Project

Procurement
Guidelines
 PROJECT PROCUREMENT GUIDELINES

These Procurement Guidelines were adopted by the Executive Board of IFAD at its 100th
Session in September 2010.

Table of contents
Definitions 3

I. Introduction
A.Background 3
B.Purpose 4
C.Contents 5
D.Applicability 5

II. Procurement Principles

A.Ethics 5
B.Accountability 6
C.Competition 6
D.Fairness 7
E.Transparency 8
F.Efficiency,Effectiveness,Economy 8
G.Valueformoney 9

III. Procurement Arrangements

A.Borrower/Recipientobligations 9
B.GeneralConditionsforAgriculturalDevelopmentFinancing 10
C.UseofNationalProcurementSystems 10
D.ProcurementPlanning 12
E.Eligibility 12
F.DomesticPreferences 13
G.Procurementinvolvingcommunityparticipations 13
H.IFADmonitoringandreview 15
I.Misprocurement 15
J.FraudandCorruption 15
K.Disputeresolutions 16
L.ReferencestoIFAD 17

ANNEX
Methods of procurement in the event that national systems are not suitable

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 PROJECT PROCUREMENT GUIDELINES

Definitions
ThefollowingtermshavethefollowingmeaningswheneverusedintheseGuidelines:

“Borrower/Recipient”meansthepartydesignatedassuchinthefinancingagreementorotheragree-
ment.

“Community”referstoindividualsorgroupsofprojectbeneficiaries,communitygroupswithnolegal
status, associations or groups with legal status but with or without separate legal personality as a
group,small-scaleartisansandothersmallcommercialorganizationsandguilds,andsmalllocal-level
organizations that support and facilitate rural agricultural and social activities. The “community” in
suchcasesmayparticipateasprocurementagent,implementingagency,orcontractorandsupplier
ofgoods,worksandrelatedservicesforprojectactivities.

“Procurement process” is the entire procurement cycle starting from the identification of need
throughtothecompletionofthecontract.

“Project management” means the party designated as such in the financing agreement by the
Borrower/Recipientandresponsibleforimplementingandmanagingtheproject.Itrefersequallyto
theleadproject/programmeagencyandprojectcoordinationunitsandprojectimplementationunits.

“Services”isageneraltermreferringtobothconsultancyandnon-consultancyservices.

I. Introduction
A. Background

1. Article7,section2(j)oftheAgreementEstablishingIFADprovidesthattheExecutiveBoardwill
adoptsuitableregulationsforprocuringgoodsandservicestobefinancedfromtheresourcesof
the Fund. These revised Procurement Guidelines will apply to all projects and programmes
financed from IFAD’s resources, and to financing provided from supplementary funds unless
otherwiseagreed.TheyreplacetheProcurementGuidelinesadoptedbytheExecutiveBoardin
1
December2004.

2. IFAD’s revised General Conditions for Agricultural Development Financing (April 2009) (here-
after:theGeneralConditions)adoptanewapproachtoprocurementthatisfinancedbyIFAD
loans and grants, stating that: “Procurement of goods, works and services financed by [IFAD]
shallbecarriedoutinaccordancewiththeprovisionsoftheBorrower/Recipient’sprocurement
regulations, to the extent such are consistent with the IFAD Procurement Guidelines. Each
Procurement Plan shall identify procedures which must be implemented by the
Borrower/RecipientinordertoensureconsistencywiththeIFADProcurementGuidelines.”

3. Inadoptingthisapproach,IFADisfollowingtheprinciplessetoutintheParisDeclarationonAid
EffectivenessandtheAccraAgendaforActioninrespectoftheuseofexistingnationalprocure-
mentsystems.

1 The IFAD Procurement Guidelines adopted in December 2004 will continue to apply to agreements approved or
entered into before the adoption of these revised Guidelines.

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 PROJECT PROCUREMENT GUIDELINES

4. TheuseofaBorrower’s/Recipient’sregulationsforprocurementwillalwaysbesubjecttoverifi-
cationbyIFADthat:

(a) Thoseregulationsareinlinewithinternationallyacceptedpractices forpublicprocurement;

(b) Those regulations also encompass the basic principles of procurement and support the
developmentofnationalprocurementcapacityintheprocess;and

(c) Practicalimplementationcomplieswiththoseprinciplesandwithnationallegalandregula-
toryrequirements.

5. Asaresult,theserevisedProcurementGuidelinesfocuslessonthedetailsofprocurementmeth-
odsandmoreonthegeneralprinciples,standardsandpoliciesthatBorrowers/Recipientsmust
adheretoinimplementingIFAD-financedprojects.

6. IFAD will therefore take a more active role in assessing and monitoring national procurement
regulationsandprocedurestoensurethattheyareconsistentwiththeserevisedGuidelines.In
supervisingprojectprocurementandprovidingimplementationsupport,theFundwillensure
thattheprocurementprocessconformstoagreednationalrules.

7. In cases where IFAD deems that a Borrower’s/Recipient’s system for procurement, either in
wholeorinpart,isnotinlinewiththeseGuidelines,thenalternativeprovisionsforprocurement
willapply,asprovidedforinSectionIIIandintheAnnexoftheseGuidelines.

8. Theonlyexceptionwillbeinthecaseofinternationalcompetitivebidding,where,regardlessof
theresultsofanyassessmentofnationalprocurementregulationsorprocedures,theprocedures
oftheWorldBankassetforthinitsprocurementguidelineswillalwaysapply.

B. Purpose 2

9. This document sets out the policies, principles and standards that IFAD requires
Borrowers/Recipientstoadheretowhenundertakingtheprocurementofgoods,worksorser-
2
vicesneededunderdevelopmentprojectsorprogrammesgovernedbyafinancingagreement
(SectionI.DoftheseGuidelines).

10. Forpurposesofharmonization,theseGuidelineshavebeencloselyalignedtogenerallyaccept-
edinternationalprocurementprinciplesandoperatingprocedures,andtotheprocurementpoli-
ciesandstandardsofotherdevelopmentfundinginstitutions.Theyhavealso,wherepracticable,
4
takenintoaccountthesizeandspecializednatureofIFAD’soperationsandmandate.

