORGANIZATIONAL AND STAFF CAPACITY
26
1 The procurement unit
staff’s level of English does
not let them to work in
English language.
Extreme There are two proposed mitigation
measures to tackle this risk:
1. The EA must be supported by
a Procurement Consultant to
assist them in development of
the procurement documents
and in the evaluation
procedures;
2. It is recommended that the
ruling language for bidding
documents be English, while
the IA may issue unofficial
Russian translations in order
to facilitate preparation of bids
by local bidders. In addition,
requesting the bidders to
submit bids in English
accompanied with Russian
Translation will also support
the evaluation process, as the
members of tender committee
do not speak English, but in
any case English should
remain as a ruling language
throughout the procurement
process.
2 Number and qualifications
of the staff are insufficient
to undertake the additional
procurement that will be
required under the proposed
project because due to
increasing number of
internal projects, the
procurement unit is already
overcommitted, and they do
not have enough free
capacity to undertake
additional procurement
under the proposed project.
In addition, the staff does
not possess sufficient
qualifications for the
procurement in subject,
which is reflected in the
lack knowledge, experience
and trainings both in ADB
procurement rules and in
FIDIC standard contract
conditions.
High The same mitigation measure as item
#1 above.
In addition, since the KazAvtoZhol
will have to handle contract
management after the procurement
stage, it is recommended that a group
of key persons (1 from procurement
unit, 1 from legal unit, 1 from
financial unit, 1 or 2 from road
maintenance unit) be identified and a
training program be developed for
them to increase their contract
management capacity.
27
3 The agency does not have
(neither has access to) a
procurement training
program in ADB
procurement guidelines.
Extreme It is recommended that Head of
procurement unit and at least 1 or 2
specialists undergo a training course
(at least 10 days or 2 weeks) covering
all aspects of ADB procurement
guidelines.
Best approach would be to conduct
such training before the deadline for
submission of bids from PBM or EOIs
for Supervision of PBM under the
proposed project.
4 Agency has its own
procurement process rules
and a respective manual,
but it does not cover
foreign-assisted projects.
Extreme ADB procurement guidelines must be
applied to the proposed project,
through relevant indication in the
Loan/Financing Agreement which
should afterwards obtain a legal force
to avoid any possible conflict with
local legislation.
5 There is no separate
procurement process
manual for Consultancy
Services, but rather one set
of rules and standard
documents is used for
procurement of CW,
Goods, and CS.
Extreme ADB procurement guidelines
together with standard procurement
documents must be used for the
proposed project.
6 There is no PMU in place
for the proposed project.
High The procurement related risks of the
project are mitigated through actions
listed in items 1 to 5 (inclusive) listed
above.
As for the contract management there
are several recommendations below:
1. Group of key persons must
undergo a training in FIDIC
contract management (as
described in item #2 above);
2. A provision must be made in
the Terms of Reference of the
international Supervision
Consultant to conduct on-the-
job training and knowledge-
transfer of management of
FIDIC Contracts; The training
of Employer’s/Client’s staff is
crucial for successful project
implementation, therefore it is
suggested to allocate a small
portion of the technical score
to this component, by
28
evaluating the proposed
methodology and work plan
for such training activities in
the Technical Proposals of the
Consultants;
3. ADB must increase the level
of oversight on the contract
management at least in the
first years of the contract
implementation;
7 There is only one set of
standard procurement
documents which are used
by the agency for
procurement of CW, Goods
and CS, but they are not in
line with ADB procurement
guidelines.
High ADB procurement guidelines
together with standard procurement
documents must be used for the
proposed project.
8 Procurement specifications
and ToRs are drafted ad-
hoc by different units of the
agency without following
any standard template or
rules, thus increasing the
risk of inconsistency and
low quality of the output.
High This risk is already mitigated by ADB
through hiring PPTA Consultants
who are responsible for drafting of the
Technical Specifications and TOR(s).
9 The need for consulting
services can be identified
by any unit of the agency
and each of them can act as
an “initiator” of a specific
procurement.
High This risk is mitigated under the
proposed project, since the draft
Procurement Plan includes only one
CS assignment (Supervision) the start
of selection of which should be
initiated couple months earlier before
advertisement of works’ tenders,
since the process of selection of
consultants (under QCBS) normally
takes longer than procurement of CW
.
