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Procuring supplies at CERN Presentation for EN

Procuring supplies at CERN Presentation for EN. Questionnaire – Risk Matrix). FP-PI Structure and Procurement Responsibilities & Rules. Anders Unnervik, Boi-Lan Lemoine 9 September 2014. Agenda.

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Procuring supplies at CERN Presentation for EN

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  1. Procuring supplies at CERNPresentation for EN Questionnaire – Risk Matrix) FP-PI Structure and Procurement Responsibilities & Rules Anders Unnervik, Boi-Lan Lemoine 9 September 2014

  2. Agenda «In conclusion; our major contract expires tommorrow, we have no idea of whatwewant, and no knowledge of the market. It is time to passthisacross to the procurement team…» FP Structure & 2013 Statistics Responsibility Influences & Procedures < 10 kCHF 10 to 200 kCHF > 200 kCHF ProcurementStrategy 8.Payment

  3. 1 FP Structure & 2013 Procurement statistics “Bridge the gap between Means and Ends”

  4. Anders UNNERVIK Boi-LanLemoine Lisa Bellini-Devictor Dante Gregorio Cristina Lara Accelerators and Technology Section (FP-PI-AT) Admin. and General Infrastructure Section (FP-PI-AG) Research and Computing Section (FP-PI-RC) Industrial Services Section (FP-PI-IS) Purchases of supplies exceeding 200 kCHF for the Accelerators and Technology Sector All purchases and price enquiries below 200 kCHF. Purchases of supplies exceeding 200kCHF for the Research and Computing Sector and orders for computing , hotels and conferences Purchases of supplies exceeding 200 kCHF for the Admin. and General Infrastructure Sector and the CERN Pension Fund, including CERN's stores orders, insurance and civil engineering works contracts Procurement of services exceeding 200kCHF Quality Assurance Service for the Procurement Service Bjorn Jenssen Ivo Lobmaier Floris Bonthond AdamHorrIdge Sandrine Magnan Nordine Azizi Sarah Pamelard Dominique Trolliet Arielle Gaidon Laurence Madinier Laszlo Abel Fatima NAJEH Hiba GERSTER Fleur ZROUNBA Sebastien SONNERAT Alexandra HAHNEL-BORGEAUD Stephanie BLANCHARD Sandra BENOIT-GODET Alexandre TABARY Emilia KWIATKOWSKA Anne Mansuy Pascal Droux Aissa BouBOU Gaelle Breuillaud

  5. 1.2 Procurement function @ CERN • Close link between the procurement function and organizational objectives and strategies; • Unlike private sector where the focus is profit, CERN is accountable to the taxpayers of its member states whose money is being spent, including disappointed bidders and potential suppliers; • Procedures and practices have been put into place to stand up to the scrutiny of auditors and member states on purchasing decision made. Purchasing Supplies — Procurement Strategy

  6. 1.3 Procurement objectives @ CERN • The Procurement and Industrial Services (FP-PI) Group procures all supplies and services for CERN, meeting the: • specified and contractual technical, delivery and performance requirements at the lowest possible overall cost, • while achieving balanced industrial return for the CERN Member States. Purchasing Supplies — Procurement Strategy

  7. 1.4What Supplies did we buy in 2013? 352 Million CHF

  8. 1.5 What supplies did we buy for EN in 2013? All amounts are in Swiss francs (MCHF)

  9. 1.6What services did we buy in 2013? 166 MCHF All amounts are in Swiss francs (MCHF)

  10. 1.7What Services do we buy for EN ? All amounts are in Swiss francs (MCHF)

  11. 1.8 Industrial return status Well and poorly balancedstatus for adjudication purposes for the period 1 March 2014 – 28 Feb 2015 Based on payments in 2010, 2011, 2012 and on payments and outstanding commitments for 2013 CERN/FC/5806/RA

  12. 1.9 Industrial return suppliesfrom the lowest return to the highest CERN/FC/5806/RA

  13. 2 Division of responsibilities in procurement @ CERN

  14. 2.1 Management Responsibilities (i)Management, Project Leaders/Coordinators: • Understand CERN’s broader strategies and objectives; • Identify procurement objectives & formulate strategy • Determine critical success factors and KPI’s; • Ensure cooperation between managers, technical and procurement staff by means of review committees ; • Review the effectiveness of decisions and performance; • Encourage continuous improvement of the procurement process.

