ANNUAL PROCUREMENT REVIEW

Transcription

1 ANNUAL PROCUREMENT REVIEW Prepared by The Policy Department June 2015

2 OFFICIAL USE Executive summary This report, prepared by the Department (PD), reviews public sector procurement contracts signed in, funded and/or administered by the Bank, procured by the Bank s clients and entered into the Review and Award database before the time of generating this report. A separate section (2.10) covers the procurement activities of the Nuclear Safety Department (NSD). In, a total of 172 contracts (excluding NSD contracts) were signed by the Bank s clients. The total value of these contracts amounted to billion for which EBRD s own financing totalled 901 million. In comparison with 2013, this represents a decrease in terms of the number of signed contracts (by 47 per cent) and in the total contract value (by 18 per cent). This decrease can mainly be attributed to a reduction in economic activities in the region due to the overall macroeconomic environment and the political situation concerning Ukraine and the Russian Federation. Public sector contracts awarded through open tendering represent 96 per cent of the number of contracts and 99 per cent of the total contract value. This excludes consultancy services contracts and alternative procurement procedures for which the Bank s open tender procedures do not apply. Co-financed contracts in EU member countries represented 27 per cent of the total number of co-financed contracts and 69 per cent of the total value of all co-financed contracts. Out of the 35 contracts signed in EU member countries, 28 were co-financed with EU Cohesion Funds The average contract value was 7.9 million and the average EBRD financing was 5.2 million per contract. Both figures are higher than in the previous year. The largest contract was the Construction and Installation for Vladivostok Combined Heat & Power Plant in Russia. This supply & installation contract was signed with a value of 98 million. Despite the challenging macroeconomic situation, the interest of firms to participate in EBRD financed tenders was very high. On average, 3.7 tenders were submitted when open tendering procedures under the Bank s PP&R were applied. This compares, based on PD experience, favourably with tenders under national procurement procedures in EBRD s countries of operations. Entities from the following five countries were most successful in terms of highest total contract value, regardless of procurement method: Russian Federation ( 251 million), Romania ( 197 million), Turkey ( 169 million), China ( 125million) and Germany ( 94 million), which together won a total of 836 million or 61 per cent of the total contract value. Due to the lower number of contracts, the number of tenders submitted in (640 tenders) was significantly lower compared to those submitted in 2013 (998 tenders). Out of these tenders, 76 per cent were submitted by tenderers from the EBRD countries of operation resulting in 166 contracts (97 per cent of all contracts) with a total value of 969 million (71 per cent of the total contract value). This result, underlines a trend observed over the years suggesting that the markets in the region are moving towards more maturity and competitiveness. Cross-border tendering in EBRD s countries of operations is at a very high level (41 per cent) and 36 per cent of all contracts were won by firms competing in other countries. This is substantially higher rate of cross-border tendering than the two per cent reported in EU countries, where EU Directives are followed. The number of procurement complaints received by the Bank decreased from 13 to eight. This low number may be partly explained by a reduction in the number of tenders, Another contributing factor may be the robustness of the quality assurance system applied on the contracts which are subject to the Bank s PP&R. As of 1 January 2015, based on the Bank s commitments at the time, the pipeline shows that during the forthcoming four years, the Bank s public sector clients are expected to sign about 660 contracts for an amount exceeding 7.15 billion. Section 2 of this report is based on a new and automatised format as explained in Section 1. OFFICIAL USE

3 OFFICIAL USE Abbreviations CRA EIB FIC HOP IFI IMPPM LTT MDB MEI NSD OCE OCCO OGC PD PCC PP&R TC TC Team WB Review and Awards System European Investment Bank International Federation of Consulting Engineers Heads of International Financial Institutions International Master in Public Management Legal Transition Team Multilateral Development Bank Municipal and Environmental Infrastructure Nuclear Safety Department Office of the Chief Economist Office of the Chief Compliance Officer Office of the General Counsel Department Complaints Committee Policies and Rules Technical Cooperation Technical Cooperation Team World Bank OFFICIAL USE

4 OFFICIAL USE CONTENTS PAGE 1. Introduction Analysis of public sector procurement data Volume and nature of contracts Analysis by sector Analysis by country of operation Analysis by type of contract Listing of contracts by country of operation Analysis of contract award by country of origin of the tenderers award process Level of participation Public sector procurement under sub-sovereign projects Alternative Nuclear Safety Department Compliance and integrity Complaints Prohibited practices Independent procurement reviews Annexes: 1) Listing of s by of Operations (Value in ) 1a) Listing of signed s by of Operation ( Value) Level of Bank Financing 1b) Listing of signed s by of Operation ( Value) Bank administered grants 2) Awards by of Origin of the Tenderers (Value in ) 3) Awards by of Origin of the Tenderers (Number) 4) Awards by of Origin of the Tenderers (Value in by ) 5) Awards by of Origin of the Tenderers (Value in by ) 6) s Awarded by of Origin of the Tenderers 7) Distribution of Tenders Submitted by of Operations and by Business Section 8) Distribution of Tenders Submitted by of Origin of the Tenderers and by of Operations 9) Distribution of Tenders Submitted by of Origin of the Tenderers and by Business Sector 10) s for Nuclear Safety Managed Funds 11) s entered after the freeze date OFFICIAL USE

