FIDIC backs World Bank’s “game changing” approach to promoting value in procurement

24 Apr 2023

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FIDIC has offered its full support to the World Bank’s ‘rated criteria’ approach to procurement, which the bank has hailed as a “game changer” for promoting value in its procurement processes.

In a video on the bank’s website promoting the rated criteria approach, Enzo de Laurentiis, the World Bank’s chief procurement officer, said: “A key objective of procurement in bank operations is to help borrowers achieve sustainable development objectives through value-based principles and transparent procurement strategies. Starting on 1 September 2023, most World Bank-financed international procurements will require the use of rated criteria in addition to price as part of the bid evaluation process. Using rated criteria more widely will increase borrowers’ ability to procure works, goods and services best suited to their specific needs. Rated criteria will also incentivise the best supplier to participate in bank-financed procurement with the knowledge that the added value they may bring will be considered in the evaluation.”

De Laurentiis said that a key objective the bank’s procurement framework was to enable a more strategic approach to procurement which includes balancing risk and prioritising fit for purpose solutions over simpler lowest cost offers. “Rated criteria help to better manage environmental, social, supply chain and cyber-security risks as well as leverage new opportunities such as promoting green procurement,” said de Laurentis said. “Combined with price and lifecycle cost formulas, rated criteria provide a more accurate assessment of value for money, which includes quality, sustainability and even innovation, as appropriate for a specific procurement in a particular operating environment,” he said.

Rated criteria also helps to combat bid rigging and reduce the risk of collusion in procurement processes. In the recent period there has been an increase in the use of rated criteria in public procurement in Western Europe, North America, Japan, Singapore, Australasia and amongst other OECD members. In the EU, 62% of countries already use rated criteria while in some member states the use is even higher with over 90% in France.

The video from the bank (see above) and De Laurentiis’s comments on rated criteria are timely as they come just as FIDIC is about to publish its new guide on recommended procedures to improve the application of qualifications and cost-based selection for consultants - a guide that is very much aligned with the bank’s rated criteria approach.

The World Bank says that it will implement the new approach in close collaboration with its client counterparts, the private sector and other development partners to ensure the greatest procurement impact for development. The bank will also continue to provide training, technical assistance and hands-on support to further enhance the strategic role of procurement as a key public policy and management tool. “We are excited to take our value-for-money approach to the next level by further advancing the use of rated criteria and we are looking forward to the benefits it will bring to our clients,” said De Laurentiis.

FIDIC has long advocated the concept of fair and open competition in the selection of consultants, urging that evaluation criteria should be focused on selection criteria which deliver the best outcome for clients, including highlighting the importance of long-term project performance, operation and maintenance costs and sustainability.

Dr Nelson Ogunshakin, FIDIC CEO, said: “We are delighted that the World Bank has adopted the rated criteria approach and is promoting it so widely and we fully support them in their efforts to encourage better procurement. This is a game changer for the industry and will eliminate the lowest bid tender winning the project, which ultimately leads to claims and litigations. FIDIC welcomes the move away from a ‘lowest price’ approach to procurement as it is something that we have long advocated, so we applaud the World Bank for taking a leadership position on this issue and we hope that their example will encourage other funders and clients to adopt a similar approach. Indeed, we are already aware that several World Bank client countries use rated criteria in their procurement regulatory frameworks, while others are modernising their procurement laws to incorporate this approach.

“Adoption of the rated criteria approach, which is in full alignment with FIDIC’s recommended procedures to improve the application of Qualification and Cost-based Selection (QCBS) for consultants to be published soon, by other multilateral development banks, government and private equity investors, would also improve and increase the project bankability pipeline and ultimately support the achievement of the United Nations sustainable development goals.

“As part of our collaborative relationship with the World Bank, I am delighted that Enzo de Laurentis has also agreed to participate in our annual FIDIC Global infrastructure Conference in Singapore, where we will be holding a dedicated fringe forum on the new World Bank procurement procedures with an invitation also extended to the other MDBs heads of procurement and other industry supply chain stakeholders.”

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