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Read this essay to learn about World Bank. After reading this essay you will learn about:- 1. Introduction to World Bank 2. Understanding the Basic Functions of World Bank 3. Project Business under World Bank Funding 4. Payments under Bank Financed Projects 5. Post-Evaluation of the Projects by World Bank 6. World Bank Business Guidelines 7. How to Get Business Information and Other Details. List of Essays on the World Bank Essay Contents: The World Bank's main function and objective is promoting the long run balanced growth of the international trade. Though much has been achieved in this direction but much remains to be achieved especially in the African continent, the newly liberalized economies of the former Soviet Union, countries in the south Asian and other regions in the Asian sub continent, and the countries in the central and Eastern Europe. The multilateral trading system has a long way to go before reaching a situation close to free trade but still WB has done good job in this direction and has a role cut out for it in future as well in favour of creating a world supporting free flow of trade. The Bank works through its influence on the borrowing countries aimed towards globalization of the economic resources. It tries to bring suitable reforms either with the cooperation of the recipient countries or through pressurization exerted through its monetary muscles. The main direct influence is on their (recipient) policy matters through reviews/ discussions, and loans/credits that provide for specific changes in existing policies. These create conditions for the bank to enforce conditionalities (economic policies, structural adjustments, institutional reforms and good governance) on the recipient countries in the developing economy to toe the bank's line of reforms. These conditionalities have always promoted the cross border trade and external liberalization. So much so that these have become the standard format of the lending policies of the WB and IMF. A bank is a bank so all its investment efforts in lending are directed towards economic safety norms associated with the monetary growth, fiscal deficit, and the exchange rate. The working of the bank are also influenced by their strong lenders, the lenders mostly belonging to the developed sectors of the world economy tend to create conditions conducive to their national policies of global expansion. So they sometimes use the bank's influence to propagate their policies as well. The collective result of these interconnections between the lenders to the bank and the bank itself are again in tune with the reforms initiated by WTO for a tariff free world through external and internal liberalization. Organizational Structure of World Bank: The Organizational Structure is centered on a President (elected by the members for a five-year term), followed by Board of Directors (one director from each member country) and 24 full time Executive Directors (located at the headquarters of the bank). The operations are based on regional basis. A Vice President heads each of six regions-Africa, East Asia and Pacific, South Asia, Europe and Central Asia, Middle East and North Africa, and Latin America and the Caribbean-and is responsible for all operations in the borrowing countries within that region. Each region has several Country De-partments. Each Country Department is responsible for the Bank dialogue with the country and the preparation of the Country Assistance Strategy (CAS), which is the basis for the Bank's financial support to the country. In addition, there are regional technical units made up of technical staff with specialized knowledge and skills in the major sector (Agriculture, Industry/Energy, Infrastructure, and Population and Human Resources) who act as consultants, providing expertise on a project-by-project basis. Responsibility for Managing the World Bank: Responsibility for managing the organization under the Board's direction rests with the President, who manages a staff of approximately 7,000 people from more than 125 countries. About half of these are professionals with backgrounds and experience in economics, financial analysis, accounting, engineering and technical fields such as agronomy, rural and urban development, environment, forestry, education, and private sector development. The Bank is owned and directed by member governments. Direction is exercised through a Board of Governors. The Governors meet once a year to review operations and basic policies. They delegate most functions and the responsibility for the day-to-day running of the organization to the Executive Directors. The Board of Executive Directors must approve every loan the World Bank makes, as well as IBRD borrowing operations and all matters of policy. This process ensures that the owners of the Bank have a direct input into Bank operations. A Task Team Leader who has overall responsibility for the project from inception to completion, including monitoring, procurement and consultant selection handles each project that is financed by the Bank. The Task Team Leader is selected from the professional staff based on his or her experience and professional training. The Task Team Leader can answer specific questions about a given project and is therefore a useful source of information for interested suppliers. Each region has a procurement adviser who monitors procurement activities, reviews documents, and provides advice and assistance to the Task Team Leader on procurement matters. The Procurement Policy and Services Group, located in the Operational Core Services Network, is responsible for developing policies and guidelines on procurement matters. It is also responsible for developing policies and guidelines on procurement and consultant selection and ensuring that they are properly and consistently followed by borrowers and suppliers. It provides information to the business community. The DACON Center, which handles consultant registrations, is also part of this Group. The Bank is initiating a decentralization process and several Country Departments are now located in the field in a borrowing country. In addition, the Bank has established resident missions in most of the borrowing countries. These decentralized Country Departments and resident missions may provide useful information on Bank activities and business opportunities in the respective countries. It has almost universal membership with 188 countries of the world supporting it and its policies. i. Aim: Poverty reduction in the least developed regions of the world and to serve the five billion people in the developing countries through loans, direct investments, guarantees, policy advice and knowledge services - from IBRD, IDA, IFC, and MIGA by way of annual commitments of about $25 billion a year governed by a well defined code of conduct. ii. Who can get the Assistance? Member country governments, government agencies, or private institutions which can obtain their government's guarantee. iii. What is the Scope of the Assistance? The major part of the assistance is in the form of investment loans, adjustment lending, including Structural Adjustment Loans (SALs), also provides to help reform economic and fiscal policies and address balance of payment problems, and Sector Adjustment Loans (SECALs) that focus reform within a particular sector. These are available for specific developmental projects and sector programs. iv. Who Uses the WB Funds? The borrowing country uses the funds to purchase goods and equipment, construct works, and obtains consultant services needed for these projects. v. Other Associated Financial Institutions Under WB? There are four other associated multilateral lending agency/financial institutions under the World Bank Group. These are: (a) The International Bank for Reconstruction and Development (IBRD). (b) The International Development Association (IDA). (c) The International Finance Corporation (IFC), and (d) The Multilateral Investment Guarantee Agency (MIGA). IBRD and IDA provide assistance for growth and development projects for procurement of goods and services by the borrowers. IFC makes investments in the prospective projects. vi. Can Private Firms Get Assistance? The lending is not limited to governments only but private firms can approach directly for the investment funds in the form of commercial funds but respective governments must approve and stand guarantee for such projects and provided the private institution adheres to the rules and regulations of the bank vii. How IBRD Raises Money for Lending? The IBRD lends funds, most of which it raises through the sale of AAA-rated bonds in international capital markets, to creditworthy developing countries. viii. Does IBRD Provide Credit Gurantees? Yes, but partially on development projects (risk or credit) provided there is a counter-guarantee from the respective governments. ix. How is IDA Funded? It is funded mainly by contributions from its rich member countries. x. Who Qualifies for Assistance from IDA? The poorest developing countries with per capita income below a pre-determined threshold by IDA. xi. Can Private Institutions Get IDA Credits? No, private institutions cannot get IDA assistance, the assistance is given only to the governments. xii. Is there any Difference between Lending by IDA and IBRD? The procurement procedures are the same. xiii. Who Qualifies Assistance from IFC? Private sector in developing countries. xiv. How IFC Lends/Invests? IFC invests in commercial enterprises by loans and equity financing in collaboration with other investors. xv. What are the main Functions of IFC? To provide financial, legal and technical advice to private sector organizations. xvi. What is the Role of Government in IFC Funding? There is no involvement of the member governments for any sort of government guarantees of repayment (contrary to IDA and IBRD). xvii. What is the Function of MIGA? Its main function is to: i. Encourage foreign investment in developing countries ii. Provides equity guarantees to foreign investors against loss caused by non-commercial risks. iii. Provides advisory services to developing member countries on ways and means for creating conducive environment for foreign investment. xviii. Lending Operations of WB (some facts): (a) Total lending in the last 50 years: US $ 250 billion. (b) Total projects financed: 5000 app. (c) Average annual lending: US $ 20 to 25 billion, (d) Number of projects covered (current): about 220 new projects. (e) The extent of funding for each project: 40% app. (f) Types of projects: Agricultural projects, large infrastructure projects to construct ports, roads, water systems and power plants, education, environment, finance, law, population, health and nutrition, urban and rural development, industry, information systems, telecommunications, and privatization. (g) Potential global business generated: The yearly lending of app 22 billion US $ by the WB, generates global investment of app 50 billion covering some 30,000 contracts that are awarded to firms annually by the borrowers of the funds. (h) The distribution of the global business under WB funded projects: 70% app for goods and equipment, 20% for civil works, and 10% for consultant services. xix. Does WB Identifies Prospective Projects for the Borrowing Governments? No, this is the prime job of the borrowing governments, WB can assist them in this direction, if requested to do so. xx. Administration of the Credits: Both IBRD loans and IDA credits are administered by the same World Bank staff, and the projects they finance must meet the same criteria in order to qualify for a loan. Most important, the same procedures apply in the procurement of goods and works and in the selection of consultants. Therefore, they can be treated the same in tracking potential business opportunities. The World Bank funds are available for the priority projects as identified by the national government. The bank provides app 40% of the project cost, the rest 60% has to be generated by the borrower through other financial institutions like IFC, ICICI, consortium of international banks and also through public issues etc. The primary reason behind this form of lending is that each project stimulates further industrial activities in the domestic and overseas markets in the form of various project requirements (like appointment of consultants, prime contractors for technology/process and detailed engineering etc. besides suppliers of materials and equipment). All these activities are on the supply side of the project. Once the project comes on stream there is further "downstream" activities for the units to use the produce of the project and/or the market activities for the trade in the goods thus produced. 1. WB Has a Set Pattern for Implementation of a Project in the Form of Various Progressive Stages Like: (a) Identification, (b) Project Preparation, (c) Appraisal, (d) Approval by the Bank Executive Director, (e) Signing of the agreement, (f) Implementation and supervision, and (g) Project timetable. (h) Procurement: (i) International Competitive Bidding. (ii) Alternative methods. 2. Commentary: (a) Identification: It operates in closer association with the borrowing countries and conducts regular economic studies and sectors analyses. These studies provide a framework for lending programme and appropriate country assistance strategy and selection of potential projects is done after and through these studies. The criteria for selection is that: (i) The project must be technically and financially sound, (ii) Will produce acceptable rates of return, (iii) Contribute to the borrowing country's economic growth and development, (iv) It is environmentally sustainable. (v) The borrowing country must agree to take full responsibility for the project from drawing board to implementation, commissioning and operations. Identification is the first step for getting World Bank's funding for commercially viable and/or socially justifiable projects. Any member government with need for funding of projects can approach the WB but in many cases WB also conducts studies in cooperation with the respective governments to identify potential projects. A project must have the provisional support of both the borrowing country and the Bank to ensure that its objectives are shared by both. Once a project has been identified it is then included in the WB's multiyear lending programmes for projects. The details of the projects thus identified are made public by UNDB (United Nation's Development Business), and WB's Monthly Operational Summary news. (b) Project Preparation: Once a project has been identified as having a high priority and being able to contribute significantly to the economic development of a country, it undergoes further intensive preparation and analysis by the borrower and the Bank to ensure that it is soundly designed, properly organized, and meets standards of economy and efficiency. The borrower is primarily responsible for project feasibility studies, design analysis, environmental impact assessments, and other aspects of project preparation. The Bank only ensures that the work follows proper procedures. Many countries, especially in the least developed economies and even developing economies, need assistance in preparing project reports or feasibility reports. The Bank provides such direct assistance on some occasions, but usually the borrowing country has to get the services of approved consultants. The WB has very strict code of conduct for the working of the approved consultants. Many countries in the said economic region fall short of the seeding money required at the pre- project activities or the preparatory phase of a project. WB helps arrange financing for consulting services during this preparatory phase. There are numerous options available to the borrower and the bank mainly: i. Through special technical assistance and engineering loans. ii. Reimbursing the borrower for preparatory work with proceeds of the proposed loan. iii. By including