Project funded by The European Union Government of the Republic of Serbia European Integration Office INDUCTION TRAINING SEIO Implementation: Tendering,

Project funded byThe European Union

Government of the Republic of SerbiaEuropean Integration Office

INDUCTION TRAINING SEIO

Implementation: Tendering, Procurement and Budget Support


Government of the Republic of Serbia

European Integration Office

Training Objectives Overall the training will provide basic information on EU contracting procedures so that these can be taken into account when preparing implementation plans, sequencing and monitoring of future IPA Actions.

Specifically, the training will explain: the PRAG and its relationship to the EU Financial Regulation; contract types and their uses; required documents for each contract type and procurement

procedurecontract value and its effect on procurement procedures time taken to complete the various procurement procedures

and how to incorporate this into the development of realistic implementation plans

requirements for budget support




Contracts Contracts are the normal legal basis for the

disbursement of IPA finances (there are others e.g. Delegated Agreements, Sector Budget Support)

In EU pre-accession funds a distinction is made between procurement contracts and grant contracts.

In procurement, the clients requirements are specified in contract documents (e.g. Terms of Reference for consultants).

By contrast, in grant schemes the client explains the problems and potential grant contractors make proposals to address these problems. The client chooses the best proposal and awards the grant i.e. The grant awardees design the solutions and not the clients (as in procurement).




PRAGPractical Guide to Contract Procedures for EU External

Actions (PRAG)http://ec.europa.eu/europeaid/prag/document.do?locale=en

Regulation No. 966 /2012 of the European Parliament and the Council on the Financial Rules applicable to the general budget of the Union

Commission Delegated Regulation No. 1268/2012 of 29 October 2012 on the Rules of Application of Regulation No 966/2012 of the European Parliament and Council on the financial rules applicable to the general budget of the Unionhttp://ec.europa.eu/budget/documents/financial_regulation_en.htm

http://ec.europa.eu/europeaid/prag/document.do?locale=en




http://ec.europa.eu/budget/documents/financial_regulation_en.htm

http://ec.europa.eu/budget/documents/financial_regulation_en.htm




Types of Contract and Associated Documents

IPA ActionDocument

SERVICES

SUPPLIES

WORKS

Terms of Reference

Technical Specifications

Bills of Quantity

GRANTS Guidelines for Applicants

Procure

men

t




Tendering Procedures

SERVICES>€300,000International restricted procedure

< €300,000 but > €20,0001.Framework contracts2.Competitive negotiated procedure

< €20,000Single tender

SUPPLIES> €300,000 International open procedure

<€300,000 but > €100,000 Local open procedure

<€100,000 but > €20,000Competitivenegotiated procedure


WORKS>€5,000,000 1.International open procedure 2.International restrictedprocedure

<€ 5,000,000 but > €300,000 Local open procedure

< € 300,000 but > €20,000 Competitive negotiated procedure


GRANTS >€2,000,000 International

call for proposals

>€2,000,000Local call for proposals

For any amount in cases of

urgencyDirect grant




Contracting TimesContract

TypeProcurement

ProcedureAverage

Time Taken

SERVICE International Restricted Tender

(9)-12 months

Framework (3)-5 months

SUPPLIES International Open Tender 9 months

Local Open Tender 6 months

WORKS International Open Tender 12+ months

Local Open Tender 9-12 months

GRANTS International Call for Proposals

12+ months

Local Call for Proposals (6)-9 months




Service Contracts: International Restricted Tender Procedures

Prepare ToR

Negotiations with EC

Publication of Procurement Notice

Establish Sort List and prepare tender dossier


Tender preparation /submission

Tender evaluation, prepare Evaluation Report and contract dossier


Contract Signature

Months 1 2 3 4 5 6 7 8 9 10 11 12




Service Tender Dossier

A. Instructions to the tenderersLetter of invitation to tenderInstructions to tenderers

B. Contract Contract, Special Conditions

Terms of ReferenceOrganisation and MethodologiesKey ExpertsGeneral Budget breakdownConditions for service contracts

