Vade-Mecum on Public Procurement in the Commission PDF

EUROPEAN COMMISSION Budget Central Financial Service VADE-MECUM ON PUBLIC PROCUREMENT IN THE COMMISSION April 2024 1 Disclaimer This Vade-mecum on public procurement procedures in the Commission has been produced for internal use. The aim is to provide contracting authorities in the European institutions and agencies with practical assistance in preparing and implementing these procedures. f This Vade-mecum does not apply to external actions which are covered by a separate guide (the PRAG from DG INTPA). It does not claim to cover every single matter that might arise in connection with public procurement. Because of the number and variety of contracts involved, specific questions are bound to arise that cannot be covered in what, by nature, is only a general guide. It does, however, give advice on how to find answers to them. Finally, it must be borne in mind that, although the Vade-mecum provides information and explanations that are in strict compliance with the rules and regulations in force, it cannot be relied on in law. The rules and regulations and any clarification provided by Court judgments take precedence. 2 Table of Contents Table of Contents.................................................................................................................. 3 Abbreviations......................................................................................................................... 7 Glossary................................................................................................................................. 8 Part 1. Introduction and definitions................................................................................... 10 1.1. Scope of this Vade-mecum................................................................................................... 10 1.2. Procurement at a glance....................................................................................................... 11 1.2.1. Does this Vade-mecum apply?.......................................................................................... 11 1.2.2. Before launching the procurement procedure.................................................................... 12 1.2.3. What procedure to use?..................................................................................................... 13 1.2.4. What kind of contract to choose?....................................................................................... 14 1.2.5. Sales of assets................................................................................................................... 15 1.3. How to use this Vade-mecum?............................................................................................. 16 1.4. What is public procurement?............................................................................................... 17 1.4.1. Basic information about EU public procurement................................................................ 17 1.4.2. Legal basis and general principles..................................................................................... 18 1.5. What is not public procurement – other types of expenditure.......................................... 19 1.5.1. Grants................................................................................................................................ 19 1.5.2. Employment contracts........................................................................................................ 21 1.5.3. External experts................................................................................................................. 21 1.5.4. Service Level Agreement (SLAs)....................................................................................... 22 1.6. Conflict of interests in procurement.................................................................................... 22 1.7. eProcurement......................................................................................................................... 24 Part 2. Preparing the purchase and the contract.............................................................. 26 2.1. Financing decision................................................................................................................ 26 2.2. Characteristics of the purchase........................................................................................... 26 2.2.1. Subject matter and type of purchase.................................................................................. 26 2.2.2. Lots.................................................................................................................................... 27 2.2.3. Duration of the contract...................................................................................................... 27 2.2.4. Estimating the value of a contract...................................................................................... 27 2.3. Risk Management.................................................................................................................. 29 2.4. Interinstitutional procurement.............................................................................................. 30 2.5. Joint procurement................................................................................................................. 30 2.6. Types of contracts................................................................................................................. 31 2.6.1. Direct contracts or purchase orders................................................................................... 31 2.6.2. Framework contracts (FWCs)............................................................................................ 31 2.6.3. Specific contracts or order forms........................................................................................ 31 2.6.4. Concession contracts......................................................................................................... 31 2.6.5. Mixed contracts.................................................................................................................. 32 2.6.6. Building contracts............................................................................................................... 32 2.7. Use of framework contracts.................................................................................................. 33 2.7.1. Functions and limitations of framework contracts.............................................................. 33 2.7.2. Single FWC........................................................................................................................ 34 2.7.3. Multiple FWC in cascade.................................................................................................... 34 2.7.4. Multiple FWC with reopening of competition...................................................................... 35 2.7.5. Multiple FWC with both cascade and reopening of competition......................................... 35 2.7.6. Benchmarking and mid-term review................................................................................... 36 2.8. Special contracts................................................................................................................... 36 2.8.1. IT contracts........................................................................................................................ 36 2.8.2. External relations............................................................................................................... 36 2.8.3. Legal assistance services.................................................................................................. 36 3 2.8.4. Subscription contracts........................................................................................................ 36 2.9. Purchase of studies............................................................................................................... 37 2.10. External consultancy services........................................................................................... 38 Part 3. Procurement procedures and systems.................................................................. 39 3.1. Choice of procedure.............................................................................................................. 40 3.2. Time limits for receipt of requests to participate and tenders.......................................... 42 3.3. Open procedure..................................................................................................................... 43 3.3.1. Scope and characteristics.................................................................................................. 44 3.3.2. Applicable time-limits.......................................................................................................... 44 3.4. Restricted procedure............................................................................................................. 46 3.4.1. Scope and characteristics.................................................................................................. 47 3.4.2. Applicable time-limits.......................................................................................................... 47 3.5. Competitive procedure with negotiation............................................................................. 49 3.5.1. Scope and characteristics.................................................................................................. 50 3.5.2. Applicable time-limits.......................................................................................................... 50 3.5.3. Conditions for use.............................................................................................................. 50 3.6. Procedures following a call for expressions of interest.................................................... 54 3.6.1. Scope and characteristics.................................................................................................. 54 3.6.2. Applicable time limits.......................................................................................................... 55 3.6.3. List of pre-selected candidates.......................................................................................... 56 3.6.4. List of vendors.................................................................................................................... 58 3.6.5. Comparison between list of pre-selected candidates and list of vendors........................... 59 3.7. Negotiated procedure for middle and low value contracts................................................ 61 3.7.1. Scope and characteristics.................................................................................................. 