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MANUAL FOR CONDUCTING VERY SMALL-VALUE PROCUREMENT UNDER WORLD BANK/IDA SMALL GRANTS, LOANS AND CREDITS

I.1 - NATURE OF VERY SMALL-VALUE PROCUREMENT

Projects financed by the World Bank loans, credits and grants need a variety of goods, works and services of large and small monetary values to achieve their objectives. To the extent possible, these goods, works and services are procured through international competition in order to ensure economy and efficiency, transparency and to allow suppliers, contractors and consultants from Bank member countries to participate in competition. Under competitive grants, very small amounts of the required items, such as the ones listed below, are procured to achieve grant-funded project objectives. Simplified procedures, which ensure the principle of economy and efficiency, have to be applied for the procurement of the very small items.

• office equipment for project implementation staff
• furniture
• consumables, such as office supplies and gas for vehicles
• small number of vehicles
• publications
• minor rehabilitation of office buildings
• construction or repair of small roads
• laboratory equipment
• small amounts of seeds or other agricultural inputs
• agricultural machinery, such as a tractor
• advisory services
• communication equipment
• training workshops
• travel and per diem
• renting of conference rooms, etc

The loan, credit or grant agreements specify in monetary terms the thresholds up to which different procurement methods (such as national shopping, international shopping, minor works, etc.) are applicable to small-value items. It would, therefore, be necessary to consult the procurement schedule to determine the methods to be applicable to different low value procurement of goods, works and services. In addition, project documents also normally include procurement plans which should be consulted both for the estimated value of a contract, the applicable method, and the key dates. The procurement plan is a useful tool for implementing procurement and are prepared for all projects; for projects involving simple procurement plans for small grants may be prepared as part of the grant agreement. That means it may not be necessary to prepare such a plan before a grant has been made.

For small grants, which include very small purchases, the formal shopping procedures discussed above may not be effective and expedient. These grants are made mostly to small organizations, some public, some private, including NGOs, and sometimes even private individuals. These beneficiaries are widely dispersed across a country or zone. The amounts of such grants may run from as small as US$ 5,000 to as large as US $ 250,000 and have an implementation duration of six months to three years. These funds are used for a variety of small-value goods, works and services. The procurement procedures for this situation are discussed under Part II.1 – Procurement under Small Grants.

I.2 - WHO IS RESPONSIBLE FOR PROCUREMENT?
(ROLES AND RESPONSIBILITIES)

Project implementation, including procurement, is the responsibility of the borrower (of loans and credits) and the beneficiary (of grants). The borrower/beneficiary is, therefore, responsible for

• identifying needs in goods, works and services for the project
• preparing cost estimates for the items needed
• preparing a procurement plan and seeking the Bank’s agreement to the proposed plan where practical
• preparing tender documents, including technical specifications, lists of suppliers, contractors and consultants
• sending tender documents to the suppliers, contractors or consultants
• receiving and evaluating offers in order to select the best supplier
• awarding and signing the contract or issuing a purchase order
• making payments
• supervising contract performance
• preparing progress reports for project implementation agency
• maintaining all project documents including procurement documents
• making project/procurement documents available to the Bank staff for ex-post reviews and to independent auditors for annual audits

Projects financed with the proceeds of loans or credits are usually implemented by well-staffed and equipped "project implementation agencies" sometimes called "Project Management Unit (PMU), Project Implementation Unit (PIU), or Project Coordination Unit (PCU) with adequate capacity to implement large and small-value procurement. However, most beneficiaries responsible for implementing activities financed with small grants have little experience with procurement, administration and accounting involving grant funds and are likely to be confused with the Bank's formal guidelines. They are often overseen by staff of a PMU, with national staff who have (formal) procurement expertise. The latter frequently see the Bank's rules as "the last word" and written in concrete. The purpose of this manual with regard to grants is to provide a better understanding of procurement practices and to quote a recent write-up on a "Guide for Task Teams on Procurement Procedures Used in Social Funds", to "strike a balance between designing a project which is implementable, and achieving accountability".

The Bank’s role is to ensure through progress reports and physical supervision, including prior and ex-post reviews of the conduct of procurement by the borrower/beneficiary under the project, that the loan/grants funds are being used with due consideration to economy and efficiency, and contracts are being awarded in a transparent and fair manner.

The role of the project implementation agency (PIU, PCU, PMU, etc.) is elaborated in detail during project preparation and appraisal and clearly defined in project documents. Although often not separately specified in the project documents, the beneficiary of a grant is similarly responsible for dealing with all activities in connection with the grant, including

• elaboration of a proposal for obtaining the grant;
• identifying the needs for achieving the purpose of the grant;
• if selected for receiving a grant, negotiating the grant agreement, including a procurement plan, with the project implementation agency;
• undertaking procurement under the grant, i.e., selecting suppliers of required goods, works and services;
• supervising contract performance;
• making payments to suppliers and contractors and obtaining receipts for such payments;
• maintaining project records, including procurement records;
• ensuring a sound financial management;
• facilitating monitoring and evaluation by the project implementation agency;
• resolving any issues affecting project implementation, including procurement; and
• preparing the necessary progress and completion reports.

Clearly, the procurement under a grant is the full responsibility of the beneficiary. However, as stated above, some grant beneficiaries may have no solid experience in conducting procurement. It is, therefore, recommended that every potential grant beneficiary candidate should prepare a procurement self assessment using the form at Attachment 1 and include it in their proposal for the grant. This assessment will enable the project implementation agency determine the extent of assistance it must provide to the selected grant beneficiaries in procurement. It is worth noting here that the role of the project implementation agency should normally be limited to providing assistance to the beneficiary rather than undertake the procurement responsibility itself. The preparation and submission of the self assessment form will not be a criteria for the award of a grant.