11. TherightsandobligationsoftheBorrower/Recipientandallprovidersofgoods,worksandser-
vices are governed by the conditions of the bidding   documents and contracts signed by the
Borrower/Recipientandsuchproviders,andnotbytheseGuidelinesorthefinancingagreement.
Nopartyotherthanthepartiestothefinancingagreementwillderiveanyrightsfromtheagree-
mentorhaveanyclaimtofinancingproceeds.

2 Both consultancy and non-consultancy services.

3 As defined by the General Conditions.
4 For the purposes of these Guidelines, “bid”/”bidding” and “tender”/”tendering” have the same meaning.

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 PROJECT PROCUREMENT GUIDELINES

12. TheseGuidelinesarenotdesignedtoprovidethedetailedoperationalproceduresforundertak-
ingproject-relatedprocurement.ThatinformationiscontainedintheProcurementHandbook
for use by IFAD staff and borrowers/recipients, which is available on the IFAD website
(www.ifad.org).

C. Contents

13. TheseGuidelinesareinthreeSections:

(a) SectionIcoverstheguidelines’background,purpose,contentsandapplicability;

(b) SectionIIoutlinestheprocurementprinciplesthatapplytoIFAD-fundedprojectsorpro-
grammes;and

(c) SectionIIIprovidesinformationaboutprocurementarrangements,outliningthebasicstan-
dardsexpectedduringimplementation.

D. Applicability

14. TheseGuidelinesapplytoanyprocurementactivityundertakenbyaBorrower/Recipientwhen
procuringgoods,worksorservicesunderanydevelopmentprojectorprogrammegovernedby
anIFADfinancingagreementwhereIFADisthesolefundingsource.

15. SomeIFADprojectsmayinvolvecofinancingwithcooperatinginstitutions,someofwhichhave
theirownprocurementguidelines.Whereacooperatinginstitutionwithestablishedguidelines
assumesresponsibilityforprojectadministrationandsupervisiononbehalfofIFAD,thenthat
institution’sownprocurementguidelineswillnormallybefollowedunlessotherwiseagreedwith
IFAD.TheIFADGuidelinesshouldbefollowedforallprojectsadministeredbycooperatinginsti-
3 tutionsthatdonothavetheirownprocurementguidelinesandforallprojectsdirectlysuper-
visedbyIFAD.

16. Where these Guidelines apply, deviations are permitted only where expressly stated in the
financingagreement.

II. Principles
A. Ethics

17. Theguidingprinciplesofethicalbehaviourareimpartiality,independenceandintegrity.

18. Nopersonorentityshallusehis/her/itsauthority,positionorofficeforpersonalgain,whichwill
bedefinedassoliciting,acceptingorotherwisebenefitingfromanythingofmaterialvalue,inany
5
form,eitherinpersonorindirectlythroughcloserelativesorassociates,as aresultofprocure-
mentfinancedbyIFAD.

19. Borrower/Recipientofficialsengagedinprocurementactivityhaveadutyto:

(a) MaintainandenhancethereputationoftheBorrower/Recipientcountryby:

5 Including, but not restricted to, gifts, services, favours or hospitality.

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 PROJECT PROCUREMENT GUIDELINES

(i)Maintainingthehigheststandardsofhonesty andintegrityinallprofessional relationships;

(ii)Developingthehighestpossiblestandardsofprofessionalcompetence;

(iii)MaximizingtheuseofIFADfundsandotherresourcesforwhichtheyareresponsible
for the purposes for which these funds and resources were provided to the
Borrower/Recipientcountry;and

(iv)Complyingwithboththeletterandthespiritof:

• Thefinancingagreement;

• ThelawsandregulationsoftheBorrower/Recipientcountry;

• Acceptedprofessionalethics;and

• Contractualobligations;

(b) Declareanypersonalinterestthatmayaffect,ormightreasonablybedeemedbyothersto
affect,impartialityinanymatterrelevanttotheirduties(conflictofinterest).Inasituation
ofthisnature,theofficialconcernedshouldnotparticipateinanywayintheprocurement
process,toavoidmisprocurement;and

(c) Respecttheconfidentialityofinformationgainedinthecourseofdutyandnotusesuch
informationforpersonalgainorfortheunfairbenefitofanybidder,supplierorcontractor.
Informationgiveninthecourseoftheirdutiesshallbetrue,fairandnotdesignedtomis-
lead.

B. Accountability

20. TheBorrower/RecipientisaccountabletoIFADforallactionsanddecisionsinrelationtopro-
ject-fundedprocurement.

21. Thisincludes,butisnotlimitedto:

(a) Ensuringthatthefundsareusedsolelyforthepurposeforwhichtheywereprovided;and

(b) EnsuringthatprocurementisundertakeninaccordancewiththeseGuidelines.

22. Borrowers/Recipients are further directed to the provisions of Section 4.09 “Refund of
Withdrawals” of the General Conditions and Section III.A of these Guidelines,
“Borrower/Recipientobligations”.

C. Competition

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23. Full,fairandlegitimatecompetitionamongeligiblesuppliersandcontractorsisthefoundation
onwhichproject-fundedprocurementactivitiesshouldbebased.

6 As defined in Section III.

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 PROJECT PROCUREMENT GUIDELINES

24. The most common method of seeking competition is through a competitive bidding process,
and,inthisregard,IFADspecifiesthatallgoods,worksandservicesshouldbeobtainedthrough
7 8
anagreedprocurementprocessinvolvingatleastthreeseparatesuppliersorcontractorswhose
businessisdirectlyrelatedtotheprocurementbeingundertaken.

25. Itisrecognizedthatitisneitherpracticalnorefficienttoadvertiseinternationallyforlow-value
contractsforgoods,worksorservices,andthedegreetowhichtheprincipleofcompetitionis
requiredforeachprocurementactivitywillbeoutlinedintheprocurementmethodapprovedby
IFADwithintheprocurementplan.

26. Borrowers/Recipients will be expected to promote genuine competition at every opportunity
andmayberequiredtoprovideevidenceof:

(a) Fairandgenuinecompetitioninthecompilationofshortlistsandinthesolicitationofbids;
and

(b) Theeffectivenessofcompetitionduringthebiddingprocess.

27. Singlesourcinganddirectcontractingdonotprovidetheelementsofcompetitionrequiredby
9
IFAD.Onlyinexceptionalcircumstanceswilltheseapproachesbeconsideredandapprovedin
procurementplansagreedwithIFAD.