5 OFFICIAL USE Annual Review 1. Introduction This report, prepared by the Department (PD), reviews public sector procurement contracts signed in, funded and/or administered by the Bank and procured by the Bank s clients and entered in the CRA before generating this report. A separate section (2.11) covers the procurement activities of the Nuclear Safety Department (NSD). This report covers goods, works and consultancy contracts financed under public sector financing. It does not cover consultancy contracts for the Bank s own needs, those financed through Technical Cooperation (TC) funds, those awarded by the Office of the General Counsel (OGC), or contracts for goods and services for the Bank s own needs. Information on these contracts are provided in the reports on Engagement of Consultants by the EBRD issued by the Technical Cooperation Team (formerly the Consultancy Unit), and in the Annual Corporate Review, issued by the Corporate Unit (CPU). It should be noted that consultancy contracts in this report are also reported in the Engagement of Consultants by the EBRD report. Change in format of the Annual Review In when the Department (PD) presented the Annual Review to the Audit Committee the PD asked if the Audit Committee would be positive to a change of the reporting format in order for PD to automate parts of the report and provide data in a format that would be easier to analyse. The Audit Committee concurred with this request as long as the report would reveal the same type of data. As part of this exercise PD conducted a thorough audit of the data in the Award and Review system during the last five years. This audit has revealed that a larger number of contracts than expected were entered into the system after the data was frozen every year. In order to produce the Annual Review PD used date frozen in the system at the end of January to generate the review that compares frozen data over the last five years. Given that the number of contracts entered into the system after the data was frozen is larger than expected the new reporting format will no longer use the frozen data as the basis for comparison over the years. This will however mean that the historical information (year to year data) will in each annual report show a larger number of contracts than reported the year before as historical contracts will continue to be entered into the system. The main reasons why contracts signed in one particular year are entered into the system after the report is produced is that contract are often only submitted to the Bank when the first disbursement for the respective contract is requested or as part of the reporting requirement to the Bank. Especially the acceptance of alternative procurement procedures has highlighted the need for a different format for reporting. A typical example is the contracts co-financed with the Cohesion Funds which are procured under national procurement procedures monitored by the EU and often submitted to the Bank in one batch, often after the contracts are even implemented. An analysis of the contracts that have been entered into the system after the data was frozen in the years 2010 to 2013 can be found in Annex 11. The total number of such contracts for the period of is 267, with a total value of 1.5 billion. The majority of these contracts (63% by number and 67% by value) are mainly procured under alternative procedures on the projects co-financed with the Cohesion Funds in Bulgaria, Poland and Romania (MEI projects). The majority of the remaining contracts (19% by number and 27% by value) were placed in the transport sector following the Bank s open tendering procedures in Albania (during ), Kazakhstan (in 2011) and Ukraine (mainly in 2013). In the case of Albania the project was subject to post-review of procurement activities which means that contract were only sent to the Bank at a later stage in the project. The projects in Kazakhstan were financed in the form of bonds, hence the clients did not have an incentive to send copies of the signed contracts to the Bank immediately after signing (moreover, the contracts were signed in late November of the previous year). In Ukraine the late provision of the contracts to the Bank was first caused by long delays with implementing the conditions precedent for disbursement by the Client and later in 2013 by the difficult situation in the country. The rest of the list consists largely of the contracts signed late November- OFFICIAL USE 1

6 OFFICIAL USE December and therefore received by the Bank after the annual data was frozen. Annexes 1 to 11 of the Annual Review contain the statistical data for these public sector procurement contracts during. The analysis of this data, as well as the main procurement activities of the PD (section 4), can be found in the main body of this report (with the exception of Annex 11). Sections 1-3 of this report (not section 4) as well as the annexes will be published on the Bank s website. OFFICIAL USE 2

7 2. Analysis of Public Sector procurement data 2.1 Volume and nature of contracts Overview s signed by the Bank s clients (excluding NSD) in 172 The total value of these contracts amounted to billion EBRD Financing Portion 901 million Total number of signed contracts compared with last year 47% decrease Total value of signed contracts compared with last year 18% decrease Chart 2.1.1a illustrates the number of public sector contracts signed between 2010 and 350 Number of s Years Chart 2.1.1b demonstrates the overall contract value as well as the portion financed by the EBRD between 2010 and. Over the past five years, a total of 1208 contracts have been signed with a total value of billion of which the EBRD financed billion. 2,400 Value ( million ) 2,000 1,600 1, , , , Years EBRD Portion Co-Financed Portion OFFICIAL USE 3

