Public Procurement Training Sessions

Session 1

Dr Adrian Mallia am@amjlegal.com

These sessions do not, and are not intended, to provide legal advice. Specific legal advice must be sought on a case-by-case basis as

correct advice invariably depends on the underlying facts of each particular case.

� Session 1Session 1Session 1Session 1 ◦ Legal Frameworks ◦ Which legal Framework applies? ◦ When do Local Councils have to go to tender?

Session 2 Session 2 Session 2 Session 2 ◦ Drafting tenders documents ◦ Evaluation criteria and selection criteria ◦ Specifications

Session Session Session Session 3333 ◦ Evaluating Tenders ◦ Awarding Tenders ◦ Post-award issues

� Compared to other contracting authorities, Local Councils face an added complication – sometimes one set of laws applies, sometimes another.

� Legislation issued under the Local Councils Act (Cap 363)

� Public Procurement Regulations issued under the Financial Administration and Audit Act (CAP 174).

� So the first thing to determine, is which framework applies?

� Local Councils Act (Cap 363), and various legislation promulgated thereunder including Local Councils (Tendering) Regulations, LN 255/2009 as amended, Local Councils (Financial) Regulations, LN 155/1993 as amended, Local Councils (Tendering) Procedures, 1996 as amended

� Public Procurement Regulations, LN 296/2010 as amended (the “PPRs”)

� Critical to ensure that the right framework is applied.

� Not following the right framework means (i) that the Local Council is infringing the law (ii) the whole procedure may be open to challenge

� The truth is that the interplay between frameworks is uneasy.

� Though the PPRs were promulgated after tendering regulations were issued under the Local Councils Act, these regulations were not repealed.

� So this means that the intention of the legislator is that they continue to apply. But when?

� When the PPRs apply, the Local Councils (Tendering) Regulations don’t.

� So the question is, when do the PPRs apply?

� But before that, why do they exist?

� “Public procurement accounts for 19% of EU GDP, making it a powerful lever for achieving specific societal goals”

� Source http://www.europarl.europa.eu/news/en/news-room/content/20130903IPR18507/html/Public-procurement-package-getting-

the-best-value-for-money

� “In the EU, public purchasing accounts for almost one-third of government expenditure. In 2009, it amounted to 19.4% of GDP – or €2.2 trillion – of all the income generated in the EU.”

� Source http://ec.europa.eu/internal_market/publications/docs/public-procurement_en.pdf

� Malta’s membership within the EU means that public procurement is regulated by the European treaties and directives, as well as national rules (which themselves reflect these directives).

� The PPRs transpose EU directives. The primary driving force is to ensure that public spending is open to EU-wide competition.

� This is done by seeking to ensure a number of principles are upheld.

� Equal treatment: all participants must be treated equally at every stage of the procurement procedure

� Transparency: All information regarding tenders and the rules being applied must be made available to all participants.

� Proportionality: Demands placed upon participants should be both relevant and directly related to the contract being awarded.

� Non-discrimination: between tenderers on a basis of nationality.

� Procurement is divided into three categories:

� Works

� Services

� Supplies

� Public Procurement Regulations (PPR) do not apply to public service concessions, sale / lease of land or other immovables, national security contracts, etc

� In principle, the PPRs regulate spending by contracting authorities of Euro 0.01 upwards.

� ‘Contracting Authorities’ includes government, ministries, departments, AND AND AND AND LOCAL COUNCILSLOCAL COUNCILSLOCAL COUNCILSLOCAL COUNCILS

� Progressively stricter rules apply depending on the value of the purchase.

� But from the point of view of a Local Council, it is not necessary to know the full detail of the PPRs, since the PPRs apply only limitedly to Local Councils.

� The problem is that the detail you need to know is the detail that is most complicated.

� The relatively easy parts do not apply to Local Councils; the complicated parts do

First First First First ‘Sphere’ of Application‘Sphere’ of Application‘Sphere’ of Application‘Sphere’ of Application

� The first sphere of application is simple. Are you using EU funding?

� Article 41 of the Local Councils Act “With respect to projects co-financed by the European Union, the tendering procedures shall be in accordance with the rules of the European Union and shall be regulated by the Department of Contracts.”

� Second ‘SphereSecond ‘SphereSecond ‘SphereSecond ‘Sphere’ of Application’ of Application’ of Application’ of Application The PPRs refer to Local Councils as a Schedule 3 Entity, which means that Local Councils are Contracting Authorities who are to administer their own public procurement in accordance with the provisions of these regulations Regulation 23 of PPRs � “All public contracts, the estimated value of which exceeds one hundred and

twenty thousand euro (€120,000) but does not exceed the thresholds, shall be subject to the regulatory and other functions of the Department and Director of Contracts:

� Provided that public contracts required by a contracting authority listed in Schedule 2 shall be issued, administered and determined by the Department of Contracts, which for the purposes of these regulations shall act on behalf of the contracting authority:

� Provided further that public contracts required by those contracting authorities listed in Schedule 3 shall be issued, administered and determined by the contracting authorities therein listed subject to the provisions set out in these regulations including but not limited to the right of appeal.

