1 Capacity building in EDF procedures Procedures for public procurement and for the conclusion of grants Francis Wellens August 2010

2

3

4 7th & 8th; 9th or 10th EDF? (i) General rule: once a procedure started, continue (ii) Read it in : (a) the FA (EDF procedures or x EDF procedures) (b) the Practical guide 7th & 8th EDF: transfers & balances: > 10 million : the original procedure < 10 million : 9th EDF 9th EDF: 9th & previous EDFs except: 10th EDF: once into force Which procedure to use?

Decentralised mode Ex-Ante 7 The Contracting Authority Assumes full responsibility for the actions and will be accountable for in any subsequent audit or investigation Approval of DEC? Implies a control by EC and payment garantee (may be compared the role of a bank with a letter of credit)

8 Decentralised Ex-Ante management Actors and responsibilities NAO HoD, (Authorising Officer by subdelegation Clears and authorises expenditure Approves proposal for awarding Approves tender dossiers and calls for proposals Endorses contracts and PEs Validates and authorises payments Observes in evaluation committees Prepares tender dossiers and calls for proposal Presides opening sessions and evaluation committees Receives tenders and proposals Awards and signs contracts and Programme Estimates Launches tender dossiers and calls for proposal

PRAG - Generalities 1. Eligibility Criteria (for participation in procedures for awarding contracts financed EDF) Rules of Nationality –ACP states and member states (Natural and Legal persons of) –International Organisations (+ nationalities accepted by international organisation) –Persons originating from Nations participating in the funding Origin –Origin of supplies and materials: same rules 9

PRAG - Generalities Eligibility Criteria: Practicalities Origin: Supply: originating products folowing international agreements Verifying compliance: Certificate Nationality for the contrator only : Expert: of any nationality (unless otherwise specified in FA) 10

PRAG - Generalities Eligibility Criteria: Exceptions Agreed beforehand by commission (HoD) on request of ACP state justified on the basis of: –Georgraphical location –The competitiviness –Excessive increase of cost of performance of the contract –Transport difficulties –Extreme urgency –Availability of products and services Decision HoD up to

2. Exclusions On the ground of: Bankrupt Convicted of offence in professional conduct (res judicata) Proven grave professional misconduct Social security / payment of taxes Res judicata for fraud Administrative penalty Early Warning System 12 PRAG - Generalities

Exclusions Practicalities Verification on the basis of Certificates country of origin. Sworn statements Declaration may be waived for contracts < and grants < PRAG - Generalities

3. Administrative and financial penalties In case of: –Fraud –False declarations –Breach of contractural obligations Errors, irregularities or fraud: Commission may refuse to make payments ( = the best case) 14 PRAG - Generalities

4. Visibility Set up of a Communication and Visibility plan at project start-up 15 PRAG - Generalities

Other essential points Conflict of interest Preparation tender or project excludes firm Awarding principles Transparency, proporionality, equal treatement and non discrimination No retroactive awards Date of last signature Use of standard documents Record keeping Unsuccessfull and awarded proposals Availability of funds Before signing Environmental aspects 16 PRAG - Generalities

17 PRAG - Generalities Choice of procedure

Types of procedures –Open procedure –Restricted procedure –Competitive negociated procedure –Framework contracts –Dynamic purchasing systems –Competitive dialogue –Negociated procedure –Procedure with suspensive clause 18 PRAG - Generalities

Open procedure all interested economic bodies. maximum publicity on the EuropeAid and other website and in any other appropriate media. awarded through selection procedure no negotiation is allowed. 19 PRAG - Generalities

Restricted procedure all economic operators may ask to take part only candidates satisfying the selection criteria may submit a tender. Pre-Selection procedure, long list short list Tendering procedure Selection procedure Award No negotiation allowed 20 PRAG - Generalities

Competitive negotiated procedure Contracting Authority invites candidates of its choice to submit tenders Selects the technically compliant tender service tenders: the best value for money supplies or works tenders: the cheapest compliant offer 21 PRAG - Generalities

Framework contracts Max 4 year agreement with one or more economic operators to establish the terms governing specific contracts (i.e. the duration, subject, price, implementation rules and the quantities envisaged). 22 PRAG - Generalities