D. Fairness

28. IFAD’sexpectationisthatproject-fundedprocurementwillbeopentoasmanyeligiblebidders
from IFAD’s developed and developing Member States as is practicable in order to meet the
requirementsofcompetition.

29. IFADexpectsBorrowers/Recipientstoensurethatallprospectivebiddersare:

(a) Managedwithaconsistentapproachandapplicationoflaws,regulationsandrequirements
inrespectoftheprocurementprocess;

(b) Offeredalevelplayingfieldonwhichtogenuinelycompete;and

(c) Treated in a fair, impartial and unbiased way, so that principles of impartiality and equal
opportunitycanbedemonstratedinallprocurementactivities.

30. Instrivingforfairnessinitsprocurementoperations,IFAD:

(a) Will not tolerate exclusion of, discrimination, bias or prejudice against, or favouritism or
inequalitytowardsanypotentialsupplierorcontractor,eitherdirectlyorindirectlythrough
manipulation of any part of the procurement process, including, but not limited to, the
preparationoftechnicalspecifications,evaluationcriteriaorbiddingrequirements.Where
anysuchactivityissuspectedorproven,IFADreservestherighttotakeanypreventative,
correctiveorpunitiveactionitconsidersappropriate;and

7 “Agreed” refers to the use of a recognized procurement method approved in the procurement plan.
8 In this context, “separate” means that the suppliers or contractors must (i) all have separate ownership, (ii) not
have any affiliation, connection, association or attachment with each other that may be deemed to compromise
the principle of competition, and (iii) have no common shareholders or directors.
9 Conditions for applying single source/direct contracting are defined in the Procurement Handbook.

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 PROJECT PROCUREMENT GUIDELINES

(b) Willseektoaddress,inconsultationwiththeBorrower/Recipient,anyimpositionsthatmay
deterorimpingeontheattainmentoffairnesswithintheprocurementprocess.

E. Transparency

31. IFADexpectsthehighestdegreeoftransparencyandopennesswithintheprocurementprocess-
esundertakenunderitsprojects.Alackoftransparencycanbeperceivedasanattempttowith-
holdinformation,whichinturnmaymakethefairnessandintegrityoftheprocurementprocess
suspect.
10
32. Transparency within procurement relates to disclosing,  in the public domain, information for
partiesinvolved,interestedinoraffectedbytheprocess,includingbutnotlimitedtoinforma-
tionon:

(a) Theavailabilityofpotentialandexistingprocurementopportunities;

(b) Wheretoaccessrelevantdata;

(c) Theprocessesbywhichtheprocurementisbeingundertaken;

(d) Themechanismsbywhichcontractswillbeawarded;

(e) Contractawarddata;and

(f) Appealprocedures.

33. Modesofcommunication/publicationofsuchinformationwillvarydependingonthenatureof
the data but will generally be through existing means of public information (e.g. government
websites,publicnoticeboardsormedia)orintheprocurementdocumentationrelevanttoan
individualprocurementactivity(e.g.bidnoticesandbiddingdocuments).

34. Borrowers/Recipientsarerequiredatalltimestoactopenly,predictablyandinaccordancewith
theinformationprovided.

F. Efficiency, Effectiveness and Economy

35. IFADrequiresBorrowers/Recipientstodemonstrateefficiencyandeconomyinundertakingpro-
ject-relatedprocurement,toavoidundueimplementationdelaysandtoachievevalueformoney.

36. Procurementmustbewellorganized,carriedoutcorrectlywithregardtoquantity,qualityand
timeliness,andattheoptimumprice,inaccordancewiththeappropriateguidelines,principles
andregulations.

37. Processesmustbeproportionatetotheprocurementactivity,sothattheoverallcostofconduct-
ingtheprocurementprocessisminimizedandtailoredtothesizeofthebudgetfortheactivity
beingundertaken,whileupholdingtheguidingprinciples.

10 IFAD recognizes that some countries have national legislation governing the disclosure of information, and in
such circumstances specific provision will be made during negotiations to ensure that the principle of transpa-
rency is maintained.

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 PROJECT PROCUREMENT GUIDELINES

38. Efficiencies can be obtained through a combination of methods. For instance, a strategic
approachcanbetakentoplanning,combiningandconductingprocurementactivitiessoasto
minimizelossoftimeandresources.Forthisreason,thedesignofallIFAD-fundedprojectsmust
nowincludeaprocurementplanasperSectionIII.DoftheseGuidelinesandasdefinedin,and
requiredby,theGeneralConditions.

G. Value for money

39. Underpinningalloftheaboveistheneedtoobtainvalueformoneyforallprojectprocurement
activitiesthroughtheoptimumcombinationofseveralfactors,including:

(a) Applyingsound,internationallyrecognizedprocurementprinciples;

(b) Ensuringthatthegoods,worksorservicesprocuredmeettherequirementsforthetaskand
arenotoverspecified;

(c) Ensuringthatthegoods,worksorservicesarecontractedonthebestpossibleterms,taking
intoaccounttheirexpectedlifecycle;and

(d) Ensuringthattheprovider/supplierofthegoods,works orservicesisqualified,legallyentitled

andcompetenttoexecutethecontract.

40. Bestvaluedoesnotnecessarilymeanthelowestinitialpriceoption,butratherrepresentsthe
best return on investment, taking into consideration the unique and specific circumstances of
each procurement activity; the balance of time, cost and quality required; and the successful
overalloutcomeofthecontractinmeetingitsoriginalobjectives.

III. Arrangements
A. Borrower/Recipient obligations

41. Borrowers/Recipientsmust:

(a) Actatalltimesinaccordancewiththelegalrelationshipgovernedbythefinancingagree-
ment;

(b) Takefullresponsibilityforprojectimplementation,planning,andtheawardandadministra-
tionofcontractsundertheproject;and

(c) Undertakeallproject-relatedprocurementinaccordancewiththepolicies,principlesand
standardssetoutintheseGuidelines.

42. IFAD’sreviewofprocurementprocedures,documents,evaluationsandawardrecommendations
aspartofitssupervisionfunctionsdoesnotinanywayabsolveBorrowers/Recipientsfromanyof
theirobligationsasspecifiedabove.

