1. Holland@CERN 2016 Floris Bonthond 31 May 2016

2. Agenda – Procurement at CERN 2 What does CERN buy? Procurement budget Industrial Return and Return Coefficients Contacts How? Procedures and Rules Benefits from doing business with CERN How to become a successful supplier

3. Civil engineering Buildings, roadworks Utilities Cooling & ventilation Power distribution, cables, overhead cranes Infrastructure & services Metal structures Mechanical engineering Radiation shielding Transport & handling Safety & access control Installation, operation & maintenance Data acquisition, computing & networking Various supplies Furniture, tooling, gases, etc. What do we buy? Recurrent supplies and services 3

4. Industrial controls & field buses Timing & “fast” real-time controls Beam collimation Beam injection, ejection & dump Radio-frequency equipment Power converters Beam instrumentation & diagnostics Permanent and electro-magnets Cryogenic equipment Vacuum equipment What do we buy? Accelerator technologies required for consolidation projects and new developments 4

5. Standard or Non-Standard? Standard or Non-Standard? Off-the-shelf or non-standard products which can be produced with existing manufacturing techniques and/or technologies => functional specification Non-standard products where industry has neither the required know-how nor the immediate interest to develop and design the products for its existing markets => built to print Prototypes and/or pre-series needed? What do we buy ? 5

6. Major upgrade in the 2020s. Increase LHC luminosity (rate of collisions) by a factor of five beyond original design value and integrated luminosity (total collisions created) by a factor ten. http://project-hl-lhc-industry.web.cern.ch/content/main-procurement-needs-hl-lhc 6 HL-LHC “Shopping list”

7. Procurement budget 7

8. Long term average 8 Procurement Expenditures 2000-2015 2000-2015

9. TOTAL COMMITMENTS: 269.1 MCHF 9

10. TOTAL COMMITMENTS: 7.81 MCHF 10

11. * Associate Member States 11 Contributions for 2016 (CHF)

12. Industrial Return and Return Coefficients and Return Coefficients 12

13. The return coefficient of a Member State for Supply contracts for a given twelve-month period starting on 1 st March is defined as: The ratio between that Member State's percentage share of all purchases of supplies (excluding purchases funded by non-Member States) during the preceding four calendar years and that State's percentage contribution to the Budget over the same period. For the period 01.03.2016 and 28.02.2017, a CERN Member State is considered to be well balanced if its Industrial Return Coefficient is: > 0.90 for Supply contracts; > 0.40 for Industrial Service contracts. Otherwise, it is considered to be well balanced. The return coefficient for the Netherlands for 2015 is 0.49 for supplies and 0.24 for Services. Industrial Return Coefficients 13

14. Industrial return for supplies, target for 2016 = 0.90 14 Collaboration with the Netherlands

15. 15 Industrial return

16. How? Procedures and Rules 16

17. Legal framework CERN, an Intergovernmental Organization, was established in July 1953, by the “Convention for the establishment of a European Organization for Nuclear Research”. As an Intergovernmental Organization, CERN is not a legal entity under national law but governed by public international law. CERN benefits from immunity from national jurisdiction and execution. Thus, legal disputes between CERN and its suppliers and contractors are not submitted to national courts but solved via international arbitration. CERN is thus entitled to establish its own internal rules necessary for its proper functioning, such as the rules under which it purchases equipment and services. 17

18. Procure all supplies and services for CERN Meeting all requirements and guarantee that contracts fulfil all the technical, financial and delivery requirements At the lowest possible overall cost, while Achieving balanced industrial return for the CERN Member States by setting out appropriate procedures including, but not limited to, alignment, splitting or limited tendering Respecting the CERN Procurement Rules 18 Mission of Procurement and Industrial Services

19. CERN purchases supplies and services and awards contracts in compliance with the principles of transparency and impartiality Limited to firms established in the Member States Invitation to tender documents are drafted in an objective way so as to guarantee fair competition As a rule, CERN’s tendering procedure is selective and does not take the form of open invitations to tender or price enquiries The opening, negotiation and evaluation processes of the bids are strictly confidential Contract adjudicated to firms presenting either the lowest technically compliant bid or that represents the best value for money Procurement Principles 19

20. Procedures for obtaining offers Requirements < 10’000 CHF Users may issue enquiries directly provided CERN procurement rules are followed Requirements > 10’000 CHF and < 200’000 CHF o Price Enquiries issued by Procurement Service o Time for bidding 4 weeks; Invite 3 - 5 firms; if > 50’000 CHF sent to Industrial Liaison Officers (ILOs) for information o Adjudication based on lowest offer (FCA price) which complies with all requirements, subject to the rules aimed at achieving well balanced industrial return coefficients for the Member States (from 100’000 CHF) Requirements > 200’000 CHF Market Surveys & Calls for Tenders issued by Procurement Service 20

21. Requirements exceeding 200’000 CHF Announcement List of firms Market Survey Invitation to Tender Basis of award Opening & verification of bids Contractual negotiation Contract 21

22. Phases of an IT: Announcement https://found.cern.ch/java-ext/found/CFTSearch.do 22

23. LIST OF FIRMS Firms proposed by users (hence the usefulness of being known by the CERN users) Firms selected from CERN’s supplier database or other sources by the Procurement Service (hence the usefulness of registering with CERN) Firms from the Member States which have expressed an interest in a Market Survey or a similar requirement Firms proposed by ILOs and Finance Committee or Council Delegations 23

