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{color:#0e4096}*INTERACT Point Vienna*{color}
{color:#262727}Public procurement in IPA cross-border cooperation programmes with EU Member States in shared management{color}
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*ISBN number is: 978-80-970473-4-4*
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Copyright notice:
© INTERACT Programme Secretariat on behalf of the Managing Authority, the Self-Governing Region of Bratislava.
INTERACT Programme, March 2010
You are permitted to print or download extracts from this material for your personal use. This material is allowed to be used for public purposes provided the source is acknowledged. None of this material may be used for any commercial purpose.
!worddav0d31b2db1f312e7d917c27c4c25849cf.png|height=74,width=111! INTERACT Point Vienna is funded by INTERACT, which is part of Objective 3 European Territorial Cooperation. INTERACT is co-financed by the European Regional Development Fund (ERDF). INTERACT Point Vienna is hosted by the City of Vienna Municipal Department 27.
INTERACT is designed to capitalise on the vast pool of experience and expertise accumulated through INTERREG in the areas of regional development, cross-border cooperation, transnational cooperation and interregional cooperation.
INTERACT Point Vienna does not warrant or assume any legal liability or responsibility for the accuracy, completeness or usefulness of any information, product or process disclosed in or connected to this document.
The essentials of this Manual were drafted by expert Ales Zupan.
In the effort to ensure high quality of this product, the content of the Manual was further developed during the peer review process, involving IPA CBC programme bodies, national-regional authorities, as well as the European Commission.
This process and the editing of the final text was led by Ivana Lazic and complemented by Mauro Novello of the INTERACT Point Vienna.
INTERACT Point Vienna acknowledges the efforts made by all target groups.
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{color:#365f91}*Contents*{color}
[GLOSSARY |#_Toc259536816]
[INTRODUCTION |#_Toc259536817]
[Background |#_Toc259536818]
[Legal context |#_Toc259536819]
[METHODOLOGY |#_Toc259536820]
[2.1. Basic documents |#_Toc259536821]
[2.2. Target groups |#_Toc259536822]
[2.3. Approach |#_Toc259536823]
[2.4. Key elements |#_Toc259536824]
[2.5. Needs analysis |#_Toc259536825]
[BASIC RULES |#_Toc259536826]
[3.1. The rules of nationality and origin |#_Toc259536827]
[3.2. Fair and transparent competition |#_Toc259536828]
[3.3. Grounds for exclusion |#_Toc259536829]
[3.4. Administrative and financial penalties |#_Toc259536830]
[3.5. Visibility |#_Toc259536831]
[3.6. The rule on the language to be used |#_Toc259536832]
[PROCEDURES |#_Toc259536833]
[4.1. Selection and award criteria |#_Toc259536834]
[4.2. Open procedure |#_Toc259536835]
[4.3. Restricted procedure |#_Toc259536836]
[4.4. Competitive negotiated procedure |#_Toc259536837]
[4.5. Orders on the basis of single tender |#_Toc259536838]
[4.6. Modifying contracts |#_Toc259536839]
[SERVICE CONTRACTS |#_Toc259536840]
[5.1. What is a Service contract? |#_Toc259536841]
[5.2. Procedures for Service contracts |#_Toc259536842]
[5.2.1. On the basis of single tender (up-to 10.000€) |#_Toc259536843]
[5.2.2. Competitive negotiated procedure (from 10.000 – 200.000€) |#_Toc259536844]
[5.2.3. Restricted tenders (above 200.000€) |#_Toc259536845]
[5.3. Common challenges |#_Toc259536846]
[SUPPLY CONTRACTS |#_Toc259536847]
[6.1. What is a Supply contract? |#_Toc259536848]
[6.2. Procedures |#_Toc259536849]
[6.2.1. On the basis of single tender (up-to 10.000€) |#_Toc259536850]
[6.2.2. Competitive negotiated procedure (from 10.000 – 60.000€) |#_Toc259536851]
[6.2.3. Local open procedure (from 60.000 – 150.000€) |#_Toc259536852]
[6.2.4. International open procedure (above 150.000€) |#_Toc259536853]
[6.3. Common challenges |#_Toc259536854]
[WORKS CONTRACTS |#_Toc259536855]
[7.1. What is a Works contract? |#_Toc259536856]
[7.2. Procedures |#_Toc259536857]
[7.2.1. On the basis of single tender (up-to 10.000€) |#_Toc259536858]
[7.2.2. Competitive negotiated procedure (from 10.000 – 300.000€) |#_Toc259536859]
[7.2.3. Local open procedure (from 300.000 – 5.000.000 €) |#_Toc259536860]
[7.2.4. International open procedure (above 5.000.000 €) |#_Toc259536861]
[7.3. Common challenges |#_Toc259536862]
[PERSPECTIVE OF THE PROGRAMME MANAGEMENT BODIES |#_Toc259536863]
[5.4. Perspective of the programme managing bodies |#_Toc259536864]
h1. Welcome to the INTERACT Publication Centre\!

