Project funded by
The European Union
Government of the Republic of Serbia
European Integration Office
INDUCTION TRAINING SEIO
Implementation: Tendering,
Procurement and Budget Support
Training Objectives
Overall the training will provide basic information on EU contracting
procedures so that these can be taken into account when preparing
implementation plans, sequencing and monitoring of future IPA
Actions.
Specifically, the training will explain:
 the PRAG and its relationship to the EU Financial Regulation;
 contract types and their uses;
 required documents for each contract type and procurement
procedure
 contract value and its effect on procurement procedures
 time taken to complete the various procurement procedures
and how to incorporate this into the development of realistic
implementation plans
 requirements for budget support
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Contracts
 Contracts are the normal legal basis for the
disbursement of IPA finances (there are others e.g.
Delegated Agreements, Sector Budget Support)
 In EU pre-accession funds a distinction is made
between procurement contracts and grant contracts.
 In procurement, the clients requirements are specified in
contract documents (e.g. Terms of Reference for
consultants).
 By contrast, in grant schemes the client explains the
problems and potential grant contractors make proposals to
address these problems. The client chooses the best proposal
and awards the grant i.e. The grant awardees design the
solutions and not the clients (as in procurement).
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
PRAG
Practical Guide to Contract Procedures for EU External
Actions (PRAG)
http://ec.europa.eu/europeaid/prag/document
.do?locale=en
Regulation No. 966 /2012 of the European Parliament
and the Council on the Financial Rules applicable to
the general budget of the Union
Commission Delegated Regulation No. 1268/2012 of
29 October 2012 on the Rules of Application of
Regulation No 966/2012 of the European Parliament
and Council on the financial rules applicable to the
general budget of the Union
http://ec.europa.eu/budget/documents/financi
al_regulation_en.htm
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Types of Contract and Associated Documents
IPA
Action
Document
P
r
o
c
u
r
e
m
e
n
t
SERVICES
SUPPLIES
Technical
Specifications
WORKS
Bills of
Quantity
GRANTS
Project funded by
The European Union
Terms of
Reference
Guidelines for
Applicants
Government of the Republic
of Serbia
European Integration Office
Tendering Procedures
SERVICES
>€300,000
International
restricted
procedure
< €300,000 but > €20,000
1.Framework contracts
2.Competitive negotiated procedure
< €20,000
Single tender
SUPPLIES
> €300,000
International
open
procedure
<€300,000 but >
€100,000
Local open
procedure
<€100,000 but >
€20,000
Competitive
negotiated
procedure
< €20,000
Single tender
>€5,000,000
1.International
open
procedure
2.International
restricted
procedure
<€ 5,000,000 but
> €300,000
Local open
procedure
< € 300,000 but >
€20,000
Competitive
negotiated
procedure
< €20,000
Single tender
WORKS
GRANTS
Project funded by
The European Union
>€2,000,000
International
call for
proposals
>€2,000,000
Local call for proposals
For any amount
in cases of
urgency
Direct grant
Government of the Republic
of Serbia
European Integration Office
Contracting Times
Contract
Type
SERVICE
SUPPLIES
WORKS
GRANTS
Project funded by
The European Union
Procurement
Procedure
Average
Time Taken
International Restricted
(9)-12 months
Tender
Framework
(3)-5 months
International Open Tender
9 months
Local Open Tender
6 months
International Open Tender 12+ months
Local Open Tender
9-12 months
International Call for
12+ months
Proposals
Local Call for Proposals
(6)-9 months
Government of the Republic
of Serbia
European Integration Office
Service Contracts:
International Restricted Tender Procedures
Prepare ToR
Negotiations with EC
Publication of Procurement
Notice
Establish Sort List and
prepare tender dossier
Negotiations with EC
Tender preparation
/submission
Tender evaluation, prepare
Evaluation Report and
contract dossier
Negotiations with EC
Contract Signature
Project funded by
The European Union
Months
1
2
3
4
5
6
7
8
9
Government
the Republic
10 of11
12
of Serbia
European Integration Office
Service Tender Dossier
A. Instructions to the tenderers
Letter of invitation to tender
Instructions to tenderers
B. Contract
Contract, Special Conditions
Terms of Reference
Organisation and Methodologies
Key Experts
General Budget breakdown
Conditions for service contracts
C. Other information
Shortlist notice
Administrative compliance grid
Evaluation grid
D. Tender submission form
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Supply Tender Dossier
A. Instructions to the tenderers
Letter of invitation to tender
Instructions to tenderers
b. Contract
Contract
Special conditions
Annexes
General conditions for supply contracts
Technical specifications
Budget breakdown
Model for performance guarantee
Model for advance guarantee
C. Other information
Glossary of terms
Administrative compliance grid
Evaluation grid
D.Project
Tender
submission form
funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Works Contracts
Works contracts cover construction, there are many national
‘standard’ forms of contract. Despite this, the EC have standardised
on the use of an international contract format developed by the
Federation Internationale des Ingenieurs-Conseils (FIDIC). It
should be noted that IFIs (WB, EBRD) have their own standard
documents which must be used by recipients.