C. Other informationShortlist noticeAdministrative compliance gridEvaluation grid

D. Tender submission form




Supply Tender Dossier

A. Instructions to the tenderersLetter of invitation to tenderInstructions to tenderers

b. ContractContractSpecial conditionsAnnexes

General conditions for supply contractsTechnical specificationsBudget breakdownModel for performance guaranteeModel for advance guarantee

C. Other informationGlossary of termsAdministrative compliance gridEvaluation grid

D. Tender submission form




Works Contracts Works contracts cover construction, there are many national ‘standard’ forms of contract. Despite this, the EC have standardised on the use of an international contract format developed by the Federation Internationale des Ingenieurs-Conseils (FIDIC). It should be noted that IFIs (WB, EBRD) have their own standard documents which must be used by recipients.

The most commonly used forms of contract available under FIDIC are:

Conditions of Contract for Works of Civil Engineering Construction (The ‘Red Book’)Conditions of Contract for Design –Build and Turnkey (The ‘Orange Book’)Conditions of Contract for Electrical and Mechanical Works (The ‘Yellow Book’)Short Form of Contract (The ‘Short Form’).




Most works contract dossiers contain the following documents:

The Tender (Contractor’s offer)The General Conditions of Contract (FIDIC Part I)The Conditions of Particular Application (FIDIC Part II Clauses)The Technical SpecificationsThe Design Documents (Drawings)The priced Bill of Quantities /Schedule of RatesAny other document forming part of the contract e.g. letters of clarification

Works Tender Dossier




Bills of Quantity (BoQ)An itemised list showing the number/ quantity of items required to complete the works, the units of measure, the rate per unit of quantity and the consequent total cost for that item.

The BoQ may contain a number of bills classified by structure, trade, or standard method of measurement. In turn each bill will be broken down into separate items covering all elements of the works. The total number of items can be many hundreds.

During construction the quantity of each item is re-measured and using the Contractors quoted unit rates, the value of the actual works completed by the Contractor is measured




Role of the ‘Engineer’

One of the main aims of Contractors, whilst making every effort to complete the works according to the contract, is to maximise profits wherever possible.

This means the Contractor will interpret contract provisions to maximise advantage e.g. providing the cheapest materials to meet the minimum requirements in the specifications or by requesting frequent time extensions.

Under FIDIC conditions an independent ‘Engineer’ must be appointed to supervise the works and to ensure that they are carried out according to the contract. The Engineer issues ‘Take Over’ and ‘Default Liability’ Certificates when the works are completed




Responsibilities of the EmployerEnsure that the works are legally acceptable

Appoint the Engineer

Define the scope of the Engineer’s responsibilities

Ensure that the site is freely available

Provide for the Contractor's needs

Pay the Contractor

Consult with the Engineer on contractual obligations e.g. delays (time & cost to Contractor); rejection (cost to Employer); default of the Contractor (cost to Employer) before determining the amount due.




SPD: Implementation Planning

SECTOR TITLE

2014 2015 2016 2017 2018 2019 2020

Q3 Q4 Q1Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

ACTION 1P P C C C/I I I I I I I I I I I I I I

Activity 1.1 P P C C I I I I I I I I I I I I

Activity 1.2 P P C C C C I I I I I I I I I I

…..

