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The World Bank’s New Procurement Regulations

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 THE CHINESE UNIVERSITY OF HONG KONG

FACULTY OF LAW

Research Paper No. 2016-36

The World Bank’s New Procurement Regulations

Jędrzej Górski

Electronic copy available at: https://ssrn.com/abstract=2868920

EPPPL 4|2016 The World Bank’s New Procurement Regulations 301

The World Bank’s New Procurement Regulations

Jędrzej Górski*

The World Bank has for decades influenced the regulation and international liberalisation
of public procurement markets. However, proliferating procurement chapters of trade agree-
ments and cheap commercial credit flooding emerging markets, along with new develop-
ment banks on the horizon, forced the Word Bank to conduct the first complex reform of its
procurement policies, and to compete for its share in the market of development aid. The re-
form has produced new Procurement Regulations to be implemented from July 2016 onwards.
New rules offer plentiful options, of how to configure procurement processes, and give bor-
rowers much more flexibility in terms of negotiating with bidders, or applying environmen-
tal and social considerations. Subject to the bank’s consent, the new rules allow the use of
borrower’s own or other development banks’ procurement rules, continuing a process initi-
ated with the introduction of Piloting Program on the Use of Country System in 2008. By do-
ing so, the new rules are meant to attract borrowers who could now develop their national
procurement systems and be compliant with international obligations without having to use
special procurement regimes for bank-financed projects.

I. Introduction on MDBs’ financing, to quote Reich, found them-

The World Bank (‘WB’), including the International
Bank for Reconstruction and Development (‘IBRD,’)1
and the International Development Association
(‘IDA’),2 has for decades influenced the regulation and
international liberalisation of public procurement
markets. Followed by other multilateral development
banks (‘MDBs’), the IBDR and the IDA have been im-
posing public-procurement-related requirements on
financed projects in parallel to public-procurement-
relevant trade agreements like the World Trade Orga-
nization’s (‘WTO’) Government Procurement Agree-
ment (‘GPA’).3 For long, developing countries relying
selves in a ‘waiting room’ for the GPA.4 At the same
time, the WB has seen itself as the ‘global leader in
good procurement for development.’5 As to the actu-
al numbers, in 2013, the WB added 285 new opera-
tions worth US$ 31.1 billion6 to its pre-existing about
1,600 operations worth US$ 173 billion,7 and carried
out a post-review of 9,268 contracts worth US$
7,252.50 billion,8 while the total value of contestable
public procurement in developing economies was es-
timated in 2012 at least US$ 825 billion.9
However, in the last two decades, WB’s domi-
nance has been challenged. On the one hand, prolif-
erating public procurement specific chapters of bi-

* Jędrzej Górski, Research Fellow at the Faculty of Law, Chinese
University of Hong Kong.
DOI: 10.21552/epppl/2016/4/8
1 Established in 1944 to grant loans to middle-income countries.
2 Established in 1960 to grant credits to the lowest-income countries.
3 First adopted in 1979 (signed in Tokyo on 12 April 1979, in force
1 January 1981 ‘GPA79’), and subsequently revised by (i) the
‘GPA87’ (signed in Geneva on 2 February 1987, in force 14
February 1988), (ii) the ‘GPA94’ (signed in Marrakesh on 15 April
1994, in force 1 January 1996), (iii) and the ‘GPA12’ (signed in
Geneva on 30 March 2012, in force 6 April 2014).
4 See A Reich, 'The New Text of the Agreement on Government
Procurement: An Analysis and Assessment' (2009) 12(4) Journal
of International Economic Law, 989, 994.
5 See World Bank, 'Procurement in World Bank Investment Project
Finance Phase I: A Proposed New Framework – revised’ (018
October 2013), para. 6 at 2, available at <http://siteresources
.worldbank.org/PROCUREMENT/Resources/
ProcurementProposedNewFrameworkOctober2013Final.pdf>
Last accessed on 20 June 2016.
6 See World Bank, 'Procurement in World Bank Operations.
Tables and Figures for FY13' (20 May 2014), point 1 at 1, avail-
able at <http://siteresources.worldbank.org/INTPROCUREMENT/
Resources/Final_Tables_and_Figures_for_Procurement_FY13.pdf>
Last accessed on 20 June 2016.
7 See: World Bank, 'Financial Management and Procurement in
World Bank Operations. Annual Report for FY12' (12 March
2013) SecM2013-0124, point 17.
8 See World Bank (n 6), tables 2.1-2.3 at 3-4.
9 See World Bank, 'The World Bank’s Procurement Policies and
Procedures: Policy Review: Initiating Discussion Paper' (29 March
2012) 68466, point 37 at 16.

