FCIC COUNTRY SEMINAR:“ISDB’S PROCUREMENT SYSTEM AND STRATEGY FOR MEMBER COUNTRY FIRMS”

OVERVIEW OF IsDB PROCUREMENT FRAMEWORKMarrakesh, Morocco2nd April 2019

Evolution of IsDB Group

(1975 - 2018G)

1975 1994 1999 2008 2015

Institution has Evolved from Single Entity to a Group of Six Entities

www.isbd.org

IsDB Group EntitiesIslamic Research & Training Institute (IRTI)

Research and training arm of IsDB, Development of the Islamic Financial

Services Industry to support the socio-economic development of MCs.

Activities: training, research, advisory, capacity development.

The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC)

Boost OIC MCs intra-trade Export credit insurance Political risk insurance to

encourage cross-border investment.

Islamic Solidarity Fund for Development (ISFD)Islamic Solidarity Fund for Development (ISFD)Dedicated to fighting poverty in MCs Target Endowment of $10bn

Islamic Corporation for the Development of the Private Sector (ICD)

Promote private sector development Facilitate access to Islamic capital

markets, Mobilize additional financial resources for

private sector, Promote entrepreneurship, and

encourage cross-border investment.

International Islamic Trade Finance Corporation (ITFC)

Facilitate OIC MCs intra-trade Improve access to trade finance

for businesses Provide trade-related capacity

development

www.isbd.org

IsDB Capital Resources

› Authorized:› ID100bn ($140bn)

› Subscribed: › ID50bn ($70bn)

› Authorized:› ID 2bn

› Subscribed:› ID 750m

› Paid-up capital: › ID280m

43 Years AfterInception

1975 2018

› 22 Member Countries › 57 Member Countries

Key Facts about IsDB

Established in 1975 with HQ in

Jeddah, KSA

1,128 staff distributed across entities & regional

hubs

A Unique Model of South-South

Cooperation

Global MDB : Membership: 57

Countries Spreading over 4

Continents

11Regional

Hubs

AFRICA 27

LATIN AMERICA

1ASIA26

EUROPE2

Morocco

Senegal

Indonesia

Kazakhstan

• 11 Regional Hubs to be Operational by 2020• 7 Regional Hubs are established and functioning• 4 Regional Hubs are being established Dubai, Egypt, Uganda and Suriname• 14 Field Representatives in various Member Countries

Turkey

NigeriaMalaysia( CE )Suriname

Bangladesh

Main Products and Services of IsDB GroupScholarship Programs

Special Assistance

Trade Financing & Promotion of Intra-Trade, Regional Integration

Insurance of Investment & Export Credit

Science & Technology Program

Research and Training (Islamic Economics & Finance)

Project Financing(Public & Private)

Development of the Islamic Financial Services Industry

SMEs, Microfinance/ Fund / Asset Management

Capacity Development & Technical Cooperation

www.isbd.org

AAA Credit Rating

“Aaa” & ‘Prime-1’ Short-Term

“Aaa” & ‘F1+’ Short-Term

“AAA” & ‘A-1+’ Short-Term

EU Zero Risk Weight

“Stable” Outlook

“Stable” Outlook

“Stable” Outlook

www.isbd.org

IsDB Group 10-Year Strategy (2015-2025)

