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PROJECT ADMINISTRATION INSTRUCTIONS
PAI No. 3.03
Revised on June 2022

INTERNATIONAL COMPETITIVE BIDDING
A. Introduction

1. International competitive bidding (ICB) is the most appropriate method of procurement under ADB financing in most cases. This provides an executing agency (EA)1 with a wide choice in selecting the best bid from competing suppliers and contractors. It gives prospective bidders from eligible source countries equal opportunity to bid on goods and works2 that are being procured under ADB financing. The flow charts in Appendix 1 of this Project Administration Instructions (PAI) show the main steps for procurement under ICB, including review and approval procedures.

      1 Includes implementing agency (IA) for the rest of this PAI.
      2 “Goods and works” include related services such as transportation, insurance, installation, and commissioning, training and initial maintenance.

2. The financing agreement usually provides that procurement under the project must follow ADB Procurement Guidelines. The borrower3 and its EA must follow the recommended procedures in preparing prequalification, bidding, and contract documents; advertising bid invitations; and accepting, opening, and evaluating bids. These procedures, their requirements, and relevant issues are discussed in this PAI and in PAI 3.09.

      3 Includes grant recipient for the rest of this PAI.

B. Price Thresholds for International Competitive Bidding

3. ICB procedures are normally employed for contracts with estimated values that exceed thresholds set at the time of procurement plan preparation. The current range of ICB thresholds for ADB borrowers is a minimum of $3 million and a maximum of $404 million for works contracts or a minimum of $1.0 million and a maximum of $10 million for supplying goods depending on the assessed performance of contractors/suppliers in the market. These ICB thresholds also represent contract amount ceilings for national competitive bidding (NCB) and are normally stated in the procurement plan except when some contracts have yet to be specified as in sector projects. For the current thresholds by country, ADB staff administering projects shall refer to Appendix 2 or consult with the Procurement, Portfolio and Financial Management Department (PPFD) for the latest values.

      4 The “$” values may refer to equivalents in other currencies.

C. Packaging International Competitive Bidding Contracts

4. Whenever possible, procurement should be such that each bid package or contract is large enough to be suitable for ICB. The size and scope of individual contracts will depend on the magnitude, nature, and location of the project. The objective in determining contract packages is to divide the requirements of the project into a manageable number of appropriate contract packages that will produce the maximum competitive response from bidders. To do this for goods procurement, the nature and value of the goods grouped into each contract package and the conditions of the potential market of supply must be understood. For works, homogeneous contract sections or buildings or other physical facilities need to be determined and assessed against the capabilities of local contractors and the perceived level of interest of foreign contractors. The capacity of an EA to administer the contracts may also affect the choice of contract type. Contract packaging is concluded during project processing by agreement between the EA and ADB. The contract packages and methods of procurement are documented in the procurement plan and the project administration manual (PAM) and summarized in the Report and Recommendation of the President (RRP).

5. Each contract normally includes only goods of the same or related specialty or works of a similar kind. For projects requiring both civil works and the supply and installation of equipment, separate contracts are normally awarded. Note that a certain works contract may include the supply of some or limited pieces of equipment, and a supply contract may include installation works that are civil in nature. The type of contract is normally determined by which items in the scope—goods or works—dominate; however, a single contract may be offered for a group of structures for manufacturing a certain product or for equipment and other fixtures and the building containing them for a manufacturing or industrial operation for a certain type of output. Normally, such contracts are large and complex and are referred to as a contract for “plant,” e.g., power plants, water treatment plants, telecommunications systems, and similar projects.

6. Normally, employers (and/or purchasers) provide the design and specifications, the winning suppliers or contractors deliver the goods or construct the physical facility, and the employer’s representatives or engineers supervise the performance of the contract. Bidding starts when the engineering designs are ready so that suppliers and contractors will be able to quote prices for the goods and/or works desired and in accordance with employer-provided designs and specifications. When a large, complex contract is to be undertaken, the employer may consider that completing all the engineering designs and specifications before selecting the contractor may not be efficient, in which case, the design work is included in the scope of the contract to be bid out. Thus, a single-responsibility design, supply, and install contract should be considered. Note that a single-responsibility contract has advantages, but the employer will have less control over the design and may have difficulty imposing varied requirements during contract implementation.

