Public Procurement Monitoring December 2016

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2 Public Procurement Monitoring December 2016

3 Public Procurement Monitoring Conditions affecting negatively the competition in public procurement, Construction Sector Public Procurement Trends Construction sector Comparative Analysis General overview contract awarding criteria and selection criteria. Findings and conclusions of the public procurement notices monitoring. 3

4 Public Procurement Notices (number and value) December 2016 Public procurement notices for December 2016 amount to 211 with announced estimate value of BGN 162 million. Procurement notices with announced estimate value in December 2016 are 211 or 100% of the total number of procurement notices of a value of BGN 162 million. Procurement notices with no value announced - none in December 2016.

5 Public Procurement Notices (number and value) December 2016 by segments Civil Engineering Infrastructure. 23 procurement notices in December 2016 for this segment, representing 10,9 % of the total number of procurement notices with an announced value of BGN 33 million or 20,4 % of the total value announced in the construction sector. Building Construction as a segment of the construction industry represents 8,5% (or 18 procurement notices) of the total number of procurement notices in December 2016 with total announced estimate value of BGN 26 million, representing 16,0% of the total value announced in the construction sector. Power Engineering Infrastructure 69 public procurement notices in this segment representing 32,7 % of the total number of the procurement notices in November with announced estimate value of BGN 82 million or 50,6 % the total announced value in the sector.

6 Public Procurement Notices (number and value), December 2016, by segments of the construction sector Public procurement notices in the Water Supply and Sewage segment are 8 or 3,8 % of the total number of public procurement notices with announced estimate value of BGN 12 million or 7,4 % of the total announced estimate value. Design and Supervision. The public procurement notices in this segment are 93 or 44,1% of the total number of public procurement notices in December with a total estimate value of BGN 9 million. This is a share of 5,6% of the total announced estimate value of the public procurement notices in the reported period.

7 Public procurement notices by type of construction, December 2016, /number/. Water Supply and Sewage Infrastructure; 3,8% Civil Engineering Infrastructure; 10,9% Power Engineering Infrastructure; 32,7% Design and Supervision; 44,1% Building Construction; 8,5%

8 Обявени обществени поръчки по вид строителство, м.декември 2016 г., стойност. Building Construction 16% Design and Supervision 6% Water Supply and Sewage Infrastructure 7% Civil Engineering Infrastructure 20% Power Engineering Infrastructure 51%

9 Public procurement notices in the Civil Engineering Infrastructure sector in percentage by types of activities for December Civil Engineering Infrastructure. 23 procurement notices in December 2016 in this segment representing 10,9 % of the total number of procurement notices with an announced estimate value of BGN 33 million or 20,4 % of the total announced value in the construction sector. Building, reconstruction and repair of road and railroad infrastructure in December 2016 represent 69,7 % of the total number of procurement notices for the Civil Engineering Infrastructure sector. Cleaning and correction of riverbeds, drainage and increase of rivers throughput, rehabilitation and maintenance of ports in December 2016 represent 4,3 % of the procurement notices in this segment. Cultural monuments and archaeological sites in December No public procurement notices in this section of the Civil Engineering Infrastructure sector. Landfills for household and construction waste in December 2016 represent 4,3% of the procurement notices for the Civil Engineering Infrastructure sector.

10 Public procurement notices in the Civil Engineering Infrastructure sector in percentage by types of activities December 2016 Earthworks in December 2016 this type of works represent 4,3% of the procurement notices in the Civil Engineering Infrastructure sector. New construction and renovation of parks, children s playgrounds, stadiums and recreational areas in December 2016 represent 17,4 % of the total number of procurement notices for this type of activity in the Civil Engineering Infrastructure sector. Winter maintenance and cleaning of the road network in December 2016 no procurement notices in this segment of Civil Engineering Infrastructure sector.

