South West Employers

South West Employers Legal Aspects & EU Procurement Trainer: Date:

Activity 1 - Icebreaker How many points do you have? _______ One unusual fact I have found out about someone here is? ____________________________ (5 points)

Activity 2 - Groundrules • Groundrules help to create a positive and safe learning environment. Discuss and agree a list of between 3 and 5 rules that all participants are comfortable with

At the end of the session, participants will have knowledge and an understanding of: Some of the key legal and procedural requirements of the EU public procurement directives Public Contracts directive: Application of threshold values and competition requirements Procurement routes: tenders, frameworks and negotiated approaches Best practice tendering Legal challenges and implications for public procurers Selection and Award Remedies directive: ‘Alcatel’ and managing challenges Freedom of Information Act and transparency Objectives

Sections • Legal framework and thresholds • EU procurement procedures • Legal challenges and implications • Tendering practice

Define & review need Exit & termination Manage contract performance Develop specification Manage implementation and transition Determineprocurement strategy Contract award Invite Pre-qualify suppliers Negotiate? Evaluate tenders Issue RFQ or ITT What is procurement? “ . . . process of acquiring supplies, works and services, covering acquisition from both third parties and in-house providers. The process spans the whole cycle from identification of needs, through to the end of a service contract or the end of the useful life of an asset” • Includes: • Revenue expenditure • Capital expenditure • Strategic commissioning • Acquiring third sector services • Grant-funded opportunities • Collaboration with others

EC Treaty (Recital 9) EU Consolidated Directive 2004/18/EC Public Contracts Regulations 2006 (A) Your local Contract Procedure Rules Competition Act – a more generic law Regulations & governance • Key principles: • Equal treatment • Non-discrimination • Transparency • Mutual recognition • Proportionality • Value for Money These rules and regulations are enforced with statutory powers and there would be specific legal ramifications in our failure to comply. The recent growth in legal claims and challenges – combined with an evolving backdrop of legislation and case law – places increasing responsibility on all public officers to ensure adherence to procedure and due process

Types of procurement . . . same principles, same policies, similar procedures

Shared Services and collaboration • Trading between two independent public sector bodies (non-Crown) is also subject to the competition requirements of the Public Contracts Regulations • In-house service provision is exempt • Three key tests for ‘in-house’ provision: • Structural dependence – do we have strategic ownership/control over the party? • Economic dependence – is the other party wholly funded by us? • No private sector participation • If explicitly set up as ‘central purchasing body’ such as OGC, then exemption may apply

EU Thresholds As of 1 January 2010 Remember:rules of aggregation apply when estimating contract value Goods and services = £156,442 Works [projects] = £3,927,260

Aggregation rules • Apply to the total contract value, not simply an annual or monthly amount and including extensions • Ongoing requirements (supplies and services) require aggregation over minimum of 48 months • Either aggregate projected values over next 4 years • Or, take last 12 months’ expenditure and x 4 • Need to aggregate total expenditure across an authority • Avoid disaggregation • Limiting contract length to reduce value below thresholds • Breaking up needs to multiple contracts, each below threshold • Considered breach of EU procurement directives

Activity 3 - Aggregation • Work in pairs or small groups and for each of the scenarios, identify the aggregated value of the contract opportunity and state whether this is above or below the relevant EU threshold

Restricted procedure Open procedure Framework agreement Competitivedialogueprocedure EU procurement routes EU procurement procedures Acceleratedprocedure Negotiatedprocedure Central purchasingBodies Electronic auctions Dynamic purchasing systems

Process overview – Open Tender Min: 52 days Max: 12 months Publish PIN in OJEU (optional) Publish Contract Notice in OJEU Receive Expressions of Interest Max: 6 days Send out Invitation to Tender Min: 45 days 40 days if hosted 15 days with PIN Manage tender clarifications Receive tenders Evaluate tenders(exclusion and selection) Mandatory standstill period Min: 10 days Award contract Debrief unsuccessful tenderers Max: 48 days Publish Award Notice in OJEU

Process overview – Restricted Tender(assumes electronic submission) Min: 52 days Max: 12 months Publish PIN in OJEU (optional) Publish Contract Notice in OJEU Receive Expressions of Interest Max: 6 days Min: 30 days Send out PQQs Receive completed PQQs Evaluate to determine shortlist(exclusion and selection) Send out Invitation to Tender Manage tender clarifications Min: 35 days 30 days if hosted 17 days with PIN Receive tenders Evaluate tenders Mandatory standstill period Min: 10 days Award contract Debrief unsuccessful tenderers Max: 48 days Publish Award Notice in OJEU

