Guidelines of Foreign Partner Selection in the USSR

W O R K I N G P A P E R

GUIDELINES OF FOREIGN PARTNER SELECTION I N T H E USSR

I. Solom'ev

January 1989 WP-8902

C

I n t e r n a t i o n a l I n s t i t u t e for Applied Systems Analysis

GUIDELINES OF FOREIGN PARTNER SELECTION IN THE USSR

I. Soloviev

January 1989 WP-89-02

Working Papers are interim reports on work of the International Institute for Applied Systems Analysis and have received only limited review. Views or opinions expressed herein do not necessarily represent those of the Institute or of its National Member Organizations.

INTERNATIONAL INSTITUTE FOR APPLIED SYSTEMS ANALYSIS A-2361 Laxenburg, Austria

FOREWORD

This working paper is one of a series* produced by TES-MTC project discussing the problems of East-West Joint Ventures located in the CMEA countries on a country basis.

The share of joint ventures as the latest form of economic relations between CMEA countries and market-economy countries is increasing rapidly. Managers and policy- makers in state governmental organizations are now trying to overcome various problems arising during the process of partner selection, negotiation and operation of joint ventures.

The problem of partner selection, for example, has already become evident in the many countries' experience. To address the rapidly increasing number and complexity of offers from both Eastern and Western potential partners calls for creating a special methodol- ogy and practical procedures for this activity. In many countries, a lack of information about potential partners and of established contacts has also contributed to the p r o b lematic situation.

In order to resolve this practical problem, the All-Union Institute for External Economic Affairs has developed a methodology to help Soviet companies identify and select the right partner for a joint venture. This working paper describes stepby-step the procedure through which Soviet companies can select the appropriate partner for joint ventures or projects. The methodology is based on the assumption that one of the most effective tools for choosing a joint venture partner is the international tender. This creates a competitive environment for partner selection and presents an opportunity to attract various Western companies as potential partners.

The Management of Technological Change (MTC) project, part of the Technology, Economy and Society Program, has as one of its objectives to disseminate new relevant information about solutions generated in various countries concerning the practice of joint ventures. The working paper of Dr. Soloviev is among the first papers to serve that objec- tive. It should be noted that the elaborated methodological procedure for partner selec- tion is recommended not only for business organizations, but also for policy-makers from different governmental agencies, such as the Ministry Council of the Soviet Union, as well as for various ministries and other organizations making decisions concerning the creation of joint ventures.

F. Schmidt-Bleek Leader

Technology, Economy and Society Program

*To date, the following papem have been published:

Djarova, Julia Joint Ventures: A New Reality of East-West Cooperation (State-of-theArt), June 1988, WP-88-054.

Benedek, Tamas Some Experiences of Joint Venture Establishment and Operation in Hungary, September 1988, WP-88-88.

Ranenko, V., Soloviev, I. Joint Ventures with Foreign Capital Participation in the Soviet Union: Experi- ences and Future Outlook, January 1989, WP-84-03

G U I D E L I N E S O F F O R E I G N P R R T N E R S E L E C T I O N I N THE U S S R

1. G E N E R R L C O N D I T I O N S

1 . 1 . T h e p r e s e n t G u i d e l i n e s a r e d r a w n u p a n d i n t e n d e d f o r d o m e s t i c e n t e r p r i s e s , a m a l g a m a t i o n s a n d c o o p e r a t i v e s , h e r e i n a f t e r c a l l e d f o r a s S o v i e t p a r t n e r s , w h i c h a r e t a k i n g p a r t in t h e p r o c e s s o f e s t a b l i s h i n g j o i n t v e n t u r e s w i t h i n t h e t e r r i t o r y o f t h e U S S R a s t h e i r f o u n d e r s ( e q u i t y h o l d e r s ) ; f o r M i n i s t e r s a n d d e p a r t m e n t s o f t h e U S S R ; f o r t h e C o u n c i l o f M i n i s t e r s o f S o v i e t R e p u b l i c s a s w e l l a s f o r S o v i e t f o r e i g n t r a d e o r - g a n i z a t i o n s a n d f i r m s w h i c h o n b e h a l f o f S o v i e t p a r t n e r s m a y a c t a s c o n s u l t a n c y b o d i e s w h e n s e l e c t i n g t h e f o r e i g n p a r t n e r s o f t h e r e l e v a n t j o i n t v e n t u r e o n t h e b a s i s o f t e n d e r i n g p r o c e d u r e s .

1.2. W h e n c h o o s i n g a f o r e i g n j o i n t v e n t u r e P a r t n e r t h e r e l e v a n t S o v i e t j o i n t v e n t u r e p a r t n e r s h o u l d p u b l i s h a N o t i c e a b o u t t h e f o r t h c o m i n g c o n t e s t ( t e n d e r ) i n v i t i n g i n t e r e s t e d f o r e i g n f i r m s t o a p p l y f o r t h e a p p r o p r i a t e i n f o r m a t i o n , s h o u l d t h e n o b t a i n p r o p o s a l s in t h e f o r m o f t e n d e r s and a r r a n g e f o r a p r o p e r e v a l u a t i o n a n d s e l e c t i o n o f t h e m o s t s u i t a b l e f o r e i g n j o i n t v e n t u r e p a r t n e r .

