ERDF National Procurement Guidance ERDF-GN-1-004 · ERDF-GN-1-004 V3 Last updated 3 July 2014 Page...

ERDF National Procurement Guidance ERDF-GN-1-004 V3 Last updated 3 July 2014 of 75

ERDF National Procurement Guidance ERDF-GN-1-004


TABLE OF CONTENTS

1 BACKGROUND ........................................................................................ 4

2 THE LAW .................................................................................................. 4

3 THE PRINCIPLES .................................................................................... 4

4 CONTRACTING AUTHORITIES .............................................................. 5

5 NON-CONTRACTING AUTHORITIES SPENDING ERDF MONEY ......... 7

6 TYPE OF CONTRACT ............................................................................. 7

7 VALUE OF CONTRACT ......................................................................... 10

8 OJEU PROCUREMENT THRESHOLDS ................................................ 11

9 SUB-OJEU PROCUREMENT ................................................................. 12

10 ADVERTISING SUB-OJEU PROCUREMENTS ..................................... 12

11 TABLE OF RECOMMENDED ACTION - SUB-OJEU ............................. 19

12 PROCUREMENT PROCEDURES ......................................................... 20

13 PROCUREMENT PROCEDURE TIME LIMITS ...................................... 23

14 CONTRACT AWARD ............................................................................. 25

15 FRAMEWORK AGREEMENTS .............................................................. 25

16 SELECTION AND AWARD CRITERIA ................................................... 26

17 RECORD KEEPING ............................................................................... 27

18 MOST COMMON ERRORS ................................................................... 28

19 FINANCIAL CORRECTIONS ABOVE OJEU .......................................... 29

20 FINANCIAL CORRECTIONS SUB-OJEU .............................................. 46

21 OTHER CONSEQUENCES (REMEDIES DIRECTIVE) .......................... 48

22 SINGLE TENDER ACTION- RARE EXCEPTION(S) .............................. 50

23 Schedule 1 - Key Definitions ................................................................... 52

24 Schedule 2 - List of Contracting Authorities ............................................ 57

25 Schedule 3 – Procurement Flow Chart ................................................... 66

26 Schedule 4 - Procurement Q&A .............................................................. 68


THE FOLLOWING IS INTENDED AS A GUIDE ONLY AND SHOULD NOT BE SUBSTITUTED FOR THE GRANT RECIPIENTS’ OWN INDEPENDENT LEGAL ADVICE CAPITALISED TERMS USED WITHIN THIS GUIDANCE DOCUMENT ARE DEFINED IN THE KEY DEFINITIONS SECTION IN SCHEDULE 1


1 BACKGROUND

1.1 Public procurement is the purchase of goods, works or services by Contracting Authorities.

1.2 The primary objective of the public procurement rules is to open up sufficient competition between suppliers. The secondary objective is to ensure public contracts are awarded fairly, transparently and without discrimination.

1.3 Failure to comply with the public procurement rules was the leading reason for the recovery of grants during the 2007-2013 ERDF programme.

1.4 Depending on the nature of the failure, up to 100% of the grant may be recovered by way of a financial correction if a non-compliant procurement is identified by the Audit Authority, the Managing Authority or the EU Commission audit services.

2 THE LAW

EU directives

2.1 The EU public procurement directives (EU Directives) set out the legal framework for public procurement:

2.2 Directive 2004/18/EC1 covers contracts awarded by central government, local authorities and other public sector bodies (such as schools, universities and health authorities).

2.3 Directive 2004/17/EC covers contracts awarded by entities operating in the water, energy, transport and postal services sectors.

Implementation in the UK

2.4 The EU Directives have been implemented into UK law by regulations. The current regulations which came into force on 31 January 2006 are:

2.4.1 The Public Contracts Regulations 2006 (SI 2006/5); and

2.4.2 The Utilities Contracts Regulations 2006 (SI 2006/6).

2.5 (together referred to as the “Regulations”).

3 THE PRINCIPLES

General EU principles

3.1 The EU Directives are adopted further to the principles of the Treaty on the Functioning of the European Union (TFEU), in particular the principles of:

1 Directive 2004/18/EC of the EP and Council on the co-ordination of procedures for the award of

public works contracts public supply contracts and public service contracts

http://uk.practicallaw.com/1-505-7444?pit=

http://uk.practicallaw.com/4-509-0319?pit=


3.1.1 Freedom of movement of goods;

3.1.2 Freedom of establishment;

3.1.3 Freedom to provide services;

and the principles deriving from these, such as the principles of:

3.1.4 Equal treatment;

3.1.5 Transparency;

3.1.6 Non-discrimination;

3.1.7 Mutual recognition; and

3.1.8 Proportionality.

3.2 In the UK, where there is a spend of public money, transparent procurement procedures are encouraged to ensure that those expending public money:

3.2.1 Consider value for money (VFM)

3.2.2 Maximise the efficient use of public money and;

3.2.3 Maintain competitiveness and fairness across the EU.

3.3 It is advised that Grant Recipients in receipt of ERDF (i.e. public) money, regardless of their status (i.e. Contracting or Non-Contracting Authority see section 4 below) comply with the Principles in respect of ERDF spend.

4 CONTRACTING AUTHORITIES

ALL GRANT RECIPIENTS (INCLUDING THOSE FROM THE PRIVATE AND CHARITABLE SECTORS) ARE ADVISED TO CHECK WHETHER THEY ARE “CONTRACTING AUTHORITIES” UNDER THE REGULATIONS

What is a Contracting Authority?

4.1 A Contracting Authority is defined in Article 1.9 of the Directive as: “Contracting authorities means the State, regional or local authorities, bodies governed by public law, associations formed by one or several of such authorities or one or several of such bodies governed by public law. A ‘body governed by public law’ means any body: (a) established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character;


(b) having legal personality; and (c) 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.”

4.2 Therefore, a body will be a Contracting Authority if (broadly speaking) it is:

4.2.1 established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character; and

4.2.2 having legal personality; and

a) obtains more than 50 per cent of its funding from another contracting

authority; or

b) is subject to management supervision by another contracting authority; or

c) has more than half of its board of directors/members appointed by

another contracting authority. Note that this can in some cases include joint venture companies with public and private members.

4.3 Regulation 3 sets out a non-exhaustive list of specific public bodies to whom the Regulations will apply. However, Regulation 3(1)(w) is a catch-all provision which means that a potentially much wider field of public bodies than those expressly listed will be covered.

4.4 Private Organisations falling within definition of Contracting Authority

4.4.1 Private sector organisations letting subsidised public works and services contracts are treated as if they are a Contracting Authority, and caught under the Regulations where:

4.4.2 the private sector is acting as a delivery agent on behalf of the public sector; or

4.4.3 where more than 50% public money is funding:

4.4.3.1 an above-threshold public works contract and which is carrying out:

4.4.3.1.1 any of the civil engineering activities specified in Schedule 2 of the Regulations; or


4.4.3.1.2 building work for hospitals, facilities intended for sports, recreation and leisure, school and university buildings or buildings for administrative purposes; or

4.4.3.1.3 an above-threshold public services contract which is connected to one of those types of public works contracts.2

5 NON-CONTRACTING AUTHORITIES SPENDING ERDF MONEY

5.1 The Principles are set out in section 3. Contracting Authorities are expected to comply with these Principles by virtue of the TFEU and Regulations.

5.2 Whilst Non-Contracting Authorities are not subject to the strict letter of the Regulations, the fact that there is public money being spent, attaches with it the Principles by which the Department expects Non-Contracting Authorities to comply with.

5.3 Since EU funds are being used for purposes specified in EU legislation, Non-Contracting Authorities are advised to at the very least, adhere to the EU Principles of free movement, non-discrimination, equal treatment, transparency, proportionality and mutual recognition when expending EU funds. In any event, Non-Contracting Authorities will still need to consider their own procurement policies (including any standing orders applicable) and any other applicable requirements relating to value for money when carrying out a procurement.

5.4 This will involve a sufficient degree of advertising before ERDF money is used to procure services/goods/works. Whilst an OJEU notice is not legally required for above threshold procurements by Non-Contracting Authorities, the expectation is that the higher the value of the services/goods/works being procured by a Non-Contracting Authority using ERDF money, the higher the degree of advertising expected to be demonstrated.

6 TYPE OF CONTRACT

6.1 There are three types of contracts under the Regulations:

a. Works – are items listed in Schedule 2 to the Regulations

b. Supplies – essentially the purchase or hire of goods (including

electricity and gas)

c. Services – Schedule 3 to the Regulations classifies services into 27 different types. These are then designated as either "Part A" or "Part B" as set out in the table below.

2 Paraphrasing Reg 34 of the Regulations


6.2 Part A and Part B Services

6.2.1 There is a distinction between the procurement of certain services – split and referred to as ‘Part A’ and ‘Part B’ services and this, together with the contract value, will determine the procurement route to follow.

Part A Services Part B Services

Maintenance and repair of vehicles and equipment. Hotel and restaurant services.

Transport by land, including armoured car services and courier services, but not including transport of mail and transport by rail.

Transport by rail.

Transport by air but not transport of mail. Transport by water.

Transport of mail by land, other than by rail, and by air.

Supporting and auxiliary transport services.

Telecommunications services. Legal services.

a) Financial services: b) Insurance services. c) Banking and investment services other than

financial services in connection with the issue, sale, purchase or transfer of securities or other financial instruments and central bank services.

Personnel placement and supply services.

Computer and related services. Investigation and security services, other than armoured car services.

Research and development services where benefits accrue exclusively to the contracting authority for its use in the conduct of its own affairs and the services are to be wholly paid for by the contracting authority.

Education and vocational health services.

Accounting, auditing and book-keeping services. Health and social services.

Market research and public opinion polling services. Recreational, cultural and sporting services.

Management consultancy services and related services, but not arbitration and conciliation services.

Other services.


Architectural services: engineering services and integrated engineering services: urban planning and landscape architectural services: related scientific and technical consulting services; technical testing and analysis services.

Advertising services.

Building cleaning services and property management services.

Publishing and printing services on a fee or contract basis.

6.2.2 Procurements of Part A services where the value exceeds the financial thresholds for those services are subject to the full procurement regime. The rationale is that EU-wide competition is thought most realistic in these services.

6.2.3 Whilst procurements of Part B services are treated with a lighter touch than those relating to Part A services (mostly in relation to less onerous advertising requirements3) they are still caught by general obligations such as transparency, equal treatment and non discrimination that derive directly from the TFEU. This means that:

a) Contracting Authorities should act in a transparent way and treat all potential providers equally and in a non-discriminatory way.

b) Contracting Authorities should comply with the detailed requirements relating to technical specifications set out in the Regulations.

c) A contract award notice should be published in the Official Journal no later than 48 days after a contract award.

d) Details of procurements of Part B services need to be included in any reports that Contracting Authorities submit to the Cabinet Office.

e) A right to take court action for financial loss against a Contracting Authority is granted to third parties if there is any failure to comply with the requirements of the Regulations or the TFEU.

3 Parts 1, 9 and 10 of the Regulations and Regulations 9, 31, 40(2), 41 and 42.

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6.2.4 Where a contract is for a combination of Part A and Part B services, the contract will be deemed to be for the category of services to which the greater value is attributed.

7 VALUE OF CONTRACT

7.1.1 The Department expects all Grant Recipients to conduct open fair and transparent competitions before awarding contracts for any goods, works or services (whether or not they are for Part A or B goods/works/services).

7.1.2 Grant Recipients will need to be able to demonstrate that they have followed the correct procurement route based on the nature and value of the contract.

7.1.3 The bullet points below set out a guide as to how this value may be calculated:

a) The starting point for calculating the contract value is to establish a

genuine pre-estimate of the value of the entire contract. This includes all payments to be made, or potentially to be made, under the entirety of the contract and for the whole of the predicted contract period (including proposed extensions and options).

b) Grant Recipients should take into account, using their best genuine estimates, the impact of any inflation value or uplift on the contract.

c) The Regulations can cover contracts which are below the stated EU threshold where they constitute repeat purchases and/or purchases of a similar type in a specified period. Grant Recipients should therefore seek advice on the application of the EU Rules where they envisage that they may require to make such purchases.

d) Where there is uncertainty surrounding the potential total contract value, for example, the inflation provisions have not been finally agreed or there are a number of options, then Grant Recipients need to use their best estimate and act cautiously and assume that the higher potential value will apply.

e) In the case of public contracts without a fixed term or the term of which cannot be defined, the value is the monthly value multiplied by 48.

f) Grant Recipients should pay particular attention to the provisions of Regulations 8(11) - (15) concerning the valuation of a single requirement where a number of contracts have been entered into, and which should be aggregated. Grant Recipients should not incorrectly value a contract or framework agreement with the intention of avoiding the Regulations;

g) Grant Recipients should not artificially split larger requirements into smaller units to avoid the aggregation rules and thresholds (e.g. collaborative multi-partner projects are advised to consider public procurement requirements at the level of the project i.e. not at individual partner level which could be judged as avoidance of the aggregation rules)


NOTE THAT THE VALUE OF THE CONTRACT INCLUDES THE ELEMENT OF THE CONTRACT PRICE WHICH IS FUNDED BY ERDF AND ANY OTHER MATCH FUNDING (WHETHER PUBLICLY OR PRIVATELY PROVIDED). THUS A WORKS CONTRACT VALUED AT £5M, £500,000 OF WHICH IS FUNDED 50% FROM ERDF AND 50% FROM ANOTHER PUBLIC FUND SHOULD BE LET IN ACCORDANCE WITH THE PROCUREMENT RULES FOR ABOVE OJEU WORKS CONTRACTS. THE POINT IS THE VALUE OF THE CONTRACT AS A WHOLE, NOT THE VALUE OF THE ERDF COMPONENT. DO NOT BE MISLED INTO THINKING THAT BECAUSE THE ERDF CONTRIBUTION IS BELOW THRESHOLD, THERE IS NO NEED TO FOLLOW THE RULES.

