BISNIS-EBRD Teleconference

"Taking Advantage of Procurement Opportunities with EBRD"

May 26, 2004 10:00 a.m. EST

Coordinator Welcome and thank you for standing by. At this time all participants are in a, listen-only, mode. After the presentation we will conduct a question and answer session. Today’s conference is being recorded. If you have any objections, you may disconnect at this time. Now I will turn the meeting over to Dr. Gunn. Sir, you may begin.

Dr. T. Gunn Thank you very much, Vicki. Trevor Gunn here at BISNIS in Washington DC, we’d like to welcome everybody, a hearty welcome from Washington DC. On the line with me as well, my colleague, Irina Mitchell, who amongst others is our managing editor of our Trades and Tenders Program, which is very much an appropriate compliment to the conference call we’ll be hosting with our colleagues at the EBRD today.

I just wanted to back up a little bit and talk, for a moment, about our relationship with EBRD, which has been just tremendous, over time. We’ve worked on an off with EBRD over the past 12 years at this particular office, but at no time has our collaboration with office been more intense and substantive in terms of the U.S. company benefit, then perhaps during the past year or two years. It all culminated, actually, in the past fall, when I actually signed an MOU with EBRD, together with First Vice President Noreen Doyle and myself, supported intensely by my colleagues in the business development unit at the EBRD. We’ll be hearing from them in a second, Gunner Belvedere, who is absent and his colleague Julia Zuberman. Equally so my colleagues at the U.S. Directors Office, at the EBRD, Alice Davenport, who is not there today, but her colleague, Senior Commercial Specialist, Iasha Ozcana is, and she’ll be delivering just a couple of welcoming remarks in a second.

We’ve done a tremendous amount of outreach into the United States and tried to do our part, with this MOU in hand, or without this MOU in hand, to try to do something of x-raying different functions of the EBRD, indeed having individuals, we once had the chief economist of the EBRD, about three weeks ago we had the director for the consultancy unit Elec Moshet on a public conference call as well, and today we’re very honored to have Maurice Lapage, who is Director of Purchasing and Procurement for the bank, joining us as well.

But before going on to Maurice, let me hand the gavel over to my colleague, Iasha Ozcana, with the U.S. Directors Office. Iasha.

I. Ozcana Thanks, Trevor. I just want to add a few words about our office. We are part of the U.S. Executive Office in the EBRD. Our job is really to assist U.S. companies in pursuing EBRD opportunities. Also we provide advice on the EBRD financing. If you would like to get in touch with us, and my remarks are very short, if you want to get in touch with us, please visit our Web site, which is buyusa.gov/ebrd, I’ll repeat that, buyusa.gov/ebrd. You will find our names, contact features and more information on how we work with the U.S. companies. Thank you and we look forward to hearing from you.

Dr. T. Gunn Now I’d like to turn it over to my colleague, Julia Zuberman, who is with the business development unit at the EBRD, for a few welcoming remarks, as well.

J. Zuberman Thank you, Trevor. Thank you very much for giving me an opportunity to speak to your audience and also thank you very much for your very warm words and our corporation’s feelings are very mutual. We have in fact been working very closely with BISNIS over the past several years, and we hope that our corporation would only get stronger. The events today, as Trevor mentioned, which is part of a series of similar teleconferences that we’ve had in the past is not the last one, we’ll continue to have more and continue to identify those sectors that are of particular interest to U.S. companies.

The one thing that I also want to say is that it’s of great importance for us to be able to have an opportunity to address the U.S. audience, which is a priority market for us. We have a main European bank and very often there’s a little bit of confusion, but in fact the U.S. is the largest shareholder of the bank, and we work very closely with U.S. companies and as I said, it is a priority market for us. So we value the opportunity to be able to address American companies.

I’m not going to take much more of your time, I just want to say a little bit that the countries of operation, the region which is ranging from Russia and Central Asia to Central Europe and Southeastern Europe, continues to provide very impressive results and impressive growth rates, and we as a bank still believe that it is a fantastic investment destination and there are a lot of contracts and a lot of procurement opportunities in this part of the world. So perhaps it’s a great opportunity to be able to share with you what kind of opportunities they are, so that hopefully we can work with you in the future. Thank you very much.

Dr. T. Gunn Thanks very much, Julia. Before going on to formally introduce Maurice, let me just tell our conference participants a little bit about a couple of logistics issues. The first one, and many of you got an e-mail conformation from Irina, which gave us the PowerPoint presentation, some of you may not have got that and I need to repeat that Web address right now, so that you can follow along with Maurice’s presentation. Obviously Maurice will probably do a fair amount of footnoting as well, but he’s promised me to sort of refer to the title at the top of the PowerPoint. If you’ve got pencil in hand, here it is, www.bisnis.doc.gov/bisnis/bisdoc/0405ebrdprocur.ppt, I’ll repeat it quickly again, www.bisnis.doc.gov/bisnis/bisdoc/0405ebrdprocur.ppt.

Point two, Maurice will be addressing us for about 20 or 25 minutes in sort of lecture style, there will be no questions and answers. But immediately after that we’re really looking forward to putting Maurice on the spot, so to speak, with all the tough questions, and letting him spread his wings fully, to listen to the tougher and perhaps some of the easier questions on behalf of U.S. companies. So please stay tuned for that, we’re expecting that probably at somewhere between half past the hour and 40 minutes past the hour, so everybody knows that.

With no further ado let me quickly introduce Maurice. He spent 12 years as a civil engineer. Indeed he spent, after that and maybe indeed concurrently, 20 years with the Canadian National Development Agency by the name of SIDA. At that particular agency he was Director General for Procurement and Purchasing, similar to his position, presumably, with EBRD today. Indeed, he today is the Director of Procurement and Purchasing Department of EBRD in London, and has been in that position since 2002. Maurice, thank you very much for spending time with us this afternoon; your time and our morning. Welcome.

