GOVERNMENT OF THE REPUBLIC OF SERBIA EU INTEGRATION …

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„The PPF3 project is funded by the EU and implemented by a consortium led by PM Group“

Republic of Serbia Government European Integration Office

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GOVERNMENT OF THE REPUBLIC OF SERBIAEU INTEGRATION OFFICE

MANUALFOR PRIVATE SECTOR

ON EU PRE-ACCESSION ASSISTANCE

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MANUAL

GOVERNMENT OF THE REPUBLIC OF SERBIAEUROPEAN INTEGRATION OFFICE

FOR PRIVATE SECTOR ON EU PRE-ACCESSION

ASSISTANCE: PUBLIC PROCUREMENT

PROCEDURES

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Table of Contents

INTRODUCTION ..................................................................................................................... 5Purpose of the guide and target group ..................................................................................... 5Structure of the guide ........................................................................................................................ 5Recommendations for readers ........................................................................................................ 5General remarks ..................................................................................................................................... 5

WHAT IS IPA FUNDING FOR? ................................................................................................ 6IPA legal framework ............................................................................................................................. 6IPA strategic framework ...................................................................................................................... 8IPA financial framework ...................................................................................................................... 8Management of IPA funds ................................................................................................................. 8IPA institutional framework and main beneficiaries ............................................................ 9How the private sector can use allocated EU/IPA funds ...................................................... 12

HOW TO APPLY ................................................................................................................... 13Type of contracts relevant to private sector ....................................................................... 13Where to look for funding opportunities ................................................................................ 16Selection and award criteria .......................................................................................................... 17Who evaluates tenders? .................................................................................................................... 18Terms of Reference and Technical Specifications ................................................................. 19

SERVICE CONTRACTS ......................................................................................................... 19Service contracts – content of the Tender Dossier ................................................................. 20Service contracts – the evaluation process .............................................................................. 22Service contracts – Framework Contracts ............................................................................... 22

SUPPLY CONTRACTS ......................................................................................................... 23Supply contracts – content of the Tender Dossier ................................................................. 23Supply contracts – the evaluation process ............................................................................ 24

WORKS CONTRACTS .......................................................................................................... 25Works contracts – content of the Tender Dossier ................................................................. 25Works contracts – the evaluation process .............................................................................. 27

GRANTS ................................................................................................................................. 27Grants – the main steps and key documents .................................................................... 29Grants – the evaluation process .............................................................................................. 30Opportunities in secondary procurement ............................................................................. 31Ethics issues for all types of contracts .................................................................................... 32

CONCLUSION ....................................................................................................................... 32Long-term benefits of mastering the process .......................................................................... 32

MANUAL FOR PRIVATE SECTOR ON EU PRE-ACCESSION ASSISTANCE:PUBLIC PROCUREMENT PROCEDURES

Publisher:Republic of SerbiaGovernmentEuropean Integration Office For publisher:Milica Delevic, PhD Author:European Integration Office No. of copies:300 Design and prepress:GSM Advertising d.o.o., Belgrade

Printing:Global Print Belgrade, 2011

ISBN 978-86-914485-3-0

CIP - Katalogizacija nedostaje

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INTRODUCTION

Purpose of the guide and target group

The purpose of this guide is to provide essential and useful information regarding the Instrument for Pre-Accession Assistance (IPA) financing for the private sector in Serbia.

The three main objectives of this guide are to:

1. Disseminate relevant information regarding the IPA programme in Serbia2. Explain the role and responsibility of the EU and Serbian institutions in

relation to the IPA3. Highlight points relevant for the private sector regarding the IPA programme

in Serbia and, in particular, explain how to participate in IPA (EU) tenders

The guide is primarily aimed at the private sector in Serbia, which may benefit from the available opportunities, but also at all readers interested in learning more about how business is done with IPA funds.

Structure of the guide

The first part of this guide, “What is IPA funding for?“ offers general information about the IPA’s legal, strategic, financial and institutional framework. The second main part, “How to apply“, explains the procurement procedures related to different types of contracts (service, supply, works and grants). The Glossary (at the end of the guide) provides short explanations of relevant terms and concepts.

Recommendations for readers

This guide takes a generalist approach. It outlines the wide range of information about IPA financing and highlights key points. However, only those entities that are well prepared and informed will be able to avail of IPA (and other opportunities) for project financing. Users should thus obtain more detailed information about the IPA that is relevant to their business. Gathering information about possibilities for financing is a continuous process, so the earlier that business entities learn about the IPA, the better their chances of benefiting from opportunities.

General remarks

The accession of Serbia to the European Union (EU) is the process of Serbia joining the EU. Serbia officially applied for EU membership on 22 December 2009. The IPA offers assistance to countries engaged in the accession process over the period 2007–2013. The aim of the IPA is to enhance the efficiency and coherence of this assistance by means of a single framework that supports the stabilisation and association process of candidate and potential candidate countries, while respecting their specific features

ANNEXES .............................................................................................................................. 33Key documents .................................................................................................................................... 33Key links .................................................................................................................................................. 33IPA budget ............................................................................................................................................. 34

GLOSSARY ............................................................................................................................ 37

List of Tables

Table 1.1: IPA structures and authorities in Serbia, with reference to current state of affairs ................................................................................................................................................... 10Table 1.2: The PRAG eligibility rules ........................................................................................... 14Table 1.3: PRAG procurement procedures for services, supply and wor .................... 15Table 1.4: Rules for applying standard procurement procedures ................................. 15Table 1.5: EU procurement principles and practice ........................................................... 16Table 1.6: Content of a Service Tender Dossier .................................................................. 21Table 1.7: Content of a Supply Tender Dossier ................................................................... 24Table 1.8: Content of a Works Tender Dossier ..................................................................... 26Table 1.9: The grant evaluation process .................................................................................. 31

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and the processes in which they are engaged. Through the implementation of IPA funding, the country creates a better economic context for the development of the private sector.

Serbia has been a beneficiary of various EU assistance programmes and of the IPA programme since 2007. The possibility of accessing IPA funds has opened numerous opportunities to the public, private and voluntary sectors of the Serbian economy. To make best use of those opportunities, potential beneficiaries need to be familiar with the EU and Serbian institutions involved in the process and to assimilate concepts and know-how regarding the procedures for best use of IPA funds.

WHAT IS IPA FUNDING FOR?

IPA legal framework

The European Commission serves as the executive arm of the European Union. It administers the EU budget and supervises the implementation of EU common policies. To carry out its tasks, the Commission supports with available financial instruments a wide range of projects in different countries.1

IPA replaces the CARDS, PHARE, ISPA and SAPARD programmes. Under the IPA, the EU finances projects that lead to full harmonisation of national legislation with the acquis communautaire (or ‘EU acquis’: the accumulated legislation, legal acts and court decisions that constitute the body of EU law), the full application of harmonised legislation, and preparation for implementation of EU cohesion and agricultural policies.

The financial value of the IPA programme for 2007–2013 totals nearly €11.5bn, of which €1.4bn has been allocated to Serbia.2

Figure 1.1: IPA Budget 2007-13

The IPA beneficiary countries are divided into two categories, depending on their status under the accession process:

• Potential candidate countries – Albania, Bosnia-Herzegovina, and Serbia• Candidate countries – Croatia, Macedonia, Iceland, Montenegro and Turkey

The IPA is intended as a flexible instrument, providing assistance that depends on the needs of the beneficiary countries and on the progress they make. The IPA programme is made up of the following five components:

• IPA Component I: Transition Assistance and Institution Building – includes measures for institutional capacity-building and related investments, with the goal of fulfilling political, economic and other EU accession criteria and the responsibilities involved in EU membership. Assistance can come in the form of technical assistance (TA), twinning projects (entailing the secondment of EU experts), procurement of equipment (supply), works and grants.

• IPA Component II: Cross-Border Cooperation – provides support for cross-border cooperation with bordering countries. Cross-Border Cooperation programmes also have an important role for the regional development of the country. The priorities of IPA II are: promoting cross-border cooperation, sustainable development of the environment, market development, economic development, improving cohabitation on the EU external borders, improving living standards in border regions, and strengthening the capacities of local/regional/national institutions to implement EU programmes.

• IPA Component III: Regional Development, and IPA Component IV: Human Resources Development. Through IPA III and IV, the necessary preparations are made for managing the financial instruments that will be available after EU accession (Structural Funds and the Cohesion Fund). The potential beneficiaries are state administration bodies, public institutions, social partners and non-government organisations. The allocation of funds is based on multi-annual programming documents – Operational Programmes.

• IPA Component III supports projects in the environmental and transport sectors, and programmes which promote regional competitiveness and development while serving as a predecessor to the European Regional Development Fund (ERDF) and the Cohesion Fund.

• IPA Component IV supports projects aimed at promoting employment, education/training and social inclusion, while serving as a predecessor to the European Social Fund (ESF).

• IPA Component V: Rural Development: emulates post-accession Rural Development programmes by financing rural development-type measures, similar in nature to these programmes, but smaller in scale.

Potential candidate countries can receive assistance through Components I and II, while Components III, IV and V are open to EU candidate countries. Nevertheless, assistance under Component I may also be provided through measures and actions of a similar nature as those foreseen under the regional, human resources and rural development Components, including investment-type operations.

1 The IPA was presented by the Commission to the European Parliament and the EU Council. The IPA Council Regulation (EC) No. 1085/2006 was adopted on 17 July 2006. The Commission Regulation (EU) No. 80/2010 amending regulation (EC) No. 718/2007 Implementing Council regulation (EC) No. 1085/2006 has been adopted.2 See Annex ‘IPA Budget’ and footnote 9 of this Manual.

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IPA strategic framework

Assistance under the IPA has to be provided in accordance with the general EU policy framework for pre-accession defined by the European and Accession Partnerships, and taking due account of the Reports and the Strategy Paper included in the annual enlargement package of the Commission. The Multi-Annual Planning Document (MIPD) is the strategic document for the IPA. It applies for a multi-year rolling period, with annual reviews.

The IPA Strategic Coherence Framework (SCF) is the umbrella strategy document regulating priorities in the framework of IPA Components III and IV in the area of infrastructure investments in environmental protection and transport, and subsequently in developing the economy and competitiveness and in employment and education.

Particular country priorities are elaborated in detail at the level of sector-specific implementation documents, Operational Programs (OPs), written by national operating structures as multi-year programming sectoral documents, produced in close cooperation with EU Commission services and relevant stakeholders. Individual state administration bodies were given responsibility for their preparation in accordance with their sector-specific competences.

Those documents set out a hierarchy of objectives, indicators and guidelines on how to progress from strategy to operations (projects) and how to provide outputs and achieve the projects’ required impacts.

IPA financial framework

The strategic planning also entails multi-annual indicative planning documents. These are established for each beneficiary country in accordance with the broad political guidelines set out in the Commission’s enlargement package, which includes a Multi-annual Indicative Financial Framework (MIFF).

The MIFF presents the Commission’s intentions for the allocation of funds for the coming years, broken down by beneficiary and by Component, on the basis of the needs and the administrative and management capacity of each country and compliance with the accession criteria.

Management of IPA funds

As regards action on the ground, the European Commission adopts annual or multi-annual programs based on the indicative planning documents. These programs are implemented following four management methods: centralised, decentralised, joint or shared.

