ankara, february 21, 2005 workshop on public procurement ankara, february 21, 2005

Ankara, February 21, 2005Ankara, February 21, 2005

Workshop on Public Procurement

Ankara, February 21, 2005


Economics of Procurement, Economics of Procurement, Project management tools, Project management tools, Evaluation techniques and Evaluation techniques and

Public Procurement policy in a Public Procurement policy in a Member StateMember State


Public Procurement Policy in the Public Procurement Policy in the Netherlands:Netherlands:

Very simple: WE HAVE NO PUBLIC Very simple: WE HAVE NO PUBLIC PROCUREMENT POLICY IN THE PROCUREMENT POLICY IN THE NETHERLANDS!NETHERLANDS!

We do not even have national public We do not even have national public procurement legislation!procurement legislation!

Only exception: public works.Only exception: public works. Here we have “ uniform procurement Here we have “ uniform procurement

guidelines”guidelines”


Procurement in the NetherlandsProcurement in the Netherlands

These are compulsory for Central These are compulsory for Central Government, but all other public Government, but all other public bodies are free to do what they likebodies are free to do what they like

For Central Government there is only For Central Government there is only one other obligation: for every one other obligation: for every contract exceeding 50.000 euro a contract exceeding 50.000 euro a minimum of three potential minimum of three potential contractors must be asked to make contractors must be asked to make an offeran offer


Procurement in the NetherlandsProcurement in the Netherlands

Means that participating in Means that participating in procurement processes can be procurement processes can be extremely difficult and riskyextremely difficult and risky

Therefore contractors should Therefore contractors should evaluate every invitation to tender evaluate every invitation to tender very carefully.very carefully.

Participating without careful Participating without careful evaluation/examination beforehand evaluation/examination beforehand may KILL your companymay KILL your company


Incorporation in acquisition policyIncorporation in acquisition policy

Participation in the public procurement Participation in the public procurement process must be part of the contractors process must be part of the contractors aquisition policy because: it takes time, it aquisition policy because: it takes time, it costs money, it requires knowledge of the costs money, it requires knowledge of the rules!rules!

It has to be laid down in internal It has to be laid down in internal administrative proceduresadministrative procedures

It should be communicated through all It should be communicated through all levels of the organizationlevels of the organization


Ideally, one department should be Ideally, one department should be

made responsible for organizing, made responsible for organizing, coordinating and facilitating coordinating and facilitating participation in procurement participation in procurement procedures and for keeping up with procedures and for keeping up with changes in the regulationschanges in the regulations

This department should also draw up This department should also draw up a timetable and have the (delegated) a timetable and have the (delegated) authority to force people to deliver authority to force people to deliver the information that is needed the information that is needed according to this timetableaccording to this timetable


Always remember and remind the Always remember and remind the contracting authority:contracting authority:

Public procurement is a COMMERCIAL Public procurement is a COMMERCIAL process rather than a legal process: process rather than a legal process: Lawyers are necessary to see that it Lawyers are necessary to see that it is executed according to the law but is executed according to the law but the COMMERCIAL specialist should be the COMMERCIAL specialist should be leading!!leading!!


Strategic partnershipsStrategic partnerships

Contractors should ask themselves Contractors should ask themselves whether it is advisable to form whether it is advisable to form strategic partnerships in order to strategic partnerships in order to become more succesfull: become more succesfull:

By participating with strategic By participating with strategic partners ( maybe even in the form partners ( maybe even in the form of a European Economic of a European Economic partnership) you wil be able to partnership) you wil be able to offer:offer:


PartnershipsPartnerships

More turnoverMore turnover More experienceMore experience Bigger workforceBigger workforce More reference projectsMore reference projects Better quality control(?)Better quality control(?) More innovation strengthMore innovation strength


Exclusion from participationExclusion from participation

Contracting Authorities can exclude Contracting Authorities can exclude potential contractors from participation potential contractors from participation when the candidate is: when the candidate is:

1.1. Bankrupt or being wound up, has not Bankrupt or being wound up, has not paid his taxes or social security paid his taxes or social security contributions, has been convicted for contributions, has been convicted for grave professional misconduct, has grave professional misconduct, has deliberately given false informationdeliberately given false information

2.2. They are allowed to ask for official proof They are allowed to ask for official proof that no such circumstance is the casethat no such circumstance is the case


Exclusion from participationExclusion from participation

If they do so, ask them to issue a so If they do so, ask them to issue a so called “ own declaration” in which you called “ own declaration” in which you declare that you are in no such declare that you are in no such circumstances and that you will come up circumstances and that you will come up will all official proof (official documents) will all official proof (official documents) once they have selected you as their once they have selected you as their preferred contractorpreferred contractor

This saves time, money and This saves time, money and bureaucracy!bureaucracy!


