1. European Structural and Investment Funds Masterclass
How to Deliver Compliant Procurement in ESIF Projects
Andy Luff LLB (Hons.) – ACL European
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2. Presentation Structure
Overview of reformed public procurement rules
ESIF Procurement Guidance
Treaty principles in procurement
Procurement Thresholds
Single Tender Actions (STAs)
Basic run through – Procurement Process
Error rates in Structural Funds – Procurement
Summary/questions
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3. Reformed Procurement Directives (2014)
February 2014
EU Council and Parliament Adopted two new procurement directives
Directive 2014/24/EU Public Procurement
Directive 2014/25/EU Procurement by Utilities
By April 2016
To transpose into National Law (except e-procurement by October 2018)
UK - Public Contracts Regulations 2015

4. Reformed Procurement Directives (2014) - Aims
Simplification
Flexibility
Greater inclusion:
Environmental protection (full life costing)
Social responsibility
Innovation
Allows:
Innovation partnerships (for R&D and subsequent purchase)
Consulting the market – preliminary market consultation with suppliers to get advice

5. Procurement Rules/ ESIF Guidance – National Rules
Below EU Directive Level – Treaty Principles or National Rules apply (UK examples).
Contracting Authority (yes):
Public Contracts Regulations 2015 apply.
Treaty Principles
a. Equal treatment & non-discrimination
b. Transparency;
c. Mutual recognition; and
d. Proportionality

6. Reformed Procurement Directives (2014) - Thresholds
Central Government authorities
Works contracts, subsidised works contracts €
All services concerning social and other specific services listed in Annex XIV €
All subsidised services €
All other service contracts and all design contests €
All supplies contracts awarded by contracting authorities not operating in the field of defence
Supplies contracts awarded by contracting authorities operating in the field of defence
Concerning products listed in Annex III
Concerning other products
Sub-central contracting authorities
All other service contracts, all design contests, subsidised service contracts, all supplies contracts
EU Public Procurement Directive
Thresholds
Central Government and sub-central contracting authorities (i.e. Local Authorities in the UK)

7. Low Level Procurement Thresholds
Contracts within the scope of the interpretative communication are required to apply “a degree of advertising sufficient to enable the… market to be opened up to competition and the impartiality of procedures to be reviewed”.
Value of Contract
Minimum Procedure
Advertising Required
£0 - £2,499
Direct award
None
£2,500 - £24,999
3 written quotes or prices sought from relevant suppliers of goods, works and services
£25,000 – Relevant Public Contracts Regulations threshold
Formal tender process in line with the Interpretative Communication and ESIF Procurement Guidance.
Advertised on Contracts Finder, and
Opportunity is advertised on the ESIF grant recipient’s website for a reasonable time period

8. Procurement Rules – Single Tender Action (STA)
STA Justification Form and Declaration
When?
Extreme urgency (unforeseen)
Only one supplier
No organisations have responded to advertisement
Must have prior approval (of DCLG/DWP) Note disclaimer

9. Procurement – Treaty Principles
Source – European Court of Auditors

10. Procurement – Stages of a Procurement Process
Basic Stages of a Procurement
Preparation and planning
Invitation to bid (advertising)
Submission and selection of bids (selection criteria)
Evaluation of bids (award criteria)
Awarding the contract (contracting phase)
Contract implementation

11. Procurement Stage 1 Preparation and planning
Procurement plan (ESIF requirement)
Procurement route/contracting authority
Choose process (see next slide)
Apply thresholds
Scoping of the specification
Choose selection and award criteria
Identify conflicts of interest
Timescales (for procurement stages and delivery)
Arrangements for a clear audit trail
Type of contract envisaged (e.g. performance related)

12. Procurement Stage 1 Choosing a Procedure
Preparation and planning (2) – Choosing procedure
Open procedure
Restricted procedure
Competitive procedure with negotiation
Competitive dialogue
Innovation partnership
Negotiated procedure without prior publication
Also consider:
Framework agreements
Dynamic purchasing system

13. Procurement – Types of Procedure
The six main types of public procurement procedure
Open procedure
The most often used, accounting for 51 % of all contracts awarded. Offers have to be submitted by a certain date and all admissible offers are evaluated
Restricted procedure.
Interested suppliers are first asked to provide their qualifications, then a shortlist is drawn up and only the shortlisted suppliers are invited to tender.
Competitive dialogue
Used for more complex procurements. The procedure involves a dialogue between the contracting authority and potential suppliers, with the aim of identifying and defining the best legal and/ or financial set‑up of a project to satisfy the contracting authority’s needs or objectives.

14. Procurement – Types of Procedure (2)
The six main types of public procurement procedure
Competitive procedure with negotiation
After a call for tender and an initial evaluation, the contracting authority invites its chosen economic operators to submit an initial tender. It then negotiates the initial and all subsequent tenders submitted, except for the final tender, with a view to improving their content.
Negotiated procedure without publication
Can be used only in a small number of pre‑determined cases. The contracting authority enters into contract negotiations with one or more suppliers.
Innovation partnership
The contracting authority selects suppliers following an advertisement, and uses a negotiated approach to invite them to submit ideas to develop innovative works, supplies or services aimed at meeting a need for which there is no suitable existing ‘product’ on the market. The contracting authority can award such partnerships to more than one supplier.

