Procurement of NCS
Procurement of NCS
Procurement of NCS
Procurement of
Non-Consultant
Services
&
User’s Guide
The World Bank
December 2002
Revised April 2007
iii
Revisions
April 2007:
The features of May 2004, revised October 2006, Procurement Guidelines have been
incorporated.
iv Table of Contents
Table of Contents
User’s Guide...........................................................................................................................79
v
Introduction
The Sample Bidding Documents in this publication have been prepared for use by
Borrowers in the procurement of Services by International Competitive Bidding (ICB).
These documents may also be adapted to National Competitive Bidding (NCB) with some
changes generally necessary in the Instructions to Bidders and the Conditions of Contract.
These Sample Bidding Documents are intended as model lump sum types of
Contract, which are the most common in Services contracting. Lump sum contracts are used
in particular for Services which are well defined and are unlikely to change in quantity or
specification, and where encountering difficult or unforeseen site conditions are unlikely.2
Care should be taken to check the relevance of the provisions of the standard
documents against the requirements of the specific Services to be procured. The following
directions should be observed when using the documents:
(a) All the documents listed in the Table of Contents are normally required for the
procurement of Services; however, they should be adapted as necessary to the
circumstances of the particular Project.
1
IBRD and IDA are generally referred to as the World Bank. Since the procurement requirements for
IBRD and IDA are identical, “World Bank” in this handbook refers to both IBRD and IDA, and “loan”
refers to either an IBRD loan or an IDA credit. However, for the Invitation for Bids, the distinctions are
retained.
2
Lump sum contracts should be used for Services that can be defined in their full physical and
qualitative characteristics before bids are called, or where the risks of substantial design or performance
variations are minimal. In lump sum contracts, the concept of priced “activity schedules” has been
introduced, to enable payments to be made as “activities” are completed. Payments can also be made on
the basis of percentage completion of each activity.
vi Introduction
inside brackets. Those details not filled in by the Employer are the
responsibility of the Bidder.
(c) These Sample Bidding Documents are intended to serve on a repetitive basis
in a Borrower’s country, once agreement between the Borrower and the World
Bank has been reached. Modifications to address specific Project or Contract
needs should be provided only in the Special Conditions of Contract as
amendments to the Conditions of Contract. If modifications must be made to
the bidding procedures, they can be presented in the Bidding Data Sheet.
(d) The foot-notes and the notes inside boxes with single borders are not part of
the text, but rather contain instructions for the user, as do the Preface and this
Introduction section. They should not be incorporated in the bidding
documents. The cover should be modified as required to identify the bidding
documents as to the names of the Project, Contract, and Employer, in addition
to the date of issue.
(e) The notes inside boxes with double borders should be retained in the issued
bidding documents, since these notes provide important guidance to bidders.
(f) The standard documents have been prepared for bidding where
postqualification applies; adaptations are necessary to ITB Clause 5 and
corresponding Bidding Data Sheet, and Forms when prequalification has
taken place. The process of prequalification of bidders is not covered in these
standard documents.
Introduction vii
Summary Description
These Standard Bidding Documents for Procurement of Works and its User’s Guide apply
either when a prequalification process has taken place before bidding or when a
prequalification process has not taken place before bidding (provided alternative documents
should be selected as applicable). A brief description of these documents is given below.
A. General................................................................................................................................5
1. Scope of Bid.......................................................................................................5
2. Source of Funds.................................................................................................5
3. Corrupt or Fraudulent Practices.........................................................................5
4. Eligible Bidders.................................................................................................7
5. Qualification of the Bidder................................................................................8
6. One Bid per Bidder..........................................................................................10
7. Cost of Bidding................................................................................................10
8. Site Visit...........................................................................................................10
B. Bidding Documents..........................................................................................................11
9. Content of Bidding Documents........................................................................11
10. Clarification of Bidding Documents................................................................11
11. Amendment of Bidding Documents................................................................11
C. Preparation of Bids..........................................................................................................12
12. Language of Bid...............................................................................................12
13. Documents Comprising the Bid.......................................................................12
14. Bid Prices.........................................................................................................12
15. Currencies of Bid and Payment.......................................................................13
16. Bid Validity......................................................................................................13
17. Bid Security.....................................................................................................14
18. Alternative Proposals by Bidders.....................................................................15
19. Format and Signing of Bid...............................................................................16
D. Submission of Bids...........................................................................................................16
20. Sealing and Marking of Bids...........................................................................16
21. Deadline for Submission of Bids.....................................................................17
22. Late Bids..........................................................................................................17
23. Modification and Withdrawal of Bids..............................................................17
F. Award of Contract.............................................................................................................21
32. Award Criteria..................................................................................................21
4
33. Employer’s Right to Accept any Bid and to Reject any or all Bids.................21
34. Notification of Award and Signing of Agreement...........................................21
35. Performance Security.......................................................................................22
36. Advance Payment and Security.......................................................................22
37. Adjudicator......................................................................................................23
Section I. Instructions to Bidders 5
Instructions to Bidders
A. General
1. Scope of Bid 1.1 The Employer, as defined in the Bidding Data Sheet (BDS),
invites bids for the Services, as described in the Appendix A to
the Contract. The name and identification number of the
Contract is provided in the BDS.
1.2 The successful Bidder will be expected to complete the
performance of the Services by the Intended Completion Date
provided in the BDS.
2. Source of 2.1 The Borrower, as defined in the BDS, intends to apply part of
Funds the funds of a loan from the World Bank, as defined in the
BDS, towards the cost of the Project, as defined in the BDS, to
cover eligible payments under the Contract for the Services.
Payments by the World Bank will be made only at the request of
the Borrower and upon approval by the World Bank in
accordance with the Loan Agreement, and will be subject in all
respects to the terms and conditions of that Agreement. Except
as the World Bank may specifically otherwise agree, no party
other than the Borrower shall derive any rights from the Loan
Agreement or have any rights to the loan proceeds.
3. Corrupt or 3.1 It is the Bank’s policy to require that Borrowers (including
Fraudulent beneficiaries of Bank loans), as well as bidders, suppliers, and
Practices contractors and their subcontractors under Bank-financed
contracts, observe the highest standard of ethics during the
procurement and execution of such contracts. 3 In pursuance of
this policy, the Bank:
(a) defines, for the purposes of this provision, the terms set forth
below as follows:
(i) “corrupt practice”4 is the offering, giving, receiving or
soliciting, directly or indirectly, of anything of value
to influence improperly the actions of another party;
(ii) “fraudulent practice”5 is any act or omission,
3
In this context, any action taken by a bidder, supplier, contractor, or a sub-contractor to influence the
procurement process or contract execution for undue advantage is improper.
4
For the purpose of these SBDs, “another party” refers to a public official acting in relation to the
procurement process or contract execution]. In this context, “public official” includes World Bank staff and
employees of other organizations taking or reviewing procurement decisions.
5
For the purpose of these SBDs, “party” refers to a public official; the terms “benefit” and “obligation”
relate to the procurement process or contract execution; and the “act or omission” is intended to influence
the procurement process or contract execution.
6 Section I. Instructions to Bidders
five years;
(g) evidence of adequacy of working capital for this Contract
(access to line(s) of credit and availability of other
financial resources);
(h) authority to the Employer to seek references from the
Bidder’s bankers;
(i) information regarding any litigation, current or during the
last five years, in which the Bidder is involved, the parties
concerned, and disputed amount; and
(j) proposals for subcontracting components of the Services
amounting to more than 10 percent of the Contract Price.
5.4 Bids submitted by a joint venture of two or more firms as
partners shall comply with the following requirements, unless
otherwise stated in the BDS:
(a) the Bid shall include all the information listed in ITB Sub-
Clause 5.3 above for each joint venture partner;
(b) the Bid shall be signed so as to be legally binding on all
partners;
(c) the Bid shall include a copy of the agreement entered into
by the joint venture partners defining the division of
assignments to each partner and establishing that all
partners shall be jointly and severally liable for the
execution of the Contract in accordance with the Contract
terms; alternatively, a Letter of Intent to execute a joint
venture agreement in the event of a successful bid shall be
signed by all partners and submitted with the bid, together
with a copy of the proposed agreement;
(d) one of the partners shall be nominated as being in charge,
authorized to incur liabilities, and receive instructions for
and on behalf of any and all partners of the joint venture;
and
(e) the execution of the entire Contract, including payment,
shall be done exclusively with the partner in charge.
5.5 To qualify for award of the Contract, bidders shall meet the
following minimum qualifying criteria:
(a) annual volume of Services of at least the amount specified
in the BDS;
10 Section I. Instructions to Bidders
B. Bidding Documents
9. Content of 9.1 The set of bidding documents comprises the documents listed in
Bidding the table below and addenda issued in accordance with ITB
Documents Clause 11:
Section I Instructions to Bidders
Section II Bidding Data Sheet
Section III Bidding Forms
Section IV Eligible Countries
Section V Activity Schedule
Section VI General Conditions of Contract
Section VII Special Conditions of Contract
Section VIII Performance Specifications and Drawings (if
Applicable)
Section IX Contract Forms
9.2 The Bidder is expected to examine all instructions, forms, terms,
and specifications in the bidding documents. Failure to furnish
all information required by the bidding documents or to submit
a bid not substantially responsive to the bidding documents in
every respect will be at the Bidder’s risk and may result in the
rejection of its bid. Sections III, V, and IX should be completed
and returned with the Bid in the number of copies specified in
the BDS.
10. Clarification of 10.1 A prospective Bidder requiring any clarification of the bidding
Bidding documents may notify the Employer in writing or by cable
Documents (“cable” includes telex and facsimile) at the Employer’s address
indicated in the invitation to bid. The Employer will respond to
any request for clarification received earlier than 14 days prior
to the deadline for submission of bids. Copies of the
Employer’s response will be forwarded to all purchasers of the
bidding documents, including a description of the inquiry, but
without identifying its source.
11. Amendment of 11.1 Before the deadline for submission of bids, the Employer may
Bidding modify the bidding documents by issuing addenda.
Documents
11.2 Any addendum thus issued shall be part of the bidding
documents and shall be communicated in writing or by cable to
all purchasers of the bidding documents. Prospective bidders
12 Section I. Instructions to Bidders
C. Preparation of Bids
12. Language of 12.1 The bid prepared by the Bidder, as well as all correspondence
Bid and documents relating to the bid exchanged by the Bidder and
the Employer shall be written in the language specified in the
BDS. Supporting documents and printed literature furnished by
the Bidder may be in another language provided they are
accompanied by an accurate translation of the relevant passages
in the language specified in the Bidding Data Sheet, in which
case, for purposes of interpretation of the Bid, the translation
shall govern.
