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									  2008/148-635
Support to Social
  Development




                           EC Contracting Rules

                    Practical Guide to Contract Procedures
                       for EC External Actions (PRAG)
                       http://ec.europa.eu/europeaid/work/procedures/implementation/index_en.htm




    Technical
    Assistance
Purpose of Procurement

Procurement is the timely acquisition of goods, works and
   services while addressing the following:
• the objectives of the organisation concerned
• fairness, integrity and transparency through competition
• economy and effectiveness
• best value for money.




Training Course on Use of PRAG, May 2008, Cairo   2008/148-635
Programmes in Use
• EC Programmes
      – PHARE/ISPA               (Poland, Hungary accession expanded to 12 new countries)


      – IPA     (New accession candidates – e.g. Croatia, Macedonia)


      – TACIS        (Eastern Europe, Caucasas and Central Asia)


      – MEDA (includes Egypt)
      – ACP (Africa, Caribbean, Pacific)
      – ALA (Asia, Latin America)

• PRAGs are merged but retain differences between BUDGET and
  EDF programmes
• BUDGET versus EDF
      – Egypt is in the BUDGET Programme




Training Course on Use of PRAG, May 2008, Cairo                                             2008/148-635
Institutional Issues

• Decentralisation and De-concentration (§2.2)
      – Separation of Powers
      – EC has de-concentrated to ECD to act as Controller (Technical
        and Financial)
      – EC has decentralised to SFD as Contracting Authority

• Ex-ante versus Ex-poste
      – We utilise the ex-ante rules which means that CA (SFD) can
        not make financial commitments without ECD prior approval.




Training Course on Use of PRAG, May 2008, Cairo           2008/148-635
Structure of PRAG

• PRAG has 7 chapters + Annexes
      – 1. Introduction (what the PRAG does not cover)
      – 2. Basic Rules for service, supply and works contracts
      – 3. Service Contracts
      – 4. Supply Contracts
      – 5. Works Contracts
      – 6. Grants
      – 7. International Organisations
      – 8. Legal Texts




Training Course on Use of PRAG, May 2008, Cairo            2008/148-635
Annexes to PRAG

The annexes to PRAG contain standardised documents:
• A – General
• B – Services (esp. Terms of Reference and tender dossier)
• C – Supplies
• D – Works (esp. format for Tender dossier)
• E – Grants
• F – International Organisations




Training Course on Use of PRAG, May 2008, Cairo   2008/148-635
Procurement Procedures (§2.4.1)
            Service Contracts                  Supply Contracts                       Works Contracts
                                          Contracts of €150.000 or more         Contracts of €5.000.000 or
                                                                                            more
                                          International   open     tender     International   open     tender
                                          procedure following publication     procedure following publication
                                          of a procurement notice             of a procurement notice

      Contracts of €200.000 or more         Contracts between €60.000          Contracts between €300.000
                                                   and €150.000                       and €5.000.000
      International restricted tender     Open       tender   procedure       Open       tender    procedure
      procedure following publication     published locally                   published locally
      of procurement notice
       Contracts under €200.000 but        Contracts under €60.000 but         Contracts under €300.000 but
            more than €10.000                   more than €10.000                   more than €10.000
      Negotiated procedure without        Negotiated procedure without        Negotiated procedure without
      publication                         publication                         publication
      (Beneficiary consults at least 3    (Beneficiary consults at least 3    (Beneficiary consults at least 3
      service providers)                  suppliers)                          contractors)
      Framework Contracts
        Contracts with a value of           Contracts with a value of           Contracts with a value of
              €10.000 or less                     €10.000 or less                     €10.000 or less
      Order on basis of a single tender   Order on basis of a single tender   Order on basis of a single tender




Training Course on Use of PRAG, May 2008, Cairo                                               2008/148-635
Service Contracts

>€200,000 (§3.3)

• International restricted tender

• Procurement notice published defines selection criteria

• Pre-qualify 4-8 tenderers.

<€200,000 (§3.4)

• Framework Contract or Competitive negotiated procedure
  without publication, Beneficiary consults at least 3 service
  providers & negotiates the terms with 1 or more.