8 OJEU PROCUREMENT THRESHOLDS

8.1 The public procurement procedures set out in the Regulations must be followed before awarding certain contracts when the contract value is above a certain threshold. In particular the contracts should be advertised in the Official Journal of the European Union (OJEU).

8.2 Thresholds are set every 2 years and the current thresholds are set out below. Note that the thresholds have changed four times since the ERDF programme began in 2007: in 2008, 2010, 2012 and now the 2014 threshold applies. These can all be found on the OJEC website, http://www.ojec.com/Threshholds.aspx and Grant Recipients should check this to ensure that they are working to the correct values.

FROM 1 JANUARY 2014 (thresholds are net of VAT)

SUPPLIES SERVICES WORKS

Entities listed in Schedule 1 of the Regulations

£111,676 (€134,000)

£111,676 (€134,000)

£4,322,012 (€5,186,000)

Other public sector contracting authorities

£172,514 (€207,000)

£172,514 (€207,000)

£4,322,012 (€5,186,000)

Indicative Notices £625,050 (€750,000)

£625,050 (€750,000)

£4,322,012 (€5,186,000)

Small lots £66,672 (€80,000)

£66,672 (€80,000)

£833,400 (€1,000,000)

Utilities Contracts £345,028 (€414,000)

£345,028 (€414,000)

£4,322,012 (€5,186,000)

http://www.ojec.com/Threshholds.aspx


9 SUB-OJEU PROCUREMENT

9.1 A procurement may not have reached the relevant OJEU threshold for the Regulations to apply in full, or in the case of Part B Services, those rules may not apply to the same extent as for Part A Services, but there are still rules to be followed. Since EU funds are being used for purposes specified in EU legislation, the EU Principles of free movement, non-discrimination, equal treatment, transparency, proportionality and mutual recognition must be adhered to throughout the entire process regardless of the value of the contract. Grant Recipients must be able to demonstrate the legitimacy of the procurement route followed and should be able to demonstrate documentary supporting evidence in the event of an audit. As with all other ERDF documentation there is a requirement to retain all procurement evidence until 3 years after the final payment made on the programme and at present this is likely to be until at least 2025.

9.2 Grant Recipients are strongly encouraged to read and understand the Commission Interpretative Communication (the Communication) on the Community Law applicable to contract awards not, or not fully, subject to the provisions of the Public Procurement Directives, which is available in full at - (2006/C 179/02) and which sets out the legal position in the light of a number of important European Court decisions4.

9.3 The Communication is mainly concerned with the degree of advertising about any Sub-OJEU contract awards. The principle is that, for any potential tenderer, there should be “a degree of advertising sufficient to enable the services market to be opened up to competition and the impartiality of the procedures to be reviewed.”5

10 ADVERTISING SUB-OJEU PROCUREMENTS

10.1 If there is likely to be a cross-border interest the Treaty Principles will apply.

10.2 If a provider in another EU member state would be interested in providing the goods, services or works that a contracting authority requires, the Treaty Principles will apply. This is the case if the procurement is regulated or not.

10.3 There are no formal rules governing whether a contract will attract cross-border interest. The Commission states that the following factors will be significant:

a) The subject matter of the procurement.

b) The estimated value of the procurement.

c) The place of performance or delivery.

4 Cases C-324/98 Telaustria [2000] ECR; Coname, 21.7.2005 and C-458/03 Parking Brixen

5 Paragraph 62 of Judgement in Telaustria Verlags GmbH v Telecom Austria (Case C-

324/98)).


d) The size and structure of the relevant service market.

10.4 The Commission also states that it will be down to individual Contracting Authorities to apply these factors themselves on a case-by-case basis. In the event that a Contracting Authority concludes that there is no cross border interest, legal advice should be taken and a full consideration of the factors above should be documented. The fact that a contract is beneath the relevant threshold will not be enough of a reason for there to be no cross border interest.

Advertising contracting opportunities: applying the Treaty Principles

The obligation to advertise

10.5 The ECJ has held that the principles of equal treatment and non-discrimination require transparency in the procurement process. The first impact of this is the necessity for a "degree of advertising sufficient to enable the market to be opened up to competition" (Telaustria Verlags GmbH v Telecom Austria (Case C-324/98)). The advertising must inform potential providers in other member states of the procurement. It must also allow them the opportunity to express an interest before any contract is let (Consorzio Aziende Metano (Coname) v Comune di Cingia de' Botti (Case C-231/03)).

10.6 The Commission has stated that it is not sufficient for a Contracting Authority to contact potential providers itself to advertise the opportunity (even if some of those contacted are in another member state). It requires that a "suitably accessible" advert is published.

What does this duty to advertise mean in practice?

10.7 Unfortunately, to date the ECJ has not been clear on the degree of advertising required for contracts partially or fully outside the scope of the Directive and the Regulations. However, the European Commission has published non-binding guidance which seeks to clarify the position (referred to in this guidance as the Communication).

10.8 The first step is to decide whether a particular contract is of interest to providers in other Members States. In order to determine this, the Contracting Authority should consider the subject-matter of the contract; its estimated value; the particular market involved; and the geographical location where the contract is to be carried out.

10.9 If, having carried out this assessment, the Contracting Authority determines that the contract is likely to be of interest to parties in other Member States, it should publish a “sufficiently accessible advertisement” prior to awarding the contract. The greater the potential cross-border interest the wider the advertisement must be. For Part B Services contracts which exceed the financial threshold, the Commission states that “adequate transparency will typically require publication in a medium with wide coverage”.

http://uk.practicallaw.com/D-005-0207





10.10 The Commission stresses that it is for Contracting Authorities to decide themselves on the most appropriate means of advertising but does suggest the following methods (these are explored further in section 10.20):

a) Advertisement on the Contracting Authority’s own website

b) Advertisement on a portal website specifically created for contract

advertisements

c) Publication in national newspapers, specialist journals or national

journals

d) Publication of a voluntary OJEU notice in the Official Journal (which the

Commission suggests as an option for larger contracts)

e) Local advertising (the Commission’s view is that this is really only

suitable for very small contracts for which there is only a local market)

Very Low Value Contracts

10.11 There is no set threshold below which contracts do not need to be advertised. When deciding on the ‘sufficient degree of advertising’ for very low value contracts, Grant Recipients are encouraged to exercise their reasonable judgement.

10.12 The ECJ stated in the Coname Judgement6 that it might be considered in individual cases that “because of special circumstances, such as a very modest economic interest at stake”, a contract award may have no interest for suppliers located in other Members States and that “effects on the fundamental freedoms are…. to be regarded as too uncertain and indirect” to warrant the applications of EU Principles.

10.13 In the view of the Commission, the conclusion that a contract is not relevant for the Common Market and may therefore be awarded without observing the EU Principles, cannot be based on abstract criteria unrelated to the circumstances of the contract award, on simple assumptions, or on a past practice not corroborated by objective elements.

10.14 Based on the Commission’s experience in infringement cases, it can reasonably be assumed that contracts with a value that amounts to only a minor percentage of the Directives’ threshold values are in general of little interest to suppliers located in other Member States and therefore can be let without advertising.

6 Cases C-324/98 Telaustria [2000] ECR I-10745, paragraph 62, C-231/03 Coname,

judgment of 21.7.2005 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62003CJ0231:EN:HTML


10.15 In an earlier EC discussion document, the Commission proposed that in view of these factors, it would, as a general rule, not institute proceedings either upon application or its own initiative with regard to individual contract awards where the contract value does not exceed 10% of the threshold values provided for in Directives 2004/18/EC and 2004/17/EC.

10.16 This, however, is only an indicative value, and others’ consideration is that this percentage is far too low and that a figure of 20% would be a more appropriate level. This would give rise to an advertising threshold within the UK of approximately £20,000. The Commission nevertheless reserves the right to intervene if the contract award in question corresponds to a widespread illegal practice or if there are concrete indications that a contract of below this threshold is of relevance to the Common Market.

Some Examples (to be treated as a guide only)

10.17 Example 1: Small contract – large supply base

A contract is to be let by a London borough for painting and decorating to the value of £15,000. Given the potential supply market within London, a local advertisement would be appropriate. However, if the contract was worth £120,000 obviously there would be interest beyond the London supply market and a wider advertisement would be more appropriate.

10.18 Example 2: Small contract – limited supply base

A London borough requires to let a contract valued at £15,000 for consultancy with regards to flooding issues. The supply market within London is probably very small and therefore even given the low-value of the contract an advert reaching a wider geographical area is required to comply with the Treaty. Only if the authority can demonstrate that advertising a low-value contract cannot deliver value for money or substantiate another business reason can they avoid advertising.

The cost of advertising in newspapers or trade publications cannot be considered a legitimate reason for non-advertising as other communication channels with relatively low or no cost implications are available.

It is the responsibility of the individual contracting authorities to decide whether an intended contract award might potentially be of interest to economic operators located in other Member States. In the view of the Commission, this decision has to be based on an evaluation of the individual circumstances of the case, such as the subject-matter of the contract, its estimated value, the specifics of the sector concerned (size and structure of the market, commercial practices, etc.) and the geographic location of the place of performance.

10.19 Choose an appropriate advertising medium


The appropriate advertising medium depends on the likely level of interest in the procurement. The more interest that there is likely to be, the wider the coverage must be.

10.20 Suggested methods of advertising for sub OJEU contracts

10.20.1 Internet

a) The wide availability and ease of use of the World Wide Web makes contract advertisements on websites far more accessible, especially for undertakings from other Member States and for small and medium enterprises (SMEs) looking for smaller contracts. The Internet offers a large choice of possibilities for advertising of public contracts.

b) Advertisements on the Contracting Authority’s own website are flexible and cost-effective. They should be presented in a way that potential bidders can easily become aware of the information. Contracting Authorities might also consider publishing information on forthcoming contract awards not covered by the Regulations as part of their buyer profile on the Internet.

c) Portal websites specifically created for contract advertisements have a higher visibility and can offer increased search options. In this respect, the setting-up of a specific platform for low value contracts with a directory for contract notices with subscription for e-mail constitutes a best practice, making full use of the Internet's possibilities in order to increase transparency and efficiency. It is however important to note that Grant Recipients would still be advised to carry out some kind of sub selection from these portal websites which must be done in an open and transparent way.

10.20.2 Contracts finder

It is recommended that Contracting Authorities register on Contracts Finder, http://www.contractsfinder.businesslink.gov.uk and/or Compete for in London http://www.competefor.com and publish opportunities on this site. Contracting Authorities can also sponsor suppliers enabling them to post sub-contracting opportunities on the service. Any open procurement opportunity above £10k can be advertised on the site.

10.20.3 Local means of publication

Contracting Authorities may still use local means of publication such as local newspapers, municipal announcement journals or even notice boards. However, such means ensure only strictly local publication, which might be adequate in special cases, such as very small contracts for which there is only a local market.

http://www.contractsfinder.businesslink.gov.uk/

http://www.competefor.com/


10.20.4 Official Journal of the European Union/TED (Tenders Electronic Daily)

Publication in the Official Journal is not mandatory for Sub-OJEU procurements but could be an option, particularly for larger, significant contracts which do not quite reach the OJEU threshold. Grant Recipients are advised that if they chose to follow this route it must be followed correctly otherwise financial corrections may be imposed.

10.20.5 Include enough detail for potential suppliers

The advert should include enough detail to allow potential providers to consider whether they have an interest in meeting the Contracting Authority's needs. In addition, if the Contracting Authority intends to adopt any short-listing process in relation to expressions of interest it receives, the advert should set out details of this process.

10.21 Running the procurement: applying the Treaty Principles

Structuring an "unregulated" procurement

10.21.1 All those who respond to an advert must be treated fairly and impartially (Telaustria). The Commission has set out key principles to ensure that the appointment process is fair and impartial:

a) The subject matter of the contract should be set out in a non-discriminatory manner. This includes using general descriptions of the performance or functions of products, rather than specific requirements relating to specific makes or sources.

b) Service delivery should allow equal access to operators from all member states. In particular, avoid direct or indirect restrictions, such as requirements based on local establishment.

c) There should be mutual recognition of diplomas, certifications and other evidence of formal qualifications.

d) Any time limits should be appropriate and long enough to allow for a meaningful assessment of the need and the preparation of a bid.

e) A contracting authority should use transparent and objective criteria.

f) Where negotiation is involved, ensure that all bidders have access to the same information and that no one bidder receives favoured treatment.

