Training for Auditors Estonia/Latvia/Russia ENPI CBC Programme Riga, Tartu, April 2012 Training for Auditors Estonia/Latvia/Russia ENPI CBC Programme Riga, Tartu, April 2012 Procurement: Overview and general rules Procurement: Overview and general rules 1

Member States and Russian public entities Beneficiaries and Partners: National public procurement law and rules Rule of nationality and origin applied Other entities: Annex IV + Chapters 2(General), 3(Service), 4(Supply), 5(Works) of PRAG adjusted to Annex IV specific provisions Procurement in grants 2

Other entities: For what is not described in the Annex IV (detailed procedures, tender documents): Or Chapters 3(Service), 4(Supply), 5(Works) of PRAG adjusted to Annex IV specific provisions Procurement in grants 3

Annex IV: Natural and legal persons Open to all Member states + states allowed by Financial regulation (ENPI) ENPI Regulation (Art. 21): Memeber states ENPI, IPA, EEA countries International organisations The detailed list in Annex A2 to PRAG (General Annexes) ”Eligibility – Programmes ”, second section on ENPI The nationality rule 4

Do not apply to the experts proposed by service providers taking part in tender procedures or service contracts financed by the grant If implemented through International organisation:  + natural or legal persons eligible pursuant to the rules of that organisation  But: equal treatment to al donors to be ensured The nationality rule 5

Annex IV: If the Regulation contains... ENPI Regulation (Art. 21): Memeber states ENPI, IPA, EEA countries The detailed list in Annex A2 to PRAG (General Annexes) ”Eligibility – Programmes ”, second section on ENPI ***If implemented through International organisation:  + pursuant to the rules of that organisation  But: equal treatment to all donors to be ensured The rule of origin 6

Customs Code, Council Regulation 2913/1992, Art. 23 Goods originating in a country shall be those wholly obtained or produced in that country The expression ‘goods wholly obtained in a country’ means: (a) mineral products extracted within that country; (b) vegetable products harvested therein; [...] (j) goods which are produced therein exclusively from goods referred to in subparagraphs (a) to (i) or from their derivatives, at any stage of production The rule of origin – “origin” 7

Customs Code, Council Regulation 2913/1992, Art. 24 Goods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture The rule of origin – “origin” 8

The rule of origin applies to ALL supplies and materials (ENPI Regulation) The Certificate of origin: Contractor must present to the Beneficiary for equipment and vehicles of a unit cost on purchase of more than € Made by the competent authorities of the country of origin  In the Partner countries – Chambers of Commerce Must comply with Community legislation  Art. 12 of Customs Code and Arts of Code’s Implementing provisions  Annex 12 (model EU certificate) The rule of origin – certificate 9

By Derogation only (request to the Contracting authority) Justifyed by: Unavailability of products and services in the markets of the countries concerned For reasons of extreme urgency If the eligibility rule were to make the realisation of a project, a programme or an action impossible or exceedingly difficult ***NOT if a product of ineligible origin is cheaper than the Community or local product Nationality and origin: exceptions 10

Possibility of block derogation For some equipment which constantly poses a problem of origin After market research by JMA or several cases during implementation Would apply to all the projects, but for a limited time (1 year indicatively) Does not prevent the JMA from requesting some individual derogations also for the equipment that has not been identified in the block derogation The time needed for such a block derogation should be taken into account not to hamper the projects’ implementation Procurement plan would also help to identify the equipment for block derogation Rule of origin: exceptions 11

EU MSs ENPI countries: Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova, Morocco, Palestinian Authority of the West Bank and Gaza Strip, Russian Federation, Syria, Tunisia, Ukraine IPA countries: Croatia, The former Yugoslav Republic of Macedonia, Turkey, Albania, Bosnia, Montenegro, Serbia, including Kosovo. EEA countries: Iceland, Liechtenstein, Norway The nationality and origin rule 12

EC Note from 12/05/2011 For the TA procured by JMA and co-financed by MS Rule of the MS Procurement by Projects ENPI rule Rule of origin

Annex IV to the Grant Contract ENPI Regulation PRAG The nationality rule Annex A2 to PRAG “Eligibility of programmes ” The rule of origin EU Customs web site: _duties/rules_origin/index_en.htm _duties/rules_origin/index_en.htm EU Customs Code: Council Regulation (EEC) No 2913/1992 EU Customs Code Implementing provisions: Commission Regulation (EEC) No 2454/1993 Documents and links 14

Annex IV and PRAG 15

Service contracts: Studies: identification and preparation of projects, feasibility studies, economic and market studies, technical studies, evaluations and audits or Technical assistance: advisory role, to manage or supervise a project, or to provide the experts specified in the contract Supply contracts: Purchase, leasing, rental or hire purchase, with or without option to buy, of products. A contract for the supply of products and, incidentally, for sitting and installation Work contracts: the execution, or both the execution and design, of works List of works in the Annex I to Directive 2004/18/EC Definition of contracts 16

Thresholds (Annex IV) 17 SERVICES ≥ € 200,000 International restricted tender procedure € 10,000 Negotiated procedure ≤ € 10,000 Single tender SUPPLIES ≥ € 150,000 International open tender procedure < € 150,000 but ≥ € 60,000 Local open tender procedure € 10,000 Negotiated procedure WORKS ≥ € 5,000,000 International open tender procedure < € 5,000,000 but ≥ € 300,000 Local open tender procedure € 10,000 Negotiated procedure