11 Public Procurement Notices in the Water Supply and Sewage Infrastructure in percentage by types of activities December 2016 Public procurement notices in the Water Supply and Sewage Sector are 8 or 3,8 % of the total number of public procurement notices with an announced estimate value of BGN 12 million or 7,4 % of the total announced estimate value. New construction and repair of wastewater and effluent treatment plants in December There are no public procurement notices in this segment. New construction and repair of pump stations in December There are no public procurement notices in this segment of the Water Supply and Sewage sector for the reported period. Construction and reconstruction of water supply and sewage installations in December The share of procurement notices in this segment is 100% of the public procurement notices. Sewage collectors rehabilitation in December 2016 There are no public procurement notices in this segment. Construction of sediment trap and tanks - no procurement notices in this segment in December Water Cycle Project - no procurement notices in this segment in December Drilling Works - no procurement notices in December 2016.

12 Public Procurement Notices in the Building Construction Sector in percentage by types of activities December 2016 Building Construction as a segment of the construction industry represents 8,5 % (or 18 procurement notices) of the total number of procurement notices in December 2016 with total announced estimate value of BGN 26 million, representing 16,0% of the total announced value in the construction sector. New construction holds a share of 5,6 % of the total number of procurement notices in the Building Construction segment in December Reconstruction, repair works and other construction works, restoration and conservation in building construction represent 94,4 % of the procurement notices in the Building Construction segment in December 2016.

13 Public Procurement Notices in the Power Engineering Infrastructure Sector by types of activities December 2016 Power Engineering Infrastructure 69 public procurement notices in this sector representing 32,7 % of the total number of procurement notices in December 2016 with an announced estimate value of BGN 82 million or 50,6% of the total announced value in the sector. Energy efficiency measures - represent 71,1% of the procurement notices in December 2016 in the Power Engineering Infrastructure segment. Repair, reconstruction and assembly works hold a share of 2,9% of the total number of procurement notices in the segment in December New construction in December 2016 holds a share of 24,6% of the procurement notices in the Power Engineering Infrastructure segment. Canceled contracts in December 2016 represent 24.6% of total number of the procurement notices in the Power Engineering Infrastructure segment.

14 Public Procurement Notices in December 2016 in the Design and Construction Supervision Sector Design and supervision. The procurement notices in this segment are 93 or 44,1% of the total number of procurement notices in December 2016 with a total announced estimate value of BGN 9 million. This is a share of 5,6% of the total announced value of public contracts for the reported period. The distribution is as follows : Providing expertise and technical services, consultations, technical assistance represents 2,2% of this type of works in the total number of procurement notices in the Design and Supervision segment in December Investment project development and designer s supervision a share of 37,5 % of the total number of procurement notices in the Design and Supervision segment in December. Construction supervision and preparation of construction site passports a share of 58,1 % of the total number of procurement notices for the Design and Supervision segment in December. Energy efficiency audits, indicates a share of 2,2 % of the total number of procurement notices in the Design and Supervision segment.

15 Share of public procurement notices according to the criterion Source of Financing, December 2016 /number/ according to PPA data OPTTI none OP Regions in Growth 117 Rural Developm ent Program OPRD none EMEPA none. Бюджет- 81 бр. Financial Mechanism of the European Economic Area - none 1 OP Environme nt 9 EU Solidarity Fund none Financial Mechanism of EEA and Norwegian financial mechanism - none National Trust Eco Fund. 2 OPHRD none

16 Trend in Public Procurement according to the criterion Source of funding /number /. Operational Programme INTEREG Greece - Bulgaria none. European Refugee Fund Programme no procurement notices. Connecting Europe Mechanism - none. Bulgarian-Swiss Cooperation Programme - none. Asylum, Migration and Integration Fund 1. Beautiful Bulgaria Project none. Good Governance Operational Programme none. Funding from Agency for People with Disabilities at MLSP - none. Grant Agreement with the Executive Agency "Innovation and Networks none.

