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General considerations EU Directives apply EU Directives do not apply

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2 General considerations EU Directives apply EU Directives do not apply
Brief overview of the principles of Public Sector Procurement with special consideration of European Territorial Cooperation programmes and projects: General considerations EU Directives apply EU Directives do not apply Controlling Public Procurement WORD OF WARNING! It is a complex matter! This presentation is not intended to provide guidance on how EU Directives and Member States legislation should or should not be applied. It is not a substitute for due consideration of the legislation and appropriate legal advice! I am now going to provide an overview of the principles of PP with special consideration of ETC programmes an projects. First, there is going to be a section on general condierations related to PP; The main part of the presentation is divided in two sections: First dealing with procurements subject to the EU Directives implementions thereof in the MS and then dealing with procurements not subject to the Directive. A Final part deals with the basics of controlling PP. Before I start, I would like to point out that public procurement rules are complex and there is much uncertainty not only within ETC but also in general. The following provides a very brief overview of the basics and is rather dense. Most likely you are going to have questions. In case you have questions, please be so kind as to take notes. There will be a presentation by EU COM after mine which will also explain some of the more important issues and a Q&A session. This presentation is not intended to provide guidance on how the Directive should or should not be applied. If there is any doubt about the application of the PPP rules, legal advice must be sought.

3 Public Procurement Basics – General Considerations
Why does Public Procurement matter? Public Procurement is one of the most important economic factors in European Member States: An estimated 16% of the European GDP Public Procurement law is highly dynamic and increasingly determined by European Directives Lack of tendering: Among the 3 most frequent errors in previous SF period! Before looking at the Legislation in some detail, let‘s spend a minute recalling why Public Procurement is important to the MS and the EU as a whole: The broad picture to keep in mind is that Public procurement in the EU is a vast market and a very important economic factor amounting to an estimated 16% of the European GDP. Due to its general importance and also relevance to the internal market, PP law is highly dynamic with a growing body of case law derived from decisions of the European Court of Justice. It is also increasingly determined by EU Directives and ist practicability and usability will evolve over time. In terms of ETC PP is also very important because –according to the European Court of Auditors- deficiencies in PP were among the 3 most frequent errors in the past SF period. For this reason programmes are now strongly encouraged to pay specific attention to PP. Effective public procurement is essential for good public services and the acquaiation of goods and services of better quality and a better price. . The EU Com estimates that the procurement market amounts to 16% of GDP worth €1800 billion in Its importance varies significantly between Member States ranging between 11% and 20% of GDP. EU Total public procurement in the EU – i.e. the purchases of goods, services and public works by governments and public utilities - is estimated at about 16% of the Union’s GDP or €1500 billion in 2002. Since the beginning of 2006, European Directives are formally implemented in the MS. Public procurement tends to obtain attention in cases where shortcoming –resulting in the waste of tax money- are detected by the court of auditors (Bundesrechnungshof). To buy goods and services of better quality and a better price. The opening up of public procurement within the Internal Market has increased cross-border competition and improved prices paid by public authorities. There remains potential for significant further competition in procurement markets and for further savings for taxpayers. Erhebliche Änderungen sind vor allem bei der EU-weiten Vergabe (oberhalb der neuen Schwellenwerte) anzutreffen. Hervorzuheben sind zum einen die Einführung eines „Wettbewerblichen Dialogs“ und zum anderen die Zulassung von Rahmenverträgen sowie der Einsatz von Subunternehmern z. B. durch Generalübernehmer. Schätzungen der Europäischen Kommission zufolge setzen öffentliche Auftraggeber in der Europäischen Gemeinschaft jährlich etwa 16 % des Bruttoinlandproduktes der EU für die Beschaffung von Waren und Dienstleistungen um, wertmäßig entspricht dies etwa Milliarden Euro. GDP: Gross Domestic Product

4 Public Procurement Basics – General Considerations
EU Procurement Directives (2004/18/EC and 2004/17/EC) relate to the award of contracts for public works, supplies and services and set up detailed rules for EU-wide competitive tendering procedures. The Directives are designed to: open up the EU's public procurement market to competition, prevent ‘buy national’ policies and promote the free movement of goods and services foster quality, transparency and fairness Member States implemented the EU Procurement Directives into national law and MS legislations provide further clarification to the EU Directives. The two EU PP Directives relate to the acquisition of works, supplies and services by public bodies. It provides a framework within which public procurement must be conducted, including detailed rules for EU-wide tendering. The Directives are designed to: stimulate EU-wide competition and to promote the free movements of goods and services and to foster the single market. They are also designed to foster quality of the goods and services obtained, transparancy of public sector acqusistions and overall fairness. Provisions of the EU Directive are widely drawn to cater 27 Member States. MS had to implement the Directives into national law by end of January 2006 the latest and provided further clarifications to the EU Directive in a national context. This means that normally it should be sufficient to consult national public procurement law when seeking advice. Implementation 1. The Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive no later than 31 January They shall forthwith inform the Commission thereof. The EU Directives covers a wide field of actions ranging from the purchase of routine supplies or services to formal tendering of large infrastructural projects by a wide and diverse range of contracting authorities. Die Mitgliedstaaten der EU sollen bei der Umsetzung der EG-Richtlinien in nationales Recht sicherstellen, dass (europaweite) Ausschreibungen in Zukunft mehr dem Wettbewerb unterliegen und mehr Informationen und Transparenz für Bieter geschaffen werden. Hierbei soll das Vergaberecht eine rechtsfehlerfreie Vergabe öffentlicher Aufträge gewährleisten und konkurrierenden Unternehmen die Möglichkeit bieten, gegen rechtsfehlerhafte Vergaben vorzugehen Public procurement is subject to Community and international rules although not all public procurement is subject to these obligations. Under these rules public sector procurement must follow transparent open procedures ensuring fair conditions of competition for suppliers. Some purchases can be exempted from Community rules under certain conditions (ex: arms, munitions and war material, if this is necessary for the protection of the essential interests of security) and purchases below thresholds must respect the principles of the Treaty only.

5 Public Procurement Basics – General Considerations
Applicable Rules and Guidelines (most relevant) COMMUNITY Legislation and Guidelines (most relevant) (1) Treaty and Value for Money Principle EU Procurement Directives Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors Relevant case-law Legal Acts (e.g., (EC) No 1564/2005 establishing standard forms for the publication of notices in the framework of public procurement procedures) The entire EU public procurement law comprises provisions of the EC Treaty, the General Budget, two Directives, a substantial body of case law, and a number of legal acts implementing the Directives, and a number of interpretative communications and guidelines of the Commission. Among the EU procurement directives: Directive 2004/18 is also called the ‘Public Sector Directive‘. It deals with procedures for the award of public work, public supplies and public service contracts. , Directive 2004/17, the ‚Utlities Directive‘ applies to entities operating in the…. The Utilities Directive generally allows for more flexibility compared to the Public Sector Directive and is not covered by my presentation.. There is also a growing number of relevant case-law And a number of Legal Acts for the implementation of the PP Directives such as the one establishing standard forms for PP notices. Vergaberichtlinien zur Koordinierung der Verfahren zur Vergabe öffentlicher Bau-, Liefer- und Dienstleistungsaufträge (die sog. „Klassische Richtlinie“) und die Richtlinie zur Koordinierung der Auftragsvergabe durch Auftraggeber im Bereich der Wasser-, Energie- und Verkehrsversorgung sowie der Postdienste (die sog. „Sektorenrichtlinie“) haben im wesentlichen das Ziel das Vergaberecht in den Mitgliedsstaaten zu verschlanken.

