Situations of Urgent Need of Assistance or Capacity Constraints

simplified PROCUREMENT PROCEDURES

Guidance to World Bank Staff

April 2013

I. Introduction

1.  This paper provides guidance to Bank staff on the procurement of goods, works and services financed under projects where the borrower/beneficiary is deemed by the Bank to: (i) be in urgent need of assistance because of a natural or man-made disaster or conflict; or (ii) experience capacity constraints because of fragility or specific vulnerabilities (including for small states). under projects in situations of urgent need of assistance or capacity constraints. (See OP 11.0 Procurement paragraph 20)

II. Financing Flexibility

2.  When designing implementation arrangements in situations of urgent need of assistance or capacity constraints task teams and procurement staff should be aware of the following provisions:

(a)  The ceiling for advances from the Project Preparation Facility (PPF) is $10 million. The PPF facilitates project preparation activities such as taking of inventories; carrying out preliminary studies; preparing terms of reference (TOR), shortlists, requests for proposals (RFPs) and bidding documents; carrying out advance procurement; and recruiting management staff and consultants. The PPF may also finance urgent start-up activities, using agreed simplified procurement procedures that are acceptable to the Bank.

(b)  The retroactive financing limit is 40 percent of the loan/credit/grant amount. The Bank allows retroactive financing under the following conditions: (i) the activities financed are included in the project description; (ii) the payments are for items procured in accordance with acceptable Bank procurement procedures, including advertising; and (iii) the payments were made by the borrower not more than 12 months before the date of the signing of the project legal agreement. The Bank reviews the borrower’s process to determine whether previous contracts are consistent with the procurement procedures specified in the Loan Agreement. Exceptions to the retroactive financing limits may be approved in exceptional circumstances by the RVP in consultation with the Vice President, OPCS.

III. Organizational and Institutional Support

3.  Assistance must be supported by sufficient attention to the borrower’s proposed organizational and institutional arrangements for implementation, including procurement.

4.  Within the Country. Rapid and appropriate assistance requires the Bank to work in a flexible and pragmatic way with other institutions.

(a)  In countries with weak implementation capacity, the Bank may consider a proposal from a borrower to contract UN agencies, nongovernmental organizations (NGOs), intergovernmental and regional institutions, and other multilateral and bilateral donors to undertake all or part of project implementation, including the procurement function.

(b)  Harmonization of procurement procedures and review arrangements among donors should be considered in project design. Use of pooled funds with common simplified procurement procedures should also be considered, to the maximum extent possible.

5.  Within the Bank. The following changes in the Bank’s normal procedures are intended to help ensure rapid processing for these urgent situations.

(a)  Regional procurement managers (RPMs) should give particular attention to delegating higher approval authority (up to RPM thresholds) to procurement specialists in the field offices who are working on projects with situations which have a need for urgent assistance or where there are significant borrower capacity constraints (eg FCS or Small states). This delegation should be done on a case-by-case basis and may be authorized for a limited duration of project preparation and implementation. The objective here is to ensure accelerated clearance for issuance of no-objection letters and to reduce time taken for procurement prior reviews. To ensure effective and timely response to weak country capacities, additional resources for Bank supervision budget may be allocated to projects requiring rapid response. The RPM should discuss with the country unit the requirements for procurement input for each project.

(b)  Exceptionally, in response to the request of a borrower that lacks implementation capacity, and in the absence of any viable implementation alternative, the Bank may directly execute start-up activities that are necessary to enable the recipient to undertake the execution of project activities.[1] The Loan/Credit/Grant Agreement determines the ceiling for individual contracts and the aggregate amount of such Bank-executed procurement. The Bank should avoid delivering any services directly to beneficiaries. Titles for goods and services procured by the Bank are transferred to the borrower at the time they are received and accepted. Bank-executed activities may include assistance in contracting consulting engineers to carry out inventories/surveys/studies or to support project management; purchasing of simple off-the-shelf goods; and implementing minor civil works that are urgently needed for start-up activities. In these cases, the Bank works through its General Services Department (GSD), whose field offices may be authorized to enter into contracts with consultants, contractors, or suppliers, in accordance with the provisions of AMS 15.00 and AMS 15.10. The cost of these contracts may be financed from a PPF or from a trust fund. Each proposal for Bank execution requires the authorization of a Managing Director through the RVP, in consultation with OPCS/OPCPR if needed.

