Types of Process
There is a number of types of procurement procedures permitted under the 2014 directives. The most common procedure is the open procedure by which all interested parties may tender a single fully priced offer in response to an advertisement.
The restricted procedure requires interested parties to prequalify. They then may be invited to participate and submit a fully priced and particularised tender. his
The competitive procedure with negotiation has a prequalification stage and a negotiation stage. The negotiation stage is undertaken with the qualified group of tenders and seeks improved offers.
The competitive dialogue procedure allows dialogue to be conducted with potential builders to develop one or more suitable solutions for the requirements on which the chosen bidders may be invited to tender.
The 2014 Directives provide for two additional procedures. The innovation partnership permits tenderers to submit a request to participate in response to a contract notice to establish a partnership for the development of an innovative product, service or work meeting a need where there is no suitable existing product.
A further new procedure is the competitive procedure with negotiation. In this case, there is negotiation with each tender with a view to improving the tenders.
The contracting parties may choose the open or restricted procedures. The competitive dialogue and competitive procedure with negotiation are mutual alternatives and may be used only in certain cases where the circumstances are particularly complex and there is no readily available solution and the technical specifications cannot be defined in advance.
The negotiated procedure without publication of a contract notice allows a contracting authority to negotiate with one or more providers, if because of technical and artistic reasons or because of the protection of exclusive rights, the contracts may be undertaken by those suppliers only.
Open, and Negotiated / Restricted Procedure
The tendering procedures may follow a number of broad procedures which are defined by the legislation. Open procedures permit any interested tenderer to submit an offer. Open procedures should be the norm. Open procedures are more appropriate where the procurement process is simple and straightforward and pricing is the principal criteria.
Restricted or negotiated procedures are permissible for more complex or atypical cases. Negotiated procedures involve the authorities negotiating with a number of contractors.
Negotiated procedures with prior notification provide for selection in two rounds. In the first round, all interested tenderers or contractors may submit their proposals or tenders. The authority selects the parties with whom to negotiate. In the second round negotiations with a limited number of successful candidates takes place. There should generally be at least three candidates.
Negotiated procedures without prior notice are permitted in some limited circumstances. In these cases, the authorities may choose a contractor and commence negotiations with them.
Under the restricted procedure only those contractors who are invited by the authority may submit tenders. There are usually two phases. In the first, interested contractors signal their interest, and the authority selects the candidates to be invited to tender. There should generally be at least five. In the second round the bids are submitted and considered. The contract is awarded.
An accelerated form of the restricted or negotiated procedure may be permitted in urgent cases. The grounds must be stated in the official journal notification.
Justifying Restricted / Negotiated Procedures
The use of restricted and negotiated procedures must be justified by reference to the nature of the products and services and the balance between value and the administrative costs of the procurement.
There are conditions which must be met before the restricted or negotiated procedures may be used. The award criteria should still be the most economically advantageous offer. This need not necessarily be the lowest price.
Negotiated procedures without notification may be permitted where the procurement involves technical and artistic reasons, the protection of exclusive rights or the particular contractor is selected in a case of extreme urgency brought about by unforeseeable events not due to the contracting authority.
Negotiated procedures without notification may be permitted where no tenders, no suitable tenders (or no requests or suitable requests to participate) have been submitted for a previous open or restricted tender. The initial conditions of the contract must not be substantially altered. A tender is not suitable where it is irrelevant to the contract. A request to participate shall be considered not to be suitable where the bidder has been or would be excluded or where it does not meet the selection criteria.
Discussions with tenders are prohibited in relation to the details of the contract and particulars of price under the open and restricted procedure. Discussions may be had to clarify and supplement a tender.
Competitive dialogue is a newer form of the procurement process. It may be used in relation to complex contracts where the open or restricted procedures would not allow the award of contract and the negotiated procedure is unsuitable. A project may be complex because it may not be defined objectively or it is not possible to specify the legal or financial parameters.
The procedure is more complex than the others. The initial advertisement requires a descriptive outline of basic need. After that contract authorities may seek advice or dialogue, which may be used in the preparation of specifications. During the selection phase, the number of candidates is reduced. There should be a minimum of three but there may be fewer.
Lastly, the competitive dialogue commences. This may involve the discussion of the needs, and best means to satisfy the particular requirement. The proposal may be discussed, but equality must be maintained between the parties. Discriminatory information or anything, which may give one party an advantage over the other is not allowed.
Competitive Procedure with Negotiation
A competitive procedure which provides the possibility for negotiation with tenderers before finalisation of their tenders applies has been introduced under the 2014 Directives. Contracting authorities must provide the market with a description of
- the requirements
- the characteristics of the goods, works or services to be procured, and
- the award criteria.