|h1.{anchor:_Toc259536816}GLOSSARY| |
|{color:#262727}Contracting Authority{color}|{color:#262727}The party concluding the contract. Differentiation must be made between *Contracting Authority* in the sense of *public procurement* for service, supply and works contracts and Contracting Authority in the sense of grant contracts signed after the selection within the context of Open call for projects (in most cases it is *Managing Authority* of the programme){color}| |
|Contractor|A generic term for the firm, consortium, or individuals with whom any of the contract types (service, supply, works) is signed. Counterpart of the contractor is the Contracting Authority, which is also bound by the contract to pay the price to the contractor, against the delivery of service, supply or work.| |
|Contract|An agreement with specific terms between two or more persons or entities in which there is a promise and an obligation to provide services and/or supplies for an agreed price. According to the type there are service contracts, supply contracts and works contracts. In the financial regulation the definition is: "Contract for pecuniary interest between economic operators and contracting authorities, in order to obtain, against payment of a price the supply of movable or immovable assets, the execution of works or the provision of services."| |
|CBC|{color:#262727}Cross-border cooperation – cooperation between neighbouring regions across the EU internal or external borders with the aim of promoting regional development and improvement of living conditions.{color}| |
|IPA CBC|{color:#262727}IPA cross-border cooperation – Component 2 (in this Manual mainly refers to CBC implemented under shared management){color}| |
|CC/PCC|{color:#262727}Candidate Country/Potential Candidate Country – Countries at different stages of EU accession process with perspective of full EU membership{color}| |
|IPA beneficiary country|{color:#262727}A country which is using IPA funds, see also CC/PCC{color}| |
|IPA IR|{color:#262727}IPA Implementing Regulation 718/2007{color}| |
|EU|{color:#262727}European Union{color}| |
|MS|{color:#262727}Member State{color}| |
|IPA|{color:#262727}Instrument for Pre-accession Assistance. A unified pre-accession instrument for the period 2007-2013. It is established by the Council Regulation No. 1085/2006 and implemented by the Commission Regulation 718/2007. Its objective is to assist candidate and potential candidate countries in their alignment with _acquis_{color} {color:#262727}_communitaire{_}, with a view to EU membership.{color} | |
|JTS|{color:#262727}Joint technical secretariat: A secretariat set up by the Managing Authority and the participating countries. Its task is to assist the Managing Authority and other programme authorities in carrying out their tasks.{color}| |
|MA|{color:#262727}Managing Authority – authority designated by the Member State to manage the crossborder programme{color}| |
|PRAG|{color:#262727}Practical Guide to EC External Aid Contract Procedures – EC guide on procurement and contracting procedures and rules which apply to EC external aid contracts. It can be also applicable to the projects financed from the pre-accession funds and replace public procurement rules of the participating countries, within the limits set by the decision C (2007) 2034.{color} | |
|FLC|First Level Control| |
|Managing bodies|General term for all authorities involved in direct management of CBC programmes| |
|CA|{color:#262727}Certifying Authority – a body in charge of certifying a statement of expenditure and applications for payment before they are sent to the EC. In the ERDF programmes, this authority substitutes the so called paying authority of the programming period 2000-2006.{color} | |
|AA|{color:#262727}Audit Authority. In charge of the audit of programme expenditures (system audit and sample audits), also called second level control, in the 2000-2006 programming period. It can be complemented by a Group of Auditors (GoA) made of auditors representing all countries participating in the programme. It draws up the audit strategy, the compliance assessment and the annual audit reports.{color} | |
|Final Beneficiary \\ |Grant beneficiary - Project partner. Both Lead beneficiary (Lead partner) and project partner. According to IPA IR it can be a public/private body/firm responsible for initiating/implementing operations (called projects, selected after a call for proposal) receiving public aid (see also „grant" definition).| |
|Public procurement|Public procurement contracts cover *supplies, services and works* financed from the project budget with aim of implementation of the project activities. Public procurement also includes the expenditures made necessary for managing the programme, paid out of Technical Assistance budget. NOTE: this definition refers to procurements under grants (see definition below of 'secondary procurement'). This is indeed correct, since most  if not all of the CBC programmes will be implemented through grants (in general, following open calls for proposals)\].| |
|Secondary procurement (procurement under grants)|In the IPA CBC environment  where funds are allocated to final beneficiaries in the form of grants following an open call for proposals 'secondary procurement' means the procurement of supply, service or works carried out by the grant beneficiary for the purpose of implementing the project for which he/she received the grant. In this context, the grant beneficiary (or final beneficiary or grantee) becomes the contracting authority of these procurements. This does not necessarily refers to the power of the contractor, who signed a contract upon selection following on a call for tender, to sub-contract the object of the service, supply or work to a third party, which is usually regulated in the contract and specified in the tender dossier.| |
|Works contract|A contract between a construction firm and the Contracting Authority for the execution of works of building of the structure| |
|Supply contract|A contract between a supplier and the Contracting Authority for the purchase, lease, hire or hire-purchase (with or without the option to buy) of goods. It may also cover such tasks as installation, servicing, repairs, training and after-sales service. | |
|Service contract|A contract between a service provider and the Contracting Authority for the provision of services such as studies, etc.| |
|Grant|A direct payment of non-commercial nature to a specific beneficiary to implement an action, or, as defined in the Financial Regulation "direct financial contributions, by way of donation, to finance an action or a body". | |
|Grant contract|Contract between Managing Authority and Project Lead beneficiary (Lead partner). This is also called Subsidy contract or Grant offer letter in the ERDF Territorial Cooperation environment. The purpose of the grant contract is a donation, instead of purchase of service, supply and work, which is the typical purpose of the contract referred to in this manual.| |
|Grant beneficiary|Recipient of a grant. Also called project partner. The lead beneficiary (lead partner) signs the grant contract with the programme Managing Authority, while the other project partners usually sign a partnership agreement with the lead beneficiary.| |
|Subcontracting|The power of the contractor, who signed a contract upon selection following on a call for tender, to sub-contract the object of the service, supply or work to a third party, which is usually regulated in the contract and specified in the tender dossier.| |
|Call for proposals|In IPA CBC implemented in the shared management mode, this is a public invitation by the programme Managing Authority for the submission of project proposals by clearly identified types of applicants and within the framework of a specific EU policy programme – applicable for *grant procedures*| |
|Tender|A written or formal offer to supply goods or perform services/works for an agreed price| |
|Tenderer |Any natural or legal person or group of such persons submitting a tender with a view to concluding a contract| |
|Tender procedure|The overall process of putting a contract out for tender, starting with the publication of a procurement notice and ending with the award of the tendered contract. There are various types of tender procedures: open, restricted, local, international, negotiated, simplified | |
|Tender dossier|The dossier compiled by the Contracting Authority and containing all documents needed to prepare and submit a tender. It includes at least terms of reference for service contracts, technical specifications for supply contracts, bills of quantities for works. | |
|Most economically advantageous tender|The tender regarded as the best according to the criteria laid down for the contract in question e.g. quality, technical properties, functional qualities, after sales service and technical assistance, delivery date or performance period and the price. These criteria must be published in the procurement notice or stated in the tender dossier| |
|EuropeAid|EuropeAid Cooperation Office – Directorate General of EC in charge of implementing and monitoring external aid instruments of the EC which are funded by the EC budget and EDF. Although its area of responsibility does not include pre-accession programmes, the website contains useful information on tenders under those programmes [http://ec.europa.eu/europeaid/index_en.htm|http://ec.europa.eu/europeaid/index_en.htm] | |
|ETC|European Territorial Cooperation - In the programming period 2007-2013, Objective 3 of the EU Cohesion Policy aiming at strengthening cross-border, transnational and interregional cooperation. As such it continues the INTERREG.| |
|ERDF|European Regional Development Fund – one of the Structural funds. It's goal is to reinforce economic and social cohesion by redressing the main regional imbalances in the EU through support to development and structural adjustment of regional economies, and support to cross-border, transnational and interregional cooperation. IPA countries will become eligible for ERDF upon accession.| |
|DG Enlargement (DG ELARG)|Directorate General for Enlargement – A part of the EC in charge of the EU's enlargement policy. In terms of financial assistance it is responsible for implementation of IPA| |
|DG Regional Policy (DG REGIO)|Directorate General for Regional Policy - A part of the EC in charge of the EU cohesion policy. In terms of pre-accession assistance it is responsible for Component 2 of IPA for cross-border cooperation between MS and CC/PCC (as well as for IPA component 3 – Regional development) | |
|Financial regulation|Legal act defining principles for the establishment and implementation of the general budget of the EU. Financial regulation applicable to the general budget of the European Communities – Council regulation (EC) No. 1605/2002, detailed implementing rules are contained in the Commission regulation (EC) No. 2342/2002| |
|Shared management|Method of implementation of EU budget where certain implementation tasks are delegated by the European Commission to the Member States. | |
|EC|European Commission| |
|Expression of Interest|A document, in a pre-designed format, completed by companies who, following the publication of a procurement notice for a restricted service tender procedure, wish to be considered for the short list for a service, work and supply provision (sometimes also called project).| |
|Negotiated procedure|Procedure without prior publication of a procurement notice, in which the Contracting Authority consults the candidate or candidates of its choice and negotiates the terms of the contract with one or more of them. This procedure is used only in exceptional circumstances.| |
|Eligibility criteria|A set of conditions for a candidate to be allowed to take part in a tender or to be awarded a grant contract.| |
|Rule of Origin|A rule by which all supplies and equipment financed from an EU assistance programme in external aid environment must originate from the EU or an eligible country defined by EU regulations or international agreements, except for duly justified exemptions made by the Contracting Authority.| |
|Rule of Nationality|An external aid rule by which a legal person participating in a tender for a project financed by an EU assistance programme must be registered in the EU or an eligible country as defined by programme rules. Natural persons (experts) may be of any nationality| |
|Publication of tenders|Depending on the tender procedure, tenders can be published locally or at European level. On the European level they should be published in the Official Journal of the European Communities and on the European Commission websites (EuropeAid or TED). Also, publication in the local press and/or specialised publications may be advisory. | |
|TED|Tenderers Electronic Daily - Data base of all public procurement under obligation to be published in the Official Journal of the European Union (OJ). Website: [http://ted.europa.eu/|http://ted.europa.eu/] | |
|Tender evaluation|Evaluation of tenders received in response to a call for tenders| |
|Evaluation Committee|A committee made up of an odd number of voting members, appointed by the Contracting Authority. Members of the Evaluation committee should possess the necessary technical, linguistic and administrative capacities to evaluate submitted tenders. | |
|General conditions|The general contractual provisions setting out the administrative, financial, legal and technical clauses governing the execution of all contracts of particular type (service, supply, works)| |
|Special conditions|Clauses *specific to the contract* laid down by the Contracting Authority as an integral part of the contract, including amendments to the General conditions| |
|Annex to the contract|Documents attached to the contract and representing its constituent part. | |
|Open procedure|Procedure in which any natural or legal person or group may submit a tender in response to a procurement notice| |
|Restricted procedure|Procedure in which, after publication of a procurement notice, only candidates invited by the Contracting Authority may submit a tender| |
|Simplified procedure|Procedure without prior publication of procurement notice, in which only candidates invited by the Contracting Authority may submit a tender| |
|Contract award procedure|Procedure followed by the Contracting Authority to identify a consultant/supplier/contractor to provide defined services/supplies/works and conclude a contract with them. | |
|External actions|Programmes which EU finances in third countries. Pre-accession programmes are considered third country programmes by their nature, and are in the area of responsibility of DG Enlargement (and DG Regional Policy)| |
|Contract budget|Breakdown of costs performing the contract. The total of these costs is contract value.| |
|Budget breakdown|Specification of project costs per budget lines| |
|Supplies|All items which supplier is required to supply to the beneficiary, including, where necessary, services such as installation, testing, provision of expertise, supervision, maintenance, repair, training, and other such obligations connected with the items to be provided under the contract| |
|Technical offer|The part of the tender which contains all non-financial elements of the tender dossier. Technical offer must not contain any financial indications.| |
|Financial offer|The part of tender which contains all financial elements of the tender, including its summary budget and any detailed price breakdown or cash flow forecast required by the tender dossier| |
|ToR|Terms of Reference – In case of service contracts this document defines the tasks required of a contractor and indicating project background and objectives, planned activities, expected inputs and outputs, budget, time tables and job descriptions| |
|Technical specification|Document drawn up by the Contracting Authority setting out the requirements and/or objectives in respect of the provision of supplies or works, specifying where relevant the methods and resources to be used and/or the results to be achieved| |
|Bill of Quantities|In the context of works contracts, this document contains and itemised breakdown of the tasks to be carried out in a unit price contract, indicating a quantity for each item and the corresponding unit price.| |
h1.{anchor:_Toc259536817}INTRODUCTION
Instrument for pre-accession assistance (IPA) is an unified European Union's financial instrument bringing all pre-accession support into one single funding instrument aimed at aiding the Pre-Accession process for Candidate and Potential Candidate Countries (hereinafter CC/PCC) in preparing for their accession to the EU. The support is allocated through five components:
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1.Transition Assistance and Institution Building
2.Cross-Border Co-operation
3.Regional Development
4.Human Resources Development
5.Rural Development
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While other components are providing support inside of beneficiary countries, the Component 2 (hereinafter 'IPA CBC') has a broader character. The support is provided through cross-border initiatives designed to deliver focused support to cross-border cooperation between EU Member States and Candidate and Potential Candidate Countries as well as between IPA beneficiary countries themselves, and may also fund participation of beneficiary countries in ERDF transnational cooperation programmes.
IPA CBC programmes with Member States can be implemented in two modes: shared management As defined in Article 53b of Regulation (EC, Euratom) No 1605/2002 and transitional approach. In shared management, implementation tasks are delegated to a single management authority located in one of the participating EU Member State, using single set of rules across entire eligible territory. Transitional approach is possible when conditions for shared management are not yet met. In that case, on the side of the MS the programme is implemented in shared management while on the side of the IPA beneficiary country the programme is implemented in centralised or decentralised management. Eight out of 10 IPA CBC programmes are being implemented in shared management mode Data from December 2009. Greece-Albania and Greece-former Yugoslav Republic of Macedonia are implemented in transitional approach..
{color:#d80073}This manual addresses only IPA CBC programmes with MS implemented in shared management.{color}
h2.{anchor:_Toc259536818}Background
According to the IPA general and implementing regulations, in the management of IPA CBC programmes in shared management between CC/PCC and MSs a system effectively identical to the Structural Funds approach is applied. Public procurement is *the main difference* and the use of set of *rules and procedures defined for actions financing cooperation with third countries* is to be applied Pre-accession programmes are considered third country programmes by their nature. (hereinafter 'public procurement according to external rules').
IPA CBC programmes are implemented through Calls for proposals, therefore the external aid procurement rules referred to in Art. 121 and in this Manual essentially relate to the procurement procedures to be used *by grant beneficiaries in procuring services, supplies or works to implement the project* for which they received the grant and it *does not concern the grant award procedure* (publication of the call, selection of the projects, etc.).
Public procurement provisions in IPA CBC are defined in Article 121 of the IPA Implementing Regulation (EC) No. 718/2007 (hereinafter 'IPA IR'). Article 121 of IPA IR establishes that one single set of procurement rules should be applicable, on both sides of the border, for all IPA CBC programmes implemented in shared management with Member States and that such rules would be those applicable to external actions, as set out in the Financial Regulation (EC, Euratom) No. 1605/2002 and its Implementing Rules (EC, Euratom) No. 2342/2002., as well as the decision C(2007) 2034, with the exclusion of Section II.8.2 of that decision.
One of the main focuses of the IPA instrument is the assistance to IPA countries, in view of their accession, to adopt the _acquis_ _communautaire{_}, as expressly set in the preamble (no. 7) of the implementing regulation. These countries should learn how they will have to manage ERDF, upon accession. Secondly, the decentralised management should enhance the ownership of the programmes (see preamble no. 12), helping the managing bodies in these countries to take up responsibilities for a sound management of the EU funds, together with the European Commission. These principles seem not to fully match with the principle of „one single set of procurement rules", as in ERDF territorial cooperation programmes procurement and eligibility rules may differ from country to country. However, sometimes even the participating Member States in some ERDF co-financed CBC programmes decide to agree on some joint rules, in order to make the management of funds and the control of expenditures easier and in this way mitigate the risk of errors and irregularities Even in European Territorial Cooperation programmes, the different rules in the participating countries create some drawbacks: How can the programme MA ensure and check the overall sound financial management of funds? How can the MA coordinate the different national controllers, using completely different rules? The same applies for the AA and for lead beneficiaries-partners: How can they ensure consistency? And different rules mean often that activities take place where the most convenient rules exist, instead of where it is actually needed, as well as a non-equal treatment of partners.
As a matter of fact, one of the main reasons behind the choice of the single set of rules was the dissatisfaction of the Member States with the system applicable in the past CBC programmes between beneficiary third countries and Member States, for which different instruments (e.g. INTERREG/PHARE/CARDS/Neighbourhood programmes), thus different set of rules, were applicable on each side of the border. IPA CBC represents a radical improvement compared to the situation of previous cross-border cooperation at EU external borders. *A single set of rules* – including in terms of procurement – applicable on both sides of the borders and to all beneficiaries  is the cornerstone of the IPA CBC approach, which can *ensure genuinely joint cross-border cooperation activities{*}.
Furthermore, the application of one single set of rules for all project partners from either side of the border, presents several advantages such as *increased transparency and fair competition* between bidders, harmonized rules with same principles and thresholds applying to all of the geographical areas and programmes operating under the instrument, with clear improvements in terms of facilitating controls and certifying expenditures.
Finally, since regions in a MS or an IPA beneficiary countries may be eligible to several IPA CBC programmes, the application of a single set of procurement rules across all programmes facilitates the participation of potential beneficiaries in the programmes, removing _inter alia_ the risk of applicants applying to the programme offering the most favourable conditions in terms of procurement rules.
Due to the fact that experience in use of external public procurement according to external rules in MSs is limited or none Among MSs participating in the IPA CBC programmes, Bulgaria and Romania relatively recent experience with implementation of external procurement rules, Hungary, Slovenia have not been using them since 2004, and Italy and Greece never had any experience in external public procurement rules and procedures and due to the fact that a need for standardised and straightforward approach was necessary – since many programmes have overlapping territories and all IPA beneficiary countries are participating in several IPA CBC programmes For example, a Croatian beneficiary potentially participates in 3 CBC programmes with MSs + 3 IPA-IPA programmes, and a Serbian beneficiary potentially participates in 4 CBC programmes with MSs + 3 IPA-IPA programmes. More or less the same for Albania, Bosnia, Montenegro and the former Yugoslav Republic of Macedonia. Moreover, IPA final beneficiaries in programmes implemented in transitional approach and transnational programmes already use External aid rules as well (even if in a slight adapted format). The same difficulty applies to MAs managing different programmes, such as the National Development Agency in Hungary, Romanian MDPWH, Bulgarian MRDPW, Italian Region Abruzzo, etc., as well as the national controllers (FLC) and auditors (AAs), all of which could lead to further confusion among project partners - INTERACT Point Vienna was approached with the request for preparation of a *Procurement manual* that would cover basic contracting and procurement issues expected within the IPA CBC programmes under shared management.
The *INTERACT's Procurement manual* is covering *procedures for service, supply and works contract* in relation to procurement procedures as a part of project implementation activities, as well as for the programme activities financed by technical assistance. It is based on Art. 121 of the IPA IR and the suggested approach by this Manual is based as far as possible on the *well-known and well-tested rules used already in the external aid{*}. Therefore this Manual is based mostly on existing procedures described in the PRAG document ("Practical Guide to Contract procedures for EC external actions"), even though Art. 121 does not include an obligation to use the PRAG and it only refers to relevant parts of the Financial Regulation and its implementing rules, as well as to Commission Decision C(2007)2034, as legally binding. However, we believe that PRAG can provide useful material which can be used – adapted when needed – in the IPA CBC context for shared management, in particular Annex IV, providing the applicable procurement rules for the project beneficiary, like the annotated version of the Decision C(2007)2034 – Part II.
It should be remembered that Art. 121 also apply to procurement of services, works or supplies under the technical assistance budget.
*The procedures for awarding grants are not addressed in this Manual* In IPA CBC programmes with MS in shared management, grant award procedure is essentially the one implemented under Structural Funds CBC (not 'external rules'){*}!*
h2.{anchor:_Toc259536819}Legal context
In order to be able to apply public procurement rules in a more confident way, it is necessary to know where these rules originate (legal basis) and what their aim is. In this paragraph we would like to sum up the legal background of Art. 121 of Reg. (EC) No. 718/2007 and the context of public procurement rules even if only in an extremely simplified version. +It has to be kept in mind that public procurement rules and their interpretation are constantly changing{+}.
Most of the time, rules set at lower levels in the legal hierarchy just clarify and specify more general rules set at higher levels. Nonetheless some conflicts may arise and therefore it is necessary to acknowledge and apply basic legal principles and purposes in order to correctly interpret and use specific rules to concrete situations. This is exactly the same procedure used by the courts, such as the Court of Justice of the European Union. In our opinion, following main rules must be borne in mind This list of legal documents-rules is not necessarily complete and exhaustive, but based on the experiences collected by INTERACT in the assistance of INTERREG and Neighbourhood programmes. The procurement rules are the same both for beneficiaries of the Member States and of the IPA countries. However some distinction in the legal background must be made.:
|{color:#d80073}*FOR MSs{*}{color}{*}:* EU Treaty articles 181a, 49 and 279|.. are the legal basis of the IPA regulation and implementing regulation (please see preamble of the regulations). Members States beneficiaries are bound as by any other treaty of international law, superseding any national law in the interstate relationships. \\
These articles provide the general objectives of the external aid policy, as well as the possibility to become member of the European Union. To be borne in mind that for European territorial Cooperation programmes, Regulation (EC) No. 1083/2006 has a different legal basis in the Treaty, i.e. articles 161 and 158. This difference in the legal basis has several implication in the interpretation, application and thus in the day-to-day implementation of IPA CBC programmes.|
|{color:#d80073}*FOR IPA BENEFICIARY COUNTRIES{*}{color}{*}:* framework and financing agreements|*The legal basis for IPA countries are the framework (Art. 17 IPA Reg.) and the financing agreements (Art. 8 IPA IR), instead of the EU-Treaty.* \\
*Moreover, the secondary EU-law, regulations, directives etc. listed below are applicable as far as recalled in the framework and financing agreements and not directly applicable, as for MSs.*|
|Council Regulation (EC) No 1085/2006 IPA|... is the basic document, directly applicable in the Member States territories because of the EU treaty and usually having the same force of ordinary law, depending on the different national legal systems. In the Regulation public procurement rules are not set, but the general principles and aims of the IPA instrument Article 13 of REGULATION NO. 1085/2006 provides that shared management has to be in accordance with Regulation (EC, Euratom) No 1605/2002. The second part: „ the managing authority shall operate in accordance with the principles and rules laid down in Regulation (EC) No 1083/2006" does not refer to Public procurement, but to general management rules (see EC letters below).|
|Regulation (EC, Euratom) No 1605/2002 Financial and Regulation (EC, Euratom) No 2342/2002|At the same level as Reg. (EC) no. 1085/2006. Important leading principles are set here, such as e.g. the distinction between grant and public contract, the principle of efficiency/effectiveness in the use of EU funds. These principles directly apply to concrete public procurement rules, which have to be interpreted on their basis.|
|Directives 2004/17/EC and 2004/18/EC |Even though directives are not directly applicable like the regulations, but through implementing acts of the Member States, they are compulsory in all their elements. For public procurement, directives 2004/17/EC and 2004/18/EC (as applied in the national legislations) bound all Member States, in particular above the EU thresholds set by these directives. They also include important principles, such as the principle of contracting authority and public equivalent body For directive 2004/17/EC "Contracting authorities" are State, regional or local authorities, bodies governed by public law, associations formed by one or several such authorities or one or several of such bodies governed by public law. A body governed by public law" means any body:- established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character,- having legal personality and - financed, for the most part, by the State, regional or local authorities, or other bodies governed by public law; or subject to management supervision by those bodies; or having an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law. relevant for public procurement. Even if not entirely and in all their parts, directives have to be adopted as part of the acquis communautaire by accessions countries and they might be already in the adoption pipeline in some candidate countries. . Art. 22(a) of Dir. 2004/17/EC and art. 15(a) of Dir. 2004/18/EC provide, in substance, that the rules of the procurement directives do not apply to "public contracts governed by different procedural rules and awarded pursuant to an international agreement concluded in conformity with the Treaty between a Member State and one of more third countries and covering supplies or works intended for the joint implementation or exploitation of a work by the signatory States or services intended for the joint implementation or exploitation of a project by the signatory States".|
|Court of Justice of the EU consolidated case law|Besides this, the Court of Justice of the EU has developed a consolidated case law, which provides the principles to correctly interpret and apply public procurement rules. This is an on-going process to be followed up on, not only by IPA CBC programmes and it cannot be specifically recalled in the limited scope of this manual.|
|Commission Regulation (EC) No 718/2007 |In particular art.121 for public procurement- provides further specification for implementing regulation (EC) No. 1085/2006 and this is also compulsory in the scope of the IPA Regulation itself.|
|EC decision C(2007)2034 |As quoted by art. 121, even the decision C(2007)2034 becomes binding for the IPA CBC programme beneficiaries of the Member States, as it specifies how the "one single set of rule" principle, set by art 121, should be concretely applied. This a binding document, not to be confused with the practical guides PRAG, in use under external aid. Even though not binding, the latter can be very useful and a source of joint rules-procedures-templates for IPA CBC beneficiaries and managing structures|
|MoU of programmes|The memorandum of understanding (MoU), signed by the countries participating in a CBC programme according to art. 118 of the Implementing Regulation, either ratified by national parliaments as treaty of international law in the meaning of the Convention of Vienna, or as legal agreement binding for national authorities of participating countries, shall include the provisions concerning the rules and procedures for public procurement as referred to art. 121.|
|National public procurement rules|There are different approaches towards national public procurement rules, not covered by directives 2004/17/EC and 2004/18/EC -under the thresholds herein-: It is clear that principles (e.g. value for money, transparency, equal treatment of the bidders, etc.) still apply under threshold in all national legislation. It is also clear, that substantial rules set by the art. 121 are in line with the national legislations. Nonetheless quite different national procedural requirements and thresholds are in place, conflicting with art. 121 rules and these can be derogated by Member States, especially in the cooperation with third countries, as stated also in Art. 22(a) of Dir. 2004/17/EC and art. 15(a) of Dir. 2004/18/EC This happens beyond the fact that art. 118 MoU can be ratified as international treaty in the meaning of the Convention of Vienna and is therefore higher than national rules, in the hierarchical system or if art. 121 rules are considered as rules of international organisations and are therefore exempted from national rules.. |
|Programme rules|Some programmes may adopt even some specific rules if in line with C(2007)2034, to be included in the art.115 description, as well as in its guidance documentation for beneficiaries (manuals etc.). The rules we describe below based on PRAG, e.g., can become programme specific rules, if adopted e.g..|
|Grant contract|It is strongly recommended to recall that these rules are compulsory for all final beneficiaries in the subsidy/grant contract as well as to require the same in the partnership agreements The subsidy/grant contract or the art. 115 can simply recall the rules laid down in the decision C(2007)2034|
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Following up on some requests for clarification by the Member States addressed to the responsible services of the European Commission, some key principles have been set in some letters and meetings Letters by DG Enlargement to:1) Hungarian NDA, 28.05.2008 2) Hungarian NDA, 19.12.2008 3) Romanian MDPWH, 19.12.2008, as well as Letter by DG Regional Policy to: 1 ) Italian Region Abruzzo, 29.05.2009 and 29.07.2009. Meetings between the EC and the Member States: Brussels, February and June 2005 (technical meetings) / Rome, March 2006 (international conferences), Brussels 7 July 2008 (technical meeting). Even the 2007 new Member States Romania and Bulgaria were involved in the process and present in the meetings, e.g. in 2006., which might help in the interpretation and application of Art. 121 Reg. (EC) No 718/2007 as well:
# The single set of rules (incl. Procurement rules) is the corner stone of the IPA CBC Because of the "unsatisfactory" situation in Neighbourhood programmes, EU Parliament and Member States asked for radical improvements: The single set of rules (incl. Procurement rules) is the corner stone of the IPA CBC. To this purpose, it would not be reasonable to use national rules of one Member States in the entire CBC area (e.g. IPA –Adriatic, Italian rules in the territory of 3 MSs and 5 IPA countries).
# The use of C(2007)2034 rules has several practical advantages Advantages such as an increased transparency, a fair competition between bidders, harmonized rules, principles and thresholds and especially improvements for control and audit of expenditures according to this rules.
# Art. 118 IPA IR agreement (MoU) should include procurement rules Art. 118 IPA IR agreement (MoU) should include procurement rules (attached to art. 115 MCSD) and advance payment to IPA CBC programmes can be made only after approval of the compliance report of the art. 115 MCSD, unlike ERDF territorial cooperation.
# Art. 13(2) of Reg. 1085/2006 refers only to „general management matters" Art. 13(2) of Reg. 1085/2006 referencing Reg. 1083/2006, refers only to „general matters" management, not to matter of procurement, otherwise it would contradict the one single set of rules principle. Moreover as a general principle a lex generalis such as this cannot override a lex specialis such as art. 121. .
# This applies both to public and private bodies, both final beneficiaries and Managing Authorities Section II.8.2. of C(2007) 2034 in the part „MSs public bodies apply national rules" cannot apply, as it would be contrary to the purpose of Art. 121.1 (single set of rules). In the revised IPA IR, adopted on 28 January 2010, Art. 121 explicitly excludes the application of Section II.8.2 of C(2007)2034. Moreover Art. 108(2) of Reg. 1606/2002 providing that Managing Authorities are not being „grant beneficiaries" would imply that only these would apply external aid rules and not final beneficiaries, which would be a paradox.
The following documents are available:

h1.{anchor:_Toc259536820}METHODOLOGY
h2.{anchor:_Toc259536821}2.1. Basic documents
The INTERACT Procurement manual is based on the following:
* {color:#0e4096}*Commission Decision 2034 from 2007 defining Rules and procedures for service, supply and works contracts financed from the general budget of the European Communities for the purpose of cooperation with third countries{*}{color}. The document represents a legal basis for implementation of EC external aid contracting procedures. It provides basic rules and procedures for service, supply and works contracts.

