Private Public Partnerships: Sample Standard Bidding Documents for Design-Build-Operate (DBO) for Solid Waste Management
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1 Partnerships: Sample Standard Bidding Documents for Design-Build-Operate (DBO) for Solid Waste Management Presented by Allan Rotman Sr. Environmental Specialist Context for DBO for SWM in MNA Initiated as part of the Solid Waste Management Strategy for METAP countries - presented at Cairo conference-may 2000 METAP is Mediterranean Technical Assistance Program Financed by ESSD Norwegian Trust Fund - multi-year program Work began on DBO documents in 2001 Endorsed for pilot testing in
2 SWM Strategy for METAP Countries MNA Region needs approx. $ billion over next 10 years: 8% - Correction of Past/Current Problems 15% - Strengthen/Rationalise Collection 12%-Legal/Institutional/IWM Planning/Capacity Strengthening 65% - Facilities Investments Why We Started on DBO in SWM? Experience in Bank financed SWM projects Difficult to construct a SWM facility in 5 yrs Multiple procurements cause slow implementation Feasibility contract Environmental and Social Safeguards Assessment Detailed engineering design contract Civil works contract Supervision of construction contract Operations contract 2
3 Other Reasons for DBO in SWM Overlaps lead to messy handovers sector likes DBOs Can bundle with other activities (e.g. dump closure, transfer stations, access roads) Uses the strong technical and project management skills of private sector Allows municipalities to focus their limited human resources on systemic SWM issues More Reasons for DBO in SWM Incentives for cost effectiveness PSD adapted to local conditions One private operator is responsible for design, construction and environmental impacts (does not own or lease land) Prevents good landfills reverting to open dumps Can include other optional features: performance incentives (e.g. carbon finance, recycling rates) Equipment purchase Transfer of employees 3
4 Approaches to PPP Approach Asset Ownership Operation & Maintenance Capital Investment Commercial Risk Contract Duration Service Contract /private 1-2 years Management Contract 3-5 years Design-Build- Operate 5-88 years Lease Shared 8-15 years Concession years Build-Operate- Transfer (BOT) and 2-30 years Characteristics of the DBO Intermediate step in PSD sector financing and financial risks sector technical skills and technical risks Typical duration is 8 years: 1 year detailed design phase 2 years construction phase 5 years operations phase Can bundle with other SWM priorities Examples: dump closure, training and outreach Transitional step to full cost recovery by municipality 4
5 Again More Reasons for DBO After the DBO a municipality / utility still has options: Operate itself as public sector Continue with same private sector operator (e.g. annual contract renewals) Bid a new contract to the private sector Key Features in the DBO Designed for Bank loans Follows Bank procurement guidelines Classified as works based on Supply and Installation of Plant and Equipment Innovations: flexible pre-qualification performance based approach 5
6 Prerequisites to DBO for SWM 1. Social and Environmental Safeguards Assessment 2. Land acquisition completed 3. Financing secured e.g. Bank loan for 5 yrs and central/municipal financing for 3 yrs 4. Feasibility level site layout drawings 5. Transaction advisors (legal and technical) for first few transactions for sample documents Key Features in the DBO Two Part Process (not two stage) Part 1: Pre-qualification Sub-contractor contractor s s SWM technical and financial experience is eligible Part 2 : Bidding One Envelope Bid Submittal-both both technical and financial Unified Bid Evaluation Process Technical Evaluation: Pass or fail evaluation based on substantially responsive Financial Evaluation: Pass or fail based on substantially responsive WINNER - Lowest evaluated price of technically responsive bids wins 6
7 Pre-Qualification Issues evaluation of applications based on solid waste facility design, build and operations experience, financial position, personnel capabilities and litigation history subcontractors experience may be considered Key Features in the DBO NOT A DESIGN COMPETITON BASIC CONCEPTUAL DESIGN SET OUT IN BID Important role for Technical Evaluation Committee 1. Design-build criteria 2. Operations criteria 3. Staffing plan criteria DO NOT quantify above criteria (lesson learned) Assistance by transaction advisors and/or supervision consultant (lesson learned) 7
8 Key Features in the DBO Bid Price Structure Design-Build services flat monthly fee vs. progress payments (lesson learned - no unit prices and quantities) Operations services - monthly fee Bottom line = total lump sum price Role of Supervising Consultant technical evaluation advisor acceptance of final design progress payments change orders Key Success and Lessons Learned in Pilot DBO Successes Testing private sector reaction to DBO concept and document structure (San Fernando City Philippines) Working across sectors and regions at Bank Procurement can be innovative and flexible Lessons For capacity building in the sector When to use the DBO tool Procurement process and contents of the bidding documents 8
9 DBO Generic Documents Tab I Pre-qualification Documents Tab II Bidding Documents Annex A - Draft Contract General Conditions Appendices 1 to 11 to the General Conditions Annex B - Various Bidding Documents and Forms (Bid Form, Bidders Price Form and Price Schedule, Bid Security Form, Performance Security Form, Bank Guarantee Form-Advance Payment and Form of Curriculum Vitae) DBO Generic Documents Appendices to the General Conditions» Appendix 1 -Special Conditions of Contract» Appendix 2 -Terms and Procedures of Payment» Appendix 3 - Technical Specifications - Appendix 3A -Design-Build Services - Appendix 3B - Operations Services - Appendix 3C - Technical Standards 9
10 DBO Generic Documents Appendices to the General Conditions (continued)» Appendix 4 - Site» Appendix 5 - Service Area» Appendix 6 - Contract Price Adjustment» Appendix 7 - Incentive Compensation» Appendix 8 - Liquidated Damages» Appendix 9 - Existing Staff» Appendix 10 - Operator s s Personnel» Appendix 11 - Operator s s Bid Solid Waste DBO Baseline Procurement /Legal Documents Pre-Qualification Source SDB Works General legal conditions- Sources - FIDIC - existing standard World Bank bidding documents - existing management and operating contracts 10
11 Solid Waste - Design-Build Operate Bid Evaluation preliminary examination of bids technical aspects of each Bid evaluated with respect to the following factors: the Design-Build Workplan the Operations Workplan the Staffing Plan price evaluation to ensure substantial responsiveness Solid Waste - Design-Build Operate Bid Evaluation award is to the Bidder whose Bid has been determined to be substantially responsive and has the lowest evaluated Bid Price 11
12 Key Sector Lessons Learned Hard to insert DBO in existing Bank loans Need to be very pro-active with clients (beneficiary level and implementing agencies) Use DBO cost savings for early transaction advisors (legal, procurement and technical) DBO process builds technical and management capacity Key Procurement Lessons Learned Start early with transaction advisors (legal, procurement and technical) Front-load the capacity building effort with all in-country stakeholders DO NOT quantify technical evaluation criteria follow ITB 5.5 and not performance criteria in 3A, 3B and 3C Clearly define when design-build ends (DO NOT use unit prices and quantities) Clearly define when operations begin 12
13 Next Steps Already on Bank Procurement (OPCPR) web page as a Sample Edition Comments by e to OPCPR Being used in several Bank solid waste projects in Philippines, Argentina, Tunisia and Iran Easily adapted to solid waste carbon projects Considering advisory committee to regional RPA/RPM and task teams 13
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