Procurement of IT- Fiduciary Forum 2008 – Page 1 Procurement of Information Technology Fiduciary...

Procurement of IT- Fiduciary Forum 2008 – Page 1

Procurement of Information Technology

Fiduciary Forum 2008

Overview


AGENDA

• Characteristics of ICT • packaging approach for IT components; • selection of Standard Bidding Documents (Goods

vs the SBD for Supply and Installation of Information Systems (SII; and single stage vs two-stage bidding);

• evaluation methodology and technical requirements, including establishing price/technical ratio

• Two stage bidding


• Enormous level of continuing innovation

• Prices come down, performance increases

• Lifetime of “hard” investments potentially low

• Technology now permeates business processes, with heavy integration across all systems

• Private sector (as provider) remains key driving force

Characteristics of ICT


Typical Parts of Major ICT Components

• General studies (BPR, IT strategy, establishing the linkage with project goals, establishing priorities, approach)

• Design studies (user requirements, functional specifications, designs, “blueprints”)

• Application software customization/development

• Hardware and standard software delivery

• Project management (often a complex task)

• Training (users, technical staff)

• Other services (e.g., digitization, data conversion, surveys)


FAILURE FACTORS

Factor Percent

1 Incomplete requirements 13.1

2 No user involvement 12.4

3 Lack of resources 10.6

4 Unrealistic expectations 9.9

5 No support from senior management

9.3

6 Unstable requirements 8.7

7 Poor planning 8.1

8 System non-usable at finish 7.5

9 No IT management 6.2

10 No technical competence 4.3


SUCCESS FACTORS

Factor Percent

1 User involvement 15.9

2 Support from senior management 13.9

3 Clearly defined requirements 13.0

4 Good planning 9.6

5 Realistic expectations 8.2

6 Phased approach 7.7

7 Competent personnel 7.2

8 User ownership 5.3

9 One vision and clear goals 2.9

10 Effective and goal oriented personnel 2.4


Examples of ICT Components in Typical Bank-Financed Projects

Computer classrooms for schools Agency’s main e-mail and document handling system (e.g.,

Outlook/Exchange, Lotus Notes) Court administration system Financial Information System (e.g., Budget, Payroll, Integrated FMS) Geographical Information System (e.g., cadastre, forest management) Information System (laws, general statistics, highway accidents, etc.) Management Information System (e.g., health, education) Operational Information System (e.g., Railway, Central Bank RTGS) Social Insurance System (medical, pensions, unemployment) Revenue Management System (tax, customs administration) Treasury System (budgeting, expenditure control)


Large IT projects


Why IT Procurement Is Different

• IT Professional Mindset• Know chances of failure are high (US gov. study – 45% of projects

unusable)• Are experienced to eliminate ambiguity and uncertainty• Know who can do the job best• Fast technical changes

• Market• extremely competitive• becoming commodity driven

• Environment• Policy, legal and regulatory changes• Management change

It Is aLethal Mix

of Risks


• IT frequently combines Goods and Services elements

• software pricing/licensing/IP presents an additional element needing special treatment, as do possible telecommunications facilities

• installed base and related staff skills may have considerable impact

• de-facto market monopolies may weigh heavily

Need for specialized Standard Bidding Documents (SBDs) and for skill in packaging the overall procurement

Procurement challenges presented by IT


Low

Consulting Services ContractsLow

High

High

Service Content

Product Content

Low

Consulting Services ContractsLow

High

High

Service Content

Product Content

Consulting Services ContractsConsulting Services ContractsLow

High

High

Service Content

Product Content

Complexity diagram


ICT toolset for Task Managers Guidance on SBD selection for ICT procurement Other IT Guidance Notes

SBD for Information Systems Supply and Installation (IS1STG SBD, Version 3a, March 2003)*

Two-stage (IS2STG SBD, Version 3a, March 2003)* Goods SBD (use only for IT products)* Shopping (only for well-defined IT products of small value) RFP approach (for strategy development, design studies, development

of user requirements and application software development)*

Appropriate overall approach may use all of these options to advantage* Versions in French and Spanish are available

The available instruments


Services Content

Goo

ds C

onte

nt

High

High

Low

Low

RFP

Goods SBD

IS1STG SBD

IS1STG SBD

IS2STG SBD

Shopping

Which Approach to Use?