M. Lapage Thank you very much, Trevor, and hello everyone. It is a pleasure to address the audience from North America, from the U.S. A word before I start, you have seen, from the BISNIS Web site that my presentation is on there. It comprises a total of 44 slides, they are numbered; there is a small number at the bottom of each slide. Now I have purposely put more information into the slides then I can cover in the allocated time, however I felt that it was important for you to have the information available. I will be skipping over some of the slides, but I will be guiding you, using the small number at the bottom right-hand corner. So let’s start.

First of all, if you look at slide two, it gives you a structure of the presentation. What will we be covering? We will be covering EBRD's procurement principles. I’ll show you a few statistics and I’ll give you a number of do’s and don’ts. Like when you board an airplane, what do you do? You check to see if you’re heading towards the right destination.

I must say that in my presentation I will not cover the consultancy services aspect of the work done by EBRD; that was covered by Doug Masset, a few weeks ago. So therefore, that particular aspect is not covered in my presentation. For consultancy services, I will limit myself to strictly the loan funded consultancy aspect.

If you flip to slide three, slide three gives you the full project cycle. I thought it was important for you to understand how the bank examines projects, from the initial request, the initiation to the implement to the repayment. Today we will be examining, in more detail, the lower part of that project cycle, which is the bottom two dots, between the signing and the disbursement. All of the procurement occurs between those two dots at the bottom of the circle.

Now if you go to slide four, EBRD projects can be classified into two major categories, the private sector and the public sector categories. The EBRD finances approximately 75% of its end growth, what’s in its portfolio, goes to private sector deals, whereas 25% of the deals go to public sector projects. My presentation concentrates mostly on the public sector projects. So I will be concentrating on the rules and regulations that cover the public sector component, which represents only 25%.

I say only 25%, but last year our overall end growth was close to $4 billion. So basically the public sector contracts represent a bit less than a billion. Last year we financed 720 million euros worth of contracts. So it’s still a fair amount of contracts, it’s worth hustling to get the business. At the very end of my presentation I will give you a couple of indications as to how you can access the private sector opportunities, if you want. There are contracting opportunities in that section, as well.

Slide five, procurement rules are quite important. They’re important for the clients, they’re important for the bank’s shareholders, but they’re important for you also, for the business community. They’re important for the client, because we want to ensure that there are good principles of economy and accountability. They’re also important for the shareholders; they want to make sure that the public money that we are disbursing is disbursed properly. Finally, they’re important for you, from the business community, to make sure that the processes, as followed, are fair and transparent.

That is where we play a role at EBRD, where we assist our borrowers to ensure that the procurement processes followed are adequate. In that way it also protects you. When you compete on EBRD financed projects, you can be assured that we follow closely and we insure that things are done properly.

One aspect that procurement rules is fighting — it’s a way of fighting fraud and corruption, as indicated on slide six. In the case of EBRD, we cooperate closely with the other IFIs, with the multi-national banks, other multi-national banks. But there is one component within our procurement rules that is specific to EBRD; we have the possibility of doing some cross-debarred. So typically we examine the lists of entities that are debarred on the World Bank list.

We also have access to the list of sanctioned companies in the Asian Development Bank; even though the list is not public we have an agreement with the bank. We examine the various cases and we decide whether we should apply sanctions ourselves. Up to now we have not found cases that would warrant a debarment within EBRD projects. But as we are speaking we’re examining other cases, which a special committee will be examining, in order to see if firms or individuals should be debarred.

Slide seven, EBRD's public procurement principles are based on or aligned with the WDO Government Procurement Agreement. So there’s nothing new, it’s not rocket science. We are basing our procurement principles on tested and agreed general principles.

Two elements that I would like to flag to your attention, first the issue of eligibility. Most development banks have limitations regarding eligibility. In our case there is no such limitation; anyone, from any country, is eligible to submit a tender on EBRD finance projects. The other element that I flag to your attention is the domestic preference. In the case of EBRD there is no domestic preference, so therefore we can be assured if you decide to participate in a tender finance buy, EBRD, you have an equal chance at any other party, whether that party if a local NC or a competitor from Europe or from … or South America. That means also that a non-member country can participate, whereas if you look at other banks, quite often they limit their participation to member countries.

Slide eight gives you a snapshot of what our procurement policies and rules look like. There is an Adobe example on our Web site that you can download and there are also hardcopies that are available upon request.

If you move to slide nine, EBRD has procurement policies and rules that are very detailed for public sector procurement. You will see that we emphasize open tendering. Last year, in 2003, more than 95% of all the contracts financed by EBRD, were subject to open tendering. So that means if you compete, you have a chance. If you do not compete, you will not have a chance.

As far as policies for private sector operations, it is fairly simple. We establish our rules and policies to indicate that private sector entities should have good commercial practices that will ensure good and fair market prices.

Now you will find, also, on our Web site, our standard documents. There is guidance to tenders in there. If there are questions, you can always submit your questions to the tendering authority.

If you move to slide ten, you will see that the client, our borrower, is the one who is in the driver’s seat. It is the client that invites tenders, receives tenders, evaluates tenders and awards contracts. The role of EBRD is one of compliance. We verify whether the client has followed good procurement practices and vet or we provide no objection at various stages. The procurement specialists, who are seated in banking, verify the tender documents, verify the evaluation parameters and give a no objection to that.

When the tenders are received, we receive a tender evaluation report, with a contract award recommendation. The specialists in banking verify that report and then corporately, my group verifies that the specialists in banking have done an appropriate job in their verification. So we provide the final go ahead for the award of contract.