7. In the context of ADB-financed projects, particularly for a contract for plant, another dimension in classifying the type of contract is whether it is a turnkey contract in which the engineering, the design, the supply of equipment, and the construction and commencement of operations of a complete plant are provided through a single contract, including commissioning and training. The employer requires the delivery of a fully-equipped facility from the contractor, ready for operation (at the “turn of the key”). Usually, the contractor carries out all the engineering, procurement, and construction works, in which case, a turnkey contract is also termed an EPC contract. EPC contracts, which have the advantage of less risk and administrative burden on the employer, normally involve little or no underground works. Note that the more the responsibility given to the contractor, the less the employer’s role in administering the contract. More responsibility also means more risk taken by the contractor with the expectation of higher contract prices to accommodate it.

8. Contract size must also be considered. If there is unlikely to be international interest, particularly for smaller value contracts, NCB may be considered and the criteria are set out in PAI 3.05.

9. For similar but separate construction works or items of equipment, bids should be invited under alternative contract options, i.e., bidders may submit bids for any or all contracts in a multi-contract package so that both small and large contractors or suppliers can bid for individual sections of the contract or for a group of similar goods. Bids and combinations of bids are evaluated simultaneously to determine the least cost combination. The method of evaluating and awarding the contract must be clearly stated in the bidding documents.

10. Multiple contracts bid and evaluated at the same time involve bid comparisons to arrive at the least cost combination for the EA. Bidders may offer various combinations of discounts for awards of two or more contracts; and in another dimension of evaluation, bidders may be eligible for contract awards based on different qualification criteria, i.e., annual turnover, financial resources, and relevant experience. Thus, a matrix of combinations needs to be evaluated which becomes complicated when more than 5 contracts are taken up at the same time. ADB staff need to discuss the number of contracts packaged together carefully with the EA, as experience indicates that debriefing losing bidders may present difficulties when more than five contracts are bid together.

11. Depending on the capacity and experience of EAs, project teams may consider contract forms other than those provided in ADB’s standard bidding documents such as internationally recognized forms for design-build, design-build-operate, operation and maintenance, turnkey or EPC contracts. In all cases, ADB’s bidding procedures will be used.

D. Bidding Procedures

12. The ADB Procurement Guidelines prescribe two main bidding procedures and their variants that an EA may choose from, to suit procurement: single-stage, one-envelope and two-stage are the default procedures; and the two-envelope procedures adapted for single-stage and two-stage are the variants. Choosing the appropriate bidding procedure will depend on the complexity of the contract and the circumstances surrounding procurement. These bidding procedures may be utilized in NCB or other methods of procurement.

1. Bidding Procedures and Contract Type

13. The four bidding procedures are described in the ADB website5. The single-stage: one-envelope procedure, or simply the “single envelope procedure,” is the generally recommended ADB procedure. Not all procedures are appropriate for all contract types. Goods procurement may utilize the four bidding procedures, but the procurement of works normally use only the single envelope procedure and its variant, single-stage, two-envelope. The latter procedure is popular in South Asia and Southeast Asia, and may be prescribed in their national procurement laws, rules and regulations. For the procurement of plant, either the single-envelope or the two-stage procedures are recommended. For highly complex procurement, e.g., complex power plants or processing plants, a bidding procedure for design-build contracts, which may be different from a two-stage procedure, could be used with prior consultations with OGC and PPFD.


14. While prequalification is not a separate bidding procedure, it is a procedure that is part of competitive procurement in which the EA/IA assesses the suitability of firms to undertake a specific contract prior to being invited to submit a bid. In accordance with the guidelines (para. 2.9), prequalification is suitable for large or complex works, as well as for large and complex plant contracts, and for contracts to be bid as turnkey or design and build contracts. Another situation in which prequalification is suitable for some EAs is when significantly large numbers of bidders are expected to participate, and screening their qualifications early will reduce the number of technical and financial proposals to be evaluated in tedious detail during the actual bidding.

15. ADB has issued a standard procurement document for prequalification with a comprehensive user’s guide that provides guidance on preparing the document and managing the process and a discussion on the benefits and disadvantages of undertaking prequalification. Note, however, that the document that can be downloaded from www.adb.org was prepared for large and complex works contracts and adapted for contracts for plant.

16. ADB staff should take note of the following when supervising projects undergoing prequalification:

17. Prequalification is followed by closed competitive bidding to which only those firms meeting specified prequalification criteria are invited. The results of prequalification shall be used for bidding within 6 months after approval or within 1year from the deadline for submission of applications. Use of the prequalification results after this requires prior approval of ADB. If they are not used after one year, the EA may instead seek prior ADB approval to proceed with bidding under post-qualification.