13. Documents 13.1 The Bid submitted by the Bidder shall comprise the following:
Comprising
the Bid (a) The Form of Bid (in the format indicated in Section III);
(b) Bid Security;
(c) Priced Activity Schedule;
(d) Qualification Information Form and Documents;
(e) Alternative offers where invited;
and any other materials required to be completed and submitted
by bidders, as specified in the BDS.
13.2 Bidders bidding for this contract together with other contracts
stated in the IFB to form a package will so indicate in the bid
together with any discounts offered for the award of more than
one contract
14. Bid Prices 14.1 The Contract shall be for the Services, as described in Appendix
A to the contract and in the Specifications, Section VIII, based
on the priced Activity Schedule, Section V, submitted by the
Bidder.
14.2 The Bidder shall fill in rates and prices for all items of the
Services described in the in Specifications (or Terms of
Reference), Section VIII and listed in the Activity Schedule,
Section V. Items for which no rate or price is entered by the
Section I. Instructions to Bidders 13
Bidder will not be paid for by the Employer when executed and
shall be deemed covered by the other rates and prices in the
Activity Schedule.
14.3 All duties, taxes, and other levies payable by the Service
Provider under the Contract, or for any other cause, as of the
date 28 days prior to the deadline for submission of bids, shall
be included in the total Bid price submitted by the Bidder.
14.4 If provided for in the BDS, the rates and prices quoted by the
Bidder shall be subject to adjustment during the performance of
the Contract in accordance with and the provisions of Clause 6.6
of the General Conditions of Contract and/or Special Conditions
of Contract. The Bidder shall submit with the Bid all the
information required under the Special Conditions of Contract
and of the General Conditions of Contract.
14.5 For the purpose of determining the remuneration due for
additional Services, a breakdown of the lump-sum price shall be
provided by the Bidder in the form of Appendices D and E to
the Contract
15. Currencies of 15.1 The lump sum price shall be quoted by the Bidder separately in
Bid and the following currencies:
Payment
(a) for those inputs to the Services which the Bidder expects
to provide from within the Employer’s country, the prices
shall be quoted in the currency of the Employer’s country,
unless otherwise specified in the BDS; and
(b) for those inputs to the Services which the Bidder expects
to provide from outside the Employer’s country, the prices
shall be quoted in up to any three currencies of any
member country of the Bank.
15.2 Bidders shall indicate details of their expected foreign currency
requirements in the Bid.
15.3 Bidders may be required by the Employer to justify their foreign
currency requirements and to substantiate that the amounts
included in the Lump Sum are reasonable and responsive to ITB
Sub-Clause 15.1.
16. Bid Validity 16.1 Bids shall remain valid for the period specified in the BDS.
16.2 In exceptional circumstances, the Employer may request that the
bidders extend the period of validity for a specified additional
period. The request and the bidders’ responses shall be made in
writing or by cable. A Bidder may refuse the request without
14 Section I. Instructions to Bidders
D. Submission of Bids
20. Sealing and 20.1 The Bidder shall seal the original and all copies of the Bid in
Marking of two inner envelopes and one outer envelope, duly marking the
Bids inner envelopes as “ORIGINAL” and “COPIES”.
20.2 The inner and outer envelopes shall
(a) be addressed to the Employer at the address provided in
the BDS;
(b) bear the name and identification number of the Contract as
defined in the BDS and Special Conditions of Contract;
and
Section I. Instructions to Bidders 17
24. Bid Opening 24.1 The Employer will open the bids, including modifications made
pursuant to ITB Clause 23, in the presence of the bidders’
representatives who choose to attend at the time and in the place
specified in the BDS.
24.2 Envelopes marked “WITHDRAWAL” shall be opened and read out
first. Bids for which an acceptable notice of withdrawal has
been submitted pursuant to ITB Clause 23 shall not be opened.
24.3 The bidders’ names, the Bid prices, the total amount of each Bid
and of any alternative Bid (if alternatives have been requested or
permitted), any discounts, Bid modifications and withdrawals,
the presence or absence of Bid Security, and such other details
as the Employer may consider appropriate, will be announced
by the Employer at the opening. No bid shall be rejected at bid
opening except for the late bids pursuant to ITB Clause 22;
Bids, and modifications, sent pursuant to ITB Clause 23 that are
not opened and read out at bid opening will not be considered
for further evaluation regardless of the circumstances. Late and
withdrawn bids will be returned unopened to the bidders.
24.4 The Employer will prepare minutes of the Bid opening,
including the information disclosed to those present in
accordance with ITB Sub-Clause 24.3.
25. Process to Be 25.1 Information relating to the examination, clarification,
Confidential evaluation, and comparison of bids and recommendations for
the award of a contract shall not be disclosed to bidders or any
other persons not officially concerned with such process until
the award to the successful Bidder is notified of the award. Any
effort by a Bidder to influence the Employer’s processing of
bids or award decisions may result in the rejection of his Bid.
25.2 If, after notification of award, a bidder wishes to ascertain the
grounds on which its bid was not selected, it should address its
request to the Employer, who will provide written explanation.
Any request for explanation from one bidder should relate only
to its own bid; information about the bid of competitors will not
be addressed.
26. Clarification of 26.1 To assist in the examination, evaluation, and comparison of bids,
Bids the Employer may, at the Employer’s discretion, ask any Bidder
for clarification of the Bidder’s Bid, including breakdowns of the
prices in the Activity Schedule, and other information that the
Employer may require. The request for clarification and the
response shall be in writing or by cable, telex, or facsimile, but no
change in the price or substance of the Bid shall be sought, offered,
Section I. Instructions to Bidders 19
Sub-Clause 23.5.
30.3 The Employer reserves the right to accept or reject any
variation, deviation, or alternative offer. Variations, deviations,
and alternative offers and other factors, which are in excess of
the requirements of the bidding documents or otherwise result in
unsolicited benefits for the Employer will not be taken into
account in Bid evaluation.
30.4 The estimated effect of any price adjustment conditions under
Sub-Clause 7.6 of the General Conditions of Contract, during
the period of implementation of the Contract, will not be taken
into account in Bid evaluation.
31. Preference for 31.1 Domestic bidders shall not be eligible for any margin of
Domestic preference in Bid evaluation.
Bidders
F. Award of Contract
32. Award Criteria 32.1 Subject to ITB Clause 33, the Employer will award the Contract
to the Bidder whose Bid has been determined to be substantially
responsive to the bidding documents and who has offered the
lowest evaluated Bid price, provided that such Bidder has been
determined to be (a) eligible in accordance with the provisions
of ITB Clause 4, and (b) qualified in accordance with the
provisions of ITB Clause 5.
32.2 If, pursuant to ITB Sub-Clause 13.2 this contract is being let on
a “slice and package” basis, the lowest evaluated Bid Price will
be determined when evaluating this contract in conjunction with
other contracts to be awarded concurrently. Taking into account
any discounts offered by the bidders for the award of more than
one contract.
33. Employer’s 33.1 Notwithstanding ITB Clause 32, the Employer reserves the right
Right to to accept or reject any Bid, and to cancel the bidding process
Accept any Bid and reject all bids, at any time prior to the award of Contract,
and to Reject without thereby incurring any liability to the affected Bidder or
any or all Bids bidders or any obligation to inform the affected Bidder or
bidders of the grounds for the Employer’s action.
34. Notification of 34.1 The Bidder whose Bid has been accepted will be notified of the
Award and award by the Employer prior to expiration of the Bid validity
Signing of period by cable, telex, or facsimile confirmed by registered letter
Agreement from the Employer. This letter (hereinafter and in the Conditions of
Contract called the “Letter of Acceptance”) will state the sum that
the Employer will pay the Service provider in consideration of the
22 Section I. Instructions to Bidders
Security.
36. Advance 36.1 The Employer will provide an Advance Payment on the
Payment and Contract Price as stipulated in the Conditions of Contract,
Security subject to the amount stated in the BDS.
37. Adjudicator 37.1 The Employer proposes the person named in the BDS to be
appointed as Adjudicator under the Contract, at an hourly fee
specified in the BDS, plus reimbursable expenses. If the Bidder
disagrees with this proposal, the Bidder should so state in the
Bid. If, in the Letter of Acceptance, the Employer has not
agreed on the appointment of the Adjudicator, the Adjudicator
shall be appointed by the Appointing Authority designated in the
Special Conditions of Contract at the request of either party.
25
A. General
1.1 The Employer is _________________________________.
The name and identification number of the Contract is _________________
_____________________________________________________________
1.2 The Intended Completion Date is __________________________________
2.1 The Borrower is _______________________________________________
The Project is _________________________________________________
The loan/credit number is _______________________________________
5.2 Prequalification _____________ been undertaken.
5.3 The Qualification Information and Bidding forms to be submitted are as
follows: _______________________________________
5.4 The information needed for Bids submitted by joint ventures is as follows:
_______________________________________________
5.5 The qualification criteria in Sub-Clause 4.4 are modified as follows: ________
_______________________________________________________________
5.5(a) The minimum required annual volume of Services for the successful Bidder in
any of the last ten years shall be ____________________________________
5.5(b) The experience required to be demonstrated by the Bidder should include as a
minimum that he has executed during the last 5 years the following:
______________________________________________________________
5.5(c) The essential equipment to be made available for the Contract by the successful
Bidder shall be ________________________________________________.
5.5(e) The minimum amount of liquid assets and/or credit facilities net of other
contractual commitments of the successful Bidder shall be ______________
_____________________________________________________________
5.5 Subcontractors’ experience ____________be taken into account.
B. Bidding Data
26
9.2 and The number of copies of the Bid to be completed and returned shall be _____
19.1
C. Preparation of Bids
12.1 Language of the bid: _____________________________________________
13.1 The additional materials required to be completed and submitted are: _______
______________________________________________________________
14.4 The Contract ___________ subject to price adjustment in accordance with
Clause 6.6 of the Conditions of Contract.
15.1 Local inputs shall be quoted in ______________________________.
16.1 The period of Bid validity shall be ______________ days after the deadline for
Bid submission specified in the BDS.
17.1 The Bidder shall provide: ___________________________________.
17.2 The amount of Bid Security shall be _______________ or an equivalent amount
in a freely-convertible currency.
18.1 Alternative bids ____________ permitted.
18.2 Alternative times for completion ___________ permitted. If permitted, the
range of acceptable completion time is: ______________________.
If alternative times for completion are permitted, the evaluation method will be
as follows: ______________________________________________.
18.4 Alternative technical solutions shall be permitted for the following parts of the
Services: ________________________________.