If the bank is not satisfied with the process that has been followed, the bank will normally just withdraw its financing. So nine times out of ten or more rather, in general, the client does not play around with us and ensures that they comply to the banks requirements, in order to be eligible to get financing.

So if you move to slide 11, it gives you a summary of the role. I’ve indicated the bank’s role in public sector operations, that of review. We also receive and exam complaints of tenderers. So if tenderers are not satisfied with the process, they submit a complaint to the client, copy it to us, we then ensure that the client examines the same properly and that we are satisfied with the response. If we are not, we dig in further and we ensure the process is equitable. As far as private sector operations are concerned, we just examine the practices of the private sector, to ensure that good fair market value is obtained.

If you move to slide 12, it gives you the types of contracts that we finance through our loans. They are basically goods, works, supply and install and consultancy services. As indicated in my introduction, they do not cover the technical cooperation funded consultancy services, but they do cover the loan funded services.

I will skip over slide 13, 14 and 15. These three slides give you examples of goods, works and supply and install contracts, in the various sectors. If you do require additional information or if you want me to expand on this, I can do so at the end of the presentation.

Slide 16 gives you an example of the type of loan funded, sorry, it gives you an example of the consultancy services contract. Some are loan funded, others are TT funded. Normally we use consultants for due diligence, to assist the clients in the preparation of contracts and … and also to monitor the limitation of the contract. Depending on the nature of the contract, the consultancy services contract can be either loan funded or TT funded.

Slide 17 gives you a breakdown of the public sector contracts, by number and by value, for the last five years. You will see that the number of contracts hovers around 175 per year. For the last two years we had 181. But if you look at the expenditures, the value of the contract finance, you will realize that last year we financed 721 million euros worth of contracts.

If you flip to slide 18, you’d get, for the last three years, a breakdown by nature of the contracts that we have funded. You will see that last year there was more than 450 million euros worth of contracts, for works contracts. So typically, people who are involved either in the transports or municipal infrastructure or environment sector projects would be interested in the work contracts that are done there. They can be for roads, but they can be roads, rail or aviation. You will see also that we also have a fair amount of goods. We finance the buying of a lot of machinery and equipment.

Moving on to slide 19, and this is the core of the presentation, this is the purpose of this whole presentation. How did U.S. companies do as far as procurement concerns last year? If we look at the statistics, in 2003 we placed 181 contracts, that is, our clients placed 181 contracts. For those 181 contracts, we received 656 tenders. Unfortunately, only 14 tenders were from U.S. firms.

So the message that I would like to pass is that there is something wrong in this sector. U.S. firms are not tendering. So therefore it is not surprising to see that out of the 181 contracts, for which they have submitted only 14 tenders, they won only four contracts. Now if you look at the proportion, four contracts out of 14 tenders, that’s a fairly high proportion. We could draw the conclusion that when you do go through the trouble of tendering, you are fairly successful.

However, if you look at the value of those four contracts, those were not major contracts; they were worth only $7.8 million. So as you can see, U.S. entities are not tendering and they’re not winning. Winning eight million euros that is close to over $700 million is a very poor performance. I’ve given the list of the winners; we had three winners for goods and one for works.

Now a note of caution, please note that these statistics, we report back, only the lead partner. So if there is a joint venture, in which the lead partner is from Germany, but there is a secondary partner from the USA, we do not report the statistics against the USA, we report the full statistics against the lead partners, which in the latter case would be Germany.

As far as the other caveat is that we don’t report back on subsidiaries, or we don’t report back on the mother company, if a subsidiary wins a tender, a U.S. subsidiary company, it is reported back as being from the country of the subsidiary. So if there is a U.S. company established in Turkey, then the statistics go against Turkey.

Now that is bad news, but if you go to slide number 20, the bad news is that you won 7.8 million euros last year, the worst news is that that was your best performance in the last five years. Now I will not go through the grueling pain of giving you each number for each of the years, but I would say, to say the least, it was an abysmal performance, mostly because people were not in the running, people do not submit tenders. If there is a single message that I can pass to you today, I hope that it will encourage you to … open more business and to participate more in tenders.

I will press on, given the time is advancing. Slide number 21 indicates that, again, most of our contracts that we finance are through open tendering; more than 95% of the values financed last year were through open tendering. If we add to that, the consulting services, the percentage goes up to more than 98%. If you compare this to World Bank projects, the competitive tendering in World Bank, I think is around 20%. So we are by far more competitive and more transparent, but you have to participate.

Slide 22 gives you the key milestones of open tendering. Basically we place a procurement plan, we develop a procurement plan, we advertise a general procurement notice, and clients invite tenders, evaluate and then establish the contract.

Slide 23 is the opener for the other slides, which we will now move into the part that gives you advice on how to get business. If you move to slide 24, basically it gives you the places where you can look for business opportunities. There is a lot of information on our Web site, the address is there. Check the national press and we encourage you to contact clients, make yourself known.

What you should look for? Well there are procurement opportunities, but there is also the project pipeline. Check the project pipeline and see what’s coming up. Check the procurement opportunities. Of course check the invitations for pre-qualification or for tendering. If you are a consultant, submit your expressions of interest.

Slides 25 and 26 give you a snapshot of what the Web site looks like. So let’s move to slide number 27. You have to establish a strategy; you cannot submit a bid on all contracts. So try to be focused and try to concentrate on what you do best. There’s no use offering tendering on something that you are not that good at. However, you might consider proposing your services through joint ventures.

Slide 28 provides you again, a strategy on when you prepare you tender, make sure that you study our standard tender documents beforehand, so that you don’t have any surprises, so that you don’t waste time when preparing a tender. Read the instructions properly. You would be surprised to see the number of tenders that are disqualified, because they have not followed the instructions. So they have 30,000 euros or dollars to prepare a tender and it’s just money thrown down the drain, because they have not followed procedures.

