Budget
Central Financial Service
VADE MECUM
ON PUBLIC PROCUREMENT PROCEDURES
IN THE COMMISSION
October 2003
Updated August 2005
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NOTE
The Vade Mecum on public procurement procedures in the Commission has been produced for internal use. The aim is to provide contracting authorities in the Commission with practical assistance in preparing and implementing these procedures.
Itdoes not claim to cover every single matter that might arise in connection with public procurement. Because of the number and variety of thecontracts involved, specific questions are bound to arise that cannot be covered in what, by its 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. It is these rules and regulations and any clarification resulting from Court judgments that take precedence.
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TABLE OF CONTENTS
1.INTRODUCTION...... 5
1.1What is a public contract?...... 6
1.2Overview of Commission public procurement...... 7
1.3Grants and public contracts...... 8
1.4Work contracts and public contracts...... 11
1.5Scope of this Vade Mecum...... 13
2.HOW TO USE THIS VADE MECUM...... 14
3.DEFINING THE CONTRACT - FINANCING DECISION...... 15
3.1Legal bases and underlying concepts...... 16
3.2Defining the contract...... 18
3.3Financing decision...... 22
4.CHOOSING THE PROCEDURE...... 23
5.OUTLINE OF THE PROCEDURES (with crossreferences to the relevant
chapters)...... 26
5.1Open or restricted procedure with publication of a contract notice in
the Official Journal...... 27
5.2.Restricted procedure following a call for expressions of interest...... 30
5.3.Procedures applicable to service contracts underAnnex IIB to
Directive 2004/18/EC...... 34
5.4Low-value contracts...... 36
5.5Procedures reserved for exceptional cases: negotiated procedures and
fasttrack procedures...... 39
5.6Dynamic purchasing system...... 45
5.7Competitive dialogue...... 47
6.PRE-INFORMATION NOTICE AND OTHER FORMS OF PUBLICITY...51
7.CALL FOR EXPRESSIONS OF INTEREST AND OTHER FORMS OF
PUBLICITY...... 54
8.CALL FOR TENDERS...... 58
8.1Common characteristics...... 59
8.2Guidelines for the specification...... 61
8.3Model invitation to tender...... 76
8.4Draft contract...... 81
8.5Use of a framework contract...... 86
9.CONTRACT NOTICE AND OTHER FORMS OF PUBLICITY...... 90
10.DISPATCH OF CALLS FOR TENDERS, SUBMISSION AND OPENING OF
TENDERS...... 93
10.1Receipt of requests to participate and selection of candidates (restricted
procedure or negotiated procedure with contract notice)...... 94
10.2Arrangements for receiving, opening and evaluating tenders……...... 97
10.3Dispatch of calls for tenders...... 99
10.4Contacts with tenderers before the closing date for submission of
tenders...... 100
10.5Opening of tenders...... 102
11.EVALUATION OF TENDERS...... 104
12.AWARD DECISION, NOTIFICATION, CONCLUSION OF CONTRACT
AND POSTINFORMATION...... 110
13.BUILDINGS CONTRACTS...... 116
14.CONTESTS...... 117
15STUDY CONTRACTS………………………………………………………120
Annex 1Articles of the Financial Regulation concerning public contracts
concluded by the Commission on its own account...... 123
(Part I, Title V)...... 123
Corresponding articles of the Implementing Rules...... 123
(Part I, Title V)...... 123
Annex 2Annexes IIA and IIB to Directive 2004/18/EC...... 124
Annex 3Forms which must be used for drafting notices...... 125
Annex 4Outline of notice of call for expressions of interest...... 126
Annex 5Use of languages in Commission documents...... 129
Annex 6Declaration of absence of conflict of interest and of confidentiality...131
Annex 7Appointment of [opening board] [evaluation committee]...... 132
Annex 8Record of opening of tenders...... 133
Annex 9Distinguishing between selection criteria and award criteria in
specifications and when tenders are evaluated...... 134
Annex 10Award decision...... 136
Annex 11Reference file for public procurement...... 138
Annex 12Commission communication on the procedure for informing candidates
and tenderers...... 140
Part 1
INTRODUCTION1.1What is a public contract?
1.2Overview of Commission public procurement
1.3Grants and public contracts
1.4Work contracts and public contracts
1.5Scope of this Vade Mecum
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INTRODUCTION
1.1What is a public contract?
The rules state: "Public contracts are contracts for pecuniary interest concluded in writing by a contracting authority (in practice a Commission department) in order to obtain, against payment of a price paid in whole or in part from the budget, the supply of movable or immovable assets, the execution of works or the provision of services"(seePart 3, Chapter 3.1).