funds for preparatory work in a loan for a subsequent project in the same sector. iv. Make advances from its Project Preparation Facility (PPF). v. Financing by UN agencies such as the Food and Agriculture Organization (FAO) or the United Nations Development Program (UNDP), bilateral aid programs etc. (c) Appraisal: This is a comprehensive review of the technical, economic, financial and institutional aspects of the proposal. Bank staff with or without the help from external consultants conducts it. For each project there is a Task Team headed by its nominated leader who might be referred to as the project coordinator or the project manager. The scope of appraisal includes: (i) The types of works. (ii) Goods. (iii) Services. (iv) Equipment necessary for the project (procurement procedures and schedule). (v) Financing plan (to ensure that cost estimates are accurate and that sufficient funds are available to complete the project). (vi) Co-financing (bilateral aid agencies, regional development banks, export credit institutions, or commercial banks). Based on the above (i to vi) the Bank prepares a Project Appraisal Document (PAD). This is a comprehensive project document. The interested parties can access this document once their loan is approved. (d) Approval by Executive Director: After the PAD is prepared negotiations are held between the bank and the borrower. From the Bank's side the main objective is to ensure the project's success and the items covered for negotiation are detailed schedules for procurement arrangements and implementation. After reaching an agreement the total set of documents is sent to the executive director for approval. (e) Signing of the Agreement: After approval by the ED of the Bank, the loan agreement is signed by the Bank and the borrower. This signed document is a legal obligation of both parties for its smooth execution. (f) Implementation and Supervision: After the loan is approved, funds are available to borrower to implement the project. Implementa-tion is the responsibility of the borrower. Bank is not a party to any procurement contract but for the disbursement of the funds the borrower must follow the procurement procedures as contained in the loan's legal documents. The Bank only supervises project implementation and the procurement process to make sure that the procedures are followed and that the process is transparent, fair and impartial. (g) Project Timetable: Once the project has been approved and funds made available to the borrower it is the sole responsibility of the borrower to follow the Bank's set rules for procurement. The borrower has to fix the procurement schedule, publish the advertisement, evaluate the bids, and award and manage the contract, including payments. The Bank provides financing from its loans for the contracts, but the contract itself is between the borrower and the supplier or contractor. The Bank's role is to make sure that the agreed procurement procedures are observed, and that the entire process is conducted with efficiency, fairness, transparency and impartiality. (h) Procurement: (i) International Competitive Bidding. (ii) Alternative methods. Each procurement is governed by the specific bidding documents issued by the borrower. If bidders feel that any of the provisions or bid evaluation criteria in the bidding documents appear unclear, restrictive, or inconsistent, they should raise this issue in writing with the borrower before the bid closing date and within the period specified in the bidding documents. In most cases of procurement of goods, plants or civil works, these objectives can best be achieved through an International Competitive Bidding (ICB) process with a margin of preference given to domestic goods, plants, and, under certain conditions, domestic contracting services in developing countries. When ICB is not the most appropriate method of procurement, alternative methods are used. (i) International Competitive Bidding (ICB): It is similar to public bidding procedures used by many governments and public undertakings. In India DGS&D (Director General of Supply & Disposal) had been the window for procurement for the Government of India for a very long time. Their procurement rules and regulations are somewhat more strict but lack the transparency as expected by WB. The salient features of ICB are: 1. Public notification, 2. Currency of bid, 3. Payments, 4. Language and clarity of bidding documents, 5. Public bid opening, 6. Preferences, and 7. Awards. Commentary: (a) Public Notification: UNDB issues a general procurement notice for the goods and works required under ICB. The notice gives general information on the nature of the procurement to be carried out. Borrowers are required to keep information on those who express interest in bidding for the project and to notify them when specific bids are announced. Invitations to bid for specific contracts will also be advertised in at least one major local newspaper. Further, for large specialized contracts, invitations will be advertised in Development Business and/or in well-known technical magazines, newspapers and trade publications of wide international circulation. Borrowing countries are also invited to provide copies of advertisements to Bank member country representatives, usually commercial officers or attaches, located in their country. (b) Currency of bid: Any currency (maximum three) of a member country or in the European Currency Unit (ECU). The local contents have to be in the currency of the borrower. Alternatively, the bidders can quote in local currency but mentioning the foreign exchange requirements separately. For the purpose of comparing prices, bid prices are converted to a single currency (mostly US $) as stated in the bidding documents. (c) Payments: Payments are made in the currency of the bids. (d) Language: Mostly English. (e) Clarifications: The bidders have the right to get clarifications before the bid closing date. (f) Bid Opening: Bids under ICB are subject to public opening. No change is allowed after bid opening and no clarifications and/or negotiations/discussions are held after or during the bid opening. (g) Preferences: (i) On the basis of equal access to information, equal opportunity to bid for contracts, and a fair and impartial consideration of award, independent of national origin. (ii) Contracts are awarded to the lowest evaluated responsive bidder, regardless of nationality. (iii) However, to promote the development of local industries within the borrowing country, the Bank permits the borrower to give a margin of preference to locally manufactured goods, plants, and civil works contractors when they are competing against foreign suppliers or contractors. (iv) In the comparison of bids, manufactured goods with a minimum of 30% domestic content- raw materials, components-are afforded a margin of preference equal to the applicable customs and import tariff, or 15% of the cost, insurance and freight (CIF) price of the imported goods offered by the competitor, whichever is less. (v) For the supply and installation of plant and equipment or turnkey contracts, the preference will apply only to locally-manufactured plants or equipment within the package. (vi) In the case of domestic civil works contracts, the margin of preference is 7.5% over the price of the competing foreign contractor. This preference is available only to low-income countries. The bidding documents will clearly indicate any preference to be granted and the detailed bid evaluation procedure. (vii) Any financing offered by the bidders to the borrowers is not to be considered for any preferences in bid evaluation. (viii) No preference for any deviation (howsoever attractive it might be) in bid that is not called for in the bid documents. (ix) The bids must be free from any political preferences of the bidder's country. (x) There is no quota system of preferences that links the award of contracts to the size of contributions or share of membership by a country in the Bank. (h) Award of contracts under ICB: It is done on the basis of the lowest evaluated responsive bid, based on the evaluation criteria (quality, durability, availability of after-sale service and spare parts, training, and even maintenance and operating costs) set forth in the bid documents. (ii) Other Methods of Procurement: Conditions: (a) Where the amount of the purchase may be small, (b) The goods or works may be urgently needed, (c) There may only be a few suppliers, (d) Participation by invitation instead of by tendering. (Limited International Bidding (LIB), in which suppliers or contractors of specialized goods and services participate by invitation rather than in response to an advertisement.), (e) The scope of work is unlikely to attract international competitive bidding. (National Competitive Bidding (NCB), when the type of goods or scope of work is unlikely to attract foreign competition. A similar method of procurement may also take place in projects where local communities and/or local non- governmental organizations (NGOs) could participate in order to increase the utilization of local know-how and materials or to employ labour-intensive and other appropriate technologies. Procurement procedures are broadly consistent with ICB procedures, with exceptions in advertising, language, and currency requirements.), and (f) For purchasing low-value, off-the-shelf items. (i) Direct purchase, normally on a negotiated basis, when proprietary equipment can be obtained from only one supplier. (ii) When procurement carried out on behalf of the borrower by specialized UN agencies, procurement agents, or management contractors. (iii) Procurement in Adjustment Lending. For countries operations in reforming economic and fiscal policies and addressing balance of payments problems, 20% is distributed through SALs and SECALs. SALs provide foreign exchange to finance general imports of goods or goods already procured and/or delivered within a certain period (luxury goods, military supplies, environ-mentally dangerous materials, and other commodities are prohibited). Procurement is usually conducted through established procedures of the public sector, provided these have been examined and found acceptable to the World Bank, or through normal commercial procedures in the private sector. In large contracts-generally exceeding US$5 million-simplified ICB procedures are followed. Potential suppliers should track these operations in order to identify both the types of goods and products that the borrower envisages procuring, and the procurement procedures that will apply. (iv) Procurement under Private Sector Arrangements (v) Procurement under Co-Financing: World Bank provides only upto 40% portion of the financial resources needed by developing countries, however it encourages and helps its borrowers to obtain additional financing from other sources for Bank-assisted projects in the form of co-financing from - government bilateral aid programs, regional development banks, export credit agencies, and commercial banks. When co-financing is involved, different procurement issues often arise because of variations in the terms and conditions on which co-financing is provided. For example, the funds may be "tied" to specific purchases or purchases from the country offering the financing, or subject to other restrictions. Thus, when co-lenders are involved, procurement arrangements have to be tailored to the specific terms, conditions and objectives of each source of financing. There are two methods of structuring co-financing arrangements. (vi) Parallel Financing: The choice of lenders and arrangements for parallel financing is the sole responsibility of the borrowing country. The administration of procurement is the responsibility of the co-lenders. The Bank limits its role to advising and assisting the borrower in achieving economy in the arrangements, as well as ensuring successful project implementation. In a parallel financing arrangement, the World Bank and the co-lender finance different goods and services or components of a project. This arrangement is used in cases where the co-lender has procurement procedures which are not compatible with the Bank's guidelines, and the procurement can be divided into packages that may be procured under separate contracts without seriously affecting project costs, implementation schedules, or overall performance. Because many co-lenders, including most bilateral aid institutions, regional development banks and special funds established by regional blocs, put limitations on the use of their funds, parallel financing arrangements are used in most co-financed projects. (vii) Joint Financing: In a joint financing operation, the financing of all or certain contracts is shared between the Bank and the co-lender in agreed proportions. All procurement under joint financing arrangements must be in accordance with the Bank's guidelines (normally ICB), and bidding must be open to all parties who are eligible under the Bank's guidelines. This latter requirement, which prohibits "tied" funds, is the most frequent reason why joint financing is unacceptable to many co-lenders. Selection of the Project Services Consultants: (i) The selection is based on three factors: Objective: Quality and Cost-Based Selection, QCBS. Scope: Engineering, architecture, economics, environment, education, health, finance, management and privatization. Criteria: High professional quality, technically responsible performance, and good track record. (ii) The bank provides information on consultant services, including a brief description of the nature of services, timing, estimated cost, staff-month, and so forth, in the Project Information Document (PID) similar information is also included in the description of each project in the Monthly Operational Summary (MOS) of the bank. Each project requires the publication of a General Procurement Notice in the United Nations Development Business (UNDB) which will include a more detailed description of the required services, the client agency, and the budgeted cost. In the case of large value contracts, a specific notice seeking "expression of interest" in the national press and UNDB will follow this. The project documentation contains more detailed information. (iii) Selection Process: The consultant selection process is entirely the borrower's responsibility. The Bank's role is to ensure that only capable firms are considered for selection, that the selection process is equitable, and that the chosen firm or individual is able to provide the required services. The same rules of eligibility apply: consultants from all member countries are eligible for consideration to work on any project financed by the World Bank. Procedures for competitive selection of consultants: a. Shortlist, request for proposals, b. Terms of Reference, c. Preparation of a short list of firms (maximum 6 firms), d. Not more than two firms from one country, and e. At least one firm from the less developed country. (iv) Registration: The Bank maintains a computerized database of firms interested in working on Bank-assisted projects to assess qualifications of consulting firms proposed by borrowers and to assist borrowers in preparing shortlists. Registration with this Data on Consulting Firms (DACON) system is free of charge and not compulsory for being shortlisted. Registration is open for firms with more than five permanent professional staff and with experience on more than ten assignments exceeding US$ 100,000 or 10% of their annual fee, whichever is the lowest. (i) Objective: Loans and credits are used exclusively for the purposes set out in the loan or credit agreement. Funds may be disbursed only to meet project expenses as they are actually incurred and to finance goods or services that are needed for the project. (ii) Time Period for Disbursement: Within ten to thirteen business days of the receipt of required documents that are properly executed (iii) Mode of Payment: The World Bank makes payments only at the request of the borrower and unless where the Bank has issued a Special Commitment, no third party has any right to the proceeds of the loan or credit. There are three alternatives to make payments to the contractors, suppliers and consultants: (a) The borrower can pay them directly, either using advanced funds provided from a revolving account (Special Account), or be reimbursed by the Bank from the concerned loan or credit. (b) The Bank can make payments directly to the supplier on behalf of the borrower. Borrower instruction is required for each payment. (c) The borrower may arrange a letter of credit with a commercial bank in the supplier's country. The Bank will provide a special commitment, which irrevocably guarantees payment to the commercial bank. This is an independent evaluation by the bank. In this evaluation the bank compares the actual results with those expected at the inception. This is highly technical in nature and each evaluation is different from the others. Each project's procurement rules and procedures are clearly stated in its Project Appraisal Document (PAD). In most cases of procurement of goods, plants or civil works, these objectives can best be achieved through an International Competitive Bidding (ICB) process with a margin of preference given to domestic goods, plants, and, under certain conditions, domestic contracting services in developing countries; When ICB is not the most appropriate method of procurement, alternative methods, as explained later in this document, are used. But there are some common factors that the bank looks for in each evaluation like: 1. Has the loan been used to buy/import only those goods and services as agreed to and as needed to carry out the project? 