Engagement of Consultants 2016

April 2017 Engagement of Consultants 2016 Technical Cooperation Team

EXECUTIVE SUMMARY Expanded Consultancy Portfolio, with Increasing Use of Donor Funds, in Particular Bilateral Donors and Shareholder Special Fund 3,005 consultancy contracts awarded with a total value of 189.15 million, the largest volume and value in any single year and a six per cent increase in number and 12 per cent in value on 2015. 1,758 donor funded technical cooperation contracts awarded with a combined value of 129.3 million, an increase of 15 per cent in number and 10 per cent in value from 2015 and maintaining a steady increase in value since 2012. Bilateral donors funded 27 per cent by value of all donor funded contracts (402 contracts totalling 34.7 million, seven per cent more than in 2015), with Austria and Kazakhstan, accounting for 44 per cent of all bilateral donor funded contracts between them. The Shareholder Special Fund, financed from EBRD s net income, accounted for 33 per cent by value of donor funded contracts ( 42.2 million, a 21 per cent increase on 2015). Little Change in Figures for Competitive Selection, Significant Increase in Client Contracting and ASB Contracts 68 per cent of contracts by value awarded following competitive selection ( 128.3 million), a slight increase from 67 per cent in 2015. 124 Grant Agreements (for Client Contracting) issued with a combined value of 39.1 million, a 10 per cent increase in number and 13 per cent in value on 2015. 950 Advice for Small Businesses Contracts awarded, nine per cent more than in 2015. Major Expansion in Number of Contract Awards to Consultants based in EBRD Countries of Operation and Large Increase in Number of Framework Agreements issued 67.7 million of contracts (36 per cent of the total) were awarded to consultants from EBRD s countries of operation (CoO), an increase of 32 per cent in value from 2015. This includes Office of the General Counsel awarding 35 per cent of the total value of its 2016 contract awards to outside counsel based in CoO. The number of Framework Agreements issued in 2016 rose by 50 (or 132 per cent) in comparison with 2015 and the number of framework contracts issued in 2016 fell by 6 (or 43 per cent). The value of call-offs awarded under framework agreements rose by 55 per cent. By nationality, British consultants (both individuals and firms) had the largest share of contract awards by value (21 per cent totalling 39.5 million), followed by German consultants (9 per cent 16.1 million) and Italian consultants (7 per cent 13.1 million). ii

Abbreviations ASB BAS CAR CPU CoO DCF EBRD EoI ETC EU FI GEF IA IPPF MDB MEI OGC PISSA PP&R PPP RFP SEFF SEMED SP Com SSF TC TC Com TCRS Advice for Small Businesses Business Advisory Services Consultant Assignment Reporting Corporate Procurement Unit Countries of Operations Donor Co-Financing team European Bank for Reconstruction and Development Expression of Interest Early Transition Countries European Union Financial Institutions Global Environment Facility International Advisory The Infrastructure Project Preparation Facility Multilateral Development Bank Municipal and Environmental Infrastructure Office of the General Counsel Project Implementation Support Services Agreement Procurement Policies and Rules Public Private Partnership Request for Proposals Sustainable Energy Financing Facility Southern and Eastern Mediterranean region Strategy and Policy Committee Shareholder Special Fund Technical Cooperation Technical Cooperation Review Committee Technical Cooperation Reporting System iii

Table of Contents 1 Introduction... 1 2 Overall Results of Consultancy Contract Awards... 1 3 Funding Sources... 2 4 Consultants Engaged for Operational and Institutional Needs... 6 5 Consultant Selection... 9 6 Nationality of Consultants... 14 7 Consultancy Contracting Type... 19 8 Performance of Consultants... 245 ANNEXES iv

Value of Contracts million Number of Contracts 1 Introduction The Annual Report on Engagement of Consultants in 2016 (the Report ) provides an overview of consultancy contract awards by the European Bank for Reconstruction and Development (the EBRD or the Bank ) and its clients financed from the Bank s budget, 1 donor funds including Special and Cooperation Funds, Nuclear Safety grants and public sector loan proceeds. 2 The Report has been prepared by the Technical Cooperation ( TC ) Team which is responsible for the selection and engagement of consultants financed by the Bank s budget and donor funds, for the administration of these contracts, and for oversight of the Office of the General Counsel s ( OGC ) selection and engagement of outside counsel. On approval by the Management Committee ( MCom ) and review by the Audit Committee, and in accordance with the Bank s Public Information Policy, the Report will be published on the Bank s website. 3 2 Overall Results of Consultancy Contract Awards In 2016, 3,005 consultancy contracts totalling 189.15 million were awarded by EBRD and its clients. In comparison with 2015 there was a six per cent increase in the number of consultancy contracts (from 2,824), and a twelve per cent increase in the value (from 169.6 million). Although the total value of contracts issued between 2012 and 2015 was relatively consistent, within the range of 166.6 million (2014) to 173.7 million (2013), 2016 saw a large increase outside of this range (see Figures 1 and 2 4 and Annex 1 for more detail). Figure 1. Consultancy Contracts Awarded by EBRD and its Clients by Value, 2012 2016 200 180 160 140 120 Figure 2. Consultancy Contracts Awarded by EBRD and its Clients by Number, 2012 2016 3100 3000 2900 2800 2700 2600 100 2012 2013 2014 2015 2016 2500 2012 2013 2014 2015 2016 1 The Report does not cover the selection and engagement of consultants to support the operation of the Bank s Headquarters and Resident Offices (namely: Administration, Communications, Information Technology, Human Resources departments and the Office of the Secretary General for the preparation of the Annual Meeting) the responsibility for which was transferred from the TC Team to the Corporate Procurement Unit ( CPU ), Vice Presidency Human Resources and Corporate Services, as of 1 January 2014, for details of the consultancy contracts awarded by CPU please refer to the Annual Corporate Procurement Review. 2 These contract awards are also reported in the Annual Procurement Review prepared by the Procurement Policy Department. 3 Annual Reports on Engagement of Consultants for previous years are available at http://www.ebrd.com/work-with-us/procurement/consultancy-services.html. 4 The decrease in contract awards between 2013 and 2014 was due to changes in the Bank s internal reporting (see footnote 1). Those contract areas transferred to the Corporate Procurement Unit from 2014 accounted for approximately 10 per cent by value and seven per cent by number of all consultancy contract awards in 2013. 1