E. Planning for International Competitive Bidding

18. The requirements for goods and/or works are determined from the outputs of project preparatory activities, and the cost estimates are updated to current costs. These requirements are translated into contracts (lots) or packages (groups) of contracts based on project locations, homogeneous works sections, EAs or IAs, and their procurement and supervisory capacities. To provide the optimal impacts to project beneficiaries, the schedule of implementation and completion of these requirements must also be extracted from the feasibility or other reports and considered in identifying and scheduling ICB procurement activities as indicated in the procurement plan.

19. While the ADB default procurement method is ICB, staff should expect that borrowers will tend to promote their own sets of procurement rules and regulations, so processing staff should be prepared to discuss the merits of ICB from the foregoing discussions, as well as from PAI 3.01. Local rules and regulations still need to be assessed against the guidelines to determine whether they can be the basis for adopting NCB for contract packages. Conditions for applying these local rules and regulations are spelled out in the NCB annex of the procurement plan or in the financing agreement (PAIs 3.02 and 3.05).

20. Staff should consider that EAs and IAs will need to prepare detailed specifications or detailed engineering, and their capacity to do so will determine whether consultants are to be hired (normally under advance action). The completion of these tasks normally allows procurement to start with the engineering consultants providing assistance. When contracts for plant are identified, these consultants may deliver only performance specifications or conceptual designs, when design, supply, and install contracts are to be procured.

21. Among ICB contracts and packages, single-stage: one-envelope bidding is usually adopted for straightforward goods and simple works procurement. Some ADB regions have a preference for single-stage: two-envelope bidding, mainly for undertaking technical evaluations without being influenced by the price. For planning purposes, staff may advise EAs that different bidding procedures require different time requirements. Appendix 3 provides guidance on the minimum milestone targets under most ideal conditions for these two bidding procedures. These timelines may be adapted taking into account country processes and other factors.6

      6 For example, the following factors will extend the timelines: additional advertising requirements; limited availability of technical expertise in the EA; layers of technical review required; and multiple levels of approving authorities after the technical review.

22. For large and complex works contracts and if procuring plant and turnkey contracts is required, two-stage bidding is most appropriate. When prequalification is also contemplated for such large and complex projects, evaluating qualifications do not need to be a separate process but may also be undertaken in the first stage. Experience has shown that two-stage: two-envelope bidding does not offer advantages in terms of time, particularly when complications in determining rectifiable deviations in the technical evaluation stage may arise.

F. Distinctive Features of International Competitive Bidding

1. Proper Advertisement

23. Proper advertisement is a key element of ICB, providing timely, adequate, and correct information to potential bidders in ADB member countries. Advertisements serve to inform potential bidders and the public that the ADB procurement system and procedures shall apply. Moreover, a publication on the ADB website leads an interested party to the ADB guidelines as well as the SBDs to be used. It is likewise advised that the ADB anticorruption policy applies, including sanctions currently imposed on firms and individuals. Information on ICB procurement is available in the general procurement notice, the procurement plan, the invitation for prequalification, or the invitation for bids for specific contracts published also on www.adb.org, as well as in a local newspaper with national circulation.

24. For ICB procurement, advertisements or invitations for prequalification and for bids generally require a minimum posting of 6 weeks which corresponds to the minimum period allowed for applicants to prepare prequalification submissions and for bidders to prepare and submit bids. This period is counted from the publication date of the relevant invitation in the Business Opportunities section of adb.org or locally in English (locally known website or local newspaper), or the date when documents are available for issuing, whichever is the later, up to the date for submission of applications or bids. The posting period may be longer for larger and more complex works and plant contracts. Details of advertising requirements for ICB are found in Appendix 4 of this PAI. Inadequate or improper advertising may lead to misprocurement.

2. Use of Standard Bidding Documents

25. The guidelines require that borrowers use the appropriate SBD issued by ADB. During the time of preparation of the procurement plan, master bidding documents (MBDs) should also be prepared, as discussed in Part G of PAI 3.02. For ICB contracts identified in the procurement plan, the ADB SBDs shall be used as basis, subject to the flexibility provided in para. 11 above, but for contracts below the ICB threshold, the likely basis for these MBDs are the national laws, rules or regulations, subject to modification when indicated in the NCB annex of the procurement plan. Once issued at the time of procurement, a contract-specific bidding document becomes the principal document defining the relationship and interaction between bidders and the purchaser/employer (of the borrower) from the time of receipt of the document up to awarding the contract and publishing bid results. PAI 3.09 discusses the SBDs for the various bidding procedures including their most appropriate use and common issues arising from them. The SBDs have been harmonized with similar documents issued by other multilateral development banks and international financial institutions and are available with their user’s guides for downloading from the ADB website. Issues arising under bidding procedures prescribed by these documents are discussed in PAI 3.09.

