1. INDUCTION TRAINING SEIO
Implementation: Tendering, Procurement and Budget Support

2. Training Objectives
Overall the training will provide basic information on EU contracting procedures so that these can be taken into account when preparing implementation plans, sequencing and monitoring of future IPA Actions.
Specifically, the training will explain:
the PRAG and its relationship to the EU Financial Regulation;
contract types and their uses;
required documents for each contract type and procurement procedure
contract value and its effect on procurement procedures
time taken to complete the various procurement procedures and how to incorporate this into the development of realistic implementation plans
requirements for budget support

3. Contracts
Contracts are the normal legal basis for the disbursement of IPA finances (there are others e.g. Delegated Agreements, Sector Budget Support)
In EU pre-accession funds a distinction is made between procurement contracts and grant contracts.
In procurement, the clients requirements are specified in contract documents (e.g. Terms of Reference for consultants).
By contrast, in grant schemes the client explains the problems and potential grant contractors make proposals to address these problems. The client chooses the best proposal and awards the grant i.e. The grant awardees design the solutions and not the clients (as in procurement).

4. PRAG
Practical Guide to Contract Procedures for EU External Actions (PRAG)
Regulation No. 966 /2012 of the European Parliament and the Council on the Financial Rules applicable to the general budget of the Union
Commission Delegated Regulation No. 1268/2012 of 29 October 2012 on the Rules of Application of Regulation No 966/2012 of the European Parliament and Council on the financial rules applicable to the general budget of the Union

5. Types of Contract and Associated Documents
IPA Action Document
SERVICES
Terms of Reference
Procurement
SUPPLIES
Technical Specifications
WORKS
Bills of Quantity
Services
Studies - identification and preparation of projects, feasibility studies, economic and marketing studies, technical studies, evaluations and audits (Global price)
Technical assistance - the service provider has an advisory role, directs or supervises a project, or providing expert services defined in the contract (fee-based)
The combination - defined as resources and product
Supplies
Purchase, lease or rental of assets (equipment).
During the delivery of the equipment may be required installation and maintenance products
Works
Performance, or design and construction that result in the building or work of civil engineers who themselves are sufficient to meet the economic or technical function.
Twinning (Twinning: 1-2 MEUR and Twinning light: up to EUR)
Cooperation tool between a Public Administration in a Partner/ Beneficiary country and the equivalent institution in an EU Member State
It consists of sending to Serbia at least one resident adviser ( months)- RTA- and a number of medium and short-term missions, all to be carried out by public officials of the EU Member State institution
Key features is the concept of mandatory results: both the Serbian and the EU partner commit themselves to work towards a commonly agreed result, which should be measurable and precise.
Includes at least some elements of approximation to the EU acquis
Grants
Direct payments of non-commercial nature
Grants contract is used for the grant scheme as direct donation for local and regional authorities and civil society organizations
Direct Agreements
For particular tasks with specific organizations like UNHCR etc.
GRANTS
Guidelines for Applicants

6. International call for proposals Local call for proposals
Tendering Procedures
SERVICES
>€300,000
International restricted procedure
< €300,000 but > €20,000
1.Framework contracts
2.Competitive negotiated procedure
< €20,000
Single tender
SUPPLIES
> €300,000
International open procedure
<€300,000 but > €100,000
Local open procedure
<€100,000 but > €20,000
Competitive
negotiated procedure
WORKS
>€5,000,000
1.International open procedure 2.International restricted
procedure
<€ 5,000,000 but > €300,000
< € 300,000 but > €20,000 Competitive negotiated procedure
GRANTS
>€2,000,000
International call for proposals
Local call for proposals
For any amount in cases of urgency
Direct grant
Local open postupak
Ovaj postupak se sprovodi za nabavke koje su > Eur
Koji su koraci u okviru ovog postupka:
Najava (contract forecast) nije obavezna
Objava nabavke (procurement notice) se objavljuje samo o zemlji. Komisija objavljuje samo referencu te procedure na svom web site-u
Podnošenje ponuda (minimum 30 dana od objave nabavke u lokalnim novinama\medijima)
Evaluacija prispelih ponuda (oko 30 dana)
rocedure (Otvoreni postupak u zemlji)
Competitive negotiated procedure (konkurentni postupak)
Ovaj postupak se sprovodi za nabavke koje su Eur > Eur
Nema javnog oglašavanja za nabavku
Ugovorna strana pozove, po svom izboru, min. 3 dobavljača da dostave ponude za dobavljanje robe
Dobavljači imaju rok od 30 dana da daju ponudu
Evaluacija prispelih ponuda
Single tender (princip jedne ponude)
Ovaj postupak se sprovodi za nabavke koje su Eur > 0 Eur
Kontaktira se jedna firma koja će da da ponudu,
Rok za dostavljanje ponude je stvar odluke Ugovarača, preporuka minimum 7 dana
Evaluacija prispele ponude (7 dana)
For services with a value of less than or equal EUR the Contracting Authority may simply pay against invoices without prior acceptance of a tender.
Restricted procedure
All service contracts worth € 300 000 or more must be awarded by restricted tender procedure following international publication of a contract prior information notice and a contract notice
For supplies with a value of less than EUR 2 500, the Contracting Authority may pay on the basis of an invoice without prior acceptance of a tender

