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Project funded byThe European Union
Government of the Republic of SerbiaEuropean Integration Office
INDUCTION TRAINING SEIO
Implementation: Tendering, Procurement and Budget Support
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Training Objectives Overall the training will provide basic information on EU contracting procedures so that these can be taken into account when preparing implementation plans, sequencing and monitoring of future IPA Actions.
Specifically, the training will explain: the PRAG and its relationship to the EU Financial Regulation; contract types and their uses; required documents for each contract type and procurement
procedurecontract value and its effect on procurement procedures time taken to complete the various procurement procedures
and how to incorporate this into the development of realistic implementation plans
requirements for budget support
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Contracts Contracts are the normal legal basis for the
disbursement of IPA finances (there are others e.g. Delegated Agreements, Sector Budget Support)
In EU pre-accession funds a distinction is made between procurement contracts and grant contracts.
In procurement, the clients requirements are specified in contract documents (e.g. Terms of Reference for consultants).
By contrast, in grant schemes the client explains the problems and potential grant contractors make proposals to address these problems. The client chooses the best proposal and awards the grant i.e. The grant awardees design the solutions and not the clients (as in procurement).
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
PRAGPractical Guide to Contract Procedures for EU External
Actions (PRAG)http://ec.europa.eu/europeaid/prag/document.do?locale=en
Regulation No. 966 /2012 of the European Parliament and the Council on the Financial Rules applicable to the general budget of the Union
Commission Delegated Regulation No. 1268/2012 of 29 October 2012 on the Rules of Application of Regulation No 966/2012 of the European Parliament and Council on the financial rules applicable to the general budget of the Unionhttp://ec.europa.eu/budget/documents/financial_regulation_en.htm
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Types of Contract and Associated Documents
IPA ActionDocument
SERVICES
SUPPLIES
WORKS
Terms of Reference
Technical Specifications
Bills of Quantity
GRANTS Guidelines for Applicants
Procure
men
t
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Tendering Procedures
SERVICES>€300,000International restricted procedure
< €300,000 but > €20,0001.Framework contracts2.Competitive negotiated procedure
< €20,000Single tender
SUPPLIES> €300,000 International open procedure
<€300,000 but > €100,000 Local open procedure
<€100,000 but > €20,000Competitivenegotiated procedure
< €20,000Single tender
WORKS>€5,000,000 1.International open procedure 2.International restrictedprocedure
<€ 5,000,000 but > €300,000 Local open procedure
< € 300,000 but > €20,000 Competitive negotiated procedure
< €20,000Single tender
GRANTS >€2,000,000 International
call for proposals
>€2,000,000Local call for proposals
For any amount in cases of
urgencyDirect grant
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Contracting TimesContract
TypeProcurement
ProcedureAverage
Time Taken
SERVICE International Restricted Tender
(9)-12 months
Framework (3)-5 months
SUPPLIES International Open Tender 9 months
Local Open Tender 6 months
WORKS International Open Tender 12+ months
Local Open Tender 9-12 months
GRANTS International Call for Proposals
12+ months
Local Call for Proposals (6)-9 months
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Service Contracts: International Restricted Tender Procedures
Prepare ToR
Negotiations with EC
Publication of Procurement Notice
Establish Sort List and prepare tender dossier
Negotiations with EC
Tender preparation /submission
Tender evaluation, prepare Evaluation Report and contract dossier
Negotiations with EC
Contract Signature
Months 1 2 3 4 5 6 7 8 9 10 11 12
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Service Tender Dossier
A. Instructions to the tenderersLetter of invitation to tenderInstructions to tenderers
B. Contract Contract, Special Conditions
Terms of ReferenceOrganisation and MethodologiesKey ExpertsGeneral Budget breakdownConditions for service contracts
C. Other informationShortlist noticeAdministrative compliance gridEvaluation grid
D. Tender submission form
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Supply Tender Dossier
A. Instructions to the tenderersLetter of invitation to tenderInstructions to tenderers
b. ContractContractSpecial conditionsAnnexes
General conditions for supply contractsTechnical specificationsBudget breakdownModel for performance guaranteeModel for advance guarantee
C. Other informationGlossary of termsAdministrative compliance gridEvaluation grid
D. Tender submission form
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Works Contracts Works contracts cover construction, there are many national ‘standard’ forms of contract. Despite this, the EC have standardised on the use of an international contract format developed by the Federation Internationale des Ingenieurs-Conseils (FIDIC). It should be noted that IFIs (WB, EBRD) have their own standard documents which must be used by recipients.
The most commonly used forms of contract available under FIDIC are:
Conditions of Contract for Works of Civil Engineering Construction (The ‘Red Book’)Conditions of Contract for Design –Build and Turnkey (The ‘Orange Book’)Conditions of Contract for Electrical and Mechanical Works (The ‘Yellow Book’)Short Form of Contract (The ‘Short Form’).
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Most works contract dossiers contain the following documents:
The Tender (Contractor’s offer)The General Conditions of Contract (FIDIC Part I)The Conditions of Particular Application (FIDIC Part II Clauses)The Technical SpecificationsThe Design Documents (Drawings)The priced Bill of Quantities /Schedule of RatesAny other document forming part of the contract e.g. letters of clarification
Works Tender Dossier
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Bills of Quantity (BoQ)An itemised list showing the number/ quantity of items required to complete the works, the units of measure, the rate per unit of quantity and the consequent total cost for that item.
The BoQ may contain a number of bills classified by structure, trade, or standard method of measurement. In turn each bill will be broken down into separate items covering all elements of the works. The total number of items can be many hundreds.