If alternative technical solutions are permitted, the evaluation method will be as
follows: _________________________________.
D. Submission of Bids
20.2 The Employer’s address for the purpose of Bid submission is ______________.
For identification of the bid the envelopes should indicate:
Contract: _________________________
Bid / Contract Number: _________________________
21.1 The deadline for submission of bids shall be __________________________.
F. Award of Contract
35.0 The Performance Security acceptable to the Employer shall be the in the
Standard Form of ________________________________.
36.1 The Advance Payment shall be of _______________ percent of the Contract
Price.
37.1 The Adjudicator proposed by the Employer is _______________________. The
hourly fee for this proposed Adjudicator shall be ____________. The
biographical data of the proposed Adjudicator is as follows: ____________.
29
Qualification Information.....................................................................................................32
Letter of Acceptance..............................................................................................................35
Form of Contract...................................................................................................................36
Bid-Securing Declaration......................................................................................................41
30
Having examined the bidding documents including addenda No …….., we offer to execute
the [name and identification number of Contract] in accordance with the Conditions of
Contract, specifications, drawings and activity schedule accompanying this Bid for the
Contract Price of [amount in numbers], [amount in words] [names of currencies].
(b)
We accept the appointment of [name proposed in the Bidding Data Sheet] as the Adjudicator.
[or]
We do not accept the appointment of [name proposed in the Bidding Data Sheet] as the
Adjudicator, and propose instead that [name] be appointed as Adjudicator, whose daily fees
and biographical data are attached.
This Bid and your written acceptance of it shall constitute a binding Contract between us.
We understand that you are not bound to accept the lowest or any Bid you receive.
We hereby confirm that this Bid complies with the Bid validity and Bid Security required by
the bidding documents and specified in the Bidding Data Sheet.
Authorized Signature:
Name and Title of Signatory:
Name of Bidder:
Address:
32 Section III. Bidding Forms
Qualification Information
1. Individual 1.1 Constitution or legal status of Bidder: [attach copy]
Bidders or
Individual Place of registration: [insert]
Members of Principal place of business: [insert]
Joint Ventures Power of attorney of signatory of Bid: [attach]
1.2 Total annual volume of Services performed in five years, in the
internationally traded currency specified in the BDS: [insert]
1.3 Services performed as prime Service Provider on the provision
of Services of a similar nature and volume over the last five
years. The values should be indicated in the same currency used
for Item 1.2 above. Also list details of work under way or
committed, including expected completion date.
(b)
(b)
(a)
(b)
(b)
1.7 Financial reports for the last five years: balance sheets, profit
and loss statements, auditors’ reports, etc. List below and attach
copies.
1.8 Evidence of access to financial resources to meet the
qualification requirements: cash in hand, lines of credit, etc.
List below and attach copies of support documents. We
certify/confirm that we comply with eligibility requirements as
per ITB Clause 4.
1.9 Name, address, and telephone, telex, and facsimile numbers of
banks that may provide references if contacted by the Employer.
1.10 Information regarding any litigation, current or within the last
five years, in which the Bidder is or has been involved.
(b)
2. Joint Ventures 2.1 The information listed in 1.1 - 1.11 above shall be provided for
each partner of the joint venture.
2.2 The information in 1.12 above shall be provided for the joint
venture.
2.3 Attach the power of attorney of the signatory(ies) of the Bid
authorizing signature of the Bid on behalf of the joint venture.
2.4 Attach the Agreement among all partners of the joint venture
(and which is legally binding on all partners), which shows that
(a) all partners shall be jointly and severally liable for the
execution of the Contract in accordance with the Contract
terms;
(b) one of the partners will be nominated as being in charge,
authorized to incur liabilities, and receive instructions for
and on behalf of any and all partners of the joint venture;
and
(c) the execution of the entire Contract, including payment,
shall be done exclusively with the partner in charge.
3. Additional 3.1 Bidders should provide any additional information required in
Requirements the BDS and to fulfill the requirements of ITB Sub-Clause 5.1,
if applicable.
Section III. Bidding Forms 35
Letter of Acceptance
[letterhead paper of the Employer]
[date]
This is to notify you that your Bid dated [date] for execution of the [name of the Contract
and identification number, as given in the Special Conditions of Contract] for the Contract
Price of the equivalent of [amount in numbers and words] [name of currency], as corrected
and modified in accordance with the Instructions to Bidders is hereby accepted by our
Agency.
Note: Insert one of the 3 options for the second paragraph. The first option should be used if
the Bidder has not objected the name proposed for Adjudicator. The second option if the
Bidder has objected the proposed Adjudicator and proposed a mane for a substitute, who was
accepted by the Employer. And the third option if the Bidder has objected the proposed
Adjudicator and proposed a mane for a substitute, who was not accepted by the Employer.
or
or
You are hereby instructed to proceed with the execution of the said contract for the provision
of Services in accordance with the Contract documents.
Authorized Signature:
Name and Title of Signatory:
Name of Agency:
Attachment: Contract
36 Section III. Bidding Forms
Form of Contract
[letterhead paper of the Employer]
LUMP-SUM REMUNERATION
This CONTRACT (hereinafter called the “Contract”) is made the [day] day of the month of
[month], [year], between, on the one hand, [name of Employer] (hereinafter called the
“Employer”) and, on the other hand, [name of Service Provider] (hereinafter called the
“Service Provider”).
[Note: In the text below text in brackets is optional; all notes should be deleted in final text .
If the Service Provider consist of more than one entity, the above should be partially
amended to read as follows: “…(hereinafter called the “Employer”) and, on the other hand,
a joint venture consisting of the following entities, each of which will be jointly and severally
liable to the Employer for all the Service Provider’s obligations under this Contract, namely,
[name of Service Provider] and [name of Service Provider] (hereinafter called the “Service
Provider”).]
WHEREAS
(a) the Employer has requested the Service Provider to provide certain Services
as defined in the General Conditions of Contract attached to this Contract
(hereinafter called the “Services”);
(b) the Service Provider, having represented to the Employer that they have the
required professional skills, and personnel and technical resources, have
agreed to provide the Services on the terms and conditions set forth in this
Contract at a contract price of……………………;
(c) the Employer has received [or has applied for] a loan from the International
Bank for Reconstruction and Development (hereinafter called the “Bank”) [or
a credit from the International Development Association (hereinafter called
the “Association”)] towards the cost of the Services and intends to apply a
portion of the proceeds of this loan [or credit] to eligible payments under this
Contract, it being understood (i) that payments by the Bank [or Association]
will be made only at the request of the Employer and upon approval by the
Bank [or Association], (ii) that such payments will be subject, in all respects,
to the terms and conditions of the agreement providing for the loan [or credit],
and (iii) that no party other than the Employer shall derive any rights from the
agreement providing for the loan [or credit] or have any claim to the loan [or
credit] proceeds;
NOW THEREFORE the parties hereto hereby agree as follows:
1. The following documents shall be deemed to form and be read and construed as part of
this Agreement, and the priority of the documents shall be as follows:
(a) the Letter of Acceptance;
(b) the Service Provider’s Bid
Section III. Bidding Forms 37
[Authorized Representative]
For and on behalf of [name of Service Provider]
[Authorized Representative]
[Note: If the Service Provider consists of more than one entity, all these entities should
appear as signatories, e.g., in the following manner:]
For and on behalf of each of the Members of the Service Provider
[name of member]
38 Section III. Bidding Forms
[Authorized Representative]
[name of member]
[Authorized Representative]
Section III. Bidding Forms 39
Beneficiary: ___________________
Date: ________________
BID GUARANTEE No.: _________________
We have been informed that ___________ (hereinafter called "the Bidder") has submitted to
you its bid dated (hereinafter called "the Bid") for the execution of __________ under
Invitation for Bids No. __________ (“the IFB”).
Furthermore, we understand that, according to your conditions, bids must be supported by a
bid guarantee.
At the request of the Bidder, we __________ hereby irrevocably undertake to pay you any
sum or sums not exceeding in total an amount of _________ (_________) upon receipt by us
of your first demand in writing accompanied by a written statement stating that the Bidder is
in breach of its obligation(s) under the bid conditions, because the Bidder:
(a) has withdrawn its Bid during the period of bid validity specified by the Bidder in the
Form of Bid; or
(b) having been notified of the acceptance of its Bid by the Purchaser during the period of
bid validity, (i) fails or refuses to execute the Contract Form; or (ii) fails or refuses to
furnish the performance security, if required, in accordance with the Instructions to
Bidders.
This guarantee will expire: (a) if the Bidder is the successful bidder, upon our receipt of
copies of the contract signed by the Bidder and the performance security issued to you upon
the instruction of the Bidder; or (b) if the Bidder is not the successful bidder, upon the earlier
of (i) our receipt of a copy of your notification to the Bidder of the name of the successful
bidder; or (ii) twenty-eight days after the expiration of the Bidder’s Bid.
Consequently, any demand for payment under this guarantee must be received by us at the
office on or before that date.
This guarantee is subject to the Uniform Rules for Demand Guarantees, ICC Publication No.
458.
_____________________________
[signature(s)]
40 Section III. Bidding Forms
8
The amount of the Bond shall be denominated in the currency of the Purchaser’s country or the
equivalent amount in a freely convertible currency.
Section III. Bidding Forms 41
Bid-Securing Declaration
[The Bidder shall fill in this Form in accordance with the instructions indicated.]
Date: ____________________
Bid No.: ____________________
Alternative No.: ____________________
To: ____________________
We, the undersigned, declare that:
We understand that, according to your conditions, bids must be supported by a Bid-Securing
Declaration.
We accept that we will automatically be suspended from being eligible for bidding in any
contract with the Purchaser for the period of time of ____________________ starting on
____________________, if we are in breach of our obligation(s) under the bid conditions,
because we:
(a) have withdrawn our Bid during the period of bid validity specified in the Form of
Bid; or
(b) having been notified of the acceptance of our Bid by the Purchaser during the period
of bid validity, (i) fail or refuse to execute the Contract; or (ii) fail or refuse to furnish
the Performance Security, if required, in accordance with the ITB.
We understand this Bid Securing Declaration shall expire if we are not the successful Bidder,
upon the earlier of (i) our receipt of your notification to us of the name of the successful
Bidder; or (ii) twenty-eight days after the expiration of our Bid.
