1. 1 Bölgesel Rekabet Edebilirlik Operasyonel Programı’nın Uygulanması için Kurumsal Kapasitenin Oluşturulmasına Yönelik Teknik Yardım Technical Assistance on Institutional Building for the Implementation of RCOP in Turkey This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 PRAG Procurement Supply Contracts – version November 2010 Advance Module – Day I RCP-CIC By: Berk Babila, Managing Director - Ecorys in Turkey berk.babila@ecorys.com.tr Ankara, 29 March 2011

2. 2 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Content 1)Introduction 2)Basic Rules 3)Procurement Procedures 4)Technical Specifications – purpose, objectivity and confidentiality, preparation of TS, division of lots, general requirements; market study

3. 3 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Supply Contracts Introduction Supply contracts cover –Purchase, –Lease, –Rental or hire purchase, –With or without option to buy, of products (incidentally, including sitting and installation)

4. 4 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Basic Rules Eligibility – the rule on nationality Participation in the procurement and grant procedures is open on equal terms to all natural and legal persons of the EU member states and the countries covered by the Regulation under which the contract is financed

5. 5 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Basic Rules (2) Eligible Countries Member States of the European Community: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom Member States of the European Economic Area: Liechtenstein, Norway Candidate Countries: Croatia, Former Yugoslav Republic of Macedonia, Montenegro, Turkey Potential Candidate Countries: Albania, Bosnia and Herzegovina, Iceland, Kosovo under UNSCR nº 1244, Serbia, 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 Participation is also open to: Developing countries specified by the OECD DAC (thematic programmes) International organisations Beneficiary countries that have reciprocal access to External Aid A third country (with a derogation endorsed by the EC)

6. 6 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Basic Rules (3) Eligibility – the Rule of Origin All supplies and equipment purchased must originate in the EU or in an eligible country as defined above in the nationality rules In its tender, a tenderer must state the origin of supplies

7. 7 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Basic Rules (4) How to establish origin? Origin: Country where the goods have undergone their last, economically justified, substantial transformation Evidence: Certificate of Origin To be presented either: When bringing supplies to the beneficiary country When the first invoice is presented (pre-financing) When Provisional Acceptance takes place (if not, breach of contract)

8. 8 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Basic Rules (5) Exceptions to the rules Decided on case-by-case basis by the EC before the procedure is launched ◦May extend eligibility to natural and legal persons from a country not eligible ◦May allow the purchase of goods and materials originating from a non-eligible country (Price will not be accepted as justification) Any derogation must be foreseen at PN stage

9. 9 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Exercise Derogation from rule of origin

10. 10 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Basic Rules (6) Grounds for Exclusion – PRAG 2.3.3 Candidates, tenderers or applicants will be excluded from participation in procurement procedures if they a)in financial difficulties b)convicted of an offense c)guilty of grave professional misconduct d)not fulfilled their obligations relating to social security contributions or taxes e)subject of a judgement for fraud, corruption, involvement in a criminal organisation or any other illegal activity f)currently subject to an administrative penalty referred to relevant articles of the regulations

11. 11 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Basic Rules (7) Grounds for Exclusion – PRAG 2.3.3 Documents to be submitted not to be excluded from tenders Relevant Commercial Court / Court of Liquidation and Bankruptcy Chambers of Commerce -Trade Registry Public Procurement Authority - PPA or for Companies Commercial Court and for partners (natural persons) and managers, General Directorate of Record of Convictions or Statistics or relevant Public Prosecutor To be checked by EC/CFCU and/or Records of Public Procurement Authority-PPA Social Security Institution, Tax Offices Same as (a) Same as (b)

12. 12 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Basic Rules (8) Administrative and financial penalties Tenderers who have been guilty of ◦making false declarations or ◦substantial errors or ◦committed irregularities and fraud ◦having been found in serious breach of their contractual obligation may be excluded from all contracts and grants financed by the EU for a maximum of five years and this period may be extended to 10 years in the event of a repeated offence within five years Before deciding to exclude a party, in principle the concerned party has the right to be heard (contradictory procedure)

13. 13 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Basic Rules (9) Visibility – communication and visibility manual Contractors must take the necessary measures to ensure the visibility of the EU financing or co-financing. Communication and Visibility Manual for EU External Actions: http://ec.europa.eu/europeaid/work/visibility/index_en.htm http://ec.europa.eu/europeaid/work/visibility/index_en.htm

14. 14 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Other essential points Conflict of interest Awarding principles No retroactive awards Use of standard documents Record keeping Availability of funds Environmental aspects Joint procurement with an EU member state Expost publication of beneficiaries http://ec.europa.eu/europeaid/work/funding/beneficiaries_en.htm

15. 15 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Procurement Procedures The basic principle governing the award of contracts is competitive tendering. The purpose is two folds, to ensure the transparency of operations to obtain the desired quality supplies at the lowest price. There are several different procurement procedures, each allowing a different degree of competition.