6 Public Procurement Basics – General Considerations
Applicable Rules and Guidelines (most relevant) COMMUNITY Legislation and Guidelines (most relevant) (2) EU COM Interpretative Communication 2006/C 179/02 on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives EU COM Guidelines for determining financial corrections to be made to expenditure co-financed by SF or the CF for non-compliance with the rules on public procurement Among the additional documents there are two, which are especially relevant to ETC: The first one, the Commission Intepretative Communication on the Community law... Explains how the EU COM expects the principles of the Treaty to be applied to below-threshold procurements. We will look at the content of this communication in more detail later. This document is also included in your conference folders! The second are the Guidleines on Financial Corrections, which gives a good overview of what the EU COM expects from proper procurement processes and how failure to comply should be sanctioned. This will be delat with in mode detail in the next presentation of EU COM. Some copies of this document can be found on the desk over there.

7 Public Procurement Basics – General Considerations
Applicable Rules and Guidelines (most relevant) MEMBER STATES Legislation and Guidelines MS public procurement legislation National / regional ERDF Public Procurement guides (if existing) PROGRAMMES Programme eligibility rules (if existing) INSTITUTIONS Institutional procurement rules (if existing) In addition to the Community rules, there is of course MS PP legislation with national laws and sometimes additional regional provisions. In some cases nation/regional Procurement guidelines exit speicfically for the ERDF world. Programmes may have set their own eligibility rules concenring the award of contracts complementing EU and national regulations. And finally institutions such as regional administrations can have additional procurement rules. In MS national EFRE eligibility rules for objective 1 and 2 can sometimes be recommended as guidelines for best practice also in cooperation programmes. For instance, in Austria, national EFRE eligibility rules state that they have guidance character for ETC but are not legally binding. National EFRE eigibility rules can have only guidance guidance character for ETC (e.g., Austria). AUSTRIA: there is one single law regulating the procurement law for whole Austria, namely the Bundesvergabegesetz 2006, BGBl I Nr 17/2006, (http://www.ris.bka.gv.at) direct contracting is possible up to an amount of Euro (exclusive of VAT). FRANCE: the threshold, under which no public procurement is necessary, differs from region to region. French project participants shall check Décret n° du 1er août 2006 portant code de s marchés publics. GERMANY: German Partners must act in respect of the Verordnung über die Vergabe öffentlicher Aufträge (Vergabeverordnung –VgV-). Further details about the application of the VgV are to be found in the Verdingungsordnung für Leistungen (VOL) and in the Verdingungsordnung für freiberufliche Leistungen (VOF). All documents can be found on: ITALY: Italian Partners must act in respect of Italian Public Procurement Code, Law n. 163 dated SLOVENIA: Slovenian Partners must act in respect of Slovenian Public procurement Law, Zakon o javnih naročilih ZJN -2 (Uradni list RS, 128/2006). Provisions of ZJN-2 are not used for procurements under threshold Euro (exclusive of VAT) for goods and services or Euro (exclusive of VAT) for constructions. National laws exist in the MS but in some MS, regions have introduced a few additional directives and decrees that apply above the thresholds (e.g., federal “Länder” in Germany).

8 Public Procurement Basics – General Considerations
Applicable Rules and Guidelines (most relevant) Does the EU Public Procurement Directive 2004/18 EC and MS implementations thereof apply? STEP 1 YES NO Treaties and Value for Money EU Procurement Directive Member States public procurement legislation (similar throughout EU) EU COM Interpretative Communication 2006/C 179/02 Member States public procurement legislation (vary throughout EU) STEP 2 Given the complexity of the matter, it can be very difficult to get started with the evaluation of a public procurement process This slides provides one possible approach to shedding light on the jungle of applicable rules. Here in a first step, we would decide whether or not EU procurement directives and MS implementations thereof apply. And I will explain the basics of that in a minute. In a next step, there can be two cases: In case of procurement subject to EU Directives, MS legislation will be similar throughout Europe and I will also outline the basics of the rules in a minute. In case the Directives do not apply, The EU COM Interpretative communication on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives. Here also MS procurement legislation is relevant but will differ from MS to MS. Finally, in all cases, additional information can be found in MS guidelines, Programme eligibility rules and institutional eligibility rules if existing. In all cases it will also be useful to consult the EU COM guidelines or determining..to get a good idea on what the EU COM expects. Member States public procurement guidelines Programme eligibility rules Institutional procurement rules EU COM Guidelines for determining financial corrections STEP 3

9 Public Procurement Basics – Directive 2004/18/EC
Does the EU Directive apply? The procuring body is a ‘contracting authority’ as defined in the Directive (except for entities operating in the water, energy, transport and postal services sectors): ‘Contracting authority’ means the State, regional or local authorities, bodies governed by public law, associations formed by one or several of such authorities or one or several of such bodies governed by public law. OR Private bodies in certain services connected with building works AND subsidised more than 50% (rarely relevant to ETC) STEP 1 The Regulations generally apply when three main pre-conditions are met: The procuring body is a "contracting authority" as defined in the rules. The definition is wide and includes central government, local authorities, associations formed by one or more contracting authorities and other "bodies governed by public law" (e.g. registered social landlords and fire authorities); 2) Article 8 Contracts subsidised by more than 50 % by contracting authorities: Service contracts which are subsidised directly by contracting authorities by more than 50 % and the estimated value of which, net of VAT, is equal to or greater than EUR and which are connected with a works contract within the meaning of point (a). Value amended to Directive 2004/18/EC and 1422/2007

10 Public Procurement Basics – Directive 2004/18/EC
STEP 1 Does the EU Directive apply? A ‘body governed by public law’ means any body: (a) established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character; (b) having legal personality; and (c) financed, for the most part, by the State, regional or local authorities, or other bodies governed by public law; or subject to management supervision by those bodies; or having an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law. The Directive provides the famous definition of Body governed by public law, which many programmes are familiar with as it has been used for the definition of eligible partners. I ma not going to o through this in detail but in general those are publicly controlled bodies and undertakings financed for the most part by public authorities and it can include Regional development agencies, groupings of municipalities and universities or other research facilities. — National Museums and Galleries — Research Councils — Fire Authorities — National Health Service Strategic Health Authorities — Police Authorities — New Town Development Corporations — Urban Development Corporations National Forest Service, Agricultural Research Department, groupings of muncipalities, port and airport authorities, (consortia for water engineering works, Tourism development, public establishments for cooperation between local authorities, water supply agencies, Entsorgung (Straßenreinigung, Abfall- und Abwasserbeseitigung, swimming baths, sports facilities Many programmes know this because of eligibility of PEB!! Directive 2004/18/EC