The most commonly used forms of contract available under FIDIC
are:
Conditions of Contract for Works of Civil Engineering Construction
(The ‘Red Book’)
Conditions of Contract for Design –Build and Turnkey
(The ‘Orange Book’)
Conditions of Contract for Electrical and Mechanical Works
(The ‘Yellow Book’)
Short Form of Contract
(The ‘Short Form’).
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Works Tender Dossier
Most works contract dossiers contain the
following documents:
The Tender (Contractor’s offer)
The General Conditions of Contract (FIDIC Part I)
The Conditions of Particular Application (FIDIC Part II
Clauses)
The Technical Specifications
The Design Documents (Drawings)
The priced Bill of Quantities /Schedule of Rates
Any other document forming part of the contract e.g.
letters of clarification
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Bills of Quantity (BoQ)
An itemised list showing the number/ quantity of items
required to complete the works, the units of measure,
the rate per unit of quantity and the consequent total
cost for that item.
The BoQ may contain a number of bills classified by
structure, trade, or standard method of measurement. In
turn each bill will be broken down into separate items
covering all elements of the works. The total number of
items can be many hundreds.
During construction the quantity of each item is remeasured and using the Contractors quoted unit rates,
the value of the actual works completed by the
Contractor is measured
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Role of the ‘Engineer’
One of the main aims of Contractors, whilst making
every effort to complete the works according to the
contract, is to maximise profits wherever possible.
This means the Contractor will interpret contract
provisions to maximise advantage e.g. providing the
cheapest materials to meet the minimum requirements
in the specifications or by requesting frequent time
extensions.
Under FIDIC conditions an independent ‘Engineer’
must be appointed to supervise the works and to ensure
that they are carried out according to the contract. The
Engineer issues ‘Take Over’ and ‘Default Liability’
Certificates when the works are completed
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Responsibilities of the Employer
Ensure that the works are legally acceptable
Appoint the Engineer
Define the scope of the Engineer’s responsibilities
Ensure that the site is freely available
Provide for the Contractor's needs
Pay the Contractor
Consult with the Engineer on contractual obligations
e.g. delays (time & cost to Contractor); rejection (cost
to Employer); default of the Contractor (cost to
Employer) before determining the amount due.
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
SPD: Implementation Planning
SECTOR
TITLE
2014
2015
2016
Q
Q3 Q4 Q1 2 Q3 Q4
2017
2018
2019
2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
ACTION 1
Activity
1.1
Activity
1.2
P
P
C C C/I
I
I
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P
P
C C
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P
P
C
C C C I
I
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P
C C C C/I I
P
P
C C C
C
P
P
C C
I
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I
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I
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…..
