European Maritime and Fisheries Fund Competitive Tendering and Public Procurement. Technical Guidance Notes

Transcription

1 Welsh Government Rural Communities Rural Development Programme European Maritime and Fisheries Fund Competitive Tendering and Public Procurement Technical Guidance Notes Crown Copyright 2015 ISBN Number:

2 CONTENTS Paragraph Introduction 1 Competitive Tendering 2-32 Public Procurement Public Procurement below Official Journal of the European Union (OJEU) threshold Public Procurement above OJEU threshold Procurement Directives 53 How to access Sell2Wales 54 Issued by: Welsh Government Page 2 of 12

3 Introduction 1. The aim of these notes is to provide guidance to project sponsors on competitive tendering and public procurement procedures for project activities, which are subject to funding under the Rural Programmes the European Agricultural Fund for Rural Development (EAFRD) and the European Maritime and Fisheries Fund (EMFF). Competitive Tendering 2. Third sector organisations that are not financed or supervised by public sector bodies and commercial enterprises in the private sector who receive grant support of less than 50% of the total project costs may not be covered by the European Community (EC) Procurement Directives. European Union (EU) Procurement Directive 2004/18/EC Article 8 - Contracts subsidised by more that 50% by contracting authorities - has the effect of making the full public procurement directive apply in situations where the grant assistance exceeds 50%. Therefore by analogy if the grant rate is below 50% then the provisions of this Directive do not apply. But such organisations and businesses are still expected to use fair and open practices, including competitive tendering, when buying goods or services as part of project activities that are being supported through EU funded Programmes. 3. Project sponsors must demonstrate that they have used fair and open practices by using a competitive tendering exercise for all goods or services that are included in the project for which they intend to claim grant support. The grant paid on goods or services may be reclaimed in full or in part if it is found subsequently that the competitive tendering requirements have not been met. 4. There are three key aims of competitive tendering: to demonstrate fairness of opportunity for suppliers to make a contribution to EU funded investment activities; to improve the competitiveness of suppliers; to demonstrate that the expenditure costs are reasonable. 5. For those organisations and businesses that are not caught by the formal EC Procurement Directives then the following competitive tendering requirements must be followed according to the total value of the goods or services purchased exclusive of VAT. Issued by: Welsh Government Page 3 of 12

4 6. The thresholds and the requirements for a competitive tendering exercise are shown in the table below: Final Value of the goods or services purchased Competitive Tendering Requirement 0-4,999 One written quote 5,000 24,999 Three written quotes 25,000 and above Full and open competition Action It is recommended to use suppliers that are registered on It is recommended to use suppliers that are registered on Requirements must be published through Quotes may be sought by direct reference to suppliers 7. Competitive tendering by getting quotes based on detailed written specifications of requirements is something that all Third Sector Organisations have to do in order to demonstrate that they are taking informed decisions about spending their money. 8. Commercial businesses may have long term arrangements with preferred suppliers of goods or services, or they may want to use certain suppliers of specialised equipment, or they may want to use certain suppliers that have demonstrated a good track record. There are many valid reasons why commercial businesses may take immediate decisions about where they will buy goods or services and the price that they are prepared to pay but it is still good practice to get quotes, compare prices and take an informed decision. 9. If an organisation or a commercial business is making an investment, say a building extension and buying some new equipment and machinery, and that investment is to be grant aided through an EU funded programme it is a condition of the grant that a competitive tendering exercise must have been undertaken. 10. The competitive tendering process is not intended to prevent an organisation or commercial enterprise from taking a reasonable and justified decision about where to place orders for equipment, machinery, goods or services nor does it place any restrictions on what is selected and the final price to be paid. 11. Project sponsors are free to take such decisions but the process by which the information was collected, how the specifications and prices were compared and the reasons explaining how the final decision was taken must be fully documented. That documentation must be kept by the project sponsor Issued by: Welsh Government Page 4 of 12