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 PROJECT PROCUREMENT GUIDELINES

B. General Conditions for Agricultural Development Financing

43. AsstatedinSectionI.AoftheseGuidelines,theGeneralConditionswererevisedinApril2009
takingintoaccountIFAD’snewapproachtoprocurementfinancedbyitsloansandgrants.These
Guidelinesarealsoinlinewiththevariouscommitmentsoftheinternationaldonorcommunity
11
toworktowardsincreasingtheuseofnationalsystems.

44. The revised General Conditions are designed to be clearer and less complex for IFAD and
Borrower/Recipientstaff.Theyapplytoallfinancingagreementsforprojectsapprovedafterthe
ninety-sixthsessionoftheIFADExecutiveBoard.

45. Specificallyinrelationtoprocurement,theGeneralConditionsfocuson:

(a) TheemphasisplacedonusingtheBorrower’s/Recipient’sprocurementregulations,provid-
edtheyaredeemedtobeconsistentwithIFAD’sGuidelines;and

(b) Theincreasedimportanceoftheprojectprocurementplaninidentifyingprocurementpro-
cedurestobefollowedbytheBorrower/Recipienttoensureconsistencyduringimplemen-
tation.

46. BothoftheseaspectsarediscussedinmoredetailinSectionsIII.CandD.

C. Use of national procurement systems

47. InlinewiththeprovisionsoftheGeneralConditions,procurementofgoods,worksandservices
financed by IFAD shall be carried out in accordance with the provisions of the
Borrower’s/Recipient’s procurement regulations, to the extent such are consistent with these
Guidelines.Eachprocurementplanshallidentifyproceduresthatmustbeimplementedbythe
Borrower/RecipientinordertoensureconsistencywiththeseGuidelines.

48. ThisSectionthereforeelaboratestheprocessthatIFADwillusetoassesswhetheracountry’s
nationalprocurementsystemandregulationsareconsistentwiththeprocurementpolicies,prin-
ciplesandstandardslaiddownintheseGuidelines.

Stage 1: Overarching country assessment

49. Duringpreparationofacountrystrategicopportunitiesprogramme(COSOP),orintheabsence
of a COSOP process, when deemed appropriate, IFAD in conjunction with the
Borrower/Recipient,willundertakeadeskreviewofexistingavailabledatatoascertainthestatus
oftwoaspects:

(a) Theoveralllegislativeandregulatoryframework;and

(b) Thenationalstructureforpublicprocurement.

50. Sourcesofsuchdataforthiskindofassessmentwillvaryaccordingtotheavailabilityandcom-
pletenessofinformationandthesizeoftheoverallcountryportfolio,butwillusuallyinclude:

11 For example, the Paris Declaration on Aid Effectiveness, to which IFAD is a signatory, affirmed the commitment
for “increasing alignment of aid with partner countries priorities, systems and procedures and helping to
strengthen theit capacities” (paragraph 3 (ii)). The Accra Agenda for Action reaffirmed this by committing to
“strengthen and use developing country systems to the maximum extent possible” (paragraph 15).

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 PROJECT PROCUREMENT GUIDELINES

(a) Results from assessments of national procurement systems made by the Organisation for
EconomicCo-operationandDevelopment’sDevelopmentAssistanceCommittee;

(b) Recentfindingsfromothergovernmentalimplementingagencies,donorsanddevelopment
partners;and

(c) PreviousworkingexperiencefromIFADprojects.

51. Asaresultofthisreview,IFADwillinclude,forgeneraloverviewpurposes,somehigh-levelstate-
mentswithintheCOSOPregardingitsfindings.Thesestatementswillnotbeabsolutedecisions
but will merely serve as the starting point for more detailed assessment at the project design
stage.

52. ShouldIFADconclude,asaconsequenceofthisreview,thattherearenumerousand/orfunda-
mentalconcernsinrelationtotheissuesassessed,thentheoverarchingcountryassessmentwill
statethattheprocurementsystemcannotbeadoptedatthepresenttime.
12
Stage 2: Specific project assessment

53. Carryingoutprocurementefficientlyiscriticaltogoodprojectimplementation,totheattainment
ofaproject’sobjectives,andtoitssustainability.Duringprojectdesign,IFADwillundertake,in
13
conjunctionwiththeBorrower/Recipient,amorecomprehensiveassessmentoftheagencyor
agenciesdesignatedtoundertakeprojectprocurement.Thiswillinclude,butnotberestricted
to,issuessuchas:

(a) The level of practical application of any existing laws, decrees, regulations or procedures
coveringprocurementandtheextenttowhichtheymeettherequirementsofSectionIIof
theseGuidelines;

(b) Theleveloftheexistinghumancapacitytoundertakeprojectprocurement;

(c) Organizationandfunctions;

(d) Thesupportandcontrolsystemsrelatingtoprocurement;

(e) Recordkeeping;and

(f) Theoverallprocurementenvironmentwithintheagencyoragencies.

54. AchecklistoftheissuestobereviewedisincludedintheProcurementHandbook.

55. As a result of this stage-2 assessment, IFAD will classify these aspects individually into one of
threecategories:

(a) Fullyinlinewithrequirementsandconsideredsuitableforuseforprojectprocurement;

(b) Generally in accordance with requirements and possibly suitable for use for project pro-
curementwithsomemodifications;and

12 To be conducted at project design.

13 IFAD will depend on relevant assessments carried out by other regional development banks and partners where
available.

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 PROJECT PROCUREMENT GUIDELINES

(c) Notinlinewithrequirementsandconsideredunsuitableforuse.

Findings and results

56. Basedontheresultofthefindingsoftheindividualassessments,IFADwilldecidetowhatextent
thenationalsystemforprocurementcanbeusedinwhole,inpart,ornotatall.Thisdecision
willbesharedwiththeBorrower/Recipientandbereflectedintheprojectdesign.

57. Whereprocurementmethodsorpracticeswithinthelegalandregulatoryframeworkareclassed
as“notinlinewithrequirementsandconsideredunsuitableforuse”,IFADwillusetheprocure-
mentmethodsattachedasanAnnextotheseGuidelines.Theseprocurementmethodsarecon-
sistentwiththoseofotherimplementingagencies,donorsanddevelopmentpartners.

58. Whereanyotheraspectsofnationalsystemsarefoundtobe“notinlinewithrequirementsand
considered unsuitable for use” for project procurement, then IFAD, in conjunction with
Borrowers/Recipients,willseektoidentifymeasurestobeintroducedthatwillapplytoitspro-
jects and support Borrowers/Recipients in meeting their own development goals through the
managementoftheirownresources.