62 3.7.2. Minimum time limits............................................................................................................ 62 3.7.3. Adequate publicity for middle and low value contracts....................................................... 63 3.7.4. Easing the formalities below Directive thresholds.............................................................. 64 3.8. Negotiated procedure without prior publication of a contract notice............................... 66 3.8.1. Scope and characteristics.................................................................................................. 67 3.8.2. Minimum time-limits............................................................................................................ 67 3.8.3. Conditions for use.............................................................................................................. 67 3.9. Competitive dialogue............................................................................................................. 73 3.9.1. Scope and characteristics.................................................................................................. 74 3.9.2. Minimum time-limits............................................................................................................ 75 3.9.3. Procedure for competitive dialogue.................................................................................... 75 3.10. Innovation partnership........................................................................................................ 78 3.10.1. Scope and characteristics................................................................................................ 78 3.10.2. Minimum time-limits.......................................................................................................... 78 3.10.3. Procedure for innovation partnership............................................................................... 78 3.11. Design contest..................................................................................................................... 79 3.11.1. Definition.......................................................................................................................... 79 3.11.2. Calculation of the estimated value of the design contest................................................. 79 3.11.3. Organisation and procedure............................................................................................. 79 3.12. Negotiated procedure for building contracts.................................................................... 80 3.13. Dynamic purchasing system.............................................................................................. 80 3.14. Electronic auction................................................................................................................ 81 3.15. Electronic catalogue............................................................................................................ 83 Part 4. Stages in the procurement procedure................................................................... 84 4.1. Preliminary market analysis................................................................................................. 84 4.2. Ex-ante publicity.................................................................................................................... 86 4.2.1. Prior information notice...................................................................................................... 86 4.2.1.1. Arrangements for publication........................................................................................................... 86 4 4.2.1.2. Other forms of publicity.................................................................................................................... 87 4.2.2. Call for expressions of interest........................................................................................... 87 4.2.2.1. Publication of calls for expressions of interest................................................................................. 87 4.2.2.2. Other forms of publicity.................................................................................................................... 87 4.2.3. Publicity on the website...................................................................................................... 88 4.3. Preparation of the procurement documents....................................................................... 88 4.3.1. Tender specifications......................................................................................................... 89 4.3.1.1. Title, purpose and context of the procurement................................................................................ 89 4.3.1.2. Subject of the contract and technical specifications........................................................................ 89 4.3.1.3. Sustainability aspects...................................................................................................................... 92 4.3.1.4. Innovation Procurement................................................................................................................... 94 4.3.1.5. Variants............................................................................................................................................ 94 4.3.1.6. Access to the market....................................................................................................................... 95 4.3.1.7. Joint tenders and subcontracting..................................................................................................... 95 4.3.1.8. Criteria............................................................................................................................................. 97 4.3.1.9. Exclusion criteria.............................................................................................................................. 97 4.3.1.10. Selection criteria............................................................................................................................ 98 4.3.1.11. Award criteria............................................................................................................................... 101 4.3.1.12. Award methods............................................................................................................................ 102 4.3.1.13. Distinction between selection and award criteria......................................................................... 106 4.3.1.14. Value of the contract.................................................................................................................... 107 4.3.1.15. Price and reimbursement of expenses........................................................................................ 107 4.3.1.16. Contents of the tender................................................................................................................. 108 4.3.1.17. Identification, legal status and access to the market................................................................... 109 4.3.1.18. Declaration and evidence on exclusion criteria........................................................................... 110 4.3.1.19. Declaration and evidence on selection criteria............................................................................ 112 4.3.2. Draft contract.................................................................................................................... 113 4.3.2.1. Use of the DG BUDG model contracts.......................................................................................... 113 4.3.2.2. Terms of payment.......................................................................................................................... 114 4.3.2.3. Reimbursement of expenses......................................................................................................... 114 4.3.2.4. Guarantees.................................................................................................................................... 115 4.3.2.5. Intellectual property rights.............................................................................................................. 116 4.3.2.6. Contract phases, renewal or options............................................................................................. 116 4.3.2.7. Recovery of established debts by offsetting.................................................................................. 116 4.3.3. Invitation to tender............................................................................................................ 117 4.3.3.1. Site Visit......................................................................................................................................... 118 4.3.4. Contract notice................................................................................................................. 119 4.3.4.1. Content.......................................................................................................................................... 119 4.3.4.2. Additional publicity......................................................................................................................... 120 4.3.4.3. Correction of a contract notice....................................................................................................... 120 4.4. Launching of the call for tenders....................................................................................... 121 4.4.1. Procedures with a contract notice.................................................................................... 121 4.4.2. Procedures without prior publication of a contract notice................................................. 121 4.4.3. Translation....................................................................................................................... 121 4.5. Submission phase............................................................................................................... 122 4.5.1. Contacts during the submission phase............................................................................ 122 4.5.2. Receipt of requests to participate..................................................................................... 124 4.5.3. Selection of candidates.................................................................................................... 125 4.5.4. Dispatch of procurement documents................................................................................ 126 4.5.5. Receipt of tenders............................................................................................................ 