2. Has the borrower procured the materials and services in the most efficient and economical manner possible. 3. Has the borrower given equal opportunity to the qualified bidders in the bank's eligible list of the countries? 4. Has the borrower's actions in procurement encouraged or discouraged the local suppliers who are otherwise qualified to bid. 5. Has the borrower followed transparency in procurement action? The World Bank has listed following guidelines for getting its business: (i) Learn how the World Bank operates, how it is organized, in what lending activities it is involved, and how it develops projects. (ii) Determine from the borrowers or their implementing agencies whether the goods and services your company offers are needed in projects financed by the World Bank. The Bank finances more than 200 new projects each year, which involve an estimated 30,000 individual contracts. Chances are good that some of these projects will use your contract. (iii) Find out what opportunities are coming up. Subscribe to and review the information sources that best fit your needs. Closely track those projects where your goods or services might be needed. Make use of contacts in borrowing countries. (iv) Contact the borrowers and/or project beneficiaries as early as possible, and follow a project through each stage of the project cycle. Keep informed of developments. (v) Decide where your firm has the best chances of winning. Choose from among the hundreds of projects and countries and focus your efforts on those where your firm is likely to have a comparative advantage over other competitors due to past experience, language, trading partners, or other factors. (vi) Learn as much as possible about the implementing agencies responsible for each project. Provide them with appropriate information about your company, product, or service. (vii) If possible, either travel to the country and make direct contact with relevant agency officials or associate your firm with a local agent or partner. (viii) For consultants, it may be helpful to employ a local representative who knows the country and the language to keep you informed, since most consultant business occurs very early in the project cycle-at the identification and preparation stages-before much detail is available for publication. (ix) Obtain the bidding documents as soon as they are available from the implementing agency. If needed, embassies can usually assist. (x) Read the bidding documents and evaluation criteria carefully. Ask for clarification where needed but before bids have to be submitted. Make sure your bid is priced competitively and complies strictly with all specifications and contractual conditions stipulated in the documents. Seek clarification if you have any questions. (xi) Make sure that your bid has the correct address, that it meets any deadlines, and that it abides by all other delivery requirements. (xii) Pay special attention to the requirements for bid security, performance security or guarantees, and arrange with your bank or other institution to produce exactly what is requested. (xiii) If possible, be present or represented at the public bid opening, where each bid price is read aloud, to learn about the competition. (xiv) If you did not win, analyze the reasons, learn from your experience, and modify your approach accordingly for your next bid. And do bid again. You have to compete in order to win. 1. There are various sources for getting business information on bank's funded project business. The most important is the Development Business published by the United Nations. It is a bi-weekly tabloid that carries information on business opportunities generated through the World Bank, regional development banks, and other development agencies. Development Business publishes specific information about goods, works, and consulting services financed by the Bank. It includes the following information: Monthly Operational Summary (MOS) is a monthly report listing all of the projects being considered for financing by the World Bank. The MOS tracks projects from identification to loan or credit signing. Nearly 900 projects are listed, providing enough information for companies to begin marketing to the borrowers. The Approved Projects section includes descriptions of projects as they are approved by the World Bank, including a detailed scope of the project, financing arrangements, address of the implementing agency, consultant requirements, and a procurement schedule listing the type of items to be procured under the project. General Procurement Notices (GPNs) are issued by the borrower for projects that contain ICB, generally around the time of project appraisal, and at least eight weeks before bidding documents are available. GPNs describe the type of procurement expected to take place during project implementation. This is the earliest public notice of procurement, and is the time for companies to contact the borrower if they are interested in supplying the goods or services listed in the notice. Publication of GPNs in Development Business is mandatory. Specific Procurement Notices (SPNs) are invitations to bid for specific items or works. SPNs describe the item(s) being procured and give details about purchasing bidding documents, deadlines for submitting bids, and other requirements. Publication of SPNs in Development Business is mandatory for large contracts. SPNs are also published in the local press of the borrowing country. Major Contract Award Notices identify the successful bidders for contracts that have recently been awarded. This information is useful in identifying successful firms for possible collaboration on future contract competitions. 2. The business information can be collected either from the web site or through the various outlets located in major cities: (a) Web Sites: www(dot)worldbank(dot)org/html/extpd/Publications(dot)html, www(dot)worldbank(dot)org/html/opr/procure/contents(dot)html, www(dot)worldbank(dot)org/html/pic/PIC(dot)html, and This site can be accessed on the Internet. (b) World Bank Info Shop: Address: 1818 H Street, NW, Washington, DC 20433. Requests to the Info Shop may also be submitted through the Internet The World Bank Info Shop is a "one-stop-shop" which facilitates public access to information about the Bank's work. It offers a large selection of World Bank publications, as well as reports related to Bank-assisted projects. To keep everyone informed about the material currently available, the Info Shop has homepages on the Internet which are updated on a weekly basis. 3. Project documents are also available in Public Information Centres (PIC) in London, Paris and Tokyo. Each of the offices has a reading room with a workstation to view the Internet and also a full set of documents for reference. Some documents are available free of cost and some are US $ 15 each. The list of the free documents: a. The Project Cycle (NC), b. Guidelines: Procurement under IBRD loans and IDA Credits, c. Guidelines: Selection and Employment of Consultants World Bank Borrowers, d. World Bank Annual Report, e. Project Information Documents, and f. Operational Polices and Bank Procedures. The list of the paid documents (app US $ 15/each); a. World Bank Group Directory, b. Standard Bidding Documents, c. Disbursement Handbook, d. Economic and Sector Reports, e. Environmental Assessments, f. Loan and Credit Agreements, g. Staff Appraisal Reports, h. Sector Policy Papers, i. National Environmental Action Plans, j. OED Reviews and Studies, and k. IFC Environmental Assessments. 4. Information on World Bank Publications can be Accessed from the following E-Mail and Web Sites: E-mail: books [at]worldbank(dot)org www(dot)worldbank(dot)org/html/extpd/Publications(dot)html 5. Information on the IFC and MIGA can be Accessed at following Sites: www(dot)IFC(dot)org/ & www(dot)MIGA(dot)org 6. World Bank Reports: These are comprehensive, informative, and highly useful reports. Students of international business will find them extremely useful for better understanding of the global picture as presented by the Bank. The list of the projects is given at the end of this section for student's reference. The detailed reports can be accessed from the World Bank web site www(dot)worldbank(dot)org data/data by topic. Whenever and wherever there are monetary gains to be achieved and/or given, and power for decision making under competitive situations, there is bound to be corruption/frauds in one form or the other, either directly or indirectly, to creep up in the system. These are system poison that damages/ weakens not only the structure of the organization but also hamper the beneficiaries to get the due benefits. World Bank system is vigilant to this problem and has very strict regulations to prevent propagation of such practices. In this section we shall cover such safeguards on two accounts: (a) Internal controls directed for the banking staff. (b) External controls directed for the beneficiaries. (A) Internal Controls Directed for the Bank Staff: These guidelines are also called the "Ethical Guide for the Bank Staff handling Procurement Matters in the Bank Financed Projects". The gist of these guidelines is contained in the internal memo by the Director and Head of the Operational Core Services WB (Katherine Sierra) dated 23rd April 1998. This memo cautions the staff on five accounts: 1. Avoid strictly any conflict of interest or even the appearance of a conflict of interest in any matter related to the performance of the staff member's duties. 2. Respect the confidentiality of information received in the course of duty and never use it for personal gains---- , information given in the course of duty should be true and fair and never designed to mislead. 3. Decline acceptance directly or indirectly of any gratuity, gift, favour, entertainment, or anything of money value from anyone who has an interest in seeking business in bank related projects. Exceptions are authorized. 4. Disclose to his/her line manager any personal interest which may influence or appear to influence the staff member's impartiality in any matter relevant to his / her duties. 5. Disqualify him/her from outside employment or activities, including dealing with former or future employers and employment after separation, that conflict with his/her bank duties and responsibilities---." The Bank rallies more on the self-discipline and sense of higher ethical values of its staff. These types of internal memos are circulated every year to all concerned staff of the bank as a reminder to their loyalties for the bank and for re-aliening their ethical values. The system has worked well so far as there is no report on the contrary in the public documents or otherwise to contradict it. (B) External Controls Directed for the Beneficiaries: Defining Corruption/Frauds: The World Bank expects that borrowers (including beneficiaries of Bank loans), as well as Bidders/Suppliers/Contractors under Bank-financed contracts, observe the highest standard of ethics during the procurement and execution of such contracts that are financed under various schemes of the bank. According to the 1996 Guidelines for Procurement under IBRD Loans and IDA Credits, it defines corruption and frauds as: "Corrupt practice means the offering, giving, receiving, or soliciting of anything of value to influence the action of a public official in the procurement process or in contract execution; and fraudulent practice means a misrepresentation of facts in order to influence a procurement process or the execution of a contract to the detriment of the borrower, and includes collusive practices among bidders (prior to or after bid submission) designed to establish bid prices at artificial, non-competitive levels and to deprive the borrower of the benefits of free and open competition." The 1997 Guidelines includes in its definition and coverage the consultants as well. The punishments under both the said documents (for firms and consultants) are: Firms: World Bank will declare a firm ineligible, either indefinitely or for a stated period of time, to be awarded a Bank-financed contract if it at any time determines that the firm has engaged in corrupt or fraudulent practices in competing for, or in executing, a Bank-financed contract. Consultants: "World Bank will declare a Consultant ineligible, either indefinitely or for a stated period of time, to be awarded a Bank-financed contract if it at any time determines that the Consultant has engaged in corrupt or fraudulent practices in competing for, or in executing, a Bank-financed contract." The punishment ranges from "Permanent disqualification" to "Time bound disqualification". After declaring a firm ineligible World Bank then publishes a list of such firms/individuals and no further business is considered with them for the duration of the punishment. The administrative process at the bank constantly monitors and gets feedback from its sources on the ethical behaviour of firms /consultants in the conduct of business under its funding. Once a fraud/ corruption case is detected the accused firm/individual is asked to explain his conduct and for this purpose the bank issues a Letter of Reprimand to the detected firm/individual. If the explanation is not enough to clear the allegations the Bank then decides on the extent of punishment to be imposed on the firm/individual. (Ref. Annex I for WB List of ineligible firms) Coverage of the defaulter: 1. Firm: "Any firm which own the majority of its capital or any firms of which it owns the majority of the capital". 2. Individual: "Any firm of which the individual owns the majority of the capital". Bank's Decision & Notification: Once the allegations have been fixed on an individual and/or a firm, World Bank publishes their names in a list of firms that are debarred from any further business with the bank. This list in updated periodically for the benefit of those individuals/firms that intend to do business under Bank funded projects. The intending firms/individuals must refer to this list before picking up their suppliers and/or sub-contractors. Any wrong decision may land them up in troubles at the various evaluation stages of the business.
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Essay on the World Bank
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Essay On The World Bank

