ERDF National Procurement Requirements ERDF-GN-1-004€¦ · ERDF-GN-1-004 Version Number 2 Date Published 5 August 2013 Page 3 of 44 academic institutions or charities which may

ERDF National Procurement Requirements ERDF-GN-1-004 Version Number 2 Date Published 5 August 2013 Page 1 of 44

ERDF National Procurement Requirements ERDF-GN-1-004


National Procurement Requirements

1 Background This document provides an overview of the rules governing procurement which are often complex and can be difficult to understand it is however no substitute for legal advice tailored to cover individual circumstances A Grant Recipient of ERDF funding whether or not it falls within the definition of a contracting authority should if in doubt about the way to approach letting contracts for the supply of goods works or Part APart B services funded to any extent by ERDF seek its own legal advice In this guidance we aim to raise grant recipientsrsquo awareness of their likely obligations and to draw attention to the consequences of failing to do so Grant recipients should be aware that financial penalties may be imposed for failure to comply with procurement procedures which could in some circumstances mean repayment of up to 100 of the grant funding by way of financial corrections imposed by the Audit Authority the Managing Authority or the EU Commission audit services

2 Introduction Robust and transparent procurement is required to ensure that Grant Recipients

Comply with the law

Consider value for money (VFM)

Maximise the efficient use of public money and

Maintain competitiveness and fairness across the EU

3 The Law The Public Sector Directive 200418EC1 sets out the EU public procurement requirements It was implemented into English law by the Public Contracts Regulations 2006 (SI 200605) (the rsquoRegulationsrsquo) The law as set out in the Regulations is subject to interpretation through evolving European and national case law The law is applicable to ldquocontracting authoritiesrdquo as specified and defined in regulation 3 of the Regulations A list of contracting authorities is set out in Annex A While government departments and local authorities are listed along with organisations such as fire and police authorities a generic definition is provided at Regulation 3(1)(w) which may catch organisations such as

1 Directive 200418EC of the EP and Council on the co-ordination of procedures for the

award of public works contracts public supply contracts and public service contracts


academic institutions or charities which may otherwise not have regarded themselves as bound by the procurement rules Under that provision a contracting authority is defined2 as any body meeting the following three conditions

established for the specific purpose of meeting needs in the general interest not having an industrial or commercial character and

having legal personality and

financed for the most part by the State or regional or local authorities or other bodies governed by public law or subject to management supervision by those bodies or having an administrative managerial or supervisory board more than half of whose members are appointed by the State regional or local authorities or other bodies governed by public law

In addition private sector organisations letting subsidised public works and services contracts are treated as if they were contracting authorities and caught under the regulations where

the private sector is acting as a delivery agent on behalf of the public sector or

where more than 50 public money is funding (a) an above-threshold public works contract and which is carrying out

(i) any of the civil engineering activities specified in Schedule 2 of the Regulations or

(ii) building work for hospitals facilities intended for sports recreation and leisure school and university buildings or buildings for administrative purposes or

(b) an above-threshold public services contract which is connected to one of those types of public works contracts3

Universities have traditionally fallen within the definition of a contracting authority under the Public Procurement Regulations as the majority of their funding came from the public sector More recently there is scope to look at the way in which the University is funded before determining which route to follow as if the University can demonstrate that the majority of their funding is now from other sources such as fees and loans then they would not be subject to the Public Procurement Regulations Responsibility for determining whether or not the Public Procurement Rules apply will sit with the Universities themselves and this will be tested and agreed during the appraisal process For further information see section 2411 of the following document

2 Article 1 of the Directive and Regulation 3

3 Paraphrasing Reg 34 of the Regulations


httpwwwbisgovukassetsbiscorehigher-educationdocsg12-890-government-response-students-and-regulatory-framework-higher-educationpdf Grant recipients even if from the private (or charities) sector should appreciate that the question of whether or not they may be regarded as a contracting authority is one that should be considered fully

4 Most common errors Under the law procedures must be followed by contracting authorities when awarding contracts the award can be legally challenged by third parties who might otherwise have won the contract or the authorities The risks of facing the consequences of failure to comply with the law can be more immediate under the ERDF regime than otherwise because of the intense scrutiny of the use of funds by the Managing Authority the Internal Audit Services the European Commission audit services and the European Court of Auditors Errors or failures in procurement procedures carry the consequence of correction according to established guidelines on a scale ranging from 2 to 100 Failures in cross-border advertising are particularly severely dealt with by the Commission and can carry up to a 100 correction Grant recipients should not rely on their existing organisational policies to ensure compliance with the EC requirements as they are often not tailored towards ERDF specific issues which auditors will look at Examples of some of the most common errors made in procurement include

Contracts awarded directly without competition (without appropriate consideration of whether a direct award (often described as a lsquosingle tenderrsquo) is permissible under the Regulations It is only in exceptional circumstances that an award without competition can be made

Contracts awarded without publication in OJEU (or another suitable means of advertising)

Amendments to contracts for additional works or services without appropriate consideration of whether an extensionaddition is permissible under the original contract and whether or not a new competition should be held4

The advert or OJEU Contract Notice does not mention all selection and award criteria

The contract notice has insufficient detail

Selection process does not adhere to the published selection criteria

4 Note in particular the effect of the decision in Case C-45406 - pressetext Nachrichtenagentur

GmbH


Confusion between selection and award criteria (with criteria being mixed andor applied at incorrect stages in the procurement)

Failure to publish a Contract Award Notice in OJEU

Contracts artificially split in order to fall below threshold levels

Minimal or no evidence of audit trail relating to the evaluationselection and award process

Failure to advertise to a lsquosufficient degreersquo even in sub-OJEU procurements in accordance with the Commissionrsquos Interpretative Communication (see more detailed consideration in paragraph 8)

Please note the above list is not exhaustive Should audits reveal that methods of procurement have not been compliant financial corrections are likely to be imposed Because of the nature of procurement once an error has been identified it is rarely the case that a grant recipient can cure the defect and in most cases some level of financial correction will be applied This can be of between 2 and 100 depending on the nature of the irregularity Note that failure to advertise is regarded as a particularly serious breach of the Regulations and can of itself result in a 100 correction If grant recipients are unsure about anything relating to the procurement or award of any contract for supply works or services they should seek their own legal or specialist procurement advice

5 The key requirements As set out in section 2 above there are general considerations which Grant Recipients are expected to apply to all procurements The additional requirements of the Regulations only apply to certain procurements depending upon the value and type of the contracts being awarded Grant Recipients may find it helpful to consider the decision tree below when determining what procurement route to follow


Failure to follow the correct steps set out above may lead to financial corrections which means repayment of all or part of the grant as well as putting the Grant Recipient in the position of being likely to have breached the Funding Agreement which can have additional consequences

Are you a contracting authority as defined in

section 3 above (Private sector note 50

public worksservices contracts)

Follow a robust and transparent process respecting EC Treaty

Principles

NO

YES

Is the estimated value of the contract above the thresholds set out

in section 8

Follow a robust and transparent process (the general considerations in

section 2 above) Also see section 8 and in

particular consider advertising using internet and transparencyequal

treatment duties

NO

YES

Advertise contract in OJEU and see section 9 to determine the type of procedure to follow ndash do not forget to advertise

award even when following less onerous

procedure

Is the contract for supply of goods

services or works (See section 6)

NO

YES

No need to apply the public procurement regulations


6 Classification of types of Contracts As a brief reminder of their scope note that there are three types of contracts under Regulations

(a) Works ndash are items listed in Schedule 2 to the Regulations

(b) Supplies ndash essentially the purchase or hire of goods (including electricity and gas)

(c) Services ndash Schedule 3 to the Regulations classifies services

into 27 different types These are then designated as either Part A or Part B as set out in the table below

Procurements of Part A services where the value exceeds the financial thresholds for those services are subject to the full procurement regime The rationale is that EU-wide competition is thought most realistic in these services

Procurements of Part B services are treated with a much lighter touch with only some of the less onerous requirements applying mainly in relation to advertisement These are parts 1 9 and 10 of the Regulations and regulations 9 31 40(2) 41 and 42 This means that

Contracting authorities must act in a transparent way and treat all potential providers equally and in a non-discriminatory way

Contracting authorities must comply with the detailed requirements relating to technical specifications set out in the Regulations