D. Procurement planning

59. Accurateandrealisticplanningandprioritizationofneedsisanessentialprerequisitetoeffective
procurementandakeytoolformonitoringprojectimplementation.

60. Atthetimeofnegotiationofeachproject,theBorrower/Recipient,inconsultationwithIFAD,
mustestablishan18-monthprocurementplan,whichmustinclude,asaminimum:

(a) Abriefdescriptionofeachprocurementactivitytobeundertakenduringthatperiod;

(b) Theestimatedvalueofeachactivity;

(c) Themethodofprocurementtobeadoptedforeachactivity;and

(d) The method of review IFAD will undertake for each activity (Section III.H of these
Guidelines);

61. WherenationalprocurementplantemplatesexistandareagreedbyIFADassuitable,thensuch
templatesshouldbeused.Ifnosuchtemplatesexist,IFADwilladoptthosefromotherinterna-
tionalfinancinginstitutionswithwhichtheBorrower/Recipientisfamiliarandwhichareinuse
forotherprojects.

62. Borrowers/Recipients are required to keep plans updated frequently to reflect changes to the
projectortimescales.

63. IFAD’sreviewofandnoobjectiontoprocurementplansiscompulsoryunderallfinancingagree-
mentsdirectlysupervisedbyIFAD.

E. Eligibility

64. IFAD financing proceeds are disbursed exclusively for expenditures for goods, works and ser-

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vicesproducedinorsuppliedfromtheterritoryofanycountry.

F. Domestic preferences

65. TheBorrower/Recipientmay,withtheagreementofIFAD,grantamarginofpreferenceinthe
evaluation of bids conducted under the international competitive bidding method of procure-
mentto:

(a) GoodsmanufacturedintheBorrower’s/Recipient’scountry,whencomparingagainstbids
offeringgoodsmanufacturedfromabroad;and

(b) WorksinMemberStatesthatareBorrower/RecipientsunderIFADfinancingonhighlycon-
cessionalterms,whencomparingbidsfromeligibledomesticcontractorswiththosefrom
foreignfirms.

66. The conditions for the application of any such preference will be stipulated in the financing
agreement.

G. Procurement involving community participation

67. GiventhesizeandnatureofIFADprojects,thereisahighdegreeofinvolvementwithcommuni-
ty-basedprocurementactivities.

68. It needs to be underscored that procurement with community participation is not a distinct
methodofprocurementanditthereforerequiresthesameadherencetoallprinciplesandstan-
dardssetoutintheseGuidelines.Projectdesignersaretoensurethatsimpleyetreliablearrange-
ments,whichadheretotheseGuidelines,areinplacewithintheprojectto:

(a) FacilitatetranslationofdocumentsandrecordsfromtheBorrower’s/Recipient’sofficiallan-
guage(s)tooneoftheIFADofficiallanguagesasmayberequiredforpurposesofauditand
review;

(b) Provide appropriate procedures for regular monitoring and audit of community procure-
mentactivities,includingtheretentionofrelevantrecordsbytheprojectmanagementstaff
and/ortheintermediaryagency;

(c) Definetherelationships,rolesandresponsibilitiesbetweenintermediariesandthecommu-
nity,includingaclearexitstrategyforthecompletionoftheintermediaryassistance;and

(d) Ensureproperhandoverofassets.

69. Undertheterm“communityparticipation”,itisunderstoodthatthecommunitymayplayoneor
moreofthefollowingrolesduringprojectimplementation.

70. Asaproviderofgoods,worksorservicesdirectlytotheproject, communitiesarepermittedto

undertakeworksorprovidegoodsorservicestotheprojectwhere:

(a) Itisanimplementationmodalitywithintheprojectdesigndocument;or

(b) ItisnotanimplementationmodalitybutitisagreedwithIFADthatthisrepresentsacost-
effective and practical alternative to procuring externally. IFAD will also consider factors

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suchasfosteringownership,thesustainabilityofprojectactivities,effectiveoperationand
maintenanceofaprojectfacility,andtheoverallrisk/rewardequation.

71. Generally,agreementwillonlybegrantedwhereitcanbedemonstratedthatsuchgoods,works
orserviceshavebeenorcouldbesuccessfullyprovidedorproducedbythecommunity.

72. Asaprovider,acommunitymayacteither:

(a) Onacommercialbasisundercontract;or

(b) Aspartorallofthebeneficiarycommunity’scontributiontotheproject;

73. Ineithercase,theestimatedfinancialvalueofthecommunitycontributionandthemodalities
forsupervisionmustbequantifiedandagreedwithIFAD.

74. Astheimplementingagencyundertakingprocurementfortheproject,communitiesorinformal
groupsmaybebroughttogethertoactasimplementingagenciestoundertake project procurement.

75. Wherethisisthecase,theirrolewillinclude:

(a) Competitivecontractingusinganyoftheagreedprocurementmethods;and

(b) Supervisionofacontractedproviderofworks,goodsorservices.

76. Theextenttowhichthisispermittedwillbedeterminedonaproject-by-projectbasis,identified
intheprojectdesignand/orintheimplementationmanual,andclearlydefinedintheapproved
procurement plan. Factors to be considered as part of the assessment are defined in the
ProcurementHandbook.

77. Where the project’s beneficiary community does not have adequate institutional capacity to
receiveandaccountforfundsoradministerprocurementreliably,itmaybenecessarytointro-
duceintermediariestoactonbehalfofthecommunity.Suchintermediariescouldbecivilsociety
organizations,cooperativesocieties,privateentitiesorothers.

78. Theprojectmanagementwillensurethatsuchintermediarieshaveadequatecapacitytoperform
suchduties.

79. When civil society organizations or other entities are included as implementing agencies for
weakcommunitygroups,thefollowingaspectswillbeaddressedduringprojectdesign:

(a) Legal status of intermediary. Thiswillincluderegulationsgoverningregistration(with

thegovernmentorlocalauthority),functioninginspecificsectors,authoritytoreceiveand
accountforpublicfunds,andabilitytoparticipateintheproject;

(b) Selection of intermediary. Intermediaries can be hired either through a transparent
competitive process (if more than one intermediary is available) or through sole-source
directcontracting(ifonlyonefunctioningintermediaryexistsinthetargetedcommunity);
and

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 PROJECT PROCUREMENT GUIDELINES

(c) Financial viability and administrative capacity. Theintermediary’sprimarysourceof

funding,staffing,management,administrativecapacityandaccountabilityviaindependent
audits,etc.,shouldbeexaminedtoensuresafetyandsecurityinhandlingpublicfundson
behalfoftheprojectmanagementandthecommunity.