B. INFORMATION MANAGEMENT
10 There were no Substantial or High risks identified in terms of information
management. The archiving system is relatively weak, but not enough so to trigger a
substantial risk factor. Since 2017 the agency has switched to e-procurement system
that should drastically improve their information management system. The first
results can already be seen by the fact that procurement documents of recent tenders
are saved in the e-procurement system.
C. PROCUREMENT PRACTICES
11 The agency has very small
experience in
implementation of IFI
funded projects.
Extreme The lack of experience in IFI project
procurement and implementation is a
substantial risk to the proposed
project, but it will be mitigated
through:
29
• Procurement Stage:
involvement of a procurement
consultant to assist EA in
tender procedures;
• Implementation Stage:
involvement of experienced
international Construction
Supervision Consultant who
will share FIDIC contract
management experience and
conduct on-job trainings for
the EA staff;
12 Agency representatives
stated that Bank rules are
relatively difficult and very
different from their own
procurement rules. This has
caused some challenges
during evaluation of
Consultants’ proposals,
because the criteria were
not very well defined.
Extreme This risk underlines relative lack of
understanding of ADB procurement
guidelines by the staff of the Agency,
but it can be effectively mitigated
through trainings as proposed in item
#3 above.
13 The agency is not familiar
with and does not use
Letters of Credit as a
standard practice.
Extreme Risk is likely to take place unless
capacity strengthening exercises are
implemented and procurement
consultant's support is provided
during the procurement process
14 Agency representatives
stated that they had one case
of failed procurement (that
caused re-advertisement) of
consultancy services,
because their original
budget was very low and
did not attract enough
competition.
This risk can be extended to
CW also, since the CE (cost
estimate) are being
prepared based on state
standards, which normally
are much lower than
international standards. As
a result, the cost estimate is
in some cases unrealistic
(low). Although in ADB
procurement bidders can
propose price above the
cost estimate, the
evaluation criteria are
Extreme It is recommended that ADB provides
increased oversight regarding
development of Cost Estimates to
ensure that they correspond to
international (and not local)
standards, since the procurement
targets international contractors.
30
developed based on the CE
and therefore having
unrealistically low estimate
with artificially lower
qualification criteria that
might lead to procurement
of a weak/unqualified
contractor.
D. EFFECTIVENESS
15 There is no system of
monitoring and reporting of
contractual performance
set-up, but rather most of
the contracts are managed
by the regional branches of
the agency depending on
the geographical location of
work site.
High This is relatively easy to mitigate in
case of proposed project, since a)
there will be an international
Construction Supervision Consultant
hired who will be responsible for
management of the Contracts;
In addition to the above, it is crucial to
provide capacity building activities as
part of the proposed project.
16 There is no complaints
management mechanism in
the agency.
Medium The risk of contractual
claims/complaints will be mitigated
by the FIDIC contract itself, since it
mandatorily requires that a DB
(Dispute Board) be employed.
As for the social/environmental
complaints, in case when the project’s
safeguard category will be changed,
the Agency will have to set-up a GRM
(Grievance Redress Mechanism)
which will be the first step for
complaints’ review and resolution.
E. ACCOUNTABILITY MEASURES
17 There were no Substantial or High risks identified in terms of accountability
measures. The detailed Q&A is provided in Annex 1 – Procurement Questionnaire.
31
IV. Project Specific Procurement Thresholds
There is no need for setting up project specific procurement thresholds, since all CW contracts
fall under OCB and the CS falls under QCBS.
V. Procurement Plan
Draft procurement plan is developed and is attached as Annex 2 – draft Procurement Plan.
VI. Conclusion
Based on the overall project procurement risk assessment based on assumption that JSC
KazAvtoZhol will act as an EA, the project procurement risk is rated as “Extreme” (on the
scale of Extreme, High, Medium, and Low).
Summary of main recommended actions are given below, while the details of these are
available in P-RAMP tables in other sections of the report.
Key Recommended Actions: As based on current assessment, taking into consideration weak
procurement capacity of the EA with regard to necessary procurement under proposed project,
these key recommended actions relate to: measures for improving ADB project preparation
and implementation as well as measures to improve EA’s capacity and understanding of a)
ADB procurement guidelines, b) FIDIC Pink Book Contracting modality in order to increase
the sustainability of proposed project.
