Training for AuditorsEstonia/Latvia/Russia ENPI CBC Programme

Riga, Tartu, 24-25 April 2012

Training for AuditorsEstonia/Latvia/Russia ENPI CBC Programme

Riga, Tartu, 24-25 April 2012

Procurement:Overview and general

rules

Procurement:Overview and general

rules

1

• Member States and Russian public entities Beneficiaries and Partners:

• National public procurement law and rules

• Rule of nationality and origin applied

• Other entities:

• Annex IV

+ Chapters 2(General), 3(Service), 4(Supply), 5(Works) of PRAG adjusted to Annex IV specific provisions

Procurement in grantsProcurement in grants

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Other entities:

• For what is not described in the Annex IV (detailed procedures, tender documents):

• Or Chapters 3(Service), 4(Supply), 5(Works) of PRAG adjusted to Annex IV specific provisions

Procurement in grantsProcurement in grants

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Annex IV:

• Natural and legal persons

• Open to all Member states + states allowed by Financial regulation (ENPI)

ENPI Regulation (Art. 21):• Memeber states• ENPI, IPA, EEA countries• International organisations

The detailed list in Annex A2 to PRAG (General Annexes) ”Eligibility – Programmes 2007-2013”, second section on ENPI

The nationality ruleThe nationality rule

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• Do not apply to the experts proposed by service providers taking part in tender procedures or service contracts financed by the grant

• If implemented through International organisation:

+ natural or legal persons eligible pursuant to the rules of that organisation

But: equal treatment to al donors to be ensured

The nationality ruleThe nationality rule

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Annex IV:

• If the Regulation contains...

ENPI Regulation (Art. 21):• Memeber states• ENPI, IPA, EEA countries

• The detailed list in Annex A2 to PRAG (General Annexes) ”Eligibility – Programmes 2007-2013”, second section on ENPI

***If implemented through International organisation:

+ pursuant to the rules of that organisation

But: equal treatment to all donors to be ensured

The rule of originThe rule of origin

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Customs Code, Council Regulation 2913/1992, Art. 23

• Goods originating in a country shall be those wholly obtained or produced in that country

• The expression ‘goods wholly obtained in a country’ means:

• (a) mineral products extracted within that country;

• (b) vegetable products harvested therein;

• [...]

• (j) goods which are produced therein exclusively from goods referred to in subparagraphs (a) to (i) or from their derivatives, at any stage of production

The rule of origin – “origin”The rule of origin – “origin”

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Customs Code, Council Regulation 2913/1992,

Art. 24

• Goods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture

The rule of origin – “origin”The rule of origin – “origin”

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• The rule of origin applies to ALL supplies and materials (ENPI Regulation)

The Certificate of origin:

• Contractor must present to the Beneficiary for equipment and vehicles of a unit cost on purchase of more than € 5.000

• Made by the competent authorities of the country of origin

In the Partner countries – Chambers of Commerce

• Must comply with Community legislation

Art. 12 of Customs Code and Arts. 47-62 of Code’s Implementing provisions

Annex 12 (model EU certificate)

The rule of origin – certificateThe rule of origin – certificate

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• By Derogation only (request to the Contracting authority)

• Justifyed by:

• Unavailability of products and services in the markets of the countries concerned

• For reasons of extreme urgency

• If the eligibility rule were to make the realisation of a project, a programme or an action impossible or exceedingly difficult

• ***NOT if a product of ineligible origin is cheaper than the Community or local product

Nationality and origin: exceptionsNationality and origin: exceptions

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Possibility of block derogation

• For some equipment which constantly poses a problem of origin

• After market research by JMA or several cases during implementation

• Would apply to all the projects, but for a limited time (1 year indicatively)

• Does not prevent the JMA from requesting some individual derogations also for the equipment that has not been identified in the block derogation

• The time needed for such a block derogation should be taken into account not to hamper the projects’ implementation

• Procurement plan would also help to identify the equipment for block derogation

Rule of origin: exceptionsRule of origin: exceptions

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EU MSs

ENPI countries:

• Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova, Morocco, Palestinian Authority of the West Bank and Gaza Strip, Russian Federation, Syria, Tunisia, Ukraine

 IPA countries:

• Croatia, The former Yugoslav Republic of Macedonia, Turkey, Albania, Bosnia, Montenegro, Serbia, including Kosovo.

