Entering the New Era: International Research Administration Asian Development Bank Technical Assistance Proposal and Contract
Hatley, Josephine B., SRA Journal
INTRODUCTION: OVERVIEW OF ASIAN DEVELOPMENT BANK
The Asian Development Bank (the bank), headquartered in Manila, Philippines, is a multilateral development finance institution. The mission of the bank is to promote the economic and social progress of its developing member countries within the Asian and Pacific regions. Bank operations began in 1966. For the past 30 years, the bank has been a catalyst in promoting economic and social development within developing member countries, such as the Philippines.
The bank is owned by the governments of member countries - 40 members representing countries within the region and 16 members representing countries outside of the region. A 12 member board of directors (representing eight regional countries and four non-regional countries) oversee general bank operations. The board of governors, which is the highest policy making body of the bank, elects the board of directors and the president of the bank.
By the end of 1996, the bank's headquarters included 23 departments, 653 professional staff, and 1,286 supporting staff. Seven resident missions are located in Bangladesh, Cambodia, India, Indonesia, Nepal, Pakistan, Vietnam, and Vanuatu. Three representative offices are located in Japan, Germany, and the United States.
Funding sources for the bank include: subscribed capital, reserves, funds raised through loans, special contributions funded by member countries, accumulated net income and amounts previously set aside from paid-in capital. Its 56 member countries own the bank's capital stock.
The bank provides technical assistance (TA) grants to meet the needs of smaller, less developed countries. Special attention is given to projects that contribute to the harmonious economic growth of the region. Bank operations cover a broad area of social and economic development. These activities include: fostering social and economic growth, reducing poverty, improving the status of women, supporting human development (including population planning), and protecting the environment.
TECHNICAL ASSISTANCE GRANTS
Technical assistance (TA) grants are vital to the bank's development strategies. TA grants are defined as activities that strengthen the capacity of recipient member countries in the following areas: (a) identifying, formulating, and implementing projects, (b) improving their institutional capabilities, (c) formulating development strategies, (d) promoting the transfer of technology, and (e) fostering regional cooperation.
TA grants are classified in four development categories:
1. Project preparatory technical assistance (PPTA)
2. Project implementation technical assistance (PITA)
3. Advisory technical assistance (ADTA)
4. Regional technical assistance (RETA)
A TA grant provides the services of experts, including the bank's staff and the services of external experts. The expertise of international consultants is essential, as the projects that are financed by the bank continue to be at the cutting edge in the technical and managerial areas of developing countries.
The bank's position is to provide state of the art technical knowledge, and the broad experience of domestic and international experts. The bank's data bank of external experts includes more than 2,500 firms from the 43 member countries and more than 6,300 individual consultants from 48 member countries. Recently, the bank has started to secure the resources and expertise of non-governmental organizations.
Financing of TA activities is accomplished through grants, loans (or a combination of both), and other banks' financial resources. Between 1966 and 1997, the bank provided $1.45 billion in TA grants, funding 3, 692 projects. In 1997, funds for TA activities were distributed across the following categories:
1. Project preparatory technical assistance (PPTA): $378 million
2. Project implementation technical assistance (PITA) and advisory technical assistance (ADTA): $831 million
3. Regional technical assistance (RETA): $245.7 million
The bank draws on its own database of expertise to improve the economic and social conditions of the Asian and Pacific populations. The two trends shaping the bank's future TA for developing countries are: increasing emphasis on private sector involvement and the incorporation of social objectives. The bank supports infrastructure and economic growth activities by funding projects with cross cutting components of health development, poverty alleviation, and training.
RESPONDING TO A TA PROPOSAL BID: A CASE STUDY
The Technical Proposal
In 1997, the Asian Development Bank authorized a TA grant to the Government of Mongolia to finance the services of a team of experts to enhance the efficiency and effectiveness of the Ministry of Science, Technology, Education and Culture of Mongolia. Seven organizations including the University of Pittsburgh were invited to submit technical proposals. Acknowledgment of the invitation and the intent to submit a proposal response needed to be confirmed by each organization within five days of receipt, via cable, telex, or facsimile to the bank.
Each applicant was asked to describe how their organization would provide expertise to meet the expectations of the TA Proposal's Terms of Reference/Scope of Work. No financial information was to be included with the technical proposal submission. (The bank refers to this process as the two-envelope, two-stage procurement bidding process.)
