Consulting

Summary of Methods for Selection of Consulting Firms/Organizations

1.  Consultants for projects financed by the Asian Development Bank (ADB) must be selected and engaged in accordance with the principles, practices, and procedures in the Guidelines on the Use of Consultants by the Asian Development Bank and its Borrowers (the Guidelines).

2.  The policies in the Guidelines on recruiting consultants are derived from The Agreement Establishing the Asian Development Bank (the Charter). The basic principles in the Charter relating to consulting services are:

1. ADB funds must only be used to recruit consultants who are nationals of ADB member countries.
2. The ADB must make sure that the funds are only used for the purpose for which they were approved, with due consideration of economy and efficiency.

3.  The ADB and its borrowers must follow these basic principles in the Charter and the Guidelines when they recruit consultants for ADB-financed projects. Further, the ADB as an international, multilateral development finance institution has an obligation to provide fair opportunities to all the technically qualified consultants in its member countries. If a borrower does not follow all of the basic principles when it recruits consultants, including when it evaluates consultants' proposals and awards contracts, the ADB may refuse to finance that part of the consulting services and cancel the corresponding portion of the loan.

4.  The Request For Proposal (RFP) documents sent to the shortlisted consultants for consulting services funded by the ADB must include the provisions necessary to comply with the ADB's principles, practices and procedures. When the ADB and borrowers evaluate and rank consultants' proposals, they must comply with the terms and conditions stated in the RFP. Evaluating consultants' proposals fairly, accurately and transparently is one of the most important aspects of recruiting consultants.

5.  The Guidelines provide three methods of selecting consulting firms:

1. Quality and Cost-Based Selection (QCBS)
2. Quality-Based Selection (QBS)
3. Direct Selection.

6.  ADB missions state the proposed selection method in the Report and Recommendation of the President (RRP) or the Technical Assistance (TA) paper. QCBS is the preferred selection method. QBS and direct selection are used in special cases, when it is appropriate. When an ADB mission proposes to use QBS or direct selection, the mission provides a justification in the RRP or TA paper.

7.  The choice of the appropriate selection method depends on the nature and complexity of the assignment. QBS may be more appropriate than QCBS when:

1. The assignment is very complex or highly specialized and it is not possible to write detailed Terms of Reference (TOR) showing the tasks the consultant will perform. Examples are country economic or sector studies, multi-sector feasibility studies and financial sector reforms.
2. The project will have a high impact and it's appropriate to engage the best experts. Examples are national policy studies and capacity building in large government agencies.
3. The assignment can be carried out in substantially different ways and the technical proposals may not be directly comparable. Examples are management advice and sector and policy studies in which the value of the services depends on the quality of the analysis.

A.  Quality and Cost-Based Selection (QCBS)

8.  QCBS is a method of selecting consulting firms based on both the quality of the their technical proposals and the costs shown in their financial proposals. QCBS is used whenever possible because it accords with the requirements in the Guidelines to ensure maximum economy and efficiency. When QCBS is used the TOR must be detailed and specific. The scope of the consultant's work must be precisely defined and the required inputs and all the other requirements affecting the cost of the services must be indicated, so that the consultants can prepare detailed and complete financial proposals.

9.  The RFP asks the consultants to submit their technical and financial proposals at the same time in separate sealed envelopes. Any proposals received after the submission deadline are rejected. The proposals are evaluated in two stages, first the technical quality and then the cost. After the closing time for submitting proposals, the Consultant Selection Committee (CSC) opens the envelopes containing the technical proposals and the unopened financial proposals are safely stored. The CSC members do not have access to the financial proposals until the technical evaluation process has been completed. For borrowers, this includes obtaining ADB's approval of the borrower's technical evaluation report.

