Project Procurement Risk Assessment Report · million, including ADB loan for $249.80 million equivalent from OCR. 2. The proposed project will assist in the further development of

Irrigation Rehabilitation Project (RRP KAZ 50387)

Project Procurement Risk Assessment Report

Project Number: 50387-001 August 2019

Kazakhstan: Irrigation Rehabilitation Project This document is being disclosed to the public in accordance with ADB’s Access to Information Policy.

http://www.adb.org/Documents/RRPs/?id=50387-001-3

CURRENCY EQUIVALENTS

(as of 3 June 2019)

Currency unit – Tenge (T) T1.00 = $0.002610 $1.00 = T381.21

ABBREVIATIONS

ADB – Asian Development Bank

EBRD – European Bank for Reconstruction and Development

KVK – KazVodKhoz

OCB – open competitive bidding

IsDB – Islamic Development Bank

NCB – national completive bidding

MDB – multilateral development bank

MOF – Ministry of Finance

O&M – operation and maintenance

PAM – project administration manual

PIU – project implementation unit

PMO – project management office

PPL – public procurement law

CONTENTS

EXECUTIVE SUMMARY ................................................................................................................. i

I. Introduction ......................................................................................................................... 1

II. Project Procurement Risk Assessment ................................................................................ 2

A. Overview ......................................................................................................................... 2

B. Strengths ......................................................................................................................... 9

C. Weaknesses .................................................................................................................... 9

D. Procurement Risk Assessment and Management Plan (P-RAMP) ................................ 10

III. Project Specific Procurement Thresholds ...................................................................... 11

IV. Procurement Plan .......................................................................................................... 11

V. Conclusion ........................................................................................................................ 13

APPENDIXES 1. Sector/Agency Procurement Risks Assessment Tool ........................................................... 14 2. Project Procurement Risk Assessment ................................................................................. 26 3. List of Civil Works Contracts in Water Sector 2012-2018 ...................................................... 36 4. Procurement Plan ................................................................................................................. 41 5. Terms of Reference (TOR) ................................................................................................... 42 6. Procurement Risk Categorization Tool ................................................................................. 43

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EXECUTIVE SUMMARY 1. The overall project procurement risk is high. The executing agency, KazVodKhoz (KVK) has the following weaknesses which needs mitigation actions. 2. The project has the following major weaknesses in procurement: (a) lack of staff capacity in implementation, management and procurement practices under projects financed by Multilateral Development Banks (MDBs); (b) lack of qualified national contractors familiar with MDB’s procurement requirements; and (c) inadequate ethics and anticorruption measures. 3. The mitigation actions to address the weaknesses are:

(i) To enhance KVK’s capacity, the Project Management Office (PMO) should be established and staffed with experienced project management, procurement, finance, monitoring and evaluation, construction supervision, and safeguards specialists. The PMO capacity should be enhanced by international consulting company. ADB will need to conduct project implementation and procurement workshop for KVK and PMO staff.

(ii) ADB will need to conduct business opportunities seminar for potential bidders to disclose the list of procurement contracts and ADB’s requirements for participation, qualification, contract management, and performance.

(iii) The KVK is not familiar with ADB’s integrity and anticorruption principles. ADB’s integrity and anticorruption requirements should be provided in Project Administration manual (PAM). ADB will need to conduct integrity and anticorruption seminar workshop for EA. All procurement should follow prior review procedure.

4. The project implementation and procurement arrangements with appropriate mitigation measures are considered satisfactory. ADB will need to conduct (i) project implementation and procurement workshop for EA and PMO staff; (ii) business opportunities seminar for national contractors, and (iii) integrity and anticorruption seminar for EA staff. ADB and the government will jointly undertake reviews of the project at least once a year. The reviews will assess progress in the project activities, including implementation of the mitigation measures, procurement transactions, performance of contractors, consultants, and suppliers, monitoring and reporting of project assets, identify issues and constraints, and determine necessary remedial actions and adjustments.

I. Introduction 1. The project procurement risks assessment (PPRA) was prepared in accordance with Guide on Assessing Procurement Risks and Determining Project Procurement Classification (2015) and Guiding Notes on Procurement Risks Frameworks. The project concept paper and technical assistance (TRTA 9317-KAZ) for $1.1 million to prepare the Irrigation Rehabilitation Sector Project were approved on 12 May 2017. The estimated cost of the project is $320.88 million, including ADB loan for $249.80 million equivalent from OCR. 2. The proposed project will assist in the further development of water resources in Kazakhstan by financing part of the 600,000 ha irrigation subsector investment planned by the government. The project impact is aligned with “agriculture production contribution to gross national product increased”, as outlined in Strategy Kazakhstan 2050.1 The project outcome will be farm productivity increased in East Kazakhstan, Karaghandy, Kyzylorda, and Zhambyl. The proposed project outputs will be (i) irrigation infrastructure rehabilitated and/or improved; (ii) water management improved and beneficiaries’ capacity enhanced; (iii) KVK management capacity strengthened. The project will also support project administration and implementation. The team of international and national individual consultants for project preparation were fielded from August 2017. The national design firm was recruited in January 2018 to prepare the national feasibility study report and design documents. 3. The project will rehabilitate irrigation systems covering 171,100 ha in East Kazakhstan, Karaghandy, Kyzylorda, and Zhambyl provinces. The project will include procurement of:

(i) Civil works for: (a) excavation works to clean 1,976 km of irrigation and 358 km of drainage canals; (b) lining of 1,064 km of irrigation canals, flumes, and pipelines; (c) 4,185 hydraulic structures; (d) 19 irrigation and 27 vertical drainage wells; (e) reconstruction of 19 pump stations and supply of 34 mobile pumping units; (f) reconstruction of workshops and KVK office.

(ii) Supply of goods comprising: (a) operation and maintenance, and workshop equipment for KVK; and (b) vehicles, office equipment and furniture for project management office (PMO) and Project Implementation Units (PIU).

(iii) Consulting services comprising: (a) project management, design, procurement, and construction supervision; (b) capacity building of KVK in O&M of irrigation facilities and beneficiaries in water resources management; (c) annual audit of project financial statements; and (c) socio-economic survey.

4. KVK will be the executing agency (EA) and have overall responsibility for the project. KVK will establish, prior to disbursement of loan proceeds, the project management office (PMO) in Astana to manage project implementation. To support PMO activities in the field and coordinate local project activities, prior to disbursement of loan proceeds, four project implementation units (PIUs) will be established one each in East Kazakhstan, Karaghandy, Kyzylorda, and Zhambyl provinces. The PMO and PIUs will be supported by the team of international and national experts to be hired through an international consulting firm in association with local firm(s). All procurement process will be supported by PMO established within KVK. 5. The PPRA was undertaken by ADB staff intermittently during 19 September 2017 – 17

1 “Kazakhstan-2050” Strategy: new political course of the established state” announced by President of Kazakhstan in

his annual Address to the People of Kazakhstan on 14 December 2012, endorsed by Presidential Decree No. 449 dated 18 December 2012

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March 2019 via four missions. The preparation activities included: (a) review and analyses of national procurement law, ADB’s country procurement risk assessment report, and ongoing procurement experience in the agriculture and water sector; (b) interviews and discussion with counterpart staff of Committee for Water Resources under the Ministry of Agriculture, KVK, Islamic Development Bank (IsDB), European Bank for Reconstruction and Development (EBRD), and World Bank. The outputs of interviews and discussions are provided in the sector, agency and project procurement risks assessment questionnaires (Appendix 1 and 2). The overall project procurement risk is high (Appendix 6). II. Project Procurement Risk Assessment

A. Overview 6. The public procurement in the water sector is governed by national Law No.434-V “On Public Procurement” (PPL) of 4 December 2015, and Decree of the Ministry of Finance No. 648 “On approval of Public Procurement Regulations” (PR) of 11 December 2015. There is no exemption for the sector and executing agency from above national procurement law. Based on the PPL the sector agencies should conduct all procurement of goods, works, and services electronically via sole government e-procurement web portal www.goszakup.gov.kz. The implementation of e-procurement in the public sector started from 2007.

i. Organization and Staff Capacity

7. The project executing agency will be national state enterprise KazVodKhoz (KVK) under Committee for Water Resources. The KVK was established in accordance with Government Decree No. 196 of 28 February 2011 by merging the state water enterprises. The key objective of KVK is rehabilitation and operations and maintenance (O&M) of water facilitates (reservoirs, canals, pipelines, pump stations, and other water facilities), and supply of irrigation and drinking water to the users. It has 20 branch offices over the country. The KVK is responsible for the proper operation of 77 water reservoirs of various capacities, 81 water catchment systems, more than 10,000 km of pipeline channels and their distributors and more than 2,000 km of irrigation network. The KVK uses government funds and foreign investments for rehabilitation and O&M of the water facilities. It is also the executing agency for the two ongoing loan projects financed by IsDB, and EBRD.2 Both these multilateral development banks (MDB) financed projects are at early stage of procurement and implementation. All public procurement financed from the government budget is subject to PPL and PR and conducted via national e-procurement web portal. 8. The KVK has corporate procurement department comprising 5 full time staff. The ordinary staff has not less than 3 years in public procurement while the head of department has more than 4 years. All staff passed public procurement trainings and holds completion certificates. The KVK staff has very limited experience (preparation of bidding documents, and RFP) in MDB financed projects since that projects are at early stage of implementation. 9. KVK will have overall responsibility for the project. Deputy Director General, KVK will be appointed as a project director to oversee project implementation. KVK will establish, prior to disbursement of loan proceeds, the PMO in Astana to manage project implementation. The PMO will be responsible for (i) financial management; (ii) procurement and recruitment of consultants;

2 IsDB financed Rehabilitation of Irrigation and Drainage Project ($250 million), and EBRD financed South Kazakhstan

Water Supply Project: Aktobe, Zhambyl and South Kazakhstan provinces ($180 million).

http://www.goszakup.gov.kz/

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(iii) preparing the periodic progress reports; (iv) ensuring compliance with ADB and the government’s environment and social safeguards’ requirements; (v) project monitoring and evaluation (M&E); and (vi) coordinating with relevant agencies. To support PMO activities in the field and coordinate local activities for implementation of project outputs, prior to disbursement of loan proceeds, four Project Implementation Units (PIUs) will be established in the East Kazakhstan, Kyzilorda, Zhambyl, and Karaghandy provinces. 10. The PMO will be headed by a project manager appointed by KVK and acceptable to ADB. The project manager will report to the project director. The project manager will be supported by teams of specialists for design and construction supervision, contract management and procurement, accounting, M&E, water resources management, and safeguards along with administrative staff. Each PIU will be headed by a deputy project manager to be appointed by KVK, and supported by technical and administrative staff. The deputy project manager will report to the project manager. PMU and PIU staff will be recruited by the Executing Agency using procedures acceptable to ADB. The PMU and PIUs will be supported by international and national consultants (firm) recruited by the project. 11. The risk of organization and staff capacity is high. To mitigate this risk ADB will conduct a seminar on project implementation and procurement for KVK and PMO staff. All procurement must follow prior review. The international project management consultant will have qualified international and national procurement experts who will provide permanent on-the-job procurement support and training to EA staff. These requirements will be in the consultant’s TOR.

ii. Information Management

12. The KVK follows the national regulations for processing, filing, record keeping, and saving in archive of the letters, minutes of the procurement committee, bidding and contract documents. The records keeping are governed by following law and regulations: (i) Standard rules of processing and communication management in government organizations No. 10129 of 23 January 2015; (ii) Clauses 1037-2001, 1042-2001, and 1237-2004 of State Standards of the Republic of Kazakhstan; (iii) Guidance on electronic record keeping for government organization No. 430 of 17 April 2004; (iv) List of typical documents of government and non-government organization and terms of their filing, recording and storing No. 10345 of 27 February 2015; (v) Instructions on terms and conditions of documents in National Archive Fund of Kazakhstan. 13. The KVK has a referencing system for procurement system both in hard copy and electronic system form. There is a special secure filing room within the KVK office to file confidential procurement documents. All procurement documents and files related to e-procurement are kept on the national procurement web portal, invoices for payment are also submitted electronically and kept in the system. The standard rules for keeping of procurement are following: 5 years for correspondence, 10 years for bidding and contract documents, and 15 years for procurement committee minutes. 14. The risk of information management is moderate. The risk will be mitigated via KVK’s allocation of space and facilities for record keeping of procurement and financial files. Upon project completion, the records will be transferred to the state archives for long-term keeping in accordance with national regulations.

