OGC buying.solutions

1. OGCbuying.solutions Procurement of Projects Presented by Andy Hamer Pre Accession Advisor, Finance Ministry

2. To cover: • EU legislative background • Key concept • Typical procurement process • Comparison of EU to Latvia • Open Competition – steps • Restricted Competition – steps • Structural / Cohesion Funds • Final thoughts Introduction

3. Objective of purchasing To obtain: • the RIGHT Quality Product / Service • in the RIGHT Quantity • in the RIGHT Place • at the RIGHT Time • at the RIGHT Price = VALUE FOR MONEY!! Basic principles

4. EC Procurement EU Objectives Achievement of the Single Market via the four freedoms: • free movement of people • freedom of establishment and services • free movement of capital • free movement of goods Basic principles

5. EC Procurement Legislative Framework • European Community Treaties • European Community Regulations • European Community Directives • European Commission and National policies Practical experiences • Member state examples • Court of Justice decisions Basic principles

6. EU Directives There are three kinds of procedures: Open – all interested parties may tender for the contract Restricted – only selected persons may submit tenders Negotiated – purchaser may negotiate with one or more selected person(s) Basic principles

7. EC Procurement Impact on Procurement • Non-discrimination • Transparency • Mutual Recognition • Competition • Fairness = VALUE FOR MONEY!! Basic principles

8. Typical Tender Process (in EU; eg UK) • Business Case Development and Approval • Advertise in OJEC • Receive and Evaluate Expressions of Interest (Supplier Appraisal) • Shortlist and Produce Tender List • Site Visits • Produce Invitation to Tender Package • Set Evaluation Criteria • Issue ITT • Receive Responses • Undertake Evaluation • Contract Award • Debriefing The Procurement Cycle

9. Identify Need Vendor Rating • Supplier Evaluation Financial Approval • Option Appraisal • Business Case Manage Contract Develop • Specification • Contract Strategy • Evaluation Criteria Award Contract Identify Suitable Suppliers • Source the Market • Appraise Suppliers Post Tender Negotiation (not Latvia) Receive Tenders • Open Tenders • Evaluate Tenders Compile Tender Documents • Specification • Terms and Conditions • Pricing Schedule Invite Tenders

10. Value levels – comparison with EU

11. Latvian selection process

12. Section 1 – Concepts behind large competitions

13. The two main procurement procedures • Open competition (Latvia) • Restricted competition (Latvia)

14. Open competition (Latvia) – 13 key steps • Identify purchasing need • Form procurement commission • Draft tender documentation and specifications • Formal announcements • Respond to any requests for information • Competition regulation sent to tenderers • Submission of tenders • Tender opening • Evaluation of tenders • Announcement of results • Complaints period • Proceed with contract • Retain records

15. Step 1 – Identify purchasing need • Do we need ? • Have we got budget ? • What will it cost ? • Business case & option appraisal • Project strategy = Project pipeline and associated tasks!

16. Step 2 – Form procurement commission Section 23 of the Law Competent + authorised person Minimum 5 persons Relevant experience / construction specialists Additional person from official approved list for construction works over 500 000 lats

17. Step 3 – Draft tender documentation and specifications Technical specifications: • Procurement Commission approves technical specifications Competition Regulations: • Requirements that each supplier must meet (e.g.Track record, technical competence, quality, place and time of delivery, deadline for submission of tenders) Invitation to tender package = Competition Regulations + Technical specifications + draft contract + templates

18. Step 4 – Formal announcements • Send notice to PMB • Publication on Internet + “Latvijas Vēstnesis” • Does not meet EC-Directives

19. Step 5 – Send invitation to tender packages • Package sent to all interested suppliers • Technical specification • Competition Regulations • Draft contract • Templates for replies

20. Step 6 – Respond to any requests for information All requests for information on Competition Regulations treated equally Any responses copied to all suppliers Retain audit trail

21. Step 7 – Submission of tenders • All tenders are submitted to the Procurement Commission • Record date and time of receipt