I. 3 - IDENTIFICATION OF NEEDS, PREPARATION OF COST ESTIMATES AND PROCUREMENT PLANS

Bank-financed projects normally include sufficient details to facilitate the procurement staff’s tasks of implementing procurement. For example, project preparation includes preparing a detailed procurement plan (See Attachment 2) with a brief description of each contract, its estimated cost, the applicable procurement method and the key procurement processing dates.

Potential grant-funded projects, especially under CG, however, may not include a procurement plan, especially during the beneficiary selection phase. In order to facilitate the process of procurement, a procurement plan serves as a good implementation tool. However, for competitive grants it may not be feasible to prepare a procurement plan before a beneficiary has been selected. It would then be more appropriate to elaborate a procurement plan for every grant during negotiations between the project implementation agency and the selected beneficiary.

For the preparation of a procurement plan, the following steps should be taken:

• Make a list of items of goods, works and services needed to achieve the project objective.
• Package the items on the list in logical contract groups, i.e., if the list includes a jeep and a passenger car, these together would make a "vehicles contract package" for procurement purposes.
• Research the local market for the availability of the required goods, works and services.
• Obtain unit prices of items included in each package from suppliers, shopkeepers, catalogues, previous contracts, internet, etc., and using this information, cost each package.
• See Section I.4 and Part II.1 for thresholds for determining procurement methods.
• Prepare a procurement plan using the template at Attachment 2.
• Complete Attachment 1 – beneficiary’s capacity to conduct procurement – which will help the project management to approve the proposed procurement plan in light of this capacity and to determine whether there is need for assistance in conducting procurement.
• Submit the procurement plan and the completed capacity assessment form along with the final application for grant.

Sample documents at Attachment 3 may be used for contract approval/signature and for contract payment procedures.

I.4 - HOW WILL IT BE PROCURED UNDER COMPETITIVE GRANTS?
(PROCUREMENT METHODS)

Consult the project procurement plan for the procurement methods applicable under loans and credits. For competitive grants, which are normally valued between US$5,000 to US$250,000, use the following thresholds to determine different procurement methods which are described in detail in the next section.

1. For contracts estimated less than US$10,000 equivalent each, prices will be obtained from different suppliers/shops/contractors (preferably a minimum of three) in order to select the best supplier. When necessary, procurement may also be conducted through negotiations and in direct contracting. The figure of $10,000 may vary from project to project but will not exceed $10,000.

2. For goods contracts estimated to cost less than US$50,000 equivalent each, use National Shopping based on a minimum of three quotations from domestic suppliers.

3. For goods contracts estimated to cost less than US$100,000 equivalent each, use International Shopping based on a minimum of three quotations from two different countries, including the country where the project is located.

4. For works contracts estimated up to US$100,000 equivalent each, use the procedure applicable to the procurement of minor works and based on a minimum of three quotations obtained from domestic contractors.

5. If after selection of a CG beneficiary, it is established during negotiations of CG terms and conditions between the implementation agency and the beneficiary that the beneficiary has experience in conducting purchases of goods, works and services, through the purchasing practices used in the private sector, such a beneficiary may be allowed to conduct its procurement through those commercial practices up to $250,000 each.

6. For consultant services, generally, the following two procedures will be applicable:

(a) If a firm is to be selected and the estimated cost of the contract is less than US$100,000 equivalent, the procedure based on Consultant’s Qualifications (CQ) should be used; and

(b) For the selection of an individual consultant/advisor, a minimum of three Curriculum Vitae (CVs) of experts in the field in which the advice is needed should be obtained and evaluated for the selection of the best candidate, except in cases where "single sourcing" is justified (see below).

7. In case goods, services or works are available only from a single source because of the proprietary nature or because of an emergency situation, or there are no suppliers/contractors/consultants interested/available, for example, in remote places, or very small amounts are involved, the direct contracting method of procurement can be used.

8. Hiring of government agencies, universities and research institutes or their staff is permissible only in cases where there is no viable private sector alternative. In such cases, works carried out by departments are treated as force account. In the hiring of university or research institute, the following methods are acceptable:

• Single-Source Selection when the case meets the criteria for this method of selection as set out in paras. 3.8 to 3.11 of the Consultant Guidelines.
• Quality-Based Selection (QBS) when more than one of these institutions qualifies to execute the assignment and the assignment meets the criteria set out in the Consultant Guidelines (para. 3.2).
• Selection Based on Consultant’s Qualifications when more than one of these institutions are uniquely qualified to execute the assignment and the assignment meets the criteria set out in the Consultant Guidelines (para. 3.7).

Government-owned universities and research institutes in the Borrower/Beneficiary country that are not financially autonomous or do not operate under commercial law may participate in competitive selection in association with private consultants only as sub-consultants to carry out specialized tasks for which these entities are uniquely qualified.

Universities or institutes that operate under the direct supervision or administrative control of the Borrower or Sub-Borrower cannot be hired under Bank-financed projects because of the conflict of interest situation. For example, if the Ministry of Education is a borrower/beneficiary of a loan/grant, any university or institute which is under the direct control of this Ministry cannot be hired, unless the Bank is satisfied that there are exceptional circumstances such as uniqueness of the required expertise, etc.

procurement_form_eng.doc (438 Kb)