Immediate measures to support preparation and implementation of proposed project:
1. Increased procurement oversight with prior review for all procurement, regardless of
methods;
2. Use of ADB procurement regulations and standard procurement documents for all
procurement under the project;
3. Provision of procurement consultant’s support to the EA in preparation of procurement
documents and subsequent tendering process;
4. Using English as the ruling language for bidding, while allowing the IA to issue
unofficial Russian translations in order to facilitate preparation of bids by local bidders;
5. Training of a) EA’s procurement staff on ADB procurement guidelines before the date
of bid opening; b) EA’s key persons (who will be involved in contract management) in
FIDIC Contracting modality;
6. More intense involvement of ADB procurement staff in early project design and later
in contracts management stage as also required by ADB’s new Procurement Policy;
32
Annex 1 – Procurement Questionnaire
PROJECT PROCUREMENT RISK ASSESSMENT QUESTIONNAIRE
QUESTION RESPONSE10 RISK11
A. ORGANIZATIONAL AND STAFF CAPACITY
PROCUREMENT DEPARTMENT/UNIT
A.1 Does the agency or
Government have a
Procurement Committee that is
independent from the head of
the agency?
No, there is a procurement unit
which is under the head of the
agency.
Low
A.2 Does the agency have a
procurement department/unit,
including a permanent office
that performs the function of a
Secretariat of the Procurement
Committee?
Yes
A.3 If yes, what type of
procurement does it undertake?
It undertakes all types of
procurement of the Agency,
including Gov. budget funded
and IFI funded.
A.4 How many years’ experience
does the head of the
procurement department/unit
have in a direct procurement
role?
N/A
A.5 How many staff in the
procurement department/unit
are:
i. full time
ii. part time
iii. seconded
i. 5
ii. N/A
iii. N/A
A.6 Do the procurement staff have
a high level of English
language proficiency (verbal
and written)?
No, their level of English does
not let them to work in English
language.
*Extreme
A.7 Are the number and
qualifications of the staff
sufficient to undertake the
No, due to increasing number of
internal projects, the procurement
unit is already overcommitted,
*Extreme
11 Questions indicated with * are associated with potentially “Extreme” or “High” risks due to the consequence being “Major” or “Severe”, therefore the strategy for managing those risks should be addressed in the Project Procurement Risk Analysis (Appendix 3).
33
QUESTION RESPONSE10 RISK11
additional procurement that
will be required under the
proposed project?
and they do not have enough free
capacity to undertake additional
procurement under the proposed
project. In addition, they do not
possess sufficient qualifications
to do so, due to lack of
knowledge, experience and
trainings both in ADB
procurement rules and in
Performance Based Contracting
modality.
A.8 Does the unit have adequate
facilities, such as PCs, internet
connection, photocopy
facilities, printers etc. to
undertake the planned
procurement?
There is no risk in terms of office
facilities required for
procurement activities.
A.9 Does the agency have, or have
ready access to, a procurement
training program?
There are trainings for Agency’s
own procurement rules and
sometimes for PPL procurement.
Also, there are sometimes
trainings for donor projects, but
only 2 out of 5 persons have
undergone such trainings. There
is no training program which
would plan such activities in the
nearest future.
*Extreme
A.10 At what level does the
department/unit report (to the
head of agency, deputy etc.)?
Once a week (sort of progress
reports) and/or after every step of
procurement
Low
A.11 Do the procurement
positions in the agency have
job descriptions, which outline
specific roles, minimum
technical requirements and
career routes?
Yes, there are specific job
descriptions for each position
which outline specific roles and
minimum technical requirements,
but it does not mention anything
about career routes.
Low
A.12 Is there a procurement
process manual for goods and
works?
Yes, there are two separate
manuals for agency, one for own
procurement rules and for e-
procurement, but agency mainly
uses its own procurement rules.
There is one manual for these
rules which encompasses CW,
Goods and CS. The same
procurement rules and
procedures apply to all three
above.
34
QUESTION RESPONSE10 RISK11
A.13 If there is a manual, is it up
to date and does it cover
foreign-assisted projects?