11 Public Procurement Basics – Directive 2004/18/EC
Does the EU Directive apply? The contract is a public works, services or supplies contract (services listed in Annex II/2 not fully subject to Directives such as health, social and legal services) 3) The estimated value of the contract (net of VAT) equals or exceeds the relevant financial threshold. Very basically, for: Service and Supply Contracts: Central Government: over EUR (excl. VAT) Local and Regional Authorities: over EUR (excl. VAT) Public Works Contracts: over EUR (excl. VAT) Thresholds updated every 2 years! Member States may also set lower thresholds! STEP 1 The second condition of course is that it is a public works, services or supplies contract. The Directive does also not fully apply to services listed in Annex II/2 such as Education services, Health and social services and Legal services. For those only rules on technical specification and advertising apply. The Directive does also not apply to specific contracts such as employment contracts (e.g., between the contracting authority and the JTS), inhouse contract awards (e.g., contracts between a contracting authority and a private body controlled fully by the contracting authority) and specific reserach and development services. Thresholds are updated every 2 years to take account of currency fluctuations . Last update (amendment to the directive 2004/18/EC): 4 December Directive 2004/18/ and 1422/2007 EC This Directive shall not apply to public service contracts for: (a) the acquisition or rental, by whatever financial means, of land, existing buildings or other immovable property or concerning rights thereon; nevertheless, financial service contracts concluded at the same time as, before or after the contract of acquisition or rental, in whatever form, shall be subject to this Directive; (b) the acquisition, development, production or co-production of programme material intended for broadcasting by broadcasters and contracts for broadcasting time; (c) arbitration and conciliation services; (d) financial services in connection with the issue, sale, purchase or transfer of securities or other financial instruments, in particular transactions by the contracting authorities to raise money or capital, and central bank services; (e) employment contracts; (f) research and development services other than those where the benefits accrue exclusively to the contracting authority for its use in the conduct of its own affairs, on condition that the service provided is wholly remunerated by the contracting authority. Sometimes the contract will be a mixed contract (e.g. for the supply and maintenance of computers). Where it is, a contracting authority must determine, in accordance with the rules, the predominant element of the contract and, therefore, which set of rules will apply. This is important to get right as the rules vary slightly depending on the type of contract (e.g. lower financial thresholds apply to services and supplies contracts than to works contracts); The estimated value of the contract (net of VAT) equals or exceeds the relevant financial threshold. Purchases below thresholds must respect the principles of the Treaty only. The rules expressly prohibit deliberately splitting contracts to bring them below the thresholds. The current thresholds are: £3,611,319 for the procurement of works; £93,738 for the procurement of supplies and so-called Part A services by Central Government bodies, and £144,371 for the procurement of supplies and Part A services by other public sector bodies. Contracts caught by the Regulations must be advertised by way of an OJEU notice i.e. a standard form notice placed in the EU's Official Journal. Use of the standard form notices is mandatory, and they are available on the EU's SIMAP website. The threshold set by the Directive is rather high by the standards of many cooperation projects. In other words, for most contract awards within the framework of ETC, full tenders will not be necessary. Furthermore many bodies under public law that are defined as ‘contracting authorities’ do not apply public procurement legislation to contracts below the EU thresholds. Why are we discussing them anyway? First in transforming the EU Directive into national law, some MS have made these procedures also available for below threshold tenders (e.g., Austria). Below the thresholds, in some countries (e.g., German) procurement legislation can also stipulate procedures similar to those above the EU threshold but under different names. The legislative package of public procurement Directives, approved in 2004 by the European Parliament and the EU's Council of Ministers, will help simplify and modernise procurement procedures, for example by facilitating electronic procurement in the public sector. Procurement projects with a value over a stipulated threshold for goods and services and in certain spend categories (most, but not all, of government’s key spend areas) are fully subject to the EU Procurement Directives. These procurements must be advertised in the Official Journal of the EU (OJEU) and meet set timescales, from the initial notice to contract award, and define, for example, the minimum time during which suppliers must be allowed to respond. The Directives also provide for four main procurement procedures to be used by authorities.

12 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies Very basic implications Where these three pre-conditions are satisfied a contracting authority must normally: 1 Advertise the contract in the EU's Official Journal Carry out procurement procedures in line with applicable law Select bidders according to selection critera (non-discriminatory and transparent) Award contract according to award criteria (non-discriminatory and transparent) Stick to the time frames 2 3 4 Legal Acts: (EC) No 1564/2005 establishing standard forms for the publication of notices in the framework of public procurement procedures . Carry out the procurement in line with the applicable national law Publish the call for tenders (EU-wide or on national level only, depending on contract value Select best or cheapest offer according to procedures Award contract accordingly Stick to time frames 5 Always check Member States legislation!

13 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 1 Publication in the EU Official Journal (OJEU) Legal Acts: (EC) No 1564/2005 establishing standard forms for the publication of notices in the framework of public procurement procedures . A common fedature of all award procedures is the requirement to publish a contract notice in the OJEU. Official Journal of the European Union /TED (Tenders Electronic Daily)

14 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 2 Choice of procurement procedures (1) Open All interested parties can submit a tender in response to the OJEU notice (albeit only those meeting the contracting authority's selection criteria, if there are any, will be entitled to have their tender assessed). No negotiation with the bidders is permitted. There are no restrictions under the Directives as to when the procedure can be used. There are 4 types of procurement procedures set out in the Directive, namely open, restricted, negotiated and competitive dialogue. The so called open procedure is similar to an open call of cooperation programmes. The contracting authority publishes a contract notice specifying selection and ward criteria and all parties interested in the contract can submit a tender in response to the OJEU notice. Also exist: Framework agreements, Electronic auctions, Dynamic purchasing systems In awarding public contracts, contracting authorities apply the national procedures adjusted for the purpose of implementing the EU Directive. For this reason, national procurement laws across Europe are similar at least for those procurement processes that are covered by the EU Directives. This also means that in these cases normally it should be sufficient to consult national law when seeking information.

15 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 2 Choice of procurement procedures (2) Restricted All interested parties may express an interest in tendering for the contract but only those meeting the contracting authority's selection criteria will actually be invited to submit a tender. No negotiation with the bidders is permitted. There are no restrictions under the Directives as to when the procedure can be used. The restricted procedure is similar to a two-step call in which a short list is made of interested economic operators invited to tender. only a limited set of those responding to the contract notice are invited to submit a tender.

16 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 2 Choice of procurement procedures (3-1) Negotiated WITH prior publication Under the negotiated procedure with prior publication, an OJEU notice must be published. Tenderers are invited to negotiate the terms of the contract with the contracting authority. This procedure can only be used in the limited circumstances described in the Directive (e.g., contract specification cannot sufficiently be established). Negotiated procedures allow the contracting authority to negotiate a contract with tenderers. There are two types of negotiated procedure. Negotiated procedure with prior publication: This can only be used in a limited number of circumstance described in the regulations such as cases in which contract speicfications cannot sufficiently be established. Competitive Dialogue is a rather new procedure only applicable to particularly complex contracts such as complex IT networks or projects involving complex financing. The Regulations do not set out any rules to govern the conduct of negotiations, which means that the contracting authority can, within certain parameters, establish its own procedures for the negotiation and tender stage.

