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Presentation by Daniel Ivarsson, SIGMA (ENG) Second SIGMA Regional ENP East Conference on Public Procurement, Kyiv 29-30 May 2018

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Presentation by Daniel Ivarsson, SIGMA expert (ENG) Second SIGMA Regional ENP East Conference on Public Procurement, Kyiv 29-30 May 2018

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Presentation by Daniel Ivarsson, SIGMA (ENG) Second SIGMA Regional ENP East Conference on Public Procurement, Kyiv 29-30 May 2018

  1. 1. © OECD Forthcoming SIGMA Paper: Implementation of framework agreements in the EU Daniel Ivarsson, SIGMA expert, Sweden Kyiv, 30 May 2018
  2. 2. Topics covered • Nature and purpose • Operations • SIGMA Paper • Lessons learned 2
  3. 3. Framework agreement Agreement between: - one or more contracting entities; and - one or more economic operators, with the purpose to establish the terms governing contracts to be awarded during a given period, in particular the terms as to price and, where appropriate, the quantity envisaged 3
  4. 4. Regulatory framework • EU Directives  Directive 2014/24/EU, recitals 57, 60-62, 71  Directive 2014/24/EU, Article 33 • Case law of the Court of Justice of the European Union • National legislation • Other regulations 4
  5. 5. One contracting authority, one or more economic operators Contracting Authority Vendor Contracting Authority Vendor Vendor Vendor
  6. 6. Several contracting authorities one economic operator Contracting Authority VendorContracting Authority Contracting Authority
  7. 7. Several contracting authorities several economic operators Vendor Vendor Vendor Contracting Authority Contracting Authority Contracting Authority Vendor Vendor Contracting Authority
  8. 8. Fields of application  Repeated requirements for standard items – Standard equipment, office supplies, consumables – Standardised services (maintenance, cleaning) – IT or other technical support services  Uncertainty about total quantities – Foreseeable needs for urgent action (snow clearing, . .) 8
  9. 9. Advantages I • Flexibility to purchase goods or services covered by that framework agreement • The conclusion of the subsequent contracts is greatly simplified and can be performed more quickly than by using a “normal” tender procedure • Increased competition through call- offs/mini-competitions
  10. 10. Advantages II • Useful tool for avoiding the abusive way in which certain situations are wrongly set in the urgent needs category, thus forcing the use of direct purchasing • Greater opportunities for SME participation – potential for better value for money • Contracts adaptable to rapidly changing market conditions (IT products; fuel or energy; foodstuffs)
  11. 11. Operations • Award of the framework agreements themselves • Award of contracts under framework agreements (through a call-off mechanism) 11
  12. 12. Overview of main steps I • Determine needs and approach; aggregate • Advertise / invite tenders • Standard procedures for selection & award • Open, restricted, negotiated; competitive dialogue • Conclude agreement with one/several contractors • Agreement governs the way contracts are awarded under the framework, conditions of contract, duration (max. 4 years)
  13. 13. Overview of main steps II • Call off deliveries as needed  If there are several contractors, a secondary competition (“mini-competition”) may be used each time a contract is awarded under the framework  No subsequent changes to the terms and conditions of the framework agreement • Check deliveries; pay invoices • Monitor use, especially if several contracting authorities • Evaluate outcomes; adjust approach; prepare follow-up framework agreement
  14. 14. Lessons learned: typical issues  Suitability of a framework agreement vs. a traditional public contract  Planning and preparations are vital  Carefully analyse type of framework agreement and call-off procedure to use  Choice of procedure, criteria and tender evaluation methodology is important  Market concentration and SMEs  Duration of the framework agreement
  15. 15. Important reminders • Strong structuring effects on the market • Beware of tendency to use framework agreements in areas where they are not at all suitable • Before moving ahead with preparing a framework agreement, consider seriously whether it would indeed be most suitable for the procurement in question 15
  16. 16. Forthcoming SIGMA Paper • Complement to SIGMA Paper 47 Centralised Purchasing Systems in the EU • Good examples, lessons learned from EU practice of using framework agreements • Comparative data, gaps to be filled • Help introduce the use of framework agreements, guide their improvement 16
  17. 17. SIGMA Paper main parts • Basic definitions and concepts • Legal framework • Framework agreements step by step • Specific, related topics • Framework agreements in the EU • Conclusions and recommendations • Award and use in selected EU member countries 17
  18. 18. Basic definitions and concepts • Characteristics • Rationale • Institutional arrangements • Challenges and risks • Risk management 18
  19. 19. Legal framework • Legal framework  Concept  Definition  Parties  Award • Related procurement instruments  E-procurement, e-auctions  Dynamic purchasing systems (DPS)  E-catalogues 19
  20. 20. FAs step by step • Planning and award of FAs  Approach, structuring, market interactions  Specifications, selection & award criteria  Tendering, evaluation, conclusion of FA • Execution of FAs  Client and supplier relations  Call-off procedures and management  Monitoring, termination, renewal 20
  21. 21. Specific topics related to FAs • E-technology, e-auctions, DPS • Horizontal policies: social, environmental • Market and competition aspects • Framework agreements in the EU • Complaints review and integrity 21
