Guidelines - Introduction

I. Introduction

1.1 ... Purpose     1.2 ... General Considerations     1.5 ... Applicability of Guidelines     1.6 ... Eligibility     1.9 ... Advance Contracting and Retroactive Financing     1.10 ... Joint Ventures     1.11 ... Bank Review     1.12 ... Reserved Procurement     1.13 ... Misprocurement     1.14 ... References to Bank     1.15 ... Fraud and Corruption

Purpose

1.1 ... The purpose of these Guidelines is to inform those carrying out a project that is financed in whole or in part by a loan from the International Bank for Reconstruction and Development (IBRD) or a credit from the International Development Association (IDA),¹ of the arrangements to be made for procuring the goods and works² (including related services) required for the project. The Loan Agreement governs the legal relationships between the Borrower and the Bank, and the Guidelines are made applicable to procurement of goods and works for the project, as provided in the agreement. The rights and obligations of the Borrower and the providers of goods and works for the project are governed by the bidding documents,³ and by the contracts signed by the Borrower with the providers of goods and works, and not by these Guidelines or the Loan Agreements. No party other than the parties to the Loan Agreement shall derive any rights therefrom or have any claim to loan proceeds.

General Considerations

1.2 ... The responsibility for the implementation of the project, and therefore for the award and administration of contracts under the project, rests with the Borrower4. The Bank, for its part, is required by its Articles of Agreement to "ensure that the proceeds of any loan are used only for the purposes for which the loan was granted, with due attention to considerations of economy and efficiency and without regard to political or other non-economic influences or considerations,"5 and it has established detailed procedures for this purpose. While in practice the specific procurement rules and procedures to be followed in the implementation of a project depend on the circumstances of the particular case, four considerations generally guide the Bank's requirements:

(a) ... the need for economy and efficiency in the implementation of the project, including the procurement of the goods and works involved;

(b) ... the Bank's interest, as a cooperative institution, in giving all eligible bidders from developed and developing countries6 an opportunity to compete in providing goods and works financed by the Bank;

(c) ... the Bank's interest, as a development institution, in encouraging the development of domestic contracting and manufacturing industries in the borrowing country; and

(d) ... the importance of transparency in the procurement process.

1.3 ... The Bank has found that, in most cases, these needs and interests can best be realized through international competitive bidding (ICB), properly administered, and with suitable allowance for preferences for domestically manufactured goods and, where appropriate, for domestic contractors7for works under prescribed conditions. In such cases, therefore, the Bank requires its Borrowers to obtain goods and works through ICB open to eligible suppliers and contractors8. Section II of these Guidelines describes the procedures for ICB.

1.4 ... On the other hand, where ICB is clearly not the most economic and efficient method of procurement, other methods of procurement are specified in the Loan Agreement. Section III describes these other methods of procurement and the circumstances under which their application would be more appropriate. The particular methods to be followed for the procurement of goods and works for a given project are specified in the Loan Agreement for such project.

Applicability of Guidelines

1.5 ... Generally the Bank finances only a part of the cost of the project. The procedures outlined in these Guidelines apply to all contracts for goods and works financed in whole or in part from Bank loans. For the procurement of those contracts for goods and works not financed from a Bank loan, the Borrower may adopt other procedures. In such cases the Bank shall be satisfied that the procedures to be used will fulfill the Borrower's obligations to cause the project to be carried out diligently and efficiently, and that the goods and works to be procured:

(a) ... are of satisfactory quality and are compatible with the balance of the project;

(b) ... will be delivered or completed in timely fashion; and

(c) ... are priced so as not to affect adversely the economic and financial viability of the project.

Eligibility

1.6 ... Funds from Bank loans are disbursed only on account of expenditures for goods and works provided by nationals of, and produced in or supplied from, Bank member countries9. Under this policy, nationals of other countries or bidders offering goods and works from other countries shall be disqualified from bidding for contracts intended to be financed in whole or in part from Bank loans.

1.7 ... In connection with any contract to be financed in whole or in part from a Bank loan, the Bank does not permit a Borrower to deny prequalification, if required, to a firm for reasons unrelated to its capability and resources to successfully perform the contract; nor does it permit a Borrower to disqualify any bidder for such reasons.