ACTION 2 P P P C C C C/I I I I I I I I I I I I

Activity 2.1 P P P C C C C I I I I I I I I I I I

Activity 2.2 P P P C C I I I I I I I I I I I I

P = programming (period when the IPA action programme is expected to be adoptedC = procurement and grant award procedureI = implementation period




Contracting & Disbursement Deadlines

Deadline for concluding the Financing Agreement

The final date for the signature of the Financing Agreement is X+1 (where X=year in which budgetary commitment was made). Conclusion of FA=year N

Contracting deadline The end date for the signature of contracts (including grant contracts) is 3 years from the date of conclusion of the Financing Agreement i.e. N+3

Deadline for the execution of contracts

The end date by which contracts (including grant contracts) must be finished is 3 years from the contract signature. The contracting deadline for the FA=N+3+3

Disbursement deadline The end date for making payments to contractors is 1 year after the deadline for executing contracts i.e. N+3+3+1

Final date for the implementation of the Financing Agreement

The end date for closure of the Financing Agreement is 8 years. After this date no financial transactions can be made legally under the Financial Agreement concerned




18

Collective rural projects

Land consolidation

Improved farming tools

Industrial buildings for new

companies

Restoration of the environment /

rural landscape

Reinforcement of rural producers

Modernisation and adaptation

Attraction of outside

companies

Improved value of

natural areas

Improved productivity

Development of existing activities

New activities (tourism)

Better image of

rural areas

Increased revenues

Jobs created & safeguarded

Better living conditions

Stopping rural exodus

Operations

Results

Specific Objectives

Overall Objective

Activities

Programme Intervention Logic


Government of the Republic of SerbiaEuropean Integration Office

INDUCTION TRAINING SEIO

Budget Support




What is Budget Support (BS)?

BS is a method of delivering financial assistance which normally has 4 steps:

(Sector) Policy Dialogue Financial Transfers (in ‘tranches’) to National

Treasury Account Performance Assessment Capacity Development

BS is delivered by means of ‘Sector Reform Contracts’.




Political and Economic Focus of IPA-BS

Compliance with the political criteria should be the primary focus of IPA2 BS. In particular, assistance should support preparations for acquis chapters 23 and 24 (The ‘Rule of Law’)

For the economic criteria, the main focus of IPA2 BS should be on supporting the establishment of a functioning market economy (Copenhagen Criteria: i.e. ‘The ability to withstand the pressures of the internal market’)




Assessment of Eligibility

Assessment takes place at 2 stages in the programme cycle.

During programme preparation: assessment of relevance (are key constraints /weaknesses addressed?) and credibility (realism, institutional capacity, track record, political commitment)

During programme implementation: assessment of progress made in policy implementation (benchmarked against reform commitments)




Risk Management FrameworkRisk management is an internal assessment of risk levels based on the analysis of replies to questionnaires in 5 categories, namely:1. Political2. Macroeconomic3. Developmental4. Public Financial Management5. Corruption /FraudThere are 4 risk levels: Low Moderate Substantial HighBeneficiaries are expected to define their risk response by means of ‘Mitigation Measures’ (these are monitored)




Whether to Provide BS?

The EC decision on providing BS is based on 3 assessments:

1. Assessment of political commitment to a reform agenda (in line with EU accession)

2. Assessment of eligibility

3. Assessment of risks and mitigation measures




Variable Tranches: Performance Reserves‘A Performance Monitoring System and related disbursement criteria is at the heart of any budget support operation’ (EC)

BS disbursements are of 2 sorts:

Base (or fixed) tranches: these are linked to eligibility criteria

Variable tranches: these are intended to create an incentive for improved performance and are based on performance indicators.

The EC limit (cap) the use of variable tranches to avoid unpredictability /volatility of disbursements. Typically, Sector Reform Contracts cover commitments for 3 years with an upper limit of 40% variable tranches




Variable Tranche (Performance) Indicators The following principles should be applied:

1. Targets and indicators should be Coherent with sector problem analysis and programme objectives

2. Whilst combined indicators may be used, the emphasis should be on Results

3. Number of indicators should be limited to a maximum of 8 per Tranche (to avoid loss of policy focus)

4. Indicators, targets and assessment methodology should be defined during programme preparation




Project funded by The European Union Government of the Republic of Serbia European Integration Office INDUCTION TRAINING SEIO Implementation: Tendering,

Documents

european union government

european parliament

procurement contracts

contract procedures

international open procedure

union http

grant contracts

local open procedure