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iii. Procurement Practices

15. The KVK has experience in corporate procurement conducted in accordance with national PPL and PR and financed from government budget. In overall water sector, 42 civil works contracts were awarded for T57.76 billion ($170.3 million equivalent) in 2012-2018. Out of 42 contracts, 11 contracts for T21.66 billion ($63.9 million equivalent) were directly awarded to KVK. So, the KVK acts as an employer, and for some contracts as general contractor. In contracts where KVK is a general contractor, the Employer is Water Resources Committee. The 11 direct contracts with KVK were not considered in below analyses and market survey. 16. The average implementation period of the contracts is about 2–3 years. Out of 31 contracts, 3 are large with a contract price ranging from $10 to $18 million. The rest are small and medium size contracts with a price below $10 million. All contractors are national firms. The summary list of contracts is provided in Appendix 3. 17. The qualification criteria used for procurement of works is based on the technical scores, and not pass/fail. The KVK establishes the evaluation committee for each public procurement contract, which is chaired by the Director KVK and comprise representatives from MOF, local government, KVK branch offices, KVK procurement staff, and others. The evaluation committee usually comprise 7 members. It may include more members for complex and large contracts. KVK uses the government-issued public procurement manuals and guidance, standard bidding documents, which are posted on the national procurement web portal www.goszakup.gov.kz. 18. All information about KVK’s procurement is provided in annual procurement plan which is publicly advertised by the KVK, and available on the national procurement web portal. The national e-procurement portal has a threshold for mode of procurement: from $1,000 to $45,000 shall use request for quotations, and above $45,000 open tender or auction (World Bank’s Country Fiduciary System Review, 2014). The conditions to apply single source selection/direct contract are described in clause 39 of PPL. Around 30% of sector’s procurement is undertaken through open competitive bidding. The average number of bidders range from 5 to 10. Maximum number was 30, and minimum 3. 19. The KVK has inadequate experience in procurement under MDB financed projects since three ongoing projects are at early stage of implementation while initial two projects were completed more than 10 years ago. Below is a summary of MDB financed project in agriculture and water resources sector. 20. Asian Development Bank (ADB). ADB’s experience in the water sector of Kazakhstan is limited to one sovereign loan project (Water Resources Management and Land Improvement Project) for $40 million (Loans 1592 and1593) in Makhtaaral district to serve 32,500 hectares (ha) area in South Kazakhstan province approved in 1997 and completed in 2006. The Ministry of Agriculture was the EA. The project had two components: (i) institutional support, which included improving the capacity of the government institutions involved in agricultural services and water management, and the skills of the relevant government staff, farm managers, and farm workers, as well as monitoring and evaluation (M&E); and (ii) rehabilitation and improvement of irrigation and drainage (I&D) systems, including reclamation of waterlogged and saline soils, and implementation of improved water management measures. The overall rating of the project at completion was satisfactory.3 The lessons learnt and recommendations related

3 ADB. 2007. Completion Report: Water Resources Management and Land Improvement Project in Kazakhstan.

Manila.


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to the project implementation and procurement are following: (i) The procurement of civil works was very slow and took about 30 months. Slow

procurement, compounded by delays in contract implementation, resulted in extension of the loan closing date for 3.3 years. The project was expected to take 4.9 years, but its actual duration was 8.2 years.

(ii) Construction supervision was considered inadequate, with insufficient oversight by the main contractor. Poorly executed works were ultimately rectified, some during the 12-month defects liability period. Project engineers should have taken a more proactive stance in contract management, rejecting payment for substandard work from the outset.

21. In designing future projects in Kazakhstan and elsewhere, ADB should (i) include organizational and financial mechanisms for adequate sustainable management, and O&M; (ii) provide support for agricultural development, as well as I&D rehabilitation activities; (iii) ensure cost recovery details are properly understood at the time alternative designs are being discussed with farmers, and that recovery levels are such that farmers can still finance ongoing O&M requirements; (iv) ensure that adequate equipment and staffing is available for O&M and capital replacement investment activities after project completion; and (v) include mechanisms to reduce the time required for the procurement of civil works. 22. World Bank (WB). In 1996 the World Bank approved its first Irrigation and Drainage Improvement Project (IDIP-1) for $80 million, which was completed in 2004.4 The project scope comprised irrigation and drainage infrastructure rehabilitation, improved water management and O&M practices, introduction of improved agricultural practices, and capacity development. The project area was in Almaty, South Kazakhstan, Kyzylorda, and Zhambyl provinces covering about 30,000 ha. After these initial interventions, the Government’s attention got diverted to the petrochemicals and agriculture got neglected for the next more than a decade. 23. The next World Bank financed IDIP-2 project was approved in 2013.5 This is a sovereign loan to the Republic of Kazakhstan. The loan agreement for $102.90 million was signed on 9 June 2015 with the MOF. The project EA is CWR. The project has following four components: (i) rehabilitation and modernization of I&D infrastructure; (ii) sustainable management, operation, and maintenance of I&D systems; (iii) agricultural development; and (iv) project management, technical assistance and training. The project area is located in Almaty, South Kazakhstan, Kyzylorda, and Zhambyl provinces covering about 113,000 ha. The project implementation period is 5 years, with a loan closing date on 31 December 2020. The project has established the project management unit under CWR with two offices, one in Astana and the other in Shymkent. The overall procurement risk rating for the project is high. This risk rating was based on experience from past and ongoing World Bank-financed projects in Kazakhstan, and general public procurement environment and current capacity of EA in handling the procurement. To mitigate the risk the World Bank recommended (a) to recruit an experienced procurement specialist who is familiar with the World Bank procurement procedures; (b) the World Bank's procurement staff based in the country office shall provide advice and assistance on a regular basis; (c) the procurement packages shall be carefully prepared in order to foster competition; and (d) wide and advance advertising shall be carried out, and proactive search and flow of information to the potential contractors, suppliers, and consultants shall be ensured. The project

4 World Bank. 1996. Appraisal Report on Loan to the Republic of Kazakhstan: Irrigation and Drainage Improvement

Project. Washington DC. 5 World Bank. 2013. Appraisal Report on Loan to the Republic of Kazakhstan: Second Irrigation and Drainage

Improvement Project. Washington DC.

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procurement plan is available on World Bank’s website.6 The project has (a) 5 procurement packages for civil works with 2 NCB and 3 ICB contracts; and (b) 2 QCBS consulting packages for works design, project management and construction supervision. Below is a summary of contracts.

Table 1. Procurement and Consulting Packages under World Bank’s IDIP-2 project (as of January 2019)

Nr. Contract name Mode Amount Status

Works

1 Improvement of Irrigation and Drainage System "Arys-Turkestan-1" in Turkestan city of South-Kazakhstan province

ICB $27,021,163 Evaluation

2 Improvement of Irrigation and Drainage System of Makhtaaral-1 Second Launch Area in Makhtaaral province of South-Kazakhstan province


3 Improvement of Irrigation and Drainage System of Big Almaty Canal (BAC) in Enbekshikazakh raion of Almaty province

NCB $9,900,841 Evaluation

4 Improvement of Irrigation and Drainage System of Georgievsky Magistral Canal in Kordai raion of Zhambyl province

NCB $4,872,937 Bidding

5 Improvement of Irrigation and Drainage System of Kyzylorda-1 in Zhalagash raion of Kyzylorda province

ICB $51,599,372 Bidding

Consulting Services

1 Works Design and Institutional Agricultural Setup (Lump-Sum Portion)

QCBS $15,423,555 Awarded

2 CW Supervision and Overall Project Management (Time-Based Portion)

QCBS $18,536,591 Awarded

ICB = international competitive bidding, NCB = national competitive bidding, QCBS = quality-and cost-based selection.

24. Islamic Development Bank (IsDB). In 2015 IsDB approved a loan for $143 million to the Republic of Kazakhstan for Rehabilitation of Irrigation and Drainage Project. The project scope includes enhancement of agricultural productivity and production and improving farmers’ welfare and incomes by improving water use efficiency, water delivery, and soil fertility; maintaining groundwater table; and reducing salinity at 136 ha in Almaty and South Kazakhstan provinces. The loan agreement was signed on 10 September 2017. KVK is the EA. The procurement plan is not publicly available. Below is a summary of contracts.

Table 2. Procurement and Consulting Packages under IsDB’s Irrigation and Drainage Rehabilitation Project

(as of January 2019) Nr. Contract name Mode Amount Status

Works

1 Rehabilitation of the Irrigation System in Eskeldi District, No.41

NCB $4,940,000 Awarded

2 Rehabilitation of the Irrigation System in Alakul District, ICB/01


6 http://documents.worldbank.org/curated/en/321751525728992099/pdf/Plan-Archive-3.pdf

http://documents.worldbank.org/curated/en/321751525728992099/pdf/Plan-Archive-3.pdf

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Nr. Contract name Mode Amount Status

3 Rehabilitation of the Irrigation System in Aksu District ICB/02

ICB $14,810,000 Preparation

4 Rehabilitation of the Irrigation System in Koksu District, ICB/03


5 Rehabilitation of the Vertical Drainage Wells in Makhtaral District, ICB/04


6 Rehabilitation of the Vertical Drainage Wells in Shardara District, ICB/05


7 Maintenance/Refurbishment of Laboratory of Hydro-Geological Expedition in Makhtaaral and Shardara districts CW/15

SSS $50,000 Preparation

Consulting Services

1 Design Review, Tendering and Supervision QCBS $6,400,000 Evaluation

2 Financial Audit Services LCS $300,000

3 Enhancing monitoring and data automation. Contract with International Center for Biosaline Agriculture (ICBA)

SSS $2,860,000 Not yet due

4 Capacity Development & Awareness Raising. Contract with UNDP

SSS $900,000 Awarded

ICB = international competitive bidding, LCS = least cost selection, QCBS = quality-and cost-based selection, SSS = single source selection.

