Procurement Principles and Rules

Approved by the BSTDB Board of Directors, 1 December 2022

1 INTRODUCTION ................................................................................................................................. 2

2 PURPOSE & SCOPE ............................................................................................................................ 2

3 TERMS & ABBREVIATIONS ................................................................................................................ 2

3.1 TERMS ............................................................................................................................................ 2
3.2 ABBREVIATIONS ............................................................................................................................... 4

4 RESPONSIBILITIES ............................................................................................................................. 4

5 POLICY.................................................................................................................................................. 5
5.1 PRINCIPLES AND CONSIDERATIONS ................................................................................................... 5
5.2 PROCUREMENT RULES FOR PUBLIC SECTOR OPERATIONS ................................................................ 8
5.3 PROCUREMENT IN PRIVATE SECTOR OPERATIONS...........................................................................23
5.4 PROCUREMENT IN OPERATIONS THROUGH FINANCIAL INTERMEDIARIES ............................................23
5.5 PROCUREMENT OF CONSULTING SERVICES .....................................................................................24

6 REFERENCES ....................................................................................................................................27

7 ASSOCIATED DOCUMENTS .............................................................................................................27

8 ANNEXES ...........................................................................................................................................27

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1 Introduction

1.1 The Procurement Principles and Rules are based on the need to achieve economy and efficiency in both
Public and Private Sector Operations, and transparency, and accountability in public administration.
Competition is the proven way to do this and a fundamental principle of good procurement practice.
1.2 Such procedures, fairly applied, in awarding public sector contracts for Goods, Works, Services, and
Consulting Services help to create dependable and stable markets for efficient private businesses. They
also form the basis for establishing accountability and encourage the cost-effective use of public funds.
1.3 The efficiency of the procurement process directly affects the cost and time required for project
execution, and the ultimate performance of the operation. Good procurement practices should lead to
significant time and money savings for the Bank’s Clients and help ensure successful project
implementation and operation. Encouraging sound procurement policies and competent organisations
to administer them is an important part of development.
Section 5.1 describes general principles and considerations that are applicable for all operations. Section
5.2 contains rules for procurement in operations involving the public sector. Section 5.3 describes
procurement arrangements in Bank-financed operations in the private sector. Section 5.4 addresses
procurement through Financial Intermediaries. Section 5.5 concerns the selection and hiring of
consultants by the Bank’s Client.

2 Purpose & Scope

The purpose of this policy document is to set out the principles and rules that apply to Clients when they contract
to procure:
a. Goods, Works, and Services (including associated services), and
b. Consulting Services
that are financed by the Bank.
This Policy is applicable to the following entities:
- All Bank staff
- All Bank Clients

3 Terms & Abbreviations

3.1 Terms

The following terms are used in this Policy as respectively defined below:
Affiliate means, in relation to a given entity (such as the tenderer),
any other legal entity controlled, directly or indirectly, by the
given entity, any other legal entity or natural person that
controls, directly or indirectly, the given entity or any other
legal entity directly or indirectly under common control with
the given entity.
Bank means the Black Sea Trade and Development Bank
Bank-financed contract means any contract financed in part or in full by Bank
resources
Client means an entity that is seeking or has obtained funding,
directly or indirectly, in relation to a Bank Operation

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Concession/PPP Agreement means a contract, which is long-term in nature, and relates
to the provision of public services or services of general
interest. The public party provides special or exclusive
rights for the provision of such services to the private party,
which undertakes to design, develop, construct,
reconstruct, rehabilitate, maintain, or operate new or
existing public infrastructure or services. The asset or
service provision is returned to the public party upon
conclusion of the contract
Consulting Services means advisory or similar services whereby individuals
and/or a firm provides expertise of an intellectual and
advisory nature to achieve the goals of a Bank Operation
Control means, in relation to a given entity, the ability to effectively
determine the decisions and policies of such entity
Fit-for-purpose means a procurement procedure or method which is well-
suited for a given procurement activity
Goods means tangible goods capable of delivery, such as
commodities, raw materials, machinery, equipment,
vehicles, and related services such as transportation,
insurance, installation, commissioning, training, and initial
maintenance
Incoterms means trade terms established by the International
Chamber of Commerce.
Legal documents mean any loan, financing, associated or subsidiary
agreement between the Bank and a Client or any agency
affiliate or parent of that Client related to the operation
concerned
Most Economically Advantageous Tender A tender that is evaluated to be the best in terms of price,
lifecycle costs, and rated quality criteria regarding
environmental, social, and other considerations
Operation means any activity or project which the Bank is considering
to finance or has financed or committed to finance, directly
or indirectly, in whole or in part, from Bank resources
Prequalification means the procedure used to identify tenderers capable to
successfully perform under a Bank-financed Contract.
Private Sector Operation means a Bank Operation that is not a Public Sector
Operation
Prohibited Practices have the meaning given to them in par. 5.1.13
Public Sector Operation has the meaning given to it in par. 5.2.3
Services means any services, other than consulting services,
including, but not limited to, transportation, insurance,
installation, maintenance, commissioning and training,
management contracting, satellite imagery, drilling,
mapping, and site cleaning.
Single tendering means directly selecting and entering into a contract with a
supplier, contractor, or consultant without a requirement for
competitive procedures.

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Sub-contractor means any sub-supplier, sub-contractor or sub-consultant
of the Tenderer under a Bank-financed Contract.
Tender means a tender, a proposal, an offer, or a quotation
submitted by a Tenderer in a procurement process for a
Bank Operation.
Tenderer means an entity, individual or Joint Venture, Consortium, or
Association (JVCA) that has submitted, or is in the process
of submitting, a Tender
Value-for-money means the effective, efficient, and economic use of
resources, achieved through the evaluation of price costs,
life-cycle costs, and quality criteria, along with an
assessment of risk for each procurement process followed
Works means construction, repair, rehabilitation, demolition,
restoration, maintenance of civil work structures, and
related services such as transportation, insurance,
installation, commissioning, and training

3.2 Abbreviations
The following abbreviations are used in this Policy:
Abbreviation Full Wording of Abbreviation
WTO/GPA World Trade Organization/Government Procurement Agreement
UN Agency United Nations Agency
PPP Public Private Partnership

4 Responsibilities
Responsibilities of each entity with regard to this Policy are defined as follows:
Name of role
• Procurement function, under the Department for Project Implementation and Monitoring (DPM),
monitors the procurement processes applicable to the Bank’s operations, advises clients, and grants the
relevant “no-objection” in consultation with the Head, Environment, the General Counsel, and any other
staff as required
• The Client shall be responsible for the entire tendering process and for the submission to the Bank of
the various reports related to the Bank’s “no-objection” as described in this Policy

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5 Policy

5.1 PRINCIPLES AND CONSIDERATIONS

5.1.1 The World Trade Organization/Government Procurement Agreement (WTO/GPA) establishes a

framework of rights and obligations with respect to laws, regulations, procedures and practices
regarding public procurement. The aim of the WTO/GPA is to achieve greater liberalisation and
expansion of world trade by establishing transparent, fair and open procurement practices. The Bank
supports the development of public procurement laws and practices within its Member States that are
consistent with the principles of the WTO/GPA and compatible with the Agreement Establishing the
Black Sea Trade and Development Bank.

5.1.2 The underlying principle of WTO/GPA and the underpinning for the Bank’s policies is that public
sector contracts should normally be awarded on the basis of open competitive Tenders. Only in
special cases should contracts be awarded on the basis of other procedures.

5.1.3 The Bank, as part of its commitment to sustainable economic development, promotes the application
of good international practices for environmental and social matters as stipulated in the Bank’s
Environmental and Social Policy and as further detailed in legal agreements for specific projects.
Clients are encouraged to determine additional green, inclusive, sustainable procurement
requirements provided that these requirements are consistent with the Bank’s Environmental and
Social Policy.

Applicability in Co-financed Operations

5.1.4 When projects are co-financed on a joint basis with another multilateral or bilateral development
institution or UN Agency and where such institution undertakes the leading role in monitoring
procurement activities in line with its own procurement procedures, which shall be acceptable to the
Bank, the Bank and the co-financing party may agree that the Bank’s Procurement Principles and
Rules may be waived. Such waiver shall take place following a recommendation of the Bank’s
procurement function, in consultation with the General Counsel, and the approval of the Credit
Committee. In such cases all procurement shall be subject to the requirements of the co-financing
party and the waiver will be reported to the Board of Directors within the Operation approval
documents.When projects are co-financed on a parallel basis, the co-financiers’ procurement
procedures would be applied for contracts financed by them, unless agreed otherwise between the
co-financiers.

