Frequently Asked Questions

 World Bank Lending Activities in China
 Business Opportunities
 Procurement Procedures
 Bidding
 Consultant Opportunities
 Obtaining Information
 Getting Paid

World Bank Lending Activities in China

How Long Has the World Bank Supported China in Its Development and How Important Has Been the Assistance?

The World Bank started working in China in 1980.  Since its first loan in 1981 in support of the development of Chinese Universities, the World Bank's cumulative lending to China as of June 30, 2007 was about US$42.2 billion for a total of 284 development projects.  70 of these projects are under implementation, making China's portfolio one of the largest in the Bank.  Currently the portfolio is concentrated in transportation, urban development, rural development, energy, and human development.

How Do World Bank Loans Provide Business Opportunities of Interest to a Private Company in China?

The Bank lends funds for a wide variety of carefully selected and clearly defined projects. These projects, which generally require the borrower to buy goods, civil works, and consulting services in the international marketplace, offer many potential business opportunities.  In FY2007 (July 1, 2006 to June 30, 2007), for example, 347 contracts were awarded to Chinese companies through World bank-funded projects with a total value of USD1,281 million, among them 299 were awarded from World Bank-funded projects in China with a total value of USD1,082 million.

How Does the World Bank Identify the Projects It Will Finance?

The Bank conducts regular economic studies and sector analyses in China. These studies, which are carried out in close consultation with country officials, provide a framework for formulating an appropriate development strategy and lending program. Individual projects are an outgrowth of the studies. All projects must be technically and financially sound, produce acceptable rates of return, and contribute to China's economic growth and development.

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Business Opportunities

How Much Business Results from World Bank Financing in China?

Over a hundred Bank-financed operations are being implemented at any one time. About 10 to 15 new loans are approved annually. The Bank commits roughly $ 1.0 to $1.5 billion each year. The Bank generally finances only the foreign exchange costs for each project, so this figure represents approximately 30% to 40% of project costs. The total value of project investment thus far exceeds the amount of Bank lending, ranging from $3 billion to $4 billion per year.

What Types of Business Opportunities Arise from World Bank-Financed Projects?

The wide variety of projects involved provides a broad scope of opportunities. Procured goods range in value from a few thousand dollars to many millions. Some typical examples are:

• For procurement of goods-vehicles, machinery, tractors, farm implements, fertilizer, transport equipment, electrical machinery and plants, industrial facilities, hardware, telecommunication systems, communications systems, information systems, school textbooks, furniture, spare parts, and raw materials.
• For procurement for civil works-construction of ports; highways; schools; hospitals; housing; railways; bridges; irrigation works; inland waterways; water supply facilities; sewage treatment plants; and hydro and thermal power plants.
• For procurement of services-design and feasibility studies, supervision of installation and construction, environmental assessment studies, monitoring of management activities and financial services.

What Eligibility Criteria Must be Met to Bid For Business Opportunities Generated by World Bank Loans?

Eligibility is based on two criteria: the bidder's nationality and the source of the goods or services being supplied. To be eligible, the bidder must be from one of the Bank's member countries. The goods supplied must also originate in these countries.

Are All Business Opportunities Suitable Only for Large Companies, or Are Some Appropriate for Small And Medium-Size Companies?

Many contracts for goods, works, and services are won by relatively small and middle size enterprises. Some extremely large contracts-those for a major multipurpose dam, power plant or petrochemical industrial plant, for instance-are suitable only for large, experienced companies. Most procured items and civil works opportunities permit all sizes of firms to compete for contracts. Moreover, companies that win major contracts often subcontract to smaller companies for goods or services. These opportunities, which often are for services, usually arise in connection with civil works. But there are opportunities for suppliers as well. For example, the supply of window frames may be subcontracted by a school building contractor, or a supplier furnishing an industrial plant may subcontract equipment components.

Must a Company be Registered With the World Bank to Participate in Its Projects?

There is no registration system for manufacturers, goods suppliers, or works contractors. For consultant services, however, the Bank maintains a computerized roster of consulting firms called the Data on Consulting Firms (DACON) system. The information contained in DACON is purely descriptive, not evaluative. It is provided by companies filling out a Data on Consultants Form. Consultants need not be listed on this roster to win a contract from China or any other Bank borrower, nor is selection based solely on DACON information. Registration with DACON can benefit a consulting firm, however. If China has no other source through which it can identify suitable consultants for a particular task, it may ask the Bank to provide names from the DACON roster.