A contract award notice must be published in the Official Journal no later than 48 days after a contract award

Details of procurements of Part B services need to be included in any reports that contracting authorities must submit to the Cabinet Office

A right to take court action for financial loss against a contracting authority is granted to third parties if there is any failure to comply with the requirements of the Regulations or the TFEU

In addition to these specific requirements a contracting authority will also have to ensure compliance with the requirements that apply to completely unregulated procurements

Where a contract is for a combination of Part A and Part B services the contract will be deemed to be for the category of services to which the greater value is attributed


Part A Services Part B Services

1 Maintenance and repair of vehicles and equipment

17 Hotel and restaurant services

2 Transport by land including armoured car services and courier services but not including transport of mail and transport by rail

18 Transport by rail

3 Transport by air but not transport of mail 19 Transport by water

4 Transport of mail by land other than by rail and by air

20 Supporting and auxiliary transport services

5 Telecommunications services 21 Legal services

6 Financial services

(a) Insurance services

(b) Banking and investment services other than financial services in connection with the issue sale purchase or transfer of securities or other financial instruments and central bank services

22 Personnel placement and supply services

7 Computer and related services 23 Investigation and security services other than armoured car services

8 Research and development services where benefits accrue exclusively to the contracting authority for its use in the conduct of its own affairs and the services are to be wholly paid for by the contracting authority

24 Education and vocational health services

9 Accounting auditing and book-keeping services 25 Health and social services

10 Market research and public opinion polling services

26 Recreational cultural and sporting services


11 Management consultancy services and related services but not arbitration and conciliation services

27 Other services

12 Architectural services engineering services and integrated engineering services urban planning and landscape architectural services related scientific and technical consulting services technical testing and analysis services

13 Advertising services

14 Building cleaning services and property management services

15 Publishing and printing services on a fee or contract basis

7 How to calculate the value correctly

The Department expects all grant recipients to conduct open fair and transparent competitions before awarding contracts for any goods works or services (whether or not they are Part A or B)

Grant Recipients will need to be able to demonstrate that they have followed the correct procurement route based on the value and nature of the contract The bullet points below set out how this value should be calculated

Pay particular attention to the provisions of Regulations 8(11) - (15) concerning the valuation of a single requirement where a number of contracts have been entered into and which must be aggregated Do not incorrectly value a contract or framework agreement with the intention of avoiding the Regulations

In particular do not artificially split larger requirements into smaller units to avoid the aggregation rules and thresholds (eg collaborative multi-partner projects must consider public procurement requirements at the level of the project ie not at individual partner level which could be judged as avoidance of the aggregation rules)

Note also that the value of the contract includes the element of the contract price which is funded by ERDF and any other match funding (whether publicly or privately provided) Thus a works contract valued at pound5m pound500000 of which is funded 50 from ERDF and 50 from another public fund must be let in accordance with the procurement rules The point is the value of the contract as a whole not the value of


the ERDF component Do not be misled into thinking that because the ERDF contribution is below threshold there is no need to follow the rules 8 Procurement rules - applicability 81 OJEU Procurement thresholds

The public procurement procedures set out in the Regulations must be followed before awarding certain contracts when their value is above a certain threshold In particular the contracts should be advertised in the Official Journal of the European Union (OJEU) OJEU is the central database for European public sector tender notices

Thresholds are set every 2 years and the current thresholds are set out below Note that the thresholds have changed three times since this programme began in 2007 in 2008 2010 and now the 2012 threshold applies These can all be found on the OJEC website httpwwwojeccomThreshholdsaspx and grant recipients should check this to ensure that they are working to the correct values

FROM 1 JANUARY 2012 (thresholds are net of VAT)

SUPPLIES SERVICES WORKS

Entities listed in Schedule 1 of the Regulations

pound113057 (euro130000)

pound1130572 (euro130000)

pound43483503 (euro5000000)

Other public sector contracting authorities

pound173934 (euro200000)

pound173934 (euro200000)

pound43483503 (euro5000000)

Indicative Notices pound652253 (euro750000)

pound652253 (euro750000)

pound4348350 (euro5000000)

Small lots pound69574 (euro80000)

pound69574 (euro80000)

pound869670 (euro1000000)


82 Sub OJEU procurement Part B Services below-threshold and other procurements not covered by the Regulations ndash lsquopartly-subject contract awardsrsquo A procurement may not have reached the relevant OJEU threshold for the Regulations to apply in full or in the case of Part B Services those rules may not apply to the same extent as for works goods and Part A Services but there are still rules to be followed Because EU funds are being used for purposes specified in EU legislation the EU principles of free movement non-discrimination and equal treatment transparency proportionality and mutual recognition must be respected throughout the entire process regardless of the value of the contract Grant Recipients will need to be able to demonstrate the legitimacy of the procurement route followed and any supporting evidence behind this in the event of an audit As with all other ERDF documentation there is a requirement to retain all procurement evidence until 3 years after the final payment made on the programme and at present this is likely to be until at least 2025 It is imperative that all grant recipients read and understand the Commission Interpretative Communication on the Community Law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives which is available in full at - (2006C 17902) and which sets out the legal position in the light of a number of important European Court decisions5 The Communication is mainly concerned with the degree of advertising about any partly-subject contract awards The principle is that for any potential tenderer there should be lsquoa degree of advertising sufficient to enable the services market to be opened up to competition and the impartiality of the procedures to be reviewedrsquo (Telaustria paragraph 62) Judgements have to be made by the grant recipient about the significance of the contract to the Internal market and this can depend on the subject matter of the contract estimated value specifics of the sector concerned and its geographic location One of the key principles is whether or not there is cross border interest and grant recipients should provide a fully documented decision making process to evidence why it was considered that there would not be any cross border interest In order to ensure that the requirements within the Communication are followed we have developed the table below which sets out what action must be taken for these partly-subject contracts where it is believed that there will be a cross border interest in the contract Note that this issue must be considered and an audit trail of that process retained

5 Cases C-32498 Telaustria [2000] ECR Coname 2172005 and C-45803 Parking Brixen


Estimated Value of Goods or Services

Action Required

Below pound20000 Sufficient degree of advertising but likely not to affect Internal Market Consider using their own website or a portal such as lsquocontracts finderrsquo VFM must be demonstrated by requesting or obtaining 3 quotes or prices but this need not be done through a formal competition

pound20001 to OJEU threshold The level of advertising must be sufficient to allow a level of competition potentially from another member state (if the contract award might be of interest to suppliers located in other Member States and depending on other factors eg geographical location) Formal invitation to tender process must be followed and the requirement advertised in the press andor on the internet for a minimum of 10 days to enable fair competition

Over OJEU threshold GoodsPart A Services Full advertisement in OJEU of a fully-compliant opennegotiated or other regulated process Part B Services ndash the lighter-touch regime specified in the Regulations

Value of Works

Action Required

Below pound429999 Sufficient degree of advertising but likely not to affect Internal Market Consider using their own website or a portal such as lsquocontracts finderrsquo VFM must be demonstrated by obtaining or requesting 3 quotes or prices but this need not be done through a formal competition

Over pound430000 The level of advertising must be sufficient to allow a level of competition potentially from another member state (if the contract award might be of interest to suppliers located in other Member States and


depending on other factors eg geographical location) Formal invitation to tender process must be followed and the requirement advertised in the press andor on the internet

Over OJEU threshold Full advertisement in OJEU of a fully-compliant opennegotiated or other regulated process

This guidance relating to sub-OJEU procurements is the Departmentrsquos suggestion as to how best to ensure that the principles of openness and transparency and equal treatment are adhered to Grant recipients must abide by these as a minimum requirement but they are free to exercise their judgement so as to follow a more rigorous path than the one specified For example they might decide that a significant service contract for the value of pound19500 may be best advertised through a formal tender requiring sealed bids and evaluated against pre-set criteria rather than just obtaining 3 quotes It is the responsibility of the individual grant recipient to decide whether an intended contract award might potentially be of interest to suppliers located in other Member States This decision has to be based on an evaluation of the individual circumstances of the case such as the subject-matter of the contract its estimated value the specifics of the sector concerned (size and structure of the market commercial practices etc) and the geographic location of the place of performance If it can be demonstrated that this analysis has been carried out and the result is that limited advertising is required then this may be sufficient Generally speaking the safest course (on sub-OJEU procurements) to adopt is to avoid direct awards to hold some kind of competitive bidding process and (prior to that) to advertise even if only to the limited extent of the grant recipientrsquos own website or something with a similar reach which is connected with the grant recipient and likely to reach the attention of interested bidders both in the UK and in other Member States (see below) In all instances a full audit trail of documents including evidence of advertising where necessary and all decisions taken relating to procurements carried out should be retained for audit purposes This needs to be retained until 3 years after the closure of the Programme currently estimated to be at least 31 December 2025