Criteria for qualitative selectionCriteria for qualitative selection

According to the directives certain According to the directives certain documents, declarations and other data documents, declarations and other data can be asked for in order to be certain can be asked for in order to be certain about the applicants abilitiesabout the applicants abilities

These concern: Enrolment in the These concern: Enrolment in the professional or trade register, financial and professional or trade register, financial and economic standing, technical capacity etc.economic standing, technical capacity etc.

This can be proved by all kinds of official This can be proved by all kinds of official documentsdocuments


BEWARE:BEWARE:

Criteria for qualitative selection are Criteria for qualitative selection are about the contractors situation, not about the contractors situation, not about his offer. about his offer.

To evaluate an offer you need To evaluate an offer you need awarding criteria.awarding criteria.

These two are completely different, These two are completely different, so beware of mixing them!so beware of mixing them!


Criteria for qualitative selectionCriteria for qualitative selection

In general: Be clear!In general: Be clear! Don’t ask: “recent declaration” but be Don’t ask: “recent declaration” but be

specific: “ not older than three months specific: “ not older than three months from the day of sending the notification”from the day of sending the notification”

Don’t ask: “last three years” but be Don’t ask: “last three years” but be specific: “ balance sheets of the year specific: “ balance sheets of the year 2000, 2001, 2002” .2000, 2001, 2002” .

Be sure why you ask something and how Be sure why you ask something and how you are going to weigh/assess it; If you are you are going to weigh/assess it; If you are not: DON’T ASK IT!not: DON’T ASK IT!


Compulsory notificationsCompulsory notifications

- Notice of open, restricted or negotiated - Notice of open, restricted or negotiated proceduresprocedures

- Notice of contract award. This notice must - Notice of contract award. This notice must include the name of the selected include the name of the selected contractor and the value of the contract contractor and the value of the contract awarded.awarded.

For EU-tenders all notices must be in For EU-tenders all notices must be in conformity with the standard format as conformity with the standard format as published on the Internet (published on the Internet (www.simap.eu.intwww.simap.eu.int).).

In the near future it will only be possible to In the near future it will only be possible to send the notices to the Bureau of Official send the notices to the Bureau of Official Publications in Luxemburg BY MAILPublications in Luxemburg BY MAIL


Time limitsTime limits

All time limits in EU-legislation are All time limits in EU-legislation are governed by regulation 1182/71/EECgoverned by regulation 1182/71/EEC

All time limits are minimum limits All time limits are minimum limits (more time may be granted and you (more time may be granted and you even have the right to demand more even have the right to demand more time if the minimum time limit is not time if the minimum time limit is not sufficientsufficient

The directives say: 52 day from the The directives say: 52 day from the time of sending the notice.time of sending the notice.


Beware:Beware: Regulation 1182/71 says: A time limit Regulation 1182/71 says: A time limit

starts only the day after a legal act has starts only the day after a legal act has been performed. been performed.

Sending the notification to Luxemburg is Sending the notification to Luxemburg is the legal act.the legal act.

This means that the time limit starts the This means that the time limit starts the next day.next day.

A time limit ends at 24.00 hours of the last A time limit ends at 24.00 hours of the last day, so opening of the offers can start day, so opening of the offers can start taking place only the day following the taking place only the day following the expiration of the time limit.expiration of the time limit.

Note: All days are calendar days.Note: All days are calendar days.


Restricted ProcedureRestricted Procedure

Free choice between open and Free choice between open and restricted procedure.restricted procedure.

Restricted procedure means one can Restricted procedure means one can limit the amount of candidates to be limit the amount of candidates to be invited to submit an offer to a invited to submit an offer to a MINIMUM OF 5MINIMUM OF 5

Problem is that the directives do not Problem is that the directives do not indicate how this limitation has to be indicate how this limitation has to be donedone

This is therefore at the discretion of This is therefore at the discretion of the contracting authoritythe contracting authority


Beware:Beware:

Contracting authorities are advised to Contracting authorities are advised to perform this selection very cautiously and perform this selection very cautiously and in a very transparent way. in a very transparent way.

