Brazil - Urban Transport Project : Loan 1563 - Project Agreement - 6 - Conformed

- 10 - SCHEDULE 2 Procurement A. International Competitive Bidding 1. Except as provided in Part D hereof, goods and civil works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Municipality shall prepare and, acting through EBTU, forward to the Bank as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procure- ment notice, in such form and detail and containing such informa- tion as the Bank shall reasonably request; the Bank will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Municipality shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding, (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to the Municipality of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in Brazil - 11 - may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following two groups: (1) Group A: bids offering goods manufactured in Brazil if the bidder shall have established to the satisfaction of the Municipality and the Bank that such goods contain components manufactured in Brazil equal to at least 50% of the value of the complete goods. (2) Group B: bids offering any other goods. 3. All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes (including merchant fleet renewal and port improvement taxes) on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. 4. If, as a result of the comparison under paragraph 3 above, the lowest bid is a bid from group B, all group B bids shall be further compared with the lowest evaluated bid from group A after adding: (i) to the c.i.f. bid price of the imported goods offered in each group B bid, for the purpose of this further comparison only, an amount equal to (A) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group B bid; or (B) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price; and (ii) to the ex- factory bid price of the domestically supplied goods offered in each Group B bid an amount equal to (A) the amount of customs duties and other import taxes which would be levied on such goods if they originated from the same foreign country as the goods - 12 - import taxes, or (B) 15% of the ex-factory price of such such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group B which as a result of the comparison under paragraph 3 is the lowest evaluated bid shall be selected. C. Review of Procurement Decisions by the Bank 1. Review of invitations to bid and of proposed awards and final contracts: With respect co all contracts for civil works and equipment estimated to cost the equivalent of $1,500,000 or more: (a) Before bids are invited, the Municipality shall furnish, acting through EBTU, to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising pro- cedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Munici- pality shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish, acting through EBTU, to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Munici- pality and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the delivery to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. - 13 - 2. With respect to each contract not governed by the preceding paragraph, the Municipality shall furnish to EBTU, promptly after its execution and prior to the delivery by EBTU to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract and such other information as the Bank shall reasonably request. The analysis of the respective bids, recommendations for award and other information shall be furnished to the procurement unit within EBTU to enable EBTU to prepare a semiannual procurement report for the Bank. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Municipality and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 20% of the original price, the Municipality shall, through EBTU, inform the Bank of the proposed modification, waiver, extension or change order and the reasons therefor. The Bank, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Municipality, and state the reasons for its determination. D. Procurement Without Contracting The Municipality may use force account for the execution of the civil works required for the bus terminal located at the industrial city; and for minor paving work under Part B. 3 of the Project.