1.3. T h e p r o p o s a l s t o b e c o l l e c t e d f r o m f o r e i g n f i r m s s h o u l d b e a r t h e c l e a r d e s c r i p t i o n o f a t e c h n o l o g i c a l and f i n a n c i a l c o n - t r i b u t i o n w h i c h is e x p e c t e d to b e p r o v i d e d by a p o t e n t i a l f o r e i g n j o i n t v e n t u r e P a r t n e r a s p a r t o f t h e a u t h o r i z e d f u n d o f t h e r e l e v a n t j o i n t v e n t u r e .

All s u c h p r o p o s a l s a r e t o b e e l a b o r a t e d by t h e f o r e i g n j o i n t v e n t u r e p a r t n e r i n s t r i c t c o m p l i a n c e w i t h t h e a p p r o p r i a t e m o d e l f o r m ( f o r m o f t e n d e r ) .

1.4. T h e o r g a n i z e d t e n d e r s ( c o n t e s t s ) m a y be:

a ) P u b l i c ( o p e n ) : T e n d e r s m e a n t h a t a l l f o r e i g n f i r m s h a v i n g c o n f i r m e d t h e i r c o n s e n t t o t a k e p a r t in t h e s e t e n d e r s ( c o n t e s t s ) a r e a l l o w e d t o d o s o w i t h o u t a n y l i m i t a t i o n ;

b ) L i m i t e d ( r e s t r i c t e d ) : F o r s u c h a t e n d e r ( c o n t e s t ) , o n l y s p e c i f i c f i r m s , s e l e c t e d b y S o v i e t j o i n t v e n t u r e

%Dr. I. S o l o v i e v is S e n i o r R e s e a r c h e r at t h e I n s t i t u t e f o r E x t e r n a l E c o n o m i c S t u d i e s , M o s c o w , U S S R .

p a r t n e r s based o n relevant e c o n o m i c and commercial information, a r e invited.

1.5. T h e p r o c e d u r e o f tendering ( c o n t e s t ) is to be divided into two main stages:

a ) P r e q u a l i f i c a t i o n s t a g e ( o b t a i n i n g and e v a l u a t i n g ten- ders): During the s t a g e o f p r e q u a l i f i c a t i o n , the Soviet

joint v e n t u r e partner p u b l i s h e s a n o t i c e o n t e n d e r s in a p p r o p r i a t e d o m e s t i c and f o r e i g n j o u r n a l s and r e c e i v e s a p p l i c a t i o n s f r o m interested f i r m s r e a d y to t a k e part

in the tendering. T h e Soviet joint v e n t u r e partner t h e n s e n d s t h e s e f o r e i g n f i r m s special Q u e s t i o n n a i r e F o r m s

from which t h e Soviet joint v e n t u r e partner o b t a i n s t h e a p p r o p r i a t e p r e q u a l i f i c a t i o n data: information about economic a c t i v i t y , financial p o s i t i o n and p r a c t i c e in t h i s area.

T h e total number o f f i r m s which must o b t a i n prequa- lification f o r m s ( Q u e s t i o n n a i r e s ) r e p r e s e n t s t h e General List o f Firms.

T h e Soviet joint v e n t u r e partner s h o u l d e v a l u a t e t h e p r e q u a l i f i c a t i o n s u b m i s s i o n s in o r d e r to identify t h o s e f i r m s whom they c o n s i d e r u n a c c e p t a b l e for t h e intended joint v e n t u r e and w h o , t h e r e f o r e , should not b e included in t h e resulting List o f Tenderers. Inquiry d o c u m e n t s , including tender model f o r m s , s h o u l d b e issued by t h e Soviet joint v e n t u r e partner o n l y to t h o s e f i r m s who h a v e b e e n s e l e c t e d for inclusion in t h e List o f Tender- ers. T h e inquiry must i n c o r p o r a t e t h e full s e t o f docu- m e n t s required by t h e f o r e i g n partner to e v a l u a t e t h e a i m , v o l u m e and technical d a t a o f t h e intended joint venture.

1.6. During t h e s t a g e o f o b t a i n i n g and evaluating t h e t e n d e r s , t h e Soviet joint v e n t u r e partner should d o t h e following:

w a r r a n g e f o r f i n a l i z i n g a full set o f t h e formal inquiry d o c u m e n t s ;

*

+ r e c e i v e w i t h i n t h e specified period o f t i m e t e n d e r s f r o m all t h e participating f i r m s ;

+

+ a r r a n g e f o r t h e relevant c o m p a r a t i v e a n a l y s i s o f t e n d e r s based o n m e t h o d s represented in t h e s e G u i d e l i n e s ;

+ s e l e c t t h e s u i t a b l e f o r e i g n p a r t n e r o f t h e j o i n t v e n - ture.

2. P R E Q U A L I F I C A T I O N

2.1. S u g g e s t i o n s o n t e n d e r i n g a r e p r e p a r e d by t h e e n t e r p r i s e in- i t i a t i n g t h e j o i n t v e n t u r e i n d e p e n d e n t l y or w i t h t h e h e l p o f a c h o s e n c o n s u l t a n t .

