Procurement

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The Government of the People's Republic of China has received a loan from ADB to finance the cost of the Liaoning Small Cities and Towns Development Demonstration Sector Project. The Liaoning Provincial Government (LPG), through the Provincial Project Coordination Group, will be the project executing agency.

The Project aims to help promote balanced and environmentally sustainable urbanization; narrow the urban-rural gap; and improve production, employment, and living conditions in small cities and towns in Liaoning Province. It will support the development of selected small cities and towns in the province. The Project is being processed as a sector loan to allow the LPG to respond to rapidly changing needs of cities and towns across the province. The Project includes about seven subprojects, including three core subprojects-Donggang City, Kazuo Mongolian Autonomous County, and Linghai City. Subsequent subprojects will be selected, prepared, and appraised during project implementation following an agreed set of criteria and procedures. The Donggang City core subproject has three components: (i) roads and bridge, and associated services; (ii) drainage and wastewater treatment; and (iii) river improvement and area upgrading. The Kazuo Mongolian Autonomous County core subproject has one water supply component. The Linghai City core subproject has one component for construction and upgrading of roads, and associated services.

The Project was formulated in line with the Liaoning 11th Five Year Plan and Liaoning Small City and Town Framework Plan (2003-2020), which highlight the promotion of small city and town development to support economically, socially, and environmentally sustainable urbanization. LPG plans to use the ADB loan to support investment in about seven small cities and towns in the province. In view of the varying degree of preparedness of subprojects to be included in the Project, and the possibility that some of the subprojects may change during project implementation, the PRC Government agrees that the ADB sector loan modality, which allows for greater flexibility during project implementation, is appropriate.

Goods, works, and services financed under the loan will be procured in accordance with ADB's Procurement Guidelines. Preliminary contract packages were formulated in consultation with the implementing agencies. Contracts for goods estimated to cost $1 million or more and contracts for works estimated to cost $10 million or more will be procured using international competitive bidding procedures. Contracts for goods and works estimated to cost less than these international competitive bidding thresholds but more than $100,000 will be procured on the basis of national competitive bidding procedures in accordance with the PRC Tendering and Bidding Law, subject to modifications and clarifications agreed to with ADB. Contracts for goods and works estimated to cost $100,000 or less will be procured using shopping procedures. Prior review will be adopted for all international competitive bidding packages and the first national competitive bidding package.

Procurement of equipment, materials and goods, civil works and services financed under the loan will be in accordance with the ADB's Procurement Guidelines . Contracts for equipment, materials, goods and services with value greater than $1 million will be procured following the international competitive bidding procedure (ICB). Contract packages valued at $1 million or less will be procured following national competitive bidding (NCB) or shopping procedures. Civil works contracts to cost more than $10 million will be procured using ICB procedures while contracts to cost the equivalent of $10 million or less will be procured using NCB procedures. Foreign contractors may participate in bid for national competitive bidding contracts.

The Project will provide funding for about 154 person-months of international and national consulting services to support the Liaoning and subproject PMOs and implementing agencies in project implementation and management, and institutional capacity building. A consulting firm will be engaged in accordance with Guidelines on the Use of Consultants using the standard quality- and cost-based selection method (80% quality and 20% cost) and simplified technical proposal. The consulting services will cover (i) support of the Liaoning and subproject PMOs and implementing agencies in project preparation and management including procurement, (ii) development of the project performance management system (PPMS), (iii) financial management including ADB disbursement and imprest account procedures, (iv) social and environmental support, (v) O&M, and (vi) institutional strengthening. Capacity building for the PMOs and implementing agencies will be achieved through consultant inputs; training courses provided by universities, specialized institutes, and firms; in-country and/or international study visits; and acquisition of additional equipment financed from the loan. To assist the PMOs and implementing agencies in expediting project implementation, another consulting firm will be engaged using the consultants' qualification selection method to prepare several contracts for advance contracting and design review, and construction supervision for half a year, prior to the recruitment of the consulting firm for the majority of the consulting services.