• Negotiated procedure with 1 or more in special circumstances

<€10,000 on basis of single tender



Training Course on Use of PRAG, May 2008, Cairo         2008/148-635
Works Contracts (large)

>€5million (§5.2.1)

• International open tender

• Procurement notice published defines selection criteria.

>€300,000 to €5million (§5.2.2)

• Open tender procedure advertised locally.




Training Course on Use of PRAG, May 2008, Cairo    2008/148-635
Works Contracts (small)

<€300,000 (§5.2.3)

• Competitive negotiated procedure without publication,
  Beneficiary consults at least 3 contractors & negotiates
  terms with 1 or more.

<€10,000 on basis of single tender (§5.2.3)




Training Course on Use of PRAG, May 2008, Cairo   2008/148-635
Tender Evaluation - Eligibility                              (§2.3)



•    Participation in the procurement procedures is open on equal terms to all
     legal persons who are established in (a) a Member State of the European
     Community, (b) in an official candidate country as recognised by the
     European Community, (c) in a Member State of the European Economic
     Area, or (d) any country other than those referred in a), b) and c), where
     reciprocal access to their external assistance has been established.
•    All supplies and materials purchased under a contract financed under a
     Community instrument must originate from an eligible country. If the last
     substantial transformation has not taken place in a Member State of the
     European Union or one of the eligible recipient countries, the goods cannot
     be tendered for the project.




Training Course on Use of PRAG, May 2008, Cairo                       2008/148-635
Tender Evaluation - Exclusions                                     (§2.3.3)



Candidates or tenderers will be excluded from participation in a procurement
   procedure if (see PRAG for full definitions):
•    a)     bankrupt;
•    b)     convicted of an offence;
•    c)     guilty of grave professional misconduct;
•    d)    not fulfilled obligations relating to the payment of social security
     contributions or the payment of taxes;
•    e)   subject of a judgment which has the force of res judicata for fraud,
     corruption, involvement in a criminal organisation, etc.;
•    f)     declared to be in serious breach of contract.
False declarations may be punished (§2.3.5).




Training Course on Use of PRAG, May 2008, Cairo                      2008/148-635
Tender Evaluation (§2.8)

• Committee appointed by Contracting Authority (non-voting
  Chairman and Secretary, + voting: minimum of 3 for services, 5
  for works). (§2.8.1)

• Confidential. (§2.8.2)

• Prepares the Tender Evaluation Report, incl. Clarifications,
  evaluation grids.

• Tender evaluation, incl. approval from ECD, must occur within
  tender validity period (e.g. 90days for open international works).




Training Course on Use of PRAG, May 2008, Cairo           2008/148-635
Negotiated Procedure (§2.4.8)

Most relevant situations include:

• Extreme urgency

• Entrusted to public-sector bodies and relate to activities of
  an institutional nature

• Unforeseen additional works

•     Unsuccessful tendering (all conforming tenders exceed
     budget)

• Only 1 provider!




Training Course on Use of PRAG, May 2008, Cairo     2008/148-635
Award Criteria for Works

• Lowest conforming tender or most economically
  advantageous (Lowest Total Cost).

• Significant non-compliance is rejected. Must be justified in
  Tender Evaluation Report.

• Eliminate ineligible tenderers or financially weak (§5.3.3)

• See §2.4.12




Training Course on Use of PRAG, May 2008, Cairo     2008/148-635
Works Tender

• Tender evaluation based on administrative, technical and
  financial criteria.

• Criteria are specified in works tender dossier Volume 1,
  Section 6.