5.1.5 When projects are co-financed on a parallel basis, the Client shall promptly report to the Bank any
and all matters arising from such financing that may impact the Bank’s lending and/or the overall
project. Such matters shall thereafter be reported monthly until such time as the issues are resolved
or the Bank advises otherwise.

5.1.6 The Bank will finance only those contracts that are an agreed part of a project and that have been
awarded and executed in accordance with the Bank’s Procurement Principles and Rules as
incorporated in the Legal documents applicable to that project.

Eligibility

5.1.7 The Bank permits businesses, whether firms or individuals, from any country, to offer Goods, Works
and Services for Bank-financed projects regardless of whether the country is a member of the Bank
and to tender or submit proposals independently or participate as sub-contractors. Businesses from
developing countries as well as from the Bank’s member states are encouraged to participate on
equal (or otherwise stated terms) and thereby assist their own country’s development process.

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5.1.8 Except where specifically stated in the Procurement Principles and Rules or the Legal documents,
any conditions for participation shall be limited to those that are essential to ensure the capability of
the business to fulfil the contract in question. Clients shall not exclude a business from open
competition for a contract, or from prequalifying for a contract, or from contract award, for reasons
unrelated to its capability to perform the contract in question unless any of the reasons stated in 5.1.9
and 5.1.10 applies.

5.1.9 Consistent with international law, the proceeds of the Bank’s operations should not be used for
payment to persons or entities or for any import of Goods if such payment or import is prohibited by a
decision of the United Nations Security Council taken under Chapter VII of the Charter of the United
Nations. Persons, entities, suppliers or contractors offering Goods, Works or Services covered by
such prohibition shall therefore not be eligible for the award of Bank-financed contracts.

5.1.10 Following the Bank’s prior no-objection, the Bank’s Client may also exclude a Tenderer: a) if, as a
matter of law or official regulation, the Client’s country prohibits commercial relations with the country
of the Tenderer, b) it is or it will become unlawful under national law for a Bank’s Client to enter into a
contract with a Tenderer (or any of its sub-contractors) or to perform its obligations under the
contract, c) the Tenderer (or any of its sub-contractors) has been declared ineligible by the Bank as
per 5.1.14 below, and d) a circumstance or event exists, outside the Client’s control (including but not
limited to the imposition of any law), which has or might reasonably be expected to have the effect of
prohibiting, impairing or delaying in any material respect the performance by either the Tenderer or
the Client under the contract. The Bank may also consider, weighing all the relevant circumstances,
excluding a Tenderer if the Tenderer is listed at the time of Tender submission in the debarment list
of another Multilateral Development Bank.

Client responsibilities

5.1.11 Clients are responsible for implementing Bank financed projects, including all aspects of the
procurement process from the planning stage through the award of contracts, as well as the
administration of the contracts themselves. The Bank may advise and assist Clients in the
procurement process and institutional development for specific projects, and require provisions as a
condition of financing, but it is not a party to the resulting contracts. The rights and obligations of the
Client vis-à-vis Tenderers for Goods, Works and Services to be furnished for the project shall be
governed by the Tender documents issued by the Client and neither by these Procurement Principles
and Rules, nor any applicable Legal documents related to the financing.

Fraud and corruption

5.1.12 It is the Bank’s policy to require that Clients, as well as Tenderers, suppliers, contractors,
concessionaires and consultants under Bank-financed contracts, observe the highest standard of
ethics during the procurement and execution of such contracts.

5.1.13 In pursuance of this policy, the Bank defines, for the purposes of this provision, the terms set forth
below as follows, collectively termed as Prohibited Practices:

a) “corrupt practice” is the offering, giving, receiving, or soliciting, directly or indirectly, anything
of value to influence improperly the actions of another party.

b) “fraudulent practice” is any act or omission, including a misrepresentation, that knowingly or

recklessly misleads, or attempts to mislead, a party to obtain a financial or other benefit or to
avoid an obligation.

c) “coercive practice” is impairing or harming, or threatening to impair or harm, directly or

indirectly, any party or the property of the party to influence improperly the actions of a party.

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 d) “collusive practice” is an arrangement between two or more parties designed to achieve an
improper purpose, including influencing improperly the actions of another party.

e) “obstructive practice” is i) deliberately destroying, falsifying, altering or concealing of

evidence material to the investigation or making false statements to investigators in order to
materially impede a Bank investigation into allegations of a corrupt, fraudulent, coercive, or
collusive practice; and/or threatening, harassing, or intimidating any party to prevent it from
disclosing its knowledge of matters relevant to the investigation or from pursuing the
investigation, and ii) acts intended to materially impede the exercise of the Bank’s
investigation and audit rights provided for under par. 5.1.14. (f) below.

5.1.14 The Bank, in respect of the procurement of Goods, Works and Services governed by this document: :

a) requires that each party to a contract to be awarded by a Bank Client shall certify and
covenant that it, including any of its directors, managers, employees or any person acting on
its behalf or with its knowledge or consent,

• has not been found by a judicial process or other official enquiry to have engaged in
Prohibited Practices, money-laundering, terrrorism financing or tax evasion activities
during the fifteen years preceding the eligibility assessment, provided that a criminal
conviction for the above practices is final in the relevant national jurisdiction and was
rendered in judicial proceedings providing for adequate due process acceptable to
the Bank

• will not engage in any such practice in connection with the project concerned, and

• will promptly inform the Bank should any such practice come to its attention;

b) will reject a proposal for award if it determines that the supplier, contractor, concessionaire or
consultant recommended for award has engaged in Prohibited Practices, money-laundering,
terrrorism financing, or tax evasion activities in competing for the contract in question;

c) will cancel the portion of the Bank financing allocated to a contract for Goods, Works,
Services or Concessions/PPP agreements if, at any time, it determines that Prohibited
Practices, money-laundering, terrrorism financing, or tax evasion activities were engaged in
by representatives of the Client or of a beneficiary of the Bank financing during the
procurement or the execution of that contract without the Client having taken timely and
appropriate action satisfactory to the Bank to remedy the situation;

d) will declare a business ineligible, either indefinitely or for a stated period of time, to be
awarded a Bank-financed contract if, at any time, it determines that the business has
engaged in Prohibited Practices, money-laundering, terrrorism financing, or tax evasion
activities in competing for, or in executing, a Bank-financed contract;

e) reserves the right, where a Client or a business has been found by a judicial process or other
official enquiry to have engaged in Prohibited Practices, money-laundering, terrrorism
financing, or tax evasion activities, to:

• cancel all or part of the Bank financing for such Client; and

• declare that such a business is ineligible, either indefinitely or for a stated period of
time, to be awarded a Bank financed contract; and

f) will have the right to require that, in contracts financed by the Bank, a provision be included
requiring suppliers, contractors, concessionaires, and consultants to permit the Bank to
investigate their accounts and records relating to the performance of the contract and to
have them audited by auditors appointed by the Bank.

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Procurement documentation

5.1.15 The Client shall retain all the documents related to procurement activities for subsequent examination
by independent auditors and Bank staff for a period of not less than five years following completion of
the lending operation.

5.2 PROCUREMENT RULES FOR PUBLIC SECTOR OPERATIONS

General

5.2.1 Competition is the foundation for good procurement practice. In addition to economy and efficiency,
the public sector requires transparency and accountability for the use of public funds, and this affects
the choice of the procurement method and the documentation and procedures that are used.
Therefore the Bank requires its public sector Clients, in all appropriate cases, to obtain Goods,
Works, and Services through international competitive tendering procedures in accordance with the
rules outlined in this section.

5.2.2 Other methods, see the sections commencing 5.2.32, may be appropriate for certain circumstances,
depending on the nature and value of the Goods, Works or Services to be obtained, the required
completion time and other considerations.

Applicability

5.2.3 For the purpose of this section of the Procurement Principles and Rules, Public Sector Operations
are investments of the Bank:

a) which are guaranteed by the government or a public agency or instrumentality of the country
of operations; or

b) for national or local governments of the country of operations or agencies and businesses
majority beneficially owned by any of them, other than such businesses that in the Bank’s
judgement are operating autonomously in a competitive market environment and are subject
to bankruptcy or insolvency law.

