south west employers

South West Employers

Legal Aspects & EU Procurement

Trainer: Date:

Activity 1 - Icebreaker

Is a middle child

(1 point)

Likes to eat Japanese food

(1 point)

Is wearing pink

(1 point)

Plays a team sport

(1 point)

Speaks another language

(1 point)

Wears glasses

(1 point)

Is over 6’ tall

(1 point)

Has less than four letters in his/her

first name

(1 point)

Has a last name that starts with a W

(1 point)

Has green eyes

(1 point)

Owns a Vauxhall car

(2 points)

Likes classical music

(2 points)

Preferred Maths to English in school

(2 points)

Knows someone famous

(2 points)

Has red hair

(2 points)

Has more than 2 children

(3 points)

Has made a parachute jump

(3 points)

Has visited more than 10 countries

(3 points)

Has more than 7 letters in his/her

first name.

(3 points)

Has a birthday in the same month as me

(3 points)

One unusual fact I have found out about someone here is? ____________________________ (5 points)

How many points do you have? _______

Activity 2 - Groundrules

Groundrules help to create a positive and safe learning environment. Discuss and agree a list of between 3 and 5 rules that all participants are comfortable with

Objectives

At the end of the session, participants will have knowledge and an understanding of:

Some of the key legal and procedural requirements of the EU public procurement directives

Public Contracts directive:

• Application of threshold values and competition requirements

• Procurement routes: tenders, frameworks and negotiated approaches

• Best practice tendering

• Legal challenges and implications for public procurers

• Selection and Award

Remedies directive:

• ‘Alcatel’ and managing challenges

Freedom of Information Act and transparency

Sections

1. Legal framework and thresholds

2. EU procurement procedures

3. Legal challenges and implications

4. Tendering practice

What is procurement?“ . . . process of acquiring supplies, works and services, covering acquisition from

both third parties and in-house providers. The process spans the whole cycle from identification of needs, through to the end of a service contract or the end of the

useful life of an asset”

Planning

Enquiry

Implement

Define & review need

Define & review need

Develop specification

Develop specification

Determine procurement strategy

Determine procurement strategy

InviteInvite

Pre-qualify suppliers

Pre-qualify suppliers

Issue RFQ or ITT

Issue RFQ or ITT

Evaluate tenders

Evaluate tenders

Negotiate?Negotiate?

Contract award

Contract award

Manage implementation and transition

Manage implementation and transition

Manage contract performance

Manage contract performance

Exit & termination

Exit & termination Includes:

• Revenue expenditure

• Capital expenditure

• Strategic commissioning

• Acquiring third sector services

• Grant-funded opportunities

• Collaboration with others

Regulations & governance

EC Treaty (Recital 9)

EU Consolidated Directive 2004/18/EC

Public Contracts Regulations 2006 (A)

Your local Contract Procedure Rules

Competition Act – a more generic law

These rules and regulations are enforced with statutory powers and there would be specific legal ramifications in our failure to comply.

The recent growth in legal claims and challenges – combined with an evolving backdrop of legislation and case law – places increasing responsibility on all public

officers to ensure adherence to procedure and due process

Key principles:

• Equal treatment

• Non-discrimination

• Transparency

• Mutual recognition

• Proportionality

• Value for Money

Types of procurement

Supplies Corporate and operational expenditure (the supply of goods and commodities)

Services People and teams to plan, guide, advise, design, develop, consult, care, operate and provide services to your authority and its partners

Part A Services (primary)

Part B Services (residual)

Works Construction and commissioning of facilities, buildings, infrastructure and major capital assets

. . . same principles, same policies, similar procedures

Shared Services and collaboration

Trading between two independent public sector bodies (non-Crown) is also subject to the competition requirements of the Public Contracts Regulations

In-house service provision is exempt

Three key tests for ‘in-house’ provision:

• Structural dependence – do we have strategic ownership/control over the party?

• Economic dependence – is the other party wholly funded by us?