3. Domestic Preference

26. A margin of preference may be granted for domestically manufactured goods and domestic contractors, when provided in the financing agreement at the request of the borrower. The margin is applied during bid evaluation and referred to as the domestic preference scheme. The scheme grants a margin of preference for domestically manufactured goods to be procured and domestic contractors to be engaged under ADB-financed projects. Applying the scheme is subject to certain eligibility requirements for the goods to be procured in supply contracts and for domestic contractors in works contracts. For works contracts, even before borrowers request to apply the scheme, it has to be determined whether the country is eligible based on per capita GNP as defined by ADB annually7. Note that even when provided in the financing agreement, borrowers may opt not to apply domestic preference in any particular procurement exercise. When applicable, however, the advertisement or invitation, whether for prequalification or for bids, has to clearly state that that the domestic preference scheme shall apply, and the bidding documents to be issued shall indicate the manner of application. Methods for applying domestic preference in accordance with the guidelines8 are clearly indicated in Section 3 of each of ADB SBD. Appendix 5 of this PAI elaborates further on the domestic preference scheme.

      7 ADB Procurement Guidelines, para. 2.55.
      8 ADB Procurement Guidelines, Appendix 2.

27. ICB procurement by ADB EA and IA is subject to review and approval by ADB at various levels depending on the contract size, in combination with the level of supervision (prior or post review) indicated in the procurement plan. PAI 3.02 discusses the review levels and the review procedures. If upon review, ADB determines that the goods or works were not procured in accordance with the agreed procedures in the financing agreement, it may declare misprocurement.

G. Procurement in Projects with Cofinancing 28. The guidelines apply to all contracts for goods and works financed in whole or in part by ADB. In cases where ADB is financing a large procurement package with other cofinanciers, the cofinanciers must decide whose procurement guidelines will prevail. The answer will affect the procurement arrangements for the procurement package concerned, including the following: Negotiating and documenting these procurement arrangements requires timely consultations and close collaboration with Office of Cofinancing Operations (OCO), PPFD, and OGC.

H. Supervision of Procurement under ICB

29. Unless otherwise provided in the financing agreement, all ICB procurement undergoes review—prior or post—by ADB staff as shown in Appendix 1 of this PAI. ADB review is normally conducted at two stages in the procurement process, first at the bid document preparation and second at the bid evaluation and contract award stage. The current process for reviewing EA actions and decisions is in PAI 3.02 Parts B and L, where a table of supervision responsibility and decision authority based on contract size is presented. Guidance is provided to project divisions and to EAs and IAs in bid document preparation and review, through user’s guides in the various SBDs, and in bid evaluation and award through the Guide on Bid Evaluation.

30. Under prior review, the draft contract-specific prequalification and/or bidding documents, submitted by the EA to ADB are circulated for comments to the project counsel, procurement specialist, and in appropriate cases, the financial control specialist concerned. Since these documents are based on the agreed MBDs, comments should be provided to the originating project division within 5 working days of receipt of the documents for consolidation and transmittal back to the EA either to proceed with issuance or for amendments before issuance. Procedure for Review of Prequalification and Bidding Documents is presented in Table 1 below.

31. For ICB contracts following the first of each type, ADB intervention even under prior review may be moved until after EA issuance of documents, so that amendments to the document may still be issued before the submission deadline.

32. Under normal post review for ICB contracts, ADB review is undertaken after the evaluation stage and upon submission by the EA of all documents, including bidding document issued and the prequalification and/or bid evaluation reports. As the project divisions have primary responsibility for the approval of the documents, referral to PPFD and OGC, for legal issues, and Controller’s for currency and payment concerns, is at their option. Decision Authority for Evaluation or Award for Prequalification, Technical, and/or Financial Bids is presented in Table 2 below.

33. Tables 1 and 2 below provide more specific procedures based on contract sizes that correspond to the table of supervision responsibility and authority in Part L of PAI 3.02. Procedures are indicated for the review of bidding documents and the review of bid or prequalification evaluation. Misprocurement may be declared by whoever has supervision authority for a specific contract.

34. When submitting a procurement transaction for review and approval, the Procurement Approval Form attached as Appendix 1 to PAI 3.10 shall be used.

35. In the case of an MFF, each tranche is treated as a separate loan, and the following threshold rules apply:

36. The project division should always obtain copies of documents for all contracts and keep them on file in case a special review is necessary.