Signed: ________________________________________
In the capacity of: ________________________________________
Name: ________________________________________
Duly authorized to sign the bid for and on behalf of: ____________________
Dated on ____________ day of __________________, _______
Corporate Seal (where appropriate)
43
1. In accordance with Para 1.8 of the Guidelines: Procurement under IBRD Loans and
IDA Credits, dated May 2004, the Bank permits firms and individuals from all countries to
offer goods, works and services for Bank-financed projects. As an exception, firms of a
Country or goods manufactured in a Country may be excluded if:
Para 1.8 (a) (i): as a matter of law or official regulation, the Borrower’s Country
prohibits commercial relations with that Country, provided that the Bank is
satisfied that such exclusion does not preclude effective competition for the
supply of the Goods or Works required, or
Para 1.8 (a) (ii): by an Act of Compliance with a Decision of the United Nations
Security Council taken under Chapter VII of the Charter of the United
Nations, the Borrower’s Country prohibits any import of goods from that
Country or any payments to persons or entities in that Country.
2. For the information of borrowers and bidders, at the present time firms, goods and
services from the following countries are excluded from this bidding:
(a) With reference to paragraph 1.8 (a) (i) of the Guidelines:
_________________________
_________________________
Table of Clauses
A. General Provisions.............................................................................................................53
1.1 Definitions........................................................................................................53
1.2 Applicable Law................................................................................................54
1.3 Language..........................................................................................................54
1.4 Notices.............................................................................................................54
1.5 Location...........................................................................................................55
1.6 Authorized Representatives.............................................................................55
1.7 Inspection and Audit by the Bank....................................................................55
1.8 Taxes and Duties..............................................................................................55
7. Quality Control.................................................................................................................64
7.1 Identifying Defects...........................................................................................64
7.2 Correction of Defects, and...............................................................................65
8. Settlement of Disputes......................................................................................................65
8.1 Amicable Settlement........................................................................................65
8.2 Dispute Settlement...........................................................................................65
A. General Provisions
1.1 Definitions Unless the context otherwise requires, the following terms whenever
used in this Contract have the following meanings:
(a) The Adjudicator is the person appointed jointly by the
Employer and the Contractor to resolve disputes in the first
instance, as provided for in Sub-Clause 8.2 hereunder.
(b) “Activity Schedule” is the priced and completed list of items
of Services to be performed by the Service Provider forming
part of his Bid;
(c) “Bank” means the International Bank for Reconstruction and
Development, Washington, D.C., U.S.A.;
or
(c) “Association” means the International Development
Association, Washington, D.C., U.S.A.;
(d) “Completion Date” means the date of completion of the
Services by the Service Provider as certified by the Employer
(e) “Contract” means the Contract signed by the Parties, to which
these General Conditions of Contract (GCC) are attached,
together with all the documents listed in Clause 1 of such signed
Contract;
(f) “Contract Price” means the price to be paid for the performance
of the Services, in accordance with Clause 6;
(g) “Dayworks” means varied work inputs subject to payment on a
time basis for the Service Provider’s employees and equipment,
in addition to payments for associated materials and
administration.
(h) “Employer” means the party who employs the Service Provider
(i) “Foreign Currency” means any currency other than the currency
of the country of the Employer;
(j) “GCC” means these General Conditions of Contract;
(k) “Government” means the Government of the Employer’s
country;
54 Section V. General Conditions of Contract
2.1 Effectiveness of This Contract shall come into effect on the date the Contract is
Contract signed by both parties or such other later date as may be stated in
the SCC.
2.2 Commencement
of Services
2.2.1 Program Before commencement of the Services, the Service Provider shall
submit to the Employer for approval a Program showing the general
methods, arrangements, order and timing for all activities. The
Services shall be carried out in accordance with the approved
Program as updated.
2.2.2 Starting The Service Provider shall start carrying out the Services thirty (30)
Date days after the date the Contract becomes effective, or at such other
date as may be specified in the SCC.
2.3 Intended Unless terminated earlier pursuant to Sub-Clause 2.6, the Service
Completion Date Provider shall complete the activities by the Intended Completion
Date, as is specified in the SCC. If the Service Provider does not
complete the activities by the Intended Completion Date, it shall be
56 Section V. General Conditions of Contract
2.5.1 Definition For the purposes of this Contract, “Force Majeure” means an event
which is beyond the reasonable control of a Party and which makes
a Party’s performance of its obligations under the Contract
impossible or so impractical as to be considered impossible under
the circumstances.
2.5.2 No Breach The failure of a Party to fulfill any of its obligations under the
of Contract contract shall not be considered to be a breach of, or default under,
this Contract insofar as such inability arises from an event of Force
Majeure, provided that the Party affected by such an event (a) has
taken all reasonable precautions, due care and reasonable alternative
measures in order to carry out the terms and conditions of this
Contract, and (b) has informed the other Party as soon as possible
about the occurrence of such an event.
2.5.3 Extension Any period within which a Party shall, pursuant to this Contract,
of Time complete any action or task, shall be extended for a period equal to
the time during which such Party was unable to perform such action
as a result of Force Majeure.
2.5.4 Payments During the period of their inability to perform the Services as a
result of an event of Force Majeure, the Service Provider shall be
entitled to continue to be paid under the terms of this Contract, as
well as to be reimbursed for additional costs reasonably and
necessarily incurred by them during such period for the purposes of
the Services and in reactivating the Service after the end of such
period.
2.6 Termination
2.6.1 By the The Employer may terminate this Contract, by not less than thirty
Employer (30) days’ written notice of termination to the Service Provider, to
be given after the occurrence of any of the events specified in
paragraphs (a) through (d) of this Sub-Clause 2.6.1:
(a) if the Service Provider does not remedy a failure in the
performance of its obligations under the Contract, within
thirty (30) days after being notified or within any further
Section V. General Conditions of Contract 57
9
For the purpose of this Contract, “another party” refers to a public official acting in relation to the
procurement process or contract execution. In this context, “public official” includes World Bank staff and
employees of other organizations taking or reviewing procurement decisions.
10
For the purpose of this Contract, “party” refers to a public official; the terms “benefit” and
“obligation” relate to the procurement process or contract execution; and the “act or omission” is intended
to influence the procurement process or contract execution.
11
For the purpose of this Contract, “parties” refers to participants in the procurement process (including
public officials) attempting to establish bid prices at artificial, non competitive levels.
12
For the purpose of this Contract, “party” refers to a participant in the procurement process or contract
execution.
58 Section V. General Conditions of Contract
3.1 General The Service Provider shall perform the Services in accordance with
the Specifications and the Activity Schedule, and carry out its
obligations with all due diligence, efficiency, and economy, in
accordance with generally accepted professional techniques and
practices, and shall observe sound management practices, and
employ appropriate advanced technology and safe methods. The
Service Provider shall always act, in respect of any matter relating
to this Contract or to the Services, as faithful adviser to the
Employer, and shall at all times support and safeguard the
Employer’s legitimate interests in any dealings with Subcontractors
or third parties.
3.2 Conflict of
Interests
3.2.1 Service The remuneration of the Service Provider pursuant to Clause 6
Provider shall constitute the Service Provider’s sole remuneration in
Not to connection with this Contract or the Services, and the Service
Benefit Provider shall not accept for their own benefit any trade
from commission, discount, or similar payment in connection with
Commissio activities pursuant to this Contract or to the Services or in the
ns and discharge of their obligations under the Contract, and the Service
Discounts. Provider shall use their best efforts to ensure that the Personnel, any
Subcontractors, and agents of either of them similarly shall not
receive any such additional remuneration.
3.2.2 Service The Service Provider agree that, during the term of this Contract
Provider and after its termination, the Service Provider and its affiliates, as
and well as any Subcontractor and any of its affiliates, shall be
Affiliates disqualified from providing goods, works, or Services (other than
Not to be the Services and any continuation thereof) for any project resulting
Otherwise from or closely related to the Services.
Interested
in Project
3.2.3 Prohibition Neither the Service Provider nor its Subcontractors nor the
of Personnel shall engage, either directly or indirectly, in any of the
Conflicting following activities:
Activities
(a) during the term of this Contract, any business or professional
activities in the Government’s country which would conflict
60 Section V. General Conditions of Contract
3.8.1 Payments of The Service Provider shall pay liquidated damages to the Employer
Liquidated at the rate per day stated in the SCC for each day that the
Damages Completion Date is later than the Intended Completion Date. The
total amount of liquidated damages shall not exceed the amount
defined in the SCC. The Employer may deduct liquidated
damages from payments due to the Service Provider. Payment of
liquidated damages shall not affect the Service Provider’s
liabilities.
3.8.2 Correction If the Intended Completion Date is extended after liquidated
for Over- damages have been paid, the Employer shall correct any
payment overpayment of liquidated damages by the Service Provider by
adjusting the next payment certificate. The Service Provider shall
be paid interest on the overpayment, calculated from the date of
payment to the date of repayment, at the rates specified in Sub-
Clause 6.5.
3.8.3 Lack of If the Service Provider has not corrected a Defect within the time
performance specified in the Employer’s notice, a penalty for Lack of
penalty performance will be paid by the Service Provider. The amount to be
paid will be calculated as a percentage of the cost of having the
Defect corrected, assessed as described in Sub-Clause 7.2 and
specified in the SCC.
3.9 Performance The Service Provider shall provide the Performance Security to the
Security Employer no later than the date specified in the Letter of
acceptance. The Performance Security shall be issued in an amount
and form and by a bank or surety acceptable to the Employer, and
denominated in the types and proportions of the currencies in which
the Contract Price is payable. The performance Security shall be
valid until a date 28 days from the Completion Date of the Contract
in case of a bank guarantee, and until one year from the Completion
Date of the Contract in the case of a Performance Bond.
4.1 Description of The titles, agreed job descriptions, minimum qualifications, and
Personnel estimated periods of engagement in the carrying out of the Services
of the Service Provider’s Key Personnel are described in Appendix
C. The Key Personnel and Subcontractors listed by title as well as
62 Section V. General Conditions of Contract
5.1 Assistance and The Employer shall use its best efforts to ensure that the Government
Exemptions shall provide the Service Provider such assistance and exemptions as
specified in the SCC.
5.2 Change in the If, after the date of this Contract, there is any change in the Applicable
Applicable Law with respect to taxes and duties which increases or decreases the
Law cost of the Services rendered by the Service Provider, then the
remuneration and reimbursable expenses otherwise payable to the
Service Provider under this Contract shall be increased or decreased
accordingly by agreement between the Parties, and corresponding
adjustments shall be made to the amounts referred to in Sub-Clauses
6.2 (a) or (b), as the case may be.
5.3 Services and The Employer shall make available to the Service Provider the
Facilities Services and Facilities listed under Appendix F.