Manual does not cover foreign-
assisted projects. Extreme
A.14 Is there a procurement
process manual for consulting
services?
No, the same rules applied for
CW, Goods and CS Extreme
A.15 If there is a manual, is it up
to date and does it cover
foreign-assisted projects?
There is no separate manual for
CS, but rather one set of rules
which covers CW, Goods and
CS.
Extreme
PROJECT MANAGEMENT UNIT
A.16 Is there a fully (or almost
fully) staffed PMU for this
project currently in place?
No, there are separate full-time
departments in the organization
each responsible for their field
(i.e. construction, maintenance
etc.). In case if any of them
requires new procurement to be
undertaken, they act in the role of
“initiator” of this procurement,
subsequently the procurement
unit does the
procedural/procurement part and
after signing of the contract it is
passed back to the “initiator” for
project/contract management.
*High
A.17 Are the number and
qualifications of the staff
sufficient to undertake the
additional procurement that
will be required under the
proposed project?
No, since there is no designated
PMU. *Extreme
A.18 Does the unit have adequate
facilities, such as PCs, internet
connection, photocopy
facilities, printers etc. to
undertake the planned
procurement?
Yes, because all
units/departments in the agency
have sufficient office facilities
available to them.
Low
A.19 Are there standard
documents in use, such as
Standard Procurement
Documents/Forms, and have
they been approved for use on
ADB funded projects?
Yes, there is one set of standard
documents which are used for
procurement of CW, Goods and
CS, but they are not in line with
ADB procurement guide.
*Extreme
A.20 Does the agency follow the
national procurement law,
Yes mostly, except cases when
projects are funded by IFIs in
which case procurement rules in
35
QUESTION RESPONSE10 RISK11
procurement processes, and
guidelines?
accordance with Loan Agreement
apply.
A.21 Do ToRs for consulting
services follow a standard
format such as background,
tasks, inputs, objectives and
outputs?
No, each “initiator” drafts their
own ToRs without a standard
template/format.
Medium
A.22 Who drafts the procurement
specifications?
Respective department of the
agency who acts as a
“procurement initiator” in each
specific case.
High
A.23 Who approves the
procurement specifications?
Deputy Chairman (curator) Low
A.24 Who in the PMU has
experience in drafting bidding
documents?
There is one set of bidding
documents and it does not change
among different procurement
(one typical format for CW,
Goods and CS)
*Extreme
A.25 Are records of the sale of
bidding documents
immediately available?
Yes, they are published on the
web-page of the agency which is
free of charge and public
*Low
A.26 Who identifies the need for
consulting services
requirements?
Respective department who acts
as an “initiator” of each specific
procurement.
High
A.27 Who drafts the Terms of
Reference (ToR)
Respective department who acts
as an “initiator” of each specific
procurement.
High
A.28 Who prepares the request for
proposals (RFPs)
There is no such thing as RFP in
the procurement rules of
Kazavtozhol.
Extreme
B. INFORMATION MANAGEMENT
B.1 Is there a referencing system
for procurement files?
Secretary of the committee has
this obligation.
Only winning bidder submits
original hardcopy documents,
and bids of other bidders are
saved only electronically in the
system of e-procurement
Low
B.2 Are there adequate resources
allocated to record keeping
infrastructure, which includes
the record keeping system,
space, equipment and
personnel to administer the
procurement records
There is an issue of
systematization of archive
documents, but all procurement
documents are saved in Archive.
Relatively new procurements
(since 2017) are all undertaken
electronically and are
*Medium
36
QUESTION RESPONSE10 RISK11
management functions within
the agency?
automatically saved in e-
procurement portal.
B.3 Does the agency adhere to a
document retention policy (i.e.
for what period are records
kept)?
5 years – bids, winner’s bid 10 –
years, protocols of results –
stored forever.
*Low
B.4 Are copies of bids or proposals
retained with the evaluation?
5 years – bids, winner’s bid 10 –
years, protocols of results – saved
forever.
There is no such thing as
proposals, everything is called
bids under agency’s own
procurement rules.
Medium
B.5 Are copies of the original
advertisements retained with
the pre-contract papers?
Everything is saved – whole
cycle of procurement either in e-
procurement portal or in files of
procurement office.