In general, with centralised management, the Commission is the contracting authority and takes decisions for the beneficiary country; with decentralised management, the beneficiary country acts as the contracting authority and takes decisions on the procurement and award of contracts, and refers them to the Commission for approval.

The IPA Implementing Regulation envisages that decentralised management of EU funds by the beneficiary country will apply to the implementation of IPA assistance. In the case of potential candidate countries, centralised management is permitted for Components I and II only.

As a potential candidate country, Serbia is striving to achieve “conferral of management” based on accreditation of the Decentralised Implementation System (DIS) as a prerequisite for signing the Financing Agreements for IPA Components III, IV and V, covering at least tendering, contracting and payments.

IPA institutional framework and main beneficiaries

A Directorate-General (DG) is a branch of EU administration dedicated to a specific field of expertise and headed by a European Commissioner. The Directorates-General are divided into four groups: Policy DGs, External Relations DGs, General Service DGs and Internal Service DGs. The following DGs are relevant to the IPA:

• Directorate-General for Enlargement – one of the external-relations DGs, it is responsible for the EU enlargement process.

• Directorate-General for Regional Policy (DG REGIO)– one of the policy DGs, it is responsible for EU measures to assist in the economic and social development of the “less-favoured” regions of the European Union. IPA Component III (Regional Development) is under the responsibility of DG Regio (IPA/ISPA unit).

• Directorate-General for Employment, Social Affairs and Equal Opportunities (DG EMPEL) – also one of the policy DGs, it has the task of contributing to the development of a modern, innovative and sustainable European social model, with more and better jobs in an inclusive society based on equal opportunities. IPA Component IV (Human Resources Development) is under its responsibility.

• Directorate-General for Development and Cooperation – EuropeAid (DG DEVCVO) – this combines (since January 2010, two former DGS, DG Development and DG EuropeAid, in order to provide a single contact point for stakeholders both inside and outside the EU. It plays a leading role in the international debate on development involving donors, international institutions, developing and emerging countries and non-state actors. EuropeAid website:http://ec.europa.eu/europeaid/who/index_en.htm

In Serbia, the main structures and authorities involved in managing and implementing IPA funding under the DIS are:

• National IPA Coordinator (NIPAC)• Strategic Coordinator for Components III and IV (SCO)• Competent Accrediting Officer (CAO)• National Authorising Officer (NAO)

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• National Fund (NF)• Operating Structure (OS)• Audit Authority (AA)

Table 1.1: IPA structures and authorities in Serbia, with reference to current state of affairs

Body/authority Description Situation in Serbia

National IPA C o o r d i n a t o r (NIPAC)

High-ranking official in the government or state administration of the beneficiary country, who ensures the overall co-ordination of assistance under the IPA Regulation

The Government of Serbia appointed Deputy Prime Minister for EU Integration, Božidar Đelić, to be the National IPA Coordinator (NIPAC).

NIPAC’s operating activities are carried out by NIPAC’s technical secretariat or the European Integration Office.

Strategic Coordinator

Entity within the state administration of the beneficiary country, placed under the responsibility of the NIPAC, and with no direct involvement in the implementation of the relevant IPA Components.

The function of the Strategic Coordinator is performed by the European Integration Office.

Ognjen Mirić, Deputy Director of the European Integration Office and Coordinator for EU Funds, was designated as the responsible person for carrying out the activities of the Strategic Coordinator.

C o m p e t e n t A c c r e d i t i n g Officer (CAO)

High-ranking official in the government or state administration of the beneficiary country

In accordance with Government Conclusion 19-3192/2008 of 21 August 2008, the function of the CAO was performed by the former Minister for Finance, Diana Dragutinović. The new CAO will be appointed by the new Government of Serbia. The CAO is responsible for issuance, monitoring and suspension or withdrawal of accreditation for the National Authorising Officer and the National Fund.

N a t i o n a l A u t h o r i s i n g Officer (NAO)

High-ranking official in the government or state administration of the beneficiary country

The Government of Serbia appointed State Secretary in the Ministry of Finance, Vuk Djoković, to be the NAO.

National Fund (NF)

Body located in a state-level ministry of the beneficiary country, with central budgetary competence

The National Fund (both as a Treasury function and as the NAO Services) was established directly under the NAO as a new Department in the Ministry of Finance.

O p e r a t i n g Structures (OS)

Body or a collection of bodies within the administration of the Operational Programmes (OPs)

The operating structure is set up for each IPA Component separately:The Implementing Agency for IPA Components I, II, III, IV is the Department for Contracting and Financing of EU Funded Projects) within the Ministry of Finance under the overall supervision of the NAO. The Assistant Minister, Arleta Manojlović, in charge of the Implementing Agency for IPA Components I, II, III, IV, was appointed as Programme Authorising Officer. Within the line ministries, relevant internal units for programming and implementation (PIU) have been established, headed by the Senior Programme Officer (SPO). IPA I and IPA IIThe Sector for Cross-Border and Transnational Cooperation Programmes in SEIO was designated as the OS within the transitional system of managing cross-border cooperation programmes. SEIO is the national authority for managing and implementing cross-border cooperation programmes within the system of shared responsibilities. The Department for Contracting and Financing of EU Funded Projects carriees out the activities of first-degree control. Ognjen Mirić, Deputy Director and Coordinator for EU Funds, was appointed as responsible person for performing the activities of the Operating Structure and the National Authority. IPA III and IPA IVThe Department for Contracting and Financing of EU Funded Projects was designated as the authority responsible for the OP of IPA Component III. The Department for Employment within the Ministry of Economy and Regional Development was designated as the Authority Responsible for the OP of Component IV.In addition to the Ministry of Finance, the OS for IPA Component III consists of the authorities responsible for infrastructure, energy, environment, mining, spatial planning, agriculture, forestry, water management, economy, regional development, science and technological development.Besides the Ministry of Economy and Regional Development and the Ministry of Finance, the OS for IPA Component IV consists of the authorities responsible for education, labour and social policy.

Audit Authority Functionally independent body from all actors in the management and control system, designated by the beneficiary country

New amendments to the systematisation of the Ministry of Finance (under preparation) will also include the formal appointment of the Audit Authority. Consultations are ongoing on the positions, staffing and training, to comply with the requirements of the IPA Implementing Regulation.

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In addition to the main bodies, the IPA Implementing Regulation stipulates two levels of Monitoring Committee, in order to provide coherence and coordination in the implementation of IPA and engage all relevant actors:

• IPA Monitoring Committee (IPA MC)• Sectoral Monitoring Committees (SMCs)

How the private sector can use allocated EU/IPA funds

With a GDP for 2008 and 2009 estimated at €33,418m and €29,967m respectively,3 and GDP per capita of €4,546 and €4,093 respectively, Serbia is a middle-income economy. The GDP growth rate rose in 2005–2007 but declined to 0.0% in 2008–2009. However, in 2010–2012, GDP growth is expected to be between 1.5% and 2% according to EU, World Bank and International Monetary Fund (IMF) estimations.

The economy has a high unemployment rate – 16.1% in 2009, up to 19.2% in October 2010 – and an unfavourable trade deficit.4

IPA and other EU funds offer a variety of opportunities for the growing Serbian economy and for Serbian private companies to participate in business opportunities in the region. Different types of companies in various fields of activities can benefit from IPA funds: consulting, service providers, equipment suppliers, engineering companies, research and development companies, etc. Participation in the award of IPA procurement (service, supply and works tenders) or grant contracts is open to all natural and legal persons and international organisations. As such, natural persons must be nationals of, or legal persons established in:

• a member state of the EU or the European Economic Area (EEA)5• a country that is a beneficiary of the IPA6, or • a country that is a beneficiary of the European Neighbourhood and Partnership

Instrument (ENPI)7

Participation is also open to natural and legal persons from countries other than those mentioned above where these countries enjoy reciprocal access to EU external assistance.

Important:

In practice, the IPA brings new business opportunities to Serbia, but Serbian companies can participate in IPA-financed projects abroad, in other IPA beneficiary countries.

HOW TO APPLY

The IPA funds are disbursed through programmes and projects that contribute to the realisation of national strategic priorities and EU policies. Private companies can apply for participation in different kinds of projects in which the required tasks cover a wide variety of subjects. If a company is a suitable candidate and successful in its bid, it will be invited to sign a contract with the contracting authorities.

Type of contracts relevant to private sector

The types of contract that may offer opportunities to private companies are:

• Services (technical assistance, studies, provision of know-how and training)• Supplies (equipment and materials)• Works (infrastructure and other engineering works).• Secondary procurement (projects implemented through grant schemes)

The calls for tenders are announced by the EU Delegation and relevant Serbian government institutions. Participation in the tenders is open on equal terms to all qualified natural and legal persons.

Tender procedures for all kind of contracts established by the European Commission for procurement under the IPA programme are consolidated in the Practical Guide to Contract procedures for EU external actions (PRAG). It is essential that private entities that want to participate in announced tenders become familiar with PRAG:

http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm

PRAG is the sole working tool which explains the contracting procedures applying to all EU external aid contracts financed from the EU budget. Therefore, PRAG must be followed in IPA contracting procedures. There are strict rules governing the way in which contracts are awarded. These help to ensure that suitably qualified contractors are chosen without bias and that the best value for money is obtained, with the full transparency appropriate to the use of public funds.

Important:

PRAG rules define the eligibility criteria for the bidders. These rules are: the rule on nationality, the rule on origin of goods, and the rules describing grounds for exclusion.

3 According to the Statistical Office of the Republic of Serbia: hhttp://webrzs.stat.gov.rs/axd/en/ 4 Idem5 At present, the contracting parties to the EEA Agreement are the EU and its 27 members plus Iceland, Liechtenstein and Norway. While Switzerland is not in the EEA, Swiss nationals have the same rights as EEA nationals.6 The beneficiary countries are divided into two categories, depending on their status as either candidate countries under the accession process or potential candidates under the Stabilisation and Association process, namely: candidate countries (Annex I to the Regulation): the former Yugoslav Republic of Macedonia, Croatia, Iceland, Montenegro, Turkey, and potential candidate countries as defined at the Santa Maria da Feira European Council of 20 June 2000 (Annex II to the Regulation): Albania, Bosnia-Herzegovina, and Serbia including Kosovo as defined by the United Nations Security Council Resolution 1244/1999.7 This instrument has a budget of approximately €12bn; it covers European Community aid to Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova, Morocco, the Palestinian Authority, Russia, Syria, Tunisia, and Ukraine for the period 2007–2013.

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Table 1.2: The PRAG eligibility rules

Rule DetailsThe rule on nationality

This rule stipulates that participation in the procurement and grant procedures is open on equal terms to all natural and legal persons from:

a) a member state of the European Unionb) a member state of the European Economic Areac) an official candidate country / potential candidate country that is a

beneficiary of the IPAd) a country that is a direct beneficiary of the aid allocated through the

corresponding basic act e) in the case of procurement and grants financed under a thematic

programme, a developing country as specified by the OECD Development Assistance Committee

f ) as the case may be, another third countryg) those countries that are beneficiaries of a decision establishing

reciprocal access to external aidh) international organizations

The rule on origin of goods

All goods (supplies and materials) purchased under a contract financed under an EU instrument must originate from the EU or an eligible country

Grounds for exclusion

Candidates / tenderers / applicants may be excluded from participation in procurement procedures in a number of situations defined in PRAG. For all contracts and at all stages of procurement procedure, the contracting authority may require evidence that the tenderer/applicant respects local legislation on a number of points. They must produce proof that they are not bankrupt or being wound up, that the management has not been convicted of any offence or professional misconduct, that they fulfil their obligations under local employment law or in regard to payment of tax, that they have not been investigated for fraud, etc.