6.1 Lump-Sum The Service Provider’s remuneration shall not exceed the Contract
Remuneration Price and shall be a fixed lump-sum including all Subcontractors’
costs, and all other costs incurred by the Service Provider in carrying
out the Services described in Appendix A. Except as provided in Sub-
Clause 5.2, the Contract Price may only be increased above the
Section V. General Conditions of Contract 63
Lmc is the index prevailing at the first day of the month of the
corresponding invoice date and Loc is the index prevailing 28
days before Bid opening for labor; both in the specific currency
“c”.
Imc is the index prevailing at the first day of the month of the
corresponding invoice date and Ioc is the index prevailing 28
days before Bid opening for other inputs payable; both in the
specific currency “c”.
If a price adjustment factor is applied to payments made in a
currency other than the currency of the source of the index for a
particular indexed input, a correction factor Zo/Zn will be
applied to the respective component factor of pn for the formula
of the relevant currency. Zo is the number of units of currency of
the country of the index, equivalent to one unit of the currency
payment on the date of the base index, and Zn is the
corresponding number of such currency units on the date of the
current index.
6.6.2 If the value of the index is changed after it has been used in a
calculation, the calculation shall be corrected and an adjustment
made in the next payment certificate. The index value shall be
deemed to take account of all changes in cost due to fluctuations
in costs.
6.7 Dayworks 6.7.1 If applicable, the Daywork rates in the Service Provider’s Bid
shall be used for small additional amounts of Services only when
the Employer has given written instructions in advance for
additional services to be paid in that way.
6.7.2 All work to be paid for as Dayworks shall be recorded by the
Service Provider on forms approved by the Employer. Each
completed form shall be verified and signed by the Employer
representative as indicated in Sub-Clause 1.6 within two days of
the Services being performed.
6.7.3 The Service Provider shall be paid for Dayworks subject to
obtaining signed Dayworks forms as indicated in Sub-Clause
6.7.2
7. Quality Control
7.1 Identifying The principle and modalities of Inspection of the Services by the
Defects Employer shall be as indicated in the SCC. The Employer shall
check the Service Provider’s performance and notify him of any
Defects that are found. Such checking shall not affect the Service
Section V. General Conditions of Contract 65
8. Settlement of Disputes
8.1 Amicable The Parties shall use their best efforts to settle amicably all disputes
Settlement arising out of or in connection with this Contract or its interpretation.
8.2 Dispute 8.2.1 If any dispute arises between the Employer and the Service
Settlement Provider in connection with, or arising out of, the Contract or the
provision of the Services, whether during carrying out the
Services or after their completion, the matter shall be referred to
the Adjudicator within 14 days of the notification of
disagreement of one party to the other.
8.2.2 The Adjudicator shall give a decision in writing within 28 days
of receipt of a notification of a dispute.
8.2.3 The Adjudicator shall be paid by the hour at the rate specified in
the BDS and SCC, together with reimbursable expenses of the
types specified in the SCC, and the cost shall be divided equally
between the Employer and the Service Provider, whatever
decision is reached by the Adjudicator. Either party may refer a
decision of the Adjudicator to an Arbitrator within 28 days of the
Adjudicator’s written decision. If neither party refers the dispute
to arbitration within the above 28 days, the Adjudicator’s
decision will be final and binding.
8.2.4 The arbitration shall be conducted in accordance with the
arbitration procedure published by the institution named and in
66 Section V. General Conditions of Contract
Number of Amendments of, and Supplements to, Clauses in the General Conditions
GC Clause of Contract
1.1 The words “in the Government’s country” are amended to read “in [name of
country].”
1.1(a) The Adjudicator is ____________________
1.1(e) The contract name is ____________________.
1.1(h) The Employer is ____________________
1.1(m) The Member in Charge is ____________________
1.1(p) The Service Provider is ____________________
1.2 The Applicable Law is: ____________________
1.3 The language is ____________________
1.4 The addresses are:
Employer:
Attention:
Telex:
Facsimile:
Service Provider:
Attention:
Telex:
Facsimile:
1.6 The Authorized Representatives are:
For the Employer:
For the Service Provider:
2.1 The date on which this Contract shall come into effect is _______________.
2.2.2 The Starting Date for the commencement of Services is ________________.
2.3 The Intended Completion Date is ____________________.
68
Number of Amendments of, and Supplements to, Clauses in the General Conditions
GC Clause of Contract
Number of Amendments of, and Supplements to, Clauses in the General Conditions
GC Clause of Contract
follows, subject to certification by the Employer, that the Services have
been rendered satisfactorily, pursuant to the performance indicators:
_______(indicate milestone and/or percentage) __________________
_______(indicate milestone and/or percentage) _________________ and
_______(indicate milestone and/or percentage) __________________
Should the certification not be provided, or refused in writing by the
employer within one month of the date of the milestone, or of the date of
receipt of the corresponding invoice, the certification will be deemed to
have been provided, and the progress payment will be released at such
date.
The amortization of the Advance mentioned above shall commence when
the progress payments have reached 25% of the contract price and be
completed when the progress payments have reached 75%.
The bank guarantee for the advance payment shall be released when the
advance payment has been fully amortized.
6.5 Payment shall be made within ____________________ days of receipt of
the invoice and the relevant documents specified in Sub-Clause 6.4, and
within ____________________days in the case of the final payment.
The interest rate is ____________________.
6.6.1 Price adjustment is ____________________ in accordance with Sub-Clause
6.6.
The coefficients for adjustment of prices are ____________________:
(a) For local currency:
AL is ____________________
BL is ____________________
CL is ____________________
Lmc and Loc are the index for Labor from ____________________
Imc and Ioc are the index for ________ from _______________
(b) For foreign currency
AF is ____________________
70 Section VI. Specifications
Number of Amendments of, and Supplements to, Clauses in the General Conditions
GC Clause of Contract
BF is ____________________
CF is ____________________
Lmc and Loc are the index for Labor from ____________________
Imc and Ioc are the index for _______ from ___________________
7.1 The principle and modalities of inspection of the Services by the Employer
are as follows: ____________________
The Defects Liability Period is ____________________.
8.2.3 The Adjudicator is ____________________. Who will be paid a rate of
____________________ per hour of work. The following reimbursable
expenses are recognized: ____________________
8.2.4 The arbitration procedures of ____________________ will be used
8.2.5 The designated Appointing Authority for a new Adjudicator is
____________________
71
Table of Forms
Performance Bond.................................................................................................................76
This Agreement is made on the _______ day of _______, _______ between ______________ of
______________ (hereinafter called “the Guarantor”) of the one part and ______________ of
______________ (hereinafter called “the Employer”) of the other part.
Whereas
(1) This Agreement is supplemental to a contract (hereinafter called the Contract) made
between ______________ of ______________ (hereinafter called the Service Provider) of the
one part and the Employer of the other part whereby the Service Provider agreed and undertook
to execute the Services of ____________________________ for the sum of ______________
being the Contract Price; and
(2) The Guarantor has agreed to guarantee the due performance of the Contract in the manner
hereinafter appearing.
Now therefore the Guarantor hereby agrees with the Employer that upon receipt of
(1) a written notice to the Guarantor from the Service Provider, or
(2) a written notice to the Guarantor from the Adjudicator, or
(3) a binding arbitration or Court award confirming that the amount of the Guarantee is
payable to the Employer,
the Guarantor will indemnify and pay the Employer the sum of _______, _______ such sum
being payable in the types and proportions of currencies in which the Contract Price is payable,
provided that the Employer or his authorized representative has notified the Guarantor to that
effect and has made a claim against the Guarantor not later than the date of issue of the Defects
Liability Certificate.
The Guarantor shall not be discharged or released from his Guarantee by an arrangement
between the Service Provider and the Employer, with or without the consent of the Guarantor, or
by any alteration in the obligations undertaken by the Service Provider, or by any forbearance on
the part of the Service Provider, whether as to the payment, time, performance or otherwise, and
any notice to the Guarantor of any such arrangement, alteration, or forbearance is hereby
expressly waived.
Given under our hand on the date first mentioned above.
Signed by
for and on behalf of the Guarantor in the presence of
Signed by
for and on behalf of the Employer in the presence of
Section VIII. Contract Forms 75
To: _____________________
And whereas it has been stipulated by you in the said Contract that the Service Provider shall
furnish you with a Bank Guarantee by a recognized bank for the sum specified therein as security
for compliance with his obligations in accordance with the Contract;
And whereas we have agreed to give the Service Provider such a Bank Guarantee;
Now therefore we hereby affirm that we are the Guarantor and responsible to you, on behalf of
the Service Provider, up to a total of ________, ________, such sum being payable in the types
and proportions of currencies in which the Contract Price is payable, and we undertake to pay
you, upon your first written demand and without cavil or argument, any sum or sums within the
limits of ________________] as aforesaid without your needing to prove or to show grounds or
reasons for your demand for the sum specified therein.
We hereby waive the necessity of your demanding the said debt from the Service Provider before
presenting us with the demand.
We further agree that no change or addition to or other modification of the terms of the Contract
or of the Services to be performed there under or of any of the Contract documents which may be
made between you and the Service Provider shall in any way release us from any liability under
this Guarantee, and we hereby waive notice of any such change, addition, or modification.
This Guarantee shall be valid until a date 28 days from the date of issue of the Certificate of
Completion.
Name of Bank
Address
Date
76 Section VIII. Contract Forms
Performance Bond
By this Bond, _______ as Principal (hereinafter called “the Service Provider”) and
________________________ as Surety (hereinafter called “the Surety”), are held and firmly
bound unto ____________ as Obligee (hereinafter called “the Employer”) in the amount of
____________ ____________] for the payment of which sum well and truly to be made in the
types and proportions of currencies in which the Contract Price is payable, the Service Provider
and the Surety bind themselves, their heirs, executors, administrators, successors, and assigns,
jointly and severally, firmly by these presents.
Whereas the Service Provider has entered into a Contract with the Employer dated the
______day of ______, ______ for ____________ in accordance with the documents, plans,
specifications, and amendments thereto, which to the extent herein provided for, are by reference
made part hereof and are hereinafter referred to as the Contract.
Now, therefore, the Condition of this Obligation is such that, if the Service Provider shall
promptly and faithfully perform the said Contract (including any amendments thereto), then this
obligation shall be null and void; otherwise it shall remain in full force and effect. Whenever the
Service Provider shall be, and declared by the Employer to be, in default under the Contract, the
Employer having performed the Employer’s obligations there under, the Surety may promptly
remedy the default, or shall promptly:
(1) complete the Contract in accordance with its terms and conditions; or
(2) obtain a Bid or bids from qualified bidders for submission to the Employer for
completing the Contract in accordance with its terms and conditions, and upon
determination by the Employer and the Surety of the lowest responsive Bidder,
arrange for a Contract between such Bidder and Employer and make available as
work progresses (even though there should be a default or a succession of defaults
under the Contract or Contracts of completion arranged under this paragraph)
sufficient funds to pay the cost of completion less the balance of the Contract Price;
but not exceeding, including other costs and damages for which the Surety may be
liable hereunder, the amount set forth in the first paragraph hereof. The term
“Balance of the Contract Price,” as used in this paragraph, shall mean the total
amount payable by the Employer to the Service Provider under the Contract, less the
amount properly paid by the Employer to the Service Provider; or
(3) pay the Employer the amount required by the Employer to complete the Contract in
accordance with its terms and conditions up to a total not exceeding the amount of
this Bond.
