5.2.2 Negotiated procedure without publication of

a contract notice

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Pursuant to the Community Directives and the national legislation, use of the negotiated procedure without publication of a contract notice is justified in ten cases.

These cases are summarised in the table below:

No.

cases justifying use of the negotiated procedure without PUBLICATION OF A contract notice

FIELD OF APPLICATION

SUPPLIES

SERVICES

WORKS

1

The case of “lack” of tenders

P

P

P

2

The case where the contract may be awarded only to a particular economic operator

P

P

P

3

The case of “extreme urgency”

P

P

P

4

The case where the products involved are manufactured purely for the purpose of research, experiment, study or development

P

 

 

5

The case of additional deliveries by the original supplier

P

 

 

6

The case of supplies quoted and purchased on a commodity market

P

 

 

7

The case of supplies being purchased on particularly advantageous terms

P

 

 

8

The case of contracts that follow a design contest

 

P

 

9

The case of additional works or services not included in the original contract

 

P

P

10

The case of new works and services consisting in the repetition of similar works or services of the original contract

 

P

P

The case of “lack” of tenders

This case refers to tender procedures for the award of public works contracts, public supply contracts and public service contracts conducted using the open or restricted procedure, in response to which no tenders or no suitable tenders or no applications have been submitted. All these three sub-cases are considered as cases of “lack” of tenders.

In this case, the Contracting Authority may cancel the tender procedure with a relevant advertisement in the OJEU and in the OGRC and, if it so wishes, repeat it using the negotiated procedure without publication of a contract notice, insofar as the original terms of the contract are not substantially altered (in what regards the definition of substantial alteration, the discussion presented above in the case of irregular or unacceptable tenders applies).

Tenders are considered unsuitable when their contents are not in agreement with the terms and scope of the tender documents and thus do not meet the requirements of the Contracting Authority as laid down in these documents. For this reason, submission of such tenders is considered as lack of tenders. The table below lists some examples of unsuitable tenders.

 

EXAMPLES OF UNSUITABLE TENDERS

Tenders that do not meet the qualitative selection criteria (e.g. failure to submit a certificate or document regarding the tenderers personal situation, thus making it impossible to obtain additional information or clarifications) or the requirements of the award criteria.

Tenders made with reservations or tenders containing intentional or systematic errors.

Tenders made conditionally or containing conditions for counter-offers.

Tenders whose prices are demonstrably the product of collusion between the tenderers and are sheltered from competitive forces, or if more generally there are serious indications of collusion between the tenderers with the purpose of circumventing genuine competition or if, in the opinion of the Contracting Authority, there was not sufficient competition during the tendering procedure.

Financial offers that exceed the estimated budget of the Contracting Authority (when this budget is set as the ceiling in the tender documents, i.e. when negative reductions are not acceptable).

Abnormally low tenders that cannot be justified in writing by the tenderers following a request by the Contracting Authority.

The case where the contract may be awarded only to a particular economic operator

This case refers to public works contracts, public supply contracts and public service contracts which, for technical or artistic reasons, or for reasons connected with the protection of exclusive rights, may be awarded only to a particular economic operator.

This particular case is extremely restrictive and is applied only in cases where Contracting Authorities are able to demonstrate that the specific work, supply or service may be implemented only by a particular economic operator.

The cases where this exception may be applied most safely are those where an economic operator has the exclusive right to execute, supply or provide a particular work, product or service.

Nevertheless, this exception does not apply in cases where the particular exclusive right has also been granted to other economic operators, or may reasonably be obtained by other economic operators through licensing

For example, a sculptor may have the exclusive right to repair or reconstruct a work of art of his own, but he may not have the exclusive right to take pictures of it and reproduce these pictures, if he has already granted this right also to other entities or persons.