17 Public Procurement Monitoring December 2016 according to criterion Contracting Authority Public procurement notices for December 2016 announced by municipalities amount to 176 or 83,4 % of the total number of procurement notices Utilities and public sector in December or 1,9 % of the total number of procurement notices. Hospitals and educational institutions - 7 public procurement notices in December 2016 or 3,3 % of the total number of procurement notices. Ministries and agencies - 23 or 10,9 % of the total number of procurement notices in December Other public procurement notices in December 1 or 0,5%.

18 Public Procurement Notices according to the criterion Contracting Authority, number, December 2016 Source: Public Procurement Agency December 3% 11% 2% 83% Municipalities Utilities and public sector Hospitals and educational institutions Ministries and agencies Other 18

19 Public Procurement Notices Contract Awarding Procedure December 2016 Open procedure 114 public procurement notices or 54,0 % of the total number of procurement notices. Open project competition 1 public procurement notice or 0,5 % Restricted procedure - no public procurement notices. Procedure without publication of contract notice - no public procurement notices. 19

20 Public Procurement Notices Negotiation Procedure December 2016 Direct negotiation 3 public procurement notices or 1,4% of the total number of procurement notices. Negotiation without prior notice 9 or 4,3% of the total number of procurement notices. Public competition - 84 procurement notices or 39,8% Negotiation without prior call - none. Negotiation with prior call none. 20

21 Public procurement notices November Type of procedure open procedure 1% direct negotiation 40% negotiation without prior notice 54% public competition 4% 1% negotiation with prior call open project competition

22 Public Procurement Notices according to criterion: Value,, December 2016 Calculations are based on Public Procurement Agency s data Announced estamate value 100% 22

23 Public contract awarding criterion December 2016 Most economically advantageous tender Calculations based on PPA data No criteria /for awarding contracts/ For a total of 142 procurement notices in December the Contracting Authority has selected the criterion Most economically advantageous tender or 67,3% of the total 211 public procurement notices. 69 procurement notices have no evaluation criteria or 32,7% of the total 211 procurement notices. 23

24 Public Procurement Notices by Type of Funding, December December Operational Programmes; 130 State Budget ; 81 State Budget Operational Programmes

25 ISO SO 9001:2008 (Quality Certificates Management Systems) : ISO 14001:2004 (Environmental Management Systems) OHSAS 18001:2007 (Occupational Health and Safety Management Systems) SA 8000:2008 (International Social Responsibility Standard). ISO 27001:2005 (Information Security Management Systems) IEC 17020:2005 (Requirements for the accreditation and operation of bodies performing inspections)i SO 17025:2005 General requirements for the competence to carry out tests and/or calibrations, including sampling; ISO :2012 specifies the requirements for qualification testing of welders for fusion welding of steels. ISO International standard containing requirements for a Quality Management System. ISO 17024:2003 for qualified personnel in the field of metals. In December 2016 the following certificates are required in the public procurement notices : ISO 9001 : 2008, this certificate is required for 39,3 % of the procurement notices. ISO 14001:2004, this certificate is required for 22,3% of the procurement notices. OHSAS18001:2007, this certificate is required for 2,8 % of the procurement notices. SA 8000 : none ISO 27001:2005 none IEC 17020:2005 none ISO 17025:2005 no requirements ISO :2012 none ISO no requirements ISO :2003 no requirements ISO none ** The percentage is calculated based on the procurement notices excluding those for supervision and procedures without publication of a contract notice.