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              Read this essay to learn about World Bank. After reading this essay you will learn about: - 1. Introduction to World Bank 2. Understanding the Basic Functions of World Bank 3. Project Business under World Bank Funding 4. Payments under Bank Financed Projects 5. Post-Evaluation of the Projects by World Bank 6. World Bank Business Guidelines 7. How to Get Business Information and Other Details.
             
              List of Essays on the World Bank
             
              Essay Contents:
             
              The World Bank's main function and objective is promoting the long run balanced growth of the international trade. Though much has been achieved in this direction but much remains to be achieved especially in the African continent, the newly liberalized economies of the former Soviet Union, countries in the south Asian and other regions in the Asian sub continent, and the countries in the central and Eastern Europe.
             
              The multilateral trading system has a long way to go before reaching a situation close to free trade but still WB has done good job in this direction and has a role cut out for it in future as well in favour of creating a world supporting free flow of trade.
             
              The Bank works through its influence on the borrowing countries aimed towards globalization of the economic resources. It tries to bring suitable reforms either with the cooperation of the recipient countries or through pressurization exerted through its monetary muscles.
             
              The main direct influence is on their (recipient) policy matters through reviews/ discussions, and loans/credits that provide for specific changes in existing policies. These create conditions for the bank to enforce conditionalities (economic policies, structural adjustments, institutional reforms and good governance) on the recipient countries in the developing economy to toe the bank's line of reforms.
             
              These conditionalities have always promoted the cross border trade and external liberalization. So much so that these have become the standard format of the lending policies of the WB and IMF. A bank is a bank so all its investment efforts in lending are directed towards economic safety norms associated with the monetary growth, fiscal deficit, and the exchange rate.
             