Procurement Methods

• ICB is common for initial investment. Goods or Single-stage Supply and Installation of Information Systems SBDs are used.

• Two-stage Supply and Installation of Information Systems SBDs used for turnkey and complex procurements

• Pre-qualification for exceptional very specialized cases critical for project implementation. No standard pre-qualification document is available. LIB can be used in lieu of pre-qualification in some cases.

• Shopping may be necessary for start up activities, to fill gaps, for specialized tools, and minor purchase updates


Practical suggestions

• Turnkey implementation SBD – only exceptional, high risk of failure.• Goods SBD – general purpose hardware and off-the-shelve software

(without customization).• Single-stage SBD – detailed requirements for system (hardware and

software) are known and the weight of technical scoring is no more than typically 25%.

• Two-stage SBD – the solution is known but the alternatives are allowed and there is need for the weight of technical scoring higher than typically 25 % (30%-50%), in the first stage.

• Technical assistance RFP – for design, development and integration of the system, or any combination of these activities (the suggested minimum is design and/or integration).


• single responsibility (“turnkey”) contract(s) • separating the application software development• building on existing efforts if they hold promise• phasing application software development (prototyping,

RAD, piloting, partial and full “roll-out”)• splitting procurement and managing several suppliers

(splitting in time, and by type of procurement package)

Each approach has its own set of pros and cons.Actual approach needs to fit the situation.Should also reflect Borrower’s competence and will.

Approaches for dividing and packaging


Use SBD for Goods…

• For ready-made equipment and materials, pre-installed

software packages and consumables only • Package contains only incidental services, such as

installation, LAN, standard training, etc. (15% of total contract value)

• Contract can be fully implemented in at most 6 months

• Recurrent costs comprise only the standard warranties and software licenses, up to 3 years

In other words, the procurement package resembles a typical Goods procurement.


SHOPPING

The ITQ for Shopping (SH) may be used as an alternative when the procurement package is:

• only off-the-shelf IT and is small in value (consult thresholds in LA/DCA/PP) and can be handled by simple payment on Delivery (in any case max US$100,000);

• only incidental services are delivery and installation;

• must use the ECA Shopping Website:


Use RFP…

• Typically for IS project management support, development of ICT strategies, user requirements, functional specifications, design of application software, and the assembly of ICT bidding documents

• For implementation: When the content comprises almost only services (e.g., development of an application system), and usually for pilot applications

• The size of the task is within the grasp of typical consultant or software engineering firms

• The hardware and packaged software content should be minimal, e.g., less than 20% of the estimated contract value

• Requires special customization to the standard contract (for intellectual property rights, support/warranty, testing and acceptance, and appropriate payment clauses

Purchaser assumes higher risk.Provides good scope for the use of competent local firms.


Use the Single-Stage SBD…

• Especially if procurement package combines critical Goods and Services elements

• Sophisticated hardware requiring an informed performance comparison and special training requirements

• A dominating value of the software packages• Extra installation and support requirements for these • Software design, large-scale adaptation and/or

development • Requirements for the supplier to continue to operate the

equipment after installation • For contracts requiring pricing for both investment &

recurrent costs (life-cycle)Use as default for Information Systems


Use the Two-Stage SBD…

• When it is unclear whether full solutions are available from potential bidders

• When the submission of technical alternatives is actively encouraged

• When it is important to gain confidence via the bidding process about acceptable and desirable solutions

• Includes the possibility to test proposed solutions prior to contracting

Requires more time than single-stage; entails the prospect of prejudicing the Purchaser.


