1. IDB-financed Projects
Doing Business Under
IDB-financed Projects
Basic Principles and Considerations
Magda Theodate, Procurement Specialist
Inter-American Development Bank
Trinidad, June 2007

2. How to do Business with the IDB
TABLE OF CONTENTS
How to do Business with the IDB
Get Acquainted with the IDB and learn how it works
Identify Projects with Potential Opportunities
Know the Procurement Principles
Ins and Outs of the Procurement Policies
The Bidding Process
Advice to Prospective Bidders

3. Get Acquainted with the IDB

4. OVERVIEW Founded in 1959, oldest and largest of the regional
multilateral development banks
Largest source of development finance for Latin America & the Caribbean
47 Member countries
- 26 Borrowing
- 21 Non-borrowing (Republic of Korea, 2004)
: approved US$145 billion in loans
2006: $6.4 billion approved, $6.5 billion disbursed
Money is raised in various ways, including bonds issues

5. HISTORICAL PRIORITIES
Poverty Reduction & Social Equity
Sustainable Development & Growth
Mostly provided public sector loans thru three operational departments: Region 1; Southern cone of South America
Region 2; Mexico/Central America
Region 3; Andean/Caribbean countries

6. Expanded Sector of Activities-
Finance & Basic Infrastructure Sectors
Energy
Transportation
Telecommunications
Productive
Agriculture
Industry
Social
Education
Health
Urban Development
Environment
Water & Sanitation
Reform
Modernization of state and decentralization

7. NEW INITIATIVES Reorganization of the IDB as of July 1, 2007
INTERNAL:
Reorganization of the IDB as of July 1, 2007
Four Vice-Presidencies with responsibility for:
1) Sector and Knowledge
2) Countries
3) Private Sector and Non-Sovereign Guaranteed Operations
4) Finance and Administration

8. CAPITAL SHARE & VOTING POWER
50%
30% 4%
11% 5% 4
30%
11% 5%
50%

9. ROLES
Borrowing countries are asked to provide a portion of the cost of the entire project, sometimes in the form of human capital
Only firms from members countries are eligible to compete for contracts for IDB-funded projects
Borrowing countries have ministries or agencies called “executing agencies” that
Often originate projects for loan or grant consideration of IDB Board of Executive Directors
Plan the project with the project team and conduct all aspects of the procurement process
Responsible for successful implementation of the projects
IDB staff support and supervise the projects to ensure that Bank’s guidelines and policies are followed

10. Identify Where The Opportunities Are

11. 2007-2008 PIPELINE: Project Distribution

12. POTENTIAL OPPORTUNITIES
Public Sector Projects
Preparation of Projects:
* Contact Bank staff / team leader for feasibility studies and project preparation
2) Implementation of Projects:
* Contact Executing Agencies (Government Ministries) for procurement requirements, bidding documents, contract information, procedures & payments
Private Sector Projects
* Contact PRI, IIC and MIF for due diligence contracts

13. Business Opportunities With IDB
Procurement contracts with IDB direclty, mainly
consulting services
project preparation support ~ 5%
Procurement contracts with Executing Agencies in projects financed by IDB
works, goods
consulting services ~ 95%

14. Project Concept Document16
PROJECT CYCLE
Negotiation
and
Approval
Execution
and
Supervision
Programming
Identification
Preparation
Analysis
Borrower
& Bank
Borrower
& Bank
Borrower
& Bank
Borrower
& Bank
Borrower
& Bank
Bank
Project Concept Document
PROGRAMMING MISSION
The cycle begins with a programming mission from the Bank to borrowing countries to review their priority development programs. e.g. Power Plant
IDENTIFICATION MISSION
The specialists of the energy sector visit the country and the potential executing agency. There is an identification of the basic characteristics of the loan. For the first time the Bank publishes the Project Outline on the internet. There may be needs for consultancy works at this stage.
PREPARATION MISSION
The project team begins to asses feasibility of the project from different point of view: technical, financial, economic and environmental. They usually hire external consultants to conduct those assessments and studies. Then, the project team prepares a Project Concept Document to submit to the Loan Committee.
Project Report
PROJECT
OUTLINE
PROCUREMENT
PLAN
1-2 Years
4-8 Years