5.2.4 These rules shall apply to Goods, Works and Services contracts (except Consulting Services, for
which the procedures are described in par. 5.5) financed in whole or in part by the Bank in public
sector operations and include, inter alia, purchase, hire-purchase, rental and leasing.

5.2.5 Contracts shall be procured following International Competitive Tendering, see Section 5.2.21, if their
value is estimated to equal or exceed EUR 250,000 for Goods and Services and EUR 6 million for
Works and supply and installation contracts, except for cases as stipulated in 5.2.42 (National
Competitive Tendering), 5.2.38 (Single Tendering), and 5.2.33 (Selective Tendering).

5.2.6 If the Bank determines that the above thresholds may have the effect of limiting competition or are
not likely to ensure the most economic and efficient outcome, then it may opt to require more
appropriate thresholds for such specific circumstances. These would need to be specified in the
reports and papers approved by its Board of Directors and incorporated in the Legal documents.

5.2.7 Prior to loan signing, all exceptions to international competitive tendering shall be clearly justified and
agreed by the Bank.

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5.2.8 No procurement requirement shall be divided with the intent of reducing the value of the resulting
contract(s) below these thresholds with the purpose of circumventing these rules.

5.2.9 For Goods, Works and Services contracts below these threshold values, Clients are encouraged to
follow international competitive tendering but may, subject to the Bank’s ‘no objection’, use other
procedures that are consistent with principles concerning competition, transparency, fair treatment,
economy and efficiency and that are acceptable to the Bank.

Procurement process

5.2.10 The normal process for public sector procurement involves the following steps:

a) notification of opportunities for tendering;

b) prequalification where appropriate;

c) invitation to Tender and issuance of Tender documents;

d) receipt of Tenders, evaluation of Tenders and contract award; and

e) contract administration.

The extent of the process and specific procedures to be followed for each step will depend on the
method of tendering that is used. The Bank encourages the Client to use e-procurement systems that
are compatible with and allow the application of the Bank’s Procurement Principles & Rules. Such e-
procurement systems shall be accessible and secure, ensure integrity and confidentiality, and have
sufficient audit trail features.

Procurement planning

5.2.11 Sound planning of procurement is crucial. The Client shall undertake a market analysis and, when
required by the Bank, conduct market consultations, to develop a project delivery strategy to achieve
results on a value-for-money basis. Following such market analysis and consultations, the Client shall
prepare the overall project delivery strategy, including the procurement plan and shall obtain a no-
objection from the Bank prior to commencing any procurement process. In the project delivery
strategy and the procurement plan, the Client shall determine and present (a) the objectives of the
Bank financed project, (b) what Goods, Works, Services, and Consulting Services are required to
carry out the project, (c) their cost estimates, (d) by when they are to be delivered and what
standards are needed, (e) the need for co-financing, (f) which procurement and contracting
strategies and procedures are most suitable for each contract, and (g) the resources and
capacities/skills needed to procure and implement the contracts.

5.2.12 The Client and the Bank shall determine, by mutual agreement, the particular procedures and the
Goods, Works, and Services to which they apply. Both shall be approved by the Bank’s Board of
Directors within the Operation approval documents and shall be incorporated in the Legal documents.
Subject to the Bank’s ‘no objection’, adjustments and refinements to the plan shall continue as
needed throughout the duration of the project. The Bank’s review and ‘no objection’ to the project
delivery strategy and the the procurement plan is one of the essential steps for establishing the use
of the proceeds of its financing to be completed before any procurement begins, save as outlined in
section 5.2.99 below. The project delivery strategy shall seek to employ the most fit-for-purpose
procurement methods proportional to the nature, market conditions, complexity, and value of the
procurement.

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5.2.13 In certain cases the Bank may accept or require a turnkey contract under which the design and
engineering, the supply and installation of equipment, and the construction of a complete facility or
works are provided under one contract. Alternatively, the Client may remain responsible for the
design and engineering, and invite bids for a single responsibility contract for the supply and
installation of all goods and works required for the project component. Design and build, and
management contracting contracts, where the contractor does not perform the work directly but
contracts out and manages the work of other contractors, taking on the full responsibility and risk for
price, quality, and timely performance, are also acceptable.

Notification

5.2.14 After the procurement plan has been prepared and as early in the project cycle as possible, the Client
shall issue a general procurement notice that advises the business community about the nature of
the project. This notice shall include the amount and purpose of the Bank’s financing and the overall
procurement plan, including:

a) the Goods, Works, Services, and Consulting Services to be procured;

b) the applicable procurement rules and procedures;

c) the expected timing for the start of procurement; and

d) a name and address to contact to express interest and obtain additional information.

5.2.15 Prior to issuing the general procurement notice, the Client shall submit the texts to the Bank for its ‘no
objection. The notice shall be published in a newspaper with wide circulation in the Client’s country
and, as appropriate, in the official gazette or procurement portal of the Client’s country, and, as
appropriate, in international business publications, and on the Client’s web site. The Bank will
arrange for publication of the notice on the Bank’s web site. The procurement process shall not
commence prior to the publication of the general procurement notice.

5.2.16 The general procurement notice shall be updated each time the procurement plan has been
materially modified.

5.2.17 The Client shall maintain a log of all those businesses that responded to the general procurement
notice with an expression of interest.

5.2.18 The publishing of notices, other than those published on the Bank’s web site, shall be at the Client’s
expense.

5.2.19 Prior to issuing a prequalification Notice or a Tender notice, its text shall be submitted to the Bank for
its ‘no objection’. Prequalification and Tender notices, for individual contracts using international
competitive tendering procedures shall be published in a quality newspaper with wide circulation in
the Client’s country, and, as appropriate, in the official gazette or procurement portal of the Client’s
country and, as appropriate, in international business publications and on the Client’s web site. They
shall also be transmitted, by email, to potential Tenderers that have responded with an expression of
interest to the general procurement notice as well as to local representatives of foreign countries that
are potential suppliers of the Goods,Works, and Services required. The Bank will arrange for
publication of the notice on the Bank’s Web site.

5.2.20 In order to encourage and facilitate the participation of Sub-contractors and sub-suppliers in
contracts, the Client should make available to interested parties the list of potential Tenderers that
have acquired Tender documents and, where prequalification is being followed, the list of prequalified
Tenderers.

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International Competitive Tendering

5.2.21 International competitive tendering procedures are those procedures under which all interested
suppliers or contractors are given adequate notification of contract requirements and all such
Tenderers are given an equal opportunity to submit a Tender. It provides extensive opportunities for
competition and satisfies the needs for economy and efficiency. International competitive tendering
may be done either with the one single stage tendering process, whereby technical and priced
Tenders are submitted simultaneously, or with the two-stage tendering process, as described below.

5.2.22 The Client shall give sufficient advance public notification of international competitive tendering
opportunities for potential Tenderers to determine their interest and to prepare and submit their
Tenders.

Prequalification of Tenderers

5.2.23 Clients may require potential Tenderers to apply to prequalify for large and complex contracts.
Prequalification is not a form of selective tendering but a first stage in a competitive tendering
process.

5.2.24 The notification for prequalification and the evaluation procedure shall be consistent with those for
international competitive tendering in these rules.

5.2.25 The prequalification criteria, which shall be specified in the prequalification documents, shall be
based entirely upon the capability and resources of prospective Tenderers to perform the particular
contract satisfactorily, taking into account relevant factors such as their:

a) experience and past performance on similar contracts,

b) capabilities with respect to personnel, equipment, and construction or manufacturing

facilities, and

c) financial position.

5.2.26 The Client shall intite all Tenderers that have demonstrated that they have met the prequalification
criteria to submit Tenders and shall notify all Tenderers that did not meet the prequalificaiton criteria
that they have been excluded. In the notification of exclusion, the Client will inform that any Tenderer
who wishes to ascertain the grounds on which its Tender was not prequalified, may request an
explanation from the Client within three working days. The Client shall promptly provide an
explanation on why such Tenderer was not prequalified to each requesting Tenderer, either in writing
and/or in a debriefing meeting, at the option of the Client, within three working days. The requesting
Tenderer shall bear all the costs of attending such a debriefing. Should the Tenderer object to the
reasons for such exclusion, the Tenderer may file an objection with the Client within three working
days from receiving a debriefing explanation. The Client shall promptly review the objection filed and
if, as a result of such review and following the Bank’s “no-objection”, the Client decides to modify the
prequalification selection, the Client shall issue an addendum to the notification, and if necessary,
extend the Tender submission deadline.