Framework contracts Only when funds are available (no suspensive clause) Steps 1)Identification of the lot (12 lots) 2)Preparing the specific ToRs 3)Creating the request (EC-Del) 4)Sending the request for offers and ToRs (EC-Del) 5)Evaluation of the offers The beneficiary authorities should be invited to take part in the evaluation and if they are absent, they have to approve the experts proposed 6)Notification of results and contracting 7)Evaluation of the performance: By the Contracting Authority 23 PRAG - Generalities

Dynamic purchasing system Electronic process for making commonly used purchases which is limited in duration and open throughout its validity to any economic operator who satisfies the selection criteria and has submitted an indicative tender that is found compliant. not yet available 24 PRAG - Generalities

Competitive dialogue For particularly complex contracts, –Publication of a contract notice –Dialogue with the candidates satisfying the selection criteria (min 3 if at least 3 satisfy) –Stages in negotiation allowed –Final tenders on the basis of the solution(s) of the dialogue 25 PRAG - Generalities

Negotiated procedure To be used in exceptional cases. Extreme urgency, Crisis situation, additional works(50%0%), Unsuccessful tender, secrecy reasons Mixed contracts The Contracting Authority determines –on the basis of the strategic importance of each component which of the components prevails (services, supplies, works) 26 PRAG - Generalities

Preferences Widest possible participation of the natural and legal persons of ACP States Works: ¼ capital & > ¼ management staff is ACP 10% price preference Supplies: 50% of value originates in ACP 15% price preference Service contracts: preference is given to: 1)ACP; 2)ACP in consortium with EC; 3)EC with ACP sub-contractors South Africa cannot benefit from the preference system 27 PRAG - Generalities

Selection Criteria General principles Criteria are specific to be addapted to the nature, cost and complexity of the contract. They have to be precise, non desicrimatory and open to fair competition. –Clear and non-discriminative selection criteria (proof documents!) –Possibility to lay down minimum capacity levels –In procurement notice/call for expression of interest: the references chosen to test the status and the legal capacity of tenderers and candidates –Proof of the financial, economic, technical and professional capacity Service & supply: only succesful tenderers give proof before the award of contract Works : in accordance with tender dossier 28 PRAG - Generalities

Selection Criteria Verification of eligibility of tenderers or candidates: cf higher (fraud, EWS, etc.) Verification of the financial and economic capacities of tenderers or candidates (statements of banks; profesional risk indemnity insurance; balance sheets; statement of overall return) Verification of technical and professional capacities if tenderers, candidates and their management staff (educational capacities; work attestations; description of technical equipment; etc) 29 PRAG - Generalities

Award criteria As specified in tender Most usual procurement procedure: conditions & specifications are OK than lowest price Best-value-for-money procedure: the most economically advantageous tender (needs derogation) 30 PRAG - Generalities

Cancellation of procurement procedures Cancelling may occure where: –Unsuccessful tender –Economic and technical data of the project are fundamentally altered –Exceptional circumstances / force majeure –Out of budget –Irregularities Cancelling - before signature of contract – is possible (candidates can not make compensation claims) Canceling of single lots only is also possible Notification of the reason 31 PRAG - Generalities

Ethical clauses & Appeals Ethical clauses: p Appeals –CA replies within 90 days of complaint; –Amicable solution –Any interested party may appeal an administrative decision to the hierarchical superior –European Ombudsman 32 PRAG - Generalities

33 PRAG - Generalities The evaluation committee Non-voting Chairman + voting Members (min. 3 for service & supply and min. 5 for works) –Language –Technical & administrative capacities –Sign Impartiality and confidentiality Decentralised ex-ante: –Contracting Authority nominates (approval 5 wd in advance) –EC is invited on a systematic basis as observer Decentralised ex-post: the relevant services nominates on a personal basis

34 PRAG - Generalities The evaluation committee Non-voting Chairman + voting Members (min. 3 for service & supply and min. 5 for works) –Language –Technical & administrative capacities –Sign Impartiality and confidentiality Decentralised ex-ante: –Contracting Authority nominates (approval 5 days in advance) –EC is invited on a systematic basis as observer Decentralised ex-post: the relevant services nominates on a personal basis