Value of Contracts million 3 Funding Sources For the analysis in this Report, the funding sources for consultancy contracts are grouped into: (a) (b) (c) Donor funds including Special Funds such as the Shareholder Special Fund ( SSF ) and Nuclear Safety Funds, 5 the Bank s Budget, and Public Sector Loan Proceeds. Although with the exception of 2016 the total value of consultancy contracts awarded has remained largely stable over the past 5 years, the distribution of contracts across the three funding sources has varied annually (see Figure 3). Specifically there has been a steady increase in the total value of donor funded contracts for TC since 2012. Between 2015 and 2016, the total value of donor funded contracts increased by 11.34 million (10 per cent) representing a 45 per cent increase since 2012, reflecting an increasing support from donor funds to advance the Bank s operational work. Whilst Figure 3 also reveals a significant reduction in Bank budget funded contracts, in particular between 2013 and 2014 (from 65.6 million to 41.8 million), this is primarily the result of reallocation in reporting of contracts to support the internal corporate activities of the Bank s Headquarters and Resident Offices, which are now reported by Corporate Procurement Unit. Since this time the value of Bank Funded contracts contracted by TC Team have been relatively stable. For additional information on Bank budget funded consultancy contracts awarded for the Bank s administrative needs, please refer to the Annual Corporate Procurement Review. Public Sector Loan Proceeds funded contracts increased by 9.76 million (91 per cent) between 2015 and 2016, with most of this increase being attributable to a single large contract of 8.1 million (see section 3.3 for additional detail). Figure 3. Value of Consultancy Contracts by Funding Source 2012-2016 200 180 160 140 120 100 80 60 40 20 0 20.51 8.41 10.75 23.39 25.04 39.3 65.63 40.89 55.37 41.81 118 129.34 89.31 99.69 99.71 2012 2013 2014 2015 2016 Public Sector Loan Proceeds Bank's Budget Donor Funds including Special Funds 5 As the selection and engagement of consultancy contracts financed by Nuclear Safety grants and managed by the Nuclear Safety Department is supported by the Procurement Policy Department, these contracts are reported in the Annual Procurement Review. Only those consultancy contracts for the Nuclear Safety Department where the TC Team select and engage consultants are included in this Report. 2

Number of Contracts Value of Contracts million 3.1 Donor Funded Contracts Since 2012 the number and value of donor funded contracts for technical cooperation has consistently risen. 2016 saw the highest ever value of donor funded consultancy contracts for the EBRD, with 1,758 contracts issued for a cumulative value of 129.3 million, a 15 per cent increase in number and 10 per cent increase in value on 2015 (see Figure 4). Donor funded contracts represent 68 per cent by value of all consultancy contract awards covered by this Report. The relative proportions of donor funding sources have also changed over this period (Table 1 and Annex 4(a)). EBRD s 2016 Grant Co-Financing Report prepared by the Donor Co-Financing ( DCF ) Team provides a comprehensive review of donors funding. 1800 1600 1400 Figure 4 Number of Donor Funded Contracts Awarded (bar) and Value of Donor Funded Contracts (line) 2012-2016 120 100 1200 1000 800 600 400 200 80 60 40 20 Number of Donor Funded Contracts Issued Overall value of Donor Funded Contracts 0 2012 2013 2014 2015 2016 0 Table 1. Donor Funded Contract Value by Source, 2012 2016 Source 2012 2013 2014 2015 2016 European Union 33,016,963 21,866,436 27,781,737 26,251,993 29,898,800 EBRD Special Funds 19,964,821 25,165,593 24,783,659 36,912,214 43,655,676 Bilateral Donor Funds 19,453,131 30,981,859 26,659,674 32,471,097 34,732,177 Multi-Donor and Multi-Lateral funds 6 16,873,690 21,672,898 20,483,118 22,357,095 21,053,901 TOTAL 89,308,605 99,686,786 99,708,188 117,992,400 129,340,554 3.1.1 The European Union In 2016 the European Union ( EU ) financed 557 consultancy contracts totalling 29.9 million, 23 per cent of the total value of donor funded contracts. This represented a fourteen per cent increase on the 26.3 million of EU financed contracts in 2015. The EU funded the highest value of consultancy contracts of any single external donor and it additionally contributes to several multi-donor funds, including the EBRD-Ukraine Stabilisation and Sustainable Growth Multi-Donor Account, European Western Balkans Joint 6 Includes contracts financed from multiple donor sources. 3