The letter of invitation issued by the bank provided a two-month proposal preparation period. Solicitation guidelines recommended a prior visit to the host country (project area) for familiarization of project requirements and assessment of the services to be provided. (Prior experience is critical for successful bidding.)
The bank required that three copies of the technical proposal be submitted in English via international overnight courier. Advance details were forwarded to the bank via fax or telex providing flight number, air bill number, and the expected date of arrival of proposal documents in Manila. The proposal was also submitted to the Mongolian Minister of Education.
Each proposal was considered and reviewed by the bank on its technical and organizational merit forming the basis for detailed contract negotiations. The review of each technical proposal included an evaluation of the organization, its personnel, and how the contents of the technical proposal were presented.
Financial Proposal (Bid)
Once the University of Pittsburgh (the university) was selected for bidding, a financial bid was submitted in advance of the on-site negotiation. The bid provided a detailed cost breakdown of anticipated funding requirements for services to be provided. Cost details allowed the bank to negotiate rates on a reasonable "cost-plus-fee" basis. Project costs needed to be "fully loaded," i.e., inclusive of applicable institutional indirect cost rates. In this case, institutional indirect cost was included in the salary/benefit base.
Bidder qualification for the on-site negotiation is based on technical merit only. Information on a viable bid range is not disclosed before the on-site negotiation. Therefore, budget details had to include institutional infrastructure costs, such as home office support. Before on-site negotiations, university representatives met to determine a monthly infrastructure rate to be utilized during negotiations.
Salaries for faculty or professional staff must be auditable and consistent with current employment practices. During the bid process, special attention was required to prevent faculty from inflating salary quotes to cover consultant fees. A clear distinction had to be made between faculty salary and faculty consulting. Table 1 presents the financial details that were submitted in the format supplied by the bank.
Table 1 Remuneration Out of Pocket Expenses Apply Indirect Cost to: Do Not Apply Indirect Cost to: Personnel Salaries Domestic Travel Associated Fringe Benefits International Travel Per Diem Miscellaneous Travel Expenses Emergency Evacuation Insurance Subcontractor Cost Consulting Cost Communication Report Reproduction Shipment of Documents, Office Supplies Equipment Seminars/Workshops/Public Meetings Survey Documents/Studies Translator Fees
The international subcontractors in this proposal submission acted as partners with the university to meet the requirements of the technical work statement and the financial bid. Each subcontractor submitted appropriate documents detailing their involvement in the scope of work and the estimated levels of effort that would be subject to negotiations. Submission of the financial bid completed the two-stage procurement bidding process.
The Asian Development Bank conducted contract negotiations with representatives of the selected organization and provided a seven-day advance notice of the planned negotiation date. The bank expected technical and fiscal representatives of the selected organization to attend negotiations. All associated travel costs incurred during negotiations were the responsibility of the university.
Personnel proposed by the University of Pittsburgh and its subcontractors were knowledgeable and had experience in Mongolia, the project area. Some of the personnel had established consulting records of accomplishment with the bank. However, consistent with institutional policy, the university was required to delegate signature authority to appropriate administrative and technical representatives making the trip.
Representatives authorized to conduct negotiations on behalf of the institution selected were required to provide written institutional authorization to (a) negotiate budget details, (b) negotiate contract terms/conditions, and (c) sign contracts on behalf of the institution. A grant officer and two co-investigators conducted the negotiation. The co-investigators were authorized to participate in technical discussions and the grant officer was authorized to participate in business discussions and sign the contract.
The bank negotiator conducts all aspects of the negotiation. While the negotiations were occurring, the negotiator recorded the minutes on a laptop computer.
Negotiations commenced with the formal introductions of the following negotiation attendees:
* Bank Negotiator
* Bank Program Officer
* University Investigators
* University Grant Officer
* Mongolian Subcontractor Director
* Mongolian Minister of Education
* Mongolian Education Sector
* Development Program Director.
* Philippine Subcontractor Program Officer
* Philippine Subcontractor Fiscal Officer
At the beginning of negotiations, the negotiator requested written institutional authorizations. The negotiator provided strict instructions on how the negotiations would proceed.
During the negotiations, salary documentation was submitted for all personnel listed in the financial proposal. A payroll slip serves as acceptable salary documentation. Alternative salary documentation is a previously established independent consultant rate with the bank.
