Public Administration
Procurement Directive for ADB Borrowers (2026): Procurement Reform
2026-01-12 16:09:18
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Procurement Directive for
ADB Borrowers (2026): Procurement Reform
The
Procurement Directive for ADB Borrowers (2026) replaces the 2017 Procurement
Regulations for all new projects. While the 2017 framework introduced the
concept of "Value for Money" (VfM), it was often implemented using
traditional "lowest-price" methods. The 2026 Directive makes quality-based
evaluation and social impact mandatory for all internationally advertised
contracts.
The
Document Hierarchy (2026)
- ADB
Procurement Policy (2017): Remains the high-level policy document.
- Procurement
Directive for ADB Borrowers (2026): The core legal document governing
borrower-administered procurement.
- Technical
Instructions (2026): Replaces much of the "Guidance Notes" as
the mandatory "how-to" manual for executing agencies.
- Staff
Instructions (2026): Internal rules for ADB staff to supervise and clear
procurement actions.
Comparison: 2017
Framework vs. 2026 Directive
The Procurement
Directive for ADB Borrowers (2026) shifts from a compliance-heavy "Lowest
Price" model to a performance-driven "Value for Money" model
|
Feature
|
2017 Procurement Regulations
|
2026 Procurement Directive
|
|
Primary
Selection Goal
|
Lowest
Evaluated Substantially Responsive Bid (LESRB).
|
Most
Advantageous Bid (MAB) – Balancing quality, cost, and impact.
|
|
Evaluation
Method
|
Price-dominant;
technical was often pass/fail.
|
Mandatory
Merit Point Criteria (MPC) for all international tenders.
|
|
Local
Economic Impact
|
Domestic
Preference (optional 7.5%–15% price margin).
|
Mandatory
50% Local Labor Rule (minimum of total person-days).
|
|
Market
Engagement
|
Optional
/ Part of internal planning.
|
Mandatory
Early Market Engagement (EME) before tender launch.
|
|
Technical
Weighting
|
Usually
0% (if pass/fail) or low percentage.
|
Min.
50% Technical Weighting for high-risk/complex projects.
|
|
Sustainability
|
Qualitative/Ad-hoc
mentions in EMP.
|
Scored
& Quantitative (Carbon, Resilience, Life Cycle).
|
|
Contract
Monitoring
|
Focus
on physical progress & milestones.
|
Focus
on Social KPIs (local jobs, training, gender targets).
|
The
Three Mandatory Pillars of 2026
1.
Mandatory Merit Point Criteria (MPC)
Starting
in 2026, ADB no longer permits "lowest price" as the default for
internationally advertised contracts.
ü Weighted Scoring: Bidders are
scored on technical merit (e.g., innovation, experience, sustainability) and
financial price.
ü Thresholds: For high-risk or
complex projects, technical merit must account for at least 50% of the total
score.
ü Exemptions: MPC is not required for
commodities (fuel, grain), pharmaceuticals, vaccines, or low-value
off-the-shelf items.
2.
Mandatory Local Participation (The "50% Rule")
A
groundbreaking social requirement to ensure project funds stay within the
borrower country.
ü Labor Quota: At least 50% of the
total person-days (labor hours) on construction contracts must be performed by
local labor (nationals or permanent residents).
ü The Bonus Incentive: Bidders can
earn up to 15% of their technical merit points by proposing plans that exceed
the 50% minimum or provide structured skills-transfer programs to the local
workforce.
3.
Mandatory Early Market Engagement (EME)
To
reduce the risk of "failed tenders" (where no one bids or prices are
too high), Borrowers must now engage the market before publishing the
tender.
ü Activities: Borrowers must conduct road
shows, supplier surveys, or pre-tender workshops.
ü Outcome: Market feedback must be
used to refine technical specifications and risk allocation in the final
bidding documents.
Sector-Specific
Applications: Sectoral Example
Transportation
Sector (Roads, Rail, Ports)
ü Merit Focus: Scoring rewards lifecycle
durability (e.g., pavement life), climate resilience (flood-proofing), and safety
innovations.
ü Local Impact: Large-scale civil
works must strictly report local labor hours month-by-month.