25. European Bank for Reconstruction and Development (EBRD). In 2016, EBRD approved a loan for $174 million to the Republic of Kazakhstan for South Kazakhstan Water Supply Project. The project scope comprises repairing of outdated canals to increase water supply and efficiency and reduce leakage, restoration of deteriorated water management facilities and water supply canals previously connected to irrigated lands in areas where infrastructure exists as well as construction of water canals in the areas with no water supply infrastructure at 92,704 ha in Aktobe, South Kazakhstan, and Zhambyl provinces. KVK is the EA. The loan agreement was signed on 10 May 2017 and became effective on 20 April 2018. The EA has recruited national consulting firms for detailed design and international consulting firm for project implementation and procurement. Procurement of works is ongoing. The project procurement plan is not available. 26. Based on above information, it has been concluded that KVK’s procurement practices risk is high. To mitigate this risk, the loan and project agreement should have a provision that ADB procurement and consulting guidelines must be followed for the project. ADB should conduct project implementation and procurement training for EA, and business opportunities seminar for potential bidders as soon as PMO established. All procurement should follow prior review. The PAM should clearly reflect procurement procedures and arrangements. The NCB requirements of the procurement plan should have a provision that KVK will be encouraged to use ADB’s standard bidding documents for small works and goods.

iv. Plans to introduce e-procurement system

27. There is a good legal and regulatory framework that enables KVK to use an e-procurement system. All procurement is conducted electronically through the national web portal, and there is no option to submit bids in paper format to the KVK. The implementation of e-procurement started in 2007. The authorized government body in procurement is the Ministry of Finance. The registration number (BIN) of KVK as an Employer is 110740000364. Using this BIN it is easy to track in the web portal any contract bid by KVK.

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28. The national procurement web portal (www.goszakup.gov.kz) also includes a separate page for procurement notices under four World Bank financed projects implemented by the State Tax Committee, Ministry of Health, State Customs Committee, and Ministry of Education and Culture. 29. The Country and Sector Procurement Risks Assessment (Appendix 1) gives a high score (3 out of 3 points) to the performance of national e-procurement system. It is recommended that KVK should advertise project general procurement notice, procurement plan, special procurement notices on national procurement web portal.

v. Effectiveness

30. KVK monitors contractual performance of the contractors and make payments based on the construction progress certificates. Based on the PR the maximum size of advance payment is 50% of contract amount. But usually it is between 20-30%. The time for payment of invoices indicated in the standard contracts is 60 calendar days, but usually KVK makes payment within 10-15 calendar dates. The information about non-performing contractors shall be submitted to the authorized government agency, MOF, which is responsible to maintain the list of debarred bidders. MOF after review makes decision on debarment. 31. The information about the bidding results is posted on the national procurement web portal and available to bidders as well as any third party. As per clause 47 of PPL all suppliers, contractors, and consultants have a right to submit the complaint. In KVK practice, usually about 30% of bidders submit complaints which are reviewed in line with PPL. Generally, 60% of complaints upheld. There are no sector related records. EA doesn’t’ make monitoring of complains. The MOF is a responsible body to review the complaints. There is no non-judicial mechanism to review complaints. All procurement decisions and disputes supported by written narratives such as minutes of evaluation, minutes of negotiation, notices of default/withheld payment. 32. The effectiveness risk is moderate. This risk be mitigated through strict monitoring and prior review procedures for procurement. The Project Administration Manual (PAM) will have provisions on non-discriminatory participation, transparent tender processes, including complaints review procedures.

vi. Accountability Measures

33. The integrity is one of the principles of the PPL (para. 7 of Clause 4). The PPL includes clauses related to ethics, conflict of interest, and eligibility of bidders. Eligibility and qualification requirements for bidders are provided in clause 9 of PPL. The bidders shall (i) has a right to provide services, works, goods as indicated in its charter; (ii) shall be financially sound, without tax debts; (iii) not be a bankrupt; (iv) poses material and labor resources; (v) have a working experience. As per clause 12 of PPL, the government procurement body is responsible to keep the list of debarred bidders, suppliers, contractors and consultants for ethical or integrity violations. The list of debarred firms is provided on national e-procurement portal. 34. All procurement transactions are subject for approval by the EA’s evaluation committee. The procurement decisions are publicly available on e-procurement portal and can be easily traced by the bidders and any third party. However, the KVK has inadequate experience in MDB financed projects and is not familiar with their integrity and accountability principles.


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35. The risk of project related accountability measures is high. ADB’s integrity and anticorruption requirements, and accountability measures will be provided in the PAM. ADB will make integrity and anticorruption seminar workshop for EA. All procurement will follow prior review procedure.

B. Strengths

36. The strengths have been considered in the following areas: (i) Experience in corporate procurement management and e-procurement. KVK has

6 years of experience in the public procurement conducted via e-procurement web portal. It has corporate procurement department with 5 staff, certified in public procurement, and e-procurement. Thus, KVK staff understands the public procurement and contract management principles.

(ii) Contract management and construction supervision. The KVK has good team of permanent design and construction supervision engineers in the head quarter and regional branches. It has finance and accounting department involved in disbursement and financial management of the contracts. It has legal department to overview legal aspects of the contracts and represent KVK in disputes and litigations. The good point is that KVK is responsible for reconstruction and O&M of irrigation facilities. This will avoid issues during reconstruction and operational acceptance of facilities since KVK is Employer and Operator for these facilities.

C. Weaknesses 37. The KVK has weaknesses in:

(i) Lack of staff capacity in implementation, management, and procurement of MDB financed projects. The number and qualification of KVK staff are insufficient to undertake additional procurement under the project in line with ADB procedures. To enhance KVK’s capacity, the PMO should be established and staffed with experienced project management, procurement, finance, monitoring and evaluation, construction supervision, and safeguards specialists. The PMO capacity should be enhanced by international consulting company. ADB will need to conduct project implementation and procurement workshop for KVK and PMO staff.

(ii) Lack of qualified national contractors familiar with MDB’s procurement requirements. The national construction firms in water sector have no experience to bid and perform under MDB financed contracts. Thus, there is high risk of failure for open competitive biddings (OCB) with national advertisement. ADB will need to conduct business opportunities seminar for potential bidders to disclose the procurement plan and ADB’s requirements for participation, qualification, contract management, and performance. EA will use OCB with international advertisement, as much as possible, for large contracts costing more than $10.5 million.

(iii) Inadequate ethics and anticorruption measures. The KVK is not familiar with ADB’s integrity and anticorruption principles. ADB’s integrity and anticorruption requirements should be provided in PAM. ADB will need to conduct integrity and anticorruption seminar workshop for EA. All procurement should follow prior review procedure.

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D. Procurement Risk Assessment and Management Plan (P-RAMP) 38. Based on the above strengths and weaknesses, the ADB’s fiduciary risks are considered high. KVK has low project implementation and procurement capacity. The P-RAMP has been prepared based on the weaknesses identified during the discussions the various agencies involved in procurement and based on the responses provided in the procurement risk assessment questionnaire. P-RAMP is given Table 2 below.

Table 3: Procurement Risk Assessment and Management Plan RISK DESCRIPTION RISK

ASSESSMENT MITIGATION MEASURES OR RISK

MANAGEMENT PLAN

Insufficient qualified staff to efficiently undertake the procurements required to implement the project

Substantial Mitigation:

• Establishment of strong PMO

• Provision of intensive training on ADB procedures before procurement is undertaken

• Procurement specialist to be recruited by PMU must have good procurement experience

• International consultant’s TOR must include support and capacity building for procurement and contract management

• an advertisement requirement (e.g., procurement notices for all packages shall be posted on the national e-procurement portal in addition to the advertisements through ADB website) to ensure transparency and non-discriminatory process

The Agency uses practices inconsistent with national procurement law or bidding documents unsuitable for ADB-funded procurement.

Moderate Mitigation:

• Provision of training on ADB procedures (see above) to EA and PMU staff

• Loan and project agreement shall have a provision that ADB procurement and consulting guidelines must be followed

Record-keeping is inadequate to enable internal or external audit of procurement processes.

Moderate Monitoring:

• EA must ensure that secured dedicated room is ready before procurement is started

• If procurement activities begin before such room is available, ensure that temporary space is provided by EA until permanent room is ready.

Mitigation:

• Project management consultant will develop a manual for PMU on how to make proper record-keeping. This will be in its TOR.

Agency does not promote non-discriminatory participation, transparent tender processes (including advertisement, tender documentation, tender evaluation, complaints mechanism)?

Moderate The KVK follows non-discriminatory and transparency principles in line with PPL. Mitigation:

• This will be anticipated through strict monitoring and prior review procedures for procurement.

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RISK DESCRIPTION RISK ASSESSMENT

MITIGATION MEASURES OR RISK MANAGEMENT PLAN

The Agency has inadequate ethics and anticorruption measures in place.

High Mitigation:

• ADB’s integrity and anticorruption requirements will be provided in PAM

• ADB will make integrity and anticorruption seminar workshop for EA

• All procurement will follow prior review procedure

ADB = Asian Development Bank, EA = executing agency, KVK = KazVodKhoz, PAM = project administration manual, PMO = project management office, PMU = project management unit, PPL = public procurement law, TOR = terms of reference.

III. Project Specific Procurement Thresholds 39. The OCB with international advertisement will be applied to goods estimated to cost $2,000,000 and above, and works contracts estimated to cost $10.5 million and above. Goods contracts worth less than $2 million and works contracts worth less than $10.5 million will follow the OCB procedure with national advertisement. Request for Quotations (RFQs) procedure will be used for contracts for works and goods valued less than $200,000. All contracts will be subject to prior review. For more information please see the Procurement Plan (Appendix 4). IV. Procurement Plan

A. Scope of Procurement

40. The proposed project will mainly include civil works for rehabilitation of irrigation and drainage infrastructure consisting: (i) excavation works, (ii) concrete lining, (iii) installation of water regulation facilities, pumps, motors, electrical, and mechanical equipment, and (iv) drilling of irrigation and drainage wells. The construction of irrigation and drainage pumping stations will involve electromechanical works which can be carried out by international contractors or consortiums of national and international contractors. Rehabilitation of irrigation canals and drainage collectors will need international and national contractors specialized in the sector.