Value of Contracts million Fund - Sub Fund (EBRD Operations under WBJF) and Eastern Europe Energy Efficiency and Environment Partnership. 3.1.2 EBRD Special Funds In 2016, 519 contracts with a combined value of 43.7 million were funded from EBRD Special Funds. The number of Shareholder Special Fund ( SSF ) 7 financed contracts (472 contracts) 8 increased by fifteen per cent over 2015 (410 contracts) and the total contract value increased by 21 per cent from 35 million to 42.2 million. Contracts financed by the SSF now constitute almost 33 per cent of the total value of donor funded contracts. As noted in the 2015 report, the SSF continues to be increasingly drawn upon to meet demand for financing, after other donor funding sources have been explored, and has been used to fund, fully or partly, a growing number of TC assignments. 3.1.3 Bilateral Funds In 2016, 27 per cent by value of all donor funded contracts (402 contracts totalling 34.7 million) were financed by bilateral donors, from 18 countries through 41 funding agreements. The 34.7 million represented a seven per cent increase on the 32.5 million of bilateral funds utilised in 2015. Contracts financed by Austria and Kazakhstan each accounted for just over 22 per cent of the total value of bilateral donor funded contracts. Figure 5 shows the bilateral donors which financed more than 1 million in 2016. For details of all bilateral donor funded contracts please see Annex 4(a). Figure 5. Bilateral Donors Which Financed More than 1 million of Consultancy Contracts in 2016 Against 2015 Values for that Donor 9 8 7 6 5 4 3 2 1 0 2016 2015 3.1.4 Multi-Donor Funds and Multi-Lateral Funds Contracts funded from Multi-Donor and Multi-Lateral funds constituted 15 per cent by value of all donor funded contracts. The 7 The SSF was established in 2008 with the resources of the Bank's net income. The SSF supports a range of activities including investment grants, incentives, risk sharing and complements other donor funds provided by using the principle of matching. It also provides funding for projects in some sectors and countries for which other donor funds cannot be found. Since its establishment, the SSF financed 3,204 consultancy contracts totalling approximately 229 million. SSF captures contracts financed from EBRD Shareholder Special Fund (SSF) and Infrastructure Project Preparation Facility (SSF subaccount) (IPPF). 8 46 contracts with a combined value of 1.4 million were awarded as SEMED cooperation funds account and one additional contract for 55,300 was awarded under the EBRD Post Graduation Special Fund. 4

21.1 million contracted from these sources in 2016 represented a six per cent fall in comparison to 2015 ( 22.4 million). Figure 6. Multi-Donor Funds Financing, by value EE Energy Efficiency & Environment, 830K SEMED Multi-Donor Account, 1m Russia Small Business, 1.3m European Western Balkans Joint Fund, 1.6 EBRD-Ukraine Stabilisation and Sustainable Growth, 5.3m Green Carbon Fund 1.9m Early Transition Countries Fund, 4m The total value of multi-donor funded contracts amounted to almost 16 million (Figure 6). The 169 contract awards financed from various multi-donor funds supported the Bank s strategic initiatives, including the EBRD-Ukraine Stabilisation and Sustainable Growth Multi-Donor Account, Early Transition Countries Fund, Green Carbon Fund (GCF), European Western Balkans Joint Fund - Sub Fund (EBRD Operations under WBJF), Russia Small Business, Southern and Eastern Mediterranean ( SEMED ) Multi-Donor Account, Eastern Europe Energy Efficiency and Environment Partnership. Figure 7. Multi-Lateral Donors, by value Climate Investment SF - SCF, 215k GFSC, 50K GEF II, 272K GIFF, 278K EBRD - Middle East and North Africa Transition Fund, 1.3m Climate Investment SF - CTF 701K Thirty two consultancy contracts totalling 2.8 million were financed from multi-lateral donor funds, namely the EBRD - Middle East and North Africa Transition Fund (World Bank), Climate Investment Special Fund - CTF, Global Infrastructure Facility Trust Fund (GIFF), Global Environment Facility II (GEF II), Climate Investment Special Fund - SCF and the Strategic Climate Change Fund (GFCF) (Figure 7). 5

The remaining 79 donor funded contracts (worth a total of 2.2 million) were financed from multiple donor sources. See Annex 4(a). 3.2 Bank s Budget The Annual Corporate Procurement Review details contracts procured for the Bank s administrative needs, which are outside of the scope of this report. In 2016 the Bank issued 1,229 contracts using the Bank s budget for the Bank s operational needs for a combined value of 39.3 million or 21 per cent of the total value of consultancy contracts awarded. The share of value of Bank funded contracts fell by four per cent from 40.9 million or 24 per cent in 2015. The number of contracts also fell by four per cent compared to 2015 when 1,285 Bank funded contracts were issued. The Bank s consultancy budget is allocated across the Bank s departments and is used for low value, initial scoping assignments. For larger assignments Teams typically seek to utilise alternative funding sources for financing their consultancy needs. In 2016, the Bank s budget financed consultancy services for a range of purposes including project preparation due diligence on legal, financial, technical, integrity and environmental matters, lender s supervisor to assist project monitoring and Nominee Directors representing the Bank on the boards of investee companies. Consultants for research and specialised responsibilities of non-banking departments such as the Evaluation Department, Office of the Chief Economist and Office of the Chief Compliance Officer were also engaged. In 2016 this included 398 contracts totalling nearly 14 million for the Banking departments, 730 contracts totalling 21.99 million awarded by OGC for retention of outside counsel, which are recovered from clients as part of transaction costs, and 101 contracts for nearly 3.5 million for non-banking teams. See Annex 8(b) for more detail. 3.3 Public Sector Loan Proceeds As contracts funded from loan proceeds are dependent on the pace of investment operation implementation their overall number and value inevitably fluctuates from year to year as these depend on public sector loans under implementation and the resulting procurement of consultancy contracts funded by loan proceeds. In 2016, 18 contracts for consultancy services totalling 20.5 million funded by loan proceeds of public sector operations were awarded by the Bank s borrowers following the Bank s PP&R. In 2015, 14 consultancy contracts with a total value of 10.8 million were funded by loan proceeds. 4 Consultants Engaged for Operational and Institutional Needs Consultants are engaged to support either EBRD s operational or institutional requirements. In 2016, over 95 per cent of the value of all consultancy contracts were for the Bank s operational needs, i.e. in relation either to specific operations, including project preparation and project implementation loan/transaction assistance to the Bank s clients, or for assistance with the Bank s key programmes, facilities and initiatives. 6

