TSUNAMI RELIEF PROGRAM KICK OFF MEETING

INTRODUCTION WHAT IS PROCUREMENT? WHY IS UNDERSTANDING PROCUREMENT SO IMPORTANTS? WHAT ARE THE BASIC PRINCIPLES THAT GOVERN BANK PROCUREMENT POLICIES? WHERE ARE THE PROCUREMENT REQUIREMENTS OF A PROJECT SPECIFIED?

WHAT IS PROCUREMENT ? PROCESS BY WHICH WORKS, GOODS AND SERVICES ARE ACQUIRED IMPORTANT ACTIVITY IN PROJECT IMPLEMENTATION LINK BETWEEN COMMITMENT OF A GRANT AND ITS DISBURSEMENT

WHY IS UNDERSTANDING PROCUREMENT SO IMPORTANT? WORKS, GOODS & SERVICES NORMALLY ACCOUNT FOR THE MAJOR PORTION OF THE PROJECT POOR PROCUREMENT PRACTICES VIRTUALLY GARANTIE FAILURE OF PROJECTS

BANK PROCUREMENT POLICY- SOME BASIC PRINCIPLES USE FUNDS FOR PURPOSES INTENDED, WITH ECONOMY AND EFFICIENCY EQUAL OPPORTUNITY TRANSPARENCY

IMPORTANCE OF PROCUREMENT CRITICAL TO PROJECT IMPLEMENTATION DISBURSEMENT MADE ON BASIS OF CONTRACTS -LARGE AMOUNTS INVOLVED PERCEPTION OF FAIRNESS

LEGAL ASPECTS OF PROCUREMENT THE LOAN / GRANT AGREEMENT THE WORLD BANK’S GUIDELINES FOR GOODS & WORKS AND CONSULTANTS

Civil Works and Goods Guidelines for Procurement under IBRD Loans and IDA Credits, dated May 2004 Consultant Services Guidelines for Selection and Employment of Consultants by World Bank Borrowers, dated May 2004 PROJECT GUIDELINES

PROJECT COMPONENTS I.COMMUNITY SUB-GRANTS (GOODS, WORKS & CONSULTING SERVICES) II.CAPACITY BUILDING (WORKSHOP & TRAINING)

PROCUREMENT RESPONSIBILITY I. COMMUNITY SUB-GRANTS  The structure is highly decentralized for Community Contracting.  Most tasks being undertaken by Communities but with the advice and guidance from the Project Implementing Partner (PIP) in the provinces that report directly to the PIP at the Center.  The Villagers are responsible for procurement under the approved sub-project grants with the assistance and support by the PIP team.  The Operations Guideline will provide procedures for “ Procurement for Sub-grants”.

PROCUREMENT METHODS I. COMMUNITY SUB-GRANTS (a)Community Force Account for Civil Works (Small Infrastructure)  The villagers implement the sub-grant using their own resources (skilled and unskilled labor)  The PIP will assist the villagers throughout the implementation of the sub-project grants  The PIP will support the Community for standard design for most types of small scale infrastructure and unit cost database are prepared and available.

(b) Procurement of Small Works (small scale infrastructure)  No capacity or capability to implement the proposed sub-grant  Need to hire contractor  The Basis of comparing price quotations obtain from at least three construction firms and/or individual entrepreneurs  Sending the invitation to potential bidders  Advertise in at least two places ( at province (PIP), and village) PROCUREMENT METHODS (Cont’d)

(c) Local Shopping for goods  Comparing price quotations obtained from several suppliers, at least three, to assure competition price (WB Guidelines –Article 3.5)  Sending the invitation to the potential suppliers  Advertise in at least two places ( at province (PIP), and village) (d) Direct Contracting (Usually, procurement of goods/works below Baht 100,000)  It is justified that only single source of suppliers is available (e) Consultants Services  Community would like to hire Consultants to provide technical assistance i.e. Water Supply sub-grants. PROCUREMENT METHODS (Cont’d)

f. Labor  Community may decide whether to hire skilled labor for their sub-grant directly. The needs for skilled labor will be estimated before starting of subproject implementation and included in the subproject agreement.  The PIP will provide standard pay rates for labor and these scales should not be exceeded. This information will be periodically updated in the unit cost database by PIP. Simplified Contracting Documents  The PIP should provide simple standard contracts (in local language) for hiring skilled labor/consultants, procuring materials/contractors.  Contracts should include warranty and penalty clauses. PROCUREMENT METHODS (Cont’d)