83 Suggested methods of advertising for sub OJEU contracts

Internet The wide availability and ease of use of the World Wide Web makes contract advertisements on websites far more accessible especially for undertakings from other Member States and for small and medium enterprises (SMEs) looking for smaller contracts The Internet offers a large choice of possibilities for advertising of public contracts Advertisements on the contracting entitys own website are flexible and cost-effective They should be presented in a way that potential bidders can easily become aware of the information Contracting entities might also consider publishing information on forthcoming contract awards not covered by the Regulations as part of their buyer profile on the Internet Portal websites specifically created for contract advertisements have a higher visibility and can offer increased search options In this respect the setting-up of a specific platform for low value contracts with a directory for contract notices with subscription for e-mail constitutes a best practice making full use of the Internets possibilities in order to increase transparency and efficiency It is however important to note that you still need to carry out some kind of sub selection from these portal websites which must be done in an open and transparent way Contracts finder It is recommended that contracting authorities register on Contracts Finder httpwwwcontractsfinderbusinesslinkgovuk and publish opportunities on this site Contracting authorities can also sponsor suppliers enabling them to post sub-contracting opportunities on the service Any open procurement opportunity above pound10k can be advertised on the site if a grant recipient chooses although as stated above the DCLG suggested threshold for sub OJEU is pound20k National Official Journals national journals specialising in public procurement announcements newspapers with national or regional coverage or specialist publications Local means of publication Contracting entities may still use local means of publication such as local newspapers municipal announcement journals or even notice boards However such means ensure only strictly local publication which might be adequate in special cases such as very small contracts for which there is only a local market


Official Journal of the European UnionTED (Tenders Electronic Daily) Publication in the Official Journal is not mandatory but could be an option particularly for larger significant contracts which donrsquot quite reach the OJEU threshold Grant recipients are advised that if they chose to follow this route it must be followed correctly otherwise financial corrections may be imposed

9 Procurement Four main proceduresFrameworks 91 Open Procedure - This procedure provides the broadest scope for competition as anyone can tender but risks a large number of tenders and can incur high management costs The assessment of both tender and tenderer is carried out in a single-tier process This process will normally take a minimum of 52 days not including a mandatory 10 day period for appeal once the standstill notice is issued Where an effective degree of pre-market engagement has occurred this can be a good way of finding new entrants to the market and Cabinet Office prefers contracting authorities to approach new procurement this way 92 Restricted Procedure - The most commonly used although its tendency to restrict the market to already-established players and the lengths of each stage have been criticised This is a two tier process Potential delivery organisations are selected using a pre qualification questionnaire (lsquoPQQrsquo) following publication of the contract requirements in OJEU inviting expressions of interest A minimum of five short-listed organisations are then selected to submit a full tender from which the winning tender is selected The requirement is to allow 37 days for the first stage and 40 days for the second with a 10 day standstill period before the contract is awarded An accelerated restricted procedure has in very limited circumstances been permitted which can restrict the process to 30 days and was only available initially until December 2010 At the start of 2011 the Commission agreed to extend the relaxation until the end of 2011 Data in relation to projects using this method may be required by the EC at a later date so contracting authorities should keep information on contract values the type of contract (suppliesworksservices) business sector and types of purchased goodservices 93 Competitive Dialogue - This is a relatively new procedure for complex contracts such as build and design where the best solution is not pre-known Following the OJEU notice and pre qualification stage dialogue is permitted with potential bidders to develop options before competitive tenders are invited Work can continue to refine the proposal with the preferred bidder to point at which contract is awarded 94 Negotiated Procedure Features ndash


(a) All interested parties may express an interest in tendering and the contracting authority will select potential bidders with whom to negotiate the terms of the contract

(b) A minimum of three suppliers must be invited to negotiate (unless fewer candidates have met the selection criteria and these are sufficient to ensure genuine competition that is at least two)

When to use

The Regulations state that the negotiated procedure may only be used where

o another procedure has failed to produce any acceptable tenders

o exceptionally where prior overall pricing is not possible

o in the case of services where specifications cannot be established with sufficient precision or

o for certain research and development related works contracts

However the Office of Government Commerce (OGC) has issued guidance that other than in circumstances where an OJEU notice is not required the negotiated procedure should only be used in very rare circumstances where there is clear reasoning why the competitive dialogue procedure is not appropriate In reality this policy means that the negotiating procedure should no longer be used by a contracting authority if it is required to publish an OJEU notice

Projects considering adopting this procedure should be referred to the PDT for consideration 95 Framework Agreements These can be used for repeat but irregular purchases for example stationery supplies legal services building repairs Generally they are of no more than four yearsrsquo duration There are four main types single-supplier multi-supplier single user multi-user Suppliers who are permitted to provide to a closed list or class of purchasers are selected in the normal way under an open or restricted procedure Subsequent call-off contracts may be the subject of a mini-competition between a number of suppliers on the framework to one particular purchaser The same selection and award criteria used when setting up the framework agreement should be used when calling off supplies from this agreement Provided the agreement is compliant with these requirements pre-existing framework agreements may be used to select suppliers to the project Contracting authorities utilising a framework agreement need to ensure that they are eligible to make use of it (ie that they are within the class contemplated when the framework was established) the framework agreement has been properly established and it is used in the way it was set up to be used ie mini competitions are held if this was an original requirement


10 Selection and Award Criteria There are two distinct types of evaluation criteria that are governed by different rules and objectives and these must each be demonstrated for a compliant procurement In simple terms selection criteria aims to establish can they do it and award criteria how will they do it and public bodies must make a distinction between the two separate criteria Selection Criteria ndash these must assess the ability of the tenderers to perform a contract according to economic financial capability technical andor professional ability (for example experience qualifications) The selection criteria sub-criteria and any weighting used must be proportionate to the requirement in question and must be publicised in the OJEU notice or in the Pre-Qualification Questionnaire (PQQ)tender documents (depending on the procedure adopted) The aspects which can be evaluated as selection criteria are set out in Regulations 23 to 26

23 Criteria for the rejection of economic operators

24 Information as to economic and financial standing

25 Information as to technical or professional ability

26 Supplementary information

The Regulations require a minimum number of candidates to be short-listed under the Restricted process and under the Competitive Dialogue process Award Criteria ndash these are set in order to award the contract on the basis of either the most economically advantageous tender (for example balancing factors such as quality price delivery timeframe) or the lowest price The criteria sub-criteria and weightings must be disclosed in the OJEU notice or in the invitation to tender documents The award criteria must be objective and must relate to the subject matter of the contract and be proportionate and transparent Award criteria must be made against Regulations 30 to 32

30 Criteria for the award of a public contract

31 Contract award notice

32 Information about contract award procedures

11 Advertising Requirements 111 Non compliance with advertising requirements is a common error The time limits for open restricted competitive dialogue and negotiated procedures all run from the date of notification of the contract in the OJEU We have already looked at the way that the Commissionrsquos interpretative Communication impacts on contracting authorities by imposing obligations to


consider how best to publicise partly-subject contracts ndash see sections 82 and 83 Dependent upon the type of procurement procedure prescribed time limits from advert to award apply and these can be found in the Regulations For planning purposes projects will need to consider these timescales Other considerations such as failing to meet N + 2 targets are not an acceptable reason for circumventing the timescales

Minimum time limits in award procedures

Procedure Minimum time limits Days

Open Minimum time for receipt of tenders from date Contract Notice sent

52

Restricted Minimum time for receipt of requests to tender (PQQ response) from the date Contract Notice sent

37

Minimum time for receipt of tenders from the date invitation to tender sent

40

Accelerated restricted (if urgent)

Minimum time for receipt of requests to tender from the date Contract Notice sent

15


10

Competitive dialogue and negotiated

Minimum time for receipt of requests to participate in dialogue or negotiate from the date Contract Notice sent