However no detailed provisions or standard format documents are provided.
* {color:#0e4096}*Practical Guide to contract procedures for EC external actions (PRAG){*}.{color} The document provides detailed instructions for implementation of EC external aid contracting procedures. It provides a set of standard format documents used in implementation of the procedures.

Apart from these basic documents used in elaboration of the Manual, its content was based also on:
* Council Regulation No. 1085/2006 establishing IPA and implemented by Commission Regulation 718/2007
* Interpretations of Article 121 of Commission Regulation EC 718/2007 (IPA IR) by DG Enlargement and DG Regional Policy Letters by DG Enlargement to IPA CBC Managing Authorities: Hungarian NDA on 28.05.2008 and on 19.12.2008, and to Romanian MDPWH on 19.12.2008; Letter by DG Regional Policy to: Italian Region Abruzzo, 29.05.2009
* Inputs from EC
* Inputs by IPA CBC Programmes
* Other relevant EC Regulations and Decisions Regulation (EC) No 1605/2002; Regulation (EC) No 2342/2002; Regulation (EC) No 1080/2006; Council Regulation (EC) No 1083/2006, etc.
* Survey of the needs conducted by Interact Point Vienna in July-August 2009
* Experiences from previous programming periods

The *basic document used in the Manual is the Commission Decision{*}. The Practical Guide PRAG will be used in description of practical application of the procedures and definition of standard documents for implementation of the procedures.
h2.{anchor:_Toc259536822}2.2. Target groups
The target groups of the INTERACT Procurement manual are primarily *organisations and individuals managing and supporting the IPA CBC Programmes with MS{*}. These include Managing Authorities (MA), Joint Technical Secretariats (JTS), JTS Antennas, as well as programme control bodies (First Level Controllers – Audit Authorities). The Manual is presenting the procurement procedures having in mind specific needs and position of these entities. This means that the perspective of the Manual will be more on management issues (with some advises how to help project beneficiaries) rather than direct implementing provisions (from the perspective of grant beneficiaries). The level of details presented should sufficiently cover management and control provisions. However in case of use of this document by final beneficiaries/project partners, at some points further clarifications might be needed and applied.
h2.{anchor:_Toc259536823}2.3. Approach
The main challenge of the INTERACT Procurement Manual is finding balance between legal requirements, proportionality and effectiveness principles and practical approach. The main objective is to provide response to concrete needs, while staying in line with minimum legal requirements. The approach to the preparation of the document can be summarised in the following points:
* {color:#0e4096}*Understandable{*}.{color} While the text of the Commission Decision is focused, it does not provide answers on a number of specific questions and issues. On the other hand the Practical Guide (PRAG) provides detailed answers to a number of specific questions. However the size and complexity makes it hard to understand and apply, particularly for users which are interested only in specific segments. The aim of the INTERACT Procurement Manual is to present the key issues in elaborate but still understandable way. The document will be focused on concrete needs, which were identified by needs analysis.
* {color:#0e4096}*Practical{*}.{color} Both documents mentioned in the above point present relatively extensively all aspects related to public procurement procedures. Nevertheless they both lack practical advice, often needed in concrete practice. The Procurement Manual will go beyond theoretical and procedural descriptions of the both basic documents. In addition to basic requirements it will provide concrete example from practical cases of application. Each of the key sections of the document contains specific part _"practical aspects and common challenges"._ These parts will describe some of practical challenges, not addressed in the either of the basic documents.
* {color:#0e4096}*Standardised{*}.{color} The Procurement Manual will promote standardised approach for all programmes under IPA CBC with MS implemented in shared management. This includes use of standard procedures and use of standard documents as far as possible. The practice will not only enable control and comparison throughout the IPA CBC area, but should also bring benefit to final beneficiaries. Namely even in the countries where several different IPA Programmes are being implemented, the same approach and rules should be used in all programmes. It is understandable that one and the same approach applicable to all IPA CBC programmes in shared management cannot be developed, but the intention was to create *a common framework* that could be used by all in order to facilitate easier implementation of public procurement according to external rules.

h2.{anchor:_Toc259536824}2.4. Key elements
Contracting procedures for EC external actions are defining an extensive area of interventions related to different types of contracts. The procedures are covering steps in contracting procedures from basic principles and programming to selection procedure and implementation.
Content of this Manual is adapted to concrete specific needs of the target groups. It does not aim at providing overall review as presented in the PRAG, but is rather taking practical approach, focusing on the issues which have been defined as priority in the needs analysis and are applicable to the needs of IPA CBC in shared management. They include the procedures which will be most commonly applied in the IPA CBC programmes. In definition of these issues the following key elements are particularly important.
* {color:#0e4096}*Financial thresholds{*}{color}. The financial thresholds are defining which procedure needs to be applied. The thresholds are defining the limits between single offer procedures, competitive and open procedure, depending on the type of contract. Detailed provisions are described under each section, describing the types of contracts.
* {color:#0e4096}*Procedure{*}{color}. Depending on the size of the contract different procedures are applied in publication and process. Some of the procedures can be concluded on the basis of single offer, while other stipulate open publication and consequentially comparison of several competitive offers.
* {color:#0e4096}*Use of standard format documents{*}{color}. In order to enable comparison and control the PRAG provides a number of standardised documents, covering every step in the procedure. Depending on the size and type of the contract specific provisions apply. They are described under each specific section. Standardized format of tender documents provided in PRAG is *recommended* for use also in IPA CBC shared management, in order to achieve more harmonized implementation.
* {color:#0e4096}*Evaluation procedure{*}{color}{*}.* Evaluation procedure largely depends on the type of contract. The differences are defined by selection criteria. In some cases the price is the exclusive selection criteria and in other cases the selection is based on the combination of price and technical quality of offers. Specific provisions are described under each section.

h2.{anchor:_Toc259536825}2.5. Needs analysis
As mentioned above, development of the Procurement Manual was based on several factors, but the main approach and content has been defined on the basis of analysis implemented within the target groups of the Manual. The analysis was implemented to define specific needs and expectation of potential users of the Manual.
The research has been implemented in the period of 20 July – 30 August of 2009 and has involved 30 representatives of the target groups. 16 institutions and individuals provided reply to the survey.
The analysis clearly pointed in which direction the specific parts of manual would need to be steered. The most important conclusions were the following:
* *Type of the contract{*}. The majority of expected tendering procedures will deal with _service type_ of contracts (estimated 50%). The rest will deal with supply and in smaller proportion with works contracts. Following this, the Procurement Manual would need to put specific attention on service types of contracts.
* *Average size of the project{*}. Expected average size of projects is in majority cases between 100.000 and 1M€+. On the basis of the results it was established that the tendering procedures will either be numerous or large.
* *Average number of tendering/procurement procedures{*}. In the majority of the cases somewhere between 5 and 10 procurement procedures are expected per project. The results are in line with previous points, pointing to a large number of procedures, rather than to extreme size of individual procedures.
* *Expected size of tendering procedures{*}. Based on the previous two points it can be established that a large number of procedures of average size are expected. The Procurement Manual would need to put particular attention to procedures of up-to 100.000€ which are in majority cases competitive negotiated procedures.
* *Level of involvement and interventions{*}. On the basis of analysis it can be established that the interest of interviewees is focused on monitoring, control and management issues rather than detailed implementing provisions. The Manual tries to reflect this and provide solution at the level of management and control bodies rather than direct project beneficiaries.

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h1.{anchor:_Toc259536826}BASIC RULES
As it was stated above, the decision on use of single set of procurement rules was made in order to enable better joint implementation of joint activities in CBC programmes co-financed by IPA and implemented in shared management. However, Member States, as well as IPA beneficiary countries, might decide to have additional legal requirements (agreed between participating countries in the programme) or administrative procedures, even though the same legal principles apply. {color:#0e4096}Nevertheless, financial thresholds and procedures defined by these thresholds defined for public procurement according to external rules must be always taken into account. Based on the legal basis,{color} {color:#0e4096}*the IPA CBC procurement rules prevail{*}{color}.
Basic rules to be observed are described in the following chapters.
h2.{anchor:_Toc259536827}3.1. The rules of nationality and origin Based on the Commission decision C (2007) 2034 available in the Annex 1 to this Manual
The usual rule of nationality, applicable on the level of grant contract states that _"the beneficiaries of grants comply with the eligibility rules for public procurement foreseen in the respective regulations for different cooperation programmes..._ See also Article 19 of Council Regulation No. 1085/2006{_}"_ – meaning that grants are made to final beneficiaries according to programme rules and territorial eligibility for applicants usually specified in the programme documents, such as calls for proposal at programme level.
This *does not apply to the experts* proposed by the service providers taking part in the calls for tenders or in the service contracts financed by the grant - *they may be of any nationality{*}. This provision is without prejudice to the qualitative and financial requirements set out in the Community's procurement rules.
In accordance with the Regulations on different cooperation and external aid programmes as well as the basic acts or other acts relating to the implementation of Title V of the Treaty of the European Union (CFSP/ESDP) supplies and materials purchased under a contract financed under a Community instrument {color:#0e4096}must originate in the Community or in one of the countries eligible for external aid{color} This may be in contracts with national procurement laws of the Member States where it is not allowed to limit rules of origin, provided that the specific requirements for bidders are fulfilled. The rule is an exception to the general obligation to not restrict or favour procurement to national products, which is admitted by the WTO treaty only in the external aid assistance. In the IPA CBC context, the prevailing purpose and the related legal basis of the EU treaty articles is the external aid assistance and therefore this exception should reasonably apply in the whole IPA CBC programme area.. Tenderers must state the origin of the supplies in their tenders. For unit purchase *higher than EUR 5000* the contractor must submit proof of origin for equipment and vehicles to the grant beneficiary no later than when the first invoice is presented. The proof of origin has to ensure that the indication of origin does comply with the rules laid down by the relevant Community legislation.
In exceptional cases the _derogation from the rule of origin can be approved{_}. Derogations may be justified on the basis of the unavailability of products and services in the markets of the countries concerned, for reasons of extreme urgency, or if the eligibility rules would make the realisation of a project, a programme or an action impossible or exceedingly difficult.
{color:#0e4096}_Each Contracting authority will decide on a case-by-case basis whether this derogation is necessary for the purpose of the procurement envisaged. It is strongly recommended to document and store the reasons on which this decision is based (see table below as example). In some specific/exceptional cases, as well as in similar doubtful cases repeatedly occurring, an ex-ante consultation with the control bodies, the programme audit authority, as well as even with the audit unit of the European Commission, might be useful to prevent later finding of irregularities and therefore possible recovery procedures. Nonetheless, the use of this opportunity must be carefully evaluated and as far as possible coordinated by the managing authority of the programme for example, as the work load for these bodies is usually rather heavy._{color}
Some of the possible challenges related to rules of nationality and origin are presented in the Table 1.
_Table 1{_}: Challenges related to rules of nationality and origin
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|*CHALLANGES*|*RECOMMENDATIONS*|
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*Specific professional equipment{*}. Some projects require purchase of specific professional equipment which is supposedly not available as EU or other eligible countries' origin. \\ | \\
- Implement a wider analysis of potential suppliers. \\
- In case of non availability ask for derogation well in advance, providing proper justification (eg. Proof of sufficient research that no such product of acceptable origin could be found, etc.). \\ |
| \\
*Compatibility of equipment.* On a number of occasions the purchase of equipment is focused on up-grading existing equipment which is non-EU or other eligible countries' origin. Such cases are particularly frequent in computer equipment and software purchase. \\ | \\
- In general avoid upgrading of existing equipment. In case of such projects check compatibility with similar EU or other eligible countries' origin equipment. \\ |
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h2.{anchor:_Toc259536828}3.2. Fair and transparent competition Based on the Commission decision C (2007) 2034 available in the Annex 1 to this Manual
If the implementation of an action which is supported by a grant from the Community for the purposes of external actions requires procurement by the grant beneficiary, the contract must be awarded to the *most economically advantageous tender* (i.e. the tender offering the best price-quality ratio), in accordance with the principles of transparency and fair competition for potential contractors and taking care to avoid any conflicts of interest.
In the event of failure to comply with these rules, planned or occurred expenditures related to the projects and activities in question *will not be eligible* for Community financing.
Some of the possible challenges related to the fair and transparent competition are presented in the Table 2.
{color:#262727}_Table 2{_}: Challenges related to fair and transparent competition{color}
|*CHALLANGES*|*RECOMMENDATIONS*|
| \\
*Above market prices{*}. In case of competitive negotiated or in open procedures if the tenderers contact each other, they could raise the tender price above market standards. In single tenders the only invited tenderer could propose price above market standards. \\ | \\
- Even if the financial thresholds stipulate single tender procedure the Contracting Authority should be advised to invite more than one company in order to be able to compare existing market prices ({_}and thus effectively apply competitive negotiated procedure{_}). \\
- In case of single tender it could also be advisable to ask of a invited tenderer to provide some proof that prices are real and fair (conduct research on general prices in relevant field eg. on the Internet or similar, and submit proof of the research with the offer). {color:#0e4096}_Tip: This option could be suggested for tenders above certain threshold (eg above 5000 EUR)._{color} \\
- Carefully check the market prices prior to evaluation. In case of significant discrepancies either negotiate the price (depending on possibilities within procedures) or cancel the procedure. |
| \\
*Conflict of interest{*}. Some of the individuals involved in the process are one way or another connected with one or more tenderers. \\ | \\
- Use independent experts in the process of preparation of tender documentation and in the selection process. \\
- Check potential connections between involved individuals and tenderers (on the basis of their CV)|
h2.{anchor:_Toc259536829}3.3. Grounds for exclusion From PRAG
Candidates or tenderers will be excluded from participation in procurement procedures if:
# they are bankrupt or being wound up, are having their affairs administered by the courts, have entered into an arrangement with creditors, have suspended business activities, are the subject of proceedings concerning those matters, or are in any analogous situation arising from a similar procedure provided for in national legislation or regulations;
# they have been convicted of an offence concerning their professional conduct by a judgment which has the force of _res judicata_ _Res judicata_ or _res iudicata_ is the Latin term for "a matter \[already\] judged", and may refer to two things: in both civil law and common law legal systems, a case in which there has been a final judgment and is no longer subject to appeal; In the case of _Res judicata{_}, the matter cannot be raised again, either in the same court or in a different court.
; (i.e. against which no appeal is possible);
# they have been guilty of grave professional misconduct proven by any means which the Contracting Authority can justify;
# they have not fulfilled obligations relating to the payment of social security contributions or the payment of taxes in accordance with the legal provisions of the country in which they are established or with those of the country of the Contracting Authority or those of the country where the contract is to be performed;
# they have been the subject of a judgment which has the force of _res judicata_ for fraud, corruption, involvement in a criminal organisation or any other illegal activity detrimental to the Communities' financial interests;
# they are currently subject to an administrative penalty referred to in Article 96(1) of the Financial Regulation (BUDGET)/ Article 99 of the Financial Regulation (10th EDF).

Points (a) to (d) shall not apply in the case of purchase of supplies on particularly advantageous terms from either a supplier which is definitively winding up its business activities, or the receivers or liquidators of a bankruptcy, through an arrangement with creditors, or through a similar procedure under national law.
The cases referred to in point (e) applicable are the following:
# cases of fraud as referred to in Article 1 of the Convention on the protection of the European Communities' financial interests drawn up by the Council Act of 26 July 1995;
# cases of corruption as referred to in Article 3 of the Convention on the fight against corruption involving officials of the European Communities or officials of Member States of the European Union, drawn up by the Council Act of 26 May 1997;
# cases of participation in a criminal organisation, as defined in Article 2(1) of Joint Action 98/733/JHA of the Council;
# cases of money laundering as defined in Article 1 of Council Directive 91/308/EEC.