Electronic copy available at: https://ssrn.com/abstract=2868920

302 The World Bank’s New Procurement Regulations
lateral and regional trade agreements modelled af-
ter the GPA have encroached upon WB’s regulatory
function.10 On the other hand, the cheap commer-
cial credit flooding emerging markets, along with
the establishment of new MDBs like the Asian In-
frastructure Investment Bank (‘AIIB’) on the hori-
zon, has forced the WB to evolve and compete for
its market share.11 Against this background, WB’s
management decided to work on its first complex
procurement reform in January 2011 and launched
the first round of consultations in May 2012, chiefly
in order to ‘sustain its leadership.’12 The core points
of the reform included (i) a shift from ‘one-size-fits-
all’ to ‘fit-for-purpose’ policy and a green light for
more innovative procurement methods, (ii) capaci-
ty-building by the use of country-procurement-sys-
tems, (iii) risk-based management along with more
focus on the quality and performance during con-
tract-administration, and (iv) harmonisation of WB’s
policies with other international instruments regu-
lating public procurement such as the GPA, RTAs, or
European Union’s (‘EU’) procurement directives.13
Eventually, new Procurement Regulations for Bor-
rowers (‘Procurement Regulations’) were approved
by WB’s Board of Directors in July 2015 and have
been applied to new projects from July 2016 on-
wards.14
This article seeks to review core elements of this
reform. This article starts by offering background in-
formation on (i) the history of WB’s procurement
policies, (ii) their harmonisation with other MDBs,
and (iii) avoiding conflicts between MDBs procure-
ment policies and trade agreement (in part II). Then,
it moves on to discuss the changes brought by Pro-
curement Regulations in terms of (i) procurement
procedures and their impact on international liberal-
isation of procurement markets, (iii) sustainable de-
velopment, (iv) other novel features, and (v) specific
rules for the selection of consultants (in part III). This
article concludes by trying to assess new Procure-
ment Regulations against the goals of the reform (in
part IV).
II. Background
1. Six Decades of Procurement Regulation
Since its inception, the World Bank has been re-
quired by the Articles of Agreement to “make
Electronic copy available at: https://ssrn.com/abstract=2868920
EPPPL 4|2016
arrangements to ensure that the proceeds of any loan
are used only for the purposes for which the loan was
granted, with due attention to considerations of econ-
omy and efficiency and without regard to political or
other non-economic influences or considerations.”15
However, the procurement process remained unreg-
ulated until 1951 when the International Competitive
Bidding (‘ICB’) was introduced in order to (i) break
up previous de facto monopoly of the US suppliers,
and (ii) prevent the IBRD from financing projects
coming from circles with vested interests in provid-
ing equipment, services or construction works for
specific projects.16 More regulation came in 1964
with the Guidelines on the Procurement of Goods,
Works and Non-consulting Services (‘General Guide-
lines’ also known as the ‘red book’) regulating the
ICB, followed by the separate Guidelines on Selec-
tion and Employment of Consultants (‘Consultant
Guidelines’ also known as the ‘green book’) first is-
sued in 1966.17
Yet in 1956, the WB ‘tied’ granted loans by limit-
ing eligible bidders to nationals of the IBRD (plus
Switzerland) and continued to finance mostly large
projects subjected to the ICB throughout the 1970s.18
Suppliers and contractors from Western Europe, the
10 See: World Bank (n 9), points 37-40 at 15-16,
11 See Ch L Pallas and J Wood, ‘Use of Country Systems for Procure-
ment: A Good Idea Gone Bad?’ (2009) 27 (2) Development Poli-
cy Review, 215, 220.
12 See: World Bank (n 9), 1 point; World Bank (n 5).
13 See World Bank (n 5), para 4 at v; World Bank (n 9), point 6, 2nd
tiret ix, point 8 at x and para 48 at 20; point 39 at 16, point 41 at
17, point 42 at 18-19. See also: J Jaeger, 'World Bank Tries Pro-
curement Reform to Cut Fraud' (2015) 12(143) Compliance Week
16; B Swick, H-J Priess and Ch R Yukins, 'International Procure-
ment Developments in 2015: Structural Reforms to International
Procurement Laws' GW Legal Studies Research Paper No.
2016-6, (Washington 2016), 8-9.
14 See World Bank, 'Procurement in World Bank Investment Project
Financing Phase II: The New Procurement Framework.' (11 June
2015), Annex F, Procurement Regulations for Borrowers.
15 See US Department of Treasury, 'Articles of Agreement. Interna-
tional Bank for Reconstruction and Development' (Bretton Woods
1 to 22 July 1944, as last amended 27 June 2012), section 5.b.
See also World Bank, 'Articles of Agreement. International Devel-
opment Association' (Washington effective 24 September 1960),
section 1.g.
16 See: R R Hunja. 'Recent revisions to the World Bank's procure-
ment and consultants selection guidelines' (1997) (6) Public
Procurement Law Review 217; World Bank (n 9), points 3 and 4
at 2.
17 See: Hunja (n 16), 221; World Bank (n 9), point 10 at xi, points 3,
4 at 2; S Williams, 'The Debarment of Corrupt Contractors from
World Bank-Financed Contracts' (2007) 36(3) Public Contract
Law Journal, 277, 279.
18 See World Bank (n 9), point 4 at 2.
EPPPL 4|2016
United States, Canada and Japan accounted for 62%
IBRD’s disbursement between 1966 and 1970, and for
80% of IDA’s disbursement in 1971.19 However, since
1966, the World Bank has allowed some forms of do-
mestic procurement in the case of smaller contracts
and even preferences for domestic suppliers and con-
tractors.20 This led, in the 1980s, to the development
of alternative procurement methods like the Nation-
al Competitive Bidding (‘NCB’) or ‘shopping.’21 Such
smaller contracts were subjected only to a limited
post-review by the WB staff22 whereas the largest
contracts subjected to the ICB continued to be ap-
proved ex ante and, since 1980s, also had to be based
on contract-templates and be accompanied with stan-
dard bidding documents (‘SBD’).23
An increasing reliance on local procurement (com-
bined with WB’s new focus on the efficiency and in-