8 2.1.2 Co-Financing In, the total contract value awarded was billionof which the EBRD financed 901 million The balance of 487 million was provided by other sources, such as other financial institutions (IFIs, EU Agencies, bilateral donors etc.) or by the borrowers themselves. In comparison with 2013 a decrease of the total value provided by other sources can be noted. Total value of signed contracts financed by the Bank: 901 million Total value financed by other sources: 487 million Total value financed by other sources in comparison with ( 2013 ) -22% Number of contracts with co-financing ( ) 129 Number of contracts with co-financing ( 2013 ) 198 Percentage of co-financed contracts out of total number of contracts ( ) 76% Percentage of co-financed contracts out of total number of contracts ( 2013 ) 61% Percentage difference of co-financed contracts ( ) vs co-financed contracts ( 2013 ) 15% increase Value of contracts with co-financing ( ) 466 million Value of contracts with co-financing ( 2013 ) 625 million Percentage difference of co-financed contract value ( ) vs co-financed contract value ( 2013 ) 3% decrease The value of the contracts in which co-financing was present ( ) 466 million EBRD portion for ( ) 289 million Chart 2.1.2a and Chart 2.1.2b present the distribution of the 129 co-financed contracts, in EU member countries and non-eu member countries by number and by value. Co-financed contracts in EU member countries represented 27% of the total number of co-financed contracts and 83% of the total value of all co-financed contracts. The sector with the highest co-financed contractual activity in terms of the number of contracts was the MEI sector with 106 contracts, i.e. 76% per cent of all co-financed contracts, representing 253 million. In the MEI sector,94 out of 129 co-financed contracts were signed in non-eu member countries. Out of the 35 contracts signed in EU countries 28 are co-financed with EU cohesion funds. The highest overall co-financed contract value was in the MEI sector, ( 253 million representing 76% per cent of the total co-financed contract value ). Chart 2.1.2a Number of s MEI Power and Energy Transport Business Sector EU Non-EU OFFICIAL USE 4

9 Chart 2.1.2b Value of contracts in Million MEI Power and Energy Transport Business Sector 28 EU Non-EU Average Values of all s 2013 Percentage Change Average contract value ( million) % increase Average EBRD Financing per contract ( million) % increase Large Value s 2013 Number of contracts with a value above 10 million Number of contracts with a value above 20 million Largest contract by Value: of Construction and Installation Vladivostok Combined Heat & Power Plant Total Value EBRD Funding Portion 98million 4million OFFICIAL USE 5

10 2.2 Analysis by sector Cumulative data overview Charts a and b illustrate the overall contract value and the number of public sector contracts signed between 2010 and by business sector. With a total number of 224 contracts worth 718 million the MEI sector had the highest contractual activity in terms of number. The Transport sector recorded the highest activity in terms of value with billion ) over the past five years. Annual number and value of public sector contract awards by business sector ( ) Chart 2.2.1a Sectors Information & Communication Technologies Manufacturing & Municipal & Env Inf Natural Resources Power and Energy Transport Number of s Chart 2.2.1b 1, Value ( millions ) Years Sectors Information & Communication Technologies Manufacturing & Municipal & Env Inf Natural Resources Power and Energy Transport Years OFFICIAL USE 6

11 2.3 Analysis by country of operation analysis Number of countries of operation with public sector contracting activities: 23 The Countries with the highest number of contracts signed: Rank of Operation Number of contracts % of the total contract number in 1 ROMANIA 30 18% % % 4 UKRAINE 14 8% % 5 MOLDOVA 12 7% Overall - Total % The Countries with the highest cumulative value of contracts: Rank of Operation Value of contracts ( ) % of the total contract value in 1 UKRAINE 306 million 22% million 15% 3 ROMANIA 193 million 14% 4 KAZAKHSTAN 137 million 10% 5 HUNGARY 91 million 7% Overall - Total 938 million 69% OFFICIAL USE 7

12 2.3.2 Cumulative data overview Table shows the countries with the highest total value of contracts over the past five years in descending order. of Operations Awarded ( ) ROMANIA UKRAINE KAZAKHSTAN BOSNIA AND HERZEGOVINA Overall - Total billion billion 792 million 690 million 655 million billion The contracts in these five countries totalled billion which represented 59% per cent of the overall total contract value of the past five years ( billion). In the period 2010 to no public sector contracts were reported in: of Operations BELARUS CYPRUS EGYPT ESTONIA GREECE JORDAN KOSOVO LITHUANIA MONGOLIA SLOVAK TUNISIA TURKMENISTAN UZBEKISTAN OFFICIAL USE 8

13 Chart Public sector contract awards in the countries of operation by value in ( ) Chart illustrates the distribution of contracts signed between 2010 and in the countries of operation by contract value. ALBANIA ARMENIA Awarded EUR Value of s ( millions) Value of s ( millions) AZERBAIJAN BOSNIA AND HERZEGOVINA Value of s ( millions) Value of s ( millions) OFFICIAL USE 9

14 BULGARIA CROATIA Awarded EUR Value of s ( millions) Value of s ( millions) FYR MACEDONIA GEORGIA Value of s ( millions) Value of s ( millions) OFFICIAL USE 10

15 HUNGARY KAZAKHSTAN Awarded EUR Value of s ( millions) Value of s ( millions) LATVIA Value of s ( millions) Value of s ( millions) OFFICIAL USE 11

16 MOLDOVA MONTENEGRO Awarded EUR Value of s ( millions) Value of s ( millions) MOROCCO POLAND Value of s ( millions) Value of s ( millions) OFFICIAL USE 12

17 ROMANIA Awarded EUR Value of s ( millions) Value of s ( millions) SERBIA SLOVENIA Value of s ( millions) Value of s ( millions) OFFICIAL USE 13