              The working of the bank are also influenced by their strong lenders, the lenders mostly belonging to the developed sectors of the world economy tend to create conditions conducive to their national policies of global expansion.
             
              So they sometimes use the bank's influence to propagate their policies as well. The collective result of these interconnections between the lenders to the bank and the bank itself are again in tune with the reforms initiated by WTO for a tariff free world through external and internal liberalization.
             
              Organizational Structure of World Bank:
             
              The Organizational Structure is centered on a President (elected by the members for a five-year term), followed by Board of Directors (one director from each member country) and 24 full time Executive Directors (located at the headquarters of the bank). The operations are based on regional basis.
             
              A Vice President heads each of six regions-Africa, East Asia and Pacific, South Asia, Europe and Central Asia, Middle East and North Africa, and Latin America and the Caribbean-and is responsible for all operations in the borrowing countries within that region. Each region has several Country De-partments.
             
              Each Country Department is responsible for the Bank dialogue with the country and the preparation of the Country Assistance Strategy (CAS), which is the basis for the Bank's financial support to the country.
             
              In addition, there are regional technical units made up of technical staff with specialized knowledge and skills in the major sector (Agriculture, Industry/Energy, Infrastructure, and Population and Human Resources) who act as consultants, providing expertise on a project-by-project basis.
             
              Responsibility for Managing the World Bank:
             
              Responsibility for managing the organization under the Board's direction rests with the President, who manages a staff of approximately 7,000 people from more than 125 countries. About half of these are professionals with backgrounds and experience in economics, financial analysis, accounting, engineering and technical fields such as agronomy, rural and urban development, environment, forestry, education, and private sector development.
             
              The Bank is owned and directed by member governments. Direction is exercised through a Board of Governors. The Governors meet once a year to review operations and basic policies. They delegate most functions and the responsibility for the day-to-day running of the organization to the Executive Directors.
             
              The Board of Executive Directors must approve every loan the World Bank makes, as well as IBRD borrowing operations and all matters of policy. This process ensures that the owners of the Bank have a direct input into Bank operations.
             
              A Task Team Leader who has overall responsibility for the project from inception to completion, including monitoring, procurement and consultant selection handles each project that is financed by the Bank.
             
              The Task Team Leader is selected from the professional staff based on his or her experience and professional training. The Task Team Leader can answer specific questions about a given project and is therefore a useful source of information for interested suppliers.
             
              Each region has a procurement adviser who monitors procurement activities, reviews documents, and provides advice and assistance to the Task Team Leader on procurement matters. The Procurement Policy and Services Group, located in the Operational Core Services Network, is responsible for developing policies and guidelines on procurement matters.
             
              It is also responsible for developing policies and guidelines on procurement and consultant selection and ensuring that they are properly and consistently followed by borrowers and suppliers. It provides information to the business community. The DACON Center, which handles consultant registrations, is also part of this Group.
             
              The Bank is initiating a decentralization process and several Country Departments are now located in the field in a borrowing country. In addition, the Bank has established resident missions in most of the borrowing countries. These decentralized Country Departments and resident missions may provide useful information on Bank activities and business opportunities in the respective countries.
             
              It has almost universal membership with 188 countries of the world supporting it and its policies.
             
              i. Aim:
             
              Poverty reduction in the least developed regions of the world and to serve the five billion people in the developing countries through loans, direct investments, guarantees, policy advice and knowledge services - from IBRD, IDA, IFC, and MIGA by way of annual commitments of about $25 billion a year governed by a well defined code of conduct.
             
              ii. Who can get the Assistance?
             
              Member country governments, government agencies, or private institutions which can obtain their government's guarantee.
             
              iii. What is the Scope of the Assistance?
             
              The major part of the assistance is in the form of investment loans, adjustment lending, including Structural Adjustment Loans (SALs), also provides to help reform economic and fiscal policies and address balance of payment problems, and Sector Adjustment Loans (SECALs) that focus reform within a particular sector. These are available for specific developmental projects and sector programs.
             
              iv. Who Uses the WB Funds?
             
              The borrowing country uses the funds to purchase goods and equipment, construct works, and obtains consultant services needed for these projects.
             
              v. Other Associated Financial Institutions Under WB? There are four other associated multilateral lending agency/financial institutions under the World Bank Group.
             
              These are:
             
              (a) The International Bank for Reconstruction and Development (IBRD).
             
              (b) The International Development Association (IDA).
             
              (c) The International Finance Corporation (IFC), and
             
              (d) The Multilateral Investment Guarantee Agency (MIGA).
             
              IBRD and IDA provide assistance for growth and development projects for procurement of goods and services by the borrowers. IFC makes investments in the prospective projects.
             
              vi. Can Private Firms Get Assistance?
             
              The lending is not limited to governments only but private firms can approach directly for the investment funds in the form of commercial funds but respective governments must approve and stand guarantee for such projects and provided the private institution adheres to the rules and regulations of the bank
             
              vii. How IBRD Raises Money for Lending?
             
              The IBRD lends funds, most of which it raises through the sale of AAA-rated bonds in international capital markets, to creditworthy developing countries.
             
              viii. Does IBRD Provide Credit Gurantees?
             
              Yes, but partially on development projects (risk or credit) provided there is a counter-guarantee from the respective governments.
             
              ix. How is IDA Funded?
             
              It is funded mainly by contributions from its rich member countries.
             
              x. Who Qualifies for Assistance from IDA?
             
              The poorest developing countries with per capita income below a pre-determined threshold by IDA.
             
              xi. Can Private Institutions Get IDA Credits?
             
              No, private institutions cannot get IDA assistance, the assistance is given only to the governments.
             
              xii. Is there any Difference between Lending by IDA and IBRD?
             
              The procurement procedures are the same.
             
              xiii. Who Qualifies Assistance from IFC?
             
              Private sector in developing countries.
             
              xiv. How IFC Lends/Invests?
             
              IFC invests in commercial enterprises by loans and equity financing in collaboration with other investors.
             
              xv. What are the main Functions of IFC?
             
              To provide financial, legal and technical advice to private sector organizations.
             
              xvi. What is the Role of Government in IFC Funding?
             
              There is no involvement of the member governments for any sort of government guarantees of repayment (contrary to IDA and IBRD).
             
              xvii. What is the Function of MIGA?
             
              Its main function is to:
             
              i. Encourage foreign investment in developing countries
             
              ii. Provides equity guarantees to foreign investors against loss caused by non-commercial risks.
             
              iii. Provides advisory services to developing member countries on ways and means for creating conducive environment for foreign investment.
             
              xviii. Lending Operations of WB (some facts):
             
              (a) Total lending in the last 50 years: US $ 250 billion.
             
              (b) Total projects financed: 5000 app.
             
              (c) Average annual lending: US $ 20 to 25 billion,
             
              (d) Number of projects covered (current): about 220 new projects.
             
              (e) The extent of funding for each project: 40% app.
             
              (f) Types of projects: Agricultural projects, large infrastructure projects to construct ports, roads, water systems and power plants, education, environment, finance, law, population, health and nutrition, urban and rural development, industry, information systems, telecommunications, and privatization.
             
              (g) Potential global business generated: The yearly lending of app 22 billion US $ by the WB, generates global investment of app 50 billion covering some 30,000 contracts that are awarded to firms annually by the borrowers of the funds.
             
              (h) The distribution of the global business under WB funded projects: 70% app for goods and equipment, 20% for civil works, and 10% for consultant services.
             
              xix. Does WB Identifies Prospective Projects for the Borrowing Governments?
             
              No, this is the prime job of the borrowing governments, WB can assist them in this direction, if requested to do so.
             
              xx. Administration of the Credits:
             
              Both IBRD loans and IDA credits are administered by the same World Bank staff, and the projects they finance must meet the same criteria in order to qualify for a loan. Most important, the same procedures apply in the procurement of goods and works and in the selection of consultants. Therefore, they can be treated the same in tracking potential business opportunities.
             
              The World Bank funds are available for the priority projects as identified by the national government. The bank provides app 40% of the project cost, the rest 60% has to be generated by the borrower through other financial institutions like IFC, ICICI, consortium of international banks and also through public issues etc.
             
              The primary reason behind this form of lending is that each project stimulates further industrial activities in the domestic and overseas markets in the form of various project requirements (like appointment of consultants, prime contractors for technology/process and detailed engineering etc. besides suppliers of materials and equipment).
             
              All these activities are on the supply side of the project. Once the project comes on stream there is further "downstream" activities for the units to use the produce of the project and/or the market activities for the trade in the goods thus produced.
             
              1. WB Has a Set Pattern for Implementation of a Project in the Form of Various Progressive Stages Like:
             
              (a) Identification,
             
              (b) Project Preparation,
             
              (c) Appraisal,
             
              (d) Approval by the Bank Executive Director,
             
              (e) Signing of the agreement,
             
              (f) Implementation and supervision, and
             
              (g) Project timetable.
             
              (h) Procurement:
             
              (i) International Competitive Bidding.
             
              (ii) Alternative methods.
             
              2. Commentary:
             
              (a) Identification:
             
              It operates in closer association with the borrowing countries and conducts regular economic studies and sectors analyses. These studies provide a framework for lending programme and appropriate country assistance strategy and selection of potential projects is done after and through these studies.
             