B. Packaging

41. The key procurement and consulting contract packages are summarized in below table while all details are provided in procurement plan (Appendix 4). The reason of combining consulting services into one package is following (i) design, procurement, and construction supervision shall be in one package to avoid any disputes during bidding and civil works, so one consultant will be responsible and make sole control; (ii) the capacity building component was added in one package with design and supervision because there is a risk that EA can have less interest in this package and can drop it later (we had many examples when EAs delayed selection and dropped such soft contracts from the project). The draft TOR for procurement package is attached in Appendix 5.

12

Table 3. Proposed Procurement and Consulting Packages

Nr. Procurement Package Mode Amount ($) Remarks

I Works: 9 packages 166,749,814

1 Reconstruction of Workshops OCB 595,000

National

advertising

Q1/2020

2 Construction of KVK office in Astana OCB 6,548,000

National

advertising

Q4/2019

3 Rehabilitation of Irrigation System in

East Kazakhstan and Karaghandy

Provinces:

OCB

32,356,373

National

advertising

Q3/2019

Lot 1 East Kazakhstan Urzhar district

(7,227 ha) 7,374,447

Lot 2 East Kazakhstan Тarbagatai district

(5,010 ha) 4,576,716

Lot 3 East Kazakhstan Zharma district

(6,564 ha) 1,242,653

Lot 4 East Kazakhstan, Kurchum district

(17,246 ha) 10,339,876

Lot 5 Karaghandy Province, Abai, Bukhar-

Zhyrau, Zhanaarka, Zhezkazgan

districts (11,390 ha):

8,822,681

4 Construction of KVK office in East

Kazakhstan RFQ 40,000

5

Rehabilitation of Irrigation System in

East Kazakhstan Province (46,203 ha):

Kokpekti and Zaisan districts

OCB 22,929,524

International

advertising

Q4/2020

6

Rehabilitation of Irrigation System in

Karaghandy Province (16,510 ha): Nura

and Osakarov districts

OCB 19,401,372

International

advertising

Q4/2020


Kyzylorda Province (28,974 ha) OCB 26,949,186

International

advertising

Q4/2020


Zhambyl Province (37,977 ha) OCB 57,930,360

International

advertising

Q4/2020

II Goods (6 packages) 9,137,290

1 O&M machinery and equipment for KVK OCB 8,535,000

International

advertising

Q3/2019

2 PMO and PIUs office equipment RFQ 56,480 National

Q3/2019 3 PMO and PIUs office furniture RFQ 25,140

4 PMO and PIUs vehicles RFQ 166,670

5 Agri-cooperatives equipment RFQ 112,000 National

Q1/2020 6 Workshop equipment RFQ 242,000

13

Nr. Procurement Package Mode Amount ($) Remarks

III Consulting Services (5 contracts) 20,934,160

1

Project management, detailed design,

procurement, construction supervision,

and capacity development

QCBS 20,430,160

International

advertising

Q2/2019

2 Project Audit (5 years) LCS 112,000 National

Q4/2019

3 Socio-economic survey (Project mid-

term and completion) CQS 112,000

National

Q4/2021 4 Training and Study tour CQS 168,000

5

Irrigation System Performance

Monitoring (Remote Sensing) CQS 112,000

TOTAL 196,821,264

CQS = consultant qualification selection, KVK = KazVodKhoz, LCS = least-cost selection, OCB = open competitive bidding, Q = quarter, QCBS = quality-and cost-based selection, RFQ = request for quotation. *The number of lots and their estimated costs will be finalized after detailed design.

C. Advance Procurement Actions

42. Advance contracting and retroactive financing will be used for (i) consulting services; (ii) goods and works; and (iii) project management office staff recruitment and provision of training.

V. Conclusion 43. The project implementation and procurement arrangements with appropriate mitigation measures are considered satisfactory. ADB will need to conduct (i) project implementation and procurement workshop for EA staff; (ii) business opportunities seminar for national contractors, and (iii) integrity and anticorruption seminar for EA staff. ADB and the government will jointly undertake reviews of the project at least once a year. The reviews will assess progress in the project activities, including implementation of the mitigation measures, procurement transactions, performance of contractors, consultants, and suppliers, monitoring and reporting of project assets, identify issues and constraints, and determine necessary remedial actions and adjustments.

14 Appendix 1

Sector/Agency Procurement Risks Assessment Tool Summary Sheet

Indicators/Questions

Country

Score

Sector/

Agency

Scores

Comments

1. Legislative and Regulatory Framework Average

1.6

Average

1.8

1.1 Does the national public procurement law

(including supporting regulations, standard

bidding documents and operational

manuals/guides) apply to the sector?

2 2 The sector is subject to

public procurement law

1.2 Is the supply market for the sector

sufficiently competitive to give full effect to

the national procurement law and/or open

competitive tendering?

1 2 There is a record of core

suppliers in the KVK.

According to para 9 of

Clause 12 PPL, the

authorized procurement

agency, which is Ministry

of Finance (MOF) shall

keep records of qualified

suppliers and

contractors.

The average number of

bidders range from 5 to

10. Maximum number

was 30, and minimum 3.

According to KVK, the

availability and quality of

suppliers, labor force,

goods, and services is

sufficient in the market.

Around 95% of works,

goods, and services are

locally provided. Foreign

contractors and

suppliers are not

interested in small and

medium size contracts.

1.3 If there is a sector specific legal framework,

does it support non-discriminatory

participation, transparent tender processes

(including advertisement, tender

documentation, tender evaluation,

complaints mechanism)?

1 1 There is a record of core

suppliers in the KVK.

According to para 9 of

Clause 12 PPL, the

authorized procurement

agency, which is MOF

shall keep records of

qualified suppliers and

contractors.

1.4 Is the sector subjected to excessive

regulation or government control such that

competition is limited or non-existent?

1 1 The sector is subject to

government control, the

competition in the sector

is limited.

Appendix 1 15


Country

Score

Sector/

Agency

Scores

Comments

1.5 Is there a legal and regulatory framework

that enables the agency to use an e-

procurement system

3 3 Yes, KVK conducts all

procurement via national

e-procurement portal

2. Institutional Framework/Management

Capacity

Average

1.5

Average

1.8

2.1 Is the procurement cycle in the sector

required to be tied to an annual budgeting

cycle (i.e. can a procurement activity

commence only when budget has been duly

appropriated for it?

1 2 Yes, the EA first

prepares the annual

budget, get it approved

by the Government and

then prepare its annual

procurement plan based

on that approved

budget. However, there

is no requirement and

procedures for

preparation of budget

and procurement plan

for 3-5 years period.

2.2 Does the system foster efficiency through

the use of adequate planning?

1 1 The sector doesn’t have

midterm and long-term

procurement plans.

2.3 Does the procurement system in the sector

feature an oversight/regulatory body?

2 2 The sector procurement

is subject for control and

monitoring by national

oversight/regulatory

body as per clause 18 of

PPL.

2.4 Is there a public procurement capacity

development or professionalization

program?

1 2 The rules and

requirements on

capacity development of

procurement staff

approved by the MOF

Decree No. 697 of 28

December 2015. The

EA’s procurement staff

holds graduation

certificate of national

procurement rules

training. The staff shall

improve its improve the

procurement capacity on

annual basis. 100% of

EA’s procurement staff

passed procurement

training.

The procurement web

portal has a reference

link to the national

16 Appendix 1


Country

Score

Sector/

Agency

Scores

Comments

procurement training

center

https://ecc.kz/ru/training

2.5 Is there a dedicated group institutionalized in the agency structure for e-procurement?

2 2 The EA use only

national e-procurement

system and all staff

passed the training hot

to use e-procurement.

There EA doesn’t have

own e-procurement

system.

2.6 If an e-procurement system is used, is there

a structured approach to capacity building

and analyzing its effective use?

2 2 The EA’s e-procurement

capacity is high. all staff

are certified in public e-


web portal.

3. Procurement Operations/ Market

Practices

Average

1.6

Average

1.6

3.1 Is private sector competitive, well organized

and able to access the sector market?

2 2 There is a reasonable

well-functioning private

sector serving the

agency but competition

for large contracts is

concentrated in a

relatively small number

of firms

3.2 Do measures exist in the sector to ensure

the adequacy and accuracy of cost

estimates before bidding, and to manage

contract price variations?

1 1 Cost estimates is

prepared by national

design entities. Once

contract budget

approved it is rigid, any

bid price which is above

budget will be rejected.

3.3 Is the private sector able to access and

participate in the agency’s e-procurement

2 2 E-procurement system is

accessible to private

sector; use of the

system is limited to MDB

funded projects.

3.4 Is there a mechanism in the sector to

receive and handle observations,

complaints and protests?

1 1 There is no mechanism

in the sector. As per

clause 47 of PPL all

suppliers, contractors,

and consultants have a

right to submit the

complaint. About 30% of

bidders usually submit

complaints which are

reviewed in line with


Appendix 1 17


Country

Score

Sector/

Agency

Scores

Comments

PPL. Generally, 60% of

complaints upheld.

3.5 Is country signatory to New York

Convention on Arbitration?

2 2 Not applicable

4. Integrity and Transparency of the Public

Procurement System

Average

1.5

Average

1.7

4.1 Is there a formal internal control and audit

framework in the sector?

2 2 The procurement is

subject for audit by

authorized government

body in accordance with

Clause 18 of PPL. The

KVK is subject for

financial audit by

independent audit firm

recruited on competitive

basis.

4.2 Is information pertaining to public

procurement in the sector easy to find,

comprehensive and relevant?

1 2 Information about all

biddings is provided in

annual procurement plan

which published on

national e-procurement

portal and mass media.

Invitation for bids for

each contract is

published only on e-

procurement portal.

Third party observers

can easily track


e-procurement portal.

4.3 Can bidders and other stakeholders easily

access procurement information through the

agency’s e-procurement system?

2 2 Yes.

4.4 Does the sector have ethics and

anticorruption measures in place?

1 1 There is no sector

specific ethics and

anticorruption measures.

OVERALL SCORES 1.55 1.72

EA = executing agency, KVK = KazVodKhoz, MDB = multilateral development bank, MOF = Ministry of Finance, PPL = public procurement law.

18 Appendix 1

SECTOR/AGENCY PROCUREMENT ASSESSMENT QUESTIONNAIRE

Indicators/Questions Sector/Agency Questions Score Narrative

1. Legislative and Regulatory Framework

1.1 Does the national

public procurement

law (including

supporting

regulations,

standard bidding

documents and

operational

manuals/guides)

apply to the sector?

Is the sector exempted by

legislation from being subject

to the national public

procurement law?

2 The sector and agency, Kazvodkhoz (KVK) are subject to national Law

No.434-V “On Public Procurement” (PPL) of 4 December 2015, and

Decree of the Ministry of Finance No. 648 “On approval of Public

Procurement Regulations” of 11 December 2015. There is no exemption

for the sector and agency from above national procurement law. Based on

national procurement law the KVK has to conduct all procurement of

goods, works, and services electronically via sole government

procurement web portal www.goszakup.gov.kz. The registration number

(BIN) of KVK as an Employer is 110740000364.

Even if subject to the national

public procurement law, does

the sector tend to follow it?