18 TURKEY Awarded EUR Value of s ( millions) Value of s ( millions) UKRAINE Value of s ( millions) OFFICIAL USE 14

19 2.4 Analysis by type of contract Table gives the distribution of contracts by size and type in. The 93 works contracts represented the largest total value by contract type (64% per cent of the overall contract value) as well as the largest proportion in value financed by EBRD and EBRD administered grants 590 million out of 868 million. Table Distribution of s by Size and ( ) Size ( M) Supply & Installation Consultant Total 0~ ~ > Total Total Value ( ) 868,243, ,756, ,701,922 25,935,100 1,366,637,019 Average Value ( ) 9,335,950 19,486,480 3,202,682 1,127,613 7,945,564 Fund Portion* ( ) 589,505, ,921, ,956,303 17,342, ,726,450 *Loan and EBRD administered Grants 2.5 Listing of contracts by country of operation Annex 1 provides a breakdown by country of operation of all contracts signed during (excluding NSD funded contracts) showing the winning tenderer and participating tenderers. Annex 1a provides a list of contracts and the level of Bank financing (as per percentage shown). Annex 1b provides a list of contracts financed by Bank administered grants (percentage shows the grant funded portion). OFFICIAL USE 15

20 2.6 Analysis of contract award by country of origin of the tenderers Annex 2 provides a distribution by country of origin of the successful tenderers and the value of contracts signed for the period Tenderers from ROMANIA have been the most successful over the last five years as they have won a total of billion or 14% per cent of the overall contract value. During the past five years the countries with the highest total amount of contract value were, in descending order: Rank Tenderer Total Value Awarded ( ) 1 ROMANIA billion 2 TURKEY 781 million million 4 GERMANY 486 million 5 POLAND 444 million The contracts won by firms from these five countries amount to billion which represented 43% per cent of the overall total contract value for the past five years. Annex 3 provides the same breakdown but on the basis of the total number of public sector contracts won and signed in the period according to the country of origin of the firms. Out of the 1207 contracts administered by EBRD in the period the highest numbers of contracts were awarded to firms from: Rank Tenderer Number of s 1 ROMANIA BOSNIA AND HERZEGOVINA 56 5 GERMANY 50 The number of contracts won by firms from these five countries is 592 which represented 49 per cent of the overall total contract count for the past five years. Annex 4 provides the total value of contracts signed in, distributed by type and by country of origin of the winning firms. This annex illustrates that in the following country or countries were the most successful overall in terms of winning Bank administered contracts (14% per cent of the total value of contracts). Tenderer ROMANIA OFFICIAL USE 16

21 The following table illustrates the most successful firms by their country for each type in Consultant Tenderer Value for ( millions) Total Value for Year ( millions) Value as % of Overall Value FRANCE % TURKEY % GERMANY % Supply & Installation % OFFICIAL USE 17

22 2.7 award process Public Postings Table summarises data concerning the public procurement opportunities posted on the Bank s Internet site. It should be noted that the procurement notices were also sent to the United Nations Development Business for posting in the MDB business opportunity section as well as to the EU for publishing in the Official Journal of the European Union. Table Public postings on web site ( ) Year General Notices Invitations for Expressions of Interest Invitations to Prequalify Invitations for Tenders Total In, the Bank published a total of 264 procurement notices on its internet site. Out of 103 General Notices published in, 54, were for new projects Distribution of contracts by award method Table illustrates that the majority (114) of the public sector contracts were awarded through open tender. This represented a 85 per cent of the total number of contracts awarded and 85 per cent of the total contract value. As open tendering only applies to goods, works and supply and installation contracts procured in accordance with the Bank s PP&R (which in 2013 was a total of 256 contracts), the public sector contracts awarded through open tendering represent 98 per cent of the number of these contracts and 99 per cent of the total contract value. This excludes consultancy services contracts and alternative procurement procedures. Size ( M) Shopping Direct Selection Competitive Alternative ** Total 0~ ~ > Total Total Value ( ) 1,158,266, ,784 2,135,148 22,694, ,141,426 1,366,637,019 Average Value ( ) 10,160, , ,030 1,621,015 5,357,101 7,945,564 Fund Portion ( ) * 863,038, ,784 2,135,148 14,850,672 19,309, ,726,450 *Loan and EBRD administered Grants ** Please refer to the Policies and Rules edition October, for explanation of different tender methods. OFFICIAL USE 18

23 2.8 Level of Participation Overview Table provides data on the level of participation in public sector tenders by country of origin of the tenderers for contracts signed in A total of 640 tenders from 54 countries were received during, which is a decrease (-36 per cent) compared with the 998 tenders received in On average, 3.7 tenders were submitted when open tendering procedures were applied (compared with and average of 3 tenders in 2013). Firms from the following five countries were most successful in terms of highest total contract value, which together won a total of 836 million or 61 per cent of the total contract value, regardless of procurement method Tenderer ROMANIA TURKEY CHINA GERMANY Awarded Value 251 million 197 million 169 million 125 million 94 million The 5 most successful tendering countries in terms of number of awarded contracts were: Rank Tenderer Number of s 1 ROMANIA FRANCE 7 Firms from these 5 countries won a total of 97 contracts (56 per cent of the total number of contracts) worth 485 million, which represented 35 per cent of the total contract value. OFFICIAL USE 19