During construction the quantity of each item is re-measured and using the Contractors quoted unit rates, the value of the actual works completed by the Contractor is measured
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Role of the ‘Engineer’
One of the main aims of Contractors, whilst making every effort to complete the works according to the contract, is to maximise profits wherever possible.
This means the Contractor will interpret contract provisions to maximise advantage e.g. providing the cheapest materials to meet the minimum requirements in the specifications or by requesting frequent time extensions.
Under FIDIC conditions an independent ‘Engineer’ must be appointed to supervise the works and to ensure that they are carried out according to the contract. The Engineer issues ‘Take Over’ and ‘Default Liability’ Certificates when the works are completed
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Responsibilities of the EmployerEnsure that the works are legally acceptable
Appoint the Engineer
Define the scope of the Engineer’s responsibilities
Ensure that the site is freely available
Provide for the Contractor's needs
Pay the Contractor
Consult with the Engineer on contractual obligations e.g. delays (time & cost to Contractor); rejection (cost to Employer); default of the Contractor (cost to Employer) before determining the amount due.
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
SPD: Implementation Planning
SECTOR TITLE
2014 2015 2016 2017 2018 2019 2020
Q3 Q4 Q1Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
ACTION 1P P C C C/I I I I I I I I I I I I I I
Activity 1.1 P P C C I I I I I I I I I I I I
Activity 1.2 P P C C C C I I I I I I I I I I
…..
ACTION 2 P P P C C C C/I I I I I I I I I I I I
Activity 2.1 P P P C C C C I I I I I I I I I I I
Activity 2.2 P P P C C I I I I I I I I I I I I
P = programming (period when the IPA action programme is expected to be adoptedC = procurement and grant award procedureI = implementation period
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Contracting & Disbursement Deadlines
Deadline for concluding the Financing Agreement
The final date for the signature of the Financing Agreement is X+1 (where X=year in which budgetary commitment was made). Conclusion of FA=year N
Contracting deadline The end date for the signature of contracts (including grant contracts) is 3 years from the date of conclusion of the Financing Agreement i.e. N+3
Deadline for the execution of contracts
The end date by which contracts (including grant contracts) must be finished is 3 years from the contract signature. The contracting deadline for the FA=N+3+3
Disbursement deadline The end date for making payments to contractors is 1 year after the deadline for executing contracts i.e. N+3+3+1
Final date for the implementation of the Financing Agreement
The end date for closure of the Financing Agreement is 8 years. After this date no financial transactions can be made legally under the Financial Agreement concerned
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
18
Collective rural projects
Land consolidation
Improved farming tools
Industrial buildings for new
companies
Restoration of the environment /
rural landscape
Reinforcement of rural producers
Modernisation and adaptation
Attraction of outside
companies
Improved value of
natural areas
Improved productivity
Development of existing activities
New activities (tourism)
Better image of
rural areas
Increased revenues
Jobs created & safeguarded
Better living conditions
Stopping rural exodus
Operations
Results
Specific Objectives
Overall Objective
Activities
Programme Intervention Logic
Project funded byThe European Union
Government of the Republic of SerbiaEuropean Integration Office
INDUCTION TRAINING SEIO
Budget Support
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
What is Budget Support (BS)?
BS is a method of delivering financial assistance which normally has 4 steps:
(Sector) Policy Dialogue Financial Transfers (in ‘tranches’) to National
Treasury Account Performance Assessment Capacity Development
BS is delivered by means of ‘Sector Reform Contracts’.
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Political and Economic Focus of IPA-BS
Compliance with the political criteria should be the primary focus of IPA2 BS. In particular, assistance should support preparations for acquis chapters 23 and 24 (The ‘Rule of Law’)
For the economic criteria, the main focus of IPA2 BS should be on supporting the establishment of a functioning market economy (Copenhagen Criteria: i.e. ‘The ability to withstand the pressures of the internal market’)
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Assessment of Eligibility
Assessment takes place at 2 stages in the programme cycle.
During programme preparation: assessment of relevance (are key constraints /weaknesses addressed?) and credibility (realism, institutional capacity, track record, political commitment)
During programme implementation: assessment of progress made in policy implementation (benchmarked against reform commitments)
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Risk Management FrameworkRisk management is an internal assessment of risk levels based on the analysis of replies to questionnaires in 5 categories, namely:1. Political2. Macroeconomic3. Developmental4. Public Financial Management5. Corruption /FraudThere are 4 risk levels: Low Moderate Substantial HighBeneficiaries are expected to define their risk response by means of ‘Mitigation Measures’ (these are monitored)
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Whether to Provide BS?
The EC decision on providing BS is based on 3 assessments:
1. Assessment of political commitment to a reform agenda (in line with EU accession)
2. Assessment of eligibility
3. Assessment of risks and mitigation measures
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Variable Tranches: Performance Reserves‘A Performance Monitoring System and related disbursement criteria is at the heart of any budget support operation’ (EC)
BS disbursements are of 2 sorts:
Base (or fixed) tranches: these are linked to eligibility criteria
Variable tranches: these are intended to create an incentive for improved performance and are based on performance indicators.
The EC limit (cap) the use of variable tranches to avoid unpredictability /volatility of disbursements. Typically, Sector Reform Contracts cover commitments for 3 years with an upper limit of 40% variable tranches
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office
Variable Tranche (Performance) Indicators The following principles should be applied:
1. Targets and indicators should be Coherent with sector problem analysis and programme objectives
2. Whilst combined indicators may be used, the emphasis should be on Results
3. Number of indicators should be limited to a maximum of 8 per Tranche (to avoid loss of policy focus)
4. Indicators, targets and assessment methodology should be defined during programme preparation
Project funded byThe European Union
Government of the Republic of Serbia
European Integration Office