37

Accelerated negotiated (if urgent)

Minimum time for receipt of requests to negotiate from the date contract notice sent

15

The minimum time limits set out in the table above may be reduced by seven days (five days for accelerated restricted procedure) where the notices are transmitted electronically (in accordance with the requirements in the Regulations) by five days where the contracting authority offers full access by electronic means to the contract documents from the date of the Contract Notice and provided the Contract Notice specifies the internet address at which the documents are available


On 19 December 2011 the Cabinet Office published a Procurement Policy Note confirming that the relaxation of the use of the accelerated restricted procedure which the European Commission introduced in 2009 as an emergency measure during the financial crisis has been withdrawn For procurements where a contract notice is published on or after 1 January 2012 the accelerated restricted procedure will only be available where urgency renders impracticable the normal time limits for the restricted procedure

112 Following the selection and award process a contracting authority must inform anyone who submitted an offer of its decision to award the contract by notice in writing It must then allow 10 days (ldquothe standstill periodrdquo) before it awards the contract to allow time for any bidder who is dissatisfied with the bidding process to take action (see the 2006 Regulations as amended by the Public Contracts (Amendment) Regulations 2009) A contract award notice must be published in the OJEU within 48 days of the contract award 113 There are only very rare occasions in relation to fully regulated contract awards in which an OJEU notice is not required

When a contract is caught by the Regulations a contracting authority will normally need to publish an OJEU Notice to advertise the opportunity However in certain circumstances the negotiated procedure may be used without publishing a contract notice The most common of these circumstances are

In the absence of tenders suitable tenders or applications in response to an invitation to tender by the contracting authority using the open or the restricted procedure provided the terms of the contract offered in the original tender have not been substantially altered

Where for technical or artistic reasons or for reasons connected with the protection of exclusive rights a contract may only be awarded to a particular economic operator (the sole supplier exemption)

When in cases of extreme urgency for reasons unforeseeable by and not attributable to the contracting authority the time limits of the prescribed procedures cannot be met

When a contracting authority wants a contractor to carry out additional works or services further to a tendered project which have through unforeseen circumstances become necessary and could not be provided for separately without major inconvenience and which do not exceed 50 of the original contract value

In Case C-42307 - Commission v Kingdom of Spain the ECJs decision highlights that this provision will be interpreted strictly and cannot be relied on as a method of circumventing the advertising obligations under public procurement law

A version of these requirements is commonly referred to as a lsquosingle tender actionrsquo The use of a Single Tender Action must first be consented to by the


Department prior to the contract being awarded The Grant Recipient will need to directly contact their respective PDT for a Single Tender Request Form In this form the Grant Recipient should set out in writing the nature of the procurement and its reasons for requiring approval Where Single Tenders are allowed to proceed Grant Recipients should be aware that this is done at their own risk

12 Record keeping During Project Engagement Visits (PEVs) Article 13 Project Progress and Verification Visits and other audits procurement processes will be reviewed and Grant Recipients will need to demonstrate satisfactory evidence of the procurement process with appropriate supporting documentation This documentation as a minimum must include

Explanation of procurement procedure selected with justification

Copy of OJEU notice or relevant advertisement and OJEU Prior Information Notice (PIN) if applicable (including for Framework Agreements)

PQQ including the associated selection criteria (where used) and log of responses received

Copy of tender specification with clear award criteria

Log sheet for all tenders received (time and date)

Copy of all tenders

Copy of tender score sheets dated and signed by two people

PQQ assessment scores

Copy of OJEU award notice

Copy of report on evaluation of tenders

Copy of correspondence including interview questions where appropriate

Copy of letters to unsuccessful tenderers giving an appropriate standstill period (where appropriate)

Copy of award letter signed contract

Copy of notes from inception meeting

Summary record of the above process to assist with future monitoring and audits

Records must be maintained for verification until at least the end of 2025 Grant Recipients must ensure that delivery partners and sub-contractors also retain evidence

13 Financial corrections Under the general law (aside from ERDF rules) if the Regulations are not observed a contract may be prevented from being awarded andor damages


may be awarded by a Court In the case of ERDF any audit bodies will look very closely at all of the procurements during their visits Breach of procurement requirements is the most common reason for repayment of grant and the procedures must be carefully followed and monitored throughout the project The irregularities are often inadvertent mistakes Unfortunately the liability for mistakes is strict This note is intended to help the Grant Recipient to be aware of the steps it must take and the need to seek help from its own advisors in order to ensure it is not subject to a financial correction The table below6 illustrates the corrections which can be imposed as a result of procurement breaches The table is split into two sections-

Above OJEU thresholds and

Below OJEU thresholds

Above OJEU threshold

Issue Description Correction

Non-compliance with the advertising procedures

The contract was awarded without complying with the advertising requirements laid down in the EC Public Procurement Directives except in the cases referred to in point 2 below This is a flagrant disregard of one of the conditions for Community co-financing

100 of the value of the contract involved


The contract was awarded without complying with the advertising requirements laid down in the EC Public Procurement Directives but was advertised to some extent allowing economic operators located in another Member State access to the contract


Attribution of contracts without competition in the absence of extreme urgency brought about by unforeseeable events or the absence of an

The main contract was awarded in accordance with the EC Public Procurement Directives but was followed by one or more supplementary contracts (whether or not formalised in writing) awarded without complying with the

100 of the value of the contract involved In cases where the total of supplementary

6 Taken from COCOF 07003703-EN


unforeseen circumstance for complementary works and services or for supplies

provisions of the Public Procurement Directives namely the ones related to the negotiated procedures without publication for reasons of extreme urgency brought about by unforeseeable events or for attribution of complementary supplies works and services

contracts (whether or not formalised in writing) awarded without complying with the provisions of the Public Procurement Directives do not exceed the thresholds of the Directives and 50 of the value of the original contract the correction may be reduced to 25

Additional works or services exceeding the limit laid down by the Directives provided in Unforeseen circumstances

The main contract was awarded in accordance with the provisions of the EC Directives but was followed by one or more supplementary contracts exceeding the value of the original contract by more than 50 The additional works themselves do not constitute a separate work within the meaning of Article 1(c) of Directive 9337 or Article 1(2) (a) and 2(b) of Directive 200418 or a separate service within the meaning of Article 1(a) of Directive 9250 or Article 1(2) (a) and 2(d) of Directive 200418 In cases where the additional works or services exceed the thresholds of the Directives and constitute a separate work or service it is necessary to take account of the aggregate value of all the additional works or services for the purposes of the application of the Public Procurement Directives

100 of the amount exceeding 50 of the value of the original contract


Where the additional works or services constitute a separate work or service and exceed the thresholds laid down by the Directives the above mentioned point 1 applies Where the additional works or services constitute a separate work or service but do not exceed the thresholds laid down by the Directives point 21 below applies

Failure to state all the selection and contract award criteria in the tender documents or tender notice

The contract was awarded in compliance with the advertising rules of the Public Procurement Directives but the tender documents or tender notice failed to state all the selection andor award criteria or to describe them sufficiently

25 of the value of the contract This amount may be reduced to 10 or 5 depending on seriousness

Application of unlawful contract award criteria

The contract was awarded applying unlawful contract award criteria (for example use of a selection criterion for the award of the contract non-compliance with the criteria stated by the contracting authority in the tender notice or tender documents or incorrect andor discriminatory application of contract award criteria)


Unlawful selection andor contract award criteria laid down in the tender procedure

Cases in which certain operators have been deterred from bidding on account of unlawful restrictions laid down in the tender notice or tender documents (for example the obligation to already have an establishment or representative in the country or region or setting technical standards that are too specific and favour a single operator or the possession of experience in the region etc)

25 of the value of the contract (A financial correction of 100 of the value of the contract may be applied in the most serious cases when there is a deliberate intention to exclude certain


bidders)

Insufficient or discriminatory definition of the subject-matter of the contract

The description in the tender documents or tender notice is discriminatory or insufficient for bidders to determine the subject-matter of the contract or for the contracting authorities to award the contract


Negotiation during the award procedure

The contract was awarded by open or restricted procedure but the contracting authorities negotiated with the bidders during the award procedure except where the discussions were solely intended to clarify or supplement the content of their bids or specify the obligations of the contracting authorities


