AMENDMENTS TO THE CERN FINANCIAL RULES CERN/FC/6129/RA Anders Unnervik ILO Forum – 26 September 2017

History Dec 2015, FC Discussion about contract splitting Mar 2016, FC The Management proposed an internal review in order to reduce the number of poorly balanced Member States Dec 2016, ILO Forum Discussion about various proposals to be presented to the FC as a White Paper Mar 2017, FC White Paper presented and discussed, Delegations invited to comment on the proposed amendments before 15 April 2017 Jun 2017, Council, FC Amendments to the Financial Rules for approval

Proposed changes Simplifying and clarifying some rules, e.g. the way the industrial return is calculated; Introduction of the possibility to reject abnormally low bids; Introduction of a new category of purchases – Utilities- supplies and services necessarily originating in France or Switzerland for compelling technical, geographical or legal reasons; Contract splitting between bidders offering supplies or services originating in poorly balanced Member States; Increase the threshold for “very poorly balanced” Member States from 0.3 to 0.4 allowing more often limited tendering among firms from very poorly balanced Member States.

Abnormally low bids Rejection of abnormally low bids only after having followed a process which is transparent and give the bidder concerned an opportunity to explain a very low price. Only in case the bidder’s explanations indicate: non-compliance with the requirements of the price enquiry or the invitation to tender; that the price is not economically viable, or any other substantial risk to the proper performance of the contract, then CERN shall reject the bid.

Utilities Supplies and services necessarily originating in France or Switzerland for compelling technical, geographical or legal reasons. A new Overall return coefficient will be published in the annual procurement report. The coefficient will be based on all purchases of supplies and services, including purchases of utilities (but excluding purchases funded by non-Member States and individual purchases for an amount below 1000 CHF). A list of all utility orders and contracts will be published in the annual procurement report, showing the type of supply/service, name of contractor, country or origin and amount.

Utilities, examples, 2016 Supplier Order/contract Supply Amount, 2016 CoO EDF - ELECTRICITE DE FRANCE E123 Electricity 48,591,056 FR RTE E124 transport of electricity 4,340,756 ALPIQ E127 - CH SIG - SERVICES INDUSTRIELS DE GENEVE E106 350,000 E047 Gas for heating 3,359,903 E059 Water 2,307,990 CD 6620704 Used water treatment 490,000 SOGEDO Div orders Water SPS and LHC sites 91,136 E046 Waste treatment 358,469 ANDRA B1431 Elimination of radioactive waste 739,305 PSI - PAUL SHERRER INSTITUTE KE1684 SWISSCOM X128 Mobile telephony services 733,539 LA POSTE SUISSE KE2090 postal charges 90,389 LA POSTE FRANCE KE2377 84,032 VAUDOISE GENERALE ASSURANCES KE1996-98 Vehicle insurance 536,753 GRUNDERCO B1419 Maintenance and repair of heavy vehicles 150,502 TOTAL FR (CHF) 53,846,285 TOTAL CH (CHF) 8,377,545

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.

Contract splitting, case 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% The animation is perfect. Little detail can the red bid move to the level of the green one and not below? It’s difficult – I tried to adjust the best I could – what do you think now? Well balanced MS Poorly balanced MS Contracts

Contract splitting, case 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% The animation is perfect. Little detail can the red bid move to the level of the green one and not below? It’s difficult – I tried to adjust the best I could – what do you think now? Well balanced MS Poorly balanced MS Contracts

Contract splitting, case 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 align contracts placed with the lowest bid and the bid from PB MS Bid (CHF) <20% The animation is perfect. Little detail can the red bid move to the level of the green one and not below? It’s difficult – I tried to adjust the best I could – what do you think now? Well balanced MS Poorly balanced MS Contracts

Thank you for your attention!