15. Get to know the procurement principles & Ins & Outs of Procurement Policies

16. Principles and Considerations
Governance
Loan Contract governs Borrower/Bank legal relationship
Procurement policies applicable through incorporation in Loan Contract
Rights and obligations of Borrowers/Suppliers
Governed by BD, not Policies or Loan Contract and
Signed supply/construction contracts
Only parties to Loan Contract derive rights thereon / claims on loan proceeds

17. Legal Relationship and Responsibility
BANK
LOAN CONTRACT
POLICIES
BORROWER X
SUPPLIER
CONTRACTOR
CONSULTANT
BIDDING DOCUMENT
SUPPLY CONTRACT
WORKS CONTRACT
CONSULTING CONTRACT

18. Principles and Considerations
Procurement Responsibility
Borrower
Project implementation
Procurement
Payment of project goods, works, and services
Bank
Loan Proceeds can be used
Only for purposes the loan was granted
With due attention to Economy and Efficiency
Disbursements only at Borrower’s request
Bank is not a party to procurement contracts

19. Principles and Considerations
Procurement Responsibility of Bidders
Carefully analyze ALL requirements of the bidding documents or request for proposal documents
Strictly comply with the instructions and specifications/terms of reference in the bidding/request for proposals documents
Require clarifications to documents in writing
Review bid/proposal for compliance with the requirement before submitting
Submit bid/proposal before deadline

20. Procurement Policies Goods and Works and General Services
The Policies comprise 3 sections and 4 Appendices
Appendices
I: Review by the Bank
II: Domestic Preference
III: Guidance to Bidders
IV: Procurement in Loans to the Private Sector
Sections
I: Introduction
II: International Competitive Bidding
III: Other Methods of Procurement

21. Procurement Policies Consulting Services
The Policies comprise 5 sections and 4 Appendices
Sections
I: Introduction
II: Quality and Cost Based Selection
III: Other Methods of Selection
IV: Types of Contracts & Important Prov.
V: Selec. Of Individual Consultants
Appendices
I: Review by the Bank
II: Instructions to Consultants
III: Guidance to Consultants
IV: Procurement in Loans to the Private Sector

22. New Areas of Selected Policies
Eligibility
Fraud and Corruption
Misprocurement
Qualification of Bidders

23. Eligibility Nationality and Origin
Only firms and individuals from member countries can
Receive payments from Bank funds
Participate in Bank financed contracts
Only goods originating in member countries
Can be financed by the Bank (*)
(*) Exception Goods labelled “made in the European Union”

24. Eligibility (cont) Nationality and Origin (cont) Exceptions:
Firms or goods from a country may be excluded if
Borrower’s law or official regulation prohibits commercial relations with that country
Compliance with decision of UN Security Council prohibits imports from, or payments to, that country

25. Eligibility (cont) Conflict of Interest (Section 1.9)
Consulting firm that prepares or implements project is disqualified from also
Supplying Goods
Constructing Works
Supplying Services (does not apply to turn-key contracts)
Ex: Firm hired to prepare environmental study for project, will not be engaged to actually implement the recommendations made in the study

26. Eligibility (cont) Government Enterprises of Borrower
Can participate if they
Are legally and financially autonomous
Function in accordance with commercial laws
Are independent (not an agency) of Borrower or Sub-borrower

27. Eligibility (cont) Declaration of Ineligibility by the Bank
Firm cannot be awarded Bank-financed contract if
Following investigation by the Borrower and Office of Institutional Integrity, evidence exists that it has engaged in act of Fraud and Corruption in Bank-financed project

28. Fraud and Corruption Fraud and Corruption are prohibited May include:
Corrupt practice
Fraudulent practice
Coercive practice
Collusive practice
These practices are defined as follows:

29. Fraud and Corruption Definitions: Corrupt practice:
Offering, giving, receiving or soliciting, directly or indirectly, anything of value to influence actions of another party
Fraudulent practice:
Any act or omission, including misrepresentation, which misleads, or attempts to mislead, a party in order to obtain financial or other benefit or to avoid an obligation

30. Fraud and Corruption Definitions (cont) Coercive practice
Impairing or harming or threatening to impair or harm, directly or indirectly, any party or property of a party to influence the actions of a party
Collusive practice
Arrangement between two or more parties designed to achieve an improper purpose, including to influence improperly actions of another party

31. Fraud and Corruption (cont.)
Bank requirements
The Bank, Borrowers, Executing and Contracting Agencies and Bidders, Contractors, Suppliers, Consultants and Concessionaries must:
Adhere to highest ethical standards
Report to the Bank suspected acts of Fraud and Corruption

