How can an entity apply for EU external actions contracts?

Lisbon 24 November 2015 Agneta Lindqvist

International Cooperation and Development Unit E.3 – Finance, Contract and Audit for Sub-Saharan Africa

1

• Content

Instruments for financing

Practical Guide to contract procedures for EU external actions (PRAG)

Eligibility

Funding opportunities

Implementation of contracts

Common mistakes

More information?

2

English (en)

EDF / DCI

ENI

IPA

THEMATIC PROGRAMMES

LEGAL INSTRUMENTS

Who does what?

Multi-annual Programming

Evaluation

Implementation Formulation

Identification

Financing

Mainly EEAS supported by International Cooperation and Development – DG DEVCO

Joint responsibility

DG DEVCO with Delegations

DG DEVCO with Delegations

DG DEVCO with Delegations

Commission's Financing Decision

DIRECT

EU Delegations

Headquarters

Who launches the tender - who is the Contracting Authority?

Management Modes

Management modes in force from 01/01/2014

SHARED

EU Member States

INDIRECT

International Organisations

Partner Countries

EU MS Agencies

6

The Practical Guide - PRAG

The Practical Guide to contract procedures for European Union external actions

Why to we have it?

•Harmonisation of procedures

•Sole working tool

•Coherent application of rules

Where do I find it?

• http://ec.europa.eu/europeaid/about-funding_en

•

7

8

9

How is the PRAG structured?

As per type of contract

1. Services

2. Supplies

3. Works

4. Grants

+ Introduction and basic rules

11

Principles

Core principles

- Transparency

- Proportionality

- Sound financial management

- Equal treatment and non-discrimination

- Avoidance of any conflict of interests

- Widest competition

- Non-retroactivity

Why?

2 interests:

- Contracting Authority: to get a good deal

- Contractors: to get a fair chance to compete for the contract 12

13

Procurement

Procedures

Award procedures & publication requirements - How to award a contract?

• Call for Tenders:

• Open or restricted - International/Local

• Competitive Negotiated Procedure

• FrameWorkContract

• Single tenders

• Competitive Dialogue

• Very detailed exceptions where direct award

of contract may be allowed.

PRAG 6.3

14

Procurement procedures

Open tender / call for proposals Any operator can send a bid/proposal.

Restricted tender / call for proposals

Any bidder or applicant may apply to participate, but only

some will be invited to submit a bid/proposal following the

results of the pre-selection phase (selection criteria). There are

therefore two phases in the restricted procedure.

15

SERVICES

Service contract:

Contract between a service provider and the Contracting Authority for the provision of services such as technical assistance or studies

Technical assistance:

The service provider is called on to play an advisory role, to manage or supervise a project, or to provide the expertise specified in the contract

Studies:

It includes studies for the identification and preparation of projects, feasibility studies, economic and market studies, technical studies, evaluations and audits.

16

Types of service contracts

Global Price Fee-based

Specifies an outcome Specifies the means

Final Product Tasks performed

Payment linked to services

actually provided

E.g. Study, audits, training, E.g. Technical Assistance,

conferences Supervision.

SUPPLIES

Supplies contract:

They cover the purchase, leasing, rental or hire purchase (with or without option to buy) of goods.

The contract may include commissioning, spares, maintenance, after-sales service, training and/or other ancillary services.

18

WORKS

Works contract:

Cover either the execution, or both the execution and design, of works or the realisation by whatever means of a work corresponding to the requirements specified by the contracting authority.

A "work" is the outcome of building or civil engineering works taken as a whole that is sufficient of itself to fulfill an economic or technical function.

19

GRANTS

Grants are direct financial contributions, by the way of donation, from the budget in order to finance any of the following:

•An action intended to help to achieve a Union policy objective ("action grants")

•The functioning of a body which pursues an aim of general Union interest or has an objective forming part of, and supporting, a Union policy ("operating grants")

20

Which procedure for which amount?

