BOS 1 Procurement of Goods and Works Asian Development Bank Business Opportunities.

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Procurement ofGoods and Works

Asian Development BankBusiness Opportunities

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Asian Development Bank Procurement System – Principles

Key Principles Source of Procurement Economy and Efficiency Fairness Transparency Promotion of Domestic

Industries

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ADBBoard Policy

Commercial Practices

OtherMDBs

ADBExperience

ADBCharter

Asian Development Bank Procurement System - Guidelines

PROCUREPROCUREMENTMENT

GUIDELINGUIDELINESES

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Asian Development Bank Procurement System - Eligibility

Eligibility Goods

• must be produced in a member country

Bidders• must be nationals of eligible source

countries• must not have a conflict of interest• must not be under declaration of

ineligibility by ADB• must not be ineligible due to an UN

Security Counsel resolution • must be, in case of a GOE, legally

and financially autonomous, operate under commercial law and be independent of the Employer

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Responsibilities

The Borrower (Executing Agency) is responsible for all procurement activities

ADB will review the procurement activities to ensure that the ADB’s Guidelines for Procurement are followed

Asian Development Bank Procurement System - Responsibilities

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Asian Development Bank Procurement System - Anticorruption

Corrupt Practiceoffering, giving, receiving, or soliciting, directly or indirectly, anything of value to influence improperly the actions of another party

Fraudulent Practiceany act or omission, including a misrepresentation, that knowingly or recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to avoid an obligation

Coercive Practicesimpairing or harming, or threatening to impair or harm, directly or indirectly, any party or the property of the party to influence improperly the actions of a party

Collusive Practicean arrangement between two or more parties designed to achieve an improper purpose, including influencing improperly the actions of another party

Definitions

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ADB will if it determines at any time that any party has engaged in corrupt, fraudulent, coercive, or collusive practices reject a proposal to award contract cancel the portion of a loan declare a firm ineligible either indefinitely

or for a stated period of time inspect accounts and records of suppliers

and contractors and have them audited by auditors appointed by the Bank

Asian Development Bank Procurement System – Anticorruption

Actions

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Asian Development BankProcurement System – Procurement Methods

International Competitive Bidding

Limited International Bidding

National Competitive Bidding

Shopping Direct Contracting Force Account Procurement from

Specialized Agencies Procurement Agents Inspection Agents

Procurement in Loans to Financial Intermediaries

Procurement under BOO / BOT / BOOT, Concessions and Similar Private Sector Arrangements

Performance Based Procurement

Procurement under Loans Guaranteed by ADB

Community Participation in Procurement

Procurement under Disaster and Emergency Assistance

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International Competitive Bidding (ICB)

For supply contracts valued at US$1.0 million or more

For works contracts valued at US$10.0 million or more

Value for money

Provides for adequate, fair and equal opportunities


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Preparation of Preparation of BidsBids

Bid OpeningBid Opening

Bid EvaluationBid Evaluation

Award of Award of ContractContract

PrequalificationPrequalificationICB Activities


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Source of Procurement Use of SBDs Reference to ADB Bid Validity & Bid

Security Language Clarity Standards Use of Brand Names Pricing Price Adjustment Transportation and

Insurance

Currency of BidCurrency of Bid Currency of Bid Comparison Currency of Payment Terms of Payments Alternative Bids Conditions of ContractConditions of Contract Performance Security Liquidated Damages & Bonus Force Majeure Settlement of Dispute

Key Provisions of ICBKey Provisions of ICB


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Time for Preparation of Bids

Bid Opening Procedures

Clarification or Alteration of Bids

Confidentiality Examination of Bids Evaluation and

Comparison of Bids

Key Provisions of ICBKey Provisions of ICB Domestic Preference Extension of Bid

Validity Postqualification of

Bidders Award of Contract Publication of the

Award of Contract Rejection of all Bids Debriefing


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Limited International Bidding

ICB by Invitation

Appropriate for

. . . if there is only a limited number of suppliers

. . . other exceptional reasons


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National Competitive Bidding Procurement is done domestically, within

the borrowing DMC Allowed when :