Slide 29 gives you the typical structure of a tender document, the first part, volume one is always the EBRD standard document. The second part, volume two is the model contract. We do not impose a form, but most of our clients for works contracts use the CD standard contract. Then volume three gives the specific specifications and specific requirements. Slide 30 gives you the typical listing of tender documents for a supply and install contract.

Let’s move to slide 31, on slide 31 we have two components, one covers off the goods and the other one the works and supply and install. We are looking for different things for these two elements. One is that you have to demonstrate commercial conformity and of course you are evaluated on price. So if you’re asked for a three-legged widget, don’t supply a four-legged widget. As far as works and supply and install, it’s past experience and capability that is evaluated.

Slide 32 gives material deviations. Basically material deviations are things that might affect the scope or quality of performance or might bias, give an unfair advantage to the one who tenders. So we examine, we ensure that the client examines that the tenders do not have material deviation hidden in there.

Slide 33 gives you examples of material deviations. If your tender security is not valid, it’s thrown out. If a tender is not signed, it’s thrown out. If you’re not in conformity with the specs, it’s thrown out, etc. So I would suggest that you look at that.

If you look at slide 34, it gives you a couple of pieces of advice as to what to do and what not to do after the tender is closed. Don’t try to influence the evaluation process, you might be disqualified.

Slide 35 gives you the recourses that you might have. Those are also listed in our procurement rules and regulations, policies and rules, that is. It’s one of the annexes at the end. You can submit a complaint and the procedures to follow are listed there.

I will skip over slide 36, you can look at that. Slide 37 and 38 gives you things that you should do. Make your interest known to the client. If you have concerns about the procedure being followed, flag it, we will examine it. As always, you address your concerns to the client, you copy us, if we consider that you have a valid case, we will follow up with the client.

One of the elements that you should be aware of and it’s the last point on the bottom of page 38. If you are a large firm that has multiple entities, quite often we have entities that have consulting and engineering arms. If you have a consulting and engineering arm that’s involved in the project, you can not be involved in the implementation. So make sure that you close the loop with your entities, so that you don’t have your engineering entity going after a $100,000 contract and then you get disqualified for a $100 million contract. So check your things.

Time is running out, I will not cover 39 and 40, except to say in 40 that if you make allegations, if you make a complaint, make sure that you have a sound case, so that you are not sending us on a wild goose chase. You lose more by making unfounded allegations. If you don’t have the facts, clear up the facts first, and then you can raise your concerns.

Slide 41 gives you our general contact numbers. Then slides 42, 43 and 44 are what I call the hidden opportunities. If you look on our Web site, we have a listing of projects that have been approved from the private sector. Quite often, these hide good opportunities.

To give you an example, let’s use a goods project. If we have somebody that wants to build a brewery in Russia or in Poland or in any other country and you will see that at one point the board will have approved this project, if you are a manufacturer of brewing equipment or if you are a contractor that has had the experience in the building of such plants, you might approach a client to make yourself known and offer your services.

In this case it is not the public sector procurement rules that apply, in as long as good commercial practices are followed, we are satisfied and we support the loan. Trevor, that concludes my presentation. As you can see, I’m slightly over time; however, I am available to answer any questions, even past the hour if required.

Dr. T. Gunn Give that man some water. Maurice, it was eloquently done and a very much forceful message, smack in the middle of, I think it was about slide 20, on the lack of American participation as being probably one of the chief contributing factors. That’s a lot of the reasons why we definitely signed this MOU.

Maurice, for the public, I’m going to be getting the operator on the line, we’re going to be going on to the formal question and answer period with Maurice. Maurice has said that he does not need to dash at exactly 11 a.m. EST, 4 o’clock his time, but he can stay over a little bit, depending upon market demand. So Vicki, are you still with us?

Coordinator Yes sir. Are you ready for questions?

Dr. T. Gunn Yes, we’re about ready for questions, and maybe you could give folks the technical details and I’ll give them the spiritual details after you.

Coordinator Thank you, we will now begin the question and answer session.

Dr. T. Gunn Vicki, if I could publicly ask people, also, in introducing yourself, please say your name, please say your company if at all possible, and your location. I think that would help Maurice and at least the other people in London to center themselves. I know it will center me on knowing who you are.

Coordinator Golda Gregorian, you may ask your question.

G. Gregorian Maurice, thank you for your presentation. I’ve been in very close contact with EBRD for many years, and met with Bruno on a few occasions. My interest is Armenia and I do believe that as of the end of September 2003, the EBRD has contributed 51.4 million euro in power transportation general industry, financial sectors. I’m sure that you are aware that Armenia has been eligible on May the 6^th, by the U.S. government, on the MCA Millennium Challenge Account, due to the fact that they have done tremendous work in developing their private sectors and economy in many areas.

I have gone through your strategy for Armenia and 26% has been devoted in the private portfolio. My question to you is, I’m currently working with a very reputable company called Humana International and we’ll building a community of 500 in …. My question to you would be, if we had approached the EBRD and I had this question before from Bruno, with the proposal to build a community center, which will help the SMEs to grow, would this be in EBRD strategic planning?

M. Lapage Thank you very much for the question. The question that you are posing, putting forward, is outside of my realm of authority and expertise. So I will limit myself to very few words.

First of all, you must keep in mind that the purpose of the bank, the strategy of the bank is to bring countries, make some progress in their transition and to improve the private sector. We support strongly, SMEs. In your question you indicated building a community center, it would depend what is involved in this, of course, and the case would have to be examined by ….