  15. 2.2 Technical Responsibilities • Technical : • Evaluate the need and specify requirements; • Consult procurement staff • Plan realistically • Allow sufficient time for the procurement process; • Avoid splitting requirements; • Avoid over-specifying requirements; • Keep informed on market developments; • Monitorcontractor’s performance; • Inform the procurement as soon as problems arise! Purchasing Supplies — Procurement Strategy

  16. 2.3 Procurement Responsibilities (1) (iii)Procurement : • Formulate and implement procurement strategies for each requirement in collaboration with the technical officers; • Assist in the development and review of the technical specifications with technical officers; Purchasing Supplies — Procurement Strategy

  17. 2.4 Procurement Responsibilities (2) (iii)Procurement : • Draw up the tender forms, based on the technical specifications, formulate the basis of adjudication, prior to seeking offers; • Ensure that bidding documents are clear, concise and consistent in collaboration with the technical officers. Purchasing Supplies — Procurement Strategy

  18. 2.5 Procurement Responsibilities (3) (iii)Procurement : • Negotiate favorable conditions with suppliers; • Contract administration; • Assist in the continuous improvement of the procurement process. Purchasing Supplies — Procurement Strategy

  19. 2.6 Fraud issues Fraud or perception of Fraud will have a negative impact on the organisation! • Bid rigging - where suppliers collude with or without the knowledge of CERN Staff to control the tender process. • Manipulation of specifications – where inadequate bid specifications in order to facilitate the selection of a favoredbidder • Corruption – where CERN staff leak helpful information to a favored bidder while withholding such information from other bidders. Reminder: • Do not pick up goods from the suppliers premises • Do not ask firms to deliver supplies prior to the establishment of an order. Purchasing Supplies — Procurement Strategy

  20. 3 Influences & Procurement Procedures

  21. 3.1 Influences on Procurement Strategy 4. Cost 5. Non-costfactors 3. Supplymarket 6. Risks 2. Demand Strategy 1. Objectives 7. Stakeholders Purchasing Supplies — Procurement Strategy

  22. 3.2 Definition of Supply contracts: Contracts for supplies of equipment including R&D contracts, machinery, magnets, electricity, telecommunications and insurance contracts as well as maintenance and leasing contracts covering data processing, printing and telecommunication equipment. Purchasing Supplies — Procurement Rules

  23. 3.3 a function of Price: Procedure = ƒ( Price estimate ) Purchasing Supplies — Procurement Rules

  24. 3.4 Thresholds: Purchasing Supplies — Procurement Rules

  25. 3.5 Time: Purchasing Supplies — Procurement Rules

  26. 4 Requirements below 10’000 CHF Range: 0 CHF – 1000 CHF Range: 1’000 CHF – 5’000 CHF Range: 5’000 CHF – 10’000 CHF ‘ Centraled’Achat 10 kCHF’ Ms. Sarah Pamelard 0 CHF – 1’000 CHF Ms. Arielle Gaidon 1’000 CHF – 5’000 CHF Ms. Laurence Madinier “ “ Ms. Dominique Trolliet 5’000 CHF – 10’000 CHF (*)

  27. Purchasing Supplies — Procurement Rules

  28. 6.2 Definitions • COUNTRY OF ORIGIN : • The country in which the supplies (includingtheir components and sub-assemblies) are manufactured or undergo the last major transformation by the contractor or hissub-contractor(s). • CERN PAYMENT TERMS: • One month net fromacceptance of the supplies by CERN and receipt of a correct invoice. • VALID SINGLE TENDER JUSTIFICATIONS: • The compatibility with supplies already installed at CERN. • No technical equivalence on the market. Purchasing Supplies — Procurement Rules