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Two-stage tendering

5.2.27 Detailed design and engineering of the Goods and Works to be provided, including the preparation of
technical specifications and other tendering documents, normally precede the invitation to tender for
major contracts. However, there are cases when it may be undesirable or impractical to prepare
complete technical specifications in advance. To address this issue, the Client may use a two-stage
tendering process in the case of: (a) a turnkey contract, where the contractor is responsible for the
design, (b) a contract for large complex Works or Services, (c) a contract for Works of a special
nature, (d) a contract for innovative or bespoke goods, (e) a contract for Goods that are subject to
rapid technological advances or which may be produced with different technical methods, or (f) a
contract which by its nature or complexity requires comprehensive dialogue with the Tenderers. In
such a case, a two-stage tendering procedure may be used;

a) In the first stage, the Client will invite unpriced technical proposals on the basis of a
conceptual design or performance specifications. Such proposals are subject to technical as
well as commercial clarifications and adjustments, following which amended tender
documents are issued, if necessary. If the Client amends and reissues Tender documents for
the second stage, the Client should respect the confidentiality of the Tenderers’ technical
proposals used in the first stage, consistent with requirements of transparency and
intellectual property rights.

b) The second stage is the submission of final technical proposals and priced tenders.

Domestic and Regional Preference applicable to tenders offered from within the Member States

5.2.28 Pursuant to Article 13 of the Agreement Establishing the Black Sea Trade and Development Bank,
the Bank may agree to the application of domestic and/or regional preference in awarding contracts
through International Competitive Tendering, on a case by case basis.

5.2.29 Where the Legal documents provide for margins of preference for Goods manufactured in the
Member States, the margin of preference shall be up to a maximum of fifteen per cent for domestic
suppliers and for suppliers from other Member States when evaluated in comparison with Tenders
from outside the region.

5.2.30 Where the Legal documents provide for margins of preference for Works and/or Services other than
consulting Services to be executed in the Client’s country, the margin of preference shall be up to a
maximum of seven and one half per cent for domestic contractors and five per cent for other regional
contractors, when evaluated in comparison with Tenders from outside the region.

5.2.31 The procedures to be adopted shall be set out in the Tender documents.

Exceptions to International Competitive Tendering

General

5.2.32 Exceptions to international competitive tendering shall be identified in the legal documentation or by
modification thereto.

Selective Tendering

5.2.33 Selective tendering procedures are similar to those for international competitive tendering except that
the Client preselects qualified businesses that are invited to submit Tenders. It may be a suitable
method for awarding contracts where:

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 a) the required product or service is highly specialised and complex; or

b) there is only a limited number of suppliers of the particular Goods or Services needed; or

c) other conditions limit the number of businesses that are able to meet contract requirements;
or

d) critical Goods, Works or Services are urgently required.

5.2.34 With the Bank’s ‘no-objection’ in the above cases, a Client may invite international Tenders from a list
of qualified businesses, including at least one business from the Bank’s Member States where this is
practicable. The lists shall include foreign businesses wherever possible.

5.2.35 In no case shall the quality of the required Goods, Works or Services or the project be compromised
by the selection process.

Restricted Procedures related to Intra-regional Trade

5.2.36 Pursuant to Articles 2 and 13 of the Agreement Establishing the Black Sea Trade and Development
Bank, restricted procedures may be appropriate for operations assisting in the promotion of intra-
regional trade between businesses in the Member States, and agreed in the Legal documents,
where:

a) the contract value is estimated not to exceed the thresholds set in 5.2.5 and

b) the tenor of the financing operation is not more than seven years, and

c) the Bank is satisfied that the supply market for the required Goods to be contracted is
adequately competitive and that competitive tendering procedures acceptable to the Bank
are, or have been, applied, or that the products to be financed are procured at fair market
prices.

5.2.37 Only businesses registered in a Member State are eligible to tender under these procedures.

Single Tendering

5.2.38 Single Tendering may be used in exceptional cases where:

a) the extension of an existing contract awarded in accordance with procedures acceptable to

the Bank for additional Goods, Works or Services of a similar nature would clearly be
economic and efficient and no advantage would be obtained by further competition; or

b) there has been an unsatisfactory response to international competitive tendering or selective

tendering or restricted procedures for intra-regional trade carried out in accordance with the
Bank’s Procurement Principles and Rules; or

c) a product can only be provided by a single supplier because of exclusive capabilities or

rights; or

d) standardisation with existing equipment is determined to be important and justified, the

number of new items is generally less than the existing number and compatible Goods
cannot be provided by other suppliers; or

e) it is a case of extreme urgency, brought about by unforeseeable events or circumstances not

attributable to the procuring entity.

Procurement Principles and Rules Page 13 of 28

5.2.39 Having demonstrated that the application of a competitive method of procurement is neither practical,
economic or efficient and following the Bank’s ‘no-objection’, a Client may invite a single business to
present its Tender without prior public notification.

Shopping

5.2.40 Shopping procedures may be agreed to by the Bank for contracts estimated not to exceed the
thresholds set in 5.2.5 for:

a) readily available off-the-shelf items; and

b) standard specification goods.

5.2.41 Shopping is a simplified form of selective tendering that only requires written price quotations from at
least three suppliers, including foreign suppliers wherever possible.

National Competitive Tendering

5.2.42 National competitive tendering in accordance with national procedures may be the most economic
and efficient method of procuring Goods, Works or Services when:

a) contract values not to exceed the thresholds set in 5.2.5; or

b) proposed Works’ sites are scattered geographically or Works are to be constructed at

different times; or

c) the Goods, Works or Services are available locally at prices less than the international
market; or

d) by their nature or scope contracts are unlikely to attract foreign competition.

5.2.43 The procedures under which national competitive tendering is carried out shall be acceptable to the
Bank. In exceptional circumstances, acceptable national competitive procedures may also be
allowed for other reasons, provided such reasons are adequately justified, following the
recommendation of the Bank’s procurement function and approval by the Credit Committee. Any
such exception shall be reported to the Board of Directors within the operation appoval
documents.They shall provide for adequate notification and competition in order to ensure
reasonable prices, evaluation criteria shall be made known to all Tenderers and shall be applied
fairly, and the conditions of contract should be fair and appropriate to the project.

5.2.44 For national competitive tendering to be acceptable to the Bank:

a) there shall be adequate notification as required by national law;

b) the specifications shall be clearly stated and non-restrictive to attract reasonable prices;

c) evaluation criteria shall be made known to all Tenderers and applied fairly, and

d) the conditions of contract shall be fair and appropriate to achieving a successful project.

Tendering shall be open to foreign businesses that wish to participate in accordance with such
procedures. The Bank shall encourage Clients to use national e-procurement portals when available
and acceptable to the Bank.

Procurement Principles and Rules Page 14 of 28

5.2.45 If the Bank takes equity or guarantees the repayment of a loan made by another lender, the
procurement of Goods and Works related to the equity or guarantee shall:

a) have due regard for economy and efficiency,

b) be in accordance with applicable law, and

c) be acceptable to the Bank.

International Competitive Tendering documentation

5.2.46 Tender documents are the basis for informing potential Tenderers of the requirements to supply
specific Goods and Services or to construct Works. They should furnish all information necessary to:

a) permit all eligible Tenderers to submit responsive Tenders,

b) permit and encourage international competition,

c) specify clearly the scope of Works, Goods or Services to be supplied, and

d) set out the rights and obligations of the purchaser and of suppliers and contractors, the
conditions to be met in order for a Tender to be declared responsive, and fair and non-
discriminatory criteria - except only in so far as domestic or regional preference has been
agreed to in the legal documentation - for selecting the winning Tender.

5.2.47 The detail and complexity shall vary according to the size and nature of the contract but generally
they should include an invitation to Tender, instructions to Tenderers, the form of Tender, Tender
security requirements, the conditions of contract, advance payment guarantees, performance security
requirements, technical and or performance specifications, drawings, a schedule or requirements for
the Goods, Works or Services, and the form of contract.

5.2.48 The Bank shall review the standard Tender documents provided by the Client, as appropriate for
each type of procurement. Clients may use internationally-recognised standard procurement
documentation and conditions of contract, based on the harmonized standard bidding documents of
the Multilateral Development Banks or other documents containing provisions as may be acceptable
to the Bank.