24 Table Distribution of tenderers by country of origin ( ) The column Rate of Success seen in Table provides an indication of the ratio of the award of contracts and the number of tenders submitted by entities from each country. Tenderer Signed % of Total Value Won Number of s Won % of Total s Won Number of Unsuccessful Tenders Total Number of Tenders % Rate of Success % of Total Tenders Submitted ALBANIA 1,539, % % % 0.62% ARMENIA 254, % % % 1.25% AUSTRIA 26,798, % % % 3.12% AZERBAIJAN 85,878, % % % 1.41% BELGIUM % % % 0.62% BOSNIA AND HERZEGOVINA 32,217, % % % 1.41% BULGARIA 27,960, % % % 2.03% CANADA 60, % % % 0.78% CHINA 125,023, % % % 3.28% CROATIA 64,229, % % % 2.50% CZECH 10,730, % % % 0.62% DENMARK % % % 0.31% FINLAND % % % 0.47% FRANCE 14,630, % % % 2.97% FYR MACEDONIA 7,491, % % % 0.47% GEORGIA 11,020, % % % 0.31% GERMANY 93,783, % % % 1.88% GREECE % % % 0.94% HUNGARY % % % 0.31% INDIA 13,035, % % % 0.94% IRAN % % % 0.31% IRELAND % % % 0.31% ISRAEL 53,929, % % % 0.31% ITALY 38,234, % % % 3.59% KAZAKHSTAN 2,156, % % % 2.34% KOREA 62, % % % 1.41% KOREA, DEMOCRATIC PEOPLE'S % % % 0.16% KOSOVO % % % 0.31% 5,112, % % % 7.66% LATVIA % % % 0.16% LITHUANIA 12,778, % % % 0.47% MOLDOVA 300, % % % 1.25% MONTENEGRO 438, % % % 0.16% NETHERLANDS % % % 0.16% NORWAY % % % 0.16% OFFICIAL USE 20

25 Table Distribution of tenderers by country of origin ( ) The column Rate of Success seen in Table provides an indication of the ratio of the award of contracts and the number of tenders submitted by entities from each country. Tenderer Signed % of Total Value Won Number of s Won % of Total s Won Number of Unsuccessful Tenders Total Number of Tenders % Rate of Success % of Total Tenders Submitted POLAND 13,078, % % % 0.47% PORTUGAL % % % 0.62% ROMANIA 196,839, % % % 5.94% 251,100, % % % 10.78% SAUDI ARABIA % % % 0.16% SERBIA 21,433, % % % 1.25% SLOVAK % % % 0.16% SLOVENIA 299, % % % 0.78% SPAIN 27,413, % % % 2.50% SWEDEN % % % 0.31% SWITZERLAND 1,807, % % % 1.41% 17,241, % % % 23.12% TURKEY 169,472, % % % 3.12% UKRAINE 39,813, % % % 2.03% UNITED ARAB EMIRATES % % % 0.31% UNITED KINGDOM 471, % % % 1.88% UNITED STATES % % % 0.16% Total 1,366,637, % % % and sector tendering analysis Annex 8 presents the distribution of tenders submitted by country of origin of the tenderers and by country of operations. Annex 9 presents the distribution of submitted tenders by country of origin of the tenderers and by business sector. OFFICIAL USE 21

26 2.8.3 Analysis by business sector Annex 7 presents the level of interest generated by business sector in the respective countries of operation. The following analysis is based on open tendered contracts only: Participation of firms from countries of operations Chart 2.8.3a shows that out of the overall 834 tenders that were submitted, 76 per cent were submitted by tenderers from countries of operations. From Chart 2.8.3b it can be seen that out of the 172 contracts awarded, 64 per cent were won by firms from countries of operations tendering in their own country and 17 per cent were won by firms from countries of operations tendering in other countries of operations. Chart 2.8.3a: All submitted Tenderers Tenderers from Countries of Operations tendering in their own country Tenderers from Countries of Operations tendering in other Countries of Operations Tenderers not from Countries of Operations 17% 24% 59% Chart 2.8.3b: All successful Tenderers (Number of s) Tenderers from Countries of Operations tendering in their own country Tenderers from Countries of Operations tendering in other Countries of Operations Tenderers not from Countries of Operations 17% 19% 64% OFFICIAL USE 22

27 2.8.4 Success of entities from countries of operations Table represents the success of firms from countries of operations s won by entities from EBRD s countries of operations s won by entities from EBRD s countries of operations in their own country s won by the entities from EBRD s countries of operations in a country which is not their country of origin s won by the entities from EBRD s countries of operations in their own countries only (list of countries below) Number of s Value of s % of the total Number of s % of the total Value million 97% 71% million 77% 36% million 20% 35% 38 62million 22% 5% In, 9 countries from the EBRD Countries of Operations won contracts only in their own country. These were: Tenderer ALBANIA ARMENIA FYR MACEDONIA GEORGIA KAZAKHSTAN MOLDOVA MONTENEGRO SERBIA OFFICIAL USE 23

28 2.9 Public sector procurement under sub-sovereign projects Number of s under sub-sovereign projects Value of s under sub-sovereign projects ( million) % of total s Compared to the previous year 82 48% - 45% % - 24% 2.10 Alternative Alternative is the categorisation given to those contracts which are co-financed with other International Financial Institutions and for which the Board has granted an exception under paragraph 2.4 of the PP&R from the use of the Bank s procurement procedures. In such cases, these contracts are procured under rules and procedures applicable to the co-financing institution as well as subject to acceptable alternative monitoring procedures, as set out in the request for exception approved by the Board. Number of s 34 Total Value 182,141,426 EBRD funded portion 19,309,301 Average EBRD financing 10.6% Largest 17,054,445 s won by firms from the Project 31 out of 34 OFFICIAL USE 24