Framework Agreements • Act as ‘call-off’ arrangement for 1, 3 or more suppliers • No commitment to specific volume – ideal where demand not really known • If pre-existing, considerable time/efficiency advantages – no full tender – however can be time-consuming to set up • Maximum length: 4 years • Examples: stationery, spares, consultancy • Examples of framework suppliers are Buying Solutions and Pro5 • Risk that suppliers can consider the mini competitionas a ‘double tender’

Negotiated approach (single supplier) • EU requires specific justification to use these procedures • Specific limited circumstances: • When all tenders have proven irregular/unacceptable • No applications or tenders have been received • Where artistic/technical rights are exclusively protected • Extreme and unforeseeable urgency • Goods for R&D or experimentation only • Partial replacements of existing goods • Raw material commodities from exchange markets • Liquidation/bankruptcy conditions • Design contests • Specific relation to existing works Services & works Supplies Services Works You should refer to your legal advisers for clarification Some CPRs require prior written consent before negotiation is permitted

Comparison

Activity 4 – Procurement routes • Work in pairs or small groups and for each of the scenarios, identify which procurement route you should adopt given the requirements of the EU Directives

Point of No Return Ability to influence the procurement outcome Once the OJEU contract notice has been published and the tenders invited, there is limited opportunity to influence the outcome Stages in the procurement procedure A full EU procedure can take 6 -12 months to award the contract

What is a challenge? • Any third party has the right to challenge the procedures and decisions we make • Derived principles of EC Treaty (Recital 9): • Equal treatment • Non-discrimination • Mutual recognition • Proportionality • Transparency • Alcatel provides a specific formal opportunity – but there are wider general opportunities for challenge too • General trend: challenges are on the increase

New Remedies Directive • Remedies Directive 2007/66/EC - incorporated into UK law by 20 December 2009 • Key provisions: • EU-wide adoption of the minimum 10-day ‘standstill’ period • Requirement to suspend procedure once challenged • Contracts to be considered ‘ineffective’ where serious infringement (eg no prior contract notice, no standstill etc)

What is the impact of a challenge? • Potential suspension of process (…delay and disruption) • Investigation and discovery of documentation • Consultation with relevant third parties • Potential legal involvement/action (…cost) And if outside of procedure: • Potential injunction/set aside • Potential damages • Reputational issues • Potential disciplinary action for the relevant officer(s)

Recent case law - implications • Tenderers must be on equal footing with transparent criteria • Can not evaluate suitability or experience of supplier at ‘award’ stage • Must provide full transparency of evaluation criteria • Can not award marks for ‘exceeding’ requirements • The full sub-criteria needs to be disclosed • Award must be based on stated evaluation criteria • Cannot be selective in choice of which price elements to consider • MEAT implies cost has to be one of the criteria

Activity 5 - Learning Points Summary • Selection and award are two ________ processes within the restricted procedure • Tenderers must be treated on an ___________ • Once selected, cannot __________ selection • Must provide full ____________ of evaluation criteria • Award decision must be based on ______ criteria • ____ must be one of the award criteria in MEAT • Cannot be _______ in your evaluation • Cannot score additional marks for ___________ stated added value partial Cost re-evaluate separate transparency equal basis

Stage 1: Exclusion Restricted Procedure: Selection & Award • Ineligible tenderers (offenders, insolvencies, etc) • (Regulation 23) • Failure to meet “minimum standards” • (Regulations 24 and 25) Stage 2: Selection • Selection of firms to invite to tender [short-list] • (Regulation 16) Stage 3: Award • Award the tender to MEAT (or lowest price) • (Regulation 30) “A contracting authority shall use criteria linked to the subject matter of the contract to determine that an offer is the most economically advantageous, including quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, running costs, cost effectiveness, after-sales service, technical assistance, delivery date, delivery period and period of completion.” (Regulation 30)

Activity 6 – Selection & Award • Work in pairs or small groups to consider each of the criteria and decide in which part of the Selection & Award process you should be assessing them

Restricted tendering • Most popular route – two-stage process • ‘Pre-qualifies’ acceptable suppliers • Basic process: • Issue PIN (optional) • Advertise OJEU notice • Pre-qualify expressions of interest – selection decisions • Invite tenders (typically 5 – 9 tenderers) • Evaluate tenders – award decision • Standstill period • Award contract

