WINNING ADB CONTRACTS IN CENTRAL ASIA

 

By Ellen S. House

 

U.S. companies are currently not taking full advantage ofopportunities to win procurement and consulting contracts in Central Asia fromthe Manila-based Asian Development Bank (ADB). ADB projects will be the sourceof over $1 billion in loans and some $38 million in technical assistance toKazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan during 1999-2001. Inaddition, the bank is currently processing applications for membership fromTurkmenistan and Azerbaijan.

 

ADB projects are fully financed and bid according tointernational competitive bidding guidelines, and are a promising potentialsource of new business for U.S. consulting and equipment firms. U.S. companiesthat plan ahead and are well informed about how to negotiate the process forwinning ADB contracts will increase their chances of success. At a Junepresentation at the USA Trade Center by Denny Barnes, U.S. Commercial Liaisonto the ADB, U.S. business representatives were enthusiastic about theseopportunities. Although Europeans have dominated this market since the creationof the Central Asian republics in 1991, U.S. companies are now well positionedto capture a bigger market share.

 

The ADB in Central Asia

ADB projects in Central Asia focus on agriculture,transportation infrastructure, social sector development, water supply andsanitation, and education, health, and the environment. Technical assistance isprovided to governments for feasibility studies, capacity building, financialsector and economic policy development, and government reorganization.Moreover, ADB is now prepared to provide up to 25 percent of the financing forprivate projects in Central Asia that meet the developmental needs of themember country. The amount and character of assistance to Central Asia variesby country.

 

*Kazakhstan*:Since 1994, Kazakhstan has received 10 loans  totaling $415 million from the ADB. In addition, ADBprovided almost $15 million in grants for 28 technical assistance projects forcapacity building, institutional strengthening, and preparing loan operations.No loans were approved in 1998 because the government delayed formulating itspublic investment program and borrowing strategy, but technical assistancegrant projects continued. Agriculture is a strong focus for bank lendingproposed for 1999-2001, and a $60 million loan for a farm restructuring sectordevelopment program is already in the appraisal stage. Also, the KazakhstaniGovernment reportedly asked the ADB for a $10 million emergency loan to combatlocusts in 2000. In August, the ADB moved its resident mission in Kazakhstan tothe new capital city of Astana, but it will also maintain a liaison office inAlmaty.

 

*Kyrgyzstan*:ADB operations in the Kyrgyz Republic began in 1994. As of December 31, 1998,the ADB had approved 12 loans for 10 projects totaling $314.2 million. Inaddition, 28 technical assistance grants have been approved worth $18.2million. ADB assistance to Kyrgyzstan during 1999–2001 will concentrate onimproving the provision of public services, including banking and waterresources; agriculture, including rural finance; education; and infrastructure,especially rehabilitation projects in the energy and roads sectors. ADB willopen a resident mission in Bishkek in early 2000.

 

*Uzbekistan*:  Uzbekistan has received loans worthsome $210 million since joining the ADB in 1995. More than half of these loans($120 million) were made in 1998, of which $50 million was for roadrehabilitation and $70 million for railway rehabilitation. Priority areas forADB projects in Uzbekistan are agriculture, infrastructure, and education. TheADB resident mission in Tashkent was opened in 1998.

 

*Tajikistan*:Tajikistan joined the ADB only in 1998, receiving its first loan, $20 millionfor a postconflict infrastructure program, in December. ADB will focus itsefforts in Tajikistan on agriculture (and agro-processing), infrastructurerehabilitation, capacity building and institutional strengthening, health,social protection services, and education. Some $60 million in loans and $8million in technical assistance funds are being considered for Tajikistan for1999–2000.

 

*Turkmenistan*:ADB has approved Turkmenistan’s membership. It will become a full member whenit makes its required capital contribution to the bank. **

 

*Azerbaijan*:In October 1999, press reports said that the Azerbaijani parliament approvedlegislation on its country’s membership in the ADB. Now, ADB approval is allthat is needed for Azerbaijan to join.

 

Winning Contracts with the ADB

Firms interested in winning procurement or consultingcontracts should integrate the ADB into their planned marketing strategies forCentral Asia, and plan to make regular visits to the bank’s headquarters inManila and to the national agency executing the project. Face-to-facerelationships are essential to doing business in this part of the world.

 

*Bidsfor Goods & Equipment*: By monitoring the ADB website, companies cancarefully plan winning strategies for upcoming procurement opportunities. On purchasesover $500,000, the ADB uses international competitive bidding (ICB) to ensureeconomy and efficiency in the procurement of goods and services. ICB requiresadvertising and a reasonable length of time for firms from any member countryof the ADB to submit bids. To streamline and facilitate the bidding process,the ADB has developed standard bidding documents that are available online topotential bidders.

 

The ministry or executing agency of the country that isresponsible for implementing the project is also accountable for the properconduct of the procurement process. Officials of the borrowing governmentdetermine who wins the various contracts to supply goods and services for theirproject. However, for purchases over $100,000, ADB reserves the right to reviewthe procurement process and routinely reviews all bids done under ICB.

 

*Biddingfor Consulting Services*: For best results, consulting firms should obtainproject information as early as possible and prepare by building relationshipswith ADB project officers and officials in the executing agency. Theserelationships will not only make the company known to the key decisionmakers,but also may help in gathering information to write an effective proposal.

 

Unlike procurement, selection for consultants for technicalassistance (TA) project grants is done within the ADB itself, not in thecountry receiving the services. However, the executing agency does have inputinto the process. ADB uses quality-based evaluation (QBE), and consultants areselected purely on technical merit and then invited to negotiate to establishthe rates. The consultant selection process from when the TA project is firstannounced until the contract is awarded is about a 12-month process. Noprequalification is needed for consulting firms, but consultants are encouragedto register with ADB on its website using the Data on Consulting Firms (DACON)and Data on Individual Consultants (DICON) consulting firm and individualconsultant registration systems. Consulting firms should note that there is aquota of three bids per year on the submission of proposals for technicalassistance projects.

 

The U.S. Government Can Help

The U.S. Department of Commerce’s Multilateral DevelopmentBank Operations (MDBO) office in Washington, part of the U.S. and ForeignCommercial Service, maintains a U.S. Commercial Liaison to ADB Office in Manilato encourage participation of U.S. firms and represent U.S. commercialinterests vis-a-vis ADB. The ADB Liaison Office in Manila provides one-on-one counselingand detailed information on ADB procurement opportunities, and assists U.S.firms in scheduling appointments with ADB project officers. 

 

*Tocontact the **U.S. Commercial Liaison tothe ADB**, tel: (632) 804-0460 or fax: (632) 804-0357, or send an email to[email protected].*

 

*U.S.manufacturers, equipment suppliers, consulting firms, and individualconsultants can learn of project opportunities by visiting the **ADB**website atwww.adb.org/business/opportunities. More information on **MDBO**is available by calling (202) 482-3399 or 1-800-USA-TRADE(872-8723), or visiting www.ita.doc.gov/mdbo.*