August 2015

Guide on Assessing Procurement Risks and

Determining Project Procurement Classification
 ABBREVIATIONS

CAPE – Country Assistance Program Evaluation

CPAR – Country Procurement Assessment Report
CPS – Country Partnership Strategy
CPRM – Country Portfolio Review Mission
CSA – Country and Sector/Agency Procurement Risk Assessment
CSO – civil society organization
DMC – developing member country
EA – Executing agency
e-GP - Electronic government procurement
GACAP II – Second Governance and Anticorruption Action Plan
IA – Implementing Agency
ICB – International Competitive Bidding
ICPA – Initial Country Procurement Assessment
IS - International Shopping
MAPS – Methodology for Assessment Procurement Systems
NCB – National Competitive Bidding
NGO – non-governmental organizations
OAI – Office of Anticorruption and Integrity
OECD-DAC – Organization for Economic Co-Operation and Development –
Development Assistance Committee
OSFMD – Operations Services and Financial Management Department
P-RAMP – Procurement Risk Assessment Management Plan
PC – Procurement Committee
PCA - Procurement Capacity Assessment
PEFA – Public Expenditure Financial Accountability
PPRR – Project Procurement-Related Review
PPTA - Project Preparatory Technical Assistance
PRA - Project Procurement Risk Assessment
PREI – Procurement Review for Effective Implementation
RD – Regional Department
RRP – Report and Recommendation of the President
TOR – Terms of Reference

NOTE
In this report, “$” refers to US dollars.

In preparing any country program or strategy, financing any project, or by making any
designation of or reference to a particular territory or geographic area in this document, the
Asian Development Bank does not intend to make any judgments as to the legal or other status
of any territory or area.
 CONTENTS
Page
I. INTRODUCTION ............................................................................................................. 3
II. PURPOSE ....................................................................................................................... 3
III. COUNTRY AND SECTOR/AGENCY PROCUREMENT RISK ASSESSMENT................ 6
A. Phase I: Planning the Assessment ....................................................................... 6
B. Phase II: Conducting the Assessment................................................................ 10
IV. PROJECT PROCUREMENT CLASSIFICATION ........................................................... 14
A. Procurement Environment Risk .......................................................................... 14
B. Project Characteristics ....................................................................................... 14
V. PROJECT PROCUREMENT RISK ASSESSMENT....................................................... 17
A. Planning the Assessment................................................................................... 17
B. Conducting the Assessment .............................................................................. 18
C. Project Procurement Risk Assessment .............................................................. 18
VI. IMPLEMENTATION SUPPORT..................................................................................... 22
VII. CONCLUSION .............................................................................................................. 22
 APPENDICES
Page

Appendix 1. Country Procurement Data Sheet ...................................................................... 23

Appendix 2. Country Procurement Assessment Tool ............................................................. 27
Appendix 3. Country and Sector/Agency Procurement Assessment –
Indicative Terms Of Reference........................................................................... 35
Appendix 4. Sector/Agency Procurement Assessment Tool .................................................. 37
Appendix 5. Country and Sector/Agency Procurement Assessment Report Outline .............. 53
Appendix 6. Potential Procurement Risks – Country/Sector/Agency ...................................... 56
Appendix 7. Risk Assesment and Risk Management Plan Template ..................................... 58
Appendix 8. Guide on Setting ICB And NCB Thresholds ....................................................... 59
Appendix 9. Guide on Setting Prior Review Thresholds for Procurement of Goods
and Works.......................................................................................................... 63
Appendix 10. Project Procurement Risk Assessment – Indicative Terms of Reference ........... 65
Appendix 11. Project Procurement Risk Assessment Questionnaire ....................................... 67
Appendix 12. Project Procurement Risk Assessment – Report Outline.................................... 75
Appendix 13. Project Procurement Risk Analysis .................................................................... 77
Appendix 14. Guidance on e-Procurement ………………………………………………………...78
 3

I. INTRODUCTION

1. ADB’s Governance Framework, as described in the Second Governance and

Anticorruption Action Plan (GACAP II)1, requires that country and sector2 procurement risks be
assessed during the preparation of Country Partnership Strategies (CPS) and mitigated at the
project level as part of project preparation. ADB’s Procurement Governance Review 3 also
recommended incorporating a risk based approach to procurement and establishing
procurement thresholds at the country level. These have been further highlighted in the
Midterm Review of Strategy 2020 Action Plan4, and the Procurement Reform – 10 Point Action
Plan5.

2. The procurement risks assessments are intended to:

(i) identify risks that country, sector, agency or project systems and/or practices could result
in sub-optimal use of ADB resources;
(ii) assess the severity of the risk; and
(iii) develop a practical risk management plan to address those risks that could adversely
impact project implementation and/or achievement of project outcomes.

The procurement risk assessment would also:

(i) provide information as to whether the EA/IAs procurement system / commercial
practices are acceptable to be used under country or agency procurement systems;
(ii) sector assessments provide clearer picture of project implementation path; and
(iii) as certain if sectors have different legal and regulatory framework and different market
conditions that our assessment gives full background of this.

II. PURPOSE

3. This guide is meant to supplement the GACAP II Implementation Guidelines 6 and

provide the processes, frameworks and tools for (i) conducting country, sector/agency and
project procurement risk assessments and (ii) determining the project procurement classification.
The guidelines are based on the cascading approach adopted under ADB’s Governance
framework as depicted in Figure 1. Sequence of activities to be undertaken during each stage of
the project cycle is in Figure 2.

4. The procurement risk assessments are fiduciary in nature, intended to inform ADB’s own
operations in a given country and/or sector. They may not be sufficient for planning and/or
undertaking broad country or sector procurement reforms, where more comprehensive
diagnostic assessments is likely required.

1
ADB. 2006. Second Governance and Anticorruption Action Plan. Manila.
2
Sector procurement risk assessments are required for priority sectors based on ADB’s current and expected
future operations
3
ADB, 2013. ADB Procurement Governance Review, Manila.
4
Midterm Review of Strategy 2020, April 2014
5
The Procurement Reform – 10 Point Action Plan was approved by VPAC in 2014 as part of the Midterm Review
of Strategy 2020
6
ADB. 2011. Revised Guidelines for Implementing ADB’s Second Governance and Anticorruption Action Plan
(GACAP II). Manila.
4

Figure 1: Procurement Governance Framework

 5

Figure 2: Sequence of Activities

6

III. COUNTRY AND SECTOR/AGENCY PROCUREMENT RISK ASSESSMENT

5. The Country and Sector/Agency Procurement Risk Assessments (CSA) shall be

undertaken at the Country Partnership Strategy (CPS) preparation stage. However, if significant
changes have been identified which could materially impact the risk ratings, they may be
updated at any time during the CPS period. For countries for which CPS is not prepared, an
abbreviated CSA may be conducted during project processing.

6. The objective of the CPS is to formulate ADB’s strategic operational approach in a given
developing member country (DMC). The CPS seeks alignment between the country’s
development strategy and the corporate strategic priorities of ADB. The CSA form part of the
thematic and sector analysis undertaken to support the preparation of a new CPS. In particular,
the CSA responds to GACAP II requirements.

7. The assessments take a two stage approach commencing with Phase I or a planning
phase which involves a literature review of existing country and ADB procurement assessments
and experience, using a tool for initial country procurement assessment and leading to
development of terms of reference (TOR) for field work and the final assessment. Phase II
involves mission and discussions with Government and other stakeholders, validation of the
initial country procurement assessment and culminating in the CSA. The CSA represents the
final assessment of country and sector/agency procurement risks in the form of a report and
informs the Procurement Risk Assessment and Management Plan (P-RAMP).

A. Phase I: Planning the Assessment

8. The country team (which may include OSFMD staff) is responsible for the CSA. The
assessment may be conducted either by staff or a consultant(s) under the direction of the
country team with input from OSFMD. An initial desk review is required In order to plan the
assessment and determine the resources required and to assess the quality and timeliness of
existing procurement assessments as well as ADB’s procurement experience in the country and
across key sectors.

1. Literature Review

9. The purpose of this step in the process is to identify information relating to public
procurement systems. These could include, but not be limited to:

a. Country Procurement Assessment Reports (CPAR): Introduced in July 2000, the

CPAR is the World Bank’s main instrument to assists its member countries in
analyzing their present procurement policies, organization, and procedures. ADB
and other development partner regularly participate in the CPAR exercise.
Publicly available CPARs can be found on the World Bank website at:
http://go.worldbank.org/RZ7CHIRF60.

b. Organization for Economic Co-operation and Development – Development

Assistance Committee (OECD-DAC) Methodology for Assessing Procurement
Systems (MAPS): Issued in February 2010, the MAPS is intended to provide a
common tool which developing countries and donors can use to assess the
quality and effectiveness of procurement systems. The MAPS process has 4
pillars (Legislative and Regulatory Framework; Institutional Framework and
Management Capacity; Procurement Operations and Market Practices; and
 7

Integrity and Transparency of the Public Procurement System), supported by 12

indicators and 54 sub-indicators.

c. Public Expenditure and Financial Accountability (PEFA): The PEFA Program was
founded in 2001 as a multi-donor partnership to assess the condition of country
public expenditure, procurement and financial accountability systems. The PEFA
Framework assesses a country’s public financial management across 31
indicators, one of which assesses the competition, value for money and controls
in procurement. Publicly available PEFA assessments can be found on the PEFA
website: www.pefa.org.

d. Internet Search: A variety of bilateral donors and non-governmental

organizations (NGOs) regularly assess public procurement systems, either from
the perspective of fiduciary risk assessment (i.e. the United Kingdom’s
Department for International Development, the Canadian International
Development Agency, Revenue Watch etc.). A web search on “procurement
fiduciary assessment [country name]” should be performed to identify additional
secondary sources of information. In addition, the web search should also
include e-procurement assessments by various IFIs, case studies, presentations
and/or research papers relevant to the country.

2. ADB’s Procurement Experience

10. In addition to the existing assessments of procurement systems, ADB’s own experience
at the country and sector/agency level should be reviewed.

i) Country Procurement Data Sheet: The current portfolio of active contracts in the
country, and priority sectors, is reviewed to identify potential risks. The portfolio is
reviewed from the perspective of total number of contracts, contract value,
current procurement thresholds, active contracts by threshold as well as
experience with contract variations. In addition indicators of procurement
efficiency, competition and effectiveness are reviewed. A sample country
procurement data sheet is provided as Appendix 1. Completed data sheets are
available on OpsPedia.

ii) Existing CPS, Country Assistance Program Evaluation (CAPE) and/or CPS final
review: The existing CPS and relevant lessons learned should be reviewed to
better understand ADB’s operation at the country level, and sector and thematic
priorities. For CSPs prepared after 2008, Procurement Risk Assessment and
Management Plans (P-RAMPs) should be available for the country and a number
of priority sectors. In particular, the quality, completeness and timeliness of the P-
RAMPs should be assessed.

iii) Office of Anticorruption and Integrity (OAI) Procurement-Related Reviews

(PPRRs): OAI conducts project procurement-related reviews on active ADB-
financed, administered and supported projects, to confirm compliance with
applicable policies, guidelines and the loan agreement. The focus is to prevent
and detect integrity violations. PPRR reports are publicly available at:
http://www.adb.org/site/integrity/project-procurement-related-review.
8

iv) Procurement Review for Effective Implementation (PREI) Reports: The PREI is
an evaluation tool developed by OSFMD to assess procurement performance
during project implementation. The objective is to identify actions that will assist
executing and implementing agencies to more effectively manage procurement
on time and within budget. The PREI assesses procurement plans,
organizational effectiveness and risk management. The PREI Methodology and
complete PREI reports are available on OpsPedia.

v) Country Portfolio Review Mission Report (CPRM): The purpose of the annual
CPRM is to review the overall performance of the portfolio in terms of completing
the projects within the approved time and budget as well as its contribution to
sector outcomes and outputs. The CPRM (i)examines country-specific common
project implementation problems and constraints, and work out appropriate
remedial measures; (ii) reviews projects with EAs, and propose solutions for
specific problems being encountered; (iii)undertakes field visits to selected
problem projects to assess the magnitude and effects of identified problems; and
(iv) agrees on a time-bound action plan with quantifiable and monitoring targets
to remedy or improve the performance of the portfolio. The CRPM report and the
Mission’s back to office report should be reviewed to identify potential
procurement risks.

vi) Sample of Project Procurement Risk Assessments and Procurement Plans:

Project Procurement Risk Assessments and procurement plans are required for
each ADB loan or grant financed project. At least one procurement plan, from a
recent Reports and Recommendation of the President (RRP), for each priority
sector should be reviewed to assess both quality and completeness. In addition,
reviewing procurement plans across sectors could indicate the need for
adjustments to the country and/or sector procurement thresholds.

vii) National Competitive Bidding (NCB) Annex. The existing arrangements for NCB
should be reviewed and an assessment should be made about whether these
continue to be relevant, or if there is a need to supplement or amend the
arrangements. The NCB Annex for some DMC can be found on OpsPedia.

viii) Procurement Committee (PC) Decisions: The PC decisions relating to

transactions involving Executing Agencies (EAs) and Implementing Agencies
(IAs) in ADB’s priority sectors should be reviewed. Key messages, and/or
findings may indicate possible weaknesses in country and/or sector procurement
practices.

ix) e-Procurement Assesments: ADB initiates assessments of e-procurement

systems in order to determine their acceptability for use in ADB financed
projects. The purpose of the assessment is to ensure compliance of the EA’s e-
procurement system with the MDB e-procurement guidelines and that the system
complies to the ADB procurement guidelines and processes associated with the
procurement of works, goods and services and consulting services.
 9

3. Application of the Country Procurement Assessment Tool

11. The initial country assessment identifies additional information required to complete the
CSA, determines the resources required to collect the information and the most appropriate
means by which to undertake the field work.

12. The information gathered from literature review and ADB’s experience will be used to
answer basic questions about a country’s public procurement environment in terms of policies,
rules, regulations and institutions at the national level. The initial country assessment will result
in a preliminary score for each of the 154 indicators, an average score for each of the four pillars
and a total average score for the country. The scores will indicate the level of maturity in country
procurement systems.

13. The country procurement assessment tool and scoring guide are provided in Appendix 2.
The tool is derived from the OECD MAPS and assesses the legislative and regulatory
framework governing public procurement, the institutional framework and management capacity,
procurement operations, market practices, the integrity and transparency of public procurement
systems. The tool also allows for an assessment of the gaps in information or where information
is dated, introduces some additional questions pertaining to e-procurement and additional
verification or updating that would be required during the CSA.

14. Regarding e-procurement, this guide includes additional questions which should be used
where there is an e-procurement system in place. Depending on level of maturity of e-
procurement system(s) and their potential to be mainstreamed in ADB financed operations,
assessment of e-procurement system may separately be undertaken by project/country team in
accordance with PAI 3.08

4. Terms of Reference – Country and Sector/Agency Procurement Risk

Assessment

15. The final step of the planning process is to develop TOR to guide the country and
sector/agency procurement risk assessments. The TOR will guide the work of either ADB staff
or staff consultants who are engaged to support CPS preparation. At a minimum, the mission
would: (i) confirm the findings of the initial country procurement assessment updating
information gaps and narrative description of the country procurement systems where
necessary, including the use of e-GP system; (ii) assess sector procurement performance; (iii)
assess country and sector procurement risks and identify mitigating measures (i.e. prepare the
P-RAMP); (iv) propose appropriate country, and where applicable, sector procurement
thresholds; and changes, if any, required to the NCB Annex; and (v) prepare the Country and
Sector/Agency Procurement Risk Assessment Report. A sample Terms of Reference is
provided as Appendix 3.