H. IFAD monitoring and review

80. ToensurethattheprocurementprocessiscarriedoutinconformitywiththeseGuidelinesand
with the agreed procurement plan, IFAD will review arrangements for procurement of goods,
worksandservicesproposedbytheBorrower/Recipient,including:

(a) Contractpackaging;

(b) Applicableproceduresandprocurementmethods;

(c) Biddingdocumentation;

(d) Compositionofbidevaluationcommittees;

(e) Bidevaluationsandawardrecommendations;and

(f) Draftcontractsandcontractamendments.

81. Theextenttowhichthesereviewprocedureswillbeappliedtoeachprojectorprogrammewill
becontainedinthelettertotheBorrower/Recipientandtheprocurementplan.

82. Forfulldetailsonthereviewprocesses,refertotheProcurementHandbook.

I. Misprocurement

83. IFADwillnotfinanceexpendituresforgoods,worksorconsultingservicesthathavenotbeen
procuredinaccordancewiththeseGuidelinesandthefinancingagreement.Insuchcases,IFAD
may,inaddition,takeotherremedialactionunderthefinancingagreement,includingcancella-
tionoftheamountinquestionfromtheloanand/orgrantaccountbydeclaringitineligible.Even
ifthecontractwasawardedfollowingIFAD’s“noobjection”statement,theFundmaystilldeclare
misprocurementifitconcludesthatthisstatementwasissuedonthebasisofincomplete,inaccu-
rateormisleadinginformationfurnishedbytheBorrower/Recipient,orthatthetermsandcondi-
tionsofthecontracthadbeenmodifiedwithoutIFAD’sapproval.

J. Fraud and corruption

84. IFADrequiresthatitsownstaffandthestaffofBorrowers/Recipients(includingbeneficiariesof
IFAD financing), and all bidders, suppliers, contractors and consultants under IFAD-financed
contracts,observethehigheststandardofethicsandintegrityduringtheexecutionofandpro-
curementundersuchcontracts.ThispositionisclearlystatedintheIFADPolicyonPreventing
Fraud and Corruption in its Activities and Operations14 (hereafter: the anticorruption policy),
whichappliestotheseguidelines.Inlinewiththispolicy,IFADwillhavetherightto:

14 The IFAD Policy on Preventing Fraud and Corruption in its Activities and Operations (EB 2005/85/R.5/Rev.1) is
available on the IFAD website at www.ifad.org.

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 PROJECT PROCUREMENT GUIDELINES

(a) Rejectaproposalforawardifitdeterminesthatthebidder,supplier,contractororconsul-
tantrecommendedforawardhas,directlyorthroughanagent,engagedincoercive,collu-
15
sive,corruptorfraudulentpracticesincompetingforthecontractinquestion;

(b) SuspendorcancelallorpartofthefinancinginaccordancewiththeGeneralConditionsifit
determinesatanytimethatrepresentativesoftheBorrower/Recipientorofabeneficiaryof
thefinancingengagedincoercive,collusive,corruptorfraudulentpracticesduringthepro-
curementortheexecutionofthatcontract,withouttheBorrower/Recipienthavingtaken
timelyandappropriateactionsatisfactorytoIFADtoremedythesituation;

(c) Sanctionanindividualorfirm–whichmayincludedeclaringtheindividualorfirmineligi-
bletobeawardedanIFAD-financedcontractindefinitelyorforastatedperiodoftime–if
at any time it determines that the individual or firm has, directly or through an agent,
engagedincoercive,collusive,corruptorfraudulentpracticesincompetingfor,orinexe-
cuting,anIFAD-financedcontract;

(d) Require that bidding documents and the contracts that it finances include a provision
requiringsuppliers,contractorsandconsultantstopermitIFADtoinspecttheiraccounts,
recordsandotherdocumentsrelatingtothebidsubmissionandcontractperformance,and
tohavethemauditedbyIFAD-appointedauditors;

(e) Referanycasesofirregularpracticesthatinclude,butarenotlimitedto,fraudandcorrup-
16
tiontotherelevantnationalauthoritiesforfurtherinvestigation;and

(f) Apply,intheeventofcasesinwhichirregularpracticeshavebeendetermined,thesanc-
tionsitdeemsnecessaryandappropriate.

85. WiththespecificagreementofIFAD,aBorrower/Recipientmayinclude,inbidformsforIFAD-
financedcontracts,anundertakingofthebidderorconsultanttoobserve,whencompetingfor
andexecutingacontract,thecountry’slawsagainstfraudandcorruption(includingbribery),as
17
listed in the bidding documents or requests for proposals.   IFAD will accept the inclusion of
sucharequirement,attherequestoftheBorrower’s/Recipient’scountry,providedthearrange-
mentsgoverningsuchanundertakingaresatisfactorytoIFAD.

K. Dispute resolutions

86. In the event of a dispute between IFAD and its Borrower/Recipient, the provisions of Section
14.04oftheGeneralConditionswillapply.

87. WherethereisadisputebetweentheBorrower/Recipientandabidderorcontractor,thenthe
process for dealing with this dispute will be as outlined in the bidding documents, contract
and/or national laws of the country, as applicable. In these circumstances, IFAD will not be
namedasanarbitratororbeaskedtonameanarbitrator.

15 As defined in the General Conditions.

16 As defined in IFAD’s anticorruption policy as may be amended from time to time.
17 An example might be: “We undertake that, in competing for (executing) the contract, we will strictly observe the
laws against fraud and corruption in force in the country of the (purchaser) (employer), as such laws have been
listed by the (purchaser) (employer) in the bidding documents for this contract.”