For EU services, supply and works in IPA countries, PRAG lays down different procurement procedures, each allowing for a different degree of competition.

Table 1.3: PRAG procurement procedures for services, supply and works

Single tender The contracting authority may award contracts to a value of €10,000 or less on the basis of a single tender.

Framework contracts (FCs)

FCs are applicable to services under €200,000, which implies a relatively small amount / duration of expertise to be provided. The expertise solicited under this procedure may be delivered to the beneficiaries relatively quickly.

Competitive negotiated tender procedure

In negotiated procedure, the contracting authority directly invites economic operators to submit offers. If it considers that the offers can be improved, negotiations can be carried out, on equal terms for all tenderers.

At the end of the procedure, the contracting authority selects the technically compliant tender which offers the best value for money.

(Local or international) Open tender procedure

Open procedure is by far the most commonly used and represents more than half of the contracts signed. Terms of reference / technical specifications are immediately accessible to all potential candidates. Any natural or legal person wishing to tender may apply.

(International) Restricted tender procedure

All economic operators may ask to take part (by submitting an “Expression of Interest”), but only shortlisted candidates evaluated according to the exclusion and selection criteria will receive the terms of reference and may submit a tender.

The rules for applying standard procurement procedures are summarised in Table 1.4. The financial thresholds given are based on the maximum budget for the contract in question (including any co-financing). Where contracts are subdivided in lots, the value of each lot shall be taken into account when calculating the overall threshold.

Table 1.4: Rules for applying standard procurement procedures

Type of contracting

PRAG Thresholds (€) and Relevant Procurement Procedure8

SERVICES ≥ 200,000

International restricted tender procedure

< 200,000 but > 10,000

Framework contracts or competitive negotiated procedure

≤ 10,000

Competitivenegotiated procedure or single tenderSUPPLIES ≥ 150,000

International open tender procedure

< 150,000 but ≥ 60,000

Local open tender

procedure

< 60,000 but > 10,000

Competitive negotiated procedure

WORKS ≥ 5,000,000

International open tender procedure or

international restricted tender procedure

< 5,000,000 but ≥ 300,000

Local open tender

procedure

< 300,000 but > 10,000

Competitive negotiated procedure

8 PRAG procurement thresholds and procurement procedures are not applicable to grants, which have a separate definition for procedures. See section ‘Grants’ of this guide.

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In addition, a number of governing principles apply to all EU funding under the EU public procurement legislation9 enabling contracts to be awarded through competitive tendering. Regardless of procedure, the contracting authority must ensure that operations are transparent and guarantee that the desired quality of procurement is obtained at the best possible price. The principles are listed in Table 1.5.

Table 1.5: EU procurement principles and practice

EU procurement principle

Principle as implemented in practice

Fair competition No bidder must be given preferential treatment during the procurement procedure.

Transparency The tendering procedure must be publicised widely and in an easily accessible way.

Standard documents All tendering documents must use the same template and format.

Equal treatment The contract award must be completely impartial and involve no preference for any candidate.

Non-discrimination Legitimate tenderers who offer guarantees equivalent to internationally accepted standards and ensure compliance with the provisions of sound financial management cannot be discriminated against based on any criteria.

Best value for money Where the quality of technical offers is the same, the contract must be awarded to the cheapest compliant one in a case of supply and works tenders and to the economically most advantageous tender in the case of services tenders.

No retroactive awards Contracts are considered to take effect from the date of signature of the last signatory. No disbursements can be effected and no goods and services provided before the contract is signed.

Where to look for funding opportunities

All EU (IPA) tenders are public. Contractors should look regularly at the Official Journal of the European Union and the EuropeAid website where Contract Forecasts for Services, Supply and Works contracts are published, together with full instructions on how to apply and participate in the announced tenders:

• EuropeAid – Calls for proposals & procurement notices:https://webgate.ec.europa.eu/europeaid/online-services/index.cfm?do=publi.welcome

A Contract Forecast is a public document setting out the specific characteristics of the particular tender. It must be published at least 30 days before the publication of the full tender dossier. The contract forecast gives a brief indication of the subject, content and value of the contracts concerned. Since they are forecasts, the document does not bind the contracting authority to finance the contracts proposed so the companies are not expected to submit application forms at this stage.

Important: Preparation of Proposals

When preparing a proposal (bid), particular attention should be paid to:

• respecting the deadlines

• preparing and submitting a complete set of documentation

• using the correct templates

• ensuring that documents are well translated

Selection and award criteria

Regardless of the type of procedure used, the following criteria are always applied:

• Selection criteria• Award criteria

Selection criteria: The contracting authorities will draw up clear and non-discriminatory selection criteria in every procurement procedure. The purpose is to assess that the tenderer has sufficient financial, economic, technical and professional capacity to implement the tasks of the contract. The chosen selection criteria may not go beyond the scope of the contract and must take account of the legitimate interests of the tenderer, relating in particular to protecting the firm’s technical and business secrets.

In practice, the tenderer will be asked to submit information about their economic, financial, professional and technical capacity according to the selection criteria specified in the tender documents. Companies must also fulfil all the reference criteria, providing references to prove their professional and technical status. For example, the following may be requested:

• Details of annual turnover, in order to establish the economic and financial capacity of the tenderer;

• Number of staff, and number of previous projects, in order to establish technical capacity; Information about, for example, the main services provided and supplies delivered in the past three years, and information about works carried out in the last five years, as evidence of technical experience

A company must fulfil all the selection criteria or it may be excluded from the evaluation procedure. Note that companies often do not apply alone but may group in a consortium.

9 See http://ec.europa.eu/internal_market/publicprocurement/legislation_en.htm

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A consortium is a grouping of eligible natural and legal persons (companies) from different or one country which submits a tender or application to a tender procedure. It may be a permanent, legally established grouping or a grouping constituted informally for a specific tender procedure. If contracted, all members of a consortium (i.e. the leader and all other partners) are jointly liable to the contracting authority.

In procurement procedures for service and supply contracts, the selection criteria are applied to the consortium as a whole. This is applicable also to works tenders unless otherwise stipulated.

Important:

A consortium is usually established at an early stage of the tender procedure. The lead company of the consortium is usually in charge of implementing the project. From the point of view of good business practice, a written agreement between the members of the consortium (a Consortium Agreement) should be signed before submitting any proposal.

Award criteria: Contracts are awarded on the basis of the award criteria established for the call for tender in one of the following two ways:

• under the automatic procurement procedure, in which case the contract is awarded to the tender that, being in order and satisfying the conditions laid down, quotes the lowest price

• under the best-value-for-money procedure (i.e. the most economically advantageous tender)

Important:

Companies that want to participate in EU tenders should start to build their business references and the know-how that will make them sufficiently competitive (either alone or in a consortium) not only to be shortlisted after submitting expressions of interests, but also to win an increasing number of tenders.

Who evaluates tenders?

Tenders are opened and evaluated by an Evaluation Committee appointed formally by the contracting authority (EU Delegation in Serbia or Contracting Authority in charge), comprising a non-voting chairperson, a non-voting secretary and an uneven number of voting members (minimum of three for all procedures except for works tenders above €5 million, where a minimum of five are required).

Every member must have a reasonable command of the language in which the tenders are submitted and possess the technical and administrative capacities necessary to give an informed opinion on the tenders. The identity of the evaluators should be kept confidential.

Terms of Reference and Technical Specifications

For all tenders, the contracting authority prepares the Terms of Reference (for service contracts) and Technical Specifications (for supply and works contracts). Their purpose is to give instructions and guidance to contractors at the tendering stage about the nature of the tender they will need to submit, and also to serve as the contractor’s mandate during project implementation. They are part of the Tender Dossier and become an annex of the eventually awarded contract.

The Terms of Reference and the Technical Specifications must afford equal access for candidates and should not create unjustified obstacles to competitive tendering. They should be clear and non-discriminatory and be in proportion to the project and the allocated budget.

The Technical Specifications must not refer to particular brands or be too specific, thus encouraging competition.

While there is equal access for all candidates, it is up to the company to decide if it can comply with all the administrative and technical criteria of the tender and if the proposed budget is sufficient to cover the scope of work required.

The Terms of Reference and the Technical Specifications are integral parts of a contract, constituting a legal obligation of the contractor once the tender is awarded.

Important: Preparation of offers and common mistakes

Several common mistakes made by tenderers can jeopardise their proposals and eventually exclude them from the tender procedure.

According to PRAG, infringement of rules may lead to the rejection of the tender. The tender must be submitted in accordance with the instructions to tenderers.

When preparing offers, particular attention should be paid to avoiding relatively simple mistakes such as: not respecting deadlines, poor use of templates, omission of signatures, lack of information on necessary guarantees, etc.

It is essential to read carefully the Terms or Reference / Technical Specifications when preparing offers. Candidates should prepare their offers so that they reflect as closely as possible the needs of the contracting authority. All the criteria for evaluation are public, and provided in Tender Documentation; therefore, candidates should seek to optimise their evaluation by fulfilling these criteria as fully as possible.

SERVICE CONTRACTS

Technical and economic support in the course of EU cooperation policy involves recourse to outside know-how on the basis of service contracts10,most of them for studies or technical assistance.

Study contracts include studies for the identification and preparation of projects, feasibility studies, economic and market studies, technical studies, evaluations and

1⁰ Types of service contracts: Global price, Fee-based

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audits. They generally specify an outcome, i.e., the contractor must provide a particular product; the technical and operational means by which it achieves the specified outcome are irrelevant. These contracts are often lump-sum (global-price) contracts and the contractor will be paid only if the specified outcome is achieved.

Technical assistance contracts (fee-based) are used where a service provider is called on to play an advisory role, to manage or supervise a project, or to provide the experts specified in the contract.

For a fee-based service contract, the Terms of Reference (ToR) include the allocated budget headings.11 The services are provided on the basis of a fixed daily fee rate for the days the experts work under the contract. The budget consists of a fixed provision for incidental expenditure which covers all actual expenses incurred by the consultant which are not included in the fees. The section for incidental expenditure should specify the type of expenditure which could be included in the expenditure verification of the contract. The ToR also specify a provision for expenditure verification. The budgets for incidental expenditures and expenditure verification are fixed by the contracting authority and must correspond to the requirements of the ToR and be carefully estimated.

Experts – For service contracts, experts are the key element for good implementation of projects. There are different types of experts: short-term, long-term, junior, senior. An expert can also be qualified as a key expert/team leader or as a non-key expert. (A previous distinction between local and international experts has been abolished.) Key expert CVs are submitted with the technical offer for the selection procedures. The scoring of the key expert CVs is crucial for winning a project.

Procurement notice: All service contracts of €200,000 or more must be the subject of a restricted procedure. The European Commission is responsible for publishing the notice in the Official Journal of the European Union and on the EuropeAid website. Companies that want to participate in the tender should submit an Expression of Interest (EoI). The minimum deadline for submitting EoIs is 30 days from the date of publication of the procurement notice.

