Introduction to Project Finance & Legal Aspects of Projects - CT3102 Lecture 5 - Procurement Law PDF

Introduction to project finance & legal aspects of projects - CT3102 5 - Procurement law September 19, 2024 1 Set-up lecture 1. Public procurement 2. Principles of public procurement law 3. Public procurement procedure...

Introduction to project finance & legal aspects of projects - CT3102 5 - Procurement law September 19, 2024 1 Set-up lecture 1. Public procurement 2. Principles of public procurement law 3. Public procurement procedures September 19, 2024 2 1. What’s public procurement law and why? Public procurement law = government procurement law = procurement law = tender law Public procurement = regulated process leading up to the award and conclusion of a public contract between a public body (contracting authority) and a market player But why..? 1. What is procurement procedure / tender in brief? The contracting authority (public body) wants to purchase supplies, services or works The contracting authority places an order / starts a tender / starts procurement procedures Interested economic operators can submit a bid The contracting authority evaluates all bids and chooses the best economic operator and motivates its decision Examples of public procurement Purchase of Construction of works passports Public transport 1. Who must apply the rules on procurement? All contracting authorities have to follow public procurement law procedures States, provinces, regional/local authorities Bodies governed by public law, publicly controlled (>50%) or publicly financed bodies (>50%) States, provinces and regional/local authorities Executive bodies or Parliament authorities Ministries Municipalities Bodies governed by public law, publicly controlled (>50%) or publicly financed bodies (>50%) Community colleges Academic hospitals (Universities) Rijksmuseum Schiphol International Airport Bodies governed by public law, publicly controlled (>50%) or publicly financed bodies (>50%) Sometimes there is a grey area Contracting authority: No contracting authority: academic hospitals ordinary hospitals 1. Which contracts must be put out for tender? Pecuniary interest = “money” (very easy definition) Difference between public contracts for works, supplies and products 1. Threshold value European of national? Thresholds for the Thresholds for the decentralized central government government Supplies €143.000 Supplies €221.000 Services €143.000 Services €221.000 Works €5.538.000 Works €5.538.000 1. Exceptions Purchase or rental of real estate Hiring of government officials (recruitment) Legal support (lawyers) … 1. Am I obliged to start a European public procurement procedure? 1. Contracting authority? yes/no 2. Public contract? yes/no 3. Threshold value? yes/no 4. No exceptions applicable? yes/no Is a European public procurement procedure mandatory? NS is the national railway company in the Netherlands. It wants to purchase new WiFi systems for roughly 150 trains. It expects that one system costs on average € 2.000. The Ministry of Finance is the only shareholder in NS. Is a European public procurement procedure mandatory? Q 1: The NS is a contracting authority, because it is owned for more than 50% by the state. Q 2: The NS intends to purchase goods (Wi-Fi systems) in exchange for a remuneration. Q 3: The worth of the contract is 150 x € 2.000 = € 300.000. The central government’s threshold for goods is applicable (€143.000). Q 4: No exception is applicable. Conclusion: a European procurement procedure is mandatory. 2. Principles of procurement law Non-discrimination Equal treatment Transparency Proportionality 2. Principle of non-discrimination No discrimination based on nationality from other EU nations EU internal market prerogative Examples Supporting documents (certificates e.g.) from other EU Member States must be allowed No denial of foreign EU suppliers based on language, but a translation may be required No preference for local or national producers (see example UK passport after Brexit, tender won by Dutch-French firm) 2. Principle of equal treatment All economic operators and candidates must be treated equally and have the same opportunities to win the contract Examples: The contracting authority may not evaluate the bids of two candidates differently because one candidate is an old friend No submissions after the tender deadline; if an extra submission would be allowed, one economic operator would have gotten more time than others 2. Principle of transparency Allows parties to verify the actions of a contracting authority and allows the contracting authority to justify its decisions Contracting authority must motivate every step in the tender process Examples: The contracting authority has to motivate its decision to award a public contract Prevents discrimination and inequality by giving objective facts All unclarities in tender guidelines must be communicated with all economic operators and candidates 2. Principle of proportionality All must be in balance with the characteristics of the public contract: technical requirements, exception grounds, selection criteria, awards criteria etc. Examples: For the award of a contract worth €400.000 a contracting authority cannot expect a yearly turnover of €10.000.000 of the economic operator to prevent the risk of bankruptcy of the economic operator If a contracting authority wants to exclude a candidate on the basis of unpaid tax debt from the candidate, the contracting authority must asses the amount of debt and circumstances of the case 3. Choice of a procedure Contracting authorities must choose the most suitable procedures for every project, depending on: Size of the government contract; Transaction/implementation of the government contract; Amount of interested economic operators; Desired result; Complexity of the government contract; Characteristics of the market; And more.. 3. European and national procedures Procedures above the threshold: European procurement procedures Open procedure Restricted procedure More procedures (not discussed) Procedures below the threshold: national procurement procedures Contracting authority has more freedom to set the procedure, but with due regard of the principles of public procurement law 3. Open procedure Every economic operator can submit a bid Overload of candidates and bids? Relatively fast 3. Restricted procedure The contracting authority invites a selected group of economic operators to submit a bid → on the basis of clear and objective selection criteria (principles of transparency and equality) To limit the number of economic operators and bids Might be useful for projects with security risks.