126 4.6. Opening phase..................................................................................................................... 127 4.6.1. Opening of tenders........................................................................................................... 127 4.6.2. Opening committee.......................................................................................................... 128 4.6.3. Reasons for rejection....................................................................................................... 129 4.6.4. Opening record................................................................................................................ 130 4.7. Evaluation phase................................................................................................................. 131 4.7.1. Evaluation of tenders....................................................................................................... 131 4.7.2. Evaluation committee....................................................................................................... 132 4.7.3. External experts in evaluation.......................................................................................... 134 4.7.4. Contacts with tenderers................................................................................................... 135 4.7.5. Reasons for rejection....................................................................................................... 136 5 4.7.5.1. Abnormally low tenders................................................................................................................. 138 4.7.5.2. Non admissible tenders................................................................................................................. 139 4.7.5.3. Non-selection of tenderers............................................................................................................. 139 4.7.5.4. Professional conflicting interest..................................................................................................... 140 4.7.5.5. Rejection from a given procedure.................................................................................................. 143 4.7.5.6. Collusion in public procurement -“Bid rigging”............................................................................... 143 4.7.6. Consultation of the early detection and exclusion system................................................ 144 4.7.7. Evaluation report.............................................................................................................. 145 4.8. Negotiation phase................................................................................................................ 146 4.9. Award decision.................................................................................................................... 147 4.10. Cancellation of procedure................................................................................................. 149 4.11. Notification of the outcome of the procedure................................................................. 149 4.11.1. Information letter............................................................................................................ 149 4.11.2. Standstill period.............................................................................................................. 150 4.11.3. Means of redress........................................................................................................... 150 4.12. Request for additional information.................................................................................. 151 4.13. Signature of the contract.................................................................................................. 153 4.14. Ex-post publicity................................................................................................................ 157 4.14.1. Publication of an award notice in the Official Journal..................................................... 157 4.14.2. Publication on internet.................................................................................................... 158 4.14.3. Annual Activity Report on negotiated procedure without prior publication of a contract notice................................................................................................................. 159 4.15. Documentation of the procedure...................................................................................... 159 Part 5. Contract management........................................................................................... 160 5.1. Payment time limits and default interest........................................................................... 160 5.2. Price revision....................................................................................................................... 161 5.3. Mid-term review and benchmarking................................................................................... 161 5.4. Assignment of contracts..................................................................................................... 162 5.5. Factoring............................................................................................................................... 162 5.6. Management of guarantees................................................................................................ 163 5.7. Amendment or modification of the contract..................................................................... 164 5.7.1. Technical amendment...................................................................................................... 164 5.7.2. Amendment with procedure............................................................................................. 165 5.7.3. Modification of contract.................................................................................................... 165 5.7.4. Procedure for amendment................................................................................................ 168 5.8. Possible reactions to problems connected with contractors or tenderers.............................................................................................................. 170 5.8.1. General overview............................................................................................................. 170 5.8.2. Administrative sanctions based on regulations................................................................ 170 5.8.3. Protective measures based on the contract..................................................................... 170 5.8.4. Liquidated damages......................................................................................................... 171 5.8.5. Reduction of payment...................................................................................................... 172 Part 6. Reference documents and sources of guidance................................................ 174 6.1. Legislation............................................................................................................................ 174 6.2. Specific guidance................................................................................................................ 174 6.3. Model documents................................................................................................................ 174 6.4. Financial Helpdesk.............................................................................................................. 174 6 Abbreviations used in the Vade-mecum English Meaning French ABAC Accrual-Based Accounting and financial IT system of the European Commission; one of its modules is the register of contracts is the ABAC Legal Commitment module, commonly called “ABAC LCK” AO Authorising Officer ordonn ateur CEI Call for expressions of interest (“appel à manifestations d’intérêt”) AMI CPV Common Procurement Vocabulary EDES Early Detection and Exclusion System EMAS Environmental Management and Audit Scheme EURM EU Restrictive Measures FR Financial Regulation RF FWC Framework Contract CC FTS Financial Transparency System GPA Government Procurement Agreement IPR Intellectual Property Rights ISO International Organisation for Standardization LCC Life-cycle costing MEAT Most economically advantageous tender MS Member States EM OJ S Supplement to the Official Journal of the European Union, where JO S procurement notices are published QES Qualified Electronic Signature PO Publications Office OP PPMT Public Procurement Management Tool TED Tenders Electronic Daily TFEU Treaty on the Functioning of the European Union TFUE TEU Treaty on the European Union TUE 7 Glossary English Meaning French request to the first step in two-step procurement procedures candidature participate award notice advertisement published in the OJ S to inform avis interested parties that a contract has been awarded or d'attribution is to be awarded buyer profile part of the web page of the contracting authority where profil d’acheteur information concerning its procurement is published call for a public procurement procedure (regardless of the type appel d’offres, tenders of procedure) appel à la concurrence candidate any economic operator who submits a request to candidat participate in a two-step procedure concession type of contract used when purchasing a service or contrat de contract works concession (as opposed to public contract) concession contract generic term that may refer to any type of contract and contrat includes both public contract and concession contract contract advertisement launching the procurement procedure avis de marché notice published in the OJ S contracting public body launching a procurement procedure pouvoir authority adjudicateur day unless specified otherwise, “day” means a calendar day jour (not a working day)1 direct contract containing all the details necessary to contrat direct contract implement it (as opposed to FWC) (the) the Public Procurement Directive – Directive la directive Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 thresholds thresholds as from which the Directive applies, which seuils de la set in the are updated on 1 January of even years directive Directive economic any natural or legal person, including a public entity or opérateur operator group thereof that offers supplies, services or works on économique the market framework contract establishing the general outline of the services contrat cadre contract or supplies to be delivered and requiring an additional (FWC) step to make the actual purchase invitation to letter giving the necessary details for tender invitation à tender submission; it is part of procurement documents soumissionner order form simplified form of