Yes, the KVK tend to follow strictly PPL except projects financed by

international financing agencies (IFA), where KVK must follow

procurement guidelines of IFAs.

Do agencies in the sector use

government-issued public

procurement manuals or

guidance?

Yes, sector agencies use government-issued public procurement manuals

and guidance, which are posted on the national procurement web portal

www.goszakup.gov.kz.

Have government-issued

documents been tailored to

meet sector requirements?

Yes, the government issued standard electronic bidding documents for

each type of procurement (works, goods and services) and mode of

procurement (open competitive bidding, shopping, etc).

In absence of government-

issued documents, does the

sector have its own standard

bidding documents/

guidelines?

No, sector has not rights to issue own standard bidding documents and

guidelines.

1.2 Is the supply

market for the

sector sufficiently

competitive to give

full effect to the

national

procurement law

and/or open

Is competitive bidding a

common feature under the

sector?

2 The national e-procurement portal has a threshold for mode of

procurement: from $1,000 to $45,000 shall use request for quotations, and

above $45,000 open tender or auction (World Bank’s Country Fiduciary

System Review, 2014). The conditions to apply single source

selection/direct contract are described in clause 39 of PPL.

Is there a core of suppliers in

the sector who regularly

submit responsive bids?

There is a record of core suppliers in the KVK. According to para 9 of

Clause 12 PPL, the authorized procurement agency, which is Ministry of

Finance (MOF) shall keep records of qualified suppliers and contractors.



Appendix 1 19


competitive

tendering?

What proportion, by %, of the

sector’s procurement is

undertaken through open

competitive bidding?

Around 30% of sector’s procurement is undertaken through open

competitive bidding.

What is the average number

of bidders for publicly bid

contracts?

The average number of bidders range from 5 to 10. Maximum number was

30, and minimum 3.

Do EAs tend to make

sufficient efforts to attract bids

(e.g. adequate advertising,

bidding periods)?

All information about the procurement is provided in annual procurement

plan which is publicly advertised by the KVK, and available on the national

procurement web portal.

Is there availability and quality

of suppliers, labor force and/or

related goods and services in

the domestic market?

According to KVK, the availability and quality of suppliers, labor force,

goods, and services is sufficient in the market. Around 95% of works,

goods, and services are locally provided. Foreign contractors and

suppliers are not interested in small and medium size contracts.

1.3 If there is a sector

specific legal

framework, does it

support non-

discriminatory

participation,

transparent tender

processes

(including

advertisement,

tender

documentation,

tender evaluation,

complaints

mechanism)?

Has the sector adopted non-

discriminator, transparent

tender processes?

1 The tender process is quite transparent and non-discriminator, except

cases when licensee can be required for complex design works.

Transparency is one the procurement principles indicated in clause 4 of

PPL.

What is the average number

of bidders for publicly bid

contracts?

The average number of bidders range from 5 to 10. Maximum number was

30, and minimum 3.

1.4 Is the sector

subjected to

excessive

regulation or

Does the sector apply a

domestic preference scheme?

1 Support of local suppliers, contractor, and consultants is one the

procurement principles indicated in para 4 of Clause 4 of PPL. There is no

restriction for participation of foreign bidders, except they should open

local representation office.

20 Appendix 1


government control

such that

competition is

limited or non-

existent?

Does the sector require pre-

registration of bidders?

All bidders shall be registered on national procurement web portal. Once

they registered in the portal there is no preregistration requirement for

each particular contract.

Are there acceptable

provisions in the sector for the

participation of State-Owned

Enterprises?

There is no eligibility criteria for SOEs except the conflict of interest

requirements.

1.5 Does the legal and

regulatory

framework enable

the sector/agency

to use an e-

procurement

system

Does the sector/agency abide

by the rules, regulations and

guidelines for the use of e-

procurement incorporated in

the national procurement

laws?

3 Yes, KVK is subject to PPL and should conduct e-procurement through

national procurement web portal.

Are electronic and paper

documents considered as

equally valid by the

sector/agency?

All procurement is conducted electronically through the national web

portal, there is no option to submit bids in paper format to the EA.

Are there sector/agency

specific tender/bidding

procedures, contract

management processes and

approval ceilings in the e-

procurement implementation

There is no sector specific bidding procedures, contract management and

approval ceilings.

2. Institutional Framework and Management Capacity

2.1 Is the procurement

cycle in the sector

required to be tied

to an annual

budgeting cycle

(i.e. can a

procurement

activity commence

only when budget

has been duly

appropriated for it?

Are procurement plans in the

sector prepared on as part of

the budget planning and

formulation process?

2 Yes, the EA first prepares the annual budget, get it approved by the

Government and then prepare its annual procurement plan based on that

approved budget. However, there is no requirement and procedures for

preparation of budget and procurement plan for 3-5 years period.

Do systems and processes in

the sector or key agencies in

the sector require certification

of availability of funds before

solicitation of tenders?

The PPL does not allow to solicit the tender without certification of

availability of funds.

Appendix 1 21


2.2 Does the system

foster efficiency

through the use of

adequate planning?

Does the sector, or key

agencies in the sector, have a

formalized procurement

planning process(s)?

1 As indicated in para 2.1 above, the EA doesn’t prepare the multiyear

procurement planning. The EA prepares annual procurement plan based

on the annual budget approved by the Government.

2.3 Does the

procurement

system in the

sector feature an

oversight/regulatory

body?

Does the sector fall under the

remit of the national

oversight/regulatory body?

2 The sector procurement is subject for control and monitoring by national

oversight/regulatory body as per clause 18 of PPL.

If a national body does not

exist, is there a sector-specific

body that oversees/regulates

procurement?

The national body exists.

2.4 Is there a public

procurement

capacity

development or

professionalization

program?

What proportions of

procurement-related officers

and staff in the sector have

been trained under the

national or sector capacity

development program or

participated in any formal

procurement training

program?

2 The rules and requirements on capacity development of procurement staff

approved by the MOF Decree No. 697 of 28 December 2015. The EA’s

procurement staff holds graduation certificate of national procurement

rules training. The staff shall improve the procurement capacity on annual

basis. 100% of EA’s procurement staff passed procurement training.

The procurement web portal has a reference link to the national

procurement training center https://ecc.kz/ru/training

2.5 Is there a dedicated

group

institutionalized for

e-procurement in

the sector/agency’s

procurement unit`?

Does the sector/agency use

the national e-procurement

system or does it use its own

e-procurement system?

2 The EA use only national e-procurement system and all staff passed the

training hot to use e-procurement. There EA doesn’t have own e-

procurement system.

Is e-procurement strategically

positioned in the

sector/agency’s governance

map/long term development

plan?

The e-procurement is strategically positioned in the national procurement

law.


22 Appendix 1


How is e-procurement

positioned within the overall

sector/agency structure?

All corporate sector procurement is undertaken via national e-procurement

system.

Does the sector/agency have

sufficient IT infrastructure to

support e-procurement

The EA has sufficient IT infrastructure to use e-procurement.

2.6 If an e-procurement

system is used, is

there a structured

approach to

capacity building

and analyzing its

effective use?

What is the sector/agency’s e-

procurement capacity to

implement system?

2 The EA’s e-procurement capacity is high. all staff are certified in public e-

procurement via national web portal.

Does the agency/e-

procurement unit recognize

the need for knowledge and

skill building for the new way

of working under e-

procurement

The EA use only national e-procurement system and all staff passed the

training hot to use e-procurement.

The rules and requirements on capacity development of procurement staff

approved by the MOF Decree No. 697 of 28 December 2015. The EA’s

procurement staff holds graduation certificate of national procurement

rules training. The staff shall improve the procurement capacity on annual

basis. 100% of EA’s procurement staff passed procurement training.

3. Procurement Operations and Market Practices

3.1 Is private sector

competitive, well

organized and able

to access the

sector market?

Is the private sector well

organized and able to access

the sector market?

2 There is a reasonable well-functioning private sector serving the agency

but competition for large contracts is concentrated in a relatively small

number of firms; there are some constraints inhibiting private sector

access to sector procurement.

Do civil society organizations

regard public procurement in

the sector to be open and

accessible to the market?

All EAs procurement is open to third parties, it can be openly tracked on

the national procurement web portal.

3.2 Do measures exist

in the sector to

ensure the

adequacy and

accuracy of cost

estimates before

bidding, and to

manage contract

price variations?

What percentages of contracts

are awarded for values less

than the original cost

estimates?

1 The national e-procurement system doesn’t accept the bid price which is

higher than original cost estimates. Thus, all contracts are awarded within

original cost estimates.

What percentage of contract

variations amount to a

cumulative impact of more

than 10% of the original

contract price?

The records are not available. Based on the interview with EA’s

procurement staff the percentage is less than 10%.

Appendix 1 23


3.3 Is the private sector

able to access and

fully participate in

the agency e-

procurement

activities

What functions exist and are

being used in the

sector/agency e-procurement

system?

2 E-procurement system is accessible to private sector; use of the system is

limited to MDB funded projects.

Are all forms

available/accessible online?

Yes.

Do bidders pay any fees for

the use of the system?

No fee to use the national e-procurement system.

What other government IT

systems does the e-

procurement system link to?

No records.

Are foreign bidders able to

participate in sector/agency’s

e-procurement?

Yes, if they have representation office registered in the country.

What percentage of

sector/agency’s total bids are

transacted through the e-

procurement system?

100%

3.4 Is there a

mechanism in the

sector to receive

and handle

observations,

complaints and

protests?

Are there sector-specific

procedures to receive and

handle observations,

complaints and protests?

1 As per clause 47 of PPL all suppliers, contractors, and consultants have a

right to submit the complaint. About 30% of bidders usually submit

complaints which are reviewed in line with PPL. Generally, 60% of

complaints upheld.

There is no sector related record. EA doesn’t’ make monitoring of

complains.

Are complaints and protests in

the sector processed within

the maximum time limit

provided for in the law?

Have bidders used the

complaint and protests

mechanisms?

4. Integrity and Transparency of the Sector Public Procurement

System

4.1 Is there a formal

internal control and

audit framework in

the sector?

Do key agencies in the sector

have an independent internal

audit function?

2 The procurement is subject for audit by authorized government body in

accordance with Clause 18 of PPL. The KVK is subject for financial audit

by independent audit firm recruited on competitive basis.

24 Appendix 1


The sector has effective segregations of duties and is subjected to annual

audit. There is no internal audit function. Do key agencies in the sector

have adequate internal control

mechanisms to oversee the

procurement function?

Are key agencies in the sector

subjected to regular

performance or value for

money audits?

Are key agencies in the sector

subjected to annual financial

audits?

Are internal or external audit

findings/recommendations

acted on in a timely fashion?

4.2 Is information

pertaining to public

procurement in the

sector easy to find,

comprehensive and

relevant?

What percentage of bids is

published in a medium that is

easily and freely accessible?

2 Information about all biddings is provided in annual procurement plan

which published on national e-procurement portal and mass media.