Does China Get an Equal Share of Contracts, or is the Amount Related to the Size of the Country's Shareholding in the Bank?

Contracts are not awarded on either basis. Instead, qualified firms from China have equal access to information, equal opportunity to bid for contracts, and a fair and impartial consideration of award. Contracts are awarded to the lowest-evaluated responsive bidder, regardless of nationality or other non economic considerations.

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Procurement Procedures

Who is Responsible for Procuring Goods, Selecting Civil Works Contractors, and Appointing Consultants under World Bank-Financed Projects?

China and its project implementation agencies are responsible for all procurement associated with Bank- financed projects in China. A loan agreement is negotiated between China and the Bank on the basis of each project's needs and requirements. This agreement is contractual. An implementing agency is made responsible for the project. This implementation agency with assistance generally from a tendering company procures goods and equipment, selects civil works contractors, and recruits consultants according to the provisions in the loan agreement.

What Procedures Must China Follow When Procuring Goods and Civil Works for Use in World Bank-Financed Projects?

International competitive bidding (ICB) is the preferred method of procurement for goods and works financed by the Bank. ICB is used when procurement is of a size and nature that would interest eligible bidders outside China. It requires that eligible prospective bidders receive adequate notification, and that they have an equal opportunity to bid.

Under ICB, implementation agencies must specify their requirements in the bidding documents. Bidding opportunity advertisements must fully describe what is needed and give those who are interested enough time to prepare and submit a bid.

Bids must be opened at a public meeting. All bidders who wish to attend may do so. Prices are read aloud and recorded at this time. Using the criteria established in the bidding document, borrowers then evaluate the bids. The contract must be awarded to the lowest-evaluated responsive bidder that is qualified to perform the contract. The award is based purely on the bid submitted. Other than clarifying the purchaser's questions, there may be no discussions or negotiations. After bids have been opened, bidders may not make changes.

Are Other Methods of Procurement Besides International Competitive Bidding Permissible?

Yes. If the procurement value is small or not of interest to foreign bidders, the borrower may use national competitive bidding (NCB) procedures. NCB allows China to advertise only in China, using the Chinese language and its currency, the RMB. Foreign bidders may, however, participate in NCB. Limited international bidding (LIB) may also be used if there are only a few known manufacturers of a particular item. Advertising is not required in these cases. Instead, known suppliers are informed of a procurement opportunity and the availability of bidding documents, and are invited to bid.

Shopping is permitted for small quantities of off-the-shelf and catalog items. In these cases, the borrower asks a number of foreign or local suppliers for prices and buys from the one offering the best quotation.

When an item is available only from one source, direct negotiated procurement is sometimes necessary and appropriate. Similarly, when an item must be purchased immediately-and a lengthy competitive bidding process would cause financial losses-a directly negotiated procurement might be used. This method might also be employed to purchase small items or to extend ongoing contracts.

Does Procurement Ever Occur Before the World Bank Approves a Loan?

Occasionally, advance contracting takes place before loan approval. Such contracts are eligible for financing if they are awarded in accordance with the Bank's procurement guidelines. The notice of intent to purchase would state that China has applied for a Bank loan and intends to use the proceeds to finance the contract. This notice does not obligate the Bank to approve the project, however. If the loan is not approved, China must use its own funds or find other funds to finance signed contracts.

How Does the World Bank Make Certain Its Loans are Used for the Intended Purpose?

The Bank's articles of agreement provide that the funds allocated for a specific loan shall be used only for that purpose. Bank staff regularly visit the project site to review all aspects of the project. Funds are disbursed only after the loan agreement provisions related to goods, works, and services have been met. Under a construction contract, for example, progress payments are not made until the engineer has certified that the work has been satisfactorily completed. Payment is made for goods only after they have been delivered on board the ship or at a specified destination.

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Bidding

Who Prepares Bidding Documents?

China through its implementation agencies with the assistance of tendering companies prepares bidding documents. These documents must include instructions to bidders, evaluation criteria, conditions of the proposed contract, and a detailed description of the goods or works to be procured. Bidding documents must be made available to everyone who asks for them and pays the borrower's fees, if any.

To help with bid preparation, the Bank has developed Standard Bidding Documents (SBD). China has also prepared with the assistance of the Bank some Model Bidding documents (MBD). By using these documents, China can considerably accelerate the preparation process. Suppliers and contractors should also be familiar with these sample documents to facilitate the bidding process. The Bank monitors the procurement process for all major ICB transactions to ensure that its guidelines are followed. Bank staff thus review bidding documents before they are issued, the borrower's evaluation of the bids, and proposal for contract award. When the contract is awarded, it is reviewed to make certain that it corresponds with the bid.

