Project Administration Instructions

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PROJECT ADMINISTRATION INSTRUCTIONS

PAI No. 3.06
Revised on June 2018

OTHER METHODS OF PROCUREMENT

1. While international competitive bidding (ICB) is the recommended method of procurement to be used for ADB-financed projects, other methods may sometimes be more appropriate.

2. Next to ICB, national competitive bidding (NCB) is often the method requested by borrowers¹, as it utilizes local laws, rules, and regulations to the extent that they are acceptable to ADB. As NCB is separately discussed in PAI 3.05, the other methods of procurement are described here, in descending order of preference, in accordance with the ADB Procurement Guidelines para. 3.1.

1 Throughout these PAIs, the term “borrower” includes “grant recipient.”

A. Limited International Bidding

3. Limited international bidding (LIB) is essentially ICB by direct invitation without the required newspaper advertisement and also without domestic preference. LIB is an appropriate method of procurement when:

(a) there is a limited number of known suppliers, and therefore of potential bidders (preferably at least three) who are likely to have an uncommon technical specialty, skill, or product;

(b) the estimated contract amount is not large enough to interest foreign suppliers and contractors to undertake ICB; or

(c) other exceptional circumstances exist that justify a departure from the full, open tendering provided under ICB such as when early delivery is of paramount importance for certain goods or works in disasters or emergencies, or when rebidding is necessary, the executing agency (EA) may invite bids from all the bidders who purchased the bidding documents at the first instance, or may invite bids only from the bidders who previously submitted the bids.

4. The standard bidding documents (SBDs) used for ICB may be simplified for use in LIB, but the invitation for bids, instructions to bidders, and conditions of contract can be used with little modification. A flowchart showing the main steps for procurement under LIB is provided in Appendix 1. For LIB procurement, the EA:

issues written invitations for bids (providing clear technical specifications for the required goods and related services or works and the terms and conditions of purchase) to all bidders deemed able to provide the goods—preferably a minimum of three—with a minimum bidding period of 3 weeks;

adopts the procedures for public bid opening; and

evaluates the bids using ICB procedures.

5. The EA may optionally advertise the notice inviting bids in English (e.g., on its or the ADB website, in a local newspaper, or through notice to embassies) if there is a possibility that additional suppliers might be interested in the procurement in which case a minimum bidding period of 4 weeks may be adopted.

6. Contract packages proposed for LIB and provisions for prior or post review will be detailed in the procurement plan. The requirements for adopting LIB should be identified during project processing, fully justified, and agreed between Procurement, Portfolio and Financial Management Department (PPFD) and regional departments (RD). For contracts identified for LIB procurement in the procurement plan, review procedures for ICB shall be adopted. Since LIB is also ICB, the same levels of review and approving authority apply as indicated in PAI 3.03.

7. Unless otherwise indicated in the procurement plan, ADB review of subsequent contracts will generally occur after the award of the contract when the EA sends the following:

copies of the signed contract;

bidding documents;

details of bid opening procedures including minutes of bid opening;

bid evaluation report;

results of the evaluation; and

a certificate of eligibility of the contract if required by ADB.

These steps ensure fairness and transparency. ADB reserves the right to refuse to finance the contract if there is misprocurement. ADB, therefore, discourages the system of prior award of contract by the EA and after-the-fact approval by ADB unless the EA has sufficient funds to finance the contract if ADB declares misprocurement.

B. Shopping

8. Shopping is a simplified procedure used for procuring small-value, readily available, off-the-shelf goods or simple civil works of small value. When considering shopping, ADB should be satisfied that there are sufficient suppliers (or contractors for works) that can meet the requirements of the procurement, and should assure competitive prices by comparing a minimum of three quotations.

9. The single contract ceiling for shopping is currently set at $100,000 for all borrowers but may be adjusted in consultation with the PPFD, depending on the capacity of the borrower. Contracts worth more than the ceiling would normally be procured following NCB or ICB unless another method (such as direct contracting) has been specifically agreed in the financing agreement and procurement plan.

10. Project staff should recommend that EAs use the sample requests for quotation (RFQ) documents for inviting quotations from suppliers and contractors. A guidance note on conducting procurement by shopping is also available from PPFD. Appendix 2 provides the following documents:

i) Shopping for Goods Sample Request for Quotation;

ii) Shopping for Works Sample Request for Quotation; and

iii) Guidance on Shopping for Procurement.

11. Shopping is generally used for local procurement. Review and approval of the procurement are within the purview of the project divisions or resident missions administering the project.

C. Direct Contracting

12. Direct contracting involves contracting without competition (single source) of a particular manufacturer, supplier, or contractor, and is allowed by ADB in any of the following circumstances.

Procuring goods:

if standardization is important and the equipment and spare parts needed to expand or repair existing equipment must be procured from the original supplier or from a supplier of identical goods;

if the equipment or goods are proprietary and obtainable only from one supplier;

if critical items are to be procured from specialized suppliers as a condition of a performance guarantee;

if additional items are required under an existing contract that was awarded in accordance with ICB procedures beyond the normal limits for variations under the contract—ADB should be satisfied that no better offer is likely to be received under another procurement procedure and that the price to be paid is not more than the original price; usually, the

repeat order should occur within 18 months of the original order, and the additional quantities should not exceed 30% of the original

;

in exceptional cases such as in response to natural disasters; and

for very small-value items up to $10,000 such as office equipment and consumables that the EA may purchase directly from a supplier.

Procuring works:

if civil works are a natural extension of an earlier or ongoing job, or when engaging the same contractor is shown to be more economical and ensures compatibility of work quality; and

in exceptional cases such as in response to natural disasters.

13. Staff should note that direct contracting for standardization may be justifiable if the original equipment is suitable and the possible advantages of having another make of equipment and an alternative supplier are outweighed. In the case of proprietary parts, if a number of distributors stock the same parts and are free to compete, they must be purchased through competitive bidding.

14. In direct contracting (negotiations) for extending civil works, the following must be shown:

The original contract was awarded following ICB, LIB, or NCB acceptable to ADB.

There is a valid and reasonable basis for unit rates that could be the unit rates of the earlier contract, adjusted in accordance with the provisions in the original contract to reflect any increase or decrease in the cost of construction.

The contractor's performance has been satisfactory.

The additional work may be unlikely to result in lower prices if subjected to bidding.

15. In all these cases, ADB must first be satisfied that preferred methods such as competitive bidding offer no advantage and that the prices to be paid under this noncompetitive method are reasonable, subject to verification. Contract packages to be procured using direct contracting are to be identified in the procurement plan and justified at the Management/Staff Review Meeting. Contracts for direct contracting shall always undergo prior review, except for small value contracts up to $10,000.

Appendix 1

Flow chart on procurement under Limited International Bidding

PAI 3.06 Appendix 1 - 13 Aug 2014.pdf

Appendix 2

Shopping for Goods Sample Request for Quotation; Shopping for Works Sample Request for Quotation; and Guidance on Shopping for Procurement.

PAI 3.06_Appendix 2_June2018.pdf