Constanta Water – Preparation of a Performance Based Service Agreement

AMENDMENT DATED 2/12/2016: THE CLOSING DATE FOR RECEIPT OF EXPRESSIONS OF INTEREST IS EXTENDED UNTIL 13 DECEMBER 2016 AT 16:00

Executing Agency (Client):
S.C. RAJA S.A

The Client Contact Person:
Mr. Stelian Budeş
Deputy Director for Development and External Finance
Direction for Development and External Finance
S.C. RAJA S.A.
Călăraşi 22-24 Street
Constanţa, Romania
Tel:     0040-241/484.240
Mobile:  0040-754/073.217
Email: bstellis@gmail.com

The EBRD Contact Person:
Maria Haugh
European Bank for Reconstruction and Development
One Exchange Square
London EC2A 2JN
Tel: + 44 20 7338 7185
Fax: +44 20 7338 7451
E-mail: haughm@ebrd.com

Project Description:

The European Bank for Reconstruction and Development (“EBRD” or the “Bank”) is currently working with S.C. RAJA S.A. Constanta (the “Company” or “RAJA”) in the City of Constanta in Romania on financing options for an investment programme and services to reduce leakages and reduce the non-revenue water in the water distribution network in the City (the “Project”).

One of the financing options being discussed is that the investment programme is financed by a contractor (the Private Partner) partially/totally from a loan engaged from the Bank.  The Company would engage a Private Partner to design, engineer, implement and co-operate certain District Metered Areas (DMAs) in a specific area of operation of the Company, to achieve a selection of pre-defined performance indicators. The length of the contract is estimated to be up to 5 years, to be established in correlation with the agreed financing structure. The payment mechanism will be linked to meeting certain performance indicators by the Private Partner. It is estimated that a proportion of the contract price will be a fixed fee paid to the Private Partner based on deliverables and to cover some of costs and materials, while the rest of the fee will be remitted to the Private Partner as a periodic incentive based fee for leakage reduction and maintenance and operation of DMAs. It is expected that a meaningful share of the remuneration will be linked to performance, with the exact proportion to be determined following the market sounding exercise.

On this basis, a Performance Based Service Agreement (the PBSA) would need to be introduced between the Company and the Private Partner which will be the key to monitoring and evaluation of the services to be provided by the Private Partner.

The Company therefore wishes to engage a consultant (the Consultant) to provide assistance with the design of a PBSA and support the procurement of the Project (the “ Assignment”).

A separate assignment will cover the initial review of the legal, regulatory and institutional framework, the results of which will feed into the current Assignment.  The Consultant for that will be engaged for the initial review of the legal, regulatory and institutional framework  will not be eligible for this Assignment and vice versa.

A steering group (the Steering Group) will be established, in order to facilitate and oversee the drafting, negotiation and introduction of the PBSA and ensure that all terms and conditions of the PBSA are acceptable to all parties. The Steering Group will consist of representatives of the Company, the Consultant and the EBRD Operation Leader as an observer.

Assignment Description:

The Consultant will draft the PBSA and prepare and launch the tender, as per scope of work below. The key objectives of the assignment are as follows:

• Develop the PBSA, and procurement documents in implementation thereof, based on the best international practices and standards in the area of water and wastewater services and with due regard to the requirements of PBSA and structured accordingly to take into account the excessive complexity of the existing legislation, current shareholding structure and ownership of assets.
• Prepare tender documentation and assist the Company in successfully launching the tender of the Project.
• Ensure, throughout the assignment, appropriate transfer of skills via regular updates, provision of formal presentations and trainings to the Company and, as appropriate, other stakeholders.

It is expected that the scope of work will cover the following tasks and phases:

PBSA (Draft) and Approval Phase

Based on the reviews and outcomes of the Initial review of the legal, regulatory and institutional framework (subject to a separate consultancy contract) the Consultant will develop a first draft of the PBSA (the “Initial Draft PBSA”) ensuring, to the extent possible, that the First Draft shall set forth the terms and conditions as required under applicable law for agreements of this kind and ensure the conformity of the PBSA to the best international practices and standards, including, inter alia, as follows:

1. Clear definition of the scope of the PBSA and the Project, including identification of the DMAs and the services to be rendered by the Contractor;
2. In cooperation with the Company, define the mandatory standards applicable to the services, including their technical characteristics (e.g. water pressure), environmental standards (e.g. quality of water) and service reliability (targets for scheduled and unscheduled service interruptions);
3. Define a mechanism that defines the process for the Company and the Contractor agreeing on:
   1. The level of service (reduction in leakages) to be achieved once the technical status of the network is known;
   2. Baseline indicators for definition of performance;
   3. Performance targets for the services with an emphasis on verifiable technical improvement targets, taking into account the existing condition of the DMAs
4. Draft rules governing the maintenance and operation of DMAs and replacement of the Facilities, including responsibilities of the parties related to access to the Facilities and financial liability;
5. Draft rights, obligations and liabilities of the relevant parties (to be set out with the appropriate level of detail), termination clauses, rules governing amendments and dispute resolution mechanisms;
6. Draft investment procedures and responsibilities including agreement on investment plan with appropriate timeframe and financing responsibilities of the relevant parties;
7. Draft detailed reporting requirements to ensure that the Company and other stakeholders (e.g. consumers) are able to obtain adequate information on all aspects of performance during the life of the PBSA (i.e. key operating efficiency measures, etc.), with clear parameters on the structure and frequency of reporting;
8. Draft “change mechanisms” that allow the PBSA to adapt to specified changed circumstances including changes in law/applicable standards and taking into account the appropriate risk allocation;
9. Draft rules governing the application of the relevant environmental standards during the term of the PBSA to ensure that the services are provided in compliance with the national and, as appropriate, international environmental rules and procedures; a schedule of proposed environmental improvements;
10. Draft appropriate incentives/disincentives throughout the entire term of the PBSA;
11. Draft a procedure of approval and implementation of the Company production and investment programmes;
12. Draft a monitoring and assessment procedure for the Contractor Performance;
13. Draft a system of penalties for not complying with the service requirements and key performance indicators, including guarantee instruments to ensure the Company from the risk of non-payment of the Contractor.
14. Update as necessary the potential interested contractors/bidders on the outcome of the proposed structure of the Project, type of contract and timeline to tender.