 EEA countries:

•  Iceland, Liechtenstein, Norway

The nationality and origin ruleThe nationality and origin rule

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EC Note from 12/05/2011

• For the TA procured by JMA and co-financed by MS

• Rule of the MS

• Procurement by Projects

• ENPI rule

Rule of originRule of origin

• Annex IV to the Grant Contract

• ENPI Regulation

• PRAG

The nationality rule

• Annex A2 to PRAG “Eligibility of programmes 2007-2013”

The rule of origin

• EU Customs web site: http://ec.europa.eu/taxation_customs/customs/customs_duties/rules_origin/index_en.htm

• EU Customs Code: Council Regulation (EEC) No 2913/1992

• EU Customs Code Implementing provisions: Commission Regulation (EEC) No 2454/1993

Documents and linksDocuments and links

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Annex IV and PRAGAnnex IV and PRAG

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Service contracts:

• Studies: identification and preparation of projects, feasibility studies, economic and market studies, technical studies, evaluations and audits

• or Technical assistance: advisory role, to manage or supervise a project, or to provide the experts specified in the contract

Supply contracts:

• Purchase, leasing, rental or hire purchase, with or without option to buy, of products.

• A contract for the supply of products and, incidentally, for sitting and installation

Work contracts:

• the execution, or both the execution and design, of works

• List of works in the Annex I to Directive 2004/18/EC

Definition of contractsDefinition of contracts

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Thresholds (Annex IV)Thresholds (Annex IV)

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SERVICES

≥ € 200,000International

restrictedtender

procedure

< € 200,000 but > € 10,000 Negotiated procedure

≤ € 10,000Single tenderSUPPLIES

≥ € 150,000International open tenderprocedure

< € 150,000 but

≥ € 60,000Local open

tender procedure

< € 60,000 but > € 10,000Negotiated procedure

WORKS≥ € 5,000,000 Internationalopen tender procedure

< € 5,000,000 but

≥ € 300,000Local open

tenderprocedure

< € 300,000 but>

€ 10,000Negotiated procedure

• Projects must not be split artificially to circumvent the procurement thresholds

• The possible grounds for splitting:

1. Time: needed at different stages of the project

2. Type: difference in nature of the contract – services, supplies or works

3. Nature: different nature of the purchaise (e.g. tractors and medical equipment)

• Procurement with several Lots identifyed is possible allowing different compagnies applying for different Lots

Split of contractsSplit of contracts

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PRAG structurePRAG structure

• Publication of the individual contract forecast: not required by Annex IV

• Publication requirements are different:

• To be published in all appropriate media, in particular on the Beneficiary’s web site, in the international press, national press or in other specialist periodicals (Annex IV)

• Deadline for submission: long enough, allowing reasonable and appropriate period (Annex IV). (PRAG: 60 days for Supplies and 90 days for Works in international tenders, 30 for Supplies and 60 for Works in local tenders)

• Framework contract procedure for services not foreseen in Annex IV (PRAG – possible for services of < € 200.000 but > € 10.000

Specific rules of Annex IVSpecific rules of Annex IV

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• Most economically advantageous tender, i.e. the tender offering the best price-quality ratio, best value for money (whereas price as the only criterion for supplies and works in PRAG)

!!! Double envelope system, i.e., in an outer parcel or envelope containing two separate, sealed envelopes, one bearing the words "Envelope A - technical offer” and the other "Envelope B - financial offer“

• This system enables the technical offer and the financial offer to be evaluated successively and separately: it ensures that the technical quality of a tender is considered independently of the price

Specific rules of Annex IVSpecific rules of Annex IV

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• Number of Evaluation Committee members - odd number of voting members, at least 3 (PRAG – at least 5 for International open tender for Works)

• International restricted tender procedure for Works not foreseen (PRAG – possible for Works of > 5,000,000)