              The criteria for selection is that:
             
              (i) The project must be technically and financially sound,
             
              (ii) Will produce acceptable rates of return,
             
              (iii) Contribute to the borrowing country's economic growth and development,
             
              (iv) It is environmentally sustainable.
             
              (v) The borrowing country must agree to take full responsibility for the project from drawing board to implementation, commissioning and operations.
             
              Identification is the first step for getting World Bank's funding for commercially viable and/or socially justifiable projects. Any member government with need for funding of projects can approach the WB but in many cases WB also conducts studies in cooperation with the respective governments to identify potential projects.
             
              A project must have the provisional support of both the borrowing country and the Bank to ensure that its objectives are shared by both. Once a project has been identified it is then included in the WB's multiyear lending programmes for projects. The details of the projects thus identified are made public by UNDB (United Nation's Development Business), and WB's Monthly Operational Summary news.
             
              (b) Project Preparation:
             
              Once a project has been identified as having a high priority and being able to contribute significantly to the economic development of a country, it undergoes further intensive preparation and analysis by the borrower and the Bank to ensure that it is soundly designed, properly organized, and meets standards of economy and efficiency.
             
              The borrower is primarily responsible for project feasibility studies, design analysis, environmental impact assessments, and other aspects of project preparation. The Bank only ensures that the work follows proper procedures. Many countries, especially in the least developed economies and even developing economies, need assistance in preparing project reports or feasibility reports.
             
              The Bank provides such direct assistance on some occasions, but usually the borrowing country has to get the services of approved consultants. The WB has very strict code of conduct for the working of the approved consultants.
             
              Many countries in the said economic region fall short of the seeding money required at the pre- project activities or the preparatory phase of a project. WB helps arrange financing for consulting services during this preparatory phase.
             
              There are numerous options available to the borrower and the bank mainly:
             
              i. Through special technical assistance and engineering loans.
             
              ii. Reimbursing the borrower for preparatory work with proceeds of the proposed loan.
             
              iii. By including funds for preparatory work in a loan for a subsequent project in the same sector.
             
              iv. Make advances from its Project Preparation Facility (PPF).
             
              v. Financing by UN agencies such as the Food and Agriculture Organization (FAO) or the United Nations Development Program (UNDP), bilateral aid programs etc.
             
              (c) Appraisal:
             
              This is a comprehensive review of the technical, economic, financial and institutional aspects of the proposal. Bank staff with or without the help from external consultants conducts it. For each project there is a Task Team headed by its nominated leader who might be referred to as the project coordinator or the project manager.
             
              The scope of appraisal includes:
             
              (i) The types of works.
             
              (ii) Goods.
             
              (iii) Services.
             
              (iv) Equipment necessary for the project (procurement procedures and schedule).
             
              (v) Financing plan (to ensure that cost estimates are accurate and that sufficient funds are available to complete the project).
             
              (vi) Co-financing (bilateral aid agencies, regional development banks, export credit institutions, or commercial banks).
             
              Based on the above (i to vi) the Bank prepares a Project Appraisal Document (PAD). This is a comprehensive project document. The interested parties can access this document once their loan is approved.
             
              (d) Approval by Executive Director:
             
              After the PAD is prepared negotiations are held between the bank and the borrower. From the Bank's side the main objective is to ensure the project's success and the items covered for negotiation are detailed schedules for procurement arrangements and implementation. After reaching an agreement the total set of documents is sent to the executive director for approval.
             
              (e) Signing of the Agreement:
             
              After approval by the ED of the Bank, the loan agreement is signed by the Bank and the borrower. This signed document is a legal obligation of both parties for its smooth execution.
             
              (f) Implementation and Supervision:
             
              After the loan is approved, funds are available to borrower to implement the project. Implementa-tion is the responsibility of the borrower. Bank is not a party to any procurement contract but for the disbursement of the funds the borrower must follow the procurement procedures as contained in the loan's legal documents.
             
              The Bank only supervises project implementation and the procurement process to make sure that the procedures are followed and that the process is transparent, fair and impartial.
             
              (g) Project Timetable:
             
              Once the project has been approved and funds made available to the borrower it is the sole responsibility of the borrower to follow the Bank's set rules for procurement. The borrower has to fix the procurement schedule, publish the advertisement, evaluate the bids, and award and manage the contract, including payments.
             
              The Bank provides financing from its loans for the contracts, but the contract itself is between the borrower and the supplier or contractor. The Bank's role is to make sure that the agreed procurement procedures are observed, and that the entire process is conducted with efficiency, fairness, transparency and impartiality.
             
              (h) Procurement:
             
              (i) International Competitive Bidding.
             
              (ii) Alternative methods.
             
              Each procurement is governed by the specific bidding documents issued by the borrower. If bidders feel that any of the provisions or bid evaluation criteria in the bidding documents appear unclear, restrictive, or inconsistent, they should raise this issue in writing with the borrower before the bid closing date and within the period specified in the bidding documents.
             
              In most cases of procurement of goods, plants or civil works, these objectives can best be achieved through an International Competitive Bidding (ICB) process with a margin of preference given to domestic goods, plants, and, under certain conditions, domestic contracting services in developing countries. When ICB is not the most appropriate method of procurement, alternative methods are used.
             
              (i) International Competitive Bidding (ICB):
             
              It is similar to public bidding procedures used by many governments and public undertakings. In India DGS&D (Director General of Supply & Disposal) had been the window for procurement for the Government of India for a very long time. Their procurement rules and regulations are somewhat more strict but lack the transparency as expected by WB.
             
              The salient features of ICB are:
             
              1. Public notification,
             
              2. Currency of bid,
             
              3. Payments,
             
              4. Language and clarity of bidding documents,
             
              5. Public bid opening,
             
              6. Preferences, and
             
              7. Awards.
             
              Commentary:
             
              (a) Public Notification:
             
              UNDB issues a general procurement notice for the goods and works required under ICB. The notice gives general information on the nature of the procurement to be carried out.
             
              Borrowers are required to keep information on those who express interest in bidding for the project and to notify them when specific bids are announced. Invitations to bid for specific contracts will also be advertised in at least one major local newspaper.
             
              Further, for large specialized contracts, invitations will be advertised in Development Business and/or in well-known technical magazines, newspapers and trade publications of wide international circulation. Borrowing countries are also invited to provide copies of advertisements to Bank member country representatives, usually commercial officers or attaches, located in their country.
             
              (b) Currency of bid:
             
              Any currency (maximum three) of a member country or in the European Currency Unit (ECU). The local contents have to be in the currency of the borrower. Alternatively, the bidders can quote in local currency but mentioning the foreign exchange requirements separately. For the purpose of comparing prices, bid prices are converted to a single currency (mostly US $) as stated in the bidding documents.
             
              (c) Payments:
             
              Payments are made in the currency of the bids.
             
              (d) Language:
             
              Mostly English.
             
              (e) Clarifications:
             
              The bidders have the right to get clarifications before the bid closing date.
             
              (f) Bid Opening:
             
              Bids under ICB are subject to public opening. No change is allowed after bid opening and no clarifications and/or negotiations/discussions are held after or during the bid opening.
             
              (g) Preferences:
             
              (i) On the basis of equal access to information, equal opportunity to bid for contracts, and a fair and impartial consideration of award, independent of national origin.
             
              (ii) Contracts are awarded to the lowest evaluated responsive bidder, regardless of nationality.
             
              (iii) However, to promote the development of local industries within the borrowing country, the Bank permits the borrower to give a margin of preference to locally manufactured goods, plants, and civil works contractors when they are competing against foreign suppliers or contractors.
             
              (iv) In the comparison of bids, manufactured goods with a minimum of 30% domestic content- raw materials, components-are afforded a margin of preference equal to the applicable customs and import tariff, or 15% of the cost, insurance and freight (CIF) price of the imported goods offered by the competitor, whichever is less.
             
              (v) For the supply and installation of plant and equipment or turnkey contracts, the preference will apply only to locally-manufactured plants or equipment within the package.
             
              (vi) In the case of domestic civil works contracts, the margin of preference is 7. 5% over the price of the competing foreign contractor. This preference is available only to low-income countries. The bidding documents will clearly indicate any preference to be granted and the detailed bid evaluation procedure.
             
              (vii) Any financing offered by the bidders to the borrowers is not to be considered for any preferences in bid evaluation.
             
              (viii) No preference for any deviation (howsoever attractive it might be) in bid that is not called for in the bid documents.
             
              (ix) The bids must be free from any political preferences of the bidder's country.
             
              (x) There is no quota system of preferences that links the award of contracts to the size of contributions or share of membership by a country in the Bank.
             
              (h) Award of contracts under ICB:
             
              It is done on the basis of the lowest evaluated responsive bid, based on the evaluation criteria (quality, durability, availability of after-sale service and spare parts, training, and even maintenance and operating costs) set forth in the bid documents.
             
              (ii) Other Methods of Procurement:
             
              Conditions:
             
              (a) Where the amount of the purchase may be small,
             
              (b) The goods or works may be urgently needed,
             
              (c) There may only be a few suppliers,
             
              (d) Participation by invitation instead of by tendering. (Limited International Bidding (LIB), in which suppliers or contractors of specialized goods and services participate by invitation rather than in response to an advertisement. ),
             
              (e) The scope of work is unlikely to attract international competitive bidding. (National Competitive Bidding (NCB), when the type of goods or scope of work is unlikely to attract foreign competition. A similar method of procurement may also take place in projects where local communities and/or local non- governmental organizations (NGOs) could participate in order to increase the utilization of local know-how and materials or to employ labour-intensive and other appropriate technologies. Procurement procedures are broadly consistent with ICB procedures, with exceptions in advertising, language, and currency requirements. ), and
             
              (f) For purchasing low-value, off-the-shelf items.
             