Value of Contracts million 4.1 Consultant Contracts Supporting EBRD s Operational Needs In 2016, 2,722 contracts totalling 176.8 million were awarded for the Bank s operational needs. These included 18 contracts ( 20.5 million) funded by loan proceeds in public sector operations, and 616 contracts ( 17.3 million) for retention of outside counsel by OGC. In 2016, TC Team also managed the selection and engagement of 6 consultancy contracts totalling 2.1 million supporting EBRD s Nuclear Safety programme. 9 Among the Bank s CoO the largest value of contracts for operational needs, excluding regional projects, was supporting TC projects in Kazakhstan ( 17.2 million), then Ukraine ( 15.3 million), followed by Egypt ( 11.1 million) and Turkey ( 10.9 million). Figure 8 shows the ten CoO in which the highest cumulative values of consultancy contracts were based and sets this against the 2015 figures for the same countries. 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Figure 8. The 10 CoO with Largest Value of Contract Awards in 2016 with Comparison Against 2015 Values 2016 2015 By region, Central Asia had the highest value of contracts ( 35.3 million), followed by Eastern Europe and the Caucasus ( 31 million). Contracts supporting the Bank s activities in the SEMED region rose by 18 per cent to 20.3 million. In 2016 there were 38 consultancy contracts with a total value of 2.4 million awarded for projects in Russia, the majority of which were for nominee directors appointments and business as well as specialist advisory services in relation to the Bank s existing investment portfolio in the country. In 2016, four sectors, Financial Institutions, Municipal and Environmental Infrastructure (MEI), Energy Efficiency and Climate Change (E2C2) and SME Finance and Development, collectively accounted for 54 per cent of all contracts for operational needs by value, representing 65 per cent by number. 10 The most significant sector by volume of contracts 9 Procurement Policy Department oversees and administers grant agreements contracted by the Nuclear Safety Department. These grant agreements are reported in the Annual Procurement Review. 10 Excluding those contracts awarded by OGC. 7

processed was SME Finance and Development - 48 per cent of all contracts (998 in total), but these represented only 9 per cent ( 12.9 million) by value. Financial Institutions was the largest sector by value of contracts processed, accounting for near to a fifth of the total portfolio ( 26.1 million) followed by Municipal and Environmental Infrastructure representing 15% of the total operational contracts by value ( 20.3 million) (Figures 9 and 10). Figure 9: 2016 Contract Share by Value MEI 15% Financial Institutions 30% Agribusiness SME Finance and Development 19% E2C2 5% 4% 6% 11% 9% 1% Energy Transport Legal transition Other Figure 10: 2016 Contract Share by Number 22% 6% 6% 3% MEI Financial Institutions Agribusiness 3% 2% 4% 6% 48% SME Finance and Development E2C2 Energy Transport Legal transition Other 4.2 Consultant Contracts Supporting the Bank s Institutional Needs In 2016, 283 contracts totalling 12.3 million were awarded in support of the Bank s institutional needs. These included business development consultants as well as specialised expertise to provide on-going technical support to the Banking teams. 8

Of the 283 contracts awarded in support of institutional needs, 114 contracts were awarded by the Office of the General Counsel. Of the other 169 institutional contracts, 28 contracts totalling 1.2 million were awarded to consultants performing services at the Bank s offices (Table 2). These Consultants brought specialist expertise to the Bank in the industrial and manufacturing sectors, economics as well as nuclear safety. Table 2. Contracts with Individual Consultants by EBRD Teams, 2016 11 Department Value ( ) Number Policy & Partnerships (including Economics, Policy & Governance, External Relations and Partnerships, Country Strategy Coordination and Results Management, Nuclear Safety) Banking (including Industry, Commerce and Agribusiness, Eastern Europe and the Caucasus, Manufacturing and Services, Sust Energy Investment, Power and Energy) 379,234 7 425,922 8 Office of the Chief Economist 120,107 6 Office of the General Counsel (Legal Transition) 165,642 4 Risk and Compliance (including Environment and Sustainability) 25,686 1 Finance and Operations 59,275 2 Total 1,175,866 28 5 Consultant Selection 5.1 Selection Methods Consultant selection procedures for the EBRD and its Clients are defined in the PP&R. 12 For low value assignments a qualified consultant may be selected directly. 13 For higher value assignments consultant selection should follow a competitive procedure, either a selection from a shortlist 14 or evaluation of proposals. 15 The Bank s PP&R, Section 5.9 stipulates when it may be necessary or advantageous to engage or continue to engage with a specific consultant rather than performing a competitive procedure. 16 Contracts awarded under Section 5.9 are justified by the teams and approved by the TC Review Committee ( TC Com ) for donor funded TC contracts and by TC Team for Bank funded contracts on a caseby-case basis. For details see Annex 2. 11 Excluding those contracts awarded by OGC. 12 See the Bank s PP&R available at http://www.ebrd.com/news/publications/policies/procurement-policies-and-rules.html. 13 See Section 5.3(a) of the Bank s PP&R. 14 Section 5.3(c) of the Bank s PP&R: for contracts estimated to cost 75,000 or more with individuals, selection is made on the basis of an evaluation of short-listed, qualified candidates and the rationale for the choice is recorded. For contracts with firms that are estimated to cost 75,000 or more and less than 300,000, a short list of qualified firms is prepared. The selection is based on an evaluation of the short-listed firms proven experience and current expertise related to the assignment. The selected consultant is invited to submit a proposal and to contract negotiations. 15 Section 5.3(d) of the Bank s PP&R: major contracts with firms estimated to cost 300,000 or more normally follow a competitive procedure based on invited proposals from a short list of three to six qualified firms. 16 Section 5.9 of the Bank s PP&R permits direct selection when: (a) the consultant has unique expertise or experience; (b) the consultant has been or is involved in the early phases of the project such as feasibility or design and it has been determined that continuity is necessary and no advantage would be gained from following competitive procedures; or (c) additional services not included in the original contract have, through unforeseen circumstances, become necessary for the performance of the contracted services, on condition that those additional services cannot be technically or economically separated from the original contract without major inconvenience to the contracting authorities or when such services, although separable from the performance of the original contract, are strictly necessary for its completion. In such cases the consultant in question may be invited to submit a proposal and a contract negotiated directly. 9

