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GENERAL GUIDELINES FOR PROCUREMENT

NORDIC INVESTMENT BANK February 1999

General Guidelines for Procurement

Foreword

These "General Guidelines for Procurement" for projects financed by the Nordic Investment Bank (NIB) are intended to provide promotors and suppliers of projects with information on the procedures relating to tendering and briefing of potential tenderers for procurement for such projects. The Bank places great emphasis on transparency and accountability in procurement as it does in all its activities. NIB, as the common international financing institution of the five Nordic countries, attaches the greatest importance to ensuring that the projects it finances are both technically and economically sound and in conformity with the priority objectives of the Bank. This, of course, requires that procurement for the projects to be financed is cost efficient. During the last five years (1994-1998) NIB lent about Euro 5 billion to various sectors of the economy within the Nordic countries, and Euro 1 billion outside the Nordic region. The lending within the Nordic region aims at promoting economic growth through cross-border integration of industry and infrastructure and environmental improvement. The Bank's lending outside the Nordic countries is intended to strengthen economic cooperation between developing and transitional economies and the Nordic region in order to promote sustainable economic and environmental development. The aim of this brochure is to serve as a general guide rather than a detailed manual. If you need further or more detailed information the Lending Departments of the Bank will assist you.

Jón Sigurðsson President and CEO of NIB Helsinki, February 1999

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Source: NIB's publications

General Guidelines for Procurement

Table of contents Foreword.............................................................................................................................................2 1. Introduction....................................................................................................................................4 1.1. General ......................................................................................................................................4 1.2. Basic provisions ........................................................................................................................4 2. Procurement responsibilities.........................................................................................................5 2.1. Promoters ..................................................................................................................................5 2.2. Tenderers...................................................................................................................................5 2.3. The Bank ...................................................................................................................................5 3. Rules for financing operations within the European Economic Area.......................................5 3.1. Eligibility ..................................................................................................................................5 3.2 Public sector projects .................................................................................................................5 3.3. Private sector projects ...............................................................................................................6 4. Rules for financing operations outside of the European Economic Area.................................6 4.1. Eligibility ..................................................................................................................................6 4.2 Public sector projects .................................................................................................................6 4.2.1. Publication of notices.........................................................................................................6 4.2.2. Tendering specifications ....................................................................................................6 4.2.3. Criteria for the award of contracts .....................................................................................6 4.2.4. Language............................................................................................................................6 4.2.5. Currency.............................................................................................................................6 4.2.6. Technical specifications.....................................................................................................7 4.2.7. Evaluation of tenders .........................................................................................................7 4.2.8. Local preference.................................................................................................................7 4.3. Private sector projects ...............................................................................................................7

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1. Introduction

1.1. General

NIB attaches great importance to ensuring that investment projects financed by the Bank, in addition to being economically, financially, technically and environmentally viable, are implemented rationally and efficiently. It is the prime responsibility of the Bank to ensure that the funds provided are used in the most economic and efficient way in both public and private sector investments, so as to serve the priority objectives of the Bank which are - promoting economic integration as well as environmental and infrastructural improvement within the Nordic region - contributing to transition and economic development in the areas adjacent to the Nordic region, particularly in the field of environmental and infrastructural improvement - strengthening economic cooperation between countries outside of the Nordic region and the Nordic countries The Bank places great emphasis on transparency and accountability in the use of the funds it provides for investment. In all its lending activities the Bank aims for a net interest margin that will generate a reasonable return on its capital.

1.2. Basic provisions

The Agreement regarding NIB, which was signed by the Nordic Ministers of Finance and Economy on October 23, 1998, stipulates in its Preamble and Article 1 that

"The Governments of Denmark, Finland, Iceland, Norway and Sweden, desiring to strengthen and further develop the co-operation among the Nordic countries through the Nordic Investment Bank, as a common international financial institution having the same status as other legal persons conducting similar operations within and outside the Nordic countries, have agreed as follows:

Article 1 The purpose of the Nordic Investment Bank, hereinafter referred to as the [email protected], is to make loans and to issue guarantees in accordance with sound banking principles, taking into account socio-economic considerations, in order to effect investment projects of interest to the Nordic countries and other countries which receive such loans and guarantees".