5 because it will be subject to inspection both during the project delivery and for up to five years post-completion. 12. The full grant paid may be at risk if there is insufficient evidence to demonstrate how the competitive tendering exercise was carried out because the lack of evidence may result in a penalty being applied to that grant amount. 13. The grant paid on goods or services may be reclaimed in full or in part if it is found subsequently that the competitive tendering requirements have not been met. 14. The requirements for the competitive tendering exercise are explained in the following sections. 15. A competitive tendering exercise of the correct type (see table at point 6) must be undertaken and the time needed to do this must be factored into the project delivery plan. It is not an acceptable excuse to say that the order had to be placed quickly so there was not enough time to do the correct advertising or get a sufficient number of quotes. 16. The threshold for the value of the goods or services is determined by the final invoice price not the initial values given in an estimate or a quotation. These figures must be exclusive of VAT. 17. If the initial quotation figures are close to the threshold, for example the quote is 4,990 but the invoiced amount is 5,020, then the competitive tendering requirement would be 3 written quotes not 1 written quote. 18. The cost of an item procured from the same supplier must not be broken down into smaller amounts to avoid using the correct competitive tendering requirement. For example: Item 1 Forklift truck chassis 2,000 Item 2 Forklift truck body 2,000 Item 3 Forklift truck engine 3,000 These should be costed as one Forklift truck with a value of 7,000 which would require 3 written quotes. 19. The competitive tendering exercise must be carried out by getting independent quotations for the goods or services that are being sought. Quotes from related companies - that is wholly or partly owned subsidiary companies or companies that are linked by directors and/or managers in common, must be clearly marked as such. Issued by: Welsh Government Page 5 of 12

6 20. Any perceived or actual conflicts of interest between the project sponsor and the suppliers that are asked to provide quotes - for example getting quotes from related companies, must be explained in writing. 21. Written evidence must be provided that demonstrates which suppliers were approached and asked to quote; this must include the date they were contacted and who in the company the enquiry was sent to. 22. The quotations received must be from genuine suppliers of the goods or services. The prices quoted must be genuine, without collusion between suppliers and/or the project sponsor. The quotation documents must contain all the necessary information for the supplier to be identified including the address, contact details and Company Registration Number and VAT Number if applicable. 23. The quotations received must be considered fairly and the reason or reasons why a particular supplier was chosen must be recorded in writing. 24. If the competitive tendering exercise requires a full and open competition on Sell2Wales then the good or services to be bought must be advertised according to the Sell2Wales requirements and the grant fund must be clearly shown. 25. Sometimes there are limited suppliers of specialist equipment for example, and in such situations businesses in particular have sought approval for a Single Tender Competition. This is no longer possible because all purchases above 25,000 per contract must be advertised on Sell2Wales. 26. This requirement does not prevent an organisation or a business from getting a quote from a specialist supplier and that may be done by direct contact. 27. The key advantage of the Sell2Wales open advertising is that a project sponsor can show that no other suppliers were available and/or no other suppliers submitted a quote. Therefore the project sponsor can demonstrate that they have used fair and open practices. 28. There are some other considerations that must be taken into account as part of the competitive tendering requirements. 29. Any existing contracts already in place can only be used if the contract period has not expired. All purchases must be made within the scope of contract that is in place and the orders must be placed and fulfilled within the terms of the contract. 30. An agreed contract or a submitted quotation cannot be split and individual items (good or services) taken out of the contract or out of the quotation to be Issued by: Welsh Government Page 6 of 12