17 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 2 Choice of procurement procedures (3-2) Negotiated WITHOUT prior publication Under the negotiated procedure without prior publication, the contracting authority is not required to issue an OJEU notice and may negotiate directly with the supplier of its choice. This procedure can only be used in the limited circumstances described in the Directive (e.g., extreme urgency, for technical or artistic reasons or for reasons connected wit the protection of exclusive rights) COMPETITIVE DIALOGUES: In the case of particularly complex contracts. That allows for a dialogue between the contracting authority and ielected candidates prior to the tender phase. All interested parties may express an interest in tendering for the contract but only those meeting the contracting authority's selection criteria will actually be invited to do so. During the ‘dialogue’ phase, tenderers are able to discuss all aspects of the contract individually with the contracting authority. Once the dialogue has generated solutions to the agreed requirements, final tenders are invited based on each tenderer's individual solution. The best tender can then be selected, but there is very limited room for any further changes to be made once submitted. Competitive dialogue: e.g., for integrated transport infrstructure, IT networks, projects involving complex financing. Choice of procurement procedures (4) Competitive Dialogue (for very complex contracts only)

18 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 2 Cases justifying the use of negotiated procedure without publication of a contract notice (1): Urgency or only one operator available Extreme urgency due to unforeseeable events. Applies to e.g. natural disasters rather than tight schedules For technical or artistic reasons or reasons connected to the protection of exclusive rights: contract can only be executed by one particular ecomonic operator. Very limited. There is normally more than one potential supplier i.e. normally not applicable The negotiated procedure without publication of a contract notice allows, under certain circumstances, a procedures without publication of an advertisement. It might thus be seen as very convenient by contracting authorities. There is a growing tendency in cooperation projects to use procurement procedures without prior publication. Here it has to be kept in mind that the Directve quite narrowly stipulates conditions under which this can be done. Extreme urgency and unforeseen events relates to events outside of the sphere of influence of the contracting authority such as natural disasters. It does NOT refer to internal factors such as tight schedules (e.g., in case the contracting authority started the procurement process too late). The second criteria is frequently chosen by projects, which argue that there is only one potential supplier (e.g., the contractoe, who prepared the AF). These derogations, in the view of the EU COM, can also be applied to contract awards below threshold provided they meet the conditions laid down in the Directive for one of the derogations

19 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 2 Cases justifying the use of negotiated procedure without publication of a contract notice (2): Additional work or services not included in the original contract For additional works or services not included in the original contract, when such work: Cannot be technically or economically separated from the original contract OR Is strictly necessary for its completion May not exceed 50% of the amount of the original contract. The most freqeuent case for the application of the negotiated procedure without publication (source: wikipedia) is the conduction of additional works or services not included in the original contract. This can, however, only be done in cases where contracts cannot be separated or additional work is absolutely necessary for its completion OR where contracts could be technically separated but the additional work is absolutely necessary for its completion. In addition the additional work must relate to unforeseen events, which were not foreseeable at the time of the procurement of the original contract. Wording is here ‘unforeseen events’. In case of ‘extreme urgency’ it is: ‘extreme urgency brought about by events unforeseeable by the contracting authority’. There is a growing tendency in cooperation projects to use procurement procedures without prior publication. Here it has to be kept in mind that the Diretcive quite narrowly stipulates conditions under which this can be done. Also these rules have been applied to below threshold contracts by some MS (e.g., Austria).

20 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 3 Selection (1): Verification of the suitability of tenderers (open procedure) Selection of candidates (restricted and negotiated procedure): EXCLUSION: A contracting authority must exclude a bidder from the procurement process, in cases where a bidder has been convicted of involvement in organised crime, corruption, fraud or money laundering. SELECTION (1): A contracting authority may exclude a bidder from the process, in cases where certain grounds concerning the supplier's personal position are met (e.g. bankruptcy, professional misconduct, non-payment of social security or taxes). Contracting Authorities can ask bidders and competent authorities (also in other MS) to provide relevant documents / information! In a tender procedure is it important to clearly distinguish between selection of tenderers (open procedure) and selection of candidates (restricted or negotiated procedures) on the one hand and the award of the contract on the other hand. In the selection process the contracting authority excludes a bidder from the process, without any assessment of the quality of the offer itself. This is much like the eligibility check in calls for proposals of cooperation porgrammes. A contracting authority MUST exclude … A contracting authority may automatically exclude a bidder …. Where appropriate, the contracting authorities should ask candidates or tenderers to supply relevant documents and, where they have doubts concerning the personal situation of a candidate or tenderer, they may seek the cooperation of the competent authorities of the Member State concerned. It is now mandatory to exclude suppliers convicted of involvement in organised crime, corruption, fraud or money laundering. Article 45 Personal situation of the candidate or tenderer: 1. Any candidate or tenderer who has been the subject of a conviction by final judgment of which the contracting authority is aware for one or more of the reasons listed below shall be excluded from participation in a public contract: (a) participation in a criminal organisation, as defined in Article 2(1) of Council Joint Action 98/733/JHA (1); (b) corruption, as defined in Article 3 of the Council Act of 26 May 1997 (2) and Article 3(1) of Council Joint Action 98/742/JHA (3) respectively; (c) fraud within the meaning of Article 1 of the Convention relating to the protection of the financial interests of the European Communities (4); (d) money laundering, as defined in Article 1 of Council Directive 91/308/EEC of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering (5). Any economic operator may be excluded from participation in a contract where that economic operator: (a) is bankrupt or is being wound up, where his affairs are being administered by the court, where he has entered into an arrangement with creditors, where he has suspended business activities or is in any analogous situation arising from a similar procedure under national laws and regulations; (b) is the subject of proceedings for a declaration of bankruptcy, for an order for compulsory winding up or administration by the court or of an arrangement with creditors or of any other similar proceedings under national laws and regulations; (c) has been convicted by a judgment which has the force of res judicata in accordance with the legal provisions of the country of any offence concerning his professional conduct; (d) has been guilty of grave professional misconduct proven by any means which the contracting authorities can demonstrate; (e) has not fulfilled obligations relating to the payment of social security contributions in accordance with the legal provisions of the country in which he is established or with those of the country of the contracting authority; (f) has not fulfilled obligations relating to the payment of taxes in accordance with the legal provisions of the country in which he is established or with those of the country of the contracting authority;