This can be achieved either by a public This can be achieved either by a public draw (not allowed in every EU country) or draw (not allowed in every EU country) or by selecting on the basis of an objective by selecting on the basis of an objective weighing instrument, where only the best weighing instrument, where only the best scoring candidates will be selected. In the scoring candidates will be selected. In the interest of transparancy this instrument interest of transparancy this instrument should be made public. should be made public.


Advantages/disadvantages of Advantages/disadvantages of various proceduresvarious procedures

Open procedure:Open procedure: Advantages: Unlimited amount of offers, Advantages: Unlimited amount of offers,

therefore unlimited competition. Relatively therefore unlimited competition. Relatively quickquick

Disadvantages: Risk of huge piles of Disadvantages: Risk of huge piles of paper, all to be examined by the paper, all to be examined by the contracting authority. Besides coming up contracting authority. Besides coming up with all papers to meet the selection with all papers to meet the selection criteria, all candidates have to submit criteria, all candidates have to submit offers in the mean time, which means an offers in the mean time, which means an lot of calculating. This increases the cost lot of calculating. This increases the cost of participating in the tender procedure of participating in the tender procedure and eventually leads to higher pricesand eventually leads to higher prices


Advantages/disadvantagesAdvantages/disadvantages Restricted procedure:Restricted procedure: Advantages: Preliminary selection of Advantages: Preliminary selection of

candidates based on qualitative criteria. candidates based on qualitative criteria. Candidates know beforehand how many Candidates know beforehand how many competitors there are so can calculate their competitors there are so can calculate their chances. By reducing the number of chances. By reducing the number of candidates: less paperwork to examine by the candidates: less paperwork to examine by the contracting authoritycontracting authority

Disadvantages: Longer and sometimes more Disadvantages: Longer and sometimes more complicated procedure, higher risk of complicated procedure, higher risk of complaints if not properly executed.complaints if not properly executed.


Contact between Contracting Contact between Contracting authorities and candidatesauthorities and candidates

Contact is permitted but contracting Contact is permitted but contracting authorities must ensure that this authorities must ensure that this does not impair fair competition.does not impair fair competition.

It is up to the contracting authority to It is up to the contracting authority to decide how he will deal with this.decide how he will deal with this.

If he includes a name of a contact If he includes a name of a contact person and a telephone number or person and a telephone number or personal e-mail address, he indicates personal e-mail address, he indicates that he does not object to contactthat he does not object to contact


Contact Contact (continued)(continued)

He should in any case organize a question He should in any case organize a question and answer round ca. halfway procedure and answer round ca. halfway procedure (one in case of open procedure, two in (one in case of open procedure, two in case of restricted procedure).case of restricted procedure).

He should allow all candidates to submit He should allow all candidates to submit their questions till a certain date and hour, their questions till a certain date and hour, then answer ALL questions and send them then answer ALL questions and send them (anonimized) together with answers, to all (anonimized) together with answers, to all candidates. This creates a level playing candidates. This creates a level playing field.field.


Submission of TendersSubmission of Tenders Contracting authorities should be clear Contracting authorities should be clear

about what they want to receiveabout what they want to receive It is advisable to be rather rigid in this, It is advisable to be rather rigid in this,

for instance” Your balance sheets over for instance” Your balance sheets over the years 2000, 2001 and 2002 must the years 2000, 2001 and 2002 must be included in annex 1, your proof of be included in annex 1, your proof of membership of the Chamber of membership of the Chamber of Commerce must be included in annex Commerce must be included in annex 2 etc. Failure to obey this will lead to 2 etc. Failure to obey this will lead to rejection of your offer”rejection of your offer”


Submission of TendersSubmission of Tenders Also be clear regarding:Also be clear regarding: Final date of submission (date, time) Note: Final date of submission (date, time) Note:

Always make it very clear that this is a fatal Always make it very clear that this is a fatal time limit: One minute too late means time limit: One minute too late means rejection!rejection!