Capacity Development1

www.isbd.org

IsDB Footprint in Field

1.SENEGAL Hub Senegal Guinea Bissau Mali Gambia Sierra Leone Guinea Ivory Coast

2.NIGERIA Hub Nigeria Chad Togo Niger Cameroon Burkina Faso Benin Gabon

3.Uganda Hub Uganda Mozambique Djibouti Comoros Somalia

5. KAZAKHSTAN Hub Kazakhstan Tajikistan Uzbekistan Kyrgyz Republic Turkmenistan

4. SURINAME HubSuriname Guyana

6. INDONESIA Hub Indonesia Malaysia Brunei Darussalam

7. BANGLADESH Hub Bangladesh Maldives

8. MOROCCO Hub Morocco Mauritania Algeria Tunisia Libya 9. EGYPT Hub

Egypt Sudan Lebanon Jordan Iraq Syria

10. UAE Hub UAE Pakistan Afghanistan Iran Oman Qatar Kuwait Bahrain

11. Turkey Hub Turkey Azerbaijan Albania

HQ: Saudi Arabia Palestine Yemen

www.isbd.org

IsDB Organizational Structure

Financial Control

Treasury

Investments

Financial Policy, Planning & Analytics

Administrative Services

Human Resources Management

Health Services

Information Management and

Disruptive Technology

Operations Quality & Results

Project Procurement

Project Financial

Management

Director General, Global Practices

& Chief Economist

Economic & Social Infrastructure

Resilience & Social Development

Country Strategy & Cooperation

Islamic Financial Sector Development

Economic Research &

Institutional Learning

Global Partner-ship & Resource

Mobilization

Crowd Engagement & External

Funds Management

Group ShariahBoard

Operations Evaluation

IsDBBoard of Governors

Chairman, IsDBGPresident, IsDB

IsDBBoard of Executive

Directors

Country Relations & Services

Africa & Latin America

Country Relations & Services

MENA & Europe

Country Relations & Services Asia

Decentralization Facilitation

Director General, Country Relations

& Services

Vice President(Administration)

Vice President(Country Programs)

Vice President(Finance) & CFO

Vice President(Partnership

Development)

Legal

Integrity & Ethics

Compliance

General Counsel

Risk Management

Office of the President

Strategy & Transformation

Internal Audit

Ombudsman

Science, Technology& Innovation

Communications & External Relations

General Secretariat

Islamic Solidarity Fund for

Development

Hadi & Adahi Project

Shariah Compliance

Corporate Governance

Partnership Policy and Results

www.isbd.org

Typical Project Cycle • Carried out in the framework of a

“Project Cycle”• Project Cycle shows common

elements of a project and how they relate to each other in sequence

• “Procurement Plan” is critical to ensure smooth procurement process

• Procurement Plan is finalized during preparation phase; executed and updated during implementation

Planning• Procurement Document Procurement• Evaluation & Recommendation• Contract AwardExecution• Deliverables (detail design, etc.)• Construction, supply & installation• Contract ManagementDelivery & Completion• Taking over & maintenance

Procurement Plan

Identification

Preparation

Appraisal

Negotiation -AgreementBoard Approval

Implementation

Evaluation

www.isbd.org

IsDB Procurement Framework

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www.isbd.org

IDB “ARTICLES OF AGREEMENT” mandates theuse of Bank’s managed fund strictly for the: (i) purposeintended with regards to economy and efficiency, (ii) theuse of competitive approach for procurement and (iii)promoting development of Member Countries.

IsDB Board of Executive Directors,representing all Member Countries, mandates theuse of IsDB Procurement Guidelines (Policies &Procedures) for projects financed by IsDB.

Use of IsDB Procurement Guidelines ismandatory for procurement of contractsfinanced in whole or in parts by IsDB as furtherreflected in Project Documents (PAD, RRP) andFinancing Agreements.

Policy + Procedures & Operational documents(Administrative Instruction - AI, Operational Directives - OD,

Standard Procurement Documents, Guidance Notes – GN, etc.)

– The Overall Procurement Policy Framework -

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www.isbd.org

IsDB Project Procurement

Financing Agreement (FA) and Project Documents govern the legal obligations between a Beneficiary and IsDB regarding procurement financed by IsDB.

The Company has the option to send copy of its complaint to the Bank, in particular if the complaint has not been fully resolved

The Beneficiary has the obligation to respond and fully resolve the issues raised in the complaint before actual contract award

Procurement Documents issued bya Beneficiary and Contract signedbetween the Beneficiary and aCompany define the rights andobligations between both parties(Governing Documents)

Financing Agreement, PAD, PIASR

BENEFICIARY

IsDB

“SERVICE PROVIDER”

–The Stakeholders -

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www.isbd.org

Procurement Process… Always By Beneficiary… Will Not Change Much in Near Future…

ALLDone

by BENEFICIARY

…!...