2.2. T h e f i r s t a d v e r t i s e m e n t s a b o u t t e n d e r s c a n b e p u b l i s h e d i n p e r i o d i c a l s c h o s e n by t h e S o v i e t j o i n t v e n t u r e p a r t n e r , d i s - t r i b u t e d t o U S S R t r a d e d e l e g a t i o n s a b r o a d , a s w e l l a s t o n a t i o n a l a n d i n t e r n a t i o n a l b u s i n e s s a s s o c i a t i o n s .

T h e f i r s t a d v e r t i s e m e n t u s u a l l y i n c l u d e s :

+ t h e n a m e a n d s p h e r e o f a c t i v i t y o f t h e j o i n t v e n t u r e ;

i t t h e list a n d t h e e s t i m a t e d p r o d u c t i o n c a p a c i t y ;

+ t h e t e n d e r i n g p r o c e d u r e , d a t e s o f d i s t r i b u t i o n o f q u a l i - f i c a t i o n d o c u m e n t s ( l i s t o f q u e s t i o n s ) a n d o f f i c i a l c o m m e r c i a l i n q u i r y ;

+ t h e a d d r e s s , t e l e p h o n e a n d t e l e x n u m b e r s o f t h e p l a c e w h e r e t h e t e n d e r is to b e h e l d ( s h o u l d t h e a d d r e s s e s o f t h e S o v i e t joint v e n t u r e p a r t n e r a n d t h e p l a c e o f t e n - d e r i n g not b e t h e s a m e ) ;

+ i n f o r m a t i o n o n r e c e i p t o f t h e q u a l i f i c a t i o n d o c u m e n t ( q u e s t i o n n a i r e ) .

2.3. Q u a l i f i c a t i o n d o c u m e n t s s h o u l d c o n s i s t of:

+ t h e s t a n d a r d p r e q u a l i f i c a t i o n f o r m ( A n n e x 3 ) and t h e i n s t r u c t i o n s f o r c o m p l e t i n g a n d p r e s e n t i n g i t ;

+ t h e list o f c o m m o n e s t i m a t e d t e c h n i c a l a n d e c o n o m i c a l d a t a o f t h e j o i n t v e n t u r e ( s e e item 3.5.).

P r e q u a l i f i c a t i o n d o c u m e n t s a r e t o b e i s s u e d w i t h a f o r m a l l e t t e r , s i g n e d by t h e a u t h o r i z e d p e r s o n o f t h e S o v i e t joint v e n t u r e p a r t n e r , i n c l u d i n g t h e d a t e o f s u b m i s s i o n o f t h e f o l l o w i n g d o c u m e n t s :

+

e r a n d t h e p e r i o d o f t h e i r v a l i d i t y ( s e e i t e m 3.2. a n d 3.3.).

2.4. T h e P r e q u a l i f i c a t i o n f o r m is p r e p a r e d by t h e S o v i e t j o i n t v e n t u r e p a r t n e r in a c c o r d a n c e w i t h t h e s t r u c t u r e o f t h e j o i n t v e n t u r e . T h e f o r m s h o u l d b e i s s u e d w i t h i n s t r u c t i o n s f o r c o m p l e t i n g it ( i n E n g l i s h o r F r e n c h d e p e n d i n g o n w h e r e it w i l l b e d i s t r i b u t e d ) .

2.5. A n a l y s i s o f the received P r e q u a l i f i c a t i o n d o c u m e n t s should lead to t h e s e l e c t i o n o f t h e tender p a r t i c i p a n t s ( t e n d e r e r s ) . 2.5.1. T h e S o v i e t joint v e n t u r e partner e v a l u a t e s t h e P r e -

q u a l i f i c a t i o n d o c u m e n t s in order to e l i m i n a t e t h o s e f i r m s w h o s e p r o d u c t i o n e x p e r i e n c e and/or q u a l i f i c a t i o n s d o not suit t h e aim and d a t a o f t h e joint v e n t u r e being o r g a n i z e d and which should t h e r e f o r e not be included o n t h e List o f Tenderers.

2.5.2. T h e t e n d e r e r s a r e to b e f o r m a l l y informed o f t h e need to c o n f i r m their intention t o t a k e part in t h e tender and o f t h e d a t e for s u b m i s s i o n o f t h e formal inquiry.

2.5.3. T h e tender d o c u m e n t s , o n c e issued, may r e q u i r e exten- s i v e effort and e x p e n s e to prepare. In t h i s c a s e , t h e S o v i e t joint v e n t u r e partner may e s t i m a t e its p r i c e and

inform t h e T e n d e r e r s accordingly o f the account number, bank n a m e and a d d r e s s , w h e r e t h e payment must b e made.

2.5.4. According to c u r r e n t international tendering p r a c t i c e , it is recommended to include o n t h e List o f T e n d e r e r s no f e w e r t h a n 3 to 5 firm names.

3. TENDERING

3.1. T h e s e t o f tender d o c u m e n t s prepared by t h e Soviet joint v e n t u r e partner to b e issued to T e n d e r e r s includes:

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ing their offers.