Value of Contracts million This chapter begins by providing an overview of selection methods for all contracts covered by this report. It then continues to explore selection method by funding source and by function. Donor funded TC contracts are procured under the management of the TC Team. The Bank budget funded contracts which are the subject of this Report are procured under the management of TC Team and OGC. The loan funded contracts are procured by the EBRD s Clients under the oversight of the Procurement Policy Department. 5.2 Selection Overview In 2016, competitive selection methods were used to award almost 68 per cent by value of all contracts ( 128.3 million), a slight increase from 67 per cent in 2015 ( 114.3 million). Figure 11 shows the breakdown by selection method over the past five years, demonstrating broadly consistent proportions across selection methods over this period to 2015 with a notable increase in use of evaluation of proposals in 2016 compared to previous years, which was partly due to the large increase of high value Loan Funded consultancy in 2016. 190 170 150 130 110 90 70 50 30 10-10 Figure 11. Consultancy Contracts by Consultant Selection Methods, by value 2012 2016 37.17 15.07 40.84 39.18 13.04 43.32 38.48 40.98 18.72 14.39 34.11 35.79 74.78 78.19 75.25 78.48 44.69 16.18 39.73 88.56 2012 2013 2014 2015 2016 Direct Selection (< 75k) Direct Selection under PP&R 5.9 Selection from Shortlist Evaluation of Proposals 5.3 Selection Methods by Funding Source Although the values increased, the proportional distribution of selection methods by funding source for contracts awarded in 2016 was similar to that for 2015 (see Figure 12). 5.3.1 Donor Funded Contracts There was an eight per cent increase in the value of contracts selected by evaluation of proposals for donor or special funds TC contracts, which increased in value from 67.5 million (or 57 per cent of all such funded contracts) in 2015 to 72.9 million (56 per cent) in 2016. Whilst the amount of donor funding has increased, the distribution of procurement methods used for procurement of donor funded contracts are broadly consistent with previous years. In 2016 154 Selection from Shortlist and 177 Evaluation of proposals procedures were conducted for donor-funded consultant contracts. The use of direct selection methods for donor funded contracts increased slightly to 26 per cent ( 34.6 million) in 2015, from 25 per cent ( 29 million) the previous year. There was an 10

Value of Contracts million increase in the use of Direct Selection under PP&R 5.9. See Annex 2(a) and 3 for additional detail. 5.3.2 Bank Funded Contracts 2016 saw a slight increase in the share of contracts awarded under direct selection but a fall from 7.6 million to 7 million in the value of contracts awarded directly under PP&R 5.9. There was also a reduction from 0.6 million (12 contracts, mainly Framework Agreements) in 2015 to 0.5 million (3 contracts) in 2016 in the value of contracts issued following evaluation of proposals. 5.3.3 Public Sector Loans These financed 18 consultancy contracts totalling 20.5 million in 2016. All but one of these contracts (which was worth 500,000) were awarded following competitive selection. Figure 12. Consultant Selection Methods by Funding Source 140 120 100 80 60 40 20 0 Donor Funds and Special Funds 2015 Donor Funds and Special Funds 2016 Bank's Budget 2015 Bank's Budget 2016 Public Sector Loan Proceeds 2015 Public Sector Loan Proceeds 2016 Direct Selection (< 75k) 22.2 25.9 18.7 18.8 0.1 0 Direct Selection under PP&R 5.9 6.8 8.7 7.6 7 0 0.5 Selection from Shortlist 21.5 21.8 14 13 0.3 4.9 Evaluation of Proposals 67.5 72.9 0.6 0.5 10.3 15.1 5.4 Selection Methods by Function 5.4.1 Engagement of Technical Cooperation Support In 2016, TC Team managed the selection and engagement of 2,257 contracts, with a total value of 146.7 million, up from 2,093 contracts with a value of 138 million in 2015. 88 per cent of these contracts were financed with donor funds (see section 5.3.1). The remainder were financed with Bank funds, with selection following the Bank s PP&R; 57 per cent used a direct selection method, 40 per cent used selection from shortlist and 3 per cent evaluation of proposals. As the Bank s budget is used for lower value assignments (an average of 34,688 in 2016), selection from shortlist is the most common competitive approach for these contracts. 5.4.1.1 Consultants Contracted as Individuals For TC consultants contracted as individuals, there was an increase in direct selection from 66 per cent in 2015 to 68 per cent by value of the contracts awarded in 2016, 13 per cent of contracts for individuals contracts 11

were awarded under section 5.9 of PP&R. As per the Bank s PP&R, the most competitive selection method for individual consultants is selection from a shortlist. 5.4.1.2 Consultants Contracted as Firms EBRD contracts a large number of consulting firms to support its TC and operational needs. The use of competitive selection methods with consulting firms is higher with 68 per cent by value of contracts for firms being awarded following competitive processes (58 per cent by value of contracts were awarded as Evaluation of Proposals, which is the most competitive method). With respect to contracts issued by TC Team, the ten firms awarded the largest number of consultancy contracts (Table 3) were collectively awarded 6 per cent of the total number of contracts. The average value of contracts with the top-10 firms was 183,337 whereas the overall average value of all consultancy contracts with firms generally was 95,776. Firms with the highest numbers of contracts are often multinationals with capacity to carry out several complex assignments simultaneously. Table 3. Firms with Largest Number of Contract Awards (regardless of office location), 2015 a Consultancy Firm Main Areas of Expertise Number of Contracts Value ( ) Fichtner GmbH & Co. KG Engineering, environmental 20 2,937,314 Frankfurt School of Finance Finance, SME 16 2,536,056 &Management Keypath Ltd GmbH Consultancy Training 15 92,533 WSP UK Limited Power & Energy, Municipality 13 1,603,772 GEMAR Capital Investment SRL Small Businesses 11 136,358 Montgomery Watson Harza Muhendislik Engineering, environmental 9 7,486,291 ve Kommunalkredit Musvairlik Ltd Public Consulting Finance, Environmental 8 2,141,735 GmbH People 1st Social Inclusion 8 583,854 Ergon Associates Infrastructure, Gender 8 453,505 Ove Arup & Partners International Ltd Environmental and Engineering 7 365,703 TOTAL 115 18,337,121 a This table excludes call-off notices under framework agreements. 5.4.2 Engagement of Outside Legal Counsel In implementing Paragraph 5.6 of the PP&R, OGC applies competitive procedures for assignments estimated to cost 75,000 or above. The shortlists of firms to be invited to compete for individual assignments above that value are generated from firms recorded in the OGC Database of Registered Law Firms. These firms have responded to the invitation posted on the Bank s website by providing an expression of interest ( EoI ) in EBRD assignments that fall in their particular areas of expertise. Although for non-legal assignments invitations for EoI are posted for each specific assignment, the general invitation of EoI for legal assignments on ebrd.com and registration of responding firms on the OGC Database takes account of the following special considerations: i. A public invitation for EoI for each specific legal assignment would require the disclosure of confidential or commercially sensitive client information and hence would not be compatible with the Bank's obligation to preserve the confidentiality of such information. ii. OGC's reliance on its Database of Registered Firms serves to streamline the competitive selection of outside counsel. It also makes best use of OGC's 12