specific contract, used under a bon de framework contract commande prior optional advertisement in the OJ S announcing the avis de pré- 1 For details please chek the Regulation (EEC, Euratom) 1182/71 8 information intention of launching the procurement procedure in the information notice near future purchase simplified form of direct contract used for simple bon d'achat order purchases of low value specific contract specifying details of a particular purchase contrat contract based on a framework contract spécifique technical document describing the subject of the procurement spécifications specifications (part of the tender specifications) techniques tender offer, bid; sometimes incorrectly used as public offre procurement procedure procurement set of documents presented by the contracting authority documents documents to economic operators to enable them to submit tenders d’appel à la (includes notice, tender specifications, draft contract concurrence and invitation to tender) public type of contract used when purchasing services, supplies contrat public contract or works (as opposed to concession contract) tender document or set of documents giving full details of the cahier des specifications subject matter, conditions and organisation of the charges procurement procedure (includes technical specifications and criteria) tenderer an economic operator who has submitted a tender soumissionnaire 9 Part 1. Introduction and definitions 1.1. Scope of this Vade-mecum This Vade-mecum applies only to public contracts for services, supplies, works and buildings or concession contracts for services or works concluded by the European institutions on their own account, as defined in Title VII, Chapter 2 of the Financial Regulation. It does not cover operations such as staff recruitment, to which different rules apply. Nor does it cover contracts concluded by the Commission on behalf of and on the account of one or more beneficiaries in connection with external actions (see Practical Guide to contract procedures for EU external actions), as defined in Title VII, Chapter 3 of the Financial Regulation. The award of such contracts is subject to the special provisions laid down in Chapter 3 of Annex 1 to the Financial Regulation. Throughout this Vade-mecum, “EU procurement”, “EU public contracts” or “awarded by the contracting authority” mean public contracts awarded by the Commission, other institutions, executive agencies, decentralised agencies or the European External Action Service on their own account, as defined above. 10 1.2. Procurement at a glance 1.2.1. Does this Vade-mecum apply? I want to buy something. Do I need to follow the rules in this Vade-mecum? Am I going to spend EU money? No  Follow the rules laid down by the owner of Yes the money. Go to the next question.  It is most probably a grant: see Vade- Am I going to pay money and receive something in No  mecum, Chapter 1.5.1. return for the contracting authority's needs? Yes It may be also interest for late payments, Go to the next question. compensation ordered by a court, a penalty  or a fine. Am I paying for something that could be considered to Yes  See Vade-mecum, Chapter 1.5.2. be employment of staff? No Go to the next question.  Am I paying an individual expert a fixed fee to evaluate tenders, proposals or projects or to provide Yes  See Vade-mecum. Chapter 1.5.3. advice? No Go to the next question.  Am I buying on behalf of the European institutions? If I am buying on behalf of a state outside No  the EU, different rules apply. For further Yes information see the Practical Guide to Go to the next question. contract procedures for EC external actions.  Am I buying from another European institution or You are going to sign an administrative Yes  agreement which is not a public another service of the Commission? procurement contract. No  Your answers to the questions above indicate that you do need to follow the procurement rules in this manual. 11 1.2.2. Before launching the procurement procedure Before you start your procurement procedure, answer the following further questions: Maybe I already have what I need? You may consult ABAC LCK or It is advisable to make sure that no-one else – in your or another DG – has already Yes  Budgpedia to look for existing signed a contract covering your needs. contracts or framework contracts or the Official Journal on TED to look No for existing Calls for Expression of Go to the next question. Interest (see Chapter 3.6) or contact colleagues who may be  dealing with similar issues. Do I have the money available? You have to identify the budget No  line, make sure that the legal basis You have to be sure that you are indeed allowed to make the budgetary commitment (not in case of framework contract). and budget comments permit procurement and verify how much Yes time you have. E.g. administrative Go to the next question. expenditure (chapter 01 of each title of the budget) is qualified as  non-differentiated and thus should be contracted in the current year (N) and spent until the end of the following year (N+1). Is there a framework contract that I can use? It is advisable to consult the BUDGpedia list of available framework contracts (FWC) and/or ABAC to identify whether there is a valid framework contract covering your field Yes  See Chapter 2.7. of interest. If there is, contact the department managing it to verify whether the level of use made of it allows an additional specific contract. No Go to the next question.  You cannot launch the procedure Do I have a financing decision covering my needs (for No  without a financing decision. See operational expenditure only)? Chapter 2.1. Yes Go to the next question.  Do I know who is responsible for my procurement? You have to know which You have to know the main parties involved in your procedure. contracting authority will sign the No  contract and who the authorising Yes officer is. Go to the next question.  Do I know what type of contract I need? See Chapter 2.6. You have to know whether you are going to buy services, supplies or works or to sign a No  building contract or whether you need a concession contract. Yes Go to the next question.  Do I know what principles I need to follow? See Chapter 1.4.1. No  Yes Go to the next question.  Do I know the value of my purchase? No  See Chapter 2.2.4. Yes  Now you should start preparing your procurement procedure. Please continue with choosing the type of the procedure. 12 1.2.3. What procedure to use? Do you want an “all-in-one” procedure, where any interested economic operators will get all the information they need for preparing a tender and then you will evaluate all the tenders in one go and choose the best one? Then you might opt for an: 3.3 Open procedure Do you want to pre-select operators who have the economic and technical capacity necessary for implementing your contract and ask only them to send you a tender? Then you might choose a: 3.4 Restricted procedure You are in a situation where you can negotiate with tenderers, e.g.: you need a concession contract; you need training or hotel or restaurant services; Then you might be interested in a: 3.5 Competitive procedure with negotiation Do you need a series of similar services or supplies over a period of time and do not yet know exactly when nor all the details, but are sure that the yearly value will be below Directive threshold? Then the best way to deal with this situation might be to launch one of these two procedures: 3.6.3. List of pre-selected candidates 3.6.4 List of vendors The value of your procurement is below the Directive threshold? Then you may use the: 3.7. Negotiated procedure for middle or low- value contracts You are in exceptional circumstances, e.g.: You have received no tender in response to your open or restricted procedure and this is definitely not due to bad timing or imprecise tender specifications. There is a monopoly situation on the market. Then you might be interested in a: 3.8. Negotiated procedure without publication You intend to procure a particularly complex product or service and you want to hold discussions with pre-selected candidates to come up with options for the best solution and then ask them to send you their tender based on the outcome of this dialogue? Then you are entitled to use a: 3.9. Competitive dialogue You intend to procure something which does not exist so you will finance research services and purchase the end-product. Then you should use an: 3.10. Innovation partnership You need fresh ideas in a field where creativity is a must and where you have to ask for proposals without previously giving details of every aspect of the future contract? In this case you could go for a: 3.11. Design contest 13 1.2.4. What kind of contract to choose? Before launching the procurement procedure you also have to decide what kind of contract you will use. Depending on its subject, repetitiveness and value you may choose one of the following: Type of contract Direct Framework Concession Type of Purchase Direct service Framework service contract Concession contract If you are procuring series of services but contract If you are procuring the precise volume and timing of delivery services and the cannot be defined at the outset, the volume precise volume and and other specific conditions will be laid timing of delivery can down in “specific contracts” or “order be defined at the forms”: Services outset: model framework contract model direct contract or, for a very low, low or middle value contract, model purchase order (It is a simplified direct contract) Direct supply Framework supply contract Not contract If you are procuring series of supplies but applicable If you are procuring the precise volume and timing of delivery supplies and the cannot be defined at the outset, the volume precise volume and and other specific conditions will be laid timing of delivery can down in “order forms”: be defined at the model framework contract Supplies outset: model direct contract or, for a very low, low or middle value contract, model purchase order (It is a simplified direct contract) Work contract Framework work contract Concession If you are executing If you are procuring a series of works to contract works to construct all construct all or part of buildings (model or part of a building provided by OIB). Works (model provided by Used mainly by OIB and OIL, there is no OIB): model contract provided. model for work Model framework contract for works contract Building contract Buildings If you are buying or renting all or part of a building 14 1.2.5. Sales of assets The sale of assets follows a procedure similar to procurement procedures, on the basis of Article 87(2) of the FR. The obligation of transparency is based on the value of the purchase of the asset. The contracting authority must obtain the highest price for these sales, in