32. Fraud and Corruption (cont)
Sanctions
In case of demonstrated Fraud and Corruption, the Bank may impose sanctions which can be public or private
Not to finance
Suspend disbursements
Cancel and/or accelerate payment of part of the loan

33. Fraud and Corruption (cont)
Sanctions (cont)
Issue reprimand
Declare individual, entity or firm ineligible, permanently or for a period of time, to be awarded or participate in Bank financed contracts
Refer matter to appropriate law enforcement authorities
Impose other sanctions, i.e.:
Fines to reimburse the Bank for investigation costs

34. Fraud and Corruption (cont)
Bank has right to require that:
Bidders, Suppliers, Contractors, Consultants and Concessionaries
Permit Bank inspection of accounts and records
Permit Audit by Bank designated auditors
Consultants
Keep documentation for 3 years after completion
Deliver information for investigation of Fraud and Corruption

35. Fraud and Corruption (cont)
Borrowing country anticorruption laws can be applied
At request of Borrower
With agreement of the Bank
Borrower may require Bidders to declare in Bids (large contracts) observance of Borrowing country’s laws against Fraud and Corruption

36. Fraud and Corruption (cont)
Combating Fraud and Corruption (cont)
Reporting allegations (Bank protects whistleblowers and witnesses)
To OII: by confidential secure phone (hot line), , fax, mail, in person
Directly to other recipients in the Bank
President, Vice president, Managers, COF Representatives
These other recipients must transmit allegation to OCFC within 72 hours

37. Fraud and Corruption (cont)
Combating Fraud and Corruption
Bank Functions and responsibilities
OCFC: Oversight Committee on Fraud and Corruption
Leads Bank fight against Fraud and Corruption
Reports directly to the President
OII: Office of Institutional Integrity (OCFC Secretariat)
Investigating allegations of Fraud and Corruption
Information and procedures:
www. iadb.org/OCFC

38. Misprocurement Bank declaration of misprocurement Consequences
The procurement conducted is not in accordance with Loan Contract and Procurement Plan
After no objection, if based on incomplete, inaccurate or misleading information
Consequences
Bank does not finance contract, may exercise other remedies
Bank policy: offers option to cancel loan portion assigned to contract

39. Qualification of Bidders
What if the Borrower doesn’t like the bidder?
Bank does not permit Borrower to:
Deny pre or post-qualification to Bidder or
Disqualify Bidder
…for reasons unrelated to capability and resources to successfully perform contract

40. Bidder’s Right to Protest
Procurement Process
Bidder’s Right to Protest
Bidders/Consulting Firms may submit a complaint in writing at any stage of the procurement process
Procurement process is not suspended when complaint is submitted
Contracting Agency resolves the complaint
If Bank determines that its procurement policies have not been adhered to, Bank can declare misprocurement

41. The Bidding Process for Bank-financed Projects

42. Public Bidding Process
Public Access to Award
Bid results & notification
small fees for documents
Procurement Plan
Bidding documents
Public bid opening
Contract Signing
Bid Submission
Clarifications
Bid evaluation
Publicity

43. Standard Procurement Documents Typical structure of SBD
Instructions to Bidders
Bidding Data Sheet
Evaluation and Qualification Criteria
Bidding Forms
Eligible Countries
Schedule of Requirements
General Conditions of Contract
Special Conditions of Contract
Contract Forms
Invitation for Bids (not a part of BD)

44. Standard Procurement Documents
Available SBD / SPD / SRFP/Instructions
Procurement of Goods
Procurement of Health-Sector Goods
Procurement of Books and Reading Materials
Prequalification for Procurement of Works
Procurement of Works
Procurement of Works – Smaller Contracts
Selection of Consultants

45. STARTING THE PROCUREMENT PROCESS
Publicity
General Procurement Notice (GPN)
Published once within 30 days of loan’s approval by the Board of Directors in:
United Nations periodical “Development Business” (online)
IDB’s web site - Procurement Portal immediately thereafter:

46. Competitive Bidding - Publicity
STARTING THE PROCUREMENT PROCESS
Competitive Bidding - Publicity
Specific Procurement Notice (SPN)
Required for International Competitive Bidding (ICB) - published in:
United Nations periodical “Development Business” (online)
IDB’s web site - Procurement Portal immediately thereafter
Required for National Competitive Bidding (NCB) published in:
The Country’s official web site for advertising government business opportunities; or
One local newspaper of wide circulation

