UNCITRAL United Nations Commission on International Trade Law Framework agreements as a centralized purchasing technique from the UNCITRAL perspective Samira Musayeva UNCITRAL secretariat 9th Public Procurement Exchange Platform (Skopje, May 2013)

UNCITRAL United Nations Commission on International Trade Law Outline -What is UNCITRAL? -What it has to do with public procurement? -Framework agreements (FAs) and centralized purchasing from the UNCITRAL perspective: -Benefits; -Concerns; -How does UNCITRAL addresses the latter (concerns) without jeopardizing the former (benefits)? -Open issues to be addressed by enacting States

UNCITRAL United Nations Commission on International Trade Law What is UNCITRAL? -UN core legal body in the field of commercial law with the mandate to harmonize and modernize international commercial law -Subsidiary organ of the UN General Assembly -How does it perform its mandate? -Its activities (legislative, coordination and cooperation, TAC, dissemination of information, training and teaching) -Its main areas of work (international sale of goods, commercial dispute resolution, e-commerce, insolvency, etc.) -Its membership and work methods (60 member States, others participate as observers, consensus building, inclusiveness) -How does it differ from e.g. the WTO?

UNCITRAL United Nations Commission on International Trade Law What has UNCITRAL to do with public procurement (1)? -The 1993 and 1994 Model Laws in the area of public procurement -The 2011 Model Law on Public Procurement with its 2012 Guide to Enactment -Template for national procurement law, reflect international best procurement practice at the relevant moment and not designed by or for any one region -Main objectives – economy and efficiency, international competition, fair, equal and equitable treatment of all suppliers and contractors, integrity, accountability and transparency -Areas covered: -Selection of the winner (starting from the announcement of the procurement) -Award of the procurement contract -Dispute resolution related to the two above -Areas not covered: -Procurement planning -Contract administration

UNCITRAL United Nations Commission on International Trade Law From the 1994 Model Law on Procurement of Goods, Construction and Services to the 2011 Model Law on Public Procurement – reasons for revisions: – Facilitate e-procurement – Strengthen anti-corruption measures and challenge mechanisms – Modernize in the light of experience gained with the use of the 1994 Model Law and evolution of procurement practices since 1994 – Ensure consistency with UNCAC, GPA and other applicable international and regional instruments regulating public procurement – Simplify and standardize some provisions What has UNCITRAL to do with public procurement (2)?

UNCITRAL United Nations Commission on International Trade Law Framework agreements and centralized purchasing from the UNCITRAL perspective -What are we talking about? -Not covered in the 1993 and 1994 texts – why? -The 2011 Model Law and the Guide addresses 3 types of FAs: -Closed without second-stage competition; -Closed with second-stage competition -Open Why? -Issues of centralized purchasing are addressed mainly in the context of FAs

UNCITRAL United Nations Commission on International Trade Law Benefits derived from the use of FAs and centralized purchasing, as reported to UNCITRAL -Economy (e.g. price reductions through the anticipated volume of orders ) -Efficiency (e.g. repeated steps are avoided) -Flexibility (e.g. in scheduling requirements, both in terms of timing and quantity) -Transparency and competition (cf. RfQ and single- source procurement for small-value repeated purchases or urgent procurement) -Arguably some other (Security of supply? Effect on SMEs?) -Specific to centralized purchasing (e.g. better quality tender and other documents, higher uniformity and standardization across government, further costs saving through large-volume purchase orders)

UNCITRAL United Nations Commission on International Trade Law Concerns over use of FAs and centralized purchasing, as reported to UNCITRAL -Overuse: focus on efficiency over appropriateness -Negative effect on: -Competition (at micro- and micro-levels, e.g. exclusion of new comers, risks of creation of monopolistic or oligopolistic market) -Fair, equal and equitable treatment of suppliers (e.g. favouritism) -Integrity (conflicts of interest, collusion) -Transparency (difficulties with oversight of second- stage processes (in particular award criteria and procedures)) -Specific to central purchasing (e.g. influence of fee- earning considerations, no accountability throughout the process from the procurement planning to the performance of the contract) -Other (e.g. risks to proper procurement planning)

UNCITRAL United Nations Commission on International Trade Law How does UNCITRAL addresses the latter (concerns) without jeopardizing the former (benefits) (1)? Conditions for use -Indefinite or repeated needs -Anticipated urgent need for products covered by the FA during a given period of time -Additional implicit condition for open FAs as stated in the Guide – for procurement of commonly used, off-the-shelf goods or straightforward, recurring services that are normally purchased on the basis of the lowest price Are they effective safeguards against improper use of FAs?

UNCITRAL United Nations Commission on International Trade Law How does UNCITRAL addresses the latter (concerns) without jeopardizing the former (benefits) (2)? Minimum requirements for the award of the FA -Dual regime for closed and open FAs (open tendering is default) -Publicity of awards Maximum duration Minimum requirements for second-stage competition -Mini-tendering rules (publicity and transparency throughout, e.g. notice of purchase orders to all parties of the FAs, public notices of awards) Minimum requirements for purchase orders under FAs without second-stage competition

UNCITRAL United Nations Commission on International Trade Law How does UNCITRAL addresses the latter (concerns) without jeopardizing the former (benefits) (3)? Limits on changes to the terms and conditions of the procurement throughout the operation of the FA -No change to the description of the subject matter of the procurement -Other changes only to the extent they have been specified at the outset of the procurement -Illusory safeguards unless effective monitoring is in place; IT tools may make these safeguards effective

UNCITRAL United Nations Commission on International Trade Law How does UNCITRAL addresses the latter (concerns) without jeopardizing the former (benefits) (3)? Records -Exhaustive re actions and decisions taken and reasons therefor; -Prompt access by persons entitled thereto Challenges -All decisions and actions can be challenged -Safeguards against unjustified disruptions (Who can challenge? When? What? Exceptions to standstill period, suspension and prohibition to enter into the contract)

UNCITRAL United Nations Commission on International Trade Law Open issues to be addressed by enacting States -Appropriate use of FAs -Approval for the use of FAs? -Legal effect of the FAs -Binding on the Government -Binding on suppliers -Parallel FAs -Issues of outsourcing and fees -Relations between CPA and user procuring entities -Monitoring in -Detailed procurement regulations -Implementation and use guidance -Other provisions of law -Supporting infrastructure and institutions

UNCITRAL United Nations Commission on International Trade Law Conclusion The UNCITRAL texts in the area of public procurement are available at ts/procurement_infrastructure.html