5. Country Considerations

16. When planning procurement risk assessments, consideration should be given to

achieving an acceptable level of comfort in the most cost effective manner possible. Depending
on the size of the country, the level of decentralization, the geographic focus of ADB’s forward
program or the size of ADB’s program in a given sector a modified approach to country and
sector/agency procurement risk assessment may be warranted. For example:
10

(i) For large DMCs, particularly when ADB’s program has a geographic
concentration or with a high degree of decentralized government services
(including procurement), consideration should be given to subnational
procurement assessments.

(ii) For smaller programs, with limited loan/grant financing, it may be more
appropriate to conduct the sector/agency procurement assessment as part of
project processing.

(iii) For larger programs, or with dominant sector agencies, the sector assessments
may be best conducted at the agency level, rather than aggregated at the sector
level.

(iv) If ADB loan and grant financed operations are focused on a particular subsector,
then it may be more appropriate to conduct the sector/agency assessment at the
level of that subsector.

(v) Fragile or conflict-affected situations (FCAS) require specific consideration, not

only with respect to how to assess country, sector and/or agency procurement
risks, but also how to identify opportunities for providing additional flexibility that
may be needed to enable effective project implementation.7

6. Communicating With the Government

17. Once the planning has been completed, the Country Team should arrange for the
assessment with the concerned client Government and key sector agencies. Consideration
should also be given as to the level of involvement of Government counterparts and other
development partners. This would be particularly relevant if a joint CPS is being considered.

B. Phase II: Conducting the Assessment

1. Confirm the Country Procurement Assessment and Complete the

Sector/Agency Procurement Assessments

18. The in-country assessment will involve discussions with all relevant stakeholders,
including the government, development partners, pertinent local industries and civil society
organizations (CSOs) that are active in ADB’s key sectors. The in-country assessment will
update and verify the information gathered during the desk review and assess sector/agency
procurement performance.

19. The sector tool is provided as Appendix 4. The tool should be applied to each of the
sectors assessed to determine the degree of variability in procurement capacity across sectors
and as compared to the expectations embodied in the national procurement systems. The
sector includes a questionnaire that should be used when conducting interviews and a scoring
guide. The sector score should reflect the average score across agencies. The questionnaire
should be used by the assessor. It is not designed as a self-assessment tool.

7
For further information with respect to FCAS planning considerations, refer to Working Differently in Fragile and
Conflict-Affected Situations – A Staff Handbook, (ADB. 2012. Manila)
 11

20. The results are analyzed and form the basis for completing the narrative assessment of
the country and sector/agency procurement systems. An outline for the Country and
Sector/Agency Procurement Assessment Report is provided in Box 1 below, an annotated
outline is available in Appendix 5.

Box 1: Country and Sector/Agency Procurement Risk Assessment Report Outline

Executive Summary
I. Introduction
II. Country Procurement Assessment
A. Overview
B. Strengths
C. Weaknesses
D. Procurement Risk Assessment and Management Plan (P-RAMP)
III. Sector/Agencies Procurement Assessment(s)
A. Overview
B. Strengths
C. Weaknesses
D. Procurement Risk Assessment and Management Plan (P-RAMP)
IV. Country (and where applicable, Sector/Agency) Procurement Thresholds
V Conclusion
Appendices

21. For the country, and each priority sector assessed, the report should cover the
description of the procurement systems (at the country level) and procurement practices (at the
sector or agency level); the strengths of the procurement systems/practice (generally these
would include areas with a score of 2 or 3 on average) and any weaknesses identified
(generally these would be areas with a score of 0 or 1 on average).

2. Assessing Country and Sector/Agency Procurement Risk

22. Risk Identification: The potential weaknesses in country procurement systems and
sector/agency procurement practices are further examined to determine the extent to which
these weaknesses pose risk to ADB loan or grant financed projects. An example of how to
convert an identified weakness into a potential risk is provided in Box 2.

Box 2: Risk Identification - Example

Weakness: Key sector agencies use direct selection as the default procurement method

Risk: Agencies are unfamiliar with undertaking competitive procurement processes

consistent with ADB Procurement Guidelines

Potential Impact: Lack of transparency, procurement delays, increased prices, reduced quality,
reduced life span of assets procured, reputation risk to ADB

23. An initial long list of risk events should be prepared (a list of indicative procurement risks
at the country and sector/agency level is provided as Appendix 6). Additional information and/or
verification may be required to identify risks as a result of the diagnostic assessments. In other
words, if a weakness is identified, it may be necessary to gather additional information to
determine the root cause of the weakness and how it may result in a risk.
12

24. Risk Assessment: Once risks have been identified, it is necessary to determine
whether or not the risk is likely to occur and if it were to occur, the likely impact it could have on
ADB financed operations. A risk would be considered “likely” if we would expect it to occur at
least once in every five procurement transactions. High impact would be if the risk could result
in larger than necessary costs, long delays and/or substandard goods and/or services procured.
The risks should be categorized as follows:

High - likely to occur, likely to have high impact if occurs

Substantial - unlikely to occur, but likely to have high impact if occurs
Moderate - likely to occur, but unlikely to have high impact if occurs
Low - not likely to occur, not likely to have high impact if occurs

25. Risk assessment requires knowledge not only of good procurement practices, but also of
country context and sector/agency specific conditions. The purpose of the risk assessment is to
identify situations or events and the extent to which they could hamper the effective
implementation of an ADB financed project. The categorization of risk also helps to guide the
nature and extent of mitigating measures required. An example is provided in Box 3.

26. Risk Mitigation and Management: Risks are assessed and categorized to help focus
and prioritize remedial action. There are a variety of options for managing risks, these include:

Risk mitigation – specific measures to minimize or eliminate unacceptable risks. Risk

mitigation measures are directed at reducing the severity of the risk, reducing the
probability of the risk materializing or reducing exposure to the risk.

Risk monitoring – mechanisms to track and report on exposure to risks, particularly to

ensure that neither the probability nor the impact associated with the risk is increasing.

Risk avoidance – mechanisms to avoid assuming the risk altogether.

Box 3: Risk Assessment – Example

Risk Impact Likelihood Overall

Agencies are unfamiliar High – Likely – without High – as the
with undertaking competition is a intervention (i.e. impact is high
competitive procurement guiding principle through and it is likely to
of sound public procurement plan occur, the overall
processes consistent with procurement, it and/or application risk level is
ADB Procurement results in both of ADB’s considered High.
Guidelines fair and cost procurement
effective guidelines) it is
procurement of likely that that there
goods and would be
services insufficient
competition

27. Particular attention should be accorded to mitigating high and substantial risks. The
purpose of risk mitigation is to strike a balance between the efficiency of the mitigation measure
and the cost of implementing it. In some cases, the only available mitigation measure may be
“avoidance”, for example, national procurement systems are so weak that 100% of ADB funds
 13

must be expended through ADB systems. Figure 3 provides a high level approach to
determining how and when to mitigate risks.

28. If an e-procurement system is used in the country (or by specific EAs), the assessment
should capture if this has helped in the management of procurement risks. The current scope
and plans to further improve the e-procurement system should be clearly mentioned. The report
should also mention risks related to use of e-procurement , if any and how they are planned to
be mitigated.

Figure 3: Risk Categories

28. Procurement Risk Assessment and Management Plan (P-RAMP): Once the risks
have been identified and categorized and mitigation measures identified, the P-RAMP is
prepared 8 . The risks should be disaggregated between the country level and the specific
sector/agency specific risk with overall risks ratings provided for both the country and individual
sectors assessed. The standard template is provided as Appendix 7.

29. The final step of the risk assessment is to determine the overall country procurement risk,
the overall procurement risk in each of the core sectors reviewed, as well as the proposed
thresholds for the use of ICB/NCB method and for Prior Review. The overall risk should be rated
as “High”, “Substantial”, “Moderate” or “Low” and are reflected in the P-RAMP. In considering
the overall score, the assessor considers the cumulative impact of the risks identified and the
likely hood of that impact occurring. This requires professional judgment and should not simply
be a straight average of individual risk ratings. An example of how the P-RAMP should be
prepared is found in Box 4. Appendix 8 and 9 provide guide on setting thresholds for the use of
ICB/NCB method as well as thresholds for Prior Review of procurement for goods and works.

8
The P-RAMP will be incorporated into the overall Risk Assessment and Management Plan in the Country
Partnership Strategy itself.
14

IV. PROJECT PROCUREMENT CLASSIFICATION

30. Project classification is a function of procurement environment in the country and sector
(or where applicable, agency) procurement systems and operations (as determined through the
country and sector/agency procurement risk assessments) and project specific characteristics.

31. Projects are classified, as either “Category A” or “Category B” at concept stage to guide
project preparation and due diligence. While still at a very preliminary stage of preparation, it
should be possible to identify tentative procurement requirements at this stage, and this is taken
into account when considering project specific characteristics. OSFMD must confirm the
classification during interdepartmental circulation of the project concept paper. For Procurement
Category A projects, OSFMD’s active involvement is envisaged, throughout project preparation
and processing.

A. Procurement Environment Risk

32. The first step is to assess the procurement environment risk based on the country and
sector/agency risk assessment based on a three-point scale (Low, Medium, and High) as
indicated in Figure 4. Low risk implies that procurement procedures and practices are closely
aligned with international best practices. Medium risk implies that procurement procedures and
practices are generally aligned with international best practices. High risk implies that
procurement procedures and practices need improvements to align more closely with
international best practices. When both the country and sector risks are considered high and/or
substantial, the environment risk is considered high. Where country and sector risk combined is
high/substantial or moderate/low, the environment risk is considered medium. And when both
country and sector risk is moderate and/or low, the environment risk is considered low.

Figure 4: Procurement Environment Risk

B. Project Characteristics

33. At the concept stage, there is limited information available on specific characteristics of
project implementation. However, an initial project procurement classification is required which
is used to determine the nature and extent of project preparation and due diligence from a
procurement perspective. The following table provides some of the key procurement related
questions that can help at this stage to anticipate the procurement effort in the project:
 15

Table 1: Procurement factors to consider when recommending “Category A” projects

Characteristic Assessor’s comments

& finding summary
Is the Procurement Environment Risk for this project assessed as “High”
based on the country and sector/agency risk assessments according to
Figure 4 above?
Are multiple (typically more than three) and/or diverse Executing (EAs)
and/or Implementing Agencies (IAs) envisaged during project
implementation? Do EAs/IAs lack prior experience in ADB project
implementation?
Are multiple contract packages and/or complex and high value contracts
expected (compare to recent donor projects in DMC)?
Does the project plan to use innovative contracts (PPP, Performance-
based, Design &Built, O&M, etc.)?
Are contracts distributed in more than three geographical locations?
Are there significant ongoing contractual and/or procurement issues under
ADB (or other donor) funded projects? Has misprocurement been declared
in the DMC recently?
Does the DMC have prolonged procurement lead times, experience
implementation delays, or otherwise consistently fail to meet procurement
timeframes?
Do EAs/IAs lack capacity to manage new and ongoing procurement? Have
EAs/IAs requested ADB for procurement support under previous projects?
OVERALL PROJECT CATEGORIZATION RECOMMENDED

34. If the answer to one or more questions in Table 1 is ‘Yes’, the project officer shall make
an assessment (with comments, if necessary) and determine if additional procurement support
to the EA/IA will be required or if despite the assessment the EA/IA has adequate resources
and/or institutional capacity to address procurement issues. The project officer shall also assess
if the ADB project team includes sufficient experience/skills to deliver such support or additional
support will be required from OSFMD. If additional support is required from OSFMD
procurement specialist, the project should be recommended as Category A. If not, it should be
recommended as Category B. The level of involvement of OSFMD procurement specialist under
Category A and B projects is in Table 2 below.

C. Procurement Responsibilities

35. For Category A projects, it would be expected that a procurement specialist is included
in the PPTA team and that the ADB’s project team includes sufficient procurement capacity.
This would typically require the active involvement of OSFMD staff to oversee the work of the
PPTA consultants and participate in project processing. However, during the PPTA following the
completion of the executing agency’s procurement capacity assessment, finalization of the
procurement plan or other procurement-related factors, the project classification could be
reconsidered. Table 2 provides an indicative level of procurement specialist involvement
through project preparation and due diligence; Table 3 provides an indicative level of
procurement specialist involvement through project implementation.
16

Table 2: Level of Procurement Activity during Project Preparation/Due Diligence

Procurement Specialist (OSFMD) Processing Divisions
 Provide input into PPTA TOR  Finance staff consultant participation in
 Review procurement related output from Mission team or OSFMD mission travel
the PPTA (including Procurement as applicable
Capacity Assessment and Project  Arrange for and finance EA/IA training
Procurement Risk Assessment and  Ensure adequate coverage of
Mitigation Plan) procurement related matters in RRP
 Participate, as member, in processing and PAM/FAM
Category A mission(s) to assist the project team in
projects preparing the PAM/FAM
 Support preparation of and approve
procurement plans and master bidding
documents
 Provide basic procurement training to
EA/IAs
 Advise on procurement risk mitigation
strategies, including appropriate
procurement review procedures
 Review RRP, PAM, Procurement Risk  Oversee and review procurement
Assessment and Procurement Plans as related output from PPTA consultants
part of interdepartmental review process  Prepare Project Procurement Risk
Category B Assessment and Mitigation Plan
projects  Prepare procurement plans
 Ensure appropriate coverage of
procurement related matters in the
PAM/FAM

Table 3: Level of Procurement Activity during Project Implementation

Procurement Specialist (OSFMD) Processing Divisions
 Provide support to procurement  Finance OSFMD mission travel as
supervision activities, particularly during applicable
review of initial contracts requiring post  Responsible for procurement
review supervision
 Participate, as member, in  Follow up on implementation of
administration mission(s) to assist the procurement risk mitigation strategies
Category A
projects project team in assessing the quality of
procurement/sampling of contracts
awarded by the EA/IA
 Approve amendments to procurement
plans
 Assist in monitoring implementation of
procurement risk mitigation strategies
 Review procurement packages where  Responsible for procurement
OSP1/2 counter signature and/or PC supervision activities, particularly during
no-objection is required review of initial contracts requiring post
Category B  Approve amendments to procurement review
projects plans  Assessing the quality of procurement
through sampling of contracts awarded
by the EA/IA
 Assist in monitoring implementation of
procurement risk mitigation strategies
 17

V. PROJECT PROCUREMENT RISK ASSESSMENT

36. ADB’s Project Administration Instructions require that project teams assess the capacity
of the executing agency (EA) and the implementing agency (IA), if any, to procure the goods,
works and consulting services as part of the project preparation process. The purpose of the
project procurement risk assessment (PRA) is to determine the overall procurement risk, and
establish appropriate review and supervision processes (including thresholds) and other
measures to mitigate these risks.

37. The project procurement risk should be informed not only by the country and
sector/agency procurement risks, but also by the characteristics of the proposed project. For
example, although large, a project with a single contract may have less risk than a smaller
project, with multiple implementing agencies, multiple geographic locations and a large number
of low value contracting packages. The framework guiding procurement risk assessment at the
country, sector and project level is based on the cascading approach adopted under ADB’s
Governance framework and indicated in Figure 1.

38. Risk assessment requires knowledge not only of good procurement practices but also of
country context and sector specific conditions. The purpose of the risk assessment is to identify
situations or events which could hamper the effective implementation of the ADB financed
project.

A. Planning the Assessment

39. The Project Team is responsible for the project procurement risk assessment. The
assessment may be conducted by staff9, the PPTA consulting team or a staff consultant under
the direction of the Project Team. In planning the assessment, consideration should be given to
the country and sector procurement risk assessments and whether the project has been
classified “complex” or “standard”.