21 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 3 Selection (2): Verification of the suitability of tenderers (open procedure) Selection of candidates (restricted and negotiated procedure): SELECTION (2): Bidders may also be assessed and excluded on the basis of their economic and financial capacity (e.g. annual turnover for past three years) and technical capacity (e.g. experience of similar contracts over the past five years). The contracting authority must specify non-discriminatory selection criteria in the contract notice as well as any minimum standards (e.g. a minimum turnover requirement)! Bidders can also be assessed and excluded on the basis of their economic and financial capacity (e.g. annual turnover for past three years) and technical capacity (e.g. experience of similar contracts in the past five years). For this purpose, non-discriminatory criteria … which the contracting authorities may use when selecting competitors and the means which economic operators may use to prove they have satisfied those criteria. Under the Regulations, the shortlisting rules or criteria must be specified in the OJEU notice, and any minimum standards (e.g. a minimum turnover requirement) must also be specified in the notice. Verification of the suitability and choice of participants and award of contracts 1. Contracts shall be awarded on the basis of the criteria laid down in Articles 53 and 55, taking into account Article 24, after the suitability of the economic operators not excluded under Articles 45 and 46 has been checked by contracting authorities in accordance with the criteria of economic and financial standing, of professional and technical knowledge or ability referred to in Articles 47 to 52, and, where appropriate, with the non-discriminatory rules and criteria referred to in paragraph The contracting authorities may require candidates and tenderers to meet minimum capacity levels in accordance with Articles 47 and 48. The extent of the information referred to in Articles 47 and 48 and the minimum levels of ability required for a specific contract must be related and proportionate to the subjectmatter of the contract. These minimum levels shall be indicated in the contract notice. 3. In restricted procedures, negotiated procedures with publication of a contract notice and in the competitive dialogue procedure, contracting authorities may limit the number of suitable candidates they will invite to tender, to negotiate or to conduct a dialogue with, provided a sufficient number of suitable candidates is available. The contracting authorities shall indicate in the contract notice the objective and non-discriminatory criteria or rules they intend to apply, the minimum number of candidates they intend to invite and, where appropriate, the maximum number. The contracting authorities shall invite a number of candidates at least equal to the minimum number set in advance. Where the number of candidates meeting the selection criteria and the minimum levels of ability is below the minimum number, the contracting authority may continue the procedure by inviting the candidate(s) with the required capabilities. In the context of this same procedure, the contracting authority may not include other economic operators who did not request to participate, or candidates who do not have the required capabilities.

22 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 4 Award of Contract: Lowest price: The lowest priced tender wins. No other element of the tender may be taken into account OR The most economically advantageous tender (MEAT): Factors other than or in addition to price, like quality, technical merit , running costs and delivery period can be taken into account A contracting authority must award a contract on the basis of either: If MEAT is being used: the headline contract award criteria (e.g. "price, quality of services, risk to contracting authority etc.") must be set out either in the OJEU notice or the tender documents; and the weighting of each criterion must also normally be given, either as an exact number or as a meaningful range (e.g. 'price: 30%-40%'). Article 53 Contract award criteria: the contracting authority shall specify in the contract notice or in the contract documents or, in the case of a competitive dialogue, in the descriptive document, the relative weighting which it gives to each of the criteria chosen to determine the most economically advantageous tender. The contracting authority must specify non-discriminatory award criteria and the relative weighting it gives to each of the criteria (e.g., in the contract notice).

23 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 4 Information and Debriefing: On request the contracting authority must give any unsuccessful bidder: The reason why the tender/application was rejected The relative advantages of the tender selected as well as the name of the successful bidder Information must be provided within 15 days! Such information includes in particular, in the form of a summary, the reasons as laid down in Directives 2004/17/EC and 2004/18/EC respectively (Article 41). Remedies Directives: 89/665 and 92/13 On the basis of public consultations and an impact assessment, the Commission has put forward a proposal for a Directive, amending Council Directives 89/665/EEC and 92/13/EEC, which aims to improve the effectiveness of national review procedures for the award of public contracts. The proposed Directive was submitted for adoption under the 'co-decision' procedure to the European Union's Council of Ministers (subject to qualified majority voting) and the European Parliament. An agreement at first reading was reached. The Directive has been formally adopted and has been published as Directive 2007/66/EC on 20 December Member States have until 20 December 2009 to implement the new Directive into national law. Main content: 10 days stand still period. Require all MS to ensure that effective remedies are made available to unsuccessful bidders who believe that they have been harmed by an infringement of procurement rules. Complaints can be made to national courts. Complaints can also be made to the EU COM which may start formal proceedings against the MS at the European Court of Justice. Debriefing of unsuccessful candidates can also be regulated at MS level.

24 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 5 Minimum Time Scales Open Procedure Contract Award Notice to OJEU Contract Notice Receipt of Tenders Notification of Winner Contract Award The directive sets out detailed rules regarding time limits for advertising of contracts, standstill between the notification of the winner and the contract award and the publication of the contract award notice. Reductions are possible in cases of PIN or when the procurement process is conducted electronically. Article 38: Time limits for receipt of requests to participate and for receipt of tenders In the case of open procedures, the minimum time limit for the receipt of tenders shall be 52 days from the date on which the contract notice was sent. When contracting authorities have published a prior information notice, the minimum time limit for the receipt of tenders under paragraphs 2 and 3(b) may, as a general rule, be shortened to 36 days, but under no circumstances to less than 22 days. Electronic communication – 7 day reduction for electronic notices 5 day reduction for electronic tender docs All timescales must be reasonable 10 days Mandatory standstill period 48 days max 52 days minimum Less with Prior Information Notice and/or electronic communication Not specified 10 days min

25 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 5 Minimum Time Scales Restricted Procedure request to participate Receipt of Contract Award Notice to OJEU Selection of candidates Contract Notice Receipt of Tenders Notification of Winner Contract Award 37 days minimum Less with electronic com. and/or ‘Accelerated procedure’ 40 days min Less with PIN, electronic com. and/or ‘Accelerated procedure 10 days min 48 days max Not specified Minimum number of selected candidates: 5

26 Public Procurement Basics – Directive 2004/18/EC
STEP 2 EU Directive Applies - 5 Minimum Time Scales Negotiated Procedure Receipt of request to participate Selection of candidates Contract Award Notice to OJEU Receipt of Final Offers Contract Notice Contract Award Notification of Winner Negotiation 37 days minimum Less with electronic com. and/or ‘Accelerated procedure’ 10 days min 48 days max Not specified Minimum number of selected candidates: 3

27 Public Procurement Basics – Below EU Threshold or
Services listed in Annex II B of 2004/18/EC STEP 2 EU Directive does NOT Apply In ETC the Directive do NOT apply to the majority of contracts. In these cases, the following still apply: Principles of the Treaty and EU COM Interpretative Communication 2006/C 179/02 Principle of value for money MS public procurement legislation and procurement guidelines (if any) EU COM Guidelines for determining financial corrections (see presentation of EU COM) 1 2 3 4 EU Directives apply to the majority of public procurements exceeding the EU threshold. As you will be aware of, the thresholds are rather high for the standards of cooperation projects and 99% of the procurements within the framework of ETC will not directly be affected by the Directives and their implementation into national law. In ETC EU Procurement Directive does NOT apply to a wide range of contracts such as: Organisations that are not defined a ’bodies governed by public law’ (except in cases of subsidised contracts) Contracts below the thresholds for application of the Public Procurement Directives Does not apply to organsiations that are not financed or supervised by public sector bodies (except in cases of subsidised contratcs). The Directive does also not fully apply to services listed in Annex II/2 such as Education services, Health and social services and Legal services. For those only rules on technical specification and advertising apply. In addition there can be applicable programme eligibility rules and/or instititional rules!