• Criteria cannot be modified during evaluation! (§5.3.3)




Training Course on Use of PRAG, May 2008, Cairo    2008/148-635
Award Criteria for Services                           (§3.3.4)



• Technical Score – 100 points
      – Typically 30-40% for methodology
      – Typically 60-70% for staffing (CVs)
      – Evaluate score (100), and reject those <80.
      – Award best tender as 100 points and remaining tenders pro-rated
      – 80% weighting (§3.3.10.3)

• Financial Score – 100 points
      – Lowest score gets 100 points and remaining tenders get inverse rating
      – 20% weighting (§3.3.10.4)




Training Course on Use of PRAG, May 2008, Cairo                  2008/148-635
Services Tender Structure
(1) Rationale
•         Any comments on the Terms of reference of importance for the successful execution of activities, in particular its objectives and expected
          results, thus demonstrating the degree of understanding of the contract. An opinion on the key issues related to the achievement of the
          contract objectives and expected results
•         An explanation of the risks and assumptions affecting the execution of the contract
(2)       Strategy
•         An outline of the approach proposed for contract implementation
•         A list of the proposed activities considered to be necessary to achieve the contract objectives
•         The related inputs and outputs
•         In the case of a tender being submitted by a consortium, a description of the input from each of the consortium members and the distribution
          and interaction of tasks and responsibilities between them
•         A description of the support facilities (back-stopping) that the team of experts will have from the contractor during the execution of the contract
•         A description of sub-contracting arrangements foreseen, if any and within the limit indicated in clause 3 of the Instructions to tenderers, with a
          clear indication of the tasks that will be entrusted to a sub-contractor and a statement by the tenderer guaranteeing the eligibility of any sub-
          contractor
(3)       Timetable of activities
•         The timing, sequence and duration of the proposed activities, taking into account mobilisation time
•         The identification and timing of major milestones in execution of the contract, including an indication of how the achievement of these would be
          reflected in any reports, particularly those stipulated in the Terms of reference
•         The expected number of working days required from each category of expert each month during the period of execution of the contract (using
          the Excel spreadsheet linked to the Budget breakdown)]
(4)       Logframe
•         A Logical framework reflecting the considerations described in items 1 - 3 (see the Project Cycle Management Manual available from the PCM
          Home page: http://ec.europa.eu/europeaid/reports/index_en.htm)




Training Course on Use of PRAG, May 2008, Cairo                                                                                  2008/148-635
Services Financial Tender

                                                                                                        Amount
                                                                Estimated number of   Fee rate (€ per
                                                        Notes
                                                                    working days       working day)

                                                                                                        €
           FEES (including overheads):                  1
           Long-term experts                            2, 4
           - Team leader                                                                                0.00
           - Senior experts                                                                             0.00
           - Junior experts                                                                             0.00


           Short-term experts                           3, 4                                            0.00
           - Senior experts                                                                             0.00
           - Junior experts                                                                             0.00


           Total fees (including overheads)                                                             0.00
           PROVISION FOR INCIDENTAL EXPENDITURE:        5
           PROVISION            FOR       EXPENDITURE
           VERIFICATION                                 6
           MAXIMUM CONTRACT VALUE                                                                       0.00




Training Course on Use of PRAG, May 2008, Cairo                                                         2008/148-635
Cancellation of Procedure

What happens if:
• No qualitatively or financially worthwhile tender has been
  received.
• International restricted tender yields less than 4 eligible
  candidates.
• Economic or technical conditions substantially altered.
• Force majeure.
• Technically compliant bids exceed budget.
• Irregularities.




Training Course on Use of PRAG, May 2008, Cairo      2008/148-635
Options when Procedure cancelled

Cancel procedure.



Options include:

• Re-launch.

• Negotiate.

• Cancel.




Training Course on Use of PRAG, May 2008, Cairo   2008/148-635
General Comments

• If Tenderers attempt to influence tendering process, they shall be
  rejected.

• If Tenderers feel they have been subjected to an irregularity
  during the award process, they may petition the Contracting
  Authority which must reply within 90 days. If this procedure fails,
  the Tenderer may have recourse to the ECD.

• Visibility according to specified guidelines (§2.3.6).

• No preferences (§2.4.11)




Training Course on Use of PRAG, May 2008, Cairo            2008/148-635
Final Stages of Project

• Contract preparation (§2.9).

• Advise unsuccessful tenderers.

• Addenda during implementation (§2.10).




