WINNING ADB CONTRACTS IN CENTRAL ASIA
By Ellen S. House
U.S. companies are currently not taking full advantage of opportunities to win procurement and consulting contracts in Central Asia from the Manila-based Asian Development Bank (ADB). ADB projects will be the source of over $1 billion in loans and some $38 million in technical assistance to Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan during 1999-2001. In addition, the bank is currently processing applications for membership from Turkmenistan and Azerbaijan.
ADB projects are fully financed and bid according to international competitive bidding guidelines, and are a promising potential source of new business for U.S. consulting and equipment firms. U.S. companies that plan ahead and are well informed about how to negotiate the process for winning ADB contracts will increase their chances of success. At a June presentation at the USA Trade Center by Denny Barnes, U.S. Commercial Liaison to the ADB, U.S. business representatives were enthusiastic about these opportunities. Although Europeans have dominated this market since the creation of the Central Asian republics in 1991, U.S. companies are now well positioned to capture a bigger market share.
The ADB in Central Asia
ADB projects in Central Asia focus on agriculture, transportation infrastructure, social sector development, water supply and sanitation, and education, health, and the environment. Technical assistance is provided to governments for feasibility studies, capacity building, financial sector and economic policy development, and government reorganization. Moreover, ADB is now prepared to provide up to 25 percent of the financing for private projects in Central Asia that meet the developmental needs of the member country. The amount and character of assistance to Central Asia varies by country.
Kazakhstan: Since 1994, Kazakhstan has received 10 loans totaling $415 million from the ADB. In addition, ADB provided almost $15 million in grants for 28 technical assistance projects for capacity building, institutional strengthening, and preparing loan operations. No loans were approved in 1998 because the government delayed formulating its public investment program and borrowing strategy, but technical assistance grant projects continued. Agriculture is a strong focus for bank lending proposed for 1999-2001, and a $60 million loan for a farm restructuring sector development program is already in the appraisal stage. Also, the Kazakhstani Government reportedly asked the ADB for a $10 million emergency loan to combat locusts in 2000. In August, the ADB moved its resident mission in Kazakhstan to the new capital city of Astana, but it will also maintain a liaison office in Almaty.
Kyrgyzstan: ADB operations in the Kyrgyz Republic began in 1994. As of December 31, 1998, the ADB had approved 12 loans for 10 projects totaling $314.2 million. In addition, 28 technical assistance grants have been approved worth $18.2 million. ADB assistance to Kyrgyzstan during 1999–2001 will concentrate on improving the provision of public services, including banking and water resources; agriculture, including rural finance; education; and infrastructure, especially rehabilitation projects in the energy and roads sectors. ADB will open a resident mission in Bishkek in early 2000.
Uzbekistan: Uzbekistan has received loans worth some $210 million since joining the ADB in 1995. More than half of these loans ($120 million) were made in 1998, of which $50 million was for road rehabilitation and $70 million for railway rehabilitation. Priority areas for ADB projects in Uzbekistan are agriculture, infrastructure, and education. The ADB resident mission in Tashkent was opened in 1998.
Tajikistan: Tajikistan joined the ADB only in 1998, receiving its first loan, $20 million for a postconflict infrastructure program, in December. ADB will focus its efforts in Tajikistan on agriculture (and agro-processing), infrastructure rehabilitation, capacity building and institutional strengthening, health, social protection services, and education. Some $60 million in loans and $8 million in technical assistance funds are being considered for Tajikistan for 1999–2000.
Turkmenistan: ADB has approved Turkmenistan’s membership. It will become a full member when it makes its required capital contribution to the bank.
Azerbaijan: In October 1999, press reports said that the Azerbaijani parliament approved legislation on its country’s membership in the ADB. Now, ADB approval is all that is needed for Azerbaijan to join.
Winning Contracts with the ADB
Firms interested in winning procurement or consulting contracts should integrate the ADB into their planned marketing strategies for Central Asia, and plan to make regular visits to the bank’s headquarters in Manila and to the national agency executing the project. Face-to-face relationships are essential to doing business in this part of the world.
Bids for Goods & Equipment: By monitoring the ADB website, companies can carefully plan winning strategies for upcoming procurement opportunities. On purchases over $500,000, the ADB uses international competitive bidding (ICB) to ensure economy and efficiency in the procurement of goods and services. ICB requires advertising and a reasonable length of time for firms from any member country of the ADB to submit bids. To streamline and facilitate the bidding process, the ADB has developed standard bidding documents that are available online to potential bidders.
The ministry or executing agency of the country that is responsible for implementing the project is also accountable for the proper conduct of the procurement process. Officials of the borrowing government determine who wins the various contracts to supply goods and services for their project. However, for purchases over $100,000, ADB reserves the right to review the procurement process and routinely reviews all bids done under ICB.
Bidding for Consulting Services: For best results, consulting firms should obtain project information as early as possible and prepare by building relationships with ADB project officers and officials in the executing agency. These relationships will not only make the company known to the key decisionmakers, but also may help in gathering information to write an effective proposal.
Unlike procurement, selection for consultants for technical assistance (TA) project grants is done within the ADB itself, not in the country receiving the services. However, the executing agency does have input into the process. ADB uses quality-based evaluation (QBE), and consultants are selected purely on technical merit and then invited to negotiate to establish the rates. The consultant selection process from when the TA project is first announced until the contract is awarded is about a 12-month process. No prequalification is needed for consulting firms, but consultants are encouraged to register with ADB on its website using the Data on Consulting Firms (DACON) and Data on Individual Consultants (DICON) consulting firm and individual consultant registration systems. Consulting firms should note that there is a quota of three bids per year on the submission of proposals for technical assistance projects.
The U.S. Government Can Help
The U.S. Department of Commerce’s Multilateral Development Bank Operations (MDBO) office in Washington, part of the U.S. and Foreign Commercial Service, maintains a U.S. Commercial Liaison to ADB Office in Manila to encourage participation of U.S. firms and represent U.S. commercial interests vis-a-vis ADB. The ADB Liaison Office in Manila provides one-on-one counseling and detailed information on ADB procurement opportunities, and assists U.S. firms in scheduling appointments with ADB project officers.
To contact the U.S. Commercial Liaison to the ADB, tel: (632) 804-0460 or fax: (632) 804-0357, or send an email to Denny.Barnes@mail.doc.gov.
U.S. manufacturers, equipment suppliers, consulting firms, and individual consultants can learn of project opportunities by visiting the ADB website at www.adb.org/business/opportunities. More information on MDBO is available by calling (202) 482-3399 or 1-800-USA-TRADE (872-8723), or visiting www.ita.doc.gov/mdbo.