A characteristic example is the case of a complaint filed with the European Court of Justice for violation of the Community Directives in connection with the supply of pharmaceutical products and specialities. The defendant (in this case, Spain) invoked the exclusive right conferred to it under the national law regarding the purchase of pharmaceutical products and specialities by the public hospitals within the social insurance security system, to justify the direct award of a contract for the supply of such products to Farmaindustria, the national association of pharmaceutical companies. The Court pointed out that the justification that the said products may be covered by exclusive rights is not adequate, on the grounds that it is not sufficient for the pharmaceutical products and specialities in question to be protected by exclusive rights, but they must also be capable of being manufactured or delivered only by a particular supplier. Since this requirement is satisfied only with respect to those products and specialities for which there is no competition in the market, the grounds invoked cannot in any way justify general and indiscriminate recourse to a single-tender procedure for all supplies of pharmaceutical products and specialities (Judgement of 3 May 1994 in Case C-328/92 Commission v Spain [1994] ECR I-1569, point 17).

The case of “extreme urgency”

This case refers to tender procedures for the award of public works contracts, public supply contracts and public service contracts where, for reasons of extreme urgency brought about by events unforeseeable by the Contracting Authority, the time limits laid down by the other procedures cannot be complied with.

The circumstances invoked by the Contracting Authority to justify the occurrence of extreme urgency must not in any event be attributable to the Contracting Authority.

Unforeseeable events are considered to be events transcending the normal bounds of economic and social life (for example, earthquakes or flooding) and requiring immediate action for relief and assistance to those affected.

It should be noted that this case may only be invoked to justify putting out to tender the works, supplies and services which are necessary for meeting and alleviating the immediate needs which have resulted from the unforeseeable events, and not as a pretext to fulfil additional needs.

As the practice of invoking occurrence of unforeseeable events is common among Contracting Authorities, who use “single-tender procedures” to meet their needs and thus circumvent the conventional procedures provided for by the Community Directives (open and restricted procedure etc.), which impose specific selection and award constraints and specific time limits, the Community law is particularly strict regarding the application and interpretation of the corresponding provisions of the Directives.

The Contracting Authorities should bear in mind that the minimum time limits laid down by both the Community Directives and the national transposition law for urgent circumstances “due to unforeseeable events” may meet their requirements without the need for recourse to the case of “extreme urgency” discussed here.

Furthermore, it should be taken into account that recourse to “extreme urgency” is justified for actions which the Contracting Authority may carry out during a limited period of time (shorter than the minimum time limits for urgent cases under the conventional procedures).

For works, services and supplies required beyond this period of time, Contracting Authorities have sufficient time in which to publish a contract notice and award the contract using the conventional procedures (open or restricted etc.) (Case C-24/91 Commission v Spain, [1992] ECR I-1989, where the European Court of Justice held the extreme urgency relied on by the Spanish Government to be incompatible, because the time limits specified exceeded those laid down by the Community Directives for cases of extreme urgency).

However, in the health sector for example, the Court judged that extreme urgency was correctly invoked by hospitals to justify use of the negotiated procedure without publication of a contract notice for the supply of pharmaceutical products, as an urgent need for a particular pharmaceutical speciality may well arise in a hospital, and taking also into account the freedom of doctors in these hospitals to prescribe the pharmaceutical products they consider necessary. The Court however noted that this cannot justify the a priori systematic recourse to private contracting for all supplies of pharmaceutical products and specialities to hospitals.

The case where the products involved are manufactured purely for the purpose of research, experiment, study or development

This case refers only to tender procedures for the award of public supply contracts where the involved products are manufactured purely for the purpose of research, experimentation, study or development. This provision does not extend to quantity production to establish commercial viability or to recover research and development costs.

Furthermore, this case does not cover the purchase of research or laboratory equipment (the purchase of microscopes, personal computers etc.).

The case of additional deliveries by the original supplier

This case too refers only to tender procedures for the award of public supply contracts and concerns additional deliveries by the original supplier which are intended either as a partial replacement of normal supplies or installations in use or as the extension of existing supplies or installations where a change of supplier would oblige the Contracting Authority to acquire material having different technical characteristics which would result in incompatibility or disproportionate technical difficulties in operation and maintenance.

The length of such contracts as well as that of recurrent contracts may not, as a general rule, exceed three years.

The case of supplies quoted and purchased on a commodity market

This case too refers only to tender procedures for the award of public supply contracts and concerns supplies quoted and purchased on a commodity market such as crude oil, cotton, cereals etc.

The case of supplies purchased on particularly advantageous terms

This case too refers only to tender procedures for the award of public supply contracts and concerns the purchase of products on particularly advantageous terms, from either a supplier who is definitively winding up its business activities, or from the receivers or liquidators of a bankruptcy, a court settlement, or a similar procedure under national laws or regulations.

