1

Its unwise to pay too much, but worse to pay too little.
When you pay too much, you lose a little money. When
pay too little you sometimes lose everything, because
the thing you bought was incapable of doing what it
was supposed to do. The common law of business
balance prohibits paying a little and getting a lot – it
can’t be done. If you deal with the lowest bidder, it is
well to add something for the risk you run, and if you
do that, you will have enough to pay for something
better’.

John Ruskin (1819 -1900)

 
TRAINING OUTLINE
2

 Group introduction
 Background to Procurement
 Procurement Definitions, Principles & Goals
 The Purchasing Process
 Ethics in Purchasing
 Legal Requirements
 EU Tendering Procedures
 Introduce Competitive Tendering Process /
Role of Specifications & Total Life Cycle
Costs)
TRAINING OUTLINE
3

 Group Exercise (Specifications / Total Life

Cycle Costs)
 Debrief from Group Exercise
 Negotiation Principles / Concepts
 Competitive Tender Process Continued
 Questions and Answers
 Evaluation Form
OBJECTIVES of TRAINING 4

 Increase awareness of procurement and the role of the

procurement function
 To examine role of specification in evaluation processes
 To obtain current knowledge base for evaluation procedures
 5

PROCUREMENT / PURCHASING

BACKGROUND

DEFINITIONS

PRINCIPLES

GOALS
 The Value Chain 6

firm infrastructure
Support human resource management M
ar
activities technology development g in
procurement

inbound operations outbound marketing service

M
logistics logistics and sales

ar
gin
Primary activities
 7

The role of purchasing

Aspects Buying for primary Buying for support
activities activities
Product assortment Limited to large Very large
Number of suppliers Limited, transparent Very large
Purchasing turnover Very large, considerable Limited
Number of purchase orders Considerable Very Large
Average order size High Small
Control Depends on type of production Limited, forecast-related or
planning project-related planning

Decision-making unit Engineering, manufacturing Fragmented, varies with

specialists dominant product or service
 The Value System 8

Firms Buyer
Supplier Distribution
Value
Value Chain Value
Chain
Chain
 Process View
9

Process View Functional View

 Emphasis on improving  Which products or services
how work is done are delivered
 Cross-functional co-  Frequent hands off among
ordination , teamwork functions – largely
stressed uncoordinated
 Systems View  Pieces of process managed
 Customer Orientation  Internal orientation

Process vs Functional View adapted McCormack and Johnson, 2001

 Procurement adapted Van Weele 2004 10

purchasing function

tactical/initial ordering/operational

Expediting Follow-up
Internal Speci-
Selecting Contracting Ordering and and Supplier
customer fication
evaluation evaluation

Sourcing Supply
Buying
Procurement
 11

Definition of concepts
Purchasing:
All activities for which the company receives an invoice from outsid
parties. Differentiation between:
 Purchasing function
 Purchasing department

Procurement:
All activities that are required in order to get the product from the supplier to it
final destination.
 is the strategic element of purchasing
 ensures that the buying of materials, supplies and services are effectively, integrated and managed in
a satisfactory manner to the needs of the organisation.
 Other elements of procurement may include: Materials and Inventory Management; Physical Distribution / Logistics
activities

Sourcing:
Finding sources of supply, guaranteeing continuity in supply, ensuring alternative
sources of supply and gathering knowledge of procurable resources.
 12

Definition of concepts
Purchasing Management
All activities that are required to manage supplier relationships.

Supply Chain Management

The management of all activities, information, knowledge and
financial resources associated with the flow and transformation of
goods and services up from the raw materials suppliers, component
suppliers and other suppliers in such a way that the expectations of
the end users of the company are being met or surpassed
 13

Changes in the business context

1. Globalisation of trade

Resulting from:
 Deregulation in many industries
 Intercultural homogenisation and the resulting homogenisation of
consumer preferences
 The forming of trade blocks (NAFTA, GATT, EEC)
 Improved transportation facilities
 More sophisticated information and communications technology
 14

Changes in the business context

2. The information society
 Growing economic value from generating, using and selling
information
 Advanced retail and manufacturing information systems; improved
capabilities for tracking and tracing
 Xerox: ‘pay for production’

3. Changing consumer patterns

 Customers increasingly demand convenience of purchase, after-sales
service, reliability, uniqueness, quality, etc.
 Customers take charge: they tell the manufacturers what they want,
when, how and what they are willing to pay
 This leads to constant innovation and service offerings
 15

Impact on strategies and structures

1. Value chain management

 Every firm can be considered basically as a collection of primary

and supporting value activities that are performed to design,
produce, market, deliver and support products that are valuable for
customers (Porter).
 Competitive advantage depends primarily on the art of positioning a
company in the right place of the value chain vis-à-vis its:
 Customers
 Competitors
 Suppliers.
 Companies should focus on their core competencies.
 16

Impact on strategies & structures

2. Process orientation
 Shift from functional organisation to process organisation
 Process means in this case the set of activities that produce a value
to a customer

3. Outsourcing and managing best-in-class supplier

networks
 Often specialist suppliers can perform the outsourced activities at
lower cost and with higher value-added than the buyer
 Best-in-class suppliers are then needed
 17

The changing landscape in purchasing and

supply
1. Seller’s market Buyer’s market
2. Increasing pressure on sales prices and margins leads to:

 Co-ordination of purchasing requirements

 Integration of purchasing and logistics
 Integration of purchasing in engineering and production planning
 Make or buy
 Reciprocity agreements and compensation agreements
 Total quality control and just-in-time production
 Environmental issues
 The purchasing process
18

Expediting Follow
Speci- and up/
Selecting Contracting Ordering
fication evaluation evaluation
 get specifi-  assure  prepare  establish  establish  assess
cation adequate contract order expediting supplier
P&S role supplier routine routine
selection

 functional  pre-  contracting  develop  expediting  supplier

spec. qualification expertise order  ‘trouble- evaluation
 technical of suppliers  negotiating routines shooting’  supplier
Elements changes  request for expertise  order rating
 bring quotation handling
supplier
knowledge
to
engineering
 functional  supplier  contract  order  exception  preferred
spec selection report supplier list
 norm/spec proposal  due date  supplier
control  supplier listings ranking
Documents proposal  invoices scheme
 PURCHASING STAGES / CYCLE

Determining the need or requirement

19
 

Developing a specification to define the need
 

Researching to find and select potential supply sources
 

Obtaining quotations, bids from potential suppliers against the specification
 

Evaluating supplier responses
 

Negotiating the terms of the contract
 

Awarding the contract and placing an order
 

Receiving the goods or services
 

Making payment for the goods or services
 
 20

The purchasing process

 Process approach: the various steps in the model are closely connected and the
quality of the output of the preceding steps determines to a large extent the
quality of the subsequent steps

 Defining the interfaces: the output of each phase has to be clearly defined,
preferably with a document

 Determining responsibilities: purchasing is considered to be a cross-functional

responsibility. Therefore, the tasks, responsibilities and authority of the parties
involved should be clearly indicated in each phase

 Combining different skills, different types of knowledge and expertise: key

question is how to combine the different types knowledge, skills and expertise in
such way that all parties involved arrive at an optimal solution for the company
 21

The purchasing process

Three types of purchasing situations:

1 New-task situation: purchase a completely new product,

supplied by an unknown supplier

2 Modified rebuy: purchase a new product from a known

supplier or an existing product from a new supplier

3 Straight rebuy: purchase a known product from a known

supplier
 High risk
New task
22

gs
di n
Examples of purchasing situations

il
Bu
New task

t n
me
s ui p
t er eq
m pu on
Co m cti
du
st e o
sy Pr
ne
ho
lep
Te
ar s
es sc
sin
Modified rebuy

Bu als
in
m
ter
e s t er
vic
s er
pu
er
m
uri Co
Co
s
nt
ne
u re
po
ni t om
fu r cc
fi ce ni
Of ec
t ro
El
ls
ic a
c h em
lk
Straight rebuy
Bu rt s
pa
ls are
ri a
at e Sp
gm ie s
a nin pl
Cle i ty up
tric es
l ec fi c

Routine task
r, e Of
at e
s, w

Low risk
Ga
 Model of Organisational
Range and nature
Of environmental
Buying Behaviour
Task and non task
23
constraints
Adapted Van Weele 2004

Range and nature

of organisational
Task and non task
constraints

Amount and type

Marketing Of task and non task
Stimuli Interaction among
Members of buying
centre
The organisational
Buying responses

Communication activities
Nature of the •Search for information
Individuals •Communicate
Task and non task •Negotiation
variables
Purchase activities
•Buy or not
•Source loyalty

Decision process carried out by members

Of the buying centre
Models of industrial buying behaviour 24

1. Variables that affect the buying process

 Characteristics of the product
 Strategic importance of the purchase
 Sums of money involved in the purchases
 Characteristics of supply markets
 Degree of risk related to the purchase
 Role of the purchasing department in the organisation
 Degree to which the purchase product affects existing routines
in the organisation
Models of industrial buying behaviour 25

Product complexity
•Standard product •Customised product
•Technically simple •Complex technology
•Existing product •New product
•Repeat purchase •Initial purchase
•Easy to install & use •Difficult to install
•No after sales service required •After sales service required
Commercial
uncertainty Low High
•Limited Investment
•Small order size Low
•Short-term impact Purchasing
Engineering
•No organisational adaptation required department
dominant
•Low impact on financial results dominant

•High Investment
•Large order size
Finance and
•Long-term impact Cross-functional
administration
•Extensive organisational adaptation required decision making
•High impact on financial results dominant
High

Fisher
Models of industrial buying
26

behaviour
2. Variables that affect the buying decision

 Task variables: variables that are related to the tasks,

responsibilities and competences assigned by the
organisation to the person involved in the purchase
decision

 Non-task variables: variables that are related to the

professional’s personality
Models of industrial buying
27

behaviour
Within the Decision Making Unit various roles can be
distinguished…

 Users: people who will work with the product

 Influencers: people who are able to affect the outcome of the
purchasing process by means of solicited or unsolicited advice
 Buyers: people who will negotiate with the suppliers about
terms and conditions and who place the order
 Decision makers: people who actually determine the selection
of the supplier
 Gatekeepers: people who control the flow of information from
the supplier towards the other members of the DMU
 Models of industrial buying behaviour 28

r
r

eepe
ence

ider
er

ek
u
r

Buy
Infl
Use

Dec

Gat
1. Identification of need

2. Establishing specification &

scheduling the purchase
3. Identifying buying alternatives

4. Evaluating alternative buying

actions
5. Selecting the suppliers

Webster and Wind

 29

4 Dimensions of the purchasing function

Technical dimension Commercial dimension

•Determine specifications •Supply

market research
•Audit suppliers’ quality organisation •Supplier visits
•Value analysis •Requests for quotations
•Quality Control •Evaluate quotations
•Supplier selection •Negotiations with suppliers
•Draw up contract
Purchasing function
Logistical dimension Administrative dimension

•Optimisation of ordering policy •Orderhandling, expediting and

•Order expediting and follow-up filing
•Incoming inspection •Checking supplier invoices
•Monitoring delivery reliability •Checking payments to supplier
 30

THE PURCHASING PROCESS:

THE BUYER’S ROLE
 31

Programme
 The purchasing process:
 Step 1: determining on purchase order specifications
 Step 2: supplier selection
 Step 3: the purchasing contract
 Steps 4 and 5: ordering and expediting
 Step 6: follow up and evaluation of the buying
process
 32

Step 1: Develop purchase order

specification
Differentiation between:
 Functional specification
Describes the functionality which the product must have for the user
Advantages of a functional specification:
1. Potential suppliers are challenged to give advice using their expertise and experience
2. It stimulates innovation and innovative ideas
3. It creates terms of reference, against which all supplier proposals can be evaluated

 Detailed technical specification

Describes the technical properties and characteristics of the product as well as the activities to
be performed by the supplier in detail
 33

Step 1: Purchase order specifications

The purchase order specification comprises the following:

 Quality specifications (technical norms and standards the product should

meet)
 Logistics specifications (quantities and delivery time)
 Maintenance specification (how the product will be maintained and
serviced)
 Legal and environmental requirements (products, services and
production process should be in compliance with legislation)
 Target budget (supplier solutions and proposals would be within
predetermined financial limits)
 34

Step 1: Added value of the buyer

 Ensuring unambiguous functional, technical, logistics and

maintenance specifications
 Preventing the use of supplier or product brand specifications
 Recording clear procedures regarding approval of specification
changes
 Ensuring a clear sample inspection procedure
 Ensuring clear descriptions of the methods for testing product
quality
 Ensuring a general cost breakdown to help assessment of quotations
at a later stage
Step 2: Supplier selection 35

Step 2 Supplier selection contains 4 sub-steps….

1. Determining the method of (sub)contracting

2. Preliminary qualification of suppliers and drawing up
the ‘bidders list’ (long list and short list)
3. Preparation of the request for information (RFI),
request for quotation (RFP) and analysis of the bids
received
4. Selection of the supplier
Step 2: Supplier selection 36

1. Method of
subcontracting
Responsibility of the entire assignment is
placed with the supplier
Turnkey Subcontracting

Assignment is divided into parts that are

contracted out separately, to various
suppliers: co-ordination rests with the
Partial subcontracting
principal
 37

Step 2: Supplier selection

1. Fixed price: principal orders the supplier to perform the required

activities at a fixed price, before a predetermined date.

Advantages Disadvantages
 Principal knows where he stands  Difficult to get insight in
financially supplier’s cost breakdown
 After completion no need for  Preparation costs a lot of time
settlements: supplier carries all the  One does not know in advance
risks which supplier will turn out to
A firm completion date be the best
 38

Step 2: Supplier selection

2. Cost-reimbursable: nature and scope of activities are not determined
in advance; the supplier works at an agreed hourly rate

Advantages Disadvantages
 Principal obtains exact picture of the  Principal is not sure about the
cost structure of the work financial consequences
 Principle is free in his choice of  No incentive to work faster, as
suppliers the supplier is paid per hour
 No certainty about completion
date
 39

Step 2: Supplier selection

Decision in favour of either fixed price or cost-reimbursable contracts is
determined by a number of factors.....