tegrity of borrowers’ public expenditures, public-sec-
tor management and institutions) led to the introduc-
tion of Country Procurement Assessment Reviews
(‘CPAR’), first in the 1980s only for countries with
‘weaker’ procurement systems, and for all borrowers
since 2002. 24 This went in tandem with the provi-
sion of mechanisms for (i) the debarment of suppli-
ers/contractors in the case of corruption initially nar-
rowly defined as bribing in 1996 (since 2004 also bid-
rigging, collusion, and price-fixing etc.), and (ii) the
cancellation of related WB’s loans for such mispro-
curement.25 WB guidelines were constantly refined
in communication with WB’s major borrowers (last
time in July 2014). However, in the eyes of many,
guidelines became overly complicated while, at the
19 See ibid., point 24 at 10.
20 See ibid., point 4 at 2.
21 See ibid., points 4-5 at 2, point 6 at 3.
22 See ibid., points 6 at 3.
23 See ibid., point 9 at 3. See also: K V S K Nathan, 'World Bank
Procurement Sacred Cow or Case of Mad Cow Disease' (2001)
2(4) The Journal of World Investment & Trade, 713, 726; World
Bank (n 7), 716.
24 See World Bank (n 9), point 11 at 4, 5.
25 See ibid.., point 15 at 5, 6; Williams (n 17), 80.
26 See World Bank (n 9), point 9 at xi; E W Debevoise and Ch R
Yukins, 'Assessing the World Bank’s Proposed Revision of its
Procurement Guidelines' (2016) 52(21) The Government Contrac-
tor, 180.
27 See Swick (n 13), 11; World Bank, 'Expanding the use of Country
Systems in Bank-supported Operations: Issues and Proposals'
(Washington 4 March 2005), 31734.
28 See World Bank, ‘Use of Country Systems in Bank-Supported
Operations: Proposed Piloting Program’ (approved by the Bank’s
The World Bank’s New Procurement Regulations 303
same time, remained conservative like by disallow-
ing negotiated procurement methods.26 As such,
WB’s procurement rules could not help develop effi-
cient country-procurement-systems, instead often
force borrowing countries to use separate rules for
WB-financed projects and more flexible provisions
for other procurement (a practice known as ‘ring-
fencing’).27 Thus, in order to prevent ring-fencing,
WB’s executive directors agreed to launch works on
the use of country systems in September 2004 and
approved a piloting program in April 2008, which
was in force until the implementation of the dis-
cussed reform.28
2. Harmonisation with other MDBs
Meanwhile, since 1999, major MDBs have taken steps
to harmonise their procurement policies under the
WB’s leadership and under the coordination by the
Development Assistance Committee (‘DAC’) of the
Organization for Economic Co-operation and Devel-
opment (‘OECD’), so far resulting among others in (i)
alignment of procurement guidelines, (ii) adoption
of a number of harmonised SBDs, and (iii) creation
of cross-debarment mechanism among the MDB.29
In line with the 2003 Johannesburg Declaration and
2005 Paris Declaration on Aid Effectiveness, major
MDBs and the DAC have also jointly worked toward
common methods for assessing country procure-
ment systems and toward untying development
aid.30 In 2006, the Joint Venture for Procurement
Board of Executive Directors on April 24, revealed 19 June 2008)
R2008-0036. See also references made in footnote 27, ibid.
General Guidelines 2014, point 3.20; Consultant Guidelines
2014, point 3.12.
29 See World Bank (n 9), point 17 at 8. See also OECD/DAC, 'Rome
Declaration on Harmonization' (24-25 February 2003); United
Nations, 'Monterrey Consensus of the International Conference
on Financing for Development' (18-22 March 2002)
A/CONF.198/11, chapter 1, resolution 1, annex.
30 See OECD/DAC, 'A Framework for Developing Effective Procure-
ment Systems in Developing Countries: the Johannesburg Decla-
ration' (DAC High Level Meeting, 22-23 April 2003); OECD/DAC,
'Declaration of Paris on Aid Effectiveness' (2nd High Level Forum
on Aid Effectiveness, 3 February 2005) DCD/DAC/EFF(2005)1/FI-
NAL, points 3.vi and 31. See also: OECD Trade Directorate,
'Arrangement on Guidelines for Officially Supported Export
Credits' (19 December 1997) TD/CONSENSUS(97)70, 60209,
chapter 3; OECD/DAC, 'Accra Agenda for Action' (3rd High
Level Forum on Aid Effectiveness, 4 September 2008), points 28
and 31; OECD/DAC, 'Busan Partnership for Effective Develop-
ment Co-operation' (4th High Level Forum on Aid Effectiveness,
29 November-1 December 2011) points 18.e. and 19.b.
304 The World Bank’s New Procurement Regulations
chaired by the DAC and the WB drew up the Method-
ology for Assessment of National Procurement Sys-
tems‖ (MAPS), first tested on 22 countries, and then
used by the WB in its CPARs and in the abovemen-
tioned WB’s piloting program on the use of country
systems.31 The WB’s loans were untied in 2004 when
both General Guidelines and Consultant Guidelines
ceased to restrict the eligibility for bidding to nation-
als of WB members.32 Other MDBs have generally
followed those developments and have drawn upon
WB’s CPARs and MAPS, as well as have largely un-
tied their loans with the notable exception of the
Asian Development Bank.33 Most recently, even the
AIIB, initially believed by many to fend off from oth-
er MDB’s harmonisation efforts, pledged to pattern
its procurement policies on WB’s documents, use
MAPS and to offer untied loans from the beginning
of its operations (since January 2016).34
3. Conflicts with Trade Agreements
Finally, it must also be noted that in the case of po-
tential conflicts, public-procurement-related trade
agreements have always given precedence to WB’s
and other MDBs’ procurement rules. For example,
the most recent text of the GPA provides that the GPA
does not apply “under the particular procedure or con-
dition of an international organization, or funded by
international grants, loans or other assistance where
the applicable procedure or condition would be incon-
sistent with this Agreement,”35 and similar provisions
can be found in procurement chapters of RTAs or in
EU’s procurement directives.
Prima facie, such straightforward conflict-of-laws
rules might seem very favourable for the WB and
other MDBs. However, one could also claim that, in
the era of public-procurement-liberalising RTAs pro-
liferating among countries borrowing from MDBs,