10.22 Shortlisting bidders


10.22.1 Any mechanism for selecting a shortlist must be transparent and non-discriminatory. This requires that the shortlisting process be outlined in the advert. The Commission has stated that it may be appropriate to consider the following objective factors:

a) The experience of the applicants in the sector concerned.

b) The size and infrastructure of the applicants’ business.

c) The technical and professional ability of the applicant.

10.22.2 Where shortlisting does take place there should be enough shortlisted providers to ensure adequate competition.

10.22.3 The Commission also accepts that a Contracting Authority may put a qualification process in place. This system would provide a short-list of potential suppliers who can either subsequently compete for contract opportunities without further advertising, or be awarded contracts on a rotating (or other non-discriminatory) basis. However, this approach may only be used where the list of qualified operators is compiled following a sufficiently advertised, transparent and open procedure. Such an approach is replicated in the formal procurement regime by the ability to set up framework agreements.

10.23 Fulfilling the requirement to obtain value for money

A Contracting Authority will also always need to consider its own policies or standing orders and the extent to which it is subject to any requirement to obtain value for money when structuring any procurement. These may require that a competition is run in a certain way.


11 TABLE OF RECOMMENDED ACTION - SUB-OJEU

11.1 In order to ensure that the requirements within the Communication are followed we have developed the table below (as a guide only) which sets out what action is recommended to be taken for Sub-OJEU procurements. Note that this issue must be considered at the outset of a procurement, and an audit trail of that process must be retained.

Estimated Value of Goods or Services

Action Required

£20,000 and below Sufficient degree of advertising is required but is not likely to affect Common Market (see section 10.11 – 10.19 on Very Low Value Contracts). Grant Recipients to consider using their own website or a portal such as ‘contracts finder’.

£20,001 to OJEU threshold The level of advertising must be sufficient to allow for competition, potentially from another member state; even if the organisation feels that the contract award might not be of interest to suppliers located in other Member States (depending on other factors e.g. geographical location) it is still advisable to consider advertising on their own website or a portal such as ‘contracts finder’. If this is not done, the reason why it is felt that there is no risk of breaching the Principles should be recorded. Formal invitation to tender process is advised and it is suggested that the is requirement advertised in the press and/or on the internet for a minimum of 10 days to enable fair competition.

Over OJEU threshold Goods/Part A Services Full advertisement in OJEU of a fully-compliant open/negotiated or other regulated process


Part B Services – the lighter-touch regime specified in the Regulations

Value of Works

Action Required

£429,999 and below Sufficient degree of advertising; although it might be considered unlikely to affect the Common Market, consider using their own website or a portal such as ‘contracts finder’. If not, record why it is felt that there is no risk of breaching the Principles.

£430,000 and above The level of advertising must be sufficient to allow for competition, potentially from another member state; even if the organisation feels that the contract award might not be of interest to suppliers located in other Member States (depending on other factors e.g. geographical location) it is still advisable to consider advertising on their own website or a portal such as ‘contracts finder’. If this is not done, the reason why it is felt that there is no risk of breaching the Principles should be recorded. Formal invitation to tender process is advised and it is suggested that the is requirement advertised in the press and/or on the internet for a minimum of 10 days to enable fair competition.

Over OJEU threshold Full advertisement in OJEU of a fully-compliant open/negotiated or other regulated process

12 PROCUREMENT PROCEDURES

12.1 Open Procedure

This procedure provides the broadest scope for competition as anyone can tender, but risks a large number of tenders and can incur high management


costs. This process will normally take a minimum of 52 days, not including a mandatory 10 day period for appeal once the standstill notice is issued. Where an effective degree of pre-market engagement has occurred, this can be a good way of finding new entrants to the market, and Cabinet Office prefers contracting authorities to approach new procurement this way.

12.2 Restricted Procedure

The most commonly used, although its tendency to restrict the market to already-established players, and the lengths of each stage have been criticised. This is a two tier process. Potential delivery organisations are selected using a pre qualification questionnaire (‘PQQ’) following publication of the contract requirements in OJEU inviting expressions of interest. A minimum of five short-listed organisations are then selected to submit a full tender from which the winning tender is selected. The requirement is to allow 37 days for the first stage and 40 days for the second with a 10 day standstill period before the contract is awarded.

12.3 Competitive Dialogue

This is a relatively new procedure for complex contracts, such as design and build, where the best solution is not pre-known. Following the OJEU notice and pre qualification stage, dialogue is permitted with potential bidders to develop options before competitive tenders are invited. Work can continue to refine the proposal with the preferred bidder to a point at which contract is awarded.

12.4 Negotiated Procedure

12.4.1 Features: –

a) All interested parties may express an interest in tendering and the Contracting Authority will select potential bidders with whom to negotiate the terms of the contract.

b) A minimum of three suppliers must be invited to negotiate (unless fewer candidates (at least two) have met the selection criteria and these are sufficient to ensure genuine competition).

12.4.2 When to use

The Regulations state that the negotiated procedure may only be used where:

a) another procedure has failed to produce any acceptable tenders;

b) exceptionally where prior overall pricing is not possible;


c) in the case of services, where specifications cannot be established with sufficient precision; or

d) for certain research and development related works contracts.

12.4.3 However, the Office of Government Commerce (OGC) (now the ‘Efficiency and Reform Group’) issued guidance7 that other than in circumstances where an OJEU notice is not required, the negotiated procedure should only be used in very rare circumstances where there is clear reasoning why the competitive dialogue procedure is not appropriate. In reality, this policy means that the negotiated procedure should no longer be used by a Contracting Authority if it is required to publish an OJEU notice.

12.4.4 Non compliance with advertising requirements is a common error. The time limits for open, restricted, competitive dialogue and negotiated procedures all run from the date of notification of the contract in the OJEU.

12.4.5 Dependent upon the type of procurement procedure prescribed time limits from advert to award apply and these can be found in the Regulations. For planning purposes projects will need to consider these timescales. Other considerations such as failing to meet N + 2 targets are not an acceptable reason for circumventing the timescales.

7 https://www.gov.uk/.../uploads/.../introduction-public-procurement.pdf


13 PROCUREMENT PROCEDURE TIME LIMITS

Procedure Minimum time limits Days

Open Minimum time for receipt of tenders from date Contract Notice sent

52

Restricted Minimum time for receipt of requests to tender (PQQ response) from the date Contract Notice sent

37

Minimum time for receipt of tenders from the date invitation to tender sent

40

Accelerated restricted (if urgent)

Minimum time for receipt of requests to tender from the date Contract Notice sent

15

Minimum time for receipt of tenders from the date invitation to tender sent

10

Competitive dialogue and negotiated

Minimum time for receipt of requests to participate in dialogue or negotiate from the date Contract Notice sent

37

Accelerated negotiated (if urgent)

Minimum time for receipt of requests to negotiate from the date contract notice sent

15


13.1 The minimum time limits set out in the table above may be reduced by seven days (five days for accelerated restricted procedure) where the notices are transmitted electronically (in accordance with the requirements in the Regulations) by five days where the Contracting Authority offers full access by electronic means to the contract documents from the date of the Contract Notice and provided the Contract Notice specifies the internet address at which the documents are available.

13.2 The Cabinet Office published a Procurement Policy Note (19th December 2011) confirming that the relaxation of the use of the accelerated restricted procedure, which the European Commission introduced in 2009 as an emergency measure during the financial crisis, has been withdrawn. For procurements where a contract notice is published on or after 1 January 2012, the accelerated restricted procedure will only be available where urgency renders impracticable the normal time limits for the restricted procedure.

13.3 A summary flow-chart on the various procedures and timescales can be found below:


14 CONTRACT AWARD

Following the selection and award process, a Contracting Authority must inform anyone who submitted an offer of its decision to award the contract by notice in writing. It must then allow 10 days (“the standstill period”) before it awards the contract to allow time for any bidder who is dissatisfied with the bidding process to take action (see the 2006 Regulations as amended by the Public Contracts (Amendment) Regulations 2009). A contract award notice must be published in the OJEU within 48 days of the contract award.

15 FRAMEWORK AGREEMENTS

15.1 Frameworks can be used for repeat but irregular purchases for example stationery supplies, legal services, building repairs. Generally, they are of no more than four years’ duration. There are four main types: single-supplier, multi-supplier, single user, multi-user. Suppliers who are permitted to provide to a closed list or class of purchasers are selected in the normal way under an open or restricted procedure.

15.2 Subsequent call-off contracts may be the subject of a mini-competition between a number of suppliers on the framework to one particular purchaser. The same selection and award criteria used when setting up the framework agreement should be used when calling off supplies from this agreement. Provided the agreement is compliant with these requirements, pre-existing framework agreements may be used to select suppliers to the project.

15.3 Grant Recipients who intend on using a framework (as a partner authority) that has been set up by another Contracting Authority are strongly advised to carry out and document the necessary due diligence and checks to ensure that the framework that they intend on using has been procured correctly and that they are eligible to use the framework. Grant Recipients are encouraged to check:

that they are within the class contemplated when the framework was established

the framework agreement has been properly established and it is used in the way it was set up to be used (see further details below)

15.4 Where a Grant Recipient utilises an existing framework that has been procured and set up by another Contracting Authority, the procurement of this framework may be fully checked and audited and if it is deemed to be incorrectly procured or utilised then financial corrections may apply.

Procurement risks arising from all multi-purchaser contracts


15.5 Both the original authority and the partner authorities could be challenged if the procurement process for the original contract is flawed. The following matters should be considered at the outset:

The OJEU notice must identify the partner authority (either by name or category) as an actual or potential purchaser under the contract.

The description of the goods, services or works in the OJEU notice and eventual contract must include the partner authorities' requirements. Any substantial amendments to the contract after it is advertised may trigger a claim that a new procurement process was required.

The value of the contract (as stated in the OJEU notice) must provide for the partner authorities' potential spend.

The contract should set out the means by which the partner authorities will purchase through or use the contract (i.e. mini competitions are held if this was an original requirement).

16 SELECTION AND AWARD CRITERIA

16.1 There are two distinct types of evaluation criteria that are governed by different rules and objectives and these must each be demonstrated for a compliant procurement. In simple terms, selection criteria aims to establish "can they do it?" and award criteria "how will they do it?" and public bodies must make a distinction between the two separate criteria. OGC (now the ‘Efficiency and Reform Group’) issued some guidance on this point8.

16.2 Selection Criteria

16.2.1 Selection Criteria must assess the ability of the tenderers to perform a contract according to economic, financial capability, technical and/or professional ability (for example experience, qualifications). The selection criteria, sub-criteria and any weighting used must be proportionate to the requirement in question and must be publicised in an OJEU notice or in the Pre-Qualification Questionnaire (PQQ)/tender documents (depending on the procedure adopted).

16.2.2 The aspects which can be evaluated as selection criteria are set out in Regulations 23 to 26:

23. Criteria for the rejection of economic operators 24. Information as to economic financial standing 25. Information as to technical or professional ability 26. Supplementary information

8


16.2.3 The Regulations require a minimum number of candidates to be short-listed under the Restricted process and under the Competitive Dialogue process.

16.3 Award Criteria

16.4 Award criteria are set in order to award the contract on the basis of either the most economically advantageous tender (MEAT) (for example balancing factors such as quality, price, delivery timeframe) or the lowest price. The criteria, sub-criteria and weightings must be disclosed in the OJEU notice or in the invitation to tender documents. The award criteria must be objective and must relate to the subject matter of the contract and be proportionate and transparent.

16.5 Award criteria must be made against Regulations 30 to 32:

30. Criteria for the award of a public contract 31. Contract award notice 32. Information about contract award procedures

17 RECORD KEEPING

17.1 During Project Engagement Visits (PEVs), Article 13 Project Progress and Verification Visits and other audits, procurement processes will be reviewed and Grant Recipients will need to demonstrate satisfactory documentary evidence of a compliant procurement process. This documentation, as a minimum, must include:

a) Explanation of procurement procedure selected with justification b) Copy of OJEU notice or relevant advertisement and OJEU Prior

Information Notice (PIN) if applicable (including for Framework Agreements)

c) PQQ including the associated selection criteria (where used) and log of responses received

d) Copy of tender specification with clear award criteria e) Log sheet for all tenders received (time and date) f) Copy of all tenders g) Copy of tender score sheets dated and signed by two people h) PQQ assessment scores i) Copy of OJEU award notice j) Copy of report on evaluation of tenders k) Copy of correspondence, including interview questions where

appropriate l) Copy of letters to unsuccessful tenderers giving an appropriate

standstill period (where appropriate) m) Copy of award letter /signed contract n) Copy of notes from inception meeting


o) Summary record of the above process to assist with future monitoring and audits.