• Negotiated procedure (Competitive negotiated procedure in PRAG): Beneficiary consults at least 3 suppliers of its choice and negotiate the terms of contract with one or more of them

• Use of negotiated procedure for higher amounts, than allowed by standard ceilings - listed in Art.7 of Annex IV (combination of all correspondent Arts of PRAG)

Specific rules of Annex IVSpecific rules of Annex IV

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0. Publication of the indicidual contract forecast: not required by Annex IV

1. Publication of procurement notice

• To be published in all appropriate media, in particular on the Beneficiary’s web site, in the international press, national press or in other specialist periodicals (Annex IV)

• Deadline for submission: long enough, allowing reasonable and appropriate period (Annex IV). For information, PRAG: 60 days for Supplies and 90 days for Works in international tenders, 30 for Supplies and 60 for Works in local tenders

International open tenderInternational open tender

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• Additional information – in writing to all tenderers, or published (21 days - questions, 11 - answers)

• Supplies: Meetings/visits not permitted, unless specifically scheduled for all tenderers

• Works: Visits for individual companies permitted, ensuring transparency and equal treatment

International open tenderInternational open tender

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2. Evaluation (Annex IV + Art. 2.8, 4.3.8, 5.3.8)

• Evaluation Committee - Non-voting Chairman, non-voting Secretary and odd number of voting members (Annex IV: at least 3)

• Stages:

• Receipt and registration of proposals, preparatory meeting

• Tender opening session

• Formal public process, but restricted to the companies which are tendering for the contract

International open tenderInternational open tender

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• Evaluation of technical offers/technical offers

• Administrative and technical complience of tenders

• YES/NO grid, no scoring method used

• Lot by lot

• Evaluation of financial offers

• Arithmetical errors corrected without penalty

• Offers are compared and discounts applied for each lot

• Conclusions and drafting of the Evaluation report

• Contracting

International open tenderInternational open tender

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• For services only!!!

• Procurement notice is published

• Application form submitted

• Short list is established

• Establishing a long list summarising all the applications received

• Eliminating candidates who are ineligible

• Applying the published selection criteria

• Between 4 and 8 candidates

• Only then tender submitted

International restricted tenderInternational restricted tender

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• For services only!!!

• Procurement notice is published

• Application form submitted

• Short list is established

• Establishing a long list summarising all the applications received

• Eliminating candidates who are ineligible

• Applying the published selection criteria

• Between 4 and 8 candidates

• Only then tender submitted

International restricted tenderInternational restricted tender

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• NOT FORESEEN BY ANNEX IV!!!

• So, not applicable in procurement in grants

Restricted procedure for WorksRestricted procedure for Works

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• Publication (Annex IV):

• Procurement notice is published in all appropriate media, but only in the country of the Action

• But: shall provide other eligible suppliers with the same opportunities as the local firms

• Tender dossier:

• Tender guarantee - optional

• For supplies only: Simplified tender dossier is possible

• Selection criteria:

• Supplies: Supporting documents optional (But: financial guarantee if pre-financing, except public bodies)

• All other measures applicable to International open procedure apply by analogy

Local open tenderLocal open tender

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• Without publication (Annex IV):

• Beneficiary consults at least 3 suppliers of its choice and negotiate the terms of contract with one or more of them

• Can also be used for higher ammounts in exceptional cases listed in Art.7 of Annex IV

• All other measures applicable to International open procedure apply by analogy

Negotiated procedureNegotiated procedure

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• No Evaluation Committee needed for Single tender or Negotiated procedure based on a single tender

Do not mix with Negotiated procedure without publication (EvC needed)!!!

• In all cases, the Contracting Authority must prepare a report

• Explaining the manner in which the grant beneficiaries were identified and the amounts established

• And the grounds for the award decision

• Template in annex a10_ and a10_b to PRAG

• CA must follow the negotiation steps shown in the negotiation report templates (A10_a and A10_b) and ensure that basic principles relating to procurement procedures such as checking compliance with eligibility rules (nationality rules), capacity to carry out the contract and and exclusion criteria are duly applied

Negotiated procedure and Single tender

Negotiated procedure and Single tender