Project Administration Instructions

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PROJECT ADMINISTRATION INSTRUCTIONS

PAI No. 3.10
Revised on June 2022

FUNCTIONS AND RULES OF THE PROCUREMENT COMMITTEE

A. Introduction

1. ADB project divisions¹ are primarily responsible for monitoring and verifying executing agency (EA) procurement actions and ensuring that approved procurement procedures have been applied properly. The delegation of authority for procurement to ADB regional and resident missions is established in their respective operating guidelines. The Procurement Committee is established to ensure consistent and correct application of procurement practices, generally for contracts valued at $70 million and above.

¹Includes sector divisions, resident missions, and regional offices that are implementing projects.

2. To ensure that delegated authority is exercised appropriately, PPFD will periodically review the timeliness and quality of procurement approvals by authorities other than the PC. The findings, with recommendations to address any adverse findings, will be reported to the PC semi- annually. Action plans will be agreed with regional departments as appropriate.

B. Composition of the Procurement Committee

3. The Procurement Committee members are the following:

Director General,
Procurement, Portfolio and Financial Management Department (PPFD) Chair
Assistant General Counsel concerned Member
Director, project division concerned Member²

² For projects administered by resident missions, the member will be the country director or designated representative of the mission concerned.

4. In the absence of the Director General of PPFD, the Deputy Director General of PPFD will chair the Procurement Committee. In the absence of both the Director General and the Deputy Director General of PPFD, Director of PFP1 or PFP2 which is not responsible for the region for the concerned procurement will chair the Procurement Committee. If all three are absent, the assistant general counsel concerned will chair the Procurement Committee, in which case PPFD will be represented by a senior staff member.

5. The Director General of PPFD will appoint a lead or principal procurement specialist to serve as the permanent secretary of the Procurement Committee. In the absence of the permanent secretary, the Director General may designate an acting secretary.

C. Matters for Procurement Committee Consideration

6. The following matters are submitted to the Procurement Committee for decisions on whether or not to concur with executing/implementing agency recommendations:³

³Another threshold, other than as indicated below, may be applicable to a project division if approved by Director General, PPFD based on the project division’s track record of strong performance in reviewing and approving procurement transactions.

a proposal or decision to prequalify applicants for contracts estimated at $70 million and above;
approval of an EA evaluation report on technical proposals in two-stage or two envelope bidding procedures if the estimated contract value is $70 million and above;
a proposal or decision to award or rebid a contract valued at $70 million⁴ and above⁵;
a proposal or decision to cancel⁶ bidding for a contract valued at $70 million and above;
a case where the proposed action of a borrower or EA conflicts with normal ADB requirements as specified in the financing agreement, procurement plan, or the ADB Procurement Guidelines, except for changes in the method of procurement for which the procedures indicated in PAI 3.02, Part H are to be followed;
a proposal or decision that changes the essential terms and conditions that formed the basis of a decision taken previously⁷ by the Procurement Committee (either on a no- objection basis or a formal meeting) in the same case;
a proposed contract modification⁸ to a works, goods, or design-supply-install contract that, when combined with prior contract modifications, would increase the original contract amount by more than 15% and at least $70 million in the aggregate;
any procurement matter that a regional department deems complicated or has issues requiring broader discussion, irrespective of value; and
any procurement matter that may be referred to the Procurement Committee by Management.

⁴

When bids are quoted in currencies other than dollars, the most recent exchange rate as indicated in the bidding documents for the purpose of bid evaluation is used.

⁵

Notwithstanding this provision, a financial bid evaluation report for a contract proposed for award at $70 million and above and having no issues may be jointly approved by the relevant project division director and director of PFP1/PFP2 (co-approval) pursuant to PAI 3.02 (Table 2), PAI 3.03 (Table 2), PAI 3.05 (Table 2), and PAI 3.10 (Table 2). For the purposes of this footnote, ‘No issues’ denotes low procurement risk in awarding a contract as proposed by the EA and is indicated by, but is not limited to, (i) the bid recommended for award had the lowest price at bid opening and is not conditional, (ii) the EA does not recommend price negotiations with the winning bidder or rejection of all bids, and (iii) the EA does not recommend, due to Abnormally Low Bid considerations, to reject a bid or increase the performance security of the bidder recommended for award. Director of PFP1/PFP2 assesses the procurement risk of each contract proposed for award at $70 million and above, in consultation with the project division and OGC if necessary.