3.2. T h e Letter o f I n v i t a t i o n should include:

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w or a l t e r n a t i v e l y , t h e request to t h e t e n d e r e r s to pre- sent t h e Tender G u a r a n t e e which is to b e released after s e l e c t i n g t h e f o r e i g n joint v e n t u r e partner.

3.3. T h e I n s t r u c t i o n s to t h e T e n d e r e r s should include:

additional information about t h e d a t e and t i m e o f ten- dering and t h e formal c l o s i n g d a t e ( d e p e n d i n g o n t h e s i z e and c h a r a c t e r i s t i c s o f t h e joint venture, t h e period o f e v a l u a t i o n r a n g e s f r o m 3 to 12 w e e k s s t a r t i n g f r o m t h e d a t e o f receiving bids);

c o n d i t i o n s o f submitting and releasing t h e T e n d e r Gua- r a n t e e ( B a n k G u a r a n t e e or Letter o f G u a r a n t e e and its v a l u e a s fixed by t h e Soviet joint v e n t u r e p a r t n e r ) ; s t a t e m e n t o f t h e number o f c o p i e s , t h e language in which they s h o u l d b e formulated ( E n g l i s h a s a r u l e ) , and a d d r e s s to which they should b e s e n t ;

principal issues o f current joint venture legislation in t h e U S S R ;

request to s u b m i t certified statement o f tenderer's financial r e s p o n s i b i l i t y either f r o m a bank or t h e Chamber o f C o m m e r c e o f t h e tenderer's c o u n t r y o f o r i g i n ;

information o n c o n d i t i o n s for visiting t h e project s i t e o f t h e joint v e n t u r e ( i f n e c e s s a r y ) by t h e T e n d e r e r s ; n o t i f i c a t i o n that t h e Tender with t h e highest value o f a f o r e i g n p l e d g e t o w a r d s t h e authorized fund may not b e

judged t h e most a d v a n t a g e o u s ;

a l t e r n a t i v e l y , instructions to T e n d e r e r s to s u b m i t s e v - eral a l t e r n a t i v e bids.

3.4. T h e standard T e n d e r F o r m ( A n n e x 3 ) should normally include:

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In t h e s u p p l e m e n t to t h e Tender f o r m , t h e T e n d e r e r should point out ( i f required):

*

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.

3.5. T h e T e n d e r e r is a l s o provided with information o n general technical and economic d a t a concerning t h e joint venture, which should include t h e following:

a ) t h e aim o f t h e joint venture e s t a b l i s h m e n t ; the l o c a t i o n and expected d a t e o f occupancy o f t h e s i t e o f t h e n e w joint v e n t u r e ; t h e n a m e o f the s p o n s o r o r g a n i z a t i o n o f t h e f o r e i g n joint v e n t u r e partner.

b ) e s t i m a t e d p r o d u c t i o n and s e l l i n g c a p a c i t y , list o f p r o d u c t s , number o f personnel ( e n g i n e e r s and w o r k e r s ) , basic r e q u i r e m e n t s for s u p p l y m a t e r i a l s and c o m p o n e n t s ; expected p r o f i t a b i l i t y and cost indices, d e s c r i p t i o n o f basic technology and s p e c i f i c a t i o n s o f e q u i p m e n t likely to b e used, and other d a t a which will a l l o w t h e T e n - derer to e v a l u a t e the a d v a n t a g e s o f participating in the

joint venture.

c ) c h a r a c t e r i s t i c s o f t h e existing technical and p r o d u c t i o n b a s e o f t h e Soviet joint v e n t u r e partner (should t h e joint v e n t u r e b e established s u b j e c t to r e s t r u c t u r i n g a n e x i s t i n g f a c t o r y ) .

d ) d e s c r i p t i o n o f t h e estimated Soviet joint v e n t u r e part- ner's c o n t r i b u t i o n , which should include t h e following:

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3.6. T h e s e t o f tender d o c u m e n t s is to b e forwarded o n l y to t h o s e f i r m s who a r e p a r t i c i p a t i n g in t h e tender (i.e., t h o s e who a r e included o n t h e List o f T e n d e r e r s ; s e e item 2.5.3.). T h e set o f d o c u m e n t s s h o u l d be distributed o n l y after r e c e i v i n g

t h e c o r r e s p o n d i n g payment f r o m the Tenderer.

3.7. Should any f u t u r e c h a n g e s in t h e tender d o c u m e n t s o c c u r , t h e Soviet joint v e n t u r e partner must a d v i s e t h e T e n d e r e r s o f t h o s e c h a n g e s in d u e time. All c h a n g e s a n d / o r a d d i t i o n s to t h e d o c u m e n t s a r e considered to b e a n integral part o f t h e tender documents.

3.7.1. S h o u l d any r e q u e s t for c l a r i f i c a t i o n b e received f r o m a tenderer, t h e S o v i e t joint v e n t u r e partner s h o u l d pre- p a r e and s u b m i t w r i t t e n r e p l i e s t o all T e n d e r e r s without s p e c i f y i n g t h e s o u r c e o f t h e query.

