SOUTH WEST EMPLOYERS Legal Aspects EU Procurement

SOUTH WEST EMPLOYERS Legal Aspects & EU Procurement Trainer: Date:

Activity 1 - Icebreaker Is a middle child How many points do you have? Plays a team sport _______ Speaks another Likes to eat Japanese food Is wearing pink (1 point) (1 point) Wears glasses Is over 6’ tall Has less than four letters in his/her first name Has a last name that starts with a W Has green eyes (1 point) (1 point) Owns a Vauxhall car Likes classical music Preferred Maths to English in school Knows someone famous Has red hair (2 points) language (2 points) Has more than 2 children Has made a parachute jump Has visited more than 10 countries Has more than 7 letters in his/her first name. Has a birthday in the same month as me (3 points) (3 points) One unusual fact I have found out about someone here is?

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

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 and transparency

Sections Legal framework and thresholds 2. EU procurement procedures 3. Legal challenges and implications 4. Tendering practice 1.

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” Define & review need Exit & termination Manage contract performance Manage implementation and transition Includes: Develop specification Implement Planning • Capital expenditure • Strategic commissioning • Acquiring third sector services • Grant-funded opportunities Contract award Negotiate? Determine procurement strategy • Revenue expenditure Invite Enquiry Evaluate tenders Pre-qualify suppliers Issue RFQ or ITT • Collaboration with others

Regulations & governance £ EC Treaty (Recital 9) £ EU Consolidated Directive 2004/18/EC • Equal treatment £ Public Contracts Regulations 2006 (A) • Transparency Key principles: • Non-discrimination • Mutual recognition £ £ Your local Contract Procedure Rules Competition Act – a more generic law • 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 Supplies Corporate and operational expenditure (the supply of goods and commodities) Services People and teams to plan, guide, advise, design, develop, consult, care, operate and provide services to your authority and its partners Part A Services (primary) Part B Services (residual) Works Construction and commissioning of facilities, buildings, infrastructure and major capital assets . . . 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 Goods and services Works [projects] = £ 156, 442 = £ 3, 927, 260 Remember: rules of aggregation apply when estimating contract value

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

Sections Legal framework and thresholds 2. EU procurement procedures 3. Legal challenges and implications 4. Tendering practice 1.

EU procurement routes EU procurement procedures Competitive dialogue procedure Open procedure Restricted procedure Framework agreement Accelerated procedure Central purchasing Bodies Negotiated procedure 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 Min: 45 days 40 days if hosted 15 days with PIN Send out Invitation to Tender Manage tender clarifications Receive tenders Evaluate tenders (exclusion and selection) Min: 10 days Mandatory standstill period 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 Min: 30 days Send out PQQs Receive completed PQQs Evaluate to determine shortlist (exclusion and selection) Send out Invitation to Tender Min: 35 days 30 days if hosted 17 days with PIN Manage tender clarifications Receive tenders Evaluate tenders Min: 10 days Mandatory standstill period Award contract Max: 48 days Debrief unsuccessful tenderers Publish Award Notice in OJEU Max: 6 days

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 Pro 5 Risk that suppliers can consider the mini competition as 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 You should refer to your legal advisers for clarification Some CPRs require prior written consent before negotiation is permitted Services & works Supplies Services Works

Comparison Advantages Open Tenders £ Quicker than restricted £ Simple/easily understood Disadvantages £ Can generate many tenders £ Can cause confusion between evaluation and selection Restricted Tenders £ Selection of suppliers Most popular £ Additional procedure so takes longer £ Most commonly used method £ Fewer tenderers to manage Call off orders £ Avoids tendering process from a £ Quick, easy (once set up) Framework £ Pre-qualified £ How tailored to your need? £ Best deal? £ Time consuming to set up the FWA in the first place

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

Sections Legal framework and thresholds 2. EU procurement procedures 3. Legal challenges and implications 4. Tendering practice 1.

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 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 Case Outcome EMM G Lianakis AE and others v Dimos Alexandroupolis and others (2008) • Tenderers must be on equal footing with transparent criteria • Can not evaluate suitability or experience of supplier at ‘award’ stage Letting International Ltd v London Borough of Newham (2008) • Must provide full transparency of evaluation criteria • Can not award marks for ‘exceeding’ requirements Mc. Laughlin & Harvey Ltd v Department of Finance & Personnel • The full sub-criteria needs to be disclosed (2008) Henry Brothers (Magherafelt) Ltd and others v Department of Education for Northern Ireland (2008) • 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 re-evaluate added value separate partial transparency Cost equal basis

Restricted Procedure: Selection & Award Stage 1: Exclusion Stage 2: Selection Stage 3: Award • Ineligible tenderers (offenders, insolvencies, etc) (Regulation 23) • Failure to meet “minimum standards” (Regulations 24 and 25) • Selection of firms to invite to tender [short-list] (Regulation 16) • 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

Sections Legal framework and thresholds 2. EU procurement procedures 3. Legal challenges and implications 4. Tendering practice 1.

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

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

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 1. 2. 3. 4. 5. 6. 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 is recorded 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’

‘Alcatel’ standstill period The standstill time limits: Standstill Notice (Award Decision Notice) has to include: £ The standstill period is a minimum of 10 days where notice sent £ The award criteria unless already electronically published £ When sent by other means, either: ¡ £ 10 days from day of receipt The Standstill period must end on a working day ¡ £ 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 15 days from day of sending; or ¡ £ 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

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 for future 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