Service contracts – content of the Tender Dossier

In general terms, a Service Tender Dossier includes the following content:

Table 1.6: Content of a Service Tender Dossier

Instruc tions for Tenderers

The document defines the rules for tender participation and provides administrative information, including a list of the administrative and financial references required, which are part of the selection and award criteria.All the provisions and information that tenderers need to present their tenders are included: procedures to follow, documents to provide, cases of non-compliance, award criteria and their weightings, stipulations on subcontracting, etc.

Draft Contract Agreement and Special Conditions of Contract, with annexes

The contract is a legally enforceable agreement between two or more parties, where the mutual obligations of the contracting authority and future service provider are defined.The Draft Contract Agreement and Special Conditions contain information related to provision of services. The contract stipulates: The Consultant will carry out the services on the terms and conditions set out in this contract, which comprises, in order of precedence, these special conditions (“Special Conditions”) and the following annexes:

• Annex I: General Conditions for service contracts financed by the EU• Annex II: Terms of Reference [including clarifications before the deadline

for submission of tenders and minutes from the information meeting/site visit]

• Annex III: Organisation and methodology [including clarifications from the tenderer provided during tender evaluation]

• Annex IV: Key experts • Annex V: Budget [breakdown – for fee-based contracts only] • Annex VI: Forms and other relevant documents • Annex VII: Report of factual findings and ToR for expenditure verification

Terms of Reference (ToR)

The ToR is the most important document for Service Contracts as it defines the contractor’s tasks and duties and objectives to achieve. The purpose of ToR is to give instructions and guidance to consultants at the tendering stage about the nature of the tender they will need to submit. It also:

• serves as the consultant’s mandate during project implementation• becomes an annex of the eventual contract awarded as a result of the

tender Other information

Shortlist notice, administrative compliance grid, evaluation grid, tender submission form, etc

See: http://ec.europa.eu/europeaid/work/procedures/implementation/services/index_en.htm

Important: Envelope System

When preparing an offer, the bidder should:

• Prepare and send the technical offer in Envelope A and the financial offer in (separate) Envelope B – both envelopes should be sealed and labelled properly

• Understand fully the scoring system

• Fulfil all administrative criteria (e.g. relevant documents have been signed)

• Provide sufficient information on the guarantee (if required) – this can take time to obtain

11 For fee-based contracts, the envelope B (financial offer) contain 3 lines: fee, incidentals and verification expenditure.

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Service contracts – the evaluation process

Establishment of shortlists: From the companies that have provided expressions of interest, the Evaluation Committee will draw up a shortlist of candidates that consists of a maximum of eight consortia / individual companies. Shortlisted candidates will receive a letter of invitation to tender and the tender dossier. At the same time, the final shortlist must be published on the EuropeAid website.

Evaluation procedure for service contracts: The Evaluation Committee will use the administrative compliance grid included in the Tender Dossier to record the administrative compliance of each of the tenders. (Companies submitting bids should pay attention to the provided grids to ensure they clearly fulfil the criteria.)

In service contracts, ‘best value for money’ is interpreted as the “economically most advantageous proposal”. The criteria cover both the technical quality and price of the tender. According to PRAG, while the Committee examines the technical offers, the financial offers remain sealed.

‘Best value for money’ is established by weighing technical quality against price, normally on an 80/20 basis. This is done by multiplying the scores awarded to the technical offers by 0.80 and the scores awarded to the financial offers by 0.20. Full details are provided in the tender dossier.

The shortlisted company must send two separate envelopes. According to PRAG, tenders must be submitted in accordance with the double envelope system, i.e., in an outer parcel or envelope containing two separate, sealed envelopes, one bearing the words ‘Envelope A – technical offer’ and the other ‘Envelope B – financial offer’. Envelope A contains a technical offer with a methodology and key expert CVs (all parts of the tender other than the financial offer must be submitted in Envelope A).

Service contracts – Framework Contracts

Services with a value of more than €10,000 but less than €200,000 must be contracted using the Framework Beneficiaries 2009 (FWC BENEF 2009) which runs until 15 September 2011 and may be extended until 15 September 2013.

Important: Framework Contracts

These are of particular interest as the bidding process (while restricted to a number of ‘Lots’) is simple and fast. The contracts are short (less than one year) and small (less than €200,000). Framework contracts are divided into different thematic lots. Detailed information about one example, FWC BENEF 2009, can be found on the EuropeAid FWC website.

For sectors not covered by the Framework Contract or where such a procedure has been unsuccessful or impossible, the competitive negotiated procedure must be used.

As it is a Multiple Framework Contract, the specific contract award is based on a competition. A request must be sent to three Framework contractors of the same lot. This request can only be issued during the period of validity of the Framework Contract. The competition between the three framework contractors must respect the principles of transparency, proportionality, equal treatment, non-discrimination and sound competition.

SUPPLY CONTRACTS

Supply contracts cover the purchase, leasing, rental or hire purchase, with or without option to buy, of products. A contract for the supply of products and for siting and installation is considered to be a supply contract. During the delivery of the equipment, installation and maintenance of the product could be required.

Supply contracts – content of the Tender Dossier

Publication of procurement notice: In addition to forecasts, all supply contracts of EUR 150,000 or more must also be the subject of a procurement notice. The European Commission (acting on behalf of the contracting authority) is responsible for publishing the notice in the Official Journal of the European Union and on the EuropeAid website. If the procurement notice is published locally, the contracting authority must arrange local publication directly.

The procurement notice must provide would-be suppliers with the information they need to determine their capacity to fulfil the contract in question.

In general terms, the Supply Tender Dossier has the following content:

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Table 1.7: Content of a Supply Tender Dossier

Instructions to Tenderers

The document defines the rules for tender participation and provides administrative information, including a list of the administrative and financial references required, which are part of the selection and award criteria. It specifies the type of supply contract (for all kind of equipment, including computers, technical equipment, etc).The instructions contain information related to:1 Supplies to be provided; 2 Timetable; 3 Deadline for submission of tenders; 4 Participation; 5 Origin; 6 Type of contract; 7 Currency; 8 Lots; 9 Period of validity; 10 Language of offers; 11 Submission of tenders; 12 Content of tenders; 13 Pricing; 14 Additional information before deadline for submission of tenders; 15 Clarification about meeting/site visit; 16 Alteration or withdrawal of tenders; 17 Costs of preparing tenders; 18 Ownership of tenders; 19 Joint venture or consortium; 20 Opening of tenders; 21 Evaluation of tenders; 22 Signature of contract and performance guarantee; 23 Tender guarantee; 24 Ethics clauses; 25 Cancellation of tender procedure; 26 Appeals

Draft Contract Agreement and Special Conditions of Contract, with annexes

The contract is a legally enforceable agreement between two or more parties, where the mutual obligations of the contracting authority and future service provider are defined.These conditions amplify and supplement, if necessary, the General Conditions governing the contract. Unless the Special Conditions provide otherwise, the General Conditions remain fully applicable. The numbering of the articles of the Special Conditions is not consecutive but follows the numbering of the articles of the General Conditions. In exceptional cases, and with the authorisation of the competent Commission departments, other clauses may be introduced to cover specific situations

Technical Specifications

The Technical Specifications are the key elements of the tender package. The detailed description and technical characteristics of the goods are given, together with conditions for delivery (installation of equipment), warranty, and maintenance conditions and training, if needed. The technical specifications describe:

a) the quality levelsb) environmental performance (e.g. the specifications, where possible,

should take into consideration the latest developments in the area)c) design requirements (including accessibility for people with disabilities

and environmental aspects, in line with the latest developments in the area)

d) the levels and procedures of conformity assessment, including environmental aspects

e) fitness for usef ) technical details including, for supplies, the sales name and user

instructions, and, for all contracts, terminology, symbols, testing and test methods, packaging, marking and labelling (including environmental labelling, e.g. on energy consumption), production procedures and methods

Additional information

Administrative compliance grid, evaluation grid, tender application form, etc

Supply contracts – the evaluation process

The opening of the supply offers is public. The Evaluation Committee opens received tenders, announces the companies that gave the offer and the offer of each company, and verifies the receipt of guarantees.

Technical offer: This consists of a detailed description of supply in accordance with the technical specifications.

Financial offer: This includes the costs for supply and installation of the equipment, a description of the training for using the equipment, the contract for warranty and maintenance.

The technical evaluation consists of two phases:

1. Checking that the administrative requirements prescribed by the tender have been met

2. Checking that the technical offer satisfies the required specifications

Important: Supply Tender Compliance

The winning offer must:

• Fulfil the formal requirements prescribed by the tender

• Fulfil the minimum technical characteristics of the required goods

• Be the cheapest compliant offer (and within the budget limit)

WORKS CONTRACTS

Works contracts cover either the execution or both the execution and design, by whatever means, of a work corresponding to the requirements specified by the contracting authority. A work means “the outcome of building or civil engineering works that is sufficient of itself to fulfil an economic or technical function”.

Works contracts – content of the Tender Dossier

Publication of procurement notice: As well as contract forecasts, all works contracts of €5 million or more must be the subject of an officially published procurement notice. The European Commission (acting on behalf of the contracting authority) is responsible for publishing the notice in the Official Journal of the European Union and on the EuropeAid website. If the procurement notice is published locally, the contracting authority must arrange local publication directly.

In general terms, the Works Tender Dossier has the following content:

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Table 1.8: Content of a Works Tender Dossier

Volume 1: Instructions to Tenderer and Tender Forms

The document defines the rules for tender participation and provides administrative information, including a list of the administrative and financial references required, which are part of the selection and award criteria. It specifies the type of work contract (for all kind of works, including buildings, roads, bridges, infrastructure, etc). The instructions contain information related to: General Instructions (financing, participation), Tender documents, Tender preparation, Submission of tenders, Opening and evaluation of tenders, Contract Award (Award criteria, Notification of award), Contract clarifications, Ethics clauses, Appeals, etc.

Volume 2: Draft Contract and Conditions

The contract is a legally enforceable agreement between two or more parties, where the mutual obligations of the contracting authority and future service provider are defined. The conditions of contracts for works may vary depending on their technical nature and on the financial and managerial objectives of the contracting authority.The usual draft contract contains information related to: Preliminary provisions, Obligations of the contracting authority, Obligation of the contractor, Commencement and delays, Materials and workmanship, Payments, Acceptance and defects liability, Breach of contract and termination, Settlement of disputes, Final provisions.

Volume 3: Technical Specifications (TS)

The TS indicate, where applicable, lot by lot, the exact nature and performance characteristics of the works. It is essential that the performance characteristics correspond with the intended purpose. The purpose of the TS is to define the required works precisely. The minimum quality standards, defined by the TS, will enable the Evaluation Committee to determine which tenders are technically compliant. Unless warranted by the nature of the contract, the TS must not mention or describe products of a given brand or origin, thus favouring or excluding certain products.

Volume 4: Model Financial Bid (MFB)

The MFB defines the mode of payments to be established between the contracting authority and a contractor during execution of the works.

Volume 5: Design Documents and Drawings

A list of drawings and all design documents (technical drawings)

The tender documents must clearly state whether a firm, non-revisable price must be quoted. A price revision clause might be justified; works contracts are commonly subject to price revision. If that is the case, it is recommended that a price revision formula, following the models established in the Special Conditions, be included.

Works contracts – the evaluation process

The selection criteria concern the tenderer’s capacity to execute similar contracts, with particular reference to works executed in recent years.