SERVICE

CONTRACTS

≥ € 300 000

International restricted

tender procedure

< € 300 000 but > € 20 000

-Framework contracts

or

-Competitive negotiated procedure ≤ € 20 000

Single tender

For service, and supply

contracts, a payment may

be made against invoice

without prior acceptance of

a tender if the expenditure

is ≤ 2 500€

SUPPLY

CONTRACTS

≥ € 300 000

International open tender

procedure

< € 300 000 but ≥

€ 100 000

-Local open tender

procedure

or

-Frame work contract

< € 100 000 but

> € 20 000

-Competitive

negotiated procedure

or

-Frame work contract

WORKS

CONTRACTS

≥ € 5 000 000

-International open

tender procedure

or

-International

restricted tender

procedure

< € 5 000 000 but ≥

€ 300 000

Local open tender

procedure

< € 300 000 but>

€ 20 000

Competitive negotiated

procedure

• Procedures for service contracts

Single offer

FWC OR Competitive Negotiated Procedure

International restricted

0

20.000

300.000

Com

petitive D

ialo

gue

Negotiate

d p

rocedure

(e

xceptional)

Invoice

2.500

22

• International Restricted Tender for service contract

• "Step by step"

1. Publication

2. Shortlist *

3. Tender launch *

4. Tenders received

5. Evaluation

6. Contract Award

7. Contract Signature

23 * International Restricted Tender for services or works

• Publications

• Pre-information notice

• Contract notice

• Launch the procedure • Content legally binding • Deadline for reply • Defines criteria

• Shortlist • Award notice

24

• Shortlist

• Selection criteria will be applied

• Financial capacity

• Professional capacity

• Technical capacity

• Additional criteria

• 4-8 candidates will be invited to tender

• Report approved by Contracting Authority

25

• Tender Launch

• Dispatch Tender Dossier

• Unsuccessful candidates informed + publication of shortlist notice

• Deadline for submission = minimum 50 days

• Questions 21 days – Answers 11 days

• Tenders are valid 90 days (extension 40 days)

26

Key documents: Instructions to Tenderers & Terms of Reference

Different templates for global price and fee based

Requirements: min. quality standard

Contract objectives

Tasks

Info session / site visit

Logistics & timing

Expertise required

Key / non-key experts

Budget for fee based:

Fees

Incidental Expenditure

Lump sums

Expenditure Verification

27

• Evaluation

Odd number of voting members + secretary + chairperson

Declaration of impartiality and confidentiality

Held “in camera” in 5 phases:

• Tender Opening Session

• Administrative compliance

• Technical Evaluation (weighting 80%)

• Financial Evaluation (weighting 20%)

• Conclusion

28

Tender Opening Session

• Not public

• Check offers arrive sealed and within deadline

• Double Envelope System

• Declarations of impartiality & confidentiality

• Tender Opening Report

29

Administrative Compliance

• Fill in Administrative Compliance Grid

• Documentation complete as required

• Nationality of Sub-Contractors

• May request clarifications

30

Technical Evaluation

• Individual Evaluation Grids

• Evaluators give scores and comments

• Calculate average score for each offer

• Calculates technical score only if average 80% or more

• Possible interviews with key experts

• Technical score = average score x 100

• Highest scoring tender = 100 points

highest score

31

Financial Evaluation

• Open financial envelopes

• Check arithmetical errors

• Financial offer within maximum budget

• Financial score = lowest fees x 100

• Cheapest offer = 100 points

actual fees

32

Conclusion

Technical Score x 0.80

+

Financial Score x 0.20

Best value for money wins!

33

• Contract Award

The Committee recommends to • Award the contract to the best value for • money

or • Cancel the procedure

Contracting Authority must approve the evaluation report

34

• Contract Signature

• Inform successful Tenderer and verify that the key experts are available

• Information is simultaneously sent to all tenderers

• Prepare contract

• Sign and send contract

• Publish contract award

35

• Notification of results will be sent simultaneously to all tenderers immediately after the evaluation approval

• 3 types of

• information letters

36

a) successful tenderer

b) second best tenderer

c) unsuccessful tenderers

Validity of tender only kept for a+b

40 days extension of validity only exceptionally

37

The successful tenderer which is notified of award

must confirm that the key experts are availabile or

unavailable within 5 days of notification.

If the key experts are available the contract signature process is started.

The key expert must accept the first

post which is proposed chronologically.

Date of notification counts.

