This project is co-financed by the European Union and the Republic of Turkey

1. Bölgesel Rekabet Edebilirlik Operasyonel Programı’nın Uygulanması için Kurumsal Kapasitenin Oluşturulmasına Yönelik Teknik Yardım Technical Assistance on Institutional Building for the Implementation of RCOP in Turkey This project is co-financed by the European Union and the Republic of Turkey PRAG Procurement Supply Contracts – version November 2010 Advance Module – Day I RCP-CIC By: Berk Babila, Managing Director - Ecorys in Turkey berk.babila@ecorys.com.tr Ankara, 29 March 2011 PRAG Supply Contracts Training 29-31 March 2011

2. This project is co-financed by the European Union and the Republic of Turkey Content • Introduction • Basic Rules • Procurement Procedures • Technical Specifications – • purpose, objectivity and confidentiality, preparation of TS, division of lots, general requirements; market study PRAG Supply Contracts Training 29-31 March 2011

3. This project is co-financed by the European Union and the Republic of Turkey Supply Contracts Introduction • Supply contracts cover • Purchase, • Lease, • Rental or hire purchase, • With or without option to buy, • of products (incidentally, including sitting and installation) PRAG Supply Contracts Training 29-31 March 2011

4. This project is co-financed by the European Union and the Republic of Turkey Basic Rules Eligibility – the rule on nationality • Participation in the procurement and grant • procedures is open on equal terms to all • natural and legal persons of the EU member states and the countries covered by the Regulation under which the contract is financed PRAG Supply Contracts Training 29-31 March 2011

5. Basic Rules (2) This project is co-financed by the European Union and the Republic of Turkey Eligible Countries • Member States of the European Community: • Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom • Member States of the European Economic Area: • Liechtenstein, Norway • Candidate Countries: • Croatia, Former Yugoslav Republic of Macedonia, Montenegro, Turkey • Potential Candidate Countries: • Albania, Bosnia and Herzegovina, Iceland, Kosovo under UNSCR nº 1244, Serbia, • ENPI Countries: • Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova, Morocco, Palestinian Authority of the West Bank and Gaza Strip, Russian Federation, Syria, Tunisia, Ukraine • Participation is also open to: • Developing countries specified by the OECD DAC (thematic programmes) • International organisations • Beneficiary countries that have reciprocal access to External Aid • A third country (with a derogation endorsed by the EC) PRAG Supply Contracts Training 29-31 March 2011

6. This project is co-financed by the European Union and the Republic of Turkey Basic Rules (3) Eligibility – the Rule of Origin • All supplies and equipment purchased must originate in the EU or in an eligible country as defined above in the nationality rules • In its tender, a tenderer must state the origin of supplies PRAG Supply Contracts Training 29-31 March 2011

7. This project is co-financed by the European Union and the Republic of Turkey Basic Rules (4) How to establish origin? • Origin: Country where the goods haveundergone their last, economically justified, substantial transformation • Evidence: Certificate of Origin To be presented either: • When bringing supplies to the beneficiary country • When the first invoice is presented (pre-financing) • When Provisional Acceptance takes place (if not, breach of contract) PRAG Supply Contracts Training 29-31 March 2011

8. This project is co-financed by the European Union and the Republic of Turkey Basic Rules (5) Exceptions to the rules • Decided on case-by-case basis by the EC before the procedure is launched • May extend eligibility to natural and legal persons from a country not eligible • May allow the purchase of goods and materials originating from a non-eligible country • (Price will not be accepted as justification) • Any derogation must be foreseen at PN stage PRAG Supply Contracts Training 29-31 March 2011

9. This project is co-financed by the European Union and the Republic of Turkey Exercise Derogation from rule of origin PRAG Supply Contracts Training 29-31 March 2011

10. Basic Rules (6) This project is co-financed by the European Union and the Republic of Turkey Grounds for Exclusion – PRAG 2.3.3 Candidates, tenderers or applicants will be excluded from participation in procurement procedures if they in financial difficulties convicted of an offense guilty of grave professional misconduct not fulfilled their obligations relating to social security contributions or taxes subject of a judgement for fraud, corruption, involvement in a criminal organisation or any other illegal activity currently subject to an administrative penalty referred to relevant articles of the regulations PRAG Supply Contracts Training 29-31 March 2011

11. This project is co-financed by the European Union and the Republic of Turkey Basic Rules (7) Grounds for Exclusion – PRAG 2.3.3 • Documents to be submitted not to be excluded from tenders • Relevant Commercial Court /Court of Liquidation and Bankruptcy Chambers of Commerce-Trade Registry • Public Procurement Authority - PPAor for Companies Commercial Court and for partners (natural persons) and managers, General Directorate of Record of Convictions or Statistics or relevant Public Prosecutor • To be checked by EC/CFCU and/or Records of Public Procurement Authority-PPA • Social Security Institution, Tax Offices • Same as (a) • Same as (b) PRAG Supply Contracts Training 29-31 March 2011