1.8 ... As exceptions to the foregoing:

(a) ... Firms of a member country or goods manufactured in a member country may be excluded if, (i) as a matter of law or official regulation, the Borrower's country prohibits commercial relations with that country, provided that the Bank is satisfied that such exclusion does not preclude effective competition for the supply of goods or works required, or (ii) by an act of compliance with a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations, the Borrower's country prohibits any import of goods from that country or any payments to persons or entities in that country.

(b) ... A firm which has been engaged by the Borrower to provide consulting services for the preparation or implementation of a project, and any of its affiliates, shall be disqualified from subsequently providing goods or works (other than a continuation of the firm's earlier consulting services) for the same project. This provision does not apply to the various firms (consultants, contractors or suppliers) which together are performing the contractor's obligations under a turnkey or design and build contract10.

(c) ... Government-owned enterprises in the Borrower's country may participate only 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 Bank-financed project shall be permitted to bid or submit a proposal for the procurement of goods or works under the project.11

(d) ...A firm declared ineligible by the Bank in accordance with subparagraph (d) of paragraph 1.15 of these Guidelines shall be ineligible to be awarded a Bank-financed contract during the period of time determined by the Bank.

Advance Contracting and Retroactive Financing

1.9 ... In certain circumstances, such as to accelerate project implementation, the Borrower may wish to proceed with the initial steps of procurement before signing the related Bank loan. The procurement procedures, including advertising, shall be in accordance with the Guidelines in order for the eventual contracts to be eligible for Bank financing, and the normal review process by the Bank shall be followed. A Borrower undertakes such advance contracting at its own risk, and any concurrence by the Bank with the procedures, documentation or proposal for award does not commit the Bank to make a loan for the project in question. If the contract is signed, reimbursement by the Bank of any payments made by the Borrower under the contract prior to loan signing is referred to as retroactive financing and is only permitted within the limits specified in the Loan Agreement.

Joint Ventures

1.10 ... Suppliers and contractors in the Borrower's country are encouraged to participate in the procurement process since the Bank encourages the development of domestic industry. They may bid independently or in joint venture with foreign firms, but the Bank will not accept conditions of bidding which require mandatory joint ventures or other forms of mandatory association between domestic and foreign firms.

Bank Review

1.11 ... The Bank reviews the Borrower's procurement procedures, documents, bid evaluations, award recommendations and contracts to ensure that the procurement process is carried out in accordance with the agreed procedures. These review procedures are described in Appendix 1. The Loan Agreement shall specify the extent to which these review procedures shall apply in respect of the different categories of goods and works to be financed, in whole or in part, from the Bank loan.

Reserved Procurement

1.12 ... When open competition would be the appropriate method of procurement for particular goods or works of the project, but the Borrower wishes to reserve this procurement for one or more specific firms or enterprises, the Bank may accept such reserved procurement only on condition that:

(a) ... it is not eligible for financing out of the Bank loan; and

(b) ... it will not significantly affect the satisfactory project implementation in terms of costs, quality and completion time.

Misprocurement

1.13 ... The Bank does not finance expenditures for goods and works which have not been procured in accordance with the agreed procedures in the Loan Agreement, and it is the policy of the Bank to cancel that portion of the loan allocated to the goods and works that have been misprocured. The Bank may, in addition, exercise other remedies under the Loan Agreement.

References to Bank

1.14 ... If the Borrower wishes to refer to the Bank in procurement documents, the following language shall be used:

"(name of Borrower) has received (or in appropriate cases 'has applied for') a loan from the International Bank for Reconstruction and Development in various currencies equivalent to USD¼toward the cost of (name of project), and intends to apply a portion of the proceeds of this loan to eligible payments under this contract. Payment by the International Bank for Reconstruction and Development will be made only at the request of (name of Borrower or designate) and upon approval by the International Bank for Reconstruction and Development, and will be subject, in all respects, to the terms and conditions of the Loan Agreement. The Loan Agreement prohibits a withdrawal from the Loan Account for the purpose of any payment to persons or entities, or for any import of goods, if such payment or import, to the knowledge of the Bank, is prohibited by a decision of the United Nations Security Council taken under Chapter VII of the Charter of the United Nations. No party other than (name of Borrower) shall derive any rights from the Loan Agreement or have any claim to loan proceeds."12

