ADB Procurement
Reforms
1
Agenda
i. Concept of the Reform
ii. Implementation Plan
iii. Expected Benefits
2
i. Concept of the Reform
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Drivers of ADB Procurement Reforms
1. Increased lending operations
2. Evolving needs of Developing Member Countries
3. Harmonization with Multilateral Development Banks
4. Need to improve procurement delivery systems
4
ADB Procurement Cycle
5
6
• Risk Assessment
identifies and assesses
project risks through
the procurement
process, transition-in,
execution and
transition-out
• Mitigation measures
specified
Procurement
Risk
Framework
Procurement
Planning
Project
Execution
Procurement
Principles
Risk
Identification
Risk
Management
• Risks are managed via
the procurement
arrangements (i.e.
procurement method,
contract structure,
contract terms,
performance
measures, etc.)
• Risk monitoring
• Communication Plan
Bidding and
Selection
• Contract
Management Plan
takes risks from the
revised assessment
that are to be
managed during
project execution,
and the
corresponding
mitigation measures
• Contract
Management
includes monitoring
and managing risks in
the contract
management plan
and any other
issues/risks that occur
during execution
• Risk Assessment
revised to reflect any
new or altered risks or
risk mitigations arising
as a result of bid
responses, the
proposed solution or
contract negotiations
• Identification of any
new risks that arise
during project
execution
Risk Based Procurement Approach
Old vs. New
Category Old
Approval
Procurement
Policy
Board
Procurement
& Consulting
Procedures
Staff
Instructions
President
Bidding
Documents
OSFMD
Project
Administration
Instructions
(PAI 2 & 3)
New
Approval
Board
President
DG
OSFMD
• Staff Instructions
(Procurement of
Goods, Works,
Nonconsulting &
Consulting Services)
• TA Staff Instructions
• Guidance Notes
• Standard
Procurement and
Consulting documents
Standard
Procurement and
Consulting
documents
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Old vs. New
Category Old
Approval
Procurement
Policy
Board
Procurement
& Consulting
Procedures
Staff
Instructions
President
Bidding
Documents
OSFMD
Project
Administration
Instructions
(PAI 2 & 3)
New
Approval
Board
President
DG
OSFMD
• Staff Instructions
(Procurement of
Goods, Works,
Nonconsulting &
Consulting Services)
• TA Staff Instructions
• Guidance Notes
• Standard
Procurement and
Consulting documents
Standard
Procurement and
Consulting
documents
8
New Procurement Principles
Economy
Efficiency
Fairness
Transparency
Quality
Value for money
Existing
New
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How principles work together
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Value for Money
Is the effective, efficient and economic use of resources, which requires an evaluation of relevant costs and benefits
along with an assessment of risks, non-price attributes and/or total cost of ownership as appropriate.
Efficiency
Quality
Flexibility
• Decreased transaction costs
• Increased skills
• Increased HLT usage
• Improved procurement planning
• Support and encouragement of e-
procurement systems
• Contract management support
• Prompt resolution of complaints
• Improved developing member
countries procurement process
• Improved procurement planning
• Governance
• Contracts with clear
performance criteria
• Minimal number of complaints
• Improved ADB processes
• Open competitive bidding
• Decentralization
• Accreditation APA
• Principles based decisions
• Improved procurement planning
• Delegation
• Tenders with weighted proposal criteria
Transparency
Fairness
Transparency
Risk-Based Oversight
Procurement Principles
Prior Review
Procurement audits
Post Review
(sampling)
Trust and Verify
Procurement Review
Upfront assessment
ADB procedures
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Decentralized Procurement Support
Transaction focus End to end support
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ii. Implementation Plan
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Rollout of the new framework
❖ New Investment Lending projects:
❖ Applies to all projects with concept notes approved on or after 1
July 2017;
❖ Projects under preparation:
❖ Quality assurance meeting scheduled on or after 1 October 2017;
❖ Regional Departments, in consultation with OFSMD, will review
based on request by borrowers for use of the new framework;
❖ Projects under implementation:
❖ Regional Departments, in consultation with OFSMD, will review
based on request by borrowers for use of the new framework;
❖ Only procurement transactions to be initiated after 1 October
2017 will be considered.
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iii. Expected Benefits
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Key features
❖ Use of a less-prescriptive, more principles-based procurement
policy to meet the emerging needs of ADB clients and changing
market conditions;
❖ Adoption of fitness for purpose as the operational model in
designing project procurement arrangements;
❖ Use of risk-based procurement review approaches in order to
improve operational efficiencies;
❖ Support for the procurement of high-level technologies,
particularly to help developing member countries address
climate change and meet other growth aspirations; and
❖ Use of alternative procurement arrangements to reduce
transaction costs for developing member countries and ADB’s
cofinanciers.
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Expected Benefits
1. Reduced procurement time, improved quality and
delivery systems
2. Faster implementation of ADB-financed projects
3. Greater engagement with DMCs
4. Lower transaction costs in co-financing
5. Fiduciary comfort throughout the project cycle
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For more information
https://www.adb.org/documents/adb-procurement-policy
https://www.adb.org/documents/procurement-regulations-
adb-borrowers
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