The Contracting Authority will accept, as satisfactory evidence that the candidate or tenderer is not in one of the situations described in (a), (b) or (e) production of a recent extract from the judicial record or, failing that, a recent equivalent document issued by a judicial or administrative authority in the country of origin or provenance showing that those requirements are satisfied. The Contracting Authority shall accept, as satisfactory evidence that the candidate or tenderer is not in the situation described in (d), a recent certificate issued by the competent authority of the State concerned. Where no such document or certificate is issued in the country concerned and for the other cases of exclusion listed above, it may be replaced by a sworn / solemn statement made by the interested party before a judicial or administrative authority, a notary or a qualified professional body in its country of origin or provenance.
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{color:#0e4096}_Tip 1: Mandatory use of Sworn statements may vary from programme to programme or from country to country. Please consult your programme/beneficiaries on this matter_{color}
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{color:#0e4096}_Tip 2: Since obtaining such statements include additional costs and possibly complicated procedures programmes may decide to set a minimum threshold above which tenderers must provide Sworn statements. Otherwise potential tenderers could become discouraged to participate in tenders for smaller contracts due to large additional costs._{color}
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{color:#0e4096}_Tip 3: Some national rules and procedures in use might be even stricter than external public procurement rules. If these national requirements are *not against or does not constitute an obstacle for the purpose of ensuring "reliable" candidates{*}, they might be used as well_{color} As an example, in some cases, in Italy a certificate could be required, that the bidder has not being part of criminal organisations, as set by the national procurement rules.{color:#0e4096}{_}._{color}
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h2.{anchor:_Toc259536830}3.4. Administrative and financial penalties
Without prejudice to the application of penalties laid down in the contract, candidates or tenderers and contractors who have made false declarations, have made substantial errors or committed irregularities and fraud, or have been found in serious breach of their contractual obligations may be excluded from all contracts and grants financed by the Community budget for a maximum of five years from the date on which the infringement is established, as confirmed following an adversarial procedure with the contractor. That period may be extended to 10 years in the event of a repeated offence within five years of the above-mentioned date. Tenderers or candidates who have made false declarations, have committed substantial errors or irregularities and fraud, may also be subject to financial penalties representing 2% to 10% of the total estimated value of the contract being awarded. Contractors who have been found in serious breach of their contractual obligations may be subject to financial penalties representing 2% to 10% of the total value of the contract in question. That rate may be increased to 4% to 20% in the event of a repeat infringement within five years of the above-mentioned.
{color:#0e4096}_Tip: Some national rules and procedures might be even stricter than these and if they are not against these, they might be used as well._{color}
h2.{anchor:_Toc259536831}3.5. Visibility
Unless otherwise requested or agreed, contractors for services, supplies, works must take the necessary measures *to ensure the visibility of the actions financing or co-financing by EU{*}. Such measures, depending on the programme decision, can be in accordance with the Visibility Manuals developed by each of the IPA CBC programme or in absence of these they can apply rules on the visibility of external actions laid down and published by the European Commission. These rules are set out in the Communication and Visibility Manual for EU External Actions available from the EuropeAid website at: [http://ec.europa.eu/europeaid/work/visibility/index_en.htm|http://ec.europa.eu/europeaid/work/visibility/index_en.htm] or may be provided by IPA CBC Programmes.
{color:#0e4096}_Tip: National rules might require additional visibility arrangements and they have to be taken into account._{color}
h2.{anchor:_Toc259536832}3.6. The rule on the language to be used
PRAG explicitly mentions the compulsory use of the English language for the tender dossier. The Decision C(2004)2034 does not foresee or specifically refers to the question of the language to be used. However, it explicitly requires "fair and transparent" competition, which implies that all interested and eligible bidders should be able to participate.
As a matter of fact, the *use of the English language* adds to this purpose and *increases the possibility for tenderers from different countries* to be properly informed; therefore this may not be fulfilled if only national languages are used. On the other hand, many participating countries have the obligation to publish call for tenders and tender dossiers in the national languages within their national systems (such as official journals, IT systems, registers, etc.). In INTERREG/European Territorial Cooperation programmes sometimes the national language accompanies a translation in English (or another language when needed). This is a good compromise also for the IPA CBC public procurement. It is therefore *recommended* to all programmes to include this rule – *overall use of English language{*}.
Nonetheless this would not may sometimes be the best in terms of the value for money principle, for example for tenders of small amounts, as the costs for translation might even exceed the value of the contract. Also small values deliveries of supplies-services might be even more efficient if originating from local tenderers. The binding principles set in the financial regulation about efficiency and effectiveness of the action financed by EU budget should also not be forgotten.
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{color:#0e4096}_Tip: It is_{color} {color:#0e4096}_advisable in order to be more efficient and to respect value for money for the programmes to use both national and English languages for contracts above 10.000 EUR. Under this amount, the Contracting authority could estimate how far the contract might become interesting for other tenderers and the programme managing bodies should control that this does not become a rule for illegally favouring national tenderers. The Contracting authority must always strive for a fair and transparent competition and could decide to publish the call for tenders or a part of it (e.g. an abstract) in English, even under 10.000 EUR._{color}
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{color:#d80073}In all public procurement procedures the professional judgement about what value and leading principle should prevail by the responsible contracting bodies, as well as by controllers and auditors, is not to be avoided!{color}
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h1.{anchor:_Toc259536833}PROCEDURES
Main procedures that should be implemented in case of procurement according to external rules are described in the following chapters. Which procedure is applicable always depends on the type and size of the contract.
Detailed procedures for each type and size of contracts are also provided in the following chapters. Described procedures are based on what is *normally and commonly implemented* in public procurement in the context of EC external aid and could be used *as a basic approach to public procurement* for IPA CBC in shared management. Some of the procedures may differ in some of the programmes, but they must always respect {color:#d80073}_Rules and procedures for service, supply and works contracts financed from the General budget of the European Communities for the purposes of cooperation with third countries{_}{color}{_}._ Therefore please always be aware of *possible procurement rules* *or conditions defined by respective IPA CBC programme in addition to existing external procurement rules (where applicable)* Some IPA CBC Programmes choose to adapt or add to obligatory external procurement rules to make procurement more operational for grant beneficiaries, whereas others decided to completely implement PRAG rules as it was in the past. .
{color:#0e4096}_Templates and annexes mentioned in the description of procurement procedures are standard PRAG templates used for external aid programmes. They are *recommended for use in order to simplify and unify tendering dossiers* in IPA CBC programmes and they provide sufficient basis for preparation of tender documentation. However, these templates can be adapted, modified and adjusted to programme/country needs, but should be applicable in all participating countries in_{color} {color:#0e4096}_a given IPA CBC programme in order to avoid confusion for grant beneficiaries._{color}
h2.{anchor:_Toc259536834}4.1. Selection and award criteria
Selection criteria differ between different types of contract. They are as follows:
* {color:#0e4096}*Service contracts{*}{color}. The offer which provides *the best value for money* is awarded with the contract. Normally the ratio 20% price and 80% technical quality is used.
* {color:#0e4096}*Supply contracts{*}{color}. The contract shall be awarded to the *cheapest technically compliant* offer.
* {color:#0e4096}*Works contracts{*}{color}. The contract shall be awarded to the *cheapest technically compliant* offer.

h2.{anchor:_Toc259536835}4.2. Open procedure
The *open procedure* is applicable for *supply and works contract{*}. The procedure follows one step process where open invitation for submission of tenders is issued either on national and international level.
Depending on whether it is a local or international open procedure the procurement notice is to be published in all appropriate media, in particular on the *grant beneficiary's website* (in its role of Contracting authority) - in case of *local* and *international open{*}; in the *international press* - in case of *international open;* and the *national press* of the country in which the action is being carried out - in case of *local* and *international open{*}.
h2.{anchor:_Toc259536836}4.3. Restricted procedure
*Restricted procedure* applies *only in case of service contracts* and is in a way similar to open procedure in supply and works. The procedure follows *two step process{*}. In the *first* *step* a *public invitation for submission of express of interest is issued{*}. In the *second* *step* the *initial offers are reviewed and a short-list of candidates is formed{*}. The short-listed candidates are invited to submit full proposal.
The initial procurement notice is to be published in all appropriate media, in particular on the Grant Beneficiary's website (in its role of Contracting authority), Official journal of the EU Publication on EuropeAid website is optional and can be done if wished, in the international press and the national press of the country in which the action is being carried out, or in other specialist periodicals. It must state the number of candidates which will be invited to submit tenders. This number will be in the range of four to eight and must be *sufficient to ensure genuine competition{*}.
h2.{anchor:_Toc259536837}4.4. Competitive negotiated procedure
*Competitive negotiated procedure* applies to *service, supply and works contracts{*}.
Under the competitive negotiated procedure, the Grant Beneficiary (in its role of Contracting authority) *invites candidates of its choice* *to submit tenders{*}. Normally at least 3 candidates should be invited. The procedure could be implemented using simplified tender documents. At the end of the procedure the Contracting Authority selects the *technically compliant tender which offers the best value for money in case of service tenders* and the *cheapest compliant offer in case of supplies or works tenders{*}.
h2.{anchor:_Toc259536838}4.5. Orders on the basis of single tender
Orders on the basis of *single tender apply to service, supply and works contracts{*}.
Under the *single tender* procedure the Grant Beneficiary (in its role of Contracting authority) *invites one candidate to submit offer* Even though one offer is procedurally enough, it is strongly recommended that grant beneficiary, i.e. Contracting Authority collects more than one (at least 2) offer, in order to be able to make a financially and technically sound and transparent decision to be able to get a clear information on real market prices and similar. . Offers are normally submitted using simplified tender documents. At the end of the procedure the Contracting Authority checks whether the single offer corresponds to the requirements in case of services or is technically compliant in case of supply and works tenders.
h2.{anchor:_Toc259536839}4.6. Modifying contracts
Contracts may need to be modified during their duration if the circumstances affecting project implementation have changed since the initial contract was signed. *Contract modifications must* be formalised through an *administrative order or an addendum* to the contract in accordance with the provisions of the General Conditions of the contract. *Substantial modifications* to the contract must be made by means of an *addendum{*}. Such an addendum must be signed by the contracting parties. Changes of address and changes of bank account may simply be *notified* *in writing* by the contractor to the Grant Beneficiary, in its role of Contracting authority, although this does not affect the right of the Grant Beneficiary (in its role of Contracting authority) to oppose the contractor's/beneficiary's choice of bank account.
Following this logic, {color:#0e4096}major changes, such as a fundamental alteration of the Terms of Reference/Technical Specifications, *cannot be made* by means of an addendum or an administrative order.{color}
A request for contract modifications *should not automatically be accepted* by the Contracting Authority (Grant Beneficiary). There must be *justified reasons* for modifying a contract. The Contracting Authority (Grant Beneficiary) must examine the reasons given and reject requests which have little or no substantiation. Contracts can only be modified within the execution period of the contract. The purpose of the addendum or administrative order must be closely connected with the nature of the project covered by the initial contract.
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{color:#0e4096}_Tip 1: IPA CBC Programmes may decide to determine from the start in top-down approach what constitutes as 'significant modification' that has to be made by means of addendum. Alternatively programme management bodies may leave this decision up to the Grant Beneficiaries in their role as Contracting Authorities. In either case, how this decision on using addendum or not using addendum procedures for contract modifications was made, has to be clearly justified for the needs of the control, as well as any reasons for contract modifications._{color}
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{color:#0e4096}_Tip 2: Programme bodies may request from Contracting Authority/Project partners to request from programme confirmation or approval prior to making a decision on significant contract modifications. However, this could mean more work load for programmes, but could be useful as a tool for more safety._{color}
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Requests for contract modifications must be made (by one contracting party to the other) well in advance to allow for the addendum to be signed by both parties before the expiry of the execution period of the contract.
In preparing an addendum, the Grant Beneficiary in its role as Contracting Authority must use the template for an addendum (Annex B16, C12, D11)
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*Financial thresholds and related tendering procedures*
|*SERVICES* |*≤ € 10.000* |*> € 10.000 < € 200.000* | |*≥ € 200.000* |
| |SINGLE TENDER |COMPETITIVE NEGOTIATED PROCEDURE | |RESTRICTED PROCEDURE (in exceptional cases negotiated procedure) |
|*SUPPLY* |*≤ € 10.000* |*> € 10.000 < € 60.000* |*> € 60.000 <€ 150.000* |*≥ € 150.000* |
| |SINGLE TENDER |COMPETITIVE NEGOTIATED PROCEDURE |LOCAL OPEN PROCEDURE (possible negotiated procedure) |INTERNATIONAL OPEN PROCEDURE (in exceptional cases negotiated procedure) |
|*WORKS* |*≤ € 10.000* |*> € 10.000 < € 300.000* |*>€ 300.000 <€ 5.000.000* |*≥ € 5.000.000* |
| |SINGLE TENDER |COMPETITIVE NEGOTIATED PROCEDURE |LOCAL OPEN PROCEDURE (possible negotiated procedure) |OPEN PROCEDURE (in exceptional cases restricted procedure or negotiated procedure) |
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h1.{anchor:_Toc259536840}SERVICE CONTRACTS Specific provisions except for financial thresholds are taken from PRAG - Practical Guide to Contract procedures for EC external actions
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h2.{anchor:_Toc259536841}5.1. What is a Service contract?
Grant contracts in the context of EC External aid include specific support in form of studies or technical assistance. Study contracts include studies for identification and preparation of projects, feasibility studies, economic and market studies, technical studies, evaluations and audits.
*Study contracts* generally specify an outcome, i.e., the contractor must provide a given product. Normally the contracts are applied as lump-sum contracts and the contractor will be paid only if the specific outcome is achieved.
*Technical assistance contracts* are used where a service provider is called on to play advisory role, to manage or supervise a project, or to provide the experts specified in the contract. Technical assistance could also cover other (simpler) type of services like translation, printing, transport services, promotion in media and organisation of events. The contracts for technical assistance can be either awarded on the principle of lump-sum contracts or per-unit contract, depending on size, type and complexity.
Possible example of service procedures in the context of a grant contract (a project) may include the following:
{color:#0e4096}*Setting-up new tourist product in cross-border region*{color}
The objective of the project is to set-up a new tourist product, based on joint ethnology and cultural heritage of the region.
Project activities include review of tourism potentials of the region, networking of tourism providers, training activities, promotion and testing of the new tourist product through "diplomatic weekend".
Resources for implementation of the project include: project team, travel costs, purchase of limited amount of equipment and external services.
The external services that need to be procured for efficient implementation include:
- Marketing training of tourism providers. One part of the training of tourism providers will include marketing aspects of their work. Since the necessary qualifications are not available within the project team it was decided to outsource the service to marketing consulting company.
- Design and printing of tourism brochures. The project partners do not possess{anchor:_GoBack} necessary qualification or equipment for preparation and printing of tourism brochures. A qualified printing company and designer will be engaged on procurement contracting basis.
- Promotion of the tourist product in media. The new tourist product will be promoted in regional and national media. It was decided that a marketing agency ought to be contracted to arrange and implement a marketing campaign and engage media.
- Translation services. The project will be implemented in cross-border region. Partners from both sides of the border are having difficulties to communicate due to language barriers. Translators will be engaged to overcome this obstacle.
- Services of organising and accommodation of "diplomatic weekend". The event will bring up to 50 representatives of diplomatic corps and other public figures to the region. Accommodation and catering will be organised on public procurement basis. A local agency will be engaged to organise the services.
Different nature of services requires publishing a *separate procedure* for each of these contracts.
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{color:#0e4096}*Feasibility study and main project for construction of business zone*{color}
The objective of the project is to prepare feasibility study and the main project design for construction of a business zone in the cross-border region.
Project activities include preparatory activities, networking of business stakeholders in the region, preparation of feasibility study, presentation and public debate of the document and preparation of the main project design.
Taking into account relatively specific services required, the project largely depends on external resources. The following external services are expected to be outsourced through public procurement:
- Preparation of the feasibility study. Preparation of feasibility study is a complex task requiring participation of different profiles of experts (economist, environmental expert) and a certified company. The service will be outsourced as a whole task to a professional company with necessary resources and certificates.
- Preparation of the main project. The preparation of the main project is a complex task requiring civil engineering and architectural expertise. The task will be outsourced to a professional company possessing necessary staff resources and certificates.
- Translation services{*}.* Public debate implemented on the local level will require interpretation from local language to English and vice-versa. A professional translation company will be engage to support the process.
Different nature of services requires publishing a *separate procedure* for each of these contracts. However, the feasibility study and the main project could be implemented by one company.
h2.{anchor:_Toc259536842}5.2. Procedures for Service contracts
h3.{anchor:_Toc259536843}5.2.1. On the basis of single tender (up-to 10.000€)
*Tender documents:*
_•Tender dossier_
Even in the procedures based on a single tender, it is *strongly recommended* to the Grant Beneficiary in its role as Contracting Authority to use tender documentation. The tender documents should describe in sufficient details procedures and expectations from the tenderer. Full format documents for this procedure may be found on the web-page:
[http://ec.europa.eu/europeaid/work/procedures/implementation/services/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/services/index_en.htm]
The basic tender documents normally include all the documents listed under the B8: Standard tender dossier (including contract).
The Grant Beneficiary in its role as Contracting Authority might decide to use simplified tender documents (provided also on above mentioned web-page or respective programme websites where applicable). However specific attention should be put to keeping minimum information necessary to evaluate the received tender.
In the case of single tender procedures, *at least* the following documents should be requested from the tenderer:
* Organisation and methodology,
* Financial offer (sealed in a separate envelope),
* CVs of key experts,
* Tender submission form, including the sworn statement Mandatory use of a Sworn statement may vary from programme to programme or from country to country. Please consult your programme authorities on this matter. of the tenderer and statements of availability and exclusivity of all proposed experts,
* Copy of legal registration of the tenderer.