Training Course on Use of PRAG, May 2008, Cairo   2008/148-635
Eligible Costs

• Eligible costs and proportion are defined in the Financing
  Memorandum & Contract.
• Operating costs are not covered by EC (compare cars to
  sludge collection vehicles).
• Costs must be incurred in Financing Agreement/Contract
  period.
• No VAT, taxes, Land purchase, exchange rate loss, related
  contracts




Training Course on Use of PRAG, May 2008, Cairo     2008/148-635
Observations
• Can’t split the project into smaller contracts to meet rules.
• Conflict of interest (§2.3.7)

• Civil servants not allowed to be involved in tendering (unless prior
  agreement).
• Principles of transparency, proportionality, equal treatment and
  non-discrimination (§2.3.7).
• No retro-active awards (§2.3.7).
• Use of standard documents (§2.3.7).
• Keep records for 7 years (§2.3.7).




Training Course on Use of PRAG, May 2008, Cairo           2008/148-635
Observations

• ToR, Tech specs & budget must afford equal access for
  tenderers & not create unjustified obstacles to competition.




Training Course on Use of PRAG, May 2008, Cairo    2008/148-635
Exercise
  Questions                                                                      Option 1                      Option 2

  1. What version of PRAG should you be using                                    EDF                           BUDGET

  2. Best place to find the PRAG documents are                                   EC Website                    SFD files

  3. What is the award criteria for works tenders                                Lowest conforming price       Highest score based on technical (80%) and financial
                                                                                                                       (20%) weighting.




  4. Does the Contracting Authority require EC approval before entering into a   Yes, it is ex-ante control.   No, it is ex-poste control.
          works contract?




  5. Where do you find the standard tender dossier for works?                    Chapter 5                     Annex D



  6. What would you do if all conforming tenders exceeded the budget?            Re-launch the tender.         Cancel procedure and apply negotiated procedure.



  7. Are operating costs eligible, e.g. cars?                                    Yes                           No

  8. A Libyan team of experts are proposed. Is this acceptable?                  Yes                           No, Not MEDA member



  9. Cost was incurred after FM expired. Should it be                            Rejected                      Accepted

  10. What is the language of the tender evaluation Report, incl. Evaluation     English                       Arabic
         grids, clarifications.




Training Course on Use of PRAG, May 2008, Cairo                                                                                          2008/148-635
Service Contracts (Appendix B)

Service contracts may include:

• Master Plans

• Feasibility Studies

• Detailed Design and Tender Documents

• Construction Supervision

• Technical Assistance




Training Course on Use of PRAG, May 2008, Cairo   2008/148-635
Tender Dossier for Services

Tender Dossier includes (main documents)

• Instructions to Tender

• Conditions of Contract (Annex I)

• Terms of Reference (Annex II)

• Structure for the Proposals (Annex III)

• Structure of the CVs (Annex IV)

• Structure for Financial Proposal

http://ec.europa.eu/europeaid/work/procedures/implementati
   on/services/annexes_standard_documents/index_en.htm


Training Course on Use of PRAG, May 2008, Cairo   2008/148-635
Terms of Reference for Services

• Main document within the Tender Dossier is the Terms of
  Reference

• Standard format for the structure of the ToR

http://ec.europa.eu/europeaid/work/procedures/documents/e
   xecution/services/b8annexiitor_en.doc




Training Course on Use of PRAG, May 2008, Cairo   2008/148-635
Terms of Reference

1. BACKGROUND INFORMATION

2. CONTRACT PURPOSE & EXPECTED RESULTS

3. ASSUMPTIONS & RISKS

4. SCOPE OF THE WORK

5. LOGISTICS AND TIMING

6. REQUIREMENTS

7. REPORTS

8. MONITORING AND EVALUATION



Training Course on Use of PRAG, May 2008, Cairo   2008/148-635
Generic Formats for ToR

Attached are generic formats for ToR for:

• Feasibility Studies

• Design and Tender dossiers

• Construction Supervision




Training Course on Use of PRAG, May 2008, Cairo   2008/148-635

								
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