Domestic production or construction facilities are available

Foreign contractors and suppliers are unlikely to be interested

Procedures for domestic procurement are acceptable to ADB

Borrower has requested for NCB


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Two Stage

Two-Stage: Two-Envelope

Single-Stage: Two-Envelope

Single-Stage: One-Envelope

Asian Development BankProcurement System – Bidding Procedures

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ADBAppro

valDeadline

STOP

Preparation

TechnicalProposal

FinancialProposal

Evaluation

Technical

Financial

TechnicalProposal

FinancialProposal

Bidding ProceduresSingle-Stage: One-Envelope

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DeadlineADB

Approval

ADBApproval

Preparation Evaluation 1

Evaluation 2

TechnicalProposal

FinancialProposal

FinancialFinancial

TechnicalProposal

FinancialProposal

Technical

STOP

Bidding ProceduresSingle-Stage: Two-Envelope

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ADBAppro

valDeadli

neTechnicalProposal

Technical

TechnicalProposal

Revised Techn.Proposal

Suppl. FinancialProposal

FinancialProposal

Financial

FinancialProposal

Evaluation 2

Preparation 2

Evaluation 1

Preparation 1

ADBApprov

alDeadline

Revised Technical

Suppl. Financial

Revised Techn.Proposal

Suppl. FinancialProposal

Financial Financial

STOP STOP

Bidding ProceduresTwo-Stage: Two-Envelope

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ADBAppro

valDeadline ADB

Approval

Deadline

Evaluation 2

Preparation 2

Evaluation 1

Preparation 1

TechnicalProposal

TechnicalProposal

TechnicalRevised Technical

Financial

RevisedTechnical Proposal

FinancialProposal

RevisedTechnical Proposal

FinancialProposal

STOP STOP

Bidding ProceduresTwo-Stage

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Prequalification

•Advertisement and Invitation to Prequalify•Evaluation Criteria•Evaluation of Applications

Preparation of Bid

Documents

•Invitation to Bid•Advertisement •Bid Documents

Bid Evaluation•Evaluation Report•Proposal of Award

Award of Contract

•Certified Contract

EA

Procurement Plan

• Contracts (Goods, Works, Services)• Procurement Mode• Procurement Timing• ADB review (post/prior)

Asian Development BankProcurement System – ADB Prior Review

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Additional ADB Approval Requirements

Extension of bid validity

Complaints from bidders after contract award

Change in contract award recommendation

Change in the terms and conditions of contract

Time extensions, modifications of conditions, change orders increasing in aggregate the original contract amount by more than 15%

Asian Development BankProcurement System – ADB Prior Review

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Prerequisite- EA capacity assessmentProcedure - Prior review of 1st set of

procurement documents in project only- Advertisement provided after posting- ADB reviews contract award decisions post facto

Timing - BER and contract documents to be submitted as soon as completed- ADB must respond in 6 months- EA required to keep files for 2 years

Risk - Misprocurement cancellation of funds

Asian Development BankProcurement System – ADB Post Review

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Award of contracts for values of $10.0mill. and above must be approved by the Bank’s

— Procurement Committee —Chairman : Principal Director,

COSO

Members : Assistant General Counsel Director, Sector Division

Secretary : Senior Procurement Specialist (Non-Voting)

Asian Development BankProcurement System – ADB Review

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Matters for Consideration For contracts estimated at $10.0 million or

more Prequalification Evaluation Technical Evaluation (2-stage/2-envelope

bidding) Bid Evaluation Award Proposal for Rebidding Proposal for Cancellation

Actions in conflict with the ADB requirements

Proposal to vary previous PC decisions Any matters designated by management

Asian Development BankProcurement System – ADB Review

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Purposeto ensure that bids are submitted only by firms that have the necessary qualifications in terms of Eligibility Experience Financial Capacity Pending Litigationto undertake the work for which bids are to be invited.