38

If a key expert is unavailable

the tenderer may propose

replacement experts within 15 days

of notification.

Justification for unavailability

must be given.

Several experts may be proposed

but within the 15 days

The CA shall choose expert

39

The replacement must be at least

equally good

The total scores of the original

key expert and the replacement are

compared – not each heading

The CA compares – not evaluation

committee

If no equally good replacement expert?

2nd best tender cancel

40

When the 2nd best tenderer is

notified of award it will be the

successful tenderer and the same

award procedure is repeated.

If the contract may not be signed with

the 2nd best tenderer the procedure

will be cancelled.

The approval dossier for the 2nd best tenderer shall

contain justification for rejection of the proposed

replacements.

41

The evaluation committee shall evaluate the

original tender including original key experts

regardless if these are available or not.

Even if informed about unavailaility?

YES

Should a tenderer deliberately conceal the fact that

a key expert is unavailable the evaluation committee

may recommend exlusion from the procedure.

42

• Time Line for Service Contract

Pre-information notice

30 days

Contract

Notice 30 days

Short List

Tender invitation 50 days

3 6

Procedure takes at least 6-7 months!

Award of contract

Signature of contract

Evaluation

43

Framework Contract

Published procedure to select contractors

Valid 2 years – may be extended once

Lots to divide the service areas

Specific contracts when using the FWC

At least 4 FWC will be consulted - must reply

Contract within 14 days usually

44

The main on-going framework contracts are:

• 1. Beneficiaries 2013

• The FWC BENEF 2013 provides short-term technical assistance assignments covering the entire range of project cycle operations in the field of external aid and in the exclusive interest of the beneficiary country.

• 2. Commission 2011

• The FWC COM 2011 is an instrument for recruiting expertise / logistics within 3 lots for activities in the interest of the EC (or mixed interest

• EC+ beneficiary country).

• 3. Audit 2014

• The FWC Audit 2014 provides services by professional firms for auditing programmes and projects of external aid for development financed by the EU. The audits can also cover contributions of the EU to international organisations in the context of development aid.

45

Supplies and Works contracts

46

Procedures Artificially splitting related activities into smaller lot sizes or contracts to circumvent the procurement thresholds is prohibited

47

Single tender

Competitive negotiated procedure

Local open tender

International open tender

0

300.000

Com

petitive D

ialo

gue

Negotiate

d p

rocedure

(e

xceptional)

100.000

20.000

Invoice

2.500

Time Line International Open call for tender

48

Prior information

notice 30 days

Contract Notice

60 days

March June

Procedure takes at least 6-7 months

Contract Award

Contract Signature

Evaluation

Procedures

Artificially splitting related activities into smaller lot sizes or contracts to circumvent the procurement thresholds is prohibited

49

Single tender

Competitive negotiated procedure

Local open tender

1. International open tender 2. International restricted tender

0 Com

petitive D

ialo

gue

Negotiate

d p

rocedure

(e

xceptional)

20.000

5.000.000

300.000

Time Line International Open call for tender

50

Prior information

30 days

Contract Notice

90 days

March June

Procedure takes at least 7 months

Contract Award

Contract Signature

Evaluation

Supply/Works Contracts

International Open Procedure

• Publication

• Tenders received

• Evaluation

• Contract Award

• Contract Signature

51

Differences with service tender

• Tender dossier is published (supply) or purchased (works)

• Information meeting and site visit

• Rules of Origin

• Incoterms

• One envelope system

• No budget published

• Tender guarantee (1-2% of budget)

• Financing (co-financed/financed)

• Sub-contractors and suppliers (to be named if more than 10%)

52

Supervisor

• The person or body who supervises the work

• The supervisor has the power to issue an

• administrative order to change any part

• of the works if necessary for the proper

• completion and/or functioning of the works.

• May include additions, omissions, substitutions, changes in quality, quantity, form, character, kind, position, dimension, level or line and changes in the specified sequence, method or timing of execution of the works.

• Power of supervisor clearly indicated in contract

53

Contract Notice

• Tender dossier is ready

• Published at least 60/90 days before deadline

• Tender guarantee (1-2%)

• No budget

• Defines criteria

54

Tender Period

• Contract Notice + Tender dossier published

• Deadline for submission = min. 60/90 days

• Questions 21 days – answers 11 days

Tenders are valid for 90 days only!