respect of sound financial management principle. The principles applicable to procurement can be used for sales. As an exception, these rules don't apply to sales between Union Institutions and their bodies referred to in Article 70 of the FR. 15 1.3. How to use this Vade-mecum? This Vade-mecum is structured in a way that will allow you to consider the key factors which determine the choice of procedure right at the start of the procurement operation and then to go straight to the relevant parts: – Part 1 “Introduction and definitions” sets out the scope of this Vade-mecum, the basic concepts which apply to all contracts, sales and other types of expenditure which are not procurement. – Part 2 “Conceiving the purchase and the contract” presents the obligations as regards financing decisions, the factors which services must take into account when defining the characteristics of a purchase, joint and interinstitutional procurement and the different types of contracts. – Part 3 “Procurement procedures and systems” presents, one by one, the different procedures which apply, depending on the nature and value of the contracts, as well as specific electronic systems that may be used in procedures. – Part 4 “Stages in the procurement procedure” gives a detailed description of the steps in the procedure. – Part 5 “Contract management” gives information about basic concepts and dealing with potential problems with contract implementation. This structure makes it possible to refer directly to the chapter(s) concerning any particular part of the procurement exercise. It also avoids repetition of chapters common to several types of procedure. The Vade-mecum also offers a facility to go straight to the description of any particular aspect of the procedure, using the links in the overview table at the end of the description of each procedure. This symbol is used to explain how eProcurement supports the process. 16 1.4. What is public procurement? 1.4.1. Basic information about EU public procurement “Public procurement” means the purchasing of works, supplies and services by public bodies at either national or Union level. Public procurement within the European Union is governed by Directive 2014/24/EU, while the legal basis for Commission procurement is laid down in the Financial Regulation (FR). The goal of procurement rules EU public procurement plays an important part on the single market and is governed by rules intended to remove barriers and open up markets in a non-discriminatory and competitive way. The objective of public procurement is to increase the choice of potential contractors to public bodies, thereby allowing achieving a most economically advantageous tender, while at the same time developing market opportunities for companies. The following rules should be followed: Accountability: effective mechanisms must be in place in order to enable authorising officers of the contracting authority to discharge their personal responsibility on issues of procurement risk and expenditure. Competition: procurement should be carried out by competition, unless there are justified reasons to the contrary. Consistency: economic operators should be able to expect the same general procurement policy across the public sector. Effectiveness: the contracting authority should meet its commercial, regulatory and socio-economic goals in a balanced manner. Efficiency: procurement processes should be carried out as cost effectively as possible. Equal treatment: economic operators should be treated fairly and without discrimination, including protection of commercial confidentiality where required. The contracting authority should not impose unnecessary burdens or constraints on economic operators. Informed decision-making: the contracting authority needs to base decisions on accurate information and to monitor requirements to ensure that they are being met. Integrity: there should be no corruption or collusion with or between economic operators. Legality: the contracting authority must conform to European Union law and other legal requirements. Responsiveness: the contracting authority should endeavour to meet the aspirations, expectations and needs of the community served by the procurement. Transparency: the contracting authority should ensure that there is openness and clarity on procurement policy and its delivery. Advertising the contract Most contracts covered by the public procurement rules must be subject to a call for tenders to be published in the form of a notice in the OJ S (contracts as from the Directive thresholds) or to be advertised by appropriate means (contracts below the Directive thresholds). Choosing the right award procedure The notice published in the OJ S must specify the procurement procedure that the contracting authority will follow. There are three main award procedures: open, restricted and negotiated. The contracting authority has a free choice between the open and restricted procedure, but may use the negotiated procedure only in specific circumstances. Conclusion Any contracting authority awarding a contract should remember the following key principles: Be open and transparent – allow tenderers to understand what you are going to do and how you are going to do it. Be objective and ensure equal treatment of tenderers – allow all tenderers a fair and equal chance of winning the contract. Be consistent – do what you said you were going to do. Tenderers should ensure that they understand the procedure and, if in doubt, seek clarification from the contracting authority. 17 1.4.2. Legal basis and general principles The legal basis for EU procurement consists of the relevant articles of the Financial Regulation (FR) and its Annex 1. Please note that all legal references to the FR should point to the initial act only, which include by definition all subsequent amendments (dynamic legal reference)2. − Financial Regulation – Regulation (EU, Euratom) No 2018/1046 of the European Parliament and the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union3, Part One, Title V (Common rules), Title VII (Public procurement and concessions) and Annex 1. − Judgments, mainly of the General Court in procurement cases. The FR incorporates the rules from Directive 2014/24/EU4 on public procurement (“the Directive”) and Directive 2014/23/EU on concessions5. The provisions of the FR will be described in detail, with examples, in each chapter of this Vade-mecum. At this stage it is important to look at some of the fundamental concepts underlying procurement which contracting authorities must keep in mind throughout the procedure.  All EU procurement must comply with the principles of transparency, proportionality, equal treatment and non-discrimination and sound financial management.  The basic rule underlying public procurement is to ensure competition between economic operators. Cases where a contracting authority can approach an operator of its choice without launching a competitive procedure are the exception and are reserved for specific, clearly defined situations.  Competitive procedures are based first on a precise definition of the subject and terms and conditions of the contract and, second, on a variety of criteria, of which operators must be notified so that they can draw up their tender accordingly.  The EU institutions are not legally bound vis-à-vis an economic operator until the contract is signed. This should be made clear in all contacts with candidates/tenderers. Up to the time of signature, the contracting authority may cancel the procedure without the candidates/tenderers being entitled to any compensation. Reasons must, of course, be given for the decision and the candidates/tenderers must be notified.  As a general principle, any request from a tenderer must be replied in the official language in which the tenderer has expressly indicated in its request or, failing this, in the (official) language of the request itself6.  During the procurement procedure tenders or requests to participate can be submitted in any official language of the EU. 2 See the DAP (Drafter's Assistance Package): Home - DAP - EC Extranet Wiki (europa.eu) (only Commission access) 3 Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012, OJL 193, 30.7.2018, p. 1, see https://eur-lex.europa.eu/legal- content/EN/TXT/?uri=uriserv:OJ.L_.2018.193.01.0001.01.ENG&toc=OJ:L:2018:193:TOC 4 OJ L 94, 28.03.2014, p. 65, see http://eur-lex.europa.eu/legal- content/EN/TXT/PDF/?uri=CELEX:32014L0024&from=EN 5 OJ L 94, 28.03.2014, p. 1, see http://eur-lex.europa.eu/legal- content/EN/TXT/PDF/?uri=CELEX:32014L0023&from=EN 6 Article 2 of Regulation No 1/1958 determining the languages to be used by the European economic Community, see eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:31958R0001 18 On the contrary, after the completion of the procurement procedure, during the execution of the Framework Contract, if justified by the object of the contract, the contracting authority has the possibility to require the use of specific European languages(s) for submitting offers. In this case in order to comply with the transparency principle, it is advised to announce that in the tender specifications of the procurement procedure.  When the contracting authority needs to contact a tenderer – namely to request additional information about its submitted tender – such request should be made in the official language in which the tenderer has submitted its tender. In case the tender includes documents written in several languages, the contracting authority should address its request in the (official) language used predominantly by the tenderer. Complying with the legal requirements relating to public procurement should not be seen as a mere formality or bureaucratic requirement with no real implications, as any economic operator who is eliminated from a procurement procedure can use failure to comply with any one of these requirements as grounds to challenge the decision awarding the contract and possibly have it annulled. Moreover, failure to comply may lead to non-contractual liability (damages) against the contracting authority. Compliance is also essential for administrative and political reasons (scrutiny by the European Parliament’s Budgetary Control Committee, the Ombudsman, the Court of Auditors, etc.). 