Article 2 of the Agreement stipulates that

"The Bank shall conduct its operations in accordance with its Statutes, approved by the Nordic Council of Ministers". ------------

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The contents of Article 1 of the Agreement are reiterated in Paragraph 1 of the Statutes of the Bank. Paragraph 7 of the Statutes further stipulates that

The business of the Bank shall be conducted in accordance with the principles referred to in Paragraph 1 and in accordance with the following guidelines: a) A loan shall not be made or a guarantee given if it is opposed by the state of the beneficiary. -------------------------------------------------------------------------------------------------------------

There are no stipulations within the legal framework of the Bank requiring that funds lent by the Bank shall be spent within the Member States of the Bank or restricting procurement of goods and services from any country.

2. Procurement responsibilities

2.1. Promoters

The promoters are solely responsible for implementing the projects financed by the Bank, in particular for all the aspects of the procurement process, from drafting of the tender specifications through to awarding the contracts, as well as administration of the contracts.

2.2. Tenderers

The rights and obligations of the promoters in relation to the tenderers for goods, works or services to be furnished are governed by the tendering documents published by the promoters.

2.3. The Bank

The involvement of the Bank is confined solely to satisfying itself that the conditions attached to its financing operation are met and that the proceeds of any loan by the Bank are responsibly used for the project for which the loan was granted. In connection with every financing operation, the need to comply with the relevant guidelines concerning procurement or the need to ensure fair competition in tendering procedures, as the case may be, is emphasized by the Bank in order to meet the requirements of its statutes of sound banking and economic principles. Projects which the Bank co-finances in close cooperation with the major multilateral financial institutions are normally subjected to the procurement rules of the latter.

3. Rules for financing operations within the European Economic Area

3.1. Eligibility

A great majority of all the projects financed by the Bank have been located in the Nordic countries. This will also be the policy of the Bank in the future. A number of projects have been financed in EEA-countries other than the five Nordic countries, a policy that will also be continued.

3.2 Public sector projects

Calls for tender relating to operations in the Nordic and the other EEA- countries are governed by the Directives enacted in the respective Member States of the EEA.

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3.3. Private sector projects

In case the above Directives do not apply, promoters may satisfy the need to ensure effective use of resources and the criteria of economy and efficiency by recourse to commercial practices other than official calls for tender. Whenever appropriate, the Bank will recommend to promoters of private sector projects the use of competitive bidding procedures, especially for major contracts, in order to ensure that their capital investments are carried out in a cost effective manner.

4. Rules for financing operations outside of the European Economic Area

4.1. Eligibility

A smaller part of all the projects financed by the Bank have been located in the countries outside the EEA. This line of policy will be followed by the Bank also in the future. Only countries which have been approved as eligible for financing, as evidenced i.a. by framework agreements and memoranda of understanding with the respective governments, qualify for financing by NIB. Calls for tender are in principle open to firms and individuals from all countries. Firms and individuals may be excluded from tendering if an exclusion is based upon law or official regulation which is in force in the EEA-countries or in the country of the promoter or the country in which the project will be implemented.

4.2 Public sector projects

4.2.1. Publication of notices NIB requests, whenever appropriate, the promoters to publish invitations to participate in the tendering procedures in publications stipulated in the Directives referred to under Section 3.2. above, or in other publications including local newspapers. Any exceptions to such requests must be justified and approved by the Bank. 4.2.2. Tendering specifications Promoters are encouraged to use internationally recognized standard documents, drafted in such a way as to permit adequate international competitive bidding. 4.2.3. Criteria for the award of contracts Documents for publication and those relating to the call for tenders must specify the selection criteria to be adopted by the promoters, e.g. the lowest price or the economically most advantageous tender. In the latter case, the parameters adopted must be outlined and quantified. 4.2.4. Language The tendering documents, including the report on the evaluation of tenders, must be drafted in a major international language whenever appropriate. 4.2.5. Currency Tenderers must be allowed to express their bids in major international currencies.

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4.2.6. Technical specifications Promoters must have recourse to European and international standards and specifications, wherever these are applicable and appropriate. 4.2.7. Evaluation of tenders All tenders must be treated in a transparent way at the same time as the confidentiality thereof must be safeguarded. The promoters must scrutinize the tenders. No amendment to the substance of the tender or to the price can be accepted after the opening of tenders. 4.2.8. Local preference As a general rule, the Bank does not allow preference to be given to supplies originating in the country in question.

4.3. Private sector projects

Private sector enterprises often meet the concerns for appropriate use of funds and economy and efficiency by following established commercial practices other than formal open tendering for their procurement. Nevertheless, whenever appropriate the Bank will encourage the use of competitive bidding methods by its private sector clients, in order to ensure that their capital investments are carried out in a cost effective manner.

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General guidelines for procurement

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