Projects must not be split artificially to circumvent the procurement thresholds The possible grounds for splitting: 1.Time: needed at different stages of the project 2.Type: difference in nature of the contract – services, supplies or works 3.Nature: different nature of the purchaise (e.g. tractors and medical equipment) Procurement with several Lots identifyed is possible allowing different compagnies applying for different Lots Split of contracts 18

21 PRAG structure

Publication of the individual contract forecast: not required by Annex IV Publication requirements are different: To be published in all appropriate media, in particular on the Beneficiary’s web site, in the international press, national press or in other specialist periodicals (Annex IV) Deadline for submission: long enough, allowing reasonable and appropriate period (Annex IV). (PRAG: 60 days for Supplies and 90 days for Works in international tenders, 30 for Supplies and 60 for Works in local tenders) Framework contract procedure for services not foreseen in Annex IV (PRAG – possible for services of € Specific rules of Annex IV 22

Most economically advantageous tender, i.e. the tender offering the best price-quality ratio, best value for money (whereas price as the only criterion for supplies and works in PRAG) !!!Double envelope system, i.e., in an outer parcel or envelope containing two separate, sealed envelopes, one bearing the words "Envelope A - technical offer” and the other "Envelope B - financial offer“ This system enables the technical offer and the financial offer to be evaluated successively and separately: it ensures that the technical quality of a tender is considered independently of the price Specific rules of Annex IV 23

Number of Evaluation Committee members - odd number of voting members, at least 3 (PRAG – at least 5 for International open tender for Works) International restricted tender procedure for Works not foreseen (PRAG – possible for Works of > 5,000,000) Negotiated procedure (Competitive negotiated procedure in PRAG): Beneficiary consults at least 3 suppliers of its choice and negotiate the terms of contract with one or more of them Use of negotiated procedure for higher amounts, than allowed by standard ceilings - listed in Art.7 of Annex IV (combination of all correspondent Arts of PRAG) Specific rules of Annex IV 24

0. Publication of the indicidual contract forecast: not required by Annex IV 1.Publication of procurement notice To be published in all appropriate media, in particular on the Beneficiary’s web site, in the international press, national press or in other specialist periodicals (Annex IV) Deadline for submission: long enough, allowing reasonable and appropriate period (Annex IV). For information, PRAG: 60 days for Supplies and 90 days for Works in international tenders, 30 for Supplies and 60 for Works in local tenders International open tender 25

Additional information – in writing to all tenderers, or published (21 days - questions, 11 - answers) Supplies: Meetings/visits not permitted, unless specifically scheduled for all tenderers Works: Visits for individual companies permitted, ensuring transparency and equal treatment International open tender 26

2.Evaluation (Annex IV + Art. 2.8, 4.3.8, 5.3.8) Evaluation Committee - Non-voting Chairman, non-voting Secretary and odd number of voting members (Annex IV: at least 3) Stages: Receipt and registration of proposals, preparatory meeting Tender opening session Formal public process, but restricted to the companies which are tendering for the contract International open tender 27

Evaluation of technical offers/technical offers Administrative and technical complience of tenders YES/NO grid, no scoring method used Lot by lot Evaluation of financial offers Arithmetical errors corrected without penalty Offers are compared and discounts applied for each lot Conclusions and drafting of the Evaluation report Contracting International open tender 28

For services only!!! Procurement notice is published Application form submitted Short list is established Establishing a long list summarising all the applications received Eliminating candidates who are ineligible Applying the published selection criteria Between 4 and 8 candidates Only then tender submitted International restricted tender 29

For services only!!! Procurement notice is published Application form submitted Short list is established Establishing a long list summarising all the applications received Eliminating candidates who are ineligible Applying the published selection criteria Between 4 and 8 candidates Only then tender submitted International restricted tender 30

NOT FORESEEN BY ANNEX IV!!! So, not applicable in procurement in grants Restricted procedure for Works 31

Publication (Annex IV): Procurement notice is published in all appropriate media, but only in the country of the Action But: shall provide other eligible suppliers with the same opportunities as the local firms Tender dossier: Tender guarantee - optional For supplies only: Simplified tender dossier is possible Selection criteria: Supplies: Supporting documents optional (But: financial guarantee if pre-financing, except public bodies) All other measures applicable to International open procedure apply by analogy Local open tender 32

Without publication (Annex IV): Beneficiary consults at least 3 suppliers of its choice and negotiate the terms of contract with one or more of them Can also be used for higher ammounts in exceptional cases listed in Art.7 of Annex IV All other measures applicable to International open procedure apply by analogy Negotiated procedure 33

No Evaluation Committee needed for Single tender or Negotiated procedure based on a single tender  Do not mix with Negotiated procedure without publication (EvC needed)!!! In all cases, the Contracting Authority must prepare a report Explaining the manner in which the grant beneficiaries were identified and the amounts established And the grounds for the award decision Template in annex a10_ and a10_b to PRAG CA must follow the negotiation steps shown in the negotiation report templates (A10_a and A10_b) and ensure that basic principles relating to procurement procedures such as checking compliance with eligibility rules (nationality rules), capacity to carry out the contract and and exclusion criteria are duly applied Negotiated procedure and Single tender