Typical Borrower Issues

• Reliance on inadequate IT expertise• Project management and implementation capacity often

lacking or unsustainable• Mindset fixed on obtaining specific brands• Eager to receive hardware, with little regard to use it

productively any time soon• Lack of attention to the effort and skills it takes to put

adequate BDs together• Desire to do everything with own staff• Poor communication with the World Bank


Typical World Bank Issues

• Giving ICT components a separate life from the start

• No or inadequate reliance on IT expertise• Non-use of World Bank procurement expertise in

IT• Lack of problem appreciation by Task Manager

and Procurement Accredited Staff• Clearing BDs and BERs in frustration


Preparation of Bidding Documents

• Clearly describe what is to be procured (Technical Specifications and IFB) ... can be complex

• Pay attention to how the global and local markets work in the areas of the technical requirements (what to include and what not, RFP vs. ICB, division into lots)

• Needing special attention: technical evaluation method (if any), recurrent cost table, schedule

• Also needing attention: investment price table, payment schedule, project management and approach to acceptance

• Capture required quality / performance for equitable competition


Preparation of Bidding Documents

• To the extent possible, simplify bid evaluation. Define what is really wanted and make it mandatory

• Quality points reserved only for extra value offered by the Bidder, and the value is actually invited by the Purchaser

• The dilemma of the argument of Purchaser “wants” versus “needs”.

• Eliminate recurrent costs evaluation if at all possible. This is the most common cause of problems in bid evaluation.

TIP Use International

Consultants to assistthe Borrower


Key areas needing attention

• Composition of evaluation team

• Letting evaluators do their job

• Expectation of non-conformities (bids are rarely perfect)

• Special issues in two-stage bids between stage one and two

• If technical merit is scored, BER must be informative to allow World Bank to review the scoring

• Review outcome as to being competitive in view of the expected market

Bidding and bid evaluation stages


Key Areas Needing Attention

• Maintain focus on milestones, goals• Prevent premature delivery and payment of hardware and

user licenses for packaged software• Carefully assess proposed replacements of Supplier staff

and resist if appropriate, especially at the start of the contract

• World Bank involvement typically is a positive factor outside the contractual conflict resolution framework

• but, World Bank policies typically are very restrictive in times of contract implementation

Contract execution


Software Rights

• STANDARD SOFTWARE– RIGHTS WITH OWNER

• CUSTOM (DEVELOPED) SOFTWARE– MUST BE SPECIFIED IN SCC

• A) FULLY VESTED IN PURCHASER• B) REMAIN VESTED IN SUPPLIER• C) ANY INTERMEDIATE APPROACH (BETWEEN A AND B)

• SOURCE CODE • SOFTWARE MONOPOLY – both Purchaser and

Supplier are SW owner with equal and separate rights to develop the software independently of each other after contract execution


PAYMENT CONDITIONS

• PAYMENT IS DIVIDED AMONG 7 CATEGORIES– ADVANCE (USUALLY 10% excl. Recurrent Costs)

– INFORMATION TECHNOLOGIES, MATERIALS AND OTHER GOODS (not custom software or custom materials) usually 60% delivery, 10% installation, 10% Op. Accept.

– CUSTOM SOFTWARE AND CUSTOM MATERIALS usually 60% installation, 20% Op. Accept.

– SERVICES`OTHER THAN TRAINING (usually 80% monthly in arrears against services performed)

– TRAINING (usually 30% at start of training and 50% monthly in arrears)

– COMPLETE SYSTEM INTEGRATION (usually 10% of entire contract excl. Recurrent Costs)

– RECURRENT COSTS (100% monthly in arrears against services delivered)


MAIN FEATURES

BIDDING MAY BE CONDUCTED AS A SINGLE OR TWO STAGE PROCESS

STG 1

STG 1 STG 2


USE A SINGLE STAGE PROCESS

as default anytime, but especially if procurement package

combines critical Goods and Services elements and result is critical for production

operation

Requires comprehensive specifications; at a minimum functionally comprehensive

specifications.

MAIN FEATURES


USE A SINGLE STAGE PROCESS WHEN:- Procurement is simple e.g. “supply and install”

- Technical requirements are well defined and can be defined by clear technical specifications

- Purchaser is clear what technical solution is required

- Solution can be met by products that are already available

- Procurement involves purchase and installation of large number of computers and off-the-shelf software

- Design risk is borne by the Purchaser

MAIN FEATURES


Bidding Documents

(issued by Purchaser) Bid

(submitted by Bidder)

Contract Documents

SINGLE STAGE FLOWCHART

1. Pre-bid Conference

2. Questions & answers

3. Amendments


PROCEDURE

Bidding Documents(issued by Purchaser)

Invitation for Bids (IFB)