such rules only add to the problem of ring-fencing
and thwart WB’s efforts to support development of
borrowers’ procurement capacity.36 Developing
countries have actually found themselves between
the devil and the deep blue sea, having to comply
with (i) specific rules for WB-financed projects on
the one hand, and (ii) different provisions of GPA-
modelled RTAs, affecting such countries’ national
procurement systems, on the other. And this ex-
plains well why, despite clear conflict-of-laws rules
in place, the WB placed the alignment of its new pro-
EPPPL 4|2016
curement rules with the GPA on the agenda of the
reform.37
III. New Regulations
1. General Background
The Procurement Regulations have replaced both
General Guidelines and Consultant Guidelines.38 In
addition, as a part of the new procurement frame-
work, previous ‘operational policies’ and ‘bank pro-
cedures’ (internal documents addressed to the WB’s
staff)39 have been replaced by Procurement Policy,
Procurement Directive, and Procurement Procure40
which altogether clarify how the WB’s staff shall im-
plement the Procurement Regulations.41
The absolute highlight of the New Regulations is
that, unlike previous guidelines, they widely facili-
tate the use of alternative procurement arrange-
ments (‘APA’).42 Subject to the WB’s consent, APAs
may include procurement rules of (i) borrowers’
agencies or entities, replacing the piloting program
31 See World Bank (n 9), para 64 at 29; See also references made in
footnote 28, point 5, 1st tiret.
32 See WB General Guidelines 2004, point 1.6; WB Consultant
Guidelines 2004, point 1.11. Compare with: WB General Guide-
lines 1999, point 1.6; WB Consultant Guidelines 2002, point
1.10.
33 See AfDB, 'Review of ADB’s Procurement Policy, Procedures and
Processes' (May 2014) Policy Framework Paper, points 8.2 and
15.2; ADB, 'Review of Member Country Procurement Eligibility
Restrictions at the Asian Development Bank' (ADF X Midterm
Review Meeting, October 2010) points 9-13.
34 See L Jin, ‘AIIB to Benefit Asia and beyond’ China Daily (New
York, NY, 28 December 2015) 12; AIIB, 'Procurement Policy'
(January 2016), point 5.8.1 and footnote 2 to point 5.4; AIIB,
'Interim Operational Directive on Procurement Instructions for
Recipients' (2 June 2016), point 4.9.1.
35 See GPA12, Article II:3(e)(iii).
36 See references made in footnote 27.
37 See references made in footnote 13.
38 See World Bank (n 14), Annex I – Summary of main changes
between current Procurement Guidelines1 and proposed pro-
curement Regulations for Borrowers, point 1.
39 See respectively: World Bank, 'Operational Policies: Procure-
ment' (January 2011, revised 1 July 2014) OP 11:00; World Bank,
'Bank Procedures: Procurement' (January 2011, revised July 2014)
BP 11.00.
40 See respectively, World Bank (n 14), Annex C, Annex D and
Annex E.
41 See generally, World Bank (n 14), Annex G – Comparison be-
tween OP11.00 and new Procurement Framework; Annex H –
Comparison between BP 11.00 and New Procurement Frame-
work.
42 See World Bank (n 14), point 3 at 1-2.
EPPPL 4|2016
on the use of country systems, or (ii) other MDBs or
bilateral aid agencies, which was not possible under
the previous system.43 Procurement under APAs still
needs to comply with (i) well-elaborated WB’s ‘core
procurement principles’ of value-for-money, econo-
my, integrity, fit-for-purpose, and (iii) the Procure-
ment Regulations’ governance-related provisions on
accountability, conflict of interests, ban on multiple
proposals, eligibility of bidders, non-compliance
with loan agreements, and handling complaints.44
Moreover, in the case of WB’s guarantees and pro-
curement financed through WB’s intermediaries,
Procurement Regulations do not apply at all.45 This
all implies that the role of the detailed procurement
procedures offered by the Procurement Regulations
will be diminished compared with previous guide-
lines, and will largely depend on the scope of APAs’
application.
2. Procurement Methods and
International Liberalisation
Various purchasing procedures under Procurement
Regulations need to be looked at along with their im-
43 See WB Procurement Regulations, point 2.3; note 39, OP 11:00,
points 9 and 10.
44 See WB Procurement Regulations, points 1.3 and 2.4.
45 See ibid. point 2.1; World Bank (n 14),, point 3 at 1-2.
46 See WB Procurement Regulations, point 7.1., Table 1.
47 See references made in footnote 13.
48 See GPA 12, Article IV.1.
49 See ibid.
50 See ibid., Article IV.2.
51 See ibid.. Article IV.6.
52 See WB General Guidelines 2014, point 1.3.
53 See ibid., point 2.7.
54 See ibid., point 2.12.
55 See ibid., point 2.15.
56 See ibid., 2.19.
57 See ibid., 2.28.
58 See references made in footnote 20.
59 See WB General Guidelines 2014, Appendix 2 points 5 and 8
and footnote 82 to point 8.
60 See respectively, ibid., points 2.66 and 2.68.
61 See ibid., point 3.2.
62 See ibid., point 3.3.
63 See ibid., point 3.5.
64 See ibid., point 3.7.
The World Bank’s New Procurement Regulations 305
pact on the international liberalisation of public pro-
curement markets. This is because the approach to
liberalisation, since the introduction of the ICB, has
always been a built-in feature of specific procurement
methods, now renamed as market approach options
(‘MAO’).46 And this is all the more true given the at-
tempts to align Procurement Regulations with the
provisions of the GPA,47 the purpose of which has
been to liberalise procurement markets. In very sim-
ple terms, the GPA opens ‘covered’ procurement (i.e.
the procurement of listed goods and services by list-
ed agencies or entities, and above high value-thresh-
olds) to international competition by imposing re-
quirements of national treatment,48 most-favoured-
nations clause,49 a ban of offsets,50 and a ban on dis-
crimination against foreign-owned local establish-
ments.51 For covered procurement, the GPA favours
open tendering and, only under certain conditions,
allows less competitive or negotiated methods, in-
cluding even direct sourcing whereby procurers
might only covertly and preater legem prefer domes-
tic to foreign content.
In contrast, previous General Guidelines favoured
the ICB52 which, among others required internation-
al advertising,53 application of SBDs,54 and the use