G. Gregorian I’m so sorry, a commercial center.

M. Lapage A commercial center. Well the case would have to be examined on its value and if you were to communicate with Bruno, again, he would be able to explain to you, how to prepare a case. The bank normally requires that you have local partners. That there is an added value in the bank’s participation and that it is not something that you could just go through the local bank and get financed. So we must have an added value and we try to bring leveraging. So I would refer you to Bruno, unfortunately he’s not here. Bruno would probably refer you to the banking specialist that looks after this. Julia has a word to say on this.

J. Zuberman Since I work on Bruno’s team, I just wanted to maybe suggest I can give you my contact details. My phone number is 44-207-338-6640 and my e-mail address is dilbermj@ebrd.com, send me an e-mail with some ideas and proposals and we can take it from there and then we can see what we can do.

G. Gregorian I didn’t get your e-mail address, but if you would be kind enough to get my e-mail address from Irina and send me an e-mail.

Dr. T. Gunn It was Miss Gregorian, correct?

E. Mitchell Yes, I noted it. Julia, I will be in touch with you with Miss Gregorian’s e-mail address.

J. Zuberman Thank you very much.

G. Gregorian Thank you.

Dr. T. Gunn Operator, next question.

Coordinator Darrin Lawrence, you may ask your question.

D. Lawrence Hello. Again, thank you Maurice, for that presentation, it was very interesting. I work for a company called Tyco International and we’re quite focused in the telecoms industry. Referring back to your slide about American companies and entities, of course we’re an American company, but we do have and EMEA entity, which is based in Germany. Now we would bid from there, generally, for any projects that would come under the EBRD umbrella for telecoms. My question is, is there any benefit to us bidding as the U.S. entity or as the European entity?

M. Lapage The straight answer to that is none whatsoever. It does not matter from which entity you are submitting a tender. Whatever entity is most qualified and will provide the best value for money, it does not matter from which entity you are using.

Just to give you an example, as far as Germany is concerned, I’ll just wet your appetite, Germany last year, out of 682 tenders; they submitted 57 tenders and they won 14 contracts, for a value of 101 million. So possibly your firm is part of that statistic.

D. Lawrence Okay, we’re quite focused in telecoms, so we’ve never worked with EBRD before, so hence the participation in this call. I do details of the contact person, I think in London, for the telecom sector. But how much in a percentage, does that equate to the overall business of what you’re doing? The telecoms field, how much of your business is within telecoms?

I. Ozcana While Maurice is looking at the figures, this is Iasha Ozcana from Commercial Service. We do advise the companies to actually partner with — if they are interested in specific projects, to partner with the local companies, when they are participating in the projects, to use their local knowledge. One of the suggestions we give to the companies is if you look for partners in regions. So hence the figures show that maybe low participation from the U.S. companies, like yourself from Germany and from other countries, there are a number of participations. So you can consider actually going to and finding partners and participating in the EBRD projects.

D. Lawrence Yes, I mean personally it’s Tyco; we always encourage some local participation.

M. Lapage I have your numbers. For 2003 we had five contracts in telecom, worth 11.3 million euro. Now for other members who are on the line, I might as well go through the overall orders of magnitude. If you look municipal and environmental engineering, we’ve got 59 contracts for 191 million, I’ll spare you the numbers after. For natural resources, which are mostly environment, we have rotation projects; they’re fairly small projects, 33 contracts for 11.8 million. For power and energy, 15 contracts for 29.3 million. Telecom I’ve already given. For transport we have 67 contracts for 474 million.

Now I don’t have the summary breakdown with me. But we dice and slice the pie different ways and we can say that most of the contracts are works contracts. Some however, are in goods. To give you an example, there was rail grinding equipment that was supplied for a railway project; that was a goods project. We supplied, also, a refinance of air navigation equipment, I don’t recall if that was under goods or under supply and install. So when we talk about transport, it’s not only roads and bridges.

Dr. T. Gunn Can we go to the next question?

Coordinator Dan Blutt, you may ask your question.

D. Blutt Yes, good morning, Maurice, Dan Blutt here with Procurement Services Associates. Maurice, for first time bidders to the EBRD, how important is relevant past experience in the review and evaluation of the tender replies?

M. Lapage Whether it’s for EBRD or for any of the multi-lateral banks, past experience is a major component in the waging factor. Typically, whether it is for goods or works, we examine the past track record of companies and quite often we go through a pre-qualification exercise, in order to ensure that the people who compete have the capacity. That protects the clients, but it also protects the tenderers, so that a tenderer is not competing against a wild card, somebody that does not have any experience and tries to undercut everybody, but will not be able to deliver the product.

My advice for a newcomer, a new entity, I would strongly recommend that if you are interested, to do work in our region or for that matter, anywhere abroad. That you join up forces through joint ventures, try to partner with entities that have previous experience and then you become a partner to that, and then the next time, after two or three of those, then you will be able to say, we have that experience, we have done it, we can put it in the accomplishments of our company.

D. Blutt Thank you. The other question, I guess Maurice is that given ….

Dr. T. Gunn I’m sorry, we’re limiting it to one question, unless it’s directly relevant to the past one.

D. Blutt Thank you.

Dr. T. Gunn My apologies. Operator, could we go on to the next question?

Coordinator Kevin Spencely, you may ask your question.

Dr. T. Gunn Kevin, before you introduce yourself, please name your organization and location.

K. Spencely Sure. It’s Kevin Spencely from American Consuls for International Education; I’m calling from Washington DC. My question is does the EBRD fund or sponsor any projects or programs at all in education and social infrastructure type projects? Thank you.

M. Lapage The answer to that is short, it is no. We are concentrating — there are various development needs, there are banks and … donors who do have programs in education and health and what not. EBRD's mandate does not cover that, EBRD’s mandate is focused to bring countries in transition, if you want; to bring them into the market economy. We are trying to do that, mostly through the private sector. Yes, we do have public sector projects, but most of our public sector projects create an enabling environment that will promote the improvement of the private sectors. To give you an example, when we finance a road project, we examine the impact of that road project, the impact that it will have on the improvement of the private sector.