Low
B.6 Is there a single contract file
with a copy of the contract and
all subsequent contractual
correspondence?
Contracts are given under special
act to accountant who saves them,
and subsequent letters and
invoices are saved in the branch
offices in the regions who
manages the contract on a day to
day basis.
Medium
B.7 Are copies of invoices
included with the contract
papers?
Copies of invoices are saved in
the accounting department of the
agency.
Medium
B.8 Is the agency’s record keeping
function supported by IT?
No, everything is saved in a
hardcopy yet, except for new
procurement documents
(procurement after 2017) which
is conducted electronically, and
all documents are saved
electronically.
Medium
C. PROCUREMENT PRACTICES
Goods and Works
C.1 Has the agency undertaken
procurement of goods or works
related to foreign assistance
recently (last 12 months or last
36 months)? If yes, indicate
the names of the development
partner/s and project/s.
Last 12 months - EBRD –
reconstruction of Kurty-
Buribaytal.
CW 2
CS 2
Last 36 months – nothing else.
*High
37
QUESTION RESPONSE10 RISK11
C.2 If the answer is yes, what were
the major challenges faced by
the agency?
Agency representatives stated
that Bank rules are relatively
difficult and very different from
their own rules. Additional
challenge was cause by the fact
that there are no specific
evaluation criteria in CS in Bank
procurement rules.
*Extreme
C.3 Is there a systematic process to
identify procurement
requirements (for a period of
one year or more)?
No (there is procurement plan for
1 year only which is tied to the
allocated budget). Budget is
allocated annually without any
longer-term plan on the Agency’s
level.
Medium
C.4 Is there a minimum period for
the preparation of bids and if
yes, how long?
20 calendar days *High
C.5 Are all queries from bidders
replied to in writing?
Yes, all questions and answers
are public (everybody can see
who asked the questions and what
was the answer)
*Medium
C.6 Does the bidding document
state the date and time of bid
opening?
Yes *Low
C.7 Are bids opened in public? Yes – electronically (after bid
opening 3 business days and clear
instructions are given to the
bidders to improve every possible
defect with the bid (including
improvement of bids)).
Afterwards, price bids of those
bidders who improved their bids
are opened.
*Extreme
C.8 Can late bids be accepted? No *Low
C.9 Can bids (except late bids) be
rejected at bid opening?
No *Low
C.10 Are minutes of the bid
opening taken?
Yes *Low
C.11 Are bidders provided a copy
of the minutes?
Yes *Low
C.12 Are the minutes provided
free of charge?
Yes *Low
38
QUESTION RESPONSE10 RISK11
C.13 Who undertakes the
evaluation of bids
(individual(s), permanent
committee, ad-hoc
committee)?
Ad-hoc tender committee for
each tender (mandatory members
– lawyers, procurement
specialists, initiators of
procurement) not less than 5
(normally 5)
Medium
C.14 What are the qualifications
of the evaluators with respect
to procurement and the goods
and/or works under
evaluation?
It is impossible to say because the
evaluation group is always
different, but it always includes at
least one procurement specialist
from the procurement department
who has adequate qualifications
in the agency’s own procurement
rules
*Medium
C.15 Is the decision of the
evaluators final or is the
evaluation subject to additional
approvals?
The decision is final *Low
C.16 Using the three ‘worst-case’
examples in the last year, how
long from the issuance of the
invitation for bids can the
contract be awarded?
20 calendar days for
advertisement 10 business days
for evaluation 3 business for bid
improvement 10 business days
for evaluation. These periods are
fixed.
High
C.17 Are there processes in place
for the collection and clearance
of cargo through ports of
entry?
No – since agency always uses
Incoterms DDP method.
Low
C.18 Are there established goods
receiving procedures?
Yes Low
C.19 Are all goods that are
received recorded as assets or
inventory in a register?
Yes, except of consumables,
such as office paper, printer
cartridges etc.
Low
C.20 Is the agency/procurement
department familiar with
letters of credit?
No, Letter of Credit is not
practiced
High
C.21 Does the procurement
department register and track
warranty and latent defects
liability periods?
Yes, except of consumables. Low
Consulting Services
39
QUESTION RESPONSE10 RISK11
C.22 Has the agency undertaken
foreign- assisted procurement
of consulting services recently
(last 12 months, or last 36
months)? (If yes, please
indicate the names of the
development partner/s and the
Project/s.)