of (i) English, French, or Spanish,55 (ii) standards de-
termined by the International Standardization Or-
ganisation,56 and (v) fully convertible currencies.57
Nonetheless, the ICB also allowed mentioned domes-
tic preferences,58 which included price penalties
against (i) foreign goods of not more than 15%, and
(ii) foreign contractors of not more than 7.5 %, the
latter only applicable to projects realised in the least
developed countries. 59 The General Guidelines also
allowed a number of other procurement methods in-
cluding (i) modified ICB for programmes of imports
and procurement of commodities,60 (ii) limited inter-
national bidding (‘LIB’) if the pool of likely bidders
was limited, whereby procurers could directly invite
bids,61 (iii) the NCB in the case contracts unlikely to
attract foreign suppliers contractors for the reasons
such as meagre procurement value, labour-intense
character of procured works, or lower domestic cost
of procured content against its cost in international
markets,62 (iv) ‘shopping’ in the case off-the-shelf
products (not more than US$100,000) or basic civil-
engineering works (not more than US$200,000),63 or
(v) direct contracting for extensions of existing con-
tracts, supplementary supplies, or for purchases in
emergency.64 Importantly, interested foreigners
306 The World Bank’s New Procurement Regulations
could participate in the NCB but under the conditions
applicable to national bidders, including having to
(i) comply with local procurement rules and local bid-
ding documents, and (ii) use local language and cur-
rency.65
The Procurement Regulations have brought com-
plicated, yet largely editorial modifications. Domes-
tic preferences have remained in place (except for
procurement related to the development of industri-
al plants)66 despite the fact that (i) preferences’ mar-
gins were determined randomly, and (ii) preferences
were used only occasionally and, even if they were,
it had no material effect on the outcome of the bid-
ding process.67 Previous procurement methods, the
ICB included, have been (i) replaced by Approved
Selection Methods (‘ASM’) and Approved Selection
Arrangements (‘ASA’) determining details of pro-
curement process, and (ii) decoupled from approach-
es international liberalisation now determined by
mentioned MAOs.68
For the sake of good record, the ASMs include (i)
request for proposals, (ii) request for bids, (iii) request
for quotations, and (iv) direct selection. 69 The ASAs
include among others (i) competitive dialogue, (ii)
public-private partnerships, (iii) commercial prac-
tices, (iv) e-auctions, (v) imports, (vi) commodities,
and (vii) community driven development.70 In addi-
tion, core MAOs include (i) open competition, as a
preferred MAO, (ii) limited competition only allowed
if “there are only a limited number of firms or there
are other exceptional reasons that justify departure
from open competitive procurement approaches,” (iii)
international competition preferred for complex,
high-risk contracts above threshold set by the WB,
and (iv) national competition allowed for contracts
unlikely to attract foreign competition.71 On top of
that, procurement can be also be configured with
‘particular types of contractual arrangements’ includ-
ing (i) framework agreements, or (ii) performance
based contracts whereby “the payments are made for
measured outputs instead of inputs” like, for exam-
ple, in the case of contract for rehabilitation and
maintenance of roads within specified periods.72
The Procurement Regulations now give borrow-
ers a wide leeway in matching specific ASMs and
AOAs witch specific MAOs, subject only to obvious
limitations such as for example that (i) direct selec-
tion (an ASM) cannot be matched with any MAO, or
(ii) community driven development (an ASA) cannot
go in tandem with international competition.73 Un-
EPPPL 4|2016
like the General Guidelines, the Procurement Regu-
lations accept interactions between procurers and
bidders like by allowing (i) competitive dialogue (an
ASA) when procurers cannot define technical speci-
fications or relevant legal and financial arrangements
upfront, (ii) multi-stage procurement in the case of
request for proposals (an ASM) if a project involves
complex design works, (iii) free negotiation follow-
ing bid evaluations, yet only in the case of contracts
open to international competition and subjected to
WB’s prior review, or even (iv) commercial practices
so long as they are consistent with core procurement
principles.74
In essence, however, a lot has remained the old
way. The use of APAs or of majority of procurement
configurations deviating from open and/or interna-
tional competition will require WB’s approval. Pre-
viously, similar outcomes could be achieved via indi-
vidually granted ‘operational policy waivers,’ a num-
ber of which used to be granted each year.75 Among
procurement methods only electronic reverse auc-
tions are completely new while solutions like frame-
work agreements or public-private-partnerships
have now been slightly modified but first appeared
in previous guidelines already in 2011.76 Internation-
al competition and national competition (MAOs)
have simply replaced the ICB and the NCB. The re-
65 See ibid., points 3 and 3.4.
66 See WB Procurement Regulations, point 5.3.
67 See Nathan (n 23), 720; Ch Fletcher and A Myrna, ‘Background
Paper: Review of the World Bank’s Procurement Policies and
Procedures. The Use and Impact of the Bank’s Policy of Domestic
Preferences (World Bank, July 2012) 9, 5.
68 See footnote 46.
69 See respectively, (i) WB Procurement Regulations, points 7.3.-7.7,
(ii) ibid., points 7.8.-7.9, (iii) points 7.10, and (iv) ibid., points
7.11-7.13.
70 See respectively, (i) ibid., points 7.37-7.39, (ii) ibid., points
7.40-7.42, (iii) ibid., point 7.43, (iv) ibid., point 7.48, (v) ibid.,
point 7.49, (vi) ibid., point 7.50, and (vii) ibid., point 7.51.
71 See respectively, (i) ibid., point 7.14, (ii) ibid., point 7.15, (iii)
ibid., point 7.16, and (iv) ibid., point 7.1. table 1.
72 See respectively, (i) ibid., points 7.54-7.55 and Annex XV, (ii)
ibid., point 7.5.7 and points 2.4-2.5 to Annex VII.
73 In the case of direct selection, only the configuration table men-
