March 2011

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The responsibility for the implementation of the project, and therefore for the award and administration of contracts under the project, rests with the Borrower.

The following considerations guide the Bank's requirements to the Borrower in the implementation of a project:

  1. The need for economy and efficiency in the implementation of the project, including the procurement of the goods and works involved.
  2. The Bank's interest in giving all eligible bidders from developed and developing countries the same information and equal opportunity to compete in providing goods and works financed by the Bank.
  3. The Bank's interest in encouraging the development of domestic contracting and manufacturing industries in the borrowing country.
  4. The importance of transparency in the procurement process.

In most cases the Bank requires its Borrowers to obtain goods, works, and services through International Competitive Bidding open to eligible suppliers and contractors.

Where International Competitive Bidding is not the most appropriate method of procurement, the following methods of procurement may be used (listed in descending order of preference):

  1. Limited International Bidding;
  2. National Competitive Bidding;
  3. Shopping; and
  4. Direct Contracting.

Under specific circumstances the Bank allows the use of other methods (for details see Section III of the document GN-2349-9).

The particular methods that may be followed for procurement under a given project are provided for in the Loan Contract.


These Policies apply to all contracts for goods and works financed in whole or in part from Bank loans.

When the Borrower adopts other procedures for the procurement of those contracts for goods and works not financed from a Bank loan, the Bank shall be satisfied that the procedures to be used will fulfill the Borrower's obligations to cause the project to be carried out diligently and efficiently, and that the goods and works to be procured:

  1. Are of satisfactory quality and are compatible with the balance of the project.
  2. Will be delivered or completed in timely fashion.
  3. Are priced so as not to affect adversely the economic and financial viability of the project.


Funds from the Bank loans can be used only for the payment of goods, works, and services contracted with firms or individuals from Bank member countries. In the case of goods, their origin shall be from Bank member countries.

Individuals or firms from other countries shall not be eligible to participate in contracts to be financed in whole or in part from Bank loans.

The Bank does not permit a Borrower to deny pre- or postqualification to a firm for reasons unrelated to its capability and resources to successfully perform the contract; nor does it permit a Borrower to disqualify any bidder for such reasons.


The Borrower may wish to proceed with the initial steps of procurement before signing the related Bank loan, but undertakes such advance contracting at his/her own risk, and any concurrence by the Bank with the procedures, documentation, or proposal for award does not commit the Bank to make a loan for the project in question.

If the contract is signed, reimbursement by the Bank of any payments made by the Borrower under the contract prior to loan signing is referred to as retroactive financing and is only permitted within the limits specified in the Loan Contract.


Any firm may bid independently or in joint venture confirming joint and several liability, either with domestic firms and/or with foreign firms, but the Bank does not accept conditions of bidding which require mandatory joint ventures or other forms of mandatory association between firms.


The Bank reviews the Borrower's procurement procedures, documents, bid evaluations, award recommendations, and contracts to ensure that the procurement process is carried out in accordance with the agreed procedures.

The Procurement Plan approved by the Bank shall specify the extent to which these review procedures shall apply in respect of the different categories of goods and works to be financed, in whole or in part, from the Bank loan.


The Bank does not finance expenditures for goods and works which have not been procured in accordance with the agreed provisions in the Loan Contract and as further elaborated in the Procurement Plan. In such cases, the Bank will declare misprocurement, and it is the policy of the Bank to cancel that portion of the loan allocated to the goods and works that have been misprocured.

Even once the contract is awarded after obtaining a "no objection" from the Bank, the Bank may still declare misprocurement if it concludes that the "no objection" was issued on the basis of incomplete, inaccurate, or misleading information furnished by the Borrower or the terms and conditions of the contract had been modified without the Bank's approval.


The Bank requires that all borrowers adhere to the highest ethical standards, and report tothe Bank all suspected acts of fraud or corruption of which they have knowledge or become aware during the bidding process and throughtout negotiation and execution of a contract.  Fraud and corruption are prohibited.

Fraud and corruption include acts of: (i) corrupt practice; (ii) fraudulent practice; (iii) coercive practice; and (iv) collusive practice.

  • A corrupt practice is the offering, giving, receiving, or soliciting, directly or
    indirectly, of anything of value to influence the actions of another party;
  • A fraudulent practice is any act or omission, including a misrepresentation,
    which misleads, or attempts to mislead, a party in order to obtain a financial
    or other benefit or to avoid an obligation;
  • A coercive practice is impairing or harming, or threatening to impair or harm,
    directly or indirectly, any party or property of the party to influence the
    actions of a party; and
  • A collusive practice is an arrangement between two or more parties designed
    to achieve an improper purpose, including to influence improperly the actions
    of another party.

If it is demonstrated that any firm, entity or individual bidding for or participating in a Bank-financed project has engaged in an act of fraud or corruption, the Bank may:

(i) decide not to finance any proposal to award a contract or a contract awarded
for works, goods, and related services financed by the Bank;

(ii) suspend disbursement of the operation if it is determined at any stage that
evidence is sufficient to support a finding that an employee, agent, or
representative of the Borrower, Executing Agency, or Contracting Agency
has engaged in an act of fraud or corruption;

(iii) cancel, and/or accelerate repayment of, the portion of a loan or grant
earmarked for a contract, when there is evidence that the representative of
the Borrower, or Beneficiary of a grant, has not taken the adequate remedial
measures within a time period which the Bank considers reasonable, and in
accordance with the due process guarantees of the borrowing country’s

(iv) issue a reprimand in the form of a formal letter of censure of the firm,
entity, or individual’s behavior;

(v) issue a declaration that an individual, entity or firm is ineligible, either
permanently or for a stated period of time, to be awarded or participate in
contracts under Bank-financed projects except under such conditions as
the Bank deems to be appropriate;

(vi) refer the matter to appropriate law enforcement authorities; and/or

(vii) impose other sanctions that it deems to be appropriate under the
circumstances, including the imposition of fines representing reimbursement
to the Bank for costs associated with investigations and proceedings. Such
other sanctions may be imposed in addition to or in lieu of other sanctions.


As part of the preparation of the project, the Borrower shall, before loan negotiations prepare and furnish to the Bank for its approval, a Procurement Plan acceptable to the Bank setting forth:

  1. The particular contracts for the goods, works, and/or services required to carry out the project during the initial period of at least 18 months.
  2. The proposed methods for procurement of such contracts that are permitted under the Loan Contract.
  3. The related Bank review procedures.

The Borrower shall update the Procurement Plan annually or as needed throughout the duration of the project.

The Borrower shall implement the Procurement Plan in the manner in which it has been approved by the Bank.


Prevailing Reference Document:

GN-2349-9, March 2011

Prevailing Procedures:

Procurement Function Operational Guidelines OP-272-2, April 2010