Session “Best practice for the procurement of services” Procurement of Intellectual Services

1. Session “Best practice for the procurement of services” Procurement of Intellectual Services Manfred Essletzbichler EBRD-Consultant, WOLF THEISS Kiev, November 2012

2. Agenda General Definition Examples (Non-)Descriptiveness Choice of procurement procedure Award criteria

3. General (1) “Services […], insofar as the nature of the services to be provided is such that contract specifications cannot be established with sufficient precision to permit the award of the contract by selection of the best tender according to the rules governing open or restricted procedures” (Art 30 (1) c EU-PPD) Characteristics of “intellectual services” Services which do not (necessarily) result in the same outcome Main objective is the solution to an assignment by intellectual “work” Creative or innovative element in order to solve the problem/ the task to be performed Conceptual activity Complete and exhaustive (prior) description is impossible (however, outcome or assignment can be described) Clear and definite description of service would “anticipate” the solution and therefore “torpedo” the purpose of the tender Bids are not comparable without negotiations

4. General (2) Examples for intellectual services (Construction) planning services Research services Development (R&D) services Advertisement services (campaigns, branding) Consultancy services Software-development (customized software) Scientific studies Reports, professional opinions (e.g. tax, legal, economic)

5. General (3) Consequences for procurement of intellectual services Negotiated procedure is obligatory (strict prohibition of negotiations in open and restricted procedure)  as the nature of the services to be provided is such that contract specifications cannot be established with sufficient precision to permit the award of the contract by selection of the best tender according to the rules governing open or restricted procedures Economically most advantageous bid (not lowest price !)  sole price negotiations are not allowed

6. General (4) Boundary between intellectual and “standardized” services Case-by-case evaluation Decisive whether service can be (exhaustively) described Services include both kinds of services: Main value test vs main object test

7. (Non-)Descriptiveness (1) Descriptiveness Description of subject of the service Indescribable if contract specifications cannot be established with sufficient precision to allow the evaluation of the bids in an open or restricted procedure Objective assessment before launch of the tender ! (technical) expert opinion might be needed for assessment of descriptiveness Austrian review authority “Descriptiveness does not necessarily mean for the envisaged outcome/result to be describable, but descriptiveness of the process to achieve the result: every bidder must have the same and distinct conception of the envisaged or necessary scope of services”

8. (Non-)Descriptiveness (2) Indicators for “Non-descriptiveness” (1) Bidders determines the exact scope of services and quality through their bids ! Various possible solutions ! Solution depends on bidder ! Unclear allocation of risks ! No “standardized” behavior or process for bidder High complexity of the scope of services High number of different interests Size (and complexity) of project Number of components and parts Number of parties involved Number of planning stages and coordination rounds

9. (Non-)Descriptiveness (3) Examples from Austrian case law Non-describable services (i.e. intellectual service) Design for works (i.e. construction planning services) Draft of tender documents and execution of tender procedure Monitoring accompanying / accompanyinginspectionforthe implementation of a sewagetreatment plant Project management for construction of a hospital Advertising and marketing services for hospital PR campaign for environmental certificate Describable services (i.e. „standardized“ services) Construction supervision and coordination ? Personal view: no standardized approach possible  intellectual service

10. Choice ofProcedure Negotiated procedure is mandatory The nature of the services requires a “dialogue” (i.e. negotiations) Negotiations are necessary to establish comparable bids which only then can be assessed according to award criteria Negotiated procedure with prior notice 1st stage: call for requests to participate (eligibility/qualification and selection criteria) 2nd stage: negotiations with (at least) 3 bidders regarding every aspect of the tender

11. Award Criteria – Special caseofreferenceprojects Eligibility and award criteria Usually strict division between eligibility & selection criteria and award criteria Eligibility & selection criteria are company/contractor related Award criteria are contract related Permissibility of the evaluation of reference projects in the award stage when procuring intellectual services ? References are company related References may therefore, prima facie, not be an award criteria Special situation in case of intellectual services Quality of service is linked to the quality of the person rendering the services (e.g. an creative director for a marketing campaign, project manager, etc)  References regarding key personnel arguably permitted !

12. Contact Mag. Manfred Essletzbichler Tel: + 43 / 1 / 51510 – 5350 Fax: +43 / 1 / 51510 – 665350 E-Mail: manfred.essletzbichler@wolftheiss.com WOLF THEISS Attorneys-at-LawSchubertring 61010 ViennaAustria