tions a ‘direct’ MAO, yet such a MAO does not appear in the
Procurement Regulations’ main text. See ibid., point 7.1., Table 1.
74 See respectively, (i) ibid., point 7.38, points 2.2 and 3.1.to Annex
XIII (ii) ibid., point 7.28 and point 3.3. to Annex XII, (iii) ibid.,
point 7.30, and (iv) ibid., point 7.43.
75 See: World Bank (n 9), point 95 at 46; World Bank, 'Review of
Operational Policy Waivers' (25 July 2011), 76236.
76 See: World Bank (n 14), Annex I, points 31, 33 and 34; WB
Consultant Guidelines 2011, points 3.14 and 3.6.
EPPPL 4|2016
quirements of international competition related to
currencies, languages, publicity or the use of SBDs
are not unlike requirements previously imposed by
the ICB.77 The rule that “[i]f foreign firms wish to par-
ticipate in open national competitive procurement,
they are allowed to do so on the terms and conditions
that apply to national firms” repeats an identical so-
lution which was also previously applicable to the
NCB. 78 Finally, domestic preferences can still not be
applied to national competition (just like they could
not be previously applied to the NCB), and can only
be matched witch international competition com-
bined with various AOMs/AOAs (just like previous-
ly they could only be matched with the ICB).79
3. Sustainable Procurement
The actual revolution in WB’s procurement policies
can be seen in the recognition of procurers’ right to
integrate non-commercial considerations (green, so-
cial) at various stages of the procurement process.
The WB’s staff was traditionally strongly reluctant
to accept any such considerations but the reform had
77 See WB Procurement Regulations, points 6.6, 6.9, 6.16, 6.18.
78 See ibid., point 7.19; note 65.
79 See ibid., Annex VI, point 1.1.
80 See T Tucker, 'A Critical Analysis of the Procurement Procedures
of The World Bank' in S Arrowsmith and A Davies (eds), Public
procurement: global revolution (Kluwer Law International: Lon-
don 1998),153; World Bank (n 9), points 53-54 at 25.
81 See European Commission, Communication on the Public Pro-
curement in the European Union (1998) COM (l998) 143 final,
point 4.1 at 25.
82 See Case C-513/99 Concordia Bus Finland Oy Ab, formerly
Stagecoach Finland Oy Ab v Helsingin kaupunki and HKL-Bussili-
ikenne ECR [2002] I-07213, [34].
83 See: Directive 2004/18, paras. 1 and 29 of the preamble, Articles
19 23 6, 27, and Annex VII; Directive 2004/17, Preamble paras. 1
and 29 of the preamble, Article 34.6 and annex XXI.
84 See WTO Committee on Government Procurement, 'Committee
on Government Procurement - Revision of the Agreement on
Government Procurement as at 8 December 2006 - Prepared by
the Secretariat' (11 December 2006) GPA/W/297, points X.6 and
X.9. The assumption that the recognition of environmental con-
siderations was proposed by the EU can be made when consider-
ing that only the EU submitted a proposal of the new provisions
on technical specifications in 2001. See WTO Committee on
Government Procurement, 'Committee on Government Procure-
ment - Minutes of the Meeting Held on 21 February 2002' (2 May
2002) GPA/M/17, point 65 at 11.
85 See Procurement Regulations, point 5.9.
86 See ibid., Annex VII, point 3.2.
87 See ibid., Annex VII, 3.5; Directive 2014/24, Annex X, Directive
2014/25, annex XIV.
The World Bank’s New Procurement Regulations 307
to embrace the developments in the EU directives
and the GPA since the late 1990s.80
In short, in 1998, the European Commission first
issued a procurement-related sui generis communi-
cation which stated that it was “necessary to lay down
clear guidelines to purchasers on how they how envi-
ronmental and social criteria can be taken into ac-
count in their contract award procedures, while com-
plying with Community law, particularly as regards
transparency and non-discrimination and the public
procurement rules.”81 Subsequently, the Commis-
sion’s stance was confirmed in the(i) Concordia case
decided in 2002 referring to the 1998 Communica-
tion,82 and (ii) fourth generation procurement direc-
tives (passed in 2004) which referred to Concordia
and expressly allowed, among others, to support shel-
tered employment or protect environment and
labour rights.83 Meanwhile, negotiations on the text
of GPA12 were underway and most likely also on the
EU’s initiative; the GPA’s 12 text (agreed already in
2006) allowed incorporating environmental consid-
erations in technical specifications and in evaluation
criteria.84
The Procurement Regulations go even further pro-
viding that “[i]f agreed with the Bank, Borrowers may
include sustainability requirements in the Procure-
ment Process, including their own sustainable procure-
ment policy requirements where they are applied in
ways that are consistent with the Bank’s Core Procure-
ment Principles.”85 Sustainability requirements can
be applied at various stages of procurement, includ-
ing pre-qualification of firms, functional/technical
specifications, evaluation criteria, or contract terms
and conditions.86 Moreover, Procurement Regula-
tions also indicate that the “[t]he Borrower may adopt
international sustainability standards covering a wide
range of product and service groups.” And this, inter-
estingly, is in line with developments in the EU’s fifth
generation directives (to be implemented 2016-2018)
which list a number of almost universally accepted
agreements, to which suppliers/contractors have to
conform regardless of the place of their operations.87
4. Other Relevant Modifications
Other noteworthy changes to WB’s procurement
policies defy easy categorisations. To begin with the
subject of procurement, the Procurement Regula-
tions clearly allow a procurement of used and leased
308 The World Bank’s New Procurement Regulations
assets while previously only WB’s internal opera-
tional policies addressed this issue.88 Next, at the
stage of screening bids, procurers can now identify
abnormally-low prices and require higher perfor-
mance-security or reject bids in the case of unsatis-
factory clarifications by the bidders, which was not
possible before.89 Regarding evaluation criteria, the
WB emphasises allowing procurers to factor-in life-
cost, risk or innovation on top of the initial cost of
procurement. 90 However, under the previous Gener-