• No private sector participation

If explicitly set up as ‘central purchasing body’ such as OGC, then exemption may apply

EU Thresholds

As of 1 January 2010

Remember:rules of aggregation apply when estimating contract value

Goods and services = £156,442Works [projects] = £3,927,260

Aggregation rules

Apply to the total contract value, not simply an annual or monthly amount and including extensions

Ongoing requirements (supplies and services) require aggregation over minimum of 48 months

Either aggregate projected values over next 4 years

Or, take last 12 months’ expenditure and x 4

Need to aggregate total expenditure across an authority

Avoid disaggregation

Limiting contract length to reduce value below thresholds

Breaking up needs to multiple contracts, each below threshold

Considered breach of EU procurement directives

Activity 3 - Aggregation

Work in pairs or small groups and for each of the scenarios, identify the aggregated value of the contract opportunity and state whether this is above or below the relevant EU threshold

Sections





EU procurement routes

EU procurement procedures

Open procedure

Restricted procedure

Framework agreement

Central purchasing

Bodies

Competitivedialogue

procedure

Dynamic purchasing

systems

Negotiatedprocedure

Acceleratedprocedure

Electronic auctions

Process overview – Open Tender

Publish PIN in OJEU (optional)

Manage tender clarifications

Debrief unsuccessful tenderers

Publish Contract Notice in OJEU

Award contract

Send out Invitation to Tender

Receive tenders

Evaluate tenders(exclusion and selection)

Mandatory standstill period

Publish Award Notice in OJEU

Receive Expressions of Interest

Min: 52 daysMax: 12 months

Min: 45 days40 days if hosted15 days with PIN

Min: 10 days

Max: 48 days

Max: 6 days

Process overview – Restricted Tender(assumes electronic submission)

Publish PIN in OJEU (optional)

Manage tender clarifications


Publish Contract Notice in OJEU

Award contract

Send out Invitation to Tender

Receive tenders

Evaluate tenders

Mandatory standstill period

Publish Award Notice in OJEU

Receive Expressions of Interest

Min: 52 daysMax: 12 months

Min: 30 days

Min: 10 days

Max: 48 days

Max: 6 daysSend out PQQs

Receive completed PQQs

Evaluate to determine shortlist(exclusion and selection)

Min: 35 days30 days if hosted17 days with PIN

Framework Agreements Act as ‘call-off’ arrangement for 1, 3 or more suppliers

No commitment to specific volume – ideal where demand not really known

If pre-existing, considerable time/efficiency advantages – no full tender – however can be time-consuming to set up

Maximum length: 4 years

Examples: stationery, spares, consultancy

Examples of framework suppliers are Buying Solutions and Pro5

Risk that suppliers can consider the mini competitionas a ‘double tender’

Negotiated approach (single supplier) EU requires specific justification to use these

procedures

Specific limited circumstances: When all tenders have proven irregular/unacceptable No applications or tenders have been received Where artistic/technical rights are exclusively protected Extreme and unforeseeable urgency Goods for R&D or experimentation only Partial replacements of existing goods Raw material commodities from exchange markets Liquidation/bankruptcy conditions Design contests Specific relation to existing works

You should refer to your legal advisers for clarificationSome CPRs require prior written consent before negotiation is permitted

Services & works

Supplies

Services

Works

Comparison

Advantages Disadvantages

Open Tenders Quicker than restricted

Simple/easily understood

Can generate many tenders

Can cause confusion between evaluation and selection

Restricted Tenders

Most popular

Selection of suppliers

Fewer tenderers to manage

Most commonly used method

Additional procedure so takes longer

Call off orders from a Framework

Avoids tendering process

Quick, easy (once set up)

Pre-qualified

How tailored to your need?

Best deal?

Time consuming to set up the FWA in the first place

Activity 4 – Procurement routes

Work in pairs or small groups and for each of the scenarios, identify which procurement route you should adopt given the requirements of the EU Directives

Point of No Return

Stages in the procurement procedure

Ability to influencethe procurement

outcome

Once the OJEU contract noticehas been published and the tenders invited, there is limited opportunity to influence the outcome

A full EU procedure can take 6 -12 months to award the contract

Sections





What is a challenge?