Reduction in the scope

of the contract

The contract was awarded in compliance with the Public Procurement Directives but was followed by a reduction in the scope of the contract without making a proportional reduction in the value of the contract (This correction applies even in cases where the amount of the reduction is used to carry out other works)

Value of the reduction in the scope Plus 25 of the value of the final scope


of the contract

The contract was awarded in compliance with the Public Procurement Directives but was followed by a reduction in the scope of the contract with a proportional reduction in the value of the contract already carried out (This correction applies even in cases where the amount of the reduction is used to carry out irregular supplementary contracts)

25 of the value of the

final scope

Incorrect application of certain ancillary

The contract was awarded in compliance with the provisions of

2 5 or 10 of the


elements the Public Procurement Directives but without complying with certain ancillary elements such as publication of the notice of award of the contract Note If this type of irregularity is only of a formal nature without potential financial impact no correction will be made

value of the contract according to the seriousness of the irregularity and whether a repeat occurrence

Below OJEU threshold


Non-compliance with the requirement of an adequate degree of advertising and transparency

Contract awarded without adequate competitive tendering involving non compliance with the principle of transparency

25 of the value of the contract

Attribution of contracts without competition in the absence of extreme urgency brought about by unforeseeable events or for complementary works and services brought about unforeseen circumstance

The main contract was awarded after adequate competitive tendering but was followed by one or more supplementary contracts (whether or not formalised in writing) awarded without adequate competition in the absence of reasons of extreme urgency brought about by unforeseeable events or (for contracts of works and services) in the absence of unforeseen circumstances justifying them

25 of the value of the contract(s) attributed without adequate competition

Application of unlawful selection andor contract award criteria

Application of unlawful criteria which deter certain bidders on account of unlawful restrictions laid down in the tender procedure (for example the obligation to have an establishment or representative in the country or region or the setting of technical standards that are too specific and favour a single operator)

10 of the value of the contract This amount may be reduced to 5 depending on seriousness


Breach of the principle of equal treatment

Contracts awarded in accordance with the rules on advertising but where the contract award procedure breaches the principle of equal treatment of operators (for example when the contracting authorities have made an arbitrary choice of candidates with whom they negotiate or if they give preferential treatment to one of the candidates invited to negotiate)


14 Exceptions Single Tender Actions are permitted in exceptional circumstances but are not recommended by DCLG Where European Funding is being applied the use of Single Tender must be made in accordance with the Regulations The Regulations permit Single Tenders only in defined and exceptional circumstances including

Cases of extreme urgency arising from unforeseeable circumstances not attributable to the contracting authority andor

Where there is no alternative supplier in Europe due to technical artistic andor exclusive rights

The use of a Single Tender Action must first be consented to by the Department prior to the contract being awarded The Grant Recipient will need to directly contact their respective PDT for a Single Tender Request Form In this form the Grant Recipient should set out in writing the nature of the procurement and its reasons for requiring approval Where Single Tenders are allowed to proceed Grant Recipients should be aware that this is done at their own risk

15 Summary of relevant websites and regulations

Public Sector Directive 200418EC

The Public Contracts Regulations 2006 (SI 200605) (the rsquoRegulationsrsquo)

COCOF 07003703-EN - GUIDELINES FOR DETERMINING FINANCIAL CORRECTIONS TO BE MADE TO EXPENDITURE COFINANCED BY THE STRUCTURAL FUNDS OR THE COHESION FUND FOR NON-COMPLIANCE WITH THE RULES ON PUBLIC ROCUREMENT


COMMISSION INTERPRETATIVE COMMUNICATION - on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives (2006C 17902)

European Commission guidance - eceuropaeuinternal_marketpublicprocurementindex_enhtm

httpwwwcontractsfinderbusinesslinkgovuk

httpwwwojeccomThreshholdsaspx

16 Supporting QampA Document This is attached as Annex C The responses in this QampA should be read as guidance only and should not be taken as a statement of the law or compliance with the EC Regulations


Annex A

Contracting authorities

3mdash(1) For the purposes of the Regulations each of the following is a contracting authoritymdash (a) a Minister of the Crown (b) a government department (c) the House of Commons (d) the House of Lords (e) the Northern Ireland Assembly Commission (f) the Scottish Ministers (g) the Scottish Parliamentary Corporate Body (h) the National Assembly for Wales (i) a local authority (j) a fire authority constituted by a combination scheme under the Fire Services Act 1947(a) (k) a fire and rescue authoritymdash (i) within the meaning of section 1 of the Fire and Rescue Services Act 2004(b) (ii) constituted by a scheme under section 2 of that Act or (iii) constituted by a scheme to which section 4 of that Act applies (l) the Fire Authority for Northern Ireland (m) a police authority established under section 3 of the Police Act 1996(c) (n) the Metropolitan Police Authority established under section 5B(d) of the Police Act 1996 (o) a police authority established under section 2 of the Police (Scotland) Act 1967(e) (p) the Northern Ireland Policing Board (q) an authority established under section 10 of the Local Government Act 1985(f) (r) a joint authority established by Part IV of that Act (s) any body established in accordance with an order under section 67 of that Act (t) the Broads Authority (u) any joint board the constituent members of which consist of any of the bodies specified in paragraphs (i) (j) (m) (n) (o) (p) (q) (r) and (s) (v) a National Park authority established by an Order under section 63 of the Environment Act 1995(a) (w) a corporation established or a group of individuals appointed to act together for the specific purpose of meeting needs in the general interest not having an industrial or commercial character andmdash (i) financed wholly or mainly by another contracting authority (ii) subject to management supervision by another contracting authority or


(iii) more than half of the board of directors or members of which or in the case of a group of individuals more than half of those individuals are appointed by another contracting authority (x) an association of or formed by one or more of the above and (y) to the extent not specified in sub-paragraphs (a) to (v) an entity specified in Schedule 1

SCHEDULE 1 Regulation 2(1)

GPA ANNEX 1 CONTRACTING AUTHORITIES

Where an entity listed in this Schedule is succeeded by another entity which is itself a contracting authority the successor entity shall be deemed to be included in this schedule Cabinet Office

Office of the Parliamentary Counsel National School of Government

Central Office of Information Charity Commission Department for Constitutional Affairs

Boundary Commission for England Circuit Offices and Crown County and Combined Courts (England and

Wales) Combined Tax Tribunal Council on Tribunals Court of Appeal Criminal Immigration Appellate Authorities Immigration Adjudicators Immigration Appeals Tribunal Lands Tribunal Law Commission Legal Aid Fund (England and Wales) Office of the Social Security Commissioners Pensions Appeal Tribunals Public Trust Office Supreme Court Group (England and Wales) Transport Tribunal

Department for Culture Media and Sport British Library British Museum Commission for Architecture and the Built Environment The Gambling Commission Historic Buildings and Monuments Commission for England (English Heritage) Imperial War Museum


Museums Libraries and Archives Council National Gallery National Maritime Museum National Portrait Gallery National History Museum 64 Science Museum Tate Gallery Victoria and Albert Museum Wallace Collection

Crown Prosecution Service Crown Estate Commissioners (Vote Expenditure Only) Department for Education and Skills

Higher Education Funding Council for England Department for Environment Food and Rural Affairs

Agricultural Dwelling House Advisory Committees Agricultural Land Tribunals Agricultural Wages Board and Committees Cattle Breeding Centre Countryside Agency Plant Variety Rights Office Royal Botanic Gardens Kew Royal Commission on Environmental Pollution

Department of Health Dental Practice Board National Health Service Strategic Health Authorities NHS Trusts Prescription Pricing Authority

Department for International Development Department of the Procurator General and Treasury Solicitor

Legal Secretariat to the Law Officers Department of Trade and Industry

Central Transport Consultative Committees Competition Commission Electricity Committees Employment Appeal Tribunal Employment Tribunals Gas Consumersrsquo Council National Weights and Measures Laboratory Office of Manpower Economics Patent Office

Department for Transport Maritime and Coastguard Agency

Department for Work and Pensions Disability Living Allowance Advisory Board Independent Tribunal Service Medical Boards and Examining Medical Officers (War Pensions) 65 Occupational Pensions Regulatory Authority


Regional Medical Service Social Security Advisory Committee

Export Credits Guarantee Department Foreign and Commonwealth Office

Wilton Park Conference Centre Government Actuaryrsquos Department Government Communications Headquarters Home Office