3.7.2. If r e q u i r e d , t h e Soviet joint v e n t u r e partner s h o u l d a r r a n g e f o r relevant m e e t i n g s with the T e n d e r e r s in order to c l a r i f y t h e aim and technical and e c o n o m i c c o n d i t i o n s o f e s t a b l i s h i n g t h e joint venture.

3.8. It is r e c o m m e n d e d t h a t T e n d e r e r s w h o s e o f f e r s h a v e n o t b e e n r e c e i v e d t h r e e d a y s b e f o r e t h e c l o s i n g d a t e s h o u l d b e s o a d - v i s e d b y t h e S o v i e t j o i n t v e n t u r e p a r t n e r b y t e l e x o r t e l e - g r a m .

4. RECEIPT AND REGISTRATION OF OFFERS

4.1. T e n d e r e r s a r e e x p e c t e d to s u b m i t t h e i r o f f e r s w i t h c o v e r l e t t e r s . U p o n r e c e i p t o f s u c h l e t t e r s , t h e S o v i e t j o i n t v e n - t u r e p a r t n e r s h o u l d r e g i s t e r t h e m , s t a t i n g d a t e a n d t i m e o f r e c e i p t .

\

4.2. L e t t e r s r e c e i v e d a f t e r t h e c l o s i n g d a t e ( t e n d e r s u b m i s s i o n d a t e ) m u s t n o t b e a c c e p t e d . T h e y a r e t o b e r e t u r n e d w i t h a n e x p l a n a t i o n o f t h e d e c l i n e .

4.3. I n t h e c a s e o f p u b l i c t e n d e r s , t h e e n v e l o p s c o n t a i n i n g o f f e r s a r e t o b e f o r m a l l y o p e n e d b y t h e S o v i e t j o i n t v e n t u r e p a r t - ner. R e p r e s e n t a t i v e s of t h o s e f i r m s p a r t i c i p a t i n g i n t h e t e n d e r m u s t b e p r e s e n t .

4.4. At t h e t i m e o f o p e n i n g t h e e n v e l o p s , t h e n a m e o f t h e t e n d e r - e r , d a t e o f r e c e i p t a n d m a i n e l e m e n t s o f e a c h o f f e r a r e to b e e n t e r e d i n a w r i t t e n r e g i s t e r .

5. EV4LUATION OF OFFERS

5.1. T h e S o v i e t j o i n t v e n t u r e p a r t n e r e s t a b l i s h e s t h e p r o c e d u r e a n d c o n d i t i o n s f o r e v a l u a t i n g t h e o f f e r s . T h e d u r a t i o n o f t h e e v a l u a t i o n p e r i o d d e p e n d s o n t h e p r o g r a m a d o p t e d b y t h e S o v i e t j o i n t v e n t u r e P a r t n e r a n d s t a r t s f r o m t h e c l o s i n g d a t e ( t e n d e r s u b m i s s i o n d a t e ) .

5.2. W h e n r e q u i r e d , t h e S o v i e t j o i n t v e n t u r e p a r t n e r c a n a s k f o r a d d i t i o n a l i n f o r m a t i o n t o t h a t p r o v i d e d i n t h e offer. M o r e - o v e r , h e m a y t a k e s t e p s t o a v o i d r e q u e s t s t o p r e s e n t i n f o r - m a t i o n i n e x c e s s o f w h a t w a s i n i t i a l l y r e q u i r e d .

5.3. R e c e i v e d o f f e r s a r e e v a l u a t e d i n 3 c a t e g o r i e s : a d m i n i s t r a - t i v e , t e c h n i c a l a n d c o m m e r c i a l .

5.3.1. A d m i n i s t r a t i v e e v a l u a t i o n :

+ t e c h n i c a l m i s t a k e s , o m i s s i o n s a n d s l i p s ;

+ c o n f o r m i t y o f t h e s u b m i t t e d d o c u m e n t s t o t h e re- q u i r e m e n t s o f t h e i n s t r u c t i o n s ;

+ c o n f o r m i t y o f r e c e i v e d i n f o r m a t i o n t o a l l o t h e r r e q u i r e m e n t s ;

+ f i n a n c i a l a n d l e g a l a s p e c t s o f t h e d o c u m e n t s .

O f f e r s declined in t h e c o u r s e o f t h e a d m i n i s t r a t i v e evalua- tion a r e returned to t h e t e n d e r e r s with a n e x p l a n a t i o n of t h e decline. O f f e r s which p a s s t h e a d m i n i s t r a t i v e e v a l u a t i o n a r e handed over for technical and commercial evaluation.

5.3.2. T h e technical e v a l u a t i o n analyzes:

*

*

*

*

5.3.3. Commercial e v a l u a t i o n includes:

+ c o m p a r i s o n o f different e l e m e n t s o f t h e o f f e r s ( e q u i p m e n t , licenses, know-how, e n g i n e e r i n g , etc.);

+ c o m p a r i s o n o f financial p o s s i b i l i t i e s with joint v e n t u r e r e q u i r e m e n t s ;

+ a c c e p t a b i l i t y o f financing c o n d i t i o n s ;

+ a n a l y s i s o f c o n d i t i o n s o f t h e p a r t i c i p a t i o n o f the f o r e i g n partner in t h e s a l e o f joint v e n t u r e pro- d u c t i o n abroad.