1.5. What is not public procurement – other types of expenditure 1.5.1. Grants This Vade-mecum does not apply to grants paid from the Union's budget. Still it is helpful to look at the definition of grants in order to draw a clear distinction between them and contracts. “Grants are direct financial contributions, by way of donation, from the budget in order to finance: a) either an action intended to help achieve an objective forming part of a European Union policy; b) or the functioning of a body which pursues an aim of general European interest or has an objective forming part of a European Union policy.” As a general rule, the difference between a public contract and a grant is fairly clear. Briefly, in the case of a contract the Commission obtains a product or service it needs in return for payment, while in the case of a grant it makes a contribution either to a project carried out by an external organisation or directly to that organisation because its activities contribute to Union policy aims. Generally, the legal basis, financing decisions and budget lines include comments that determine whether the expenditure should be classified as procurement or grant. The table below explains into which category the proposed operation falls into by virtue of its main characteristics. Please note that if an economic operator is a beneficiary of a grant, it does not prevent it from being awarded a contract. 19 Comparison of procurement and grants Public contract Grant Purpose To acquire a supply, service, work or building which the To encourage action recognised by the Commission as useful contracting authority needs for its own activities. for Union policies, but which falls primarily within the scope of the beneficiary’s activities. Initiative and Lie entirely with the contracting authority (CA): the CA The application for financing originates with the beneficiary, control produces the detailed specifications. The successful who submits a proposal for support for activities it is carrying tenderer must comply with the specifications. out or plans to carry out in response to a Commission call for proposals. The proposal sets out the specifications for the action to be performed within the framework laid down in advance by the Commission. Ownership Ownership as a rule remains with the contracting Ownership as a rule remains with the beneficiary of the grant. authority. Union The contracting authority pays 100% of the contract price. The grant may not finance the total cost of the action, save in contribution exceptional cases. The contract is bilateral: it imposes reciprocal obligations Conditions are attached to the grant awarded, but there is no Mutual on the CA and on the contractor direct specific link between individual obligations on either side The CA monitors the delivery of the purchase. (Commission and beneficiary). obligations and The Commission has the right to monitor technical implementation of the action and the use made of the funds monitoring granted. Profit It is natural that the contractor's remuneration should In principle the grant must not have the purpose or effect of include an element of profit. producing a profit for the beneficiary. Procedures Tenders are received in response to a call for tenders. Grant applications are normally received in response to a call for proposals. Legal The outcome of a procurement procedure is a contract. The outcome of a grant award procedure takes usually the form instrument of a grant agreement. For further information on awarding grants see the Grants Vade-mecum. 20 1.5.2. Employment contracts The confusion between employment contract and provision of services can lead to difficult legal situations, since the link between the contracting authority and the contractor can sometimes be misconstrued as an employment contract. In fact, despite the diversity of national law, the national courts will almost always take into account a range of factors, including: working on Commission premises, using Commission infrastructure and, especially, having an e-mail address ending in “@ec.europa.eu” instead of “… @ext.ec.europa.eu”, a job description in Sysper, the right to use a parking space in Commission buildings, etc.; the existence of a hierarchical link, whether formal (clauses in a contract or references in specifications) or de facto (authorisation of leave or organisation of working time, attendance requirements (hours or days), services provided expressed in terms of hours per month, taking instructions from and reporting to a “hierarchical superior”, etc.); payment for services comparable with a salary (fixed monthly amount rather than payments for individual specifically defined tasks); the nature of the tasks actually performed (as compared with the description of the service purchased under the procurement procedure); the duration and continuous nature of the services. DG HR insists that natural persons should not provide services for the Commission for more than seven years over a period of twelve years7. However, this precaution is not, in itself, enough to prevent confusion. Application of this restriction must be checked (in principle by DG HR). Using loose terminology can also create a false impression of the nature of the contractual link: a service provider operating under a service contract is not “recruited”, does not have a “job” or “duties” at the Commission, is not paid a “salary”, does not “take leave” and does not “resign”. All these terms imply employment, and hence obligations for the institution as an employer, rather than performance of a public contract. Consequently, special attention must be paid to these aspects when drawing up the procurement documents and during performance of the contract. 1.5.3. External experts For contracts with a value below the threshold set in the Directive, a procedure based on Article 237 FR (call for expression of interest) may be used to select experts needed to assist in evaluation of grant proposals or procurement tenders, in project follow-up and in ex-post evaluation and for providing opinion and advice in specific cases. The procedure for the selection and use of experts is different from the procurement procedures. The remunerated external experts represent a separate instrument for implementing the Union budget, such as grants, procurements, financial instruments etc. The remunerated external experts’ contracts are therefore different compared to the procurement contracts, despite the fact that the general principles, of transparency and non- discrimination for example, also apply. The main difference is that there is no competitive tendering based on price, since the price is fixed by the institution. Moreover, it is only aimed at natural persons who are selected "ad personam" and does not require submission of tenders. The selection of experts relies on the evaluation of their professional capacity as needed depending on the tasks they will execute. It is however possible to contract the services of external experts under a framework contract, provided the framework contract covers this type of tasks. The experts may be staff of the contractor or sub-contractors. It does not matter whether the experts providing 7 See Commission implementing rules on 7 years rule at: Human resources (europa.eu) 21 services under existing contracts are delivering them extra muros or intra muros, because they are considered as outside experts in the meaning that they are not employed by the contracting authority.When external experts' services are contracted under a framework contract, the tasks are performed under the responsibility of the contractor and the payment of the services is made to the contractor according to the provisions of the contract. The authorising officer responsible must ensure that these external experts satisfy the obligations concerning conflict of interests and confidentiality. For this purpose, each external expert must sign a declaration of no-conflict of interests as well as a code of conduct. These must be attached to the specific contract concluded with the contractor under a framework contract or to the expert's contract if there is no framework contract involved. It should also be pointed out that remunerated external experts are not a category of staff. Their tasks cannot include executive powers of the institution and cannot lead them to exercise discretionary power8. When their tasks consist in evaluating proposals submitted in a call for proposals or tenders, the external experts are not members of the evaluation committee9, but they only assist the committee. Therefore, they should not participate in the meetings of the committee (except on request of the evaluators for clarifying their opinion if necessary) and cannot be involved in the drafting of the evaluation report. The role of external experts is to provide an opinion in writing about all the tenders or proposals received, but limiting their opinion to their field of expertise. External experts do not sign the evaluation report including the award recommendation by the committee. For further details, see the Interpretative Note on Remunerated External Experts published on BUDGpedia. 1.5.4. Service Level Agreement (SLAs) Service Level Agreements are agreements that the Union institutions may conclude with each other or that may be agreed upon between departments of Union institutions, Union bodies, European offices, bodies or persons entrusted with implementation of specific actions in the CFSP pursuant to Title V of the TEU and the Office of the Secretary-General of the Board of Governors of the European schools. Union institutions and bodies are not deemed to be contracting authorities when they conclude service-level agreements (SLAs) with each other. In other words, the Commission and the Parliament or the Commission and an executive or decentralised agency can conclude SLAs. SLAs can also be agreed upon between departments of Union institutions. For instance, two Commission DGs or an Office and an agency can conclude SLAs. For example, when the JRC participates in a procurement procedure and is awarded the contract, the contract will also take the form of a SLA10. For further information please see the relevant page in BUDGpedia about SLAs. 1.6. Conflict of interests in procurement The term "conflict of interests" is used with different meanings in different contexts. To avoid confusion, four main cases can be distinguished: (1) conflict of interest for the contracting authority, (2) grave professional misconduct, (3) involvement in drafting tender specifications and distortion of competition, (4) professional conflicting interests. 8 Article 62 FR. 9 Article 150(3). 10 Please consult the Commission circular of 20 February 2024 on JRC participation in procurement and grant procedures, available on BUDGpedia. 