 Comprehensiveness of the specification: availability of extensive

specifications is crucial for fixed price contracting

 Available time: is there enough time for a tender procedure and price
negotiations, or should the work be started immediately

 Technical expertise: if specialised knowledge is required, a cost reimbursable

contract is preferred

 Knowledge of the industry: the degree to which the principal knows the
methods and price arrangements operating in that particular industry
 40

Step 2: Supplier selection

Unit-rate contract:

Determines the cost per activity for standardized and

routine activities. Unit-rate contracts are used for
activities that are standardized but which are difficult
to estimate in terms of volume and time
 41

Step 2: Supplier selection

2. Preliminary qualification of suppliers

 Summary of the prequalification requirements,

based on the purchase order specification

 Assembling the initial bidders list that indicates

which suppliers may probably do the job
 42

Step 2: Supplier selection

1. Identify 3 to 5 prospective suppliers (bidders’ short list)
2. Receive quotations
3. Preliminary technical and commercial evaluation
4. Use of ranking schemes

Supplier selection proposal

 Decision to select certain supplier
 Underlying ranking schemes
 Underlying quotations
Step 2: Added value of the buyer
43

 Determining the most adequate way of subcontracting

 Identifying reliable supplier-partners by means of an
adequate procedure of prequalification
 Drawing up the request for comparable quotations
 Handling requests for information from suppliers
 Conducting a balanced analysis of quotations in close
co-operation with the user
 44

Step 3: The purchasing contract

Prices and terms of delivery

 Fixed price plus incentive fee: motivate suppliers to deliver work

above agreed standard

 Cost plus contract: actual cost plus agreed profit margin used in
situations where the work cannot be specified adequately or when a
fixed price constitutes too big a risk for supplier or buyer

 Cost-reimbursable contract: based on fixed hourly rates (which

include profit for supplier)

 Agreement with price adjustment: mainly used for agreements with

long-term delivery or when very specific and market-sensitive
materials are processed
 45

Step 3: The purchasing contract

Terms of payment
 Common practice that payment takes place in several terms
 Preferred method of payment is based on suppliers performance

Penalty clauses and warranty conditions

Suppliers have to guarantee:
 The goods are of good quality and in accordance with specifications
 The goods are completely new and free of defects
 Legal and government regulations have been met
 Base materials obtained from ‘sustainable’ sources of supply

A sound purchasing contract includes agreement on penalty clauses, warranty period and (if
applicable) systems responsibility
 46

Step 3: The purchasing contract

Other arrangements

 Insurance and safety regulations

 Transfer of rights and obligations
 Contracting out to third parties
 Terms of delivery
Step 3: Added value of the buyer
47

 Providing the required contracting expertise in the form of

modular purchase contracts (and contract clauses) and
general terms of purchase
 Determining what price and other commercial conditions
will be negotiated
 Preparing specific contractual arrangements to minimize
risks and liabilities
 Preparing and conducting the negotiations about all terms
and conditions of the contract
 Editing the purchase agreement
 Monitoring contract compliance and contract-review
 48

Steps 4 & 5: Ordering and expediting

Several types of expediting...

 Exception expediting: buyer only undertakes action when the organization sends out signals of material
shortages

 Routine status check: preventing materials supply and quality problems - few days before promised delivery,
the buyer contacts the supplier to confirm the delivery date

 Advanced status check: for critical purchase parts – a detailed production plan will be handed over to the
buyer and during the process the buyer will carry out periodic checks

 Field expediting: for critical purchase parts – field inspector periodically inspects on site whether supplier is
on schedule (e.g. military projects)
 49
Steps 4 & 5: Added value of the buyer

 Developing efficient ordering routines

 Checking that all purchase orders are confirmed by the
supplier
 Developing and executing a computer-supported,
differentiated method of expediting and inspection
 Maintaining a computer-supported database with regard to
critical purchasing and supplier information
 Developing a sound procedure for order handling
 Applying effective ‘trouble shooting’ when necessary
Step 6: Follow up and evaluation 50

Things that have to be taken care of:

 Settling warranty claims and penalty clauses

 Settling the results of work in excess or work that does not
meet specifications
 Organising the purchase and supplier documentation
 Recording project evaluations
 Evaluating and ranking supplier performance
Step 6: Added value of the buyer
51

 Settling claims, with regard to work not covered

in the specification
 Recording the user’s experience with specific
products and suppliers by means of a detailed
vendor rating system
 Supervising compliance with agreements
A Definition

 Public Procurement:

 The acquisition, whether under formal contract or

not, of works, supplies and services by public
bodies.

 It ranges from the purchase of routine supplies or

services to formal tendering and placing contracts
for large infrastructural projects by a wide and
diverse range of contracting authorities
Public Procurement Objectives

 Similar objectives to that of the private sector

 Variety of stakeholders
 Complex legislative environment
 Procurement
Identify
the Need Process

Remember: tendering is only one part of the

Define & Refine overall procurement process
User
Requirements

Pre-Market Select Design

Budget Engagement Procurement Tender
Requirements Procedure

Tender
Exercise

Repeat if Contract Contract Evaluation

required Management
Award and Debriefing
Private vs. Public Procurement

Activity Public Sector Private Sector

Compliance High Low
Public Scrutiny High Low
FOI Yes Low
Auditing Internal, External, Generally external
C & AG, EU
Tender Timescales Longer Shorter
Motivated by Profit No Yes
Supplier Base Larger Low, Strategic
Partnerships
Budgets Usually fixed/short Flexible, React to market
term
Scope for Creativity Low/Medium High
Admin Costs High Lower
Irish Landscape

 Traditionally a decentralised system

 Migration to e-procurement

 Establishment of National Procurement Service

(NPS)
 Emphasis on joined-up policy
 Indigenous business sector
 Environmental Stewardship
 Product + Service Innovation

 Centralised Procurement
 Efficiencies/cost saving pressures
Previous Organisation

Current Organisation
DPER

Departments
OGP
State Spend Profile

 “The total State non-pay expenditure on goods and services,

excluding capital expenditure and commercial semi-States,
was approximately €9 billion based upon the vote estimates
in 2011..”
 (Accenture, Capacity and Capability Review of Central
Procurement Function Report, 2012)
State Spend Profile

 (Accenture, Capacity and Capability Review of Central Procurement Function Report, 2012)
State Spend Profile

 1. Construction  15. Postage

 2. ICT  16. General Maintenance
 3. Travel  17. Laboratory Supplies
 4. Energy  18. Fuel
 5. Professional Services  19. Food, Catering
 6. Roads  20. Security Services
 7. Energy  21. Printing & Publishing
 8. Waste Disposal  22. Janitorial & Cleaning
 9. Water  23. Recruitment
 10.Plant & Equipment  24. Training
 11. Medical Supplies  25. Stationery
 12. Transport  26. Uniforms & Clothing
 13. Advertising  27. Audits & Accounting
 14. Telephones  28. Office Equipment
 29. Insurance
Current Changes

 Consolidated and integrated approach to

public procurement’ involving:

 Office Government Procurement (OGP)

 OGP to come under the aegis of the Department of
Public Expenditure and Reform
 Appointment of a Chief Procurement Officer
(CPO)
Current Changes

How the OGP should work?

