Procurement principles and procedures th October … Funds Programmes/Other...Procurement principles and procedures Competitive tendering is used by public sector bodies throughout

Procurement principles and procedures

27th October 2015


National and EU Public Procurement Regulations oblige Member States to ensure that public funds are used in a manner that ensures:

Transparency

Equality of treatment

Good governance

Mutual recognition

Proportionality

Sound financial management


Audits and management verifications ensure adherence to the afore-referred to principles and assess whether strong internal controls are present in this respect.


Competitive tendering is used by public sector bodies throughout the European Union and provides all suppliers with the opportunity to sell their products and services in competition with other interested parties. Competitive tendering is used because the process enables the public sector to source products and services from the best suppliers at prices that reflect true market conditions. The process is based on tenderers quoting against specifications that satisfy the buyer's requirements.


The current public procurement regulations were introduced in June 2010. Some of the changes brought about by the introduction of these regulations, include: • Departmental thresholds were increased from €47,000 and €120,000,

• Departmental contract committees, • Public contracts review board, • Schedules of contracting authorities, and • 3 package procedure threshold up to

15million euros.

Departmental contracts committee art.19 (1)

… all public contracts, the estimated value of which does not exceed €120,000, shall be regulated and administered by the contracting authority ….

Following the evaluation of the tender by the Departmental Adjudicating Board, an evaluation report shall be drawn up and communicated to the Department Contracts Committee (DCC).

Departmental contracts committee art.19 (2)

The DCC shall make definite recommendations for the award of the contract, and a copy of its recommendation shall be forwarded to the Director of Contracts.

The DCC shall be composed of: a) The Director Corporate Services or his

representative; b) An officer appointed by the Permanent

Secretary; and c) A representative of the Department of

Contracts.

Contracting Authorities

Schedule 1 – Groups all contracting authorities. Schedule 2 – Those authorities that fall within the competence of the Department of Contracts (DoC). Schedule 3 – Those authorities that administer their own procurement in accordance with the provisions of the Public Procurement Regulations (PPRs).


One can procure: a) Works; b) Services; c) Supplies. • ’ Public works contract’ means a public

contract which has as its object either the execution, or both the execution and the design, of works related to one of the activities referred to in Schedule 6, …


• ’ Public supply contract’ means a public contract other than a public works contract having as its object the purchase, lease, rental or hire purchase, with or without option to buy, of products.

• ’Public service contract’ means a public contract other than a public works or supply contract having as their object the provision of services referred to in Schedules 7 and 8 (art. 2).

Procurement thresholds (1) – Estimation (art.16)

Contracting authorities need to establish an estimated contract value of the item which they are going to procure. This should be realistic and inclusive of all applicable taxes but net of vat. Contracting authorities shall not adopt any mechanism, including sub-division of public contracts, the purpose of which is to circumvent the application, in part or in whole, of the PPRs.

Procurement thresholds (2)

Value up to €2,500 (art. 20 (1a)) … the equipment, stores, works or services may be procured departmentally either after obtaining quotations or direct from the open market at the discretion of the Head of Department taking into consideration the amount involved, the urgency attached to the procurement and restrictions of choice and availability.


Value exceeding €2,500 but less than €6,000 (art. 20 (1b))

…the equipment, stores, works or services may be procured departmentally after a call for tenders, or after obtaining quotations, or direct from the open market, taking into consideration the amount involved, the urgency attached to the procurement and restrictions of choice and availability, and shall be approved by the Minister responsible for that department, or by such member of the department as may be authorised by that Minister.


Value up to €25,000 (art. 20 (1c)) Purchases of the same or closely similar material in different lots under art. 20 (1)(a) and art. 20 (1)(b), during a period of 6 months shall not exceed a total value of €25,000.


Value exceeding €6,000 but less than €120,000 (art. 20 (1d))

…the equipment, stores, works or services may be procured after a departmental call for tenders, or after publishing a call for quotations in the Gazette. The tenders and quotations shall be opened in public by 3 senior officers of the said department and the prices quoted shall also be made public.

Direct orders (art. 20(4))

Direct contracts valued in excess of Euro 6,000 may, in exceptional cases, be placed by any contracting authority listed in Schedule 2 after such an authority obtains the prior written approval of the Minister of Finance who may delegate his authority in writing to the Permanent Secretary or any other senior official in the Ministry.

Value added tax (VAT) In the case of acquisitions from suppliers (supplies), contractors (works) or service providers (services) who are not registered with the VAT Authority in Malta, VAT shall be accounted for and paid by the Contracting Authority directly to the tax Authorities in Malta. For EU-funded tenders, contracts over €250,000, where VAT is not an eligible cost, and whose output VAT is liable to be paid in Malta, such VAT will be paid directly to the VAT Department in Malta by the Final Beneficiary.

