Public procurement procedure

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Public procurement procedure

• Simo Paukkunen
• Joensuu 15.6.2006

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Municipal decision about the heating system

• Definition of the energy need
• - Heat load of the building and heat
  network
• 2. Carring out of the procure proses
• - Tendering prosedure
• - Negotiation
• - Decision of the acquisition
• 3. The contract of delivering heat

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Network of the Municipal decision about the
heating system
The Act of conservation environment
The Act of land use
Energy production contract
Agreement Law
Inter-company agreements

Municipality
Competition Law
Subcontracting
Heat entrepreneur ship and municipal energy
decisions
Procuration of the plant
Administration procedure
Procuration of fuel
Company Law
Customer agreements
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Public procurement

• Public procurements are
• Buying of goods and services
• Renting or acts parallel to it
• Subcontracting using a maker who comes outside
  the general government
• The main principles the of public procurement
• Creating of competition
• Fair and undiscriminated treatment of the bidders
• Transparency

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Municipal decision about the heat plant
acquirement

• A political decision, which binds the acquisition
  
• e.g. It is possible to decide what is the fuel of
  the plant

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Legal principales for energy solutions,
regulations which affects to the acquisitions

• The treaty about establishing the European
  community (Official Journal C 325 of 24 December
  2002)
• The directive of European parlament and Council
  of Europe 2004/18/EY, about to integrate the
  procedures related to public building contracts
  and goods and service acquisition 31.3.2004,
  acquisition directive
• The directive of European parlament and Council
  of Europe 2004/17/EY, about to integrate the
  procedures of water and energy supply, trafic and
  post services, basic service

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Threshold amounts for public contracts (according
COMMISSION REGULATION (EC) No 2083/2005)

• Directive 17/2004
• 422 000 (goods and services)
• 5 278 000 (building contracts)
• Directive 18/2004
• 137 000 (goods and services)
• 5 278 000 (building contracts)
• Every country can have different kind of
  regulation for public acquisitions which
  tresholds are lower than EU limits
• Those regulations and guidelines has to respect
  principles which are mentiones in The treaty
  about establishing the European community

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Assessment of the invitation of tenders

• Acquisition has to be made with so low costs as
  possible
• The most cheapest solution in general, or
• Cheapest price
• If there is no mention about the most cheapest
  solution in general in the invitation of tender,
  the only criteria is the price
• The common practice has been, that when the
  lowest price has been the only assessment
  criteria, the cheapest tender have been accepted

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Choosing of the most cheapest tender in general

• The choosing has to be made due the criterias
  which have made in advance
• Assessment criterias may be
• price, delivery time, manufacturing day, costs of
  usage, quality, life cycle costs, esthetical and
  functional properties, technical specifications,
  maintenance services, delivery certainty,
  technical support and the costs of the
  environmental issues
• The Court of Justice of the European Communities
  noted that environmental aspects can be used in
  the comparison of tenders, Helsinki city bus
  transportations case (L-513/99)

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Choosing of the most cheapest tender in general

• When using the principle of the most cheapest
  tender in general as a choosing method
• All assessment criterias have to be mentioned
  which are enforced when making the decision
• The assessment criterias have to be mentioned in
  value order if possible

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Basic principles of public procurement

• Transparency
• Competition
• Equal treatment
• Reliability
• Confidentiality
• Public supervision
• Efficient use of resources

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The main principles

• To create competition the usual way is to arrange
  a competitive bidding
• All of the bidders have to be treated fairly and
  by undiscriminated way
• It is not allowed to favour a tenderer who comes
  from the same municipality
• Not allowed choosing methods are also the purpose
  to increase tax incomes of own municipality or
  employment factors
• It is not allowed to favour old supplier at the
  expense of new tenderers

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The main principles

• Transparency means
• It is allowed to inform wide enough about the
  acquisition to the public
• In the invitation of tenders has to be said which
  are the facts which are the base when selecting
  the best tender
• After the tendering process all of the document
  become public