 Manage all strategic spend for common categories of

goods and services
 Assume responsibility for strategic and operational
procurement policy
 Implement effective compliance framework across all
sectors
 Dedicated procurement officer for each sector (health,
education, local government etc)
PRINCIPLES 63

• VFM - maximum value for every € spent

• Optimise systems and procedures
• Compliance with National and EU Directives –
competitive tendering
• Professional approach to Procurement Management
GOALS 64

1. Maximising VFM, service and quality.

2. Minimise cost of achieving it – optimise life cycle
cost.

• Maintain supply of goods/services

• Minimise waste / inventory
• Supplier selection
• Improve efficiency
• Maintain ethical business standards
• Legal compliance
ETHICS IN PURCHASING 65

 High level of public scrutiny

 Purchasing code of ethics based on three key concepts

1. Impartiality – equal treatment

2. Honesty – in all dealings
3. Loyalty – separate personal /
professional business

Refer to IIPMM code of ethics (www.iipmm.ie)

PRINCIPLES OF ETHICAL BEHAVIOUR
66

 Declare any ‘conflict of interest’

 Do not accept gifts or money, free travel or
invitations to events
 Reasonable hospitality acceptable
 Maintain confidentiality
 Minimise requests for sponsorships and
donations
LEGAL REQUIREMENTS 67

 Public Authorities are required to comply with

government procedures when awarding
contracts including all projects, routine
purchases and disposals of goods and services
 ‘Green Book’ – Dept of Finance guidelines
including:
- Property transactions
- Information Technology
- Engagement of Consultants
- Planning and Design Procedures
- Tendering Procedures
- EU Directives / Thresholds
LEGAL REQUIREMENTS (cont’d) 68

 Competitive tendering is ‘essential and should always be

used unless exceptional circumstances apply’
 Tax clearance certificates are obligatory in all cases
where orders or cumulative orders exceed €6,349
(inclusive of VAT) within a 12 month period
 EU Directives apply if total value of the contract exceeds
the financial threshold and must be open for competition
across the EU

 Non-adherence to EU Directives can result in serious

legal and financial sanctions for a contracting authority
 69

Overview of
the European
Public Procurement
Directives
 70

Exports Europe
 Europe in the World
 The worlds biggest
USA

Japan

Canada
trading block partner
China

Rest of the
world
 In less than half a
century the European
Union has become the
Imports Europe
Worlds major trading
USA

Japan
power
Canada

China

Rest of the
world
European Union 71

 Obligations Under the Directives

 To give suppliers and contractors across Europe an
equal chance of competing for and winning business
 Use Procurement procedures that are open and fair
 Advertise our requirements through the EU
 Apply predetermined objective criteria for selecting
tenderers and awarding contracts
 Use broadly based technical specifications that allows as
many vendors as possible to meet them
European Union 72

 Transformation from
 A professional Procurement Function to a
 Clerical Bureaucratic Function

 Littleor no discussion with vendors

 Buyers tied up in paperwork
 Unable to use current practices in procurement
 Inability to negotiate with vendors
 Tied to long time frames before contracts can be awarded
(slow process)
 Manage big legal risk
European Union 73

A licence to print money for the legal

profession?
 Buyers spending more time with legal advisors on
contracts
 Vendors spending a lot of time with their legal
advisors accessing buyers contracts
 Some vendors get their legal advisors at ways to
challenge contract awards
 The legal profession involved in drafting more and
more restricted legislation
 The legal profession involved in trying to interpret
this legislation
European Union 74

 Purchasing in a Gold Fish Bowl

 Transparency
 Accountability
 Negotiation frowned upon
 Co-operation / partnership with suppliers ruled out
 Legislation heartily favours vendors
 Buyers appear to be mistrusted
European Union 75

 Benefits / Opportunities
 Opens up bigger markets that may have been closed
in the past
 Opportunity to win business right across Europe
 Provides buyers with a wider choice of goods and
services
 Encourages competition in price, quality and service
 Helps prevents political interference
European Directives 76

 Basic Objective
 To promote transparent and non-discriminatory
procurement by prescribing procedures which must
be strictly followed and requiring publication in the
EU’s official journal.
 Directives apply above fixed thresholds (as shown
previously) to three types of procurement
transaction (works, supplies and services) and two
types of purchaser (“classic” public sector and
utilities)
European Directives 77

 The Directives are transposed by Irish statutory instruments but

parts of them are also directly effective
What Rules Exist in Ireland?

 There are several sources of public procurement law in Ireland.

 The primary source is the Directives adopted by the European
Parliament and Council.

 Directive 2004/17/EC of the European Parliament and of the

Council of 31 March 2004 coordinating the procurement
procedures of entities operating in the water, energy, transport
and postal services sectors (Official Journal L 134 , 30/04/2004
P. 0001 – 0113)

 Directive 2004/18/EC of the European Parliament and of the

Council of 31 March 2004 on the coordination of procedures
for the award of public works contracts, public supply contracts
and public service contracts ( OJ L 134, 30.4.2004, p. 114–240)
Fundamental Principles

 The Directives are ultimately underwritten by a series of

fundamental freedoms and principles derived from the Treaty of
the Functioning of the European Union (“ TFEU” ).

 The fundamental freedoms namely include;

 Free movements of Goods (Article 28)

 Freedom to provide Services (Article 49)
 Principle of Establishment (Article 43)
 Prohibition against discrimination on the grounds of nationality
(Article 12)
Fundamental Principles

 Member states’ public bodies must conform to the

principles derived from the fundamental freedoms.

 The main principles deriving from the freedoms include;

 The principle of Transparency

 The principle of Proportionality
 The principle of Equal Treatment
 The principle of Non-Discrimination
Transparency

 Requires contracting authorities to conduct procurement

procedures in an open and transparent manner.

 Prevents subjective and discriminatory decision making.

 The principle requires contracting authorities to publish or

advertise a proposed contract.
 (Case C-324/98 Telaustria)
 (C-231/03, Coname)
Transparency - Advertising

 Why is it necessary to advertise potential contracts?

 To enhance fair competition in the market place.

 When are you required to advertise potential contracts?

 The EU rules sets the value of contracts above which tenders
must be advertised and published in the Official Journal of the
European Union (OJEU) on a two year cycle.

 Where do you advertise the contract notices?

 European Tenders Electronic Daily (OJEU)
 http://ted.europa.eu/TED/misc/chooseLanguage.do
Financial Thresholds

 The main advertising thresholds with effect from 1 January 2014 to 31

December 2016 are as follows:

Works

Contract Notice €5,186,000 Applies to Government Departments

and Offices, Local and Regional
Authorities and other public bodies.
Supplies and Services

Contract Notice €134,000 Threshold applies to Government

Departments and Offices
Contract Notice €207,000 Threshold applies to Local and Regional
Authorities and public bodies outside
the Utilities sector.
Utilities

Works Contracts / Prior €5,186,000 For entities in Utilities sectors

Indicative Notice
Supplies and Services €414,000 For entities in Utilities sectors
Non-discrimination

 Principle of non-discrimination / mutual recognition

 Prevents contracting authorities from rejecting tender

applications from suppliers based in another EU Member
State

 Contracting authorities should accept EU Member State’s

equivalent certificates, diplomas, technical and professional
qualifications.
Proportionality

 The principle of proportionality

 Requires any process or requirements chosen be both

necessary and appropriate in light of the objectives sought.