1. Instructions to Bidders (ITB)

2. Bid Data Sheet (BDS)

3. Eligibility for the Provision of Goods, Works and Services in Bank-Financed Procurement

4. General Conditions of Contract (GCC)

5. Special Conditions of Contract (SCC)

6. Technical Requirements (TS)

7. Sample Forms


PROCEDURE

Bid(submitted by Bidder)

Bid Form

Price Schedules

Bid Security

Authorization to sign (& any Joint Venture documents)

Attachments:

1. Bidder’s eligibility2. Bidder’s qualifications (incl. manufacturer’s authorizations)

3.Eligibility of goods and services4. Conformity of the information system (incl. technical bid and project plan) and deviations if any exists. 5. Proposed Subcontractors6. Intellectual property

[7. Alternative technical bids]


PROCEDURE

Contract DocumentsNotification of AwardBid FormPrice SchedulesGeneral Conditions of ContractSpecial Conditions of ContractContract Agreement and Appendixes: 1.Supplier’s Representative 2.Adjudicator 3.Approved Subcontractors 4.Categories of Software 5.Custom Materials 6.Revised Price Schedules (if any) 7.Minutes of Contract Finalization 8. Change order procedures and forms Updated Technical Bid

Any other documents agreed as forming a part of the Contract


ITB – Bidder Qualifications

• ITB 6.1• Ask bidders for:

– Experience, staffing, financial stability– Installed user base, references, site visits– Software history, development methodology,

maintenance, and stability`

• Set thresholds/hurdle targets• Subcontractors’ qualifications can be indicated

here, however note provisions of ITB 6.2• Manufacturer’s authorization (usually always)


Bid evaluation

• Avoid technical scoring of mandatory requirements unless it concerns the method of implementation

• Select only few features – in the range 5-8 ; bidder capacity should be evaluated mostly as qualifications

• Describe the rules of assigning scores for each technical feature; predefined values for each feature

• Subjective scores should be assigned by consensus of the evaluation committee not by simple averaging


Bid Evaluation

• Technical evaluation is complex to review, often requiring professional expertise - include IT specialists in evaluation committee

• Use pre-defined procedures for assigning scores and conclude with a consensus of the evaluation committee

• Bidders complain a lot• No perfect bids• Applying corrections• When are recurrent costs needed• When to use technical evaluation for

merit as opposed to technical compliance


A material deviation, exception, objection, conditionality, or reservation is one

that limits in any substantial way the scope, quality, or performance of the Information System; or

that limits, in any substantial way that is inconsistent with the Bidding Documents, the Purchaser’s rights or the successful Bidder’s obligations under the Contract; or

the acceptance of which would unfairly affect the competitive position of other Bidders who have submitted substantially responsive bids.

MATERIAL DEVIATION


AWARD OF CONTRACT TO THE LOWEST EVALUATED BIDDER WHO:

MEETS THE SPECIFICATIONS HAS CAPABILITIES AND RESOURCES HAS BEEN DETERMINED TO BE

SUBSTANTIALLY RESPONSIVE TO THE BIDDING DOCUMENTS

OFFERS THE LOWEST EVALUATED BID PRICE

AWARD


ITB –Evaluation Methodology

• ITB 28

• Evaluation Formula (B=Evaluated Bid Score):

XT

TX

C

CB

high

low 1

C = Evaluated Bid PriceClow= Lowest of all Evaluated Bid Prices among responsive bidsT = Total Technical Score awarded to the bidThigh= Technical Score achieved by bid scored highestX = Weight for the Price as specified in the BDS

Bid with highest B will be termed “Lowest Evaluated Bid”


ITB –Evaluation Methodology

• ITB 28.4• In most cases, you will assign a weight to

technical factors• Technical weight determined by degree of

professional judgment, project management, and risk management skills required from Supplier

• Range from 0% for well defined products to up to 60% could be justified for highly complex requirements of high intellectual input

• Typical 15%


ITB – Evaluation Methodology

• Often very difficult to describe technical limits (i.e., server expansion or performance benchmarks, such as TPC-C)

• Purchaser would like to look at a spectrum of options in their investment decisions