Language

5.2.49 The Client shall prepare the Tender documentation, including all published procurement notices, in
English.

5.2.50 In order to assist local businesses in tendering, the Client may choose to prepare the Tender
documentation in English and the local language, jointly or separately. While Tenders from local
businesses shall be in English, a version on the local language may also be submitted but the
English language version shall govern.

5.2.51 Except as set out below, the language of the contract shall be English, which shall be the governing
language.

Procurement Principles and Rules Page 15 of 28

5.2.52 Contracts entered into with local Tenderers (excluding joint ventures between local and foreign
businesses) may, at the Client's option, be in the national language of the Client, which shall be the
governing language for such contracts provided that the conformed copies of the contract and all
related documents submitted to the Bank shall also include full, certified, English translations. In the
event of any complaint, the Bank may also require an English translation of the relevant documents
pertaining to the complaint. The Bank shall determine on the basis of such English language
documents whether procurement has been carried out in accordance with the agreed procedures.

Tender Prices, Currencies and Evaluation Criteria.

5.2.53 A Tenderer may express the Tender price in any currency or currencies. In addition, Clients may
require Tenderers to state the local cost portion of a Tender in the local currency.

5.2.54 The Client shall request Tender prices for the supply of Goods from foreign sources on the basis of
relevant Incoterms, as agreed with the Bank. For locally supplied goods, Tenders may be priced ex-
factory with, as appropriate, additions for handling insurance and transportation etc.

5.2.55 Evaluation of Tenders for supply of Goods shall be comparably based and exclude import duties and
taxes payable on imported Goods and on directly imported components to be incorporated in locally
supplied goods, but shall include all costs associated with the supply, delivery, handling and
insurance of the Goods as required by the Client at the final place of destination.

5.2.56 The Client may request Tender prices for Works and Services contracts to be substantially executed
in the Client’s country to be inclusive of all duties, taxes and other levies. The evaluation and
comparison of Tenders shall be on this basis and the selected contractor made responsible for all
duties, taxes and levies in the performance of the contract.

5.2.57 Tender documents shall specify the relevant factors in addition to price to be considered in Tender
evaluation and the manner in which they shall be applied for the purpose of determining the Most
Economically Advantageous Tender.

5.2.58 Factors other than the Tender price that may be taken into consideration include, inter alia, post
Incoterms ‘delivery’ costs such as the costs associated with handling and transport to the project site,
the payment schedule, the time of completion of construction or delivery, the maintenance and
operating costs, the efficiency and compatibility of the Goods, performance and quality, the
availability of service and spare parts, and minor deviations, if any. Additional quality criteria
regarding environmental and social requirements as per the Bank’s Environmental and Social policy
may be added, in consultation with the Bank’s relevant department. Where appropriate, the Client
shall use a lifecycle cost-based approach to encourage sustainable procurement and achieve value-
for-money. The factors other than price to be used for determining the Most Economically
Advantageous Tender should be expressed in monetary terms or, where that is not practicable, the
Bank may give its ‘no-objection’ to merit points being given a judicious relative weight to be set out in
the evaluation factors in the Tender documents.

5.2.59 For the purpose of Tender evaluation and comparison, Tender prices shall be converted to a single
currency selected by the Client using the selling (exchange) rates for the currencies of the Tender
price quoted by an official source (such as the central bank) for similar transactions on a date
selected in advance. This date shall be specified in the Tender documents as being on or after the
date 30 days prior to the date originally specified for the Tender opening and that opening date not
later than the original date prescribed in the Tender documents for the expiry of the period of Tender
validity.

Procurement Principles and Rules Page 16 of 28

Standards and specifications

5.2.60 Clients shall use international standards and specifications wherever these are available and
appropriate. If particular national or other standards are used, the Tender documents shall state that
other standards that ensure equivalent or higher quality or performance than the specified standard
would also be accepted.

5.2.61 The use of brand names or other designations that would discriminate among suppliers should be
avoided. If they are necessary to clarify the nature of the product requirements, the Tender
documents shall state that products of equal or higher quality would be acceptable.

Clarifications

5.2.62 The Client shall supply to all prospective Tenderers the same information, and shall provide equal
opportunities to obtain additional information on a timely basis. Clients shall provide reasonable
access to project sites for visits by prospective Tenderers. For works or complex supply contracts,
particularly for those requiring refurbishing existing works or equipment, a pre-tender conference may
be arranged in which Client representatives may mee with prospective Tenderers to provide
clarifications (in person or online). The Client shall provide minutes of the conference to all
prospective Tenderers and to the the Bank. The Client shall send any additional information,
clarification, correction of errors, or modifications of Tender documents to each recipient of the
original Tender documents in sufficient time before the Tender deadline. If necessary, the Client may
extend the deadline, following the Bank’s “no objection” for such an extension.

Payments

5.2.63 Payment under the contract shall be made in the currency or currencies in which the Tender price is
stated in the proposal of the successful Tenderer.

5.2.64 For civil works and other similar contracts that involve performance in the Client’s country, the Client
may require that the price(s) are converted into that currency. In such cases payment of the Tender
price(s) in equivalent amounts shall be made in the Client’s currency without loss or risk to the
contractor.

5.2.65 Payment terms and procedures shall be in accordance with the international commercial practices
applicable to the Goods, Works or Services and the market in question. Contracts for supply of
Goods shall provide for full payment on delivery and inspection, if so required, of the contracted
goods, except for contracts involving installation and commissioning, in which case a portion of the
payment may be retained until the supplier or contractor has complied with all its obligations.

Time limits

5.2.66 Prescribed time limits for preparation and submission of Tenders shall be adequate for all Tenderers
to prepare and submit Tenders taking into account commonly observed public holidays. Generally no
less than calendar 45 days from the publication of the invitation to Tender or the availability of Tender
documents, whichever is later, should be allowed for the preparation and submission of Tenders. For
large or complex works or items of equipment, this period should be extended to 90 days or more or
as otherwise agreed with the Bank.

5.2.67 Tender validity periods and delivery dates shall be consistent with the Client’s reasonable
requirements but shall not be used to discriminate against any potential Tenderer.

Procurement Principles and Rules Page 17 of 28

5.2.68 In exceptional cases it may be necessary to request Tenderers to extend the validity of their Tenders.
In such cases Tenderers shall not be allowed or required to change their Tenders and shall be free
not to give such extension.

5.2.69 Where the Tender is for a fixed price contract, provision should be made in the Tender documents for
the Tender price of the successful Tenderer to be adjusted for inflation up to the date of contract
award, so as to mitigate the risk accruing to Tenderers offering such an extension.

Tender documents and conditions of contract

5.2.70 Nothing in the Tender documents shall be designed to restrict competition or offer an unfair
advantage to a Tenderer other than preferences as agreed in the legal documentation. Clients shall
not provide to any potential supplier or contractor information regarding a specific procurement that
would have the effect of reducing or precluding competition.

5.2.71 All amendments to Tender documents shall be sent at the same time and by comparable means to
be received quickly by each recipient of the original Tender documents.

5.2.72 The contract shall:

a) clearly define the scope of Goods, Works or Services to be supplied or performed, the rights
and obligations of the Client and of suppliers and contractors and should include, inter alia,
appropriate provisions for guarantees of performance and warranties, liability and insurance,
acceptance, payment terms and procedures, price adjustment, liquidated damages and
bonuses, handling of changes and claims, force majeure, termination, settlement of disputes,
personal data protection, and governing law.

b) be drafted so as to allocate the risks associated with the contract fairly, with the primary aim
of achieving the most economic price and efficient performance of the contract.

5.2.73 The form of contract to be used should be appropriate to the objectives and circumstances of the
project. Wherever appropriate, standard forms of contract incorporating generally accepted
international conditions shall be used.

Eligibility to submit Tenders

5.2.74 Businesses, including any Affiliate or parent of the business, that did not acquire the prequalification
or Tender documents according to a general, published, requirement of the Client shall be ineligible
to Tender.

5.2.75 Businesses may participate individually or in voluntary joint venture confirming joint and several
liability, either with domestic firms and/or with foreign firms. The Bank shall not accept conditions of
tendering that require mandatory joint ventures or other forms of mandatory association between
domestic and foreign firms.