              (i) Direct purchase, normally on a negotiated basis, when proprietary equipment can be obtained from only one supplier.
             
              (ii) When procurement carried out on behalf of the borrower by specialized UN agencies, procurement agents, or management contractors.
             
              (iii) Procurement in Adjustment Lending. For countries operations in reforming economic and fiscal policies and addressing balance of payments problems, 20% is distributed through SALs and SECALs.
             
              SALs provide foreign exchange to finance general imports of goods or goods already procured and/or delivered within a certain period (luxury goods, military supplies, environ-mentally dangerous materials, and other commodities are prohibited).
             
              Procurement is usually conducted through established procedures of the public sector, provided these have been examined and found acceptable to the World Bank, or through normal commercial procedures in the private sector.
             
              In large contracts-generally exceeding US$5 million-simplified ICB procedures are followed. Potential suppliers should track these operations in order to identify both the types of goods and products that the borrower envisages procuring, and the procurement procedures that will apply.
             
              (iv) Procurement under Private Sector Arrangements
             
              (v) Procurement under Co-Financing:
             
              World Bank provides only upto 40% portion of the financial resources needed by developing countries, however it encourages and helps its borrowers to obtain additional financing from other sources for Bank-assisted projects in the form of co-financing from - government bilateral aid programs, regional development banks, export credit agencies, and commercial banks.
             
              When co-financing is involved, different procurement issues often arise because of variations in the terms and conditions on which co-financing is provided. For example, the funds may be "tied" to specific purchases or purchases from the country offering the financing, or subject to other restrictions.
             
              Thus, when co-lenders are involved, procurement arrangements have to be tailored to the specific terms, conditions and objectives of each source of financing. There are two methods of structuring co-financing arrangements.
             
              (vi) Parallel Financing:
             
              The choice of lenders and arrangements for parallel financing is the sole responsibility of the borrowing country. The administration of procurement is the responsibility of the co-lenders. The Bank limits its role to advising and assisting the borrower in achieving economy in the arrangements, as well as ensuring successful project implementation.
             
              In a parallel financing arrangement, the World Bank and the co-lender finance different goods and services or components of a project.
             
              This arrangement is used in cases where the co-lender has procurement procedures which are not compatible with the Bank's guidelines, and the procurement can be divided into packages that may be procured under separate contracts without seriously affecting project costs, implementation schedules, or overall performance.
             
              Because many co-lenders, including most bilateral aid institutions, regional development banks and special funds established by regional blocs, put limitations on the use of their funds, parallel financing arrangements are used in most co-financed projects.
             
              (vii) Joint Financing:
             
              In a joint financing operation, the financing of all or certain contracts is shared between the Bank and the co-lender in agreed proportions. All procurement under joint financing arrangements must be in accordance with the Bank's guidelines (normally ICB), and bidding must be open to all parties who are eligible under the Bank's guidelines.
             
              This latter requirement, which prohibits "tied" funds, is the most frequent reason why joint financing is unacceptable to many co-lenders.
             
              Selection of the Project Services Consultants:
             
              (i) The selection is based on three factors:
             
              Objective:
             
              Quality and Cost-Based Selection, QCBS.
             
              Scope:
             
              Engineering, architecture, economics, environment, education, health, finance, management and privatization.
             
              Criteria:
             
              High professional quality, technically responsible performance, and good track record.
             
              (ii) The bank provides information on consultant services, including a brief description of the nature of services, timing, estimated cost, staff-month, and so forth, in the Project Information Document (PID) similar information is also included in the description of each project in the Monthly Operational Summary (MOS) of the bank.
             
              Each project requires the publication of a General Procurement Notice in the United Nations Development Business (UNDB) which will include a more detailed description of the required services, the client agency, and the budgeted cost.
             
              In the case of large value contracts, a specific notice seeking "expression of interest" in the national press and UNDB will follow this. The project documentation contains more detailed information.
             
              (iii) Selection Process:
             
              The consultant selection process is entirely the borrower's responsibility. The Bank's role is to ensure that only capable firms are considered for selection, that the selection process is equitable, and that the chosen firm or individual is able to provide the required services. The same rules of eligibility apply: consultants from all member countries are eligible for consideration to work on any project financed by the World Bank.
             
              Procedures for competitive selection of consultants:
             
              a. Shortlist, request for proposals,
             
              b. Terms of Reference,
             
              c. Preparation of a short list of firms (maximum 6 firms),
             
              d. Not more than two firms from one country, and
             
              e. At least one firm from the less developed country.
             
              (iv) Registration:
             
              The Bank maintains a computerized database of firms interested in working on Bank-assisted projects to assess qualifications of consulting firms proposed by borrowers and to assist borrowers in preparing shortlists. Registration with this Data on Consulting Firms (DACON) system is free of charge and not compulsory for being shortlisted.
             
              Registration is open for firms with more than five permanent professional staff and with experience on more than ten assignments exceeding US$ 100,000 or 10% of their annual fee, whichever is the lowest.
             
              (i) Objective:
             
              Loans and credits are used exclusively for the purposes set out in the loan or credit agreement. Funds may be disbursed only to meet project expenses as they are actually incurred and to finance goods or services that are needed for the project.
             
              (ii) Time Period for Disbursement:
             
              Within ten to thirteen business days of the receipt of required documents that are properly executed
             
              (iii) Mode of Payment:
             
              The World Bank makes payments only at the request of the borrower and unless where the Bank has issued a Special Commitment, no third party has any right to the proceeds of the loan or credit.
             
              There are three alternatives to make payments to the contractors, suppliers and consultants:
             
              (a) The borrower can pay them directly, either using advanced funds provided from a revolving account (Special Account), or be reimbursed by the Bank from the concerned loan or credit.
             
              (b) The Bank can make payments directly to the supplier on behalf of the borrower. Borrower instruction is required for each payment.
             
              (c) The borrower may arrange a letter of credit with a commercial bank in the supplier's country. The Bank will provide a special commitment, which irrevocably guarantees payment to the commercial bank.
             
              This is an independent evaluation by the bank. In this evaluation the bank compares the actual results with those expected at the inception. This is highly technical in nature and each evaluation is different from the others. Each project's procurement rules and procedures are clearly stated in its Project Appraisal Document (PAD).
             
              In most cases of procurement of goods, plants or civil works, these objectives can best be achieved through an International Competitive Bidding (ICB) process with a margin of preference given to domestic goods, plants, and, under certain conditions, domestic contracting services in developing countries; When ICB is not the most appropriate method of procurement, alternative methods, as explained later in this document, are used.
             
              But there are some common factors that the bank looks for in each evaluation like:
             
              1. Has the loan been used to buy/import only those goods and services as agreed to and as needed to carry out the project?
             
              2. Has the borrower procured the materials and services in the most efficient and economical manner possible.
             
              3. Has the borrower given equal opportunity to the qualified bidders in the bank's eligible list of the countries?
             
              4. Has the borrower's actions in procurement encouraged or discouraged the local suppliers who are otherwise qualified to bid.
             
              5. Has the borrower followed transparency in procurement action?
             
              The World Bank has listed following guidelines for getting its business:
             
              (i) Learn how the World Bank operates, how it is organized, in what lending activities it is involved, and how it develops projects.
             
              (ii) Determine from the borrowers or their implementing agencies whether the goods and services your company offers are needed in projects financed by the World Bank. The Bank finances more than 200 new projects each year, which involve an estimated 30,000 individual contracts. Chances are good that some of these projects will use your contract.
             
              (iii) Find out what opportunities are coming up. Subscribe to and review the information sources that best fit your needs. Closely track those projects where your goods or services might be needed. Make use of contacts in borrowing countries.
             
              (iv) Contact the borrowers and/or project beneficiaries as early as possible, and follow a project through each stage of the project cycle. Keep informed of developments.
             
              (v) Decide where your firm has the best chances of winning. Choose from among the hundreds of projects and countries and focus your efforts on those where your firm is likely to have a comparative advantage over other competitors due to past experience, language, trading partners, or other factors.
             
              (vi) Learn as much as possible about the implementing agencies responsible for each project. Provide them with appropriate information about your company, product, or service.
             
              (vii) If possible, either travel to the country and make direct contact with relevant agency officials or associate your firm with a local agent or partner.
             
              (viii) For consultants, it may be helpful to employ a local representative who knows the country and the language to keep you informed, since most consultant business occurs very early in the project cycle-at the identification and preparation stages-before much detail is available for publication.
             
              (ix) Obtain the bidding documents as soon as they are available from the implementing agency. If needed, embassies can usually assist.
             
              (x) Read the bidding documents and evaluation criteria carefully. Ask for clarification where needed but before bids have to be submitted. Make sure your bid is priced competitively and complies strictly with all specifications and contractual conditions stipulated in the documents. Seek clarification if you have any questions.
             
              (xi) Make sure that your bid has the correct address, that it meets any deadlines, and that it abides by all other delivery requirements.
             
              (xii) Pay special attention to the requirements for bid security, performance security or guarantees, and arrange with your bank or other institution to produce exactly what is requested.
             