17.2 Where a framework that has been procured or set up by another contracting authority has been utilised by the Grant Recipient, the Grant Recipient must be able to provide documentary evidence to show the details outlined in section 15.

17.3 Records must be maintained for verification until at least the end of 2025. Grant Recipients must ensure that delivery partners and sub-contractors also retain such documentary evidence.

18 MOST COMMON ERRORS

18.1 Under procurement law, there are certain procedures that must be followed by Contracting Authorities when tendering and awarding contracts. If these procedures are not followed then there is a risk that the contract award can be legally challenged by third parties which can result in the aggrieved party seeking an interim injunction suspending the tender process or the implementation of any decision or action by the awarding body. The court can also declare the award of a contract “ineffective” if any aspect of the procurement process has been breached. In addition, the challenger can claim damages for any loss or damage it may have suffered as a result of the breach.

18.2 The risks of facing the consequences of failure to comply with procurement law can be more immediate under the ERDF regime than otherwise because of the intense scrutiny of the use of funds by the Managing Authority, the Internal Audit Services, the European Commission audit services and the European Court of Auditors. Errors or failures in procurement procedures carry the consequence of correction (leading to grant money being clawed back from the Grant Recipient). Financial corrections are enforced in accordance with established guidelines which range from 2% to 100%, Failures in cross-border advertising are particularly severely dealt with by the Commission, and can carry up to a 100% correction.

18.3 Grant Recipients should not rely on their existing organisational policies to ensure compliance with the EC requirements as they are often not tailored towards ERDF specific issues which auditors will look at.

18.4 Examples of some of the most common errors made in procurement include but are not limited to:

a) Contracts awarded without publication in OJEU (or another suitable

means of advertising); b) Amendments to contracts for additional works or services without

appropriate consideration of whether an extension/addition is


permissible under the original contract and whether or not a new competition should be held9;

c) The advert or OJEU Contract Notice does not mention all selection and award criteria;

d) The contract notice has insufficient detail; e) Selection process does not adhere to the published selection criteria; f) Confusion between selection and award criteria (with criteria being

mixed and/or applied at incorrect stages in the procurement); g) Failure to publish a Contract Award Notice in OJEU; h) Contracts artificially split in order to fall below threshold levels; i) Minimal or no evidence of audit trail relating to the evaluation/selection

and award process; j) Failure to advertise to a ‘sufficient degree’, even in sub-OJEU

procurements, in accordance with the Commission’s Interpretative Communication;

k) Inconsistency between selection process when portal websites have been used alongside direct approaches to organisations.

18.5 In light of the nature of the procurement process, it is highly unlikely that a Grant Recipient can go back and rectify a breach of the procurement rules where it has not complied with the defined procedures. It is therefore imperative that adequate aforethought is given to the procurement route and process and if Grant Recipients are in any doubt, they are strongly urged to seek independent specialist legal advice at the outset.

19 FINANCIAL CORRECTIONS ABOVE OJEU

19.1 Under the general law (aside from ERDF rules) if the Directives are not observed a contract may be prevented from being awarded and/or damages may be awarded by a Court. In the case of ERDF any audit bodies will look very closely at all of the procurements during their visits. Breach of procurement requirements is the most common reason for repayment of grant and the procedures must be carefully followed and monitored throughout the project. The irregularities are often inadvertent mistakes. Unfortunately, the liability for mistakes is strict. This note is intended to help the Grant Recipient to become aware of the steps it must take and the need to seek help from its own advisors in order to ensure it is not subject to a financial correction.

19.2 The table below10 illustrates the corrections which can be imposed as a result of procurement breaches.

9 Note in particular the effect of the decision in Case C-454/06 - pressetext

Nachrichtenagentur GmbH 10

Taken from Commission Decision C(2013) 9527 of 19 December 2013


Contract notice and tender specifications

Type of irregularity Applicable law / reference

document

Description of the irregularity Rate of correction

1 Lack of publication of contract notice

Articles 35 and 58 of Directive 2004/18/EC Article 42 of Directive 2004/17/EC Section 2.1 of the Commission interpretative communication n° 2006/C 179/02

The contract notice was not published in accordance with the relevant rules (e.g. publication in the Official Journal of the European Union (OJEU) where this is required by the Directives ix).

100% 25% if publication of a contract notice(s) is required by the Directives and the contract notice(s) was(not published in the OJEU but it was published in a way that ensures that an undertaking located in another Member State has access to appropriate information regarding the public procurement before it is awarded, so that it would be in a position to submit a tender or express its interest to participate in obtaining that contract. In practice, this means that either the contract notice was published at national level (following the national legislation or rules in that regard) or the basic standards for the publication of contract notice was



document


respected. For more details on these standards, see section 2.1 of the Commission interpretative communication n° 2006/C 179/02.

2. Artificial splitting of works/services/supplies contracts.

Article 9(3) of Directive 2004/18/EC


A works project or proposed purchase of a certain quantity of supplies and/or services is subdivided resulting in its coming outside the scope of the Directives, i.e., preventing its publication in OJEU for the whole set of works, services or supplies at stake.

100% 25% if publication of a contract notice is required by the Directives and the contract notice was not published in the OJEU but it was published in a way that ensures that an undertaking located in another Member State has access to appropriate information regarding the public procurement before it is awarded, so that it would be in a position to submit a tender or express its interest to participate in obtaining that contract. In practice, this means that either the contract notice was published at national level (following the national legislation or rules in that regard) or the basic standards for the publication of



document


contract notice was respected. For more details on these standards, see section 2.1 of the Commission interpretative communication n° 2006/C 179/02.

3. Non-compliance with - time limits for receipt of tenders; or

- time limits for receipt of requests

to participate ⅹ.

Article 38 of Directive 2004/18/EC


The time limits for receipt of tenders (or receipt of requests to participate) were lower than the time limits in the Directives.

25% if reduction in time limits >= 50% 10% if reduction in time limits >= 30% 5% if any other reduction in time limits (this correction rate may be reduced to between 2% and 5%, where the nature and gravity of the deficiency is not considered to justify a 5% correction rate).

4 Insufficient time for potential tenderers/candidates to obtain

tender documentation



Time for potential tenderers/candidates to obtain tender documentation is too short, thus creating an unjustified obstacle to the opening up of public procurement to competition.

25% if the time that potential tenderers/candidates have to obtain tender documentation is less than 50% of time limits for receipt of tenders (in line with relevant provisions). 10% if the time that potential



document


Corrections are applied on a case by case basis. In determining the level of the correction, account will be taken of possible mitigating factors related to the specificity and complexity of the contract, in particular a possible administrative burden or difficulties in providing the tender documentation.

tenderers/candidates have to obtain tender documentation is less than 60% of time limits for receipt of tenders (in line with relevant provisions). 5% if the time that potential tenderers/candidates have to obtain tender documentation is less than 80% of time limits for receipt of tenders (in line with relevant provisions).

5. Lack of publication of - extended time limits for receipt of tenders; or - extended time limits for

receipt of requests to participate xi

Article 2 and Article 38(7) of Directive 2004/18/EC

Articles 10 and 45(9) of Directive 2004/17/EC

The time limits for receipt of tenders (or receipt of requests to participate) were extended without publication in accordance with the relevant rules (i.e., publication in the OJEU if the public procurement is covered by the Directives).

10% The correction can be decreased to 5% depending on the seriousness of the irregularity.

6. Cases not justifying the use of the negotiated procedure with

Article 30(1) of Directive Contracting authority awards a public contract by negotiated

25%



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prior publication of a contract notice.

2004/18/EC procedure, after publication of a contract notice, but such procedure is not justified by the relevant provisions.

The correction can be reduced to 10% or 5% depending on the seriousness of the irregularity.

7. For the award of contracts in the field of defence and security falling under directive 2009/81/EC specifically, inadequate justification for the

lack of publication of a contract notice

Directive 2009/81/EC Contracting authority awards a public contract in the area of defence and security by means of a competitive dialogue or negotiated procedure without publication of a contract notice whereas the circumstances do not justify the use of such a procedure.

100%. The correction can be decreased to 25%, 10% or 5% depending on the seriousness of the irregularity.

8. Failure to state: - the selection criteria in the contract notice; and/or - the award criteria (and their weighting) in the contract notice

or in the tender specifications.

Articles 36, 44, 45 to 50 and 53 of Directive 2004/18/EC and Annexes VII-A (public contract notices: points 17 and 23) and VII-B (public works concessions notices: point 5) thereof. Articles 42, 54 and 55 and

Annex XIII of Directive

The contract notice does not set out the selection criteria. And/or When neither the contract notice nor the tender specifications describe in sufficient detail the award criteria as well as their weighting.

25% The correction can be decreased to 10% or 5% if the selection/award criteria were stated in the contract notice (or in the tender specifications, as regards award criteria) but with insufficient detail.



document


2004/17/EC

9. Unlawful and/or discriminatory selection and/or award criteria laid down in the contract notice

or tender documents

Articles 45 to 50 and 53 of Directive 2004/18/EC

Articles 54 and 55 of Directive 2004/17/EC

Cases in which operators have been deterred from bidding because of unlawful selection and/or award criteria laid down in the contract notice or tender documents. For example:

obligation to already have an establishment or representative in the country or region;

tenderers’ possession of experience in the country or region.

25% The correction can be decreased to 10% or 5% depending on the seriousness of the irregularity.

10 Selection criteria not related and

proportionate to the subject matter of the contract

Article 44 (2) of Directive 2004/18/EC


When it can be demonstrated that the minimum capacity levels of ability for a specific contract are not related and proportionate to the subject matter of the contract, thus not ensuring equal access for tenderers or having the effect of creating unjustified obstacles to the opening up of public




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procurement to competition.

11. Discriminatory technical specifications



Setting technical standards that are too specific, thus not ensuring equal access for tenderers or having the effect of creating unjustified obstacles to the opening up of public procurement to competition.


12. Insufficient definition of the subject-matter of the contract

Article 2 of Directive 2004/18/EC Article 10 of Directive 2004/17/EC Cases C-340/02 (Commission/France) and C- 299/08 (Commission/France)

The description in the contract notice and/or the tender specifications is insufficient for potential tenderers/candidates to determine the subject-matter of the contract.

10% The correction can be decreased to 5% depending on the seriousness of the irregularity. In case the implemented works were not published, the corresponding amount is subject to a correction of 100%

Evaluation of tenders


No Type of irregularity Applicable law / reference document


13. Modification of selection criteria after opening of tenders, resulting in incorrect acceptance of tenderers

Article 2 and Article 44 (1) of Directive 2004/18/EC Article 10 and Article 54(2) of

Directive 2004/17/EC

The selection criteria were modified during the selection phase, resulting in acceptance of tenderers that should not have been accepted if the published selection criteria had been followed.

25%

The correction can be decreased to 10% or 5% depending on the seriousness of the irregularity.

14. Modification of selection criteria after opening of tenders, resulting in incorrect rejection of tenderers

Articles 2 and 44 (1) of Directive 2004/18/EC

Articles 10 and 54(2) of Directive 2004/17/EC

The selection criteria were modified during the selection phase, resulting in rejection of tenderers that should have been accepted if the published selection criteria had been followed.

25%


15. Evaluation of tenderers/candidates using unlawful selection or award criteria



During the evaluation of tenderers/candidates, the selection criteria were used as award criteria, or the award criteria (or respective sub-criteria or weightings) stated in the contract notice or tender specifications were not followed, resulting in the application of unlawful selection or award criteria.

25%





Example: Sub-criteria used for the award of the contract are not related to the award criteria in the contract notice/tender specifications.

16. Lack of transparency and/or equal treatment during evaluation

Articles 2 and 43 of Directive 2004/18/EC

Articles 10 of Directive 2004/17/EC

The audit trail concerning in particular the scoring given to each bid is unclear/unjustified/lacks transparency or is non-existent. and/or

The evaluation report does not exist or does not contain all the elements required by the relevant provisions.

25%


17. Modification of a tender during evaluation



The contracting authority allows a tenderer/candidate to modify its tender during evaluation of offers

25%





18. Negotiation during the award procedure

Article 2 of Directive 2004/18/EC Article 10 of Directive

2004/17/EC

In the context of an open or restricted procedure, the contracting authority negotiates with the bidders during the evaluation stage, leading to a substantial modification of the initial conditions set out in the contract notice or tender specifications.

25%


19. Negotiated procedure with prior publication of a contract notice with substantial modification of the conditions set out in the contract notice or tender specifications xii

Article 30 of Directive

2004/18/EC

In the context of a negotiation procedure with prior publication of a contract notice, the initial conditions of the contract were substantially altered, thus justifying the publication of a new tender.

25%


20. Rejection of abnormally low tenders

Article 55 of Directive

2004/18/EC

Tenders appear to be abnormally low in relation to the

goods, works or services but the contracting authority, before rejecting those tenders, does not request in writing details of the constituent elements of the tender which it considers relevant.