Is Prequalification Required before Bidding?

Prequalification of bidders is often required for contracts to construct civil works and for large, complex industrial facilities; in some cases, prequalification is used for suppliers of specialized equipment. Prequalification is designed to ensure that invitations to bid are extended only to companies capable of undertaking the work. Invitations to prequalify are advertised internationally (or nationally for NCB) so that prospective bidders can obtain documents and submit their responses. Any bidder who is qualified during the prequalification process must be allowed to participate in the bidding.

How Does an Interested Company Submit a Bid?

When a firm learns that procurement is about to occur, it should write to the purchaser and ask to receive the bidding documents as soon as they are available. Interested bidders should send the purchaser the fee specified for the documents. After the firm receives the bidding document, it should carefully examine the provisions and requirements to decide whether it can submit a competitive responsive bid. The bidder should be certain that it understands both the commercial and technical requirements, and follows them in bid preparation. No assumptions should be made regarding bidding terms and conditions. Any questions or doubts should be clarified with the purchaser before preparing the bid. If a company decides to bid, it must follow precisely the instructions spelled out in the document and submit its bid by the specified time and date to the specified place.

Are State Owned Enterprises (SOEs) in China Eligible to Bid for World Bank-Financed Contracts?

Yes, if they can establish that they (i) are legally and financially autonomous and (ii) operate under commercial law. No dependent agency of the Borrower or Sub-Borrower under a World Bank-financed projected shall be permitted to bid or submit a proposal for the procurement of goods and works under the project.

Is the International Competitive Bidding Procedure the Same for Both Goods and Civil Works?

The bidding procedure for goods and works is similar, although the evaluation criteria differ. In the case of civil works, for instance, the price-and sometimes the completion period-may be considered. When goods are purchased, technical factors like capacity, maintainability, fuel efficiency, and after-sales service may be considered in addition to price.

If There is Only One Bidder, Will That Bidder be Awarded the Contract?

If only one bid is submitted, the purchaser should contact others who bought bidding documents to determine why they did not bid. The conditions or requirements may have been too restrictive or unclear, causing the bidders to conclude that participation was too risky. In such cases, the bidding should be cancelled and the bidding documents revised. The process should begin again, using the revised documents.

If, however, it is determined that the bidding documents are not restrictive, that the prices quoted in the bid are reasonable, and that the bid is technically and commercially responsive, the Bank would agree to awarding the contract to the single bidder. Furthermore, if several bids are received but only one is responsive and quoted prices are reasonable, the Bank would agree to awarding the contract to that bidder.

Is the Bidding Process Carried out In the Chinese Language?

Not under international competitive bidding and limited international bidding procedures. The Bank's guidelines prescribe that for these procedures, the bidding process must be carried out in a language that is customarily used in international commercial transactions-English, French, or Spanish are accepted.

In What Currency May a Bid be Made?

For supply contracts, firms may bid either in their own currency or in a major currency widely used in international trade and specified in the bidding documents. They may also bid in the currency of the country from which the goods are actually coming.

For civil works, bids commonly are expressed in Chinese RMB since the works will be undertaken in China. Under ICB, bidders may, however, ask that a percentage of the bid price be paid in another currency to meet expenditures for foreign inputs. The bid must define the exchange rate to be used. This rate becomes contractual, protecting the bidder from currency fluctuation that may occur after the bid preparation date. The borrower, rather than the bidder, thus takes the currency exchange risk.

To compare and evaluate bids, the borrower must convert all the bids into one common currency. This is done using an exchange rate provided by an authoritative source, such as the Central Bank, on a date specified in the bidding documents. The contract is written in the currency or currencies of the bid; payment is made in the same currency.

How are Bids Evaluated?

Bids are evaluated solely on the basis of the criteria specified in the bidding document. Where feasible, the documents outline the methodology for quantifying each aspect of the bid in monetary terms. Alternatively, the bidding documents indicate the relative importance of the various criteria and assign a weight to each. The lowest-evaluated bidder may not necessarily be the lowest-priced bidder. The evaluation criteria spelled out in the bidding documents often include factors other than price. Performance, availability of spare parts, or maintenance service provisions may be included, for example. In addition, domestic contractors and bidders offering locally manufactured goods sometimes receive a domestic preference. Bidding documents must clearly explain all these evaluation criteria and comparison procedures.