28 Principles of the Treaty
Public Procurement Basics – Below EU Threshold or Services listed in Annex II B of 2004/18/EC STEP 2 EU Directive does NOT Apply - 1 Principles of the Treaty Fundamental principles of the Treaty to be observed: Non-discrimination on grounds of nationality (Article 18 TFEU [ex Article 12]) and equal treatment Free movement of goods and prohibition of quantitative restrictions on imports and exports and measures having equivalent effect (Article 34 [ex Article 28]) Right of establishment (Article 49 et seq. [ex Article 43 et seq.), also including activities as self-employed persons Freedom to provide services (Article 56 et seq. [ex Article 49 et seq.]), Transparency, proportionality and mutual recognition There is no definition of public procurement in the Treaties. Also there are no provisions in the Treaty, which refer directly to public procurement. But: the fundamental principles in the Treaty apply to public contracts, namely: No discrimination on grounds of nationality (Artcle 18 – Consolidated version of TFEU - Treaty on the fucntioning of the European union – 9 May 2008) ex Article 12 (previous version) and equal treatment of men and women (case law) Free movement of goods and prohibition of qunatitative restrictions on imports and exports and measures having equivalent effect (Artcle 34) Freedom of establishment (Aricle 49) such as the the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State. Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 54, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the Chapter relating to capital. Freedom to provide services in other MS (Article 56 - (ex Article 49 TEC): Within the framework of the provisions set out below, restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended. The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may extend the provisions of the Chapter to nationals of a third country who provide services and who are established within the Union. Transparency, proportionality and mutual recognition of diplomas. Also applies above threshold!

29 Principles of the Treaty
Public Procurement Basics – Below EU Threshold or Services listed in Annex II B of 2004/18/EC STEP 2 EU Directive does NOT Apply - 1 Principles of the Treaty The European Court of Justice has confirmed that the Internal Market rules of the EC Treaty apply also to contracts outside the scope of the Public Procurement Directives Commission Interpretative Communication on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives (2006/C 179/02) Principles of the Treaty apply specifically to intended contracts, which might potentially be of interest to ecomomic operators located in other Member States (case-by-case based on value, geography, sector concerned, etc.) In its case law, the ECJ has confirmed that… Having said that, what immediately may come to your minds, what does the application of these principles really mean in the case of public procurement? On various occasions MS have asked the EU CM for guidance on how they should apply the basic principles deriving from this case-law. The EU COM has thus published an Interpretative Communication which oulines EU COM understanding of what it means to apply the principles of the Treaty to public procurement. If the contracting entity comes to the conclusion that a contract is of potential relevance to the internal market, it has to award it in conformity with the basic standards derived from community law EU COM interpretative communication. Only if contratcs are below threshold and have no direct relevance to the internal market, internal market rules of the EC treaty do not apply. It is up to the contracting authority to decide whether an intended contract award might be of interest to ecomomic operators in oether MS. Based on sub-ject matter of the contract, estmated value, speicfities of the sector concerned, and the goegraphic location of the place of performance. Because of special circumsatnces such as very modest ecomomic interest at stake a contract award can be of no interest to operators located in other MS. According ot the COCOF paper on management verification, even where contratcs fall below EC threshold, an adequate level of advertising of the conrtac should have been made in order to ensure that the Treaty’s general principles of equal treatment and transparency have been observed. Although below-threshold contracts are not caught by the Regulations, there are indications that where the contract is potentially of interest to suppliers located in other EU Members States, contracting authorities must still procure them in line with the general EC Treaty principles of non-discrimination, equal treatment, transparency, proportionality and mutual recognition. Wikipedia: Aber: Seit Mitte 2006 liegt auch eine interpretierende Mitteilung der EU-Kommission zum Rechtsschutz unterhalb der Schwellenwerte vor. Hiergegen hat jedoch die Bundesregierung Klage wegen Kompetenzüberschreitung erhoben, denn es bestand und besteht die Befürchtung, dass über diesen Weg doch ein Rechtsschutz unterhalb der Schwellenwerte eingeführt werden könnte. Durch die geplante zweite Stufe der Vergaberechtsnovelle könnte in Zukunft jedoch auch im Unterschwellenbereich ein Primärrechtsschutz für übergangene Bieter eingeführt werden. Es bleibt jedoch abzuwarten ob und wenn ja in welcher Form der Gesetzgeber einen solchen im Gesetz verankern wird. Es bestünde zum Einen die Möglichkeit, den oberschwelligen Rechtsschutz auf die Vergaben im Unterschwellenbereich auszuweiten. Zum Anderen wäre auch eine Modifikation des Rechtsschutzes im Oberschwellenbereich für Vergaben unterhalb der Schwellenwerte denkbar oder aber die Neugestaltung eines speziellen Vergaberechtsschutzes für den Unterschwellenbereich.

30 Principles of the Treaty – EU Interpretative Communication
Public Procurement Basics – Below EU Threshold or Services listed in Annex II B of 2004/18/EC STEP 2 EU Directive does NOT Apply - 1 Principles of the Treaty – EU Interpretative Communication Fundamental principles of the Treaty imply obligation to ensure adequate advertising: On the contracting entity’s webpage AND/OR On portal sites for contracting advertisements AND/OR National official journals AND/OR Official Journal of the European Union Undertakings in other MS must have access to appropriate information and be in a position to express their interest Contacting potential suppliers not sufficient! What these principles imply in practice is that the contract has to be "adequately" advertised and some form of fair competition run thereafter. Publication on the contrctcing entities own website are flexible and cost-effetcive. Portal sites specifically created for the puropose of advertising contract awards have a higher visibility and better serach options. National official journals, national journals specialising in public procurement announcements Publication in the official journal is not mandatory below the threshold of the EU Directive but could be an interesting option for larger contratcs A degree of advertising sufficient to enable the market to be opened up to competition and acces of undertaking in other MS to information. The EU COM is of the view that the parctice of contacting a number of potential tenderers in other MS would not be sufficient in this respect even if the contarcting authority contacts all potential tenderes. Such a selective procedure cannot exclude discrimination against potential tenderers from other MS, in particular new entrants to the market.

31 Principles of the Treaty – EU Interpretative Communication
Public Procurement Basics – Below EU Threshold or Services listed in Annex II B of 2004/18/EC STEP 2 EU Directive does NOT Apply - 1 Principles of the Treaty – EU Interpretative Communication Fundamental principles of the Treaty imply obligation to ensure impartiality of the contract award procedures: Non-discriminatory description of the subject matter of the contract Non-discriminatory description of conditions Mutual recognition of diplomas, certificates etc. Appropriate time-limits Transparent and objective approach The description of the characteristics required of a service should not refer to a specific process, trade mark, patents, etc unless such as reference is justified by the subject matter and accompanied by the words ’or equivalent’. The description of conditions should not impose conditions causin direct r indirect discrimnination against potential tenderers from other MS such as the requirement that undertaking intersted in the contratc must be established in the same MS as the contratcing authority. Mutual recognition of evidence of formal education Time-limits should be long enough to allow undertakings from other MS to make a meaningful assessment and prepare their offer. All participants must be able to know the applicable rules in advance and must have certainty that these rules apply to everybody in teh same way. ABH has translated the interpretative communication and used it as baiss for programme rules! Programmes can use EU COM Interpretative Communication as basis for programme rules!