5.2.76 Except for alternatives, where these are permitted, a business, including any Affiliate or parent of the
business or party to a joint venture, may submit or participate in any capacity whatsoever in only one
Tender for each contract. Submission or participation by a Tenderer in more than one Tender for a
contract shall result in the rejection of all Tenders for that contract in which the party is involved.
However, this does not limit the inclusion of the same Sub-contractor in more than one Tender.

Procurement Principles and Rules Page 18 of 28

5.2.77 No publicly owned business or Affiliate of the Bank’s Client, nor of a procurement agent engaged by
the Client, shall be eligible to Tender or participate in a Tender in any capacity whatsoever unless
they can establish that they are legally and financially autonomous and are subject to bankruptcy or
insolvency law. No hierarchically inter-dependent agency of the Client under a Bank-financed
project shall be permitted to tender or submit an offer for the procurement of Goods,Works or
Services under the project.

5.2.78 Where, in addition to consulting, a business has the capability to manufacture or supply goods or to
construct works that business, including any affiliate or parent of the business, cannot be a supplier
of Goods or Works on a project for which it provides Consulting Services unless it can be
demonstrated that there is not a significant degree of common ownership, influence or Control. The
only exceptions would be turnkey, single responsibility, public works, Concessions/PPP agreements
or similar undertakings where design, supply and construction activities are an integral part of the
contract or where certain proprietary and critical items of equipment and materials are an essential
part of the process design.

Tender opening

5.2.79 Tenders solicited under competitive procedures other than shopping shall be received and opened
under procedures and conditions guaranteeing the regularity of the opening as well as the availability
of information from the opening.

5.2.80 The time specified for Tender opening shall be the same as for the latest delivery of Tenders or
promptly thereafter.

5.2.81 On the date and at the time and place described in the Tender documents, the Client shall open all
Tenders that have been received before the latest time stipulated for the delivery of tenders.

5.2.82 Tenders shall be opened in the presence of Tenderers or their representatives who wish to attend.

5.2.83 The name of the Tenderer, the total amount of each Tender (including alternative tenders if
permitted) and the name of the signatory to the Tender and the date shall be read aloud and
recorded when opened. The Client shall maintain a complete record of the Tender opening, which
shall be copied to the Bank.

5.2.84 Tenders received after the stipulated deadline for the submission of Tenders shall be returned
unopened to the Tenderer.

Tender evaluation and contract award

5.2.85 When competitive procedures are used, the Client shall evaluate all Tenders and compare them only
on the basis of the evaluation criteria set out in the Tender documents.

5.2.86 A Tender that is not signed and dated by a duly authorized representative of the Tenderer shall be
rejected.

5.2.87 The Tender evaluation process up to the award of the contract should be confidential.

5.2.88 Contracts should be awarded within the period of tender validity to the eligible Tenderer whose
Tender has been determined:

a) as being substantially responsive and,

Procurement Principles and Rules Page 19 of 28

 b) in terms of the specific evaluation criteria set forth in the tender documentation, is determined
as the Most Economically Advantegeous Tender,

c) and who has been determined to be fully capable of undertaking the contract.

5.2.89 The Client shall not allow or ask to change their Tenders, nor require them to accept new conditions
during evaluation or as a condition of award. At the time of contract award, The Client shall verify the
information provided in the submission for prequalification and award may be denied to a Tenderer
that is judged to no longer have the capability or resources to successfully perform the contract.

5.2.90 The terms and conditions of the contract shall not, without the Bank’s ‘no objection’, materially differ
from those on which Tenders were invited. However, when the procurement procedure allows
contract negotiations or contract finalization meetings, the Client and the Tenderer may agree on
modifications to the resulting contract, subject to the Bank’s no-objection. Such modifications shall
not significantly change the price of the contract.

5.2.91 In exceptional circumstances, under single stage tendering, the Bank may agree to the Client’s use of
Best and Final (financial) Offer (BAFO). BAFO is an option under which the Client invites Tenderers
that have submitted substantially responsive Tenders and have been determined to be fully capable
of undertaking the contract to submit their best and final financial offers, after the conclusion of the
technical and financial evaluation. Such a process may be appropriate when the procurement
process would benefit from Tenderers having a final opportunity to improve their financial offers by
reducing prices without jeopardizing the quality of the tenders. The Client shall inform Tenderers in
the Tender documentation: a) if a BAFO is to be used, b) that Tenderers are not obliged to submit a
BAFO, and c) that there shall be no negotiation after the BAFO. In this case, the second financial
offer or the original one if a Tenderer has chosen not to submit a BAFO, shall be used for the final
evaluation.

5.2.92 If during the evaluation process, the Client considers the price of a Tender for the provision of Works
to be abnormally low and the Tenderer subsequently is unable to, through a clarification process,
demonstrate to the Client its capability to perform the contract for the offered price, the Tender may
be rejected, subject to prior no-objection by the Bank.

5.2.93 The Client shall only reject all Tenders if a) none of the submitted Tenders have been deemed as
substantially responsive, b) there is evidence of collusion or if there has been unsatisfactory
competition, and c) the Tender prices received substantially exceed the cost estimates or funds
available. Before rejecting all tenders, the Client shall obtain the Bank’s views on, and ‘no objection’
to, the subsequent procedures to follow.

5.2.94 If the Client, after consultation with the Bank, rejects all Tenders as non-responsive, the Client, with
the Bank’s no-objection, may invite new Tenders from the initially prequalified Tenderers or from
those that submitted Tenders in the first instance. When Tenders have been rejected due to lack of
competition, the Client may consider changes to the scope, design, and spefications before calling for
new Tenders. In cases when all Tender prices substantially exceed the cost estimates, the Client
may, instead of calling for new Tenders, and after consultation with the Bank, negotiate with the
Tenderer having the Most Economically Advantegous Tender for a reduction of the Tender price. If
no satisfactory contract can be concluded and a retendering is called, modification of the scope of the
contract shall be considered.

Procurement Principles and Rules Page 20 of 28

5.2.95 If any Tenderer is disqualified for being substantially non-responsive or for not being fully capable of
undertaking the contract, the Client shall promptly inform such Tenderer of such decision and also
inform that if such Tenderer wishes to ascertain the grounds on which its Tender was not qualified, it
may request an explanation from the Client within three working days. The Client shall promptly
provide an explanation on why such Tender was disqualified, either in writing and/or in a debriefing
meeting, at the option of the Client, within three working days. The requesting Tenderer shall bear all
the costs of attending such a debriefing. Should the Tenderer object to the disqualification decision,
the Tenderer may file an objection with the Client within three working days from receiving a
debriefing explanation. The Client shall review the objection filed and if, as a result of such review,
and following the Bank’s “no-objection”, the Client changes its disqualification decision, it shall notify
the Tenderer accordingly and include such Tenderer in the evaluation.

5.2.96 After conclusion of the evaluation, the Client shall inform all Tenderers, whose Tenders were
evaluated, of its intention to award the contract to the Tenderer with the Most Economically
Advantageous Tender and inform that any Tenderer who wishes to ascertain the grounds on which
its Tender was not selected, may request an explanation from the Client within three working days.
The Client shall promptly provide an explanation on why such a Tender was not selected to each
requesting Tenderer, either in writing and/or in a debriefing meeting, at the option of the Client, within
three working days. The requesting Tenderer shall bear all the costs of attending such a debriefing.
Should the Tenderer object to the evaluation result, the Tenderer may file an objection with the Client
within three working days from receiving a debriefing explanation. The Client shall review the
objection filed and if, as a result of such review, and following the Bank’s “no-objection”, the Client
changes its contract award recommendation, it shall notify the revised intent to award to all previously
notified Tenderers.

5.2.97 Following the conclusion of the debriefing/objection process, the Client shall submit to the Bank a
report containing the results of the Tender evaluation and its recommendation for the award of the
contract. The Bank shall review the findings and recommendations as the final step in establishing
the eligibility of the contract for Bank financing.

5.2.98 The Bank shall publish on its website information on all awarded contracts, including, as a minimum,
the contract title and price, the name and nationality of the supplier, contractor or consultant, to whom
the contract was awarded.

Advance contracting

5.2.99 In special circumstances relating to the nature of the project, or the Client, or other factors peculiar to
the context of the project, it may be advantageous for the Client to sign a contract before the signing
of the related Bank Legal documents. Clients undertake such advance contracting at their own risk
and any ‘no objection’ by the Bank with the procedures, documents or the Tender for award does not
commit the Bank to provide funds for the project. Procurement procedures shall be consistent with
the Bank’s Procurement Principles and Rules, or otherwise acceptable to the Bank, to be eligible for
Bank financing.