40. The first consideration should be to assess the quality, timing and continuing relevance
of the country and sector/agency procurement risk assessments if these were prepared during
the CPS. If the assessments are not available, or are outdated, it may be necessary to complete
at a minimum, the country procurement risk assessment to better understand the systemic
issues that could impact project performance.

41. The project procurement risk assessment will usually involve, but not be limited to (i) the
review and, if necessary, update of country and sector/agency procurement risk assessments;
(ii) an assessment of project procurement arrangements and EA capacity; (iii) a narrative
assessment of procurement systems and capacity of EA including strengths and potential
weaknesses; (iv) risk assessment and preparation of a risk management plan; and (iv) initial
draft of the project’s procurement plans. An indicative TOR is provided in Appendix10.

42. It is essential that the project procurement risk assessment is realistic because this is the
only way for appropriate risk mitigations to be identified and built into the project design. If the
EA’s capacity is overstated, the absence of appropriate risk mitigations will inevitably result in

9
It is envisaged that staff from a regional department, resident mission or OSFMD, with procurement expertise,
could conduct the review. For projects with a “complex” classification, it is expected that OSFMD will, at a
minimum, oversee the conduct of the assessment and preparation of the project’s procurement plan.
18

implementation delays. It is also important that the assessment is conducted only on those units,
facilities and staff within the EA that will directly contribute to procurement activities under the
project (e.g. those within the Project Management Unit or separate Procurement Unit within the
EA). Assessing irrelevant entities will similarly distort the assessment resulting in inadequate
risk mitigation measures.

B. Conducting the Assessment

43. The primary source of information will be interviews conducted with counterpart staff,
development partners and other stakeholders using the Procurement Risk Assessment
Questionnaire (Appendix 11). The assessor may also conduct a workshop for contractors from
the area in which the project will be implemented to give them advance notice of the project and
procurement requirements, and to confidentially seek information as to their experience and
qualifications. This information may contribute to the final bid packaging and verification that the
country ICB threshold is appropriate.

44. The results are analyzed and form the basis for completing the narrative assessment of
the project procurement arrangements. An outline for the Project Procurement Risk Assessment
Report is provided in Box 1 below, an annotated outline is available in Appendix 10. The
methodology below describes how fiduciary risks should be incorporated into the Procurement
Risk Assessment and Management Plan (P-RAMP), which forms part of the Project
Procurement Risk Report.

Box 1: Project Procurement Risk Assessment Report Outline

Executive Summary
I. Introduction
II. Project Procurement Risk Assessment
A. Overview
B. Strengths
C. Weaknesses
D. Procurement Risk Assessment and Management Plan (P-RAMP)
III. Project Specific Procurement Thresholds (if applicable)
IV. Procurement Plan
V Conclusion
Appendices

C. Project Procurement Risk Assessment

45. Risk Identification: The potential weaknesses in agency procurement capacity are
identified in the Procurement Risk Assessment Questionnaire. Additional information and/or
verification may be required to identify risks as a result of the diagnostic assessments. In other
words, if a weakness is identified, it may be necessary to gather additional information to
determine the root cause of the weakness and how it may result in a risk. See Box 2 for an
example.
 19

Box 2: Risk Identification - Example

Weakness: Executing agency uses direct selection as the default procurement

method

Risk: Executing agency is unfamiliar with undertaking competitive procurement

processes consistent with ADB Procurement Guidelines

Potential Impact: Lack of transparency, procurement delays, increased prices, reduced

quality, reduced life span of assets procured, reputation risk to ADB

46. Risk Assessment: Once risks have been identified, it is necessary to determine
whether or not the risk is likely to occur and, if it were to occur, the impact it could have on the
project. Guidance on how to assess the likelihood of a risk occurring is included in the Project
Procurement Risk Analysis (Appendix 11). The risks should be categorized as follows:

High - likely to occur, will have high impact10 if occurs

Substantial - unlikely to occur, will have high impact if occurs
Moderate - likely to occur, will have low impact if occurs
Low - not likely to occur, will have low impact if occurs

47. Risk assessment requires knowledge not only of good procurement practices, but also of
country context and sector specific conditions. The purpose of the risk assessment is to identify
situations or events and the extent to which they could hamper the effective implementation of
the project. The categorization of risk also helps to guide the nature and extent of mitigating
measures required. An example is provided in Box 3.

Box 3: Risk Assessment – Example

Risk Impact Likelihood Overall

Executing Agency is High – Likely – without High – as the
unfamiliar with competition is a intervention (i.e. impact is high
undertaking competitive guiding principle through and it is likely to
of sound public procurement plan occur, the overall
procurement processes procurement, it and/or application risk level is
consistent with ADB results in both of ADB’s considered High.
Procurement Guidelines fair and cost procurement
effective guidelines) it is
procurement of likely that that there
goods and would be
services insufficient
competition

48. Risk Mitigation and Management: Through the Project Procurement Risk Analysis,
risks are assessed and categorized based on the responses in the Procurement Risk

10
Any risk that may result in actions that are inconsistent with the ADB Procurement Guidelines or
Guidelines on the Use of Consultants should be assessed as having ‘high impact’.
20

Assessment Questionnaire to help focus and prioritize remedial action. A variety of options exist
for managing risks, these include:

Risk mitigation – specific measures to minimize or eliminate unacceptable risks.

Risk mitigation measures are directed at reducing the severity of the risk,
reducing the probability of the risk materializing or reducing exposure to the risk.

Risk monitoring – mechanisms to track and report on exposure to risks,

particularly to ensure that the neither the probability nor the impact associated
with the risk is increasing.

Risk identification and documentation – measures to document and draw

attention to risks without needing to formally mitigate or monitor them.

Risk avoidance - mechanisms to avoid assuming the risk altogether

49. Particular attention should be accorded to mitigating high and substantial risks. The
purpose of risk mitigation is to strike a balance between the efficiency of the mitigation measure
and the cost of implementing it. In some cases, the only available mitigation measure may be
“avoidance”, for example, national procurement systems are so weak that 100% of ADB funds
must be expended through ADB systems.

If an e-procurement system is being used in the country (or by specific EAs), the assessment
should suggest areas (if any) where ADB financed transactions can benefit from its use. If the
use of e-procurement introduces additional risks, these should be candidly mentioned.

Figure 5 provides a high level approach to determining how and when to mitigate risks.

Figure 5: Risk Categories

 21

50. Procurement Risk Assessment and Management Plan (P-RAMP): Once the risks
have been identified and categorized and mitigation measures identified, the P-RAMP is
prepared. The standard template is provided as Appendix 7.

51. The final step of the risk assessment is to determine the overall project procurement risk
as well as the proposed project procurement thresholds for the use of ICB/NCB method and for
Prior Review. The overall risk should be rated as “High”, ”Substantial”, ”Moderate” or ”Low” and
are reflected in the P-RAMP. In considering the overall score, the assessor considers the
cumulative impact of the risks identified and the likely hood of that impact occurring. This
requires professional judgment and should not simply be a straight average of individual risk
ratings. An example of how the P-RAMP should be prepared is found in Box 4. Appendix 8 and
9 provide guide for setting project procurement thresholds for the use of ICB/NCB method as
well as thresholds for Prior Review of procurement of goods and works.

Box 4: Risk Assessment and Management Plan - Example

Risk Risk
Description Assessment Mitigation Measures or Risk Management Plan

Agencies are High High risk requires specific mitigation/management

unfamiliar with actions including but not limited to:
undertaking  Increased procurement oversight (lower
competitive country and/or sector prior review limits)
procurement  Systematic outsourcing of procurement to
processes independent procurement agents
consistent with  Introduce or strengthen electronic
ADB procurement
Procurement  Develop capacity through training of
Guidelines agency staff
 Revise NCB annex to address barriers to
entry
22

VI. IMPLEMENTATION SUPPORT

52. This guide, and associated tools, templates and terms of reference will be made
available on OpsPedia and will be updated as required. In addition, the Country Procurement
Data Sheet and other procurement related information will be updated regularly and also be
posted on OpsPedia. Training materials will be developed and training programs introduced for
OSFMD and RD staff.

VII. CONCLUSION

53. This guide and associated tools are provided to assist country teams to better assess
procurement risk, to ensure that this is effectively mitigated or managed through project
procurement arrangements. However, guidelines cannot substitute for professional judgment. It
is up to the ADB country team to determine how best to obtain sufficient comfort that ADB funds
will be used for intended purpose, with due regards to efficiency and effectiveness.
 23

Appendix 1

COUNTRY PROCUREMENT DATA SHEET

Note: (i) Contract information should be taken from last 2 to 3 years as described in paragraph
10(i); (ii) Source of data may be expanded to include contracts financed by the government or
from other sources; (iii) Information in these tables will be extensively used in this assessment,
particularly for setting ICB, NCB and prior review thresholds as described in Appendix 8 and 9.

COUNTRY NAME:

DATA AS:

Table 1.1 Country Procurement Thresholds and Procurement Methods

Country
Thresholds Number of Contracts
ICB ICB ICB ICB NCB NCB Direct
Description Goods Works Goods Works Goods Works Shop. Contract Total
Country
By Sector:
Transport
Energy
Education
Water/Urban
Other

Table 1.2 Total Contracts*

Contracts

Value
Description Number (Eqv. USD)
Total Country
By Sector:
Transport
Energy
Education
Water/Urban
Other
*Based on consolidation of Table 1.3 through Table 1.5
 24

Table 1.3 Goods Contracts**

Number of contracts whose value is
Total Goods Contracts (in equivalent USD)
from
Average from from 5 million more
Contract less 1 million 2 million up to than
Value Value than up to up to 10 10
Description Number (Eqv. USD) (Eqv. USD) 1 million 2 million 5 million million million
Total Country
By Sector:
Transport
Energy
Education
Water/Urban
Other

Table 1.4 Works Contracts**

Number of contracts whose value is
Total Works Contracts (in equivalent USD)
Average from from from
Contract 5 million 10 million 15 million
Value Value less than up to up to up to more than
Description Number (Eqv. USD) (Eqv. USD) 5 million 10 million 15 million 25 million 25 million
Total Country
By Sector:
Transport
Energy
Education
Water/Urban
Other

Table 1.5 Consultant Contracts**

Number of contracts whose value is
Total Consultant Contracts (in equivalent USD)
from
Average from from 5 million more
Contract less 400,000 3 million up to than
Value Value than up to up to 10 10
Description Number (Eqv. USD) (Eqv. USD) 400,000 3 million 5 million million million
Total Country
By Sector:
Transport
Energy
Education
Water/Urban
Other
** (please include contracts processed using e-procurement)
 25

Table 1.6 Contract Variations

Total Contract Original Contract Contracts with value
Variations plus all variations +/- 10% PC Threshold
% Active % Active
Description Number Value Number Value Portfolio Number Value Portfolio
Total Country
By Sector:
Transport
Energy
Education
Water/Urban
Urban
Other

Table 1.7 Efficiency

Elapsed Time to contract award*
Description PC ICB NCB Shopping
Total Country
By Sector:
Transport
Energy
Education
Water
Urban
Other
* From issue of invitation for bids to award of contract.
Can be applied to both ADB and Government financed contracts
 26

Table 1.8 Competition

GOODS* WORKS*
Average of 3 Average of 3 Average of 3 Average of 3
Largest ICB Smallest ICB Largest ICB Smallest ICB
contracts contracts contracts contracts
awarded in which awarded in which
to Local Firms Foreign Firms to Local Firms Foreign Firms
COUNTRY participated participated
Total Country
By Sector:
Transport
Energy
Education
Water
Urban
Other
*Based on data of ICB contracts awarded to local and ICB Bid Evaluation Report (BER).

Table 1.9 Effectiveness

Number of Number of Number of
Number of Retendered Cancelled Representations
Description Misprocurements Contracts Contracts or Complaints
Total Country
By Sector:
Transport
Energy
Education
Water
Urban
Other

Table 1.10 Use of e-Procurement permitted by ADB or other MDBs

Description ICB NCB Others

Total Country
By Sector
Goods
Works & related services
Consultant Selection
 27

Appendix 2
COUNTRY PROCUREMENT ASSESSMENT TOOL

Narrative / Verification or
Indicators Score
Clarification Required
1. Legislative and Regulatory Framework Average of
{MAPS Indicators 1 and 2} 1.1 – 1.5
1.1 Is there a comprehensive public procurement The Mission should provide a narrative
law, with supporting regulations, standard bidding response and determine whether or not
documents and operational manuals/guides? additional information or verification is
required.
1.2 Does the legal framework make open competitive
tendering the default method of procurement with
clarity as to when other less competitive methods
can be used?
1.3 Does the legal framework support non-
discriminatory participation (i.e. all eligible
bidders are allowed to participate, and it ensures
that registration, if required, does not constitute a
barrier to participation in tenders), and
transparent tender processes (including
advertisement, tender documentation, tender
evaluation, complaints mechanism)?
1.4 Are there restrictions or preferences based on
the nationality of bidders, consulting firms and/or
origin of goods, works and services?
1.5 Does the legal and regulatory framework enable
the use of an e-procurement system
2. Institutional Framework and Management Average of
Capacity 2.1 – 2.6
{ MAPS Indicators 3, 4, 5}
2.1 Is the procurement cycle required to be tied to an
annual budgeting cycle (i.e. can a procurement
activity commence only when budget has been
duly appropriated for it?)
2.2 Does the system foster efficiency through the use
of adequate planning?
2.3 Does the procurement system feature an
oversight/regulatory body?
2.4 Is there a nationwide public procurement capacity
development or professionalization program?
2.5 Is there a dedicated group institutionalized
for e-procurement in the public procurement
department?

2.6 If an e-procurement system is used, is there a

structured approach to capacity building and
analyzing its effective use?
3. Procurement Operations and Market Practices Average of
{MAPS Indicators 6, 7 and 8} 3.1 – 3.5
3.1 Is private sector competitive, well organized and
able to access the market?
3.2 Do measures exist to ensure the adequacy and
accuracy of cost estimates before bidding, and to
manage contract price variations?
28

3.3 Is the private sector able to access and

participate in e-procurement
3.4 Is there a mechanism to receive and handle
observations, complaints and protests?
3.5 Is country signatory to New York Convention on
Arbitration?
4. Integrity and Transparency of the Public Average of
Procurement System 4.1 – 4.4
{MAPS Indicators 9, 10, 11 and 12)
4.1 Is there a formal internal control and audit
framework?
4.2 Is information pertaining to public procurement
easy to find, comprehensive and relevant?
4.3 Can bidders and other stakeholders easily access
procurement information through the e-
procurement system?
4.4 Does the country have ethics and anticorruption
measures in place?
Average of Conclusion: describe the overall initial
Average Score for country 1,2 3 and 4 assessment

COUNTRY PROCUREMENT ASSESSMENT TOOL

SCORING GUIDE

Indicators/ Questions Scoring Guide

1. Legislative and Regulatory Framework
1.1 Is there a comprehensive 3 – These documents exist and generally consistent with each other.
public procurement law, with
supporting regulations, 2 – Procurement law exists, and not all other documents are available, or
standard bidding documents there are inconsistencies among the documents.
and operational
manuals/guides? 1 – Procurement law exists, but limited supporting regulations, standard
bidding documents and/or operational guidance.

0 – There is no public procurement law.

1.2 Does the legal framework 3 – The legal framework generally meets all the following conditions:
make competitive (a) Allowable procurement methods are established unambiguously at an
procurement the default appropriate hierarchical level along with the associated conditions under
method of procurement with which each method may be used, including a requirement for approval by
clarity as to when other less an official who is held accountable.
competitive methods can be
(b) Competitive procurement is the default method of public procurement.
used?
(c) Fractioning of contract to limit competition is prohibited.
(d) Appropriate standards for international competitive tendering are
specified and are in line with international good practices.