29 2.11 Nuclear Safety Department The EBRD manages 6 nuclear safety Funds with over 4 billion in pledged contributions. Each Fund is governed by specific provisions as set out in the Rules of the Fund approved by the respective Assembly of Contributors and by the EBRD Board of Directors. The Funds are managed by the Nuclear Safety Department (NSD) on behalf of the contributing countries. under the Funds must follow the EBRD s PP&R for public sector projects with the limitation that eligibility is restricted to entities from member countries of the respective Funds, the EU member states and the EBRD s countries of operations. Number of s managed by NSD Value of contracts managed by NSD ( million) Compared to the previous year 68-1% % Table provides the distribution of the NSD administered contracts by size and type. Size ( M) Supply & Installation Consultant Total 0~ ~ > Total Total Value ( ) 66,552,069 24,505,523 7,488,704 6,924, ,470,401 Value as % of Total Value 63% 23% 7% 7% 100% Largest awarded: Average Value ( ) 6,050,188 2,722, , ,464 1,551,035 /Grant Name Kozloduy SF - Grant No Implementation of the Decomissioning Programme by State Enterprise Radioactive Waste Awarded Value 35,000,000 OFFICIAL USE 25

30 OFFICIAL USE 3. Compliance and integrity 3.1 Complaints PD handled eight procurement complaints and three concerns for Bank financed or administered contracts during the course of, as compared to the 13 procurement complaints and six concerns in For reference, the following number of contracts was awarded under the Bank s PP&R, under which participants in the respective procurement processes are eligible to submit procurement complaints and concerns to the respective clients and the Bank. There were 172 contracts signed under public sector projects and 68 under the nuclear safety funds, 1,357 consultancy contracts, funded from Bank administered TC funds and from the Bank s own budget. Furthermore, 708 consultancy contracts were signed by OGC for retaining outside legal counsel. 2 Table presents a comparison of figures for complaints/concerns reviewed between 2010 and, by contract type and procurement method. Table Number of complaints/concerns by contract type and procurement method Supply and Installation Consultancy (Loan or NSD Grant Funded) Consultancy (TC and Bank's own funds, administered by TCT) Consultancy (outside legal counsel retained by OGC) Total Summary of all complaints and concerns The complaints/concerns raised by unsuccessful entities in varied in nature. The following issues were raised: Allegation that a shortlisted consultant was not eligible as per the requirements of the consultant selection process. Allegation that the Client had failed to follow the correct procedures concerning the opening of financial proposals in a consultant selection process. 1 A distinction is made between those issues raised by dissatisfied parties that clients can resolve themselves and complaints that are formally addressed to and require the action of the Bank. A concern is any minor issue that is brought to the attention of the EBRD by a tenderer regarding the procurement process or contract award. The concern is referred to the contracting authority, which is expected to address and resolve the issue with the relevant party under PD s supervision. If the two parties cannot come to an understanding or an agreement, the concern may be elevated to the status of a complaint. At that point, the EBRD freezes the procurement process and an investigation is undertaken. 2 The number of consultancy contracts administered by the Technical Cooperation Team (including contracts related to the Small Business Support Team (SBS) and OGC) has been included in this section as the Bank s PP&R and, consequently, the Bank s procurement complaints/concerns review procedures are also applicable for these contracts. OFFICIAL USE 26

31 OFFICIAL USE Challenging the Client s decision not to award the contract to the lowest priced tender. Challenging the Client s decision not to shortlist the Complainant in a consultant selection process. Challenging the Client s evaluation of consultancy proposals. Challenging the qualification of the lowest priced tenderer. Challenging the Client s decision to disqualify a tenderer on technical grounds. Allegation that the winning tenderer had not submitted a valid tender security. In terms of the duration of the review of complaints and concerns it is evident that whilst the review of seven of the cases could be finalised within a period of less than four months, two complaints/concerns could only be closed up to seven months after receipt by the Bank. The complaints/concerns closed in were related to MEI (three), Nuclear Safety, Transport and Power & Energy projects (two each). Allegations of improper tender evaluation were the principal sources of complaints. The following section provides a summary of the six complaints and three concerns that were closed in. The information provided includes the nature, the business sector and the outcome of the complaint process for each of these complaints and concerns. Whilst four of the six complaints were not upheld by PCC, one complaint was upheld (no. 1: Kyrgyz Republic: Bishkek Solid Waste Project) and one complaint was withdrawn (no. 9: Serbia: Belgrade Highway and Bypass Project). All three concerns were considered to have become redundant as no further correspondence was received after the Client s explanations concerning the respective allegations. Complaints and concerns by nature and by business sector (complaints and concerns closed during, presented in chronological order as received by the Bank) 1. Project: Kyrgyz Republic: Bishkek Solid Waste of Originator: Czech Republic Complaint / Concern: Complaint Business Sector: MEI Amount: 600,000 Timeline: < 7 months Nature of Complaint/Concern: The complaint, which concerns a consultant selection process, contained the following allegations: 1) One of the consulting firms, which participated as a consortium leader in the selection process, should not have been shortlisted due to the following reasons: a) This consulting firm is not eligible to operate business in the area of consultancy services. Its trade licenses were not issued for consultancy services but for: (i) wholesale and retail and (ii) intermediary services only; b) This consulting firm has ceased even this business temporarily from 1 July 2009 until 31 December and is not eligible to run any business at present; c) This consulting firm has no in house individual experts who are citizens or permanent residents of the Czech Republic; d) This consulting firm has not duly fulfilled its obligation to submit annual financial statements to the commercial register of the Czech Republic since the year 2001; e) An associated firm of this consulting firm is in bankruptcy proceedings in which it has sold its business as of 31 October ) The results of the evaluation of this consulting firm s proposal (according to the Evaluation Criteria and ology - RFP 4) seem to be exceptional. Outcome of the Complaint/Concern Process: PCC concluded, based on a determination by the Ministry of Finance (Czech Republic), that the consultant in question was not eligible to be awarded the contract. Hence the complaint was upheld. OFFICIAL USE 27