Bids that fail to conform to the commercial and technical requirements specified in the bidding documents will be rejected. Bidders that find the criteria specified in the documents unclear or proprietary should bring this to the attention of the purchaser before submitting bids. It is too late to question evaluation criteria after the bid closing date.

What are Domestic Preferences and How Do They Affect Evaluation?

There are two kinds of domestic preferences: one is for goods, the other for civil works. They operate independently. In either case, China must ask that the preference be applied, and the bid documents must state this.

China is eligible to receive the domestic preference for goods. It gives a margin of preference to a bid offering locally manufactured goods, provided the manufacturing cost of the goods includes labor, raw materials and components within China accounts for at least 30% of the ex-factory bid price. The preference is given by increasing the cost, insurance, and freight (C.I.F.) price of competing imported goods by the applicable customs duty or by 15%, whichever is less.

The domestic preference for civil works is limited to those borrowing countries with an annual per capita income of $ 760 or less (currently). Chinese domestic contractors (in 2000) are eligible for this preference. It allows a 7.5% preference to a domestic contractor, provided the majority of the ownership is locally held and it does not subcontract more than 10% of the contract price to foreign contractors. The percentage is added to the foreign contractor's bid price in the comparison process.

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Consultant Opportunities

What Opportunities are Available for Consultants to Work on World Bank-Financed Projects?

Opportunities for consultants are available in many areas. In the early stages of Project preparation, for instance, consultants may be required to prepare feasibility studies, environmental, resettlement and social assessments, engineering and project design, and cost estimates. During the implementation phase, consulting services are frequently necessary to prepare bidding documents, to evaluate bids, and to supervise construction and installation. Consultants are also used to conduct studies in such areas as marketing, distribution, export opportunities, sector master plans, and investment. There are also opportunities to prepare feasibility studies for follow-on projects and to provide training.

What are the Procedures for Selecting Consultants?

China and its implementation agencies is responsible for consultant selection. Consultants and consulting firms from Bank member countries are eligible to provide services under Bank-financed projects. Unlike international competitive bidding for goods and works, the overriding factors in consultant selection focus on quality rather than on price. There is no requirement, therefore, to bid competitively or to make the award to the lowest-evaluated bidder.

After preparing the terms of reference and a budget for the assignment, the borrower invites proposals from a short list-three to six qualified, experienced firms from a wide geographic spread. The borrower selects the most appropriate firm for the job, based on the proposals submitted. Bank staff review and comment on the terms of reference, the budget, the short list of firms, and the final selection.

If aConsulting Firm Accepts Contract to Provide Services on a Project, Can It Bid to Supply Goods?

If a consulting firm accepts an assignment to provide services on a project, it cannot participate in bidding to supply goods or to construct works for the same project. This is because the firm would have prior knowledge that might give it an unfair advantage over other bidders. The Bank would not object, however, if the firm accepts an assignment to, for instance, prepare the engineering design for a project and-in a follow-on assignment-prepares bidding documents, evaluates the bids, and supervises the contract for the borrower.

If a Consulting Firm Provides an Individual to Help Appraise a Project for the World Bank, Can the Firm Furnish Other Consulting Services or Supply Goods for the Same Project?

No. Once an individual participates in appraising a project for the Bank, his or her firm cannot bid on supplying goods or services for that project.

What is the World Bank's Role in Procurement and Consultant Selection?

Bank staff supervise the procurement and consultant selection process and review all documents. In most cases, borrowers follow the Bank's guidelines closely. If they do not, the Bank reserves the right not to provide financing. If the agreed upon procedures clearly are not followed, the Bank will not finance the contract and may cancel an equivalent part of the loan.

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Obtaining Information

How Can Firms Find out about Business Opportunities Generated by World Bank Loans?

Several sources of information are available to help companies track Bank projects and the business opportunities associated with them. The Bank offers a comprehensive subscription package, called the International Business Opportunities Service (IBOS). It includes regular mailings of procurement information, as well as all Bank publications related to procurement, bidding, project development, and cofinancing.

In addition, Development Business, a biweekly tabloid published by the United Nations, provides information about business opportunities generated through the Bank. The tabloid also contains similar information from the regional multilateral development banks, the United Nations Development Programme, and other development agencies.

