Purchasing supplies at CERN Procurement Rules and Procedures Supply contracts exceeding 200 kCHF Charles Carayon IPT-PI – 4 October 2017

Procurement function @ CERN 1. Close link between the procurement function and CERN organizational objectives and strategies; 2. Unlike private sector where the focus is profit, CERN is accountable to the taxpayers of its Member States whose money is being spent, including disappointed bidders and potential suppliers; 3. Procedures and practices have been put into place to stand up to the scrutiny of auditors and Member States on purchasing decisions made. Purchasing Supplies exceeding 200kCHF — Procurement Rules

Procurement objectives @ CERN Ensure contracts fulfil all the necessary: Technical requirements Financial requirements Delivery requirements Keep overall costs for CERN as low as possible; While achieving balanced industrial returns for the CERN Member States. Purchasing Supplies exceeding 200kCHF — Procurement Rules

Definition Supply contracts: Contracts for supplies of equipment including: R&D contracts, Telecommunications and insurance contracts, Maintenance and leasing contracts covering data processing, printing and telecommunication equipment. Purchasing Supplies exceeding 200kCHF — Procurement Rules

Purchasing Supplies exceeding 200kCHF — Procurement Rules CERN — 15/08/11 Purchasing Supplies exceeding 200kCHF — Procurement Rules

Purchasing Supplies exceeding 200kCHF — Procurement Rules CERN — 15/08/11 Purchasing Supplies exceeding 200kCHF — Procurement Rules

Announced Invitations to Tender (IT) https://found.cern.ch/java-ext/found/CFTSearch.do Purchasing Supplies exceeding 200kCHF — Procurement Rules

List of firms participating to Market Survey (MS): Firms proposed by Technical Officer Firms registered in CERN’s Supplier Database (by Procurement Officer) Firms having expressed an interest Firms proposed by ILOs and Delegations Purchasing Supplies exceeding 200kCHF — Procurement Rules

Technical auditing of tendering package Purpose: Review MS and IT documents Ensure Procurement Rules are complied with 2 phases: MS: Simplified Technical Auditing IT: Specification Committee Participants Technical Officer (TO) Procurement Officer Head of TO’s Dept. or representative A representative from HSE Unit A technical expert from another dept. Head of Procurement Service or representative If necessary, another representative appointed by chairman; e.g. Legal Service Purchasing Supplies exceeding 200kCHF — Procurement Rules

Award on ‘Lowest Compliant’ basis i.e. to the firm whose bid: Adjudication Award on ‘Lowest Compliant’ basis i.e. to the firm whose bid: complies with the technical, financial and delivery requirements and is the lowest taking into account the origin of the offer in order to ensure balanced industrial return coefficients for the Member States Purchasing Supplies exceeding 200kCHF — Procurement Rules

Adjudication Price based on ‘Free Carrier’ basis (FCA as per Incoterms 2010), i.e.: Without transport costs With packing and loading No disadvantage to firms located in distant countries However, if the ratio of DAP price (‘Delivered at Place’ as per Incoterms 2010) of the lowest FCA bid to the lowest DAP bid exceeds 1.10, Supply contracts shall be adjudicated on a DAP basis. Purchasing Supplies exceeding 200kCHF — Procurement Rules

Industrial Return Coefficient For Supply contracts and for a 12-month period starting on 1st March, defined as: “The ratio between a Member State's (MS) percentage share of all purchases of supplies (excluding purchases funded by non-MS) during the preceding four calendar years and that State's percentage contribution to the budget over the same period”. Return Coef. = % expenditure in the MS % contribution to CERN budget for this MS Purchasing Supplies exceeding 200kCHF — Procurement Rules

Industrial Return Coefficient Very poorly balanced  < 0.30 (<0.4 as of March 2018) Poorly balanced (PB)  0.30 ≥ x < 0.90 Well balanced (WB)  ≥ 0.90 (≥ 1 as of March 2018) Supply contracts (period 1/03/2017 to 28/02/2018): Well balanced : Bulgaria, Czech Republic, France, Hungary, Italy, Switzerland; Poorly balanced: Austria, Belgium, Denmark, Finland, Germany, Netherlands, Pakistan*, Poland, Portugal, Romania, Serbia*, Spain, Sweden, United Kingdom; Very poorly balanced: Cyprus*, Greece, India*, Israel, Norway, Slovakia, Slovenia*, Turkey*, Ukraine*. *Associate Members Purchasing Supplies exceeding 200kCHF — Procurement Rules

Origin of the Offer According to standards defined by EU: “the country(ies) where the supplies (including their components and sub-assemblies) are manufactured or undergo the last major transformation by the contractor or his sub- contractor” If at least 60% of the total amount of the bid comes from a poorly balanced MS, then the whole bid will be treated as that from a bidder in a poorly balanced MS Purchasing Supplies exceeding 200kCHF — Procurement Rules

Alignment Rule (Scenario 1) Lowest bid from a PB MS contract placed with it Bid (CHF) Well balanced MS Poorly balanced MS Contract Purchasing Supplies — Procurement Rules

Alignment Rule (Scenario 2) Lowest bid from a WB MS realignment rule applies if bid difference <20% Bid (CHF) <20% Well balanced MS Poorly balanced MS Purchasing Supplies — Procurement Rules

Alignment Rule (Scenario 2) Lowest bid from a WB MS (a) 1st bidder from PB MS aligns contract placed Bid (CHF) <20% Well balanced MS Poorly balanced MS Contract Purchasing Supplies — Procurement Rules

Alignment Rule (Scenario 3) Lowest bid from a WB MS (b) if not, 2nd lowest bidder from PB MS aligns contract placed Bid (CHF) <20% Well balanced MS Poorly balanced MS Contract Purchasing Supplies — Procurement Rules

Alignment Rule (Scenario 4) Lowest bid from a WB MS (c) if no alignment, contract placed with lowest bidder from WB MS Bid (CHF) <20% Well balanced MS Poorly balanced MS Contract Purchasing Supplies — Procurement Rules

Contract splitting CERN will give priority to bidders offering supplies or services originating in a poorly balanced Member State in case of splitting, provided their bids fall within 20% of the lowest bid. CERN — 15/08/11 Purchasing Supplies — Procurement Rules

Contract splitting, Scenario 1 Lowest bid from a PB MS, another bid from a PB MS falls within 20% of the lowest bid Bidder from PB MS aligns Contracts placed with the 2 lowest bids from PB MS Bid (CHF) <20% Well balanced MS Poorly balanced MS Contracts Purchasing Supplies exceeding 200kCHF — Procurement Rules

Contract splitting, Scenario 2 Lowest bid from a WB MS and two bids from PB MS fall within 20% of the lowest bid Both bidders from PB MS align Contracts placed with bids from PB MS Bid (CHF) <20% Well balanced MS Poorly balanced MS Contracts Purchasing Supplies exceeding 200kCHF — Procurement Rules

Contract splitting, Scenario 3 Lowest bid from a WB MS and only one bid from PB MS falls within 20% of the lowest bid Lowest bidder from PB MS aligns Contracts placed with the lowest bid and the bid from PB MS Bid (CHF) <20% Well balanced MS Poorly balanced MS Contracts Purchasing Supplies exceeding 200kCHF — Procurement Rules

Award: Communication of relevant information to bidders is limited to: Procurement Service (< 750 kCHF) Head of Procurement Service or a member of Directorate (≥ 750 kCHF) Purchasing Supplies exceeding 200kCHF — Procurement Rules

Accessing Procurement Website http://procurement.web.cern.ch/ Purchasing Supplies exceeding 200kCHF — Procurement Rules