1. ILO Training Procurement Rules and Procedures 15 September 2016 Anders Unnervik

2. Agenda Procurement organization and budget What does CERN buy?
How? Procedures and Rules
Some figures
Results of contracts with CERN
How to become a successful supplier

3. Organization of the Procurement Service

4. CONTRIBUTIONS FOR 2016 (CHF)
* Associate Member States

5. Procurement Expenditures
Long term average
Long term average

6. What do we buy ? Supplies for 297 MCHF (2015)

7. Recurrent supplies and services
What do we buy?
Recurrent supplies and services
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.

8. What do we buy?
Accelerator technologies required for consolidation projects and new developments
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

9. Standard or Non-Standard?
What do we buy ?
Standard or Non-Standard?
Off-the-shelf or non-standard products, using existing manufacturing techniques and/or technologies
=> functional specification
Non-standard products, 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?

10. CERN “Shopping list”

11. HL-LHC “Shopping list”

12. 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.

13. Mission of Procurement and Industrial Services
The mission of the Procurement and Industrial Services group is to:
procure all supplies and services for CERN;
meeting all requirements;
at the lowest possible overall cost, while;
achieving balanced industrial return for the CERN Member States, and;
respecting the CERN Procurement Rules.

14. Procurement Principles
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
Is either the lowest; or
Represents the best value for money.

15. 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
Price Enquiries issued by Procurement Service
Requirements > 200’000 CHF
Announcement, Market Surveys & Invitations to Tender

16. Requirements > 10’000 and < 200’000 CHF
Price enquiries:
Time for bidding 4 weeks;
Invite 3 -5 firms;
>50’000 CHF sent to ILOs for information;
Adjudication based on lowest offer (FCA price) which complies with all requirements, subject to the alignment rules aimed at achieving well balanced industrial return coefficients for the Member States (from 100’000 CHF).

17. Requirements > 200’000 CHF
Market Survey followed by a Call for Tenders:
Announcement in the document “Advance information on Forthcoming Market Surveys and Invitations to Tender expected to exceed 200’000 Swiss francs”;
Market survey;
brief technical description (1-2 pages);
qualification criteria (financial and technical) with questionnaire.
Current Market Surveys available on
Procurement Service home page

18. Requirements > 200’000 CHF
Market Survey
Time for replying, normally 4 weeks, but OK until Invitation to Tender has been issued;
List of firms participating to Market Survey:
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
Invitation to tender:
Time for bidding 4 weeks;
Invite (guidelines)
- 10 firms for contracts > 200’000 and < 750’000 CHF;
- 15 firms for contracts > 750’000 CHF;
All invitations to tender sent to ILOs for information;

19. ILO wants to add firms Requirements > 50’000 and < 200’000 CHF
Price Enquiries are issued via CERN’s e-tendering platform.
Bids MUST be uploaded on the platform to be accepted.
Only firms (persons) having received access right to the platform for the Price Enquiry concerned, from CERN, will be able to upload their bid.
ILOs must NOT send copies of complete Price Enquiries to firms (Specifications can be sent).
ILOs should inform the Procurement Service in case new firms are found. In case CERN accepts, the firm will be invited by CERN and receive access to the e-tendering platform.

20. ILO wants to add firms Requirements > 200’000 CHF Market Survey
ILOs are encouraged to send Market Surveys to firms.
No special access rights are required.
All firms can reply to a Market Survey
Invitation to Tender
In general, once the Invitation to tender has been issued, new bidders should not be added.
In exceptional cases, ILOs should inform the Procurement Service in case new firms are found. Firms will be invited to reply to the Market Survey and in case CERN accepts, the firm will be invited to tender by CERN and receive access to the e-tendering platform.

21. 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

22. Bid assessment
Bids shall be examined to establish that they comply with the technical, financial and delivery requirements in all respects
Bids in single envelop - Lowest bid evaluated first, if needed, the next, etc.
Bids in double envelopes
Technical evaluation of all bids
Commercial bid to be opened only when technical bid found technically accepted.

23. Basis of Award – Supply contracts
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.

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

25. 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

26. Best Value For Money
The following criteria and weights will be applied by CERN to evaluate the bids for Service contracts:
Criterion
Weight
Price (inc. all relevant costs) XX
Quality
Experience of the key personnel
Stability of the personnel
External references
Technical know-how
Technical training
Quality of the bid
Tests
Etc.
TOTAL
100

27. Country of origin Supply contract: Service contract:
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 contactor 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
Service contract:
Country(ies) in which the bidder is established.
If at least 40% 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

28. Industrial Return Coefficient
For Supply contracts and for a 12-month period starting on 1st March, defined as:
“The ratio between that 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 of the MS % contribution to CERN budget for this MS

29. Industrial Return Coefficient
For 2016:
Very poorly balanced < 0.30
Poorly balanced (PB) ≥ x < 0.90
Well balanced (WB) ≥ 0.90
Supply contracts (period 1/03/2016 to 28/02/2017):
Well balanced : Bulgaria, Czech Republic, France, Hungary, Italy, Switzerland;
Poorly balanced: Austria, Belgium, Denmark, Finland, Germany, Greece, Netherlands, Poland, Portugal, Romania, Serbia*, Slovakia, Spain, Sweden, United Kingdom;
Very poorly balanced: Cyprus*, Israel, Norway, Pakistan*, Turkey*.
*Associate Member States

30. The alignment rule
For supply contracts to be awarded on the lowest compliant bid basis and exceeding 100’000 CHF in value
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

31. The alignment rule, 1 Lowest bid from a PB MS contract placed with it
Bid (CHF)
Well balanced MS
Poorly balanced MS
Contract

32. The alignment rule, 2 Lowest bid from a WB MS
realignment rule applies if bid difference <20%
Bid (CHF)
<20%
Well balanced MS
Poorly balanced MS

33. The alignment rule, 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

34. The alignment rule, 2 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

35. The alignment rule, 2 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

36. The alignment rule, Splitting
2 first lowest bids from a WB MS and the 3rd from a PB MS
1st bidder from PB MS aligns
contract placed with lowest bids from WB MS and PB MS
Bid (CHF)
<20%
Well balanced MS
Poorly balanced MS
Contracts

37. Information to bidders
During bidding process – Q & A
After bid opening
Clarifications
Correction of obvious errors
After award
with ranking
Customized debriefing on request

38. Industrial return
target for 2016 = 0.90

39. How to improve industrial return?
Balanced industrial return
Industry
CERN
ILO

40. How to improve industrial return?
At CERN
A working group will propose modifications of the Procurement rules
sent to ILOs and FC delegates
Working group has met to discuss changes
Document will be sent to ILOs for comments
White Paper to FC in December 2016
Possibly a Green Paper to FC and Council in March 2016

41. How to improve industrial return?
And you, as an ILO….?
Proposing firms
Contacts with CERN technical personnel
Organizing visits
In your country
At CERN
Other….?

42. Organizing industrial exhibitions at CERN
CERN can coordinate:
For official opening –various services (VIP, Protocol office, etc..), reservations of conference rooms, auditoria..
Site visits
Cocktail, lunch…with NOVAE
Stands, information about safety rules, drawings
Reservation at CERN hostel
Preparation of access cards
Informing internal stake holders about the event (Press office, technical departments, etc..)
Delivery of packages sent by companies, to the area of the exhibition
Match making between CERN technical staff, procurement officers and companies
Etc..
Various unplanned issues

43. Organizing industrial exhibitions at CERN
Responsible at CERN:

44. Reports and studies

45. Results of contracts with CERN
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

46. 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