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

2. 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

3. 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

4. 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

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

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

7. Announced Invitations to Tender (IT)
Purchasing Supplies exceeding 200kCHF — Procurement Rules

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. Accessing Procurement Website
Purchasing Supplies exceeding 200kCHF — Procurement Rules