The Surety shall not be liable for a greater sum than the specified penalty of this Bond.
Section VIII. Contract Forms 77
Any suit under this Bond must be instituted before the expiration of one year from the date of
issuance of the Certificate of Completion.
No right of action shall accrue on this Bond to or for the use of any person or corporation other
than the Employer named herein or the heirs, executors, administrators, successors, and assigns
of the Employer.
In testimony whereof, the Service Provider has hereunto set its hand and affixed its seal, and the
Surety has caused these presents to be sealed with its corporate seal duly attested by the signature
of its legal representative, this ______ day of ______, ______.
Signed by
on behalf of ____________________________________________________________
Iin the capacity of
In the presence of
Date
Signed by
on behalf of ____________________________________________________________
In the capacity of
In the presence of
Date
78 Section VIII. Contract Forms
To: ______
Gentlemen:
In accordance with the provisions of the Conditions of Contract, Sub-Clause 6.4 (“Terms and
Conditions of Payment”) of the above-mentioned Contract, __________ (hereinafter called “the
Service Provider”) shall deposit with _________ a Bank Guarantee to guarantee his proper and
faithful performance under the said Clause of the Contract in an amount of _________
_________
We, the __________________, as instructed by the Service Provider, agree unconditionally and
irrevocably to guarantee as primary obligator and not as Surety merely, the payment to
__________________ on his first demand without whatsoever right of objection on our part and
without his first claim to the Service Provider, in the amount not exceeding _________
_________
We further agree that no change or addition to or other modification of the terms of the Contract
or of Services to be performed there under or of any of the Contract documents which may be
made between __________________ and the Service Provider, shall in any way release us from
any liability under this Guarantee, and we hereby waive notice of any such change, addition, or
modification.
This Guarantee shall remain valid and in full effect from the date of the advance payment under
the Contract until __________________ receives full repayment of the same amount from the
Service Provider.
Yours truly,
User’s Guide
Attachment: Invitation for Bids...........................................................................................80
The Invitation for Bids (see Procurement Guidelines, para. 2.8) is normally issued as
The Invitation for Bids may be incorporated in the bidding documents merely for the record,
or it may be omitted. In either event, the information contained in the Invitation for Bids
should conform to the bidding documents, and in particular, to the relevant information in the
Bidding Data Sheet and the Special Conditions of Contract.
User’s Guide 81
1. The [name of Borrower] has received13 a loan from the International Bank for
Reconstruction and Development14 towards the cost of [name of Project] and intends to
apply part of the funds to cover eligible payments under the Contract for [name and
identification number of Contract, same as the one indicated in the Special Conditions of
Contract]. Bidding is open to all bidders from eligible source countries as defined in the
Guidelines: Procurement under IBRD Loans and IDA Credits15.
2. The [name of Employer and statement of its relationship to the Borrower, if different
from the Borrower] invites sealed bids from eligible bidders for carrying out the [brief
description of the Services].
3. Bidding documents (and additional copies) may be purchased at [name and address
of office] for a nonrefundable fee of [amount in local currency], or its equivalent in a freely-
convertible currency, for each set. Interested bidders may obtain further information at the
same address.
4. Bids shall be valid for a period of [days] after Bid closing and must be accompanied
by security of [amount in local currency] or its equivalent in a convertible currency, and shall
be delivered to [name and full address of receiving office] on or before [time and date of Bid
closing], at which time they will be opened in the presence of the bidders who wish to attend.
13
Substitute “has applied for,” if appropriate.
14
Substitute International Development Association (IDA) and “credit” for “loan” where a credit has
been extended by (or requested from) IDA.
15
Occasionally, contracts may be financed out of special funds that would further restrict eligibility to a
particular group of member countries. When this is the case, it should be mentioned in this paragraph.
Also indicate any margin of preference that may be granted as specified in the loan or credit arrangement
and set forth in the bidding documents.
82 User’s Guide
This section of the bidding documents should provide the information necessary for bidders
to prepare responsive bids, in accordance with the requirements of the Employer. It should
also give information on bid submission, opening and evaluation, and on the award of the
Contract.
Matters governing the performance of the Service Provider, payments under the Contract, or
matters affecting the risks, rights, and obligations of the parties under the Contract are not
normally included in this Section, but rather under Section VI, General Conditions of
Contract, and/or Section VII, Special Conditions of Contract. If duplication of a subject is
inevitable in the different sections of the documents, care must be exercised to avoid
contradiction between clauses dealing with the same matter.
These Instructions to Bidders will not be part of the Contract and will cease to have effect
once the Contract is signed.
This section should be filled out by the Employer before issuance of the bidding documents.
The insertions should correspond to the information provided in the Invitation for Bids
A. General
1.1 The Employer is [name of Employer and statement of relationship with the
Borrower, if different from the Borrower ]
The name and identification number of the Contract is [insert the same
information included in 1.1 of the Special Conditions of Contract]
1.2 The Intended Completion date is [insert the same date included in 2.3 of the
Special Conditions of Contract]
2.1 The Borrower is [name of Borrower and statement of relationship with the
Employer, if different from the Borrower]
The “World Bank” means [insert “International Bank for Reconstruction and
Development (IBRD)” or “International Development Association (IDA),” as
appropriate], and loan refers to an [insert “IBRD loan” or “IDA credit,” as
appropriate] which, as of the date of issue of the bidding documents [insert
“has been solicited” or “has been approved,” as appropriate] by the World
Bank.
User’s Guide 83
The Project is [name and summary description of the Project financed by the
World Bank loan].
The loan/credit number is [insert number if available].
4.3 The information needed for Bids submitted by joint ventures is as follows: [list
any additions or deletions to list in Sub-Clause 4.3; otherwise list “none”].
4.4 The qualification criteria in Sub-Clause 4.4 are modified as follows: [list any
additions or deletions to list in Sub-Clause 4.4; otherwise list “none”].
4.4(a) The minimum required annual volume of Services for the successful Bidder in
any of the last ten years shall be [insert figure in international trading currency,
This amount is usually not less than 2.5 times the estimated annual cash flow
for the Contract].
4.4(c) The essential equipment to be made available for the Contract by the successful
Bidder shall be [insert equipment list].
4.4(e) The minimum amount of liquid assets and/or credit facilities net of other
contractual commitments of the successful Bidder shall be [insert figure in
international trading currency specified in Bidding Data Sheet].
4.5 Subcontractors’ experience [insert “will” or “will not”] be taken into account.
B. Bidding Data
8.2 and The number of copies of the Bid to be completed and returned shall be [insert
18.1 number, usually two: more if essential].
C. Preparation of Bids
11.1 Language of the bid: [insert “English” “French” or “Spanish”]
12.1 The additional materials required to be completed and submitted are: Insert list
of other materials required]
13.4 The Contract [specify “is” or “is not”] subject to price adjustment in
accordance with Sub-Clause 6.6 of the Conditions of Contract.
84 User’s Guide
14.1 Local inputs shall be quoted in [ insert name of local currency or, at
Employer’s option, any other currency ]
15.1 The period of Bid validity shall be [insert number The period should be a
realistic time, usually not less than 45 days nor more than 105, allowing for bid
evaluation, clarifications, and the World Bank’s “no objection” (where awards
of Contract are subject to prior review). The time should be the same as that
specified in the Invitation for Bids] days after the deadline for Bid submission
specified in the BDS.
16.2 The amount of Bid Security shall be [insert amount in local currency, as
provided in the Invitation to Bid. An amount in local currency should be
indicated, in preference to a percentage of the Bid price. It should not exceed
the equivalent of 3 percent of the estimated Contract value] or an equivalent
amount in a freely-convertible currency.
17.2 Alternative times for completion [are/are not] permitted. If permitted, the range
of acceptable completion time is: [insert range, e.g. between x months and y
months]
If alternative times for completion are permitted, the evaluation method will be
as follows: [describe method, i.e. adding to the bid price a penalty of a given
amount per month of proposed completion time above the minimum completion
time offered]
17.4 Alternative technical solutions shall be permitted for the following parts of the
Services: ________________________________.
If alternative technical solutions are permitted, the evaluation method will be as
follows: [describe method].
D. Submission of Bids
19.2 The Employer’s address for the purpose of Bid submission is [insert the
receiving address provided in the Invitation for Bids. The receiving address
should be an office that is staffed during normal working hours by personnel
authorized to certify time and date of receipt and assure safe-keeping until Bid
User’s Guide 85
20.1 The deadline for submission of bids shall be [insert time and date; the date
should be the same and the time, in no event, earlier than that given in the
Invitation for Bids, unless subsequently amended pursuant to Sub-Clause 20.2].
F. Award of Contract
34.0 The Performance Security acceptable to the Employer shall be the in the
Standard Form of [insert “Bank Guarantee” and/or “Performance Bond” A
Bank Guarantee can be conditional or unconditional (on demand). A
Performance Bond is an undertaking by a bonding or insurance company
(surety) to complete the Services required in the contract in the event of default
by the Service Provider, or to pay the amount of the Bond to the Employer] and
for an amount of [ insert amount and currency. An amount of 5 to 10 percent of
the Contract Price is commonly specified for Performance Bank Guarantees.
An amount of 30 percent of the Contract Price is commonly used internationally
86 User’s Guide
35.1 The Advance Payment shall be of [insert percentage value. The percentage
value should be adequate to minimize the needs of the Service Provider to
borrow for the Contract and will depend on the type of Services to be provided.
Recommended when the Services to be provided include field works or
preparation of products (like data base) in addition to provision of man-power]
percent of the Contract Price.
36.1 The Adjudicator proposed by the Employer is [insert name and address]. The
hourly fee for this proposed Adjudicator shall be [insert amount and currency].
The biographical data of the proposed Adjudicator is as follows: [provide
relevant information, such as education, experience, age, nationality, and
present position; attach additional pages as necessary].