ACTION 2
Activity
2.1
Activity
2.2
P
P
P
P
P = programming (period when the IPA action programme is expected to be adopted
C = procurement and grant award procedure
I = implementation period
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Contracting & Disbursement Deadlines
Deadline for concluding
the Financing
Agreement
The final date for the signature of the
Financing Agreement is X+1 (where
X=year in which budgetary commitment
was made). Conclusion of FA=year N
Contracting deadline
The end date for the signature of contracts
(including grant contracts) is 3 years from
the date of conclusion of the Financing
Agreement i.e. N+3
Deadline for the
execution of contracts
The end date by which contracts (including
grant contracts) must be finished is 3 years
from the contract signature. The
contracting deadline for the FA=N+3+3
Disbursement deadline
The end date for making payments to
contractors is 1 year after the deadline for
executing contracts i.e. N+3+3+1
Final date for the
implementation of the
Financing Agreement
The end date for closure of the Financing
Agreement is 8 years. After this date no
financial transactions can be made legally
under the Financial Agreement concerned
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Programme Intervention Logic
Operations
Collective rural
projects
Activities
Results
Reinforcement of
rural producers
Improved
productivity
Land
consolidation
Specific
Objectives
Increased
revenues
Modernisation and
adaptation
Improved farming
tools
Attraction of
outside
companies
Industrial
buildings for new
companies
Overall
Objective
Development
of existing
activities
Jobs created &
safeguarded
Stopping
rural exodus
New
activities
(tourism)
Better living
conditions
Restoration of the
environment /
rural landscape
Project funded by
The European Union
Improved
value of
natural areas
Better
image of
rural areas
18
Government of the Republic
of Serbia
European Integration Office
Project funded by
The European Union
Government of the Republic of Serbia
European Integration Office
INDUCTION TRAINING SEIO
Budget Support
What is Budget Support (BS)?
BS is a method of delivering financial assistance which
normally has 4 steps:
 (Sector) Policy Dialogue
 Financial Transfers (in ‘tranches’) to National
Treasury Account
 Performance Assessment
 Capacity Development
BS is delivered by means of ‘Sector Reform Contracts’.
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Political and Economic Focus of IPA-BS
Compliance with the political criteria should be
the primary focus of IPA2 BS. In particular,
assistance should support preparations for acquis
chapters 23 and 24 (The ‘Rule of Law’)
For the economic criteria, the main focus of IPA2
BS should be on supporting the establishment of a
functioning market economy (Copenhagen Criteria:
i.e. ‘The ability to withstand the pressures of the
internal market’)
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Assessment of Eligibility
Assessment takes place at 2 stages in the
programme cycle.
During programme preparation: assessment of
relevance (are key constraints /weaknesses
addressed?) and credibility (realism, institutional
capacity, track record, political commitment)
During programme implementation: assessment of
progress made in policy implementation
(benchmarked against reform commitments)
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Risk Management Framework
Risk management is an internal assessment of risk levels based on
the analysis of replies to questionnaires in 5 categories, namely:
1. Political
2. Macroeconomic
3. Developmental
4. Public Financial Management
5. Corruption /Fraud
There are 4 risk levels:
 Low
 Moderate
 Substantial
 High
Beneficiaries are expected to define their risk response by means of
‘Mitigation Measures’ (these are monitored)
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Whether to Provide BS?
The EC decision on providing BS is based on 3
assessments:
1. Assessment of political commitment to a
reform agenda (in line with EU accession)
2. Assessment of eligibility
3. Assessment of risks and mitigation
measures
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Variable Tranches: Performance Reserves
‘A Performance Monitoring System and related disbursement
criteria is at the heart of any budget support operation’ (EC)
BS disbursements are of 2 sorts:
 Base (or fixed) tranches: these are linked to eligibility
criteria
 Variable tranches: these are intended to create an
incentive for improved performance and are based on
performance indicators.
 The EC limit (cap) the use of variable tranches to avoid
unpredictability /volatility of disbursements. Typically,
Sector Reform Contracts cover commitments for 3 years
with an upper limit of 40% variable tranches
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Variable Tranche (Performance) Indicators
The following principles should be applied:
1. Targets and indicators should be Coherent with
sector problem analysis and programme objectives
2. Whilst combined indicators may be used, the
emphasis should be on Results
3. Number of indicators should be limited to a
maximum of 8 per Tranche (to avoid loss of policy
focus)
4. Indicators, targets and assessment methodology
should be defined during programme preparation
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office
Project funded by
The European Union
Government of the Republic
of Serbia
European Integration Office