25%




21. Conflict of interest Article 2 of Directive 2004/18/EC Article 10 of Directive

2004/17/EC

When a conflict of interest has been established by a competent judicial or administrative body, either from the part of the beneficiary of the contribution paid by the Union or the contracting authority.

100%

Contract implementation



22. Substantial modification of the contract elements set out in the contract notice or tender specifications xiii


2004/17/EC Case

Case C-496/99 P,CAS Succhi di Frutta SpA [2004] ECR I-3801 paragraghs 116 and 118

Case C-340/02,

The essential elements of the award of the contract include but are not limited to price xiv, nature of the works, the Completion period, the terms of payment, and the materials used. It is always necessary to make an analysis on a case by-case basis of what is an essential element.

25% of the amount of the contract plus

the value of the additional amount of the contract resulting from the substantial modification of the contract elements.




Commission v. France [2004] ECR I-9845

Case C-91/08, Wall AG, [2010] ECR I-2815

23. Reduction in the scope of the contract


2004/17/EC

The contract was awarded in compliance with the Directives, but was followed by a reduction in the scope of the contract.

Value of the reduction in the scope Plus

25% of the value of the final scope (only when the reduction in the scope of the contract is substantial).

24. Award of additional works/services/supplies contracts (if such award constitutes a substantial modification of the original terms of the contract xv) without competition in the absence of one of the following conditions - extreme urgency brought about by unforeseeable events;

Point 1(c) and point 4(a) of Article 31 of Directive

2004/18/EC

The main contract was awarded in accordance with the relevant provisions, but was followed by one or more additional works/services/supplies contracts (whether or not formalised in writing) awarded without complying with the provisions of the Directives, i.e., the provisions related to the negotiated procedures without publication for reasons of extreme urgency

100% of the value of the supplementary contracts. Where the total of additional works/services/supplies contracts (whether or not formalised in writing) awarded without complying with the provisions of the Directives does not exceed the thresholds of the Directives and 50% of the value of the original contract, the correction may be reduced to 25%.




- an unforeseen circumstance xvi for

Complementary works, services, supplies.

brought about by unforeseeable events or for award of Complementary supplies, works and services.

25. Additional works or services exceeding the limit laid down in the relevant provisions

Last subparagraph of §4(a) of Article 31 of Directive

2004/18/EC

The main contract was awarded in accordance with the provisions of the Directives, but was followed by one or more supplementary contracts exceeding the value of the original contract by more than 50% xvii

100% of the amount exceeding 50% of the value of the original contract.

ENDNOTES: i Public contracts below the thresholds for application of the Directives and public contracts for services listed in Annex I B to Directive 92/50/EEC, Annex XVI B to Directive 93/38/EEC, Annex II B to Directive 2004/18/EC and Annex XVII B to Directive 2004/17/EC. ii In the context of the Structural Funds and Cohesion Fund, the following is noted. The “Guidance document on management verifications to be carried out by Member States on operations co-financed by the Structural Funds and the Cohesion Fund for the 2007 – 2013 programming period” (COCOF note 08/0020/04 of 5 June 2008), sets out the Commission’s view on how the management verifications should be


organised in order to prevent and detect irregularities in the area of public procurement. As stated in this document, “verifications should be carried out as soon as possible after the particular process has occurred as it is often difficult to take corrective action at a later date”. The Member State has the obligation to ensure that operations are selected for funding in accordance with applicable EU and national rules (Articles 60(a)-(b) and 61(b)ii of Council Regulation (EC) No 1083/2006), including those related to public procurement: a) When the national ex-ante control detects that the tender procedure used for a public contract is in breach of public procurement rules and this contract has not been signed yet, the managing authority should recommend the beneficiary to launch a new tender procedure in full compliance with the mentioned rules if the launching of a new tender does not entail significant additional costs. In case no new tender is launched, the managing authority shall correct the irregularity, by applying these guidelines or stricter rules defined at national level. b) If an irregularity is detected after the contract has been signed and the operation has been approved for funding (at any stage of the project's cycle), the managing authority shall correct the irregularity, by applying these guidelines or stricter rules defined at national level. iii Depending on the date when the contract procedure was launched, the following Directives are relevant: 86/665/EEC, 92/50/EEC, 93/36/EEC, 93/37/EEC, 93/38/EEC, 92/13/EEC, 2001/78/EC, 2004/17/EC, 2004/18/EC. This is only an indicative list. iv For the period 2000-2006, the “Guidelines on the principles, criteria and indicative scales to be applied by the Commission departments in determining financial corrections under Article 39(3) of Regulation (EC) No 1260/1999” were adopted by Commission Decision C/2001/476. A similar document was adopted for the Cohesion Fund (see Commission Decision C/2002/2871). v Cases C-324/98 Telaustria [2000] ECR I-10745, paragraph 62, C-231/03 Coname, [2005] ECR I-7287, paragraphs 16 to 19 and C-458/03 Parking Brixen, [2005] ECR I-8585, paragraph 49. vi The concept of “sufficient degree of advertising” implies, in particular, the following considerations: a) The principles of equal treatment and non-discrimination imply an obligation of transparency, which consists in ensuring, for the benefit of any potential bidder, a


degree of advertising sufficient to enable the contract to be subject to competition. The obligation of transparency requires that an undertaking located in another Member State can have access to appropriate information regarding the contract before it is awarded, so that, if it so wishes, it would be in a position to express its interest in obtaining the contract. b) For individual cases where, because of particular circumstances such as a very modest economic interest at stake, a contract award would be of no interest to economic operators located in other Member States. In such a case the effects on the fundamental freedoms are to be regarded as too uncertain and indirect to warrant the application of standards derived from primary Community law and consequently there is no ground for application of financial corrections. It is the responsibility of the individual contracting entities to decide whether an intended contract award might potentially be of interest to economic operators located in other Member States. In the view of the Commission, this decision has to be based on an evaluation of the individual circumstances of the case, such as the subject-matter of the contract, its estimated value, the specifics of the sector concerned (size and structure of the market, commercial practices, etc.) and the geographic location of the place of performance. vii See the judgment in Case C-507/03, Commission v. Ireland, [2007] ECR I-9777, paragraph 32. viii Case T-384/10, Spain/Commission (GIASA), OJ C 225, 3.8.2013, p. 63–63. ix For contracts not (or not fully) subject to the Directives, there is a need to determine the existence of a certain cross-border interest or a breach of national legislation on public procurement. On this matter, see section 1.2.2 of the present guidelines. If there is cross-border interest or a breach of national law, there is a need to determine what level of publicity should have been applied in that case. In this context, as stated in section 2.1.1 of the Commission interpretative communication n° 2006/C 179/02, the obligation of transparency requires that an undertaking located in another Member State has access to appropriate information regarding the contract before it is awarded, so that, if it so wishes, it would be in a position to submit a tender or to express its interest in obtaining that contract. In practice, this implies that either the contract notice was published at national level (following the national legislation or rules in that regard) or the basic standards for the advertising of contracts were respected. See more details on these standards on section 2.1 of the mentioned Commission interpretative communication. x These time limits are applicable to restricted procedures and negotiated procedures with publication of a contract notice.


xi These time limits are applicable to restricted procedures and negotiated procedures with publication of a contract notice. xii A limited degree of flexibility can be applied to the modifications of a contract after its award even where such possibility as well as for the relevant detailed rules for implementation are not provided for in a clear and precise manner in the tender notice or in the tender documents (see point 118 of ECJ Case C-496/99, Succhi di frutta). When this possibility is not foreseen in the tender documentation, contract modifications are admitted if they are not substantial. A modification is considered substantial if: (a) the contracting authority introduces conditions, which, had they been part of the initial tender procedure, would have allowed for the admission of tenderers other than those initially admitted; (b) the modification allows award of a tender to a tenderer other than the one initially accepted; (c) the contracting authority extends the scope of the contract to encompass works/services/supplies not initially covered; (d) the modification changes the economic balance in favour of the contractor in a manner not provided for in the initial contract. xiii See endnote xii above. xiv For the moment the only modification of the initial price not considered as substantial by the Court concerns the reduction of the price by 1,47 and 2,94% (see points 61 and 62 of the Case C-454/06, Pressetext). In cases T-540/10 and T-235/11, the General Court has accepted financial corrections for modifications of less than 2% of the initial price. xv See endnote xii above. xvi The concept of "unforeseen circumstances" should be interpreted having regard to what a diligent contracting authority should have foreseen (e.g. new requirements resulting from the adoption of new EU or national legislation or technical conditions, which could not have been foreseen despite technical investigations underlying the design, and carried out according to the state of the art). Additional works/services/supplies caused by insufficient preparation of the tender/project cannot be considered "unforeseen circumstances" See cases T-540/10 and T-235/11 (referred to above) xvii There is no limit in the case of Directive 2004/17/EC. For the calculation of the 50% threshold, contracting authorities shall take into account the additional works/services. The value of these additional works/services cannot be compensated by the value of the cancelled works/services. The amount of cancelled works/services has no impact on the calculation of 50% threshold.


20 FINANCIAL CORRECTIONS SUB-OJEU

Issue Description Correction

Non-compliance with the requirement of an adequate degree of advertising and transparency

Contract awarded without adequate competitive tendering, involving non compliance with the principle of transparency.

25% of the value of the contract. This amount may be reduced to 10% or 5% depending on seriousness.

Attribution of contracts without competition in the absence of extreme urgency brought about by unforeseeable events or for complementary works and services brought about unforeseen circumstance

The main contract was awarded after adequate competitive tendering, but was followed by one or more supplementary contracts (whether or not formalised in writing) awarded without adequate competition in the absence of reasons of extreme urgency brought about by unforeseeable events or (for contracts of works and services) in the absence of unforeseen circumstances justifying them.

25% of the value of the contract(s) attributed without adequate competition.

Application of unlawful selection and/or contract award criteria

Application of unlawful criteria which deter certain bidders on account of unlawful restrictions laid down in the tender procedure (for example, the obligation to have an establishment or representative in the country or region or the setting of technical standards that are too specific and favour a single operator).

10% of the value of the contract. This amount may be reduced to 5% depending on seriousness.

Breach of the principle of equal treatment Contracts awarded in accordance with the rules on advertising but where the

10% of the value of the contract. This amount


contract award procedure breaches the principle of equal treatment of operators (for example, when the contracting authorities have made an arbitrary choice of candidates with whom they negotiate or if they give preferential treatment to one of the candidates invited to negotiate).

may be reduced to 5% depending on seriousness.


21 OTHER CONSEQUENCES (REMEDIES DIRECTIVE)

21.1 The adoption in December 2007 of a Directive (2007/66/EC) on improving the effectiveness of review procedures concerning the award of public contracts which amended Directives (89/665/EC and 92/13/EEC) (the Remedies Directive) has led to a strengthening of available remedies for breach of the public procurement rules. The Remedies Directive was implemented in England and Wales by the Public Contracts (Amendments) Regulations 2009 (SI 2009/2992) (2009 Regulations).The 2009 Regulations amend the Public Contracts Regulations 2006 (SI 2006/5) (2006 Regulations) and apply to any contract award procedures commenced on or after 20 December 2009 (Regulation 11, 2009 Regulations).

21.2 The rules were further updated on 1 October 2011, when the Public Procurement (Miscellaneous Amendments) Regulations 2011 (SI 2011/2053) (2011 Regulations) came into force.

21.3 Equivalent remedies are available under the Utilities Contracts Regulations 2006 (SI 2006/6) as amended by the Utilities Contracts (Amendment) Regulations 2009 (SI 2009/3100) and the 2011 Regulations.

21.4 There are a number of pre and post contract remedies available such as:

21.5 Standstill

21.6 Before the contract has been entered into with the successful bidder, the remedies available to claimants include:

a) An order setting aside a decision (for example, to award the contract).

b) An order requiring the Contracting Authority to amend a document (for

example, requiring a tender document to be reissued).


21.7 Automatic suspension

21.8 A key element of the 2009 Regulations was the introduction of an automatic suspension of the tender process once proceedings are issued and served on the Contracting Authority. This means that an application for injunctive relief to prevent the contract being entered into is no longer needed. The 2011 Regulations removed the requirement to serve proceedings with the effect that (where the date of knowledge is on or after 1 October 2011) the suspension takes effect when proceedings are issued and the contracting authority is aware that proceedings have been issued (Regulation 14, 2011 Regulations).

21.9 That suspension remains in force until the court brings it to an end by an interim order under Regulation 47H or the proceedings are determined, discontinued or otherwise disposed of (Regulation 47G, 2006 Regulations as amended).

21.10 Part B contracts

Part 9 of the 2006 Regulations (which deals with remedies) does apply to procurements for Part B services (Regulation 5(2)(a), 2006 Regulations). Therefore if a claim is brought under the Regulations in respect of a procurement for Part B services before the contract has been entered into, regulation 47G will apply and the award process will be suspended.