  29. 6.3 Order value below 1k CHF (Automatic) • Only one written offer is necessary • Orders are sent by fax • If purchasing support is required please select ‘’no’’ in the field ‘’ automatic treatment” • Regular controls are made by purchasing to insure no ‘multiple orders’ are made (salami tactic) Purchasing Supplies — Procurement Rules

  30. 6.4 Saving Time & Increasing Efficiency • CAUSES FOR DELAYS (Orders below 1k CHF) • Incorrect or missing information in supplier entry (especially wrong fax number) • CERN General Terms & Conditions not accepted • Advance payment requested • If the country of origin not indicated it is defaulted to firm’s country • Order does not have a value if price entered is ‘’Approx’’ • Currency is incorrect • For Swiss suppliers, an A/OI form needs to be prepared by procurement and will be sent to the firm’s commercial contact • Invoices must be sent to accounts-payable@cern.ch Purchasing Supplies — Procurement Rules

  31. 6.5 Order Value between 1k CHF to 5k CHF • One written offer is necessary • Simplified templateavailable on FP site • Orders are sent by post Purchasing Supplies — Procurement Rules

  32. 6.6 Saving Time & Increasing Efficiency • CAUSES FOR DELAYS (Orders between 1k CHF and 5k CHF) • Supplier entry (not filled out or wrong supplier) • Country of origin (not indicated or not explicit in supplier’s offer) • Transport terms not indicated or not aligned with FCA or DAP, Incoterms 2010 CERN • Suppliers request advance payments • Information in EDH (DAI) does not match offer • Only one line is created for several articles • Data entered in EDH in French and English (mix) or inconsistent with language of offer (ENG/FRA) • DAI received by FP from same user/group is for the same supplier and/or the same product Purchasing Supplies — Procurement Rules

  33. 6.7 Range: 5k CHF – 10k CHF • Bids can be requested by Technical Officer provided CERN Procurement Rules are followed: • At least 3 written bids to be sought • Simplified template available • If < 3 firms contacted  single tender procedure • Handled by FP-PI’s “CentraleAchat 10K” • Firms from CERN’s Member States • If possible, firms from very poorly balanced Member States. Purchasing Supplies — Procurement Rules

  34. 6.8 Saving Time & Increasing Efficiency • Causes for Delay (5k CHF – 10k CHF) • All the same as previous + • Incomplete justification attached Purchasing Supplies — Procurement Rules

  35. 5 Requirements rangingbetween 10k CHF and 200k CHF Range: 10k CHF – 50k CHF Range: 50k CHF – 200k CHF ‘ CentraleAchat 200k CHF Ms. Sandrine Magnan Mr. Nordine Azizi Mr. Adam Horridge

  36. Purchasing Supplies — Procurement Rules

  37. 5.2 Range: 10k CHF – 200k CHF • Price enquiry documents in English • 3 to 5 firms will be contacted • Annexes may include: • Technical drawings • Description & Quantities Estimate (DQE) • “Working on the CERN Site” (PSO/2011-001/Rev.5) Purchasing Supplies — Procurement Rules

  38. Range: 10k CHF – 200k CHF5.3 Adjudication • Lowest Compliant Bid • i.e. to the firm whose bid • complies with • the technical requirements • the financial requirements • the delivery requirements • And is the lowest cost Purchasing Supplies — Procurement Rules

  39. Range: 10k CHF – 200k CHF5.4 Adjudication • Price based on Free Carrier basis(FCA as per Incoterms 2010), i.e.: • Without transport costs • With packing and loading • No disadvantage to firms located in distant countries Purchasing Supplies — Procurement Rules