Invitation for bids for each contract is published only on e-procurement

portal.

Can bidders easily and freely

access bid information?

Yes, if they registered on national e-procurement portal.

What is the percentage of

contract awards announced in

medium that is easily and

freely accessible?

Information about all EA’s contract awards is available on national e-

procurement portal.

Are third party observers

invited to attend public

biddings?

Third party observers can easily track procurement via national e-

procurement portal.

4.3 Can bidders and

other stakeholders

easily access

What is civil society’s

involvement in the e-

procurement system?

2 Please refer to answers provided in para 4.2.

Appendix 1 25


sector/agency’s

procurement

information through

the e-procurement

system?

What kind of dynamics exist

between/among private sector

and other stakeholder groups

Are bidders and other

stakeholders able to monitor

all the sector/agency’s e-

procurement transactions?

4.4 Does the sector

have ethics and

anticorruption

measures in place?


procedures to verify a bidder’s

legitimate existence, track

records, financial capacity and

capacity to complete the job?

1 There are no sector specific procedures. Only national procedures.

Eligibility and qualification requirements for bidders are provided in clause

9 of PPL. The bidders shall (i) has a right to provide services, works,

goods as indicated in its charter; (ii) shall be financially sound, without tax

debts; (iii) not be a bankrupt; (iv) poses material and labor resources; (v)

have a working experience;


procedures to rate

performance and/or debar

bidders, supplier, contractors

and consultants for ethical or

integrity violations?

There are no sector specific procedures. Only national procedures. As per

clause 12 of PPL, the government procurement body is responsible to

keep the list of debarred bidders, suppliers, contractors and consultants for

ethical or integrity violations.

Does the sector, or key

agencies in the sector,

maintain a register of

debarred suppliers,

contractors and consultants?

The list of debarred firms is provided on national e-procurement portal.


integrity principles and

guidelines?

There is no specific sector related integrity principles and guidelines. The

integrity is one of the principles of the PPL (para. 7 of Clause 4).

26 Appendix 2

Project Procurement Risk Assessment SL No. RISK IMPACT LIKELIHOOD STRATEGY

A6, A7, A9, A16, A17, A23, C1, C2, C14, C22, C23

Procurement Department and/or PMU have insufficient qualified staff to efficiently undertake the procurements required to implement the project.

High Likely The KVK will establish PMU and recruit procurement specialist with good qualification, experience, and English knowledge. ADB will conduct a seminar on project implementation and procurement. All procurement will follow prior review. The international project management consultant will have qualified international and national procurement experts who will provide permanent on-the-job procurement support and training to EA staff. This will be in the consultant’s TOR.

A19 – A20

The Agency uses practices inconsistent with national procurement law or bidding documents unsuitable for ADB-funded procurement.

Moderate Unlikely The loan and project agreement will have a provision that ADB procurement and consulting guidelines must be followed for the project. ADB will conduct project implementation and procurement training for EA, and business opportunities workshop for potential bidders as soon as PMU established. All procurement will follow prior review. The PAM will clearly reflect procurement procedures and arrangements. The NCB requirements of the procurement plan will have a provision that ADB’s standard bidding documents for small works and good shall be used.

B2 –B3

Record-keeping is inadequate to enable internal or external audit of procurement processes.

Moderate Unlikely KVK will allocate space and facilities for record keeping. Upon project completion, the records will be transferred to the state archives for long-term keeping.

A25, C4 - C12, C24-C44, C47, D5, E7

Agency does not promote non-discriminatory participation, transparent tender processes (including advertisement, tender documentation, tender evaluation, complaints mechanism)?

Moderate Unlikely The PAM will have provisions on non-discriminatory participation, transparent tender processes, including complaints review procedures. All procurement will follow prior review. ADB KARM staff may attend as observer the public bid opening for the first large procurement contracts.

C15, E1 – E.6

The Agency has inadequate ethics and anticorruption measures in place.

High Likely ADB’s integrity and anticorruption requirements will be provided in PAM. ADB will make integrity and anticorruption seminar workshop for EA. All procurement will follow prior review procedure

ADB = Asian Development Bank, EA = executing agency, KARM = Kazalkhstan Resident Mission KVK = KazVodKhoz, NCB = national competitive bidding, PAM = project administration manual, PMU = project management unit, SOE = state-owned enterprise, TOR = terms of reference.

Appendix 2 27

PROJECT PROCUREMENT RISK ASSESSMENT QUESTIONNAIRE

QUESTION RESPONSE RISK

A. ORGANIZATIONAL AND STAFF CAPACITY

PROCUREMENT DEPARTMENT/UNIT

A.1 Does the agency or Government have a Procurement Committee that is independent from the head of the agency?

No, the Director of the KVK is a chairman of the procurement committee for agency related procurement. The procurement committee comprise 50% members from KVK and other 50% from other agencies, such as MOF and others.

High

A.2 Does the agency have a procurement department/unit, including a permanent office that performs the function of a Secretariat of the Procurement Committee?

Yes, KVK has corporate procurement department, including a permanents office and staff that performs function of a Secretariat of the Procurement Committee. However, they don’t have procurement experience in MDB financed projects

Moderate

A.3 If yes, what type of procurement does it undertake?

All type of agency related public procurement (works, goods, and services) in accordance with national Law No.434-V “On Public Procurement” (PPL) of 4 December 2015, and Decree of the Ministry of Finance No. 648 “On approval of Public Procurement Regulations” of 11 December 2015 (PR). They just started procurement under EBRD and IsDB projects.

Moderate

A.4 How many years’ experience does the head of the procurement department/unit have in a direct procurement role?

The head of procurement department has 4 years of experience in public procurement. He doesn’t have yet procurement experience in MDB projects.

Moderate

A.5 How many staff in the procurement department/unit are:

i. full time

ii. part time

iii. seconded

There are 5 full time staff. Moderate

A.6 Do the procurement staff have a high level of English language proficiency (verbal and written)?

The procurement staff has very low level of English language. Project Management Unit (PMU) will hire for the proposed project one new procurement specialist with high level of English language proficiency (verbal and written).

High*

A.7 Are the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project?

No, but to enhance the procurement capacity of the PMU, the local procurement expert will be hired, who shall have minimum 5 years of experience in this field with high level of English language proficiency. Also with the help of the international procurement consultant hired

Moderate*

28 Appendix 2


by the PMU the number and qualifications will be quite sufficient.

A.8 Does the unit have adequate facilities, such as PCs, internet connection, photocopy facilities, printers etc. to undertake the planned procurement?

The procurement department have adequate facilities. In addition to this the PMU will procure new office equipment and furniture.

Low

A.9 Does the agency have, or have ready access to, a procurement training program?

The agency so far has access only to public procurement trainings. ADB, the World Bank

and other MDBs usually organize trainings at least once a year for various subjects of project implementation, including procurement trainings. The project management consultant will have a task in the TOR to conduct procurement workshop and on-the-job training for the agency and PMU staff.

Moderate*

A.10 At what level does the department/unit report (to the head of agency, deputy etc.)?

The procurement department report to the Deputy Director KVK

Moderate

A.11 Do the procurement positions in the agency have job descriptions, which outline specific roles, minimum technical requirements and career routes?

Procurement positions have job descriptions which outline specific roles, minimum technical requirements but not career routes.

Moderate

A.12 Is there a procurement process manual for goods and works?

There is a national procurement rules provided in PPL and PR.

Substantial

A.13 If there is a manual, is it up to date and does it cover foreign-assisted projects?

No, there is no such manual. PMU will use ADB’s procurement manuals for works, goods, and consulting services.

Substantial

A.14 Is there a procurement process manual for consulting services?

There is a national procurement rules provided in PPL and PR.

Substantial

A.15 If there is a manual, is it up to date and does it cover foreign-assisted projects?

No, there is no such manual. PMU will use ADB’s procurement manuals for works, goods, and consulting services.

Substantial

PROJECT MANAGEMENT UNIT

A.16 Is there a fully (or almost fully) staffed PMU for this project currently in place?

Not yet, the PMU will be established after signing of the loan agreement.

High*

A.17 Are the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project?

No. The PMU will have local procurement specialist supported by international and national procurement experts of project management consultant.

High*

A.18 Does the unit have adequate facilities, such as PCs, internet connection, photocopy facilities,

No. PMU will be provided by adequate facilities to be procured from the loan funds.

High

Appendix 2 29


printers etc. to undertake the planned procurement?

A.19 Are there standard documents in use, such as Standard Procurement Documents/Forms, and have they been approved for use on ADB funded projects?

The EA use standard national procurement documents for e-procurement in line with PPL and PR. This standard procurement documents and forms were not approved by ADB. PMU will use standard procurement forms of ADB.

High*

A.20 Does the agency follow the national procurement law, procurement processes, and guidelines?

Yes, for public procurement they follow PPL and PR. For ADB financed project they will follow ADB’s procurement rules.

Substantial*

A.21 Do ToRs for consulting services follow a standard format such as background, tasks, inputs, objectives and outputs?

Yes, for public procurement they follow TOR requirement provided in PPL and PR. For ADB financed project they will follow ADB’s consulting management manual with requirements for TOR.

Moderate

A.22 Who drafts the procurement specifications?

KVK’s construction and design engineers. For ADB financed project the international project management consultant will draft procurement specifications.

Moderate

A.23 Who approves the procurement specifications?

KVK approves specifications Moderate

A.24 Who in the PMU has experience in drafting bidding documents?

The PMU has not been established so far. The procurement specialist and consultants will have a qualification requirement to have such experience.

High*

A.25 Are records of the sale of bidding documents immediately available?

This will be responsibility of PMU’s financial specialist.

High*

A.26 Who identifies the need for consulting services requirements?

For project management consulting services, the PPTA consultants will identify in consultation with KVK. These needs will be indicated by project procurement plan.

Moderate

A.27 Who drafts the Terms of Reference (ToR)

The PPTA consultants will draft outline TOR for consulting services in consultation with KVK.

Moderate

A.28 Who prepares the request for proposals (RFPs)

PPTA team will prepare the draft RRP for KVK.

Moderate

B. INFORMATION MANAGEMENT

B.1 Is there a referencing system for procurement files?

Yes, currently procurement department holds reference system, later PMU will have reference system for all project procurement files.

Moderate

B.2 Are there adequate resources allocated to record keeping infrastructure, which includes the record keeping system, space, equipment and personnel to administer the procurement records management functions within the agency?

Yes, there is a special secure filing room within the KVK office to file confidential procurement documents. The PMU will have additional resources to record keeping infrastructure, which includes the record keeping system, space, equipment and personnel to administer the procurement records management functions.

Moderate*

30 Appendix 2


B.3 Does the agency adhere to a document retention policy (i.e. for what period are records kept)?

Yes, 5 years for correspondence, 10 years for bidding and contract documents, and 15 years for procurement committee minutes.

Low*

B.4 Are copies of bids or proposals retained with the evaluation?

Currently KVK undertakes only e-procurement as per PPL. Yes, copies will be retained with PMU for evaluation.