Asian Development BankProcurement System – Prequalification

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Used forUsed for

Large complex works contracts

Turnkey contracts

Contracts for fabrication of custom designed plant and equipment

Specialized service contracts

Complex IT contracts

Asian Development BankProcurement System – Prequalification

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Preparing responsive bidsAvoiding common pitfalls

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Joint Venture Requirements All partners must be eligible

J.V. agreement must contain provision for joint and several liability

One of the partners must be authorized to be in charge

Copy of Joint Venture agreement must be included in the bid

Asian Development BankPreparing Responsive Bids

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Be compliant !Submit a basic offer that complies with all terms and conditions of the bidding document, even if some of these conditions appear irrelevant

Don’t qualify !Do not add any conditions. Conditionalities or qualifications will lead to rejection

Get official clarification !Submit an official inquiry to the EA if any provisions of the bidding document are unclear or unacceptable before the bid closing date or such date as may be specified. A copy may also be submitted to the bank if appropriate


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Be aware of bid evaluation criteria !Check if other factors besides price, such as delivery periods, efficiency, operating & maintenance costs, will be considered in the bid evaluation. These factors must be specified in the bidding document to be applied.

Be clear with alternatives ! Submit alternatives only if explicitly allowed in the

bidding document. Alternative proposal, if allowed, should be submitted in addition to the compliant proposal. The proposed alternatives and corresponding changes in bid price should be clearly indicated. Only the alternative proposal submitted by the bidder with the lowest evaluated and substantially responsive compliant bid can be considered, unless otherwise provided in the bidding documents.


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Ensure bid is complete !Check if the bid complies with all the requirements of the bidding document such as bid security, power of attorney, additional documents such as test certificates and technical brochures. Incomplete Bids may be rejected.

Make final check of bid ! Amount, validity and text of Bid Security Signatures and power of attorney Joint venture agreement enclosed References enclosed Discounts in covering letter or appropraiate

place as specified in the bidding document Marking of envelopes


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Be on time !Submit bid within the stipulated deadline. Late bids will not be accepted.

During opening ensure ! All relevant prices are read out All discounts are read out Presence and amount of bid security is read out No envelope remains unopened All the above is recorded correctly The record is signed by all bidders present and by

the buyer

Be Aware of Possible Extension !There may be a request to extend the bid validity period by several months, as in certain cases the evaluation of bids requires more time than originally expected.


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How your bid is evaluatedDetermining the winning

bid

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Determination of theDetermination of thelowest evaluated andlowest evaluated andsubstantially substantially responsive bidresponsive bid

Asian Development BankBid Evaluation – Purpose

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Public Opening of BidsPublic Opening of Bids Bids received are opened publicly by the EA at the

time and place indicated in the bidding documents

Required for the sake of Fairness and Transparency

Gives bidders assurance that all bids will be treated fairly and impartially

Bidders’ attendance is encouraged

Record of the items read out is to be kept by the EA

Record is initialed by the representatives of bidders present

Asian Development BankOpening of Bids

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Information read out Bidder’s name Total bid price Price of alternative bids, if any Amount or percentage of any discounts

offered and the conditions under which the discounts are applicable

Bid security - amount and validity Any other information which is deemed

necessary to be announced by the Tender Committee.

Asian Development BankOpening of Bids

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Complete Basic Data Sheet

Prepare Record of Bid Opening

Prepare Table of Bid Prices

Examine Bids for Responsiveness

Identify Bids for Detailed Evaluation

Evaluate Bids in Detail

Adjust Bid Prices

Apply Other Adjustments

Asian Development BankBid Evaluation – Typical Sequence

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Time FrameThe bid evaluation of bids and the award of contract should be completed before the expiration of the bid validity as stipulated in the bid documents

Confidentiality of ProcedureAfter opening of bids no information to non-authorized persons on : Substance of bid Preliminary examination results and

status Evaluation results and status Recommendation of award

Asian Development BankBid Evaluation – Basics

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Clarification and Alteration of BidsOnly clarifications not changing the substance or the price of the bid may be requested or accepted by the Borrower

Arithmetical Errors No cause for bid rejection. Can be

corrected : Discrepancy between Unit Price and Total

Price Unit Price will prevail

Discrepancy between Total Bid Amount and Sum of Total Prices Total Prices will prevail


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PostqualificationPostqualificationPurpose Identifies qualified bidders during initial

examination of opened bids Spares borrowers/EA from detailed

evaluation of bids of unqualified bidders

Typical Criteria Experience Financial position Staff Qualifications Technical capability After sales service Past performance


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Major DeviationsMajor Deviations Has an effect on the validity of the bid; or Has been specified in the bid documents as

grounds for rejection of the bid; or Is a deviation from the provisions of the

bidding documents with effect on the bid price, but cannot be given a monetary value; or