They can be:
–buildings contracts, for the acquisition of land, existing buildings or other real estate by various means (purchase, long lease, leasing, rental or hire purchase, with or without option to buy);
–supply contracts for the acquisition of products by various means (purchase, leasing, rental or hire purchase, with or without option to buy); the delivery of products may also include siting, installation and maintenance;
–works contracts for either the execution, or both the execution and design, of works relating to one of the activities listed in Annex I to Directive 2004/18/EC or the realisation, by whatever means, 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;
–service contracts for all intellectual and nonintellectual services other than those covered by supply contracts, works contracts and buildings contracts; these services are listed in Annexes IIA and IIB to Directive 2004/18/EC (see Part 3, Chapter 3.1).
1.2Overview of Commission public procurement
The area covered by the public contracts awarded by the Commission is vast.It includes – and this list is intentionally limited – obtaining and fitting out offices for Commission departments, purchasing IT equipment, commissioning consultancy work or technical assistance, carrying out studies, and conducting information and communication campaigns, provided the contracts are in return for payment and concluded by the Commission with an economic operator, and similarly, subject to the same proviso, setting up training courses, purchasing publications, accessing databases useful for Commission activities and organising conferences. In practice, all Commission departments make use of public procurement procedures, some more than others and for contracts varying in value, depending on their activities.
The characteristics of these contracts differ and the amounts involved vary. For this reason the rules in force and the procedures to be followed, described further on in the Vade Mecum, have been tailored to fit a number of different categories.
Statistics, drawn up on the basis of the survey of negotiated procedures under Article54 of the detailed rules for implementing the Financial Regulation and on the basis of the Commission’s obligations under Article XIX.5 of the World Trade Organization Agreement on Government Procurement[1],give a clearer picture of the public contracts awarded by Commission departments. The overall value of procurement for the Commission remains relatively high from year to year at approximately €2billion a year for an average of two thousand contracts[2]. The – very large – sums involved are equivalent to the cost of an entire Community policy; this means that Commission departments must ensure that procedures are applied with the utmost rigour. Similarly, given the large amounts of money involved, economic operators are eager to obtain Commission contracts and, in view of their economic impact, are keen that the contracting authority obeys the rules.
Service contracts account for the vast majority of public contracts awarded by the Commission on its own account - over90% of the total. Most of them are concluded by the open procedure (over 50%), followed by the restricted procedure (over 30%). The negotiated procedure accounts for less than 18% of the number of contracts (and even less in terms of value).
1.3Grants and public contracts
This Vade Mecum does not apply to grants paid from the Community budget. But it is helpful to look at the definition of grants in order to make 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 direct to that organisation because its activities contribute to Community policy aims.
In individual cases, you should refer to the table below to see which category the proposed operation falls into by virtue of its main characteristics.
Public contract / GrantPurpose
The purpose of the expenditure is to acquire a product or service[3] which the Commission needs for its own activities. / The purpose of the expenditure is to encourage actions recognised as useful by the Commission, but which fall primarily within the scope of the beneficiary's activities.
Initiative and control
Initiative and control lie entirely with the Commission: it is the Commission that places the initial order for a product or service and produces detailed specifications. The successful tenderer must comply with the specifications. / The application for financing originates with the beneficiary, who submits a proposal to the Commission for support for activities he is carrying out or planning 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
Since the product or service has been purchased and paid for by the Commission, in general it belongs to the Commission in its entirety. / Ownership as a rule is with the beneficiary of the grant.
Community contribution
The Commission usually pays 100% of the contract price. / The grant may not be used to finance the total costs of the action save in duly substantiated exceptional cases involving external actions.
Mutual obligations, monitoring
The contract is bilateral: it imposes reciprocal obligations on the Commission and on an economic operator, with the operator providing the Commission with a product or service it has ordered.
The Commission monitors the provision of the product or service it has ordered. / Conditions are attached to the award of a grant but there is no direct specific link between individual obligations on either side (Commission and beneficiary).
The Commission has the right to monitor the technical implementation of the action and the use made of the funds granted.
Profit
The Commission pays the economic operator. It is natural that the operator’s remuneration should include an element of profit. / The grant must not have the purpose or effect of producing a profit for the beneficiary.
Procedures
Tenders are received as part of an open, restricted or negotiated procedure. / Grant applications are normally received in response to a call for proposals.
1.4Work contracts and public contracts
The confusion between “work contract” and “provision of services” can lead to difficult legal situations, since the link between contracting authority and contractor can sometimes be wrongly construed as a work 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 “@cec.eu.int” instead of "…@ext.cec.eu.int", 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 a specification) 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”);
- payment for services comparable to 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 provision of services.Reference can be made in this connection to DGADMIN’s insistence that “natural persons” should not provide services for the Commission for more than six years over a period of twelve years[4]. However, this precaution is not in itself enough to prevent confusion. Application of this restriction must be checked (in principle by DG ADMIN). But there is one exception: the services provided by natural persons under service contracts covered by the Directive (i.e. contracts with a value of over €154000) do not count in the calculation of the above restriction.