Low

B.5 Are copies of the original advertisements retained with the pre-contract papers?

Yes Low

B.6 Is there a single contract file with a copy of the contract and all subsequent contractual correspondence?

Yes Low

B.7 Are copies of invoices included with the contract papers?

Yes Low

B.8 Is the agency’s record keeping function supported by IT?

Yes Low

C. PROCUREMENT PRACTICES

Goods and Works

C.1 Has the agency undertaken procurement of goods or works related to foreign assistance recently (last 12 months or last 36 months)? If yes, indicate the names of the development partner/s and project/s.

Not yet, will start soon under IsDB and EBRD financed projects. This question will be reassessed in 6-8 months before fact finding mission.

High*

C.2 If the answer is yes, what were the major challenges faced by the agency?

This question will be reassessed in 6-8 months before fact finding mission.

High*

C.3 Is there a systematic process to identify procurement requirements (for a period of one year or more)?

Yes, procurement plan for entire project period.

Moderate

C.4 Is there a minimum period for the preparation of bids and if yes, how long?

Same as in ADB financed projects, 42 days for ICB.

Moderate*

C.5 Are all queries from bidders replied to in writing?

Procurement is not yet started. This question will be reassessed in 6-8 months before fact finding mission.

Substantial*

C.6 Does the bidding document state the date and time of bid opening?

Yes, according to draft bidding documents, it is KVK office. This question will be reassessed in 6-8 months before fact finding mission.

Moderate*

C.7 Are bids opened in public? Procurement is not yet started, it will be publicly opened. This question will be

Substantial*

Appendix 2 31


reassessed in 6-8 months before fact finding mission.

C.8 Can late bids be accepted? Procurement is not yet started, it will not be accepted. This question will be reassessed in 6-8 months before fact finding mission.

Substantial*

C.9 Can bids (except late bids) be rejected at bid opening?

Procurement is not yet started, it will not be rejected. This question will be reassessed in 6-8 months before fact finding mission.

Substantial*

C.10 Are minutes of the bid opening taken?

Procurement is not yet started, it will be taken. This question will be reassessed in 6-8 months before fact finding mission.

Substantial*

C.11 Are bidders provided a copy of the minutes?

Procurement is not yet started, it will be provided. This question will be reassessed in 6-8 months before fact finding mission.

Substantial*

C.12 Are the minutes provided free of charge?

Procurement is not yet started, it will be provided for free. This question will be reassessed in 6-8 months before fact finding mission.

Substantial*

C.13 Who undertakes the evaluation of bids (individual(s), permanent committee, ad-hoc committee)?

Permanent procurement committee will be established for the project.

Moderate

C.14 What are the qualifications of the evaluators with respect to procurement and the goods and/or works under evaluation?

KVK will engage its technical staff, engineers, procurement staff. They all have experience in public procurement, but not yet in MDB projects.

Substantial*

C.15 Is the decision of the evaluators final or is the evaluation subject to additional approvals?

Yes, it will be final, and subject to no objection by MDB.

Moderate*

C.16 Using the three ‘worst-case’ examples in the last year, how long from the issuance of the invitation for bids can the contract be awarded?

No records, procurement under MDB projects is not yet started. This question will be reassessed in 6-8 months before fact finding mission.

High

C.17 Are there processes in place for the collection and clearance of cargo through ports of entry?

Not yet. PMU staff will do it. This question will be reassessed in 6-8 months before fact finding mission.

Moderate

C.18 Are there established goods receiving procedures?

Yes, as provided in Customs Law Low

C.19 Are all goods that are received recorded as assets or inventory in a register?

Yes. Low

C.20 Is the agency/procurement department familiar with letters of credit?

Yes, only generally Moderate

C.21 Does the procurement department register and track warranty and latent defects liability periods?

Yes, together with construction supervision department.

Moderate

32 Appendix 2


Consulting Services

C.22 Has the agency undertaken foreign- assisted procurement of consulting services recently (last 12 months, or last 36 months)? (If yes, please indicate the names of the development partner/s and the Project/s.)

Not yet, has just started under IsDB and EBRD financed projects. This question will be reassessed in 6-8 months before fact finding mission.

High*

C.23 If the above answer is yes, what were the major challenges?


High*

C.24 Are assignments and invitations for expressions of interest (EOIs) advertised?

Yes, EOIs were advertised internationally, and also locally on KVK’s website

Low*

C.25 Is a consultants’ selection committee formed with appropriate individuals, and what is its composition (if any)?

KVK and PMU staff. Moderate

C.26 What criteria are used to evaluate EOIs?

Technical and geographic experience Low

C.27 Historically, what is the most common method used (QCBS, QBS, etc.) to select consultants?

QCBS so far Low*

C.28 Do firms have to pay for the RFP document?

No Low*

C.29 Does the proposal evaluation criteria follow a pre-determined structure and is it detailed in the RFP?

Yes Low*

C.30 Are pre-proposal visits and meetings arranged?

Not yet due. This question will be reassessed in 6-8 months before fact finding mission.

Substantial

C.31 Are minutes prepared and circulated after pre-proposal meetings?

Not yet due. Will be circulated. This question will be reassessed in 6-8 months before fact finding mission.

Substantial *

C.32 To whom are the minutes distributed?

Not yet due. It will be circulated to MDB and shortlisted consultants. This question will be reassessed in 6-8 months before fact finding mission.

Substantial *

C.33 Are all queries from consultants answered/addressed in writing?

Not yet due. It will be answered to all shortlisted consultants. This question will be reassessed in 6-8 months before fact finding mission.

Substantial *

C.34 Are the technical and financial proposals required to be in separate envelopes and remain sealed until the technical evaluation is completed?

Yes. Not yet due. This question will be reassessed in 6-8 months before fact finding mission.

Substantial *

C.35 Are proposal securities required? Not Low*

Appendix 2 33


C.36 Are technical proposals opened in public?

Yes. Not yet due. This question will be reassessed in 6-8 months before fact finding mission.

Substantial *

C.37 Are minutes of the technical opening distributed?

Yes, will distributed. This question will be reassessed in 6-8 months before fact finding mission.

Substantial*

C.39 Who determines the final technical ranking and how?

Procurement Committee will determine based on criteria provided in RFP. This question will be reassessed in 6-8 months before fact finding mission.

Substantial*

C.40 Are the technical scores sent to all firms?

Yes, will be sent. This question will be reassessed in 6-8 months before fact finding mission.

Substantial*

C.41 Are the financial proposal opened in public?

Yes, will be opened in public. This question will be reassessed in 6-8 months before fact finding mission.

Substantial *

C.42 Are minutes of the financial opening distributed?

Yes, will distributed. This question will be reassessed in 6-8 months before fact finding mission.

Substantial*

C.43 How is the financial evaluation completed?


Substantial*

C.44 Are face to face contract negotiations held?


Substantial*

C.45 How long after financial evaluation is negotiation held with the selected firm?


Substantial

C.46 What is the usual basis for negotiation?


Substantial

C.47 Are minutes of negotiation taken and signed?


Substantial*

C.48 How long after negotiation is the contract signed, on average?


Substantial

C.49 Is there an evaluation system for measuring the outputs of consultants?


Substantial

Payments

C.50 Are advance payments made? Yes, KVK pays advances under their public procurement. No advances paid so far under MDB projects. This question will be reassessed in 6-8 months before fact finding mission.

Moderate

C.51 What is the standard period for payment included in contracts?

The standard period in public procurement contracts is 60 calendar days. This

Moderate

34 Appendix 2


question will be reassessed in 6-8 months before fact finding mission.

C.52 On average, how long is it between receiving a firm’s invoice and making payment?

In public procurement contracts it is usually 10-14 calendar days. This question will be reassessed in 6-8 months before fact finding mission.

Moderate

C.53 When late payment is made, are the beneficiaries paid interest?


Moderate

D. EFFECTIVENESS

D.1 Is contractual performance systematically monitored and reported?

Yes, KVK monitors contractual performance of contractors

Low

D.2 Does the agency monitor and track its contractual payment obligations?

Yes, KVK monitors its payments to contractors

Low

D.3 Is a complaints resolution mechanism described in national procurement documents?

Yes, it described in PPL Low

D.4 Is there a formal non-judicial mechanism for dealing with complaints?

No, there is no non-judicial mechanism. High

D.5 Are procurement decisions and disputes supported by written narratives such as minutes of evaluation, minutes of negotiation, notices of default/withheld payment?

Yes, all records conducted in form of Procurement Committee minutes

Low*

E. ACCOUNTABILITY MEASURES

E.1 Is there a standard statement of ethics and are those involved in procurement required to formally commit to it?

Yes, these ethics requirements are provided in PPL

Low*

E.2 Are those involved with procurement required to declare any potential conflict of interest and remove themselves from the procurement process?

Yes, this requirement provided in PPL Low*

E.3 Is the commencement of procurement dependent on external approvals (formal or de-facto) that are outside of the budgeting process?

All procurement shall be done within the approved budget. E-procurement system doesn’t accept bids which exceed the budget.

Moderate

E.4 Who approves procurement transactions, and do they have procurement experience and qualifications?

Procurements committee, yes they have experience in public procurement in accordance with PPL

Moderate*

Appendix 2 35


E.5 Which of the following actions require approvals outside the procurement unit or the evaluation committee, as the case may be, and who grants the approval?

Low

a) Bidding document, invitation to pre-qualify or RFP

Procurement committee makes approval. No need for approval from outside.

Low

b) Advertisement of an invitation for bids, pre-qualification or call for EOIs


Low

c) Evaluation reports Procurement committee makes approval. No need for approval from outside.

Low*

d) Notice of award Procurement committee makes approval. No need for approval from outside.

Low*

e) Invitation to consultants to negotiate


Low

f) Contracts Procurement committee makes approval. No need for approval from outside.

Low*

E.6 Is the same official responsible for: (i) authorizing procurement transactions, procurement invitations, documents, evaluations and contracts; (ii) authorizing payments; (iii) recording procurement transactions and events; and (iv) the custody of assets?

Yes, Deputy Director KVK responsible for procurement.

Low*

E.7 Is there a written auditable trail of procurement decisions attributable to individuals and committees?

Yes, it is on e-procurement portal. Low*

ADB = Asian Development Bank, EA = executing agency, EBRD = European Bank for Reconstruction and Development, EOI = expression of interest, ICB = international competitive bidding, IsDB = Islamic Development Bank, KVK = KazVodKhoz, MOF = Ministry of Finance, MDB = multilateral development bank, PAM = project administration manual, PMO = project management office, PMU = project management unit, PPL = public procurement law, RFP = request for proposal, TOR = terms of reference.