7 provided separately. This becomes a new purchase and the competitive tendering requirements must be applied. For example: A single project is made up of a number of items total value 825,000 The Sell2Wales route is used, five quotes are received and one is selected. One supplier takes on the contract and subcontracts out some items Item 1 Machinery A 400,000 Item 2 Machinery B 380,000 Item 3 Software development 45,000 The software development goes to a second company and it is agreed that the work would be better managed between the project sponsor and the software developer, so the main contractor drops out. This creates a situation where the software development is now a new, standalone item and therefore the competitive tendering requirements must be applied. 31. If the competitive tendering process is not followed according to the requirements set out above, and if the process is not properly documented so that the records are available for inspection and audit, there is a significant risk that the grant could be recovered in full or in part. 32. The Project Sponsor is responsible for ensuring that the competitive tendering process is followed correctly, that the process is properly documented and that all the records are retained for inspection. Public Procurement 33. Public sector bodies that are covered by the EC Procurement Directives are required to follow their own organisational procurement rules and procedures. The basic rules are outlined below. 34. The EC Procurement Directives apply to contracts that are financed or part financed by EU Funds. The full procurement rules apply to all public bodies and commercial enterprises in the private sector who receive grant support of 50% or more of total project costs exclusive of VAT. 35. Within the coverage of the Directives set out below, contracts above certain limits are required to be advertised in the Official Journal of the European Union (OJEU). Bids for contracts must be assessed on an objective basis and contract awards should be published in the OJEU for the amount of time relevant to the procurement procedure followed. The grant may be reclaimed Issued by: Welsh Government Page 7 of 12

8 in full or in part if it is found subsequently that the procurement rules have not been observed. Estimated Value* Requirement Action 0-4,999 One written quote It is recommended to use suppliers that are registered on 5,000 24,999 Three written quotes 25, ,046 (Goods and Services) 25,000-4,104,393 (Works) 106,047 and above (Goods and Services) Full and open competition Full and open competition Full and open competition It is recommended to use suppliers that are registered on Requirements must be published through Quotes may be sought by direct reference to suppliers Requirements must be published through Quotes may be sought by direct reference to suppliers Publish requirement throughout Europe via 4,104,394 and above (Works) Full and open competition Publish requirement throughout Europe via * Please note that these figures are exclusive of VAT 36. The Procurement Rules are complex and the following information gives a very brief description of the relevant Directives. The descriptions are not intended to provide guidance on how the Directives should or should not be applied. If there is any doubt about the application of the Procurement Rules, you should seek your own legal advice to ensure you meet all obligations. In general, where doubt remains about the application of the Procurement Rules, it may be better to err on the side of caution and apply the relevant procurement process. Directives are implemented in the UK by Statutory Instruments (SIs). Applicants should examine the appropriate SI to ensure they comply with the requirements. The thresholds are regularly revised. 37. The Project Sponsor must retain all records relating to the competitive tendering process. These records would be checked by the Welsh Government at claim inspection stages during the lifetime of the project. Public Procurement below OJEU threshold 38. Where the value of the proposed procurement does not exceed the current OJEU thresholds, project sponsors do not need to follow the detailed Issued by: Welsh Government Page 8 of 12

9 procedures set out in the Procurement Directives. However, the relevant EU principles of equal treatment, non-discrimination, transparency and proportionality should still be complied with. Whatever the value, if a bidder requests clarification on any aspects of your tender, your response should be sent to all bidders within a reasonable time to ensure that they are all treated equally. 39. A fair and transparent process should be followed regardless of value and a proportionate and risk-based approach should be taken. The process should be kept as simple as possible so suppliers are not put to unnecessary effort and expense which is disproportionate to the requirements. The selection criteria and information requested from the suppliers should be sensible and proportionate and should reflect the value and risk of whatever is being bought. 40. In accordance with the Wales Procurement Policy Statement, all requirements over 25,000 (but below the OJEU threshold) should be advertised as widely as possible using Sell2Wales to ensure that smaller firms have greater visibility of the opportunity and ample opportunity to bid. 41. Depending on your own organisation s thresholds for competitive procurement, the business should be advertised using either the Request for Quotes (RFQ) or Non-OJEU Notice facility on Sell2Wales. 42. Please note - the RFQ should not be used for advertising contract opportunities over 25k. Open and accessible competition is required for these contracts, in line with the Policy Statement. That is not achievable through the RFQ function, only the non-ojeu facility. 43. Please visit to add notices and advertise contract opportunities (for buyers) and to view public tender opportunities (for suppliers). Public Procurement above OJEU threshold 44. The EU Public Procurement Directive 2014/24/EU and the Public Contracts Regulations 2015 that implement them in the UK set out the law on public procurement. The purpose is to open the public procurement market and to ensure the free movement of goods and services within the EU. They set out procedures which must be followed before awarding a contract, when its value exceeds set thresholds unless it qualifies for a specific exemption. 45. Whether procurement is above or below OJEU, if a supplier requests clarification on any aspect of the tender, your response should be sent to all suppliers within a reasonable time to ensure they are treated equally. Specifically however, if above OJEU, you must allow 6 days between any clarifications being communicated and the tender deadline elapses. Issued by: Welsh Government Page 9 of 12