Is a deviation from the minimum experience qualifications specified in the bidding documents; or

Is an unacceptable deviation from the specifications

Conditional bid


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Minor Deviations Has no effect on the validity of the bid; or Has no effect on the price, quality or

delivery of the goods or services offered; or Has such effect, but the difference from

commercial terms and technical specifications can be given a monetary value; or

Has not been specified in the bid documents as grounds for rejection, provided total amount of deviations does not exceed a previous determined percentage of the bid price (usually 15 per cent)


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Extension of Bid Validity Considered in exceptional cases When considered, all bidders should be

asked Bidders willing to extend bid validity

cannot modify substance of bidmust extend validity of bid security

Commercial AspectsExercise flexibility in evaluating commercial aspects such as :

Delivery Schedule Terms of Payment Mode of Payments


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Price Adjustment ProvisionIn evaluating bids do not take into account price adjustment provisions. Use base price for comparison. All bids are subject to same degree of adjustment.

Alternative BidsWhen acceptable, specify Conditions in Invitation to Bid and Instructions

to Bidders Method of evaluation and comparison


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Basis for Price Comparison

Goods for Goods from outside

Includes cost of insurance and freight (CIF or CIP)

Excludes custom duties or other taxes levied on goods

for Goods from insideIncludes ex-factory price (EXW)Excludes any sales or similar taxes levied on

goods Related Services including all taxes and duties

Works Includes all taxes, duties and other levies


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Exchange RatesExchange Rates For bid comparison use single currency as

specified in bid documents (usually local currency or US$)

The rates to be used are the selling rates quoted by an official source (central bank, commercial bank, or internationally circulated newspaper)

Date of exchange rate to be specified in bidding documents shall be : Not earlier than 28 days prior to the

deadline for submission of bids Not later than the original date for the

expiry of bid validity


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Factors to be consideredFactors to be considered payment schedule delivery time operating costs efficiency and compatibility of the

equipment availability of service and spare

parts, and related training safety, and environmental benefits

The factors other than price to be used for determining the lowest evaluated bid shall, to the extent practicable, be expressed in monetary terms


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4. Performance4. Performance 2,488,614

2,488,614

232,000

232,000

BIDDER A BIDDER B

3. Technical Compliance3. Technical Compliance 477,000

477,000

723,017

723,017

B. Evaluated Bid PriceB. Evaluated Bid Price 37,785,339

37,785,339

35,396,322

35,396,322

A. Bid Price (adjusted for Scope)

33,456,72

5

33,456,72

5

34,213,30

5

34,213,30

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240,000240,0002 Adjustment for Scope2 Adjustment for Scope 2,053,000

2,053,000

33,973,305

33,973,305

1. Bid Price (arithmatically corrected)1. Bid Price (arithmatically corrected)

31,403,725

31,403,725

6. Delivery6. Delivery

1,023,000

1,023,000

123,000

123,000

105,000105,000340,000 340,000 5. Terms of Payment5. Terms of Payment

Example

Supply Contracts

Asian Development BankBid Evaluation – Domestic Preference

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Purpose To provide margin of preference to

domestically manufactured goods or domestic contractors for ADB-financed projects

To allow domestic firms to compete with foreign firms on more equal footing

Conditions Granting of preference subject to conditions Applies only to ICB Needs to be applied for by Borrower To be specified in Loan Agreement if

scheme is applied


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Responsive bids are to be classified into three groups:

Group A: Goods manufactured locally with more than 30% domestic value added

Group B: Goods manufactured locally with less than 30% domestic value added

Group C: Imported goods

Supply Contracts


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Procedure Determine lowest bid in each group

Compare lowest evaluated bids among the groups

If lowest is from group A or B, select it for contract award

If lowest is in Category III, compare: 1.15 x CIF price of Group C against EXW price of Group A

Supply Contracts


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C. Evaluated Bid Price (w. Dom .Pref.)C. Evaluated Bid Price (w. Dom .Pref.)