2 – The legal framework meets the conditions (a) and (b) and one of the
remaining conditions.

1 – The legal framework meets the conditions (a) and (b).

0 - The legal framework fails to substantially comply with any three of the
 29

Indicators/ Questions Scoring Guide

conditions a) through d) above.
1.3 Does the legal framework 3 – Legal framework supports non-discriminatory participation, and tender
support non-discriminatory processes in line with international good practices, including public
participation (i.e. all eligible advertising of business opportunities and sufficient time for bidders to
bidders are allowed to obtain documents and respond to the advertisement and effective
participate, and it ensures that complaints mechanism.
registration if required does
not constitute a barrier to 2 – Legal framework generally supports non-discriminatory participation,
participation in tenders), and and tender processes are generally transparent, with some weaknesses
transparent tender exist (for example lack of complaints mechanism, some barriers to
processes (including participation etc.).
advertisement, tender
documentation, tender 1 – Legal framework generally supports non-discriminatory participation,
evaluation, complaints but weaknesses exist that could limit participation.
mechanism)?
0 – Legal framework lacks both non-discrimination participation and
insufficient transparency of tender processes.
1.4 Are there restrictions or 3 – There is no nationality restriction and preference scheme.
preferences on the nationality
of bidders, consulting firms 2 – There is no nationality restriction, but there is a domestic preference
and/or origin of goods, works scheme.
and services?
1 – There is a limited nationality restriction (i.e. subject to clearly defined
exceptions), and/or a domestic preference scheme is adopted with
unreasonably high rates.

0 – Procurement is solely limited to national firms/individuals and/or origin

of goods, works and services.

1.5 Does the legal and regulatory 3 – National public procurement law requires the use of e-procurement by
framework enable the use of all of government, rules for e-procurement implementation included in the
an e-procurement system law and electronic and paper bid documents are considered equally valid.

2- National public procurement law required the use of e-procurement at

the national level, rules for e procurement implementation not completed
and electronic and paper bid documents may or may not be considered
equally valid.

1- National public procurement law does not require use of e-

procurement but key government agencies use e-procurement , rules for
e-procurement implementation not part of the law.

0 – National public procurement law does not require use of e-

procurement; no government agencies use e-procurement

2. Institutional Framework and Management Capacity

2.1 Is the procurement cycle 3 – The procurement cycle is adequately linked with the annual budget
required to be tied to an cycle with provision for advance procurement as necessary.
annual budgeting cycle?
2 – A procurement activity may start up to, but excluding contract award,
until the budget has been duly appropriated.
30

Indicators/ Questions Scoring Guide

1 – The law provides for procurement and budget cycles, but these are
not adequately linked (i.e. a procurement activity may commence and be
concluded even without a duly appropriated budget).

0 – No clear procurement and budget cycles are established by law.

2.2 Does the system foster 3 – There is a regular planning exercise under the law that starts with the
efficiency through the use of preparation of multiyear operating plans, followed by annual procurement
adequate planning? plans of associated expenditures, and culminating in the annual budget
formulation.

2 – The law provides for multiyear operating plans and annual

procurement plans that are independent of budget appropriation, but
these are at least required to reflect forward budget estimates.

1 – Annual procurement plans are required, but the law does not provide
for the preparation of multiyear or annual operating plans.

0 – The law does not require the preparation of procurement plans.

2.3 Does the procurement system 3 – There is an independent regulatory body or function which is clearly
feature an oversight/ assigned to various units within the government and specified in the legal
regulatory body? framework; the regulatory body is at an adequate level in government,
and financing is secured by the legal/regulatory framework.

2 – There is a regulatory body or functional designation to various units

within government but this is not part of the legal/regulatory framework
and/or is at an adequate level, but financing is subject to administrative
decisions and can be changed easily.

1 – Only partial responsibilities of a regulatory body are assigned or the

level of the body is too low or financing is inadequate for proper discharge
of its responsibilities.

0 – There is no body, or the body is too low with no independence to

perform its obligations.

2.4 Is there a nationwide public 3 – There is an externally recognized professionalization program.

procurement capacity
development and/or 2 – There is at least a government sponsored training program that is
professionalization program? implemented nationwide.

1 – There is a government sponsored training program, but it is

insufficient to meet national needs.

0 – There is neither a professionalization program nor a capacity

development program.
 31

Indicators/ Questions Scoring Guide

2.5 Is there a dedicated group 3 – There is a dedicated e-procurement unit established and imbedded in
institutionalized for e- public procurement agency to implement e-procurement
procurement in the public
procurement department? 2 - The dedicated e-procurement group is newly established in the public
procurement unit and does not have an active role in the implementation
of e-procurement; e-procurement function is still done by specific
government ministries.

1 - There is no e-procurement unit in the public procurement agency; an

ad-hoc group implementing e-procurement in the Ministries using e-
procurement.

0 – There is no e-procurement unit anywhere in government

2.6 If an e-procurement system is 3 – National e-procurement plan includes a comprehensive,
used, is there a structured professionally recognized capacity building/training program and a
approach to capacity building systematic change management plan is part of country’s long term
and analyzing its effective development plan
use?
2 – National e-procurement plan includes a good training program
targeting government officials and some change management. There is
some capacity for implementing e-procurement

1 – No formal e-procurement training program but there is a few hours of

training provided to government officials implementing e-procurement; no
change management. There is limited capacity for e-procurement in the
agencies implementing e-procurement

0 – There is neither a training or change management program.

3. Procurement Operations and Market Practices
3.1 Is private sector competitive, 3 – The private sector is competitive, well organized (e.g., professional
well organized and able to associations exist) and able to participate in the competition of public
access the market? procurement contracts.

2 – There is a reasonably well functioning private sector, but competition

for large contracts is concentrated in a relatively small number of firms.

1 – The private sector is relatively weak and/or competition is limited

owing to monopolistic or oligopolistic features in the market.

0 – The private sector is not well organized and lacks capacity and
access to information for participation in the public procurement market.
3.2 Do measures exist to ensure 3 – Detailed measures exist along with clear guidelines to check the
the adequacy and accuracy of adequacy and accuracy of cost estimates and proposed variations.
cost estimates before bidding,
and to manage contract price 2 – Some measures exist, but these do not provide sufficient guidance.
variations?
1 – There is a requirement to check the adequacy and accuracy of cost
estimates and proposed variations, but no measure (indicator) or
guidance provided.
32

Indicators/ Questions Scoring Guide

0 – There are no measures (indicators) and/or requirements.
3.3 Is the private sector able to 3 – The private sector is able to access all national public procurement
access and participate in e- information and policies and transact though the system (register
procurement electronically in the registry system, submit bids or proposal online; use
credit cards and other payment modes and receive payments through the
system); foreign bidders able to participate. There is adequate help desk
support.

2 - The private sector is able to access most of the national public

procurement information and policies and partly transact through the
system (limited to 2-3 functionalities only). Foreign bidders are not able
to participate. Limited help desk support

1 - The private sector is able to access only a limited amount of

procurement information and policies, but transacts manually. No help
desk.

0 - The private sector is not able to access and participate in e-

procurement.

3.4 Is there a mechanism to 3 – There is an independent review body that has clear authority and is
receive and handle bound by reasonable procedures and timelines.
observations, complaints and
protests? 2 – There is an independent review body, but the mechanisms for
decision-making and enforcement are unclear or cumbersome.

1 – There is a formal review mechanism, but there is no independent

review body.

0 – There is no formal review mechanism.

3.5 Is country signatory to New 3 – Yes, and there are several cases of successful process and
York Convention on enforcement of arbitrary proceedings.
Arbitration?
2 – Yes, and there are several cases of enforcement of arbitrary
proceedings but with relatively long process and/or delays.

1 – Yes, but there is no case can be identified to confirm whether an

arbitrary proceeding has been successfully enforced, or there are cases
of unsuccessful enforcement of arbitrary proceedings.

0 – No
4. Integrity and Transparency of the Public Procurement System
4.1 Is there a formal internal 3 – This is provided by law, and there are adequate internal control and
control and audit framework? audit mechanisms and institutions to oversee the procurement function.

2 – This provided by law, and there are implementing guidelines, but the
mechanisms and institutions are not adequately established.

1 – This is provided by law, but there are no implementing guidelines and

no mechanisms and institutions.
 33

Indicators/ Questions Scoring Guide

0 – The law does not provide for a formal internal audit and control
system.
4.2 Is information pertaining to 3 – Information on procurement is easily assessable in media of wide
public procurement easy to circulation and availability. The information provided is centralized in a
find, comprehensive and common place, is relevant and complete.
relevant?
2 – Information is posted in media not readily and widely accessible or
not user-friendly for the public at large OR is difficult to understand to the
average user OR essential information is lacking.

1 – Information is difficult to get and very limited in content and

availability.

0 – There is no public information system as such and it is generally up to

the procuring entity to publish information.
4.3 Can bidders and other 3 – The private sector and civil society are able to access national
stakeholders easily access procurement information through the system
procurement information
through the e-procurement
2 - The private sector and civil society are able to access some national
system?
procurement information through the system

1 - The private sector and civil society are able to access a limited
amount of national procurement information through the system

0 - The private sector and civil society are not able to access national
procurement information through the system
4.4 Does the country have ethics 3 – Tender documents including adequate provision on fraud and
and anticorruption measures corruption; fraud and corruption in procurement is defined; specific
in place? measures are in place and implemented related to conflict of interest;
responsibilities and consequences for those found guilty of fraud or
corruption is clearly described; ample evidence of enforcement; special
measures are in place for detection and prevention of corruption
associated with procurement.

2 – Tender documents generally cover fraud and corruption but without

consistency; conflict of interest is defined and highlighted in relevant
regulations; no specific definition of fraud or corruption in procurement;
some evidence of enforcement; government anticorruption program does
not include special measures related to public procurement.

1 – Few tendering documents contain language pertaining to fraud and

corruption; there is no specific policy, procedure or framework governing
conflict of interest; no specific description of individual responsibilities and
consequences with respect to public procurement; evidence of
enforcement is weak; no effectively integrated anticorruption program.

0 – Tender documents generally do not cover fraud and corruption;

legal/regulatory framework does not deal with fraud and corruption; there
is no evidence of enforcement; the government does not have an
anticorruption program or codes relating to conflict of interest.
34
 35

Appendix 3

COUNTRY AND SECTOR/AGENCY PROCUREMENT ASSESSMENT –

INDICATIVE TERMS OF REFERENCE

A. Background

This section should include the background to the CSA, either to support a new CSP, to support
the preparation of an RBL, to support an update of the CSP etc. In addition, the results of the
initial country assessment should be included.

B. Purpose and Scope of the Assessment

Purpose: The country and sector/agency procurement risk assessment is intended to (i) identify
risks that national or sector systems and/or practices could result in sub-optimal use of national
and/or ADB resources, either through leakage or inefficiency; and (ii) assess the severity of the
risk; and (iii) develop a practical risk management plan to address at a minimum high or
significant procurement risks at the country and sector level.

Scope: The review team will:

i) Assess strengths and weaknesses in country procurement systems, including e-

procurement systems, from the perspective of the legal and regulatory
framework; the institutional framework and management capacity; procurement
operations and market practices; integrity and transparency of the public
procurement systems, including the maturity of e-GP system in the country.

ii) Assess strength and weaknesses in sector/agency procurement systems and

practices from the perspective of the legal and regulatory framework; the
institutional framework and management capacity; procurement operations and
market practices; integrity and transparency of the public procurement systems.

iii) Identify and evaluate procurement risks at the country and sector/agency level.

iv) Propose risk mitigation and management strategies and/or activities.

v) Propose country, and where applicable sector specific, procurement thresholds.

C. Approach and Methodology

The review will include, but not be limited to:

i) Validation or update of initial country assessment – primarily through consultation

with government counterparts, development partners and other relevant
stakeholders using the country tool.

ii) Assessment of sector/agency procurement performance – based on interviews

with government counterparts, development partners and relevant stakeholders
supported by sampling of specific procurement transactions. The sector/agency
tool should be completed for each of the key agencies within the sector; the
average score for the sector is then computed.
36

iii) Prepare a narrative description of the country and sector/agency procurement

systems, including identification of strengthens and weaknesses.

iv) Identify and assess procurement risks, on the basis of degree of impact and
likelihood of occurrence using the following scale:
High: likely to occur, high impact if occurs
Substantial: unlikely to occur, high impact if occurs
Moderate: likely to occur, low impact if occurs
Low: unlikely to occur, low impact if occurs

v) Propose risk mitigation/management strategies to address identified risks:

High: risk mitigation recommended
Substantial: risk mitigation/monitoring recommended
Moderate: risk monitoring recommended
Low: risk documentation/identification

vi) Determine overall country, and where applicable, sector/agency procurement risk
rating.

vii) Propose country, and where applicable, sector/agency procurement method

thresholds and confirm prior review limits.

viii) Propose changes, if necessary, to the National Procurement Annex

ix) Summarize findings in the Country and Sector/Agency Procurement Risk

Assessment Report, including the maturity of e-GP system in the country (outline
provided).

x) Country Partnership Strategy Inputs prepared (including P-RAMPS).

D. Key Deliverables

i) Country and Sector/Agency Procurement Risk Assessment Report.

ii) CPS inputs (including P-RAMPS).

E. Consultants Terms of Reference

To be prepared if consultants are to support the exercise, number of consultants,

specific skills and expertise will depend upon the amount of field work required, the number of
sectors to be assessed, and the specific procurement issues identified during the initial country
procurement assessment.
 37

Appendix 4

SECTOR/AGENCY PROCUREMENT ASSESSMENT TOOL

Summary Sheet
Initial Verified Sector/
Country Country Agency
11
Indicators/Questions Score Score Scores Comments
1. Legislative and Regulatory Framework Average Average Average
1.1 Does the national public procurement law Scores Key features,
(including supporting regulations, standard should be strengths and
bidding documents and operational provided weaknesses that
manuals/guides) apply to the sector? for each distinguish the sector
sector from the country
assessed assessment should
be identified

1.2 Is the supply market for the sector

sufficiently competitive to give full effect to
the national procurement law and/or open
competitive tendering?

1.3 If there is a sector specific legal framework,

does it support non-discriminatory
participation, transparent tender processes
(including advertisement, tender
documentation, tender evaluation,
complaints mechanism)?

1.4 Is the sector subjected to excessive

regulation or government control such that
competition is limited or non-existent?

1.5 Is there a legal and regulatory framework

that enables the agency to use an e-
procurement system

2. Institutional Framework/Management Average Average Average

Capacity
2.1 Is the procurement cycle in the sector
required to be tied to an annual budgeting
cycle (i.e. can a procurement activity
commence only when budget has been duly
appropriated for it?

2.2 Does the system foster efficiency through

the use of adequate planning?

2.3 Does the procurement system in the sector

feature an oversight/regulatory body?

11
If the sector is fully consistent with the country procurement system on an issue, apply the score allocated to the
corresponding question in the country assessment.
38

Initial Verified Sector/

Country Country Agency
11
Indicators/Questions Score Score Scores Comments
2.4 Is there a public procurement capacity
development or professionalization
program?
2.5 Is there a dedicated group
institutionalized in the agency structure
for e-procurement?

2.6 If an e-procurement system is used, is there

a structured approach to capacity building
and analyzing its effective use?

3. Procurement Operations/ Market

Average Average Average
Practices
3.1 Is private sector competitive, well organized
and able to access the sector market?