IV. Simplified Procurement Arrangements

6.  To facilitate the Bank’s rapid response, task teams may consider using a range of simplified procurement arrangements. These arrangements offer greater flexibility, speed, and simplicity by delegating procurement review and clearance authority to task teams, while remaining consistent with the principles of the Bank’s procurement policies.

A. Rapid Capacity Assessments

7.  Up-front procurement capacity assessment of the implementing agency is mandatory and should be carried out in a timely manner to determine the institutional and management arrangements that would ensure proper execution of the project. To save time, streamlined procedures may be used (see Annex A for a simplified methodology for carrying out a procurement capacity assessment of the implementing agency). These assessments can be conducted by Bank staff or by another qualified resource person or entity associated with experts who are familiar with the country’s administrative system and context, and with the Bank’s procurement policies and procedures. The RPM should clear any decision to authorize a non-Bank staff to carry out the procurement capacity assessment of an implementing agency. In some cases, teams may consider preparing a generic procurement capacity assessment for the country up-front, then adapting this generic assessment to the specific implementing agency of the project.

B. Program Management and Use of UN Agencies

8.  When it is appropriate to place greater reliance on, or to delegate part or whole of project implementation to, UN agencies, single-source selection/direct contracting may be used in accordance with paragraphs 3.9 and 3.15 of the Consultant Guidelines and paragraphs 3.6 and 3.9 of the Procurement Guidelines.

C. Delegated Management of Funds

9.  When the delegation of implementation includes management of funds by a UN agency or any public or private entity, single-source selection may be used in accordance with the provisions of AMS 15.00 (if the UN is hired directly by the Bank), or in accordance with the Procurement and Consultant Guidelines (if the UN is hired by the borrower). In either case, a Project Agreement between the Bank or borrower and the entity should set out the procurement procedures to be used for executing the delegated component or package of activities.

D. Procurement Framework when UN Agencies are Involved in Project/Program Implementation

10.  UN agencies participate in activities financed by the Bank or Bank-administered trust funds in one of the following ways:

(a) the UN implements all or part of project activities on behalf of a weak-capacity country in an emergency or crisis situation;

(b) the UN acts as a supplier of critical goods (e.g., vaccines) to the borrower under a Bank-financed project; and

(c) the UN acts as a provider of technical services to the borrower under a Bank-financed project.

11.  Serious delays have been encountered under all three scenarios because of difficulties in agreeing on appropriate legal arrangements that have the right balance between effectiveness and compliance with Bank fiduciary requirements. Several agreements have been developed to address this situation: Fiduciary Principles Accord (FPA), Standard Form of Agreement for Supply of Health-Related Goods through the UN, and Standard Form of Agreement for UN Provision of Technical Services.

1. Fiduciary Principles Accord

12.  The Fiduciary Principles Accord (FPA) helps address issues that arise when the UN is a direct implementer of emergency activities under trust funds administered by the Bank. The FPA is aimed at reducing transaction costs for countries and increasing the effectiveness and impact of the assistance that the World Bank and UN provide. The FPA applies to grants under trust funds administered by the Bank that satisfy the following conditions:

(a) they are covered by OP/BP 10.0 (para 11),

(b) the involvement of a UN agency is a result of a request from a borrower that has insufficient capacity to respond to the emergency,

(c) the proposed UN agency is a signatory to the FPA, and

(d) the funds are from trust funds (multidonor trust funds and Bank surplus funds) that specifically provide for the application of the FPA.

The FPA is not applicable when a component or project implemented by a UN agency is financed from IBRD or IDA resources.

13.  The FPA is used for transfers—either directly from the Bank or passing through a borrowing government—of funds that are administered by the Bank to a UN agency implementing the needed activities. In these cases, the Bank, from a procurement point of view, has a role similar to a fiscal agent. Since the FPA was designed as a “reciprocal” framework, it also applies to the more infrequent situations when the Bank implements activities under trust funds administered by a UN agency.