22. Step 8 – Tender opening • Members of the Procurement Commission to sign declaration of Impartiality and Confidentiality • At time and date specified in Competition Regulations – the applications are opened • Procurement Commission must read out the values • Persons who submitted are permitted to attend • Procurement Commission record the meeting

23. Step 9 – Evaluation of tenders • The evaluation is carried out in accordance with the descriptions given in the Competition Regulations • 3 main aspects of evaluation: • Candidate compliance • Technical compliance • Lowest price / economically most advantageous tender • Each member of the Procurement Commission should complete a written evaluation form

24. Step 9 – Evaluation of tenders (2) Evaluation tools: • The Procurement Commission has designed the competition and chosen the balance between candidate ability, technical competence and price/MEAT • Using weighted criteria Example on weighting Concept of most economically advantageous versus lowest price

25. Step 10 – Announcement of result • Procurement Commission select one tenderer, done within 1 month of tender deadline as a result of their evaluation • Procurement Commission must complete formal report on the procedure to Contracting authority • The decision must be published: • by PMB on the Internet • by Contracting Authority in “Latvijas Vēstnesis” • Termination of tender process can happen if : • No tenders received • No compliance • PMB prohibits

26. Step 11 – Complaints periods • Before submission deadline (to Contracting authority) • Between decision of Procurement Commission and the time of entering into contract, minimum 10 days (to PMB) • After contract award (to Latvian courts)

27. Step 12 – Proceed with contract • Note the job of the Procurement Commission has finished and the Contracting authority proceeds with the contracting process • Can’t enter into contract until at least 10 days after publication of the notice • Contract is between Contracting authority and successful tenderer

28. Step 13 – Retain records • Records have been made throughout the process: • Retain for accessibility • keep copies of report of Procurement Commission • for use as management information (e.g. Technical specifications)

29. Control of major projects • Procurement is one step in the project cycle: • Identify need • Research (option appraisals, business case) • Design • Investigate market • Procurement • Enter into contract • Run and manage contract (many years) • UK OGC – sponsored Gateway process

30. Restricted competition (Latvia) – 16 key steps • Identify purchasing need • Form procurement commission • Draft tender documentation and specifications • Formal announcements • Selection Regulations sent to candidates • Respond to any requests for information • Sumbission of applications by candidates • Selection of candidates • Preparation of tender documentation and invitations to tender • Submission of tenders • Tender opening • Evaluation of tenders • Announcement of results • Complaints period • Proceed with contract • Retain records

31. Steps 1 – 6 • Identify purchasing need • Form procurement commission • Draft tender documentation and specifications • Formal announcements • Selection Regulations sent to candidates • Respond to any requests for information

32. Step 7 – Submission of applications by candidates • Expressions of interest at first stage

33. Step 8 – Selection of candidates may not be by weighted evaluation can be by compliance only Within 10 days of closing date specified in Selection Regulations additional information can be obtained from supplier (clarification) Notify unsuccessful candidates within 3 days of taking decision Aiming to have between 5 and 20 tenderers

34. Step 9 – Preparation of tender documentation and invitations to tender • Only sent to the selected candidates • Time periods: • 40 days above 120 000 Ls • 25 days less than 120 000 Ls • 15 days less than 50 000 Ls • Gives time for good tenders

35. Steps 10 - 16 Submission of tenders Tender opening Evaluation of tenders Announcement of results Complaints period Proceed with contract Retain records

36. MAIN points from SF / CF regulations Project procurement must comply with EU rules on award of public contracts[SF1260/99 Art 12;CF1164/94 Art 8-1] Publication notice in OJEC [SF;CF 1164/94, Annex II Art I] CF: Implementing body shall retain all tendering and contracting documents as part of the required ‘audit trail’ for each Project [1386/02 Annex I para 3] SF: documents on tendering and contracting procedures required for ‘audit trail’ [438/01 Annex I para 3] Contracts to include access clause for all persons [SF 448/01Art 7-3c;CF1386/02, Art 6-4c]

37. Possible issues to consider When do we begin to plan the procurement? Who is the contracting authority? Do we have an option over procurement strategy? Who needs to be involved the procurement process? How to identify any risks beyond the Latvian Law (from EU rules)