35 PRAG - Generalities Award of contract Before end of validity period of tender (deadline + 90 days) 1.Evaluation report / arithmetical errors / EWS 2.Notification to the successful tenderer (validity is extended by 60 days) 3.Succesful tender provides required evidences (< 15 days of the date of notification letter) 4.Examination by Contracting Authority of evidences 5.Preparation of contract Hod for endorsement (signature + initials) 6.Sending of contract to succesful tenderer (3 originals of template and as in tender) 7.Signature + initials of Contracting Authority 8.Publishing the award of contract (service > ; supply > ; works > )

36 PRAG - Generalities Addendum General principles: –May not alter award conditions prevailing at the time of the contract –No major changes are possible by addendum or administrative order –Justified reasons are required –Within the execution period of the contract –Coherent with the implementation period of the FA (implementation & final payments)

37 PRAG - Grants Definitions A grant is a direct financial contribution, (donation), from the EU budget or the EDF, in order to finance: an action to achieve an objective part of a EU policy; or the functioning of a body which pursues an aim of general European interest. Grant contract procurement contract A grant is made for an operation proposed to the Contracting Authority by a potential beneficiary (an applicant) and falls within the normal framework of the beneficiary's activities Grant contract financing agreement

38 PRAG - Grants Definitions A grant is a direct financial contribution, (donation), from the EU budget or the EDF, in order to finance: an action to achieve an objective part of a EU policy; or the functioning of a body which pursues an aim of general European interest. A grant is made for an operation proposed to the Contracting Authority by a potential beneficiary (an applicant) and falls within the normal framework of the beneficiary's activities. Grant contract procurement contract

39 PRAG - Grants Definitions Grant beneficiary: Is the body signing a grant contract Final beneficiary Target group

40 PRAG - Grants Characteristics Non commercial Not benefit producing (except when reinforcement of the financial capacity) Percentage of eligible cost of an action (co-financing) Not lumpsum based without prior agreement of the commission. Subject to the principles of programming, transparency and equal treatment. Not cumulative nor awarded retrospectively

41 PRAG - Grants Management ( in Decentralised Programme with ex-ante controls) awarded by the Contracting Authority designated in the financing agreement On the basis of –Annual work-programme –Call for proposals (evaluation, reports etc) –Signed grant contract

42 PRAG - Grants Eligibility rules Nationality, same as for the other contracts. Restriction not allowed if not foreseen in basis act (for location or objective purposes) Programming Accepted work programme publicised 1 year in advance (before 31 March). Co-financing Obligatory except if evidence can be given that financing in full is essential Procurement A grant has own procurement procedures.

Call for proposal Include the Guideline for applicants Is published on EuropeAid website Open or restricted (with shortlists) Exceptions (without call) after EC agreement: Possible for -Real emergency -Monopoly of the beneficiary -Provided in basic act 43 PRAG - Grants

Guideline for applicants HAS TO BE DRAFTED on the basis of the template Explains: -The purpose of the Call for Proposals -Rules regarding eligibility criteria (applicant, types of actions, types of costs etc) -Instructions how to apply -The evaluation process and criteria (for selection and for awarding) Contains moreover: -The Application form -The contract model -The procurement procedures etc. -Dead-line for application (min 90 or 60 days), Help-desk information Has to be approved by HoD 44 PRAG - Grants

Submission of Proposals Application: Contains a concept note / proposal information about the action proposed, including its budget information about the applicant information about any partners. Supporting documents and for > euros audit of the applicant 45 PRAG - Grants

Evaluation committee Non voting chairman and secretary Minimum 3 voting members (odd number) Different kinds of assessors if too much for classic committee Stages of the evaluation 1.Receipt and registration of proposals 2.Opening session and administrative check 3.Approval of opening report by HoD 4.Evaluation of the concept note (or application form) 5.Approval of the evaluation report by HoD 6.Verification of eligibility 7.Final evaluation report sent for approval by HoD 46 PRAG - Grants Evaluation

Cancelling of the call the economic or technical data fundamentally altered; exceptional circumstances or force majeure; irregularities in the procedure preventing equal treatment. Awarding grants Notification of applicants (letters, including reasons) Contract preparation and signature Characteristics of the standard grant contract Includes beneficiary's independence of action (but considering max deviation 15% per budget line) The first pre-financing payment covering 80% of 1 st year budget Final payment on final report Large grants: Expenditure verification and financial guarantee for advance Visibility rules 47 PRAG - Grants