21.11 Ineffectiveness

The most anticipated reform brought about by the 2009 Regulations was the introduction of the new remedy of ineffectiveness, which may be sought once the contract has been entered into (Regulation 47J, 2006 Regulations as amended). This involves a declaration of ineffectiveness by the court, with the effect that prospective obligations under the contract are cancelled.

21.12 Grounds for ineffectiveness

The grounds for ineffectiveness are:

a) Where the contract has been awarded without the prior publication of an OJEU Notice in circumstances where a contract notice was required (illegal direct award).

b) Award of the contract without complying with the rules on standstill or suspension, such that the operator has been deprived of the possibility of starting proceedings (or pursuing them to a proper conclusion) before the contract was entered into, combined with a breach of the public procurement rules which has affected the chances of the claimant operator obtaining the contract.

c) Award of call-off contracts with a value in excess of the applicable

public contract threshold under a framework or dynamic purchasing

system in breach of applicable requirements.


22 SINGLE TENDER ACTION- RARE EXCEPTION(S)

22.1 There are only very rare occasions, in relation to fully regulated contract awards, in which an OJEU notice is not required. A version of these requirements is commonly referred to as a ‘Single Tender Action’.

22.2

22.3 The EC strongly disapprove of unwarranted Single Tender Actions. It should also be noted that in light of its exceptional nature, the Grant Recipient is strongly advised to seek independent legal advice before directly awarding a contract under a Single Tender Action and be wholly satisfied that such a step is compliant with, and adequately justified, under Regulation 14.

22.4 If a Grant Recipient awards a contract under a Single Tender Action then it must inform the Department as soon as reasonably practicable. If the Department, upon receiving such notification, feels that the Principles and/or Regulations have been breached and the Single Tender Action was without merit, then it will apply the appropriate financial corrections.

22.5 The Grant Recipient must also retain a written record setting out the reasons why the single tender procedure was used. This is important because in addition to the need to retain a record for ERDF audit purposes, the EC keeps a close interest in the use of the Regulation 14. The Commission is entitled to ask national authorities for details of how often and for which contracts Regulation 14 has been used (Reg 14(2) and Reg 40(1)(e)).

22.6 When a contract is caught by the Regulations, a contracting authority will normally need to publish an OJEU Notice to advertise the opportunity. However, in certain exceptional circumstances the negotiated procedure may be used without publishing a contract notice further to Regulation 14. The most common of these circumstances are:

a) In the absence of tenders, suitable tenders or applications in response to an invitation to tender by the contracting authority using the open or the restricted procedure provided the terms of the contract offered in the original tender have not been substantially altered.

b) Where, for technical or artistic reasons, or for reasons connected with the protection of exclusive rights, a contract may only be awarded to a particular economic operator (the sole supplier exemption).


c) When in cases of extreme urgency for reasons unforeseeable by, and not attributable to, the contracting authority, the time limits of the prescribed procedures cannot be met.

d) When a contracting authority wants a contractor to carry out additional works or services, further to a tendered project, which have through unforeseen circumstances, become necessary and could not be provided for separately without major inconvenience and which do not exceed 50% of the original contract value.

22.7 In Case C-423/07 - Commission v Kingdom of Spain, the ECJ's decision highlights that this provision will be interpreted strictly and cannot be relied on as a method of circumventing the advertising obligations under public procurement law.


23 Schedule 1 - Key Definitions Accelerated procedure where the relevant timescales for the particular type of procurement process can be shortened, e.g. in certain circumstances where a procurement is "urgent". Audit means an audit/monitoring verification carried out pursuant to Articles 13 and 16 of Regulation 1828 by the Secretary of State in its role as ‘managing authority’ or in its role as ‘audit authority’, or any audit by the European Commission, European Court of Auditors or, where relevant, the National Audit Office. Award criteria means the list of key criteria that is used to assess a supplier’s tender. Call-off Contract means an individual contract awarded under a framework agreement for the provision of particular services, goods or works. Common Market is a single market within the European market in which the free movement of goods, services, capital and persons is ensured and in which European citizens are free to live, work, study and do business. Contract Notice is an award notice for any contract which is entered into as a result of a contract award procedure (open; restricted; negotiated; competitive dialogue) under the Public Contracts Regulations 2006 for which an OJEU notice was published. Each OJEU notice should have a corresponding award notice. In addition, an award notice should be published for the award of Part B services contracts. Contracting Authority is a body that is subject to the procurement Regulations. A list of the relevant organisations is defined and included in Schedule 1 and Regulation 3 of the Public Contracts Regulations 2006 and is amended from time to time. There are also some "catch all" statements covering public bodies not specifically included in the list. Correction or Financial Correction means a financial correction to be applied in the event of a breach of the Regulations and in accordance with Commission Decision C(2013) 9527 of 19 December 2013. Cross-border means movement, activity, relevance or interest across a border between two member states. Department means the Department of Communities and Local Government. EC means the European Commission. ERDF means the European Regional Development Fund.


Framework means an umbrella agreement which establishes the basis on which subsequent requirements for goods, services or works can be met by suppliers appointed to the framework. GDT means local Growth Delivery Team responsible for ERDF in various regions including: Cornwall and the Isles of Scilly, East Midlands, East of England, North East, North West, South East, South West, West Midlands, Yorkshire and the Humber. Grant Recipient means an eligible body in receipt of ERDF funding. ITT means a document which invites contractors and suppliers to bid for the provision of goods, services or works. An ITT is used in the restricted procedure. Managing Authority means the Secretary of State as the ‘managing authority’ for the Operational Programme pursuant to Article 59.1 of Regulation 1083 which means Council Regulation (EC) No 1083/2006 of 11 July 2006, which sets out general provisions about the Structural Funds, as amended. Match Funding means the contribution to an ERDF project to meet the balance of eligible expenditure not supported by the ERDF grant. MEAT means ‘Most Economically Advantageous Tender’ which is one of two systems which are allowed for tender selection (the other being lowest price). MEAT enables tender evaluation on the basis of the quality of the tender offer as well as the price. The quality is scored against a set of award criteria identified for each tender. Mini-Competition a mini competition is held with all those suppliers within a framework agreement who are capable of meeting a particular need when the details of the framework agreement are not sufficient to enable an immediate call-off. Where a procuring party wishes to procure under a framework agreement but the framework has insufficient information to allow the procuring party to confirm which supplier would offer the most economically advantageous tender, then a mini-competition is the method used to select a supplier. N+2 The European Commission sets each programme expenditure targets in euros to meet each year throughout its lifetime. These are known as ‘N+2’ targets. Any amount unspent against this target at the end of each year is decommitted from the programme value and the potential investment is lost locally. OGC stands for the Office of Government Commerce, the former organisation responsible for centralising and enhancing government procurement know how and expertise, now replaced principally by dedicated teams within the Cabinet Office.

https://www.gov.uk/applying-for-erdf-funding#applying-in-cornwall-and-the-isles-of-scilly

https://www.gov.uk/applying-for-erdf-funding#applying-in-the-east-midlands

https://www.gov.uk/applying-for-erdf-funding#applying-in-the-east-of-england

https://www.gov.uk/applying-for-erdf-funding#applying-in-the-east-of-england

https://www.gov.uk/applying-for-erdf-funding#applying-in-the-north-east

https://www.gov.uk/applying-for-erdf-funding#applying-in-the-north-west

https://www.gov.uk/applying-for-erdf-funding#applying-in-the-south-east

https://www.gov.uk/applying-for-erdf-funding#applying-in-the-south-west

https://www.gov.uk/applying-for-erdf-funding#applying-in-the-west-midlands

https://www.gov.uk/applying-for-erdf-funding#applying-in-yorkshire-and-the-humber


OJEU notice means a standard form notice placed in the European Union's Official Journal confirming that a contracting authority is intending to procure goods, services or works. OJEU the European Union's Official Journal. Open procedure means a process under the procurement Regulations allows all eligible applicants to tender using a single stage procurement process. Part A Services means the services listed in Schedule 3 Part A of the procurement Regulations. Part B Services the services listed in Schedule 3 Part B of the procurement Regulations. Only limited parts of the procurement Regulations apply to Part B services. The relevant services are typically those which cannot easily be provided from outside the UK, such as legal services. PAV means Progress and Verification Visit. This is the main monitoring visit and will be based on claims and performance to date. The purpose of the visit is to assess the progress of the project in terms of delivery and spend and to verify the expenditure and outputs claimed are correct and eligible and compliant with national and community requirements. This must also cover issues such as publicity and procurement. The results of such a visit must be documented and used in case a reassessment of the risk rating of a project is necessary. If not all projects will receive a PAV then a sampling methodology must be defined. PEV means Project Engagement Visit. Every ERDF project must have one of these visits. The visit should take place shortly after the Funding Agreement has been signed and preferably before the first claim is submitted. The visit should be with the team/person engaged to manage the delivery of the project and must include the person responsible for preparing the claims. This is to ensure the team delivering the project has been given the necessary advice and guidance in good time to have a bearing on how the project is actually delivered. The outcome of the visit must satisfy the RDA that the team managing the project understands the requirements of the Funding Agreement, has, or is putting in place, the required systems and can fulfil all future monitoring requirements. Even if the project is being undertaken by an experienced organisation such as a Local Authority, it should not be assumed that people managing the project are familiar with structural fund requirements, including compliance with publicity requirements, public procurement and State aid rules. The results of this visit must be documented and used to review the risk rating of the project. It may also decide the timing of the next visit. Pre-Qualification Questionnaire (PQQ) a PQQ enables a contracting authority to evaluate the suitability of potential suppliers in relation to their technical knowledge and experience, capability and financial and economic standing. PQQs are used in the restricted procedure, negotiated procedure

http://www.procurementportal.com/glossary/#European Union's Official Journal


http://www.procurementportal.com/glossary/#Authority

http://www.procurementportal.com/glossary/#Contracting authority

http://www.procurementportal.com/glossary/#Contracting authority

http://www.procurementportal.com/glossary/#Restricted procedure

http://www.procurementportal.com/glossary/#Negotiated procedure


and competitive dialogue procedure as a means of selecting the bidder to go forward to the next stage of the procurement process. Principles means the general EU principles of

Freedom of movement of goods;

Freedom of establishment;

Freedom to provide services, and the principles deriving from these, such as the principles of:

Equal treatment. Transparency. Non-discrimination. Mutual recognition. Proportionality.

And, in the UK, where there is a spend of public money, the procurement process should comply with the following additional principles:

Consider value for money (VFM)

Maximise the efficient use of public money and;

Maintain competitiveness and fairness across the EU. Prior information notice (PIN) Publication by an authority in the OJEU of details of what they intend to procure in future. Use of a prior information notice can reduce some of the timescales in a procurement. Procurement Directive means the EU Directive that established the main body of the procurement laws – Directive 2004/18/EC. Procurement Regulations generally used to refer to the Public Contracts Regulations 2006. Public concession contract means a contract under which a supplier enters into an agreement with a public body to have the exclusive right to operate, maintain and carry out investment in a public utility (such as a water supply system) for a given term. Public Contracts Regulations 2006 means the Public Contracts Regulations 2006 are the UK legislation implementing the Public Sector Directive 2004/18/EC setting out procedures for the award of contracts for goods, services and works. Public Sector Directive 2004/18/EC means the European Union Directive on the co-ordination of procedures for the award of public works contracts, public supply contracts and public service contracts.

http://www.procurementportal.com/glossary/#Competitive dialogue procedure

http://www.procurementportal.com/glossary/#Authority


http://www.mrprocurement.co.uk/files/Uploads/Documents/timescale_tracker.pdf

http://www.opsi.gov.uk/si/si2006/20060005.htm

http://www.opsi.gov.uk/si/si2006/20060005.htm

http://www.procurementportal.com/glossary/#Public Sector Directive 2004/18/EC

http://www.procurementportal.com/glossary/#Public Sector Directive 2004/18/EC


Public service contract means a contract for the supply of services to a public body. Public supply contract means a contract for the supply of goods to a public body or for the hire of goods by a public body. Public works contract means a contract to carry out works, generally construction projects, for a public body. Works are defined in detail in Schedule 2 of the procurement Regulations. Remedies Directive means the Public Procurement Remedies Directive (Directive 07/66/EEC) setting out the remedies which a supplier is entitled to for breach of the procurement Regulations. Restricted procedure means a process under the procurement Regulations can be used for any procurement and includes two stages. Any interested party may express an interest in tendering for the contract but only those meeting the contracting authority's selection criteria will then be invited to submit a tender. No negotiation with the bidders is permitted. Selection criteria means criteria used at the PQQ stage to select the bidders that are to proceed to the next stage. Selection criteria should only relate to technical and professional capability and financial and economic standing and certain grounds for disqualification. Single Tender Action means an award of contract without competition. SME stands for small and medium-sized enterprises – as defined in EU law: EU recommendation 2003/361. The main factors determining whether a company is an SME are: number of employees and either turnover or balance sheet total. Sub-OJEU means a contract for goods, works or services that falls below OJEU thresholds or is for a Part B service. TFEU means the Treaty on the Functioning of the European Union. The TFEU sets out organisational and functional details of the European Union. Value for Money or VFM is a term used to assess whether or not an organisation has obtained the maximum benefit from the goods and services it both acquires and provides, within the resources available to it. Economy - careful use of resources to save expense, time or effort. Efficiency - delivering the same level of service for less cost, time or effort. Effectiveness - delivering a better service or getting a better return for the same amount of expense, time or effort.