Last 12 months - EBRD –
reconstruction of Kurty-
Buribaytal.
CS 2 Supervision
CS 1 – Institutional strengthening
component (procurement
ongoing)
Last 36 months – nothing else.
*High
C.23 If the above answer is yes,
what were the major
challenges?
Except of answer C.2, another
major challenge was that there
was a limited number of
interested consultants - only 5
expressed interest out of which 1
was qualified but at the stage of
RFP it refused to submit
proposal because of lack of
budget. The budget was
reviewed, and assignment re-
advertised. Currently the
procurement is ongoing.
*High
C.24 Are assignments and
invitations for expressions of
interest (EOIs) advertised?
Yes *Low
C.25 Is a consultants’ selection
committee formed with
appropriate individuals, and
what is its composition (if
any)?
Ad-hoc tender committee for
each tender (mandatory members
– lawyers, procurement
specialists, initiators of
procurement) not less than 5
(normally 5)
Medium
C.26 What criteria are used to
evaluate EOIs?
There is only one set of rules /
standard bidding document for
all kinds of procurement under
agency’s own rules. The same
approach and methodology is
used for CW, Goods and CS.
Extreme
C.27 Historically, what is the most
common method used (QCBS,
QBS, etc.) to select
consultants?
There is no such notion as
QCBS, QBS etc. There is only
one set of rules / standard
bidding document for all kinds
of procurement under agency’s
own rules. The same approach
and methodology is used for
CW, Goods and CS.
*Extreme
40
QUESTION RESPONSE10 RISK11
(Except of one recent project
funded by EBRD, where
selection of consultants was
undertaken under QCBS).
C.28 Do firms have to pay for the
RFP document?
No, bidding documents (used
also for CS) are free of charge.
*Low
C.29 Does the proposal evaluation
criteria follow a pre-
determined structure and is it
detailed in the RFP?
The bid/proposal evaluation
criteria are pre-determined and
written in bidding documents.
*Medium
C.30 Are pre-proposal visits and
meetings arranged?
No Low
C.31 Are minutes prepared and
circulated after pre-proposal
meetings?
N/A *
C.32 To whom are the minutes
distributed?
N/A *
C.33 Are all queries from
consultants
answered/addressed in
writing?
Yes *Low
C.34 Are the technical and
financial proposals required to
be in separate envelopes and
remain sealed until the
technical evaluation is
completed?
Yes, first the technical bids are
opened, evaluated, then bidders
are given set of instructions on
what to improve in their bids
(what is non-compliant) and 3
business days to do so. After
expiration of this period the
price bids of those bidders who
manage to improve their bids are
opened.
*High
C.35 Are proposal securities
required?
Yes *Low
C.36 Are technical proposals
opened in public?
N/A *
C.37 Are minutes of the technical
opening distributed?
N/A *
C.39 Who determines the final
technical ranking and how?
The e-procurement system
automatically determines the
lowest price bidder as a winner.
*Low
C.40 Are the technical scores sent
to all firms?
N/A *
41
QUESTION RESPONSE10 RISK11
C.41 Are the financial proposal
opened in public?
Yes - electronically *Low
C.42 Are minutes of the financial
opening distributed?
Yes - electronically *
C.43 How is the financial
evaluation completed?
Based on the lowest price *High
C.44 Are face to face contract
negotiations held?
No *Medium
C.45 How long after financial
evaluation is negotiation held
with the selected firm?
20 calendar days for
advertisement 10 business days
for evaluation 3 business for bid
improvement 10 business days
for evaluation. These periods are
fixed.
C.46 What is the usual basis for
negotiation?
N/A
C.47 Are minutes of negotiation
taken and signed?
N/A *
C.48 How long after negotiation is
the contract signed, on
average?
20 calendar days for
advertisement 10 business days
for evaluation 3 business for bid
improvement 10 business days
for evaluation. These periods are
fixed.
C.49 Is there an evaluation system
for measuring the outputs of
consultants?
No Medium
Payments
C.50 Are advance payments
made?
Yes, usually within the range of
10-30%
Low
C.51 What is the standard period
for payment included in
contracts?