3.2 Do measures exist in the sector to ensure

the adequacy and accuracy of cost
estimates before bidding, and to manage
contract price variations?

3.3 Is the private sector able to access and

participate in the agency’s e-procurement

3.4 Is there a mechanism in the sector to

receive and handle observations,
complaints and protests?

4. Integrity and Transparency of the Public

Average Average Average
Procurement System
4.1 Is there a formal internal control and audit
framework in the sector?

4.2 Is information pertaining to public

procurement in the sector easy to find,
comprehensive and relevant?

4.3 Can bidders and other stakeholders easily

access procurement information through the
agency’s e-procurement system?

4.4 Does the sector have ethics and

anticorruption measures in place?

OVERALL SCORES Average Average Average

 39

SECTOR/AGENCY PROCUREMENT ASSESSMENT

QUESTIONNAIRE
12
Indicators/Questions Sector/Agency Questions Score Narrative
1. Legislative and Regulatory Framework
1.1 Does the national Is the sector exempted by
public procurement legislation from being subject
law (including to the national public
supporting procurement law?
regulations,
standard bidding Even if subject to the national
documents and public procurement law, does
operational the sector tend to follow it?
manuals/guides)
apply to the sector? Do agencies in the sector use
government-issued public
procurement manuals or
guidance?

Have government-issued
documents been tailored to
meet sector requirements?

In absence of government-
issued documents, does the
sector have its own standard
bidding documents/
guidelines?
1.2 Is the supply Is competitive bidding a
market for the common feature under the
sector sufficiently sector?
competitive to give
full effect to the Is there a core of suppliers in
national the sector who regularly
procurement law submit responsive bids?
and/or open
competitive What proportion, by %, of the
tendering? sector’s procurement is
undertaken through open
competitive bidding?

What is the average number

of bidders for publicly bid
contracts?

Do EAs tend to make

sufficient efforts to attract bids
(e.g. adequate advertising,
bidding periods)?

Is there availability and quality

of suppliers, labor force and/or
related goods and services in
the domestic market?

12
Describe how the sector meets the guidance applicable to the score allocated, or other justification for the score.
40
12
Indicators/Questions Sector/Agency Questions Score Narrative
1.3 If there is a sector Has the sector adopted non-
specific legal discriminator, transparent
framework, does it tender processes?
support non-
discriminatory What is the average number
participation, of bidders for publicly bid
transparent tender contracts?
processes
(including
advertisement,
tender
documentation,
tender evaluation,
complaints
mechanism)?
1.4 Is the sector Does the sector apply a
subjected to domestic preference scheme?
excessive
regulation or Does the sector require pre-
government control registration of bidders?
such that
competition is Are there acceptable
limited or non- provisions in the sector for the
existent? participation of State Owned
Enterprises?
1.5 Does the legal and Does the sector/agency abide
regulatory by the rules, regulations and
framework enable guidelines for the use of e-
the sector/agency procurement incorporated in
to use an e- the national procurement
procurement laws?
system
Are electronic and paper
documents considered as
equally valid by the
sector/agency?

Are there sector/agency

specific tender/bidding
procedures, contract
management processes and
approval ceilings in the e-
procurement implementation
2. Institutional Framework and Management Capacity
2.1 Is the procurement Are procurement plans in the
cycle in the sector sector prepared on as part of
required to be tied the budget planning and
to an annual formulation process?
budgeting cycle
(i.e. can a Do systems and processes in
procurement the sector or key agencies in
activity commence the sector require certification
only when budget of availability of funds before
has been duly solicitation of tenders?
 41
12
Indicators/Questions Sector/Agency Questions Score Narrative
appropriated for it?
2.2 Does the system Does the sector, or key
foster efficiency agencies in the sector, have a
through the use of formalized procurement
adequate planning? planning process(s)?
2.3 Does the Does the sector fall under the
procurement remit of the national
system in the oversight/regulatory body?
sector feature an
oversight/regulatory If a national body does not
body? exist, is there a sector-specific
body that oversees/regulates
procurement?
2.4 Is there a public What proportions of
procurement procurement-related officers
capacity and staff in the sector have
development or been trained under the
professionalization national or sector capacity
program? development program or
participated in any formal
procurement training
program?
2.5 Is there a Does the sector/agency use
dedicated group the national e-procurement
institutionalized system or does it use its own
for e-procurement e-procurement system?
in the
sector/agency’s Is e-procurement strategically
procurement positioned in the
unit`? sector/agency’s governance
map/long term development
plan?

How is e-procurement
positioned within the overall
sector/agency structure?

Does the sector/agency have

sufficient IT infrastructure to
support e-procurement

2.6 If an e-procurement What is the sector/agency’s e-

system is used, is procurement capacity to
there a structured implement system?
approach to
capacity building
Does the agency/e-
and analyzing its
procurement unit recognize
effective use?
the need for knowledge and
skill building for the new way
of working under e-
procurement
42
12
Indicators/Questions Sector/Agency Questions Score Narrative

3. Procurement Operations and Market Practices

3.1 Is private sector Is the private sector well
competitive, well organized and able to access
organized and able the sector market?
to access the
sector market? Do civil society organizations
regard public procurement in
the sector to be open and
accessible to the market?
3.2 Do measures exist What percentages of contracts
in the sector to are awarded for values less
ensure the than the original cost
adequacy and estimates?
accuracy of cost
estimates before What percentage of contract
bidding, and to variations amount to a
manage contract cumulative impact of more
price variations? than 10% of the original
contract price?
3.3 Is the private sector What functions exist and are
able to access and being used in the
fully participate in sector/agency e-procurement
the agency e- system?
procurement
activities
Are all forms
available/accessible online?

Do bidders pay any fees for

the use of the system?

What other government IT

systems does the e-
procurement system link to?

Are foreign bidders able to

participate in sector/agency’s
e-procurement?

What percentage of
sector/agency’s total bids are
transacted through the e-
procurement system?

3.4 Is there a Are there sector-specific

mechanism in the procedures to receive and
sector to receive handle observations,
and handle complaints and protests?
observations,
complaints and Are complaints and protests in
 43
12
Indicators/Questions Sector/Agency Questions Score Narrative
protests? the sector processed within
the maximum time limit
provided for in the law?

Have bidders used the

complaint and protests
mechanisms?
4. Integrity and Transparency of the Sector Public Procurement System
4.1 Is there a formal Do key agencies in the sector If the response to
internal control and have an independent internal 4.1 is ‘No’, just
audit framework in audit function? insert the score
the sector? from the question
Do key agencies in the sector 4.1 in the national
have adequate internal control assessment
mechanisms to oversee the questionnaire.
procurement function?

Are key agencies in the sector

subjected to regular
performance or value for
money audits?

Are key agencies in the sector

subjected to annual financial
audits?

Are internal or external audit

findings/recommendations
acted on in a timely fashion?
4.2 Is information What percentage of bids is
pertaining to public published in a medium that is
procurement in the easily and freely accessible?
sector easy to find,
comprehensive and Can bidders easily and freely
relevant? access bid information?

What is the percentage of

contract awards announced in
medium that is easily and
freely accessible?

Are third party observers

invited to attend public
biddings?
4.3 Can bidders and What is civil society’s
other stakeholders involvement in the e-
easily access procurement system?
sector/agency’s
procurement
What kind of dynamics exist
information through
between/among private sector
the e-procurement
and other stakeholder groups
system?

Are bidders and other

stakeholders able to monitor
44
12
Indicators/Questions Sector/Agency Questions Score Narrative
all the sector/agency’s e-
procurement transactions?
4.4 Does the sector Are there sector-specific
have ethics and procedures to verify a bidder’s
anticorruption legitimate existence, track
measures in place? records, financial capacity and
capacity to complete the job?

Are there sector-specific

procedures to rate
performance and/or debar
bidders, supplier, contractors
and consultants for ethical or
integrity violations?

Does the sector, or key

agencies in the sector,
maintain a register of
debarred suppliers,
contractors and consultants?

Are there sector-specific

integrity principles and
guidelines?
 45

SECTOR/AGENCY PROCUREMENT ASSESSMENT

SCORING GUIDE
13
Indicators/Questions Sector/Agency Questions Scoring Guide
1. Legislative and Regulatory Framework
1.1 Does the national Is the sector exempted by 3 – The sector has its own regulations,
public procurement legislation from being subject processes, guidelines, bidding documents that
law (including to the national public are superior to those in the national public
supporting procurement law? procurement system.
regulations,
standard bidding Even if subject to the national 2 – The sector is subject to the national
documents and public procurement law, does procurement law and tends to follow it.
operational the sector tend to follow it? Generally uses the national procurement
manuals/guides) processes, guidelines, bidding documents
apply to the sector? Do agencies in the sector use
government-issued public 1 – The sector is subject to the national
procurement manuals or procurement law but tends to not follow it.
guidance? Frequent deviations from national procurement
processes, guidelines, bidding documents.
Have government-issued
documents been tailored to 0 – The sector is exempt from, or does not
meet sector requirements? follow, the national public procurement system,
and does not have its own regulations,
In absence of government- processes, guidelines, bidding documents that
issued documents, does the compensate for this.
sector have its own standard
bidding documents/guidelines?

1.2 Is the supply Is competitive bidding a 3 – Competitive bidding is more prevalent

market for the common feature under the (by %) in the sector than generally evident in
sector sufficiently sector? the country. A core of suppliers in the sector
competitive to give regularly submits responsive bids. At least 5
full effect to the Is there a core of suppliers in bidders on average per contract. EAs make
national the sector who regularly sufficient efforts to attract bids.
procurement law submit responsive bids?
and/or open 2 - Competitive bidding in the sector is
competitive What proportion, by %, of the consistent with that generally evident in the
tendering? sector’s procurement is country. A core of suppliers in the sector
undertaken through open regularly submit bids, but often nonresponsive.
competitive bidding? At least 3 bidders on average per contract.
EAs generally make sufficient efforts to attract
What is the average number of bids.
bidders for publicly bid
contracts? 1 - Competitive bidding in the sector is less
prevalent than that generally evident in the
Do EAs tend to make sufficient country. Suppliers tend to submit one-off but
efforts to attract bids (e.g. often responsive bids. At least 2 bidders on
adequate advertising, bidding average per contract. EAs often do not make
periods)? sufficient efforts to attract bids.
Is there availability and quality
of suppliers, labor force and/or

13
This guide does not replace professional judgment about the capacity of the sector relative to that of the country
procurement system. If considerations other than this guide are used, mention them in the ‘Narrative’ column of the
questionnaire.
46
13
Indicators/Questions Sector/Agency Questions Scoring Guide
related goods and services in
the domestic market? 0 – Competitive bidding in the sector is much
weaker than that generally seen in the country.
Suppliers tend to submit one-off,
nonresponsive bids. Less than 2 bidders on
average per contract. EAs rarely do not make
sufficient efforts to attract bids.
1.3 If there is a sector Has the sector adopted non- 3 – At least 5 bidders on average per contract
specific legal discriminator, transparent
framework, does it tender processes? 2 – At least 3 bidders on average per contract
support non-
discriminatory What is the average number of 1 – At least 2 bidders on average per contract
participation, bidders for publicly bid
transparent tender contracts? 0 – Less than 2 bidders on average per
processes contract
(including
advertisement,
tender
documentation,
tender evaluation,
complaints
mechanism)?
1.4 Is the sector Does the sector apply a 3 – There are no restrictions on nationality of
subjected to domestic preference scheme? bidders or origins of goods, there is no
excessive domestic preference scheme, effective pre-
regulation or Does the sector require pre- registration processes rigorously followed,
government control registration of bidders? acceptable provisions govern participation of
such that state owned enterprises.
competition is Are there acceptable
limited or non- provisions in the sector for the 2 – No restrictions on nationality of bidders or
existent? participation of State Owned origin of goods, or pre-registration process
Enterprises? exists but not rigorously followed, or weak or
unclear provisions governing participation of
state owned enterprises.

1 – Some restrictions on nationality of bidders,

or domestic preference scheme exists,
improvements needed pre-registration process,
lack of clarity on participation by state owned
enterprises.

0 - Restrictions on nationality of bidders,

domestic preference scheme in place, no pre-
registration of bidders required, no specific
guidance with respect to state owned
enterprises
1.5 Does the legal and Does the sector/agency abide 3 – The sector/agency implements the same
regulatory by the rules, regulations and e-procurement rules, regulations and
framework enable guidelines for the use of e- guidelines consistent with the national
the sector/agency procurement incorporated in procurement laws.
to use an e- the national procurement
procurement laws?
2 – The Sector/agency tender/bidding
system
procedures and contract management
Are there tender/bidding processes are subject to the national e-
procedures, contract procurement law but implement it with some
 47
13
Indicators/Questions Sector/Agency Questions Scoring Guide
management processes and variations specific to sector/agency.
approval ceilings in the 1 – The sector/agency is subject to the national
sector/agency e-procurement e-procurement law but does not follow it.
implementation Sector/agency uses its own rules and
regulations

0 – The sector/agency is exempt from or does

not follow the national e-procurement system
and does not have its own regulation, process,
guidelnes.
2. Institutional Framework and Management Capacity
2.1 Is the procurement Are procurement plans in the 3 – Procurement plans are prepared as part of
cycle in the sector sector prepared on as part of the annual budget process; budget availability
required to be tied the budget planning and confirmed prior to solicitation of tenders.
to an annual formulation process?
budgeting cycle (i.e. 2 – Budget availability confirmed prior to
can a procurement Do systems and processes in solicitation of tenders; limited procurement
activity commence the sector or key agencies in planning serving as input to budget formulation
only when budget the sector require certification
has been duly of availability of funds before 1 – Procurement planning factors into budget
appropriated for it? solicitation of tenders? formulation, but budget availability need not be
confirmed prior to solicitation of tenders.

0 – Procurement planning does not factor into

budget formulation and budget availability need
not be confirmed prior to solicitation of tenders
2.2 Does the system Does the sector, or key 3 – There is a regular planning exercise that
foster efficiency agencies in the sector, have a starts with the preparation of multiyear
through the use of formalized procurement operating plans followed by annual
adequate planning? planning process(s)? procurement plans with associated
expenditures that forms part of the annual
budget formulation process.

2 – Multiyear operating plans and annual

procurement plans are prepared independently
of budget preparation, but these are revised in
line with forward budget estimates
1 – Annual procurement plans are prepared,
but these are not linked to multiyear operating
plans and/or not linked to budget formulation.

0 – Procurement plans are not prepared

2.3 Does the Does the sector fall under the 3 – There is a national procurement oversight
procurement remit of the national body that covers agency procurement
system in the sector oversight/regulatory body?
feature an 2 – There is no national body, however, a
oversight/regulatory If a national body does not sector specific body oversees and regulates
body? exist, is there a sector-specific procurement in the sector.
body that oversees/regulates
procurement? 1 – There is a national regulatory body, but
limited clarity with respect to its scope and or
ability to oversee/regulate procurement in the
sector
48
13
Indicators/Questions Sector/Agency Questions Scoring Guide

0 – There is no body, at the national or sector

level, that oversees or regulates procurement
2.4 Is there a public What proportion of 3 – At least 80% of procurement staff
procurement procurement-related officers
capacity and staff in the sector has 2 – At least 60% of procurement staff
development or been trained under the
professionalization national or sector capacity 1 – At least 20% of procurement staff
program? development program or
participated in any formal 0 – Less than 20% of procurement staff
procurement training program?
2.5 Is there a Does the sector/agency use 3 – The sector/agency has its own e-
dedicated group the national e-procurement procurement unit, but there is a national
institutionalized system or does it have its own oversight. E-procurement is a strategy
for e-procurement e-procurement system? identified in the sector/agency’s procurement
plan;
in the
sector/agency’s Is e-procurement strategically
procurement unit? positioned in the 2 – The sector/agency has its own e-
sector/agency’s governance procurement unit but there is no national
map/long term development oversight. Sector/agency specific body
plan? oversees e-procurement

How is e-procurement 1 – The sector/agency relies on the national e-

positioned within the overall procurement unit and there is limited clarity on
sector/agency structure? the role and responsibility for e-procurement in
the sector/agency
Does the sector/agency
have sufficient IT 0 – There is no dedicated group in the
infrastructure to support e- sector/agency and no national e-procurement
procurement unit.