⁶

Includes declaring misprocurement.

⁷

May include declaring misprocurement.

⁸

Changes in the contract price brought about by applying the price adjustment mechanism specified in the contract are not considered contract modifications.

For the above cases where prior review is prescribed, proposals are to be submitted for approval, prior to taking the decision (for example, a proposal to award a contract must be approved by the Procurement Committee before the contract is actually awarded). Where post review is applied, contracts are to be submitted to the Procurement Committee prior to processing for disbursement or for retroactive review even if the EA has already approved awards and signed contracts.

D. Submissions

7. The Procurement Committee makes a decision on whether or not to concur with EA recommendations on the basis of an electronic Procurement Approval Form which is in Appendix 1 of this PAI. The project division or resident mission concerned will prepare a detailed and self- contained submission to enable the committee to make a fully informed decision. The EA’s bid evaluation report (BER) is attached to the form. RD staff shall encourage the EA to complete Parts B, C and D of the ePAF when they submit their evaluation reports to facilitate the approval process. Reviewing staff are responsible for ensuring that all facts, issues, representations, and recommendations regarding the particular procurement are accurately and completely reflected and discussed. The members of the Procurement Committee are entitled to rely on the completeness and accuracy of the submission in providing their recommendations and/or decisions.

Submissions on a No-Objection Basis

8. All matters to be considered by the Procurement Committee are normally acted upon on a no- objection basis if the recommendations of the project division, procurement specialist, and project counsel are in agreement. The recommendation of the borrower or EA must be appended together with the written comments on the proposals of the borrower or EA from the project division, procurement specialist, and project counsel. Copies of representations received are also to be attached and addressed in the submission. The originating project division will circulate the final no-objection ePAF form to all members in the following order:

Director, project division concerned,
Assistant General Counsel concerned, and
Director General, PPFD

After receiving the submission, any committee member may request that the case be formally discussed at a meeting.

Submissions Requiring a Meeting of the Procurement Committee

9. Normally, a meeting would be held to consider: (i) a proposal that seeks to vary the essential terms and conditions that formed the basis of a decision taken previously (either on a no-objection basis or in a formal meeting) in the same case; (ii) any procurement matter that is overly complicated or has issues requiring broader discussion, as might be requested by the project division, the project counsel, or the procurement specialist; or (iii) any procurement matter referred to the Procurement Committee by Management.

10. The completed ePAF should be sent by the project division to the chair of the Procurement Committee, with copies to all committee members, the Director of PFP1 or PFP2, the project counsel concerned, the secretary, and the procurement specialist concerned. The borrower or EA recommendation and the comments of the consultant, if any, are to be attached together with written comments on the borrower or EA proposals by the project division, procurement specialist, and the project counsel concerned. Copies of any representations received must also be attached and addressed in the submission.

Submissions Involving Contract Modifications

⁹

See PAI 3.11 Section B on contract modifications.

11. Procurement Committee approval shall be required for any proposal to modify a works, goods, or design-supply-install contract, such that, when combined with prior contract modifications, would increase the original contract amount by more than 15% and by at least $70 million in the aggregate. Approval may be sought either on a no-objection basis or through a formal meeting following the relevant procedures outlined in this PAI using the Contract Modification Approval Form attached as Appendix 2 to this PAI.

12. Staff should ensure that sufficient funds are available to finance the contract modification and consult with the Controller’s Department (CTL) as needed. Consultations with the Office of Anticorruption and Integrity (OAI) prior to seeking approval is required if the contractor or supplier appears on the ADB’s complete Sanctions List. After the Procurement Committee approves a contract modification in accordance with para. 11, a subsequent modification affecting the contract amount will require ADB project division approval, but shall revert to the Procurement Committee when a proposed new modification involves an aggregate additional 15% of the contract amount and increases the value to $70 million and above in the aggregate, over the previously approved amount. After approval of the contract modification, the project division will update the EA contract record (using the Procurement Contract Update Sheet) by entering the revised data into the Loan/Grant Financial Information System (LFIS/GFIS). The reason for the contract modification and data, such as the original contract amount and completion date, should also be indicated in the updated EA contract record for future reference. Any extension of time should also be reflected in the EA contract record.