1 month Low
C.52 On average, how long is it
between receiving a firm’s
invoice and making payment?
Within the 1-month period Low
C.53 When late payment is made,
are the beneficiaries paid
interest?
No interest is paid on late
payments
Medium
D. EFFECTIVENESS
42
QUESTION RESPONSE10 RISK11
D.1 Is contractual performance
systematically monitored and
reported?
No – most contracts are
managed by branch offices of
the agency in the regions
High
D.2 Does the agency monitor and
track its contractual payment
obligations?
Yes – the accounting department Low
D.3 Is a complaints resolution
mechanism described in
national procurement
documents?
No, the complaints are received
in a form of a simple letter. Then
it is reviewed (as any other
letter) by the Legal department
together with necessary technical
specialists and a reply is
prepared. If the complainant is
unsatisfied with the reply he can
address the national court.
High
D.4 Is there a formal non-judicial
mechanism for dealing with
complaints?
No High
D.5 Are procurement decisions and
disputes supported by written
narratives such as minutes of
evaluation, minutes of
negotiation, notices of
default/withheld payment?
No *High
E. ACCOUNTABILITY MEASURES
E.1 Is there a standard statement of
ethics and are those involved
in procurement required to
formally commit to it?
No *Medium
E.2 Are those involved with
procurement required to
declare any potential conflict
of interest and remove
themselves from the
procurement process?
Yes *Low
E.3 Is the commencement of
procurement dependent on
external approvals (formal or
de-facto) that are outside of the
budgeting process?
No Low
E.4 Who approves procurement
transactions, and do they have
Procurement transactions are
approved by Managing Director
on Procurement Issues who is
*Low
43
QUESTION RESPONSE10 RISK11
procurement experience and
qualifications?
well experienced in
procurement.
E.5 Which of the following actions
require approvals outside the
procurement unit or the
evaluation committee, as the
case may be, and who grants
the approval?
The procurement process is
initiated by the respective
department who needs this
contract. Afterwards this
initiative is given as an
instruction to the procurement
unit who prepared respective
bidding documents based on pre-
determined templates where they
introduce only minor changes,
since there is only one template
used for every kind of
procurement.
a) Bidding document,
invitation to pre-qualify or
RFP
No
b) Advertisement of an
invitation for bids, pre-
qualification or call for
EOIs
No
c) Evaluation reports Tender Committee *Low
d) Notice of award N/A *
e) Invitation to consultants to
negotiate
N/A
f) Contracts No *Low
E.6 Is the same official responsible
for: (i) authorizing
procurement transactions,
procurement invitations,
documents, evaluations and
contracts; (ii) authorizing
payments; (iii) recording
procurement transactions and
events; and (iv) the custody of
assets?
Payment is authorized by branch
offices responsible for contract
management.
Procurement decisions made by
tender committee are final.
Procurement transactions are
recorded mostly by the e-
procurement system.
Custody of assets is
responsibility of a separate
division which does not interfere
with procurement/payment
procedures.
*Low
E.7 Is there a written auditable trail
of procurement decisions
Yes – there is a separate protocol
prepared for each procurement
*Low
44
QUESTION RESPONSE10 RISK11
attributable to individuals and
committees?
stage and it is signed by the
involved individuals.
Interviewees:
Mr. Pirmetov Kurbanali Habibulaevich - Director of Procurement Unit (KazAvtoZhol)
Ms. Ermukhanova Aizhan Umarovna - Director of Procurement Administration
(KazAvtoZhol)
45
Annex 2 – Draft Procurement Plan
PROCUREMENT PLAN
Basic Data
Project Name: CAREC Corridors 1 and 6 Connector Road (Aktobe–Kandyagash) Reconstruction Project Project Number: 52286-001 Approval Number: XXXX Country: Kazakhstan Executing Agency: JSC “NC” KazAvtoZhol Project Financing Amount: US$ 200,300,000 ADB Financing: US$ 176,300,000 Cofinancing (ADB Administered): Non-ADB Financing: US$ 24,000,000
Implementing Agency: N/A
Project Closing Date: 30 December 2025 Date of First Procurement Plan: 18 October 2018 Date of this Procurement Plan: 18 October 2018
A. Methods, Thresholds, Review and 18-Month Procurement Plan 1. Procurement and Consulting Methods and Thresholds Except as the Asian Development Bank (ADB) may otherwise agree, the following process shall apply to procurement of works, goods and consulting service.