The selection procedure involves:

4. Eliminating tenderers who are ineligible5. Checking that the tenderer’s financial situation (financial and economic

capacity) is sound, as backed up: for example, by balance sheets and turnover for the previous three years, if specifically required in the tender dossier

6. Verifying the tenderer’s technical and professional capacities; for example, by looking at their average annual staffing levels, the size and professional experience of their management, main services performed, supplies delivered and works carried out in the field in question in recent years

The criteria should be precise, non-discriminatory and not prejudicial to fair competition. No criteria specified in the tender dossier can be modified during the procedure. The technical evaluation will be based on the evaluation grid published in the tender dossier, which must not be modified in any way during the evaluation process. Given the wide variety of works and their technical nature, the grid must be individually developed for each tender in a yes/no format to allow clear assessment of whether or not the offer responds to the technical requirements of the tender dossier.

Important: Price

The sole award criterion applied to administratively and technically compliant tenders is price or, in exceptional cases and after derogation by the relevant services of the European Commission, the best value for money.

GRANTS

The Commission awards money in the form of grants in order to implement projects or activities in relation to EU policies. These grants may be awarded within fields as diverse as research, education, health, consumer protection, protection of the environment, humanitarian aid, etc.

The grant beneficiaries are mainly private or public organisations, and exceptionally individuals, chosen by the European Commission for their capacity to implement the projects concerned.

Since grants cover a diverse range of fields, the specific conditions that need to be fulfilled vary from one field to another. It is therefore important to consult carefully the rules of each grant programme. However, some basic principles apply in every case:

• Grants are a form of complementary financing. The EU does not finance projects up to 100%; only projects taking place outside the EU may be financed in full.

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• Grants enable a given operation to break even financially and should not lead to a profit for their beneficiaries

• Grants cannot be awarded retroactively for actions already completed.

In addition, only one grant may be awarded for the same action per beneficiary.

Grants are not awarded on a case-by-case basis. Instead, they are subject to annual programming. Before 31 March each year, the Commission departments that manage grant programmes publish their annual work programme. The work programme fixes the broad outlines of the grants envisaged over the year (area of activity, objectives, timetable, available budget, award conditions, etc). By consulting these work programmes, you may identify the fields that interest you.

Subsequently, the Commission departments publish calls for proposals on their internet sites; these invite candidates to present, within a given deadline, a proposal for action that corresponds to the objectives pursued and fulfils the required conditions. These calls for proposals can also be published in the Official Journal of the European Union – C series.

All applications are examined and evaluated on the basis of criteria that have clearly been announced in the calls for proposals, while ensuring equal treatment; candidates are individually informed of the final decision concerning their proposal.

In exceptional cases, grants are awarded directly to certain beneficiaries without a call for proposals. This may be due to their specific competences or characteristics – whereby they are the sole beneficiaries for certain actions (situations of monopoly) – or to the emergency nature of the action (humanitarian aid in particular). As grants are made with public money, the European Commission applies the principle of transparency. Thus, by 30 June of each year, the Commission departments publish on their internet sites the list of grants they awarded during the previous year, with the exception of those awarded in the form of scholarships to individuals.

The grant is expressed in terms of a percentage and a maximum amount of the eligible costs of the action actually incurred by the beneficiary. The contribution may further be limited by a percentage of the total accepted costs of the action.

There are strict rules governing the way in which grants are awarded. The award of grants is subject to the principles of programming, transparency and equal treatment. An action eligible to receive grant funding must be clearly identified. No action may be split for the purpose of evading compliance with the rules laid down in PRAG.

Important rules include those that define the eligibility criteria for the applicants. As with procurement contracts, these are: the rule on nationality, the rule on origin of goods, and the rule that describes grounds for exclusion.

Grants must be programmed by the contracting authority with clearly defined objectives. The annual work programme must be published, by budget heading or programme, on the internet site of the contracting authority (or any other appropriate media) and on the EuropeAid website as appropriate, following the PRAG template.

The availability of grants must be publicised widely and in a transparent and easily accessible way. The work programme will be implemented through the publication of calls for proposals. All grants awarded in the course of a financial year are published annually, with due observance of the requirements of confidentiality and security.

The grant award process must be completely impartial (equal treatment). This means, notably, that the proposals must be evaluated by an Evaluation Committee, with the advice of assessors where appropriate, using the published eligibility and evaluation (selection and award) criteria.

Grants – the main steps and key documents

The Guidelines for Applicants (which include the application form and other annexes) explain the purpose of the Call for Proposals, the rules on the eligibility of applicants and partners, the types of action and costs which are eligible for financing, and the evaluation (selection and award) criteria. The guidelines also contain instructions on how to fill in the application form, what to annex to it, and what procedures to follow for applying. They outline the evaluation process that will follow (including an indicative timetable) and the contractual conditions which will apply to successful applicants.

The guidelines should set out clearly and in detail the objectives and priorities of the call for proposals, and give particular attention to the eligibility criteria. The guidelines as well as any modifications to them must be published. The information published will become binding on the Evaluation Committee once the date for submission has elapsed.

The application form to be completed by applicants comprises:

• a concept note• information about the action proposed, including its budget• information about the applicant• information about any partners

Call for proposals: Grants must be awarded following the publication of a call for proposals, which is always published on the EuropeAid website. A call for proposals must also be published locally where it is not organised by a service of the European Commission headquarters.

Except in exceptional cases, calls for proposals must by default be ‘restricted’ – that is, all applicants may ask to take part but only the applicants shortlisted (on the basis of

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a Concept Note in response to the published Guidelines for Applicants) will be invited to submit a full proposal. Calls for proposals may be ‘open’ only in exceptional cases.

Important: Publicity

To ensure the widest possible participation and the requisite transparency, Guidelines for Applicants are included with every Call for Proposals. This document should be read carefully; failure to comply with the basic conditions will normally result in disqualification or rejection, and a waste of effort by the bidding entities.

Grants – the evaluation process

Eligibility criteria: The eligibility criteria determine the conditions for participating in a call for proposals. These criteria are established with due regard for the objectives of the action and comply with the principles of transparency and non-discrimination.

Evaluation criteria: selection and award

The evaluation criteria consist of selection and award criteria, all of which are defined in the evaluation grids.

• The selection criteria are used to assess the applicant’s financial and operational capacity to complete the proposed action. The applicant must have stable and sufficient sources of funding to maintain activity throughout the period during which the action is being carried out, and to participate, where appropriate, in its funding. Applicants and their partners must also have the necessary professional competencies and qualifications to complete the proposed action.

• The award criteria are used to assess the quality of proposals against the set objectives and priorities, so that grants are awarded to the actions that maximise the overall effectiveness of the call for proposals.

All eligibility and evaluation criteria specified in the call for proposals cannot be changed in the course of the procedure. The criteria should be precise and non-discriminatory.

The minimum period between the date of publication of the Guidelines for Applicants and the deadline for submission of proposals is 90 days. However, when the maximum size of each grant to be awarded within the programme is less than or equal to €100,000, the minimum period is 60 days. In exceptional cases, a shorter deadline may be allowed as a derogation.

Evaluation process: The evaluation process starts with the receipt of the concept notes/proposals by the contracting authority, and ends with the decision to award grants to the selected applicants. The procedure includes the steps set out in Table 1.9.

Table 1.9: The grant evaluation process

Receipt and registration of proposalsOpening session and administrative check

All proposals should be opened in an opening session at which the registration details are checked and completed and the proposals numbered. The proposals that have met the deadline are then subject to an administrative check as to whether they have responded ‘yes’ to all the criteria mentioned in the checklist. Incomplete dossiers may be disqualified from the evaluation process.

Evaluation of the concept notes

The concept notes submitted by the deadline and that have passed the administrative check will undergo an evaluation of the relevance and design of the action on the basis of an evaluation grid.

Evaluation of the application form

The quality of the application forms must be assessed on the basis of the evaluation grid containing the selection and award criteria. Comments are made for each heading on the basis of the questions and criteria used for that heading.

Verification of eligibility This assessment must be carried out using the declaration by the applicant, the required supporting documents, and the criteria set out in the Guidelines for Applicants. Under no circumstances may assessors or members of the Evaluation Committee change this declaration. The committee must check:

• Is the declaration by the applicant in conformity with the supporting documents requested?

• Are the applicant, the partners and the action eligible?Conclusions of the Evaluation Committee

The Evaluation Committee will draw up its recommendations after the assessors have examined all the proposals.

The report of the award decision covers the subject of the decision, the overall amount of the grant awarded, the approved evaluation report and, if appropriate, the grounds for a decision by the contracting authority to depart from the recommendations made by the Evaluation Committee in respect of a particular proposal.

Subject to the contracting authority’s legislation on access to documents, the entire procedure, from the drawing-up of the call for proposals to the selection of successful applicants, is confidential. The Evaluation Committee’s decisions are collective and its deliberations must remain secret. The committee members are bound to secrecy.

Opportunities in secondary procurement

Contracts related to procurements to be carried out by the grant beneficiaries are called secondary procurement contracts. They should be implemented in accordance with the PRAG principles of transparency, confidentiality, fair competition and equal treatment, and should follow the instructions in the manuals prepared for the particular grant programme.

Important:

By following existing grant schemes, private companies can find numerous opportunities for secondary procurement under supply and works contracts being implemented by grant beneficiaries using PRAG procedures.

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Ethics issues for all types of contracts

Companies are expected to respect a number of ethics standards, including:

• Any attempt by a tenderer to obtain confidential information, enter into unlawful agreements with competitors or influence the Evaluation Committee or the contracting authority during the process of examining, clarifying, evaluating and comparing tenders will lead to the rejection of its candidacy or tender.

• A potential candidate or tenderer must declare that it is not subject to current or potential conflict of interest, and that it has no disqualifying links with other tenderers or parties involved in the project. Should either situation arise during performance of a contract, the contractor must immediately inform the contracting authority.

• Civil servants or other officials of the public administration of the beneficiary country, regardless of their administrative situation, must not be engaged as experts by tenderers unless the prior approval of the contracting authority has been obtained.

• The contractor must at all times act impartially and as a faithful adviser in accordance with the code of conduct of its profession. It must retain from making public statements about the project or services without the contracting authority’s prior approval. It may not commit the contracting authority in any way without its prior written consent.

• For the duration of the contract, the contractor and its staff must respect human rights and undertake not to offend the political, cultural and religious mores of the beneficiary state.

• The contractor may accept no payment connected with the contract other than that provided for therein. The contractor and its staff must not exercise any activity or receive any advantage inconsistent with their obligations to the contracting authority.

• The contractor and its staff are bound to maintain professional secrecy for the entire duration of the contract and after its completion. All reports and documents drawn up or received by the contractor during the performance of the contract are confidential.

• The contract governs the contracting parties’ use of all reports and documents drawn up, received or presented by them during the performance of the contract.

• The contractor must refrain from any relationship likely to compromise its independence or that of its staff. If the contractor ceases to be independent, the contracting authority may, regardless of injury, terminate the contract without further notice and without the contractor having any claim to compensation.

CONCLUSION

Long-term benefits of mastering the process

The process of EU accession presents Serbia with big challenges, considering the need to adjust to the acquis communautaire (the total body of EU legislation), but it also opens up the opportunity to benefit from the financial resources of the European Union budget.

By joining the EU as a candidate country and eventually as a full member, Serbia will have access to substantial financial resources to support developmental goals and

speed up the growth and development of the Serbian economy and society as a whole. To use these opportunities in the best way, it is important to understand the workings of the IPA and other available EU funds.