al Guidelines, procurers could similarly identify low-
est-cost bids based on factors such as delivery time,
operating costs, efficiency and compatibility of the
equipment, availability of service and spare parts,
and related training, or safety.91 An actual novelty in
the evaluation process can rather be seen in the in-
troduction of two-envelope system, assuring that an
assessment of bidder’s qualifications and technical
offers (first envelope) would be unaffected by pro-
posed prices (second envelope), which was previous-
ly only used in the selection of consultants.92
Finally, the Procurement Regulations have even-
tually, at least partly, regulated the timing of procure-
ment process by requiring (i) giving firms 20 or 30
days for the bids’ preparation in the case of respec-
tively national and international competition, and (ii)
a 10 days’ standstill-period after a notification of in-
tention to award a contract before the actual award,
in the case of large contracts subjected to WB’s pri-
or review.93
5. Consultant Guidelines
Although consultant-specific provisions have now
been merged with the general provisions, the Pro-
curement Regulations still include two largely sepa-
rate regimes whereby consultant-specific provisions,
in principle, continue to consist in selecting consul-
tants among shortlisted firms.94 Compared with the
previous Consultant Guidelines, the Procurement
Regulations now define more concisely the term ‘con-
sultant’ as being “a firm (acting either in its individ-
ual capacity or as part of a joint venture) or an indi-
vidual that provides specialized advice or services for
limited amounts of time without any obligation of per-
manent employment.”95
The Consultant Guidelines tangled various pro-
curement methods with specific criteria as regards
the consultants’ assessment. The quality and cost-
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based selection (‘QCBS’) used to be a preferred two-
stage method of selecting invited short-listed poten-
tial consultant, and included (i) cost-blind assessment
of consultants’ quality, followed by (ii) equally-
weighting assessment of price proposals.96 The Con-
sultant Guidelines also allowed (i) quality-based se-
lection (‘QBS’) in the case of complex tasks such as
engineering design for large infrastructural projects
or policy-studies of country-wide importance where-
by the final price was negotiated only with the bid-
der who submitted highest-rank-proposal in terms of
its merits; (ii) selection under fixed budget (‘FBS’) in
the case of uncomplicated and precisely defined con-
sulting tasks; (iii) least-cost selection (‘LCS’), only ap-
plicable to simple tasks like non-complex engineer-
ing design or audits, (iv) selection based on the con-
sultants’ qualifications (‘QCS’) in the case of small as-
signments or emergency; and (v) single source selec-
tion in exceptional cases.97
Like in the case of new general rules, the Procure-
ment Regulations have replaced previous procure-
ment methods with a number of MAOs (identical
with general rules98) and consultant-specific ASMs
and ASAs. The new ASMs in essence substitute the
previous most important procurement methods and
now include (i) QCBS, (ii) FBS, (iii) LCS, (iv) QBS, (iii)
‘CQS’, and (v) direct selection only applicable to in-
dividual consultants.99 AOAs additionally include
among others (i) commercial practices, (ii) non-prof-
88 See WB Procurement Regulations, points 5.8, 5.11.b; see foot-
note 39, OP 11:00, point 19; World Bank (n 14), Annex I point 12
at 5.
89 See WB Procurement Regulations, point 6.42-6.44; World Bank
(n 14), Annex I, point 16 at 6.
90 See Annex I, point 45 at 14-15. Compare: (i) WB Procurement
Regulations, Annex X, point 2.5, and (ii) WB General Guidelines,
point 2.59.
91 See WB General Guidelines 2014, point 2.52.
92 See WB Procurement Regulations, point 7.27. On Consultant
Guidelines, see further section: III.5.
93 See respectively, (i) WB Procurement Regulations, point 6.25, and
(ii) ibid., point 6.46; World Bank (n 14), Annex I, point 17 at 6.
94 See WB Procurement Regulations, point 8.3.
95 Compare: (i) ibid. Acronyms and Glossary, point 15, and (ii) WB
Consultant Guidelines 2014, point 1.3.
96 See WB Consultant Guidelines 2014, points 2.1, 2.15, 2.18, 2.25.
97 See respectively, (i) ibid. point 3.2, (ii) ibid., point 3.5, (iii) ibid.,
point 3.6, (iv) (iv) ibid., point 3.7, and (v) ibid., point 3.8-3.9.
98 See WB Procurement Regulations, points 8.21, 8.23, 8.24, 8.27.
99 See respectively, (i) ibid., points 8.7, 8.8, (ii) ibid., points
8.9-8.10, (iii) ibid., points 8.11-8.12, (iv) ibid., points 8.13-8.15,
(v) ibid., points 8.16-8.17, (vi) ibid., points 8.18-8.20.
EPPPL 4|2016
it organisations, or (iii) banks.100 On top of that,
framework agreements can now be also used for em-
ploying consultants, which was not possible under
the Consultant Guidelines.101 All ASMs and APAs
need to be matched with an open MAO, except for
(i) QCS which can also go in tandem with a limited
MAO, and (ii) direct selection.102
The application of international and national
MAOs also to consulting services has slightly im-
proved their international liberalisation. Similar to
the Consultant Guidelines, the new consultant-spe-
cific rules do not allow any price penalties against
foreigners, instead allowing other forms of discrim-
ination. Under the Consultant Guidelines, the WB
could agree to shortlist only domestic consultants if
they were available at a competitive price and inter-
national competition was prima facie not justified.103
In contrast, under the Procurement Regulations, sim-
ilar to the new general rules, the national MAO al-
lows to indirectly discriminate against foreigners
(like by using local language or advertising in local
media only104) but disallows to preclude foreigners
from competing for contracts.105
Altogether, after the reform, slightly modified
consultant-specific provisions are none the closer to
100 See ibid., points 8.25, 8.27, 8.29.
101 See ibid., point 8.33; World Bank (n 14), Annex I, point 34 at 12.
102 See WB Consultant Guidelines 2014, point 8.1. See also refer-
ences made in footnote 73.
103 See WB Consultant Guidelines 2014, point 2.7.