32 OFFICIAL USE 2. Project: Bulgaria: Kozloduy International Decommissioning Support Fund of Originator: Bulgaria Complaint / Concern: Complaint Business Sector: Nuclear Safety Amount: 100,000 Timeline: < 4 months Nature of Complaint/Concern: This procurement complaint relates to a consultancy assignment. The complainant alleged that the client had failed to apply two specific procedures contained in the `Instructions to Consultants (ITC), namely: 1. As explicitly required by ITC 5.15, when inviting the consulting firms to attend the public opening of their financial proposals the Client did not inform those consultants of their technical scores; and 2. As explicitly required by ITC 5.16, at the public opening of the financial proposals the Client also failed to read out/announce the technical scores of the consultants. The complainant requested the Bank to examine the issue and to consider a thorough review of the technical score that its technical proposal received and/or cancellation of the procurement procedure. Outcome of the Complaint/Concern Process: On the basis that it was established that the procurement process had been carried out materially in accordance with the agreed procedures, PCC decided not to uphold the complaint. 3. Project: Bulgaria: Kozloduy International Decommissioning Support Fund of Originator: Poland Complaint / Concern: Complaint Business Sector: Nuclear Safety Amount: 3,000,000 Timeline: < 5 months Nature of Complaint/Concern: This procurement complaint related to a goods contract. The complainant alleged that despite submitting the lowest priced, fully responsive tender, it had not been awarded the contract in question and furthermore had not been provided with a satisfactory explanation/debriefing from the Bank's client. The complainant requested the Bank to investigate and provide a reasonable explanation for this course of events. Outcome of the Complaint/Concern Process: As the Bank had established that the Complainant s tender included material deviations from the tender requirements, PCC decided not to uphold the complaint. 4. Project: Armenia: Yerevan Metro Phase III - Pre-FS of Originator: Iran Complaint / Concern: Complaint Business Sector: MEI Amount: 200,000 Timeline: < 4 months Nature of Complaint/Concern: 28 OFFICIAL USE

33 OFFICIAL USE The complaint relates to the outcome of a consultancy selection procedure. The Complainant expressed its dissatisfaction with the outcome of the selection process. The Complainant believed that the information they had provided should have resulted in them having being short listed for the assignment. Outcome of the Complaint/Concern Process: It was established that the evaluation methodology was sensible and adequate to the assignment and that the evaluation of the expressions of interest had been carried out by the Bank's staff consistently with the methodology. Consequently, PCC decided not to uphold the complaint. 5. Project: Moldova: Moldova Road Rehabilitation III of Originator: France Complaint / Concern: Concern Business Sector: Transport Amount: 300,000 Timeline: < 4 months Nature of Complaint/Concern: The concerned company copied the Bank on its request to the Client in respect of the evaluation of the proposals for a consultancy assignment. The originator of the concern (a) requested the Client to provide access to the details of the financial proposals of their competitors, (b) questioned the evaluation of the competitors' personnel, and (c) requested the rejection of the proposal submitted by one of the companies that submitted proposals. Outcome of the Complaint/Concern Process: The Client addressed the points in a letter to the originator of the concern. As the Bank did not receive any further communication from the originator of the concern for a period of more than three months, the case was closed. 6. Project: Bosnia and Herzegovina: EPBiH - Hydro Power Plants Project of Originator: Switzerland Complaint / Concern: Concern Business Sector: Power & Energy Amount: 330,000 Timeline: < 4 months Nature of Complaint/Concern: The Bank was copied on a query sent to the client by unsuccessful consultants in respect of the evaluation of their proposal as well as the overall outcome of the evaluation. The consultants were concerned about the Client's reluctance to reveal details of the evaluation of their proposal and argued that essential information must be released in accordance with the provisions of the Request for Proposals documents. The consultants also complained that they were neither invited to particpate in the public opening of the financial proposals, nor did they receive the respective minutes. The consultants challenged the apparently low technical score given to their proposal by the evaluation committee. Outcome of the Complaint/Concern Process: The Client addressed the points in a letter to the originator of the concern. As the Bank did not receive any further communication from the originator of the concern for a period of more than three months, the case was closed. OFFICIAL USE 29

