Zoom

  • Increase
  • Decrease

Current Zoom: 100%

ERDF Procurement

PUBLIC PROCUREMENT COMMON ERRORS AND BEST PRACTICE

The note was compiled following from Article 13 checks by the HEA, Mazars and in particular has included findings and recommendations arising from  ERDF Audit Authority Operations Audits.

Please remember the starting point for all procurement process are the EU Directives and the Irish Circular 10/14.

When procuring goods and services public bodies must be compliant with International, EU and National law. The legal framework includes international obligations, specific domestic legislation on procurement, contract and commercial law in general, labour law and patent and copyright law. For example the WTO calls for uniform treatment of domestic and foreign suppliers in most countries.  Government procurement represents 15% to 20% of EU GDP and has been the subject of increasing European regulation since the 1970s because of its importance.

The aims of public procurement are to:

  • Ensure value for money for contracting authorities
  • Ensure efficient use of taxpayers’ money (Corruption, protectionism).
  • Open, non-discriminatory, transparent procurement procedures also contribute to the competitiveness of companies active on these markets.
  • Procurement Directives adopted by the EU set out in law what Member States must do in exercising the public procurement function.

Directives

  • The Directives are 2014/25/EU repealing 2004/17/EC covering procurement procedures for entities operating in the utilities sector (water, energy, transport and telecommunications) and
  • 2014/24/EU repealing 2004/18/EC covering procurement procedures of public sector bodies.
  • 2009/81/EC on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security.
  • New concessions directive 2014/23/EU covering procurement procedures for concessions.
  • Directive 2007/66/EC. The main objectives of the Remedies Directive are: formalising for the first time in a Directive the judicially (European Court of Justice) created standstill period or Alcatel period whereby notice must be given to other remaining interested candidates or tenderers of the intention of an awarding authority to make an award in favour of a certain tenderer but allowing a period of notice before a contract with the winning tenderer would be concluded;
  • Directive 2007/66/EC also has the objective of combating illegal direct awards of contracts.

Directives were transposed into Irish Law by S.I. No 329 of 2006 and No 50 of 2007 respectively. The most recent Irish Circular regarding procurement is the Department of Public Expenditure and Reform Circular 10/14.   

 

The Directives Impose Obligations on Contracting Authorities to:

Advertise their requirements in the Official Journal of the European Union (OJEU) for contracts whose value exceed certain thresholds. Thresholds for 2013 Commission Regulation (EU) No 1336/2013 of 13 December  2013 amending Directives 2004/17/EC, 2004/18/EC and 2009/81/EC of the European Parliament and of the Council in respect of the application thresholds for the awards of contract.
 

OJEU Thresholds

Works     
Contract Notice €5,186,000 Threshold applies to Government Departments and Offices, Local and Regional Authorities and Public Bodies
Supplies and Services                                                                                                                             
Contract Notice €134,000 Threshold applies to Government Departmensts and Offices
Contract Notice €207,000 Threshold applies to Local and Regional Authorities and Public Bodies outside the Utilities sector
Utilities                                                                                                                                                     
Works Contracts/Prior Indicitive Notice €5,186,000 For entities in Utilities sector coverd by GPA
Supplies and Services €414,000 For entities in Utlilties sector covered by GPA

 

Procurement guidelines for items under OJEU Thresholds

Threshold <5K <5K-€25K €25K-EU Threshold
Process Min. One verbal quotation (evidenced) Min. 3 written quotes

Formal Tendering Process

http://www.etenders.gov.ie

Voluntary OJ EU

Award Price/Most suitable

MEAT

Notify unsuccessful bidders

MEAT

 

Shortcomings in the public procurement process

  • Irregularities in procurement publicity. Job advertising without logos and EU recognition. Tender documentation without logos and EU acknowledgement.
  • Failure to publish Contract Award Notice (or to publish but not keep a copy for audit trail).
  • Failure to respect minimum time limits as set out in the Directives.  (Time limits for the receipt of tenders and respect for the Alcatel period).   
  • Additional Costs/Works – (Avoid by detailed planning)
  • Lack of documentary evidence (missing files and hence incomplete audit trail). 
  • Failure to send letters to unsuccessful tenders or letters sent with no reason given for their failed bid.
  • Single Source supplier used for supply of services or goods, valued under EU thresholds, without sufficient justification for failure to obtain a minimum amount of quotations.