These are principal sources of information available through these publications:

• The Monthly Operational Summary (MOS) describes all projects in the Bank's pipeline-from the time they are first identified until the Board of Directors approves their financing. About 1,200 projects are listed in various stages of the project cycle each month. The MOS also indicates whether consultant services will be required. It can be purchased separately or as part of one of the subscriptions.
• Technical Data Sheets (TDS) are published for each loan or credit approved by the Board. A TDS provides the name and address of the implementing agency and of any consulting firms that have participated in project preparation. It also describes what procurement method will be used to purchase goods, works, and services, along with the amount and sources of cofinancing.
• General Procurement Notices for investment projects involving ICB are the earliest public notice of procurement. They are issued by the borrower, usually during the project appraisal stage. The notices describe what types of procurement are anticipated during project implementation. Companies should let the borrower know they are interested in supplying goods or contracting for the items listed in the notice.
• Specific Procurement Notices-invitations to bid for specific items or works required for a project-are issued as a follow-up to the General Procurement Notice. They describe items to be procured and provide information on how to purchase bid documents, the deadlines for bid submission, and any other requirements bidders must follow. These notices are published in the national press. Many are also published in IBOS and Development Business.
• Contract Award Notices, published for all major contracts, identify the successful bidder and the contract amount.
• China also publishes information on bidding opportunities through the China Daily and various other publications such as China Tendering, China Bidding and Provincial Dailies .

Under the Bank's procurement guidelines, borrowing countries must publish a General Procurement Notice for all projects involving ICB in the UN's Development Business and in national newspapers. Additionally, they are also encouraged to provide copies of advertisements to Bank member country representatives-usually commercial officers or attachés--located in the borrowing country. Advertisements for large or specialized procurements may also appear in technical and trade journals or in broadly circulated international newspapers.

Are All World Bank Business Opportunities Published in IBOS And Development Business?

No. These publications routinely publish information only on investment projects with contracts to be procured using ICB.

If a Firm Responds to the General Procurement Notice and Requests but Does Not Receive ICB Bid Notices, What Should It Do?

The firm should telex the borrower as soon as it learns that the bidding documents are being or have been issued and ask for them immediately. If the firm does not have enough time to prepare a bid after receiving the documents, it should request a delay in bid closing to allow time to prepare a bid. If the borrower fails to respond, or does not agree to the delay, the firm should notify the Bank immediately.

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Getting Paid

Who Will Pay a Firm or an Individual for the Work Completed or the Goods Supplied?

The purchaser with whom the firm or the person has contracted to supply goods or services is obligated to pay.

Who Determines the Method of Payment?

The payment provisions, which should conform to normal commercial practice, should be spelled out in the contract between the purchaser and seller. The purchaser or borrowing country may choose to make payment against contracts that are eligible for financing from Bank loans in several ways.

They may pay from their own resources, either directly or through a letter of credit, and seek reimbursement from the Bank. If the Bank has advanced funds to a special account, they may pay directly from this account and subsequently seek repayment from the Bank. Another method is to ask the Bank to pay the supplier directly. In this case, the purchaser must submit a withdrawal application accompanied by appropriate supporting documents and signed by an authorized official representing the borrowing government. Finally, the purchaser may open a letter of credit and ask the Bank to provide the financial backing by issuing a special commitment to a commercial bank. This bank will negotiate payments against the letter of credit. Special commitments cover imported goods.

How Long Does It Take for a Supplier To Receive Payment When the World Bank Has Been Asked to Make a Direct Payment?

It takes roughly 10 calendar days, on average, from receipt of an application by the Bank until payment is executed. Some payments will take longer if the application has been incorrectly prepared, if payment instructions are incomplete, or if supporting documentation is inadequate. The Bank must receive an original signed application in order to make payment.

What Currency Will be Used for Payment?

Payment will be made in the currency designated in the contract.

Can a Supplier be Paid After the Closing Date of a Loan?

So long as the Bank agrees, limited payments may be made after a loan's closing date. These withdrawals are restricted to payments due on the closing date for goods, works, or services provided before this date. The Bank must receive applications for any such payments within four months after the closing date of the loan. Under certain conditions, the Bank may extend the original closing date established in the loan agreement.

If a Supplier Needs to Contact the World Bank about a Payment that is Due, What Details Should be Provided?

The supplier should cite the Bank loan or IDA credit number, a number assigned by the Bank at the time of loan approval; the application number, a sequential number assigned by the borrower at the time the application is forwarded to the Bank; the currency and amount due; and the date and method of dispatch of the application, if known. This information can be obtained from the purchaser. Suppliers should allow a reasonable period for receipt of the application and for payment processing before making any such inquiries.

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