FIDIC welcomes World Bank’s use of ‘rated criteria’ to promote greater value in procurement

13 Mar 2023

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From 1 September 2023, the World Bank will require the use of ‘rated criteria’ as the default approach for most international procurements using a bank standard procurement document. The bank says that using rated criteria more widely will increase borrowers’ flexibility to procure works, goods and non-consulting services best suited to their specific situation and provide a more fit-for-purpose approach.

FIDIC has welcomed the move to use rated criteria, which will also increase the willingness of the best suppliers to bid and participate in bank-financed projects with the knowledge that their added value will be part of the evaluation, thereby increasing options, global competition and the likelihood for effective market solutions.

Since 2016, the World Bank’s Procurement Framework has encouraged the use of rated criteria to evaluate quality, sustainability, and innovative aspects of bids in decision making. A key objective of the framework was to enable borrowers to adopt a more strategic approach to procurement, including the use of evaluation criteria that prioritises fit-for-purpose solutions rather than the lowest-evaluated price. The framework helped deliver significant benefits, as noted in the five-year retrospective report, Procurement in World Bank Investment Project Financing, on its use.

Procurement benefits of rated criteria

Going forward, the World Bank believes that a greater use of rated criteria will further contribute to successful contract outcomes and effective risk management, including managing issues around environmental, social, supply chain disruption, cybersecurity and global health emergencies. Rated criteria will also contribute to combating bid rigging and reducing the risk of collusion in procurement processes. It will also help create new opportunities such as improving risk management, securing supply chains, and factoring climate impacts in award decisions.

Another added advantage of the use of rated criteria is that it can also contribute to achieve more rapid solutions for the reconstruction of countries devastated by war and conflicts. The bank’s procurement review (mentioned above) makes a particular point of highlighting that the criteria would provide more direct support to borrowers, especially in fragile conflict violence environments.

Combined with price and life cycle cost formulas, rated criteria provide a truer assessment of value that focuses on quality, sustainability and other key criteria, all areas that FIDIC has been campaigning on for many years. This approach helps create incentives for highly qualified bidders and allows them greater flexibility to provide tailored and innovative solutions.

This latest move means that from 1 September 2023, the majority of World Bank-financed procurement will require the use of rated criteria which will promote the inclusion of key quality and sustainability criteria, rather than using just the lowest evaluated price for award decisions.

FIDIC CEO Dr Nelson Ogunshakin said: “FIDIC welcomes this move by the World Bank to use rated criteria for its procurement and we commend them for their approach. The move away from a ‘lowest price’ approach to procurement will be widely welcomed by the engineering and construction industry and it is something that FIDIC has long advocated. We hope that this move by a leading funder of global infrastructure projects will encourage other funders and clients to adopt a similar approach to their procurement processes as a way of ensuring better, more transparent outcomes and greater value for money for end users. We look forward to working with the World Bank in highlighting this very welcome approach to procurement to our stakeholders and the wider industry.”

Time is right to implement value-for-money approach

The bank’s five-year review of procurement mentioned above shows that there has been an increasing use of rated criteria in public procurement in Western Europe, North America, Japan, Singapore, Australasia and other OECD members. For example, 62% of public procurements in the EU use rated criteria, while in some member states the coverage is even higher (e.g. 90% in France). Several World Bank client countries also provide for the use of rated criteria in their procurement regulatory frameworks and in some other countries, modernising their procurement laws to include this feature is underway.

The bank believes that the time is right to strengthen implementation of the value-for-money approaches on which the Bank’s Procurement Framework is predicated. Ed Mountfield, vice president, operations policy and country services at the World Bank, said: “We look forward to advancing the use of rated criteria in procurement to help our borrowers get the best possible value for money as they leverage procurement to help meet their development goals. This will further strengthen our commitment to sustainability and fit-for purpose solutions to address global and local challenges.”

The new approach will be implemented in close collaboration with client countries, the private sector, international institution, and development partners to maximise procurement impact for development. The bank will continue to provide training and hands-on support to help ease the transition and enhance the strategic role of procurement as a key public policy and management tool to maximise scarce resources, deliver better value to beneficiaries and address today’s global challenges.

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