 Contracting authorities should not impose technical,

professional or financial conditions that are excessive and
disproportionate to the overall procuring goal.
Equal Treatment

 Principle of Equal Treatment

 Different to the Principle of Non-Discrimination

 Ensures that all suppliers should be treated equally and be placed on an

equal footing

 All suppliers must have the same access to contract opportunities and
information
Scope of Coverage

 What procuring activities are governed by the suite of EU Public

Procurement Directives?

 Works Contracts
 Extends to building and engineering contracts

 Supplies Contracts
 Extends to to contracts for the purchasing of goods and supplies

 Services Contracts
 extend to contracts for advertising, property management, cleaning,
management consultancy, financial and ICT related services.
Irish Legislation

 S.I. No. 329 of 2006 – Public Authorities Contracts (Transposed Directive

2004/17/EC)
 S.I. No. 130 of 2007 – Utility Sector (Transposed Directive 2004/17/EC)
 S.I. No. 130 of 2010 - Remedies Regulation
 S.I. No. 131 of 2010 – Remedies Regulation

 Department of Finance Guidelines on Public Procurement 2004 (“Gold

Book”)
 Circulars; Construction templates, Standardised Contract Templates,
Circular 10/10 Facilitating SME Participation in Public Procurement)
Irish Rules

 Less than €5,000

 Purchased on the basis of verbal quotes from one

to five competitive suppliers.

 Lowest Price

 Most Economically Advantageous Tender

(MEAT)
Irish Rules

 €5,000 to €25,000

 Purchased on the basis of a minimum of three written

quotes

 Lowest Price

 MEAT

 eTenders
Irish Rules

 €25,000 – EU threshold value

 eTenders

 Formal tendering procedures

 €50,000 – Works Contracts

Informal Bids 92

 Value of purchase under financial regulations

 No formal advertisements
 Minimum number of solicitations by post / phone
 Spirit of competition must exist to ensure VFM, fairness, openness,
transparency
 Process must stand up to public scrutiny / accountability
Formal Bids 93

 When the value of the purchase exceeds the financial threshold the
EU Directives apply
 It must now be open for competition across the European Union
and must be advertised in OJEC
 EU directives have legal force and must be followed
Key Points on Tendering Process 94

 The directives have legal force in this country and

will be followed
 Tendering documentation / specification should be
written clearly and not give rise to ambiguity - ?
Where it does
 Award criteria should be clearly identified in the
tender documentation - ? Where it is not
 Tax clearance procedures are obligatory in all
cases ( see notes at end)
Key points on tendering 95

procedures
 If unsuccessful you are entitled to be debriefed
 It the estimated value of the contract is equal or
greater than the threshold values set out in the
relevant directive, it will be advertised in the
OJEC
 This is a legal requirement
 De-aggregation or contract splitting to avoid
the EU tendering process is illegal
Key points on tendering 96

procedures
 Where an omission has occurred in the tender documentation it
should be amended and all participants expressing an interest in
the tendering process informed
 Where the omission significantly alters the nature of the process
the tender may have to be re-advertised
Internally 97

 End Users Responsibilities

 To provide the purchaser with generic specification
 To work with the purchaser in drawing up specifications that allow
maximum competition
 Inadequate and poorly written specifications are the cause of most supplier
challenges to purchasing awards
 Users should plan their requirements bearing in mind the time limits
imposed by the directives
 The timeframes laid down by the directives cannot be easily circumvented
 The use of urgent procedures or accelerated, restricted procedures, as they are
referred to in the directives, must be justified and have been caused by the
events outside the control of the Contracting Authority
 Delays by the Contracting Authority in instituting tendering procedures is not
sufficient reason for applying the accelerated procedures
EU Public Procurement 98

Directives
 What steps are required in advertising a tender?
 Prior Indicative Notice (PIN)
 Notice of Contract
 Award of Contract Notice
Prior Indicative Notice (PIN) 99

 Used for product areas where estimated annual value is equal or

greater than €750,000
 It is not a statement of intent that a contract will be awarded in the
following 12 months
 It is usually placed as soon as possible after the beginning of the
Budgetary year
Prior Indicative Notice (PIN) 100

 Following publication of a PIN Notice

 Bodies must publish individual contract notices prior to the award
of any individual contracts
 Bodies must also publish individual award notices
EU Public Procurement 101

Directives
 Notice of Contract
 Contracts which exceed the threshold limits must be
advertised in OJEC prior to publication in National or
local Newspapers or online
 The contract notice must say which procedure is being
used i.e.
 Open
 Restricted
 Negotiated
 It must state the award criteria being used
 Notice advertised locally , nationally or online must
refer to the date of despatch to OJEC
EU Public Procurement 102

Directives
 Time limits for Notice of Contracts
 Open Procedure
 52 days from date of despatch of notice
 Restricted Procedure
 37 days from date of despatch of notice to receipt of request to
participate
 Negotiated Procedure
 37 days from date of despatch of notice to receipt of request to
participate
 For receipt of offers a further 40 days minimum notice is
required
 In cases of extreme urgency these time limits can be reduced
 Receipt of request to participate 15 days
 Receipt of offers 10 days
Procurement Procedures

 The Directives allow for the use of the following

procedures;

 Open Procedure

 Restricted Procedure

 Negotiated Procedure

 Competitive Dialogue
Open Procedure

 One step procedure (Art 28, Directive 2004/18/EC)

 Relatively, straightforward and transparent

 Fair procedure, allowing all interested parties to participate

 Encourages SME participation

 Contracting authority cannot control how many responses

they receive
Open Procedure

Time period for allowing tender Days

responses
Notice of the Open Procedure 52 days
Tender
If the notice is sent electronically 45 days

If a Prior Indicative Notice (PIN) 36 days

has been published
If a PIN has been published 29 days
electronically
Open Procedure

 Current Examples

 National Consumer Agency-

Media Monitoring for the National Consumer Agency

 Department of Transport, Tourism and Sport

Supply of Microsoft software licences (1)

 Trinity College Dublin – Next Generation DNA

Sequencing

 Teagasc – Provision of Soil Analysis

Restricted Procedure

 Two stage process

 Any supplier can request to participate in a Restricted Procedure,

however only those invited by the contracting authority may submit a
tender.

 Minimum of 5 suppliers invited

 Maximum of 20 suppliers invited

 Must allow 40 days for suppliers to submit tender

 Reconfiguration and extension of Paediatric Services at Cork Universit

y Hospital
(HSE)
Negotiated Procedure

 Allows a contracting authority to consult with suppliers of their choice

and to negotiate terms of the contract
 Can only be used in limited circumstances
 Suitable in complex contracts
 Suitable in circumstances where the Open and Restricted Procedure
would fail to provide an adequate response
 May take place in successive stages
 Only allows for evaluation on the Most Economically Advantageous
Tender (MEAT) criteria

 Current examples;
 BOILER CLEAN AT EDENDERRY POWER – Bord na Mona
Negotiated Procedure

 Two types

 Negotiated procedure with prior advertising

(Complex contracts, for example contracts which do not allow for
prior overall pricing)

 Negotiated procedure with no prior advertising

(Urgent, unforeseeable cases)
Competitive Dialogue

 Use in limited circumstances

 Use for technically complex contracts

 Current example;
 Single Supplier FWA for SME Management training for ISME Skillnet –
ISME Skillnet
Procurement Tools