7. Procurement Procedure
Contracting Times
Contract Type
Procurement Procedure
Average Time Taken
SERVICE
International Restricted Tender
(9)-12 months
Framework
(3)-5 months
SUPPLIES
International Open Tender
9 months
Local Open Tender
6 months
WORKS
12+ months
9-12 months
GRANTS
International Call for Proposals
+ months
Local Call for Proposals
(6)-9 months

8. Service Contracts: International Restricted Tender Procedures
Prepare ToR
Negotiations with EC
Publication of Procurement Notice
Establish Sort List and prepare tender dossier
Tender preparation /submission
Tender evaluation, prepare Evaluation Report and contract dossier
Contract Signature
Months 1 2 3 4 5 6 7 8 9 10 11 12

9. Service Tender Dossier
A. Instructions to the tenderers
Letter of invitation to tender
Instructions to tenderers
B. Contract
Contract, Special Conditions
Terms of Reference
Organisation and Methodologies
Key Experts
General Budget breakdown
Conditions for service contracts
C. Other information
Shortlist notice
Administrative compliance grid
Evaluation grid
D. Tender submission form

10. Supply Tender Dossier A. Instructions to the tenderers
Letter of invitation to tender
Instructions to tenderers
b. Contract
Contract
Special conditions
Annexes
General conditions for supply contracts
Technical specifications
Budget breakdown
Model for performance guarantee
Model for advance guarantee
C. Other information
Glossary of terms
Administrative compliance grid
Evaluation grid
D. Tender submission form

11. Works Contracts
Works contracts cover construction, there are many national ‘standard’ forms of contract. Despite this, the EC have standardised on the use of an international contract format developed by the Federation Internationale des Ingenieurs-Conseils (FIDIC). It should be noted that IFIs (WB, EBRD) have their own standard documents which must be used by recipients.
The most commonly used forms of contract available under FIDIC are:
Conditions of Contract for Works of Civil Engineering Construction
(The ‘Red Book’)
Conditions of Contract for Design –Build and Turnkey
(The ‘Orange Book’)
Conditions of Contract for Electrical and Mechanical Works
(The ‘Yellow Book’)
Short Form of Contract
(The ‘Short Form’).

12. Works Tender Dossier
Most works contract dossiers contain the following documents:
The Tender (Contractor’s offer)
The General Conditions of Contract (FIDIC Part I)
The Conditions of Particular Application (FIDIC Part II Clauses)
The Technical Specifications
The Design Documents (Drawings)
The priced Bill of Quantities /Schedule of Rates
Any other document forming part of the contract e.g. letters of clarification

13. Bills of Quantity (BoQ)
An itemised list showing the number/ quantity of items required to complete the works, the units of measure, the rate per unit of quantity and the consequent total cost for that item.
The BoQ may contain a number of bills classified by structure, trade, or standard method of measurement. In turn each bill will be broken down into separate items covering all elements of the works. The total number of items can be many hundreds.
During construction the quantity of each item is re-measured and using the Contractors quoted unit rates, the value of the actual works completed by the Contractor is measured

14. Role of the ‘Engineer’
One of the main aims of Contractors, whilst making every effort to complete the works according to the contract, is to maximise profits wherever possible.
This means the Contractor will interpret contract provisions to maximise advantage e.g. providing the cheapest materials to meet the minimum requirements in the specifications or by requesting frequent time extensions.
Under FIDIC conditions an independent ‘Engineer’ must be appointed to supervise the works and to ensure that they are carried out according to the contract. The Engineer issues ‘Take Over’ and ‘Default Liability’ Certificates when the works are completed

15. Responsibilities of the Employer
Ensure that the works are legally acceptable
Appoint the Engineer
Define the scope of the Engineer’s responsibilities
Ensure that the site is freely available
Provide for the Contractor's needs
Pay the Contractor
Consult with the Engineer on contractual obligations e.g. delays (time & cost to Contractor); rejection (cost to Employer); default of the Contractor (cost to Employer) before determining the amount due.