24. Market Survey Identify, evaluate, qualify and select firms able to provide the supplies or services Obtain, at an early stage, information from firms interested in tendering Allow Member State Delegations, ILOs & other parties involved to contribute by proposing suitable potential bidders Encourage firms to seek an early exchange of technical information Update & improve CERN’s Suppliers Database Identify, evaluate, qualify and select firms able to provide the supplies or services Obtain, at an early stage, information from firms interested in tendering Allow Member State Delegations, ILOs & other parties involved to contribute by proposing suitable potential bidders Encourage firms to seek an early exchange of technical information Update & improve CERN’s Suppliers Database 24

25. Invitation to tender Sent to firms selected following Market Survey sent via E-tendering Tender form & annex (Technical Questionnaire) Technical specification & annexes Working on the CERN site General Conditions for Invitations to Tender CERN/FC/5312-I/Rev. General Conditions of CERN Contracts CERN/FC/5312-II/Rev. Invite: o 10 firms max. for contracts between 200’000 and 750’000 CHF o 15 firms max. for contracts exceeding 750’000 CHF All call for tenders sent to Industrial Liaison Officers (ILOs) for information Subject to approval by Finance Committee (if > 750’000 CHF) Deadline for bidders to submit a bid is at least 4 weeks from mailing date (with a longer period for more complex requirements) 25

26. Basis of Award – Supply contracts Supply contracts shall be awarded on FCA price, «Lowest compliant bid » basis…. ….and…. 26

27. Lowest cost ……? Takes into account: Initial investment Operating costs: o Energy consumption o Spares o Maintenance o Training, etc. Disposal costs 27

28. Verification of bids A. Verify calculations of all bids B. Check conformity of lowest bid 1. All requested documents submitted? 2. Bid technically compliant? C. Contractual negotiations 3. Origin of bid? 4. Alignment? Go to next lowest bid 28

29. Country of origin Supply contract: country(ies) in which the goods are manufactured or where the last major modification will take place. If at least 60% of the total amount of the bid comes from poorly balanced Member States, then the whole bid will be treated as that from a bidder in a poorly balanced Member State Service contract: country(ies) in which the bidder is established 29

30. The alignment rule For supply contracts to be awarded on the lowest compliant bid basis and exceeding 100’000 CHF in value Aimed at achieving well balanced industrial return coefficients for the Member States A bidder offering goods originating from poorly balanced Member States is offered to align his price, under certain conditions, to that of the lowest bidder and thereby be awarded the contract The following countries are considered to be well-balanced in the period 01.03.2016 until 28.02.2017 for Supply contracts: Bulgaria, Czech Republic, France, Hungary, Italy, Switzerland 30

31. The alignment rule, how it works* Case 1: > 60% of value of lowest bid originates from Poorly Balanced Member States Contract Case 2: Lowest bid originates from Well Balanced Member States a.CERN asks first bidder proposing bid with ≥ 60% of value originating from Poorly Balanced Member States to align price (if price difference < 20%) Ok Not ok b.CERN asks second bidder proposing bid with ≥ 60% of value originating from Poorly Balanced Member States to align price (if price difference < 20%) Ok Not ok Contract c.CERN awards contract to lowest bidder * Applies only to technically compliant bids 31

32. Basis of Award – Service contracts Service contracts are awarded on a «Best Value for Money» basis to the bidder submitting the most economically advantageous bid 32

33. Best Value For Money The following criteria and weights will be applied by CERN to evaluate the bids for Service contracts: 33

34. Benefits from doing business with CERN business with CERN 34

35. Study of Technology Transfer through Procurement Excluded: civil engineering, standard items, services and low value orders 629 companies contacted 35

36. 38% had developed new products 42% increased international exposure 44% improved technological learning 52% would have had poorer sales performance without CERN 17% opened a new market 60% acquired new customers all firms had derived great value from CERN as a marketing reference 36 Results of contracts with CERN

37. Study of impact of CERN contracts on firms Internship report, P. Fessia, 2001 Firms having received at least one order > 50’000 CHF during 2000-2001 Excluded, standard services and off-the-shelf products 250 companies contacted 37

38. Result of contracts with CERN Internship report, P. Fessia, 2001 New products > 50% had developed new products > 65% had either developed new or modified existing products Of these, 50% have introduced or planned to introduce new products on the market 38

39. Improvements 45% had improved technical competencies (recognized that CERN had helped reduce risk of new developments) 40% had invested to improve production 30% considered they were more competitive 30% considered new markets 33% had used the CERN contact to establish new relationships and alliances with other firms Marketing >70% of SMEs consider the CERN reference as strategic for their business 39 Results of contracts with CERN Internship report, P. Fessia, 2001

40. Other reports and studies… 40

41. How to become a successful supplier 41

42. Successful bidders and contractors Often small – medium sized and flexible firms Ensure full understanding of specifications – exceeded specifications may be too expensive (adjudication to lowest compliant bid for supplies) Communicate with CERN (problems, issues, alternatives, etc.) Take into account test requirements and documentation Make best offer directly Ensure good working relationship with partners and sub-contractors 42

43. Contacts with CERN Dutch Industrial Liaison Officer (ILO): Mr Robert Klopping NIKHEF, Science Park 105 NL - 1098XG Amsterdam +31 20 592 2091 (direct) +31 20 592 2000 (switchboard) 43

44. If you wish to know more about CERN’s values, the General Conditions of CERN Contracts, transport and delivery, VAT, invoicing, working on the CERN site and the use of the CERN logo, etc.: http://procurement.web.cern.ch/having-a-contract-with-cern A brochure: http://procurement.web.cern.ch/brochures/doing-business-with-cern http://procurement.web.cern.ch/brochures/doing-business-with-cern A 6-minute video overview: https://procurement-dev.web.cern.ch/doing-business-with-cern https://procurement-dev.web.cern.ch/doing-business-with-cern Doing business with CERN 44

45. Registering as a supplier 45

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