Tender documentation and PBSA (Final Draft) Phase

Based on actions completed, reviews and conclusions of PBSA (Draft) and Approval Phase:

1. Analyse comments and recommendations provided by the members Steering Group and any key stakeholders and develop a final draft of the PBSA (the “Final Draft PBSA”) that would incorporate the revisions as agreed
2. Draft tender documents necessary for, or incidental to, the implementation of the PBSA. The Consultant will work on the basis of the approved Procurement Strategy. It will develop the procurement documents base of the Company standards and drafts provided.
3. The Consultant will propose qualifications and experience required of bidders;
4. Define contractor insurance requirements and bonding requirements;
5. Propose evaluation criteria of bidders;

Tender Launch Phase

Based on the final versions of the documents developed in earlier phases:

1. Support and assist the Company with launching the tender, including generating interest from potential bidders in the tender (if needed, as appropriate) ensuring the Contractor will be elected by a competitive tender;
2. As necessary assist with gathering and proposing responses to bidders questions received by the Company during the tender process;
3. Participate in the evaluation of the submissions; and
4. Ensure tender is developed in a fair, consistent, transparent and competitive way, compliant with applicable rules and regulations in place.

Status of Selection Process: Interested firms or group of firms are hereby invited to submit expressions of interest.

Assignment Start Date and Duration: The Assignment is expected to start in December 2016 and has an estimated overall duration of 16 weeks.

Cost Estimate for the Assignment: EUR 180,000 (exclusive of VAT).The Consultant must determine whether any indirect taxes/VAT are chargeable on the proposed services and state the basis for such. If any indirect taxes/VAT are payable, the Client will have to pay indirect taxes/VAT element to the services directly to the Consultant unless otherwise agreed.

Funding Source: The assignment will be funded by the EBRD Shareholder Special Fund.

Eligibility:  There are no consultant nationality eligibility restrictions.

Consultant Profile: Corporate services are required. The Consultant will be group of firms with previous project experience related to:

1.   Legal and contract tendering and implementation of performance-based contracts in the water sector, including  monitoring, verification and remuneration procedures;

2.   Engineering design of District Metered Areas (DMAs), leakage detection and improvement in Non-Revenue Water (NRW);

3.   Operation of municipal water service networks including operational performance improvements.

The Consultant’s expert team is expected to include key experts as follows:

1. Key Expert No. 1 (Team Leader) engineer or project manager with preferably 15 years of previous professional experience in water sector including  implementation of private sector participation projects and at least one recent (preferably less than five years ago) performance based contract in EBRD countries of operations. Relevant experience in NRW projects will be an advantage.
2. Key Expert No. 2 (Legal Expert) lawyer with preferably 15 years of previous professional experience in drafting and implementation of service and performance-based contracts with experience in the procurement of PBC. Knowledge and experience in the Romanian legal framework will be an advantage.
3. Key Experts No.3 (Pool of Additional Experts) consisting of procurement expert, regulatory reform expert, institutional expert and other technical and legal experts.

Submission Requirements: In order to determine the capability and experience of Consultants seeking to be selected, the information submitted should include the following:

1. Company/group of firms’ profile, organisation and staffing (max. 2-4 pages).

2. Details of previous project experience or similar assignments particularly undertaken in the previous five years, including information on contract value, contracting entity/client, project location/country, duration (mm/yy to mm/yy), expert months provided (if different from duration) , main activities, objectives.

3. CVs of key experts who could carry out the Assignment detailing qualifications, experience in similar assignments, particularly assignments undertaken in the previous five years, including information on contracting entity/client, project location/country, duration (mm/yy to mm/yy), expert months provided, assignment budget, main activities, objectives.

4. Completed Consultant Declaration Form and Contact Sheet, the template for which is available from the following web-link:

http://www.ebrd.com/pages/workingwithus/procurement/notices/csu/contact_sheet.doc.

The expression of interest shall not exceed 25 pages (excluding CVs Consultant Declaration and Contact Sheet).

The complete expression of interest (including CVs, Consultant Declaration and Contact Sheet) should be submitted, in English and Romanian via email (pdf) to the Client’s contact person, to reach the Client not later than the closing date. One additional copy shall reach the Bank’s contact person by the same due date. The expression of interest shall be one file (pdf). The Client reserves the right to reject applications of firms submitting more than one file. Only if any limitation on the permissible file size is exceeded, the Consultant may split the expression of interest into further files.

Important Notes:

1. The selection will normally be made from responses to this notification only. Consultants will not be asked to submit a proposal. The highest-ranked Consultant will be selected from a shortlist and be invited to negotiate the contract, subject to availability of funding.

2. The shortlist criteria are as follows:

(a) Firm’s  experience in legal and contract tendering and implementation of performance-based service agreements in the water sector, including  monitoring, verification and remuneration procedures (30%)

(b) Firms previous experience of engineering design of District Metered Areas, leakage detection and improvement in Non-Revenue Water and operation of municipal water service networks including operational performance improvements (30%)

(c) CV of Key Experts proposed to work on the assignment in line with the Consultant Profile (40%)