Holland@CERN 2016 Floris Bonthond 31 May 2016

1. Holland@CERN 2016Floris Bonthond31 May 2016

2. Agenda – Procurement at CERN What does CERN buy? Procurement budget Industrial Return and Return Coefficients How? Procedures and Rules Benefits from doing business with CERN How to become a successful supplier Contacts 2

3. What do we buy? Recurrent supplies and services • Civil engineering • Buildings, roadworks • Utilities • Cooling & ventilation • Power distribution, cables, overhead cranes • Infrastructure & services • Metal structures • Mechanical engineering • Radiation shielding • Transport & handling • Safety & access control • Installation, operation & maintenance • Data acquisition, computing & networking • Various supplies • Furniture, tooling, gases, etc. 3

4. What do we buy? Accelerator technologies required for consolidation projects and new developments • Industrial controls & field buses • Timing & “fast” real-time controls • Beam collimation • Beam injection, ejection & dump • Radio-frequency equipment • Power converters • Beam instrumentation & diagnostics • Permanent and electro-magnets • Cryogenic equipment • Vacuum equipment 4

5. What do we buy ? Standard or Non-Standard? • Off-the-shelf or non-standard products which can be produced with existing manufacturing techniques and/or technologies => functional specification • Non-standard products where industry has neither the required know-how nor the immediate interest to develop and design the products for its existing markets => built to print • Prototypes and/or pre-series needed?

6. HL-LHC “Shopping list” Major upgrade in the 2020s. Increase LHC luminosity (rate of collisions) by a factor of five beyond original design value and integrated luminosity (total collisions created) by a factor ten. http://project-hl-lhc-industry.web.cern.ch/content/main-procurement-needs-hl-lhc 6

7. Procurement budget 7

8. Procurement Expenditures 2000-2015 Long term average Long term average 8

9. TOTAL COMMITMENTS: 269.1 MCHF 9

10. TOTAL COMMITMENTS: 7.81 MCHF 10

11. Contributions for 2016 (CHF) * Associate Member States

12. Industrial Return and Return Coefficients 12

13. Industrial Return Coefficients The return coefficient of a Member State for Supply contracts for a given twelve-month period starting on 1st March is defined as: The ratio between that Member State's percentage share of all purchases of supplies (excluding purchases funded by non-Member States) during the preceding four calendar years and that State's percentage contribution to the Budget over the same period. For the period 01.03.2016 and 28.02.2017, aCERN Member State is considered to be well balanced if its Industrial Return Coefficient is: > 0.90 for Supply contracts; >0.40 for Industrial Service contracts. Otherwise, it is considered to be well balanced. The return coefficient for the Netherlands for 2015 is 0.49 for supplies and 0.24 for Services. 13

14. Collaboration with the Netherlands Industrial return for supplies, target for 2016 = 0.90

15. Industrial return

16. How? Procedures and Rules 16

17. Legal framework CERN, an Intergovernmental Organization, was established in July 1953, by the “Convention for the establishment of a European Organization for Nuclear Research”. As an Intergovernmental Organization, CERN is not a legal entity under national law but governed by public international law. CERN benefits from immunity from national jurisdiction and execution. Thus, legal disputes between CERN and its suppliers and contractors are not submitted to national courts but solved via international arbitration. CERN is thus entitled to establish its own internal rules necessary for its proper functioning, such as the rules under which it purchases equipment and services. 17

18. Mission of Procurement and Industrial Services • Procure all supplies and services for CERN • Meeting all requirements and guarantee that contracts fulfil all the technical, financial and delivery requirements • At the lowest possible overall cost, while • Achieving balanced industrial return for the CERN Member States by setting out appropriate procedures including, but not limited to, alignment, splitting or limited tendering • Respecting the CERN Procurement Rules

19. Procurement Principles • CERN purchases supplies and services and awards contracts in compliance with the principles of transparencyandimpartiality • Limited to firms established in the Member States • Invitation to tender documents are drafted in an objective way so as to guaranteefair competition • As a rule, CERN’s tendering procedure is selectiveand does not take the form of open invitations to tender or price enquiries • The opening, negotiation and evaluation processes of the bids are strictly confidential • Contract adjudicated to firms presenting either the lowest technically compliant bid or that represents the best value for money

20. Procedures for obtaining offers • Requirements < 10’000 CHF Users may issue enquiries directly provided CERN procurement rules are followed • Requirements > 10’000 CHF and < 200’000 CHF • Price Enquiries issued by Procurement Service • Time for bidding 4 weeks; Invite 3 - 5 firms; if > 50’000 CHF sent to Industrial Liaison Officers (ILOs) for information • Adjudication based on lowest offer (FCA price) which complies with all requirements, subject to the rules aimed at achieving well balanced industrial return coefficients for the Member States (from 100’000 CHF) • Requirements > 200’000 CHF Market Surveys & Calls for Tenders issued by Procurement Service 20

21. Requirements exceeding200’000 CHF • Announcement • List of firms • Market Survey • Invitation to Tender • Basis of award • Opening & verification of bids • Contractual negotiation • Contract 21

22. Phases of an IT: Announcement https://found.cern.ch/java-ext/found/CFTSearch.do

23. LIST OF FIRMS • Firms proposed by users (hence the usefulness of being • known by the CERN users) • Firms selected from CERN’s supplier database or other sources by the Procurement Service (hence the usefulness of registering with CERN) • Firms from the Member States which have expressed an interest in a Market Survey or a similar requirement • Firms proposed by ILOs and Finance Committee or Council Delegations 23