32 Principle of Value for Money
Public Procurement Basics – Below EU Threshold or Services listed in Annex II B of 2004/18/EC STEP 2 EU Directive does NOT Apply - 2 Principle of Value for Money The principles of economy, efficiency and effectiveness apply: Economy: appropriate timing, quantity and quality and at the best price Efficiency: best relationship between resources employed and results achieved Effectiveness: attaining the specific objectives set .. There is, however, no prescribed or one-size-fits-all approach to VfM and it will have to be decided on a case-by case basis. COUNCIL REGULATION (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities The principle of sound financial management should be defined by reference to the principles of economy, efficiency and effectiveness. The principle of economy requires that the resources used by the institution for the pursuit of its activities shall be made available in due time, in appropriate quantity and quality and at the best price. The principle of efficiency is concerned with the best relationship between resources employed and results achieved. The principle of effectiveness is concerned with attaining the specific objectives set and achieving the intended results. that the selection procedure is laid down transparently and that the principles of economic and efficient use of funds is obeyed...... Also applies above threshold!

33 Member States Public Procurement Legislation (below threshold)
Public Procurement Basics – Below EU Threshold or Services listed in Annex II B of 2004/18/EC STEP 2 EU Directive does NOT Apply - 3 Member States Public Procurement Legislation (below threshold) Several possibilities, including: Provisions below EU threshold similar to those above (i.e.,. some principles of EU procurement procedures also apply to procurements below threshold) (Additional) provisions ONLY applicable to below-threshold procurements exist No provisions for procurements below EU threshold - Treaty principles and value for money still apply National regulations vary E.G., Some national public procurement systems foresee administrative decisions approving the type of PP procedure chosen by the contracting authority UK: EU Directives apply to the majority of procurements with a total value over a specified threshold. Procurements which are below threshold are not covered by the UK regulations, but are still subject to EU Treaty principles.

34 Programme Eligibility Rules (if any)
Public Procurement Basics – Additional Provisions Programme Eligibility Rules (if any) STEP 3 Additional Provisions Programmes can (and often do) set special rules on procurement, including: Require all partners (i.e., including privates) to observe public procurement rules Set programme thresholds for advertising Set requirement to request at least 3 offers Set further limits to direct contract awarding In the light of the fact that projects are co-funded with public funds in some programmes provisions exist that make the application of public procurement rule also mandatory for private partners (e.g., Alpine Space). . which shall be used in that also private partners shall commit themselves to follow the public procurement rules of the compliance with the principles of efficiency, economy and expediency the Partner States have agreed hat also private partners shall commit themselves to follow the public procurement rules of the country in which they are located. Programmes can also set a threshold (e.g, EUR) above which the transparency principle implies a publication of the contract notification (ABH Programme). Or, programmes may have set a threshold (e.g., 2000 EUR) above which at least 3 companies have to be invited to submit an application (ABH). Direct tendering: Inviting an offer from a single supplier and awarding the contract without any competition. Usually only allowed under rare and clearly specified circumstances, such as - an exceptional emergency (Where an unforeseen event is likely to cause immediate danger to people or property) OR Urgent expert technical or legal support may be required for a project (Yorkshire and Humber ERDF Procurement guide). Exclusive rights such as rights to certain materials/information –i.e. Ordnance survey maps The problem with requesting 3 offers in some MS is that the emere request of offers leads to the opening of more stringent procurement procedures such as the negotation without prior publication. So while teh intention of the contartcing authority was to be especially careful and tarnsparent by inviting 3 companies to place an offer, in relaity they started a procuremnt procedure, which they then did not stick to. For this reason it willbe better to request 3 non-committal price informations. Direktvergabegrenzen: AUSTRIA: there is one single law regulating the procurement law for whole Austria, namely the Bundesvergabegesetz 2006, BGBl I Nr 17/2006, (http://www.ris.bka.gv.at) direct contracting is possible up to an amount of Euro (exclusive of VAT). FRANCE: the threshold, under which no public procurement is necessary, differs from region to region. French project participants shall check Décret n° du 1er août 2006 portant code de s marchés publics. GERMANY: German Partners must act in respect of the Verordnung über die Vergabe öffentlicher Aufträge (Vergabeverordnung –VgV-). Further details about the application of the VgV are to be found in the Verdingungsordnung für Leistungen (VOL) and in the Verdingungsordnung für freiberufliche Leistungen (VOF). All documents can be found on: ITALY: Italian Partners must act in respect of Italian Public Procurement Code, Law n. 163 dated 12- SLOVENIA: Slovenian Partners must act in respect of Slovenian Public procurement Law, Zakon o javnih naročilih ZJN -2 (Uradni list RS, 128/2006). Provisions of ZJN-2 are not used for procurements under threshold Euro (exclusive of VAT) for goods and services or Euro (exclusive of VAT) for constructions. Institutional Procurement Rules (if any) Vary widely

35 Controlling Procurement
General Considerations Programmes / First Level Control should aim to ensure that public procurement rules are complied with and that the principles of the Treaty have been respected as well as the principles of value for money Programmes need to provide clear guidance to projects early on!!! EU COM recommends that MS develop guidance on public procurement for beneficiaries (see EU COM Guidance document on management verifications) e.g., as part of the supporting documents for the programmes Controls should be carried out as soon as possible after the public procurement process has occurred Guidance document on mamangement verification to be carried out by MS on operations co-fiannced by the SF and the CF for the 2007 – 2013 progarmming period. It is the task of the FLC body of each project participant (see also fact sheet on Financial Control System) to check if the public procurement rules have been followed and if the whole procedural documentation is orderly saved and stored by the project participant and at disposal for any further control and check for a period of three years following the closure of the programme (i.e. at least until end of 2022), either in original or as certified copies on commonly used data media safely and orderly. In case that the FLC body comes to the result that public procurement rules were not obeyed, the respective costs are not eligible for co-funding by the programme. In addition to the FLC, audits will/may be carried out by auditing bodies of the programme, the EU or of the state the respective project participant is situated in. Also these audits may cover the check if public procurement rules have been obeyed. Any irregularity detected might lead to the obligation of the project to repay ERDF- funds already received The longer problems go undetected, the more likely that most of the contract value will be rejected This section is based on the Commission Guidance document on management verifications (June 2008). It is otherwise difficult to take corrective actions at a later date. Verifications should be carried out as soon as possible after the particular process has occurred as it is often difficult to take corrective action at a later date. MS guidance on PP is particularly useful where beneficiaries are involved in one-off‘ contracts and lack relevant expertise. Some MS have already developed guidelines (which ones?). One good practice would be to send procurement guidelines to approved projects as annex to the project offer. (Government office for East Midlands). Programmes should also Include procurement knowledge in capacity checking The following should be communicated to the projects by programmes: In cases where doubts exist about the application of PP law (e.g., after consultation with lawyers) it may be better to err on the side of caution. Alpine Space: It is the task of the FLC body of each project participant (see also fact sheet on Financial Control

36 Controlling Procurement
General Considerations In sample checks, intensity of controls may vary according to risk factors such as the value, type of contract and (lack of) experience of the contracting authority A list of new contracts with all claims for each project is useful (FLC) Check if all documents proving adherence to public tender rules are kept by project (FLC) In case of doubt, obtain legal advice Other risk factors can. For exmaple, include cases where the contartcing authority is known to be inexperienced. According ot the COCOF paper on management verification, even where contratcs fall below EC threshold, an adequate level of advertising of the conrtac should have been made in order to ensure that the Treaty’s general principles of equal treatment and transparency have been observed. Kept by the project (Archiving!) The Legislation has various ifs and and ors and in case of doubt, ...