10.  The CSC members separately evaluate the technical proposals using the evaluation criteria approved by the CSC during short-listing. The CSC then meets to rank the technical proposals. Any proposals that score less than the minimum of 750 points out of 1,000 are considered non-responsive to the RFP and TOR. The ADB Consulting Services Division (COCS) or the borrower tells the firms that submitted these technical proposals that their financial proposals will be returned unopened at the end of the selection process.

11.  COCS or the borrower tells the consultants whose technical proposals scored 750 points or more the time and place where their financial proposals will be publicly opened. The public opening is scheduled at least two weeks after the notification. The financial proposals are opened in the presence of any consultants' representatives who choose to attend. The technical proposal scores are read aloud, then the financial proposals are opened and the total prices shown are read aloud. Minutes are prepared of the proceedings at the opening.

12.  The financial proposals are reviewed to correct any arithmetical errors and to ensure that all the costs of implementing the activities proposed in the technical proposals are covered. Any errors and omissions are corrected so that the proposals can be compared. Any costs in other currencies are converted to US dollars, using the source and date for the exchange rate that was shown in the RFP. The RFP asks the consultants to identify in the financial proposals any local income taxes that will be imposed on the international experts and these are excluded from the calculations of the final prices of the proposals. The lowest-priced financial proposal is given a score of 1000 and the other proposals are given scores that are inversely proportional to their prices.

The formula used to determine the score of each financial proposal is:

Sf = 1,000 x Fm / F

Sf is the financial score Fm is the lowest priced proposal
F is the price of the proposal being considered.

13.  The total score for each consultant is calculated by weighting the scores for technical quality and cost and adding them. The weight for technical quality is 80 per cent and the weight for cost is 20 per cent. These weights are fixed and are specified in the RFP.

14.  No information on the evaluation and ranking of consultants' proposals is disclosed to any person other than those directly concerned with the selection process. Any consultant or other person who tries to influence the evaluation, ranking or contract will be subjected to the provisions of the ADB's anticorruption policy.

15.  Before borrowers start contract negotiations they submit their evaluation reports to the ADB for approval.

16.  Contract negotiations are scheduled with the first ranked consultant. The negotiations include technical discussions of the methodology and comments on the TOR, the staffing and the executing agency's counterpart facilities. It is important that these discussions do not substantially alter the requirements in the TOR because this might alter the terms of the consultant's technical proposal offer and its costs. During the financial negotiations, the experts' remuneration rates and the other unit costs shown in the consultant's financial proposal are not changed; however, minor changes may be made in the inputs and the quantities of cost items.

17.  After a contract has been successfully negotiated, the other firms who submitted technical proposals that scored 750 points or more are advised in writing that they were unsuccessful. The financial proposals submitted by any firms whose technical proposals scored less than 750 points are returned unopened.

B.  Quality Based Selection (QBS)

18.  QBS is a method of selecting a consulting firm based only on the quality of the technical proposals. Many of the procedures for recruiting a firm using QBS are similar to those using QCBS. The main differences are described in the next paragraph.

19.  When QBS is used, the short-listed consultants are asked to only submit technical proposals initially. If a consultant submits a financial proposal together with the technical proposal, the proposals are considered non-responsive. The technical proposals are evaluated using the same procedures used for QCBS (paragraph 10). After the CSC ranks the technical proposals, the first-ranked consultant is asked to submit its financial proposal. At the negotiations the consultant is asked to submit documents to substantiate all of the costs shown in the financial proposal and all these costs may be negotiated. A cost-plus-fee contract is normally used. After the contract negotiations have been successfully completed, the other consultants who submitted technical proposals are advised that they were unsuccessful.

C.  Direct Selection

20.  Consulting firms are only directly selected in exceptional cases with adequate justification and with the prior approval of ADB Management or the Board of Directors.

21.  The RFP requests the consultant to submit technical and financial proposals at the same time. The technical proposal is evaluated to make sure that it meets the minimum technical requirements. Then contract negotiations are held with the consultant. Both technical and financial matters are negotiated and included in the contract.