104 See WB Procurement Regulations: points 6.11, 6.17.
105 See ibid. point 8.24; note 14, Annex I, point 40 at 13.
106 See GPA12, Article XIII.1.f.
107 Until the adoption of the fourth-generation-directives, such
services were known as ‘non-priority’ or ‘Annex II.B’ services. See
Directive 2004/18, Annex II.B. In the case of non-priority ser-
vices, procurers were merely obliged to properly publish calls for
competition and prepare non-discriminatory technical specifica-
tions. In the fifth generation directives, the distinction between
priority and non-priority services was abolished. However, a
relaxed procurement regime limited to proper publicity, trans-
parency and equal treatment of bidders remained in place for
health-related, social and education services. See Directive
2014/24, Articles 92 and 93.1, Annex XVII.
108 See Pallas/Wood (n 11), 220.
109 See: World Bank (n 5), point 8 at 2; World Bank, 'Procurement
Policy Review. Feedback from Consultations with External Stake-
holders. Executive Summary' (consultations conducted between
May 2012 and February 2013), 8, available at <https://
consultations.worldbank.org/Data/hub/files/consultation
-template/procurement-policy-review
-consultationsopenconsultationtemplate/materials/
procurementpolicyreviewexternalstakeholdersfeedbackexecutives
ummary_1.pdf>
Last accessed on 15 July2016 (hereinafter: ‘Feedback’) .
The World Bank’s New Procurement Regulations 309
aligning with other instruments regulating public
procurement markets modelled after the GPA. How-
ever, consulting services related to research and de-
velopment are expressly exempted from the GPA106
while other consulting services are simply poorly
covered in annexes to the GPA or RTAs’ procurement
chapters. Even in the case of EU’s single market, no
strict procurement rules have applied to services re-
lated to legal advice education, recreation, culture,
health or sport, which somewhat overlap with the
WB’s concept of consulting services.107 One could
therefore claim the alignment of WB’s consultant-
specific rules with the GPA might not be necessary.
Seeing that procurement of such services is usually
subjected to very limited regulation, the risk of con-
flicts of rules, ring-fencing of consultant-specific pro-
visions, and of undermining WB’s efforts to devel-
op borrowers’ procurement capacity, has been min-
imal.
IV. Assessment
The WB seems to have come away unscathed from
the reform which it had to carry out under changing
circumstances of development-aid-business, in order
protect its market share. The reform has produced
the extremely embroiled and overdone Procurement
Regulations but one could see a clear method in this
‘madness’. The Procurement Regulations offer plen-
tiful options of how to configure procurement
processes (plus APAs if those options were insuffi-
cient), in order to attract borrowers who could now
develop their national procurement systems and be
compliant with international obligations without
having to ring-fence various procurement regimes
for various purposes. By doing so, the WB is contin-
uing a process initiated by the introduction of the pi-
loting program on the use of country system, the ac-
tual purpose of which could be far from the declared
capacity-building in borrowing countries. Namely, in
the course of works on the piloting program, WB’s
insiders were to admit that the WB was ready to take
part in creditors’ race to the bottom in terms of stan-
dards, only in order to ‘stay relevant.’108
Indeed, the reform has clearly met the expectation
of WB’s best clients that derive from vibrant middle-
income emerging economies who, during consulta-
tions, wanted less complicated rules especially for
low-value contracts.109 Less rigid rules and more re-
View publication stats
310 The World Bank’s New Procurement Regulations
liance on country systems were not well received by
multinational firms and, surprisingly, by some low-
income countries whereby the latter have argued that
(i) using country systems without prior proper capac-
ity-building might only add to the problems of fraud
and corruption, and reduce competition, and (ii) the
WB should not blend its capacity-building-related ef-
forts with its procurement policy sensu stricto.110 In
turn, big business has called for keeping one system
under WB’s strong leadership at least in the case of
the highest-value contracts because it has not been
enthusiastic about having to familiarise with a num-
ber of procurement systems along with their diver-
sified approaches to quality and sustainability-prob-
lems in place of the previous universal lowest-price
paradigm.111
Interestingly, the outcomes of the reform might
be more challenging for bidders from emerging
economies and multinationals relying on offshoring
their production than for businesses located in most-
ly-developed economies which offer high-valued and
technology-based works and goods. Indeed, the times
are gone when G7 countries still dominated supplies
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for WB-financed projects, or when WB’s procure-
ment policies were believed to discourage bidders
from establishing their permanent presence in bor-
rowing countries.112 In the last two decades, the busi-
ness of WB-financed contracts has been virtually tak-
en over by locally established subsidiaries of multi-
nationals or by firms originating from BRICS coun-
tries whereas high-valued, technology-based solu-
tions have been driven out of the market because of
WB’s lowest-price paradigm and aversion to negoti-
ated procedures.113 The WB’s new more flexible
stance on negotiations, commercial practices and sus-
tainability considerations might at least partly re-
verse this trend.
110 See Feedback (n 109), 8. In any case, all consulted countries
agreed that WB’s procurement policies, whatever they would be,
should be harmonised with policies of other MDBs and other
international instruments regulating procurement. See ibid, 8, 13.
111 See World Bank (n 5), point 8 at 2; Jaeger (n 13), 17.
112 See 'G7 suppliers dominate World Bank procurement'
(1998)(322) International Trade Finance 3; Nathan (n 23), 716.
113 See World Bank (n 9), point 6m first tiret at ix, points 31-36 at
12-15.