2.5.5 What are the procedures for contracts

below EU Thresholds?

Home Page  <<  >>

The open, restricted and negotiated procedure described in section 2.5.4 can be applied also for contracts with value below the EU thresholds. In addition and under certain circumstances, the simplified procedures described below can be applied for contracts below the EU thresholds.

The Simplified Procedure - Below EU Thresholds the European Commission has published guidance on how public authorities should award contracts of low monetary value fairly. The law on public procurement also includes specific articles for awarding of such public contracts. Although they are not covered by the EU Directives on public procurement, it is important that they nevertheless comply with the principles of transparency and non-discrimination. The Commission's guidance, which is in the form of an 'Interpretative Communication', contains suggestions on how public authorities should comply with these principles at:

http://ec.europa.eu/internal_market/publicprocurement/key-docs_en.htm. The Commission also issued guidance on how to award low-value contracts fairly in July 2006 (IP/06/1053)

A good example of the use of this procedure was the procurement by the Department of Information and Technology Services of 10 portable colour printers to a total contract value of 2.360,00 Euro. In total 13 suppliers requested tender documents with 3 bids submitted. The contract was awarded on lowest price.

The following outlines the procedures found in the national Law 12(I)/2006 that contracting authorities may use:

Award procedure

If the value of contract, net of VAT, does not exceed 2.000,00 Euro, the contracting authority may directly award the contract without following any of the tendering procedures provided for in this guide.
If the value of contract, net of VAT, is more than 2.000,00 Euro but does not exceed 15.000,00 Euro, formal competition is not required. However, the contracting authority is still obliged to ensure value for money and should therefore seek the submission of written or oral tenders from a restricted number of economic operators
If the value of contract, net of VAT, is greater than 15.000,00 Euro but does not exceed 50.000,00 Euro, the contracting authority, if it chooses to use this mini competition, is required to obtain a minimum of four quotations. The steps to obtain a quotation should be as follows:
identify suppliers and keep records justifying why they were chosen;
provide suppliers with tender documents however short, but the same information should be given to all suppliers
Invite at least 4 suppliers to submit written quotations in order to provide an audit trail – according to article 84C of Law 12(I)/2006.
make a record of each quotation received and ensure copies are held on file
It might not always be easy to get a fixed price quotation depending on the nature of the procurement, but the quotation should at least give a fixed schedule of day/hourly rates, or a schedule of costs for contract components. With this information you should assess the expected time usage, product quantities based on the specified requirements and agree this with the supplier. In this way contracting authorities will be in a position to compare costs of the proposed solutions. For example, management consultants may tender for a consultancy contract. Each bidder may allocate a different number of days to complete the project. However, to compare like with like it is important that contracting authorities compare daily rates to assess value for money.

 

It is important to note that contracting authorities may still publicly advertise a contract notice even though it is below the EU thresholds if expenditure is in a critical business sector, for VFM and liability reasons. For example, software upgrades.

It is possible that not all the suppliers approached will respond, therefore it is good practice to invite at least 2 suppliers to provide 1 quotation and 6 suppliers to provide 3 quotations. Feedback should be requested from suppliers who failed to submit quotes to develop knowledge of the market place and the suppliers within it. This feedback can be either verbal or written, and should be logged on the file for the record.

There may be occasions when insufficient quotes are received even though every effort has been made to obtain them. In this case the contracting authority should widen the opportunities to source suppliers as outlined above.  If no quotes are obtained, the procurement procedure and procurement decision must be reviewed and revised.

If the value of contract, net of VAT, exceeds 50.000,00 Euro but is lower than the EU threshold the contracting authority must follow a formal tendering procedure with advertising. If the value of contract, net of VAT, exceeds the EU threshold the contracting authority must follow a formal tendering procedure with advertising including the OJEU.

It is important to refer to the regulations coupling the Law regarding the responsibility of authorising the use of the “simplified procedure”. The fact that the value of procurement is below established thresholds does not mean that the simplified procedure must be used. In cases where the savings potential from genuine competitions is high, the open, restricted, or negotiated procedure should be used. Contracting authorities should ensure that for reoccurring requirements for goods, the total value over a 12 month period does not exceed the threshold. 

Simplified methods are directly connected with low-value and one-off procurement.  If the need to procure goods or services has a recurrent character, framework agreements/call-off arrangements might be a better solution. They are suitable to procure goods, services and (maybe) works of low value. They are efficient to operate and can ensure a consistency in supply. 

The following flowchart outlines the steps contracting authorities should take when procuring contracts below EU thresholds.

 

Figure 2-3: Steps to be followed when procuring contracts below EU thresholds

 

Untitled

 

 

It is important that the procurement route chosen is appropriate for the size and complexity of the project, compliance with EC rules, business benefit and risk. An overly and unnecessarily complicated process will discourage SMEs from bidding.

 

Table 2-10:  The approach to the Simplified Procedure

Challenges for SMEs

What contracting authorities can do

Perception that the process is long and complex and are therefore discouraged from bidding.  The cost of long tendering processes can be prohibitive.

Explain the process and what will be required from the outset.

Ensure the process is appropriate to the size and complexity of the requirement.

Set a realistic timetable.

Do not know about opportunities in the market place.

Publicise opportunities widely using trade press, the internet, local networks, supplier lists.

Do not have the extensive track record to get through pre-qualification.

Make sure evaluation criteria allow for young companies without several years of audited financial statements.

Do not understand the requirements due to lack of clarity and over specification.

Make requirements clear and unambiguous.  Focus on outputs required not on how they are to be delivered, avoid over specifying, specify standards only when they are necessary.

 


© 2007 Republic of Cyprus, Treasury of the Republic, Public Procurement Directorate
Home Page | Government Web Portal | Disclaimer | Webmaster