15. Procurement – Stage 2 – Invitation to Bid (Advertising)
Choose route to advertise
Contracts above thresholds – OJEU
Contracts below thresholds – National Rules apply
Follow Treaty principles
Clarifications – Must be made available for all potential bidders

16. Procurement - Stage 3 & 4 Submission and Evaluation
3. Submission and Selection of Bids
Based only on information in bid criteria
Minimum criteria (pass/fail)
Late bids must be rejected
Selection criteria applied
Evaluation of Bids
Bids reviewed and given scores against award criteria
Keep detailed audit trial and evaluation documentation
No negotiations at this stage

17. Procurement Stages 5 & 6 Award and Contracting
5. Award Stage
Contract award notice to OJEU (within 30 days)
Contact successful organisation
Contact all bidders after decision (name of contractor and basis for decision)
Standstill period (not less than 10 days)
Appeals
Contract Implementation
Exchange of contracts
Careful with modifications (keep as minimum)
Inception, review process agreed

18. Procurement Selection Criteria
To assess the suitability of bidders (not the bid)
Must be relevant to the contract (e.g. qualifications)
May set minimum criteria
Examples:
Business probity (ethics/conduct)
Technical and professional qualifications
Capability and experience
Economic and financial standing (plus insurance)
Capacity

19. Procurement Award Criteria
To assess, based on the bid, which bidder is best placed to deliver and should be awarded the contract. Must be clearly defined in the specification.
Examples:
Price
Quality
Methodology
Technical merit
Approach to sustainability

20. Procurement Evaluation Criteria Matrix
 0 
Unacceptable
Nil or inadequate response. Fails to demonstrate an ability to meet the requirement. 25
Poor
Response is partially relevant and poor. The response addresses some elements of the requirement but contains insufficient/limited detail or explanation to demonstrate how the requirement will be fulfilled. 50
Acceptable
Response is relevant and acceptable. The response addresses a broad understanding of the requirement but may lack details on how the requirement will be fulfilled in certain areas. 75
Good
Response is relevant and good. The response is sufficiently detailed to demonstrate a good understanding and provides details on how the requirements will be fulfilled.
100
Excellent
Response is completely relevant and excellent overall. The response is comprehensive, unambiguous and demonstrates a thorough understanding of the requirement and provides details of how the requirement will be met in full.
Scoring Matrix (Example)
May also include weighting on award criteria

21. Cohesion Policy Error Rates 2014

22. Public Procurement and EU Cohesion Expenditure
Court of Auditors report 2015
Failure to comply with public procurement rules has been a perennial and significant source of error. Serious errors resulted in a lack, or complete absence, of
fair competition and/or in the award of contracts to those who were not the best bidders.

23. Public Procurement and EU Cohesion Expenditure

24. Analysis of Procurement Errors in Cohesion Policy
Pre-Tendering
Direct award of contracts
Split contracts into smaller tenders to avoid thresholds
Inappropriate tendering procedure used
82% of errors at this stage found to be serious by C of A
Tendering
Problems with publication and transparency requirements and in tender specification (highest % of errors)
Specification of unlawful, and incorrect application of, selection and award criteria
Procedural weaknesses, including lack of appropriate documentation
Contract Management
Modifying or extending the scope of contracts without using procurement procedure

25. Procurement Errors and Possible Flat Rate Corrections
Issue
Examples
Possible Correction
Inadequate preparation
Direct awards without sufficient justification
Changing the scope of the contract during tender process
Underestimating contract value
Failure to set out how bids will be scored
100%
25%-10%
25%
Sub-standard advertising
No advertising
Choosing to advertise on medium with inadequate scope
Inaccurate and discriminatory advertising
>100%
>25%
Express breaches of public procurement law
Not meeting prescribed time limits
Using frameworks not permitted to use
Mixing up selection and award criteria
Discriminatory or dissuasive criteria
Accepting bids that have not met the criteria
Failure to score
25>50%
Not following Treaty Principles
Giving additional information to certain bidders but not others
Extending deadlines for some bidders
Not applying consistent criteria
Failure to put in place procedures to address conflicts of interest
Lack of clarity in relation to interviews and inconsistency in how used in assessment
Documentation
Not having the documentation to show the process was followed

26. Summary Overview reformed public procurement rules
Treaty principles in procurement
Basic run through – Procurement Process
Error rates in Structural Funds – Procurement
Summary/questions

27. Contacts Cornwall Facilitation Team ACL EuropeanE:
T: +44 (0)
Website
ACL European
Andy Luff E:
T: +44 (0)
M: + 44 (0)
Linked In
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