55

Tender Opening Session

• Public

• One Envelope System

• Announced: name of tenderer, price, offers arrive sealed, within

deadline, guarantee

• Tender Opening Report

Only accepted offers go on to next phase!

56

Administrative Compliance

• As from this phase the evaluation is not public

• Fill in Administrative Compliance Grid

• Documentation complete as required

• May request clarifications

Only compliant offers go on to next phase!

57

Technical Evaluation

• Individual Evaluation Grids

• Use published evaluation grids

• Close checking of origin of goods

• Check if offers comply with TS

• May request clarifications

Only technically compliant offers go on to next phase!

58

Financial Evaluation

• Check arithmetical errors

• Financial offer within maximum budget

• Discounts

• Evalutaion of variants

• Award of contract to the tenderer with lowest price

59

Contract Award

Committee recommends to

Award the contract to the compliant offer with lowest price

within the budget available

OR

Cancel the procedure

Contracting Authority must approve the evaluation report

60

Contract Signature

• Inform successful Tenderer and ask for

• “Proof documents” (15 days)

• Prepare contract

• Sign and send contract (30 days)

• Publish Contract Award Notice

• Inform unsuccessful Tenderers

(15 days)

61

Time Line restricted call for tender

Prior information

Notice 30 days

Contract Notice

30 days

Shortlist

Tender Launch

60 days

March June

Procedure takes at least 7 months

Contract Award

Contract Signature

Evaluation

Case study The EC Delegation in Kenya is going to launch a call

for tender for the supply of goods where the overall

budget is €140.000.

a) Which procedure should

they use?

b) There are not many local

suppliers on the market

in Kenya. How may this

be tackled? 63

Open local tender

• No prior information notice required

• No publication in OJ

• Contract notice published on EuropeAid, and summary published locally with address where to find Tender documents

• Tendering period is minimum 30 days

64

Competitive negotiated procedure

• No publication

• Invitation of at least 3 firms to submit an offer within at least 30 days

• To proceed with contracting, at least 1 fully compliant offer is required If not cancellation and possibility to negotiate

• Other rules of open tender apply by analogy

65

Competitive Dialogue

• Exceptional procedure

• To be used in the case of particularly complex contracts where it is not possible to define the technical means required or the legal or financial makeup of the project

• Contract notice individual dialogue with at least 3

candidates which meet the selection criteria Ensure: equal treatment, confidentiality

66

Negotiated Procedure

• No threshold – any amount

• Only applicable in those cases:

1. In case of urgency 2. With public entities/non-profit institutions

(social/institutional purpose) 3. Extends ongoing activities 4. When Tender procedure unsuccessful 5. Design competition (after contest) 6. Monopoly situation/exclusive rights 7. For contracts declared to be secret/protection of essential

interests 8. After early termination of an ongoing contract

Negotiation report

Supplies also:

Additional deliveries by the original supplier

Commodity market

Advantageous terms

Works also:

Additional works (not exceeding 50% of the amount of

the main contract)

68

What is a grant?

• Payment of non-commercial nature

• Achievement of an objective forming part of a European Union policy (or of the EU-ACP Agreement)

• Implementation of an action or functioning of a body

69

What is a procurement Comparison contract? with a grant

Procurement Grant

Purchase of

services/supplies/

works

Object -Action proposed by a potential beneficiary,

intended to achieve an EU-policy objective; or

-Functioning of a body

Contracting Authority Owner of

results

Grant beneficiary

100% Financial

contribution

Co-financing - % of total eligible costs

Reimbursement of the actual eligible cost

incurred

Tenders Procedure Calls for proposal

PROFIT NO PROFIT ALLOWED 70

Basic rules grants

Programming annual work programme

Transparency publicity of calls for proposals

Equal treatment impartial evaluation on the basis of published criteria

No cumulative grants only one grant per action

No retroactivity except in crisis situations and some particular cases

Co-financing unless a) necessary (certain actions) b) interest of the Community

No profit balance between income and expenditure

PRAG 6.2

71

Open call for proposals: steps 1. Publicity

2. Receipt and registration

3. Opening and administrative check 4. Assessment of the quality of the concept notes 5. Assessment of the technical and financial quality of the proposal 6. Eligibility 7. Committee’s recommendations