22 (1) The notion of conflict of interests refers normally to situations where an agent of the contracting authority is in one of the cases listed in Article 61 FR, i.e. where the impartial and objective exercise of the function of the person is compromised for reasons involving family, emotional life, political or national affinity, economic interest or any other interest with a candidate, tenderer or contractor. If this situation happens or if there is a risk that this situation may happen, the person has the obligation to inform its hierarchy in writing and the hierarchy will decide the appropriate action. This includes finding that there is no conflict, removing the person from a specific activity, etc. In procurement, this applies to the persons and authorising officer in charge of the procedure as well as to persons involved in opening and evaluation phases. The term "conflict of interests" does not apply to economic operators and should not be used with reference to them. It can only refer to the contracting authority. For economic operators please see paragraph 4 below on professional conflicting interests. (2) There are specific situations for economic operators which qualify as "grave professional misconduct" and not as conflict of interests, e.g.: - where the operator attempts to unduly influence the decision-making of the contracting authority during a procurement procedure; - where the operator enters into agreement with other operators in order to distort competition; - where the operator tries to obtain confidential information that may give it undue advantages in the procedure. These cases are listed in Article 136(1) (c) FR and are a basis for exclusion of the operator. (3) There are cases where the contracting authority used a technical assistance contract to help drafting the tender specifications of a subsequent procurement procedure. In this case, it is the responsibility of the contracting authority to ensure equality of treatment between the operator involved in the technical assistance and other economic operators. The contractor involved in the preparation of procurement documents can be rejected from the subsequent procedure only if its participation entails a distortion of competition and that this cannot be remedied otherwise (Article 141(1) (c) FR). It is up to the contracting authority to prove the distortion of competition and to prove that it has taken all possible measures to avoid the rejection. Such rejection is subject to a contradictory procedure, so the tenderer must be given the opportunity to prove that its prior involvement cannot distort competition. In practice, it is strongly recommended to avoid the rejection and to prepare the necessary measures to avoid distortion of competition from the beginning, i.e. from the first contract. In particular, the information given to the technical assistance contractor during the preparation of the tender specifications should also be communicated to other economic operators in the second procedure. Besides, the time limit for receipt of tenders of the second procedure should be long enough (well above the legal minimum) to ensure that all operators can absorb the relevant information. A short time limit would indeed give an undue advantage to the technical assistance contractor. (4) Finally, there are specific cases where the operator has a professional conflicting interest, which negatively affects its capacity to perform a contract (Point 20.6 Annex 1 FR). This is treated at the selection stage, under the technical and professional capacity. This provision is meant to avoid any situations in which the previous or ongoing professional activities of an economic operator or even the personal situation of a key manager affects its capacity to perform a contract in an independent, impartial and objective manner. Examples of such situations are cases where an operator is awarded a contract: - to evaluate a project in which it has participated or has vested interests; 23 -to audit accounts which it has previously certified; -to evaluate a programme under which it has previously received subsidies; -to conduct a study providing input to a Union policy regulating a sector where the operator has its business interests; When assessing the risk of professional conflicting interests, the contractring authority may consider to what extend: The activities of the economic operator or of their affiliates conflict with the contract to be signed. The activities of the personnel assigned to the execution of the contract (e.g. external consultants) conflict with each other. The different closely related assignments of the economic operator/ its affiliates /personnel assigned to the contract with different EU Institutions conflict with each other. A previous employment in the Commission or the in the EU Institutions of the staff assigned to the contract conflict with the contract to be executed. Where the contracting authority has established that the operator is in such a situation, the corresponding tender is to be rejected. These cases often arise in contracts for the provisions of services where the objectivity is of great importance such as contracts for evaluation, audit framework contracts, contracts for the provision of consultancy services as well as policy related contracts. For more information, see Chapter 4.7.5.4. 1.7. eProcurement The eProcurement programme is a corporate IT programme, which is running under the SEDIA (Single Electronic Data Interchange Area) programme aimed to serve all participants involved in EU procurement and grants 11. The eProcurement programme is a fully integrated, automated and paperless solution, limiting to the strict minimum the manual input of data and covering the entire procurement process (all procedures, contract types and procurement steps): from the preparation of the procedure, to the execution, the contract implementation and up to the inventory and logistics management of the material. It provides a smooth user experience and full integration with the financial, budgetary and accounting processes (ABAC / SUMMA). With this programme, the Commission takes a decisive step towards harmonisation and simplification. The current eProcurement landscape consists of the following systems supporting the procurement process: ePreparation (PPMT - Public Procurement Management Tool): supports the planning, preparation and monitoring of all types of procurement procedures under the FR. The system creates the Ares procurement (sub)files, the contract notices and calls for tenders and supports the nomination of procurement committees. PPMT is currently used by all DGs and Executive Agencies (mandatory for all their procedures) as well as most other institutions and decentralised agencies. For detailed PPMT user guidance check the PPMT section of the eProcurement wiki. 11The SEDIA (Single Electronic Data Interchange Area) Programme was set up in 2017 with the objective to offer a single 'electronic data interchange area' for all participants in EU grants and procurement as foreseen in Article 147(1) FR. Apart from eProcurement, other corporate IT programmes, currently running under the SEDIA umbrella, are eGrants and eExperts. 24 eNotices2: supports the preparation and publication of all types of contract notices. As of 25th October 2023 all newly submitted notices should be in the new eForms which are to be prepared and sent directly from PPMT (no longer from eNotices). TED eTendering: supports the publication of call for tenders and procurement documents, the management and publication of questions and answers in the submission phase. TED eTendering is being phased out - as of 25 October 2023 it may no longer be used for new procedures with a contract notice publication. It is envisaged that after mid 2024 TED eTendering is no longer used - its functionalities will be fully taken over by the Funding & Tenders Portal. Funding & Tenders Portal (F&T portal): entry point (the Single Electronic Data Interchange Area) for participants and experts in funding programmes and calls for tenders managed by the European Commission and other EU bodies. F&T Portal will gradually replace TED eTendering – public call for tenders’ data, procurement documents and Q&As will be published only on the F&T Portal. For more information check the Funding&Tenders Portal eProcurement wiki. eSubmission: supports the submission of requests to participate/tenders in procurement procedures. eSubmission is mandatory for all procedures supported by eSubmission (check here which procedures are supported). eSubmission is used by most EU institutions, bodies and agencies. MyWorkplace: corporate user centric platform guiding users through their tasks in eSubmission back-office (e.g. opening of requests to participate/tenders, access to tenders), eRequest and eContracting. For more information check MyWorkplace wiki. eRequest: supports the preparation of requests for specific contracts under a framework contract. eContracting: supports the preparation, approval and signature of direct and specific contracts, including amendments, the submission and approval of deliverables and invoices, contract closure. More information on the eProcurement programme and detailed guidance on how to use the eProcurement tools can be found in the eProcurement wiki. 25 Part 2. Preparing the purchase and the contract 2.1. Financing decision Contracts must be covered by a “financing decision”, as provided for by Article 110 FR, in case of operational appropriations. This is not necessary in the case of administrative appropriations including technical support lines (of the form XX 01, also called ex-BA lines). The financing decision is needed for framework contracts, even if no appropriations are needed at this stage, and for direct/specific contracts. It must indicate: - the total budget reserved for the procurements during the year; - the indicative number and type of contracts envisaged and, if possible, their subject in generic terms; - the indicative timeframe for launching the procurement procedures. Further information is available in the Financing decision and annual work programme circular. 2.2. Characteristics of the purchase For departments considering launching a procurement procedure, the first step is to determine the characteristics of the contract, i.e. its subject, duration and value. Note that as a matter of principle, to ensure transparency and sound financial management, a framework contract should not be envisaged if the same subject matter is already covered by another existing framework contract (inter institutional or not) to which the contracting authority has access. 