24. Market Survey • Identify, evaluate, qualify and select firms able to provide the supplies or services • Obtain, at an early stage, information from firms interested in tendering • Allow Member State Delegations, ILOs & other parties involved to contribute by proposing suitable potential bidders • Encourage firms to seek an early exchange of technical information • Update & improve CERN’s Suppliers Database

25. Invitation to tender • Sent to firms selected following Market Survey sent via E-tendering • Tender form & annex (Technical Questionnaire) • Technical specification & annexes • Working on the CERN site • General Conditions for Invitations to Tender CERN/FC/5312-I/Rev. • General Conditions of CERN Contracts CERN/FC/5312-II/Rev. • Invite: • 10 firms max. for contracts between 200’000 and 750’000 CHF • 15 firms max. for contracts exceeding 750’000 CHF • All call for tenders sent to Industrial Liaison Officers (ILOs) for information • Subject to approval by Finance Committee (if > 750’000 CHF) • Deadline for bidders to submit a bid is at least 4 weeks from mailing date (with a longer period for more complex requirements) 25

26. Basis of Award – Supply contracts ….and…. Supplycontractsshallbeawarded on FCA price, «Lowestcompliantbid » basis….

27. Lowest cost ……? Takes into account: • Initial investment • Operating costs: • Energy consumption • Spares • Maintenance • Training, etc. • Disposal costs

28. Verification of bids • 1. All requested documents submitted? • 2. Bid technically compliant? Go to next lowest bid • 3. Origin of bid? • 4. Alignment? C. Contractual negotiations A. Verify calculations of all bids B. Check conformity of lowest bid

29. Country of origin • Supply contract:country(ies) in which the goods are manufactured or where the last major modification will take place. If at least 60% of the total amount of the bid comes from poorly balanced Member States, then the whole bid will be treated as that from a bidder in a poorly balanced Member State • Service contract:country(ies) in which the bidder is established 29

30. The alignmentrule • For supply contracts to be awarded on the lowest compliant bid basis and exceeding 100’000 CHF in value • Aimed at achieving well balanced industrial return coefficients for the Member States • A bidder offering goods originating from poorly balanced Member States is offered to align his price, under certain conditions, to that of the lowest bidder and thereby be awarded the contract The following countries are considered to be well-balanced in the period 01.03.2016 until 28.02.2017 for Supply contracts: Bulgaria, Czech Republic, France, Hungary, Italy, Switzerland

31. The alignment rule, how it works* Case 1: > 60% of value of lowest bid originates from Poorly Balanced Member States Contract Case 2: Lowest bid originates from Well Balanced Member States CERN asks first bidder proposing bid with ≥60% of value originating from Poorly Balanced Member States to align price (if price difference < 20%) Ok Contract Not ok b. CERN asks second bidder proposing bid with ≥ 60% of value originating from Poorly Balanced Member States to align price (if price difference < 20%) Ok Contract Not ok c. CERN awards contract to lowest bidder * Applies only to technically compliant bids Contract 31

32. Basis of Award – Service contracts Service contracts are awarded on a «Best Value for Money» basis to the bidder submitting the most economically advantageous bid

33. Best Value For Money The following criteria and weights will be applied by CERN to evaluate the bids for Service contracts:

34. Benefits from doing business with CERN 34

35. Study of Technology Transfer through Procurement • Excluded: civil engineering, standard items, services and low value orders • 629 companies contacted 35

36. Results of contracts with CERN • 38% had developed new products • 42% increased international exposure • 44% improved technological learning • 52% would have had poorer sales performance without CERN • 17% opened a new market • 60% acquired new customers • all firms had derived great value from CERN as a marketing reference

37. Study of impact of CERN contracts on firmsInternship report, P. Fessia, 2001 • Firms having received at least one order > 50’000 CHF during 2000-2001 • Excluded, standard services and off-the-shelf products • 250 companies contacted 37

38. Result of contracts with CERNInternship report, P. Fessia, 2001 • New products • > 50% had developed new products • > 65% had either developed new or modified existing products • Of these, 50% have introduced or planned to introduce new products on the market 38

39. Results of contracts with CERN Internship report, P. Fessia, 2001 • Improvements • 45% had improved technical competencies (recognized that CERN had helped reduce risk of new developments) • 40% had invested to improve production • 30% considered they were more competitive • 30% considered new markets • 33% had used the CERN contact to establish new relationships and alliances with other firms • Marketing • >70% of SMEs consider the CERN reference as strategic for their business 39

40. Other reports and studies… 40

41. How to become a successful supplier 41

42. Successful bidders and contractors • Often small – medium sized and flexiblefirms • Ensure full understanding of specifications – exceeded specifications may be too expensive (adjudication to lowest compliant bid for supplies) • Communicate with CERN (problems, issues, alternatives, etc.) • Take into account test requirements and documentation • Make best offer directly • Ensure good working relationship with partners and sub-contractors 42

43. Contacts with CERN Dutch Industrial Liaison Officer (ILO): Mr Robert Klopping NIKHEF, Science Park 105 NL - 1098XG Amsterdam +31 20 592 2091 (direct)+31 20 592 2000 (switchboard) 43

44. Doing business with CERN If you wish to know more about CERN’s values, the General Conditions of CERN Contracts, transport and delivery, VAT, invoicing, working on the CERN site and the use of the CERN logo, etc.: http://procurement.web.cern.ch/having-a-contract-with-cern A brochure: http://procurement.web.cern.ch/brochures/doing-business-with-cern A 6-minute video overview: https://procurement-dev.web.cern.ch/doing-business-with-cern 44

45. Registering as a supplier 45

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