Guidelines

Guarantee scheme for the reimbursement of expenses in connection with participation in international competitive tenders for aid-financed development projects in the poorest developing countries.

1. The purpose and scope of the guarantee scheme
The purpose of the tender guarantee scheme is to stimulate more active participation from Norwegian companies in international competitive tenders for aid-financed development projects in the poorest developing countries.
The scheme applies to all countries entitled to loans from the World Bank in the same was as NORAD’s commercial scheme. Currently this means countries with GNP per capita of less than USD 6925. However priority shall be given to the least developed countries (LDC) and Norway’s partner countries.
The scheme applies to all types of aid-financed projects financed by ODA funds from Norway, other OECD countries of multilateral development and financial institutions. Priority is given to the participation of small and medium-sized companies. A ”qualification limit” shall be utilised to avoid multiple guarantees being granted to the same company in the same country during the same year.
The guarantee scheme is financed by Norfund. The scheme is administered by GIEK.

On a test basis the participation of Norwegian-owned companies can be authorised in Norway’s main partner countries within developmental cooperation.
The guarantee will be paid if the applicant fails to be granted any part of the contract for which a tender was submitted. No premiums are paid for the tender guarantee.
GIEK will not normally provide a tender guarantee in cases where potential funding for project is considered extremely uncertain. In line with the purpose and scope of the scheme it is the responsibility of the applicant to establish that the tender guarantee applies to an aid-financed project and provide documentation showing that such financing is provided through ODA schemes. An expenses budget must be provided.

2. Expenses that can be guaranteed
GIEK can provide a guarantee for the majority of expenses that are directly connected with the preparation of a tender, for example wages, consultant expenses, hired help for writing, copying, translation, telecommunication costs, tender representation and postage costs, costs related to "bid bonds", travel and accommodation costs. Expenses related to preliminary studies are not covered. Note that such expenses can be covered by Nordiska Projektexportfonden.

The guarantee for expenses for consultant costs applies to both Norwegian and foreign consultancy companies deemed to be reasonable and necessary in the project work.
The guarantee coverage for each expenses entry will as a maximum be the amount approved by GIEK in the guarantee policy for the individual expenses entry. Other items will thus not be covered. However it is possible to apply for reclassification or a supplementary guarantee (increased guarantee amount) during the project work, if the actual project expenses are found to deviate significantly from the approved budget. Expenses covered by the guarantee will be stipulated in each specific case. A guarantee can be provided for necessary expenses for travel in Norway and wages paid to employees and external consultants during travel and in the course of business abroad. A guarantee can also be provided if foreign potential buyers (tender partners) are invited to visit the exporter’s facility in Norway.
For internal wages and consultant costs the same rates are used as for NORAD’s commercial schemes. Travel and accommodation costs are calculated according to the government tariff. It is a condition of the guarantee that the least expensive method of travel is used.

3. Coverage rate
The guarantee scheme is conditional upon the tender costs being at least NOK 80,000, calculated using the guidelines stipulated for the covering of costs under the scheme.
An upper limit is set for the disbursement of 50 percent of accrued costs connected with tender participation if the company does not win the tender and an exposure limit of NOK 250,000. Since the applicant’s expenses for wages may often exceed the rates for NORAD’s commercial schemes, note that GIEK’s share of the costs on disbursement will often be lower than 50 percent of the actual total costs.
For various reasons the coverage rate can also be set lower than 50 percent. This will especially apply in cases where GIEK has to ration guarantee funds if the scheme is highly popular and where the applicant/applicants’ corporation has received many guarantees over a period of time. It is the applicant's cost budget that forms the basis for GIEK's stipulation of these expenses. When stipulating expenses each individual type of expense is assessed individually (for example number of internal work hours, amount of telecommunications expenses etc.) Where required in accordance with the guidelines GIEK must refuse or reduce items of expenditure. The amounts in either the fully approved or partly reduced cost budget will be worked into the guarantee certificate. GIEK’s corrections will be specified in the covering letter for the guarantee certificate. The same applies to the approved coverage rate which will be accompanies with an explanation if this is lower than the maximum rate of 50 percent. Expenses accrued before the application is sent shall not be approved under the guarantee. The guarantee will be time-limited, but under certain conditions an extension can be granted by GIEK but will not have retroactive effect.

4. Claims and disbursement
Expenses for which a claim has been submitted for reimbursement must be related to participation in the tender that can be documented did not lead to a contract.
The calculation of compensation will be conducted with regard to the guarantee terms, submitted report and auditor-certified accounts. The auditor must also confirm that the expenses detailed in the accounts were accrued and recorded during the term of the guarantee. Claims must be submitted within 6 months of the of the guarantee recipient becoming aware that the tender bid was not accepted, and at the latest 2 years after the expiry of the guarantee term. Note that the guarantee sum does not necessarily give any indication of the final amount of the tender support. The amount that GIEK stipulates for disbursement in the event of disbursement is determined by the actually accrued expenses at the time of settlement calculated by GIEK according to the applicable rules. The disbursement amount cannot be higher than that stated in the approved cost budget. The amount will be lower where the actual costs in accordance with the accounts are lower than the respective items in the approved budget. In calculation GIEK uses the ”item by item” method. Each item of expenditure is assessed individually and the disbursement amount is finally stipulated for the respective item of expenditure on its own. The total amount disbursed under the guarantee will consist of the sum of these individual amounts. Thus there is no opportunity to ”fill up” to the total guarantee amount by transferring between items with “over coverage” or “under coverage” or by using actual but unguaranteed items.

5. Right to appeal
Appeals against decisions regarding the policy and compensation claims can be submitted to GIEK. Appeals must be sent to GIEK within three weeks of the date the notification of the decision was received, cf. chapter VI of the Public Administration Act.