HM Inspectors of Constabulary Parole Board and Local Review Committees

House of Commons House of Lords Ministry of Defence

Meteorological Office Defence Procurement Agency

The National Archives National Assembly for Wales

Higher Education Funding Council for Wales Local Government Boundary Commission for Wales Royal Commission for Ancient and Historical Monuments in Wales Valuation Tribunals (Wales) Welsh National Health Service Authorities and Trusts Welsh Rent Assessment Panels

National Audit Office National Savings and Investments Northern Ireland Assembly Commission Northern Ireland Court Service

Coroners Courts County Courts Court of Appeal and High Court of Justice in Northern Ireland Crown Court Enforcement of Judgements Office Legal Aid Fund Magistratesrsquo Courts Pensions Appeals Tribunals

Northern Ireland Department for Employment and Learning Northern Ireland Department for Regional Development Northern Ireland Department for Social Development 66 Northern Ireland Department of Agriculture and Rural Development Northern Ireland Department of Culture Arts and Leisure Northern Ireland Department of Education Northern Ireland Department of Enterprise Trade and Investment Northern Ireland Department of the Environment Northern Ireland Department of Finance and Personnel Northern Ireland Department of Health Social Services and Public Safety Northern Ireland Office of the First Minister and Deputy First Minister Northern Ireland Office

Crown Solicitorrsquos Office


Department of the Director of Public Prosecutions for Northern Ireland Forensic Science Laboratory of Northern Ireland Office of the Chief Electoral Officer for Northern Ireland Police Service of Northern Ireland Probation Board for Northern Ireland State Pathologist Service

Office of the Deputy Prime Minister Rent Assessment Panels

Office of Fair Trading Office for National Statistics

National Health Service Central Register Office of the Parliamentary Commissioner for Administration and Health Service Commissioners Paymaster Generalrsquos Office Postal Business of the Post Office Privy Council Office Public Record Office Royal Hospital Chelsea Royal Mint Rural Payments Agency Scotland Auditor-General Scotland Crown Office and Procurator Fiscal Service Scotland General Register Office Scotland Queenrsquos and Lord Treasurerrsquos Remembrancer Scotland Registers of Scotland The Scotland Office The Scottish Ministers Architecture and Design Scotland Crofters Commission Deer Commission for Scotland Lands Tribunal for Scotland National Galleries of Scotland National Library of Scotland National Museums of Scotland Royal Botanic Garden Edinburgh Royal Commission on the Ancient and Historical Monuments of Scotland Scottish Further and Higher Education Funding Council Scottish Law Commission Local Health Councils The NHS Education for Scotland Board Scottish Council for Postgraduate Medical and Dental Education Scottish National Health Service Authorities and Trusts The Office of the Accountant of Court High Court of Justiciary Court of Session HM Inspectorate of Constabulary Parole Board for Scotland and Local Review Committees Pensions Appeal Tribunals Scottish Land Court


Sheriff Courts Scottish Criminal Record Office Scottish Crime Squad Scottish Fire Service Training Squad Scottish Police College Office of the Social Security Commissioners Rent Assessment Panel and Committees The Scottish Parliamentary Body Corporate Scottish Record Office HM Revenue and Customs The Revenue and Customs Prosecutions Office HM Treasury

Office of Government Commerce United Kingdom Debt Management Office


Annex B SINGLE TENDER ACTION FORM

Grant recipient name

Address

Contact name

Email

Tel no

Project title

Proposed contract to be awarded (ie what is the purpose of the Contract what will be delivered under the Contract what are the proposed Contract outputs)

Proposed contract value (ex VAT)

Proposed contractor (if known)

Identify the proposed principle justification for non-compliance with the EU public procurement Regulations

a The Contract value is under the relevant threshold value for full EU public procurement compliance

Relevant thresholds net of VAT (fixed for 2 years from 1st January 2012) Services and supply of goods pound173934 Works pound4348350

b The Contract is for non regulated services (ie those covered by Part B of Schedule 3 to the Public Contracts Regulations 2006)

Summary of non-regulated services areas hotel and restaurant services transport by rail and water legal services personnel supply investigation and security services education health social services recreation cultural and sporting services

c The Contract falls within an exemption or exclusion to the procurement Regulations Please identify the relevant provision from the Regulations


Please explain in a clear and comprehensive manner why you believe the award of the Contract through a Single Tender route without any competitive process is considered lawful and appropriate (Please limit your response to one A4 page where possible)

Please detail the selection methods applied to identify the proposed Contractor (Please limit your response to one A4 page where possible)


DECLARATION

We confirm that we have carried out our own review in relation to the information contained within this Single Tender Action form and have not relied on any information or advice provided by DCLG in relation to the same We confirm that the information supplied to DCLG in this Single Tender Action form is true and accurate in all respects and we confirm and undertake that if any of such information becomes untrue or inaccurate that we will notify DCLG immediately and resubmit any updated information as required We confirm that we understand that this Single Tender Action form will be used by DCLG to monitor our compliance with the ERDF rules and the Funding Agreement obligations We understand that DCLGrsquos acceptance or otherwise of this Single Tender Action form is not to be regarded as confirmation that we have complied with our obligations under the Regulations and in providing such acceptance or otherwise we understand that this shall not constitute a waiver of or prevent or restrict future exercise of DCLGs right to clawback grant funding in accordance with the Funding Agreement or any other right or remedy Signed by helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip (Signature) Name helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip Position helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip For and on behalf of helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

Date helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip


Annex C

Key procurement Questions and Answers

1 BACKGROUND This QampA has been put together following a number of training sessions on procurement in 2012 It attempts to consider and answer a number of common issues arising across the ERDF Programmes in relation to procurement It is however important to note that procurement issues will turn on their own specific facts Whilst this QampA provides some illustrative examples they should not be considered as a substitute for specific legal advice If a grant recipient has any concerns they should consult a legal advisor before carrying out the procurement exercise The responses below should be read as guidance only and should not be taken as a statement of the law or compliance with the EC Regulations

2 GENERAL Q amp A Sub OJEU Advertising 1) Question - Please clarify the situation with regard to Construction Line and other portal websites One of our projects advertised sub OJEU level works opportunity on this OGC established site but were advised by A16 that the chosen advertising route was not sufficiently open to non UK based potential deliverers so the opportunity was not considered to have been appropriately advertised Answer - Advertising opportunities on Construction Line and other portal website is one possible option for grant recipients to satisfy the requirements for below threshold contracts The Commission Interpretative Communication is clear that portal websites are an adequate and commonly used means of publication It has also been confirmed that Construction Line is available to applicants outside of the UK and therefore should not be deemed as narrowing the availability to all applicants The important thing to do is to determine whether or not the opportunity is likely to have a significant cross border interest If it is you might want to consider using Construction Line and advertising on a website If this option is taken you must ensure that the opportunity is advertised in the same way and any criteria applied are applied for people coming forward under both routes in the same way to ensure that the Treaty principles of fair and open competition are respected Simply


selecting a list of suppliers from the Constructionline site and directly contacting them with invitations to tender is not considered to be sufficiently open and transparent and is also against the Constructionline protocol 2) Question - The Procurement Guidance requirements state that level of advertising has to be sufficient to allow a level of competition potentially from another member state (if the contract award might potentially be of interest to suppliers located in other Member States and depending on other factors eg geographical location ) helliphellip rdquo This is an area that seems open to interpretive opinion How should PDTs best advise projects we are mindful that A16 may disagree with the view of the project A13 teams Should we really just ensure that regardless all projects should follow the suggested methods of advertising featured in the guidance as a fail safe approach If that is the case how do we balance that instruction with the cost and workload impact for projects when they take that approach Answer ndash Procurements below the threshold are subject to interpretation of the guidance from the Commission which is much less clear than that for contracts over the OJEU value There are however a number of things that the PDT should consider when reviewing these types of contracts The first test for a contract below threshold should be to determine whether or not there is likely to be cross border interest in the opportunity This can be determined by looking at what productservice is being offered A good example might be that design of a website can be done from anywhere in Europe and so could be considered to have cross border interest whereas delivery of a very local service such as catering as part of a meetingevent is much less likely to have a cross border interest However in any circumstances the minimum suggested requirement for a grant recipient would be to advertise the opportunity on their website If there is a cross border interest or you are not sure whether there is then consideration should also be given to the other accepted forms of advertising set out in the National Procurement Requirements Where several options are taken you must ensure that the opportunity is advertised in the same way and any criteria applied are applied for people coming forward under both routes in the same way to ensure that the Treaty principles of fair and open competition are respected The higher the possibility of cross border interest which in most cases will also be linked to the value of the contract the more should be done to advertise this and the longer time for response will be required 3) Question - Where Supply2Gov or CompeteFor are used to advertise alongside direct invitations but not all of the aforementioned are then invited to bid because of a quality control process it could be argued that those who responded to invitations directly had an advantage However on the other hand opportunities are likely to have widened by introducing suppliers through Supply2Gov and CompeteFor that werenrsquot previously known to the