16. 16 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Which procurement procedure to apply? Thresholds based on maximum budget (including any co-financing) Supplies Equipment and Materials ≥ €150 000 International open tender procedure ≥ € 60 000 but < €150 000 Local open tender procedure > €10 000 but < €60 000 Competitive negotiated procedure ≤ € 10 000 Single tender

17. 17 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Procedures applied regardless of thresholds Dynamic Purchasing System Competitive Dialogue Negotiated Procedure

18. 18 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Single Tender ≤ €10 000 in exceptional and duly justified cases where the factual or legal circumstances defined in Articles 242, 244 and 246 of the Implementing Rules of the Financial Regulation are met one offer sufficient the identified provider must submit a brief technical proposal and a financial offer can be sent and received by fax the CA must prepare a report (Annex A10b) explaining the manner in which the participant(s) in the negotiations were identified and the price was established, and the grounds for the award decision

19. 19 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Competitive Negotiated Procedure > € 10 000 but < € 60 000 CA invites candidates of its choice to submit tenders No publication of procurement notice/local advertisement Bidders are sent a Letter of Invitation to Tender accompanied by a Tender Dossier Potential bidders are given at least 30 days to submit their technical and financial offers in separate envelopes If following consultation of the tenderers, the CA receives only one tender that is administratively and technically valid, the contract may be awarded provided that the award criteria are met Award criterion: Price –cheapest compliant offer –The contract is awarded by conducting selection procedure (verification of the eligibility) and procurement procedure (comparison of tenders )

20. 20 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Local Open Tender  € 60 000 but < € 150 000 all interested economic operators may submit a tender no publication of Contract Forecast required publication of Procurement Notice –standard local advert published only in the Beneficiary Country –the EC only publishes the references of such tender opportunities A local open tender procedure must provide other eligible suppliers/contractors with the same opportunities as local firms Deadline for Submission of Tenders –minimum of 30 days between the date of publication of the PN and the deadline for receipt of tenders Submission of tenders –Single envelope system Award criterion: price –cheapest compliant offer –The contract is awarded by conducting selection procedure (verification of the eligibility and of the financial, economic, technical and professional capacity of tenderers) and procurement procedure (comparison of tenders)

21. 21 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 International Open Tender  € 150 000 all interested economic operators may submit a tender Publication of a Contract Forecast followed by a Procurement Notice –minimum of 30 days between the date of publication of the CF and PN Deadline for submission of tenders –minimum of 60 days after publication of PN Additional info –clarification meeting / site visit may be foreseen –clarification questions 21 days before deadline for submission of tenders –CA must reply at least 11 days before the deadline for submission of tenders Submission of tenders –Single envelope system Award criterion: price –cheapest compliant offer –The contract is awarded by conducting selection procedure (verification of the eligibility and of the financial, economic, technical and professional capacity of tenderers) and procurement procedure (comparison of tenders)

22. 22 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Wrap up Basic Rules and Procedures

23. 23 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Technical Specifications Purpose To give instructions and guidance to contractors at the tendering stage about the nature of the tender they will need to submit To serve as the contractor's mandate during project implementation TS becomes annex of the eventual contract awarded as a result of the tender Thorough preparation of the TS is crucial for the ultimate success of the project

24. 24 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Technical Specifications (2) Objectivity and Confidentiality Strict objectivity and confidentiality must be maintained during the preparation of TS –Each beneficiary’s representative or technical specialist must sign a Declaration of Objectivity and Confidentiality –All information or documents must be held in confidence and used only for the purposes of preparing the TS and not disclosed to any third party –All contributions to preparing TS must be objective and fully respect the principles of fair competition and impartiality, do not favour any one product, manufacturer or service provider

25. 25 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Technical Specifications (3) Specifics Must afford equal access for tenderers and not have the effect of creating unjustified obstacles to competitive tendering Clear, non-discriminatory and in proportion to the budget allocated for the project Define the characteristics required of a product with regard to the purpose for which they are intended by the CA

26. 26 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Technical Specifications (4) Characteristics to be defined –the quality levels; –environmental performance (taking into consideration the latest developments on the matter); –design for all requirements (including accessibility for disabled people, environmental aspects in accordance with the latest developments on the matter); –the levels and procedures of conformity assessment, including environmental aspects; –fitness for use; –safety or dimensions, including, the sales name and user instructions, terminology, symbols, testing and test methods, packaging, marking and labelling (including environmental labelling, e.g. on energy consumption), production procedures and methods

27. 27 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Technical Specifications (5) Specifics (2) TS should clearly describe –What is required? –How much of every article is required? –Minimum quality standards? –When and where the supplies to be delivered? –Installation, training and after-sales service? –Warranty requirements, etc. Ensure clarity and conciseness in drafting the TS Do not point to particular brands and types; avoid being too specific and therefore limiting competition However, where products cannot be described in a sufficiently clear manner, they may be named as long as they are followed by the words "or equivalent"

28. 28 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Technical Specifications (6) Division of lots At the tendering stage, supplies to be procured can be in one lot or divided into lots in a logical manner and in a systematic arrangement such that the supplies in each lot must exist in common sector in the market for a sound tendering Tenderers may submit an offer for only one lot, more than one lot or all lots. However tenderers must offer all the items under that lot. An offer submitted by the tenderer for a part of the lot is rejected For each lot, a separate technical specification is developed and a separate contract is concluded

29. 29 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Technical Specifications (7) General Requirements –maximum delivery period –warranty –after-sales service –maintenance and support (before and after provisional acceptance) –the need to provide all accessories necessary for proper operation –documentation –training –acceptance procedure –recommended consumables –delivery address –background information –equipment layout –spare parts

30. 30 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Technical Specifications (8) Market study Market study is one of the preliminary steps of the preparation of the technical specifications. The identified bodies need to be analyzed in order to verify whether they are eligible and whether they would have access and interest to participate in an EC-funded tender. Itemized unit price for each product in supply tender dossier must be clear. A budget must be estimated based on list-prices or official prices for the products. In case of special design of a supply detailed cost estimate analysis for the supply is provided

31. 31 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Technical Specifications (9) Checklist Documentation sufficiently open to admit equipment from different producers? Are there any certification requirements? If yes, can they hamper competition? Documentation coherent, understandable and sufficiently specific to produce tender? Market study included? Are any warranty conditions included? If yes, are they standard?

32. 32 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 Exercise Technical specifications

33. 33 This project is co-financed by the European Union and the Republic of Turkey PRAG Supply Contracts Training 29-31 March 2011 End of Day I Closing Questions and Answers