K. Spencely Thank you.

Dr. T. Gunn The next question, operator.

Coordinator Mario Correlli, you may ask your question.

M. Correlli Yes, this is Mario Correlli, from Westinghouse. My question is about the nuclear power plants, basically I would like to explore if you are interested, what is your timetable. What Westinghouse is interested in is about ten years from now, in countries in Eastern Europe. It’s a large size, of course; we are talking hundreds of millions. So first of all is the subject of nuclear power plants within your scope and something that is going to be deployable ten years from now is on your horizon or you limiting now smaller projects immediately in the next couple of years?

M. Lapage Can you tell me the location of this power plant? I’m sorry; I must admit my ignorance of this power plant.

M. Correlli We are in talks with several countries, like Lithuania, Croatia and so forth. But anyway it’s something that we are in the planning stage and it’s ten years from now. Also, we have a partner source in Russia and the question again, is it something within your … of interest? Mostly it’s exploratory at this point, because again, there is a lot of work and a lot of water has to go under the bridge, before we get to that point, I’m just exploring; if this is something that we have to keep in our mind or not.

M. Lapage Again, I would refer you to our banking department. If you want to contact the head of the power and energy sector, please go through Julia. Julia has indicated her e-mail, previously. In a nutshell, basically we are interested in anything that will assist the development of the private sector in the various countries. We do finance certain power plants in which local utilities are involved, normally they partner western utilities or large companies like yourselves. As far as a the time horizon is concerned, ten years is quite a long time horizon and at this point I cannot say whether the bank would be in a position of committing itself, or even expressing an interest for that long a period.

M. Correlli Well of course we’ll compress the period, of course, when we’re ready to go. But I’ll say half a billion, is that in the range that you can handle, because that’s probably what the price is going to be, around half a billion dollars. Is that in the range of the EBRD, for your projects?

M. Lapage In theory we do not have a limit regarding the volume of our projects. Quite often we do, although Julia might correct me on this, we often do some financial deals with other banks, so therefore the risk is spread amongst the banks.

J. Zuberman Yes, I’ll just add, quickly, a few words. Yes, we don’t have necessarily a limit on a transaction, but we usually tend the minimum I would say, probably on average would be probably about three million of our participation. But one thing that’s important to mention is the way we structure financing is that the EBRD would participate in not more than one-third of the total project cost. One of the missions, so to say, of the bank is to attract additional investment coming into the country. So we would work with additional financing coming in from the private sector sources and our participation would vary very much on the project specifications, but we tend to not go more than one-third of the project total cost.

M. Correlli Very good. I just got the information that we need, because when we’re closer to the project finalization, then I will get in touch with you. Great, thanks. Thanks a lot.

Dr. T. Gunn Operator, before the next questioner, can I just ask Maurice a sort of in politic question, Maurice. At the risk of sounding on American, can you reflect on what you feel have been the major categories of mistakes of American firms, relative to purchasing and procurement that they actually have bid on? Obviously we’re not speaking specific companies, but what are the most common mistakes? You’ve given recommendations to that; I guess that we could sort of draw those mistakes from. Are they any different than mistakes, perhaps, made of other countries, bidders of this process?

M. Lapage I have not examined the specific tenders from the American companies, but to give you an example, quite often we see tenders and say, you’re submitting this price, but by the way, we’re not willing to abide by the law of the country, it will be the contract law of our country that will apply. Well automatically they are disqualified. We’ve seen tenders that are not signed. Yes, it’s an oversight, but it’s an oversight that is very expensive. Or, tender securities that are not valid or that are missing. Unfortunately we’ve had one case where one tenderer called us and said, “The tender has just closed, I just found the tender security on my desk, we forgot to put it in the envelope.” What do you do, we’re sorry, we can’t accept.

Dr. T. Gunn Very good. Operator, next question. Or Maurice, are you still good on time?

M. Lapage Yes, I’m still good on time.

Dr. T. Gunn Okay, very good. Operator?

Coordinator Walt Chapel, you may ask your question.

W. Chapel Yes, Maurice, this is Walt Chapel, a multi-national trading company in Wichita, Kansas. We’re a company that has worked with Russia since ’92 and Eastern Europe to a certain extent and we’re trying to work in the Agri-Industrial development area.

It seems like each time one of our Russian colleagues wants to bring a project forward, they do not find that they meet the qualifications of the bank, and therefore these projects don’t get anywhere. So even if we do find funding, we do find the tender on the EBRD Web site, it’s going nowhere. This may be a problem for other companies, as well in the U.S., trying to work on relevant projects in the private sector. Do you have any limits as far as the amount of money that you will loan for a particular project and any thresholds that we have to meet before we can actually get a client qualified for one of your loans?

M. Lapage As I indicated before, there are no limits. I was trying to recall the biggest project that I’ve seen in the last two years and it was one project in Russia that was close to 300 million. As far as the lower scale, as Julia said, normally it’s around three million euros would be about the smallest that we would go to, although we have other mechanisms that allow financing of smaller projects, but let’s say through an intermediary.

Now as far as your failure in getting projects through, I would strongly recommend that you ask for debriefings, when you are not successful. Whether it’s in a public sector project, submission of a tender or whether it’s a submission that you have submitted for a private sector initiative, try to do a post-mortem with the banker.

First of all I didn’t go through the explaining that shows a full project cycle, which is on slide number three. But if you look at it, you will see that the project has to receive four approvals. It has to receive an approval by a concept, so a concept review, which basically says should the bank consider this or that project. We’re considering, we’ve got a request for this project, in this sector, to view about this, should we continue to explore this? Then we have a structural review, which determines how the project is structured, a final review and then the board approval.