Procurement of Goods and Works
Method Comments Open Competitive Bidding for Goods Prior review Open Competitive Bidding for Works Prior review
Consulting Services Method Comments
Quality- and Cost-Based Selection for Consulting Firm 90:10 Quality:Cost ratio – Prior review Individual Consultants Selection (ICS) for individual consultant Prior review
2. Goods and Works Contracts Estimated to Cost $1 Million or More
The following table lists goods and works contracts for which the procurement activity is either ongoing or expected to commence within the next 18 months.
Package Number
General Description
Estimated Value
Procurement Method
Review (Prior/ Post)
Bidding Procedure
Advertisement
Date (quarter/year)
Comments
Civil Works – AKRP/CW/OCB-01
Reconstruction of Aktobe–Kandyagash (Two lots: Lot 1 – km11-52 Lot 2 – km 52-100)
192,000,000.00 OCB Prior 1S2E Q4/2018 Prequalification of Bidders: N Domestic Preference Applicable: N Advance Contracting: Y Bidding Document: Large Works
Equipment AKRP/G/OCB-01
Road maintenance
2,230,000.00 OCB Prior 1S2E Q2/2019 Prequalification of Bidders: N Domestic Preference Applicable: N Advance Contracting: Y Bidding Document: Goods
3. Consulting Services Contracts Estimated to Cost $100,000 or More
46
The following table lists consulting services contracts for which the recruitment activity is either ongoing or expected to commence within the next 18 months.
Package Number General Description Estimated
Value Recruitment
Method Review (Prior/ Post)
Advertisement Date
(quarter/year) Type of
Proposal Comments
CSC – AKRP/CS/QCBS-01
Construction Supervision
5,218,000.00 QCBS Prior Q1/2019 FTP Assignment: International
Quality-Cost Ratio: 90:10 Advance Contracting: Y Comments: International
CS – AKRP/IC-01
Technical advisor 320,000.00 ICS Prior Q1/2019 BTP Assignment: International
Advance Contracting: Y
CS – AKRP/IC-02
Financial Management Specialist
240,000.00 ICS Prior Q1/2019 BTP Assignment: International
Advance Contracting: Y
4. Goods and Works Contracts Estimated to Cost Less than $1 Million and
Consulting Services Contracts Less than $100,000 (Smaller Value Contracts)
The following table lists smaller-value goods, works and consulting services contracts for which the activity is either ongoing or expected to commence within the next 18 months.
Goods and Works
Package Number
General Description
Estimated Value
Number of Contracts
Procurement Method
Review (Prior/ Post)
Bidding Procedure
Advertisement Date (quarter/year) Comments
None
Consulting Services
Package Number
General Description
Estimated Value
Number of Contracts
Recruitment Method
Review (Prior/ Post)
Advertisement Date
(quarter/year) Type of
Proposal Comments
CS – AKRP/IC-03
Financial Management Specialist
108,000.00 ICS Prior Q1/2019 BTP Assignment: national
Advance
Contracting: Y
B. Indicative List of Packages Required Under the Project The following table provides an indicative list of goods, works and consulting services contracts over the life of the project, other than those mentioned in previous sections (i.e., those expected beyond the current period).
Goods and Works
Package Number
General Description
Estimated Value (cumulative)
Estimated Number of Contracts
Procurement Method
Review (Prior/Post)
Bidding Procedure Comments
None
47
Consulting Services
Package Number
General Description
Estimated Value (cumulative)
Estimated Number of Contracts
Recruitment Method
Review (Prior/Post)
Type of Proposal Comments
None C. List of Awarded and On-going, and Completed Contracts The following tables list the awarded and on-going contracts and completed contracts. 1. Awarded and Ongoing Contracts
Goods and Works
Package Number
General Description
Estimated Value
Awarded Contract
Value Procurement
Method Advertisement
Date (quarter/year)
Date of ADB Approval of
Contract Award
Comments
Consulting Services
Package Number
General Description
Estimated Value
Awarded Contract
Value Recruitment
Method Advertisement
Date (quarter/year)
Date of ADB Approval of
Contract Award
Comments