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", he does not have a "job" or "duties" at the Commission, he is not paid a "fee" or a "salary", he does not "take leave" and he does not "resign", all expressions which imply paid employment, and hence obligations for the institution as an employer, rather than the performance of a public contract.
Special attention must consequently be paid to these aspects when drawing up invitations to tender and contract documents, as well as during actual performance of the contract.
The DG ADMIN website contains more information on the regulations and administrative provisions governing "non-regular" external staff covered not by the Staff Regulations but by service contracts:
1.5Scope of this Vade Mecum
This Vade Mecum applies only to public contracts concluded by the Commission for its own account, as defined in Part I, Title V of the Financial Regulation - for buildings, supplies, works and services.
It does not cover operations such as staff recruitment, to which different rules apply.
Nor does it cover public contracts concluded by the Commission on behalf of and for the account of one or more beneficiaries in connection with external actions, as defined in Part Two, Title IV of the Financial Regulation. The award of such contracts is subject to the special provisions laid down in the Implementing Rules (Part 2, Title III) and set out in the Rules and procedures for service, supply and works contracts in the context of cooperation with third countries (Commission Decision SEC(2003) 387/2 of 25March2003:
Throughout this Vade Mecum, the expression "Commission procurement", “Commission public contracts” or "awarded by the Commission" means public contracts awarded by the Commission for its own account, as defined above.
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Part 2
HOW TO USE THIS VADE MECUM
This Vade Mecum is structured in such a way as to 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 3 (Defining the contract–Financing decision) sets out the basic concepts which apply to all public contracts, the factors departments must take into account when defining the characteristics of a contract and their statutory obligations as regards financing decisions. You are advised to consult this section at the start of the procedure since it determines all the subsequent stages.
–Part 4 (Choosing the procedure) follows on from the analysis in the previous part to identify the different procedures which apply depending on the characteristics of the contracts.
–Part 5 (Outline of the procedures) contains a description of the stages in each procedure with crossreferences to the relevant chapters.
This structure enables the contracting authority, once it has chosen the appropriate procedure, to refer directly to the chapter(s) concerned. It also avoids the repetition of chapters common to several types of procedure.
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Part 3
DEFINING THE CONTRACT -FINANCING DECISION
3.1Legal bases and underlying concepts
3.2Defining the contract
3.3Financing decision
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3.1Legal bases and underlying concepts
The legal basis for Commission procurement is constituted by the corresponding articles of the Financial Regulation and the Rules for implementation of the Financial Regulation (the Implementing Rules)(Annex I), namely:
–Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002[5] (Financial Regulation)
Part One, Title V (Procurement) (Articles 88 to 107);
–Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002[6], as amended by Commission Regulation (EC, Euratom) No 1261/2005 of 20 July 2005[7] (Rulesfor the implementation of the Financial Regulation)
Part One, Title V (Procurement) (Articles 116 to 159);
–Judgments of the Court of First Instance in procurement cases involving the institutions.
The Financial Regulation and the Implementing Rules took over, virtually word for word, the provisions of Directive 2004/18/EC. In particular it should be borne in mind that this Vade Mecum has been revised following the transposition, in the rules for implementing the Financial Regulation, of the new Directive 2004/18/EC of the European Parliament and of the Council on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts[8], referred to hereinafter as "the Directive".
The provisions of the Financial Regulation and the Implementing Rules will be described in detail, with examples, in each chapter of the Vade Mecum. It is important at this stage to look at some, though not all, of the fundamental concepts underlying procurement at the Commission which the contracting authorities must keep in mind throughout the procedure.
→All Commission procurement must comply with the principles of transparency, proportionality, equal treatment and nondiscrimination.
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→The basic rule underlying public procurement is to ensure competition between economic operators. The contracting authority must secure the best conditions in terms of price and quality but it must also ensure that the procedure is transparent and that all economic operators are placed on an equal footing.
Cases where a contracting authority can approach an operator of its choice without launching a competitive procedure are the exception and reserved for specific and clearly defined situations.
→Competitive procedures are based first on a precise definition of the subject and terms and conditions of the contract and, second, ona variety of different criteria, of which operators must be notified so that they can draw up their tender accordingly.
This competitive procedure, announced in advance, is strictly applied throughout the entire process up to and including the selection of the contractor.
→The Commission is not legally bound with regard to an economic operator until the contract is signed. This should be made quite clear by the Commission in all its contacts with candidates/tenderers.
Up to the point of signature, the Commission may either abandon the procurement or cancel the award procedure without the candidates or tenderers being entitled to claim any compensation. The decision must obviously be substantiated and the candidates/tenderers notified.