5.3.4. O f f e r s which p a s s t h e a d m i n i s t r a t i v e , technical and c o m m e r c i a l e x a m i n a t i o n s a r e then compared to select t h e offer a c c e p t a b l e in all aspects. Methods o f m a r k s and p e r c e n t a g e s c a n be used. They a r e described in 4nnex 5.

5.3.5. Received o f f e r s c a n a l s o be evaluated o n t h e b a s i s o f Provisional Typical Methods, which d e f i n e t h e profit- ability o f o r g a n i z i n g and operating a joint v e n t u r e in t h e USSR. T h e offer which, in a c c o r d a n c e with t h e complex e v a l u a t i o n procedure, p r o v i d e s t h e greatest ef-

f i c i e n c y to t h e Soviet partner and t h e Soviet e c o n o m y w i n s t h e tender.

6 - CLOSING THE TENDERS

6.1. 4 letter is s e n t to t h e tenderer w h o s e offer h a s been accep- ted, including:

*

*

*

*

order to b e g i n n e g o t i a t i o n s o n e l a b o r a t i n g d o c u m e n t a t i o n o n the joint v e n t u r e status.

6.2. A s a n a l t e r n a t i v e , t h e winner o f t h e tender and t h e Soviet partner c a n s i g n a Protocol o f Intent.

6.3. T h e Soviet joint v e n t u r e partner i n f o r m s all o t h e r par- t i c i p a n t s about t h e result o f t h e tender and r e t u r n s any tender bonds.

0t 1 C

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7 1 1 0 L O C I C I 3 3

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or- 10 E 33 E 3 L C L

C I O Q Q Q E E L E E Q Q 3 Q L U

u u a s

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at--

u

m

3.- U Q O E L L r 0 3 - 3 3 C L 3 L r 0 3 0 3

J E O Y fl- Q C U L C O f l 3 3 Q 0 0 a r r 0 9 3 f l Y d L C - L

C 9 0 1 - - 3 0 3 0.- E c u o n r L L C fl m r 0 . - 0 % 0.- 0 aid 0 E O L 3 L C O - 7

ANNEX 2

MODEL F O R M OF THE INITIAL A N N O U N C E M E N T

Subject: E s t a b l i s h m e n t o f a Joint V e n t u r e for producing m i n i c o m p u t e r s in t h e USSR

T h e aim o f t h i s publication is to identify f i r m s interested in participating in t h e preliminary q u a l i f i c a t i o n limited by t h e s e t e n d e r s and held in order to set up t h e a b o v e r e f e r e n c e d joint venture. Only f i r m s ( p o i n t out p o s s i b l e l i m i t a t i o n s about coun- t r i e s or g r o u p s o f c o u n t r i e s ) c a n t a k e part in t h e preliminary qua1 ification.

Field o f Activity o f t h e J o i n t V e n t u r e

T h e p r o d u c t i o n and assembly o f modern m i n i c o m p u t e r s ( 3 0 0 0 - 5000 p i e c e s per y e a r ) , s a l e s o r g a n i z a t i o n ( i n c l u d i n g export), and m a i n t e n a n c e s e r v i c e and repair domestically and abroad.

R u l e s f o r O r g a n i z i n g t h e T e n d e r s

F i r m s interested in t h e tender will r e c e i v e a q u e s t i o n n a i r e within 3 d a y s a f t e r receipt o f a t e l e p h o n e or telex inquiry ad- dressed to t h e Soviet partner.

F i r m s included o n t h e "List o f T e n d e r e r s " w i t h i n 14 d a y s after receipt o f a c o m p l e t e d q u e s t i o n n a i r e will r e c e i v e a formal commercial inquiry, including a Form o f Tender.

R e q u i r e m e n t s f o r a F o r e i g n P a r t n e r

Potential p a r t n e r s in t h e joint v e n t u r e must c o n f i r m their q u a l i f i c a t i o n , p r o d u c t i o n e x p e r i e n c e , p r e s e n c e o f financial re- s o u r c e s and technological o p p o r t u n i t i e s necessary for participa- t i o n in t h e joint venture's activity.

P l e a s e a d d r e s s your o f f e r s and inquiries for receipt o f q u a l i f i c a t i o n d o c u m e n t s ( q u e s t i o n n a i r e s ) to ( S o v i e t partner's full a d d r e s s and t e l e p h o n e number).