� Third Third Third Third ‘Sphere’ of ‘Sphere’ of ‘Sphere’ of ‘Sphere’ of ApplicationApplicationApplicationApplication

� The Third sphere of application depends on nature of the contract, and that contract having a certain estimated value.

� Nature of contract – works, services, supplies.

� PPRs define a public supply contract as:

� ''public supply contract'' means a public contract other than a public works contract having as its object the purchase, lease, rental or hire purchase, with or without option to buy, of products. A public contract having as its object the supply of products and which also covers, as an incidental matter, siting and installation, shall be considered to be a public supply contract.”

� ''public works contract'' means a public contract which has as its object either the execution, or both the execution and the design, of works related to one of the activities referred to in Schedule 6, or a work, as defined in this regulation, or the realisation, by whatever means, of a work corresponding to the requirements specified by the contracting authority”

� General building and civil engineering work (without any particular specification) and demolition work

� 2. General building and civil engineering work (without any particular specification)

� 3. Demolition work

� 4. Construction of flats, office blocks, hospitals and other buildings, both residential and non-residential

� 5. General Building Contractors

� 6. Roofing

� 7. Construction of chimneys, kilns and furnaces

� 8. Waterproofing and damp-proofing

� 9. Restoration and maintenance of outside walls, repainting, cleaning, etc.

� 10. Erection and dismantlement of scaffolding

� 11. Other specialised activities relating to construction work (including carpentry)

� 12. Civil engineering: construction of roads, bridges, etc.

� 13. General civil engineering works

� 14. Earth-moving (navyying)

� 15. Construction of bridges, tunnels and shafts, drilling

� 16. Hydraulic engineering, harbours

� 17. Road building including specialised construction of airports and runways

� 18. Specialised construction work relating to water (i.e. to irrigation, land drainage, water supply, sewage disposal, sewerage, etc.)

� 19. Specialised activities in other areas of civil engineering

� 20. Installation (fittings and fixtures)

� 21. General installation work

� 22. Gas fitting and plumbing, and the installation of sanitary equipment

� 23. Installation of heating and ventilating apparatus (central heating, air conditioning, ventilation)

� 24. Sound and heat insulation, insulation against vibration

� 25. Electrical fittings

� 26. Installation of aerials, lightning conductors, telephones, etc.

� 27. Building completion work

� 28. General building completion work

� 29. Plastering

� 30. Joinery, primarily engaged in on the site assembly and/or installation (including the laying of parquet flooring)

� 31. Painting, glazing, paper hanging

� 32. Tiling and otherwise covering floors and walls

� 33. Other building completion work (putting in fireplaces).

� ''public services contract'' means a public contract other than a public works or supply contract having as their object the provision of services referred to in Schedules 7 and 8. A public contract having as its object both products and services within the scope of Schedules 7 and 8 shall be considered to be a public service contract if the value of the services in question exceeds that of the products covered by the contract. A public contract having as its object services within the meaning of Schedules 7 and 8 and including activities within the meaning of Schedule 6 that are only incidental to the principal object of the contract shall be considered to be a public services contract;

� Too long to reproduce.

� Basically an exhaustive list of different types of services

� Works - €5,186,000

� Supplies and Services - € 134,000

� All amounts exclude VAT

� Contract makes use of EU Funding

� Work in excess of €5,186,000

� Service/Supply in excess of €134,000

� …the PPRs apply when (i) the contract is part funded using EU funds (ii) the supply, service or works have an estimated contract value in excess of Euro 120,000

� Different sections of the PPRs apply depending on whether the estimated value of the contract exceeds the threshold or not

� When to go to tender? (1) � Local Councils (Financial) Regulations

Regulation 24 � Amounts less than Euro 1,164.69 = authorised by Council

in accordance with Sixth Schedule of the Act (Council Resolution)

� Amounts between Euro 1,164.69 and Euro 4,658.75 = obtain at least three official signed quotations or issue public tender. If quotation method is chosen, a resolution and written justification is required. NB: items of the same nature cannot be purchased within a consecutive four month period;

� Amount in excess of Euro 4658.75 or 5% of the ordinary financial allocation of the Council = go to tender

� When to go to tender? (2) ◦ Local Councils (Financial) Regulations, Regulation 43(2) and (3):

� “The contracting to third parties of rights, concessions, permits or authorization to manage, operate, use or occupy Government property within the locality shall be made after a public call for tenders has been made according to the Local Councils (Tendering) Regulations: Provided that Government has authorised the Council, by notice in the Gazette, to administer the Government property in question.”

� “(3) The contracting to third parties of other rights, concessions, permits or authorizations within a locality shall be made after a public call for tenders has been made according to the Local Councils (Tendering) Regulations.”

Drafting tenders

Evaluation criteria and selection criteria

Specifications