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{color:#0e4096}_Tip: In case of simple contracts like driving services, printing or similar, the requirement for submission of CVs of key experts could be replaced with the "references of the contractor in similar assignments". A format table should be provided in that case, and the tender documents should be amended accordingly_{color}
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_•Terms of reference_
*The terms of reference* *(ToR)* is the key document in the tender dossier for Service contracts. It describes all details of the assignment under questions. Required inputs include type and number of experts requested and any other (material) contributions. The expected outputs describe the results and outcomes of the contract. Both aspects should be covered in sufficient details to avoid problems during the implementation (non-delivery of services or results). The terms of reference document can be drafted on the basis of the standard document provided on the above mentioned EuropeAid web-page (see Annex B8).
*Publication:*
In case of single offer based tenders, no publication is done. The Contracting Authority invites one tenderer to submission of an offer.
*Submission of tenders:*
The single tenderer is *normally* This is usual practice, number of days can be modified, giving enough time to tenderer to prepare proper an offer or to correspond to national laws when necessary. given 15 days for submission of the offer.
*Selection process:*
The selection process for single tender contracts is by definition not about comparison of different tenders. Rather than that, the selection process estimates whether the received tender is *in line with basic technical requirements* as described in the tender dossier.
The selection procedure is done by an *Evaluation Committee{*}, with *minimum 2 members{*}. The members are officially appointed by the responsible person from the Grant Beneficiary in its role as Contracting Authority.
The Grant Beneficiary in its role as Contracting Authority should draft an *evaluation grid{*}, based on the standard format provided on the web page (see Annex B12):
[http://ec.europa.eu/europeaid/work/procedures/implementation/services/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/services/index_en.htm]
The evaluation grid should *list basic elements* of the tenderer's offer: Organisation and Methodology and proposed key experts (or list of references of the contractor in cases where CVs are replaced by references). However instead of quantified scoring of the individual elements only ACCEPTED or NOT ACCEPTED score should be given. Only if the received tender is overall evaluated as "acceptable", the signing of the contract should be proposed.
The selection procedure should be accompanied by an *evaluation report{*}, based on the standard format provided on the above given web page (see Annex B11). A simplified version of the report, in line with the simplified procedure could be used. The members of Evaluation Committee have to sign the evaluation report.
Contract with the successful tenderer could be drafted on the basis of the format provided in the tender documents and available at the above web-page (see Annex B8).
h3.{anchor:_Toc259536844}5.2.2. Competitive negotiated procedure (from 10.000 – 200.000€)
*Tender documents:*
{anchor:OLE_LINK1}The tender documents are corresponding to the ones recommended for the single tender based procedures. Also in the case of competitive negotiated procedure a simplified tender dossier can be used.
Please refer to the point 5.2.1. Tender documents for further details on tender documents.
The *+difference+* from the single tender procedure is the *+evaluation grid{+}{*}. In order to enable selection and *comparison between received offers{*}, the standard evaluation grid needs to be prepared. The format is available (see Annex B8) on the web page:
[http://ec.europa.eu/europeaid/work/procedures/implementation/services/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/services/index_en.htm]
*Publication:*
In case of competitive negotiated procedure no publication is done. The Grant Beneficiary in its role as Contracting Authority *invites at least 3 tenderers* to submit offers.
*Submission of tenders:*
The invited tenderers are *normally* given minimum 30 days This is usual practice, number of days can be modified, giving enough time to tenderers to prepare proper offers or to correspond to national laws when necessary for submission of their offers.
*Selection process:*
The selection process in competitive negotiated procedure is based on *comparison* *of* *received offers{*}. The selection is based on *combination of price* (20%) and *technical quality* (80%).
The *Evaluation Committee* consists of *odd number of voting members* (minimum 3), *non-voting secretary* and *non-voting president{*}.
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{color:#0e4096}_Tip: Observers from programme structures (JTS/Antenna, MA) or other organisations could be invited to observe the evaluation process._{color} {color:#0e4096}_This could be considered/recommended in case of large contracts, possible doubts in procedures, or in case of language problems e.g. when Evaluation committee has doubts about sufficient command of English language{_}{color}.
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The Evaluation Committee members should be appointed by official nomination of the Grant Beneficiary in its role as Contracting Authority, based on their qualifications and skills (CVs should accompany the nomination). Each member must have a reasonable command of the language in which the applications are submitted. All members of the Evaluation Committee are obliged to sign a Declaration of Impartiality and Confidentiality (see Annex A4), available on the web page:
[http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm]
The selection process can be based on the documents provided on the web-page:
[http://ec.europa.eu/europeaid/work/procedures/implementation/services/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/services/index_en.htm]
The *usually* implemented steps in the selection process are as follows:
# _Receipt and registration of tenders_

On receiving tenders, the Grant Beneficiary in its role as Contracting Authority must register them mentioning the date and time of reception and provide a receipt for those delivered by hand. The envelopes containing the tenders must remain sealed and be kept in a safe place until they are opened. The outer envelopes of tenders must be numbered in order of receipt (whether or not they are received before the deadline for submission of tenders).
# _Opening of tenders_

Opening procedure is implemented in line with the *check-list provided* (see Annex B9 on the website). The Evaluation Committee must decide whether or not tenders comply with the formal submission requirements at this stage. The Summary of tenders received, which is attached to the Tender Opening Report (see Annex B10 on the website) should be used to record the compliance of each of the tenders with the formal submission requirements.
# _Checking of administrative compliance_

The Evaluation Committee checks the compliance of tenders with the instructions given in the tender dossier and in particular the administrative compliance grid (see Annex B8). Any major formal errors or restrictions affecting performance of the contract or distorting competition result in the rejection of the tender concerned.
Nationality of subcontractors: the Evaluation Committee must check at this stage that the nationalities of any subcontractors identified in the technical offers satisfy the IPA CBC programme nationality rule.
For larger and complex tenders, the tenderers could be requested to provide proof documents for the key experts proposed. This can include copies of the diplomas mentioned in the CV and employers' certificates or references proving the professional experience indicated in the CV. If missing proofs are requested it should only be for the relevant experience and diplomas which are among the requirements in the Terms of Reference.
The administrative compliance grid included in the Tender Dossier must be used to record the administrative compliance of each of the tenders.
# _Technical evaluation_

The Evaluation Committee then examines the technical offers; the financial offers must remain sealed at this stage. When evaluating technical offers, each member awards each offer a score out of a maximum 100 points in accordance with the technical evaluation grid laid down in the tender dossier. Under no circumstances may the evaluation grid be changed.
In practice, it is recommended that tenders be scored for a given criterion one after another, rather than scoring each tender for all criteria before moving on to the next. Where the content of a tender is incomplete or deviates substantially from one or more of the technical award criteria laid down in the tender dossier (e.g. the required profile of a certain expert), the tender should be automatically rejected, without being given a score, but this should be justified in the evaluation report.
For experts the scores should be given in comparison to the requirements stated in the Terms of Reference.
Each voting member of the Evaluation Committee completes an evaluation grid (see Annex B12) to record his/her assessment of each technical offer in order to establish a general appreciation of strengths and weaknesses of the individual technical offers.
On completion of the technical evaluation, the points awarded by each member are compared at the Committee's session. Besides the numerical score, a member must explain the reasons for his/her choice and defend his/her scores before the Committee.
The Evaluation Committee discusses each technical offer and each member awards it a final score. The Committee members may modify their individual evaluation grids as a result of the general discussion on the merits of each offer.
Once discussed, each Evaluation Committee member finalises his/her evaluation grid on each of the technical offers and signs it before handing it over to the Secretary of the Evaluation Committee. The Secretary must then compile a summary of the comments of the Committee members as part of the Evaluation Report.
In the case of major discrepancies, a full justification has to be provided by dissenting members during a meeting of the Evaluation Committee.
The Secretary calculates the aggregate final score, which is the arithmetical average of the individual final scores.
The Evaluation Committee might decide to implement interviews with proposed key experts to assess their competences, either by telephone on personally. {color:#0e4096}_Depending on the type of service and the size of the contract this can be strongly recommended{_}{color}.
Once the Evaluation Committee has established each technical offer's average score (the mathematical average of the final scores awarded by each voting member), any tender falling short of the 80-point threshold is automatically rejected. If no tender achieves 80 points or more, the tender procedure will be cancelled.
Out of the tenders reaching the 80-point threshold, the best technical offer is awarded 100 points. The others receive points calculated using the following formula:
Technical score = (final score of the technical offer in question/final score of the best technical offer) x 100.
| |*Maximum possible*|*Tenderer 1*|*Tenderer 2*|*Tenderer 3*|
|Evaluator A|100|55|88|84|
|Evaluator B|100|60|84|82|
|Evaluator C|100|59|82|90|
|Total|300|174|254|256|
|Average score \\
(mathematical average)| |174/3={*}58,00*|254/3={*}84.67*|256/3={*}85.33*|
|Technical score (actual \\
final score/highest final \\
score)| |Eliminated*|84.67/85.33 x 100 = *99.22*|*100.00*|
* Only tenderers with average score of at least 80 points qualify for the financial evaluation.
# _Financial evaluation_

Upon completion of the technical evaluation, the envelopes containing the financial offers for tenders who were not eliminated during the technical evaluation (i.e., those which have achieved an average score of 80 points or more) are opened and all originals of these financial offers are initialled by the Chairperson and the Secretary of the Evaluation Committee.
The Evaluation Committee has to ensure that the financial offer satisfies all formal requirements. A financial offer not meeting these requirements may be rejected. Any rejection on these grounds will have to be fully justified in the Evaluation Report.
The Evaluation Committee checks that the financial offers contain no arithmetical errors. Any arithmetical errors are corrected without penalty to the tenderer. The envelopes containing the financial offers of rejected tenderers following the technical evaluation must remain unopened and retained. They must be archived by the Contracting Authority together with the other tender procedure documents.
In the case of fee-based contracts, the total contract value comprises the fees (including employment-related overheads), the incidental expenditure and the provision for expenditure verification, which are specified in the tender dossier. In the case of lump-sum contracts only total contract value is provided. The total contract value is compared with the maximum budget available for the contract. Tenders exceeding the maximum budget allocated for the contract are eliminated.
The Evaluation Committee then proceeds with the financial comparison of the fees between the different financial offers. The provision for incidental expenditure, as well as the provision for expenditure verification is excluded from the comparison of the financial offers as it was specified in the tender dossier. In case of lump-sum contract the total contract value is used as basis for financial evaluation.
The tender with the lowest total fees receives 100 points. The others are awarded points by means of the following formula:
Financial score = (lowest total fees / total fees of the tender being considered) x 100.
Specimen Tender Evaluation Summary:
Part 2: Financial Evaluation *
| |*Maximum possible*|*Tenderer 1*|*Tenderer 2*|*Tenderer 3*|
|Total fees| | \\
Eliminated following technical evaluation \\ |€ 951.322|€ 1.060.452|
|Financial score \\
(lowest total fees/actual total fees x 100)| | | \\
100| \\
951.322/1.060.452 x100 = *89.71*|
* Only tenderers with average scores of at least 80 points in the technical evaluation qualify for the financial evaluation
# _Conclusions of the Evaluation Committee_

The best value for money is established by weighing technical quality against price on an 80/20 basis. This is done by multiplying:
- the scores awarded to the technical offers by 0,80,
- the scores awarded to the financial offers by 0,20.
Specimen Tender Evaluation Summary:
Part 3: Composite Evaluation
| |*Maximum possible*|*Tenderer 1*|*Tenderer 2*|*Tenderer 3*|
|Technical score \\
x 0.80| | \\
Eliminated following technical evaluation \\ |99,22 x 0.80 = \\
*79.38*|100.00 x 0.80 = \\
*80.00*|
|Financial score \\
x 0.20| | |100.00 x 0.20= \\
*20.00*|89.71 x 0.20= \\
*17.94*|
|Overall score| | |79.38 + 20.00= \\
*99.38*|80.00 + 17.94= \\
*97.94*|
|Final ranking| | |*1*|*2*|
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As a result of its deliberations, the Evaluation Committee may make any of the following recommendations:
* Award the contract to the tenderer which has submitted a tender:
** which complies with the formal requirements and the eligibility rules;
** whose total budget is within the maximum budget available for the project;
** which meets the minimum technical requirements specified in the tender dossier; and
** which is the best value for money (satisfying all of the above conditions).
* Cancel the tender procedure in exceptional circumstances, such as:
** none of the tenders satisfies the selection/award criteria of the tender procedure;
** no tenders achieved the minimum threshold during the technical evaluation;
** total price (comprising both the fees, the incidental expenditure and the provision for expenditure verification ) of all tenders received exceed the maximum amount available for the contract.

The entire procedure (technical and financial evaluation) is recorded in an Evaluation Report (see template in Annex B11) to be signed by the Chairperson, the Secretary and all voting members of the Evaluation Committee.
# _Notifications and signature of the contract_

The successful and unsuccessful tenderers are informed on the results of the evaluation (see Annex B13). The successful tenderer is invited to the signature of the contract. Format of the contract is provided in the tender documents (and available at the above web-page - see annex B8: Draft Contract).
h3.{anchor:_Toc247347101}{anchor:_Toc259536845}5.2.3. Restricted tenders (above 200.000€)
*Tender documents:*
The tender documents are corresponding to the ones recommended for the single tender procedures. However, in the case of restricted tenders, *+full tender dossier+* *needs* to be prepared.
Please refer to the point 5.2.1. Tender documents for further details on tender documents.
As +addition+ to the competitive negotiated procedure, *+procurement notice+* – *public invitation to potential tenders to submit their offers{*}, needs to be prepared. Prior to procurement notice a contract +forecast+ needs to be published.
The individual contract forecasts must give a brief indication of the subject, content and value of the contracts concerned. (see template in Annex B1).
The procurement notice must provide would-be service providers with the information they need to determine their capacity to fulfil the contract in question.
The selection criteria identified in the procurement notice must be:
* clearly formulated,
* easy to verify on the basis of the information submitted (recommended use of the standard application form (see Annex B3 on the EuropeAid website),
* devised to allow a clear YES/NO assessment to be made as to whether or not the candidate satisfies a particular selection criterion,
* possible to prove by the tenderer.

The procurement notice should be published on the basis of standard form (see Annex B2a). The criteria specified there are given by way of illustration and should be adapted to the nature, cost and complexity of the contract.
The tenderers offers are to be submitted on the Standard application form (see Annex B3).
*Publication:*
In case of restricted procedures the contract forecast and the procurement notice are published on the website of the organisation (Grant Beneficiary in its role as Contracting Authority), Official Journal of the EU and in national and international media For more information how to publish on EU websites see Annex ... to this Manual.
{color:#0e4096}_Tip: Publication on EuropeAid website is optional and can be done if wished_{color}
*Submission of tenders:*
The tendering procedure is implemented in two steps. In the first step the applicants submit the expression of interest, based on the standard format (see Annex B3), provided on the web-page:
[http://ec.europa.eu/europeaid/work/procedures/implementation/services/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/services/index_en.htm]
The applicants are given minimum 30 days from publication of the procurement notice to submit their expression of interest
After forming the shortlist (see below, Selection Process), the applicants are invited to the submission of the full application. They are sent full tender dossier and given minimum 50 days deadline to submit their offers.
*Selection process:*
In case of restricted procedure the selection process is implemented in two stages.
Following the publishing of procurement notice and receipt of expressions of interest, the first stage in the process is implemented.
The short-listing of candidates must be carried out by an Evaluation Committee appointed by the Grant Beneficiary in its role as Contracting Authority comprising a non-voting Chairperson, a non-voting Secretary and an odd number of voting members (minimum of three) possessing the technical and administrative capacities necessary to give an informed opinion on the applications. Each member must have a reasonable command of the language in which the applications are submitted. All members of the Evaluation Committee are obliged to sign a Declaration of Impartiality and Confidentiality (see Annex A4), available on the web page:
[http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm]
The selection procedure involves:
- establishing a long list (see template in Annex B4) summarising all the applications received;
- eliminating candidates who are ineligible
- applying the published selection criteria without modification
After examination of the responses to the procurement notice, the service providers offering the best guarantees for the satisfactory performance of the contract will be short-listed. The shortlist shall contain between four and eight candidates. If the number of eligible candidates meeting the selection criteria is greater than eight, the additional criteria published in the procurement notice will be applied in order to reduce the number of eligible candidates to eight.
If the number of eligible candidates meeting the selection criteria is less than the minimum of four, the Grant Beneficiary in its role as Contracting Authority may invite to submit a tender only those candidates who satisfy the criteria to submit a tender.
Tender documents will be sent to the short-listed candidates and they are invited to submit full proposals.
The second stage in the evaluation - evaluation of the received full proposals - is implemented under the same principles as within competitive negotiated procedures. Please refer to point 5.2.2., Selection process, for further details.
h2.{anchor:_Toc247347102}{anchor:_Toc259536846}5.3. Common challenges
The Table 3 is presenting some practical challenges in managing and controlling the service contract procedures. The list is prepared following the procedural logic as presented above.
_Table 3: Practical challenges in procurement of services_
|*CHALLANGES*|*RECOMMENDATIONS*|
|*_DOCUMENTS_*| |
| \\
*Poor quality of Terms of Reference – risk of failure of delivery{*}. The ToR document needs to specify all the details of services required. If this is not the case, disagreement between the Contracting Authority and the contractor might arise and the latter might refuse to deliver all services expected. \\ | \\
- The Contracting Authority should specify all details of the services expected. Particular attention should be put on the inputs required and results expected. \\
- The ToR documents could be checked with independent expert to get second opinion on the matter. |
| \\
*Restrictive conditions{*}. The ToR could contain restrictive conditions, formulations that could limit fair competition. Restrictive conditions are largely manifested through description of requirements for key experts. References to very narrow qualifications or specific skills are such examples. \\ | \\
- ToR document needs to be closely checked, particularly in the part of expert's requirements. The formulations should be specific enough to maximise the contract impact but should not be restrictive. Reference to very specific and narrow experiences or qualifications should be avoided. \\ |
| \\
*Splitting of contracts.* In order to avoid application of competitive negotiated or open procedure, the grant beneficiaries might decide to split contracts into several parts. Splitting of contracts containing the services of similar nature is not allowed. \\ | \\
- The beneficiary's procurement plan should be carefully checked by project/programme managers in MA, JTSs/Antenna. Services of similar nature should be tendered under one procedure. A formulation of ''similar nature'' is normally services which can be provided by one contractor. \\ |
|*_SELECTION PROCESS_*| |
| \\
*Lack of sufficient number of quality /compliant offers.* The Contracting Authority might face challenges of not receiving sufficient number of quality or compliant offer. Such situation could be caused by one of the following reasons: lack of capacity of invited tenderers, too restrictive provisions of the requested services, limited publication of tender. \\ | \\
- The Contracting Authority should organise support and advice to tenderers in the process. Clarification meetings are recommended in complex tenders. The Contracting Authority should establish list of frequently asked questions (FAQ) and submit it to all tenderers. \\
- The Contracting Authority should make sure that the tenders are not too restrictive (see above). \\
- The Contracting Authority should ensure wide publication of the tender (in case of open procedures). In case of competitive negotiated procedure a larger number of potential tenderers than minimum requested (3) could be invited. \\ |
| \\
*Tender price.* In case of service contracts this challenge is important from the perspective of the managing bodies. The grant beneficiaries might deliberately or non-deliberately overestimate the value of services. \\ | \\
- The programme management bodies should carefully estimate the level of expected inputs/outputs and proposed maximum amount available for the contract, either when project proposals are evaluated or when grant beneficiary submits its procurement plan. \\
- Inputs and outputs should be compared to market standard prices (for instance expert prices on the side of inputs and prices of studies or similar on the side of outputs). \\
- An independent expert could be invited to participate in review of tender documents. \\ |
|*_IMPLEMENTING PROVISIONS_*| |
| \\
*Replacement of experts.* The contractor might decide to propose replacement of experts (shortly) after the signature of the contract. \\ | \\
- Replacement of experts should only be allowed in exceptional cases. Addendum to the contract needs to be prepared (see point 4.6.). \\
- The replaced experts should be in line with the requirements from the ToR and should at least match if not exceed qualifications and skills of original experts. \\ |
| \\
*Financial guarantees{*}. In case of larger and more complex service contracts certain financial risks exists for the Contracting Authority. In case of failure of delivery the Contracting Authority might face the challenge of retrieving pre-paid funds. \\ | \\
- The Contracting Authority should adopt the payment schedule to the complexity and size of contract. \\
- In case of significant pre-payments a financial guarantee could be requested from the contractor. \\ |
h1.{anchor:_Toc259536847}SUPPLY CONTRACTS
h2.{anchor:_Toc259536848}6.1. What is a Supply contract?
Supply contracts cover the purchase, leasing, rental or hire purchase, with or without option to buy, of products. A contract for the supply of products and, incidentally, for sitting and installation shall be considered a supply contract.
Specific provisions and challenges in purchasing supplies are *depending on type and scope of equipment{*}. Equipment could be divided into two general categories. First category includes less complex equipment which is frequently purchased within the EC co-financed contracts, for instance: computer equipment, vehicles, audio-visual equipment. The second category is a wide range of complex professional equipment, for instance: laboratory equipment, meteorological sensors, nuclear safety equipment or similar.
Possible practical examples of supply procedures in the context of grant contract can include the following:
{color:#0e4096}*Information support and networking of local authorities*{color}
The objective of the project is to improve functioning of local authorities in neighbouring countries through establishment and functioning of information system.
The project activities include: analysis of state-of-play, comparison and cross-border exchange of experience, purchase of equipment and setting-up joint information platform and training of participating civil servants.
The resources required within project include project team, travel costs, purchase of equipment and external services. The equipment purchased from the project includes:
- Computer server. A computer server would need to be purchased to support functioning of the new information system. None of the existing servers within the project partners' facilities have sufficient capacity. Computer hardware suppliers will be invited to tender.
- Personal computers and printers. A number of personal computers and printers would need to be purchased for functioning of the information system. Computer hardware suppliers will be invited to tender.
- Computer software. Each of the personal computers purchased in the project would need to be equipped with adequate software package. On the level of information system a special software package will be purchased for management of the system.
Taking into account similar nature of supplies, *one tender* (possibly with 2 lots – one for computers, printers and software and the other one for server) should be published.
\\
{color:#0e4096}*Setting up a mobile unit for emergency situation*{color}
The objective of the project is to establish mobile unit, which will provide first response and support in case of natural disasters and other emergency situations.
The project activities include: review of situation, preparation of operational plans in the cross-border region, purchase of mobile village for 2000 persons, training and exercise of emergency services.
The resources required within the project will include: project team, travel costs, external services for emergency training, equipment purchase. The latter will include:
- Tents for mobile village{*}.* The emergency village consist of mobile tents that can be quickly deployed when necessary. Specialist providers will be invited to the tender.
- Electricity generators{*}.* The generators are a separate purchase necessary for the mobile village. They will provide lighting, warming and enable functioning of mobile kitchen and field hospital. Specialist providers will be invited to the tender.
- Furniture for equipping mobile village. Furniture includes above all beds and basic furniture to be set in the tents. It also includes bathroom and toilets equipment and furniture. Specialist providers will be invited to the tender.
- Mobile kitchen. Mobile kitchen will be purchased as one whole unit. Kitchen equipment, furniture and dishes will be contained in the purchase. Specialist providers will be invited to the tender.
- Vehicles for transport of emergency equipment and staff. One van and one truck will be purchased to enable mobility of emergency equipment and staff. Representatives and dealers of car companies will be invited to the tender.
Different type of equipment requires *separate procedures* (or one procedure with several lots).
h2.{anchor:_Toc259536849}6.2. Procedures
h3.{anchor:_Toc247347107}{anchor:_Toc259536850}6.2.1. On the basis of single tender (up-to 10.000€)
*Tender documents:*
* *Tender dossier*