• High divergence in functionality in the application software market

• Adequate evaluation of service elements of bids

Why use merit scoring…



• Estimate the costs of major components and assign weight:C1 hardware and standard software c1 (0%)C2 application software package functionality c2 (50%)C3 custom application development, studies c3 (60%)C4 other services (training, project mgt., etc.) c4 (30%)

• C1+C1+C2+C4 must be total estimate for the procurement• c1, c2, c3, c4 represent technical “importance” within the

component (prior to bidding) • Compound merit weight is: Sum of Ci*ci/sum of Ci

Determining ‘1-X’ – Method for obtaining a composite merit weight



• Estimate the costs of major components and assign weight:5m hardware and standard SW c1=0%1m application software package functionality c2=30%1m custom application development, studies c3=50%1m other services (training, project mgt., etc.) c4=20%

• C1+C1+C2+C4 = 8m• Compound merit weight is: Sum of 0+0.3+0.5+0.2 / 8

» = 12% technical merit weight

Determining ‘1-X’ – Example



• ITB 28.5 (a),(b): Category merit sub-weights• Must list categories and list of preferred/Desirable

features within each category• Number of scored features should be kept to a

minimum• Scoring based on pre-specified assignment of

points• Operative goals is for a bidder to be able to

accurately forecast its own technical score



• Score features which influence life-cycle cost and effectiveness of IS and exceed mandatory requirements

• Performance, capacity, or functionality features• Usability features (ease of use, administration,

expansion, etc.)• Quality of Bidder’s project/implementation plan,

staff experience, training, etc.

ITB 28.5 (a),(b) – What to score



• ITB 28.5 (c), (e), (f): Category Weight

• Categories (i.e, SW, BQ) are given weights

• Features with each category may be given weights

Category Weight

Software (SW) 60%

Bidder Qual. (BQ) 20%

Training Plan (TR) 10%

Implementation Plan (IP) 10%



• ITB 28.6: Evaluated Bid Price• C = Adjusted Bid Price (P)+Recurrent Cost (R)• P=total price for all goods/services less

adjustments• Adjustments include deviations as defined in ITB

28.6 (c)– Deviations to Implementation Plan– Deviations taken to contract payment schedule– Missing items (missing scored items are scored ‘0’)– Discounts



• Recurrent Costs are reduced to net present value using the following formula:

Evaluated Bid Price – Recurrent Cost

MN

x xI

RR x

1 1

N = Number of years of Warranty Period (SCC 29.4)M = Number of years of Post-Warranty Period (SCC 1.1(e)(xii)x = Index from 1 to N+MRx = Total Recurrent Cost for year “x” as recorded in the Recurrent Cost FormI = Discount Rate, defined in the BDS 28.6 (d), typically 10%


ITB – Bid Evaluation

• Price Weight X = 80%

• Technical Weight (1-X) = 20%

• T = 0.6*SW+0.2*BQ+0.1*TR+0.1*IP

• Three bidders, C evaluated as follows:

An Example Evaluation

Bidder 1 3.3 million




ITB – Bid Evaluation

C - Evaluated Bid Price




T – Total Technical Score

Bidder 1 65.0

Bidder 2 88.5

Bidder 3 46.0

Clow

Thigh

The T’s & the C’s


ITB – Bid EvaluationDetermining B – Evaluated Bid Score

C - Evaluated Bid Price

Bidder 1 (3.0/3.3)* (0.8) + (65.0/88.5) * (0.2) = 0.87

Bidder 2 (3.0/4.7)* (0.8) + (88.5/88.5) * (0.2) = 0.71

Bidder 3 (3.0/3.0)* (0.8) + (26.0/88.5) * (0.2) = 0.66

Lowest Evaluated Bid

ITB 28.4: Highest Score (B) is termed Lowest Evaluated Bidder and is eligible for contract award, subject to ITB 32


ITB – Schedule/Payment Deviations

• ITB 28.6 (c) (i) & (ii)

• Usually not used

• State maximum advance period and maximum delay period, in weeks

• 0.5% per week typical rate for delay, of bid price (none for advance)