47. Goods and Works Bid Preparation Time
Project Procurement Process
Goods and Works Bid Preparation Time
Days from publication of Specific Procurement Notice (SPN) to deadline for submission of bids
Prequalification Applications days
Bids
Goods weeks
Small Works weeks
Major Works weeks

48. Consulting Services Proposal Preparation Time
Project Procurement Process
Consulting Services Proposal Preparation Time
Days from publication of SPN to deadline for submission of proposals
Request for Expressions of Interest days
Request for Proposal (shortlist: 6 firms) 4 weeks

49. Procurement Methods Goods and Works Consulting Services Preferably ICB
Other methods
Used when ICB not economic and efficient
When used, Domestic Preference does not apply
Consulting Services
Default Method QCBS

50. Other Methods Goods and Works
General Use
Limited International Bidding (LIB)
National competitive Bidding (NCB)
Shopping
Direct Contracting

51. Procurement Methods Consulting Services Six main selection methods:
Quality & Cost Based Selection (QCBS)
Quality Based Selection (QBS)
Least Cost Based Selection (LCBS)
Fixed Budget Based Selection (FBBS)
Selection Based on Qualifications (CQS)
Single Source Selection (SSS) (non competitive)

52. Procurement Methods Key Principles
Timely adequate notification and advertising
Equal opportunity to present bids
Essential and fair conditions of contract
Appropriate time for bid preparation and presentation
Equal treatment of bidders
Sound explicit evaluation criteria
Non discriminatory requirements and specifications

53. Advice To Prospective Bidders

54. Goods and Works Who is Awarded the Contract?
CONTRACT AWARD
Goods and Works Who is Awarded the Contract?
The Bidder whose bid has been determined to be the lowest evaluated bid and is substantially responsive to the bidding documents.

55. Consulting Services Who is Awarded the Contract?
CONTRACT AWARD
Consulting Services Who is Awarded the Contract?
The Consulting Firm with the best evaluated proposal depending on the selection method.

56. Identify specific tenders Read & analyze docs Track projects
HOW TO WIN CONTRACTS
Identify specific tenders
Read & analyze docs
Track projects
Copy best practices
Be innovative & partner!
Ask yourself: how did this firm secure this contract? Who else is active in that market? What would have set them apart from the competition?

57. WINNING CONTRACTS
Make thorough assessment of competitive advantage to determine priority / niche markets in region
Review Country Strategies & Policy Documents
Frequent and careful review of most promising projects:
Sign up for RSS on IDB Procurement Portal
Check IDB Web-site for new projects  Press Releases
Subscription to UN Development Business
Local newspapers (for National Competitive Bidding)
Emphasize in-country/regional experience
Invest in language capability: essential tool, proof of commitment
in-country experience: including with CIDA, IDB, WB and explain how your expertise is distinct, relevant, state of the art and proven in the field

58. WINNING CONTRACTS Make contact: make and maintain
Meet with investment officers / country coordinators for project info and feasibility studies
Visit IDB Country Offices
Meet with country government officials
Meet with Embassy commercial staff
Make alliances with local & international partners
partnership on international bids
local knowledge
diversity, language skills etc
Know your competition

59. Submissions In Response to:
PUBLIC NOTICES
General Procurement Notice (GPN)
Specific Procurement Notice (SPN)
Requests for Proposals (short-list)
SUBMISSION
Letter of Interest
Expression of Interest (e.g, letter, brochures, references,exp.)
Detailed technical & financial proposal

60. Where to Find the Bid Notices Request for Expressions of Interest or Other Procurement Notices
Development Business:
IDB Procurement Web Site:
Local newspapers:
DB Online: US $550/ year
Free of Charge (but IDB only)
&

61. MORE INFORMATION: IDB Website
MORE INFORMATION: IDB Website

62. PROCUREMENT INFORMATION
How to receive procurement information? Sign up for RSS!

63. MORE INFORMATION: Country Websites

64. COUNTRY STRATEGY PAPERS

65. PROCUREMENT NOTICES: General and Specific

66. IDB SOURCES OF INFORMATION
1) IDB Homepage:
General
Basic Facts:
Annual Report:
Sectors and Topics:
2) Projects
Project Information & Procurement notices :
Project Documents and Public Information Center :
3) Events
IDB Business Seminars:
IDB-sponsored events:

67. Thank You!
Q & A