 Framework Agreements

 Dynamic Purchasing Systems

 E-auctions
Framework Agreements

 Single-supplier framework – between one contracting

authority and one provider
Contracting Authority
↓
Framework Agreement
↑
Economic Operator
Framework Agreements

 Single-Provider Framework – between a number of contracting authorities and one provider

Contracting Authority Contracting Authority Contracting Authority

↓
Framework Agreement

↑
Economic Operator
Framework Agreements

 Multi-provider framework – between one contracting authority and multiple providers

Contracting Authority

↓
Framework Agreement

↑
Economic Operator Economic Operator Economic Operator
Framework Agreements

 Multi-provider framework – between a number of contracting authorities and multiple providers

Contracting Authority Contracting Authority Contracting Authority

↓
Framework Agreement

↑
Economic Operator Economic Operator Economic Operator
Framework Agreements

 Multi-provider framework – between a central purchasing body acting on behalf of a number of contracting authorities and
multiple providers

Contracting Contracting Contracting Contracting

Authority Authority Authority Authority

↓
Central Purchasing Body

↓
Framework Agreement

↑
Economic Operator Economic Operator Economic Operator
Request for Tender

 RFT Documentation

 Essential Information to allow you to send in a competitive

bid

 Selection Criteria

 Award Criteria
Selection of Candidates

 Difference between Selection and Award

 Selection Stage; is about determining which economic

operators are qualified to perform the contract

 Award Stage; is about determining which tender is the best

one meeting the award criteria set
Selection of Candidates

 Mandatory grounds for exclusion

 Participation in a criminal organisation

 Corruption
 Fraud
 Money-laundering
 Art. 45 Directive 2004/18/EC
Selection of Candidates

 Suitability Criteria

 Economic and Financial Standing

- turnover
- operating profit
- solvency
Selection of Candidates

 Technical or Professional Ability

 Skills
 Equipment
 Manpower
 Past experience
Award Criteria

 Basis on which a contracting authority chooses the best

tender

 Criteria must be established in advance

 Fundamental Principles
Award Criteria

 Two Options;

 Lowest Price

 Most Economically Advantageous Tender

Award Criteria

 MEAT

 Environmental characteristics
 Quality
 Delivery time
 After-sales services
 Running cost
 Price
Awarding the Contract

 All competitors must be informed of the results

 Application of “standstill” periods

De-briefing

 Public Procurement Guidelines – voluntary de-brief

 EU Public Procurement Remedies Directive 2007/66/EC

 Freedom of Information Act 1997

Standstill Period

 First remedial right available to aggrieved tenderers

 14 days – Fax or electronic means

 16 days – Notification posted
Best practice
 The exact Standstill Period

 The name of the successful tenderer

 The scores of both the successful and unsuccessful tenderer

under each criterion

 The reasons for the rejection of the tender

 The characteristics and relative advantages of successful

tenderer
Powers of the High Court
 Declare a contract void

 Declare a contract ineffective

 Order the contract to be varied

 Award damages

 Alternative penalties
Unintended consequences
 Cost of Legal Representation

 Reputational Risk

 Duration of Legal Proceedings

 Time period to initiate a Challenge

 Time period to initiate a Legal Proceeding

EU Public Procurement 131

Directives
 Exclusion of suppliers

 Financial Standing of the Supplier

 Appropriate statements from bankers
 3 years set of accounts
 Statement of overall turnover
 Turnover in respect of contract goods for the past 3 financial years
EU Public Procurement 132

Directives
 Technical Standing of Supplier
 i.e. the ability to carry out the contract
 List of major customers
 Technical facilities
 Quality assurance schemes
 Details of technical personal involved
 Samples of products/material
 Conformity to specifications
 Proof of enrolment on a professional register
EU Public Procurement 133

Directives
 Price €
 Can only be discussed under the negotiated procedure
 Cannot be discussed under the open or restricted procedure
 Clarification can be given only
EU Public Procurement 134

Directives
 Unsuccessful Tenders
 Are entitled to the following information only
 Reason for rejection
 Name of successful tenderer
 These must be give within 15 days of the request being submitted
OBJECTIVES COMPETITIVE
TENDERING 135

1. Ensure VFM, by opening up to competition

2. Avoid abuse and allegations of abuse
3. Supplier equality – access, open
communication, offer must conform to
specification
4. Transparency of process and procedures –
intentions are public via notices and press

 Effectively managed – represents a free, open economy

LEGISLATION / GUIDELINES 136

Other legislation impacting purchasing includes:

 Competition Act
 EU Directives (Procurement; Packaging / Waste; Product Safety)
 Freedom of Information Act
 Local Government Act
 Prompt Payment Act
 Sale of Goods and Services Act
 Safety Health and Welfare at Work Act

 Subject to continuous amendment, seek professional advice

Freedom of Information Act 137

Prompt Payment Act

 STAGES IN THE COMPETITIVE TENDER PROCESS
  138
Information Stage  Quotation
 
 
Proposal Stage  Request for Proposal / Tender
 

 
Evaluation Stage  Evaluate Proposals
 
 
Negotiation Stage  Negotiation
Terms & Conditions
 
Final Stage  Contract awarded
Project completed
 
Ongoing  Contract / Supplier Management
 
 
 Competitive Tendering – Information Stage
Is Purchase covered by an existing supplier
Identify a Need 139
agreement – Preferred or Committed?
to Purchase

YES Use procedures / place order

NO

Quotation or
Tender ?

Refer to Thresholds

If threshold > £25,000

Progress to
Proposal Stage
SOURCING / SUPPLIER CATEGORIES 140

COMMITTED Contract / agreement in place and body is committed to use

supplier for the good or service.
Competitive quotations not required.
Any other suppliers SHOULD not be used.
PREFERRED Contract / agreement in place but no commitment to use that
supplier exclusively.
Competitive quotations not required.
Recommended that they are used wherever possible.
APPROVED No formal contracts / agreements in place, have provided
evidence of their products/services and financial standing.
Buyers SHOULD approach only approved suppliers when
seeking quotations and tenders.
UNCLASSIFIED Suppliers not covered in the categories above. Buyers must
ensure that such suppliers can meet the appropriate standards
of quality and service. If performance has been satisfactory
can be recommended to ‘approved’ via Procurement and
Contract Office.
QUOTATION OR TENDER ? 141
Example from a University
 Under €1269 At least 1 written
quotation

 €1,269 to €6,348 At least 3 written

quotations
 
 €6,348 to €31,743 At least 4 written
quotations
 
 €31,743 and above At least 3 tenders

Consult the Procurement and Contracts Office

(€249,681 and above , the EU Public Procurement Directives apply)

 The Tendering Process – Proposal Stage

142
Commence
Determine Tender Type
Tender Process
(Open/Restricted or consult with Procurement Office)
> € 31,743

Develop Detailed Specifications, Minimum

Selection Criteria and Contract Award Criteria

Finalise Tender Document & Contract

Advertise in local, national press or EU journal as

required or as per University policy

Issue Tender Document to suppliers as per the dates

advertised

Maintain a register of tenders issued and returned

Open tenders
on date
specified
SPECIFICATIONS 143

 Definition
‘ a description of the physical or functional
characteristics, or of the nature of a supply,
service, or construction item; the
requirements to be satisfied by a product,
material, or process indicating, if
appropriate, the procedures to determine
whether the requirements are satisfied’.