Whether the opening is public or notWhether the opening is public or not Where to submit. Note: not only the place, Where to submit. Note: not only the place,

for instance “ municipality hall” but very for instance “ municipality hall” but very specific: “ room 210” or “ secretariat of the specific: “ room 210” or “ secretariat of the director general for public works” or even: director general for public works” or even: “Miss X” (who is the administrative “Miss X” (who is the administrative secretary and does not know anything secretary and does not know anything about the tender procedure…)about the tender procedure…)


Submission of TendersSubmission of Tenders

Also be clear about:Also be clear about:- how many examples should be sendhow many examples should be send- whether you want one example on CD-romwhether you want one example on CD-romwhether they should be send under closed whether they should be send under closed

covercover- how to submit (personally against receipt, by how to submit (personally against receipt, by

post etc)post etc)

NOTE: Keep tender documents closed till after NOTE: Keep tender documents closed till after the date and time of closing of the the date and time of closing of the submission periodsubmission period


Submission of TendersSubmission of Tenders Last but not least contracting authorities Last but not least contracting authorities

should instruct personnel on key-posts, should instruct personnel on key-posts, that a closing date is imminent.that a closing date is imminent.

Many candidates wait till the last minute Many candidates wait till the last minute to submit their tenders as they are afraid to submit their tenders as they are afraid that these might otherwise be opened that these might otherwise be opened before the closing moment (and before the closing moment (and information be leaked to competitors)information be leaked to competitors)

Therefore people in the mail-handling Therefore people in the mail-handling department and behind the reception department and behind the reception should be well instructed.should be well instructed.


Rules for TendersRules for Tenders

The European directives do not specify The European directives do not specify anything as to how tenders should look anything as to how tenders should look likelike

Contracting authorities can therefore Contracting authorities can therefore determine themselves what they want to determine themselves what they want to receive and how. Standard formats will receive and how. Standard formats will help evaluating the documentation help evaluating the documentation receivedreceived

Main rule is to be utterly clear about what Main rule is to be utterly clear about what one wants to receiveone wants to receive


General Conditions applicableGeneral Conditions applicable Contracting authorities should draw up Contracting authorities should draw up

their own general conditions (terms)their own general conditions (terms) It is wise to have separate terms for works, It is wise to have separate terms for works,

supplies and servicessupplies and services We always tell Contracting authorities to We always tell Contracting authorities to

insist that only the general terms of the insist that only the general terms of the contracting authority are applicable, with contracting authority are applicable, with the exclusion of contractors conditions the exclusion of contractors conditions (otherwise they will end up with offers that (otherwise they will end up with offers that are not comparable)are not comparable)

However, if they don’t, see that your own However, if they don’t, see that your own conditions are applicable!conditions are applicable!


ChecklistsChecklists

Make checklists to monitor the whole Make checklists to monitor the whole process and its progressprocess and its progress

Draw up a timetable and send this to Draw up a timetable and send this to everybody involved in the everybody involved in the procurement process, making clear procurement process, making clear that it is everybody’s responsibility to that it is everybody’s responsibility to respect the timetablerespect the timetable


Awarding of the ContractAwarding of the Contract The European directives state two The European directives state two

awarding criteria:awarding criteria:- Lowest priceLowest price- Economically most advantageous offerEconomically most advantageous offerNote: Lowest price IS lowest price and is not, Note: Lowest price IS lowest price and is not,

repeat not, negotiablerepeat not, negotiableChoice between awarding criteria is free and Choice between awarding criteria is free and

should be subject of thorough should be subject of thorough considerationsconsiderations

Leading thought should be that “total cost of Leading thought should be that “total cost of ownership” is much more important than ownership” is much more important than price aloneprice alone


Awarding of contractAwarding of contract Economic most advantageous offer can Economic most advantageous offer can

include many aspects that are of include many aspects that are of importance to the contracting authority.importance to the contracting authority.

These aspects may be:These aspects may be:- QualityQuality- FunctionalityFunctionality- ServiceService- WarrantyWarranty- Aesthetic characteristicsAesthetic characteristics- PricePrice- Environmental aspects etc.Environmental aspects etc.


Awarding of contractAwarding of contract

All these are more or less subjective All these are more or less subjective criteria. criteria.

It is up to the contracting authority to It is up to the contracting authority to make sure that they are being make sure that they are being judged upon as objectively as judged upon as objectively as possible and that this judgment possible and that this judgment process is transparentprocess is transparent

The same applies to the judgment of The same applies to the judgment of criteria for qualitative selectioncriteria for qualitative selection



One way of creating an objective system is One way of creating an objective system is a system of musts and wants a system of musts and wants (requirements and desires)(requirements and desires)

Meeting the musts is a conditio sine qua Meeting the musts is a conditio sine qua non (Knock-out criterion)non (Knock-out criterion)