8. Approval of the Evaluation Report (award) + reserve list 9. Contract preparation 10. Publicity

72

73

Eligibility

Origin

Common eligibility

• Member States

• EEA

• Beneficiary countries of the programme

• Candidate and potential candidate countries

• International Organisations

• Reciprocity

• Natural and legal persons

• Individual expert any nationality

Particularities in eligibility

•IcSP and EIDHR

•Developing countries

•Overseas Countries and Territories (OCTs)

•Preference rules EDF

•3rd states in case of co-financing with other donors

Rules of origin

Follow nationality rules

All materials, equipment and services to be purchased under the contract

Tenderer must provide a statement

Derogation

76

My opportunities and how to apply

78

Searching for contract notices

79

80

81

84

Submission of applications • Only for international restricted procedures

• Reply to a Contract Notice. • Candidate demonstrate its capacity. • Respons period after the publication of the notice

• 30 days

• CN should be clear enough to avoid questions but

questions/clarifications are still allowed up to 21 days before submission deadline

• The application must reach the Contracting Authority by the deadline

Submission of tenders • Reply to an invitation to tender

• Respons period depending on type of procedure.

• 30, 50, 60, 90 days

• Questions/clarifications may be made up to 21

days before submission deadline. Response by Contracting Authority, to all tenderers simultaneously, no later than 11 days before the same deadline.

• The tender must reach the Contracting Authority by the deadline

Case study

The deadline for receiving tenders is Monday 15/11

at 16:00. You send your proposal by DHL on Friday

12/11. There is bad weather during the weekend

and flight is cancelled. The offer arrives to the

Contracting Authority on Monday at 16.10

Should in your opinion the tender be accepted by

the Contracting Authority?

Implementation of the EC contracts

88

The standard contracts

• Contract

• Annexes:

• Special Conditions

• General Conditions

• Terms of Reference / Technical Specification

• Technical Offer from tenderer

• Financial offer (budget)

• Expenditure verification report (services)

• Financial guarantee forms

• Various annexes depending on contract

• + clarifications from tender period and evaluation

Payments Pre-financing:

Services (global price) => 40%

Services (fee based) => 20%

Works => 10% ( 20% )

Supplies => 40%

Interim payments

Services (fee based)

Works

Final payment

Services (global price) => 60%

Services (fee based) => 10%

Supplies => 60%

Works contract balance

Pre-financing guarantee

≥ 300.000€

Below 300.000€ only if:

No proof docs

Risk analysis

Performance guarantee

Supplies and works

5-10 % of contract value

Retention guarantee

Works

10% of the interim payments

92

Implementation

• Measurements

• Interim payments

• Price revision

• Contingency

• Defect liability period

Contract amendments

General Principles

Addendum - major modifications

• Extend contract duration

• Major budget changes

• Additional or complementary services

• Replacement of key expert

Administrative order - minor modifications

• Address or bank account

• Auditor

• Within budget headings. From Fees to Incidentals

• Approval of non-key experts

Contract amendments

Addendum - major modifications

• Budget change

• Additional supplies

Administrative order - minor modifications

• Extend contract duration

• Address or bank account

Contract amendments

Addendum - major modifications

• Additional works - max 50%

• Extend contract duration if contractor at fault

Administrative order - minor modifications

• Address or bank account

• Additional works - max 15%

• Extend contract duration if contractor not at fault

96

Common mistakes

• Common mistakes made by candidates and tenderers Administrative reasons

•Late arrival

•Incomplete documentation

•Not in accordance with templates

•Tenderer/Applicant/partner not eligible

•Financial offer not in a separate envelope (only for

service tenders)

•Not signed

•Do not fulfil the selection criteria

•Financial offer is visible in technical offer (service contracts)

• Technical reasons

•Experts do not have the required experience

•Copy and paste of Terms of Reference

97

• Some recommedations and

• suggestions

• Pay extra attention to:

• Criteria on Contract notice

• Eligibility: especially nationality

• Evaluation Grids

• Questions during procedure

• Quality of the Offer

• Respect of formal submission requirements

98

Useful tips

• Stay informed! Website, Platforma etc

• Need people who know how to write well

• Need good CVs

• Don't hesitate to ask questions

• What is not prohibited is allowed

• The number of companies in a consortium can be freely decided but the rationale needs to be explained

• If not successful you may ask for reasons

• Verify your own tender/proposal by using the evaluation grid

• ”Lesson’s learnt” from earlier applications/tenders

99

• My company does not fulfill the selection criteria…

• Form a consortium (the consortium as a whole must meet the criteria, not each individual company)

• Try and gain relevant experience as consortium partner or subcontractor

• Rely on a third party in some cases

100

Legal remedies

• Accept to lose in a fair procedure

• Need for facts/basis for argument

• Formal channels

• Contracting Authority

• Ombudsman

• National court

PRAG 2.4.15 – Legal remedies

101

102

More information

Information Tools

• EuropeAid webpage: search engine for

contract notices, PRAG, annexes, news …

http://ec.europa.eu/europeaid/index_en.htm

• Training/presentations

• Helpdesk: europeaid-legal-

helpdesk@ec.europa.eu

What to do next? Some ideas:

• Closer to the action:

Country/Countries - Country Strategy Paper (CSP) and Multi-Annual Indicative Programme

http://eeas.europa.eu/countries/index_en.htm

Embassy/EU Delegation

http://eeas.europa.eu/delegations/web_en.htm

• EuropeAid Annual Report http://ec.europa.eu/europeaid/annual-reports_en

• EuropeAid Info Point http://ec.europa.eu/europeaid/external-cooperation-

infopoint_en

•Questions ?

105

Criteria

• Exclusion Purpose: to determine if the operator is allowed to participate, be

awarded or implement a contract

Selection

Purpose: to determine if the operator has the necessary capacity to implement the contract

• Evaluation Purpose: to assess if the quality of the offer is according to the

requirements

• Award Purpose: to determine which the best offer is

Criteria

1. Exclusion criteria

Operators will be excluded if:

•Bankruptcy, affairs administered by court, arrangement with creditors, suspension of business activities •Convicted of an offence concerning their professional conduct •Guilty of grave professional misconduct •Not in compliance with social security contributions or payment of taxes •Fraud, corruption, money laundering, involvement in a criminal organisation •Subject to an administrative penalty by the EU Financial regulation

108

Criteria

2. Selection criteria

•Economic and financial capacity

Example: the tenderer's average annual turnover in the last three years must exceed the annualized maximum budget of the contract / financial proposal of the tender

•Professional capacity

Examples: - number of permanent staff or in a concrete field in last 3 years - the tenderer has an ISO 9000 certificate

•Technical capacity

Example: "x" implemented projects in the last 3 years (5 for works) of at least a certain amount

109

Criteria

3. Award criteria Purpose: to determine which the best offer is

•Price:

The award of the contract is made to the cheapest bid amongst those technically compliant. For supply and works.

•Best value for money: Used in services or very complex tenders. The award is a combination of price and quality

110

Point 21- Contract Notice

1) Economic and financial standing of candidate

The average annual turnover of the candidate must exceed 3 times the annualised maximum budget of the contract

2) Professional capacity of candidate

At least 7 permanent staff members currently work in fields related to this contract.

3) Technical capacity of candidate

a) The candidate has worked successfully on at least one project with a budget of at least X € in fields related to this contract in the past three years.

b) The candidate must have experience in …

LOT No.

1. FWC BENEF LOT Title NUMBERS OF FWC

CONTRACTORS in the LOT

1 Rural Development and food security 6

2 Transport and Insfractructures 6

3 Telecommunications and information technologies 3

4 Energy and nuclear safety 4

5 Conferences 4

6 Environment 4

7 Governance and Home Affairs 6

8 Health 3

9 Culture, Education, employment, and Social 6

10 Trade, Standards and Private sector 6

11 Macro economy, Statistics, Public finance management 4

12 Humanitarian Aid, Crisis Management and Post-crisis assistance 3

TOTAL 55

7