Energy
& Irrigation Sectors
ü Energy: Focuses on Life Cycle
Costing (LCC)—the most efficient transformer or turbine wins, even if the
initial purchase price is higher.
ü Irrigation: Rewards Water Use
Efficiency (SCADA systems/sensors) and Nature-Based Solutions for canal lining
instead of traditional concrete.
Sector-Specific Merit Point
Matrices (Samples)
The following
tables illustrate how a borrower would structure a 2026-compliant tender. In
these examples, the Technical-to-Price ratio is 70:30.
A. Transportation Sector (Roads & Bridges):
Samples
For a major
highway or bridge, the focus is on durability and disruption management.
|
Technical Main
Criteria
|
Weight (%)
|
Merit Point
Focus Areas (Scored 1–100)
|
|
Construction
Methodology
|
30%
|
Innovation in
bridge launching, minimizing traffic downtime, and safety protocols.
|
|
Asset Lifecycle
& Durability
|
25%
|
Quality of
materials, pavement design life, and ease of future maintenance.
|
|
Climate
Resilience
|
20%
|
Scored against
flood-proofing designs (e.g., 1-in-100-year events) and drainage.
|
|
Local
Participation
|
15%
|
Plans exceeding
the 50% labor rule and technical skills transfer to local firms.
|
|
Environmental/Carbon
|
10%
|
Use of recycled
aggregates or low-carbon concrete mixes.
|
|
Total Technical
|
100%
|
(Contributes
70% to the Final Score)
|
B. Irrigation Sector: Modern Systems: Sample
Irrigation
projects now prioritize water-use efficiency and community ownership.
|
Technical Main
Criteria
|
Weight (%)
|
Merit Point
Focus Areas (Scored 1–100)
|
|
Technical
Performance
|
35%
|
Precision of
SCADA/automated gates and water delivery efficiency (target 90%+).
|
|
Operational
Sustainability
|
20%
|
Ease of
desilting, solar-power integration for pumps, and spare parts availability.
|
|
Social &
Local Impact
|
25%
|
Involvement of
Water User Associations (WUAs) and local training for system O&M.
|
|
Project
Management
|
10%
|
Experience in
remote rural logistics and grievance redressal mechanisms.
|
|
Environmental
Safeguards
|
10%
|
Nature-based
solutions for canal bank stabilization (bio-engineering).
|
|
Total Technical
|
100%
|
(Contributes
70% to the Final Score)
|
Implementation
& Compliance
ü Applicability:
Applies to all projects with a Concept Note approved on or after January 1,
2026.
ü Review Process: ADB will apply
"Prior Review" more strictly to the Merit Point Matrix to ensure
Borrowers aren't setting unfair technical barriers.
ü Contract Management: Local labor
requirements are now Enforceable KPIs in the contract. Failure to meet the 50%
local labor threshold can lead to financial penalties or contract breach.
Conclusion
The
2026 reform transforms ADB procurement from a transaction-based process into a strategic
tool for development. For Borrowers, it requires higher technical capacity to
evaluate bids. For Bidders, it means that being the cheapest is no longer
enough; you must be the best and the most local.
The
"Why" Behind the Change?
The
transition to the 2026 Procurement Directive is rooted in a fundamental
shift toward sustainable, high-quality development. ADB leadership has
emphasized that infrastructure must be an investment in a country’s future, not
just a purchase of physical assets.
v On Quality & Longevity
The cheapest bridge is not a
bargain if it needs rebuilding in ten years. Quality infrastructure lasts
generations. It creates jobs today and opportunities tomorrow. This is not
about fixing something broken. It is about building on what works and raising
our ambitions. — Masato Kanda, ADB President
v On Economic Impact & Local Jobs
ADB
will require meaningful local job participation on projects it finances. From
2026, at least half of all person-days worked on internationally advertised
construction contracts must be completed by local labor. This is designed to
create skills development opportunities, strengthen domestic markets, and
ensure that economic value from projects remains within the communities they serve.
- ADB Official Statement (September 2025)
v
On
Modernizing the Market
This landmark reform strengthens
ADB’s commitment to quality, sustainability, and value for money... ensuring
that contracts are awarded to bidders capable of delivering sustainable results
and long-term development impact. - ADB News Release on Merit Point Criteria