expertise regarding the capabilities of firms and practitioners operating in the Bank's countries of operations and other significant jurisdictions. The costs of engagement of outside counsel by OGC for operations funded from the Bank s budget are normally recovered from clients as part of transaction costs. In 2016, OGC awarded 730 contracts totalling 22 million. This was a two per cent increase by number and a five per cent increase by value from OGC s 2015 contract awards (717 contracts totalling 20.9 million). 84 per cent of contracts by number, totalling 17.3 million, financed legal consultants for the Banking Department (staying approximately the same as in 2015) with the balance of 4.7 million for legal advice for non-banking departments (compared with 3.6 million in 2015). OGC is responsible for reviewing every project undertaken by the Bank. For the majority of the Bank s projects OGC seeks outside counsel following the relevant selection method. Competitive selection methods were used for six per cent of OGC s contracts totalling 6.2 million (28 per cent of the total value). The remaining 685 contracts totalling 15.8 million were awarded by direct selection from the OGC database of registered law firms with 445 of these contracts being below 20,000. There were 198 direct selections and 16 extensions where the amount was between 20,000 and 75,000. Section 5.9 of the Bank s PP&R was applied for 37 contract extensions totalling 3.5 million. 17 5.4.3 Advice for Small Businesses ( ASB) 18 In 2016, a total of 950 ASB contracts for 11.7 million were awarded including contracts for the International Advisory ( IA ) Team Coordinators, and Market Development Activities consultants. As most ASB contracts were within the direct selection threshold, this method was used for 97 per cent of contracts ( 11.3) with the balance of contracts selected from a shortlist. In 2015, by comparison, a total of 869 contracts for 11.1 million were awarded for ASB, with 93 per cent of the value of contracts ( 10.3 million) awarded directly and the balance of contracts selected from shortlist. Following Internal Audit s recommendation, with the exception of Business Advisory Services consultants, the TC Team is now responsible for the engagement of consultants for small business support. Figure 13 shows the number of ASB contracts issued from 2012 onwards and also plots the percentage change in comparison to 2012, the first complete year for which TC Team assumed responsibility. Numbers of contracts issued have risen steeply in the last three years with the number of contracts issued in 2016 increasing by 38% relative to the number issued in 2012. 17 Extensions of direct selections typically resulted in the following situations that could not be anticipated at the time of the initial engagement: in banking operations, changes in proposed structure and additional due diligence requirements, postsignature amendments and other operational changes; corporate recovery matters; and HR-related litigation. 18 Contracts awarded for the ASB programme are also included in the data presented in section 5.4.1. Because of the volume of small business support activity, data is represented separately here. With the exception of Advice for Small Businesses ( ASB ) consultants, the TC Team is responsible for the engagement of consultants for small business support. 13

Figure 13. Number of ASB Contracts Issued Annually and Percentage Annual Change Relative to 2012 ASB Contracts 1000 800 600 400 200 0 13% 26% 688 0% 682-1% 779 869 950 2012 2013 2014 2015 2016 38% 40 35 30 25 20 15 10 5 0-5 Percentage Change 6 Nationality of Consultants 6.1 Overview The Bank s PP&R requires open international competition in selecting consultants. In this regard, the intention of the PP&R is to achieve a wide nationality spread among consultants, including those from the Bank s CoO. For consultancy contracts financed with donor funds, these policies have been followed to the extent that they do not conflict with donor agreements on the use of such funds. The nationality of an individual consultant is based on the nationality stated in their curriculum vitae and confirmed in their passport. For reporting purposes, the nationality of a consulting firm is based on the country where its office is located as stated in the selection documentation (e.g. proposals) received by EBRD. With increased globalisation reflected in consulting firms establishing offices across EBRD s CoO, firms are able to bid for EBRD work from locations most advantageous to winning contracts. 19 This applies not only to the larger multinational consulting firms, but increasingly to local consulting firms in CoO who first expand to neighbouring countries and then to other countries in their immediate region. Consequently, the nationality data in this section needs to be read with the above in mind. 6.2 Restrictions on Use of Funds In previous years donor agreements may have included Tied funding, which only allowed participation by consultants of the donor s nationality. Where no such eligibility restriction was applied, funding is categorised as Untied. The Bank committed itself to untying all procurement of consultancy services financed by donor funds by 31 December 2015, however, 38 consultancy assignments (including Framework Agreements) 13.6 million of contracts were awarded in 2016 which were procured on a targeted basis during 2015. For details see Annex 5. No new targeted selection processes were commenced in 2016. As at 31 December 2016, 13 target procurement processes with a combined value of 5.1 million had 19 Section 5.4 of the Bank s PP&R states: Short lists of consultants shall normally include no less than three and no more than six qualified and experienced consultants (individuals or firms, as the case may be). The list shall normally comprise a wide geographic spread of consultants, including wherever possible at least one qualified consultant from one of the Bank s countries of operations and normally no more than two from any one country. 14