37,785,339

37,785,339

40,528,318

40,528,318

BIDDER X BIDDER YGroup A

BidGroup C

BidExample

Supply Contract

4. Performance4. Performance 2,488,614

2,488,614

232,000

232,000

3. Technical Compliance3. Technical Compliance 477,000

477,000

723,017

723,017

5,131,996

5,131,996

---------

---------

7. Domestic Preference (15% of A.)7. Domestic Preference (15% of A.)

B. Evaluated Bid PriceB. Evaluated Bid Price 37,785,339

37,785,339

35,396,322

35,396,322

A. Bid Price (adjusted for Scope)

33,456,72

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33,456,72

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34,213,30

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34,213,30

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240,000240,0002. Adjustment for Scope2. Adjustment for Scope 2,053,000

2,053,000

33,973,305

33,973,305

1. Bid Price (arithmetically corrected)1. Bid Price (arithmetically corrected)

31,403,725

31,403,725

6. Delivery6. Delivery

1,023,000

1,023,000

123,000

123,000

105,000105,000340,000 340,000 5. Terms of Payment5. Terms of Payment


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9,900BID PRICECOMPAR

E9,900

10,000

10,000

9,000

9,000

9,000BID PRICECOMPAR

E

10,000

10,000

9,900

9,900 9,000

AWARD

Examples

Group A Group B Group C

Supply Contracts

AWARD 9,900BID

PRICECOMPARE

9,0009,000 x 1.15 =10,350

10,000

10,000AWAR

D


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Procedure Goods offered from outside the Borrower’s

country are quoted CIF Locally manufactured goods are quoted EXW Other components such as design,

installation, commissioning, testing and supervision are quoted separately

For comparison of local goods with imported goods, add to the offered CIF price of the imported goods the lesser of either 15% , or applicable duties and taxes to be paid for

each item

Turnkey / Supply & Installation


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Turnkey / Supply & Installation

SERVICESWORKS

SUPPLY

Example

Design 2,000

2,500Civil works 23,000

27,500Equipment EXW 10,000 60,000 Equipment CIF 100,000 50,000Total 135,000

140,000 Domestic Preference loading 15% of CIF: 15,000 7,500 COMPARE: 150,000147,500

AWARAWARDD

BID PRICE Bidder A Bidder B


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Responsive bids are to be classified into two categories

Category IBids offered by Domestic Contractors and Joint Ventures eligible for the Preference

Category IIBids offered by other Contractors

Civil Works


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Eligibility Criteria for Domestic Contractors

Incorporated in the borrower’s country

Majority ownership by nationals of borrowing country

Will not subcontract to foreign contractors more than 50% of the total value of their work

Civil Works


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Eligibility Criteria for Joint Ventures between Domestic and Foreign Firms The domestic partner is individually

eligible according to the criteria stated previously

The domestic partner would not qualify for the works without the participation of the foreign partner

The domestic partner will carry out at least 50% of the works in terms of value

Civil Works


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Procedure Determine lowest evaluated bid from

each category Compare lowest bids from each category If lowest bid is from category I, award

contract If lowest bid is from category II add 7.5%

and compare it with lowest bid from Category I, award contract to lowest

Civil Works


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Category I Category IIBID

PRICE10,0009,900

COMPARE

10,0009,900

COMPARE

9,000 x 1.075 = 9,675

9,500

AWARAWARDDBID

PRICE9,0009,500

Example

Civil Works

AWARAWARDD


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Getting PaidADB Disbursement

Procedures

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Direct Payment Procedure used for payment of large civil works progress

payments, consultant’s fees, and importation of goods where not practical to open a letter of credit

Reimbursement Procedureused for payment of local currency costs, petty purchases and small civil works payments

Commitment Procedure used extensively for financing import of goods Imprest Fund Procedure used for payment of contractors’ bills and

suppliers’ invoices in small amounts or numerous items of operating expenses

Asian Development BankDisbursement Procedures

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1 - Application for LC

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Supplier’sBank

ExecutingAgency

Borrower’sBank

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2 - LC Opened33

3 - Application for CL

444 - CL Approval

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5 - Issue of CL

Asian Development BankDisbursement Procedures

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Questions, Clarifications, Debriefing, etc

BOS 1 Procurement of Goods and Works Asian Development Bank Business Opportunities.

Documents

Transcript of BOS 1 Procurement of Goods and Works Asian Development Bank Business Opportunities.