Contract administration

5.2.100 The Client shall administer contracts with due diligence and shall monitor and report to the Bank on
the performance of contracts.

5.2.101 The Client shall seek the Bank’s no-objection before agreeing to any material modification to the
terms and conditions of a contract including, but not limited to:

a) granting a material extension of the stipulated time for performance of a contract; or

Procurement Principles and Rules Page 21 of 28

 b) issuing a change order or orders that, in aggregate, would increase the contract price by
more than fifteen percent of the Tender price, net of any change order or orders that reduce
the Tender or contract price, or that would exceed the allocated funding.

5.2.102 As an integral part of their project implementation responsibilities, Clients are required to prepare and
maintain documents and records pertaining to the procurement process and the administration of
contracts following their award.

Procurement monitoring and Bank review

5.2.103 The Bank’s review of the procurement and contract administration processes shall focus on critical
steps that are necessary to ensure eligibility of the contract for Bank financing, in particular the
procurement plan, the Tender documents, the Tender evaluation and contract award
recommendations, and material changes and claims during execution of the contract. These review
procedures are described in Annex 1.

5.2.104 All contracts other than national competitive tendering and shopping shall normally be subject to the
Bank’s prior review. The Legal documents shall specify the contracts subject to review.

5.2.105 The Bank may receive complaints regarding the procurement process according to the Bank’s
Procedure for the receipt, retention, and treatment of complaints
(https://www.bstdb.org/transparency/complaints). When a complaint regarding any aspect of a
Tender procedure is received by the Bank, the Bank shall require that the complaint is fully reviewed
to its satisfaction and that, pending the outcome of such review, no decisions are made or no-
objections given which could prejudice the outcome of the review.

5.2.106 If at any time in a procurement process for a Bank financed project, even after award of contract, the
Bank finds that the procurement or administration of a contract has not been carried out in
accordance with the procedures agreed in the legal documentation, it shall promptly inform the Client
and state the reasons for such determination. The Bank may determine that the contract will no
longer be eligible for financing by the Bank and the outstanding portion of that financing allocated to
the contract will be cancelled. The Bank may also declare a contract to be ineligible for financing if it
determines that its no-objection was based on incomplete, inaccurate or misleading information about
the procurement or contract administration process furnished by the Client, or if it determines that the
Client or the successful Tenderer has engaged in a Prohibited Practices, money laundering, or
terrorism-financing, or tax evasion activities, as per 5.1.14 (a).

Procurement Principles and Rules Page 22 of 28

5.3 PROCUREMENT IN PRIVATE SECTOR OPERATIONS

5.3.1 This section applies to lending to and equity investments in businesses that:

a) are majority privately owned and controlled, or

b) while publicly owned are, in the Bank’s judgement, operating autonomously in a competitive
market environment and are subject to bankruptcy or insolvency law.

5.3.2 The Bank will encourage such Clients to use procurement methods that lead to sound selection of
Goods, Works, and Services at fair market prices and to make their capital investments in a cost
effective manner. Careful procurement planning that takes into account the particular needs of the
project is essential for the Bank’s evaluation and agreement. Businesses often achieve these aims
by following established commercial practices other than formal international competitive tendering
for their procurement. Nevertheless, wherever appropriate, the Bank will encourage the use of
international competitive tendering methods by such Clients, particularly for large contracts.

5.3.3 Contracts shall be negotiated on a demonstrably ‘arm’s length’ basis and be in the best financial
interest of the project as distinct from the sponsors. Where a shareholder of the Client company or
one of its Affiliates, including parent companies and Affiliates of such parent companies, is also a
contractor or supplier to the project, the Bank will satisfy itself that the contract costs are in line with
fair market prices and the original cost estimates in the reports and papers approved by its Board of
Directors, and that the contract conditions are fair and reasonable. Clients shall normally be
responsible for all expenses incurred by the Bank in satisfying itself in this regard.

5.3.4 The Bank may provide financing in respect of a Concession/PPP Agreement if, following a due
diligence process, the Bank has determined, on the basis of the information analysed, that the
following conditions have been met:

a) the process for granting the Concessions/PPP agreement has demonstrated sufficient
fairness, transparency, and competition and was compliant with applicable laws and
regulations, and
b) the terms of the Concession/PPP Agreement reflect market practices and fair and
reasonable in terms of price, quality, and risk allocation, and
c) no Prohibited Practices, money laundering, terrorism financing, or tax evasion activities
were identified in relation to the granting or the implementation of a Concession/PPP
Agreement.

5.4 PROCUREMENT IN OPERATIONS THROUGH FINANCIAL INTERMEDIARIES

Where Bank funds are used through financial intermediaries for the procurement of goods, Works or
Services, these Procurement Principles and Rules apply as per the stipulations of par. 5.3 above.

Procurement Principles and Rules Page 23 of 28

5.5 PROCUREMENT OF CONSULTING SERVICES

General

5.5.1 The Bank’s Clients employ businesses, whether firms or individuals, to provide a wide range of
expert advice and Consulting Services in connection with their operations and management
responsibilities.

5.5.2 The main concern when choosing consultants shall be the quality of the services that are provided.

5.5.3 The procedures for selecting consultants and contracting for their services shall be flexible and
transparent to ensure that assignments can be efficiently executed with high standards of
performance, while providing the necessary accountability.

5.5.4 The procedures described below shall be followed by Clients for hiring consultants using the
proceeds of Bank financing under Public Sector Operations and also where consultants are hired by
Clients using contracts financed from Technical Cooperation Funds to the extent that they do not
conflict with agreements reached with the donors of such funds.

Consultant selection procedures

5.5.5 The selection process for consultants normally involves the following steps:

a) defining the scope, objectives and estimated budget of the proposed assignment and
determining the selection procedure to be followed;

b) identifying consultants that are qualified to perform the required services and preparing a
short list accordingly;

c) inviting proposals from the short-listed consultants;

d) evaluating and comparing capabilities and proposals and selecting the preferred consultant;

e) negotiating a contract with the selected consultant; and

f) contract administration.

5.5.6 Some of these steps may be simplified or omitted, depending on the value of the contract for services
to be performed:

a) For contracts estimated to cost less than EUR 75,000 with individuals or firms , a qualified
consultant may be selected directly, without the requirement to prepare a short list, and a
contract negotiated with the selected consultant.

b) For contracts estimated to cost EUR 75,000 or more with individuals, selection shall be
made on the basis of an evaluation of short-listed, qualified candidates and the rationale for
the choice shall be recorded.

c) For contracts with firms that are estimated to cost EUR 75,000 or more and less than EUR
150,000 , a short list of qualified firms shall be prepared. The selection shall be based on an
evaluation of the short-listed firms’ proven experience and current expertise related to the
assignment, without a requirement that the firms submit specific proposals for carrying out
the assignment.

Procurement Principles and Rules Page 24 of 28

 d) Major contracts with firms estimated to cost EUR 150,000 or more shall follow a competitive
procedure based on invited proposals from a short list of qualified firms.

Short lists

5.5.7 Short lists of consultants should normally include no less than three and no more than six qualified
and experienced consultants (individuals or firms, as the case may be). The list should normally
comprise a wide geographic spread of consultants, including wherever possible at least one qualified
consultant from one of the Bank’s member states and normally no more than two from any one
country.

5.5.8 In the absence of the Bank’s no-objection:

a) no Affiliate of the Client shall be included on a short list unless it can be demonstrated that
there is not a significant degree of common ownership, influence or Control amongst the
Client and the affiliate and that the Affiliate would not be placed in a position where its
judgement in the execution of the assignment may be biased.

b) no consultant, nor any of its Affiliates, shall be hired for any assignment where there may be
a conflict with another assignment past, present or to be carried out by the consultant.

c) a short-list shall not include two or more parties that are associated or affiliated.

5.5.9 For large assignments with firms estimated to cost EUR 250,000 or more, complex or specialised
assignments, or operations involving a significant number of similar assignments, a formal notice
shall be published in a quality newspaper in the Client’s country and, as appropriate, in the official
gazette of the Client’s country, in international business publications and on the Client’s web site.
They shall also be transmitted by email to potential participants that have responded with an
expression of interest to the general procurement notice as well as to known local and foreign firms
that are potential suppliers of the services required. The Bank will arrange for publication of the
notice on the Bank’s web site. The short list shall be prepared on the basis of the responses to the
solicitation.