Tenderers are invited by a contract notice or prior indicative notice to express interest in being invited to tender. Chosen tenderers are invited to submit an initial tender. Negotiations may take place between the contracting authority and each tenderer to improve the content of each tender before invitations are issued to submit a final tender. Final tenders are evaluated against the published award criteria and a contract awarded.
The competitive procedure with negotiation may only be used where the contracting authority\’s needs cannot be met through use of \’readily available solutions\’ without their adaptation, where there is a design or innovation element to the goods, works or services to be procured, where the nature, complexity or legal and financial aspects of contractual risk demand a negotiated solution.
Where a procurement process for goods, works or services falling outside the above criteria has been undertaken and only non-compliant or unacceptable tenders have been received, the authority may then adopt the competitive procedure with negotiation.
The 2014 Directive provides for an Innovation Partnership contract. Tenderers are invited to submit research and innovation projects aimed at meeting the needs identified by the contracting authority that cannot be met by existing solutions.
The Innovation Partnership is a contractual relationship formed between a public body and one or more undertaking which enables the public body and the undertaking(s) to work together in a partnership agreement in order to develop new products, works or services, where these are not already available on the market.
Innovation Partnerships are likely to be long-term in nature and may involve contracts across three phases covering research and proof of concept, an intermediate development phase and a purchase phase. The objectives of Innovation Partnerships is
to overcome the problem whereby public bodies could partner with private businesses to develop innovative solutions but were then required to reopen competition before awarding a contract so that they could not commit in advance to purchasing goods and services from any company they were supporting with product development.
To commence the process of establishing an Innovation Partnership, a contracting authority must publish a Contract Notice in the official which will \’identify the need for an innovative product, service or works that cannot be met by purchasing products, services or works already available on the market, and indicate which elements of this description define the minimum requirements to be met by all tenders\’.
There is a 30-day minimum period for requests from undertakings wishing to participate. From the parties who have asked to participate, the contracting authority selects a suitable party based on objective criteria, which must include \”capacity in the field of research and development and of developing and implementing innovative solutions\”. At least three parties must be selected provided that there are three suitably qualified businesses interested.
The selected businesses are requested to submit \”research and innovation projects aimed at meeting the needs identified by the contracting authority that cannot be met by existing solutions\”. The contracting authority assesses them against pre-determined and published criteria. It may select one or more projects to proceed.
For any project that the contracting authority wishes to pursue, it will negotiate a contract with the project proposers which is likely to cover:
- the scope of the project
- the value and terms of the contracting authority\’s financial investment
- provisions for intellectual property rights and confidentiality
- provisions for terminating the innovation partnership with the business concerned.
At intermediate stages, the number of parties involved in the partnership may be reduced, for example, where proof of concept stages do not produce satisfactory or economic proposals which the contracting authority would contemplate purchasing in due course.
Once a product or service has been developed which meets the contracting authority\’s needs, each of the partners is invited to submit a final and non-negotiable tender for the manufacture and supply of the products to the contracting authority or for the performance of the service, These tenders are evaluated to identify which offers the best combination of price and quality with a view to one of them being awarded a long-term supply contract.
Public bodies may establish framework agreements so that individual contracts under the framework agreement may be awarded without a new competition. A framework agreement is one between contractors and bodies which establish the terms and conditions of the contracts to be award during a given period. It may provide for criteria such as price, quality of supplies, service levels, et cetera.
The awards pursuant to the framework agreement must be made in accordance with a certain procedure. The agreements may not generally last more than four years. Framework agreements may be with one supplier or with several suppliers
The newer EU Legislation allows for the provision of electronic procurement which may take place by an electronic process.
The open procedure must be followed in relation to the set up of a dynamic purchasing system. Tenderers who submit a complaint, technical specification must be admitted to the system. Under the system, awards contracting authorities may use the electronic means.
Each specific contract must be the subject to an invitation to tender. Contracting authorities must publish a simplified contract notice inviting interest, and inviting economic operators to submit an indicative tender within a certain time frame. The dynamic purchasing system may last up to four years.
Under certain circumstances, electronic auctions may be permitted. The auction must be based at exclusively on price or price or the value of features. Where contracting authorities decide to use electronic auction this must be indicated in their contract notice. The specification must include certain information. The invitation must provide a full evaluation framework for the award is on the basis of the economically advantageous tender. Weightings must be set out. The award must be made at the basis of the criteria.
The 2014 Public Procurement Directive introduced an obligation to take into account accessibility criteria for disabled persons in any procurement of works, goods or services intended for use by the general public or by the staff of the contracting authority.
The 2014 Directive provides for a design contest. This may be a stage in a procurement process leading to the award of a services contract. The Directive indicates that design contests are held \”mainly in the fields of town and country planning, architecture and engineering or data processing\”. A Design Contest Notice must be issued in the official journal.