purchasing supplies at cern · purchasing supplies —legal aspects & contract follow-up 13...

Purchasing Supplies at CERN

Legal aspectsContract execution and follow-up (who does what)

Lucie Pocha DG-LS

Adam Horridge IPT-PI

Outline

Legal aspects

1. CERN contracts

2. General Conditions of CERN Contracts (GCC)

Contract follow up

1. When? Why? How? Who?

2. Case study no. 3

2

1 CERN contracts

Legal aspects: CERN contracts

Purchasing process

Selection of contractor

Formalization of

commercial arrangement


Specific clauses

General terms

Contract

between

CERN and contractor

“Tailor-

made”

contract


Specific clauses

purchase order (≤ 200k CHF) or standard contract (> 200k CHF)

General terms

General Conditions of

CERN Contracts

(GCC)

2General Conditions of CERN

Contracts (GCC)

Why GCC?

Right to issue its own rules

as necessary for its functioning

(as opposed to the application of national law)

Independent functioning

Intergovernmental Organization

composed of Member States

CERN’s own rules

Procurement: tendering

process and GCC

Labour:

Staff Rules and

Regulations

Safety:

CERN Safety rules

Utility of the GCC

Pre-approved, autonomous language (E and F)

Address standard situations

Reflect long procurement experience at CERN

Cover supplies as well as services

Application of the GCC

Stipulate applicability in purchase order/ contract

Default provisions, apply where pertinent

Complement or modify by contract-specific clauses

Documents comprising

the contract

All relevant documents

Hierarchy between documents established

Avoid contractor’s own general conditions to maximum extent

Priority between documents

Purchasing Supplies — Legal Aspects & Contract Follow-up 13

terms of the contract

service level agreement

delivery schedule

technical specification

other annexes of the contract, excl. invitation to

tender and GCC

invitation to tender, excl. GCC

GCC

contractor’s bid

Confidential information

GCC: contractor as recipient

Modification: mutual disclosure

Mark as confidential!

Intellectual property: GCC

CERN discloses IP to contractor

License for contractor to use CERN IP, without warranty by CERN

License for CERN to use contractor IP for the use of supplies/services, with warranty by contractor

IP freshly generated belongs to CERN

Intellectual Property:

reasonable modifications possible

CERN contractor

Owns generated IP

Provides no warranty

Disclosure of IP

Owns generated IP

Provides warranty

No disclosure of IP

Delivery

DATE

PLACE

• As set out in contract

• Responsibility of contractor

• Good shape

• Modification by CERN

compensation

• Receipt ≠ acceptance

Delivery: when it goes wrong…

Late delivery

Foreseen: refusal and termination of contract if it has lost purpose (wedding cake clause)

Penalties / termination if maximum penalties reached

Notify IPT

Damage or incorrect delivery

Foreseen: refusal and termination of contract if it has lost purpose

Refusal on the basis of actual damage or incorrect delivery

Notify IPT

After delivery:

acceptance procedure

Written notification of acceptance

within 3 months

CERN recognizes

that delivery is correct via:

Payment in full

Tacit acceptance if no action

for 3 months

What to do within 3 months of

delivery?

Carry out detailed inspection

Notify non-conformity in writing;

=> remedial measures by contractor

No payment of non-conforming deliveries

Penalties

Termination of contract if loss of purpose of goods/services due to delay for remedial measures

Warranty: Duration

GCC: 2 years after acceptance

Modifications possible

GCC exception: longer legal warranty

Warranty: purpose

Remedy of existing non-conformities by contractor

Remedy to supplies likely to suffer same non-conformity

No remedy measures by CERN or 3P at contractor’s expense

Extension or renewal of warranty

Termination:

when it goes really wrong…

Gross negligence

or willful misconduct

By CERN or

contractor

Bankruptc

y

insolvenc

y

Breach not

remedied timely

Bankruptcy insolvency

Breach not remedied

timely

Termination:

what to do?

Notify IPT before taking any termination measure!

Avoid serious financial and legal consequences

3 Contract follow-up - Who does what

Contract follow-up

Procurement process

Selection of contractor

Formalization of commercial arrangement

Contract follow-up

When?

Technical aspects are discussed during

“clarification” phase

• Planning established

• Equipment to be used defined

• Raw material to be purchased

• Etc.



Why? Power in the Purchasing Process

How?Follow-up meetings with

contractor

Periodicity

Participants

To be defined

Establish minutes of meetings

draft by CERN technical responsible

review by procurement officer

approval by contractor

If no comments within 8 days minutes are approved


How?

Use contractual tools in case of

problems with contract execution


• Failure to deliver or late delivery (wedding cake clause) Other breaches (delivery of docs, non compliance with laws.. )

• Problems with warranty

• Non-conforming supplies

• Late delivery, failure to deliver

Penalties No acceptance

Execution by third party

Termination, bank

guarantee


How ?

The technical officer shall:

Communicate in writing with the contractor

Involve the procurement officer asap in case of problems

Keep track of any relevant correspondence or communication with contractor (minutes, e-mails, technical reports, etc.)

NEVER commit CERN without the approval of the procurement officer.


How?

The procurement officer will:

Draft correspondence with contractual consequences, i.e.: application of penalties, notice + request for remedial measures, non acceptance of supplies, drawing on bank guarantees, termination of contract

Interact with the Legal Service and other services (invoice office), if necessary


Joker Case Study No. 3

“ Contract follow-up for the Supply

of 15 Tons of Magic Powder ”

Case study 3

Your task

• Case analysis (30 minutes):

• Make three groups: two CERN technical

officers and two CERN commercial officers

• Read the background

• Answer to the questions

• Group presentation and case synthesis (30

minutes):

• Each group makes its presentation

Contract Procurement Management Training Supplies– 20 September 2011 35