16. SPD: Implementation Planning
SECTOR TITLE
2014
2015
2016
2017
2018
2019
2020 Q3 Q4 Q1 Q2
ACTION 1 P C
C/I I
Activity 1.1 P 
Activity 1.2
…..
ACTION 2  P  C
Activity 2.1
Activity 2.2
P = programming (period when the IPA action programme is expected to be adopted
C = procurement and grant award procedure
I = implementation period

17. Contracting & Disbursement Deadlines
Deadline for concluding the Financing Agreement
The final date for the signature of the Financing Agreement is X+1 (where X=year in which budgetary commitment was made). Conclusion of FA=year N
Contracting deadline
The end date for the signature of contracts (including grant contracts) is 3 years from the date of conclusion of the Financing Agreement i.e. N+3
Deadline for the execution of contracts
The end date by which contracts (including grant contracts) must be finished is 3 years from the contract signature. The contracting deadline for the FA=N+3+3
Disbursement deadline
The end date for making payments to contractors is 1 year after the deadline for executing contracts i.e. N+3+3+1
Final date for the implementation of the Financing Agreement
The end date for closure of the Financing Agreement is 8 years. After this date no financial transactions can be made legally under the Financial Agreement concerned

18. Programme Intervention Logic
Operations
Activities
Results
Collective rural projects
Reinforcement of rural producers
Specific Objectives
Improved productivity
Overall Objective
Land consolidation
Increased revenues
Modernisation and adaptation
Development of existing activities
Improved farming tools
Jobs created & safeguarded
Stopping rural exodus
Attraction of outside companies
New activities (tourism)
Industrial buildings for new companies
Better living conditions
Improved value of natural areas
Better image of rural areas
Restoration of the environment / rural landscape

19. INDUCTION TRAINING SEIO
Budget Support

20. What is Budget Support (BS)?
BS is a method of delivering financial assistance which normally has 4 steps:
(Sector) Policy Dialogue
Financial Transfers (in ‘tranches’) to National Treasury Account
Performance Assessment
Capacity Development
BS is delivered by means of ‘Sector Reform Contracts’.

21. Political and Economic Focus of IPA-BS
Compliance with the political criteria should be the primary focus of IPA2 BS. In particular, assistance should support preparations for acquis chapters 23 and 24 (The ‘Rule of Law’)
For the economic criteria, the main focus of IPA2 BS should be on supporting the establishment of a functioning market economy (Copenhagen Criteria: i.e. ‘The ability to withstand the pressures of the internal market’)

22. Assessment of Eligibility
Assessment takes place at 2 stages in the programme cycle.
During programme preparation: assessment of relevance (are key constraints /weaknesses addressed?) and credibility (realism, institutional capacity, track record, political commitment)
During programme implementation: assessment of progress made in policy implementation (benchmarked against reform commitments)

23. Risk Management Framework
Risk management is an internal assessment of risk levels based on the analysis of replies to questionnaires in 5 categories, namely:
Political
Macroeconomic
Developmental
Public Financial Management
Corruption /Fraud
There are 4 risk levels:
Low
Moderate
Substantial
High
Beneficiaries are expected to define their risk response by means of ‘Mitigation Measures’ (these are monitored)

24. Whether to Provide BS?
The EC decision on providing BS is based on 3 assessments:
Assessment of political commitment to a reform agenda (in line with EU accession)
Assessment of eligibility
Assessment of risks and mitigation measures

25. Variable Tranches: Performance Reserves
‘A Performance Monitoring System and related disbursement criteria is at the heart of any budget support operation’ (EC)
BS disbursements are of 2 sorts:
Base (or fixed) tranches: these are linked to eligibility criteria
Variable tranches: these are intended to create an incentive for improved performance and are based on performance indicators.
The EC limit (cap) the use of variable tranches to avoid unpredictability /volatility of disbursements. Typically, Sector Reform Contracts cover commitments for 3 years with an upper limit of 40% variable tranches

26. Variable Tranche (Performance) Indicators
The following principles should be applied:
Targets and indicators should be Coherent with sector problem analysis and programme objectives
Whilst combined indicators may be used, the emphasis should be on Results
Number of indicators should be limited to a maximum of 8 per Tranche (to avoid loss of policy focus)
Indicators, targets and assessment methodology should be defined during programme preparation