The case where a contract follows a design contest

This case refers only to tender procedures for the award of public service contracts, when the contract concerned follows a design contest and must, under the applicable rules, be awarded to the successful candidate or to one of the successful candidates. In the latter case, all successful candidates must be invited to participate in the negotiations. This provision should be included in the original tender documents.

The case of additional works or services not included in the original contract

This case refers to tender procedures for the award of public works contracts and public service contracts, and concerns additional works or services not included in the approved design (in case of technical works) or in the original contract but which have, through unforeseen circumstances, become necessary for the performance of the works or services described in the original contract, on condition that the award is made to the economic operator performing such works or services:

When such additional works or services cannot be technically or economically separated from the original contract without major inconvenience to the Contracting Authorities, or
When such works or services, although separable from the performance of the original contract, are strictly necessary for its completion.

The aggregate value of contracts awarded for additional works or services may not exceed 50% of the amount of the original contract.

It should be noted that in this case “additional works or services” due to “unforeseen events” can be works and services that become necessary through events or circumstances which did not exist prior to the original contract or which could not be identified and included in the scope of the work/service of the original contract, although applicable provisions were adhered to (e.g. in the development of the relevant designs or in the conduct of the necessary investigations in the case of technical works), and due care and diligence was applied in accordance with the rules of “workmanship and science". These rules are related to the official (approved) regulations and specifications currently applicable in the Republic of Cyprus as well as to the respective internationally applicable regulations which form the scientific and technical foundations and practices regarding the scope of the work or service.

If, for example, the quantity of earthworks (excavations or embankments) in a road works project increases compared to that foreseen by the approved design as a result of geotechnical problems during the construction stage, the Contracting Authority must prove that, although the specifications for the geotechnical investigations were adhered to, the new situation was unforeseeable. If, for example, the specifications required exploratory boreholes to be drilled every 100m, but according to the design these were required every 200m, then the additional earthworks for the project cannot be justified as a result of unforeseeable circumstances. If however the above specifications were adhered to and an unforeseen soil subsidence takes place, then the additional earthworks are justified as additional works.

It is pointed out that works or services concerning the extension of the physical scope of the original contract or the improvement of its quality (e.g. by using materials of better quality or methods that are not specified in the original tender documents) cannot in any way be considered as additional works/services.

The designation of the above additional works or services as works/services made necessary by unforeseeable circumstances must be justified by actual and detailed information by the Contracting Authority. Insufficient justifications or vague statements invoking the need for completion of the scope as defined in the original contracts are contrary to the rules of Community law, which apply as national law in the Republic of Cyprus, and may cause problems in the smooth progress of the works/services and particularly in their financing by the Community Funds.

The case of new works or services consisting in the repetition of similar works or services included in the original contract

This case too refers only to tender procedures for the award of public works contracts and public service contracts, and concerns new works or services consisting in the repetition of similar works or services entrusted to the economic operator to whom the same Contracting Authorities awarded an original contract, provided that such works or services are in conformity with a basic design for which the original contract was awarded according to the open or restricted procedure.

As soon as the first project is put up for tender, the possible use of this procedure shall be disclosed and the total estimated cost of subsequent works or services shall be taken into consideration by the Contracting Authorities when they apply the thresholds for public contracts. This procedure may be used only during the three years following the conclusion of the original contract.

In the case of public works contracts, for example, this procedure applies when a contract for a series of recurrent works is put up for tender but only a part of these works are awarded through the original contract (completed section), while the extension or completion of the works (recurrent works) are awarded to the original contractor through a new contract on the same or improved terms after negotiations.

Respectively, in the case of service contracts, this procedure applies when for example a contract for Programme Management services for a particular Community Programme is put up for tender but only a part of the contract is awarded, while the new contract refers to similar services within this Programme which are performed on a recurring basis for the Programme’s finalisation or completion.

To assist Contracting Authorities in documenting the fulfilment of the terms and conditions justifying use of the negotiated procedure without publication of a contract notice, a relevant Checklist is given in Annex 5-3.

 

 


© 2007 Republic of Cyprus, Treasury of the Republic, Public Procurement Directorate
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