organisation Do increased opportunities outweigh any possible procedural anomaly Answer - Opportunities advertised on sites like these are useful and can be used alongside direct invitations to widen the opportunity as far as possible The most important thing is that if this option is taken you must ensure that the opportunity is advertised in the same way and any criteria applied are applied for people coming forward under both routes in the same way to ensure that the Treaty principles of fair and open competition are respected Frameworks 4) Question - If a project intends to make use of a historic framework (which seems appropriate to their needs) but where the original framework didnrsquot specifically refer to the fact that subsequent contact awards made might include an element of ERDF funding is this a problem Does the project have to ldquostart from scratchrdquo with a new framework ndash a ldquore-startrdquo may not be possible where the projects have already contracted ldquowinnersrdquo from the framework who are now contractually committed If this is a problem would the irregularity penalty be in these situations ndash publicity or procurement or both Answer - If the framework was put in place prior to the ERDF project which then used it then it would not be expected that ERDF was mentioned in the initial framework This would be almost impossible in most cases unless authorities were assuming ERDF would eventually use the framework and this is unlikely However when the ERDF project uses the framework we would expect them to mention ERDF in any mini competition undertaken or when the contracts are drawn down Similarly if a framework is developed during an ERDF project and then used we would expect the actual framework to include mention of ERDF If this is not done then the penalty is likely to be related to the lack of advertising on the procurement rather than a publicity based correction 5) Question - What are the exemptions (per procurement guidance) in framework agreements being over 4 year duration What are the sanctions (if not an exemption) Answer - The regulation states that ldquoThe term of a framework agreement may not exceed four years save in exceptional cases duly justified in particular by the subject of the framework agreementrdquo There is no further guidance on what an exceptional case might look like but it is expected that if a framework is set up to last longer than the 4 year period this is clearly stated and there is an agreed point at which it will end In relation to the timeframe of a framework lsquothe framework can continue to be used right until the end even if the performance of a specific contract based on the framework agreement would take place after expiration of the framework agreement itselfrsquo


Single Source Tenders 6) Question - Is there any further guidance about the level of underpinning evidence the project should provide to support their case for a single tender For example A project claims that as a result of their research only x firm in the PDT area provides this particular kit Answer - It is up to the project to evidence that they have met the relevant criteria to use a single tender and the National Procurement Requirements remind contracting authorities that any single tender actions are carried out at their own risk The burden of proof is firmly on the contracting authority to justify use of this procedure and the grounds interpreted There are certain criteria under which this procedure can be used which are set out below

Failure of initial procurement undertaken ndash proving the terms of the contract are not substantially altered

Exclusive rights or technical reasons ndash where it might be impossible to split work between two contractors artistic reasons or for reasons related to intellectual property rights In all cases contracting authority must evidence that the terms of the contract were not set so narrowly that only one supplier could apply

Extreme urgency ndash In very limited and extreme circumstances which are brought about by events unforeseeable by and not attributable to the contracting authority For the purpose of clarification the case law indicates that unforeseen circumstances largely relate to natural disasters where there is a risk to life if support services are not provided immediately The Commission expects applicants to have sufficiently researched the potential risks of extension of scope size and length of delivery of a contract as well as known potential risks such as finding asbestos great crested newts being found on the site etc and these events would not be accepted as unforeseeable circumstances

It would be wise for a contracting authority to advertise to prove that their requirement cannot be met by anyone other than one supplier which of course the one supplier can put themselves forward for Single Tenders need to be more tightly managed and approved based on the justification in the guidance as opposed to being identified post approval which then leads to penalties Delivery Partners


7) Question - Can we have clarification on the position of delivery partners in consortium bids It was suggested these need to be procured However they would quite rightly want to retain their IPR or designed role and how could they bid fairly as they would by association have a competitive advantage Wouldnrsquot projects just be wasting the time raising the hopes of other third parties in the unlikely event that the partner was happy to rescind their proposed involvement and take their chance against the wider market Answer - ERDF is entered into with partners as an agreement of grant rather than of service It is true that in some circumstances you should consider the relationship between the grant recipient and the delivery partner but as a general rule delivery partners do not need to be procured provided they are only compensated on an actual cost basis Further advice on delivery partners is contained in the National ERFD Handbook (sections 32 and 75) 8) Question - How you distinguish between genuine delivery partners and sub contractors delivering a service Raised under delivery partner related queries Answer - Genuine delivery partners are providing input and financial resources into the project They will be reimbursed on an actual cost basis not an invoice basis and include no profit in their costs Their reimbursement will not be linked to the achievement of particular targets or objectives They will not normally be reimbursed 100 of their costs 9) Question - If ERDF is awarded to a contracting authority as grant recipient if they have ldquodelivery partnersrdquo who are procuring goodsservices but they are not a ldquocontracting authorityrdquo what procedures should be followed Answer - Section 411 of The National Handbook clearly states that all delivery partners must fully adhere to the EC Regulations and the National Rules and this would include section 82 of the National Procurement Requirements in relation to ldquopartly subject contract awardsrdquo In addition some State Aid approvals require public procurement as a condition of use of the State Aid Scheme approval 10) Question - Can publicprivate partnerships work where both are delivery partners in new build eg Local authority owns the land and is the grant recipient and private company is the developer secured for wider regeneration and may have s106 obligations Answer ndash A genuine joint venture is possible if compliant with state aid but openness of the opportunity for the private sector partner to invest will be examined for transparency As per the delivery partner above the private sector partner would only be able to recover their actual costs not their developer profit within the ERDF eligible component of the project 11) Question - Does the public procurement directive cover universities


Answer - Universities would traditionally have been understood to fall under the ldquocatch-allrdquo provision in regulation 3(1)(w) of the Public Contracts Regulations 2006 to the extent that they were financed wholly or mainly by another contracting authority ndash for example the Higher Education Funding Council for England by way of a grant under section 65 of the Further and Higher Education Act 1992 However in a recent Government Response to a consultation paper on higher education BIS suggested that student loans are a contractual agreement between the student and the Government and therefore any public subsidy benefits the student and not the institution and that the agreement between the student and the institution for teaching in return for a fee is not a subsidy Accordingly the BIS conclusion is that the shift in funding from grant to loan may mean that more HEIs fall below the 50 threshold for public funding in future and so be exempt from the procurement regulations It is for a university and its legal advisers to determine whether it is a contracting authority for the purposes of the Public Contract Regulations 2006 If a university does not follow the public procurement rules in respect of an above threshold contract and the Audit Authority identifies this as an irregularity the university can make representations to the AA that it is not a contracting authority because it is not wholly or mainly funded by another contracting authority and if the AA does not accept that position the university may judicially review that decision OJEU advertising 12) Question - If grant recipients fail to answer ldquoyesrdquo to the question on OJEU about whether EU funding is involved what are the repercussions Answer ndash It is technically a breach if the procurement is directly for the delivery of the ERDF project (as opposed to a pre existing framework) Contract Notices must be in the form set out in Annex II of Regulation (EC) 15642005 and contain the specified information Failure to correctly identify that EU funding is involved in an opportunity may render the notice defective and an infringement of Community law amounting to an irregularity This could potentially lead to the imposition of a financial correction of up to 25 of the contract value for failure to comply with the advertising requirements in the EC Public Procurement Directives However it would be possible to publish a correigum to the OJEU notice recording that it is part EU funded Procurement corrections 13) Question - Should a financial correction be imposed in line with COCOF guidance if the end resultdecision has not been affected by a breach in procedural requirements eg errors in score sheets for appraisals where those errors affected suppliers which were not going to be selected