Even in the procedures based on single tender, the Grant Beneficiary in its role as Contracting Authority is strongly encouraged to use tender documentation. The tender documents should describe in sufficient details procedures and expectations from the tenderer. The format documents for the procedure are available on the web-page:
[http://ec.europa.eu/europeaid/work/procedures/implementation/supplies/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/supplies/index_en.htm]
The basic tender documents *normally* include all the documents listed under the *C4: Standard tender dossier (including contract){*}.
The Grant Beneficiary in its role as Contracting Authority might decide to use simplified tender documents (available from the above web-page or respective programmes where applicable). However specific attention should be put on keeping minimum information necessary to evaluate the received tenders.
In the case of single tender procedures *at least* the following documents should be requested from the tenderer:
* Technical offer,
* Financial offer,
* Tender submission form, including the tenderer's statement,
* Copy of legal registration of the tenderer.
* *Technical specifications*

The *technical specification* is the *key document* in the supply tender dossier. It describes all details of the equipment to be supplied. The expected outputs should precisely describe the number and specifics of the equipment to avoid potential non-delivery. The technical specifications should be drafted on the basis of the standard document provided on the above web-page (see Annex C4).
*Publication:*
In case of single offer based tenders, no publication is done. The Grant Beneficiary in its role as Contracting Authority *invites one tenderer* to submission of offer.
*Submission of tenders:*
The single tenderer is *normally* given 15 days for submission of the offer.
*Selection process:*
The selection process for single tender contracts is by definition not comparison of different tenders. Rather than that, the selection process estimates whether the received tender is in *line with basic technical requirements* as described in the tender dossier.
The selection procedure is implemented by an Evaluation Committee, with *minimum 2 members{*}. The members are officially nominated by the responsible person from the Grant Beneficiary in its role as Contracting Authority.
The Grant Beneficiary in its role as Contracting Authority should draft an evaluation grid, based on the standard format provided on the web page (see Annex C4):
[http://ec.europa.eu/europeaid/work/procedures/implementation/supplies/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/supplies/index_en.htm]
The *evaluation grid* should *list basic elements* of the tenderer's offer: Technical offer. On the basis of individual elements ACCEPTED or NOT ACCEPTED score should be given. Only if the received tender is evaluated as ''acceptable'', the contract signature should be proposed.
The selection procedure should be accompanied by an *evaluation report{*}, based on the standard format provided on the above web page (see Annex C7). A simplified version of the report, in line with the simplified procedure could be used.
Contract with the successful tenderer is drafted on the basis of the format provided in the tender documents and available at the above web-page (see Annex C4).
h3.{anchor:_Toc247347108}{anchor:_Toc259536851}6.2.2. Competitive negotiated procedure (from 10.000 – 60.000€)
*Tender documents:*
The tender documents are corresponding to the ones recommended for the single tender based procedures. Also in the case of competitive negotiated procedure a simplified tender dossier can be used.
Please refer to the point 6.2.1., Tender documents for further details.
*Publication:*
In case of competitive negotiated procedure, no publication is done. The Grant Beneficiary in its role as Contracting Authority *invites at least 3 tenderers* to submission of offers.
*Submission of tenders:*
The invited tenderers are given minimum 30 days for submission of their offers.
*Selection process:*
The award criterion for selection in the competitive negotiated procedure is the lowest price of technically compliant offers.
The *Evaluation Committee* consists of *odd number of voting members* (minimum 3), non-voting secretary and non-voting president. {color:#0e4096}_Observers from the programme structures (JTS/Antenna, MA) or other organisations could be invited to the process._{color} The Evaluation Committee members should be appointed by *official nomination* of the Grant Beneficiary in its role as Contracting Authority, *based on their qualifications and skills* (CVs should accompany the nomination). Each member must have a *reasonable command of the language in which the applications are submitted{*}. All members of the Evaluation Committee are obliged to sign a Declaration of Impartiality and Confidentiality (see Annex A4), available at web page:
[http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm]
The selection process is based on the documents provided in the web-page:
[http://ec.europa.eu/europeaid/work/procedures/implementation/supplies/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/supplies/index_en.htm]
The steps in the selection process are as follows:
# _Receipt and registration of tenders_

On receiving tenders, the Grant Beneficiary in its role as Contracting Authority must register them mentioning the date and time of reception and provide a receipt for those delivered by hand. The envelopes containing the tenders must remain sealed and be kept in a safe place until they are opened. The outer envelopes of tenders must be numbered in order of receipt (whether or not they are received before the deadline for submission of tenders).
# _Preparatory meeting_

First meeting of the Evaluation Committee to be held before the tender opening session. The tender dossier should have been distributed in advance to the members of the Evaluation Committee. The Chairperson presents the purpose of the tender, the procedures to be followed by the Evaluation Committee including the evaluation grid and selection and award criteria specified in the tender dossier.
# _Tender opening session_

The purpose of the tender-opening session is to check that the tenders are complete, that the requisite tender guarantee has been provided and that the tenders are generally in order. The tender opening session is a formal, public process. The Evaluation Committee opens the tenders in public at the place and time fixed in the tender dossier. Although it is public, participation in the tender opening session is restricted to representatives of the companies which are tendering for the contract. See tender opening checklist in Annex C5 for the detailed formalities to be carried out by the Chairperson with the assistance of the Secretary.
The Chairperson must check that no member of the Evaluation Committee has a potential conflict of interest with any of the tenderers (on the basis of the tenders received, consortium members and any identified subcontractor).
The Evaluation Committee must decide whether or not tenders comply with the formal requirements. The Summary of tenders received, which is attached to the Tender Opening Report (see Annex C6) must be used to record the compliance of each of the tenders with the formal submission requirements. The minutes of this meeting are included in the Tender Opening Report and this must be made available to the tenderers on request.
# _Evaluation of technical offers_

It is obligatory that the Evaluation Committee uses the administrative compliance grid and the evaluation grid published in the tender dossier. As part of the technical evaluation, the Evaluation Committee analyses the commercial aspects and, where applicable, the service component of the tenders to determine whether they satisfy the requirements set in the tender dossier. The results are recorded in a YES/NO grid for all elements specified in the tender dossier. No scoring method should be used. If the tender is divided into lots, the evaluation should be carried out lot-by-lot.
With the agreement of the other Evaluation Committee members, the Chairperson may communicate in writing with tenderers whose submissions require clarification, offering them the possibility to respond within a reasonable time limit to be fixed by the Committee.
*Part 1: Administrative compliance*
Before conducting a detailed evaluation of the tenders, the Evaluation Committee checks that they comply with the essential requirements of the tender dossier (i.e. the administrative compliance grid).
A tender is deemed to comply if it satisfies all the conditions, procedures and specifications in the tender dossier without substantially departing from or attaching restrictions to them. Substantial departures or restrictions are those which affect the scope, quality or performance of the contract, differ widely from the terms of the tender dossier, limit the rights of the Contracting Authority or the tenderer's obligations under the contract or distort competition for tenderers whose tenders do comply.
Each offer is examined for compliance with the tender dossier, in particular that:
- the documentation is complete
- the language required by the tender dossier has been used
The administrative compliance of each of the tenders must be recorded in the Evaluation Report (see Annex C7).
*Part 2: Technical compliance of tenders*
The detailed technical evaluation of the tenders takes place after the administrative compliance check. The criteria to be applied are those published in the tender dossier and, accordingly, the evaluation grid included in the tender dossier must be used. Under no circumstances may the Evaluation Committee or its members change the evaluation grid communicated to the tenderers in the tender dossier.
The purpose of this evaluation is to assess whether or not the competing tenders meet the selection criteria and the minimum technical requirements.
*Rule of origin:* All tenders must satisfy the rule that the goods to be supplied fulfil the requirements of the IPA CBC programmes Please refer to Article 19 of Regulation1085/2006. In case of any doubt as to the origin of goods, additional information must be requested. The tenderer will be required to provide, if possible prior to the signature of the contract, proof of origin in the form of a Certificate of Origin or other official documentation. To establish origin, one must determine where the product in question has been obtained or produced.
Tenders which clearly fail to satisfy the rule of origin must be rejected.
\\
{color:#0e4096}_Tip: Having in mind that this kind of proof bears additional costs, and, having in mind differences between national procurement laws and IPA procurement rules for external actions regarding origin of goods, this could be divided: Certificate of origin may be required only if unit_{color} {color:#0e4096}_cost of purchase is above EUR 5.000; If it is under EUR 5.000, bidders' statement of origin should be enough_{color}
*Nationality of* subcontractors{*}:* The Evaluation Committee must check at this stage that the nationalities of any subcontractors identified in the technical offers satisfies the nationality rule of the IPA CBC programme.
Having evaluated the tenders, the Evaluation Committee rules on the technical compliance of each tender, classifying it as technically compliant or not technically compliant. Where contracts include after-sales service and/or training, the technical quality of such services is also assessed during the technical evaluation in accordance with the published criteria.
# _Evaluation of financial offers_

Once the technical evaluation has been completed, the Evaluation Committee checks that the financial offers contain no arithmetical errors. Any arithmetical errors are corrected without penalty to the tenderer.
If the tender is in one lot, the cheapest technically compliant offer is awarded contract.
If the tender procedure contains several lots, financial offers are compared for each lot. The financial evaluation will have to identify the best financial offer for each lot, taking into consideration any eventual discounts granted by the tenderers.
Specimen of application of discounts:
Company A offers a discount of 20% if awarded Lots 1 and 3, Company B offers a discount of 10% if awarded all three Lots, Company C offers NO discount
| |Company A|Company B|Company C|Ranking without discount|
|LOT 1|90|80|70|Company C|
|LOT 2|Not bidding|40|50|Company B|
|LOT 3|60|70|55|Company C|
After applying the discount:
| |Company A \\
(20% discount)|Company B \\
(10% discount)|Company C \\
(no discount)|
|LOT 1|72|72|70|
|LOT 2|Not bidding|36|50|
|LOT 3|48|63|55|
\\
The 3 combinations possible:
_Combination 1:_ 72 + 40 + 48 = 160
_Combination 2:_ 72 + 36 + 63 = 171
_Combination 3{_}: 70 + 50 + 55, but since for Lot 2 there is a cheaper price offered, the sum becomes: 70 + 40 + 55 = 165
The Contracting Authority must choose combination 1, awarding contracts for Lots 1 and 3 to company A and Lot 2 to company B for the initial price offered.
# _Choice of contractor_

The successful tenderer is the one submitting the least expensive tender classified as "technically compliant" during the technical evaluation. It must be declared the successful tender if it is equal to or lower than the maximum budget available for the contract. If the chosen tender exceeds the maximum budget available for the contract, the Contracting Authority might enter into negotiations with one or more tenderers. If agreement cannot be achieved the tender procedure will be cancelled.
In the case of abnormally low tenders, the Evaluation Committee must request any relevant information concerning the composition of the tender. If, for a given contract, tenders appear to be abnormally low, the Contracting Authority must, before rejecting such tenders on that ground alone, request in writing details of the constituent elements of the tender which it considers relevant and verify those constituent elements, after due hearing of the parties, taking account of the explanations received.
The justification for accepting or rejecting an abnormally low offer must be recorded in the Evaluation Report.
# _Conclusions of the Evaluation Committee_

As a result of its deliberations, the Evaluation Committee may make any of the following recommendations:
** Award the contract to the tenderer which has submitted a tender:
*** which complies with the formal requirements and the eligibility rules;
*** whose total budget is within the maximum budget available for the project;
*** which meets the minimum technical requirements specified in the tender dossier; and
*** which is the least expensive tender (satisfying all of the above conditions).
** Cancel the tender procedure, for example when:
** none of the tenders satisfies the selection/award criteria of the tender procedure;
** all tenders received exceed the maximum budget available for the contract.