 Attributes of a product, process or service –

includes limits, numerical measures, purpose
and intent
SPECIFICATION TYPES 144

1. Functional – purpose and intent of performance.

 For most products and services

2. Technical /design - characteristics of product, manufacturing

requirements, material to be used.
 Construction work and turnkey projects

3. Combination
WRITING SPECIFICATION 145

• Use functional / performance characteristics

• Sufficiently detailed to describe what is actually required as
clearly as possible
• Any technical requirements/references to any relevant
European, international, IH&S and QA (ISO 9000 etc )
• References to brand names, sources of supply, trade marks,
patent types at the expense of another equivalent is not
acceptable
 If an item cannot be specified without a reference to
brand name must be accompanied by the words ‘or
equivalent’
 Objective to increase competitiveness ----- key to ensure
VFM and a good supplier base
E-Procurement
Towards e-Procurement

“Electronic means of information and communication can

greatly simplify the efficiency and transparency of procurement
processes. They should become the standard means of
communication and information exchange in procurement
processes, as they greatly enhance the possibilities for economic
operators to participate in procurement procedures across the
internal market”

(Recital 52)
Scope

 Leading to the development of full electronic communication

at all stages:
 Notices
 Availability of tender documentation
 Submission of bids

 No obligation to process/evaluate bids electronically.

 Post-contract award procedures fall outside scope.

 Dynamic Purchasing Systems, e-Auctions & e-Catalogues.

Considerations
 Non-discriminatory in terms of technology; interoperability &
standardisation key:
 MS to develop national capabilities.
 Potential role for the EC in developing standards.

 Some exceptions to using e-communication will exist:

 Specialised tools/software/equipment required.
 Security concerns.
Key dates

 Electronic notification and access to tender documents

mandatory across Europe by March 2016.

 Central purchasing bodies required to accept tender

submissions electronically by March 2017.

 All contracting authorities to accept electronic submissions

by of offers will become mandatory for all contracting
authorities.

 Remember “Member States and contracting authorities

should remain free to go further if they so wish”.
Towards e-Procurement in Ireland

 Procurement under the Public Service Reform Plan:

 Implementation of spend analytics (Q3 2015)
 Assess options for procurement market place capabilities (Q3 2014)
 Implement and roll-out solution for procurement market place (Q4 2016)
 Assess options for Purchase to Pay system (Q2 2015)

 Circular 10/14 – Initiatives to assist SMEs in Public

Procurement:
 Online submission of tenders should be allowed.
 Publication of award notices for all procurements in excess of €25,000 on eTenders.
 Better use of eTenders by buyers is encouraged.

 National payments plan,

Green / Sustainable
Procurement
 Introduction

 What is Green Public Procurement (GPP)?

 Recent Developments
 Uptake and existing GPP practices
 Main possibilities for GPP under the New
Directives
 EPA Guidance
 What is GPP?

 “A process whereby public authorities seek to procure goods, services

and works with a reduced environmental impact throughout their life
cycle when compared to goods, services and works with the same
primary function that would otherwise be procured”. European
Commission, 2008

 Implementation of GPP policies takes place in the context of the rules

of the Treaty on the Functioning of the European Union and
particularly the Procurement Directives.

 Green Procurement is a voluntary instrument introduced by the EU,

but there are a number of mandatory environmental EU or national
legislation e.g. Clean Vehicles Directive 2009/33/EU, Waste
Management (Food Waste) Regulations S.I. No. 508 of 2009, Etc.
 Why?

 Benefits: comply with legislation and contribute to environmental

targets, e.g. CO2 reduction, resource use and waste, water and energy.
Protect reputation, encourage new competitors, increase resilience by
reducing exposure to commodity prices.

 Costs: GPP reduces costs in many categories, especially on a whole-

lifecycle basis. In others it can lead to higher overall costs, primarily
when technology or processes are new or specialised.

 Challenges and Risks: Application of GPP can increase complexity of

tenders,, although legal framework is becoming increasingly strong. It
may require additional resources / expertise
 Financial impact of GPP per Country

Source: Pricewaterhousecoopers, Significant and Ecofys (2009) Collection of statistical

information on green public procurement in the EU.
 Financial impact of GPP in the UK per Sector

Core criteria: are designed to

achieve some improvement over basic
legal requirements, without incurring
additional costs or requiring significant
effort to verify compliance.

Comprehensive criteria: are

designed for those who wish to
purchase the best environmental
products on the market. This may
require additional costs or additional
effort to verify compliance.

Source: Pricewaterhousecoopers, Significant and Ecofys (2009) Collection of statistical

information on green public procurement in the EU.
 Recent Developments?

 In Ireland, GPP was formally adopted in the 2012 DELCG/ DPER

publication “Green Tenders: An Action Plan for Green Procurement”.
 Green Tenders identified eight priority sectors for GPP
implementation, and adopts a target for 50% of procurement in these
sectors (both by number of contracts and by value) to include at least
core GPP criteria.
 Setup of a GPP Implementation Committee.
 Creation of the Office of Government Procurement in 2013.
 SEAI Public Programme
 OPW guidance for construction – in development
 EPA guidance covering other product groups – in development.
 New Procurement Directives create more opportunities for GPP
 Uptake of GPP in the EU27

Source: Centre for European Policy Studies and College of Europe. (2012) Monitoring the Uptake of Green
Public Procurement in the EU 27.
 Current practices in Ireland?

 Policy and targets: OPW, HSE, etc.

 Examples:
 Roads, Buildings, refurbishment - NRA, OPW, LAs, etc.
 LED Lightings - LAs, etc.
 Electric vehicles - DAA, ESB, etc.
 Electricity supply - OGP, LAs, etc.
 Recycled Paper - OGP, etc.
 Laboratory Equipment – NUI Maynooth, etc.
 Organic Food - Marine Institute, etc.
 Cleaning products - OPW, etc.
 ICT - DPER, etc.
 Dublin Fire Brigade – vehicles, buildings, etc.

http://ec.europa.eu/environment/gpp/case_en.htm
http://www.environ.ie/en/Environment/SustainableDevelopment/GreenPubli
cProcurement/PublicationsDocuments/FileDownLoad,29208,en.pdf
 The New Directives a Mandate for GPP?

 Ambitions of reform: make procurement more strategic by

including considerations for environmental, social and innovation
policies.

 Mandatory vs. voluntary: Member State Choice vs. contracting

authority choice.

 Main possibilities include:

 Environmental and social records
 Sustainable production practices
 Use of eco-labels
 Life-cycle costing
 Environmental and Social Records at
Selection/Exclusion Stage

 Exclusion of economic operator (Article 57(4) of 2014/14/EU):

 Violation of International agreements, EU and National laws.
 Grave professional misconduct.
 Significant persistent deficiencies in prior contract.
N.B. Self-cleaning provision applies, and 3 years maximum exclusion
period
 Qualitative selection based on experience / technical capacity to carry
out environmental aspects (Article 58 of 2014/14/EU).
 Evidence of Environmental Management Systems supply contract as
well as services and works (Article 62(2) of 2014/14/EU).
 Indication of the supply chain management and tracking systems
that the economic operator will be able to apply (Annex XII of
2014/14/EU)
 Sustainable Production Practices
Technical Specifications and Award Criteria

 Processes and methods for production or other life-cycle

stages can be specified (Article 42 of 2014/14/EU):
Examples: Electricity from renewable sources, chlorine-free
bleaching (of paper), food from organic agriculture.