24 Schedule 2 - List of Contracting Authorities

LIST OF CONTRACTING AUTHORITIES (AS PER REGULATION 3 OF THE

PUBLIC CONTRACTS REGULATIONS 2006)

3.

(1) For the purposes of these Regulations each of the following is a

contracting authority—

(a) a Minister of the Crown;

(b) a government department;

(c) the House of Commons;

(d) the House of Lords;

(e) the Northern Ireland Assembly Commission;

(f) the Scottish Ministers;

(g) the Scottish Parliamentary Corporate Body;

(h) the National Assembly for Wales;

(i) a local authority;

(j) a fire authority constituted by a combination scheme under the Fire

Services Act 1947;

(k) a fire and rescue authority—

(i) within the meaning of section 1 of the Fire and Rescue Services Act 2004;

(ii) constituted by a scheme under section 2 of that Act; or

(iii) constituted by a scheme to which section 4 of that Act applies;

(l) the Fire Authority for Northern Ireland;

(m) a police authority established under section 3 of the Police Act 1996;

(n) the Metropolitan Police Authority established under section 5B of the

Police Act 1996;


(o) a police authority established under section 2 of the Police (Scotland) Act

1967;

(p) the Northern Ireland Policing Board;

(q) an authority established under section 10 of the Local Government Act

1985;

(r) a joint authority established by Part IV of that Act;

(s) any body established in accordance with an order under section 67 of that

Act;

(t) the Broads Authority;

(u) any joint board, the constituent members of which consist of any of the

bodies specified

in paragraphs (i), (j), (m), (n), (o), (p), (q), (r) and (s);

(v) a National Park authority established by an Order under section 63 of the

Environment

Act 1995;

(w) a corporation established, or a group of individuals appointed to act

together, for the

specific purpose of meeting needs in the general interest, not having an

industrial or

commercial character, and—

(i) financed wholly or mainly by another contracting authority;

(ii) subject to management supervision by another contracting authority; or

(iii) more than half of the board of directors or members of which, or, in the

case of a

group of individuals, more than half of those individuals, are appointed by

another

contracting authority;

(x) an association of or formed by one or more of the above; and

(y) to the extent not specified in sub-paragraphs (a) to (v), an entity specified

in Schedule 1.


(2) In the application of these Regulations to a local authority in England,

“local authority” in

paragraph (1) means—

(a) a county council, a district council, a London borough council, a parish

council, the

Council of the Isles of Scilly;

(b) the Common Council of the City of London in its capacity as local authority

or police

authority; or

(c) the Greater London Authority or a functional body within the meaning of

the Greater

London Authority Act 1999(b).

(3) In the application of these Regulations to a local authority in Wales, “local

authority” in

paragraph (1) means a county council, a county borough council or a

community council.

(4) In the application of these Regulations to a local authority in Scotland,

“local authority” in

paragraph (1) has the same meaning as in section 235(1) of the Local

Government (Scotland) Act

1973(c) and also includes a joint board or joint committee within the meaning

of section 235(1) of

that Act.

(5) In the application of these Regulations to a local authority in Northern

Ireland, “local

authority” in paragraph (1) means a district council within the meaning of the

Local Government

Act (Northern Ireland) 1972(d).

(6) Where an entity specified in paragraph (1) does not have the capacity to

enter into a contract, the contracting authority in relation to that entity is a

person whose function it is to enter into contracts for that entity.


LIST OF GPA CONTRACTING AUTHORITIES AS SET OUT IN SCHEDULE

1 OF THE PUBLIC CONTRACT REGULATIONS 2006

Where an entity listed in this Schedule is succeeded by another entity,

which is itself a contracting authority, the successor entity shall be

deemed to be included in this Schedule.

Cabinet Office

Office of the Parliamentary Counsel

National School of Government

Central Office of Information

Charity Commission

Department for Constitutional Affairs

Boundary Commission for England

Circuit Offices and Crown, County and Combined Courts (England and

Wales)

Combined Tax Tribunal

Council on Tribunals

Court of Appeal Criminal

Immigration Appellate Authorities

Immigration Adjudicators

Immigration Appeals Tribunal

Lands Tribunal

Law Commission

Legal Aid Fund (England and Wales)

Office of the Social Security Commissioners

Pensions Appeal Tribunals

Public Trust Office

Supreme Court Group (England and Wales)

Transport Tribunal

Department for Culture, Media and Sport

British Library

British Museum

Commission for Architecture and the Built Environment

The Gambling Commission

Historic Buildings and Monuments Commission for England (English

Heritage)

Imperial War Museum

Museums, Libraries and Archives Council

National Gallery


National Maritime Museum

National Portrait Gallery

National History Museum

Science Museum

Tate Gallery

Victoria and Albert Museum

Wallace Collection

Crown Prosecution Service

Crown Estate Commissioners (Vote Expenditure Only)

Department for Education and Skills

Higher Education Funding Council for England

Department for Environment, Food and Rural Affairs

Agricultural Dwelling House Advisory Committees

Agricultural Land Tribunals

Agricultural Wages Board and Committees

Cattle Breeding Centre

Countryside Agency

Plant Variety Rights Office

Royal Botanic Gardens, Kew

Royal Commission on Environmental Pollution

Department of Health

Dental Practice Board

National Health Service Strategic Health Authorities

NHS Trusts

Prescription Pricing Authority

Department for International Development

Department of the Procurator General and Treasury Solicitor

Legal Secretariat to the Law Officers

Department of Trade and Industry

Central Transport Consultative Committees

Competition Commission

Electricity Committees

Employment Appeal Tribunal

Employment Tribunals

Gas Consumers’ Council

National Weights and Measures Laboratory

Office of Manpower Economics

Patent Office

Department for Transport

Maritime and Coastguard Agency


Department for Work and Pensions

Disability Living Allowance Advisory Board

Independent Tribunal Service

Medical Boards and Examining Medical Officers (War Pensions)

65

Occupational Pensions Regulatory Authority

Regional Medical Service

Social Security Advisory Committee

Export Credits Guarantee Department

Foreign and Commonwealth Office

Wilton Park Conference Centre

Government Actuary’s Department

Government Communications Headquarters

Home Office

HM Inspectors of Constabulary

Parole Board and Local Review Committees

House of Commons

House of Lords

Ministry of Defence

Meteorological Office

Defence Procurement Agency

The National Archives

National Assembly for Wales

Higher Education Funding Council for Wales

Local Government Boundary Commission for Wales

Royal Commission for Ancient and Historical Monuments in Wales

Valuation Tribunals (Wales)

Welsh National Health Service Authorities and Trusts

Welsh Rent Assessment Panels

National Audit Office

National Savings and Investments

Northern Ireland Assembly Commission

Northern Ireland Court Service

Coroners Courts

County Courts

Court of Appeal and High Court of Justice in Northern Ireland

Crown Court

Enforcement of Judgements Office

Legal Aid Fund

Magistrates’ Courts


Pensions Appeals Tribunals

Northern Ireland, Department for Employment and Learning

Northern Ireland, Department for Regional Development

Northern Ireland, Department for Social Development

Northern Ireland, Department of Agriculture and Rural Development

Northern Ireland, Department of Culture, Arts and Leisure

Northern Ireland, Department of Education

Northern Ireland, Department of Enterprise, Trade and Investment

Northern Ireland, Department of the Environment

Northern Ireland, Department of Finance and Personnel

Northern Ireland, Department of Health, Social Services and Public

Safety

Northern Ireland, Office of the First Minister and Deputy First Minister

Northern Ireland Office

Crown Solicitor’s Office

Department of the Director of Public Prosecutions for Northern Ireland

Forensic Science Laboratory of Northern Ireland

Office of the Chief Electoral Officer for Northern Ireland

Police Service of Northern Ireland

Probation Board for Northern Ireland

State Pathologist Service

Office of the Deputy Prime Minister

Rent Assessment Panels

Office of Fair Trading

Office for National Statistics

National Health Service Central Register

Office of the Parliamentary Commissioner for Administration and

Health Service Commissioners

Paymaster General’s Office

Postal Business of the Post Office

Privy Council Office

Public Record Office

Royal Hospital, Chelsea

Royal Mint

Rural Payments Agency

Scotland, Auditor-General

Scotland, Crown Office and Procurator Fiscal Service

Scotland, General Register Office

Scotland, Queen’s and Lord Treasurer’s Remembrancer

Scotland, Registers of Scotland


The Scotland Office

The Scottish Ministers

Architecture and Design Scotland

Crofters Commission

Deer Commission for Scotland

Lands Tribunal for Scotland

National Galleries of Scotland

National Library of Scotland

National Museums of Scotland

Royal Botanic Garden Edinburgh

Royal Commission on the Ancient and Historical Monuments of

Scotland

Scottish Further and Higher Education Funding Council

Scottish Law Commission

Local Health Councils

The NHS Education for Scotland Board

Scottish Council for Postgraduate Medical and Dental Education

Scottish National Health Service Authorities and Trusts

The Office of the Accountant of Court

High Court of Justiciary

Court of Session

HM Inspectorate of Constabulary

Parole Board for Scotland and Local Review Committees

Pensions Appeal Tribunals

Scottish Land Court

Sheriff Courts

Scottish Criminal Record Office

Scottish Crime Squad

Scottish Fire Service Training Squad

Scottish Police College

Office of the Social Security Commissioners

Rent Assessment Panel and Committees

The Scottish Parliamentary Body Corporate

Scottish Record Office

HM Revenue and Customs

The Revenue and Customs Prosecutions Office

HM Treasury

Office of Government Commerce

United Kingdom Debt Management Office

The Wales Office (Office of the Secretary of State for Wales)


25 Schedule 3 – Procurement Flow Chart

Are you a Contracting

Authority? (see section 4 and

schedule 2)

Since EU funds are being used for

purposes specified in EU legislation,

non-contracting authorities are

advised to comply with the TFEU

Principles which involves a

sufficient degree of advertising.

Is the estimated value of the

contract above the OJEU

thresholds?(see section 8)

Grant Recipients must still apply the

TEFU Principles and demonstrate

that for any potential tenderer, there

is a degree of advertising sufficient

to enable the market to be opened up

to competition and the impartiality of

the procedures to be reviewed (see

sections 9 & 10) PART A? (see

section 6)

PART B? (see

section 6)

Certain parts of the regime still apply to above threshold procurements of Part

B services. These are parts 1, 9 and 10 of the Regulations and regulations 9,

31, 40(2), 41 and 42. This means that:

Contracting authorities must act in compliance with the Treaty Principles

and act in a transparent manner and treat all potential providers equally

and in a non-discriminatory way.

Contracting authorities must comply with the detailed requirements

relating to technical specifications set out in the Regulations.

A contract award notice must be published in the Official Journal no later

than 48 days after a contract award.

Follow one of four award procedures provided for in the Regulations (see section 12)

Advertisement.

Pre-qualification (other than in the case of the open procedure) and evaluation of pre-

qualification responses.

Invitation to tender/participate in a dialogue/negotiate.

Dialogue or negotiation (competitive dialogue and negotiated procedures only); in the

case of the competitive dialogue procedure, this stage may include the phased de-

selection of bidders from the procurement.

Submission of tenderers (in the case of the competitive dialogue and negotiated

procedure, this may be "final" tenders/solutions; other bidding rounds may have

preceded this one)

Evaluation of bids.

Award Decision.

Standstill.

Contract award notice published in Official Journal no later than 48 days after contract

award.

NO

YES

NO


26 Schedule 4 - Procurement Q&A

BACKGROUND This Q&A has been put together following a number of training sessions on procurement in 2012. It attempts to consider and answer a number of common issues arising across the ERDF Programmes in relation to procurement. It is however important to note that procurement issues will turn on their own specific facts. Whilst this Q&A provides some illustrative examples they should not be considered as a substitute for specific legal advice. If a Grant Recipient has any concerns they should consult a legal advisor, before carrying out the procurement exercise.

The responses below should be read as guidance only and should not be taken as a statement of the law or compliance with the EC Regulations.