5.5.10 In order to encourage and facilitate the participation of sub-consultants in contracts, the Client should
make available to interested parties the list of short-listed consultants.

Requests for Proposals

5.5.11 Consultants not on the short list shall be ineligible, without the Bank’s ‘no objection’, to submit a
proposal.

5.5.12 Requests for Proposals, including all notices, shall be prepared by the Client in English. If the Client
so chooses, and at its expense, a translation of the same text may also be published translated into
any language or languages of the Bank’s Member States on dates that are no later than the date of
publication on the Bank’s website.

5.5.13 In order to assist local businesses in participating, the Client may choose to prepare the
documentation in English and the local language, jointly or separately. While submissions by local
consultants shall be in English, a version on the local language may also be submitted but the
English language version shall govern.

5.5.14 Except as set out below, the language of the contract shall be English.

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5.5.15 Contracts entered into with local consultants (excluding joint ventures between local and foreign
consultants) may, at the Client's option, be in the national language of the Client, which shall be the
governing language for such contracts provided that the contract and all related documents submitted
to the Bank include full certified English translations.

Evaluation and selection

5.5.16 When formal proposals are requested from a short list of consultants, the invitation for proposals shall
clearly state the criteria for evaluating them. The evaluation of consultants shall normally be based
primarily on technical considerations including, but not limited to, experience in similar assignments,
local experience and presence, qualifications of key personnel proposed for the assignment, and
suitability and quality of the work plan. The price of the services can be a secondary consideration
but quality should remain the principal factor in selection. When formal proposals have been
requested, the consultant that submits the highest rated proposal (in terms of quality and price) shall
be invited to negotiate a contract with the Client.

5.5.17 Competition through a short list is preferred. However, in some circumstances it may be necessary
or advantageous to engage or continue with a specific consultant, where:

a) the consultant has unique expertise or experience; or

b) the consultant has been or is involved in the early phases of the project such as feasibility or
design and it has been determined that continuity is necessary and no advantage would be
gained from following competitive procedures. Provision for such an extension, if considered
in advance, shall be included in the original terms of reference and contract, which preferably
should have been awarded after a competitive selection and in accordance with a procedure
acceptable to the Bank.

c) there has been an unsatisfactory response to a competitive procedure carried out in

accordance with this policy

5.5.18 In such cases a Client may, with the Bank’s prior no-objection, invite the consultant in question to
submit a proposal and negotiate a contract.

Professional Standards

5.5.19 Consultants shall be contractually required to observe the highest standard of ethics during the
selection and execution of Bank and trust fund financed contracts and provide professional, objective,
and impartial advice and at all times hold the Bank’s interests paramount, without any regard for their
future work, and strictly avoid conflicts with other assignment or their own corporate interests.

5.5.20 No consultant, nor any of its Affiliates, shall be hired for any assignment where there may be a
conflict with another assignment past, present or to be carried out by the consultant in the absence of
the Bank’s no-objection.

Contract negotiations

5.5.21 During contract negotiations the selected consultant’s proposal may be modified by mutual
agreement between the Client and the consultant. The Client should indicate any changes that may
be desirable in the scope of services and in the staffing proposed by the consultant, and appropriate
adjustments in the price of services should then be agreed. Where price is taken into account in the
evaluation, no negotiations on fee rates or other prices that were used for evaluation shall be
permitted. The draft final contract shall be presented to the Bank for review before signing where
required by the Legal documents.

Procurement Principles and Rules Page 26 of 28

Contract administration

5.5.22 The Client is responsible for managing and administering the consultant’s work to ensure high
performance standards, authorising payments, making contract changes as may be needed,
resolving claims and disputes, ensuring timely and satisfactory completion of the assignment and
evaluating the performance of consultants.

Bank review

5.5.23 Where consultants are being engaged by a Client, the qualifications, experience and terms and
conditions of employment shall be satisfactory to the Bank. The Bank will review the proposed scope
of services and terms of reference, the proposed short list of consultants, the recommendation for
consultant selection and the final contract to ensure that the assignment is eligible for Bank financing.

5.5.24 The review procedures are described in Annex 1. Consultancy contracts estimated to cost EUR
150,000 or more will normally be subject to the Bank’s prior review. The Legal documents will
specify the contracts subject to review. The Bank will also require an evaluation by the Client of the
consultant’s performance.

If the Bank finds that the procurement or administration of a contract has not been carried out in
accordance with the procedures agreed in the legal or other applicable documentation, the contract
would no longer be eligible for financing with the proceeds of the Bank’s financing and the
outstanding portion of the financing allocated to the contract would be cancelled. The Bank may also
declare a contract to be ineligible for financing if it determines that its no-objection was based on
incomplete, inaccurate or misleading information about the procurement or contract administration
process furnished by the Client, or if it determines that the Client or the consultant has engaged in a
Prohibited Practices, money laundering, terrorism financing, or tax evasion activities, as per 5.1.14
(a).

6 References
• UN Charter
• World Trade Organization/Government Procurement Agreement (WTO/GPA)

7 Associated Documents
• Agreement Establishing the Black Sea Trade and Development Bank
• BSTDB Procedure on the Receipt, Retention, and Treatment of Complaints
• BSTDB Environmental and Social Policy

8 Annexes
• ANNEX 1 – BANK REVIEW OF PROCUREMENT DECISIONS FOR PUBLIC SECTOR
OPERATIONS

Procurement Principles and Rules Page 27 of 28

ANNEX 1 – BANK REVIEW OF PROCUREMENT DECISIONS FOR PUBLIC SECTOR OPERATIONS

Contracts for goods, works and services

A.1. For all contracts which, in accordance with the Legal documents, are subject to the Bank’s prior
review:
a. prior to an invitation to prequalify or Tender, the Client shall submit the complete prequalification
or Tender documents to the Bank for its review and ’no objection’;
b. prior to finalising a prequalification list or awarding a contract, the Client shall submit a detailed
prequalification or Tender evaluation report setting forth the specific reasons on which the
recommendation to prequalify businesses or award the contract is based, to the Bank for its
review and ’no objection’; and
c. one conformed copy of the contract shall be furnished to the Bank prior to the submission of a
withdrawal application in respect of such contract.
A.2. For contracts not subject to prior review, the Client shall furnish to the Bank, prior to the submission
of a withdrawal application in respect of such contract, a conformed copy of such contract, together
with a Tender evaluation report for its review and ‘no objection’.
Contracts for consultant services
A.3. For all contracts which, in accordance with the Legal documents, are subject to the Bank’s prior
review:
a. prior to an invitation to submit proposals, the Client shall submit the proposed short list of
consultants, the scope of services and terms of reference and the evaluation criteria for the
assignment, to the Bank for its review and ‘no objection’;
b. prior to inviting a selected consultant for negotiations, the Client shall submit a detailed
evaluation report setting forth the specific reasons on which the recommendation to select the
successful consultant for negotiations is based, to the Bank for its review and ’no objection’; and
c. one conformed copy of the contract shall be furnished to the Bank prior to the submission of a
withdrawal application in respect of such contract.
A.4. For contracts not subject to prior review, the Client shall furnish to the Bank, prior to the submission
of a withdrawal application in respect of such contract, a conformed copy of the contract, together
with an evaluation report for its review and concurrence.
All contracts
A.5. The Client shall make such modifications in procurement documents or reports as the Bank shall
reasonably request. The documents or reports for which the Bank has issued its ‘no objection’ shall
not be materially changed without its further ‘no objection’.
A.6. Before agreeing to any material modifications or waiver of the terms and conditions of a contract or
granting a material extension of the stipulated time for performance or issuing any change order or
orders (except in cases of extreme urgency) that, in aggregate, would increase the contract price by
more than fifteen percent of the Tender or proposal price, net of any change order or orders that
reduce the Tender/proposal or contract price, or that would exceed the allocated funding, the Client
shall obtain the Bank’s ‘no objection’ to the proposed modification, waiver, extension or change order.
A.7. If the Bank determines that the award of a contract, the contract itself or any modification or waiver of
such contract is not consistent with the Legal documents, it shall promptly inform the Client and state
the reasons for such determination.
A.8. Upon the award of any contract to be financed by the Bank, the Bank will publish a description of
such contract, including the price, and the name and nationality of the party to which the contract was
awarded and the contract price.

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