The entire procedure (technical and financial evaluation) is recorded in an Evaluation Report (see template in Annex C7) to be signed by the Chairperson, the Secretary and all voting members of the Evaluation Committee.
# _Notifications and signature of the contract_

The successful and unsuccessful tenderers are informed on the results of the evaluation (format available at the above web-page). The successful tenderer is invited to the signature of the contract. Format of the contract is provided in the tender documents and available at the above web-page (see Annex C4: Draft Contract).
h3.{anchor:_Toc247347109}{anchor:_Toc259536852}6.2.3. Local open procedure (from 60.000 – 150.000€)
*Tender documents:*
The tender documents are corresponding to the ones recommended for the single tender based procedures. In the case of local open procedure a full tender dossier needs to be prepared.
Please refer to the point 6.2.1., Tender documents for further details.
As +addition+ from the competitive negotiated procedure, *+procurement notice+* – *public invitation to potential tenders to submit their offers{*}, needs to be prepared.
The procurement notice must provide would-be suppliers with the information they need to determine their capacity to fulfil the contract in question. The procurement notice is published locally.
{color:#0e4096}_Tip: Publication on EuropeAid website is provisional and can be done if wished_{color}
The tender dossier for the contract in question is published on the website of the Grant Beneficiary in its role as Contracting Authority; it must also be sent to would-be suppliers upon request.
Publication:
In case of local open procedures the procurement notice is published on website of the organisation (Grant Beneficiary in its role as Contracting Authority) and in national media Reference can be published on the EuropeAid website if wished..
*Submission of tenders:*
The tenderers are given minimum 30 days from publication of procurement notice for submission of their offers.
*Selection process:*
The selection process in the local open procedure is implemented under the same principles as in the competitive negotiated procedure. Please refer to the point 6.2.2., Selection process.
h3.{anchor:_Toc247347110}{anchor:_Toc259536853}6.2.4. International open procedure (above 150.000€)
*Tender documents:*
The tender documents are corresponding to the ones recommended for the open local procedure (full tender dossier and procurement notice).
Please refer to the point 6.2.3., Tender documents for further details.
The +difference+ from the local open is *contract +forecast+* which needs to be published at least 30 days prior to publication of procurement notice.
The contract forecasts must give a *brief indication of the subject and content* of the tenders concerned. (see template in Annex C1).
In case of international open procedure the tender dossier needs to be made available at EuropeAid website and it must be sent to would-be suppliers upon request. *English notices of Local Open and International tenders should be forwarded to the European Commission (EuropeAid) to e-mail address{*}: [europeaid-ipapub@ec.europa.eu|mailto:europeaid-ipapub@ec.europa.eu]. The European Commission (EuropeAid) is responsible for the publication of the notices of international tenders in the Official Journal of the European Union.
*Publication:*
In case of international open procedures, the contract forecast and procurement notice are published on web page of the organisation (Grant Beneficiary in its role as Contracting Authority), Official Journal of the EC and in national and international media Provisionally also on EuropeAid website.
*Submission of tenders:*
The tenderers are given minimum 60 days from publication of procurement notice for submission of their offers.
*Selection process:*
The selection process in the international open procedure is implemented under the same principles as in the local open procedure. Please refer to the point 6.2.3., Selection process.
h2.{anchor:_Toc247347111}{anchor:_Toc259536854}6.3. Common challenges
The Table 4 is presenting some practical challenges in managing and monitoring the supply contract procedures. The list is prepared following the procedural logic as presented above.
_Table 4:_ Practical challenges in procurement of supplies
|*CHALLANGES*|*RECOMMENDATIONS*|
|*_DOCUMENTS_*| |
|*Poor quality of technical specifications – risk of failure of delivery.* If poorly prepared, the technical specifications could result in failure of delivery of planned supplies. In case of misunderstanding between the Contracting Authority and the contractor the latter might refuse delivery of expected quantities of qualities. \\ |- The Contracting Authority should dedicate particular attention to preparation of technical specifications. They need to be detailed enough in describing quantities and exact specifications of goods required. \\
- In order to avoid delivery of out-of-date goods the Contracting Authority needs to be particularly careful in formulation of specifications for computer and electronic goods. \\
- An independent technical expert could be consulted in the process. \\ |
| \\
*Restrictive conditions{*}. By introducing too restrictive conditions the Contracting Authority might limit the competition. \\ | \\
- Specific attention needs to be dedicated to technical specifications to avoid restrictive conditions and limitation of competition. Any mentioning of specific brand or producer is strictly forbidden. \\
- The managing bodies could consult an independent technical expert in the process. \\ |
| \\
*Splitting of contracts.* In order to avoid application of competitive negotiated or open procedure, the grant beneficiaries might decide to split contracts into several parts. Splitting of contracts containing the supplies of similar nature is not allowed. \\ | \\
- The beneficiary's procurement plan should be carefully checked by project/programme managers in MA, JTSs/Antennae. Supplies of similar nature should be tendered under one procedure. A formulation of ''similar nature'' is normally supplies which can be provided by one contractor (for instance computer equipment, furniture, laboratory equipment etc.). \\ |
|*_SELECTION PROCESS_*| |
| \\
*Lack of sufficient number of quality /compliant offers.* The Contracting Authority might face challenges of not receiving sufficient number of quality or compliant offer. Such situation could be caused by one of the following reasons: lack of capacity of invited tenderers, to restrictive provisions of the requested supplies, limited publication of tender. \\ | \\
- The Contracting Authority should organise support and advice to tenderers in the process. Clarification meetings are recommended in complex tenders. The Contracting Authority should establish list of frequently asked questions (FAQ) and submit it to all tenderers. \\
- The Contracting Authority should make sure that the tenders are not too restrictive (see above). \\
- The Contracting Authority should ensure wide publication of the tender (in case of open procedures). In case of competitive negotiated procedure a larger number of potential tenderers than minimum requested (3) could be invited. \\
\\
\\ |
| \\
*Tender price.* The challenge is firstly important from the perspective of the managing bodies. The grant beneficiaries might deliberately or non-deliberately overestimate the value of supplies. Secondly the challenge is important from the perspective of grant beneficiaries, Contracting Authority in the process. The invited or participating tenderers might deliberately or non-deliberately offer the prices exceeding the market standards. \\ | \\
- The programme management bodies should carefully check the expected outputs of the contract against the price, where applicable. \\
- Comparison of unit-prices with market standards should be implemented. \\
- An independent expert could be consulted in the process. \\
- The Contracting Authority should prior to publication of the tender estimate the contract price. In case of significant deviations from the expected price, negotiations with one or more tenderers could be implemented or the procedure should be cancelled. \\ |
|*_IMPLEMENTING PROVISIONS_*| |
| \\
*Quality of goods delivered{*}. The contractor might fail to deliver goods in quality stipulated in by the technical specifications. \\ | \\
- The Contracting Authority should carefully check the supplies upon delivery. The specifications of the supplies need to exactly match those from the technical specifications of the TD. \\ |
| \\
*Delivery deadlines{*}. The contractor might fail to deliver goods in time proposed by their offer. | \\
- The Contracting Authority should plan penalties for late delivery in the tender documentations. \\
\\
\\ |
| \\
*Guarantees and post-sales services.* The contractor might fail to deliver post sales service, any other services related to supply contract (for instance installation or training) or fail to realise guarantee in case of failures of goods. \\ | \\
- The Contracting Authority should carefully plan not only the specifications of goods but also any services related to the goods. These include accompanying services such as installation or training and usual post-sales services. \\
- Required guarantees, spare parts or similar should be precisely described in the tender documentation. \\
- The Contracting Authority should plan penalties in case of failure of delivery of services or guarantees. \\ |
| \\
*Origin of supplies.* The contractor might fail to deliver certificate of origin for supplied goods. \\ | \\
- Failure to deliver certificate of origin will result in ineligible costs. The Contracting Authority should make sure that the certificate is supplied before the final acceptance of goods is made. \\ |
| \\
*Financial guarantees{*}. In case of larger and more complex supply contracts certain financial risk exists for the Contracting Authority. In case of failure of delivery the Contracting Authority might face the challenge of retrieving pre-paid funds. \\ | \\
- The Contracting Authority should adopt the payment schedule to the complexity and size of contract. \\
- In case of significant pre-payments a financial guarantee should be requested from the contractor. \\ |
h1.{anchor:_Toc247347113}{anchor:_Toc259536855}WORKS CONTRACTS
h2.{anchor:_Toc247347114}{anchor:_Toc259536856}7.1. What is a Works contract?
Works contracts cover either the *execution{*}, or *both the execution and design{*}, of works or a work related to one of the following activities: Taken from Directive 2004/18/EC Annex 1

* Building site preparation,
* Building of complete constructions or parts thereof; civil engineering,
* Building installation,
* Building completion,
* Renting of construction and demolition equipment.

A 'work' means the outcome of building or civil engineering works taken as a whole that is sufficient of itself to fulfil an economic or technical function.
Practical examples of works procedures in the context of grant contract can be as following:
{color:#0e4096}*Setting up of business incubator*{color}
The objective of the project is to refurbishment of old metal working factory into business incubator.
Project activities include: review of entrepreneurial potentials of the region, definition of business sectors to be included in the incubator, reconstruction works, selection and training of incubator management staff.
Resources necessary for implementation of the project include: project team, travel costs, purchase of equipment and reconstruction services. The latter will be engaged in the form of works contract as follows:
- Works contract for refurbishment of premises. The works contract will cover the whole range of reconstruction works, from cleaning the existing premises, base construction works, replacement of roof, installation works to finalisation works.
*One contract* will be awarded for the whole scope of refurbishing works.
\\
{color:#0e4096}*Construction of cross-border bicycle path*{color}
The objective of the project is support to cross-border tourism by construction of cross-border bicycle path.
Project activities include: preparation of terrain, construction of bicycle path, supervision of works, promotion and opening of cycling path.
The resources required within the project include: project staff, travel costs, construction works, services of supervisory engineer and promotion services. The works sub-contracted from the project will include:
- Works contract for construction of the bicycle path. The contract will include: preparatory works of terrain, construction of the bicycle path, pavement, finalisation and signalisation.
*One contract* will be awarded for the whole scope of construction works.
h2.{anchor:_Toc247347115}{anchor:_Toc259536857}7.2. Procedures
h3.{anchor:_Toc247347116}{anchor:_Toc259536858}7.2.1. On the basis of single tender (up-to 10.000€)
*Tender documents:*
* *Tender dossier*

Even in the procedures based on single tender the Contracting Authority is strongly recommended to use tender documentation. The tender documents should describe in sufficient details procedures and expectations from the tenderer. The format documents for the procedure are available on the web-page:
[http://ec.europa.eu/europeaid/work/procedures/implementation/works/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/works/index_en.htm]
The basic tender documents normally include all the documents listed under the Annex *D4: Standard tender dossier (including contract){*}.
The Contracting Authority might decide to use simplified tender documents. However specific attention should be put to keeping minimum information necessary to evaluate the received tenders.
In the case of single tender procedures *at least* the following documents should be requested from the tenderer:
* Technical offer,
* Financial offer,
* Tender submission form, including the tenderer's statement,
* Copy of legal registration of the tenderer.
* *Bill of quantities and design drawings*

The Bill of quantities, based on the standard format (see Annex D4: Financial offer) and available at the above mentioned web-page, is the key document in the tender dossier. It describes all details of the works to be implemented and supplies to be installed. The Contracting Authority needs to prepare detailed description prior to the tender procedure to avoid potential non-delivery in the implementation phase.
Design drawings are detailed graphic presentation of actual site situation and expected works. The design is provided in free format, in accordance with usual practice.
*Publication:*
In case of single offer based tenders, no publication is done. The Contracting Authority *invites one tenderer* to submission of offer.
*Submission of tenders:*
The single tenderer is *normally* given 15 days for submission of the offer.
*Selection process:*
The selection process for single tender contracts is by definition not comparison of different tenders. Rather than that, the selection process estimates whether the received tender is *in* *line with basic technical requirements* as described in the tender dossier.
The Contracting Authority should draft an evaluation grid, based on the standard format provided on the web page (see Annex D4):
[http://ec.europa.eu/europeaid/work/procedures/implementation/works/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/works/index_en.htm]
The *evaluation grid* should list basic elements of the tenderer's offer: Technical offer. On the basis of individual elements ACCEPTED or NOT ACCEPTED score should be given. Only if the received tender is evaluated as ''acceptable'', the contract signature should be proposed.
The selection procedure should be accompanied by an *evaluation report{*}, based on the standard format provided on the above web page (see Annex D7). A simplified version of the report, in line with the simplified procedure could be used.
Contract with the successful tenderer is drafted on the basis of the format provided in the tender documents and available at the above web-page (see Annex D4).
h3.{anchor:_Toc247347117}{anchor:_Toc259536859}7.2.2. Competitive negotiated procedure (from 10.000 – 300.000€)
*Documents:*
The tender documents are corresponding to the ones recommended for the single tender based procedures.
Please refer to the point 7.2.1., Tender documents for further details.
*Publication:*
In case of competitive negotiated procedure no publication is done. The Contracting Authority *invites at least 3 tenderers* to submission of tenders.
*Submission of tenders:*
The invited tenderers are given minimum 30 days for submission of their tenders.
*Selection process:*
The award criterion for selection in the competitive negotiated procedure is *the lowest price of technically compliant offers{*}.
The Evaluation Committee consists of *odd number of voting members* ({*}minimum 5{*}), non-voting secretary and non-voting president. Observers from the programme authorities (JTS/Antenna, MA) or other organisations could be invited to the process. The *Committee members* should be appointed by official nomination of the Contracting Authority, *based on their qualifications and skills* (CVs should accompany the nomination). Each member must have a *reasonable command of the language in which the applications are submitted{*}. All members of the Evaluation Committee are obliged to sign a Declaration of Impartiality and Confidentiality (see Annex A4), available at web page:
[http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm]
The selection process is based on the documents provided in the web-page:
[http://ec.europa.eu/europeaid/work/procedures/implementation/works/index_en.htm|http://ec.europa.eu/europeaid/work/procedures/implementation/works/index_en.htm]
The steps in the selection process are as follows:
# _Receipt and registration of tender_

On receiving tenders, the Grant Beneficiary (in its role as Contracting Authority) must register them mentioning the date and time of reception and provide a receipt for those delivered by hand. The envelopes containing the tenders must remain sealed and be kept in a safe place until they are opened. The outer envelopes of tenders must be numbered in order of receipt (whether or not they are received before the deadline for submission of tenders).
# _Preparatory meeting_

The first meeting of Evaluation Committee to be held before the tender opening session. The tender dossier should have been distributed in advance to the members of the Evaluation Committee. The Chairperson presents the purpose of the tender and explains the procedures to be followed by the Evaluation Committee including evaluation grids, selection and award criteria specified in the tender dossier.
# _Tender opening session_

The purpose of the tender-opening session is to check that the tenders are complete, that the requisite tender guarantee has been provided and that the tenders are generally in order. The tender opening session is a formal, public process. The Evaluation Committee opens the tenders in public at the place and time fixed in the tender dossier. Although it is public, participation in the tender opening session is restricted to representatives of the companies which are tendering for the contract.
See tender opening checklist in Annex D5 for the detailed formalities to be carried out by the Chairperson with the assistance of the Secretary.
The Chairperson must check that no member of the Evaluation Committee has a potential conflict of interest with any of the tenderers (on the basis of the eventual shortlist, the tenders received, consortium members and any identified subcontractor).
The Evaluation Committee must decide whether or not tenders comply with the formal requirements. The Summary of tenders received, which is attached to the Tender Opening Report (see Annex D6) must be used to record the compliance of each of the tenders with the formal submission requirements. It must be made available to the tenderers upon request. Eventual tender guarantees must be returned to the tenderers. This implies that any tenders which arrive after the submission deadline must also be opened (after the opening session) so that the guarantees can be returned.
# _Evaluation of offers_

It is obligatory that the Evaluation Committee uses the administrative compliance grid and the evaluation grid published in the tender dossier.
As part of the technical evaluation, the Evaluation Committee analyses the commercial aspects, and, where applicable, the service component of the tenders to determine whether they satisfy the requirements set in the tender dossier. The results are recorded in a YES/NO grid for all elements specified in the tender dossier. No scoring method should be used. If the tender is divided into lots, the evaluation should be carried out lot-by-lot. With the agreement of the other Evaluation Committee members, the Chairperson may communicate in writing with tenderers whose submissions require clarification, offering them the possibility to respond within a reasonable time limit to be fixed by the Committee.
*Part 1: Administrative compliance*
Before conducting a detailed evaluation of the tenders, the Evaluation Committee checks that they comply with the essential requirements of the tender dossier (i.e. the administrative compliance grid). A tender is deemed to comply if it satisfies all the conditions, procedures and specifications in the tender dossier without substantially departing from or attaching restrictions to them. Substantial departures or restrictions are those which affect the scope, quality or performance of the contract, differ widely from the terms of the tender dossier, limit the rights of the Contracting Authority or the tenderer's obligations under the contract or distort competition for tenderers whose tenders do comply.
Each offer is examined for administrative compliance with the tender dossier in accordance with the published administrative compliance grid. The administrative compliance of each of the tenders must be recorded in the Evaluation Report (see Annex D7).
*Part 2: Technical compliance of tenders*
The detailed technical evaluation of the tenders takes place after the administrative compliance check. The criteria to be applied are those published in the tender dossier and, accordingly, the evaluation grid included in the tender dossier must be used. Under no circumstances may the Evaluation Committee or its members change the evaluation grid communicated to the tenderers in the tender dossier. The purpose of this evaluation is to assess whether or not the competing tenders meet the minimum technical requirements and selection criteria.
*Rule of origin:* All tenders must satisfy the rule that the goods to be supplied and the materials to be used for the construction fulfil the requirement of the IPA CBC programme. Tenders which clearly fail to satisfy the rule of origin must be rejected. The rule of origin does not apply to the contractor's equipment which will be used during the construction.
*Nationality of subcontractors:* The Evaluation Committee must check at this stage that the nationalities of subcontractors identified in the technical offers satisfy the nationality rule of the IPA CBC programme.
Having evaluated the tenders, the Evaluation Committee rules on the technical compliance of each tender, classifying it as technically compliant or not technically compliant.
# _Financial evaluation_

Once the technical evaluation has been completed, the Evaluation Committee checks that the financial offers contain no arithmetical errors. Any arithmetical errors are corrected without penalty to the tenderer.
If the tender procedure contains several lots, financial offers are compared for each lot. The financial evaluation will have to identify the best financial offer for each lot, taking due account of any discounts offered.
For a specimen of application of discounts, see the point 6.2.2., Selection process (competitive negotiated procedure under supplies).
# _Choice of contractor_