Storage  A simplified stock recordkeeping system including designating persons responsible for stock management. Due to theft and waste of materials are common problems that must be addressed when securing storage space. Transport & Administrative Costs Community often does not include transport and administrative costs in their subproject budgets. However, reasonable costs for these purposes shall be indicated in the community proposal budget and covered by the sub-grants. PROCUREMENT ARRANGEMENTS

Unit Cost Database and Reference Price Lists  The PIP will develop the unit cost databases which will be an important role in monitoring the economy of goods/works procured at community level.  The database will maintain by the PIP including costs of nearly all types of items purchased at the community level. It will be used as a way of cross-checking prices proposed by communities. At the same time, price proposed in community budgets will be used to update the database regularly.  The unit cost database (excel file) will be kept up to date to take into account price fluctuations.  The PIP will provide communities with reference price lists that includes prices for all materials to be purchased. Communities will use price lists to negotiate with suppliers. PROCUREMENT ARRANGEMENTS(Cont’d)

WHAT IF THE RULES ARE VIOLATED? BANK AND COUNTRY AGREE IN Grant Agreement ON APPLICABLE PROCUREMENT RULES BUT: COUNTRY VIOLATES THE AGREED RULES

MISPROCUREMENT- REFERENCES GUIDELINES PARA 1.12 FOR GOODS & WORKS AND PARA 1.17 FOR CONSULTANTS. PROCUREMENT OF ANY ITEM IS INCONSISTENT WITH PROCEDURES SET FORTH OR REFERRED TO IN THE GRANT AGREEMENT

MISPROCUREMENT-CONSEQUENCES BANK WILL NOT FINANCE THAT CONTRACT AND WILL CANCEL A CORRESPONDING AMOUNT FROM GRANT GRANT SUSPENSION/CANCELLATION

LESSONS LEARNED  The Project should ensure participant of women and socially marginalized groups.  The project management committee must be accountable to the community.  The project should elect a supervisory committee which should consist of people with the appropriate skills and technical know how. Procurement of Goods and Services  Shopping enables greater savings at the community level.  Active support on prices and quality need to be provided to communities to assist negotiating with suppliers.. PROCUREMENT ARRANGEMENTS(Cont’d)

LESSONS LEARNED  The Project should ensure transparency of procurement. steps to this end include:  i) developing a simple procurement plan for the entire project endorsed by the committee.  ii) informing community whenever goods are procured and delivered.. PROCUREMENT ARRANGEMENTS(Cont’d)

LESSONS LEARNED Maintenance and recurrent costs Sub-grants may offer a plan to cover maintenance and recurrent costs once the sub-grants is completed. Communities may need information and training on follow-up and maintenance. Communities will benefit from manuals (cartoons and simple instructions) to assist them in supervising building and maintenance activities.. PROCUREMENT ARRANGEMENTS(Cont’d)

LESSONS LEARNED What are the Risks Associated with Community Contracting? Poor technical execution and manipulation by contractors. Ignoring the interests of marginalized groups i.e. very poor, women and indigenous groups. Loss of economies of scale. Difficulty in mobilizing community contributions. PROCUREMENT ARRANGEMENTS(Cont’d)

LESSONS LEARNED Communities have a clear comparative advantage to do contracting in the situation where: Previous examples of community managed projects exist. Communities have some degree of social cohesion. Communities have responsibility for the projects’ operations and maintenance. Mechanism for community capacity-building are available.. PROCUREMENT ARRANGEMENTS(Cont’d)