Fraud and Corruption

1.15. It is the Bank's policy to require that Borrowers (including beneficiaries of Bank loans), as well as bidders/Suppliers/Contractors under Bank-financed contracts, observe the highest standard of ethics during the procurement and execution of such contracts. In pursuance of this policy, the Bank:
 

(a) defines, for the purposes of this provision, the terms set forth below as follows:

(i) "corrupt practice" means the offering, giving, receiving, or soliciting of any thing of value to influence the action of a public official in the procurement process or in contract execution; and

(ii) "fraudulent practice" means a misrepresentation of facts in order to influence a procurement process or the execution of a contract to the detriment of the Borrower, and includes collusive practices among bidders (prior to or after bid submission) designed to establish bid prices at artificial, non-competitive levels and to deprive the Borrower of the benefits of free and open competition;
 

(b) will reject a proposal for award if it determines that the bidder recommended for award has engaged in corrupt or fraudulent practices in competing for the contract in question;

(c) will cancel the portion of the loan allocated to a contract for goods or works if it at any time determines that corrupt or fraudulent practices were engaged in by representatives of the Borrower or of a beneficiary of the loan during the procurement or the execution of that contract, without the Borrower having taken timely and appropriate action satisfactory to the Bank to remedy the situation;

(d) will declare a firm ineligible, either indefinitely or for a stated period of time, to be awarded a Bank-financed contract if it at any time determines that the firm has engaged in corrupt or fraudulent practices in competing for, or in executing, a Bank-financed contract; and

(e) will have the right to require that, in contracts financed by a Bank loan, a provision be included requiring Suppliers and Contractors to permit the Bank to inspect their accounts and records relating to the performance of the contract and to have them audited by auditors appointed by the Bank.

"1.16. With the specific agreement of the Bank, a Borrower may introduce, into bid forms for large contracts financed by the Bank, an undertaking of the bidder to observe, in competing for and executing a contract, the country's laws against fraud and corruption (including bribery), as listed in the bidding documents.13 The Bank will accept the introduction of such undertaking, at the request of the Borrower's country, provided it is satisfied:
 

(a) that the requirement of such an undertaking is part of an anti-corruption program initiated by the Borrower's country; and

(b) that such requirement will apply, within a timetable agreed between the Bank and the Borrower's country, to all similar public procurement.

(next section: II. International Competitive Bidding)
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Footnotes

(1). Procurement requirements of IBRD and IDA are identical, and references in these Guidelines to the Bank include both IBRD and IDA, and references to loans include credits and project preparation facilities (PPFs). Loan Agreement includes Development Credit Agreement and Project Agreement.

(2). References to "goods" and "works" in these Guidelines include related services such as transportation, insurance, installation, commissioning, training, and initial maintenance. "Goods" includes commodities, raw material, machinery, equipment, and industrial plant. The provisions of these Guidelines also apply to services which are bid and contracted on the basis of performance of a measurable physical output, such as drilling, mapping, and similar operations. These Guidelines do not refer to Consultants' services, to which the current Guidelines: Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency apply (referred to herein as Consultant Guidelines).

(3). For the purposes of these Guidelines, the words "bid" and "tender" shall have the same meaning.

(4). In some cases, the Borrower acts only as an intermediary, and the project is carried out by another agency or entity. References in these Guidelines to the Borrower include such agencies and entities, as well as Sub-Borrowers under on-lending arrangements.

(5).The Bank's Articles of Agreement; Article III, Section 5(b).

(6).See para. 1.6.

(7). For purposes of these Guidelines, "Contractor" refers only to a firm providing construction services.

(8). See para. 1.6.

(9). See Section 5.01 of General Conditions Applicable to Loan and Guarantee Agreements, dated January 1, 1985. The Bank maintains a list of countries from which bidders, goods, and services are not eligible to participate in procurement financed by the Bank. The list is regularly updated and can be obtained from the Public Information Center of the World Bank.

(10). See para. 2.5.

(11). Other than Force Account units, as permitted under para. 3.8.

(12). Substitute "credit," "International Development Association," and "Credit Agreement," as appropriate.

(13). "As an example, such an undertaking might read as follows: "We undertake that, in competing for (and, if the award is made to us, in executing) the above contract, we will strictly observe the laws against fraud and corruption in force in the country of the [Purchaser] [Employer], as such laws have been listed by the [Purchaser] [Employer] in the bidding documents for this contract."