2.6 If an e-procurement What is the sector/agency’s e- 3 – At least 75% of e-procurement staff have
system is used in procurement capacity to completed up to 3 weeks of national e-
the sector/agency, implement system? procurement training
is there a structured
approach to
Does the agency/e- 2 – At least 55% of e-procurement staff have
capacity building
procurement unit recognize completed a one week e-procurement training
and analyzing its
the need for knowledge and program
effective use?
skill building for the new way
of working under e-
1 - At least 25% of e-procurement staff have
procurement
completed a one day e-procurement training
program

0 – Up to 20% of the e-procurement staff have

had no training
3. Procurement Operations and Market Practices
3.1 Is private sector Is the private sector well 3 – The private sector is competitive, well
competitive, well organized and able to access organized and able to participate in the
organized and able the sector market? competition for sector procurement contracts;
 49
13
Indicators/Questions Sector/Agency Questions Scoring Guide
to access the sector there are no major constraints inhibiting private
market? Do civil society organizations access to sector procurement.
regard public procurement in
the sector to be open and 2 – There is a reasonable well-functioning
accessible to the market? private sector serving the agency but
competition for large contracts is concentrated
in a relatively small number of firms; there are
some constraints inhibiting private sector
access to sector procurement.

1 – The private sector serving the agency is

relatively weak and/or competition is limited
due to monopolistic or oligopolistic features;
there are multiple constraints inhibiting private
sector access to sector procurement.

0 – The private sector is not well organized and

lacks capacity to access sector procurement
markets; there are major constraints which
discourage competition from the private sector.

3.2 Do measures exist What percentage of contracts 3 – More than 75% of the contract awards
in the sector to is awarded for values less than sampled
ensure the the original cost estimates?
adequacy and 2 – 50 – 75% of contracts awards sampled
accuracy of cost
estimates before 1 – 20 - 50% of contracts awards sampled
bidding, and to
manage contract 0 – Less than 20% of contract awards sampled
price variations?

What percentage of contract 3 – Less than 10% of contracts sampled

variations amount to a
cumulative impact of more 2 – 10 – 20% of contracts sampled
than 10% of the original
contract price? 1 – 20 – 50% of contracts sampled

0 – More than 50% of contracts sampled

3.3 Is the private sector What functions exist and are 3 – Private sector is generally able to access
able to access and being used in the and participate competitively through e-
fully participate in sector/agency e-procurement procurement; e-procurement system is an end-
the sector/agency system? to-end solution; there are no constraints
e-procurement prohibiting any firm to access or use
activities sector/agency e-procurement system
Are all forms
available/accessible online?
2 – e-procurement system is accessible to
private sector but there are only a concentrated
Do bidders pay any fees for
number of firms in the sector that are
the use of the system?
accessing and participating in bidding; use of
the system is limited to MDB funded projects
What other government IT
systems does the e-
1 – The use of e-procurement system in the
procurement system link to?
sector/agency is limited due to non-competitive
factors
50
13
Indicators/Questions Sector/Agency Questions Scoring Guide
Are foreign bidders able to
participate in the 0 – The private sector does not have the
sector/agency e-procurement? capacity to access e-procurement system;
there are major system constraints and
What percentage of weaknesses that hinder the active participation
sector/agency’s total bids are in e-procurement
transacted through the e-
procurement system?

3.4 Is there a Are there sector-specific 3 – The complaint review system has precise
mechanism in the procedures to receive and and reasonable conditions and timeframes for
sector to receive handle observations, decision with clear enforcement authority and
and handle complaints and protests? mechanisms; more than 90% of complaints are
observations, processed with stipulated timeframes;
complaints and Are complaints and protests in
protests? the sector processed within 2 – There are terms and timeframes for
the maximum time limit resolution of complaints but authority for
provided for in the law? enforcement is unclear; more than 75% of
complaints are processed within stipulated
Have bidders used the timeframes;
complaint and protests
mechanisms? 1 – Terms and timeframes for resolution of
complaints are vague; the time to resolve
complaints is tracked by the agency.

0 – There is no effective or functioning

complaints mechanism

4. Integrity and Transparency of the Public Procurement System

4.1 Is there a formal Do key agencies in the sector 3 – The sector has an effective internal control
internal control and have an independent internal framework including an independent internal
audit framework? audit function? audit function; annual financial audits are
conducted; audit recommendations are
Do key agencies in the sector implemented within six months; no significant
have adequate internal control outstanding audit findings for more than six
mechanisms to oversee the months.
procurement function?
2 – The sector has effective segregation of
Are key agencies in the sector duties; an internal audit function exists but
subjected to regular capacity is weak, or the function is not
performance or value for sufficiently independent; annual financial audits
money audits? are audited with reasonably time disposition of
audit findings.
Are key agencies in the sector
subjected to annual financial 1 – The sector has effective segregations of
audits? duties and is subjected to annual audit; There
is no internal audit function and/or audit
Are internal or external audit findings are not disposed of in a timely fashion.
findings/recommendations
acted on in a timely fashion? 0 – The internal system is weak, with no
internal audit, limited external audit and audit
findings are not disposed of in a timely fashion
 51
13
Indicators/Questions Sector/Agency Questions Scoring Guide
4.2 Is information What percentage of bids is 3 – At least 80% of bids are published; at least
pertaining to public published in a medium that is 80% of contract awards are published; bidders
procurement in the easily and freely accessible? can easily and freely access bid and contract
sector easy to find, award information; third partner observes
comprehensive and Can bidders easily and freely invited to attend public biddings.
relevant? access bid information?
2 – A least 60% of bids are published; at least
What is the percentage of 60% of contract awards are published; bidders
contract awards announced in can easily and freely access either bid and/or
medium that is easily and contract award information; third partner
freely accessible? observers may attend public biddings.

Are third party observers 1 – At least 20 % of bids are published; at least

invited to attend public 20% of contract awards are published; bidders
biddings? have some access to bid and contract award
information

0 – Less than 20% of bids are published, less

than 20% of contract awards are published.

4.3 Can bidders and What is civil society’s 3 – At least 80% of bids and awards
other stakeholders involvement in the information are published and is readily
easily access ector/agency’s e-procurement accessible at all times in e-procurement site;
sector/agency’s system? third party observers from CSOs and other
procurement partner groups are able to access and
information through download e-procurement information.
What kind of dynamics exist
the e-procurement Generally very cooperative relationship from all
between/among private sector
system? stakeholder groups; CSOs and other partner
and other stakeholder groups
groups able use e-procurement system for
monitoring
Are bidders and other
stakeholders able to monitor
2 – At least 55% of bids and awards
all the agency’s e-procurement
information are published and readily
transactions?
accessible at all times in e-procurement site;
some third party observers from CSOs and
other partner groups are able to access and
download e-procurement information. Some
stakeholder groups are not supportive of e-
procurement; Some stakeholders use e-
procurement system to monitor process and
results

1 - At least 25% of bids and awards

information are published and readily
accessible at all times in e-procurement site;
Bidders are able to access and download e-
procurement information. Negligible
stakeholder support for e-procurement;

0 – Below 20% of bids and awards information

are published and readily accessible at all
52
13
Indicators/Questions Sector/Agency Questions Scoring Guide
times in e-procurement site; Bidders are
unable to access and download e-procurement
information.
4.4 Does the sector Are there sector-specific 3 – The sector has an active anticorruption/
have ethics and procedures to verify a bidder’s Integrity program(s) in place; the sector has
anticorruption legitimate existence, track mechanisms to debar firms for failure to
measures in place? records, financial capacity and perform and/or integrity violations; the sector
capacity to complete the job? has sufficient supplier due diligence processes;
the sector has clear policy, procedures and/or
Are there sector-specific frameworks governing conflict of interest.
procedures to rate
performance and/or debar 2 – The sector has mechanisms to debar firms
bidders, supplier, contractors for failure to perform and/or integrity violations,
and consultants for ethical or or mechanisms to report suspected violations
integrity violations? to a national or sector wide anticorruption
body; they sector has sufficient supplier due
Does the sector, or key diligence processes; the concept of conflict of
agencies in the sector, interest is defined.
maintain a register of debarred
suppliers, contractors and 1 – The sector has sufficient supplier due
consultants? diligence processes including need to address
conflict of interest.
Are there sector-specific
integrity principles and 0 – The sector does not have a formal
guidelines? system(s) to deal with integrity violations,
conflicts of interest, and/or fraud and
corruption.
 53

Appendix 5

COUNTRY AND SECTOR/AGENCY PROCUREMENT ASSESSMENT REPORT OUTLINE

EXECUTIVE SUMMARY
Overall Assessment of country and sector procurement risk (High, Substantial, Moderate or Low)
Summary of weaknesses and risks identified
Summary of mitigation/management measures to be adopted

I. INTRODUCTION
The introduction should indicate that the assessment was prepared in accordance with
the Approach to Assessing Country and Sector/Agency Procurement Risks and whether
or not the CSA is being prepare to support the CPS. In addition, the assessment should
indicate when and how the assessment was undertaken “The CSA was undertaken from
<<< to <<<. Preparation activities included reviewing documents, ADB’s ongoing
procurement experience, interviews with counterpart and discussions with stakeholders.”

II. COUNTRY PROCUREMENT ASSESSMENT

A. Overview
This section should provide a narrative description of the country procurement systems
covering:

i. Legislative and Regulatory Framework

ii. Institutional Framework and Management Capacity
iii. Procurement Operations and Market Practices
iv Performance of e-procurement system (or plans to introduce one)
v. Integrity and Transparency of the Public Procurement System, including
the maturity of e-GP system (add a separate section if necessary)

B. Strengths
This section should identify strengths of the country procurement system, including those
elements such as e-procurement where ADB may wish to rely upon. This should be
based on the results of the Country and Sector Procurement Assessment tool, identifying
those areas with scores of 2 or 3.

C. Weaknesses
This section should identify weaknesses of the country procurement system. This should
be based on the results of the Country and Sector Procurement Assessment tool,
identifying those areas with scores of 0 or 1.

D. Procurement Risk Assessment and Management Plan (P-RAMP)

Based on the weaknesses identified, ADB’s fiduciary risks should be identified, assessed
on the basis of likelihood of occurrence and degree of impact and mitigation/management
measures identified.

III. SECTOR/AGENCY PROCUREMENT ASSSESSMENT(S)

For each sector/agency assessed, the following should be covered:

A. Overview
This section should provide a narrative description of the sector/agency procurement
systems covering:
54
i. Legislative and Regulatory Framework (from the sector perspective, this
should reflect the compliance/implementation of sector agencies with
national/country systems and frameworks)
ii. Institutional Framework and Management Capacity
iii. Procurement Operations and Market Practices (from the sector perspective,
the review of the market is particularly important. The assessment should
consider whether or not domestic systems support international competitive
bidding, the number of foreign bidders in domestic procurement, the percentage
of internationally bid procurements won by local bidders etc.)
iv Performance of e-procurement system (or plans to introduce one)
v. Integrity and Transparency of the Public Procurement System

B. Strengths
This section should identify strengths of the sector agencies procurement practices,
including those elements such as e-procurement where ADB may wish to rely upon. This
should be based on the results of the Country and Sector Procurement Assessment tool,
identifying those areas with scores of 2 or 3.

C. Weaknesses
This section should identify weaknesses of the country procurement system. This should
be based on the results of the Country and Sector Procurement Assessment tool,
identifying those areas with scores of 0 or 1.

D. Procurement Risk Assessment and Management Plan (P-RAMP)

Based on the weaknesses identified, ADB’s fiduciary risks should be identified, assessed
on the basis of likelihood of occurrence and degree of impact and mitigation/management
measures identified.

IV. COUNTRY (AND WHERE APPLICABLE, SECTOR/AGENCY) PROCUREMENT

THRESHOLDS

The review should recommend the followings with links and justifications based on the
assessments:

 Overall procurement risk rating at the country, and where applicable, sector level.

 Confirm prior review limits.

 Propose Procurement Method Thresholds at the country, and where applicable,

sector level based on market conditions.

 Identify adjustments required to the NCB Annex.

V. CONCLUSION

The overall conclusion including an opinion as to whether or not country procurement legal,
regulatory and institutional frameworks may be used for ADB financed projects, overall
assessment of country procurement risk and procurement risk in priority sectors/agencies and the
nature of risk mitigation/management measures required to address these risks in ADB’s
operations.

Appendices:
Completed Country Procurement Data Sheet, questionnaires, scoring tools, updated NCB Annex.
55
56
Appendix 6

POTENTIAL PROCUREMENT RISKS – COUNTRY/SECTOR/AGENCY

Risk Impact Causes Possible Mitigating Measures

Non-competitive  Genuine bidders do 1. Political and/or (i) Increased procurement
bidding not participate other interference oversight (lower country and/or
processes  Procurement delays in procurement sector ICB and prior review
 Increased prices processes limits)
 Reduced quality (ii) Systematically outsource
 Reduced life span of procurement processes to
assets independent procurement
agents
(iii) Introduce or strengthen e-
procurement system
2. Barriers to (i) Revise NCB annex to address
entry barriers to entry, particularly
with respect to international
bidders
(ii) Work with Government to
reduce ‘red tape’ for foreign
companies to operate in the
country
National  Procurement Weaknesses in (i) Revise NCB annex to address
procurement processes are domestic significant weaknesses that
system does not  Inefficient procurement could impact ADB procurement
meet  Ineffective legal/regulatory (ii) Targeted capacity development
international  Non-transparent framework (iii) Assist Government to improve
standards  Unfair the legal/regulatory framework
 Increased prices (iv) Introduce or strengthen e-
 Reduced quality procurement system
 Procurement delays
 Loss of funding
allocation
Poor  Increased prices Lack of capacity (i) Strengthen procurement
procurement  Purchase of aspects of PPTA and project
planning unsuitable products preparation activities
(packaging, or services (ii) Capacity development
technical  Procurement delays measures in projects.
specifications,  Loss of funding (iii) Assist Government to develop
contracting allocation national procurement training
strategy) and  Reduced quality system.
processing  Reduced life span of (iv) Work with professional bodies
assets and universities to strengthen
syllabus

Deficient  Contract failures 1. Lack of Work with professional bodies and

contract  Increased price capacity universities to strengthen syllabus
management  Reduced quality 2. Corrupt (i) Capacity development focused
 Inefficiency, wastage practices on strengthening transparency
(collusion, bribe in processes
seeking)
(ii) Civil society participation in
monitoring procurement
activities
 57

Risk Impact Causes Possible Mitigating Measures

Market,  Collusion Industry structure (i) Capacity development focused
regulatory  Bribe seeking on strengthening transparency
dominance of  Reduced competition in processes
country/sector  Increased price (ii) Civil society participation in
procuring  Reduced monitoring procurement
agencies transparency activities
Limited oversight  Inefficiency Weak internal (i) ADB’s increased oversight of
of procurement  Fraudulent behavior /external audit procurement and financial
and  Collusion control
expenditures (ii) Capacity development
practices
Collusion and/or  Reputational risk to 1. No or (i) Increased oversight of
other fraudulent ADB ineffective procurement by ADB
behaviors are  Genuine bidders do complaint (ii) Capacity development
undetected not participate handling (iii) Work with Government to
 Reduced mechanism introduce or improve complaint
competition handling mechanism in
 Increased prices procurement legislation or
 Reduced quality regulations.
(iv) Work with Government to
introduce or strengthen anti-
corruption authorities.
2. Weak internal (i) ADB’s increased oversight of
/external audit procurement
(ii) Capacity development
58
Appendix 7

RISK ASSESMENT AND RISK MANAGEMENT PLAN TEMPLATE

Risk Description Risk Assessment Mitigation Measures or Risk Management Plan

{Rate high, {For risks that can be mitigated by the executing agency,
medium, or low} implementing agencies, and ADB, specify major actions
planned for mitigation, responsible agencies, and timelines for
implementation.