ANNEX 3

QUESTIONNAIRE ( m o d e l f o r m )

I. GENERAL INFORMATION ON THE FIRM

1.1. Registered name, address, t e l e p h o n e and telex n u m b e r s 1.2. Category (joint-stock c o m p a n y , a s s o c i a t i o n , etc.) 1.3. D a t e o f firm's establishment

1.4. E x p e r i e n c e o f p a r t i c i p a t i o n in joint v e n t u r e s ( n u m b e r o f joint ventures):

a ) in firm's c o u n t r y o f o r i g i n b ) abroad

1.5. N a m e s and a d d r e s s e s o f c o m p a n i e s associated with the firm:

a ) material c o m p a n y b ) s u b s i d i a r y

c ) o t h e r c a t e g o r i e s o f p r o d u c t i o n c o o p e r a t i o n

2. FINANCIAL ACTIVITY OF THE FIRM 2.1. Capital

a ) fixed capital b ) loan capital

2.2. Dynamics o f production volume in joint venture's field o f activity

Year 1 9 8 3 1984 1985 1986 1987

Local p r o d u c t i o n F o r e i g n P r o d u c t ion

2.3. Main f i n a n c i a l i n d e x e s o f t h e firm's a c t i v i t y for t h e last 3 y e a r s

2.4. N a m e s and a d d r e s s e s o f m a i n b a n k s r e l a t i o n s h i p s

3. PERSONNEL

3.1. N u m b e r o f e m p l o y e e s : a ) T e c h n i c a l s t a f f

b ) A d m i n i s t r a t i v e s t a f f

3.2. E x e c u t i v e D i r e c t o r s : f u l l n a m e , p o s i t i o n , d u r a t i o n o f em- p l o y m e n t w i t h c o m p a n y

3.3. I n f o r m a t i o n o n m a i n s p e c i a l i s t s : f u l l n a m e , p o s i t i o n , d u r a - t i o n o f e m p l o y m e n t w i t h c o m p a n y , list o f m a j o r a c h i e v e m e n t s 3.4. B a s e d o n t h e i n f o r m a t i o n a b o u t t h e j o i n t v e n t u r e t o b e c r e -

a t e d a s d e s c r i b e d in t h e q u a l i f i c a t i o n d o c u m e n t s , p l e a s e d e t a i l o w n r e s o u r c e s ( p r o d u c t i o n , t e c h n i c a l a n d f i n a n c i a l ) t h a t c o u l d b e o f f e r e d a s a d e p o s i t t o t h e i n i t i a l f u n d o f t h e j o i n t v e n t u r e .

4. PRODUCTION EXPERIENCE

4.1. L i s t by c o u n t r y a n d b r i e f l y d e s c r i b e o t h e r j o i n t v e n t u r e s i n w h i c h t h e f i r m h a s b e e n i n v o l v e d .

4.2. D e s c r i b e a n y e x p e r i e n c e t h e f i r m h a s i n s e t t i n g u p j o i n t v e n t u r e i n S o c i a l i s t c o u n t r i e s ( m e m b e r s o f t h e C o u n c i l o f M u t u a l A s s i s t a n c e ) .

4.3. D e s c r i b e i n m o r e d e t a i l t h e m o s t i m p o r t a n t j o i n t v e n t u r e s e t u p b y t h e c o m p a n y d u r i n g t h e last 5 y e a r s ( n a m e , m e m b e r s , s i z e o f c a p i t a l , s h a r e o f company's p a r t i c i p a t i o n , a n n u a l p r o d u c t i o n v o l u m e , a n d o t h e r m a i n p r o d u c t i o n a n d f i n a n c i a l i n d e x e s ) .

A N N E X 4

MODEL FORM OF A TENDER

1 . 1 .

...

N a m e o f T e n d e r e r

...

Firm's a d d r e s s

T h e f i r m ( h e r e i n a f t e r n a m e d T e n d e r e r ) t e s t i f i e s h e r e w i t h t h a t t h e y a r e

...

S t a t u s o f t h e f i r m and i t s e s t a b l i s h m e n t

1.2. T e n d e r e r h e r e w i t h c o n f i r m s t h e i r c o n s e n t to s e l e c t , a f t e r a c o r r e s p o n d i n g f e a s i b i l i t y s t u d y , f i n a n c i a l , m a t e r i a l and t e c h n i c a l r e s o u r c e s , i n d u s t r i a l p o t e n t i a l and i n d u s t r i a l p r o p e r t y w h i c h b e l o n g to t h e c o m p a n y a c c o r d i n g to t h e n o m e n - c l a t u r e and q u a n t i t y s t a t e d b e l o w a s t h e i r d e p o s i t in s t a r t -

ing ( b a s i c ) c a p i t a l o f t h e joint v e n t u r e .

N a m e o f t h e J o i n t V e n t u r e

1.3. T h e o f s i z e and s t r u c t u r e o f t h e i r d e p o s i t w a s a s s e s s e d by t h e T e n d e r e r a c c o r d i n g to t h e " G e n e r a l T e c h n i c a l a n d E c o n o m i c P a r a m e t e r " o f t h e j o i n t v e n t u r e s p e c i f i e d i n t h e F o r m o f T e n d e r and to t h e d e s c r i b e d s t r u c t u r e o f t h e S o v i e t part- ner's e x p e c t e d d e p o s i t .