ITB – Post Qualification

• ITB 31• Use to specify specific tests on solutions provided

(i.e. performance tests, benchmarks)• Clear success criteria must be indicated• Site visits can be indicated • Clearly indicate how site visits will be conducted,

what evaluation methodology will be used, who will carry them

• Purchaser will bear cost of site visits


ITB - Adjudicator

• ITB 38

• There should be an Adjudicator named (or agreed upon)

• Should play “honest broker” role (typically not from Purchaser’s country)

• Bidders can counter-propose an Adjudicator


GCCPayment Terms – Example

Advance Payment

10 %

Information Technologies

(standard)

Delivery

60%

Installation

10%

Operational Acceptance

10%

Custom

Software

Installation

60%

Operational Acceptance

20%

ServicesPerformed

60%

Operational Acceptance 20%

TrainingMobilization

30%

Delivery

50%

Complete System Integration

10%


GCC

• GCC 15.4 – Intellectual Property Rights (IPR) - Copyright

• Many possible approaches for custom software/materials– Purchaser retains all IPR– Supplier retains all IPR, and license Purchaser– An intermediate arrangement, with mutual benefit

• Seek Computer/Software Law expert when drafting these clauses


GCC

• GCC 15.5 – Source Code Escrow• Source code is deposited with an “Escrow Agent”,

a neutral third party• Escrow agent keeps copy of source code secure

and safe• Source can be released to Purchaser based on pre-

set “release conditions”, such as:• Supplier goes bankrupt

• Supplier stops honoring software maintenance agreement


GCC

• Language of Escrow agreement depend on laws of the country in which agreement is drawn

• Can be used to provide a level of protection for investments in custom software

• Can be costly to manage and administer, depending on level of verification required by the Purchaser

GCC 15.5 – Source Code Escrow - Continued


Technical Requirements

• Technical requirements must be comprehensive and unambiguous

• Requirements must be stated clearly, with minimum room for differing interpretations

• Technical specifications must be vendor neutral and specified to elicit widest range of responses and competition, and not restrictive

• Brand names allowed in exceptional circumstance (Proc Tech Note #4), but always use “or substantially equivalent”

General Guidelines



• Requirements should be definitive and offer quantifiable measure, and allow for comparable bids

• Use “not less than” or “greater than or equal” when specifying technical characteristics

• Standard performance benchmark can be used, except in cases where they become restrictive or un-economical

• Clearly identify items which are mandatory, and those that are preferred (scored)

General Guidelines - Continued



• Clear, comprehensive

• Non-discriminatory

• Non-restrictive

• Up-to-Date

• Suitable to task

Specifications – in General Must be



• Background

• Business Function & Performance Requirements

• Technical Specifications

• Testing Requirements

• Implementation Schedule

The Major Sections



• Must clearly designate Mandatory vs. Preferred Specifications

• Use the following notation and enumerate specifications:

Technical Specifications

<M:cc-nnn>: Mandatory requirements which must be satisfied for a bid to be considered responsive (e.g., <M:HW-001> ). <P:cc-nnn>[score] Preferred specifications which will receive

points based on performance/functionality (e.g., <P:HW-001>[10] )

where cc indicates the Category (i.e., SW, BQ, etc.)


Technical RequirementsTechnical Specifications –Mandatory Requirements Sample

Requirement No. Feature

<M:SW-001> Bilingual (Arabic/English)

<M:SW-002> Multi-platform hardware support

<M:HW-001> Processor performance benchmark

<M:HW-002> 60 GB Serial ATA Hard disk


Processor benchmark

• Previously used clause:3.0GHz x86 CPU equivalent

• Present recommendation:Performance benchmarks such as

BAPCO Sysmark 2004 SE, or

SPEC (select appropriate one)


Technical RequirementsTechnical Specifications –Preferred Requirements Sample

Requirement No. Feature

<P:SW-001>[30] Data replication

<P:SW-002>[20] Support for mobile device messaging

<P:SW-003>[40] Multi-class/course add & drop

<P:SW-004>[10] Self-serve kiosk operation



• Service specifications typically are for:– Systems Integration elements– Training– Technical Support– Maintenance (Warranty & Post-Warranty)

Technical Specifications - Continued


Recurrent Costs

• Hardware maintenance (post-warranty) for key technology

• Cost of keeping wear and tear-type of spare parts ready at hand and replacing these parts as needed