The Bidder shall fill in and submit this Bid form with the Bid. Additional details on the price
should be inserted if the Bid is in various currencies. If the Bidder objects to the Adjudicator
proposed by the Employer in the bidding documents, he should so state in his Bid, and
present an alternative candidate, together with the candidate’s daily fees and biographical
data, in accordance with Clause 36 of the Instructions to Bidders.
The information to be filled in by bidders in the following pages will be used for purposes of
postqualification as provided for in Clause 4 of the Instructions to Bidders. This information
will not be incorporated in the Contract. Attach additional pages as necessary. Pertinent
sections of attached documents should be translated into English. If used for prequalification
verification, the Bidder should fill in updated information only.
The Letter of Acceptance will be the basis for formation of the Contract as described in
Clauses 33 and 34 of the Instructions to Bidders. This Standard Form of Letter of
Acceptance should be filled in and sent to the successful Bidder only after evaluation of bids
has been completed, subject to any review by the World Bank required under the Loan
Agreement.
User’s Guide 87
[Insert the policies of the Bank as appropriate and if applicable, regarding eligibility of firms
to participate in bidding process financed by the Bank.]
Objectives
The objectives of the Activity Schedule are
(a) to provide sufficient information on the quantities of Services to be performed to
enable bids to be prepared efficiently and accurately; and
(b) when a Contract has been entered into, to provide a priced Activity Schedule for
use in the periodic valuation of Services executed.
In order to attain these objectives, Services should be itemized in the Activity Schedule in
sufficient detail to distinguish between the different classes of Services, or between Services
of the same nature carried out in different locations or in other circumstances which may give
rise to different considerations of cost. Consistent with these requirements, the layout and
content of the Activity Schedule should be as simple and brief as possible.
Daywork Schedule
A Daywork Schedule should be included only if the probability of unforeseen work, outside
the items included in the Activity Schedule, is high. To facilitate checking by the Employer
of the realism of rates quoted by the bidders, the Daywork Schedule should normally
comprise the following:
(a) A list of the various classes of Services, labor, materials, and Plant for which basic
daywork rates or prices are to be inserted by the Bidder, together with a statement
of the conditions under which the Service Provider will be paid for work executed
on a daywork basis.
(b) Nominal quantities for each item of Daywork, to be priced by each Bidder at
Daywork rates as Bid. The rate to be entered by the Bidder against each basic
Daywork item should include the Service Provider’s profit, overheads,
supervision, and other charges.
Provisional Sums
The estimated cost of specialized work to be carried out, or of special goods to be supplied,
by other Service Providers (refer to Clause 8 of the Conditions of Contract) should be
88 User’s Guide
indicated in the relevant part of the Activity Schedule as a particular provisional sum with an
appropriate brief description. A separate procurement procedure is normally carried out by
the Employer to select such specialized Service Providers. To provide an element of
competition among the bidders in respect of any facilities, amenities, attendance, etc., to be
provided by the successful Bidder as prime Service Provider for the use and convenience of
the specialist contractors, each related provisional sum should be followed by an item in the
Activity Schedule inviting the Bidder to quote a sum for such amenities, facilities,
attendance, etc.
These Notes for Preparing an Activity Schedule are intended only as information for the
Employer or the person drafting the bidding documents. They should not be included in the
final documents.
1. This sample contract for the Provision of Services has been prepared by the World
Bank for use by its borrowers and their implementing agencies (referred to hereafter as
Employer) when they hire firms to provide Services paid on the basis of lump-sum
remuneration.
2. Lump-sum contracts are used when definition of the tasks to be performed is clear
and unambiguous, when the commercial risk taken by the Service Provider is minimal, and
when therefore such Service Provider/s are prepared to perform the assignment for an agreed
predetermined lump-sum price. Such price is arrived at on the basis of inputs—including
rates—provided by the Service Provider. The Employer agrees to pay the Service Provider
according to a schedule of payments linked to the delivery of certain outputs. A major
advantage of the lump-sum contract is the simplicity of its administration, the Employer
having only to be satisfied with the outputs without monitoring the staff inputs.
3. The Contract includes four parts: the Form of Contract, the General Conditions of
Contract, the Special Conditions of Contract, and the Appendices. The Employer using this
sample contract should not alter the General Conditions. Any adjustment to meet project
features should be made only in the Special Conditions.]
Clauses in brackets are optional; all notes should be deleted in final text.
Number of Amendments of, and Supplements to, Clauses in the General Conditions
GC Clause of Contract
1.1 The words “in the Government’s country” are amended to read “in [name of
country].”
User’s Guide 89
1.1(m) The Member in Charge is [name of Member Leader of the Joint Venture].]
Service Provider:
Attention:
Telex:
Facsimile:
2.1 The date on which this Contract shall come into effect is [date].
[ Note: The date may be specified by reference to conditions of effectiveness
of the Contract, such as approval of the Contract by the Bank, effectiveness
of Bank Loan/IDA Credit, receipt by Service Provider of advance payment
90 User’s Guide
____________________________________________________________
3.7 Restrictions on the use of documents prepared by the Service Provider are:
____________________________________________________________
3.8.1 The liquidated damages rate is [insert percentage of Contract price. Usually
liquidated damages are set between 0.05 percent and 0.10 percent per day]
per day
The maximum amount of liquidated damages for the whole contract is
[insert percentage of Contract price. Usually the total amount is not to
exceed between 5 percent to 10 percent of the Contract Price] percent of the
final Contract Price.
3.8.3 The percentage [ of the cost of having a Defect corrected ] to be used for
the calculation of Lack of performance Penalty/(ies) is [ insert percentage]
The Defects Liability Period is [insert definition of /end date].
5.1 The assistance and exemptions provided to the Service Provider are: [ Note:
List here any assistance or exemptions that the Employer may provide under
Sub-Clause 5.1. If there is no such assistance or exemptions, state “not
applicable].”
6.3.2 The performance incentive paid to the Service Provider shall be: [insert
_____________________________________________________________
The bank guarantee for the advance payment shall be released when the
advance payment has been fully amortized.
[ Note: This sample clause should be specifically drafted for each contract].
6.5 Payment shall be made within [number] days of receipt of the invoice and
the relevant documents specified in Sub-Clause 6.4, and within [number]
days in the case of the final payment.
92 User’s Guide
[ Note: specify, e.g., “forty-five (45) days,” and, in the case of the last
payment, “sixty (60) days.” ]
The interest rate is [rate].
7.1 The principle and modalities of inspection of the Services by the Employer
are as follows: [insert]
The Defects Liability Period is [insert definition of /end date].
8.2.3 The Adjudicator is [insert name]. Who will be paid a rate of [insert amount
and currency] per hour of work. The following reimbursable expenses are
recognized: [list expenses]
Notes:
(1) If the Service Provider is a national of the Government’s country, this
provision should be modified and referred to the Government country’s rules
for settlement of disputes.
User’s Guide 93
(2) For smaller contracts, the arbitration procedures are usually those of an
institution from the Employer’s country. For larger contracts, and contracts
that are likely to be awarded to international contractors, it is recommended
that the arbitration procedure of an international institution such as
UNCITRAL (the United Nations Commission on International Trade Law),
ICSID (the International Centre for Settlement of Investment Disputes) or
the ICC (International Chamber of Commerce) be prescribed
(3) The Appointing Authority should preferably be an independent
professional institution or an official of such an institution
8.2.5 The designated Appointing Authority for a new Adjudicator is [ insert name
of Authority]
Appendices
C-2 Same as C-1 for Key foreign Personnel to be assigned to work outside
the Government’s country.
1. Rates for Equipment Usage or Rental or for Personnel (Key Personnel and
other Personnel).
2. Reimbursable expenditures.
This appendix will exclusively be used for determining remuneration for additional Services.
1. Rates for Equipment Usage or Rental or for Personnel (Key Personnel and
other Personnel).
2. Reimbursable expenditures.
This appendix will exclusively be used for determining remuneration for additional Services.
ATTACHMENT # 1 – APPENDIX G
INCENTIVE COMPENSATION CALCULATION PROCEDURE NOTES
I. The Performance Incentive Compensation for each Contract Year shall be calculated
as follows:
Where:
(i) The Maximum Annual Incentive Compensation is calculated as set out in Section 2.1
of the Performance Incentive Compensation Appendix Provisions; and
(ii) The Composite Score is calculated in accordance with “Part B-The Method for
Calculating the Composite Score” of these Incentive Compensation Calculation
Procedure Notes.
(b) is less than the technical standards for a “Poor” Criterion Value, then the
Criterion Value shall be zero; or
(c) is in between the technical standards for two Criterion Values, then the
Criterion Value shall be rounded down to the nearest whole number or 0.5
decimal point.
2. For the purpose of clarity, it is noted that there are only ten Criterion Values to be used as
follows: 0, 1, 1.5, 2, 2.5, 3, 3.5, 4, 4.5 and 5.
3. Notwithstanding paragraphs 1 and 2 above, with respect to the Performance Criterion
relating to institutional improvements in Attachment #2 The Incentive Compensation Charts
1-8,
(a) if the Service Provider’s actual performance in a Contract Year is less than
the technical standard for a “Fair” Criterion Value, then the Criterion Value
shall be zero;
(b) for the purpose of clarity, it is noted that there are only three Criterion Values
to be used as follows: 0, 2 and 5; and
(c) each of the documents or plans listed under the Performance Criterion shall
be scored with the appropriate Criterion Value and a mean average score will
be taken to calculate the Criterion Value for the Performance Criterion, which
shall be rounded down to the nearest whole point or 0.5 decimal point.
4. For ease of reference, the following calculation represents the calculation of the Composite
Score for a hypothetical Service Provider for four performance criteria in one Contact Year.
The following table demonstrates the procedure for the calculation of the “Composite Score”, if at
the end of the year the achievements of the Service Provider are as follows:
(1) In respect of the Plans and Programs each plan or program listed in Section [] shall be given a score of either 5
(Excellent), 2 (Fair) or (0) and the average score for all plans and programs shall be multiplied by the Criteria
Weight. The average score shall be rounded to the nearest .5 decimal.
Samples of specifications from previous similar projects in the same country are useful in
this respect. The use of metric units is encouraged by the World Bank. Most specifications
are normally written specially by the Employer or Project Manager to suit the Contract in
hand. There is no standard set of Specifications for universal application in all sectors in
all countries, but there are established principles and practices, which are reflected in these
documents.
Care must be taken in drafting specifications to ensure that they are not restrictive. In the
specification of standards for goods, materials, Services, and workmanship, recognized
international standards should be used as much as possible. Where other particular
standards are used, whether national standards of the Borrower’s country or other
standards, the specifications should state that goods, materials, Services and workmanship
that meet other authoritative standards, and which ensure substantially equal or higher
quality than the standards mentioned, will also be acceptable. The following clause may be
inserted in the Special Conditions or Specifications.