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 PROJECT PROCUREMENT GUIDELINES

L. References to IFAD

88. IftheBorrower/RecipientwishestorefertoIFADinprocurementdocuments,thefollowinglan-
guageistobeused:

“(NameofBorrower/Recipientordesignate)hasreceived(orinappropriatecases“hasapplied
for”)afinancingfromtheInternationalFundforAgriculturalDevelopment(IFAD)invariouscur-
rencies equivalent to ___________ towards the cost of (name of project), and intends to
applyaportionoftheproceedsofthisloadtoeligiblepaymentsunderthiscontract.Paymentby
IFADwillbemadeonlyattherequestof(nameofBorrower/Recipientordesignate)andupon
approvalbyIFAD,andwillbesubject,inallrespects,tothetermsandconditionsofthefinancing
agreement.Thefinancingagreementprohibitsawithdrawalfromtheloanand/orgrantaccount
forthepurposeofanypaymenttopersonsorentities,orforanyimportofgoods,ifsuchpay-
ment or import, to the knowledge of IFAD, is prohibited by a decision of the United Nations
SecurityCounciltakenunderchapterVIIoftheCharteroftheUnitedNations.Nopartiesother
than(nameofborrower/recipient)shallderiveanyrightsfromthefinancingagreementorhave
anyclaimtofinancingproceeds.”

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 PROJECT PROCUREMENT GUIDELINES

Annex
Methods of procurement in the event that national systems are not suitable

1. ThisAnnexoutlinesthevariousmethodsofprocurementthatcanbeselectedwhenithasbeen
1

decided by IFAD that the Borrower’s/Recipient’s national procurement methods or practices
within the legal and regulatory framework are “not in line with requirements and considered
unsuitableforuse”inwholeorinpart.

2. Detailsoftheindividualstepstobetakenduringtheprocurementstagearefurtherelaboratedin
thespecificmodulesoftheProcurementHandbook.

A. International competitive bidding

3. Internationalcompetitivebidding(ICB)isaprocurementmethodsuitedtohigh-valuerequire-
mentsthatwouldbeofinteresttotheinternationalbusinesscommunity.TheobjectiveofICBis
to provide all eligible prospective bidders located and operating both within the
Borrower’s/Recipient’s country and abroad with timely and adequate notification of the
Borrower’s/Recipient’srequirementsandanequalopportunitytobidfortherequiredgoodsand
works.

4. Where ICB is the identified method of procurement within an approved procurement plan,
WorldBankproceduresassetforthintheirguidelineswillapply.

B. Limited international bidding

5. Limitedinternationalbidding(LIB)isessentiallyICBbydirectinvitationwithoutopenadvertise-
ment.Itmaybeanappropriatemethodofprocurementwhere:

(a) Contractamountsaresmall;

(b) Thereisonlyalimitednumberofsuppliersorcontractors;or

(c) OtherexceptionalreasonsexistthatmayjustifydeparturefromfullICBprocedures.

6. UnderLIB,borrowers/recipientsshouldseekbidsfromalistofpotentialsuppliersorcontractors
broadenoughtoensurecompetitiveprices.Thislistshouldincludeallsuppliersandcontractors
whenthereareonlyalimitednumber.Domesticpreferencesarenotapplicableintheevaluation
of bids under LIB. In all respects other than advertisement and preferences, ICB procedures
applytoprocurementunderLIB,includingthepublicationofthecontractaward.

1 This applies equally to goods, works and services. For consultancy services, there are also methods of selec-
tion (e.g. quality and cost-based selection, selection based on consultants’ qualifications and least cost selec-
tion), which determine the process of evaluation and award. These are discussed further in the Procurement
Handbook.

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 PROJECT PROCUREMENT GUIDELINES

C. National competitive bidding

7. Nationalcompetitivebidding(NCB)isthecompetitivebiddingprocedurenormallyusedforpub-
lic procurement in the country of the Borrower/Recipient, and may be the most efficient and
economical way of procuring goods or works that, by their nature or scope, are unlikely to
attractforeigncompetition.

8. NCBmaybethepreferredmethodofprocurementwhereforeignbiddersarenotexpectedtobe
interestedbecause:

(a) Contractvaluesaresmall;

(b) Worksarescatteredgeographicallyorspreadoutovertime;

(c) Worksarelabour-intensive;or

(d) Thegoodsorworksareavailablelocallyatpricesbelowthoseontheinternationalmarket.

9. NCBproceduresmayalsobeusedwheretheadvantagesofICBareclearlyoutweighedbythe
administrativeorfinancialburdeninvolved.

10. AdvertisingforprocurementunderNCBmaybelimitedtothenationalpress,theofficialgazette
of the Borrower’s/Recipient’s government or, where possible, a free and open-access website.
2
Biddingdocumentsmaybeinanofficiallanguageofthecountry,andlocalcurrencyisgenerally
usedforthepurposesofbiddingandpayment.Theproceduresaretoprovideforadequatecom-
petitioninordertoensurereasonableprices,andthemethodsusedintheevaluationofbids
andtheawardofcontractsaretobeobjectiveandmadeknowntoallbidders,andarenottobe
appliedarbitrarily.Theprocedureswillalsoincludepublicopeningofbids,publicationofresults
ofevaluationandoftheawardofcontract,andprovisionsforbidderstoprotest.Inaddition,bid-
ding documents will provide clear instructions on how bids should be submitted, how prices
shouldbeoffered,andtheplaceandtimeforsubmissionofbids.Adequateresponsetimefor
preparationandsubmissionofbidswillbeprovided.Ifeligibleforeignfirmswishtoparticipate
underthesecircumstances,theyaretobeallowedtodoso.

D. International or national shopping

11. Internationalornationalshoppingisaprocurementmethodthatentailscomparingpricequota-
tionsfromseveralsuppliersorcontractors(usuallyatleastthree)toensurecompetitiveprices.It
isanappropriatemethodforprocuringreadilyavailable,off-the-shelfgoodsorstandardspecifi-
cationcommoditiesthataresmallinvalue,orsimplecivilworksofsmallvalue.Requestsforquo-
tationsshouldindicatethedescriptionandquantityofthegoods,togetherwithdesireddelivery
(orcompletion)timeandplace.Quotationsmaybesubmittedbymail,electronicmailorfacsimi-
le. The evaluation of quotations will  follow the principles of competition. The terms of the
acceptedofferaretobeincorporatedinapurchaseorderorbriefcontract.

2 Translation into one of IFAD’s or the cooperating institution’s official languages is to be provided if required.
Pursuant to article 15.02 (Language of reporting) of IFAD’s General Conditions, the agreed language will be
specified in the financing agreement.