14.  When a UN agency acts as an implementing agency in a situation not covered by the FPA, the Bank’s procurement policies and procedures apply. Any deviations from the procurement policies should be cleared by a Managing Director through the RVP, after consultation with OPCS/OPSOR if needed.

2. Standard Form of Agreement between Borrowers/Beneficiaries and UN Agencies

15.  A standard form of agreement has been developed with several UN agencies[2] to address issues arising when a borrower selects a UN agency to provide critical health-related goods or technical assistance under projects financed by IDA, IBRD, or trust funds administered by the Bank.

16.  In the case of UN agencies with whom no standard form of agreement exists then refer to OPSOR for guidance

17.  The provisions of the UN standard form of agreements have been modified from the following Bank procurement policy requirements set forth in the Procurement Guidelines:

(a) to impose sanctions in the event of fraud and corruption (paragraph 1.14(d));

(b) to give the Bank the right to require provisions in Bank-financed contracts allowing it to inspect and audit records and accounts of suppliers and service providers and their subcontractors and subconsultants (paragraph 1.14(e));

(c) to require borrowers to use standard forms of contract containing conditions that provide a balanced allocation of risks and liabilities (paragraphs 2.12 and 2.38); and

(d) to require that Bank procedures as outlined in the Guidelines apply to all contracts for goods or works that are financed wholly or in part from a Bank Maryam

18.  Despite these modifications the UN standard form of agreements provide a balanced allocation of risks between Bank borrowers and UN agencies through improved contractual clauses as compared to those in previous UN-borrower agreements, and through the robust mechanism that has been agreed on to monitor outputs and payments.

19.  The arrangements contained in the agreements maintain the World Bank’s obligation to review and provide the necessary oversight for those contracts procured and implemented by a UN agency. First, the agreement obliges the UN agency to provide to the borrower, in timely fashion, documentation with regard to both supplies and services, such as invoices, delivery schedule, and warranties; the borrower keeps this documentation as part of its project records. Second, the agreement obliges project teams, the borrower, and the UN agencies to carry out sufficient procurement planning at the design stage of the project. Third, the agreement notes that the Bank project team will exercise closer normal supervision during implementation, through monitoring of outputs, instead of Bank standard prior and post reviews of individual transactions.

E. Procurement Agents and Project Management Agents

20.  When the implementing agency does not have in-house capacity for the necessary procurement or project management activities, hiring a procurement agent (PA) or project management agent (PMA) may be the most efficient option. The PA/PMA should be selected in accordance with paragraph 3.10 of the Procurement Guidelines and paragraph 3.17 of the Consultant Guidelines (see Annex B for sample TOR for Procurement Agents). As these paragraphs state, procurement carried out by the PA/PMA is to be done in accordance with procurement procedures set out in the Loan Agreement and further elaborated in the Procurement Plan approved by the Bank. In emergency situations, or where large numbers of small contracts are involved, the borrower may also employ a management contractor, whose services may be selected through the use of streamlined procedures set out below.

21.  To facilitate and expedite the process, the Bank maintains a list of pre-identified PAs from which borrowers can draw in emergency situations. This list is published on the Bank external website and is updated every two years. One main criterion for selecting a PA/PMA is the firm’s ability to deploy its staff for the borrower in a timely manner.

22.  The process for selecting the PA is as follows:

(a) In response to a borrower request, Bank teams advise the borrower of the availability of the pre-identified list of procurement agents by reference to the above link.

(b) The borrower then formulates a shortlist of firms based on the information provided in the link. Borrowers are not constrained by the Bank’s pre-identified list and are entitled to include any qualified firm in the shortlist.

(c) If the borrower decides to select the firm on the basis of the consultants’ qualifications, the borrower sends an outline of the TOR to the shortlisted firms and requests them to submit their relevant qualifications. The time for submission could be limited to 10 working days and submission accepted by mail, facsimile, or e-mail.

(d) After evaluating the submissions, the borrower sends a detailed TOR of the assignment, draft contract form, and sample proposal forms to the most qualified firm and invites it to submit technical and financial proposals.