In each of these steps, there are a number of elements that are examined. In fact there is a committee, the operations committee, in which there are twelve members, representing different sectors of the bank, that examine the project through a magnifying glass, their own magnifying glass.

In my case my group examines the project under the procurement aspect. But we have other people who examine the project on the capacity of the client who reimburse the loan. Another sector examines the project from the point of view of transition impact, and they have a rating system. So it would be important for you to understand where you failed, where you were strong, where you failed, where you should improve, so that you don’t waste your time an money on another project, and still fail, and not understand where you were weak.

If somebody tells you, look we’ve examined your client and we don’t think your … reimburse the loan, we will not go into it. Or, possibly, it’s a question of leveraging. We might say, look your project may be a good private sector commercial project, but it does not have enough of a transition impact. You might want to consider adding components that improve the transition and the banker could indicate to you, the elements that you could reinforce in your presentation.

W. Chapel Well Maurice, I don’t know if you can still hear me or not, but the question has to do with the EBRD’s overall loan philosophy. Are you doing anything in the Agri-Industrial sector and since many of these projects are less than $3 million, it seems like every time we’ve come to bat, we find that after doing a tremendous amount of spade work and engineering, building up the client’s confidence, getting paperwork started through the process, we run into that log jam, that door is closed before we ever get in to talk with you about the specifics. Are you doing anything in Agri-Industrial development in Russia and Eastern Europe?

Dr. T. Gunn Maurice before you go into that, Walt you’re a great client of ours, over many years, we’ve just hosted recently, a conference call with the top bankers in the EBRD, on agribusiness. I don’t know, you were invited to the call, but I don’t know if you attended. They gave, actually, a presentation on their track record here. I can’t necessarily, I’m sorry to have gotten out in front of Maurice here, but I think the level of activity is surprising. But anyway, Maurice, please.

M. Lapage My voice will take a break and Julia will answer.

J. Zuberman First of all yes, as Trevor said, if you have not participated in our agribusiness conference, it’s unfortunate, but be very happy to put you in touch with our agribusiness team. We are very actively involved in this sector; it is a sector that is a priority for us. But to address your concern in terms of the size of the financing that we are considering, I must say that when I spoke earlier, I referred to kind of the core business activities of the bank, but there are a lot of other products that we have to specifically address projects that are of a small size or of a smaller value.

Especially in Russia, we have a lot of regional venture fund activities; we have a … investment facility. So it would very much depend on looking at the specifications of the project and seeing what kind of products would be more appropriate in terms of providing some kind of financial assistance. So I don’t want you to be turned off by thinking that we’re only dealing with the big guys or with big numbers, there are a lot of other mechanisms that we have been able to identify that would address the financing needs of sort of the smaller transactions or smaller clients.

W. Chapel Well how do we find out about that information, do you have a Web site link to give us or an e-mail address?

J. Zuberman There are several ways. First of all, I would encourage you to look at our Web site, which www.ebrd.com and I would suggest, also to look, if it’s in the agribusiness sector then you can go into Operations Sector and agribusiness, there is a strategy for the agribusiness sector. If it’s Russia, then I would recommend that you go under the same, under Operations, Country and Russia, and there’s a strategy for Russia that would list all of the priority sectors and the range of products that are available.

Basically search through the Web site, because there are a lot, and I don’t remember exactly where on the screen you can find it, but there are a lot of other links to special projects, such as a I mentioned, the regional venture funds or the foreign … investment or trade facilitation program, it very much depends on the specifications or the ideas of the project. Probably the start should be looking into the agribusiness sector strategy on the Web site and then looking into Russia, if it’s Russia or whatever country it is that you’re interested in and then also looking at additional programs or additional products.

Dr. T. Gunn Also, Julia, what I’m going to do is send you an e-mail and c.c. Walt here that you guys pass over that PowerPoint that was given at that presentation, if you could do that.

J. Zuberman Absolutely.

Dr. T. Gunn That would be a great starting point, as well. Thanks a lot, Julia. Next question.

Coordinator David Rosenblum, you may ask your question.

D. Rosenblum Hi, this is Dave Rosenblum, calling from Development Finance International here in the Washington DC area. Thanks again for your time and consul this morning. I just wanted to follow up very briefly on a previous question, when you went over some of the contract numbers. We’re most interested here in IT, which can kind of fall into a lot of the different sectors that you mentioned. Do you have any thoughts on the amount of IT that’s procured by the EBRD and whether this would just fall under some sort of a subcontract and so the numbers are harder to find?

M. Lapage The answer is no, I don’t have an idea as to what is the volume. I can assure you that in a lot of the transport contracts, there is an IT component. Some of the projects that come to my mind are the tracking of …, or the air navigation systems, there are IT components. So basically what you have to do is you have to examine the business opportunities and read between the lines and offer your services to the main tenders. Quite often IT might be 5% or 10% of a given contract. So you have to basically hustle and dig to find the probabilities of having an IT component.

We rarely have an IT specific component or finance project. I would say even in the hidden opportunities, in the private sector. To give you an example, occasionally we provide a loan to a bank, a regional bank, and if you examine the details of that loan, you will find that quite often it will be in the interest of the bank to have an a greater outreach, it might be to change their control systems, their computer systems. So if you limit yourself just to the title, you will not see these opportunities, you really have to go into the details of the project. But IT is just like environment, it’s a cross-cutting theme, if you want. It’s in, more or less, all of the projects, and yet it is not a specific component within each project.

D. Rosenblum Okay, thank you very much. Would it be listed in some of the project component details that you guys have, would we be able to find it that way?

M. Lapage My initial answer is I don’t know. I’ll turn it over to Bridget, who is working in our group, she occasionally does some posting, possibly she could contribute, if there are some details, she would know better. Bridget?