12. Basic Rules (8) This project is co-financed by the European Union and the Republic of Turkey Administrative and financial penalties • Tenderers who have been guilty of • making false declarations or • substantial errors or • committed irregularities and fraud • having been found in serious • breach of their contractual obligation • may be excluded from all contracts and grantsfinanced by the EU • for a maximum of fiveyears and this period may be extended to 10 • years in theevent of a repeatedoffence withinfive years • Before deciding to excludea party, in principle the concerned party • has the rightto be heard (contradictory procedure) PRAG Supply Contracts Training 29-31 March 2011

13. This project is co-financed by the European Union and the Republic of Turkey Basic Rules (9) Visibility – communication and visibility manual • Contractorsmust take the necessary measures to ensure the visibility of the EU financing or co-financing. • Communication and Visibility Manual for EU External Actions:http://ec.europa.eu/europeaid/work/visibility/index_en.htm PRAG Supply Contracts Training 29-31 March 2011

14. This project is co-financed by the European Union and the Republic of Turkey Other essential points • Conflict of interest • Awarding principles • No retroactive awards • Use of standard documents • Record keeping • Availability of funds • Environmental aspects • Joint procurement with an EU member state • Expost publication of beneficiaries • http://ec.europa.eu/europeaid/work/funding/beneficiaries_en.htm PRAG Supply Contracts Training 29-31 March 2011

15. This project is co-financed by the European Union and the Republic of Turkey Procurement Procedures • The basic principle governing the award of contracts is competitive tendering. • The purpose is two folds, • to ensure the transparency of operations • to obtain the desired quality supplies at the lowest price. • There are several different procurement procedures, each allowing a different degree of competition. PRAG Supply Contracts Training 29-31 March 2011

16. This project is co-financed by the European Union and the Republic of Turkey Which procurement procedure to apply? Thresholds based on maximum budget (including any co-financing) PRAG Supply Contracts Training 29-31 March 2011

17. This project is co-financed by the European Union and the Republic of Turkey Procedures applied regardless of thresholds • Dynamic Purchasing System • Competitive Dialogue • Negotiated Procedure PRAG Supply Contracts Training 29-31 March 2011

18. This project is co-financed by the European Union and the Republic of Turkey Single Tender ≤ €10 000 in exceptional and duly justified cases • where the factual or legal circumstances defined in Articles242, 244 and 246 of the Implementing Rules of the Financial Regulation are met • one offer sufficient • the identified provider must submit a brief technical proposal and a financial offer • can be sent and received by fax • the CA must prepare a report (Annex A10b) explaining the manner in which the participant(s) in the negotiations were identified and the price was established, and the grounds for the award decision PRAG Supply Contracts Training 29-31 March 2011

19. This project is co-financed by the European Union and the Republic of Turkey Competitive Negotiated Procedure > € 10 000 but < € 60 000 CA invites candidates of its choice to submit tenders • No publication of procurement notice/local advertisement • Bidders are sent a Letter of Invitation to Tender accompanied by a Tender Dossier • Potential bidders are given at least 30 days to submit their technical and financial offers in separate envelopes • If following consultation of the tenderers, the CA receives only one tender that is administratively and technically valid, the contract may be awarded provided that the award criteria are met • Award criterion: Price • cheapest compliant offer • The contract is awarded by conducting selection procedure (verification of the eligibility) and procurement procedure (comparison of tenders) PRAG Supply Contracts Training 29-31 March 2011

20. This project is co-financed by the European Union and the Republic of Turkey Local Open Tender  € 60 000 but < € 150 000 all interested economic operators may submit a tender • no publication of Contract Forecast required • publication of Procurement Notice • standard local advert published only in the Beneficiary Country • the EC only publishes the references of such tender opportunities • A local open tender procedure must provide other eligible suppliers/contractors with the same opportunities as local firms • Deadline for Submission of Tenders • minimum of 30 days between the date of publication of the PN and the deadline for receipt of tenders • Submission of tenders • Single envelope system • Award criterion: price • cheapest compliant offer • The contract is awarded by conducting selection procedure • (verification of the eligibility and of the financial, economic, technical and professional capacity of tenderers) and procurement procedure (comparison of tenders) PRAG Supply Contracts Training 29-31 March 2011

21. This project is co-financed by the European Union and the Republic of Turkey International Open Tender  € 150 000 all interested economic operators may submit a tender • Publication of a Contract Forecast followed by a Procurement Notice • minimum of 30 days between the date of publication of the CF and PN • Deadline for submission of tenders • minimum of60 days after publication of PN • Additional info • clarification meeting / site visit may be foreseen • clarification questions 21 days before deadline for submission of tenders • CA must reply at least 11 days before the deadlinefor submission of tenders • Submission of tenders • Single envelope system • Award criterion: price • cheapest compliant offer • The contract is awarded by conducting selection procedure (verification of the eligibility and of the financial, economic, technical and professional capacity of tenderers) and procurement procedure (comparison of tenders) PRAG Supply Contracts Training 29-31 March 2011