Procedures More than Restricted tender procedure Less than Framework contract (or negotiated procedure if impossible) Negotiated procedure –extreme urgency –Public service bodies NGO or support in social field –Complementary (max 50%) and additional services (once and 0%) –Unsuccessful tender or framework contract –Contract following contest –Protection of exclusive rights and secrecy reasons Competitive dialogue 48 PRAG – Service Contracts

More than : Restricted tender procedure 1.Individual contract forecast Min 30 days, brief indication of the subject 2.Procurement notice Min 30 days Summarised description of the purpose of the contract 3.Establishment of shortlist From long list to short list, inform about (un)success 4.Drafting and submission of the tender Min 50 days 5.Submission of tenders 6.Evaluation process Normally max 90 days (+ 40 days), usual min 30 days 7.Contracting 49 PRAG – Service Contracts

More than less than : Framework contracts Compulsory provide that: –Aimed for external aid (with funds available) –In exclusive interest of an authority benefiting form external aid –Less than euros all inclusive –Less than 260 working days –Performance period less than 24 months Different consortiums in different lots, contracts with lead firm 1.Request for services to at least 3 consortiums (more now) a)Specific TOR complying with global TOR and including OUTPUTS, Duration, Key experts, Possible conflict of interest etc. b)Drawing request choosing lot and time limits Minimum 14 days 2.Awarding of specific contract Max of 2 weeks of validity 50 PRAG – Service Contracts

More than less than : Competitive Negotiated Procedure When: Framework contract impossible or unsuccessful Steps 1.Contracting Authority draws restricted list with min 3 service providers. 2.Sending of tender dossier (may be the simplified one) Minimum 30 days for reply Only one administrative and technically valid offer is sufficient Failure negotiated procedure (prior approval HoD) Below euros, single tender 51 PRAG – Service Contracts

52 PRAG – Supply Contracts Cover purchase, lease, rent, with or without buying, can include sitting and installation. Procedures International Open Procedure < but Local open procedure < Competitive negotiated procedure Negotiated Procedure Dynamic Purchase System Competitive Dialogue

53 PRAG – Supply Contracts International Open Procedure Individual contract forecast Min 30 days, brief indication of the subject 2.Procurement notice Summarised description of the purpose of the contract Provided with tender dossier Publication Minimum 60 days before deadline for submission 3.Submission of tenders 4.Evaluation process Normally max 90 days (+ 40); usual min 30 days 5.Contracting

54 PRAG – Supply Contracts Local open tender Locally publicised procurement notice but advantage can be taken from EU Website Simplified tender dossier allowed Mini 30 days No restrictions on contractors allowed (Nationality or previous success etc) Competitive Negotiated Procedure Based on a restricted list of at least 3 companies Simplified tender dossier Min 30 days for tendering

Procedures More than Open Procedure, rarely restricted procedure Less than but more than Local Open Procedure Less than Competitive Negotiated Procedure Negotiated procedure –extreme urgency –Crisis situation –additional works(50%0%) –Unsuccessful tender –secrecy reasons Competitive dialogue 55 PRAG – Works Contract

More than Open Procedure 1.Individual contract forecast Min 30 days, brief indication of the subject 2.Procurement notice Summarised description of the purpose of the contract Publication Minimum 90 days before deadline for submission 3.Tender dossiers sent on request (with or without payment) 4.Submission of tenders 5.Evaluation process Normally max 90 days (+ 40); usual min 30 days 6.Contracting 56 PRAG – Works Contract

More than restricted procedure Only with agreement of the Commission 1.Procurement notice Remains obligatory 2.Set-up of short-list 3.Tender dossiers sent with invitation to tender 4.Submission of tenders 5.Evaluation process Normally max 90 days (+ 40); usual min 30 days 6.Contracting 57 PRAG – Works Contract

Local Open Procedure Procurement notice in the beneficiary country Summarised description of the purpose of the contract Publication Minimum 60 days before deadline for submission 2.Tender dossiers sent on request (with or without payment) Must be open to other than nationals 3.Submission of tenders 4.Evaluation process Normally max 90 days (+ 40); usual min 30 days 5.Contracting 58 PRAG – Works Contract