GENERAL Q & A Sub OJEU Advertising 1) Question - Please clarify the situation with regard to Construction Line and other portal websites. One of our projects advertised sub OJEU level works opportunity on this OGC established site but were advised by A16 that the chosen advertising route was not sufficiently open to non UK based potential deliverers so the opportunity was not considered to have been appropriately advertised Answer - Advertising opportunities on Construction Line and other portal website is one possible option for Grant Recipients to satisfy the requirements for below threshold contracts. The Commission Interpretative Communication is clear that portal websites are an adequate and commonly used means of publication. It has also been confirmed that Construction Line is available to applicants outside of the UK and therefore should not be deemed as narrowing the availability to all applicants. The important thing to do is to determine whether or not the opportunity is likely to have a significant cross border interest. If it is you might want to consider using Construction Line and advertising on a website. If this option is taken are advised to ensure that the opportunity is advertised in the same way and any criteria applied are applied for people coming forward under both routes in the same way, to ensure that the Treaty principles of fair and open competition are respected. Simply selecting a list of suppliers from the Constructionline site and directly contacting them with invitations to tender is not considered to be sufficiently open and transparent and is also against the Constructionline protocol. 2) Question - The Procurement Guidance requirements state that level of advertising has to be sufficient to allow a level of competition, potentially from


another member state (if the contract award might potentially be of interest to suppliers located in other Member States and depending on other factors e.g. geographical location ) …… ” This is an area that seems open to interpretive opinion. How should GDTs best advise projects, we are mindful that A16 may disagree with the view of the project / A13 teams? Should we really just ensure that regardless all projects should follow the suggested methods of advertising featured in the guidance as a fail safe approach? If that is the case how do we balance that instruction with the cost and workload impact for projects when they take that approach? Answer – Procurements below the threshold are subject to interpretation of the guidance from the Commission which is much less clear than that for contracts over the OJEU value. There are however a number of things that the GDT should consider when reviewing these types of contracts. The first test for a contract below threshold should be to determine whether or not there is likely to be cross border interest in the opportunity. This can be determined by looking at what product/service is being offered. A good example might be that design of a website can be done from anywhere in Europe and so could be considered to have cross border interest, whereas delivery of a very local service such as catering as part of a meeting/event is much less likely to have a cross border interest. However in any circumstances the minimum suggested requirement for a Grant Recipient would be to advertise the opportunity on their website. If there is a cross border interest or you are not sure whether there is then consideration should also be given to the other accepted forms of advertising set out in the National Procurement Requirements. Where several options are taken you are advised to ensure that the opportunity is advertised in the same way and any criteria applied are applied for people coming forward under both routes in the same way, to ensure that the Treaty principles of fair and open competition are respected. The higher the possibility of cross border interest, which in most cases will also be linked to the value of the contract, the more should be done to advertise this and the longer time for response will be required. 3) Question - Where Supply2Gov or CompeteFor are used to advertise alongside direct invitations, but not all of the aforementioned are then invited to bid because of a quality control process, it could be argued that those who responded to invitations directly had an advantage. However on the other hand, opportunities are likely to have widened by introducing suppliers through Supply2Gov and CompeteFor that weren’t previously known to the organisation. Do increased opportunities outweigh any possible procedural anomaly? Answer - Opportunities advertised on sites like these are useful and can be used alongside direct invitations to widen the opportunity as far as possible. The most important thing is that if this option is taken you are advised to


ensure that the opportunity is advertised in the same way and any criteria applied are applied for people coming forward under both routes in the same way, to ensure that the Treaty principles of fair and open competition are respected. Frameworks 4) Question - If a project intends to make use of a historic framework (which seems appropriate to their needs) but where the original framework didn’t specifically refer to the fact that subsequent contact awards made might include an element of ERDF funding, is this a problem? Does the project have to “start from scratch” with a new framework – a “re-start” may not be possible where the projects have already contracted “winners” from the framework who are now contractually committed? If this is a problem would the irregularity penalty be in these situations – publicity or procurement or both! Answer - If the framework was put in place prior to the ERDF project which then used it then it would not be expected that ERDF was mentioned in the initial framework. This would be almost impossible in most cases unless authorities were assuming ERDF would eventually use the framework and this is unlikely. However when the ERDF project uses the framework we would expect them to mention ERDF in any mini competition undertaken or when the contracts are drawn down. Similarly if a framework is developed during an ERDF project and then used we would expect the actual framework to include mention of ERDF. If this is not done then the penalty is likely to be related to the lack of advertising on the procurement rather than a publicity based correction. 5) Question - What are the exemptions (per procurement guidance) in framework agreements being over 4 year duration? What are the sanctions (if not an exemption?) Answer - The regulation states that “The term of a framework agreement may not exceed four years, save in exceptional cases duly justified, in particular by the subject of the framework agreement.” There is no further guidance on what an exceptional case might look like but it is expected that if a framework is set up to last longer than the 4 year period this is clearly stated and there is an agreed point at which it will end. In relation to the timeframe of a framework ‘the framework can continue to be used right until the end, even if the performance of a specific contract based on the framework agreement would take place after expiration of the framework agreement itself’. Single Source Tenders 6) Question - Is there any further guidance about the level of underpinning evidence the project should provide to support their case for a single tender.


For example, a project claims that as a result of their research only x firm in the GDT area provides this particular kit. Answer - It is up to the project to evidence that they have met the relevant criteria to use a single tender and the National Procurement Requirements remind contracting authorities that any single tender actions are carried out at their own risk. The burden of proof is firmly on the contracting authority to justify use of this procedure and the grounds interpreted. There are certain criteria under which this procedure can be used which are set out below:

Failure of initial procurement undertaken – proving the terms of the contract are not substantially altered

Exclusive rights or technical reasons – where it might be impossible to split work between two contractors, artistic reasons or for reasons related to intellectual property rights. In all cases contracting authority must evidence that the terms of the contract were not set so narrowly that only one supplier could apply.

Extreme urgency – In very limited and extreme circumstances which are brought about by events unforeseeable by, and not attributable to, the contracting authority. For the purpose of clarification, the case law indicates that unforeseen circumstances largely relate to natural disasters where there is a risk to life if support services are not provided immediately. The Commission expects applicants to have sufficiently researched the potential risks of extension of scope, size and length of delivery of a contract, as well as known potential risks such as finding asbestos, great crested newts being found on the site etc. and these events would not be accepted as unforeseeable circumstances.

It would be wise for a contracting authority to advertise to prove that their requirement cannot be met by anyone other than one supplier, which of course the one supplier can put themselves forward for. Delivery Partners 7) Question - Can we have clarification on the position of delivery partners in consortium bids? It was suggested these need to be procured? However they would quite rightly want to retain their IPR or designed role and how could they bid fairly as they would by association have a competitive advantage? Wouldn’t projects just be wasting the time / raising the hopes of other third parties in the unlikely event that the partner was happy to rescind their proposed involvement and take their chance against the wider market? Answer - ERDF is entered into with partners as an agreement of grant rather than of service. It is true that in some circumstances you should consider the relationship between the Grant Recipient and the delivery partner but as a general rule delivery partners do not need to be procured provided they are only compensated on an actual cost basis. Further advice on delivery partners is contained in the National ERDF Handbook (sections 3.2 and 7.5)


8) Question - How you distinguish between genuine delivery partners and sub contractors delivering a service? Raised under delivery partner related queries Answer - Genuine delivery partners are providing input and financial resources into the project. They will be reimbursed on an actual cost basis, not an invoice basis and include no profit in their costs. Their reimbursement will not be linked to the achievement of particular targets or objectives. They will not normally be reimbursed 100% of their costs. 9) Question - If ERDF is awarded to a contracting authority as Grant Recipient, if they have “delivery partners” who are procuring goods/services but they are not a “contracting authority” what procedures should be followed? Answer - Section 4.11 of The National Handbook clearly states that all delivery partners must fully adhere to the EC Regulations and the National Rules and this would include section 8.2 of the National Procurement Requirements in relation to “partly subject contract awards.” In addition, some State Aid approvals require public procurement as a condition of use of the State Aid Scheme approval. 10) Question - Can public/private partnerships work where both are delivery partners in new build e.g Local authority owns the land and is the Grant Recipient and private company is the developer secured for wider regeneration and may have s106 obligations. Answer – A genuine joint venture is possible, if compliant with state aid, but openness of the opportunity for the private sector partner to invest will be examined for transparency. As per the delivery partner above, the private sector partner would only be able to recover their actual costs, not their developer profit, within the ERDF eligible component of the project. 11) Question - Does the public procurement directive cover universities? Answer - Universities would traditionally have been understood to fall under the “catch-all” provision in regulation 3(1)(w) of the Public Contracts Regulations 2006 to the extent that they were financed wholly or mainly by another contracting authority – for example, the Higher Education Funding Council for England by way of a grant under section 65 of the Further and Higher Education Act 1992. However, in a recent Government Response to a consultation paper on higher education, BIS suggested that student loans are a contractual agreement between the student and the Government and therefore any public subsidy benefits the student and not the institution; and that the agreement between the student and the institution for teaching in return for a fee is not a subsidy. Accordingly, the BIS conclusion is that the shift in funding from grant to loan may mean that more HEIs fall below the 50% threshold for public funding in future and so be exempt from the procurement regulations.


It is for a university and its legal advisers to determine whether it is a contracting authority for the purposes of the Public Contract Regulations 2006. If a university does not follow the public procurement rules in respect of an above threshold contract and the Audit Authority identifies this as an irregularity the university can make representations to the AA that it is not a contracting authority because it is not wholly or mainly funded by another contracting authority and if the AA does not accept that position the university may judicially review that decision. OJEU advertising 12) Question - If Grant Recipients fail to answer “yes” to the question on OJEU about whether EU funding is involved what are the repercussions? Answer – It is technically a breach, if the procurement is directly for the delivery of the ERDF project (as opposed to a pre existing framework). Contract Notices must be in the form set out in Annex II of Regulation (EC) 1564/2005 and contain the specified information. Failure to correctly identify that EU funding is involved in an opportunity may render the notice defective and an infringement of Community law amounting to an irregularity. This could potentially lead to the imposition of a financial correction of up to 25% of the contract value for failure to comply with the advertising requirements in the EC Public Procurement Directives. However, it would be possible to publish a correigum to the OJEU notice recording that it is part EU funded. Procurement corrections 13) Question - Should a financial correction be imposed in line with COCOF guidance if the end result/decision has not been affected by a breach in procedural requirements? e.g. errors in score sheets for appraisals where those errors affected suppliers which were not going to be selected Answer - This will depend on the severity of the error. Within the COCOF Guidance 07/0037/03-EN and the National Procurement Requirements there is a list of corrective measure to be taken where procurement requirements have not been met. If the contracting authority can evidence that the breach is purely procedural and falls under the category of “Incorrect application of certain ancillary elements” then there is the possibility that if “this type of irregularity is only of a formal nature without potential financial impact, no correction will be made.” Depending on the nature of the procedural breach, some breaches, i.e. failing to publish the Alcatel notice of who won the tender in an OJEU procurement require a mandatory penalty, regardless of the fact that it had no impact on which supplier won the tender. However, all other breaches of the regulations require some level of correction between 100 and 2%.


SME responsibilities 14) Question – Where an ERDF projects gives financial assistance (e.g. delegated grants) to SMEs to assist them in purchasing equipment, consultancy etc – to what extent would we expect the SME beneficiary to procure/follow EU treaty principles? Answer - The onus for compliance with the EC and National requirements sits with the Grant Recipient and not the end beneficiary. In most cases, end beneficiaries are not subject to the same eligibility rules as final beneficiaries, e.g. around procurement, although the final beneficiary will need to be satisfied that the funds have been used for the agreed purposes under which the grant was given and demonstrate value for money. However, please note that the interpretation of ‘end beneficiaries’ is a strict one and where, for e.g. SMEs, as end beneficiaries, provide match funding or financial resource to the project (even if not on an actual cost basis) they may be subject to the procurement rules/treaty principles. Grant Recipients are advised to assess each case individually to determine whether SMEs are true end beneficiaries. 15) Question - Is there more guidance on “private” procurement, particularly in reference to business assists and procurement evidence they may need to supply for grants of £1k Answer – ERDF is still public money and Grant Recipients should be ensuring that value for money is being obtained in respect of those persons to whom business assist grants are being provided. As a matter of best practice Grant Recipients administering business assist grants should be requiring up to 3 quotes to evidence value for money. State Aid and Procurement 16) Question - What about how state aid notifications impact on procurement regulations and requirements? Answer – The English State Aid suite of schemes require procurement, or selection in an open and transparent manner where the contracting organisation is not subject to public procurement rules. Contracting Authorities 17) Question – Are Universities a Contracting or Non-Contracting Authority? Universities have traditionally fallen within the definition of a Contracting Authority under the Regulations as the majority of their funding has historically come from the public sector. More recently there is scope to look at the way in which a University is funded before determining which procurement route to


follow. In response to the White Paper ‘Students at the Heart of the System’, the Department for Business, Innovation and Skills (BIS) explained that it considered that the change in student financing arrangements (through loans to individual students from Student Loans England) may mean that universities are no longer ‘contracting authorities’ for the purposes of the EU public procurement regime as they may have ceased to be funded for the most part by the public sector.

ERDF National Procurement Guidance ERDF-GN-1-004 · ERDF-GN-1-004 V3 Last updated 3 July 2014 Page...

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Transcript of ERDF National Procurement Guidance ERDF-GN-1-004 · ERDF-GN-1-004 V3 Last updated 3 July 2014 Page...