 Award Criteria can relate to any stage of the life-cycle provided

they are linked to subject matter of the contract i.e. cannot relate
to general corporate practices (Article 67of 2014/14/EU)
Example: can award marks for lower levels of CO2 emissions for a
particular contract, but not for a company being ‘carbon neutral’

 Link to subject matter, transparency and equal treatment

apply – criteria must not confer an unrestricted freedom of
choice and must ensure the possibility of effective competition.
 Eco-labels
 To define and verify compliance with
technical specifications, award criteria and
contract clauses (Article 43 of 2014/14/EU)
N.B. Can not require a specific label but can require 3rd party certification unless
operators have no opportunity to obtain this for reasons not attributable to them.
 From Dutch Coffee case (C-368/10): must reference criteria behind the
label, not just the label itself.
 Labels must be based on:
 only concern criteria which are linked to the subject-matter
 based on objectively verifiable and non-discriminatory criteria
 established in an open and transparent procedure in which all
relevant stakeholders may participate
 accessible to all interested parties
 are set by a third party over which the economic operator
applying for the label cannot exercise a decisive influence.
 Life-cycle costing

 Possible under 2004 Directives where MEAT is used.

 New procedural rules for LCC set out in Article 68 of
2014/14/EU.
 Covers cost borne by contracting authority or other users e.g.
acquisition, use, maintenance and end-of-life.
 Also environmental externalities, provided their monetary value
can be determined and verified, e.g. greenhouse gas emissions.
 Must indicate method to be applied and data required from
tenderers in the procurement documents. Methods must be:
 Based on objectively verifiable & non-discriminatory criteria
 Accessible to all interested parties
 Data required can be provided with reasonable effort by normally
diligent economic operators
 Where common EU methodology for LCC exists, it must be
applied.
 Contract Performance Clauses

 Article 70 of 2014/14/EU specifically authorises environmental

clauses (as previously) but now must have subject-matter link.

 Example: a contractor could be required to report on the

percentage of waste diverted from landfill for a specific contract,
but not for their operations overall.

 Article 71 of 2014/14/EU subcontracting provisions may allow

greater traceability and make it more difficult to pass off blame
for any environmental defaults/poor performance.

 Subcontractor must be held accountable for breaches of article

18(2) of 2014/14/EU.
 EPA Guidance

 Work started in January 2014, currently at draft stage.

 Focused consultation undertaken with public sector bodies and

suppliers organisations to identify level of GPP implementation and the
main perceived risks/barriers.

 Detailed review of existing criteria, guidance and legislation, how does

this apply in the Irish context.

 Development of core and comprehensive criteria for all eight sectors.

 Examples, definition and tips on practical implementation are given in

the guidance.
 Conclusions

 There have been some good progress in GPP implementation in Ireland.

 The New Directives provide further clarity.
 Some key questions remain:
 Next steps to facilitate implementation?
 Leadership needed by who?
 OGP Role?
 Dissemination of existing experience?
 Are further resources needed?
 Monitoring of implementation and benefits?
SME Access
SME Policy

 Why include SMEs?

 SMEs account for 99% of enterprises operating in the

Single Market, of which 92% are micro-enterprises
 Key drivers of employment generation
 Sources of innovation in the Single Market
SME Policy

 SME participation in the European public

procurements markets is disproportionate to
the number of SMEs operating in member
states.

 Significant challenges in both preparing and

informing SMEs of tendering opportunities
and promoting more SME-friendly
procurement techniques among public buyers.
SME Benefits

High Quality

SMEs provide
high quality Flexible

supplies and
Offering flexible
services Simple Structure
solutions to
Simple problems
organisation Local Knowledge

structure
Instinctive local
Improvement

PrProcess
knowledge.
SME Benefits

Income stream

Valuable capital
source Continuous
Demand

Continuous
Locality
local or
Accessibility to national
regional and Prompt payment demand
national buyers
Usually within 30
Improvement
days
Group Work

 Objectives:
 Reflection of public procurement overview; relating it
to your own experiences and perceptions of
procurement

 Discussion:
 Constraints of public procurement.
 Agreements, frustrations, questions

 Process:
 Group discussion
 Plenary discussion
SME Restraints

External
Restrictions

Internal
Restrictions
SME Policy
 Internal Restrictions

 Lack of technical qualifications and capabilities

 Lack of professional qualifications and capabilities
 Inability to meet financial and insurance requirements
 Inadequate tendering skills
SME Policy

 External Restrictions

 Lack of knowledge of tender opportunities

 Over-emphasis on price
 Inadequate feedback from procurers
Improving Tendering Techniques

 Public Procurers;

 Reduce the administrative burden for

suppliers
 Break contracts into lots
 Ensure financial capacity criteria are
proportionate
 Clearer award criteria
 Make themselves more accessible to suppliers
 Provide meaningful feedback
Improving Tendering Techniques

How can you improve tendering

techniques?

SMEs;
 http://procurement.ie/sites/default/files/Top%20Tender
ing%20Tips%20for%20Public%20Sector%20Contract
s%20-%2030%20Jan%202012.pdf
Technique One

Public Procurement Plan

• Annual Plan
• Consortia Planning
• Time Management
• Tender Library
Technique Two

Know your buyers

• Local, Regional, National
• Northern Ireland
• Wales
• Europe
• Attend networking events – Meet the
Buyer
Technique Three

Market your goods and services

• Local buyer contracting lists

• Framework agreement updates
Technique Four

Be selective

• Only compete for tenders you can actively

complete
• Consortia building
Technique Five

Tender Response

• Control your actions

• Designated teams
• Time management
Technique Six

Understanding the request for tender

documentation

• Read the document carefully

• Seek clarification
• Bid library
Technique Seven

Understanding the specifications and

requirements

• Bespoke answers
Technique Eight

Control Tender Submission

• Planned electronic and paper submissions

• Correct dates and time
Technique Nine

Understand the Evaluation Process

• Lowest Price

• Most economically advantageous tender

Technique Ten

Debriefing requests

• Standstill Periods
• Procurer Reviews
Technique Eleven

Internal post tender review

• Tender library
• Strengths, weaknesses
Technique Twelve

Contract Award

Contract Performance
192
RECAP - OBJECTIVES of TRAINING 193

 Increase awareness of procurement and the role of the

procurement function
 To examine role of specification in evaluation processes
 To obtain current knowledge base for evaluation
procedures
 194

QUESTIONS
&
ANSWERS
References / Further Information 195
 
Public vs Private Sector Purchasing
 
    196
Activity Public Private

     
Adherence to National Laws / EU High Low / medium

     
Public Scrutiny High Low

     
Budget Changes / Increases Fixed difficult to alter More flexible to take advantage
  of any opportunities
     
Supplier Base Large Small – strategic partnerships

Maintain confidentiality about supplier pricing and    

proposals Difficult, publicly recorded Yes

     
Motivated to be profitable / shareholders No Yes – key driver for improvement
 
     
Tender Timescales Longer Shorter

     
Administrative costs / Discipline Higher Smaller
 
   
Scope for Creativity and Innovation Low / medium High

     
Ability to Negotiate Low / medium High

     
Degree of Professionalism of Staff High High