Any third party has the right to challenge the procedures and decisions we make

Derived principles of EC Treaty (Recital 9):

• Equal treatment

• Non-discrimination

• Mutual recognition

• Proportionality

• Transparency

Alcatel provides a specific formal opportunity – but there are wider general opportunities for challenge too

General trend: challenges are on the increase

New Remedies Directive

Remedies Directive 2007/66/EC - incorporated into UK law by 20 December 2009

Key provisions:

EU-wide adoption of the minimum 10-day ‘standstill’ period

Requirement to suspend procedure once challenged

Contracts to be considered ‘ineffective’ where serious infringement (eg no prior contract notice, no standstill etc)

What is the impact of a challenge? Potential suspension of process (…delay and

disruption)

Investigation and discovery of documentation

Consultation with relevant third parties

Potential legal involvement/action (…cost)

And if outside of procedure:

• Potential injunction/set aside

• Potential damages

• Reputational issues

• Potential disciplinary action for the relevant officer(s)

Recent case law - implications

Case OutcomeEMM G Lianakis AE and others v Dimos Alexandroupolis and others (2008)

Letting International Ltd v London Borough of Newham (2008)

McLaughlin & Harvey Ltd v Department of Finance & Personnel (2008)

Henry Brothers (Magherafelt) Ltd and others v Department of Education for Northern Ireland (2008)

• Tenderers must be on equal footing with transparent criteria• Can not evaluate suitability or experience of supplier at ‘award’

stage

• Must provide full transparency of evaluation criteria• Can not award marks for ‘exceeding’ requirements

• The full sub-criteria needs to be disclosed

• Award must be based on stated evaluation criteria• Cannot be selective in choice of which price elements to consider• MEAT implies cost has to be one of the criteria

Activity 5 - Learning Points Summary Selection and award are two ________ processes within the

restricted procedure

Tenderers must be treated on an ___________

Once selected, cannot __________ selection

Must provide full ____________ of evaluation criteria

Award decision must be based on ______ criteria

____ must be one of the award criteria in MEAT

Cannot be _______ in your evaluation

Cannot score additional marks for ___________

separate equal basisre-evaluate transparency

stated Costpartialadded value

Restricted Procedure: Selection & Award

Stage 3:Award

Stage 2:Selection

Stage 1:Exclusion

• Ineligible tenderers (offenders, insolvencies, etc) (Regulation 23)• Failure to meet “minimum standards” (Regulations 24 and 25)

• Selection of firms to invite to tender [short-list] (Regulation 16)

• Award the tender to MEAT (or lowest price) (Regulation 30)

“A contracting authority shall use criteria linked to the subject matter of the contract to determine that an offer is the most economically advantageous, including quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, running costs, cost effectiveness, after-sales service, technical assistance, delivery date, delivery period and period of completion.” (Regulation 30)

Activity 6 – Selection & Award

Work in pairs or small groups to consider each of the criteria and decide in which part of the Selection & Award process you should be assessing them

Sections





Restricted tendering Most popular route – two-stage process

‘Pre-qualifies’ acceptable suppliers

Basic process:

Issue PIN (optional)

Advertise OJEU notice

Pre-qualify expressions of interest – selection decisions

Invite tenders (typically 5 – 9 tenderers)

Evaluate tenders – award decision

Standstill period

Award contract

Notices

PINPrior Indicative Notice

Non-mandatory

Helps provide prior notice (up to 12 months)

Helps reduce timescales

OJEUmandatory above threshold

Advertisement

Serves as public notice of contract opportunity to respond

Timescales are mandatory

Required, irrespective of procurement route

Pre-qualification questionnaire

Use your authority’s standard PQQ template, which should:

Identify all suitable and capable providers

Assess regulatory compliance

Assess key assurance criteria (such as E&D)

Identify and regulate sustainability

Evaluate the PQQ responses:

Minimum standards

Shortlist for tendering

Notify and debrief

Avoid repeating the PQQ evaluation criteria in the subsequent ITT

Tips for pre-qualification

1. Ensure every pre-qualified can fulfil the requirements

2. Check basic compliance documentation

3. Credit check

4. Check available references

5. Avoid subjective and unsubstantiated selection

6. Document your evaluation and archive

ITT – what to include

Background information

Instructions to tenderers

Form of Tender

Terms of Reference/Specification

Terms and conditions

Pricing schedule

Acceptance procedures, award criteria (and subcriteria) and timescales

Contact and process for queries

Non-collusive declaration (bona fide tender)

Managing clarifications

Bidders will sometimes ask questions for clarification

Sometimes for genuine reasons

Sometimes for other motives

The basic golden rules:

Keep all communication written (and recorded)

Communicate with all bidders equally – same message, same time

Avoid 1:1 communications of any kind

Avoid controversy – keep it wholly professional

Remember this correspondence could become part of the contract documentation

Tender submissions

Observe the deadline

Comply with procedures in your CPRs – there are strict legal implications

Provide written receipt

Keep securely stored on your premises until agreed time of opening

Record opening details

Tender evaluation

Evaluation criteria – as published on your OJEU notice and recorded in the ITT

Appraisal logistics:

Who?

When?

How?

Security and commercial sensitivity

Ethics and impartiality

Document the output

Who does the evaluation?

Subject to scale and complexity

A good buyer will include a wide mix of expertise in the evaluation

Team should have been decided during the procurement planning phase – it needs to reflect the procurement outcomes and score with objectivity

Make sure you manage clarifications with equality

Record all correspondence and evaluation scorings

Qualified bids

Qualified tenders = non-compliance

Depending on your ITT instructions, the supplier has chance to remove qualifier or face disqualification

You must follow this rule strictly – what is fair for one, must be fair for all

Make sure any correspondence on this isrecorded on file

Making the award

Follow the procedures

Document it

Write to successful and unsuccessful tenderers


Provide for a standstill ‘alcatel’ period (10 days)

Make the award conditional on acceptance of all final agreements

Follow up with contract – avoid ‘letters of intent’

‘Alcatel’ standstill period

The standstill time limits:

The standstill period is a minimum of 10 days where notice sent electronically

When sent by other means, either:

15 days from day of sending; or

10 days from day of receipt

The Standstill period must end on a working day

i.e. if standstill period would end on a non working day then the actual standstill period ends at the end of the next working day

The standstill period ends at midnight

Standstill Notice (Award Decision Notice) has to include:

The award criteria unless already published

The reasons for the decision, including the characteristics and relative advantages of the successful tender

The scores obtained by the recipient and the party to be awarded the contract

The successful party's name

A precise statement of when the standstill period is expected to end

Debriefing suppliers All unsuccessful tenderers should be written to stating the

reason they lost and how they ranked

Include comparisons to the winning bid

They may request further debriefing with more detailed feedback

Unsuccessful tenderers have the right to know the reasons for rejection

Assists suppliers in improving performance if the debriefing includes weaknesses of unsuccessful bid

Assists in establishing open and honest reputation

Debriefing must be tailored to the tenderer

Buyers should record the results of the debriefing forfuture reference

Documenting decisions Regulatory compliance

Audit trail

Due process

Compliance

Public interest

Probity

Political sensitivity/interest

Freedom of Information Act 2000 implications

Activity 7 – Reflecting on learning

Discuss examples that group members have been involved in for a recent tendering situation

Reflect on the content of the entire training day to explore what you might do differently having now attended the training session

Objectives

At the end of the session, participants will have knowledge and an understanding of:

Some of the key legal and procedural requirements of the EU public procurement directives

Public Contracts directive:

• Application of threshold values and competition requirements

• Procurement routes: tenders, frameworks and negotiated approaches

• Best practice tendering

• Legal challenges and implications for public procurers

• Selection and Award

Remedies directive:

• ‘Alcatel’ and managing challenges

Freedom of Information Act

south west employers

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