It is important to note that the principles and methods behind the procedures set out in PRAG – all based on EU legislation – greatly resemble the principles and methods of standard procurement that are applied within the EU in general and in its member states. Thus, in the perspective of Serbia being a member of the EU in the near future, the individual and institutional effort put into mastering the procurement procedures is a long-term investment. All the skills acquired today will be valuable in years to come.

ANNEXES

Key documents

IPA Council Regulation (EC) No 1085/2006

Commission Regulation (EU) No. 80/2010 amending regulation (EC) No. 718/2007 Implementing Council regulation (EC) No. 1085/2006The Multi-Annual Indicative Financial Framework (MIFF) for the IPA

Multi-Annual Planning Document

Key links

Getaway to the European Union http://europa.eu/

European Commission http://ec.europa.eu/

European Commission Enlargement

http://ec.europa.eu/enlargement

European Commission External Cooperation Programmes

http://ec.europa.eu/europeaid

European Parliament http://www.europarl.europa.eu/

Council of Europe http://www.coe.int/

Delegation of the European Union to the Republic of Serbia

http://www.europa.org.rs/

Serbian Government http://www.srbija.gov.rs/

EuropeAid tenders https://webgate.ec.europa.eu/europeaid/online-services/index.cfm?do=publi.welcome

PRAG http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm

SEIO http://www.seio.gov.rs/

Serbian Chamber of Commerce https://www.pks.rs

ISDACON http://www.evropa.gov.rs

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IPA budget

Multi-Annual Indicative Financial Framework (MIFF)12, Breakdown of the IPA Assistance Envelope for 2007–2013 into allocations by beneficiary and Component (€)

Component 2007 2008 2009 2010 2011 2012 2013

SERBIATransition Assistance and Institution Building

181,496 179,441 182,552 186,207 189,957 193,802 203,101

Cross-border Co-operation 8,204 11,459 12,248 11,752 11,923 12,097 11,631

TOTAL 189,700 190,900 194,800 197,958 201,880 205,899 214,732

CROATIATransition Assistance and Institution Building

49,612 45,374 45,601 39,483 39,959 40,872 38,514

Cross-borderCo-operation 9,688 14,726 15,899 15,601 15,869 16,143 16,698

Regional Development 45,050 47,600 49,700 56,800 58,200 59,348 62,000

Human Resources Development

11,377 12,700 14,200 15,700 16,000 16,040 18,000

Rural Development 25,500 25,600 25,800 26,000 26,500 27,268 27,700

TOTAL 141,227 146,000 151,200 153,585 156,528 159,671 162,912

FORMER YUGOSLAV REPUBLIC of MACEDONIATransition Assistance and Institution Building

41,642 41,122 39,311 36,917 28,803 28,207 27,941




3,200 6,000 7,100 8,400 8,800 10,380 11,200


TOTAL 58,500 70,200 81,782 91,685 98,028 105,071 117,212

ICELANDTransition Assistance and Institution Building

0 0 0 0 10,000 12,000 6,000

TOTAL 0 0 0 0 10,000 12,000 6,000

TURKEYTransition Assistance and Institution Building

256,703 256,125 239,551 217,810 228,621 233,900 238,326




50,200 52,900 55,600 63,400 77,600 89,930 96,000


TOTAL 497,200 538,700 566,400 653,700 781,900 899,500 935,500

ALBANIATransition Assistance and Institution Building

54,319 65,238 71,360 84,200 84,302 85,988 87,446


TOTAL 61,000 73,820 81,183 94,173 94,428 96,271 98,112

BOSNIA-HERZEGOVINATransition Assistance and Institution Building

58,136 69,855 83,900 100,688 102,682 104,673 106,870


TOTAL 62,100 74,800 89,108 105,385 107,428 109,471 111,812

MONTENEGROTransition Assistance and Institution Building

27,491 28,113 29,832 29,839 29,844 30,446 30,996


TOTAL 31,400 32,600 34,500 33,522 34,154 34,785 35,415

12 From “Communication from the Commission to the Council and the European Parliament and the Council, Instrument for Pre-Accession (IPA) Revised Multi-Annual Indicative Financial Framework for 2011-20013”; Brussels, 10 November 2010

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Component 2007 2008 2009 2010 2011 2012 2013

KOSOVOTransition Assistance and Institution Building

68,300 184,700 106,100 66,100 65,828 67,071 70,712

Cross-border Co-operation 0 0 0 1,200 2,872 2,929 2,988

TOTAL 68,300 184,700 106,100 67,300 68,700 70,000 73,700

TOTAL COUNTRY PROGRAMMES 1,109,427 1,311,720 1,305,073 1,397,307 1,553,047 1,692,668 1,755,395

MULTI-BENEFICIARY PROGRAMMESTransition Assistance and Institution Building

129,571 137,737 188,868 141,707 186,269 156,860 177,845

Cross-border Co-operation 0 0 0 4,922 5,293 5,672 6,059

SUPPORT EXPENDITURE

44,793 51,950 47,648 47,393 52,184 80,500 84,500

GRAND TOTAL 1,283,791 1,501,407 1,541,588 1,591,328 1,796,793 1,935,700 2,023,800

GLOSSARY

The Glossary explains in detail terms that are used in the main text of this Guide. See also Table 1.1, which defines IPA structures and authorities in Serbia.

Term Abbrv. Description

Accreditation In its strict sense, this term refers to the formal acknowledgement that a body or bodies meet the requirements contained in the IPA Implementing Regulation for the administration of IPA Components or IPA-financed programmes under decentralised management. It is issued to the body or bodies in question by a superior institution – either the National Authorising Officer or Competent Accrediting Officer (in which case, it is termed a “national accreditation”) or by the EC (in which case, it is a Conferral of Management) in the context of Stages 4 of 5 of the DIS Roadmap. During programme implementation, accreditation can be suspended or withdrawn by the institution which issued it, if it is found that the relevant body or bodies no longer meet the requirements of the IPA Implementing Regulation. The term “accreditation” is often also used in a looser sense to refer to the EC’s Conferral of Management and, by extension, the whole DIS Roadmap; it is in this sense that “DIS accreditation” or “accreditation process” should be understood.

Acquis communautaire

The French term commonly used to denote the total body of EU legislation, including all treaties, regulations, directives passed by EU institutions and all court decisions by the European Court of Justice

Bidder Natural and legal persons who submit a tender or application to a tender procedure and who, if successful, may become a service provider, supplier or contractor depending on the nature of the particular tender.

Candidate Country

CC As implied by the term, a CC is a candidate for accession to the EU. CC status is conferred by the European Council on the basis of an opinion from the EC, drawn up following an application for EU membership by the country concerned. Any European country may apply for membership if it respects the principles of liberty, democracy, respect for human rights and fundamental freedoms, as well as the rule of law. All countries in the Western Balkans (plus Iceland and Turkey) are currently, or are likely to become, CCs.

Centralised Implementation System

CIS Under centralised management, programmes are administered directly by the EC, either by Brussels, through EU Delegations or by a specially established EU agency.

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Co-financing EU funding of programmes and projects usually takes the form of co-financing the eligible expenditure (i.e. the EU does not pay for 100% of a project); the remainder has to be covered by public funds supplied by the beneficiary, though private money can sometimes be used if eligible expenditure is defined as total expenditure rather than public expenditure. For IPA, the default EU co-financing rates, sometimes referred to as “aid intensities” or “intervention rates”, vary between Components (85% for I to IV, 75% for V). In certain cases, however, exceptions can be made and the EU co-financing rate is raised, sometimes to 100%. Details per Component are to be found in Articles 38, 67, 90, 149, 153 and 173 of the IPA Implementing Regulation. The term “co-financing” obviously applies not only to funds supplied by the EU, but also to the remainder provided by a beneficiary (in most cases national public funds provided from state, regional or local budgets). EU, national public and non-public funds can be delivered via joint co-financing or parallel co-financing.

Cohesion Fund CF The Cohesion Fund is one of the EU’s funding instruments that contributes to interventions in the field of the environment and trans-European transport networks (TEN-T). It applies to Member States with a Gross National Income (GNI) of less than 90% of the Community average and serves to reduce their economic and social shortfall, as well as to stabilise their economy. It can intervene in the Convergence objective of EU regional policy. For the period 2007-2013, the budget allocated to regional policy amounts to around €348 billion, comprising €278 billion for the Structural Funds and €70 billion for the Cohesion Fund. For further information seehttp://ec.europa.eu/regional_policy/funds/cf

Community Assistance for Reconstruction, Development and Stabilisation

CARDS In the Financial Perspective 2000-2006, the EU assistance programme aiming at helping the countries of the Stabilisation and Association process (SAP): Albania, Bosnia-Herzegovina, Croatia, the then Yugoslavia, and Macedonia in their rapprochement with EU. The initial budget of the programme amounted to €4.65 billion, which was increased by €210 million, by the Thessalonica decision in 2003. Its legal basis lies in Regulation (EC) No. 2666/2000. Areas of intervention include: alleviation of the consequences of the war, democratisation and institution-building, sustainable economic development, social development, regional cooperation among beneficiary countries and transnational, regional and cross-border cooperation. In the programming period 2007-2013, CARDS has been replaced by IPA. For more information seehttp://europa.eu/legislation_summaries/enlargement/western_balkans/r18002_en.htm

Consultant A public or private organisation consortium or individual with whom the Contracting Authority concludes a service contract. A firm, consortium or individual to whom a service contract is awarded.

Contract A legally binding agreement concluded between a Contracting Authority and a contractor or grant beneficiary – the last stage in a procurement procedure. Contracts can be for services, supplies or works.

Contract award procedure

The procedure followed by the Contracting Authority to identify a consultant/supplier/contractor/beneficiary to provide defined services/ supplies/works/grants and conclude a contract with them. In the context of the pre-accession funds, the document that guides contract award procedures is PRAG.

Contract budget

A breakdown of the costs of performing the contract. The total of these costs is the contract value.

Contracting Authority

A Contracting Authority is the body responsible for procuring services, supplies or works and running grant schemes, for awarding the resulting contracts and making payments to contractors or grant beneficiaries. For IPA Components I and II under centralised management, the Contracting Authority is the EU Delegation. For IPA Components I and II under decentralised management, as well as Components III and IV, it is the Department for Contracting and Financing of EU Funded Projects. For IPA Component V it is the IPARD Agency.

Contractor A person or organisation to whom/which a contract for services, supplies or works is awarded.

Contract value The amount stated in the contract representing the total amount payable for the provision of the services/supplies/works.

Cross-Border Cooperation Programmes

CBC CBC programmes aim at, inter alia, improving economic and social cohesion within, or addressing issues (e.g. environmental protection, cultural heritage) common to regions on either side of a single land or maritime border. Projects must have a strong cross-border character, and thus usually involve organisations from both sides of a given border. Countries participating in CBC programmes may be two Member States (MSs), one Member State and one CC/potential CC, or two CCs/potential CCs. In the first case they are funded under the European Territorial Cooperation objective of the European Regional Development Fund; in the latter two cases, they are financed by IPA. In exceptional cases, they may involve more than two countries (e.g. the Adriatic programme which covers all countries along Italy’s eastern maritime border). For more information, seehttp://ec.europa.eu/regional_policy/cooperation/crossborder.