For risks that are mitigated by other agencies (e.g.,

government and other development agencies), outline the key
mitigating measures.}

Overall {Specify the

overall rating}
 59

Appendix 8

Guide on Setting ICB and NCB Thresholds

A. Objective:

1. The objective of this guide is to set monetary thresholds for procurement of goods and
works through International Competitive Bidding (ICB) and National Competitive Bidding (NCB)
methods in the country in view of five basic procurement principles mentioned in ADB’s
Procurement Guidelines, i.e. member country eligibility requirements, economy-efficiency, equal
opportunity, ADB’s interest in encouraging the development of domestic contracting and
manufacturing industries in the country of the borrower, and transparency in the procurement
process.

B. References:

2. ADB Procurement Guidelines includes in paragraph 3.3 a provision which states that
NCB procedures may be the most appropriate way of procuring goods or works which, by their
nature or scope, are unlikely to attract foreign competition due to the facts that:
a) the contract values are small, or
b) works are scattered geographically or spread over time, or
c) works are labor intensive, or
d) the goods or works are available locally at prices below the international market

3. ADB Project Administration Instructions (PAI) 3.05 further clarifies in paragraph 3 that
NCB may be appropriate if there are enough domestic producers or contractors who are
capable of providing the required quantity and quality of goods and related services or works at
reasonable costs and within the required time frame.

C. Prerequisite:

4. The use of NCB and setting ICB and NCB threshold can be considered if country
procurement procedure is acceptable- or has been made acceptable to ADB (for example
through application of NCB Annex) to assure economy, efficiency, transparency, and broad
consistency with the provisions included in Section I of the ADB Procurement Guidelines.

D. Methodology:

5. The methodology described in this section extensively utilizes information captured in

tables of Appendix 1.
6. Step 1 – Getting the Baseline Information: Use information in Appendix 1, Table 1.1 on
the existing country ICB and NCB thresholds, which could range between USD 3 to 40 million
(for works) and USD 1 to 10 million (for goods), as baseline information.

Example:
Baseline Thresholds for the country are USD 25 million for Works and USD 2 to 5 million for Goods.
60

7. Step 2 – Getting or Updating Country Procurement Information: Check for and assess
any revision and update to the country procurement procedures and map their acceptability as
per guidance and check list specified in ADB PAI 3.05 and PAI 3.08, Appendix 2 as well as the
existing country NCB Annex or other equivalent instruments.
8. Step 3 – Capturing Country Procurement Profile: Capture country past procurement data
using Table 1.2 through 1.4 of Appendix 1. The Tables could provide general information on the
highest contract value profile for each procurement category. Particular attentions should be
given to the population profile of each range of contract values.

Examples:
Table 1.2 Total Contracts
Total Contracts
Value Average Contract Value
Active Contracts Number (Eqv. 000 USD) (Eqv. USD)
Total Country 10,530 4,135,852 392,768
By Sector:
Transport 2,855 2,220,078 607,121
Energy 9 103,633 11,514,804
Education N/A N/A N/A
Water/Urban 7,666 1,812,141 200,240
Other N/A N/A N/A
Table 1.3 Goods Contracts
Number of contracts whose value is
Total Goods Contracts (Eqv. USD)
from
2 from
Average from million 5 million more
Contract less 1 million up to up to than
Value Value than up to 5 10 10
Active Contracts Number (Eqv. USD) (Eqv. USD) 1 million 2 million million million million
Total Country 155 27,842,940 179,632 153 1 1 0 0
By Sector:
Transport 37 11,125,227 300,682 36 0 1 0 0
Energy N/A N/A N/A N/A N/A N/A N/A N/A
Education N/A N/A N/A N/A N/A N/A N/A N/A
Water/Urban 118 16,717,713 141,676 117 1 0 0 0
Other N/A N/A N/A N/A N/A N/A N/A N/A

Table 1.4 Works Contracts

Number of contracts whose value is
Total Works Contracts (Eqv. USD)
Average from from from
Value Contract 5 million up 10 million 15 million
(Eqv. 000 Value less than to up to up to more than
Active Contracts Number USD) (Eqv. USD) 5 million 10 million 15 million 25 million 25 million
Total Country 5,419 3,763,109 694,429 5,385 22 3 4 6
By Sector:
Transport 1,461 2,042,436 1,397,972 1,447 10 1 1 2
Energy 9 103,633 11,514,804 1 4 1 2 1
Education N/A N/A N/A N/A N/A N/A N/A N/A
Water/Urban 3,949 1,617,039 409,481 3,937 8 1 1 2
Other N/A N/A N/A N/A N/A N/A N/A N/A
 61

Initial finding based on the above examples:

- Goods: Most contracts are below USD 1 million, with a few contracts between USD 2-5
million. But no contract is found above USD 5 million.
- Works: Most contracts are below USD 5 million, but quite number of contracts above USD 5
million, even up to above USD 25 million.

9. Step 4 – Setting Candidate ICB Thresholds: This approach utilizes information in Table
1.8 of Appendix 1, which could be a good indication of the competition level in the country. In
this case the average of 3 largest ICB contracts awarded to local firms and the average of 3
smallest ICB contracts in which foreign firms participated for each procurement category are
compared with the highest contract value identified in Step 3. The lowest among these values
could be assigned as candidate for ICB thresholds if it is higher than the baseline ICB threshold
identified in Step 1. Otherwise, there may be strong justification to use the baseline ICB
threshold as the candidate ICB threshold for this assessment.

Examples:
Table 1.8 (all values in USD million)
GOODS WORKS
Average of 3 Average of 3 Average of 3 Average of 3
largest ICB smallest ICB largest ICB smallest ICB
contracts awarded contracts contracts awarded contracts
to Local Firms in which Foreign to Local Firms in which Foreign
Firms participated Firms participated
Total Country 4.31 - 25.23 25.62
By Sector
Transport 1.98 - 23.42 31.13
Energy 5.30 - 15.76 20.10
Agriculture 1.21 - 22.34 -
Urban 1.19 - 29.93 -

Based on the example, a value of USD 5 million (for goods) and USD 25 million (for works, which is
an average of USD 29.93 million and USD 20.10 million) could be assigned as candidates for
thresholds. However, based on the information obtained in Step 3, there is no contract for goods above
USD 5 million, and the effective threshold should be between USD 1-2 million. Since Step 1 states that
the minimum current threshold for goods is USD 2 million, therefore, the candidate thresholds for
goods should now be set at USD 2 million.

10. Step 5 – Assessing the Country Procurement Characteristics: Based on sample

contracts in Table 1.2 through 1.4 check whether there is a representative number of contracts
below the candidate ICB threshold set in step 4 which are geographically scattered or spread
over time or are labor intensive. Except for works requiring highly specialized skills or
technologies (such as: dams, nuclear power plant, high value power generation, complex EPC
type of works, etc.), it is expected that many work contracts financed by ADB meet the above
characteristics.
11. Step 6 – Assessing Local Capacity: To check whether many local suppliers or
contractors can carry out contracts below the candidate ICB threshold at prices below the
62

international market, perform a general assessment of availability of these local firms to provide
the services in consultation with OSFMD.

In the example, the country database information advises that there are quite a large number of local
contractors which have experiences in performing contracts up to USD 25 million, and there are also
quite large pools of local suppliers which have experiences in performing contracts up to USD 2 million.

12. Step 7 – Threshold Comparison: Compare the candidate ICB thresholds with those of
other major donors’ in the country. If there are significant differences, then through consultation
with OSFMD further review of the thresholds must be conducted to decide whether the
candidate threshold should be retained or revised.

In the example, the World Bank has the following thresholds for the country: USD 2 million for
Procurement of Goods, and USD 25 million for Procurement of Works.

13. Step 8 – Setting the Recommended ICB Thresholds: Setting the updated ICB thresholds
for ADB financed contracts in the country.

In the example, the following ICB thresholds are recommended to be set:

USD 2 million for Procurement of Goods, and USD 25 million for Procurement of Works.
 63

Appendix 9

Guide on Setting Prior Review Thresholds for Procurement of Goods and Works

A. Objective:

1. The objectives of this guide are to identify the monetary prior review thresholds in the
country, and to mitigate procurement risks in ADB financed contracts.

B. Primary References:

2. ADB Procurement Guidelines paragraph 1.2 states that, while the responsibility for the
implementation of the project, and therefore for the award and administration of contracts under
the project, rests with the borrower, ADB, for its part, has the obligation to ensure that the
proceeds of its financing are used with due attention to considerations of economy and
efficiency.

3. ADB Procurement Guidelines paragraph 1.12 states that ADB supervision right includes
declaring misprocurement for expenditures for goods and works that are not procured in
accordance with the provisions of the financing agreement and the applicable ADB Procurement
Guidelines.

4. ADB Project Administration Instructions (PAI) 3.02 paragraphs 3 and 5-9 state that the
country and sector/agency assessments are key to establishing appropriate country, and
where applicable, sector/agency procurement supervision thresholds.

C. Prerequisite:

5. The ICB thresholds for country & sector/agency must already be determined or at least
they are being determined in parallel with these prior review thresholds.

D. Methodology:

6. Step 1 – Getting the Baseline Information: If available, use the existing country and
sector/agency prior review thresholds as baseline information.

7. Step 2 – Setting Candidate Prior Review Thresholds: Based on the country &
sector/agency procurement assessments, set the candidate for prior review thresholds. Use the
following guidance in PAI 3.02 paragraph 6 and set a threshold which does not exceed the ICB
thresholds:

Following the example in Appendix 8, the following prior review thresholds are identified from Table
13.1: Prior Review Thresholds (PAI 3.02 paragraph 6)
Contract Type Low Risk Medium Risk High Risk
Works/Plant/Goods Up to USD 20 Up to USD 10 Up to USD 5 million
million million
Direct Contract All All All

8. Step 3 – Assessing Procurement Performance Information: Use Appendix 1 Table 1.2

through 1.4 (Goods and Works contract data), Table 1.6 (Contract Variations), and Table 1.9
(Effectiveness) as guidance to assess the overall performance and competency of the procuring
64

units in the particular agency or sector and determine the level of procurement that these
procuring units have to procure independently without a close supervision. In the absence of
any of these tables, in consultation with OSFMD, other qualitative practical assessment must be
conducted to measure the procurement performance and competence of the procuring units in
an agency or sector.

9. Step 4 – Identifying Country’s Procurement Efficiency Information: Identify the country

past procurement efficiency data using table 1.7 of Appendix 1 for both ADB and government
financed contracts.

10. Step 5 – Setting Recommended Prior Review Thresholds: The candidate prior review
thresholds (step 2) are qualitatively analyzed and superimposed against information in step 3
and step 4 to find out if the procuring units may be able to, respectively, work independently
and/or efficiently without close supervision. It should be noted, however, that these candidate
thresholds must not exceed the ICB thresholds.

In the example, based on step 2 above, a medium country procurement risk could have a maximum
threshold of USD 10 million. Furthermore, based on step 3 and 4, it is identified that the country’s
performance seems adequate. Therefore, a USD 10 million threshold could be a strong candidate for
country’s prior review threshold for both goods and works. However, since the recommended ICB
threshold for goods and works are USD 2 million and USD 25 million respectively (based on example in
Appendix 8), the candidate thresholds are set to USD 2 million (for goods) and USD 10 million (for works).

11. Step 6 – Thresholds Comparison: Identification of the prior review thresholds of other
major donor(s) in the country as a comparison. If there are significant differences, in
consultation with OSFMD, a further review of the thresholds must be conducted to analyze the
situation or provide the justifications to retain the candidate thresholds.

In the example, the World Bank has the same prior review thresholds for the country, i.e. USD 2 million
(goods) and USD 10 million (works).

12. Step 7 – Setting the Recommended Prior Review Thresholds: Setting the updated prior
review thresholds for ADB financed contracts in the country.

In the above example, under the medium risk, the following prior review thresholds are recommended to be set:
USD 2 million (for goods), and USD 10 million (for works).
 65

Appendix 10

PROJECT PROCUREMENT RISK ASSESSMENT – INDICATIVE TERMS OF REFERENCE

A. Background

This section should include details pertaining to the project, as well as a description of the
country and sector procurement environment that could impact the country.

B. Purpose and Scope of the Assessment

The purpose of the assessment is to (i) identify the capacity, procedural and organizational
constraints that could hinder effective Project implementation and agree on an action plan with
the EA/IA and the developing member country (DMC) concerned, to address these constraints;
and (ii) determine the overall procurement risk, and establish appropriate review and
supervision processes, including thresholds, to mitigate these risks.

Scope: The review team will:

i) Review and update if necessary the Country and Sector/Agency Procurement

Risk Assessments.

ii) Assess strength and weaknesses in project procurement practices and capacity
from the perspective of (a) organizational and staff capacity; (b) information
management; (c) procurement practices (goods and works, consulting services
and payment practices); (d) performance of e-procurement system or (plans to
introduce one) (e) effectiveness; and (e) accountability measures.

iii) Identify and evaluate procurement risks at the project level.

iv) Propose risk mitigation and management strategies and/or activities.

v) Where applicable sector specific, procurement thresholds.

C. Approach and Methodology

The review will include, but not be limited to:

i) Assessment of project procurement arrangements – based on interviews with

government counterparts, development partners and relevant stakeholders
supported by sampling of specific procurement transactions. The Procurement
Risk Assessment questionnaire should be completed for each of Project’s
executing and implementing agencies.

ii) Prepare a narrative description of the project procurement systems, including

identification of strengthens and weaknesses.
66

iii) Identify and assess procurement risks, on the basis of degree of impact and
likelihood of occurrence using the following scale:

High: likely to occur, high impact if occurs

Substantial: unlikely to occur, high impact if occurs
Moderate: likely to occur, low impact if occurs
Low: unlikely to occur, low impact if occurs

iv) Propose risk mitigation/management strategies to address identified risks:

High: risk mitigation recommended
Substantial: risk mitigation/monitoring recommended
Moderate: risk monitoring recommended
Low: risk documentation/identification

v) Propose, where applicable, project specific procurement thresholds

vi) Summarize findings in the Procurement Capacity Assessment Report (outline

provided).

vii) Prepare an initial draft of the Project Procurement Plan

viii) RRP and PAM inputs prepared (including P-RAMPS)

D. Key Deliverables

i) Project Procurement Risk Assessment Report

ii) RRP and PAM inputs (including P-RAMPS)
iii) Project Procurement Plan

E. Consultants Terms of Reference

To be prepared if consultants are to support the exercise, number of consultants,
specific skills and expertise will depend upon the amount of field work required, the number of
sectors to be assessed, and the specific procurement issues identified during the initial country
procurement assessment.
 67

Appendix 11

PROJECT PROCUREMENT RISK ASSESSMENT QUESTIONNAIRE

QUESTION RESPONSE14 RISK15

A. ORGANIZATIONAL AND STAFF CAPACITY
PROCUREMENT DEPARTMENT/UNIT
A.1 Does the agency or Government
have a Procurement Committee that
is independent from the head of the
agency?
A.2 Does the agency have a
procurement department/unit,
including a permanent office that
performs the function of a Secretariat
of the Procurement Committee?
A.3 If yes, what type of procurement
does it undertake?
A.4 How many years’ experience does
the head of the procurement
department/unit have in a direct
procurement role?
A.5 How many staff in the procurement
department/unit are:
i. full time
ii. part time
iii. seconded
A.6 Do the procurement staff have a high *
level of English language proficiency
(verbal and written)?
A.7 Are the number and qualifications of *
the staff sufficient to undertake the
additional procurement that will be
required under the proposed project?
A.8 Does the unit have adequate
facilities, such as PCs, internet
connection, photocopy facilities,
printers etc. to undertake the
planned procurement?
A.9 Does the agency have, or have *
ready access to, a procurement
training program?