              (xiii) If possible, be present or represented at the public bid opening, where each bid price is read aloud, to learn about the competition.
             
              (xiv) If you did not win, analyze the reasons, learn from your experience, and modify your approach accordingly for your next bid. And do bid again. You have to compete in order to win.
             
              1. There are various sources for getting business information on bank's funded project business. The most important is the Development Business published by the United Nations.
             
              It is a bi-weekly tabloid that carries information on business opportunities generated through the World Bank, regional development banks, and other development agencies. Development Business publishes specific information about goods, works, and consulting services financed by the Bank.
             
              It includes the following information:
             
              Monthly Operational Summary (MOS) is a monthly report listing all of the projects being considered for financing by the World Bank. The MOS tracks projects from identification to loan or credit signing. Nearly 900 projects are listed, providing enough information for companies to begin marketing to the borrowers.
             
              The Approved Projects section includes descriptions of projects as they are approved by the World Bank, including a detailed scope of the project, financing arrangements, address of the implementing agency, consultant requirements, and a procurement schedule listing the type of items to be procured under the project.
             
              General Procurement Notices (GPNs) are issued by the borrower for projects that contain ICB, generally around the time of project appraisal, and at least eight weeks before bidding documents are available. GPNs describe the type of procurement expected to take place during project implementation.
             
              This is the earliest public notice of procurement, and is the time for companies to contact the borrower if they are interested in supplying the goods or services listed in the notice. Publication of GPNs in Development Business is mandatory.
             
              Specific Procurement Notices (SPNs) are invitations to bid for specific items or works. SPNs describe the item(s) being procured and give details about purchasing bidding documents, deadlines for submitting bids, and other requirements. Publication of SPNs in Development Business is mandatory for large contracts. SPNs are also published in the local press of the borrowing country.
             
              Major Contract Award Notices identify the successful bidders for contracts that have recently been awarded. This information is useful in identifying successful firms for possible collaboration on future contract competitions.
             
              2. The business information can be collected either from the web site or through the various outlets located in major cities:
             
              (a) Web Sites: www(dot)worldbank(dot)org/html/extpd/Publications(dot)html,
             
              www(dot)worldbank(dot)org/html/opr/procure/contents(dot)html,
             
              www(dot)worldbank(dot)org/html/pic/PIC(dot)html, and
             
              This site can be accessed on the Internet.
             
              (b) World Bank Info Shop:
             
              Address:
             
              1818 H Street, NW, Washington, DC 20433.
             
              Requests to the Info Shop may also be submitted through the Internet
             
              The World Bank Info Shop is a "one-stop-shop" which facilitates public access to information about the Bank's work. It offers a large selection of World Bank publications, as well as reports related to Bank-assisted projects. To keep everyone informed about the material currently available, the Info Shop has homepages on the Internet which are updated on a weekly basis.
             
              3. Project documents are also available in Public Information Centres (PIC) in London, Paris and Tokyo. Each of the offices has a reading room with a workstation to view the Internet and also a full set of documents for reference. Some documents are available free of cost and some are US $ 15 each.
             
              The list of the free documents:
             
              a. The Project Cycle (NC),
             
              b. Guidelines: Procurement under IBRD loans and IDA Credits,
             
              c. Guidelines: Selection and Employment of Consultants World Bank Borrowers,
             
              d. World Bank Annual Report,
             
              e. Project Information Documents, and
             
              f. Operational Polices and Bank Procedures.
             
              The list of the paid documents (app US $ 15/each);
             
              a. World Bank Group Directory,
             
              b. Standard Bidding Documents,
             
              c. Disbursement Handbook,
             
              d. Economic and Sector Reports,
             
              e. Environmental Assessments,
             
              f. Loan and Credit Agreements,
             
              g. Staff Appraisal Reports,
             
              h. Sector Policy Papers,
             
              i. National Environmental Action Plans,
             
              j. OED Reviews and Studies, and
             
              k. IFC Environmental Assessments.
             
              4. Information on World Bank Publications can be Accessed from the following E-Mail and Web Sites:
             
              E-mail: books [at]worldbank(dot)org
             
              www(dot)worldbank(dot)org/html/extpd/Publications(dot)html
             
              5. Information on the IFC and MIGA can be Accessed at following Sites:
             
              www(dot)IFC(dot)org/ & www(dot)MIGA(dot)org
             
              6. World Bank Reports:
             
              These are comprehensive, informative, and highly useful reports. Students of international business will find them extremely useful for better understanding of the global picture as presented by the Bank. The list of the projects is given at the end of this section for student's reference. The detailed reports can be accessed from the World Bank web site www(dot)worldbank(dot)org data/data by topic.
             
              Whenever and wherever there are monetary gains to be achieved and/or given, and power for decision making under competitive situations, there is bound to be corruption/frauds in one form or the other, either directly or indirectly, to creep up in the system.
             
              These are system poison that damages/ weakens not only the structure of the organization but also hamper the beneficiaries to get the due benefits. World Bank system is vigilant to this problem and has very strict regulations to prevent propagation of such practices.
             
              In this section we shall cover such safeguards on two accounts:
             
              (a) Internal controls directed for the banking staff.
             
              (b) External controls directed for the beneficiaries.
             
              (A) Internal Controls Directed for the Bank Staff:
             
              These guidelines are also called the "Ethical Guide for the Bank Staff handling Procurement Matters in the Bank Financed Projects". The gist of these guidelines is contained in the internal memo by the Director and Head of the Operational Core Services WB (Katherine Sierra) dated 23rd April 1998.
             
              This memo cautions the staff on five accounts:
             
              1. Avoid strictly any conflict of interest or even the appearance of a conflict of interest in any matter related to the performance of the staff member's duties.
             
              2. Respect the confidentiality of information received in the course of duty and never use it for personal gains---- , information given in the course of duty should be true and fair and never designed to mislead.
             
              3. Decline acceptance directly or indirectly of any gratuity, gift, favour, entertainment, or anything of money value from anyone who has an interest in seeking business in bank related projects. Exceptions are authorized.
             
              4. Disclose to his/her line manager any personal interest which may influence or appear to influence the staff member's impartiality in any matter relevant to his / her duties.
             
              5. Disqualify him/her from outside employment or activities, including dealing with former or future employers and employment after separation, that conflict with his/her bank duties and responsibilities---. "
             
              The Bank rallies more on the self-discipline and sense of higher ethical values of its staff. These types of internal memos are circulated every year to all concerned staff of the bank as a reminder to their loyalties for the bank and for re-aliening their ethical values. The system has worked well so far as there is no report on the contrary in the public documents or otherwise to contradict it.
             
              (B) External Controls Directed for the Beneficiaries:
             
              Defining Corruption/Frauds:
             
              The World Bank expects that borrowers (including beneficiaries of Bank loans), as well as Bidders/Suppliers/Contractors under Bank-financed contracts, observe the highest standard of ethics during the procurement and execution of such contracts that are financed under various schemes of the bank.
             
              According to the 1996 Guidelines for Procurement under IBRD Loans and IDA Credits, it defines corruption and frauds as:
             
              "Corrupt practice means the offering, giving, receiving, or soliciting of anything of value to influence the action of a public official in the procurement process or in contract execution; and fraudulent practice means a misrepresentation of facts in order to influence a procurement process or the execution of a contract to the detriment of the borrower, and includes collusive practices among bidders (prior to or after bid submission) designed to establish bid prices at artificial, non-competitive levels and to deprive the borrower of the benefits of free and open competition. "
             
              The 1997 Guidelines includes in its definition and coverage the consultants as well.
             
              The punishments under both the said documents (for firms and consultants) are:
             
              Firms:
             
              World Bank will declare a firm ineligible, either indefinitely or for a stated period of time, to be awarded a Bank-financed contract if it at any time determines that the firm has engaged in corrupt or fraudulent practices in competing for, or in executing, a Bank-financed contract.
             
              Consultants:
             
              "World Bank will declare a Consultant ineligible, either indefinitely or for a stated period of time, to be awarded a Bank-financed contract if it at any time determines that the Consultant has engaged in corrupt or fraudulent practices in competing for, or in executing, a Bank-financed contract. "
             
              The punishment ranges from "Permanent disqualification" to "Time bound disqualification". After declaring a firm ineligible World Bank then publishes a list of such firms/individuals and no further business is considered with them for the duration of the punishment.
             
              The administrative process at the bank constantly monitors and gets feedback from its sources on the ethical behaviour of firms /consultants in the conduct of business under its funding. Once a fraud/ corruption case is detected the accused firm/individual is asked to explain his conduct and for this purpose the bank issues a Letter of Reprimand to the detected firm/individual. If the explanation is not enough to clear the allegations the Bank then decides on the extent of punishment to be imposed on the firm/individual. (Ref. Annex I for WB List of ineligible firms)
             
              Coverage of the defaulter:
             
              1. Firm:
             
              "Any firm which own the majority of its capital or any firms of which it owns the majority of the capital".
             
              2. Individual:
             
              "Any firm of which the individual owns the majority of the capital".
             
              Bank's Decision & Notification:
             
              Once the allegations have been fixed on an individual and/or a firm, World Bank publishes their names in a list of firms that are debarred from any further business with the bank. This list in updated periodically for the benefit of those individuals/firms that intend to do business under Bank funded projects.
             
              The intending firms/individuals must refer to this list before picking up their suppliers and/or sub-contractors. Any wrong decision may land them up in troubles at the various evaluation stages of the business.
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