• Basic software bug correction and hot line service (post-warranty) for basic and application software

• Ongoing licensing costs of basic and application software

• Automatic supply of new versions/releases (for certain basic or application software packages)


Recurrent Costs

• Cost of Supplier’s technical support staff for on-site and off-site support and software improvement work (staff-days or numbers)

• Cost to operate the information system for a specified period after operational acceptance

• Cost of consumables (toner for printers or copiers, special paper costs if and as needed)

• Telecommunications costs (if facilities will not be owned by Purchaser, or will directly be purchased, such as for one-time set-up fees, monthly rental charges, data volume charges based on expected average needs)

Continued…


Two-Stage SBD

• For Two-Stage procurement of supply & installation of Information Systems.

• Developed from existing Single-Stage IS SBD, and…

• The Two-Stage SBD for Supply & Installation of Plant & Equipment


Two-Stage SBD

• Complex business applications (e.g., Real-Time Gross Settlement Systems)

• Systems requiring extensive software development• Complex information technologies (e.g., GIS)• Systems involving extensive technical services for

design, development, customization , installation, training, operations and technical support

When to use


Two-Stage SBD

• In the first-stage, Purchaser solicits non-priced technical proposals to address business/functional requirements

• By way of dialog, Purchaser arrives with each Bidder at a clear understanding of the aspects of the bid that:– (a) full-fill Purchaser’s requirements

– (b) do not conform to the requirements

– (c) are missing

General Approach


Two-Stage SBD

• Bidders who offered sufficiently responsive first-stage bids are requested to submit second-stage bids

• Second-stage bids are priced bids, and are handled and evaluated in essentially the same manner as Single-Stage bids

General Approach - continued


Two-Stage vs. Single-Stage SBD• Preface: provides rationale when to use two-stage• IFB: Two invitations, for first versus second stage,

respectively• ITB: Twelve clauses added after clause 12 of Single-Stage

SBD, to lay out first stage bid preparation, submission and evaluation

• BDS: Only one new entry related to hardware and software tests, but minor changes in other clauses too

• Sample Forms: Two bid forms (for first and second stage) instead of one such form in single-stage bidding

• GCC is unchanged• Fully detailed on IT Procurement Web Site in IS2STG

Publication Note


Additional Provisions

• Content of first stage bid: Allows bidders to state exceptions to contract and technical requirements, and offer alternative components/bids

• Clarification meetings: Discuss bid deviations and agree on changes required in second stage bids

• Optional live tests: Mostly software tests; May include pass/fail tests; Purchaser must bear any own travel costs

• Invitation to second stage: Individual (bidder-specific) protocol of changes; perhaps general addendum for all bidders. Otherwise, bid must be updated first-stage bid.


First-Stage Bid

• Similar to what is required as a full Single-Stage Bid, but without the Price Schedules

• Bidders are permitted to propose technical alternatives for components of their base bid or entire alternative bids (ITB 13.2)

• This would be in addition to, or in lieu of a base or main bid that meets the specified requirements

• Alternative bids maybe subject of discussion during the possible Clarification Meetings


First-Stage Bid

• Bids are opened in public• Names of bidders who submitted bids will

be announced and recorded• Other information maybe recorded, as

considered by the Purchaser• Bid opening minutes to be distributed to all

Bidders that met the bid submission deadline


First-Stage Bid

• First-Stage bids are examined for completeness, are in order, etc.

• Purchaser will determine if a bid substantially departs from the requirements

• If the departure is such that the bid cannot be reasonably expected to become fully responsive, Purchaser may exclude bid from further consideration


First-Stage Bid – Technical Evaluation

• Purchaser will carry out detailed technical evaluation for non-rejected bids

• Purchaser must examine bids for:• Overall completeness and compliance with technical

requirements

• Suitability of the offered Information System

• Adherence to specified performance criteria

• Compliance with the Implementation Schedule

• Other factors, including maintenance services, that affect life-cycle of the Information System


Bid Evaluation – Two-Stage

• Objective of first-stage is to refine the Purchaser’s specifications

• To allow Bidders to enhance their technical solutions to make them responsive

• In the second-stage, evaluation proceeds similar to the Single-Stage evaluation