not yet been contracted in each case the proposals (for EOP) or the expressions of interest (SSL) were received on or before 31 December 2015 but contracts were not issued for project reasons such as delays in loan implementation, those processes which have not yet resulted in a contract will be contracted in the near future or cancelled. For details see Annex 4b. 6.3 Consultants Nationality EBRD and its clients engaged individual consultants and firms representing 78 nationalities in 2016. For details see Annex 6. British consultants remained at the top of both the individual and firm consultant nationality tables by value of consultancy awards. The 682 contracts totalling 39.5 million awarded to British consultants included 214 contracts totalling 12.6 million for engagement of outside counsel by OGC, and 123 contracts totalling 1.5 million for provision of management and specialist industry advice for the ASB programme. Of the 682 contract awards to British consultants, the 10 highest value contracts accounted for 7.9 million or approximately 20 per cent of the British total. Large firms based in the United Kingdom and consortia of firms led by British partners won contracts in the municipal infrastructure, transport, energy efficiency and climate change and financial institutions sector. In 2016, the five nationalities receiving the highest cumulative value of consultancy contracts - British, German, Italian, Polish, Austrian - accounted for 48 per cent of the total value of consultancy contract awards by the EBRD and its clients (Table 4). Table 4. Five Countries Receiving the Highest Cumulative Value of Consultancy Contracts, 2016 Nationality Number Value ( ) % of total value British 682 39,488,931 21% German 141 16,150,247 9% Italian 102 13,113,332 7% Polish 54 11,410,064 6% Austrian 67 10,793,518 6% Funding Sources (per cent of value) Donor funds 49% Bank budget 51% Loan funded 0 Donor funds 91% Bank budget 9% Loan funded 0 Donor funds 47% Bank budget 7% Loan funded 46% Donor funds 20% Bank budget 9% Loan funded 71% Donor funds 98% Bank budget 2% Loan funded 0 Main Areas of Expertise Legal, engineering, environmental, integrity & compliance, HR, procurement Technical, engineering, management, finance, environmental Environment, engineering, finance, banking Environmental, engineering, legal, economics Environmental, engineering, small business German consultants were engaged in a wide spectrum of projects, mainly in the sectors of municipal infrastructure, power and energy, sustainable energy investment, small and medium enterprises and financial institutions. Italian consultants provided expertise on a number of financial institutions projects and in energy efficiency projects. They also advised on a high value of loan financed contracts particularly in the transport sector but also in the municipal and environmental infrastructure as well as the power and energy sectors. 15

Polish consultants provided expertise on areas including environmental and energy efficiency, legal reform but the largest contract, constituting 71 per cent of the Polish total, was an 8.1 million loan financed contract for the Ukraine: Dnipropetrovsk Metro Construction Completion Project awarded to ILF Consulting Engineers Polska. Austrian consultants advised on technology, energy efficiency and on infrastructure projects. Table 5 presents the nationality breakdown for firms and individuals but excludes loan funded contracts and contract awards by OGC to show contracts awarded by TC Team only (see also section 6.3.2). British consultants were awarded 17.5 per cent by value of consultancy contracts for individual consultants ( 3.7 million) followed by American individual consultants with a share of nearly 10 per cent of total contract value. The remaining 72.5 per cent of individual consultant contracts were spread across over 60 other nationalities. With regard to contracts for firms, British consultants were awarded 18.5 per cent by value of consultancy contracts ( 23.2 million), followed by German consulting firms with a share of 12% of the total contract value ( 15 million). The remaining 70 per cent was spread across 63 other nationalities. Table 5. Contracts with Individual Consultants vs Firms, 2016 Nationality Nationality of Value ( ) Number Total value % Individuals Firm Value ( ) Number Total value % 1 British 3,670,864 121 17.49% 1 British 23,186,576 347 18.45% 2 American 1,949,836 47 9.29% 2 German 15,018,284 94 11.95% 3 German 1,068,863 44 5.09% 3 Austrian 10,312,061 51 8.21% 4 French 914,754 35 4.36% 4 Turkish 8,899,739 37 7.08% 5 Turkish 886,060 24 4.22% 5 French 6,364,714 38 5.07% 6 Russian 773,510 39 3.68% 6 Italian 6,355,433 58 5.06% 7 Canadian 757,146 32 3.61% 7 Ukrainian 5,750,381 51 4.58% 8 Ukrainian 702,615 38 3.35% 8 Czech 5,375,888 23 4.28% 9 Polish 641,337 15 3.06% 9 Kazakh 4,426,521 33 3.52% 10 Irish 618,062 31 2.94% 10 American 3,139,377 26 2.50% 11 Slovak 598,580 7 2.85% 11 Spanish 2,958,007 14 2.35% 12 Finland 576,670 35 2.75% 12 Swiss 2,687,905 18 2.14% 13 Dutch 548,728 38 2.61% 13 Danish 2,674,410 12 2.13% 14 Japanese 489,266 13 2.33% 14 Polish 2,238,242 20 1.78% 15 Austrian 408,457 14 1.95% 15 Russian 1,962,836 16 1.56% 16 Italian 390,087 28 1.86% 16 Belgian 1,869,939 18 1.49% 17 Swiss 352,444 10 1.68% 17 Slovak 1,730,818 21 1.38% 18 Serbian 346,024 30 1.65% 18 Finnish 1,635,414 20 1.30% 19 Portuguese 339,021 18 1.62% 19 Dutch 1,502,810 58 1.20% 20 Georgian 333,429 19 1.59% 20 Romanian 1,472,280 40 1.17% 21-63 Others 4,625,296 307 22.03% 21-65 Others 16,097,157 317 12.81% Total 20,991,049 945 100% Total 125,658,791 1312 100% Note: OGC and loan funded contracts are excluded. 20 The total may not equal 100% due to rounding of figures. 6.3.1 Consultants from the Bank s CoO Use of consultancy services from the Bank s CoO increased significantly in 2016 compared to previous years. In 2016, 1,336 contracts totalling 67.7 million were awarded to local consultants (these included 453 contracts for local legal consultants engaged by OGC with a total value of 7.6 million). This represented an increase of 32 per cent in value and nine per cent in number over 2015 when 1,221 contracts totalling 51.3 million were awarded. Excluding consultants engaged by OGC, 883 contracts for a combined value of 60.1 million were awarded, an increase of 42 per cent by value and 19 per cent by number compared to 2015. 20 The nationality of law firms retained by OGC (by the firm s office location) is provided in Table 6. 16