Extensive technical discussions resulted in a modification of the scheduled Mongolian field activities to match the availability of all personnel responsible for executing the scope of work. Detailed cost modifications were discussed to meet the modified personnel schedule for Mongolian field activities and all associated cost for the Mongolian field office.
Cost modifications included: field visit schedules, consultant fees, travel costs, insurance coverage, and field office cost. This resulted in a "give and take" total cost reduction that was agreed to by all parties involved.
Per bank protocol, the bank negotiator revised the financial proposal bid. Revisions were made only in the presence of the fiscal negotiation representatives. Revised cost details were reviewed and approved accordingly by each fiscal representative.
Negotiation minutes were reviewed, discussed, and agreed upon by the negotiation team. Approved minutes were signed by the authorized university representative and the Mongolian Minister of Education to be incorporated as an appendix to the contract.
In-depth technical and fiscal discussions between bank officials, institutional representatives, and subcontractor representatives usually result in a four to five day negotiation period. A draft copy of the contract which included the revised budget, project personnel schedule, and the approved minutes were provided for review and acceptance. The university signed the contract on the fifth day of negotiations.
There is a direct correlation between contract provisions and details that relate to (a) project personnel schedule, (b) scope of work, and (c) payment provisions. A listing of contract clauses, including general provisions are provided in Table 2.
Crucial to award acceptance is the inclusion of an institutional bank account number, routing number, and bank address, as payments are processed and received by bank wire. In this instance, an advance payment (in U.S. dollars) was promptly issued by the bank after the signing of the grant. Subsequent payments were issued as progress payments.
To facilitate prompt payments to international subcontractors, each subcontractor was requested to provide an institutional bank account number, routing number, and bank address. Each international subcontractor provided a corresponding or equivalent United States bank. (This arrangement promotes timely issuance of payments to subcontractors through the international banking system.)
The bank required strict adherence to starting project activities on the effective date. The institutional business representative coordinated the start-up of project activities by advising the institutional program and fiscal offices how to proceed within specific contract requirements.
Personnel time schedules determined when consulting agreements and subcontracts were to be executed. Agreements and subcontracts were crafted to meet the specifications of the prime contract. Total turnaround time for executing domestic consulting agreements was approximately three weeks and total turnaround time executing international subcontracts was one month.
The Bidding Process
To become short-listed as a potential bank bidder, interested agencies should obtain a listing of the bank's annual statement of project profile areas of interest for bidding. The listing is updated weekly on the bank's web page at
The bank publishes a list of prequalified bidders. Participation as a potential subcontractor bidder may be accomplished by contacting pre-qualified bidders in advance, providing specific subcontractor qualifications for a bid response. Collaboration with a local partner in the host country (project area) is essential.
Proposals are evaluated on a 1,000-point scale; a key proposal component is personnel, which receives 700 points. Therefore, it is essential to involve personnel with considerable cultural understanding and past work experiences in the project area.
The business office of the bidding institution should coordinate the proposal submission process from beginning to end. In-house meetings with business office personnel and project personnel should be scheduled for discussions on proposal submission strategies such as:
* Interpretation of solicitation document language
* Technical format and submission requirements
* Financial proposal format and submission requirements
* Coordination of subcontractor's required institutional documents
* Coordination of rigid sponsor deadline requirements
Implementation of the above proposal strategies should yield a favorable review. The bank will notify the successful bidder of the scheduled on-site negotiation.
Once the on-site negotiation team has been identified, it is imperative that the team meet to discuss the following negotiation options:
* Determine the lead negotiators for technical and fiscal considerations.
* Establish how institutional on-site negotiation impasses will be handled.
* Establish an institutional position/policy on possible technical revisions.
* Establish an institutional position/policy on possible cost reductions.
Applying the above negotiation strategies will assist the on-site negotiation team with viable protocol tools for usage during negotiations.
Review of International Contracts
If possible, request an advance copy of the sponsor's contract for prior review. Utilization of the SRA Journal article "Crafting Contracts for International Projects" (Richey, 1993) is recommended when reviewing international contract provisions for acceptance.