Wherever reference is made in the Contract to specific standards and codes to be met by
the goods and materials to be furnished, and Services or work performed or tested, the
provisions of the latest current edition or revision of the relevant standards and codes in
effect shall apply, unless otherwise expressly stated in the Contract. Where such standards
and codes are national, or relate to a particular country or region, other authoritative
standards that ensure a substantially equal or higher quality than the standards and codes
specified will be accepted subject to the Project Manager’s prior review and written
consent. Differences between the standards specified and the proposed alternative
standards shall be fully described in writing by the Service Provider and submitted to the
Project Manager at least 28 days prior to the date when the Service Provider desires the
Project Manager’s consent. In the event the Project Manager determines that such
proposed deviations do not ensure substantially equal or higher quality, the Service
Provider shall comply with the standards specified in the documents.
100 User’s Guide
These Notes for Preparing Specifications are intended only as information for the
Employer or the person drafting the bidding documents. They should not be included in
the final documents.
Insert here a list of Drawings. The actual Drawings, including performance diagrams or
curves, etc. and site plans, geographical areas covered, should be attached to this section
or annexed in a separate folder.
Samples of acceptable forms of Performance, and Advance Payment Securities are annexed.
Bidders should not complete the Performance and Advance Payment Security forms at this time.
Only the successful Bidder will be required to provide Performance and Advance Payment
Securities in accordance with one of the forms or in a similar form acceptable to the Employer.
This form of Performance Guarantee is conditional in that the required conditions of default are
not met until an agreement has been reached on the amount of damages payable, or until an
award has been made under the applicable settlement of disputes procedures.
The triggering of this form of Performance Guarantee is conditional upon the Service
Provider’s “failing to execute the Contract or committing a breach of his obligations there
under” and requires a statement by the Employer and/or the Project Manager to that effect, and
an exercise of judgment by the Guarantor as to whether the required conditions of default have
been fulfilled. Some forms of Guarantee contain further qualifying conditions, and are not
triggered until an agreement has been reached on the amount of damages payable, or until an
award has been made under the applicable settlement of disputes procedures. The construction
industry favors this form of Guarantee over the Unconditional Guarantee whenever it is
available. However, not all commercial banks (as Guarantors) are willing to issue Conditional
Guarantees, and not all Employers are prepared to accept this form of Performance Security
User’s Guide 101
This Agreement is made on the [day] day of [month], [year] between [name of Bank] of
[address of Bank] (hereinafter called “the Guarantor”) of the one part and [name of Employer] of
[address of Employer] (hereinafter called “the Employer”) of the other part.
Whereas
(1) This Agreement is supplemental to a contract (hereinafter called the Contract) made
between [name of Service Provider] of [address of Service Provider] (hereinafter called the
Service Provider) of the one part and the Employer of the other part whereby the Service
Provider agreed and undertook to execute the Services of [name of Contract and brief
description of the Services] for the sum of [amount in Contract currency] being the Contract
Price; and
(2) The Guarantor has agreed to guarantee the due performance of the Contract in the manner
hereinafter appearing.
Now therefore the Guarantor hereby agrees with the Employer that upon receipt of
the Guarantor will indemnify and pay the Employer the sum of [amount of Guarantee] [amount
in words] such sum being payable in the types and proportions of currencies in which the
Contract Price is payable, provided that the Employer or his authorized representative has
notified the Guarantor to that effect and has made a claim against the Guarantor not later than the
date of issue of the Defects Liability Certificate.
The Guarantor shall not be discharged or released from his Guarantee by an arrangement
between the Service Provider and the Employer, with or without the consent of the Guarantor, or
by any alteration in the obligations undertaken by the Service Provider, or by any forbearance on
the part of the Service Provider, whether as to the payment, time, performance or otherwise, and
any notice to the Guarantor of any such arrangement, alteration, or forbearance is hereby
expressly waived.
Signed by
for and on behalf of the Guarantor in the presence of
Signed by
for and on behalf of the Employer in the presence of
102 User’s Guide
The Unconditional (or “On-Demand”) Bank Guarantee has the merit of simplicity and of being
universally known and accepted by commercial banks. The contracting community, however,
strongly objects to this type of Security because the Guarantee can be called (or threatened to
be called) by Employers without justification. Employers should recognize the contractual
conditions governing nonperformance by the Service Provider and should normally act only on
the advice of the Project Manager in calling a Performance Guarantee. Any unjustified calling
of a Bank Guarantee, or unreasonable pressure exercised by an Employer, would be regarded
by the World Bank as contrary to the spirit and basic principles of international procurement.
This type of Guarantee is called a “Bond” in a number of countries; however, it should be
distinguished from the U.S.-style “Performance Bond” as shown in Annex C.
Whereas [name and address of Service Provider] (hereinafter called “the Service Provider”) has
undertaken, in pursuance of Contract No. [number] dated [date] to execute [name of Contract
and brief description of Services] (hereinafter called “the Contract”);
And whereas it has been stipulated by you in the said Contract that the Service Provider shall
furnish you with a Bank Guarantee by a recognized bank for the sum specified therein as security
for compliance with his obligations in accordance with the Contract;
And whereas we have agreed to give the Service Provider such a Bank Guarantee;
Now therefore we hereby affirm that we are the Guarantor and responsible to you, on behalf of
the Service Provider, up to a total of [amount of Guarantee] [amount in words], such sum being
payable in the types and proportions of currencies in which the Contract Price is payable, and we
undertake to pay you, upon your first written demand and without cavil or argument, any sum or
sums within the limits of [amount of Guarantee] as aforesaid without your needing to prove or to
show grounds or reasons for your demand for the sum specified therein.
We hereby waive the necessity of your demanding the said debt from the Service Provider before
presenting us with the demand.
We further agree that no change or addition to or other modification of the terms of the Contract
or of the Services to be performed there under or of any of the Contract documents which may be
made between you and the Service Provider shall in any way release us from any liability under
this Guarantee, and we hereby waive notice of any such change, addition, or modification.
This Guarantee shall be valid until a date 28 days from the date of issue of the Certificate of
Completion.
User’s Guide 103
Name of Bank
Address
Date
Performance Bond
This form of Bond corresponds to the U.S. practice, and should not be interpreted in the
context of a “Bond” as known in other countries. As with the Conditional Bank Guarantee, the
wording of some bonds may be such that an award under legal proceedings is needed to trigger
action by the Surety.
By this Bond, [name and address of Service Provider] as Principal (hereinafter called “the
Service Provider”) and [name, legal title, and address of surety, bonding company, or insurance
company] as Surety (hereinafter called “the Surety”), are held and firmly bound unto [name and
address of Employer] as Obligee (hereinafter called “the Employer”) in the amount of [amount
of Bond] [amount of Bond in words] for the payment of which sum well and truly to be made in
the types and proportions of currencies in which the Contract Price is payable, the Service
Provider and the Surety bind themselves, their heirs, executors, administrators, successors, and
assigns, jointly and severally, firmly by these presents.
Whereas the Service Provider has entered into a Contract with the Employer dated the [day] day
of [month], [year] for [name of Contract] in accordance with the documents, plans,
specifications, and amendments thereto, which to the extent herein provided for, are by reference
made part hereof and are hereinafter referred to as the Contract.
Now, therefore, the Condition of this Obligation is such that, if the Service Provider shall
promptly and faithfully perform the said Contract (including any amendments thereto), then this
obligation shall be null and void; otherwise it shall remain in full force and effect. Whenever the
Service Provider shall be, and declared by the Employer to be, in default under the Contract, the
Employer having performed the Employer’s obligations there under, the Surety may promptly
remedy the default, or shall promptly:
(1) complete the Contract in accordance with its terms and conditions; or
(2) obtain a Bid or bids from qualified bidders for submission to the Employer for
completing the Contract in accordance with its terms and conditions, and upon
determination by the Employer and the Surety of the lowest responsive Bidder,
arrange for a Contract between such Bidder and Employer and make available as
work progresses (even though there should be a default or a succession of defaults
under the Contract or Contracts of completion arranged under this paragraph)
sufficient funds to pay the cost of completion less the balance of the Contract Price;
104 User’s Guide
but not exceeding, including other costs and damages for which the Surety may be
liable hereunder, the amount set forth in the first paragraph hereof. The term
“Balance of the Contract Price,” as used in this paragraph, shall mean the total
amount payable by the Employer to the Service Provider under the Contract, less the
amount properly paid by the Employer to the Service Provider; or
(3) pay the Employer the amount required by the Employer to complete the Contract in
accordance with its terms and conditions up to a total not exceeding the amount of
this Bond.
The Surety shall not be liable for a greater sum than the specified penalty of this Bond.
Any suit under this Bond must be instituted before the expiration of one year from the date of
issuance of the Certificate of Completion.
No right of action shall accrue on this Bond to or for the use of any person or corporation other
than the Employer named herein or the heirs, executors, administrators, successors, and assigns
of the Employer.
In testimony whereof, the Service Provider has hereunto set its hand and affixed its seal, and the
Surety has caused these presents to be sealed with its corporate seal duly attested by the signature
of its legal representative, this [day] day of [month], [year].
Signed by
on behalf of [name of Service Provider] in the capacity of
In the presence of
Date
Signed by
on behalf of [name of Service Provider] in the capacity of
In the presence of
Date
[name of Contract]
Gentlemen:
User’s Guide 105
In accordance with the provisions of the Conditions of Contract, Sub-Clause 6.4 (“Terms and
Conditions of Payment”) of the above-mentioned Contract, [name and address of Service
Provider] (hereinafter called “the Service Provider”) shall deposit with [name of Employer] a
Bank Guarantee to guarantee his proper and faithful performance under the said Clause of the
Contract in an amount of [amount of Guarantee] [amount in words]
We, the [Bank or Financial Institution], as instructed by the Service Provider, agree
unconditionally and irrevocably to guarantee as primary obligator and not as Surety merely, the
payment to [name of Employer] on his first demand without whatsoever right of objection on our
part and without his first claim to the Service Provider, in the amount not exceeding [amount of
Guarantee] [amount in words]
We further agree that no change or addition to or other modification of the terms of the Contract
or of Services to be performed there under or of any of the Contract documents which may be
made between [name of Employer] and the Service Provider, shall in any way release us from
any liability under this Guarantee, and we hereby waive notice of any such change, addition, or
modification.
This Guarantee shall remain valid and in full effect from the date of the advance payment under
the Contract until [name of Employer] receives full repayment of the same amount from the
Service Provider.
Yours truly,