Decentralised Implementation System

DIS The implementation system of the EC external aid programmes where management responsibilities have been conferred to the beneficiary country. The Commission exercises a systematic ex-ante control of the procurement and contracting processes and ex-post control of all processes whilst retaining an overall final responsibility for general budget execution.

Directorate-General

DG Just as national administrations are divided into ministries, the EC is divided into DGs. Each DG is headed by a Director-General and covers a specific policy area or service. For a complete list of DGs and links to their public websites, see http://ec.europa.eu/about/ds_en.htm. Those most relevant to IPA are listed below, while the portfolios they manage are indicated in their full titles.

Eligibility Criteria

A set of conditions for a candidate in order to take part in a tender/call for proposal and potentially to be awarded an EC-funded contract.

EU Funding instrument

This is a funding mechanism established by the EU which finances programmes proposed by and agreed with beneficiary countries. They include the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Guarantee Fund, the European Agricultural Fund for Rural Development, and IPA. Since they are often loosely, but incorrectly, referred to as “programmes” (e.g. “the IPA programme”), they should not be confused with the term “programme” when used in its strict sense.

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EuropeAid Directorate General (DG) of the European Commission in charge of implementing and monitoring external aid instruments of the EC which are funded by the European Community budget and the European Development Fund.

European Commission

EC The executive arm of the European Union with powers of initiative, implementation, management and control. As such it is also responsible for the implementation of the EU programmes. In 2007, it was composed of 27 independent members, including a President and Vice-President appointed for a five-year term.

European Union Delegation

EUD The EU has local offices in countries within the EU (EU Representations) and outside (EU Delegations). In CCs and potential CCs, they are responsible for monitoring the political situation (including progress towards meeting the accession criteria) and administering EU funds (i.e. IPA). With regard to the latter, their duties differ according to management mode (i.e. centralised management, decentralised management with ex-ante controls, decentralised management without ex-ante controls). Prior to the entry into force of the Lisbon Treaty on 1 December 2009, EUDs were European Commission Delegations (ECDs). For the EUD in Serbia, see http://www.europa.rs

European Parliament

EP The EU body representing EU citizens. Its members are directly elected and it is responsible, inter alia, for debating and approving EU legislation. For more information seehttp://www.europarl.europa.eu/news/public/default_en.htm

European Regional Development Fund

ERDF The ERDF, with a budget of €201 billion in the period 2007-2013, is one of the EU’s Structural Funds. The ERDF aims to strengthen economic and social cohesion in the European Union by correcting imbalances between its regions. In short, the ERDF finances direct aid to investments in companies (in particular small and medium-sized enterprises) to create sustainable jobs; infrastructures linked notably to research and innovation, telecommunications, environment, energy and transport; financial instruments (capital risk funds, local development funds, etc.) to support regional and local development and to foster cooperation between towns and regions; technical assistance measures. The ERDF can intervene in the three objectives of regional policy: Convergence, Regional competitiveness and employment, and European territorial cooperation. For more information, see http://ec.europa.eu/regional_policy/funds/feder

European Social Fund

ESF The ESF is one of the EU’s Structural Funds, set up to reduce differences in prosperity and living standards across EU Member States and regions, and therefore promote economic and social cohesion. The ESF is devoted to promoting employment in the EU and can intervene in two objectives of EU regional policy – Convergence, and Regional competitiveness and employment. It helps Member States make Europe’s workforce and companies better equipped to face new, global challenges. The current programming cycle of the ESF runs from 2007 to 2013 under the banner ‘Investing in People’. Over this period, it is investing around €75 billion – close to 10% of the EU budget – on employment-enhancing projects. Funding is given to six priority areas: improving human capital (34% of total funding); improving access to employment and sustainability (30%); increasing the adaptability of workers and firms, enterprises and entrepreneurs (18%); improving the social inclusion of less-favoured persons (14%); strengthening institutional capacity at national, regional and local levels (3%); and mobilisation for reforms in the fields of employment and inclusion (1%). In any given region, the actual distribution of funds will vary to reflect local and regional priorities. All six priorities are applicable to both the convergence and regional competitiveness and employment objectives; however, convergence would normally place an emphasis on the ‘improving human capital’ priority. For more information, see http://ec.europa.eu/employment_social/esf

European Union EU The economic and political association of 27 European countries.Evaluation A periodic assessment of the efficiency, effectiveness, impact,

sustainability and relevance of a programme/project in a context of stated objectives. It is usually undertaken as an independent analysis of the environment, objectives, results, activities and means deployed, with a view to drawing lessons that may guide future decision-making. It can be carried out as ex-ante evaluation before the implementation, interim evaluation during the implementation and ex-post evaluation after the implementation of the programme/project.

Evaluation Committee

A committee appointed by a Contracting Authority to evaluate bids or grant applications submitted by tenderers or grant applicants. In line with the PRAG rules applicable for IPA, it comprises a non-voting chairperson, a non-voting secretary and an uneven number of voting members (minimum of three), and results in an evaluation report.

Expression of Interest

EoI A PRAG form completed by consortia, companies or persons in response to a procurement notice published by a Contracting Authority under the restricted tender procedure.

External actions Programmes which the EU finances in third countries. Examples include geographically defined programmes such as CARDS (for SAP countries) or MEDA (for Mediterranean countries). DG RELEX and EuropeAid are in charge of these programmes in the Commission. Pre-accession programmes are also considered third-country programmes by their nature, but they are in the area of responsibility of DG ELARG.

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Final Beneficiary FB Final Beneficiaries are those who, beyond the level of the target groups, benefit from the project in the long term, e.g. children, due to increased spending on health and education; consumers, due to improved agricultural production and marketing, or the state, due to increased export earnings from improved agricultural production and marketing.Under IPA, an FB is defined as “a body or a firm, whether public or private, responsible for initiating or initiating and implementing operations” (see IPA Implementing Regulation, Article 1(8)). In practical terms, this means the body responsible for launching procurement procedures, signing contracts and making payments to contractors for services, supplies and works – i.e. the Contracting Authority. In the case of grants, the FB is considered the grant beneficiary, rather than the Contracting Authority, since it is responsible for procurement, contracting and payment under the grant agreement. It should be noted that the PRAG uses a different definition of ‘final beneficiary’ (“those who will benefit from the project in the long term at the level of the society or sector at large”).

Financial Offer The part of a tender which contains all financial elements of the tender, including its summary budget and any detailed price breakdown or cash-flow forecast required by the tender dossier.

Financing Agreement

FA Once a programme to receive EU financing has been adopted by the EC by way of a Commission Decision, a bilateral agreement must be concluded between the EC and the beneficiary country concerned, if it lies outside the EU. Such agreements are termed Financing Agreements and they represent the culmination of the programming process. FAs for programmes financed under IPA relate to EU funding either from a single budgetary year (annual FAs) or from a number of budgetary years (multi-annual FAs). FAs are annual for IPA Components I, IIb and IIc, and multi-annual for IIa, III, IV and V. An integral part of each FA is its annexes, which include the Framework Agreement and the documentation which was attached to the Commission Decision adopting the programme concerned (this varies by IPA Component – see Commission Decision).

Framework Agreement

FMA To make regulations relevant to EU funding instruments binding outside the EU, the EC must conclude bilateral agreements with the beneficiary countries concerned. Such agreements are termed Framework Agreements. FWAs concluded with CCs and potential CCs relate to IPA (all Components) and include provisions contained within the Financial Regulation, the Financial Regulation Implementing Regulation, the IPA Regulation and the IPA Implementing Regulation. The FWA for Serbia was signed on 29 November 2007 and ratified on 26 December 2007.

Framework Contract

FWC The framework contract is an instrument for fast and transparent recruiting of experts for all activities within the project cycle. It contains several thematic lots. Several contractors are selected for each lot. They are consortia represented by a lead firm. The leading firm has been designated by the other partners to act on their behalf for the purposes of the contract and is the only one authorised to commit the consortium. The only valid contacts for contractual purposes are contacts with the lead firm. The framework contract is a zero-value contract awarded by the EC to a consortium or company for the provision of future services world-wide at short notice. Such contracts are divided into different issue areas (e.g. rural development, health), termed “lots”. Contracting Authorities solicit bids from a number of consortia or companies in a given lot by dispatching a request for services. Once a winning bid has been selected, an order for services is concluded between the Contracting Authority and the relevant framework contractor, against which payments are made for the provision of services. The framework contract procedures can only be used for services under €200,000. For more details see http://ec.europa.eu/europeaid/work/framework-contract/index_en.htm

Framework Contractor

A company or a consortium chosen by the EC to provide services under the framework contract.

Instrument for Pre-Accession Assistance

IPA The IPA is the EU’s financial instrument for CCs and potential CCs, spans the EU’s current Financial Perspective (i.e. the budgets from 2007 to 2013) and aims at helping CCs and potential CCs on the road to accession. It is divided into five Components, the first two being open to CCs and potential CCs, the last three being open only to CCs and only under the decentralised management mode. Component I (Transition Assistance and Institution Building {TAIB}) focuses directly on helping CCs and potential CCs to meet the accession criteria, while Component II (Cross-Border Cooperation {CBC}) funds their participation in Cross-Border Cooperation and Trans-National Cooperation programmes; the latter prefigures programmes within the EU under the European Territorial Cooperation objective of the European Regional Development Fund. Components III (Regional Development), IV (Human Resources Development) and V (Rural Development) aim at preparing CCs to manage the major EU funding instruments after accession, effectively and efficiently – respectively, the Cohesion Fund and the European Regional Development Fund (IPA Component III), the European Social Fund (IPA Component IV), and the European Agricultural Fund for Rural Development (IPA Component V). The IPA was established in 2007 by the IPA Regulation; more detailed provisions on management and implementation are contained within the IPA Implementing Regulation. EC oversight of IPA as a whole rests with DG ELARG as the Directorate-General responsible for accession.

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Instrument for Structural Policies for Pre-Accession

ISPA A Pre-Accession Programme in the Financial Perspective 2000-2006 established by the Council Regulation (EC) No 1267/1999. It finances infrastructure investment in the area of transport and environment for priorities such as road and rail infrastructure, wastewater management, water supply and sewerage. It prepares a candidate country for use of the Cohesion Fund after accession. In the Financial Perspective 2007-2013, ISPA is replaced by Component III of the IPA Programme – IPA Regional Development.

IPA Regulation The IPA Regulation (Council Regulation 1085/2006 of 17 July 2006) established the IPA as of 1 January 2007 and constitutes its legal basis. Its text can be found by consulting the Official Journal. Relevant provisions in the IPA Regulation become binding on IPA beneficiary countries, once they have concluded a Framework Agreement with the EC.

IPA Implementing Regulation

IPA IR The IPA IR (Commission Regulation 718/2007 of 12 June 2007) provides detailed rules on the implementation of the IPA Regulation, and, as such, is a primary reference document for the management and implementation of IPA as a whole and of individual Components and programmes. It has been amended once (see Commission Regulation 80/2010 of 28 January 2010). Its text can be found by consulting the Official Journal – see http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32007R0718:EN:NOTGeneral provisions in the IPA IR become binding on IPA beneficiary countries, once they have concluded a Framework Agreement with the EC. Provisions particular to a Component become binding on conclusion of a Financing Agreement.