• Individual technical solutions are assessed to ascertain their acceptability in response to Bid specifications

• Alternative solutions should be evaluated on their own merit

• Determine if there are major deficiencies in the solutions and identify whether these deficiencies could be rectified by the Bidder

• This is when Clarification Meetings may be held

First-Stage Evaluation Process



• In the first-stage, technical solutions should be evaluated with respect to mandatory criteria for reference purposes only

• Purchaser should work with Bidders to make the technical solutions responsive and to refine technical specifications if warranted

First-Stage Evaluation Process - Continued



• Bids that cannot be made technically responsive, or

• If the Supplier cannot provide references or is not meeting qualification criteria, then

• Bid may be eliminated as being no-responsive

• Every attempt should be made to minimize the elimination of bidders at this stage

First-Stage Evaluation Process - Continued



• All changes required in the second-stage bid will be listed in a bidder-specific memorandum entitled “Changes Required Pursuant to First Stage Evaluation”

• The memorandum also should include deviations with are unacceptable to the Purchaser

• Changes applicable to all Bidders invited to the second bidding-stage will be reflected in an Addendum to the initial Bidding Documents

Clarification Meeting


First-Stage Clarification Meetings

• A Bidder-specific Clarification meeting may be conducted

• Used to clarify aspects of the Bid that require explanation or are not considered fully responsive by the Purchaser

• Purchaser needs to inform Bidder of any matters that would make the Bid conform to the requirements



• Bidders are not required to attend a Clarification Meeting

• If Bidder elects not to attend, Purchaser will undertake reasonable effort to achieve required clarification by correspondence

• Bidders do this on their own risk



• First-Stag Bid clarification stage may include live demonstrations and tests of Bidder’s proposed solution(s)

• BDS must clearly describe such test (ITB 23.3)• Purchaser must bear all staff, travel, and

subsistence costs associated with traveling to Bidder site

• Bidder is responsible for all costs in preparing, conducting, and dismantling tests



• Purchaser must advise Bidder of any deviations the Bidder made, and which the Purchaser finds– Unacceptable and that must be withdrawn– Acceptable and will be incorporated into the

Bidding documents by way of an Addendum– Addendum would be sent to all Bidders invited

to submit second-stage bid



• All changes required in the second-stage bid will be listed in a bidder-specific memorandum entitled “Changes Required Pursuant to First Stage Evaluation”

• The memorandum also should include deviations with are unacceptable to the Purchaser

• Changes applicable to all Bidders invited to the second bidding-stage will be reflected in an Addendum to the initial Bidding Documents



• At end of first stage evaluation, Purchaser will either:– Invite Bidder to submit an updated technical &

commercial, priced bid, based on revisions as recorded in the Bidder-specific memo and/or Addenda

– Invite Bidder to submit alternative bid(s) in lieu of or in addition to the main First Stage Bid

– Notify Bidder that its bid has been rejected on grounds of being substantially non-responsive


A substantially responsive bid is one that

(a) materially conforms with the First Stage Bid and/or any alternative components or alternative bids which the Purchaser invited the Bidder to offer in its Second Stage Bid,

(b) incorporates the modifications, if any, listed in the bidder-specific memorandum titled “Changes Required Pursuant to First Stage Evaluation” pursuant to ITB Clause 23.8, and

(c) reflects amendments, if any, to the Bidding Documents issued as Addenda together with or subsequent to the Invitation for Bids -- Second Stage, pursuant to ITB Clause 11.2.

Bid Evaluation – Two-StageSUBSTANTIALLY RESPONSIVE BID


Evaluation of Bids - Forms

• Use Trial Standard Bid Evaluation Form for Supply & Installation of Information Systems, October 2004 Version

• IT Procurement Web Site

• Feedback welcome on the Trial Version



• First-stage bid evaluation report should be formulated and sent to the Bank for review and issuance of “no objections”

• Report should include Bid opening minutes, and a copy of bidder-specific memorandum entitled “Changes Required Pursuant to First Stage Evaluation”

• The Draft “Invitation for Bids – 2nd Stage”• Amendments to the Bidding Document (if any)

First-Stage Evaluation Report

From that point on, it’s as if a Single-Stage Bid

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