E. Meetings

13. The secretary of the Procurement Committee will recommend to the chair that a meeting be convened, after receipt from the Project Division of: (i) a draft ePAF, and (ii) a request for a meeting of the Procurement Committee. Normally, at least 2 working days are required for the members to study the submission before a meeting.

14. All members are to be present at meetings. If a member is unable to attend, the officer-in- charge (OIC) shall be the representative. If the OIC is also unavailable, a representative is to be designated in writing by the member or by the head of the department or office concerned, to whom all responsibility and authority of the absent member is to be delegated.

15. The chair may permit other ADB staff or an external highly qualified technical consultant to be present at a meeting if the staff/consultant can provide expert advice on the case to be considered. External experts shall brief the committee but may not be present during the case deliberations.

F. Procurement Committee Decisions

16. The Procurement Committee renders decisions unanimously. Without unanimity, the chair will refer the matter to the head of the originating department or office to resolve the differences and reach a unanimous decision. If a unanimous decision is still not reached, the head of the originating department or office will refer the case to the Vice-President concerned for a decision. The decision thus taken is final. The provisions in paras. 18 and 19 are not applicable in this case. Deliberations of the Procurement Committee remain confidential even after award of contract.

17. The project division director or concerned resident mission country director will be responsible for implementing the decision taken.

G. Special Review Procedure

18. A special review of a Procurement Committee decision on a contract award proposed by the EA will be conducted as an exceptional case when all of the following are met:

the decision of the committee conflicts with the proposal or decision of the borrower or EA in determining the lowest evaluated, substantially responsive bid entitled to award of contract;
the matter remains unresolved for more than 4 months after the committee decision;
the estimated value of the contract exceeds $70 million and the contract involves a major project component; and
a special review has been requested by the borrower through the operations -president concerned.

19. Upon the request by the operations vice-president concerned for a special review, the Vice- President, Administration and Corporate Management (VPAC) shall create and chair a special review committee with four members, namely:

Director General, PPFD General Counsel

Director General of the regional department concerned Senior staff member appointed by VPAC

The review committee chaired by VPAC determines its own procedures in each case. The committee’s decision is final.

H. Correspondence with Board Members and Bidders

20. When the approval of contract award (prior or post review) lies with the project division:

correspondence from Board members or bidders is replied to by the director general, project division director, or country director;
the reply is sent after consulting PPFD and OGC, if necessary;
representations from the Board should be coursed through Office of the Secretary to the project division; and
the response, also through the Office of the Secretary, briefly explains the status of issues raised.

21. When the approval of contract award (prior or post review) is taken by the Procurement Committee:

the project division responds to issues that have not reached the Procurement Committee after clearance by PPFD and OGC;
the Procurement Committee chair responds to issues that have reached the committee, if necessary, after consulting the project division and OGC.

I. Procurement Committee Review Process

22. Prequalification and bid evaluation reports for contracts for $70 million and above and all other matters to be considered by the Procurement Committee in accordance with para. 6 are to be submitted by the project division through the secretary of the committee for the committee’s consideration. The process is described in Table 1 below.

Table 1: Reviewing and decision authority for contracts of $70 million and above¹⁰

¹⁰

Another threshold, other than as indicated below, may be applicable to a SD/RM if approved by Director General of PPFD based on the SD/RM’s track record of strong performance in reviewing and approving procurement transactions