36 Appendix 3

List of Civil Works Contracts in Water Sector 2012-2018

($1=T339.1)

№ Contract Name Construction

period General

Contractor Contract amount

T USD Equivalent

Akmola province 7,415,762,672 21,868,955

1 Reconstruction and modernization of Preobrakenskiy water regulation facility on Nura-Ishim canal 2012-2015 KVK 3,082,080,122 9,089,001

2 Reconstruction and modernization of facilities on Seletinskiy Water Reservoir 2012-2015 KVK 4,333,682,550 12,779,954

East Kazakhstan province 5,948,126,549 17,540,922

3 Reconstruction of water inlet facility on Bazar river in Tarbagaray district 2014- 2015

Ltd "SMU Shygys"

834,664,096 2,461,410

4

Reconstruction of facilities on Eginsu river in Urdjar district

2014-2016 Ltd "SMU Shygys"

1,637,342,672 4,828,495

5

Reconstruction on regulation facility on Tebiske river with main canals «Koktogam» and «Zhana-Togam» in Tarbagatay district

2014- 2015 Ltd "PMK Kurylys"

465,902,151 1,373,937

6 Reconstruction of weir facility on Kusak river in Urdjar district 2014-2016

Ltd "Komstroymontaj"

1,410,345,687 4,159,085

7 Reconstruction of weir facility on Jemeney river in Zaysan district

2014-2015 Ltd "SMU Shygys"

296,851,912 875,411

8 Reconstruction of weir facility on Keldy-Murat river with main canal Aktogan in Urdjar district 2014-2016

Ltd "SMU Shygys"

1,303,020,031 3,842,583

Zhambyl province 5,708,007,297 16,832,814

9 Reconstruction of main water inlet facility on Koksay river with construction of water trunks of 3.5m3/sec in Jualin district (Phase-1)

2013-2015 Ltd "Sunkar-

2002" 1,203,683,373 3,549,641

Appendix 3 37


period General


T USD Equivalent

10 Reconstruction of Tallas dam and «Bazarbay» main canal in Bayzak district 2014-2017

Ltd "Akmola Gidrogeologiya"

4,504,323,925 13,283,173

West Kazakhstan Province 350,914,816 1,034,842

11 Construction of dam for reallocation of water to Sary-Uzen river in Jangalin district 2011-2015 KVK 24,763,378 73,027

12 Reconstruction of Kirov-Chyzhyn canal in Kaztalov district (Phase 1)

2011-2015 KVK 326,151,438 961,814.92

13

Reconstruction of Kirov-Chyzhyn canal in Kaztalov district (Phase 2)

2016-2018

KVK subcontract with

Ltd "Aziya Tehstroy"

834,533,547 2,461,025

14

Reconstruction of Kirov-Chyzhyn canal in Kaztalov district (Phase 3)

2016-2018 KVK 2,324,733,936 6,855,600

Karaghandy province 1,774,870,448 5,234,062

15 Reconstruction of Jartass water reservoir

2012-2015 Ltd "Company Nuray-stroy"

1,341,462,560 3,955,950

16 Reconstruction of Water reservoir (irrigation inlet canal and outlet canal) 2004-2015 Ltd "Stroyin" 433,407,888 1,278,112

Kyzylorda province 8,303,260,669 24,486,171

17

Reconstruction of water facilities on Kyzylorda left bank main canal (Phase 1)

2012-2015 Ltd "Meliorator" 1,191,080,000 3,512,474

38 Appendix 3


period General


T USD Equivalent

18 Reconstruction of water facilities on Kyzylorda left bank main canal (Phase 2)

2014-20.10. 2017

Ltd "Kyran" 3,720,271,587 10,971,016

19 Reconstruction of water facilities on Kyzylorda left bank main canal (Phase 1) from point ПК272+55 to ПК853+00 (899+00)

2014-2016 Ltd "Shar Orda" 1,883,213,693 5,553,564

20 Reconstruction of canal and water faclities of Janakorgan-Shieliy area in Shieli ditrict(Phase 1) 2014-2016 KVK 1,508,695,389 4,449,116

South Kazakhstan province 25,814,224,283 76,125,698

21

Reconstruction of inter-farm canal К-28 in Maktaral district

2010-2011 Ltd "Shymkent Kurylys Montaj

2005" 239,657,000 706,744

22 Reconstruction of water gaging facilities on main canals in Maktaral district (Phase 1) 2010-2012

Ltd "Jalgas Kurylys"

342,481,000 1,009,971

23 Reconstruction of water facilities on Shardarya water reservoir (Phase 1) 2011-2013 Ltd "Berekeldy" 250,540,135 738,838

24 Reconstruction of water facilities on Shardarya water reservoir (Phase 2) 2012-2013 KVK 159,179,292 469,417

25 Reconstruction of water facilities on Shardarya water reservoir (Phase 3) 2012-2013 KVK 462,690,831 1,364,467

26 Reconstruction of water facilities on Shardarya water reservoir (Phase 4) 2012-2017 KVK 8,847,514,670 26,091,167

27 Reconstruction of inter-farm canal K-30 in Maktaral district 2012-2017

Ltd "Kerneu limited"

6,106,983,017 18,009,387

28 Reconstruction of BKMK canal from point ПК0+0 to ПК957+00 in Sarygash and Kyzylgurt districts (Phase 1) 2012-2015

Ltd "Corporatsiya AK ordasy"

1,561,575,214 4,605,058

Appendix 3 39


period General


T USD Equivalent

29 Reconstruction of Turkestan main canal in Ordabasin and Turkestan districts (Phase 3) 2013-2016

Ltd "Zhylstroy Industriya"

2,180,909,331 6,431,464

30 Reconstruction of Turkestan main canal. Rehabilitation of vertical drainage in Ordabasin district 2014-2016


1,554,820,170 4,585,138

31 Reconstruction of inter-farm canal K-28 in Maktaral district (Phase 2) 2014-2016

Ltd "Burmontaj Aktobe"

623,288,142 1,838,066

32 Reconstruction of water gaging facilities in Maktaral district (Phase 2)

2014-2015 Ltd «Novа-5» 845,902,523 2,494,552

33 Reconstruction of inlet facilities on Karaspan, Shaulder, Bugunskoe water reservoir (Phase 1) 2014-2015

Ltd "Sanur story-А"

75,797,142 223,524

34 Reconstruction of inter-farm canal K-26 in Maktaral district (Phase 2)

2014-2016 Ltd "MadEst" 840,046,993 2,477,284

35

Reconstruction of Kyzylkum canal in Shardarya and Arys districts (Phase 3)

2014-2016 Ltd "Umr" 1,722,838,822 5,080,622

36 Reconstruction of Turkestan main canal from point ПК0+00 to ПК 37+70 in Ordabasin district 2017-2018


1,817,944,923 5,361,088

Total 55,315,166,735 163,123,464

Operation and Maintenance Repairment Works

Almaty province 596,490,349 1,759,040

1 Capital renovation of Levoberejniy main canal and Pravay Vetka main canal on Koksu river 2015 KVK 572,575,401 1,688,515

2 Capital renovation of Bolshoy Toktamys canal 2015 KVK 23,914,948 70,525

Kyzylorda province 275,161,669 811,446.97

40 Appendix 3


period General


T USD Equivalent

3 Capital renovation on inter-farm collector YuK-16 2014-2015 Ltd "Meliorator" 275,161,669 811,446.97

Karaghandy province 109,031,114 321,530.86

4 Capital renovation of Djonov Levoberejniy inter-farm canal 2012-2013 Ltd "Energiya" 109,031,114 321,531

South Kazakhstan Province 1,464,327,373 4,318,276

5

Capital renovation of Akylbeksay water reservoir

2014-2015 Ltd "Astana LRS" 561,120,000 1,654,733

6

Capital renovation of Sayramsu water facility

2014-2015 Ltd "Malika MK" 903,207,373 2,663,543

Total O&M Works 2,445,010,505 7,210,293

Grand Total for all Civil Works 57,760,177,239.47 170,333,757.71

Appendix 4 41

Procurement Plan

(Details of the procurement plan are presented in the project administration manual)

42 Appendix 5

Terms of Reference (TOR)

For Consulting Services for

Detailed Design, Construction Supervision,

and Implementation Support

(Details of the terms of reference are presented in the Annex 1 of the Project Administration

Manual)

Appendix 6 43

Procurement Risk Categorization Tool

Table A10 describes the tool used for categorizing procurement risk during the conceptualization of projects to be financed or supported by the Asian Development Bank (ADB). It is used together with the procurement environment risk matrix described in Figure A10.

Figure A10: Procurement Environment Risk Matrix

Country Low Medium High Extreme

Sector

Extreme High Risk

High

Medium

Low Source: Asian Development Bank.

Table A10: Project Procurement Risk Categorization Tool

Characteristics Assessor’s Comments and Finding Summary

Is the procurement environment risk for this project assessed as “High” based on the country and sector/agency procurement risk assessment, per the procurement environment risk matrix in Figure A10?

Yes, the risk assessed as high for sector, project and environment

Are multiple (typically more than three) and/or diverse executing and/or implementing agencies envisaged during project implementation? Do these agencies lack prior experience in ADB project implementation?

There is one executing agency. The agency doesn’t have prior experience in ADB project implementation.

Are multiple contract packages and/or complex and high value contracts expected (compared to recent donor-funded projects in the country)?

There are 9 civil works, 6 goods, and 5 consulting services packages. Complexity is medium and similar to recent donor-funded projects.

Does the project plan to use innovative contracts (e.g., public–private partnership; performance-based; design and build; design, build, and operate; etc.)?

No, there is no any innovative contract.

Are contracts distributed in more than three geographical locations? Yes, the contracts are distributed in four locations

Are there significant ongoing contractual and/or procurement issues under ADB (or other donor) funded projects? Have instances of non-compliance been declared in respect of the executing or implementing agency?

The government has limited experience in ADB financed projects. There are 3 active loan projects, 2 transport and one finance. There is no issue or non-compliance so far.

Does the government or its executing/implementing agencies have prolonged procurement lead times, experience implementation delays, or otherwise consistently fail to meet procurement timeframes?

The government has limited experience in ADB financed projects. Out of 3 active projects, one transport project financed by ADB faced implementation delay, and the loan was extended for 3 years.

Do executing/implementing agencies lack capacity to manage new and ongoing procurement? Have executing/implementing agencies requested ADB for procurement support under previous projects?

Yes, executing agency has lack of capacity. This will be first ADB financed project in the sector.

44 Appendix 4

Does the relevant market in the country have characteristics that may materially limit reasonable competition and/or potentially expose the executing/implementing agency to any prohibited practices (e.g., fraud, corruption, collusion, etc.)?

So far no

Where electronic government procurement is mandated,a do executing agencies face any challenges in its effective implementation (e.g., poor connectivity, technical, capacity of executing agencies and bidders, security, assessment and third-party audit compliance, policy/legal framework, under-use)?

The electronic procurement is mandated for public procurement. Executing agency doesn’t inform about any challenges in effective implementation of electronic procurement.

Overall Project Categorization Recommended (“A” or “B”) A ADB = Asian Development Bank. a Where electronic government procurement is not mandated, the answer is “No.” Source: Asian Development Bank.