Preventing Procurement Irregularities/Errors at Contracting Authority Level 

  • Ensure the procurement process observes non-discrimination, equal treatment, transparency, mutual recognition, proportionality, freedom to provide service and freedom of establishment.  The textbook advice. Some best practice notes on the prevention of irregularities follow below. 
  • The use of consultants to manage aspects of public works contracts over OJEU threshold does not absolve the respective authorities of their obligations to ensure compliance with National and EU rules and directives on public procurement.

Preventing Procurement Errors at Contracting Authority Level -Tender Opening Stage

  • A log of expressions of interest recording the names of the candidates and their tender price (where applicable) should be generated at the time the expressions of interest are opened and this document should be signed and dated by those persons who opened the expressions of interest.
  • All tenders should be opened together as soon as possible after the submission deadline. Tenders received after the deadline should not be accepted.
  • A tender opening schedule recording the tenderer and price (level of fees) should be maintained and should be signed and dated by at least two officials who opened the tenders.

 

Preventing Procurement Errors at Contracting Authority Level-Evaluation of Tenderers  

Contracting authorities may choose to award contracts on the basis of most economically advantageous tender (MEAT).

For the most economically advantageous tender criteria in addition to price are specified.
Criteria examples: running costs, level of after sales service, environmental criteria. These criteria also consider other factors like whole-life cost, quality, and delivery.  Whole-life cost is relevant in complex procurements, including large supply and service contracts and construction projects, and in offsetting higher expenditure for better quality against the lower maintenance costs over the asset’s life.◦

  • In selecting bidders, undue emphasis should not be placed on size, and the standards of financial and technical capacity should be proportionate to the contract in question.
  • The weightings for the pre-qualification stage should be published in the contract notice.
  • Request for Tenders (RFT) must state all criteria being applied and their relative weightings.
  • To ensure transparency in the evaluation process, the   pre-selection / award criteria listed in the contract notice and/or contract documents should not be grouped together. New or amended criteria must not be introduced in the course of the procedure.
  • The weightings for the award criteria should be listed in the contract notice or contract documents. In the event, that this is not possible for demonstrable reasons the criteria should be listed in descending order of importance.
  • Evaluation process must be by a suitably competent team and demonstrably objective and transparent based solely on the published criteria. The pre-selection and/or award criteria listed in the contract notice should be clearly evident in the evaluation matrix to ensure complete transparency. The same evaluation criteria should not be used at both the pre-qualification stage and the award stage.
  • Tenders which do not comply with the RFT requirements should not be accepted
  • Price should be evaluated exclusive of VAT
  • Post tender negotiation not permitted
  • Abnormally low tenders

An abnormally low tender should not be rejected without investigation into the reasons behind the particularly low bid. The tenderer should be given the opportunity to explain the basis of the tender.

  • A tender evaluation report should be prepared and the reasons why tenderers were unsuccessful should be documented.
  • If there are interviews / meetings held with candidates and/or tenderers then a record of the meeting should be retained to ensure transparency of the process.

 

Preventing Procurement Errors - Measures at National Level

  • Clear National Procurement guidelines that do not conflict with EU and International Regulations.
  • Ireland has a Competition Authority where contracting authorities can report any suspected anti-competitive practices such as collusive tendering.
  • Candidates or tenderers who have been convicted of involvement in organised crime, fraud, corruption or money laundering must be excluded from performing a public contract.
  • Some countries publish irregularities and names of contracting authorities involved.
SOCIAL & COMMUNITY
hea facebook