Thresholds in relation to the EU

Once a service/supply tender exceeds Euro134,000 The DoC has to publish the tender in the Government Gazette and the EU official journal. Once a works tender exceeds Euro5,186,000 The DoC has to publish the tender in the Government Gazette and the EU official journal.

Local Councils

Article 41 of the Local Councils Act (Cap. 363 of the Laws of Malta) stipulates that with respect to projects co-financed by the European Union (and implemented by Local Councils), the tendering procedures shall be in accordance with the rules of the European Union and shall be regulated by the Department of Contracts.

Common competitive tender procedures 1

A. Open

The most common type, any interested economic operator may submit a tender, which will be evaluated against preset exclusion, selection and award criteria.


B. Restricted

Selected candidates are invited to tender, after being selected on the basis of criteria and rules for selection, which were made available in advance to interested parties through a ‘Request for Proposals’ (Minimum 5 bidders). -Schedule 2 Contracting Authorities need approval of DoC; -Schedule 3 Contracting Authorities need approval of their Minister to use this procedure.


C. Negotiated

The Contracting Authority consults prospective candidates of its choice, and negotiates the contract with them (Minimum 3 with publication of CN). -Schedule 2 Contracting Authorities need approval of DoC; -Schedule 3 Contracting Authorities need approval of their Minister to use this procedure.

On the market

Departmental tenders are to be on the market for an average of 3 weeks.

Tenders issued through the Doc must stay on the market for 40 days.

Variations in Departmental contracts (art. 20)

In the case of departmental contracts, the Minister of Finance may allow that variations in respect of such contracts be approved by the Minister charged with responsibility of that department, who may delegate his authority in writing to the Parliamentary Secretary, the Permanent Secretary or the Head of department.

Variations referred to in art. 78 - 1

• In all cases where contracts exceed Euro120,000, the variation orders where individually or in their totality exceed by more than 5% of the awarded contract value, the prior approval of the Director General (Contracts) is to be sought before a commitment is made by the contracting authority with the contractor.

• When requesting such an approval, the contracting

authority shall present a document specifying the background to the cause of such a variation, the effect on the total cost of the tender and any effect on the recurrent expenditure that will ensue.

Variations referred to in art. 78 - 2

• In granting or refusing such a request for variation, the Director General (Contracts) shall take account of whether any force majeure, or unforeseen or unforeseeable events prevail and shall specify whether such a variation could have been avoided with the contractor.

The Director General (Contracts) shall determine the

procedure to be followed in future by the contracting authority in order to avoid the necessity of variations.

Variations – Services and Works Art. 60 and 73 - 1

Additional services/works not included in the original project are allowed provided the following 3 conditions are fulfilled: (i) Contract awarded to the service provider/contractor

who supplied/carried out, the original services/works;

(ii) Additional services/works cannot be technically or economically separated from the main contract without great inconvenience, or although separable from the original contract, are strictly necessary for its completion;


Additional services/works not included in the original project are allowed provided the following 3 conditions are fulfilled: (iii) Aggregate estimated value of contracts for

additional services/works does not exceed 50% of the amount of the main contract.


New services/works consisting in the repetition of similar services/works are allowed provided the following 4 conditions are adhered to: (i) The new services/works must conform to a basic

project for which a first contract was awarded by the open or restricted procedure;

(i) When the first contract was published, notice was

given that the negotiated procedure might be adopted for additional services/works;


New services/works consisting in the repetition of similar services/works are allowed provided the following 4 conditions are adhered to: (iii) Estimated cost of subsequent deliveries/works must

be taken into consideration for the purpose of determining the applicability of the provisions of art. 16 i.e. estimated value for threshold purposes;

(iv) Can only take place within 3 years of the conclusion

of the original contract.

Variations – Supplies 67 - 1 Additional deliveries by the original supplier: Where they are intended either as partial replacement or as extension of existing supplies and a change of supplier obliges the contracting authority to acquire material having different technical characteristics which would result in: (i) Either incompatibility with the supplies covered by

the original contract or

(ii) Disproportionate technical difficulties in operation and maintenance

The length of such contracts and of recurrent contracts may, as a general rule, not exceed 3 years.

Special thanks to Mr Anthony Cachia (Director General Contracts) and Mr Oreste Cassar (Director Contracts)

Thank you for your attention

Documents

Procurement principles and procedures th October … Funds Programmes/Other...Procurement principles and procedures Competitive tendering is used by public sector bodies throughout