Action/Decision	Prior Review (Prior to award)	Post Review (After award)
$70 million and above	• EA submits bid/PQ evaluation report to ADB (SD/RM) • SD/RM sends copy of evaluation report within 1 working day to PFP1/PFP2 and OGC for parallel review • SD/RM, PFP1/PFP2 and OGC will prepare written comments within 5 working days. • SD/RM consolidates comments and prepares the draft procurement approval form or if appropriate a draft response to the executing agency requesting clarification/(s) within 1 working day, • If clarifications are required, SD/RM sends clarification/(s) to executing agency within 1 working day and awaits response for input into the draft procurement approval form, or • SD/RM submits to the secretary of the Procurement Committee the completed draft procurement approval form • Secretary of the Procurement Committee reviews and takes appropriate action, ensuring that approval of the procurement within a total of 10 working days from receipt of bid/PQ evaluation report, • assuming no clarification is sought from EA. • Immediately upon receipt of all comments the secretary of the Procurement Committee will take one of the following actions: • finalize and agree on circulation of the procurement approval form • schedules a Procurement Committee meeting • schedules a meeting of the reviewers to address any issues identified • takes other appropriate action in case an unresolved or new issue is identified	Post review is not normally adopted for contracts $70 million and above.

23. Under prior review, all the above activities take place before approving a contract award. Under post review they are done ideally as soon as possible after the contract award

J. Decision authority for contracts below $70 million

24. Prequalification and bid evaluation reports for contracts below $70 million shall be reviewed and approved as per the process presented in Table 2 below:

Table 2: Reviewing and decision authority for contracts below $70 million¹¹

Action/Decision	Prior Review (Prior to award)	Post Review (After award)
From $20 million up to, but not including, $70 million ¹²	• EA submits bid/PQ evaluation report to ADB (SD/RM) • SD/RM sends copy of evaluation report within 1 working day to PFP1/PFP2 for parallel review • SD/RM and PPFD will prepare written comments within 5 working days • SD/RM consolidates comments and prepares the draft procurement approval form or if appropriate a draft response to the executing agency requesting clarification/(s) within 1 working day • If clarifications are required, SD/RM sends clarification/(s) to executing agency within 1 working day and awaits response for input into the draft procurement approval form, or • SD/RM sends completed procurement approval form to PFP1/PFP2 • SCD gives no-objection to EA action, with countersignature or endorsement from PFP1/PFP2 Director. PFP1/PFP2 director may delegate authority to a senior PPFD outposted staff • If SD/RM and PFP1/PFP2 disagree, case elevated to the Procurement Committee. • SD/RM and PFP1/PFP2, may seek OGC opinion • SD/RM shall ensure ADB action within a total of 8 working days	Same procedure as for prior review but the review includes the bidding documents issued.

¹¹

¹²Notwithstanding the provisions of this Table, a financial bid evaluation report for a contract proposed for award at $70 million and above and having no issues may be jointly approved by the relevant SCD and PFP1/PFP2 director (co-approval). For the purposes of this footnote, ‘No issues’ denotes low procurement risk in awarding a contract as proposed by the EA and is indicated by, but is not limited to, (i) the bid recommended for award had the lowest price at bid opening and is not conditional, (ii) the EA does not recommend price negotiations with the winning bidder or rejection of all bids, and (iii) the EA does not recommend, due to Abnormally Low Bid considerations, to reject a bid or increase the performance security of the bidder recommended for award. PFP1/PFP2 director assesses the procurement risk of each contract proposed for award at $70 million and above, in consultation with the SD/RM and OGC if necessary.

	from receipt of bid/PQ evaluation report, except if the matter is elevated to the Procurement • Committee.
Below $20 million (ICB or NCB)	• SD/RM reviews and SCD gives no- objection to EA action, with endorsement from PASS accredited staff. • SD/RM shall ensure ADB action within a total of 8 working days • SD/RM may consult PPFD/OGC on specific issues	Same procedure as for prior review but the review includes the bidding documents issued.
Contracts under post review sampling	NA	• EA awards contract • ADB/SCD requests for documents of contracts in sample for review after award

Notes: SD/RM=sector division or resident mission; PFP1/PFP2=PPFD divisions; SCD=sector or resident mission country director; EA=executing agency; OGC=Office of the General Counse

25. Directors of project divisions should see to it that information similar to what is presented to the Procurement Committee is also made available to them as a basis for their own actions and that such information is secured to facilitate reviews and audits.

Appendix 1

Procurement Approval Form

appendix 1.pdf

Appendix 2

Contract modification approval form

appendix 2.pdf