I. Publication of Award of Contract

37. For prior review contracts, a list of pre-qualified bidders and recommendations of contract award, shall be published within two weeks from the date of receipt of ADB's " No-objection" or date of contract award whichever is later. The EA shall publish the information in an English language newspaper or well-known and freely accessible website. The information shall comprise of the: (a) name of each bidder who submitted a bid; (b) bid prices as read out at bid opening; (c) name and evaluated price of each bid that was evaluated; (d) name of the bidders whose bids were rejected and reasons of their ejection; and (e) name of the winning bidder, and the price it offered, as well as the duration and summary scope of the contract awarded. For post review contracts, the EA shall publish the result not later than the date of contract award.
Table 1: Review of Prequalification and Bidding Documents (Based on Master Bidding Documents)
Action/Decision
Prior Review Process
Post Review
(1) $50 million and above · Full review based on ADB standard bidding documents prior to issuance of actual bidding document by EA:
    o SD/RM1 and PPFD to review all sections in parallel;
    o OGC comments on contract conditions in parallel
    o Comments of OGC/PPFD provided to SD/RM within 5 working days for consolidation and transmittal to EA within 2 working days from receipt of comments,
    o SD/RM to convey consolidated comments to EA within 1 working day for a total of 8 working days from receipt of bidding documents
· Option for subsequent bidding documents of similar contract type:
    (i) Same reviewers but review after issuance by EA
    (ii) EA submits immediately to ADB issued BD
    (iii) ADB consolidated comments within 8 working days to EA with recommendation to amend BD, if any, as well as possible deadline extension
NA
(2) Below $50 million (except for post review (sampling))· SD/RM reviews based on ADB standard bidding documents and issues no-objection to issue bidding document to EA, subject to:
    o PPFD/OGC endorsement when BDs have exceptions to MBD, or
    o SD/RM with PPFD/OGC advice when requested for other specific issues, or
    o SCD2 gives no-objection, with endorsement from PASS accredited staff
    o SD/RM sends comments to EA within 8 working days
· For subsequent bidding documents of similar contract type:
    (i) Same reviewers but review after issuance by EA
    (ii) EA submits immediately to ADB the issued BDs
    (iii) SD/RM sends comments within 8 working days to EA with recommendation to amend BD, if any, as well as possible deadline extension
· SD/RM may adopt streamlining measure for similar contracts		· Review is undertaken together with bid evaluation and award documents.


Table 2: Decision Authority for Evaluation or Award for Prequalification, Technical, and/or Financial Bids
Action/Decision
Prior Review Process (Prior to award)
Post Review (After award)
(1) $50 million and above · EA submits bid/PQ evaluation report to ADB (SD/RM)
· SD/RM, OGC and PPFD review in parallel with review completion target of 10 working days
· Procurement Approval Form submitted to Procurement Committee for no-objection
· (see PAI 3.10 for detailed procedures)
NA
(2) $20million to $50 million · EA submits bid/PQ evaluation report to ADB (SD/RM)
· SD/RM sends copy of evaluation report to PFP1/PFP2 for review
· PFP1/PFP2 provides comments within 5 working days
· SD/RM prepares Procurement Approval Form within 1 working day and sends completed Form to PFP1/PFP2
· SCD gives no-objection to EA action, with countersignature/endorsement from PFP1/PFP2 Director. PFP1/PFP2 director may delegate authority to senior PPFD outposted staff.
· If SD/RM and PFP1/PFP2 disagree, , case elevated to the Procurement Committee
· SD/RM shall ensure ADB action within total of 8 working days from receipt of bid/PQ evaluation report, except if the matter is elevated to procurement committee
NA

(Note: For exceptional cases where post review is approved for contract sizes in this range, the same procedure as for prior review will apply.)
(3) Up to $20million· SD/RM reviews and SCD gives no-objection to EA action, with endorsement from PASS accredited staff within 8 working days
· SD/RM may consult PPFD/OGC on specific issues or request PC review		Same procedure as for prior review.

Appendix 1

Flow charts on the main steps for procurement under ICB, including review and approval procedures\

appendix 1.pdfappendix 1.pdf
Appendix 2
ICB thresholds

appendix 2.pdfappendix 2.pdf

Appendix 3
Milestones Targets for ADB and Executing Agencies
appendix 3.pdfappendix 3.pdf

Appendix 4
Advertising International Competitive Bidding for Procuring Goods and Works
appendix 4.pdfappendix 4.pdf

Appendix 5
Domestic Preference Scheme

appendix 5.pdfappendix 5.pdf