14
Responses should include a discussion of the e-procurement component if an e-procurement system is in use or if
is being planned for implementatioin.
15
Questions indicated with * are associated with potentially ‘High’ or ‘Substantial’ risks due to the impact being ‘High’,
therefore the strategy for managing those risks should be addressed in the Project Procurement Risk Analysis
(Appendix 3).
68

QUESTION RESPONSE14 RISK15

A.10 At what level does the
department/unit report (to the head
of agency, deputy etc.)?
A.11 Do the procurement positions in the
agency have job descriptions, which
outline specific roles, minimum
technical requirements and career
routes?
A.12 Is there a procurement process
manual for goods and works?
A.13 If there is a manual, is it up to date
and does it cover foreign-assisted
projects?
A.14 Is there a procurement process
manual for consulting services?
A.15 If there is a manual, is it up to date
and does it cover foreign-assisted
projects?
PROJECT MANAGEMENT UNIT
A.16 Is there a fully (or almost fully) *
staffed PMU for this project currently
in place?
A.17 Are the number and qualifications of *
the staff sufficient to undertake the
additional procurement that will be
required under the proposed project?
A.18 Does the unit have adequate
facilities, such as PCs, internet
connection, photocopy facilities,
printers etc. to undertake the
planned procurement?
A.19 Are there standard documents in *
use, such as Standard Procurement
Documents/Forms, and have they
been approved for use on ADB
funded projects?
A.20 Does the agency follow the national *
procurement law, procurement
processes, and guidelines?
A.21 Do ToRs for consulting services
follow a standard format such as
background, tasks, inputs, objectives
and outputs?
A.22 Who drafts the procurement
specifications?
A.23 Who approves the procurement
specifications?
 69

QUESTION RESPONSE14 RISK15

A.24 Who in the PMU has experience in *
drafting bidding documents?
A.25 Are records of the sale of bidding *
documents immediately available?
A.26 Who identifies the need for
consulting services requirements?
A.27 Who drafts the Terms of Reference
(ToR)
A.28 Who prepares the request for
proposals (RFPs)
B. INFORMATION MANAGEMENT
B.1 Is there a referencing system for
procurement files?
B.2 Are there adequate resources *
allocated to record keeping
infrastructure, which includes the
record keeping system, space,
equipment and personnel to
administer the procurement records
management functions within the
agency?
B.3 Does the agency adhere to a *
document retention policy (i.e. for
what period are records kept)?
B.4 Are copies of bids or proposals
retained with the evaluation?
B.5 Are copies of the original
advertisements retained with the pre-
contract papers?
B.6 Is there a single contract file with a
copy of the contract and all
subsequent contractual
correspondence?
B.7 Are copies of invoices included with
the contract papers?
B.8 Is the agency’s record keeping
function supported by IT?
C. PROCUREMENT PRACTICES
Goods and Works
C.1 Has the agency undertaken *
procurement of goods or works
related to foreign assistance recently
(last 12 months or last 36 months)? If
yes, indicate the names of the
development partner/s and project/s.
C.2 If the answer is yes, what were the *
70

QUESTION RESPONSE14 RISK15

major challenges faced by the
agency?
C.3 Is there a systematic process to
identify procurement requirements
(for a period of one year or more)?
C.4 Is there a minimum period for the *
preparation of bids and if yes, how
long?
C.5 Are all queries from bidders replied to *
in writing?
C.6 Does the bidding document state the *
date and time of bid opening?
C.7 Are bids opened in public? *
C.8 Can late bids be accepted? *
C.9 Can bids (except late bids) be *
rejected at bid opening?
C.10 Are minutes of the bid opening *
taken?
C.11 Are bidders provided a copy of the *
minutes?
C.12 Are the minutes provided free of *
charge?
C.13 Who undertakes the evaluation of
bids (individual(s), permanent
committee, ad-hoc committee)?
C.14 What are the qualifications of the *
evaluators with respect to
procurement and the goods and/or
works under evaluation?
C.15 Is the decision of the evaluators final *
or is the evaluation subject to
additional approvals?
C.16 Using the three ‘worst-case’
examples in the last year, how long
from the issuance of the invitation for
bids can the contract be awarded?
C.17 Are there processes in place for the
collection and clearance of cargo
through ports of entry?
C.18 Are there established goods
receiving procedures?
C.19 Are all goods that are received
recorded as assets or inventory in a
register?
C.20 Is the agency/procurement
department familiar with letters of
 71

QUESTION RESPONSE14 RISK15

credit?
C.21 Does the procurement department
register and track warranty and latent
defects liability periods?
Consulting Services
C.22 Has the agency undertaken foreign- *
assisted procurement of consulting
services recently (last 12 months, or
last 36 months)? (If yes, please
indicate the names of the
development partner/s and the
Project/s.)
C.23 If the above answer is yes, what *
were the major challenges?
C.24 Are assignments and invitations for *
expressions of interest (EOIs)
advertised?
C.25 Is a consultants’ selection committee
formed with appropriate individuals,
and what is its composition (if any)?
C.26 What criteria are used to evaluate
EOIs?
C.27 Historically, what is the most *
common method used (QCBS, QBS,
etc.) to select consultants?
C.28 Do firms have to pay for the RFP *
document?
C.29 Does the proposal evaluation criteria *
follow a pre-determined structure
and is it detailed in the RFP?
C.30 Are pre-proposal visits and meetings
arranged?
C.31 Are minutes prepared and circulated *
after pre-proposal meetings?
C.32 To whom are the minutes *
distributed?
C.33 Are all queries from consultants *
answered/addressed in writing?
C.34 Are the technical and financial *
proposals required to be in separate
envelopes and remain sealed until
the technical evaluation is
completed?
C.35 Are proposal securities required? *
C.36 Are technical proposals opened in *
public?
72

QUESTION RESPONSE14 RISK15

C.37 Are minutes of the technical opening *
distributed?

C.39 Who determines the final technical *

ranking and how?
C.40 Are the technical scores sent to all *
firms?
C.41 Are the financial proposal opened in *
public?
C.42 Are minutes of the financial opening *
distributed?
C.43 How is the financial evaluation *
completed?
C.44 Are face to face contract negotiations *
held?
C.45 How long after financial evaluation is
negotiation held with the selected
firm?
C.46 What is the usual basis for
negotiation?
C.47 Are minutes of negotiation taken and *
signed?
C.48 How long after negotiation is the
contract signed, on average?
C.49 Is there an evaluation system for
measuring the outputs of
consultants?
Payments
C.50 Are advance payments made?
C.51 What is the standard period for
payment included in contracts?
C.52 On average, how long is it between
receiving a firm’s invoice and making
payment?
C.53 When late payment is made, are the
beneficiaries paid interest?
D. EFFECTIVENESS
D.1 Is contractual performance
systematically monitored and
reported?
D.2 Does the agency monitor and track
its contractual payment obligations?
D.3 Is a complaints resolution
mechanism described in national
 73

QUESTION RESPONSE14 RISK15

procurement documents?
D.4 Is there a formal non-judicial
mechanism for dealing with
complaints?
D.5 Are procurement decisions and *
disputes supported by written
narratives such as minutes of
evaluation, minutes of negotiation,
notices of default/withheld payment?

E. ACCOUNTABILITY MEASURES
E.1 Is there a standard statement of *
ethics and are those involved in
procurement required to formally
commit to it?
E.2 Are those involved with procurement *
required to declare any potential
conflict of interest and remove
themselves from the procurement
process?
E.3 Is the commencement of
procurement dependent on external
approvals (formal or de-facto) that
are outside of the budgeting
process?
E.4 Who approves procurement *
transactions, and do they have
procurement experience and
qualifications?
E.5 Which of the following actions
require approvals outside the
procurement unit or the evaluation
committee, as the case may be, and
who grants the approval?
a) Bidding document, invitation to
pre-qualify or RFP
b) Advertisement of an invitation for
bids, pre-qualification or call for
EOIs
c) Evaluation reports *
d) Notice of award *
e) Invitation to consultants to
negotiate
f) Contracts *
E.6 Is the same official responsible for: *
(i) authorizing procurement
transactions, procurement
74

QUESTION RESPONSE14 RISK15

invitations, documents, evaluations
and contracts; (ii) authorizing
payments; (iii) recording
procurement transactions and
events; and (iv) the custody of
assets?
E.7 Is there a written auditable trail of *
procurement decisions attributable to
individuals and committees?
 75

Appendix 12
PROJECT PROCUREMENT RISK ASSESSMENT – REPORT OUTLINE

EXECUTIVE SUMMARY
Overall Assessment of project procurement risk (High, Substantial, Moderate or Low)
Summary of weaknesses and risks identified
Summary of mitigation/management measures to be adopted

I. INTRODUCTION
The introduction should indicate that the assessment was prepared in accordance with the
Guidelines for Assessing Country, Sector and Project Procurement Risks. A brief description of
the proposed project should be provided. In addition, the assessment should indicate when and
how the assessment was undertaken “The CSA was undertaken from <<< to <<<. Preparation
activities included reviewing documents, ADB’s ongoing procurement experience, and interviews
with counterpart and discussions with stakeholders.”

II. PROJECT PROCUREMENT RISK ASSESSMENT

A. Overview
This section should provide a narrative description of the country procurement systems
covering:

i. Organization and Staff Capacity

ii. Information Management
iii. Procurement Practices
iv. Performance of e-procurement system (or plans to introduce one)
v. Effectiveness
vi. Accountability Measures

B. Strengths
This section should identify strengths of project procurement arrangements, including
those elements where ADB may wish to rely upon. This should include those elements
considered fully capable or competent.

C. Weaknesses
This section should identify weaknesses of the project procurement arrangements. This
should be include those elements considered to be weak or need of improvement

D. Procurement Risk Assessment and Management Plan (P-RAMP)

Based on the weaknesses identified, ADB’s fiduciary risks should be identified, assessed
on the basis of likelihood of occurrence and degree of impact and mitigation/management
measures identified.

III. PROJECT SPECIFIC PROCUREMENT THRESHOLDS (if applicable)

Depending upon the nature of the project, consideration should be given as to whether or not
project specific procurement thresholds are warranted.

IV. PROCUREMENT PLANS

Indicative project procurement plans, applicability of advance contracting and/or retroactive
financing

V. CONCLUSION
The overall conclusion including an opinion as to whether or not the project arrangements with
appropriate mitigation measures, are considered satisfactory.

Appendices:
76
Completed questionnaires, procurement plans, P-RAMP
 77

Appendix 13

PROJECT PROCUREMENT RISK ANALYSIS

Using the Risk Categories at Figure 5, determine the risk management strategy to apply to each potentially
High or Substantial risk (from Appendix 2)

SL No. RISK IMPACT16 LIKELIHOOD17 STRATEGY18

A6, A7, Procurement Department and/or High [‘Unlikely’ if PMU is
A9, A16, PMU have insufficient qualified staff already established, and
A17, A23, to efficiently undertake the the Procurement Dept.
C1, C2, procurements required to and/or PMU have
C14, C22, implement the project. adequate qualified staff
C23 and access to a public
procurement capacity
development or
professionalization
program]
A19 – A20 The Agency uses practices High [‘Unlikely’ if the agency
inconsistent with national follows the national
procurement law or bidding procurement law,
documents unsuitable for ADB- procurement processes,
funded procurement. guidelines, bidding
documents]

B2 –B3 Record-keeping is inadequate to High [‘Unlikely’ if the Agency

enable internal or external audit of has adequate record-
procurement processes. keeping infrastructure
and robust document
retention policy.]
A25, C4 - Agency does not promote non- High [‘Unlikely’ if the Agency
C12, C24- discriminatory participation, uses non-discriminatory,
C44, C47, transparent tender processes transparent tender
D5, E7 (including advertisement, tender processes]
documentation, tender evaluation,
complaints mechanism)?
C15, E1 – The Agency has inadequate ethics High [‘Unlikely’ if integrity
E.6 and anticorruption measures in guidelines require self-
place. declarations, if approvals
are appropriate and
given by qualified, and
sufficiently independent
officers.]

16
Any risk that may result in actions that are inconsistent with the ADB Procurement Guidelines or Guidelines on the Use
of Consultants is assessed as ‘High’.
17
‘Likely’ or ‘Unlikely’ to occur in the life of the project, given the response to the question in Appendix 2 and the
guidance note in the column.
18
‘Mitigate’ (either through the Procurement Plan including NCB Annex or through measure/s indicated in Appendix 5),
‘Monitor’ or ‘Avoid’.
78

Appendix 14

GUIDE QUESTIONS FOR E-PROCUREMENT

Background

e-Procurement is being promoted by the ADB because of its potential to enhance procurement
transparency and provide wider access to information and markets. It offers opportunities to
streamline public procurement for greater efficiency and economy.

These questions specific to the availability and use of country e-procurement systems should be
answered as part of the Procurement Risk Assessment and the findings should be integrated in the
discussions in the narrative assessment of the Procurement Assessment Report. The assessment
results will be useful in guiding the ADB to determine the kind of strategy and support it will extend
to facilitate procurement and mitigate e-procurement risks for ADB financed projects, whether it is
for strengthening or scaling existing DMC e-procurement systems or providing support to develop
and pilot a new system.

1. Legislative and Regulatory Framework

 Does the public procurement law enable/mandate e-procurement implementation?

 Are rules for e-procurement implementation drafted and included in the public procurement
law?

2. Institutional Framework and Management Capacity

 Is e-procurement institutionalized within the government’s overall procurement function?

 Is there a dedicated group institutionalized for e-procurement in the public procurement
department?
 Is there adequate HR capability for e-procurement?
 Has the e-procurement staff been adequately trained to use the e-procurement system?
 Are the existing systems sufficient to support implementation of e-procurement?
 Is e-procurement integrated with existing public procurement, other government IT systems
and auditing/planning processes and procedures?

3. Procurement Operations and Market Practices

 Is there demonstrated successful execution or use of the e-procurement system?

 Is e-procurement used by all government procuring entities?
 What percentage of bids use e-procurement?
 Has the e-procurement systems been assessed by ADB or any other MDB or an
independent entity?
 Are there identified policy or processes to allow for integration or adoption of e-
procurement?
 Are bidders adequately trained to use the e-procurement system?
 Can bidders easily access bid information through the e-procurement system?
 Has the e-procurement system been used by ADB financed projects?
 Are e-procurement reports regularly available for policy decision makers?
 79

 Is the e-procurement system an end-to-end system that include all functions from
procurement planning, advertising, bid submission, e-tendering to contract management
and audit?

4. Benefits Achieved

 What is the impact of the e-procurement system to the government procurement function?
to the private sector?
 How did government benefit from the use of e-procurement systems?
 If used in ADB or other MDB financed projects, how did ADB or other MDB procurement
benefit from the use of the e-procurement?