37 Controlling Procurement
Things to check (potentially) FLC often checks specifically for frequent errors (e.g., lack of public procurement, exceedance of threshold through splitting up into smaller assignments, in-house contracting). Comprehensive checks can also include, for example: Specification Stage: Has the correct tender procedure been used? Have brand names or other references been avoided, which favour or eliminate potential providers or services? Has it been sufficiently advertised? Other risk factiors can. For exmaple, include cases where the contartcing authority is known to be inexperienced. According ot the COCOF paper on management verification, even where contratcs fall below EC threshold, an adequate level of advertising of the contract should have been made in order to ensure that the Treaty’s general principles of equal treatment and transparency have been observed. Guidance document on mamangement verification to be carried out by MS on operations co-fiannced by the SF and the CF for the 2007 – 2013 progarmming period.

38 Controlling Procurement
Things to check (potentially) Selection Stage: What was the basis for rejecting applicants (unsuitability, financial soundness, technical capacity or ability not suitable (e. g., non-satisfactory track record)? Evidence that principles have not been correctly announced? Evidence that principles have not been consistently applied? Evidence that they are unsuitable on grounds of bancruptcy, criminal conviction or failure to pay taxes? technical capacity or ability not suitable (e. g., non-satisfactory track record) Other risk factiors can. For exmaple, include cases where the contartcing authority is known to be inexperienced. According ot the COCOF paper on management verification, even where contratcs fall below EC threshold, an adequate level of advertising of the conrtac should have been made in order to ensure that the Treaty’s general principles of equal treatment and transparency have been observed.

39 Controlling Procurement
Things to check (potentially) Award Stage: What was the basis for contract awarding (Lowest price? MEAT)? Evidence that principles have not been correctly announced? Evidence that principles have not been consistently applied? Evidence that additional candidates have been included, who did initially not request to participate (restricted or negotiated procedure)? For all Stages: Have decisions been documented? Has the time frame been observed? Evidence that they are unsuitable on grounds of bancruptcy, criminal conviction or failure to pay taxes? technical capacity or ability not suitable (e. g., non-satisfactory track record) Other risk factiors can. For exmaple, include cases where the contartcing authority is known to be inexperienced. According ot the COCOF paper on management verification, even where contratcs fall below EC threshold, an adequate level of advertising of the conrtac should have been made in order to ensure that the Treaty’s general principles of equal treatment and transparency have been observed. All documents to prove adherence to public tender rules must be kept in project accounts for audit Projects which cannot document compliance with public tendering procedures risk loosing the ERDF grant

40 Controlling Procurement
Some documents that can be useful: Justification for use of the selected procedure Copy of the relevant publication (adequate level of advertising ?) Names of tenderers, successful or otherwise Tender evaluation reports (proper selection and award?) Contract details – e.g. value Reasons for abandoning a procedure (if applicable) Complaints submitted by tenderer (if any) and replies

41 Literature exists also in other MS
Example of Literature Literature exists also in other MS INTERACT can add information to the INTERACT website ISBN:

42 Thank you for your attention!

43 Interpretative Communication
E.g., Principle of Transparency Below EU threshold, national legislation can foresee that advertising is only required on a national level (or not required at all – e.g., direct contracting possible). According to EU case law and the EU COM Interpretative Communication, publication is required for planned contracts, which are potentially relevant to the internal market. Contacting potential suppliers is NOT sufficient.

44 Not directly binding for MS.
Interpretative Communication Present situation Based on recent case law, it has become uncertain if certain provisions in national legislation are in accordance with EU primary law. EU Commission Interpretative Communication outlines the approach of the EU Commission. Not directly binding for MS. It follows that in SF programmes this exclusion could be relevant. The contartcing authority has to ensure that results are being made publicly available (e.g., Internet) AND the contracting authority must not hold exclusive rights. Some MS raised obejctions against the EU starting to stipulate procurement rules also below EU threshold.

45 When is a planned contract relevant to the internal market?
Interpretative Communication Present situation When is a planned contract relevant to the internal market? Interpretative Communication (decided by contracting authority on a case-by-case basis): Low economic value → not relevant (value not specified) Consider value, geography, sector concerned, market, etc. EU Case law: Introduced certain tresholds for ecomomic value, above which a contract was found to be relevant to the internal market : e.g., contract value above EUR annually (C-220/06). It follows that in SF programmes this exclusion could be relevant. The contartcing authority has to ensure that results are being made publicly available (e.g., Internet) AND the contarcting authority must not hold exclusive rights. Case law: (C-220/06): applicable if the service exceed about EUR annually in reimburement costs. IS IT A CONSTANT CASE LAW, WHICH WE HAVE TO RELY ON OR A ONE OFF CASE?

46 Contracting authority needs to provide justification
Interpretative Communication Present situation In addition, EU case law also confirmed that economic considerations apply to the choice of contracting procedures: In case unproportionally high costs would be associated with the choice of a certain procurement procedure → Exclusion from transparency can be justified Contracting authority needs to provide justification It follows that in SF programmes this exclusion could be relevant. The contartcing authority has to ensure that results are being made publicly available (e.g., Internet) AND the contarcting authority must not hold exclusive rights. Case law: (C-220/06): applicable if the service exceed about EUR annually in reimburement costs.

47 Exclusions from Directive 2004/18/EC
In-house Contracting According to some Member States rules and case law, there are pre-conditions that must be met in order for in-house contracting to be applicable: The Contracting authority has to have full control over the contractor (i.e., like it was its own department). The contractor works in essence exclusively for those public authority (or authorities), by which it is owned. In this case PP does not make sense because a contracting authority cannot contract itself. This is the case of Austria. Any other Member States experience? W hat are the conditions in your national law, e.g. when can you in-house contract a development agency? Only if it is 100% owned by the contracting authority? Can this make profit?

48 Exclusions from Directive 2004/18/EC
Based on EU case law, there are 4 potential cases for in-house contracting: Contracting of a company governed by private law held by public AND private owners (in-house contracting DOES NOT apply!! Because even if a private share is tiny it is unlikely that the company is controlled like a department of the public body). Contracting of a company governed by private law held by one public owner only (in-house contracting applies in cases where above-mentioned conditions apply.) Contracting of a company governed by private law held by many public owners (in-house contracting applies in cases where above-mentioned conditions apply) Contracting of one public body by another public body (in-house contracting DOES MOST OFTEN NOT apply!!). It is unlikely that one public authority has full control over another public authority. - Last point: there are cases where a national authority (Ministry) can use the facilities of a regional-local authorities if this is subordinate. Usually not in Federal Countries.

49 Exclusions from Directive 2004/18/EC
Research and development services Directive Article 16: This Directive shall not apply to public service contracts for: .. research and development services other than those where the benefits accrue exclusively to the contracting authority for its use in the conduct of its own affairs, on condition that the service provided is wholly remunerated by the contracting authority. It follows that in SF programmes this exclusion could be relevant. The contartcing authority has to ensure that results are being made publicly available (e.g., Internet) AND the contarcting authority must not hold exclusive rights. Any experience with that in your programmes-countries?


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