IsDBFiduciary

…!...

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www.isbd.org

• Small Contract Packages• Regional Approach to Projects (1 Guideline 1981/1997)

• Consultancy Unit & DACON (1 Officer for clearance)

• Procurement Opinions by Legal Department• Projects Handled by Engineers• Relatively Small Scale Projects

- 1980’s -Earlier Days

1990s – Early 2000s

• Guidelines (Goods & Works + Use of Consultants)

• Procurement Division (1 staff - DM)• Creation of Bids Evaluation Committee

2003-2006

• IsDB Reform (Policy & Procurement)

• Adoption of Matrix System• Guidelines Revised in 2012

IsDB’s HISTORICAL JOURNEY IN "PROJECT” PROCUREMENT

2009

• Upscale ROs + CGOs• Coordination with MDBs• CDD-Type Projects

2013

• Large + Complex Packages• Procurement Analysts• From BEC to OPRC

Up Until December 2017

www.isbd.org

Nowadays: Extensive Exchanges Involving All Stakeholders

Execution and SupervisionPreparation Approval

Design and planning Selection & Award

Contract Management

MDB

Res

ourc

e Al

loca

tion

Focus of MDBs On High-Value / High-Risk

New Focus

Project Timeline

…!...What is aimed At: Risk Based Approach in Procurement…!...

NEW FOCUS IN THE PROJECT PROCUREMENT CYCLE BY MDBs

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www.isbd.org

IsDB Guidelines for Use of Consultants

IsDB Guidelines for the Procurement of Goods & Works

Approval of New Procurement Policies: BED-327 (02 September 2018)- New Guidelines Aligned With Current Trends And The Needs For IsDB New Decentralized Business

Model -

FINAL PRINTS: APRIL 2019

Roll Out Related Activities:1- Translation + Printing

2- Guidance Notes3- Training Modules

…Policies Approved by BED… …New Guidelines…

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www.isbd.org

New Documents: Overview

Policy

Guidance Notes

Procedures

Standard Procurement Documents

Policy + Procedures = GUIDELINES ( MANDATORY)

Updated Suite of Standard Procurement Documents ( MANDATORY, CAN BE CUSTOMIZED)

About 17 New Guidance Notes Recommended , 6 priorities

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www.isbd.org

1. Procurement Related

Complaints Handling

2. Procurement Plan / Strategy

Document

3. Prior and Post Review

New Documents: Overview GUIDANCE NOTES: To Clarify and Explain Important Topics in the Guidelines

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www.isbd.org

4. Advanced Contracting and

Retroactive Financing

6. Procurement in Fragile and

Conflict Affected States

New Documents: OverviewGUIDANCE NOTES: To Clarify and Explain Important Topics in the Guidelines

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5. Hands-On Implementation

Support

www.isbd.org

New Documents: Overview

Economy Efficiency Fairness

Effectiveness

VfM

FfP

Core Procurement Principles

Introduction of Value for moneyand Fit for purpose approach in procurement operations

These overarching principles will aid the ability of the Beneficiaries to achieve sustainable development

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www.isbd.org

Modern

Fit for Purpose

Tailored

Respond to Beneficiary Needs

(VfM)

The Future of Procurement in IsDB Financed Projects with the Revised Guidelines

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www.isbd.org

TranslationFrench

& Arabic

New Tool Kits

Training&

Onboarding Process

Update of All Procurement Documents

RecruitmentOf 25 Staff

23 FPOs2 RPOs

1 2 3 4

Critical Steps In Transformation of Project Procurement (PPR)

End Of March 2019 is Cut-Off Date for Exclusive Use of New Guidelines in New Projects

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www.isbd.org

3 6 24

1

1

1

PPR Setup Following IsDB Decentralization Initiative

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1975

Thank you