26 PUBLIC PROCUREMENT MONITORING CONDITIONS AFFECTING NEGATIVELY THE COMPETITION IN PUBLIC PROCUREMENT CONSTRUCTION SECTOR The findings of the Group of Experts at the BCC performing monitoring Conditions, affecting negatively the systems of procurement contract awarding in Bulgaria are as follows : The analysis for December 2016 indicates that breaches, weaknesses and restrictive criteria resulting in subjective decisions and setting of restricting barriers were found in 7 public procurement notices. The trend is toward decrease in the number of breaches by 5 compared to the previous month. Civil Engineering Infrastructure and Water Supply & Sewage 2 registered conditions affecting negatively the competition in public procurement in December 2016 or a decrease in number of breaches by 1 compared to the previous month.. Building Construction no registered conditions affecting negatively the competition in public procurement or maintaining the same level as in the previous month. Power Engineering Infrastructure - 4 registered unconformities in the public procurement notices in December 2016; the trend is toward a decrease by 5 compared to the previous month. Design and construction supervision 1 registered unconformity in the public procurement notices in December 2016 or an increase in levels by 1 compared to the previous month.

27 Violations in Public Procurement Notices by Segments of the Construction Sector, December 2016 Design and supervision Power engineering infrastructure Civil engineering infrastructure and water supply and sewage Building construction Building construction Civil engineering infrastructure and water supply and sewage Power engineering infrastructure Design and supervision Violations

28 Distribution of breaches by Type of Contracting Authority December ,5 December 4 3,5 3 2,5 2 1,5 1 0,5 0 Municipalities OP Regions in Growth - Regional development

29 Public Procurement Monitoring Conditions affecting negatively the competition in public procurement Construction Sector Public Procurement Municipality, District of Bourgas Contracting Authority Sredets Assignment: Overhaul of sites of IV- class road network, located in the municipality of Sredets Subject matter of the contract: construction within the meaning of Art. 3, para. 1 item 1a Subject of the contract, amount and / or volume: "Overhaul of sites of IV-class road network, located in the municipality of Sredets" The types of works included in the subject of the contract are: "Earthworks, "Road works", "Asphalt works" and "Repair of road requisites and facilities." The full scope and exhaustive list of activities due by the Contractor are specified in the tender documentation. Quote: II.2.5) Awarding criteria: P 1- Warranty period Weight: 10 Comment: P 3- Critical points management Weight: 20» 1. Warranty periods are determined by "Regulation 2" and minimum warranty periods are difficult to be evaluation criteria, and also what is meant by critical points management?

30 Public Procurement Monitoring Conditions affecting negatively the competition in public procurement Construction Sector Public Procurement Contracting Authority Blagoevgrad Municipality under the Operational Programme Regions in Growth Assignment: Renovation and improvement Square "George Izmerliev - Makedoncheto" Reconstruction of the square, the sub-square space and fountains, artistic lighting in the downtown area between the buildings of the municipal administration Blagoevgrad, Drama Theatre "Nikola Vaptsarov", the Regional Health Inspectorate, the building of the American University in Bulgaria and hotel "Alen mak". Quote: II.2.5) Contract awarding criteria: Evaluation of samples Weight: 25 Comment: Evaluation of samples of what? There is no clarity in the awarding criteria.

31 Public Procurement Monitoring Conditions affecting negatively the competition in public procurement Construction Sector Поръчка contracting authority Malko Tarnovo Municipality, District of Bourgas under the Regions in Growth Programme Assignment: Engineering for reconstruction, modernization and implementation of energy efficiency measures for multifamily residential buildings in the town of Malko Tarnovo in four lots. Quote: III.1.3) Technical and professional capacity: Required minimum level(s): By construction and/or design "similar" to the subject of the contract should be understood: Construction and assembly works for implementation of energy efficiency measures in buildings, incl. repair and construction works for laying (external) hydro- and thermal insulation and installing window frames in buildings for implementation of energy efficiency measures in existing buildings with an area of thermal insulation at least 600 sq.m., laying of hydro insulation in buildings with an area of hydro insulation at least 450 sq.m. and installing window frames with an area of at least 250 sq. m. / applicable for all lots/. Comment: The contracting authority has set excessive requirements for technical capacity for performance of construction and assembly works in buildings with repair and construction works for laying (external) thermal insulation with an area of thermal insulation at least 600 sq.m., laying of hydro insulation in buildings with an area of hydro insulation at least 450 sq.m. and installing window frames with an area of at least 250 sq. m. / applicable for all lots/

