Page 1 February 12, 1999 H.E. Ahmed Mohamed Sofan Minister of Planning and Development Ministry of Planning and Development P.O. Box 175 Sana'a Republic of Yemen Re: Credit No. 3168-YEM (Second Public Works Project) Parts B.1, B.2 and B.3 of Schedule 3 to the Development Credit Agreement Excellency: With reference to the above-captioned provisions of the Development Credit Agreement between the Republic of Yemen and the International Development Association of even date herewith (the Credit Agreement), we hereby confirm that the applicable procurement procedures pursuant to Decree-Law No. 49 of 1991 (Government Tenders, Auctions and Stores Law) and Decree No. 124 of 1992 Concerning the Execution of the Government Tenders, Auctions and Stores Law, are satisfactory for the purposes of the said provisions of the Credit Agreement, provided that: 1. Parastatals should be qualified for bidding only if they are managerially and financially autonomous. 2. Parastatals should be treated equally with other bidders, including the provision of bid and performance securities and advance payment guarantees. 3. Contract award should be made to the lowest evaluated substantially responsive bidder, and price negotiations with the lowest evaluated bidder should be restricted only to cases where the bid price exceeds the estimated cost by a substantial amount. 4. In contracts involving delivery of goods or completion of works which extend beyond eighteen (18) months, developments beyond the control of the bidder occurring after a stated number of days (normally 28 days) prior to the bid submission date which affect the bidder’s costs should trigger upward or downward price adjustment. \0c 5. The preference accorded to public enterprises and mixed-sector firms in shopping procedures is not acceptable. Please confirm your agreement with the foregoing by signing the form of confirmation below. Very truly yours, INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Jayanta Roy Acting Regional Vice President Middle East and North Africa Region CONFIRMED: REPUBLIC OF YEMEN By /s/ Ahmed Mohamed Sofan Page 2 Authorized Representative