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 PROJECT PROCUREMENT GUIDELINES

12. Underinternationalshopping,thepurchaseristosolicitquotationsfromatleastthreesuppliers
intwodifferentcountries.Nationalshoppingmaybeusedwherethedesiredgoodsareordinari-
lyavailablefrommorethanonesourceinthecountryoftheBorrower/Recipientatcompetitive
prices.

E. Direct contracting

13. Directcontractingwithoutcompetition(bysingleorsole-sourceselection)istheleastfavourable
methodofselection.Duetoitsnon-competitivenature,itmayonlybeusedwiththeexpress
agreementofIFADandisonlypermittedinthefollowingexceptionalcircumstances:

(a) Anexistingcontractforgoodsorworks,awardedinaccordancewithproceduresacceptable
toIFAD,maybeextendedforadditionalgoodsorworksofasimilarnaturetoamaximum
of25percentoftheoriginalcontractvalue,withthepriorapprovalofIFAD,providedthat
noadvantagecouldbeobtainedbyfurthercompetitionandthatthepricesontheextend-
edcontractarereasonable.Provisionforsuchanextension,ifconsideredlikelyinadvance,
istobeincludedintheoriginalcontract;

(b) Standardizationofvehicles,equipmentorsparepartstoensurecompatibilitywithexisting
vehicles,equipmentormachinerymayjustifyadditionalpurchasesfromtheoriginalsuppli-
er.Forsuchpurchasestobejustified,theoriginalvehicles,equipmentormachineryshould
besuitable;thenumberofnewitemsshouldgenerallybelessthantheexistingnumber;
thepriceshouldbereasonable;andtheadvantagesofanothermakeorsourceofequip-
mentaretohavebeenconsideredandrejectedongroundsacceptabletoIFAD;

(c) Therequiredequipmentisproprietaryandobtainableonlyfromonesource;

(d) Thecontractorresponsibleforaprocessdesignrequiresthepurchaseofcriticalitemsfrom
aparticularsupplierasaconditionofaperformanceguarantee;and

(e) Purchasesfromtheoriginalsuppliermayalsobejustifiedinexceptionalcasesandemer-
gencies,suchasinresponsetoanaturaldisaster,conflictandpostconflict,orincountries
wheretherearerestrictionstofreemarketsandenterprises.

14. Any request for direct contracting from a Borrower/Recipient must be accompanied by a
detailedjustification,whichIFADwillexaminecarefullytoensurethatitissatisfiedthatnoother
alternativeselectionmethodscanbeused.

F. Procurement from commodity markets

15. Marketpricesofcommodities,suchasgrain,animalfeed,cookingoil,fuel,fertilizer,pesticides
andmetals,fluctuatedependingonthedemandandsupplyatanygiventime.Pricesofmany
such commodities are quoted in established commodity markets. Procurement often involves
multipleawardsforpartialquantitiestoensuresecurityofsupplyandmultiplepurchasesovera
periodoftimetotakeadvantageoffavourablemarketconditionsandtokeepinventorieslow.A
list of prequalified bidders may be drawn up to whom periodic invitations are issued. Bidders

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 PROJECT PROCUREMENT GUIDELINES

may be invited to quote prices linked to the market price at the time of or prior to the ship-
ments.Bidvaliditiesaretobeasshortaspossible.Asinglecurrencyinwhichthecommodityis
usuallypricedinthemarketmaybeusedforbiddingandpayment.Thecurrencyistobespeci-
fiedinthebiddingdocument.Biddingdocumentsmaypermittelexedorfaxedbids,ifthereis
norequirementforbidsecurityorifprequalifiedbiddershavesubmittedstandingbidsecurities
validoveraspecifiedperiodoftime.Contractconditionsandformsconsistentwithmarketprac-
ticesaretobeused.

G. Work by force account

3
16. ForceaccountistheuseoftheBorrower’s/Recipient’sownpersonnelandequipmenttoper-
formconstructionwork.Insomecircumstancesitmaybetheonlypractical,efficientandeco-
nomicmethodforconstructingsomekindsofworks.Theuseofforceaccountmaybejustified,
andonlyusedafterIFAD’sno-objectionstatement,where:

(a) Quantitiesofworkinvolvedcannotbedefinedinadvance;

(b) Worksaresmallandscatteredorinremotelocationsforwhichqualifiedconstructionfirms
areunlikelytobidatreasonableprices;

(c) Workisrequiredtobecarriedoutwithoutdisruptingongoingoperations;

(d) TheriskofunavoidableworkinterruptionisbetterbornebytheBorrower/Recipientthan
byacontractor;or

(e) There are emergencies needing prompt attention such as natural disasters, conflict and
postconflict,orcountrieswheretherearerestrictionstofreemarketsandenterprises.

17. Whereforceaccountisused,IFADistobesatisfiedthatlocalforceaccountunitsarestaffed,
equippedandorganizedtocarryouttheworksexpeditiouslyandatareasonablecost.

18. Maintenanceandminorimprovementsofroadsareatypicalexampleofforceaccountusage.A
government-ownedconstructionunitthatisnotmanageriallyandfinanciallyautonomousisto
beconsideredaforceaccountunit.Forceaccountmayalsobeusedforspecializednon-consult-
ingserviceswhen,formattersofnationalsecurity,theBorrower’s/Recipient’slawonlypermits
fortheseservicestobeprovidedbygovernmentagencies(i.e.aerialmapping).

H. Procurement from United Nations agencies

19. TheremaybesituationsinwhichprocurementfromspecializedagenciesoftheUnitedNations,
actingassuppliersandpursuanttotheirownprocedures,maybethemosteconomicalandeffi-
cientwayofprocuringrelativelysmallquantitiesofoff-the-shelfgoods.Useofsuchagenciesas
supplysources,togetherwiththeprojectcomponentandthetypeofgoodsorworkstobepro-
cured from such sources, are to be expressly and specifically agreed between the
Borrower/Recipient andIFADbefore proceeding withtheapplication ofthismethod ofprocurement.

3 Force account is also known as “direct labour”, “departmental force” or “direct work”.

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PROJECT PROCUREMENT GUIDELINES

December 2010

Via Paolo di Dono, 44

00142 Rome, Italy
Tel. +39-06-54591
Fax +39-06-5043463
Telex 620330 IFAD-I
E-mail IFAD@IFAD.ORG

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PROJECT PROCUREMENT GUIDELINES

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