Answer - This will depend on the severity of the error Within the COCOF Guidance 07003703-EN and the National Procurement Requirements there is a list of corrective measure to be taken where procurement requirements have not been met If the contracting authority can evidence that the breach is purely procedural and falls under the category of ldquoIncorrect application of certain ancillary elementsrdquo then there is the possibility that if ldquothis type of irregularity is only of a formal nature without potential financial impact no correction will be maderdquo Depending on the nature of the procedural breach some breaches ie failing to publish the Alcatel notice of who won the tender in an OJEU procurement require a mandatory penalty regardless of the fact that it had no impact on which supplier won the tender However all other breaches of the regulations require some level of correction between 100 and 2 SME responsibilities 14) Question ndash Where an ERDF projects gives financial assistance (eg delegated grants) to SMEs to assist them in purchasing equipment consultancy etc ndash to what extent would we expect the SME beneficiary to procurefollow EU treaty principles Answer - The onus for compliance with the EC and National requirements sits with the grant recipient and not the end beneficiary End beneficiaries are not subject to the same eligibility rules as final beneficiaries eg around procurement though the final beneficiary will need to be satisfied that the funds have been used for the agreed purposes under which the grant was given and demonstrate value for money 15) Question - Is there more guidance on ldquoprivaterdquo procurement particularly in reference to business assists and procurement evidence they may need to supply for grants of pound1k Answer ndash ERDF is still public money and Grant Recipients should be ensuring that value for money is being obtained in respect of those persons to whom business assist grants are being provided As a matter of best practice Grant Recipients administering business assist grants should be requiring up to 3 quotes to evidence value for money State Aid and Procurement 16) Question - What about how state aid notifications impact on procurement regulations and requirements


Answer ndash The English State Aid suite of schemes require procurement or selection in an open and transparent manner where the contracting organisation is not subject to public procurement rules 17) Question - Should partners be able to operate compliantly and make a profit Answer ndash No You cannot make a profit from ERDF and grant recipients must operate on an actual costs basis If this question is in relation to A55 then any income generated from a project will need to be covered via an A55 assessment concluded during appraisal and then monitored post-approval


National Procurement Requirements

1 Background This document provides an overview of the rules governing procurement which are often complex and can be difficult to understand it is however no substitute for legal advice tailored to cover individual circumstances A Grant Recipient of ERDF funding whether or not it falls within the definition of a contracting authority should if in doubt about the way to approach letting contracts for the supply of goods works or Part APart B services funded to any extent by ERDF seek its own legal advice In this guidance we aim to raise grant recipientsrsquo awareness of their likely obligations and to draw attention to the consequences of failing to do so Grant recipients should be aware that financial penalties may be imposed for failure to comply with procurement procedures which could in some circumstances mean repayment of up to 100 of the grant funding by way of financial corrections imposed by the Audit Authority the Managing Authority or the EU Commission audit services

2 Introduction Robust and transparent procurement is required to ensure that Grant Recipients

Comply with the law

Consider value for money (VFM)

Maximise the efficient use of public money and

Maintain competitiveness and fairness across the EU

3 The Law The Public Sector Directive 200418EC1 sets out the EU public procurement requirements It was implemented into English law by the Public Contracts Regulations 2006 (SI 200605) (the rsquoRegulationsrsquo) The law as set out in the Regulations is subject to interpretation through evolving European and national case law The law is applicable to ldquocontracting authoritiesrdquo as specified and defined in regulation 3 of the Regulations A list of contracting authorities is set out in Annex A While government departments and local authorities are listed along with organisations such as fire and police authorities a generic definition is provided at Regulation 3(1)(w) which may catch organisations such as

1 Directive 200418EC of the EP and Council on the co-ordination of procedures for the

award of public works contracts public supply contracts and public service contracts

























GmbH















Principles

NO

YES


in section 8




treatment duties

NO

YES



procedure



NO

YES







































27 Other services


















pound113057 (euro130000)

pound1130572 (euro130000)

pound43483503 (euro5000000)


pound173934 (euro200000)

pound173934 (euro200000)

pound43483503 (euro5000000)


pound652253 (euro750000)

pound4348350 (euro5000000)



pound869670 (euro1000000)






Action Required




Value of Works

Action Required
















When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C














































GmbH















Principles

NO

YES


in section 8




treatment duties

NO

YES



procedure



NO

YES







































27 Other services


















pound113057 (euro130000)

pound1130572 (euro130000)

pound43483503 (euro5000000)


pound173934 (euro200000)

pound173934 (euro200000)

pound43483503 (euro5000000)


pound652253 (euro750000)

pound4348350 (euro5000000)



pound869670 (euro1000000)






Action Required




Value of Works

Action Required
















When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C
































GmbH















Principles

NO

YES


in section 8




treatment duties

NO

YES



procedure



NO

YES







































27 Other services


















pound113057 (euro130000)

pound1130572 (euro130000)

pound43483503 (euro5000000)


pound173934 (euro200000)

pound173934 (euro200000)

pound43483503 (euro5000000)


pound652253 (euro750000)

pound4348350 (euro5000000)



pound869670 (euro1000000)






Action Required




Value of Works

Action Required
















When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C




































Principles

NO

YES


in section 8




treatment duties

NO

YES



procedure



NO

YES







































27 Other services


















pound113057 (euro130000)

pound1130572 (euro130000)

pound43483503 (euro5000000)


pound173934 (euro200000)

pound173934 (euro200000)

pound43483503 (euro5000000)


pound652253 (euro750000)

pound4348350 (euro5000000)



pound869670 (euro1000000)






Action Required




Value of Works

Action Required
















When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C




























Principles

NO

YES


in section 8




treatment duties

NO

YES



procedure



NO

YES







































27 Other services


















pound113057 (euro130000)

pound1130572 (euro130000)

pound43483503 (euro5000000)


pound173934 (euro200000)

pound173934 (euro200000)

pound43483503 (euro5000000)


pound652253 (euro750000)

pound4348350 (euro5000000)



pound869670 (euro1000000)






Action Required




Value of Works

Action Required
















When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C



























































27 Other services


















pound113057 (euro130000)

pound1130572 (euro130000)

pound43483503 (euro5000000)


pound173934 (euro200000)

pound173934 (euro200000)

pound43483503 (euro5000000)


pound652253 (euro750000)

pound4348350 (euro5000000)



pound869670 (euro1000000)






Action Required




Value of Works

Action Required
















When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C












































27 Other services


















pound113057 (euro130000)

pound1130572 (euro130000)

pound43483503 (euro5000000)


pound173934 (euro200000)

pound173934 (euro200000)

pound43483503 (euro5000000)


pound652253 (euro750000)

pound4348350 (euro5000000)



pound869670 (euro1000000)






Action Required




Value of Works

Action Required
















When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C
























27 Other services


















pound113057 (euro130000)

pound1130572 (euro130000)

pound43483503 (euro5000000)


pound173934 (euro200000)

pound173934 (euro200000)

pound43483503 (euro5000000)


pound652253 (euro750000)

pound4348350 (euro5000000)



pound869670 (euro1000000)






Action Required




Value of Works

Action Required
















When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C





























pound113057 (euro130000)

pound1130572 (euro130000)

pound43483503 (euro5000000)


pound173934 (euro200000)

pound173934 (euro200000)

pound43483503 (euro5000000)


pound652253 (euro750000)

pound4348350 (euro5000000)



pound869670 (euro1000000)






Action Required




Value of Works

Action Required
















When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C



























Action Required




Value of Works

Action Required
















When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C
























Action Required




Value of Works

Action Required
















When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C



































When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C































When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C




























When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C

























When to use
























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C






































52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C



























52


37


40



15


10



37



15




















Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C








































Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C






























Copy of all tenders















































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C

























































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C









































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C


































bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C























bidders)








of the contract




of the contract



final scope



2 5 or 10 of the


































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C























































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C









































Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C





























Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C























Annex A
















































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C



































































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C

























































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C














































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C

































Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C




























Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C

























Address

Contact name

Email

Tel no

Project title














DECLARATION




Annex C


























DECLARATION




Annex C























DECLARATION




Annex C























Annex C


























































































Documents

ERDF National Procurement Requirements ERDF-GN-1-004€¦ · ERDF-GN-1-004 Version Number 2 Date Published 5 August 2013 Page 3 of 44 academic institutions or charities which may