Familiarization with the customs of the country in which the negotiation will take place is of extreme importance. Prior knowledge of the appropriate attire for negotiations and leisure activities is vital, as country customs on attire vary. It is also important to know the country's language requirements. For example, English was spoken fluently by the people in the Philippines. In other sites, second language ability may be essential.
Moreover, in the Philippines, the conversion rate for the American dollar changed daily. Obtaining the current conversion rate of the American dollar from the hotel desk or a local bank yields a better conversion transaction.
Daily entry to the Asian Development Bank included a body search, and bank officials searched personal belongings. One person of the negotiation team was required to leave their passport at the point of entry to the bank on a daily basis.
Knowledge of how to exchange business cards while doing business in Southeast Asia is essential. An exchange of business cards symbolizes one's personal identity - label, status, and nametag, all in one. When cards are exchanged, they are studied for a moment to determine a person's status.
In this case, travel was literally halfway around the world. The total traveling time to the Philippines was 30 hours (including a 6-hour layover in Honolulu). The 6-hour layover was extremely difficult to endure, as the body clock was ready to sleep, but could not, due to pending flight connections. The flight time includes crossing the International Date Line, which results in a gain of one day. The body clock again escalates one day ahead with a 12-hour time difference.
The lesson learned in this case is that economy flight accommodations are not ideal for collaboration with business associates regarding bank negotiation strategies. When making international travel arrangements for an extensive itinerary, personnel involved need to ensure appropriately timed flight connections and business class flight accommodations. The small additional cost for business class flight accommodations is well worth it. Institutional representatives can participate in pre-negotiation strategy sessions while traveling and arrive more rested as the result of a comfortable travel experience. Before travel, explore your institutional policy for business-class travel.
Similarly, it is wise to obtain first-class hotel accommodations. Again, this alleviates unnecessary stress for the travelers. After arriving, allow a two-day rest period before the beginning of negotiations. This is critical to enable negotiators to be in best form.
A valid passport is required for entry into the Philippines. Entry and custom declaration documents must be completed before landing in a foreign country. Airline personnel provide these documents during the flight.
The research community is constantly seeking alternative sources for research funding, and the Asian Development Bank is one mechanism for securing funding in the international market. As with any U.S. funding agency, it is important to understand the history and culture of the agency, its guidelines and procedures, and the way the agency negotiates awards and conditions for funding.
The preceding article provides research administrators with a better understanding of the Asian Development Bank's procurement terminology, proposal expectations, procedures for on-site negotiation, and strategies for crafting the contract terms and conditions for acceptance during negotiations.
Table 2: Agreement Contract Clauses
Description of Services
Reports Personnel Commencement Date Date of Arrival Facilities and Services provided by the Government Payment to the Consultant Maximum Payment Recipient Country Authorized Representative of Consultant Notices and Requests Effective Date
Personnel Personnel Input Schedule Performances of the Services Sub-Contracts Relationship of Parties Payments and Mode of Billings Accounts and Records Indemnity and Insurance Ownership of Reports, Computer Programs and Equipment Confidential Information Disposal of Data and Equipment Coordination Exemptions and Facilities Impossibility of Performance Suspension Termination Settlement of Disputes Variations Conflict of Interest
Asian Development Bank (1995). Handbook on problems in procurement for projects financed by the Asian Development Bank (revised), Asian Development Bank.
Asian Development Bank (February 1997). Asian Development Bank technical assistance solicitation No. 2719 - Mongolia "Institutional strengthening in the education sector project," Asian Development Bank.
Axtell, R. E. (1998). Gestures the do's and taboos of body language around the world, (revised and expanded edition), John Wiley and Sons, Inc.
Richey, J. B. (1993). Crafting contracts for international projects. SRA Journal, 25(3), 5-23.
Josephine Hatley ("Entering the New Era: International Research Administration Asian Development Bank Technical Assistance Proposal and Contract") has been a Grant and Contract Officer for the University of Pittsburgh for the past fourteen years with special focus on negotiating contracts and coordinating initial project start-up activities in East Europe and Southeast Asia.…
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Entering the New Era: International Research Administration Asian Development Bank Technical Assistance Proposal and Contract. Contributors: Hatley, Josephine B. - Author. Journal title: SRA Journal. Volume: 31. Issue: 2 Publication date: Summer-Fall 1999. Page number: 11. © 1994 Society of Research Administrators, Inc. COPYRIGHT 1999 Gale Group.
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