Polish ( 11.4 million), (Turkish ( 10.7 million), Ukrainian ( 7.4 million), Kazakh ( 5.9 million) and Czech ( 5.4 million) consultants had the highest value of contract awards. Contract awards to these five nationalities accounted for 60 per cent of the value of contract awards to local consultants. Consultants bidding from the SEMED region were awarded 71 contracts totalling 1.6 million. For more details see Annex 7. Consultants from CoO participated in projects in both their domestic markets and in neighbouring countries. They also participated through the Bank s PP&R, winning contracts in the Bank s CoO against international competition. As nationality data is based on the location of the bid/contract address of the lead firm that is being contracted it is expected that local consultant participation is wider than reported. However, it is difficult to access accurately information regarding local consultants that were sub-contracted by lead firms directly engaged by the Bank and its clients, or those participating in the Bank s assignments as non-lead members of consortia. As part of its effort to encourage local and wider participation, in 2016 TC Team conducted 19 outreach and consultant workshops to enable consultants to participate in the Bank s consulting opportunities (Table 12). Six of these events were in the Bank s CoO. 6.3.2 Nationality of Outside Legal Counsel In terms of consultant nationality, law firms based in the UK had the highest share of the value and number of OGC contract awards, receiving 57 per cent of the total number awarded, up from 52 per cent in 2015. The top six consultant nationalities were awarded contracts totalling more than 16.8 million, 77 per cent of the total value (Table 6). Table 6. OGC Contracts by Consultants Office Location, 2016 Ranking Consultant Nationality (location of office) Value, Number per cent of total value 1 United Kingdom 12,631,491 214 57.44 2 Russian Federation 1,118,900 44 5.09 3 Ukraine 932,901 51 4.24 4 Turkey 864,611 44 3.93 5 Kazakhstan 831,645 44 3.78 6 Poland 455,966 18 2.07 7 Japan 368,826 1 1.68 8 Romania 365,280 28 1.66 9 Georgia 349,347 14 1.59 10 Italy 309,890 12 1.41 11 France 276,391 13 1.26 12 Bulgaria 252,687 13 1.15 13 Greece 207,500 7 0.94 Others 3,026,603 227 13.76 Total 21,992,038 730 100% OGC retained approximately 250 distinct firms/offices for 730 assignments, averaging three assignments per firm/office. Most of the law firms awarded the largest number and value of contracts are international firms with offices in more than one country and capacity to carry out several assignments simultaneously (Table 7). 17

Table 7. Law Firms Receiving the Largest Number of OGC Contracts in 2016 Law Firm Value, Number Bird & Bird LLP 667,946 40 CMS 695,090 38 Dentons 736,491 30 Clifford Chance 2,079,188 27 ORIS law firm 475,019 24 Linklaters 1,049,078 19 Baker Botts 753,149 17 Watson, Farley & Williams 335,070 14 Gide Loyrette Nouel 260,039 14 DLA Piper 365,509 13 For legal assignments in EBRD s CoO, Law firms/offices were awarded 714 contracts totalling 20.9 million or 95 per cent of the total value of OGC s 2016 contracts. Legal assignments in the top five CoO accounted for 55 per cent of the total value of contracts for CoO assignments. These five countries each had over 1 million in total contracts, with Egypt leading with 3.2 million followed by Mongolia and Ukraine with around 2.3 million and 2.2 million respectively (Table 8). Table 8. OGC Contracts by Assignment Location (by Country of Operations), 2016 Country of Operation Value, Number % of Total Value Country of Operation Value, Number % of Total Value Egypt 3,237,243 27 15.53 Bosnia & Herzegovina 137,900 10 0.66 Mongolia 2,303,417 24 11.05 Armenia 124,000 8 0.59 Ukraine 2,181,410 111 10.46 Slovenia 108,690 5 0.52 Jordan 1,865,609 14 8.95 Lithuania 108,250 2 0.52 Regional* 1,805,481 56 8.66 FYR Macedonia 107,500 4 0.52 Turkey 1,505,902 65 7.22 Moldova 96,300 11 0.46 Russian Federation 1,357,881 50 6.51 Tajikistan 93,923 12 0.45 Kazakhstan 1,154,444 62 5.54 Slovak Republic 68,000 2 0.33 Georgia 809,026 21 3.88 Cyprus 64,768 5 0.31 Romania 540,936 32 2.59 Kosovo 58,800 5 0.28 Poland 481,349. 14 2.31 Montenegro 52,700 6 0.25 Bulgaria 381,287 20 1.83 Tunisia 51,998 3 0.25 Greece 342,850 6 1.64 Czech Republic 50,000 1 0.24 Belarus 320,842 24 1.54 Hungary 40,964 5 0.20 Croatia 314,047 21 1.51 Kyrgyz Republic 40,276 10 0.19 Morocco 280,538. 12 1.35 Latvia 40,177 3 0.19 Serbia 260,064 18 1.25 Turkmenistan 27,220 5 0.13 Albania 251,166 20 1.20 Uzbekistan 5,925 2 0.03 Azerbaijan 178,244 16 0.85 Estonia 2,300 2 0.01 Total 20,851,439 714 100% * Regional=assignments across more than one country 18