2.2.1. Subject matter and type of purchase It is essential to identify the subject matter in order to select the procurement procedure to be followed and the type of contract. A more detailed description of the various subjects can be found in the reference nomenclature provided by the CPV established by Regulation (EC) No 2195/200212, amended by European Commission Regulation (EU) No. 213/2008. The subject matter must be clear, giving a full and accurate description of what is being procured. The technical content must be clearly set out, indicating the duration, estimated value and type of contract. Procurement can be used for four different types of purchases: 'service' covers all intellectual and non-intellectual services other than those covered by supply contracts, works contracts and buildings contracts; 'supply' covers the purchase, leasing, rental or hire purchase, with or without option to buy, of goods (it may also include siting, installation and maintenance); 'works' cover either the execution, or both the execution and design, of works related to one of the activities referred to in Annex II to Directive 2014/24/EU or the execution or both the execution and design of a work corresponding to the requirements specified by the contracting authority. A “work” means the outcome of building or civil engineering works taken as a whole that is sufficient of itself to fulfil an economic or technical function; 'building' covers the purchase, exchange, long lease, usufruct, leasing, rental or hire purchase, with or without option to buy, of land, buildings or other real estate. It covers both existing buildings and buildings before completion provided that the candidate has 12OJ L 340, 16.12.2002, p. 1, as amended by Regulation (EC) No 2151/2003 (OJ L 329, 17.12.2003, p. 1). 26 obtained a valid building permit for it. It does not cover buildings designed in accordance with the specifications of the contracting authority that are covered by works contracts. 2.2.2. Lots Contracts covering a set of supplies or services serving a similar purpose, whose combined value is such that few operators would be able to provide them all in their entirety, should be split into lots, so that any operator who is interested can tender for one or more lots (Point 33 Annex 1 FR). Each lot has a maximum value. Dividing a contract into lots increases competition and makes it easier for small and medium-sized companies to participate. Indeed, in the case of very high value contracts competition can only be achieved by splitting the contract, since only a small number of operators would be able to offer all the products or services requested, thus placing the contracting authority in a position of dependence. Splitting into lots is also appropriate when a contract for a single global purchase is made up of a variety of products or services offered by companies operating in different sectors of the economy (for example, information and communication activities often include managing a website, producing videos, publishing written material, etc.). In such cases, a company which is highly efficient within its own sector but is not able to provide all the products or services would be unfairly prevented from competing. 2.2.3. Duration of the contract The direct contract (see Chapter 2.6.1) stipulates a limited duration for performance (duration of execution of the tasks). It is recommended that this duration includes both the execution of tasks and the approval of interim deliverables if any, since the approval of an interim deliverable usually conditions the continuation of the execution of the tasks by the contractor. In addition, the time taken for the contracting authority to approve a deliverable should not be at the detriment of the time given to the contractor to perform the contract. The period of approval of the final deliverable can be outside that duration since, at that moment, the contractor has finished performance. A direct contract itself does not have a fixed duration; the contract ends when both parties have fulfilled their obligations: the contractor has delivered according to the terms of the contract and the contracting authority has made the final payment; in addition, some conditions linked to confidentiality and access for auditors are still in force long after performance. The duration of framework contracts (see Chapter 2.6.2) shall be stipulated and may not exceed four years, save in exceptional cases justified, in particular, by the subject matter of the contract. For instance, a FWC for maintenance of a machine expected to last for 10 years should be 10 years as this is justified by the nature of the required service. A specific contract (see Chapter 2.6.3) under a framework contract shall stipulate the duration for its performance, like a direct contract. The framework contract shall continue to apply to the specific contract after its expiry. The framework contract must set a maximum duration for performance of specific contracts after its expiry (usually 6 months). Contracts awarded for multi-annual operations on administrative appropriations normally include a clause allowing them to be renewed subject to certain conditions (e.g. availability of budget), usually at the end of the first year. This renewal is not subject to procurement procedure as it is part of the contract from the outset. Following the principle of broadest possible competition and by analogy with framework contracts, the performance of direct contracts should not exceed a four year duration. 2.2.4. Estimating the value of a contract The contracting authority must estimate the value of a purchase (Point 34 Annex 1 FR) on the basis of previous experience, previous similar contracts and/or on the basis of a preliminary market research. It is possible to consult specialised services (e.g. DG COMM for communication services), to obtain information on the value of the purchase. 27 This estimate is made at the very beginning, in any event before the contracting authority launches the procurement procedure. Indeed, the value is the basis for the choice of procedure. The estimated value of a contract may not be established in such a way as to avoid the competitive tendering procedure or to circumvent the rules which apply to certain procurement procedures or above a certain threshold. Nor may a contract be split for that purpose. The estimated value is based on the total volume of the services / supplies /works to be purchased for the full duration of the intended contract including all options, phases or possible renewals. It must be calculated without VAT. It includes the total estimated remuneration of the contractor, including all types of expenses (for instance, travel and subsistence expenses). As a result, thought must be given to whether the product or service requires a one off- operation or is of a permanent or repetitive nature and will have to be renewed over a given period. For instance, it should be checked whether the contract stands on its own or covers a product or service which forms part, with others, of a technical or financial whole (e.g. the various services which must be ordered when organising a conference) and another question is whether the purchase of a product would also create a need for services (e.g. maintenance). If the contract is split into lots, the combined value of all lots should be taken into account. In the case of works contracts, account must be taken not only of the value of the works but also of the estimated total value of the supplies needed to carry out the works and made available to the contractor by the contracting authority. If the contract includes revenues The value of the contract takes into account not only the expenses but also the revenues of the contract. In the case of banking or financial services, the fees, commissions, interest and other types of remuneration must be taken into account in the estimation. The same applies to insurance services and design contracts. In practice, the sum of all revenues and all possible expenses (in absolute value) should be used for estimation. Regarding framework contracts The basis for calculating the total value of FWCs is the maximum value of all the specific contracts envisaged during the total duration of the framework contract (FWC) including all renewals, reimbursable expenses and margins for indexation and security. Regarding joint and interinstitutional contracts For joint contracts with contracting authorities from MS, EFTA states or candidate countries or interinstitutional contracts or contracts involving several departments, the estimated value is based on the total volume of the services / supplies /works to be purchased by the users of the contract. Regarding long-term purchases In the case of service contracts which do not specify a total price or supply contracts for leasing, rental or hire purchase of products, the basis for calculating the estimated value is: in the case of fixed-term contracts: if their duration is 48 months or less in the case of services or 12 months or less in the case of supplies, the total contract value for their duration; if their term is more than 12 months in the case of supplies, the total value, including the estimated residual value; in the case of contracts for an indefinite period, or in the case of services for a period exceeding 48 months, the monthly value multiplied by 48. 28 Regarding repetitive purchases In the case of service or supply contracts which are awarded regularly or are to be renewed within a given period, the contract value is established on the basis of any of the following: the total actual value of successive contracts of the same type awarded during the preceding 12 months, adjusted, where possible, to take account of changes in quantity or value which would occur in the 12 months following the initial contract; the total estimated value of successive contracts of the same type to be awarded during the financial year. Regarding concessions: The value of a concession is an estimate of the total turnover of the concessionaire generated over the duration of the concession. This value must be estimated using an objective method which must be announced in the procurement documents. The method must take into account: (a) the revenue from the payment of fees and fines by the users of the works or services other than those collected on behalf of the contracting authority; (b) the value of grants or any other financial advantages from third parties for the performance of the concession; (c) the revenue from sales of any assets which are part of the concession; (d) the value of all the supplies and services that are made available to the concessionaire by the contracting authority provided that they are necessary for executing the works or services; (e) the payments to candidates or tenderers. 2.3. Risk Management Projects are inherently exposed to certain risks, in other words, there are things that could go wrong and have a negative impact on the outcome of the project. In the procurement process, the stage of analysis and planning (assessment of needs, evaluation of value, timetable) and preparation of the contract (drafting tender specification and contract documents, defining the selection and award criteria) are key steps when to consider potential risks and how to mitigate the significant ones. It is key to identify inherent risks and assess them at an early stage, while it is still possible to setup measures that could mitigate thei

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