Evaluation of Goods and Works

…and Case Studies to test your new skills!

Seminar on Procurement of Goods, Works and Consultancy Contracts financed from World Bank

Loans and IDA Credits, February 27 - March 3, 2006, Zagreb, Croatia

WORLD BANK

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BACKGROUND Bank has issued standard bid evaluation

form – April 1996 Borrower is required to furnish the Bank

Bid Evaluation Report with tables as attachment

Just tables with “yes” / “no” statements with no explanations is not appropriate

Inadequate explanations result in queries “churning” and delays in decision

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… And many more good tips in the Evaluation Guide !!

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ISSUESIssues which must be covered in bid evaluation report are:

Levels of details depend on complexity and value of procurement. Provide more explanations for large and complex packages

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ISSUES Good practice is to determine evaluated

bids prices of especially low priced bids before rejecting them at preliminary examination on technical or commercial grounds

Price evaluation establishes whether a bid is indeed lower or not and whether it would require more careful review before rejection

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ISSUES Rejection of low bids without evaluation of

bid prices on unjustified technical or commercial grounds has caused delays – hence apply great care in rejecting low bids and give complete information and documentation to substantiate rejection

Controversial wording or number, ambiguous deviations in bid to be highlighted and relevant pages from bids should be attached

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ISSUES Provide cross referencing between text

and attachments Large arithmetical corrections to be

explained especially if the ranking order changes or large upward revision occurs due to correction and winner remains the winner – extracts from bid for such correction should be attached

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ISSUES Defects in bid security to be elaborated

and acceptability or otherwise explained in terms of bidding document - copy of bid security should be attached

After bid opening do not ask for clarification which will change price or substance of bid (except on arithmetical correction or missing historical information on qualification)

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ISSUES List all criteria for bid evaluation in addition to

price with corresponding clause numbers from bidding documents

Where multiple lots, application of cross discounts should be highlighted and explained with reference to evaluation criteria in bidding document

Detailed technical and commercial evaluation tables to be attached, and each item commented against specified conditions/technical parameters

Rejection of lower evaluated priced bids to be explained in sufficient detail

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ISSUES Conduct post qualification of the lowest

evaluated bidder (and if this bidder is not qualified, of the next ranked) to be given by attaching a table giving information on bidder’s qualifications against each of the specified criteria

In case of prequalification, check if the recommended bidder continues to meet key qualification criteria

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ISSUES If lowest evaluated bidder is not qualified

and rejected give details and documentation supporting rejection e.g. provide relevant pages of financial statement/evidence of having not completed a similar work (preferably attach extract from bid containing list of all contracts)

Minutes of bid opening should be signed by bidder on page containing information on prices read out and it should be attached with bid evaluation report

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ISSUES While opening bids read aloud all items as

per instructions in bidding documents including discounts - recurrent costs - guaranteed parameters such as efficiency, etc. as applicable

Proposed contract amount and currency should be carefully checked - Evaluated bid price may not be the contract price as for example cost of missing items may have been added for evaluation purposes but such costs are not part of contract to be awarded

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ISSUES Complaints received should be highlighted

with: (I) explanation on each point of the complaint; (II) Relevant provisions of bidding document;

and (III) correspondence from the complainant and responses given

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Items below were case studies (prepared by Gus Litvak) not used in this session in Zagreb…..

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Case 1Procurement of a school. Estimated cost is $3,000,000 equivalent.

Completion expected to use facilities on September 1, 2007 (school year begins on September 20).

1. Bid A $2,700,000. Completion on October 15, 2007. Window frames (estimated at 40,000) in BoQ are red instead of specified blue. Bid security amount $30,000 instead of required $31,000. Bidder meets qualification criteria.

2. Bid B $2,900,000. Completion on time. Parking lot not included in bid with clear indication that it is not deemed included in other unit prices. Estimate of parking lot is $150,000. Bidder meets qualification criteria.

3. Bid C $3,500,000. Everything in order.

EVALUATE THE BIDS!

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CASE 2Procurement of suspension bridge over the River

Congo. Bidder AAA is denied qualification because the JV of X and Y does not meet the requirement that each partner must meet 25% of all the requirements. X is the world leader in suspension bridges, but has no experience in hydraulic foundations. Y is a world class specialist in hydraulic foundations (caissons, pilings, pylons) but has no experience on suspension bridges.

Comment on Borrower’s decision.

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CASE 3

Procurement of 50 km rural roads in the province of NANANA. Engineer’s estimate is US$2,000,000. Five bids received, of which lowest was $2,550,000. Borrower writes to Bank explaining that a recent contract in LALALA, an adjoining province, resulted in prices even lower than the estimate, and therefore he believes collusion as occurred. Borrower proposes re- bidding.

What should the Bank respond?

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CASE 4Procurement of a Hospital.Lowest Bidder is disqualified on the grounds that

his performance on an ongoing contract with the Ministry of education has been abysmal. Bidder complains to the Bank explaining that most of the difficulties are not his fault, and that he has not received any formal notification of the employer giving him notice due to poor performance.

What should the Bank do?

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CASE 5

The Borrower has some misgivings about the veracity of some of the affirmations of a bidder concerning experience, performance, and litigation. But the Borrower, rather unsophisticated, and short of resources doesn’t know how to verify the information, and asks Bank for advice on how to proceed.

PLEASE PROVIDE A BANK”S REPLY.

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Case Study 6The Joint Venture DEF International, from Germany, and FHJ, an XYZ

National Works corporation, jointly submitted a request for pre-qualification for the construction of a large warehouse. The information regarding the formation of the joint venture was not complete. On this basis, the evaluation committee determined that DEF/HIJ should be disqualified.

Do you agree? Explain.