34 OFFICIAL USE 7. Project: Montenegro: Lastva - Pljevlja Transmission Line of Originator: Sweden Complaint / Concern: Concern Business Sector: Power & Energy Amount: 46,100,000 Timeline: < 4 months Nature of Complaint/Concern: The Client and the Bank received a letter from a tenderer. The complainant raised concerns in respect of the qualification of the lowest priced tenderer who, according to the complainant, did not meet the financial strength requirement. The complainant also noted that the specification regarding the painting requirements for the steel towers was not completely clear. Outcome of the Complaint/Concern Process: The Client addressed the points in a letter to the originator of the concern. As the Bank did not receive any further communication from the originator of the concern for a period of more than three months, the case was closed. 8. Project: Kazakhstan: Aktau Waste Management Project of Originator: Kazakhstan Complaint / Concern: Complaint Business Sector: MEI Amount: 1,245,000 Timeline: < 4 months Nature of Complaint/Concern: This procurement complaint related to a works contract. The Complainant alleged that it had been notified by the Bank's Client that its tender had not been successful despite the fact that it was the sole participant in the tendering exercise and had submitted a technically responsive tender. Outcome of the Complaint/Concern Process: As the Bank had established that the Complainant s tender included material deviations from the tender requirements, PCC decided not to uphold the complaint. 9. Project: Serbia: Belgrade Highway and Bypass Project of Originator: Serbia Complaint / Concern: Complaint Business Sector: Transport Amount: 6,000,000 Timeline: < 2 months Nature of Complaint/Concern: This procurement complaint related to a works contract. The complainant alleged that, based on the information announced at the public tender opening and in the subsequent notification of award, the contract had been awarded to a tenderer which submitted a tender security that failed to comply with the requirements of the tender documents. Outcome of the Complaint/Concern Process: OFFICIAL USE 30

35 OFFICIAL USE Following receipt of the client's explanation as to the basis upon which the tender security in question was deemed to be fully compliant with the relevant provisions of the tender documents, the Complainant formally withdrew its complaint. 3.2 Prohibited practices In 2010, the Bank signed the Agreement for Mutual Enforcement of Debarment Decisions. The Agreement was signed by the African Development Bank Group, the Asian Development Bank, the InterAmerican Development Bank, the World Bank Group and the European Bank for Reconstruction and Development. The list of entities and individuals which are currently ineligible to become an EBRD Counterparty can be found on the Bank s website at: Entities (and their affiliates) or individuals may be ineligible to become a Bank Counterparty if EBRD determines, in accordance with EBRD s Enforcement Policy and Procedures, that (a) they have engaged in any Prohibited Practice in the context of a Bank project, or (b) they are subject to a Third Party Finding or (c) they are subject to a Debarment Decision by a Mutual Enforcement Institution. In, two enforcement proceedings were instituted by the EBRD which resulted in the debarment of an individual and one firm. Pursuant to the Agreement for the Mutual Enforcement of Debarment Decisions crossdebarment provisions of the EPP, the Bank cross-debarred 54 entities and 33 individuals - based on debarment notices received from the World Bank Group (25 notices), the Asian Development Bank (1 notice), the Inter- American Development Bank (3 notices) and the African Development Bank (1 notice). Very few of these debarred entities have had previous relationships with the EBRD. A list of all EBRD debarred entities and persons is published on the EBRD s web site. As at 31 December, one firm and one individual is ineligible to be awarded EBRD funded contracts as a result of EBRD initiated debarment action. In addition, 368 entities and 96 individuals are ineligible as a result of mutual enforcement of debarment decisions. 3.3 Independent procurement reviews Independent Reviews (IPRs) are carried out with the view to strengthen the ability of the Bank to fulfil its fiduciary obligation with regard to the oversight of procurement and contract implementation, to complement the prior review and post review procedures applied, and to inform the Bank's management of the quality of the Bank s fiduciary work on procurement. The projects for IPRs are selected based on: the relevance of the project or the issue reviewed to the Bank's likely future operations; lessons-learned potential; size of the Bank's investment commitment/exposure; balance among countries of operations; relative priority of operation within PD's overall work programme as well as by reference to PD s procurement risk dashboard. The risk dashboard includes, but are not limited to, issues such as: potential preferential treatment of suppliers, project risk identified due to apparent lack of capacity of the consultant, application of new and complex contracting strategy, identified risk of collusion due to the parties involved in the project, PD reporting integrity concerns to OCCO, apparent attempts to circumvent the Bank s PP&R, mismanagement during contract implementation etc. In, PD commissioned and finalised the following two IPRs: 1) Analysis of Single Stage versus Two Stage Tendering 2) Southern Tajikistan Water Rehabilitation Project (STWRP) (OP 37656) The outcome of the two IPRs above will be reported to the Audit Committee in In, PD reported to the Audit Committee the outcome of the following six IPRs, which had been carried out in the period of : 1) Brasov Urban Transport Project (OP 36843) The IPR was carried out on one project, which was the subject of two loans, namely the Brasov Urban Transport Project City Loan (Rehabilitation of City Streets) and Brasov Urban Transport City Loan Extension. The Loans were 15 million and 7.3 million respectively for a comprehensive street rehabilitation programme OFFICIAL USE 31