  40. Range: 10k CHF – 200k CHF5.5 Adjudication However, Supply contracts shall be adjudicated on a DAP basis (Delivered at Place as per Incoterms 2010) if the ratio of DAP price of the lowest FCA bid to the lowest DAP bid exceeds1.10. Purchasing Supplies — Procurement Rules

  41. Range: 10k CHF – 200k CHF5.6 Adjudication • Supply contracts exceeding 100kCHF shall be subject to the alignment rule: • 2 possibilities, if lowest bid compliant is • from poorly balanced Member State  the bidder gets the contract • from well balanced Member State and if first lowest bid compliant isfrom poorly balanced Member State is < 20%and if it aligns with cheapest bid this bidder gets the contract Purchasing Supplies — Procurement Rules

  42. Range: 10k CHF – 200k CHF5.7 Saving Time & Increasing Efficiency • In case of a Price Enquiry (PE): • Contact the purchasing officer to define the best strategy (in function with the estimated value; risks; critical path); • Schedule enough time to prepare the final version of the technical specification document (including HSE review) in English; • Prepare a technical questionnaire for critical supplies; • Draw up a list of potential suppliers bearing in mind “CERN industrial return”. Purchasing Supplies — Procurement Rules

  43. Range: 10k CHF – 200k CHF5.8 Saving Time & Increasing Efficiency • In case of single tender, a justification memo attached to the DAI, explaining: • Why you need this supply/service ?(Project/Event) • What are the technical reasons to select such supplies/services? • Why is the supplier you have contacted the only capable to deliver such a supplies/services. • If you have undertaken a research with other suppliers, please provide the details – selection criteria, etc. Purchasing Supplies — Procurement Rules

  44. Range: 10k CHF – 200k CHF5.9 Saving Time & Increasing Efficiency • DO NOT: • Send a DAI without justification in case of single tender; • Send a DAI with only 2 offers • (minimum is three). Purchasing Supplies — Procurement Rules

  45. 6 Requirements exceeding 200k CHF Range: 200k CHF – 750k CHF Range: 750k CHF and above >750k CHF Mr. Bjorn JENSSEN (Backup Mr. Ivo LobmaieR) 200k CHF up to > 750k CHF Mr. BjornJenssen (backup Mr. Floris Bonthond)

  46. Purchasing Supplies — Procurement Rules

  47. Range: exceeding 200k CHF4.2  Market Survey (Sourcing of Firms) • Departmental Request (DR) • Start-up Meeting (Strategy & Planning) • Publication on FP web page • MS Documents (Technical Description; Technical Questionnaire; Qualification Criteria) • Technical Auditing of Documents (Specification Committee) • Sourcing of Firms (Technical Officer; Procurement Officer; DB; EOI; ILOs) Purchasing Supplies — Procurement Rules

  48. Range: exceeding 200k CHF4.3 Invitation to Tender  IT • Further to Market Survey • IT Documents drafted by Technical (Technical Specification – Drawings – Questionnaire – and Procurement (Tender Form) • Technical prepares Risk Matrix for IT > 750k CHF • Specification Committee Meetings scheduled by EN/MEF – IT documents reviewed and MS results presented • IT process (Issuance, Bidders conference, clarifications) • Electronic Bidding tool (receipt of bids) Purchasing Supplies — Procurement Rules

  49. Range: exceeding 200k CHF4.4 IT  Bid assessment • Bids shall be examined to establish that they comply with the technical, financial and delivery requirements in all respects • Communication of relevant information to bidders limitedto: • Procurement Service (< 750k CHF) • A member of Directorate (≥ 750k CHF) Purchasing Supplies — Procurement Rules

  50. Range: exceeding 200k CHF4.5 Adjudication • Lowest Compliant Bid i.e. to the firm whose bid: • Complies with the technical, financial and delivery requirements • And is the lowest cost • Taking into account the origin of the offer in order to ensure balanced industrial return coefficients for the Member State Purchasing Supplies — Procurement Rules

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