Bridget I think for the private sectors projects, where you could find it would be in … component … data summary.

Dr. T. Gunn Bridget, I apologize, could I just ask you to get a little closer to the microphone, please? Sorry about that.

M. Lapage She’s moving over.

Dr. T. Gunn Okay, very good.

Bridget On the EBRD Web site, there is a section which is called the Project Data Summary, and each project, basically, which passes the concept review in the bank, the bank should disclose the information on the project. Now within this window of project data summaries, you would actually have details on components to be procured for all the description of the components for the private sector project. So that way you would be able to find if there was any IT components to the project.

I. Ozcana I think also the general procurement … is actually enrolled in different components and IT might be within them.

D. Rosenblum Okay, thank you.

Dr. T. Gunn I’m sorry, that last comment as by Iasha, correct?

I. Ozcana Yes.

Dr. T. Gunn Okay, very good. It’s difficult for the listeners to discern the voices sometimes. Okay, very good.

D. Rosenblum Thank you.

Dr. T. Gunn Maurice, how does it look on your schedule for two last questions?

M. Lapage I’m open, I told you that this was a priority for me.

Dr. T. Gunn You’re the man, Maurice. Thank you very much.

M. Lapage We’re there for service.

Dr. T. Gunn Okay. How about two more questions, operator, please.

Coordinator Dominic Krause, you may ask your question.

D. Morris Okay, this is Dell Morris, for Dominic, I was out of the room. I’m in Jackson, Mississippi; I’m the Director of the Jackson, Mississippi U.S. Export Assistance Center. I have, just really a follow up question to another question about prior experience. Maurice, does the prior experience have to be in that particular geographic? In other words, can they be very qualified, as far as a U.S. provider of a process or service or an activity, and would that qualify them for a project, if they have not had a foreign project, but a U.S. project contract and been successful in the U.S. market?

M. Lapage As far as prior experience is concerned, in general what is stipulated is experience in similar projects. Now when you examine that component, normally our clients evaluate it into subcomponents. First of all they evaluate, is it similar in technical complexity? Is it similar in more of less general value? They examine where it was done, they give points, of course, for having done the project. Sometimes they give points for international experience and they give additional points for experience in the region.

So let us assume that you are a contractor that has experience only in the States, you would receive, let’s say full points for the size of the project, the complexity of the project; however, you would either score less or not score for the components regarding experience abroad or experience in the region.

As in anything else, if you have two or three contractors that submit, let’s say a prequalification request and one has experience in ten countries on similar projects, of course that contractor will receive higher marks than a contractor that has experience only in a single country. Again, if you’re big enough and you’re experienced enough, you might still want to try your hand, and I encourage you to do so. Or, you might want to create joint ventures or go in with large companies.

To give you an example, in the air navigation system, we’ve seen small companies tag up with Raytheon, from the U.S. and they have been successful. These small companies will then be able to say, "Oh we have participated and have done this contract," which is always good for the future.

D. Morris Thanks, Maurice.

Dr. T. Gunn Thanks to my colleague from Jackson. Okay, well we’re coming up to the last question here. Operator?

Coordinator Bill Varquetta, you may ask your question.

B. Varquetta Can you hear me?

Dr. T. Gunn We can hear you fine. Thank you.

B. Varquetta Thank you. I’m with Envirex and we’re based in the United States, in Wisconsin. My question is what is the total value for goods in the environmental municipal sector?

M. Lapage You’re asking a too specific question. I have under my eyes, the total value for the municipal sector, which I have given previously. That is 191 million, for 59 contracts. Now if I look at this roughly, if I eyeball it, I would say it’s about 60% works and 40% goods, roughly, let’s say between 30% and 40% goods. We’d have to sort the data in order to come up with an exact percentage.

Now as far as goods are concerned for everybody, for all of the banks, last year we had out of 720 million, we had 136 million worth of goods. But then you also have to examine the supply and install, which is also a large component of goods, which is an additional 88 million. I guess in cutting and dicing the statistics and this information, there’s no limit to it. So we’ve done a few cuts, as requested by our management, but that is there.

B. Varquetta Is that additional information available by contacting you outside of this conference call?

M. Lapage I would recommend that you contact Iasha. Do you want to jump in?

I. Ozcana Sure, you contact me for any EBRD related issues. We are trying to assist U.S. companies. If you want to have my e-mail address it’s ozcana.ebrd.com.

B. Varquetta Would you repeat that one more time, please?

I. Ozcana Sure, ozcana@ebrd.com.

B. Varquetta ozcana@ebrd.com, correct?

I. Ozcana Did you get that?

B. Varquetta ozcana@ebrd.com. Okay, I got it that time. Thank you very much.

I. Ozcana You’re welcome.

Dr. T. Gunn Well at this point I’m going to express our profuse thanks to Maurice for all of his efforts to make the bank a more transparent place. It has indeed been that way in the past, but it’s more so under the leadership of your specific section, and he’s received many flowers from the U.S. Directors Office, in doing that. It’s very much complimentary to where the bank is going and we would very much like to thank you for your time, generosity and sticking with us through an hour and a half this afternoon, Maurice.

I want to remind all conference participants that we have actually recorded this and we will be sending out transcripts. You can e-mail Irina Mitchell, who originally e-mailed you, if that would be helpful. We will be sending out those transcripts, just as soon as they’re finished, which is probably, if tradition holds, in about three or four days.

If there are no more issues, again, Maurice, thank you very much. Julia, thank you very much for your participation, Iasha, as well and the rest of Maurice’s team there. Irina Mitchell, thank you very much for putting things all in perspective for us today. Thank you again very much from Washington DC, Trevor Gunn, BISNIS.

I. Ozcana Thank you.

M. Lapage Thank you.