32 Public Procurement Monitoring Conditions affecting negatively the competition in public procurement Construction Sector Public Procurement Contracting Authority Sliven Municipality Assignment: Implementation of engineering works - design, architectural supervision and execution of construction and assembly works relating to the implementation of the National Energy Efficiency Programme for multifamily residential buildings on the territory of Sliven in 12 lots. III.1.3) Technical and professional capacity: Required minimum level(s): Tenderers should have experience in the performance of construction and assembly works/construction and/or design and building with subject identical or similar to the subject matter of this public contract, completed over the last 5 / five / years from the date of submission of the tender. By construction "similar" to the subject of the contract should be understood : Construction works for implementation of energy efficiency measures in buildings, incl. repair and construction works for laying hydro- and thermal insulation and installing window frames in buildings for implementation of energy efficiency measures in existing buildings with total built-up area: at least 1500 sq. m. /applicable for all lots/ Comment: The contracting authority has set excessive requirements for technical capacity for performance of construction and assembly works in buildings with total built-up area: at least 1500 sq. m.

33 Public Procurement Monitoring Conditions affecting negatively the competition in public procurement Construction Sector Public Procurement Contracting Authority Peshtera Municipality under the Regions in Growth Programme Assignment: Construction and assembly works for enhancing the energy efficiency of residential buildings in 6 lots Comment: There is no requirement for registration with CPRB of BCC. This is a violation pursuant to Art. 157, para 2, TDA and Art. 3 of the Bulgarian Chamber of Builders Act.

34 Public Procurement Monitoring Conditions affecting negatively the competition in public procurement Construction Sector Public Procurement Contracting Authority Peshtera Municipality under the Regions in Growth Programme Assignment: Construction and assembly works for enhancing the energy efficiency of public municipal building - Municipal Children Compound of Peshtera Municipality in accordance with a project proposal implemented with the financial support of the Operational Programme Regions in Growth , co-funded by the European Union through the European Regional Development Fund. Comment: There is no requirement for registration with CPRB of BCC. This is a violation pursuant to Art. 157, para 2, TDA and Art. 3 of the Bulgarian Chamber of Builders Act.

35 Public Procurement Monitoring Conditions affecting negatively the competition in public procurement Construction Sector Public Procurement Contracting Authority Etropole Municipality. Assignment: Services to develop a master plan of Etropole Municipality. Quote: To assume that the requirement for the tenderer to have completed a service with volume equal or similar to the subject of the contract has been met - if he/she has perform the relevant activity as part of a consortium, the latter should have completed not less than 30% of the activity (respectively - participation in the consortium should have been at least 30%) Comment: In my opinion, the experience of the tenderer should be determined by what volume of activity was performed, and not by the percentage of participation in any association or % of completed activity.

36 Methodology and information sources Information Sources Public procurement portal at the Public Procurement Agency. Data processing methodology : The data is processed by experts at the relevant sections of BCC by type of construction: Building construction Civil Engineering Infrastructure Water Supply and Sewerage Power Engineering Infrastructure Design and Supervision The data is reported on a monthly basis - number of notices for a particular month.. Priority of the monitoring report - BCC assessment at an expert level of : conditions affecting negatively the competitive environment laid down in the selection criteria, evaluation indicators leading to subjective decisions in awarding of contracts or elimination of participants in public procurement procedures 36

37 Eng. Emil Gigov Chief Expert Building Construction Elena Nedeva Expert Design and Construction Supervision Eng. Yoanna Betova - Expert Power Engineering Infrastructure Eng. Stefan Karchev - Chief Expert Civil Engineering Infrastructure and Water Supply and Sewage Eng. Veselka Peshova-Expert Analyses and Forecasts Tanya Bachvarova- Chief Expert Analyses and Forecasts, Project Leader of " Public Procurement Monitoring