  22. 22. Framework agreements in the EU • Data from EU statistics • Frequency of use, application areas • Procedures, criteria, number of suppliers • Categories, duration, value • Data from questionnaire to EU members  Same as above, plus:  Complaints; service fees  Organisation; related activities 22
  23. 23. Framework agreements in the EU • Data from EU statistics • Frequency of use, application areas • Procedures, criteria, number of suppliers • Categories, duration, value • Data from questionnaire to EU members  Same as above, plus:  Complaints; service fees  Organisation; related activities 23
  24. 24. Conclusions, recommendations • Lessons learned • Choice of FA type and call-off mechanisms • Complement or alternative to DPS • Risk and success factors, suggested priorities • Recommendations on the way forward • Analysis, strategy, action plan • Primary & secondary legislation, guidelines • CPB creation, capacity building for users • IT infrastructure, pilot projects; evaluation, roll- out 24
  25. 25. Award, use in selected countries • Selection of representative countries • Field visits, meetings with all concerned • Austria • Croatia • Ireland • Portugal • Sweden 25
  26. 26. Austria: main characteristics • Public procurement system  Federal law used above and below EU thresholds; high national ones, direct agreement OK below  Complaints review at federal and province level • Use of framework agreements  Centralised purchasing body: BBG, FA use mandatory for federal bodies, others free to use  All BBG framework agreements on “e-shop”  Estimated amount is also the maximum allowed  Framework agreements oblige suppliers to deliver and to participate in mini-tendering 26
  27. 27. Austria: results, lessons learned • Advantages: better value for money; no obligation to purchase; standardisation • Risks: monopolisation, lock-in effects; high share of large firms, single-supplier FAs • Issues: incorrect use; need to improve planning, build staff capacity • Decent participation rate: 4-5 per tender • Interest in cross-border FAs but no success 27
  28. 28. Croatia: main characteristics • Public procurement system  Law applies above and below EU thresholds; simpler procedures below them  National complaints review body; many complaints, especially on FA tenders • Use of framework agreements  CPB: Central Procurement Office; mandatory FA use for gov't entities; others not allowed to use  FAs: 40% of all procurement, more above EU thresholds; still mostly single-supplier; most frequent award criterion: lowest price (>90%); estimated amount is also the maximum allowed 28
  29. 29. Croatia: results, lessons learned • Advantages, disadvantages: like Austria • Single-supplier FAs frequent, similar to traditional contracts: FA flexibility ignored • Multi-supplier FAs with all conditions set, mini-tendering rarely used • Mandatory public consultation on draft tender documentation for FAs • SME participation not an issue, but weak competition: participation rate: 3.2 per tender 29
  30. 30. Ireland: main characteristics • Public procurement system  Procurement regulations above EU thresholds; below them: government policy and guidelines  Complaints above thresholds reviewed in court; infrequently used, informal alternative exists • Use of framework agreements  CPB: Office of Government Procurement (OGP) + four CPBs: health, education, defence, local gov't  High FA share in goods and services, rising trend  Pre-set conditions instead of mini-tendering  Estimated amount not a compulsory ceiling 30
  31. 31. Ireland: results, lessons learned • Focus: efficiency, savings, value for money • E-procurement established, developing • Pre-commercial consultations frequent • SMEs a focus, but medium firms dominate • Competition strong but few firms in infra- structure and IT • Horizontal issues: business development, innovation, new approaches 31
  32. 32. Portugal: main characteristics • Public procurement system  Law applies above and below EU thresholds; formal decentralisation, actual centralisation  Two-instance court review of complaints; few • Use of framework agreements  CPB: eSPap; also provides administrative services  eSPap mandatory for State, used also by others  Interministerial advisory group on policies  Many authorities for each FA; co-ordination issues  Estimated amount not a compulsory ceiling 32
  33. 33. Portugal: results, lessons learned • Advantages, disadvantages: like Austria • E-procurement mandatory, also for call-offs • All FAs multi-supplier with mini-tendering • System of reference prices: itemised ceiling prices, must not be exceeded in call-offs • Obligation to participate in mini-tendering • High participation levels; SME participation policy issue only, not in practice • Concerns about lack of dynamism 33
  34. 34. Sweden: main characteristics • Public procurement system  Law applies above and below EU thresholds  Local and regional authorities dominate  Court review of complaints; many of them Use of framework agreements  Long FA tradition, high use, except for works  National, regional, local CPBs; joint procurement also very frequent  No public portal for notices; private operator used  Estimated value not a ceiling 34
  35. 35. Sweden: results, lessons learned • Advantages: economy, efficiency, relations • Concerns: lock-in, loss of CA competence, need to compromise on requirements • Late with e-procurement; no e-auctions • Horizontal policies: environment, social, SMEs; concerns about market structuring • High participation, high success rates - does this mean strong competition? • DPS seen to replace FAs 35

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