The successful tenderer is the one submitting the least expensive tender classified as "technically compliant" during the technical evaluation. It must be declared the successful tender if it is equal to or lower than the maximum budget available for the contract.
If the chosen tender exceeds the maximum budget available for the contract, the Contracting Authority can step into negotiations with one or several tenderers. It the negotiation procedure fails the procedure will be cancelled.
In the case of abnormally low tenders, the Evaluation Committee must request any relevant information concerning the composition of the tender. If, for a given contract, tenders appear to be abnormally low, the Contracting Authority must, before rejecting such tenders on that ground alone, request in writing details of the constituent elements of the tender which it considers relevant and verify those constituent elements, after due hearing of the parties, taking account of the explanations received.
The justification for accepting or rejecting an abnormally low offer must be recorded in the Evaluation Report.
# _Conclusions of the Evaluation Committee_

As a result of its deliberations, the Evaluation Committee may make any of the following recommendations:
* Award the contract to the tenderer which has submitted a tender:

- which complies with the formal requirements and the eligibility rules;
- whose total budget is within the maximum budget available for the project;
- which meets the minimum technical requirements specified in the tender dossier; and
- which is the least expensive tender (satisfying all of the above conditions).
* Cancel the tender procedure for example when:

- None of the tenders satisfies the selection/award criteria of the tender procedure
- All tenders received exceed the maximum budget available for the contract.
The entire procedure (technical and financial evaluation) is recorded in an Evaluation Report (see template in Annex D7) to be signed by the Chairperson, the Secretary and all voting members of the Evaluation Committee.
# _Notificatons and signature of the contract_

The successful and unsuccessful tenderers are informed on the results of the evaluation (format available at the above web-page). The successful tenderer is invited to the signature of the contract. Format of the contract is provided in the tender documents and available at the above web-page (see Annex D4: Draft Contract)
h3.{anchor:_Toc247347118}{anchor:_Toc259536860}7.2.3. Local open procedure (from 300.000 – 5.000.000 €)
*Documents:*
The tender documents are corresponding to the ones recommended for the single tender based procedures (full tender dossier and procurement notice).
Please refer to the point 7.2.1., Tender documents for further details.
As addition to the competitive negotiated procedure the *procurement notice – public invitation to tenderers to submit their offers{*}, need to be prepared.
The procurement notice must *identify clearly, precisely, and completely* what the subject of the contract is and who the Contracting Authority is. The procurement notice is published locally Reference could be published on EuropeAid website (publication reference, country, Contracting Authority and type of contract), with the address where firms can obtain further information.
The Contracting Authority must send tender dossiers to would-be tenderers upon request. Because of their size and printing costs, tender dossiers for works contracts are usually sent out for a fixed fee. The tender dossier will also be available for inspection at the premises of the Contracting Authority.
*Publication:*
In case of local open procedures, the procurement notice is published on web page of the Contracting Authority and in national media See above.
*Submission of tenders:*
The tenderers are given minimum 60 days from publication of procurement notice for submission of their offers.
*Selection process:*
The selection process in the local open procedure is implemented under the same principles as in the competitive negotiated procedure. Please refer to the point 7.2.2., Selection process.
h3.{anchor:_Toc247347119}{anchor:_Toc259536861}7.2.4. International open procedure (above 5.000.000 €)
*Documents:*
The tender documents are corresponding to the ones recommended for the open local procedure (full tender dossier and procurement notice).
Please refer to the point 7.2.3., Tender documents for further details.
The difference from the local open is *contract forecast* which needs to be published at least 30 days prior to publication of procurement notice.
The contract forecasts must give a *brief indication of the subject and content of the tenders concerned* (see template in Annex D1).
*Publication**:*
In case of international open procedures, the forecast and procurement notice are published on web page of the Contracting Authority, Official Journal of the EC and in national and international media Provisionally also on EuropeAid website.
*Submission of tenders:*
The tenderers are given minimum 90 days from publication of procurement notice for submission of their offers.
*Selection process:*
The selection process in the international open procedure is implemented under the same principles as in the Local open procedure. Please refer to the point 7.2.3., Selection process.
h2.{anchor:_Toc247347120}{anchor:_Toc259536862}7.3. Common challenges
The Table 5 is presenting some practical challenges in managing and monitoring the works contract procedures. The list is prepared following the procedural logic as presented above.
_Table 5:_ Practical challenges in procurement of works
|*CHALLANGES*|*RECOMMENDATIONS*|
|*_DOCUMENTS_*| |
| \\
*Poor quality of tender dossier – risk of delivery.* Poor descriptions in the bill of quantities and the remaining tender documents could result in failure of delivery. In case of misunderstanding between the Contracting Authority and the contractor the later might fail to deliver what was expected \\ | \\
- The Contracting Authority should make sure that the tender documents are sufficiently precise to guarantee full and unconditional delivery of expected results. \\ |
| \\
*Availability of support documents – building permits.* The challenge is important from the perspective of the managing bodies. In case that the building permits and other accompanying documents are not available at the time of signature of grant contract, risk of failure of the contract exists. \\ | \\
- It is recommended that the managing bodies support only ready-to-go projects. \\
- In case of works planned under grant contracts, building permit should be requested at the time of signature of the contract. |
|*_SELECTION PROCESS_*| |
| \\
*Lack of sufficient number of quality /compliant offers.* The Contracting Authority might face challenges of not receiving sufficient number of quality or compliant offer. Such situation could be caused by one of the following reasons: lack of capacity of invited tenderers, to restrictive provisions of the requested works, limited publication of tender. \\ | \\
- The Contracting Authority should organise support and advice to tenderers in the process. Clarification meetings are recommended in complex tenders. The Contracting Authority should establish list of frequently asked questions (FAQ) and submit it to all tenderers. \\
- The Contracting Authority should make sure that the tenders are not too restrictive. \\
- The Contracting Authority should ensure wide publication of the tender (in case of open procedures). In case of competitive negotiated procedure a larger number of potential tenderers than minimum requested (3) could be invited. \\ |
| \\
*Tender price.* The challenge is firstly important from the perspective of the managing bodies. The grant beneficiaries might deliberately or non-deliberately overestimate the value of works. Secondly the challenge is important from the perspective of grant beneficiaries, Contracting Authority in the process. The invited or participating tenderes might deliberately or non-deliberately offer the prices exceeding the market standards. \\ |- The management bodies should carefully check the expected outputs of the contract against the price, where applicable (FLC or before). \\
- Comparison of unit-prices with market standards should be implemented. \\
- An independent expert could be consulted in the process. \\
- The Contracting Authority should prior to publication of the tender estimate the contract price. In case of significant deviations from the expected price negotiations with one or more tenderers could be implemented or the procedure should be cancelled. \\ |
|*_IMPLEMENTING PROVISIONS_*| |
| \\
*Quality and supervision{*}. The contractor might fail to deliver works in quality planned. \\ | \\
- The Contracting Authority should appoint competent supervisory engineer to supervise implementation of the works contract. \\
- From the perspective of the managing bodies an independent technical expert could be engaged to monitor the implementation of works contract. \\ |
| \\
*Deadlines for implementation.* The contractor could fail to implement works in the planned time. \\ | \\
- Timing of works contract should be carefully planned. Potential delays, for instance due to seasonal nature of works, should be taken into account. \\
- Penalties for delays caused by the contractor should be planned in tender documentation. \\ |
| \\
*Additional works.* The contractor could, due to unexpected situation, implement additional works from those planned in the tender documentation. \\ | \\
- The Contracting Authority should stipulate planning of 10% contingency reserve in the preparation of financial offers.|
| \\
*Financial guarantees{*}. In case of larger and more complex supply contracts certain financial risk exists for the Contracting Authority. In case of failure of delivery the Contracting Authority might face the challenge of retrieving pre-paid funds. \\ | \\
- The Contracting Authority should adopt the payment schedule to the complexity and size of contract. \\
- In case of significant pre-payments a financial guarantee should be requested from the contractor. \\
- Retention guarantee should be applied to avoid risks of poor quality construction. |
h1.{anchor:_Toc259536863}PERSPECTIVE OF THE PROGRAMME MANAGEMENT BODIES
h2.{anchor:_Toc259536864}5.4. Perspective of the programme managing bodies
In order to be able to successfully manage and control the procurement process in procurement under grant contracts, the all relevant management bodies Managing authorities, Joint Technical Secretariats (incl. antennas) and First level control bodies need to possess sufficient knowledge of procurement procedures according to external rules. The level of procedures presented in this document should cover the majority of issues the management bodies will come upon when managing, monitoring and controlling the process.
Some of the *key issues in management and controlling* *of the procurement process* from the perspective of management bodies to be considered are:
* {color:#0e4096}*Procurement plan.*{color} In order to be able to successfully and efficiently manage and control the procurement process, the management bodies should ask the grant beneficiaries to prepare a procurement plan immediately after the signature of the grant contract. The procurement plan should list all the tendering procedures, describing the type, short summary and size of contracts.
* {color:#0e4096}*Level of involvement in procedures{*}.{color} Due to relatively large number and complexity of the tendering procedures, the managing bodies might not be able to cover in details each and single procedure implemented under their programmes. Ultimately this could potentially result in larger number of procedural mistakes or failures of procedure at the side of grant beneficiaries (Contracting Authorities in tendering process). In such cases the costs occurred might be declared ineligible. Possible solution to this challenge could be:
** {color:#0e4096}*_Checking the process before publication of tender{_}{*}{color}. The management body, in particular first level controllers, could decide to check prepared tender documentation prior to publication of the tender. This keeps the possibility of mistakes at the minimum or eliminates them. It could be useful especially in countries where public procurement according to external rules is a new thing. However, it requires big workload for managing bodies and is probably very difficult to achieve. One of the options could be to set a limit of contracts of certain size to be always checked prior to publication.
** {color:#0e4096}*_Checking the process before signature of contracts{_}{*}{color}{*}.* The management body could, depending on number and complexity of procedures, define the financial limit from which the procurement procedures will be checked prior to signature of the contracts. Normally the share of these procedures should not be larger than 10% of all tendering procedures. However, by checking the largest contracts in advance, risks related to failure of procedures and ineligibility of costs could be significantly lowered or eliminated. Also, an option that could be considered, depending of the workload level, is to offer to project partners to contact JTS/MA or even first level control bodies as needed and then to provide advice.
** {color:#0e4096}*_Checking the procurement process after signature of contracts_*{color} (as a part of regular FLC checks). Tendering procedures will only be checked at the time of regular checks and interim/final reporting. This approach automatically stipulates risk for failure of procedure and re-payments of potential ineligible funds. The grant beneficiaries should be aware of this fact and should receive appropriate training and support to decrease risks to minimum.
* {color:#0e4096}*Coherence with the rules{*}.{color} The management bodies should ensure, that the procurement procedures implemented under grant contracts are in line with basic rules for EC external aid funding. This Manual is providing instructions that could be considered minimum requirements to be respected. The large majority of issues related to procurement procedures are described in the document. Eventual further explanation could be sought in PRAG, the national procurement rules or developed by programmes.
* Public procurement procedures according to EC external aid rules should also be kept in mind at the stage of the _project assessment{_}, in relation to project budget provision.
* Substantial and relevant *training* should be provided to *first level controllers* in regards to public procurement and procedures to control tendering documentation, especially in MSs.
* Possible sample checks by managing bodies could be considered, especially for larger contracts.
* *Practical implementing provisions.* The managing bodies should establish systems that will allow management, monitoring and controlling of procedures not only in the selection of projects to be awarded with grants but also in their implementation phase. The challenges in the implementation phase are related to changes and amendments of contracts, cancellations of contracts, failure to deliver services, supplies and works. The grant beneficiaries should be aware of procedures, but should on the other hand receive proper training and support to avoid such cases.| |*Services*|*Works*|*Supply*|
| | | | | * [Practical Handbook for Ongoing Evaluation|pc:Practical Handbook for Ongoing Evaluation]
|*Procedure*| | | |
| | | | |
|Single offer|Under 10.000€|Under 10.000€|Under 10.000€|
|Competitive negotiated procedure|From 10.000 – 200.000€|From 10.000 – 300.000€|From 10.000 – 60.000 €|
|Restricted procedure|Above 200.000€|-|-|
|Local open procedure|-|From 300.000 – 5.000.000€|From 60.000 – 150.000€|
|International open procedure|-|Above 5.000.000€|Above 150.000€|
| | | | |
|*Documents*| | | |
|Tender dossier|Yes|Yes|Yes|
|Terms of reference|Yes – describing details of service contracts – outputs and inputs required.|No|No|
|Technical specifications|No|Technical description|Yes – describing technical details and quantities of equipment |
|Bill of quantities|No|Yes – describing technical details and quantities of works and materials| |
|Financial offer|Per-unit price or global price|Price breakdown or global price|Per-unit price or global price|
|Guarantees |Pre-financing guarantee |Pre-financing, performance and retention guarantee |Pre-financing and performance guarantee |
| | | | |
|*Selection and award*| | | |
|Evaluation Committee|3 voting members, president, secretary, observer|5 voting members, president, secretary, observer|3 members, president, secretary, observer|
|Selection criteria|Technical quality: 80% \\
Price: 20%|Price: 100% (of technically compliant offers)|Price 100% (of technically compliant offers)|
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Annex 1
*Following overview of selection stages _courtesy of IPA Adriatic programme and F. Cuddemi_*
|*_STAGES_* |*_SELECTION PROCEDURE_*| | | | | | | | | |
| |*Competitive dialogue* |*Negotiated procedure with a single tender* |*Contest* |*Dynamic purchasing system* |*International restricted tender* |*International open tender* |*Framework contract* |*Local open tender* |*Negotiated competitive procedure* |*Single awarding* |
|1st STAGE |*OPEN* |*RESTRICTED* \\
Publicity is not required.|*OPEN* |*OPEN* |*OPEN* |*OPEN* |*OPEN* |*OPEN* |*OPEN* |*OPEN* |
|2nd STAGE |*RESTRICTED* | | |*RESTRICTED* |*RESTRICTED* | |*RESTRICTED* | |*RESTRICTED* |*RESTRICTED* |
|SERVICES |Dialogue only with at least 3 candidates chosen by an open selection*. \\
Maximum publicity of the system to be published on the OJEU, on final beneficiary and Programme web site or on any other appropriate media (in particular on the \\
national press of the country in which the action is being carried out, or in other specialist periodicals)|Negotiation with one (or more) tenderer(s) |The type of publicity depends on the contract value offered. \\
Maximum publicity for the selection of candidates to set up a short list. | |Maximum publicity for the selection of candidates to set up a short list (4-8). \\
Invitation to submit tenders only the candidates satisfying the selection criteria | |Maximum publicity for the selection of candidates to set up a short list. \\
Conclusion of the framework contract and the specific contracts, with at least 3 pre-qualified economic operators, and for not more than 4 years | |Maximum publicity for the selection of candidates to set up a short list. \\
Invitation to submit tenders at least 3 pre-qualified candidates, with whom negotiate the operation |Maximum publicity for the selection of candidates to set up a short list, for a time limit not more than 4 years \\
Invitation to submit tender to only one pre-qualified candidate satisfying the selection criteria |
|SUPPLIES | | | |Selection of the candidates' tenders to make a short list for a time limit not more than 4 years. \\
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Maximum publicity of the system to be published on the OJEU, on final beneficiary and Programme web site or on any other appropriate media| |Open procedure to select tenders. \\
Maximum publicity of the system to be published on the OJEU, on final beneficiary and Programme web site or on any other appropriate media (in particular on the \\
national press of the country in which the action is being carried out, or in other specialist periodicals)| |Maximum publicity of the system to be published on the OJEU, on final beneficiary and Programme web site or on any other appropriate media (in particular on the \\
national press of the country in which the action is being carried out, or in other specialist periodicals) | | |
|WORKS | | |The type of publicity depends on the contract value offered. \\
Maximum publicity for the selection of candidates to set up a short list.| |Maximum publicity for the selection of candidates to set up a short list. \\
Invitation to submit tenders only to the candidates that satisfy the selection criteria | | |Maximum publicity of the system to be published on the OJEU, on final beneficiary and Programme web site or on any other appropriate media| | |
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*Following overview of timing needed for receiving tenders _courtesy of IPA Adriatic programme and F. Cuddemi_*
|*_STAGES_* |*_PROCEDURE TERMS_*| | | | | | | | | | |
| |*Competitive dialogue* |*Negotiated procedure with a single tender* |*Contest* |*Dynamic purchasing system* |*International restricted tender* |*International open tender* |*Framework contract* |*Local open tender* |*Negotiated competitive procedure* |*Single awarding* |
|1st STAGE OPEN |≥ 30 days to receive the candidacies |It is suggested a time limit of ≥ 20 days to receive the tenders |The time limit period for a contest, depends of maximum value of contract offered |≥ 30 days to receive the candidacies |≥ 30 days to receive the candidacies|In certain exceptional cases and with the prior authorisation of the MA, other time limits may be authorised.|≥ 30 days to receive the candidacies |In certain exceptional cases and with the prior authorisation of the MA, other time limits may be authorised. |≥ 30 days to receive the candidacies|≥ 30 days to receive the candidacies |
|2nd STAGE RESTRICTED |The time limit period for restricted stage, depends of tender's value and the complexity of problems | | |≥ 15 days to receive the tenders |≥ 50 days to receive the tenders| |The time limit period to receive the tender for a single contract, depends of maximum value of the contract | |≥ 30 days to receive the tenders|It is suggested a time limit of ≥ 10 days to receive the tenders |
|SERVICES |X|X|X | |In certain exceptional cases and with the prior authorisation of the MA, other time limits may be authorised. | |X | |X |X |
|SUPPLIES |X |X | |X | |≥ 60 days to receive the tenders for supplies | |≥ 30 days to receive the tenders for supplies |X |X |
|WORKS |X|X |X | |In certain exceptional cases and with the prior authorisation of the MA, other time limits may be authorised. |≥ 90 days to receive the tenders for works| |≥ 60 days to receive the tenders for works|X |X |
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