Multi-annual Indicative Planning Document

MIPD The MIPD is the link between the Multi-Annual Indicative Financial Framework (MIFF), which sets out overall allocations for IPA beneficiary countries per Component, and the EU’s priorities as set out in Accession or European Partnerships and Regular Reports. It presents allocations per Component in more detail than the MIFF (e.g. for each Cross-Border Cooperation and Trans-National Cooperation programme under Component II), as well as the EU’s objectives for IPA assistance in a given beneficiary country. Developed by the EC in consultation with the country in question, it covers the anticipated funding for the three years ahead and is reviewed annually on a rolling basis (e.g. the MIPD for 2008 to 2010 for Serbia was reviewed at the end of 2008 and a new one for 2009 to 2011 drawn up). Programmes developed under IPA Components have to be aligned with the latest MIPD.

National Development Plan

NDP In certain cases a Member State develops a document setting out its total investment priorities and associated measures over a single financial perspective. A subset of the priorities and measures identified are then covered by the National Strategic Reference Framework and the individual Operating Programmes under Structural Funds.

National Fund NF One of the institutions required by the IPA Implementing Regulation for the administration of IPA under decentralised management, the NF supports the National Authorising Officer (NAO) in the performance of their duties. Its duties are outlined in Article 26 of the IPA Implementing Regulation. The NF, which is headed by the NAO, is an integral part of the management and control systems administering IPA programmes.

National IPA Coordinator

NIPAC The NIPAC, apart from Operating Structures for programmes under IPA Component IIb and IIc, is the only institution which has to be in place for IPA programmes implemented under both centralised and decentralised management. The NIPAC is responsible for the overall coordination and monitoring of EU assistance under all IPA Components, as well as for the programming of IPA Component I. He/she is supported by a secretariat. His/her duties are outlined in Articles 22 (for decentralised management) and 32 (for centralised management) of the IPA Implementing Regulation.

National Programme

Under IPA Component I, programmes are drawn up each year by beneficiary countries in consultation with the EC. With reference to the Accession or European Partnerships and Regular Reports, projects are identified and Log Frame Matrices (LFMs) and Project Fiches drafted. Once these have been agreed, the EC (DG ELARG) prepares a Financing Proposal (FP). The FP, Project Fiches and LFMs comprise the National Programme for a given year and are subject to intra- and inter-service consultation, review and approval by the IPA Management Committee, and adoption by Commission Decision. The Financing Agreements which are subsequently concluded between the EC and the beneficiary country in question contain the text of the relevant Financing Proposal in one of their annexes.

Objective Description of the aim(s) of a project or programme.Operating Structure

OS OSs have to be established for each IPA-financed programme (except those under IPA Component IIa) administered under decentralised management and are the primary institutions responsible for their management and implementation. They comprise “a body or a collection of bodies within the administration of the beneficiary country”, in accordance with Article 28 of the IPA Implementing Regulation, and are an integral part of the management and control systems administering IPA programmes. OS duties include: the development of programmes to be financed by IPA; procuring services, supplies and works; awarding grants; signing contracts; making payments to contractors or grant beneficiaries; verifying expenditure; monitoring programmes and projects, and reporting and following up irregularities. OSs usually comprise a minimum of two bodies, one taking charge of programming, monitoring and evaluation, the other being responsible for procurement, grant award, payment and verification of expenditure (i.e. the Contracting Authority). Overall responsibility for a programme is assumed by one of the bodies in the OS; the head of this body is designated the Head of the Operating Structure (HOS). Operational Agreements are concluded between each HOS and the other bodies in the relevant OS.

Operational Documents

Documents defined as guidance for implementation of a programme. They include various operational guides and books of procedures which enable responsible institutions to implement a programme in a coherent and transparent way and according to all the applicable rules.

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Operational Programme

OP OPs, a subset of programmes, are documents setting out the issues to be addressed, goals, targets, financing and implementation methods of interventions financed under the Structural Funds. Since they foreshadow Structural Fund EU funding instruments, OPs are also developed for programmes financed under IPA Components II, III and IV; for Component V, a Rural Development Programme, very similar in nature to OPs, is drafted. They are multi-annual (i.e. cover financing from a number of EU budgetary years) and, in the case of IPA, are developed by the relevant Operating Structure, in close consultation with the EC and the relevant stakeholders. Their preparation must take into account the principles underlying the planning and implementation of Structural Fund programmes – i.e. additionality, concentration, partnership and subsidiarity. OPs are divided into priority axes, each of which defines a global objective to attain; these are in turn sub-divided into measures. For IPA Components III and IV, measures are implemented through operations. For IPA, OPs are subject to intra- and inter-service consultation, review and approval by the IPA Management Committee, and the adoption of a Commission Decision. Financing Agreements are then concluded between the EC and beneficiary countries, since they lie outside the EU.

Poland and Hungary Aid for Restructuring of Economies

PHARE The EU funding instrument that supported CCs in meeting the accession criteria, corresponding to IPA Components I and II. It came to an end with the EU’s 2006 budget and was succeeded by IPA.

Potential Candidate Country

A potential CC is one which the EU has explicitly indicated as having a “European perspective”. These include all countries in the Western Balkans which are not already CCs.

Practical Guide to EC External Aid Contract Procedures

PRAG The PRAG contains the detailed procurement procedures and documents to be used for awarding contracts and grants with EU funds outside the EU itself (e.g. IPA-funded projects). It was developed in order to help Contracting Authorities in their application of the rather brief legally binding procurement rules (the Rules and Procedures for Service, Supply and Works Contracts Financed from the General Budget of the European Communities for the Purposes of Cooperation with Third Countries). While it is theoretically not a legally binding document (unless explicitly indicated in Financing Agreements), for practical purposes its procedures and documents are to be followed for IPA in almost all cases. In certain circumstances, deviations and derogations from the PRAG are possible, but only with explicit approval from the EU Delegation. The document and its annexes can be found at h t t p : / / e c . e u r o p a . e u / e u r o p e a i d / w o r k / p r o c e d u r e s /implementation/practical_guide/index_en.htm. Since it is amended from time to time, it is important to double-check that the latest procedures and documents are followed when running procurement procedures or grant schemes.

Pre-Accession Programmes

Programmes providing financial support to the EU enlargement policy. In the Financial Perspective 2000-2006 there are three Pre-Accession Programmes: PHARE for institution-building, ISPA for transport and environment infrastructure, and SAPARD for agriculture.In the Financial Perspective 2007-2013, they are replaced by a unified instrument called IPA.

Programme In the context of IPA, this term connotes a document laying out the objectives, results, projects (IPA Component I) or priority axes and measures (Components II, III, IV and V), and budget under an IPA Component. Since Component I programmes are related to the IPA allocation from a single EU budgetary year, they have to be developed annually. For the other Components, programmes are multi-annual (i.e. cover IPA allocations from more than one year), and thus only have to be developed once during an EU Financial Perspective. In consultation with the EC, they are developed by the beneficiary country(ies) during the programming process. In principle, a Component can be implemented via more than one programme, but, in the case of Serbia, this only applies to Component II, under which there are 8 programmes (see IPA Component II). Programmes are termed differently for the various Components: Component I has National Programmes, Components II, III and IV Operational Programmes, and Component V the Rural Development Programme (see the relevant entries in this glossary for more information). Each of these documents is subject to intra- and inter-service consultation, review and approval by the IPA Management Committee and adoption by Commission Decision. Since IPA beneficiary countries lie outside the EU, Financing Agreements (FAs) are concluded between the EC and the country in question; the documents comprising a programme are annexed to these FAs.

Programming This term corresponds to the first formal stage of the project cycle, as set forth in the Project Cycle Management (PCM) methodology; when programming IPA, however, it is also understood to include the 2 subsequent PCM stages: identification and formulation. During the programming process beneficiary countries identify priorities to be financed with EU assistance, with reference, inter alia, to Accession or European Partnerships, Regular Reports and the latest Multi-Annual Indicative Planning Document, as well as to their own needs. In consultation with the EC, they then draw up programmes which are divided into projects (Component I) or Priority Axes and Measures (Components II, III, IV and V); in line with the Log-Frame Matrix methodology, objectives, results, and indicators are defined for each project / Priority Axis / Measure, together with implementation modalities and budgets. Programmes are developed each year for Component I and once during a Financial Perspective for all others (since they are multi-annual). Once a programme has been agreed after intra- and inter-service consultation, it is reviewed and approved by the IPA Management Committee and adopted by Commission Decision. The programming process culminates in the conclusion of a Financing Agreement between the EC and IPA beneficiary country. The responsibility for programming rests with the Operating Structure for each Component, specifically with the Head of Operating Structure. It involves a significant amount of coordination, not only within and between the public bodies (usually ministries) to benefit from EU assistance, but with all stakeholders, such as economic, social, environmental and civil society organisations (see partnership consultation).

Project A series of activities aimed at bringing about clearly specified objectives within a defined time-period and with a defined budget.

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Project Fiche Only relevant to Component I, Project Fiches are the intermediary documents between the Financing Agreements (FAs) concluded for annual National Programmes and the documentation developed for procurement or grant award (e.g. terms of reference, technical specifications, Guidelines for Applicants). They describe the projects indicated in FAs in more detail, including: relevant background information (e.g. relation to other projects); objectives, result and activities; implementation modalities; budget and duration; and the number and type of contracts or grant schemes by which a project will be implemented. Annexes include a Log-Frame Matrix and schedules for contracting and disbursement. Project Fiches are prepared by the national administration of an IPA beneficiary country according to a standard format issued by the EC (DG ELARG). They are annexed to the Financing Proposal for the programme which they fall under and thus included in the package that goes before the IPA Management Committee

Project Implementation Unit

PIU Only relevant to IPA Component I when under decentralised management, PIUs support Senior Programme Officers in the performance of their duties. Typically they are units in line ministries responsible for EU projects in a given area (e.g. finance, home affairs).

Project Manager

The person responsible for monitoring the implementation of the contract on behalf of the Contracting Authority.

Publication of tenders

Depending on the tender procedure, tenders need to be published at the European or local level. At the European level they are published in the Official Journal of the European Communities and on the European Commission websites, for example EuropeAid or TED. Publication at local level is via the press of the beneficiary countries and, if required, in specialised publications.

Regional Operational Programme

ROP A development programme for every region on the NUTS II level (the NUTS classification is a hierarchical system for dividing up the economic territory of the EU) which is the basis for drawing assistance from Structural Funds.

Rule of origin According to the procurement rules for EU funds outside the EU, goods must originate in “eligible countries”. Such countries are different for each EU programme. For IPA, they include Member States, CCs and potential CCs. See section 2.3.1 of the PRAG for more information and its Annex A2 for a full list of eligible countries.

Rule on nationality

According to the procurement rules for EU funds outside the EU, participation in procurement and grant award procedures is only open to nationals of or legal persons registered in “eligible countries”. Such countries are different for each EU programme. For IPA, they include Member States, CCs and potential CCs. See section 2.3.1 of the PRAG for more information and its Annex A2 for a full list of eligible countries.

Special Accession Programme for Agriculture and Rural Development

SAPARD One of the three Pre-Accession Programmes in the Financial Perspective 2000-2006. The legal basis for the programme is Regulation (EC) No 1268/1999. It finances investments in agriculture and rural development and prepares a candidate country for implementation of the Common Agricultural Policy (CAP) and use of its financial instruments after accession. In the Financial Perspective 2007-2013 SAPARD is replaced by IPA, i.e. its Component 5 called IPA-RD.