PINPrior Indicative Notice Non-mandatory Helps provide prior notice (up to 12 months) Helps reduce timescales OJEUmandatory above threshold Advertisement Serves as public notice of contract opportunity to respond Timescales are mandatory Required, irrespective of procurement route Notices

Pre-qualification questionnaire • Use your authority’s standard PQQ template, which should: • Identify all suitable and capable providers • Assess regulatory compliance • Assess key assurance criteria (such as E&D) • Identify and regulate sustainability • Evaluate the PQQ responses: • Minimum standards • Shortlist for tendering • Notify and debrief • Avoid repeating the PQQ evaluation criteria in the subsequent ITT

Tips for pre-qualification • Ensure every pre-qualified can fulfil the requirements • Check basic compliance documentation • Credit check • Check available references • Avoid subjective and unsubstantiated selection • Document your evaluation and archive

ITT – what to include • Background information • Instructions to tenderers • Form of Tender • Terms of Reference/Specification • Terms and conditions • Pricing schedule • Acceptance procedures, award criteria (and subcriteria) and timescales • Contact and process for queries • Non-collusive declaration (bona fide tender)

Managing clarifications • Bidders will sometimes ask questions for clarification • Sometimes for genuine reasons • Sometimes for other motives • The basic golden rules: • Keep all communication written (and recorded) • Communicate with all bidders equally – same message, same time • Avoid 1:1 communications of any kind • Avoid controversy – keep it wholly professional • Remember this correspondence could become part of the contract documentation

Tender submissions • Observe the deadline • Comply with procedures in your CPRs – there are strict legal implications • Provide written receipt • Keep securely stored on your premises until agreed time of opening • Record opening details

Tender evaluation • Evaluation criteria – as published on your OJEU notice and recorded in the ITT • Appraisal logistics: • Who? • When? • How? • Security and commercial sensitivity • Ethics and impartiality • Document the output

Who does the evaluation? • Subject to scale and complexity • A good buyer will include a wide mix of expertise in the evaluation • Team should have been decided during the procurement planning phase – it needs to reflect the procurement outcomes and score with objectivity • Make sure you manage clarifications with equality • Record all correspondence and evaluation scorings

Qualified bids • Qualified tenders = non-compliance • Depending on your ITT instructions, the supplier has chance to remove qualifier or face disqualification • You must follow this rule strictly – what is fair for one, must be fair for all • Make sure any correspondence on this isrecorded on file

Making the award • Follow the procedures • Document it • Write to successful and unsuccessful tenderers • Debrief unsuccessful tenderers • Provide for a standstill ‘alcatel’ period (10 days) • Make the award conditional on acceptance of all final agreements • Follow up with contract – avoid ‘letters of intent’

The standstill time limits: The standstill period is a minimum of 10 days where notice sent electronically When sent by other means, either: 15 days from day of sending; or 10 days from day of receipt The Standstill period must end on a working day i.e. if standstill period would end on a non working day then the actual standstill period ends at the end of the next working day The standstill period ends at midnight Standstill Notice (Award Decision Notice) has to include: The award criteria unless already published The reasons for the decision, including the characteristics and relative advantages of the successful tender The scores obtained by the recipient and the party to be awarded the contract The successful party's name A precise statement of when the standstill period is expected to end ‘Alcatel’ standstill period

Debriefing suppliers • All unsuccessful tenderers should be written to stating the reason they lost and how they ranked • Include comparisons to the winning bid • They may request further debriefing with more detailed feedback • Unsuccessful tenderers have the right to know the reasons for rejection • Assists suppliers in improving performance if the debriefing includes weaknesses of unsuccessful bid • Assists in establishing open and honest reputation • Debriefing must be tailored to the tenderer • Buyers should record the results of the debriefing forfuture reference

Documenting decisions • Regulatory compliance • Audit trail • Due process • Compliance • Public interest • Probity • Political sensitivity/interest • Freedom of Information Act 2000 implications

Activity 7 – Reflecting on learning • Discuss examples that group members have been involved in for a recent tendering situation • Reflect on the content of the entire training day to explore what you might do differently having now attended the training session

Objectives • At the end of the session, participants will have knowledge and an understanding of: • Some of the key legal and procedural requirements of the EU public procurement directives • Public Contracts directive: • Application of threshold values and competition requirements • Procurement routes: tenders, frameworks and negotiated approaches • Best practice tendering • Legal challenges and implications for public procurers • Selection and Award • Remedies directive: • ‘Alcatel’ and managing challenges • Freedom of Information Act

South West Employers