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A tool for heat plant acquisition

• Finnish constitution 20
• Government officials has to try to safe the
  leagal rights for healthy envinronment
• Added to this rights for healthy environment is
  mentioned is in two different Acts

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A tool for heat plant acquisition

• The municipalities could set down the harmful
  impacts to envinronment to the invitation for
  tenders as an evaluation criteria
• The easiest way is transfigure different kind of
  characteristic of heating plant to euros

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Greenhouse gas contents of fuels and meaning of
CO2 allowance trading (15 /ton CO2)
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Value of evaluation criteria

• Prize
• In general the most valuable
• Weight could be 80 90 of total
• Delivering time
• Weight could be smaller than 10 of total
• Certainty of delivering
• Weight could be smaller than 10 of total
• Technical solutions
• Weight could be smaller than 10 of total
• Environmental importance
• Weight shouldnt be more than 45 of total due
  The Court of Justice of the European Communities,
  Austria Wienstom case, C-448/01
• 20 of total could be reasonable

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Open procedure

• Any interested economic operator may submit a
  tender.
• In open proredure contracting authorities shall
  make known their intention by means of a contract
  notice.

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Restricted procedure

• Means those procedures in which any economic
  operator may request to participate and whereby
  only those economic operators invited by the
  contracting authority may submit a tender.
• You have to call at least 5 candidates to
  competitive bidding and 20 candidates is normaly
  used maximum amount

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Invitation to submit tenders

• Making invitation to submit tenders is (mayby)
  the most important stage of the acquisition
  prosess.
• In invitation to submit tenders should be all
  important details from the target of the
  acguisition.
• Otherwise candidates couldnt do comparable
  tenders.

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Content of invitation to submit tenders

• Name of the contracting authorities, contact
  informations, contact person
• Closing date, delivering type and delivering
  place on the tender
• Qualifications of the tenderer
• Detailed information of the procurement (e.g.
  quality, number of pieces)
• Technical specifications (if required)

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Content of invitation to submit tenders

• Possibility for offer alternatives
• Selection criterias of tender. The criteria on
  which the contracting authorities shall base the
  award of public contracts shall be either
• the tender most economically advantageous from
  the point of view of the contracting authority
• the lowest price only.

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Content of invitation to submit tenders

• Its worth to tell about the decision prosess
• Timetable
• Publicity of documents
• Prosessing of the delayed tenders
• Arguments for rejecting offers

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Reporting of the evaluation criterias

• The winning tender could be chosen
• most economically advantageous from the point of
  view of the contracting authority
• the lowest price only
• If the most economically advantageous from the
  point of view of the contracting authority-
  criteria is used evaluation criterias has to be
  mentioned both in
• Acquisition advertisement
• Invitation to submit tenders
• The weight of the criterias should be mentioned
  also in Acquisition advertisement and Invitation
  to submit tenders

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Reporting of the evaluation criteries

• Evaluation criteries could be e.g.
• prize, delivering time
• accomplishment
• operating costs
• Quality, life span costs
• Aesthetic and functional characteristics
• Technical characteristics, services, certainty of
  delivering
• Technical sopport
• Environmental costs
• Evaluation criterias cant promote local products
  or local/national companies
• Contracting authorities cant use evaluation
  criteries which are not mentioned in Acquisition
  advertisement and/or Invitation to submit tenders.

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Operations after arrival of tenders

• Opening of tenders
• Processing of delayed tenders
• Checking of qualifications of tenderers
• Checking of content of tenders
• Comparison of tenders
• Specifying of tenders (if needed)
• Processing of tender which has exeptional low
  prize
• Rejecting of tender which is too expencive

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MAKING OF ACQUISITION AND PUBLICITY OF DOCUMENTS

• Contracting authorities should make written
  document from every acquisition decision.
• Publicity of documents
• Tender is public when its signatured
• Business secrets are classified despite previous