10 46. As a buyer, it is a legal requirement to advertise your tender opportunities. Please go to the Sell2Wales website to add notices (only available to registered users). 47. The Contract Notice should be published electronically via for onward transmission to OJEU. 48. The closing date for receipt of bids must be no earlier than 45 days from the day after the date of despatch of the contract notice to OJEU (a longer time limit must be allowed if the Contract Notice has not been published electronically). 49. Invitation to Tender (ITT) documents must be issued to all companies that respond to the contract notice. 50. The ITT must be issued within 6 days of receipt of a request for the documentation. 51. If you have published a Prior Information Notice (PIN) in accordance with Regulation 11 of the Public Contracts Notice 2006, then the closing date for receipt of bids may be reduced to 36 days (or 22 days in exceptionally justified cases). 52. Shortened time limits may be applied if ITT documents are made available electronically. Issued by: Welsh Government Page 10 of 12

11 Procurement Directives 53. Public procurement in the UK and the rest of the EU is governed by a number of Directives and Regulations which are implemented in national legislation. The table below lists the relevant Directives and the UK Regulations which make them a legal requirement in the UK. European Legislation Public Contracts Directive 2014/24/EU Procedures for the award of public works contracts, public supply contracts and public service contracts Utility Contracts Directive 2014/25/EU Procedures of entities operating in the water, energy, transport and postal service sectors Defence and Security Directive 2009/81/EC Procedures of entities operating in the fields of defence and security Directive 2007/66/EC Remedies Directive Amends the existing Remedies Directive (89/665/EEC and 92/13EEC) to improve the effectiveness of review procedures concerning the award of public contracts. UK Implementation Statutory Instrument 2015 No. 102 The Public Contracts Regulations 2015 Statutory Instrument 2006 No 6. The Utilities Contracts Regulations 2006 (see amendments below) Statutory Instrument 2011 No The Defence and Security Public Contracts Regulation 2011 The Public Contracts (Amendment) Regulations 2009 The Utilities Contracts (Amendment) Regulations 2009 The Public Contracts Regulations 2006 & The Utilities Contracts Regulations 2006 have been amended as below: The Money Laundering Regulations 2007 The Public Contracts and Utilities Contracts (Amendment) Regulations 2007 The Public Contracts and Utilities Contracts (Postal Services Amendments) Regulations 2008 The Public Contracts and Utilities Contracts (CPV Code Amendments) Regulations 2008 The Bribery Act 2010 (Consequential Amendments) Order 2011 The Public Procurement (Miscellaneous Amendments) Regulations 2011 All applicable UK legislation related to procurement can be found at: Issued by: Welsh Government Page 11 of 12

12 54. Sell2Wales is primarily for Public Sector buyers, however any project sponsor in receipt of an approval letter confirming funding under the Rural Programmes (EAFRD and EMFF) may also use Sell2Wales. For guidance on how to access Sell2Wales, please see Further guidance on how to use Sell2Wales will be available at a later date Issued by: Welsh Government Page 12 of 12