Concerning the wants all candidates will Concerning the wants all candidates will be compared in relation to the others in be compared in relation to the others in order to determine who meets the wants order to determine who meets the wants best, who ends up worst and what is the best, who ends up worst and what is the position of the other candidatesposition of the other candidates



Examples of must and wants: Examples of must and wants: Must: it is not allowed to offer a price Must: it is not allowed to offer a price

higher than higher than € € 500.000500.000 Want: the price should be as low as Want: the price should be as low as

possiblepossible Must: A service engineer must be Must: A service engineer must be

available within two hoursavailable within two hours Want: A service engineer is available Want: A service engineer is available

as soon as possibleas soon as possible


Awarding of contractAwarding of contract In this system all “wants” will get their own In this system all “wants” will get their own

rating (for instance on a scale from 1 to 10)rating (for instance on a scale from 1 to 10) The rating reflects the ranking of the wants The rating reflects the ranking of the wants

between each otherbetween each other All candidates will be compared in relation All candidates will be compared in relation

to the others to determine who responds to the others to determine who responds best to a want, who responds worst and best to a want, who responds worst and the position of the remaining candidates. the position of the remaining candidates. This is expressed in a mark (on a scale This is expressed in a mark (on a scale from 1 to 10)from 1 to 10)

The best candidate scores 10 points, the The best candidate scores 10 points, the worst 1 pointworst 1 point


AwardAward Explanation:Explanation: O = OfferO = Offer R= Rating in comparison with other R= Rating in comparison with other

competitorscompetitors T= Total score on this “ Want”T= Total score on this “ Want” Price= in 100.000 EuroPrice= in 100.000 Euro Available= availability of engineer in hoursAvailable= availability of engineer in hours Warranty= warranty in yearsWarranty= warranty in years User panel= evaluation figure on scale of User panel= evaluation figure on scale of

1-10 (1 is worst, 10 is best) by evaluation 1-10 (1 is worst, 10 is best) by evaluation teamteam


awardmatrixawardmatrixcontractorcontractor

→→AA BB CC DD

wantswants

↓↓ratingrating

↓↓oo rr tt oo rr tt oo rr tt oo rr tt

priceprice 666 6 11 66 5,5,

8822 1212 55 55 3030 44 11

006060

availableavailable 8811 1010 8080 1,1,

557,57,5 6060 22 55 4040 33 11 33

warrantywarranty 3333 11 33 55 44 1212 11

001010 3030 55 44 1212

user paneluser panel 5588 1010 5050 66 44 2020 77 77 3535 55 11 55

TotalTotal 139139 101044

131355

8080


Alcatel periodAlcatel period

Since EC court ruling in Alcatel case, Since EC court ruling in Alcatel case, memberstates are forced to memberstates are forced to announce intended awardannounce intended award

Rejected bidders get possibility to Rejected bidders get possibility to oppose award during restricted time-oppose award during restricted time-limit.limit.

In some memberstates this limit is In some memberstates this limit is only 14 days!only 14 days!

Greatly increases amount of legal Greatly increases amount of legal proceedings.proceedings.



Make several checklists for the monitoring Make several checklists for the monitoring of your participation: of your participation:

First one when first reading the invitation: First one when first reading the invitation: Who is the contracting authority, what are Who is the contracting authority, what are they procuring, what procedure, do we they procuring, what procedure, do we have enough time, financial means, know have enough time, financial means, know how to offer them, what are the how to offer them, what are the specifications, have they been drawn up specifications, have they been drawn up with someone in mind, is there a reference with someone in mind, is there a reference to certain suppliers or productsto certain suppliers or products



Second one:Second one: Who is responsible for whatWho is responsible for what What do we need to submitWhat do we need to submit What did the contracting authority What did the contracting authority

forget (this is where we start earning forget (this is where we start earning money!!!)money!!!)

What is the cost of investment What is the cost of investment against the possible net profit (roi) or against the possible net profit (roi) or its marketing value its marketing value



Do we need to form some kind of Do we need to form some kind of strategic alliance in order to create strategic alliance in order to create more critical massmore critical mass

Who else might be competing and Who else might be competing and what is our added value over them what is our added value over them and /or local contractorsand /or local contractors


Other things to checkOther things to check

You name it, I will answer it!!You name it, I will answer it!!

ankara, february 21, 2005 workshop on public procurement ankara, february 21, 2005

Documents

public procurement policy

public procurement ankara

public procurement process

procurement procedures

procurement processes

economics of procurement

public bodies

public works