D i m e n s i o n s a n d S t r u c t u r e o f t h e C o n t r i b u t i o n

D e p o s i t e l e m e n t s M e a s u r e m e n t u n i t Q u a l i t y a n d V a l u e ( C u r r e n c y d e n o m i n a t i o n ) G e n e r a l A1 t e r n a -

O f f e r t i v e O f f e r 1 . C a s h d e p o s i t

a ) i n f o r e i g n c u r r e n c y b ) in r u b l e s

2. M a c h i n e s , e q u i p m e n t , t o o l s , m a t e r i a l s a s f o l l o w s

3. R i g h t s t o i n d u s t r i a l p r o p e r t y

4. " E n g i n e e r i n g " s e r v i c e s 5. C r e d i t

ANNEX 5 HETHODS O F E V A L U A T I N G THE O F F E R S

A. P e r c e n t a g e H e t h o d

1. B e f o r e c o n d u c t i n g t h e e v a l u a t i o n , a number o f important h o m o g e n e o u s v a l u e c o m p o n e n t s f o r each tender is d e v e l o p e d , a s follows:

+ Equipment and m a t e r i a l s ( t e c h n i c a l level, if n e e d e d )

*

+ " E n g i n e e r i n g " s e r v i c e s

*

2. T h e expert e v a l u a t i o n o f t h e "specific w e i g h t " o f each com- ponent is to be s h o w n a s a percentage. T h e i r total should equal 100 per cent ( f o r e x a m p l e , t h e i m p o r t a n c e o f t h e com- ponent o f general technological equipment c a n be listed a s 2 5 % )

.

T h e next s t e p is t h e expert e v a l u a t i o n o f t h e q u a n t i t y ( y ) o f t h e h o m o g e n e o u s c o m p o n e n t s o f each firm's o f f e r which is to b e compared with others. T h e q u a n t i t y is limited from 1 to 100.

T h e final e v a l u a t i o n o f the h o m o g e n e o u s indexes o f s e p a r a t e o f f e r s ( 2 ) is defined by multiplying the q u a n t i t y o f a n element's i m p o r t a n c e ( A , B , C, D, E, F ) by t h e index ( y ) . For example, Z ( A ) = A x y ( A )

Z ( B ) = B x y ( B ) Z ( C ) = C x y ( C ) Z ( D ) = D x y ( D ) Z ( E ) = E x y ( E ) Z ( F ) = F x y ( F )

In s u m m a r y , t h e q u a n t i t y o f t h e e v a l u a t i o n index o f t h i s offer e q u a l s Z(A)+Z(B)+Z(C)+Z(D)+Z(E)+Z(F).

O f f e r s o f o t h e r f i r m s work in t h e s a m e way a s in t h e g i v e n e x a m p l e ; t h e index o f offerent #2 is t h e largest o n e at its

a b s o l u t e q u a n t i t y o r value ( s e e t a b l e 1).

B. H a r k H e t h o d

1. A s in t h e p e r c e n t a g e method, t h e major h o m o g e n e o u s value c o m p o n e n t s o f e a c h offer should be defined:

+ machinery ( e q u i p m e n t ) and m a t e r i a l s ( i f necessary d i v i d e

into t y p e s a c c o r d i n g to t h e n o m e n c l a t u r e o r t e c h n i c a l level ;

*

+ e n g i n e e r i n g s e r v i c e s ;

*

2. E a c h c h o s e n c o m p o n e n t is to b e e v a l u a t e d in m a r k s , t h e h i g h - e s t m a r k b e i n g 3.

3. T h e total s u m o f e a c h c o m p o n e n t is to b e d e f i n e d a n d t h e n t h e best o f f e r s e l e c t e d ( t h e o f f e r w i t h t h e h i g h e s t mark).

I n t h e e x a m p l e b e l o w , t h e best o f f e r is that o f f i r m 2.

O f f e r e n t s B a s e c r i t e r i o n s Total

...

E q u i p m e n t , R i g h t s to M o n e y E n g i n e e r i n g m a t e r i a l s i n d u s t r i a l ( c u r r e n c y , s e r v i c e s

p r o p e r t y r u b l e s )

F i r m 1 3 1 2 1 7

F i r m 2 2 2 3 2 9

F i r m 3 1 2 1 2 6

...

Meanings:

3

-

2

-

-

R e s u l t s : I n t o t a l , t h e m o s t a d v a n t a g e o u s o f f e r is that o f f i r m 2, w h i c h r e c e i v e s t h e h i g h e s t m a r k o f 9.

TABLE 1: RESULTS OF PERCENTAGE NFILLlRTION OF TEMER OFFERS

...

...

OFFER COMPONENTS ( % I FIRM 1 FIRM 2 FIRM 3 FIRM 4 FIRM 5

Y Z Y Z Y Z Y

z

...

...

1. EQUIPMENT imachinenj h materials)

main technoloqical < A ) 25 60 15 90 27.5 70 17.5 75 18.8 60 15

3. Ri*ts t o i n d u s t r i a l

property (C) 20 90 18 80 16 70 14 80 16 60 12

4. kmey ( 0 ) : c u r e n c y roubles

5. Engineering services

CE) 10 70 7 85 8 - 5 75 7.5 80 8 70 7

6. Other c o n p m t s <F) 5 40 2 80 4 60 3 50 2.5 40 2

TOTRL RESUTS 100 65.5 94 69.3 73.6 48

Note: (%I

=

=

Z

=