22. This project is co-financed by the European Union and the Republic of Turkey Wrap up Basic Rules and Procedures PRAG Supply Contracts Training 29-31 March 2011

23. This project is co-financed by the European Union and the Republic of Turkey Technical Specifications Purpose • To give instructions and guidance to contractors at the tendering stage about the nature of the tenderthey will need to submit • To serve as the contractor'smandate during project implementation • TS becomes annex of the eventual contract awardedas a result of the tender • Thorough preparation of the TS is crucial for the ultimate success of the project PRAG Supply Contracts Training 29-31 March 2011

24. This project is co-financed by the European Union and the Republic of Turkey Technical Specifications (2) Objectivity and Confidentiality • Strict objectivity and confidentiality must be maintained during the preparation of TS • Each beneficiary’s representative or technical specialist must sign a Declaration of Objectivity and Confidentiality • All information or documents must be held in confidence and used only for the purposes of preparing the TS and not disclosed to any third party • All contributions to preparing TS must be objective and fully respect the principles of fair competition and impartiality, do notfavour any one product, manufacturer or service provider PRAG Supply Contracts Training 29-31 March 2011

25. This project is co-financed by the European Union and the Republic of Turkey Technical Specifications (3) Specifics • Must afford equal access for tenderers and not have the effect of creating unjustified obstacles to competitive tendering • Clear, non-discriminatory and in proportion to the budget allocated for the project • Define the characteristics required of a productwith regard to thepurpose for which they are intended by the CA PRAG Supply Contracts Training 29-31 March 2011

26. This project is co-financed by the European Union and the Republic of Turkey Technical Specifications (4) Characteristics to be defined • the quality levels; • environmental performance (taking into consideration the latest developments on the matter); • design for all requirements (including accessibility for disabled people, environmentalaspects in accordance with the latest developments on the matter); • the levels and procedures of conformity assessment, including environmental aspects; • fitness for use; • safety or dimensions, including, the sales name and user instructions, terminology, symbols, testing and test methods, packaging, marking andlabelling (including environmental labelling, e.g. on energy consumption), productionprocedures and methods PRAG Supply Contracts Training 29-31 March 2011

27. This project is co-financed by the European Union and the Republic of Turkey Technical Specifications (5) Specifics (2) • TS should clearly describe • What is required? • How much of every article is required? • Minimum quality standards? • When and where the supplies to be delivered? • Installation, training and after-sales service? • Warrantyrequirements, etc. • Ensure clarity and conciseness in drafting the TS • Do not point to particular brands and types; avoid being too specific and therefore limiting competition • However, where products cannot be described in a sufficiently clear manner, they may be named as long as they are followed by the words "or equivalent" PRAG Supply Contracts Training 29-31 March 2011

28. This project is co-financed by the European Union and the Republic of Turkey Technical Specifications (6) Division of lots • At the tendering stage, supplies to be procured can be in one lot or divided into lots in a logical manner and in a systematic arrangement such that the supplies in each lot must exist in common sector in the market for a sound tendering • Tenderers may submit an offer for only one lot, more than one lot or all lots. However tenderers must offer all the items under that lot. An offer submitted by the tenderer for a part of the lot is rejected • For each lot, a separate technical specification is developed and a separate contract is concluded PRAG Supply Contracts Training 29-31 March 2011

29. This project is co-financed by the European Union and the Republic of Turkey Technical Specifications (7) General Requirements • maximum delivery period • warranty • after-sales service • maintenance and support (before and after provisional acceptance) • the need to provide all accessories necessary for proper operation • documentation • training • acceptance procedure • recommended consumables • delivery address • background information • equipment layout • spare parts PRAG Supply Contracts Training 29-31 March 2011

30. This project is co-financed by the European Union and the Republic of Turkey Technical Specifications (8) Market study • Market study is one of the preliminary steps of the preparation of the technical specifications. • The identified bodies need to be analyzed in order to verify whether they are eligible and whether they would have access and interest to participate in an EC-funded tender. • Itemized unit price for each product in supply tender dossier must be clear. A budget must be estimated based on list-prices or official prices for the products. In case of special design of a supply detailed cost estimate analysis for the supply is provided PRAG Supply Contracts Training 29-31 March 2011

31. This project is co-financed by the European Union and the Republic of Turkey Technical Specifications (9) Checklist • Documentation sufficiently open to admit equipment from different producers? • Are there any certification requirements? If yes, can they hamper competition? • Documentation coherent, understandable and sufficiently specific to produce tender? Market study included? • Are any warranty conditions included? If yes, are they standard? PRAG Supply Contracts Training 29-31 March 2011

32. This project is co-financed by the European Union and the Republic of Turkey Exercise Technical specifications PRAG Supply Contracts Training 29-31 March 2011

33. This project is co-financed by the European Union and the Republic of Turkey End of Day I Closing • Questions and Answers PRAG Supply Contracts Training 29-31 March 2011